Strong Solar Financing Leads to Big Growth in Q3

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Mercom reports strong Q3 solar financing

Mercom reports strong Q3 solar financingSolar financing through the third quarter of 2013 has already surpassed 2012 totals in certain sectors, according to a Mercom Capital Group Report on Solar Funding and M&A activity released this week.

The report found that there were more large-scale solar projects funded in the first three quarters of 2013 than in all of 2012 and more funding for third-party solar financing companies at the end of Q3 than by the end of 2012.

There were 106 large-scale solar projects - totaling 1,267 - megawatts announced during the third quarter of 2013, according to the report. That’s a significant uptick from the 84 large-scale solar funding deals announced in 2012.

Disclosed large-scale solar project funding totaled $2.89 billion in the third quarter, with a $300 million term loan for ACWA Power International topping the list as the biggest financing project. AGL Energy, Abengoa and SunEdison each raised more than $250 million for their projects during Q3 and Acciona Energy South Africa partnered with Aveng Africa to raise $179 million.

The cash doesn’t stop flowing at large-scale project funding, however.

Mercom found that third-party solar finance companies raised $584 million for residential and commercial distributed solar installations. That brings the year-to-date financing total for third-party solar to $2.4 billion, topping the 2012 total of $2 billion with another quarter still remaining in the year.

Merger and acquisition activity in the solar industry also increased, reaching $9.8 billion in 23 transactions, up from $1.3 billion in 18 transactions during the second quarter of the year.  

The report found that more than 3,000 megawatts of solar projects changed hands in Q3 2013.

Equity financing and venture capital were also flowing into the solar industry during Q3.  Companies acquired a total of $437 million in equity financing and global venture capital funding hit $207 million, which was up slightly from the previous quarter even though the average deal size dropped from $9.9 million the second quarter to $7.4 million.

This is all in line with recent solar industry trends. Several solar developers kick started large utility-scale solar projects, obtaining permits, finding financing, contracting with a utility that will buy the electricity and often starting the construction process before selling to more risk-averse companies that don’t seek funding for brand new projects, but are happy to take them over once they’re approved and underway.

The report also found that First Solar’s 1,500-megawatt acquisition of Element Power’s pipeline was the biggest deal during the third quarter.