Renewable Revolution

Solar VC Funding: "The Fear Is Gone" For Investors


Funding for solar energy projects and M&A soars, as investors and developers continue to confidently ride the demand wave.

 James Montgomery, Associate Editor, RenewableEnergyWorld.com 
 October 09, 2013

New Hampshire, USA -- Project funding and merger and acquisition (M&A) activity in the solar energy sector reached record levels from July-September of this year, reflecting an improved outlook for solar demand, according to a new report from Mercom Capital Group.

Global funding for solar energy spiked to $2.18 billion, more than twice the funding seen in 2Q13 ($915 million), Mercom says. Top VC recipients in the quarter included Solexel ($40 million, high-efficiency silicon solar cells), eSolar ($22 million, concentrated solar power developer), Clean Power Finance ($20 million, third-party solar PV financing), HelioVolt ($19 million, thin-film), and Dyesol ($16 million, dye-sensitized/organic solar cells). On the M&A side, the Applied Materials-Tokyo Electron deal was a major shakeup in the semiconductor sector but less so for silicon solar manufacturing.

The new normal is now. It's time to stop comparing today's levels of solar energy investment to the heady days of two or three years ago, when $400-$500 million quarters were routine and money flowed freely to solar technology developers jostled for positioning. "We're not seeing anything over $200 million in the last 3-6 quarters," noted Mercom CEO Raj Prabhu. "This is where we are: the new normal."

Strategic investors are stepping up. SK Group put more money into Heliovolt. Saudi conglomerate Tasnee invested in Dyesol. Over the past year Hanergy and Hanwha have been extending their reach into solar. Big strategic partners with a ton of money continue to hedge some bets on technology, possibly where they can leverage manufacturing experience.

Solar leasing's hot. Third-party solar finance companies raised approximately $584 million in the past quarter, with SolarCity, Sungevity, SunRun, etc. raising funds with help from banks. So far with three months to go, third-party solar leasing firms have raised roughly $2.5 billion this year, compared to just $2 billion in both 2012 and 2011. "This shows that it's still pretty healthy out there," Prabhu said. "Everything we're seeing is going up." Of course the ability to pull down lots of funding is especially important to third-party firms; it's not just enough to raise a few million of VC or private equity funding, but they need to raise tens and hundreds of millions of dollars and put that right into rooftop installations, Prabhu pointed out. "If they're not doing that they have a problem."

Also noteworthy during 3Q12 was SolarCity's acquisition of sales channel partner Paramount Solar, underscoring the importance of customer acquisition in the solar leasing model. "At the end of the day, anyone can go install" solar, Prabhu pointed out, but "the ability to go out and land the residential customers makes you unique."

Projects are popular


Full article here:

http://www.renewableenergyworld.com/rea/news/article/2013/10/solar-vc-funding-the-fear-is-gone-for-investors?cmpid=WNL-Friday-October11-2013