Solar and clean energy space is the new destination for investors

CleanMax Solar recently closed a $360 million equity fund raised from Brookfield Renewable through the Brookfield Global Transition Fund. The latter will have a controlling stake in CleanMax. Amp Energy India secured $250 million in funding to expand its operations. The financing round was led by Japan’s Sumitomo Mitsui Banking Corporation (SMBC), Intermediate Capital Group (ICG) and Asian Infrastructure Investment Bank. Navitas Solar secured $5 million in funding to expand its solar manufacturing capacity by 1.2 GW. The funding round involved the participation of a group of high-net-worth individuals (HNIs). The lead investors were the promoters of Parishi Diamond Group, who contributed over 50% of the total funding. Lemon Emerging Ventures and other HNI investors also participated in the funding round. Prozeal Infra Engineering raised $4 million in Series A funding from Alchemie Ventures. Solar Ladder raised nearly $1.34 million in seed funding from Axilor Ventures, Titan Capital, DeVC, Stride Ventures and angels from Atha Group, NIPHA group, Varun Alagh (Founder, Mamaearth), Subin Mitra and Aditya Bandi of Groyyo and Deepak Jain from Bain and Co.), among others. The funds will be utilized to distribute software that automates processes for solar installers. SafEarth raised nearly $0.43 million for product development initiatives and to expand its footprint across India. Anthill Ventures, Third Derivative and Mumbai Angels led the fundraiser, while ReNew announced that its wholly-owned subsidiary, Diamond II Limited, has raised $400 million through senior secured green bonds. The funds will refinance existing debt and finance ReNew's growth initiatives. The green bonds issued by ReNew’s subsidiary attracted significant investor interest from the United States, Europe and Asia. Vibrant Energy, secured $268 million financing from Power Finance Corporation (PFC) for its 300 MWac of wind-solar hybrid projects in Madhya Pradesh and Karnataka. India Grid Trust, or IndiGrid, inked a nearly $483 million deal to buy Virescent Renewable Energy Trust (VRET), a KKR-backed local renewable energy platform developer with 538 MW of solar assets.

All these developments point to the fact that financial activity in the solar industry remained healthy in 1H 2023 amid significant economic headwinds. These developments, according to the latest Mercom Capital Group study, are in line with the global scenario. Globally, total corporate funding, including venture capital (VC) funding, public market, and debt financing, in 1H 2023 stood at $18.5 billion, 54 per cent higher year-over-year (YoY) compared to $12 billion raised in 1H 2022. The number of deals decreased by 12 per cent YoY, with 80 deals in 1H 2023 compared to 91 during the same period last year.

If the Mercom study is to be believed, even amidst the tightening financial market conditions and high interest rates, the solar industry remained strong in the first half of the year. Besides AI, cleantech is one of the few sectors still attracting VC interest. The demand due to the Inflation Reduction Act (IRA) is so strong that even interest rate-sensitive public market and debt financing in solar was up year-over-year. The lack of easy money, however, affected M&A activity somewhat negatively. The bottom line is funds are flowing into the solar and clean energy space much faster than what was expected.