Solar funding down as uncertainty grows over trade

Source: Daniel Cusick, E&E News reporter • Posted: Wednesday, July 12, 2017

The solar finance sector cooled over the last three months as concerns about trade disputes, softening U.S. markets and other uncertainties cast a shadow over the world’s fastest-growing energy field.

Corporate funding of solar fell steeply during the second quarter of 2017 compared with the same period in 2016, with venture capital, public market and debt financing totaling $1.4 billion from April to June, according to a new analysis from Mercom Capital Group LLC.

That compares with $3.2 billion raised during the first quarter of this year.

Yet when measured year-to-date, the analysis shows solar spending was slightly higher in the first six months of 2017 — at $4.6 billion — compared with $4.5 billion during the first half of 2016, experts said.

“There is a great deal of uncertainty in the solar markets right now, which is reflected in funding activity,” Raj Prabhu, CEO of Mercom Capital Group, said in a statement.

But Prabhu said that publicly traded solar companies, especially on U.S. stock markets, have performed well in the first six months of 2017, even as a major trade case involving Georgia-based Suniva Inc. threatens to disrupt markets in the future.

“A lot is riding on how the Suniva anti-dumping case plays out as it will dictate market dynamics going forward,” Prabhu said.

Suniva is one of two U.S. firms to ask the U.S. International Trade Commission to impose stiff penalties on inexpensive solar panels that have flooded the U.S. market over the last decade, making it increasingly difficult for American firms to compete on prices.

Among the core tenets of the Suniva trade petition are a 78-cent-per-watt floor on the price of solar modules, as well as a new 40-cent-per-watt tariff on imports of solar panels from China and other low-cost foreign manufacturers. A decision from the ITC is expected later this year.

The petition has garnered stiff opposition from many in the industry, including U.S. solar developers, installers and others who argue that solar’s steeply falling costs — fueled by cheap modules and panels — have been the primary driver of the sector’s remarkable growth over the last decade.

A recent analysis from GTM Research suggests the U.S. market could contract by half if the Suniva petition leads to new sanctions from the Trump administration (Energywire, June 26). The Solar Energy Industries Association predicted the U.S. solar sector would shed 88,000 jobs under new trade sanctions (E&E News PM, June 15).

Experts have also observed a softening of key U.S. solar markets, including California, where residential rooftop solar has experienced a trend known as “consumer fatigue.” Alternately, utility-scale solar has remained strong, accounting for much of the roughly 2 gigawatts of new solar capacity added between January and March of this year (Climatewire, June 8).

The mixed signals appear to have had a near-term negative effect on deep-pocketed solar funders, according to Mercom.

In 2017’s second quarter, venture capital (VC) funding for the solar sector saw a steep decline, estimated at $128 million in 23 deals. That’s compared with $585 million in 22 deals for the first quarter of this year, according to the analysis.

But when measured over the first six months of the year, global VC spending was 23 percent higher in 2017 than in 2016, at $713 million, largely due to the strong first quarter, Mercom said.

Public market funding was especially up over the first half of 2017, with $934 million raised compared with $276 million during the same period of 2016. The sector also boosted spending levels between the first and second quarters of 2017, at $473 million for the April-June period, compared with $461 million from January to March.

Mercom tracked 206 new large-scale project announcements in the second quarter totaling 11.1 GW of solar power. Investment firms and funds were the most active acquirers for the first half of 2017, picking up 37 projects totaling 4.2 GW. Project developers reported 17 transactions accounting for 4.6 GW.

Top VC deals for the first half of 2017 include:

  • $200 million raised by ReNew Power Ventures Pvt. Ltd.
  • $155 million raised by Greenko Energy Holdings.
  • $125 million secured by Hero Future Energies Ltd.
  • $55 million raised by Silicon Ranch Corp.