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Global corporate funding for the solar sector fell 18% to $18.7 billion in the first nine months of 2022 from $22.8 billion in the same period last year due inflation and high interest rates, according to a report by Mercom Capital.
Additionally, in the first nine months of this year, solar debt financing activity fell 42% to $8.3 billion in 48 deals from $2.2 billion in 50. transactions during the same period last year. The report includes data from 227 solar companies and investors.
However, the number of transactions increased by 17% to 131 in the first nine months of 2022, compared to 112 in the same period last year. In the first nine months, venture capital funding saw a 150% increase to $5.5 billion from $2.2 billion.
Meanwhile, major venture-backed companies include US-based Intersect Power at $750m, US-based Longroad Energy at $500m, US-based Palmetto at $375m, Chinese-based Gokin Solar at $360 million, US-based Agilitas Energy at $350 million and Kenya-based Sun King at $260 million.
“Corporate funding in 9M 2022 lags year-over-year, impacted by inflation and high interest rates, but is still ahead of the previous six years. There is a new momentum after the passage of the Inflation Reduction Act,” said Raj Prabhu, CEO of Mercom Capital.
“We have seen a resurgence in venture capital and private equity funding, breaking funding records since 2010. 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 wallets at scale,” he adds.
In the first nine months of 2022, eight securitization deals plunged 28% to $2.3 billion, down from $3.2 billion in 11 deals in the same period last year. However, since 2013, more than $13.4 billion has been raised through securitization transactions.
In the first nine months of 2022, the total acquisition of projects for 52 GW amounted to 200 projects acquired for 55.5 GW in the 9 months of 2021. There were 90 mergers and acquisitions (M&A) transactions solar in the first nine months of 2022 against 83 transactions. at the same time last year.
The development comes at a time when countries around the world are pushing for renewable energy to reduce carbon emissions. Several national companies, including Adani Group and Reliance Industries, have announced their renewable energy expansion plans.
Adani Enterprises has pledged to invest $70 billion in energy transition and green infrastructure projects. Additionally, Reliance Industries, led by Mukesh Ambani, has also pledged an investment of over $82.2 billion in green energy.