Global solar power sector corporate funding totalled $7.5bn in the first quarter, a 51% increase from fourth quarter 2021 but 7% lower compared with a year earlier, pointing to the prospect of “significant” slow-down in the sector, according to Mercom Capital.
The research group’s Q1 2022 Solar Funding and M&A report, which tracked 49 deals involving debt financing, public market, and venture capital, found a record 23.7GW of large-scale solar projects had been acquired in Q1.
“Although financing activity was strong quarter-on-quarter with robust demand for solar assets, significant headwinds are building up that can slow the momentum considerably,” said Raj Prabhu, CEO of Mercom, citing supply chain tensions, rising commodities and component costs, and signals central banks would be raising interest rates to cool inflation, with knock-on effects on borrowing costs.
First quarter venture capital funding for the solar sector came to $1.2bn in 26 deals, a 45% decrease versus fourth quarter last year, but 19% higher compared to a year earlier, according to the report. About 94% of funding raised sent to solar downstream companies.
First quarter public market financing totalled $2.5bn, a 115% increase compared to the prior quarter. There was one initial public offering. Funding versus a year earlier was down 9%.
Announced solar debt financing last quarter totalled $3.8bn, a 137% increase versus the prior quarter but off 12% year-on-year. Four securitisation deals brought in $1.1bn, 137% above the prior quarter. Data for a year earlier was not released.
Solar downstream companies led mergers and acquisition activity with 25 deals, led by 23 involving large-scale projects. Project developers and independent power producers were the most active in the first quarter, acquiring more than 17GW of 23GW in deals.