Mercom Capital Group Reports Third Quarter 2010 Funding and M&A Activity for Cleantech Sectors of Solar, Smart Grid and Wind Energy

VC funding in itself is not the only indicator of financing activity happening throughout the supply chain, particularly in solar and wind sectors. To give a clearer picture Mercom also tracks project and other types of funding, such as loans, credit lines and more.

“There has been a significant downtrend in venture capital (VC) funding transactions in solar and smart grid sectors. The wind sector, on the other hand, has reported an uptrend in VC funding outperforming the last quarter and bouncing back to Q1 levels. Consistent growth in project and other financing in both solar and wind sectors is also noteworthy as an indication of availability of credit in the market. The growth in the value of M&A transactions in both solar and wind were on an uptick in the third quarter.” commented Raj Prabhu, Managing Partner of Mercom Capital Group.

Total disclosed VC Funding for the solar sector came in at $169.35M for 11 transactions compared to $922M for 18 transactions during Q2. Other funding transactions came in at a whopping $20.7B of 12 disclosed deals, of which over $20B are loan and credit facilities issued to Chinese manufacturers by Chinese banks. The transactions include $8.9B to LDK Solar, $4.4B to JA Solar Holdings, $5.3B to Yingli Green Energy and $1.9B to Solarfun. Significant VC investments include $65M raised by Solaria Corporation and $21.5M raised by SolarCity.

At $585.65M, there was a surge in M&A activity during Q3 compared to $298M in Q2. Out of 12 M&A transactions in Q3, eight were disclosed compared to the second quarter where only two were disclosed. A significant M&A transaction in the sector included the acquisition of Recurrent Energy by Sharp for $305 million.

Smart Grid
There was a slight decrease in both funding and M&A activity in the Smart Grid sector in Q3 compared to Q2. Total disclosed investments for the sector came in at $187.25M for nine transactions compared to $305M for 12 transactions during Q2. Significant funding transactions in the sector included $106M raised by Trilliant and $43M raised by Nexant.

Out of nine Smart Grid M&A transactions only one was disclosed of $20M compared to the second quarter which had a total of nine deals of which two were disclosed for $1.3B. Since most of the transactions are undisclosed there is no clear picture of the amounts involved.

The Wind sector had a good third quarter with VC investments coming in at $102M compared to $15M in Q2. Project and other funding investments came in at $3.6B for 17 transactions out of a total of 20, compared to $3.4B for 17 transactions during Q2, out of which 16 were disclosed. Included in these totals were two significant transactions, each over $1.2B, including project funding for C-Power in the amount of $1.22B and $1.2B in project financing for Terra-Gen Power.

Out of 9 M&A transactions, three were disclosed for a total of $922M compared to the second quarter, which had a total of 24 deals of which seven were disclosed for $515 million. Significant transactions in the sector included the acquisition of John Deere Renewables by Exelon for $860 million.

According to the Department of Energy $3.04B was spent in the third quarter of 2010 compared to $1.75B in Q2. DOE has spent a total of $7.89B so far, out of the $32B funding commitments from the Recovery Act.

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