2011 proves record year for new funds for solar projects

Bangalore: Global clean energy communications and consulting firm, Mercom Capital Group, llc, today said in a new report that $1.9 billion venture capital investments was provided for 111 projects - the highest ever - of which India received over $1 billion.

In its annual and fourth quarter funding and merger and acquisition (M&A) activity report for the solar sector in 2011, Mercom said solar venture attracted $4 billion worth mergers and acquisitions and $95 million in solar VC funding.

"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."

"As the nation's solar policies take shape, India is finally on the world's solar funding map. Most investors that participated in Indian large-scale solar projects were export banks, government or state-owned banks. For India's solar industry to truly thrive there needs to be a conducive environment to attract more robust participation from private financial institutions," said Raj Prabhu, managing partner of Mercom.

Mercom's findings for India include:

• India received $95 million (~Rs500 crore) in venture capital (VC) funding and over $1.1 billion (~Rs. 5,828 crore) in large-scale project funding in 2011.
  
• Among Indian companies, solar project developer Kiran Energy raised $30 million (~Rs158 crore) in Series A funding and $50 million (~Rs. 263 crore) in Series B funding followed by Birla Surya, a manufacturer of crystalline silicon wafers and cells, with $15 million (~Rs. 79 Crore).
  
• The top large-scale project funding deal in India was the $694 million (~Rs. 3,658 Crore) loan raised by Maharashtra State Power Generation Co. for their 150MW Dhule project ($338 million) (~Rs. 1,782 Crore) and 125MW Sakri project ($356 million) (~Rs. 1,877 Crore) solar power plants, by KfW Group.
  
• Export-Import Bank of the United States was the top investor funding seven different large-scale solar projects in India, followed by Export-Import Bank of India with three transactions, KfW Group of Germany with two transactions and State Bank of India with two transactions.

Other investors included, Asian Development Bank (ADB), Canara Bank, International Finance Corporation (IFC), Infrastructure Development Finance Co., Larsen and Toubro Infrastructure Finance Co., Overseas Private Investment Corp., PNC Bank, PTC India Financial Services, State Bank of Patiala, and State Bank of Travancore.

Globally, venture capital funding and M&A activity were strong in 2011, setting records for number of deals and M&A activity.

Some global highlights:
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), PV ($338 million in 20 deals), concentrated solar power ($308 million in 13 deals), and concentrated PV ($129 million in 10 deals).
  
• 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, of which only 26 were disclosed, 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 globally, over $700 million worth of VC investment came after the solar manufacturer's bankruptcy announcement on 31 August.

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