Regulatory ambiguities and tariff uncertainties were a drag on the global solar sector in the first quarter of 2018, causing the announced corporate funding total to fall by 65 percent quarter-over-quarter (QoQ) to $2.0 billion from the $5.7 billion raised during Q4 2017.
The data was revealed in Mercom Capital Group’s newly released Q1 2018 Solar Funding and M&A Report.
Moreover, a year-over-year (YoY) comparison reveals that Q1 2018 funding was 38 percent below the $3.2 billion raised in Q1 2017.
The drop came as both the Indian and US governments unveiled new tariffs on imported solar components that threaten to increase the cost of solar projects and hurt the project developers. The US imposed a 30 percent tariff on imported solar panels in January while developers in India are bracing for safeguard and anti-dumping duties.
“After a strong fourth quarter in 2017, financial activity slowed again in Q1 2018 to the post-tariff announcement levels of last year as uncertainties and a lack of clarity in the markets took a toll on investments,” commented Raj Prabhu, CEO of Mercom Capital Group.
“The bright spot during Q1 was a record-high number of solar project acquisitions, proving that solar power generation is a sought-after asset class,” Prabhu added.
During Q1 2018, global venture capital (VC) funding into the solar sector fell 75 percent QoQ to $161 million raised in 22 deals. In Q4 2017, the figure stood at $639 million raised in 30 deals.
The majority of the VC funding raised in Q1 2018 went to solar downstream companies which picked up $124.5 million in 18 deals.
There were 19 solar M&A transactions announced in Q1 2018 compared to 13 transactions in Q4 2017 and 29 transactions in Q1 2017.
Here are a few notable funding deals that took place in India during Q1 of 2018:
Project developer Kiran Energy Solar raised ~$11 million in funding from Bessemer Venture Partners, Argonaut Ventures, and New Silk Route. Bessemer put in $4.01 million while Argonaut Ventures and New Silk Route contributed $3.2 million and $3.55 million, respectively.
Solar module manufacturer Orb Energy raised $4 million in equity funding from Netherlands Development Finance Company (FMO). It also raised $1.05 million for solar operations in Kenya.
Project Funding Deals:
Vector Green Energy refinanced two solar projects with 223 MW of combined capacity in Telangana, India.
Mahindra Renewables closed on a 250 MW solar project in the Rewa District of Madhya Pradesh. YES Bank provided the financing in the form of ₹7.5 billion (~$115.5 million) in project debt, and other financial institutions were set to provide up to ₹2 billion (~$30.8 million).
CleanMax Solar, an Indian solar installer, secured a $20 million loan from KKR Financial Services for the construction of a 46.4 MW solar project in the state of Karnataka.
Project M&A Deals:
Vector Green Energy, a wholly-owned subsidiary of IDFC Alternatives, acquired 40 MW of grid-connected solar PV projects in Madhya Pradesh.
Lear more about Mercom’s comprehensive report and download a free executive summary by visiting: http://bit.ly/MercomSolarQ12018