Solar power installations set a new record last year, but the first nine months of 2024 apparently show a measured drop in corporate investment in the sector compared to previous dealmaking.
A new report by Mercom Capital’s research wing indicates that total corporate funding and acquisitions of solar projects totaled $22.3 billion for the first three quarters, down 23% from the $28.9 billion raised in the same nine months of 2023. Mercom’s data includes venture capital funding, public market and debt financing.
Those three types of transactions combined showed that some 28.3 GW of solar projects were acquired in the private sector over the nine months of 2024. The number of deals involved in those acquisitions dropped to 117, slightly below last year’s comparative total of 124 transactions, according to Mercom Capital.
“As we look at the financing activity in Q3 2024, it’s clear that the solar sector is grappling with significant uncertainties,” Raj Prabhu, CEO of Mercom Capital Group, said in a statement. “Regulatory concerns around antidumping and countervailing duties and tariffs, the U.S. Section 45X guidance, potential policy shifts due to election outcomes, unpredictable global trade policies, supply chain disruptions, higher costs, tight labor markets, and ongoing project delays have all dampened investor confidence and delayed key investment decisions.”
U.S. Section 45X is the advanced manufacturing production credit guidance detailing the eligibility of components in clean energy technologies. It is part of the Biden Administration’s Inflation Reduction Act.
The recent Federal Reserve decision to cut half a percent off the benchmark loan rate could help to boost fourth quarter activity in the solar sector, Prabhu added, but the market still needs more clarity and direction on future rate cuts.
Among the utility-scale and community solar acquisitions announced this year include deals by Standard Solar, CleanCapital, WEC Energy Group, BlackRock and Eni in a joint venture with Falck Renewables SpA. The Mercom Capital report mainly focused on the financial side of the projects, not intently on the level of power generation capacity.
In 2023, new solar installed capacity leaped to 32.4 GW in the U.S., a 51% rise over the previous year, according to tabulations by research firm Wood Mackenzie and the Solar Energy Industries Association (SEIA). In 2024’s first quarter, the U.S. solar industry installed 11.8 GW of direct current capacity, another all-time high for that period.
Solar energy installation fell in the second quarter but still achieved 9.4 GW, SEIA reported.
The solar acquisition insights came from Mercom Capital’s new report, Solar Funding and M&A—204, Third Quarter and Nine Month Report.
