Venture capital firms invested $406 million in the solar sector during the first quarter of this year, according to Mercom Capital Group, a clean energy research company based in Austin, Texas. The lion’s share of the total investment – or about $333 million – went to solar downstream companies, according to a new report by Mercom that details funding and merger and acquisition activity for the solar sector in the first quarter of 2016. Sunnova Energy, a residential solar project developer based in Houston, raised $300 million from Energy Capital Partners, a private equity firm based in New Jersey, to drives sales growth.
Minneapolis-based TenKsolar raised $25 million in the second largest deal closed during the first quarter of 2016. Meanwhile, PosiGen raised $20 million and Mercatus secured about $13 million. Total corporate funding for the solar sector fell by about 59% quarter over quarter from $6.9 billion in the fourth quarter of 2015 to $2.8 billion in the first quarter of this year. In addition, funding levels also fell year-over-year by about half a billion. “It’s a tough environment out there,” said Raj Prabhu, the chief executive officer of Mercom Capital Group. “Solar public companies in general have had a difficult time raising capital at depressed market valuations. Yieldcos, which accounted for significant financial activity in the debt and public markets last year, have faded this quarter.” Prabhu added that solar securitization deals and new funding for commercial and residential solar projects remained strong.