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According to recent Mercom Capital Group data, corporate spending in the global solar sector hit a ten-year high in 2021 as the industry rebounded from a COVID-affected 2020.
Total corporate solar fundraising last year was US$27.8 billion from 144 deals, according to the consultancy’s 2021 Solar Funding and Mergers and acquisitions (M&A) Report, it is almost twice (precisely 91%) the US$14.5 billion funding raised in 2020 including Venture capital (VC) and private equity, debt financing, and public market funding.
Alone, VC and private equity financing in the solar sector increased from US$1.2 billion in 2020 to US$4.5 billion last year, with 11 VC funding agreements exceeding US$100 million.
M&A activity increased to 126 transactions in 2021, the most ever reported, with the majority of agreements involving downstream solar firms.
The highest M&A deal last year was Adani Green Energy’s acquisition of SB Energy India, which valued the renewable energy business at US$3.5 billion, said the report.
In terms of large-scale solar project purchases, there was a 21% increase over 2020, with 280 plants changing hands, representing 69GW of worldwide installations in 2021. With over 34GW of solar projects purchased in 2021, project developers and independent power producers were stated to be the most active buyers, followed by oil and gas giants, which acquired 13.8GW of plants.
The top VC-funded solar startups in 2021 were GoodLeap (previously Loanpal), a home solar loan company that raised US$1.6 billion in two different deals, and Silicon Ranch, an independent power producer that obtained US$775 million in fresh equity capital.
The financing activity in the industry rebounded sharply after 2020, said the CEO of Mercom Capital Group, Raj Prabhu. There was more money pursuing transactions than ever before, along with more demand than supply of appealing firms and assets as organizations and institutions sought to fulfil their ESG and renewable energy objectives.
According to Mercom, record securitization activity was a significant contributor to the increase in solar debt financing last year, which rose 91 percent over 2020 to US$15.8 billion.
The greatest public market fundraising came from Shoals Technologies, which obtained US$2.2 billion in an initial public offering, increasing public market funding by 49 percent to US$7.5 billion.
Ten solar firms went public last year through IPOs and transactions with special purchase acquisition companies, said Mercom’s report.