2011 Sees $1.9 Billion in Solar Energy Venture Capital, $4 Billion in M&A

Mercom Capital Group, llc, a global clean energy communications and consulting firm, released its annual and fourth quarter funding and merger and acquisition (M&A) activity report for the solar power sector in 2011.

"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 energy continued to gain attention and dollars for technology and innovation through venture capital funding."

Venture capital (VC) funding and M&A activity were strong in 2011, setting record numbers. Notable findings include:

VC investment in solar totaled $1.9B (billion) in 111 deals in 2011 — the highest number of deals ever in a single year.

Thin-film technology raised the most VC funding ($595.5M (million)), beating downstream companies ($339M), crystalline silicon photovoltaic ($338M), concentrated solar thermal ($308M), and concentrating solar power PV ($129M).

Within thin-film, copper indium gallium (de)selenide (CIGS) companies were the most popular, raising $467M. Concentrating solar thermal power company BrightSource Energy raised $201M in Series E funding, making it the largest VC investment of 2011.

Stion, a high-efficiency thin-film module manufacturer, was second with $130M. The other three top VC-funded companies were MiaSolé, Suniva and Heliovolt.

The top VC investor was Kleiner Perkins Caufield & Byers, which completed eight transactions. There were 182 VC investors in solar in 2011.

While Solyndra dominated headlines, over $700M of VC investment came after its bankruptcy announcement on August 31.

Fourth quarter VC funding totaled $511M, compared to $372M in Q3.

M&A activity was more than double that of 2010, with over $4B in 65 deals, of which only 26 were disclosed, compared to $2B in 44 deals in 2010. The largest M&A transaction was Total’s 60 percent stake in SunPower for $1.4B.

"Falling panel prices and oversupply brought about a lot of consolidation activity," added Prabhu. "With valuations of publicly-traded solar companies at record lows, M&A was the go-to exit strategy."

United States led in the number of deals and VC funding, with 84 deals and $1.5B of investment. Chinese loans, credit facilities and framework agreements came to about $15.7B in ten deals, compared to $32.6B in 2010.

Mercom Capital Group, llc is a global clean energy communications and consulting firm with offices in the United States and India. Mercom’s communications division helps clean energy companies build powerful relationships with media, analysts, government decision-makers, local communities and strategic partners. Mercom’s consulting division advises clean energy companies on new market entry, custom market intelligence and overall strategic decision-making. Mercom delivers highly respected industry market intelligence reports covering solar power, wind energy and smart grid.