Venture capital (VC) investments in solar sector fell 40% globally in 2013, to $600 million from 97 deals, compared with $992 million raised in 106 deals in 2012.
The United States continued to be the leader in solar VC funding in 2013, accounting for $432 million of the $600 million invested, and 68 of the 97 deals worldwide.
Solar VC funding in the fourth quarter of 2013 also fell to $87 million in 24 deals, from $197 million in 28 deals in the previous quarter of 2013. This was the second lowest quarter for VC funding in the last five years, a report from Mercom Capital Group, a clean energy consulting firm, said.
"Although VC funding dropped by nearly 40%, the deal count fell by only 8% compared to 2012, indicating that VC investors are still interested, but in smaller deals," the report said.
The average VC deal size, however, fell sharply to $6.2 million in 2013, from $9.6 million in 2012. As VCs became more risk averse, the average deal size had fallen steadily from the highs of 2010 and 2011, Mercom said.
The largest amount of VC funding went to solar downstream companies, with $262 million in 34 deals, accounting for 45% of all solar funding. This category includes integrators, installers, developers and financiers. In 2012, solar downstream funding was $269 million in 26 deals.
Public market financing jumped considerably to $2.8 billion in 39 deals in 2013, up from $893 million in 23 deals in 2012 and $1 billion in 13 deals in 2011. There were seven IPOs that together brought in more than $1 billion, the report said.
Announced debt funding was $6.2 billion in 38 deals in 2013, compared with $6.9 billion in 34 deals in 2012, and nearly $20 billion in 41 deals in 2011. The most active provider of credit was the China Development Bank, which provided debt funding for five Chinese solar companies. For the first time since 2010, there were more non-Chinese debt deals, Mercom said.
Mercom tracked 9 GW of new large-scale project announcements in Q4 2013 in various stages of continuation worldwide. Solar residential and commercial lease funds showed continued strength in 2013, with 22 announced funds totalling $3.34 billion, a 69 percent increase in dollars over 2012. Almost $1 billion was raised in Q4 2013 alone, the report said.
Solar mergers & acquisitions (M&A) activity increased 60% in 2013 to $12.7 billion in 81 transactions compared with $6.7 billion in 51 transactions in 2012. This includes the $9.4 billion acquisition of Tokyo Electron by Applied Materials. Solar project acquisitions increased 20%, amounting to $1.7 billion in 2013, with 112 transactions in 2013, compared to 80 transactions in 2012.
About 37 new funds focusing on renewable energy investments, with more than $19 billion, were established in 2013, compared with 29 new funds and $11.2 billion in 2012. In addition, there were 14 new solar-focused funds in 2013 with $1.4 billion, compared to four new funds totalling $506 million in 2012.
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