Cleantech Sectors of Solar, Wind and Smart Grid All Up in Venture Capital (VC) Investments in 2010

Solar M&A transactions in 2010 totaled $2 billion in 44 deals. Solar project M&A activity amounted to another $450 million in 18 deals out of which only four were disclosed.

Large-scale project funding came in at $4.1 billion in 2010, while debt and other funding types logged in $36 billion of which $34 billion were in the form of credit facilities provided by Chinese Government Banks to Chinese companies, which included LDK Solar, Yingli Solar, JA Solar, Suntech and Trina Solar.

“Considering 2009 was a recession year, solar was only slightly up in 2010. After a good second quarter, VC investments trended down in Q3 and Q4,” commented Raj Prabhu, Managing Partner at Mercom Capital Group. 2010 VC activity came in at $1.67 billion in 65 transactions, up 18 percent over 2009 ($1.4 billion). There was increased activity in large-scale solar project funding as well as debt and other funding types, pointing to an ease in the availability of credit after a challenging 2009. A total of 148 different investors participated in VC funding rounds in 2010. Credit facilities provided to Chinese companies by Chinese banks came in at an eye popping $34 billion, dwarfing all other transactions in solar in 2010.

“It was a banner year for Smart Grid in terms of VC funding and M&A activity, with VC funding almost doubling compared to 2009. 87 different investors participated in VC rounds in 2010,” further commented Raj Prabhu. VC funding in the Smart Grid sector was at its highest compared to the previous two years with $769 million in 51 deals, an 88 percent increase over 2009 ($410 million). M&A activity was also robust for the Smart Grid sector in 2010 with 40 transactions. Only four were disclosed for a total of $1.3 billion, of which $1 billion was the acquisition of Ventyx by ABB.

The Wind sector also saw a 40 percent increase in VC and PE activity in 2010 with $277 million invested compared to $198 million in 2009. Large offshore wind projects boosted project funding activity to over $9 billion in 2010. M&A transactions in the Wind sector came to $1.3 billion in 23 deals, with the $860 million acquisition of John Deere Renewables by Exelon making up the bulk of it.

Notable VC transactions for the Solar sector in 2010 included BrightSource Energy VC raise of $176 million, followed closely by Solyndra’s raise of $175 million and Amonix, which secured a series B raise of $129.4 million. Project funding transactions worth noting included, Torresol Energy (Valle 1 and Valle 2 CSP plants) for $760 million, Abengoa Solar and JGC Corporation (CSP Plant) for $451 million, SunPower (California Valley Solar Ranch Project) for $450 million and Abengoa Solar and ITOCHU Corporation (CSP Plant) for $448 million. 2010 top five investors in solar included Good Energies, New Enterprise Associates, Applied Ventures, Draper Fisher Jurvetson and Polaris Venture Partners. Project funding investments for 2010 were led by Mizuho Corporate Bank, Natixis, Unicredit Group, BNP Paribas and Centrobanca.

Among the top M&A transactions for Solar this year, the acquisition of Etimex Solar by Solutia for $326 million followed by Recurrent Energy by Sharp Corp for $305 million lead the list closely followed by NextLight Renewable Power by First Solar for $285 million and SunRay by SunPower for $277 million.

Solar Q4
Total VC funding for the Solar sector in Q4 came in at $238 million for 16 transactions out of which 14 were disclosed compared to $169 million for 11 disclosed transactions in Q3. Project funding came in at $2.32B in 14 disclosed deals out of a total of 15 deals. Noteworthy project funding transactions included $450 million for SunPower followed closely by $448 million for Abengoa Solar and ITOCHU Corporation. Significant VC investments included $110 million for Abound Solar, $26 million for 1366 Technologies and $25 million for SolarEdge Technologies.

At $669 million, there was a surge in M&A activity during Q4 compared to $586 million in Q3. Out of 27 M&A transactions in Q4, eight were disclosed, which was the same in Q3. Significant M&A transactions in the Solar sector included the acquisition of Glory Silicon Technology Investments (Hong Kong Limited) by Suntech Power Holdings for $127 million and the acquisition of Sino Light Investments by Solargiga Energy Holdings for $108 million.

Smart Grid
Top Smart Grid VC transactions included the $165 million raise by Landis+Gyr, the $106 million raise by Trilliant and the $52 million raise by OpenPeak. The acquisition of Ventyx by ABB for more than $1 billion remained the largest M&A transaction for the year. Other significant Smart Grid transactions included Maxim Integrated Products’ acquisition of Teridian Semiconductor for $315 million and NXP Semiconductors’ acquisition of Jennic for $20 million. Top five investors in Smart Grid in 2010 included GE Energy Financial Services, Emerald Technology Ventures, Kleiner Perkins Caufield & Byers, Foundation Capital and RockPort Capital Partners.

Smart Grid Q4
Funding activity in the Smart Grid sector during Q4 remained flat compared to Q3. Total disclosed investments in Smart Grid was $188 million for 18 transactions out of which 17 were disclosed compared to $187.25 million for nine transactions out of which seven were disclosed in Q3. Significant VC funding transactions in the sector included a $50 million raise by OPower, a $24 million Series B raise by AlertMe and a $24 million Series C raise by Ice Energy. Debt and other funding for the quarter totaled $15 million for one transaction. Out of 15 Smart Grid M&A transactions, none were disclosed.

VC transactions for 2010 increased to $277 million for 11 transactions out of which 10 were disclosed compared to $198 million for 20 transactions in 2009. Significant VC transactions in 2010 included eGen’s raise of $79 million followed by Champlin Windpower and Nordic Windpower’s raise of $50 million and $38 million (Series C) respectively. Top VC investors for the sector included Kleiner Perkins Caufield & Byers, Khosla Ventures and MissionPoint Capital Partners.

Among significant large-scale project funding transactions, C-Power raised $1.7 billion, followed by Terra-Gen Power which raised $1.2 billion. Rabobank, European Investment Bank, and Manulife Financial Corporation (Manulife) were some of the investors who topped the list for Wind project funding this year. Other debt transactions included China Windpower, which raised a $732 million credit line and Pattern Energy Group, which raised $400 million in equity financing.

M&A transactions for the wind sector including projects in 2010 came in at $2.37 billion in 49 deals. The acquisition of John Deere Renewables by Exelon Corporation for $860 million, Seajacks International by Riverstone Holdings for $207 million, and Clipper Windpower by United Technologies Corp for $112 million is the major M&A activities for the year.

Wind Q4
In the fourth quarter, the Wind sector VC investments came in at $59 million for three deals compared to the third quarter which came in at $102 million for the same number of deals. Project and other funding investments increased to $4.9B for 24 transactions out of which 23 were disclosed. Notable VC transactions included a $50 million raise by Champlin Windpower, a $5.8 million raise by Greengate Power Corporation, and a $3.14 million raise by NGenTec. Significant project funding transactions included C-Power for $1.7B, Trianel for $919 million and Brookfield Renewable Power for $350 million.

Out of nine M&A transactions in Q4, three were disclosed for a total of $707 million compared to Q3 which had a total of nine deals out of which three were disclosed for $922 million. Significant transactions in the sector included the acquisition of Clipper Windpower by United Technologies for $112 million, followed by Mengdong Xiehe New Energy by Jilin Power Share for $27.5 million. The most notable project acquisition was Brookfield Renewable Power’s Comber Wind Project acquisition by Brookfield Renewable Power Fund for $567 million.

According to the Department of Energy, $2.5 billion was spent in the fourth quarter of 2010 compared to $3.04 billion in Q3. DOE has spent a total of $10.39 billion to date out of the $32 billion funding commitments from the Recovery Act.

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