Business solar funding stalls among COVID crisis as O&G companies drive M&A

• Company solar financing fell by 25% year-on-year to US$ 4.5 billion in the very first fifty percent of 2020, but the decrease can have been much starker, brand-new analysis by Mercom Capital has actually located.

As well as there is yet a lot more proof that oil and also gas majors are billing ahead with solar procurements, getting regarding 6.5 GW-- equal to 45% - of solar properties to change hands in the first fifty percent of the year.

Mercom's analysis places total company financing-- including financial backing (VC) financing, public market as well as debt financing-- in the initial 6 months of 2020 at US$ 4.5 billion, a 25% decrease on the US$ 6 billion recorded in H1 2019. That figure is broadly equivalent keeping that taped in H1 2017, indicating the range of the trouble to solar funding triggered by the COVID-19 pandemic.

VC financing dropped significantly, dropping 74% year-on-year to US$ 210 million, most of which originated from the US$ 72 million raised by Sunseap Group. Public market funding fell by 24% year-on-year to US$ 758 million spread over six specific offers, while financial obligation financing fell by around 16% to US$ 3.6 billion.

Raj Prabhu, chief executive at Mercom Capital, said that monetary task videotaped in the first half of the year "reflects the realities on the ground".

"Even though solar stocks have performed well, and corporate funding in Q2 looked slightly better because of several securitization deals, global economies and solar activity are still far from being back to where they should be," he said, adding that project acquisition activity, often regarded as a sign of sector health, fell dramatically in Q2 2020 as the pandemic and subsequent economic crisis began to bite.

While project acquisition activity was actually up in H1 2020 compared to the same period in 2019, activity dropped starkly in Q2. Just ~ 3GW of solar projects were acquired in the three months of Q2, almost half the 5.7 GW of acquisitions recorded in Q2 2019.

Oil and gas majors were the chief drivers of such activity however, taking on 45% of projects to have changed hands in the first half of the year.

Solar and the wider renewables economy has not been immune to the pandemic and resultant economic shock. Most estimates for solar deployment have been revised down in the crisis' aftermath, while numerous companies in the space have reported delays to project completions and financing deals such as power purchase agreements.

But, Prabhu said, given the severity of the crisis and the impact seen in other sectors, "it could have been worse".

Solar indeed finds itself at the centre of a large number of economic recovery programs, especially in Europe where billions of investment is being lined up to hasten utility-scale solar deployment, pair the technology with hydrogen generation and establish continent-wide rooftop programmes to empower consumers.