Global solar sector marred by erratic corporate funding

Total corporate funding in the global solar sector, including venture capital/private equity (VC) funding, public market, and debt financing, in 1H 2024 totaled $16.6 billion, 10 per cent lower year-over-year (YoY) compared to the $18.5 billion raised in 1H 2023. The number of deals increased nine per cent YoY, with 87 deals in 1H 2024 compared to 80 during the same period last year.Financing activity in the solar sector remains restrained despite tailwinds from the Inflation Reduction Act and favourable global policies. High interest rates, an uncertain rate trajectory and timeline, increasing trade barriers, supply chain challenges, concerns about the US Presidential election's impact on the sector, and constantly evolving trade policies have created an unpredictable and uncertain climate.

This has slowed down development, investments, and decision-making, going by the latest study by Mercom Capital Group.When it comes to India, power producer AMPIN Energy Transition secured funding of up to $35 million from responsAbility, an investor focusing on private markets, towards expanding its clean energy project pipeline across the country. Solar cold storage solutions provider Ecozen raised $30 million in a new funding round to accelerate its growth and global expansion.

Soleos Solar Energy raised Rs. 485 million in equity funding to develop its global renewable energy portfolio development and to establish manufacturing facilities all over. Rooftop solar startup SolarSquare raised $4.2 million in a new funding round to drive the company’s expansion plans.

It is pertinent to also take a look at instances of debt funding in this period. Jakson Green, the renewable energy arm of Jakson Group, obtained a sustainable trade facility of Rs. 600 million from HSBC India. The trade facility will help bolster the company’s operational needs within the renewable energy sector, including overseas. Husk Power Systems, a decentralized solar-hybrid mini-grids provider, has secured a $4 million investment in debt financing Electrifi to push efforts to provide clean energy access in rural India.When it comes to project funding, Avaada Energy, the renewable energy division of Avaada Group, has secured Rs 3.15 billionfrom Aseem Infrastructure Finance (AIFL); Avaada Energy closed Rs 44.71 billion debt refinancing deal for a solar portfolio of 1.7 GW in Rajasthan; Adani Green Energy Limited (AGEL) secured a $400 million green loan for its under-construction 750 MW solar power projects in Rajasthan and Gujarat.

The International Finance Corporation will partially finance a 550 MW solar power project being developed by Brookfield Asset Management in Bikaner with a $105 million investment. Avaada Energy has secured green financing of Rs11.9 billion from SBI.KPI Green Energy has secured a credit facility of Rs. 6.86 billionto develop a 200 MW solar photovoltaic power project in Khavda, Kutch district, andEnfinity Global, a renewable energy project developer, secured $135 million for developing and constructing 1.2 GW of solar and wind projects in India.There have been cases of M&A deals and project acquisitions also during the period. Some cases in point are Aerem andCESC. Finland-based energy company Fortum said it is exiting the Indian solar power market after signing an agreement to sell its stake in a 185 MW solar portfolio to Gentari Renewables India, a subsidiary of Malaysia-based clean energy firm Gentari.