With solar investment down across the board in the first half of the year, the $1.6 billion provided by lenders Bank of America and HSBC to French utility Engie to establish a 2 GW clean energy portfolio in the U.S. dwarfed the other big solar deals announced in the last quarter.
The Engie deal was one of the highlights of the latest solar funding report published by Texan analyst Mercom Capital.
Investment in solar fell by a quarter, year-on-year, during the first half of 2020, according to the report, from $6 billion in January-to-June last year to $4.5 billion in the last six months, with Engie landing more than a third of the funding available.
A further $683 million went Statesside in the last quarter, with Wells Fargo’s Renewable Energy & Environmental Finance Group supplying $350 million to Utah-based developer sPower for the 620 MWdc Spotsylvania project in Virginia; and Cleveland-based KeyBanc Capital Markets, Spanish lender Santander Corporate & Investment Banking and U.S. Bank providing $333 million for the 215 MWdc Little Bear Solar Project planned by San Francisco’s Longroad Energy in Fresno, California.
Acquisitions
Taiwan’s Changua Coastal Industrial Park attracted $239 million for the Chenya Energy developer sold by Florida-based private equity fund I Squared Capital to Japanese conglomerate Marubeni Corp at the start of the last quarter. That finance came from local lenders KGI Bank, Bank Sinopac, E.Sun Commercial Bank and First Commercial Bank, Singapore’s DBS Bank, Japan’s Sumitomo Mitsui Banking and France’s Société Générale.
The volume of large scale solar generation capacity that was the subject of acquisitions halved, year on year, during the second quarter, according to the Mercom report, from 56 deals for a total 5.7 GW of capacity in April-to-June last year to 2.8 GW across 36 deals.
The announcement of seven solar funds – residential and commercial – offered a rare bright spot in the April-to-June period, with the aggregated $1.04 billion allocated dwarfing the $120 million put aside for the same purpose in the second quarter of last year and the sole, $200 million fund announced in the first three months of this year.
Venture capital
Venture capital (VC) funding for solar appears to have been particularly hard hit by the Covid-19 crisis, with the total spent falling 74% from $799 million – across 29 deals – in the first half of last year to just $210 million in 14 deals this time around. Downstream projects attracted 89% of this year’s first-half total, according to Mercom, down from 82% in the same period of 2019 as last year’s $655 million from 17 deals dwindled to $187 million from a dozen. Singaporean developer Sunseap cornered $109 million of the Q2 investment, in separate deals worth $72 million and $37 million but there were also wins for Arizona-based water-from-air company Zero Mass Water, which secured $50 million, and Arkansas electric co-operative-owned Today’s Power Inc.
Public funding for solar was more robust, slowing from eight deals worth $993 million in the first half of last year to $758 million across six deals in the same period of this year. Solar borrowing of $3.6 billion in 15 agreements fell only 16% in the first half, from $4.2 billion in 27 loans in January-to-June 2019.
Some $7.5 billion in finance for 69 large scale solar projects was announced in the first half of this year, according to Mercom, down from 76 arrangements worth $9 billion in 1H 2019, and four deals arranged in the first six months of this year securitized $1.06 billion worth of solar assets, to take the tally to $6.3 billion since 2013.
Solar merger activity fell, year-on-year, according to the report, with the 37 first-half deals announced last year retreating to 25. The first half and second quarter update added, $8.1 billion of new renewable energy funds were announced in the April-to-June period.
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