Foreword

Despite challenges, the solar and storage sectors received funding in record numbers globally in 2022.

The war in Ukraine has accelerated demand for solar around the world, and the Inflation Reduction Act boosted the sector in the U.S. In 2022, we saw record venture capital and private equity funding; solar companies were acquired in record numbers; and solar projects saw its second best year for acquisitions. But we are beginning to see higher interest rates bite into financing activity which resulted in lower public and debt financing in the second half of the year.

With the passing of the Inflation Reduction, there is significant interest in investing and acquiring solar companies and projects. Along with a 30% investment tax credit for installing solar, the IRA provides substantial incentives to invest the U.S. domestic manufacturing facilities and equipment, targeting 50 GW of domestic manufacturing by 2030. Currently, the solar industry is waiting for guidance from the U.S. Department of Treasury on qualification criteria for the various tax credits and adders within the IRA.

Solar companies raised $24.1 billion in corporate funding in 2022. Global venture capital and private equity funding in the solar sector in 2022 came to $7 billion, a 56% increase compared to $4.5 billion in 2021. This is the highest amount of VC funding in a single year for the solar sector since 2010, according to Mercom reports.

A total of 128 mergers and acquisition transactions were recorded in 2022— the highest since 2010, including eight deals exceeding a billion dollars each. Solar project acquisitions in terms of GW were the second largest, with 66 GW. Funding into energy storage continued to grow at record levels as well in 2022; however, some of the funding activity shifted from venture capital and private equity to public market and debt and debt financing. In addition to record funding activity, energy storage companies and projects were also acquired in record numbers, reflecting maturity in energy storage markets and assets. The global energy transition, the shift toward EVs, and the Inflation Reduction Act provided strong tailwinds for energy storage companies.

Corporate funding for energy storage companies was up by 55%, with $26.4 billion in 2022. A record 28 energy storage companies were acquired in 2022 – the most since 2014.

We expect strong fundraising activity to continue in 2023, barring a severe global recession. However, inflation and high-interest rates will make borrowing expensive and may push some of the public market and debt activity to next year.

The solar manufacturing expansion will be a strong focus in China, U.S., and India. While China wants to dominate the supplies, U.S. and India will focus on developing local alternate supply chains to reduce dependency on China.

Overall, 2023 is expected to bring a mix of growth opportunities and challenges for the market.

Raj Prabhu CEO Mercom Capital Group

Editorial Team

Editorial Staff

Satish Shetty

Rakesh Ranjan Parashar

Utsav Sinha

Arjun Joshi

Editor - Research

Suriti K. Prasad

Joydeep Sinha Roy

Editor – Data

R Govind

Sales & Marketing

Mayukh Baid

Design and Graphics Lead

Hariprasad M

Madasamy S

Mercom India Private Limited (formerly Mercom Communications India Private Limited)

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Mercom India Clean Energy News And Insights

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Editor - T.P. PRIYADARSHINI

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