Mercom Capital Group: 2011 Sees $1.9 Billion in Solar Venture Capital, $4 Billion in M&A

Venture capital (VC) funding and M&A activity were strong in 2011, setting records for number of deals and M&A activity.

Solar VC Funding - by Quarter

“Investment activity in 2011 was robust,” said Raj Prabhu, managing partner of Mercom.  “Whether you point to the dramatic module price declines, Europe’s diminishing incentives, or the so-called ‘Solyndra effect’, solar continued to gain attention and dollars for technology and innovation through venture capital funding.”

Notable findings include:

Solar VC Funding 2011 YTD by Technology

  • VC investment in solar totaled $1.9 billion in 111 deals in 2011—the highest number of deals ever in a single year. By comparison, there were 65 VC deals in 2010, 84 in 2009, 93 in 2008, and 71 in 2007.
  • Thin-film technology raised the most VC funding ($595.5 million in 17 deals), beating downstream companies ($339 million in 26 deals), crystalline-silicon ($338 million in 20 deals), concentrated solar power ($308 million in 13 deals), and concentrated PV ($129 million in 10 deals).
  • The solar thermal power company BrightSource Energy raised $201 million in Series E funding, making it the largest single VC investment of 2011. Stion, a manufacturer of high-efficiency thin-film solar modules, came in second when it announced $130 million. The third and fourth highest VC fundraising rounds were by thin-film solar panel maker MiaSolé ($106 million, Series F), and solar cell developer Suniva ($94.4 million, Series D) respectively.
  • The top VC investor of 2011 was Kleiner Perkins Caufield & Byers, which completed eight transactions, followed by GE and Good Energies, with six transactions each. There were 182 VC investors in solar in 2011.SolarM&A-2010-11
  • M&A activity in 2011 was more than double that of 2010 in terms of dollars, and approximately 33 percent more in deals. There were $4 billion in M&A activity in 65 deals, compared to just over $2 billion in 44 deals in 2010. The largest single M&A transaction was Total’s (the French oil & gas company) 60 percent stake in the solar manufacturer SunPower, accounting for $1.4 billion of the $4 billion.
  • While Solyndra dominated headlines in the United States and globally, over $700 million worth of VC investment came after the solar manufacturer’s bankruptcy announcement on August 31, 2011.
  • Fourth quarter VC funding totaled $511 million, compared to $372 million in Q3, $354 million in Q2, and $658 million in Q1.
    Solar M&A by Quarter“Falling panel prices and oversupply brought about a lot of consolidation activity,” added Prabhu. “With valuations of publicly-traded solar companies at record lows, M&A was the go-to exit strategy.”

    The United States led all other countries in number of deals and VC funding, with 84 deals and over $1.5 billion of investments. The United Kingdom completed the second highest number of deals with five, and India garnered the second highest amount of VC funding with $95 million.

    Globally, debt financing totaled $20 billion. The top debt investor was the China Development Bank. Chinese loans, credit facilities and framework agreements came to $15.7 billion in ten transactions.

    Mercom Capital Group’s report also includes information on project-specific funding, U.S. Department of Energy Loan Guarantee awards, new funds, restructuring and bankruptcies.

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