According to clean energy research firm Mercom Capital Partners, corporate financing in the solar industry experienced a drop of nearly US$7 billion in the initial nine months of 2024 when compared to the corresponding period in the previous year.
By the conclusion of September, the overall global corporate funding for the industry amounted to US$22.3 billion, a decrease from US$28.9 billion recorded at the equivalent time in 2023. Mercom noted a 6% year-on-year (YoY) decline in the total number of deals, dropping from 124 deals in 2023 to 117 deals this year.
Mercom concentrates “solely” on markets within the US, Europe, India, and the Middle East.
Debt financing is the sole market segment that witnessed a year-on-year increase as per Mercom’s findings. In the period from January to September this year, the solar industry recorded US$16.7 billion in debt financing, marking a rise of US$700 million from the previous year’s figure of US$16 billion. Additionally, the number of deals also saw an increase, reaching 68 compared to 54 in 2023.
Nevertheless, the growth in debt financing has notably decelerated compared to the past two years. In 2023, there was a remarkable 93% year-on-year increase in debt financing, accompanied by a substantial uptick in the scale of transactions taking place.
Mercom’s analysis revealed that Venture Capital (VC) funding, Public Market funding, and Mergers & Acquisitions (M&A) financing in other sectors all experienced declines in comparison to 2023.
In 39 deals, Venture Capital (VC) funding amounted to US$3.5 billion, a decrease from US$5.5 billion across 51 deals. Downstream companies continued to lead in VC funding, securing 32 deals totaling US$3.3 billion. Pine Gate Renewables, a US solar and storage developer, received the largest VC funding in the sector, securing US$650 million from Generate Capital.
Public market financing amounted to US$2.1 billion across 10 deals, marking a substantial decline from the US$7.2 billion raised in 19 deals the previous year.
In the first three quarters of the year, there were 62 M&A transactions completed, down from 75 transactions during the same period in 2023.
Furthermore, there were 166 acquisitions of solar projects, totaling a combined capacity of 28.3GW. Mercom noted that investment firms were the most prominent acquirers of solar projects in the third quarter of 2024.
‘Significant uncertainties’
Mercom Capital Group’s CEO, Raj Prabhu, attributed the decrease in investment to the “significant uncertainties” confronting the solar industry.
Prabhu mentioned that regulatory worries regarding antidumping measures, countervailing duties, tariffs, the U.S. Section 45X guidance, possible policy changes influenced by election results, uncertain global trade policies, supply chain interruptions, increased expenses, labor market constraints, and persistent project delays have collectively reduced investor confidence and postponed crucial investment choices.
“Although the recent 50 basis points rate reduction is promising, the market requires additional clarity and guidance on forthcoming rate cuts to stimulate a revival in investment momentum.”
