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$25.3 Billion For Corporate Solar Sector Funding In 2015

by Jake Richardson
written by Jake Richardson

According to a report from Mercom Capital Group, the amount of global corporate funding in the solar sector in 2015 was $25.3 billion. This figure was down slightly from $26.5 billion in 2014. Some of funding sources were: debt financing, public market financing, yieldcos, and venture capital/private equity (VC).

solarmarcom

“Overall it was a good year for the solar sector considering the turbulence in the stock markets and trouble with yieldcos in the 2nd half of the year. The extension of the Investment Tax Credit (ITC) was a much needed boost for the sector, paving the way for a strong 2016,” explained Raj Prabhu, CEO of Mercom Capital Group.

So where did the money go?

Debt financing was linked with $18.3 billion and Solar City, AES, BBOXX, and Sunrun are examples of companies with securitization deals. Large-scale project funding accounted for about $11.6 billion and 6.6 GW of solar power capacity. There were 38 public market financing deals and they raised almost $6 billion. 

$727 million of the $1 billion raised by venture capital went to solar downstream companies. Over $170 million went to PV technology companies and $87 million went to “Balance of Systems” companies.

One of the more fascinating developments was that over $100 million was for off-grid markets in India, Africa, and South Asia.

Some of the top venture capital deals in  2015 were:

  • $300 million, Sunnova Energy
  • $105 million, Silicor Materials
  • Sunlight Financial, $80 million
  • Sungevity, $50 million
  • Conergy, $45 million.

The facts produced by the report are intriguing because they show that the solar power industry is doing well, though economic conditions are still challenging overall. Imagine if there had been no global recession in 2008 and for the last 8 years solar power had been able to grow in an unimpeded way.

The Investment Tax Credit was recently renewed in the United States, but if there had been no concern or uncertainty about its renewal, would the solar power industry have experienced no cause for pause?

It seems that solar power will continue to expand because of its own robustness and as the global economy becomes more welcoming to it.

Image Credit: vinaykumar8587, Wiki Commons

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City Of Bakersfield Urges Congress To Extend Solar Tax Credit

by Jake Richardson
written by Jake Richardson

The city of Bakersfield, CA has passed a resolution urging Congress to extend the federal Investment Tax Credit (ITC) for solar energy. Apparently, Bakersfield is the first and only city in America to officially pass such a resolution supporting the solar tax credit.

Bakersfield_CA_-_sign

“The federal solar investment tax credit is critical for supporting local jobs and reducing energy bills for Bakersfield homeowners and businesses. I am pleased that the Bakersfield City Council passed by 5 to 1 this resolution urging Congress to extend this credit to keep our local solar economy growing,” said Council member Willie Rivera, a sponsor of the city’s resolution.

Key reasons given in passing such a momentous resolution for supporting solar power by the city are the facts that it contributes billions to the California economy and has employed about 54,000 people there. Bakersfield alone has about 10,000 residences and businesses using solar power.

The 30% tax credit for solar systems on residential properties will end in December of 2016, if Congress does not extend it. For commercial properties it will by reduced from 30% to 10%.

“Without the ITC, research shows the jobs of more than 100,000 Americans – nearly 34,000 in California alone – are at risk. More cities should follow Bakersfield’s lead, sending a message to Congress that the American public deserves energy independence and the well-paying jobs that solar produces,” explained SEIA President and CEO Rhone Resch.

Eliminating this important tax credit, or reducing it by 20%, is unfair, because oil and gas do receive subsidies, and solar power is an emerging industry that is doing very well. Removing support for it makes no rational sense – it is an idea that is entirely political.

The solar tax credit should be renewed – it’s a “slam dunk,” “no-brainer” kind of decision. Solar power is growing around the world, and the US is actually far behind global leaders like Germany. The US is also gradually emerging from the worst recession since the Depression, and making federal policy changes that reduce the number of good jobs would damage an economy that is still struggling.

Image Credit: Nick Chapman, Wiki Commons

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ITC Reduction Won’t Hurt Yieldcos, Deutsche Bank Reports
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ITC Reduction Won’t Hurt Yieldcos, Deutsche Bank Reports

by Zach
written by Zach

Almost across the board, it is expected that the phasing out of the federal investment tax credit (ITC) for solar will result in a big drop in US solar power installations… unless it is renewed, of course. However, one segment of the market that may be nearly immune to the drop of the 30% tax credit to a 10% tax credit is the yieldco market, according to the analysts at Deutsche Bank.

solar power itc

Utility-scale solar is expected to be hit very hard in 2017, following the 20% ITC drop. “But Vishal Shah of Deutsche Bank is confident that many yieldcos will feel little impact. He claims many have already untangled themselves from their tax equity partner and replaced their contribution with increased debt,” John Parnell reports.

Yieldcos have been a huge boon to the solar market, and to investors looking for low-risk, moderate-return investment opportunities in the clean energy space. SunPower, First Solar, SunEdison, Canadian Solar, and others have launched yieldco products to improve their own financial story and keep growing the solar market.

“While the cash on cash yield is potentially lower than using a tax equity partner, the yieldco certainly benefits from a higher tax shield by not including the tax equity provider,” wrote Shah. “Besides, the yield is still well above the cost of equity for the yieldcos. Second…once the ITC steps down to 10%, the CAFD [cash available for distribution] only steps down from ~US$10.56 million per 100MW to ~US$8.57 million per 100MW and the yield is still above the cost of equity.”

Looks good to my eyes.

Deutsche Bank expects a 50% compound annual growth rate (CAGR) for yieldcos over the coming 5 years, while it expects a 30% CAGR for the broader global solar power market.

While the North American yieldco market gets a lot of positive attention, Shah thinks the Chinese market is getting too much skepticism. He believes that other investors are putting too high of a risk factor on the projects.

“Unlike their US counterparts, Hong Kong-listed Shunfeng releases quarterly generation data from its solar plants offering full transparency on their performance. This offers would-be investors an indicator of their ongoing output that should go some way to making investors more comfortable with investing in them,” Parnell adds.

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ITC 5-Year Extension Supported In “New Energy for America Act”

by Aisha Abdelhamid
written by Aisha Abdelhamid

Announcing its support for legislation extending the Investment Tax Credit (ITC) for both residential and commercial solar installations, the Solar Energy Industries Association (SEIA) said it will provide a big boost to the US economy, while also helping to fight pollution and climate change.

Introduced by Rep. Mike Thompson (CA-5), the New Energy for America Act (H.R. 2412) would extend Section 25D of the federal tax code for residential energy-efficient property, as well as the Section 48 commercial ITC, for an additional 5 years.

ITC 5-Year Extension Supported in "New Energy for America Act"

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solar market spurred by tax incentives, from www.saderpower.com screenshot
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SEIA: Solar Market Growth Greatly Aided by Incentives

by Aisha Abdelhamid
written by Aisha Abdelhamid

Now employing more workers than tech giants Google, Apple, Facebook, and Twitter combined, the Solar Energy Industries Association reports that state tax incentives are spurring significant growth in the solar market. As of 2014, nearly 175,000 employees in the US solar market have installed a total of 20 GW of solar energy capacity, 32% of which came in 2014 alone.

Recently released by the Solar Energy Industries Association (SEIA), a report entitled  U.S. Solar Market Insight 2014 Year in Review highlights the successful growth of the solar market in the United States.

solar market spurred by tax incentives, from www.saderpower.com screenshot

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