Venture Capitalists Invest More Funding in Solar

Venture capital funding in the solar energy sector rose for the third consecutive quarter in 3Q 2013, increasing 9.5 percent quarter over quarter, from $189 million in 2Q 2013 to $207 million, according to Mercom Capital Group's Solar Funding and M&A 2013 Third Quarter Report.

Thirty-seven large-scale project financings – a total of 1,267 megawatts (MW) of renewable power capacity – were announced in 3Q, with disclosed funding totaling $2.89 billion. Overall, the 106 solar energy project financings announced through 3Q exceeds that for all of 2012, when 84 project financings were announced.

Disclosed capital raised by third-party solar finance companies for residential and commercial solar projects through 3Q also surpassed that for all of 2012. Third-party solar finance companies have raised $2.4 billion in capital thus far in 2013 as compared to 2012's total of $2 billion.

5.5 gigawatts of large-scale solar energy in the works

Fifty-two investors participated in solar energy project financings in 3Q. Mercom tracked nearly 5.5 gigawatts (GW) of new large-scale solar energy project announcements worldwide for Q3 that are in various stages of construction.

The biggest five large-scale solar energy project financings were ACWA Power International's $300 million term loan, AGL Energy raising $272 million, Abengoa raising $270 million, SunEdison raising more than $260 million, and Acciona Energy South Africa and Aveng Africa raising $179 million.

Thirty-five venture capital companies participated in solar energy funding rounds in the third quarter as compared to 27 in 2Q. None were involved in multiple deals, according to Mercom's latest report.

3Q's top five venture capital transactions were Solexel's $39.9 million financing, eSolar's $22 million, Clean Power Finance's $20 million, HelioVolt's $19 million, and Dyesol's $16 million financing. Average transaction size declined to $7.4 million from $9.9 million for 2Q.

3Q Solar energy M&A

Turning to 3Q's mergers and acquisitions (M&A), Mercom found that activity reached $9.8 billion across 23 transactions as compared to $1.3 billion in 18 transactions during this year's second quarter. Though not “a pure-play solar transaction,” Applied Material's acquisition of Tokyo Electron, at $9.4 billion, was the largest transaction for the quarter, accounting for nearly all activity in 3Q.

Thirty solar energy projects – more than 3,000 MW rated capacity – changed hands in 3Q, according to Mercom's data, with large-scale project acquisitions reaching their highest level for the year to date. Investment funds accounted for more than half the quarterly total.

3Q's largest solar energy project acquisition was the purchase of Element Power's 1,500-MW project pipeline by First Solar.

Solar energy company equity financings registered a strong performance in 3Q, with a total of $437 million of capital raised in equity markets.