Solar Sector Funding Drops 24% YoY In 2024 Amid Economic Uncertainties
VC, public market, and debt financing all see significant declines, as industry awaits policy clarity
Global corporate funding in the solar sector fell 24 per cent year-over-year (YoY) in 2024, with USD 26.3 billion raised across 157 deals, compared to USD 34.4 billion in 161 deals the previous year, according to a new report by Mercom Capital Group. The downturn in funding is attributed to a range of challenges, including inflation, high interest rates, trade disputes, and policy ambiguity.
Raj Prabhu, CEO of Mercom Capital Group, commented on the situation: “2024 was a year of uncertainties for the solar industry, with inflation, high interest rates, trade disputes, and policy ambiguity contributing to declines in funding and M&A activity. The market is awaiting clear policy signals from the new administration on the IRA provisions, ITC extensions, and tariff measures before investors come off the sidelines and deal-making can return to healthier levels.”
In 2024, global VC and private equity funding in the solar sector totaled $4.5 billion across 60 deals, a 36 per cent decrease from the USD 7 billion raised in 70 deals in 2023. Notably, there were 14 VC deals worth USD 100 million or more in 2024. The public market saw a dramatic drop of 59 per cent, with USD 3 billion raised in 2024, compared to USD 7.4 billion in 2023. This marked a significant slowdown in equity financing, private placements, and rights issues.
Debt financing in the solar sector came in at USD 18.8 billion, representing a 6 per cent decrease from the USD 20 billion raised in 2023. However, securitization deals accounted for a record USD 5 billion in 16 transactions, showcasing some resilience in the sector.
M&A activity in the solar sector also saw a decline, with 82 corporate transactions in 2024, down 15 per cent from 96 in 2023. The largest deal of the year was Brookfield Asset Management’s acquisition, alongside institutional partners, of a 53.12 per cent stake in Neoen, a solar, wind, and energy storage project developer, for USD 6.54 billion.
The number of large-scale solar project acquisitions fell to 217 in 2024, from 231 in 2023, with the total acquired capacity dropping by 17 per cent, from 45.4 GW to 37.7 GW.
The solar sector remains poised for a potential rebound as it waits for policy clarity, particularly regarding the Inflation Reduction Act (IRA) provisions, the extension of the Investment Tax Credit (ITC), and tariff measures. These developments are expected to have a significant impact on investor sentiment and the overall health of the market in the coming year.
Mercom Capital Group’s comprehensive report, covering a wide range of solar sector funding and M&A activity, highlights the need for further industry adaptation to market conditions and governmental policies to attract investors back to the sector. The full report includes 107 charts, graphs, and tables providing detailed analysis of the funding landscape and deal activity in the global solar market.
