Solar energy companies having tough time raising capital – report

Project acquisition activity held steady in Q1 with 50 transactions (about 2.4 GW of solar projects)

Corporate funding of the global solar energy sector fell significantly in the first quarter, according to a new report from Mercom Capital Group LLC,  dropping to $2.8 billion from $6.9B in Q4.

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“It’s a tough environment out there,” said Raj Prabhu, CEO of Mercom Capital Group. “Solar public companies in general have had a difficult time raising capital at depressed market valuations.”

Prabhu says that “yieldcos,” which accounted for significant financial activity in the debt and public markets last year, have faded this quarter, but VC funding held up well, securitization deal activity picked up, and residential/commercial funds raised a billion dollars in Q1.

Global VC funding for the solar sector came in at $406 million (M) in 23 deals.

Most of the funding in the first quarter of this year went to solar downstream companies with $333M in eight deals. Sunnova Energy’s $300M raise was the largest deal.

The next largest deal was TenKsolar with a $25M raise. PosiGen raised $20M and Mercatus brought in $11.7M. Completing the Top 5 was NexWafe with $6.7M raised.

Public market financing activity fell of the cliff in the first quarter this year with $94M raised in four deals compared to $605M in eight deals last quarter. There were no IPOs this quarter.

Announced debt financing also fell sharply this quarter with just over $2.3B in 19 deals.

Securitization deals continued to gain momentum, with $387M in three deals in Q1of 2016. Securitization deals in solar have now surpassed $1 billion globally

Funding continued to pour into residential and commercial solar funds for lease/PPAs, with $1B in six deals announced in Q1 2016 compared to $650M in three deals in Q4 2015. Since 2009, approximately $18B has gone into residential and commercial funds.

There were 14 solar M&A transactions this quarter, nine of which involved solar downstream companies. To compare, there were 13 transactions in Q4 2015.

Project acquisition activity held steady this quarter with 50 transactions; about 2.4 GW of solar projects were acquired this quarter. Project acquisitions by yieldcos dropped to 234 MW in Q1 compared to 483 MW last quarter.

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