The solar companies secured $4.8 billion corporate funding in 39 deals in the first quarter (Q1) of 2025, a 41% year-over-year (YoY) decrease from $8.2 billion raised in 42 deals.

However, funding increased 20% quarter-over-quarter (QoQ) compared to $4 billion raised in 40 deals in Q4 2024.

These figures were revealed in Mercom Capital Group’s newly released Q1 2025 Solar Funding and M&A Report.

Raj Prabhu, CEO of Mercom Capital Group, said, “The decline in funding was anticipated due to the market conditions and the uncertainties that have persisted since President Trump took office. All the predictions and investor fears materialized after new tariffs were announced, followed by policy uncertainties that have continued to build up.”

In Q1 2025, the solar sector’s global venture capital (VC) funding was $1.4 billion in 14 deals, a 237% YoY increase from $406 million raised in 13 deals. Compared to Q4 2024, the funding rose 40% QoQ from $1 billion raised in 21 deals.

The top VC/private equity (PE)-funded companies were Origis Energy, raising $1 billion; Terabase Energy, with $130 million; Mission Clean Energy, with $55 million; AMPIN Energy Transition, with $50 million; and Tandem PV, with $50 million.

Solar downstream companies attracted 96% of the total VC funding with $1.3 billion in 12 deals. These companies raised $661 million in 16 deals, 65% of VC funding in Q4 of 2024.

Public market financing reached $20 million in two deals in Q1 2025, decreasing 99% from $1.4 billion funded through six deals in Q1 2024. It experienced a 98% QoQ decrease from $993 million in five deals in Q4 2024.

Announced debt financing in the solar sector in Q1 2025 stood at $3.5 billion in 23 deals, a 45% decline from $6.4 billion raised in the same number of deals in Q1 2024.

Debt financing increased 67% QoQ from $2.1 billion in 14 deals.

Q1 2025 witnessed 19 merger and acquisition (M&A) transactions, a 10% decrease from 21 transactions in the same quarter last year. Solar downstream companies led M&A activity with 16 transactions, one each for the balance of system, materials, and service provider companies.

Approximately 13.6 GW of solar projects were secured during Q1 2025, compared to 10.8 GW secured in Q1 2024 and 9.4 GW obtained in Q4 2024.

“The market fundamentals remain strong, and the long-term case for solar is intact. What we need now is clarity and policy certainty to restore confidence in the markets. Despite headwinds in the broader funding environment, we did see an uptick in project M&A in Q1,” Prabhu said.

Project developers and independent power producers were the most active acquirers in Q1 2025, procuring over 8 GW of projects. Investment firms and funds acquired 2.5 GW of projects.

Telecommunications, integrated energy trading companies, insurance providers, and several undisclosed acquirers procured 2.3 GW of projects.

Electric utilities followed with 485 MW, and major oil and gas entities secured 245 MW. Installers obtained the remaining 63 MW of projects.

Commenting on the upcoming quarter, Prabhu said, “Market conditions are expected to remain largely the same in the near term. The 90-day tariff stay has created additional uncertainty, and until there is more policy clarity, investors will likely remain cautious. We may see a few deals close, but overall, the market is still in wait-and-see mode.”

This 91-page report covers 263 companies and investors and contains 69 charts, graphs, and tables.

To learn more about Mercom’s Q1 2025 Solar Funding and M&A Report, visit: https://mercomcapital.com/product/q1-2025-solar-funding-ma-report/