‘Highest in a decade’: Solar sector witnesses unprecedented corporate funding

The UK Government has committed to decarbonise the nation’s electricity systems by 2030.

Mercom Capital Group, a global firm specialising in clean energy communications and consulting, recently published its annual report on funding and merger and acquisition (M&A) activities within the solar sector last year.***

According to the report, venture capital funding in 2023 amounted to $6.9bn across 69 deals.

Despite a slight reduction in the number of participating VC investors (207 in 2023 compared to 223 in 2022), public market financing saw a considerable increase, totalling $7.4bn across 22 deals, a 45% rise from 2022.

Announced debt financing reached $20 bn in 69 deals, a 67% increase from the $12bn raised in the same number of deals in 2022.

Mercom Capital Group’s chief executive officer Raj Prabhu said: “Investments into solar continue to defy expectations. Despite high interest rates and challenging market conditions, corporate funding in the sector was the highest in a decade.

“Driven by the Inflation Reduction Act, the global focus on energy security, and favourable policies worldwide, solar continues to attract significant investments.”

Passed by the Biden administration in the US, the Inflation Reduction Act includes a total of $369bn for low-carbon technologies, green skills training and climate adaptation. Billions are set aside for a 30% tax break for wind and solar in 2023 and 2024.

Mergers and aquistions

The solar industry witnessed 96 mergers and acquisitions (M&A) transactions, a decline from the 128 transactions recorded in 2022.

Large-scale solar project acquisitions numbered 231 in 2023, down from 268 in the previous year.

However, Q4 2023 stood out with an acquisition of more than 13.7 gigawatts (GW) of solar projects, a considerable increase compared to the 6.2GW acquired in Q3 2023.

During 2023, project Developers and independent power producers (IPPs) emerged as the most prolific acquirers, securing nearly 16GW of solar projects.

Following closely, investment firms and infrastructure funds acquired 10.5GW, while utilities completed transactions for almost 7.6GW of solar projects.

The financial trends observed in 2023 indicate ongoing support for the solar sector, shaping its trajectory toward a potentially transformative era in renewable energy.

Amazon takes the helm in corporate renewable energy procurement

In related news, Amazon has announced that its renewable energy acquisition portfolio has grown to more than 500 solar and wind projects across the world.

Based on Bloomberg NEF and publicly available records, the company claims that it remains the world’s largest corporate purchaser of renewable energy for the fourth consecutive year.

In 2023 alone, Amazon invested in more than 100 new solar and wind projects including its first brownfield project, which will repurpose a previously polluted Maryland coal mine site into a solar farm, as well as the company’s first renewable energy project in South Korea.

Amazon Web Services (AWS)’s chief executive officer Adam Selipsky said: “Amazon’s investments in solar and wind projects are helping power our operations, while also providing new sources of clean energy to the grid, spurring economic growth and supporting jobs in the communities where our customers live and work.”

“We’re focused on continuing to find innovative ways to bring new projects online, address grid constraints, and work with policymakers to mitigate the impacts of climate change.”

The company has committed to power its operations with 100% renewable energy by 2025.

Microsoft signs eight-year solar deal

Similarly to Amazon, inking an extensive eight-year agreement, Microsoft has entered into a partnership with Qcells, the largest solar manufacturer in the US.

The collaboration aims to provide Microsoft with a sufficient quantity of solar panels, facilitating the addition of 12GW of solar electricity to the grid.

Microsoft plans to deploy these panels in solar farms strategically developed to counterbalance the energy consumption of its continually expanding network of data centres.

The collective output from these solar installations is anticipated to generate electricity equivalent to powering 1.8 million homes.

*** editor’s note – the Mercom Capital report is a paid-for report but an executive summary is available publicly, here.

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