Corporate solar financing drops due to inflation and high interest rates

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There were 207 solar project acquisitions globally between January and September 2022, according to Mercom Capital Group. Image: Sonnedix.

Corporate financing in the global solar sector was held back by inflation and high interest rates in the first nine months of the year, according to research by Mercom Capital Group.

The consultancy found that total corporate solar funding – including venture capital, public market and debt funding – between January and September was $18.7 billion, down 18% than at the same time last year.

Raj Prabhu, CEO of Mercom Capital Group, said that although corporate funding over the nine months lagged year-on-year, impacted by inflation and high interest rates, the consulting firm has seen a resurgence in venture capital and private equity.

“There is no longer any doubt about the growth potential of the solar industry – it is now a race to acquire the right technology and the right portfolios at scale,” Prabhu said.

In the nine months, solar venture funding grew 150% year-on-year to US$5.5 billion, the research found.

According to Mercom, the major venture capital deals were US$750 million raised by US renewable energy developer Intersect Power, US$500 million secured by Longroad Energy, another US renewable energy developer, and US$375 million raised by Palmetto residential solar platform,

Other major venture capital deals include US$360m raised by Chinese wafer maker Gokin Solar, US$350m by US developer Agilitas Energy and US$260m by off-grid solar provider Sun King.

In terms of solar public market financing over the nine months, Mercom Capital Group said it fell 22% year-on-year to $4.9 billion, while debt financing activity in the sector fell 42% to $8.3 billion.

Meanwhile, there have been 207 solar project acquisitions, up from 200 between January and September 2021.

Mercom discovered last year that corporate financing in the global solar sector hit a decade high as the industry recovered from a COVID-affected 2020.

In its report on corporate solar finance for the second quarter of 2022, the consultancy said there was a pronounced slowdown in activity, with inflation and supply chain issues impacting the solar sector fundraising.

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