Solar PV Corporate Funding Expected to Take a hit

Lack of venture capital investment and reduced public market financing activity due to the COVID-19 pandemic will see the solar PV funding take a hit

Lack of venture capital investment and reduced public market financing activity due to the COVID-19 pandemic is squeezing cash flows. Between January and March this year, total corporate funding in the solar PV sector amounted to USD 1.9 billion, spanning across 17 deals. This is 31 percent less than the USD 2.8 billion achieved last year. Furthermore, global venture capital funding in the solar PV sector amounted to USD 145 million in the first quarter, which is significantly less compared to the USD 350 million in Q4 of 2019, says GlobalData, a leading data and analytics company.

Somik Das, Senior Power Analyst at GlobalData, said: “Funding levels dropped in Q1 2020 as the pandemic brought the global economy to a halt. Most large economies are forced to shut down and there is minimal activity in the solar PV market.

“Even public market financing dropped sharply – a mere USD 22 million in public market activity was recorded over the last three months. In comparison, the previous reporting period saw USD 259 million being raised, this was a reduction of about 91 percent. The funding levels have dropped for solar PV projects.

“The worst may be yet to come, but the solar PV sector is hopeful that activity will pick up in the second half of the year. Once the pandemic is over, the funding will pick up pace and the solar PV market would be on course to get back to shape.”

In December 2019, a report had revealed that India was the second-largest growth market for corporate renewable Power Purchase Agreements (PPAs) after the US in 2018, with an addition of 1.6 GW of capacity (BloombergNEF, 2019). However, despite retaining the second place, estimates suggest that annual corporate PPA renewable additions in the country in 2019 will be about 30-35 percent or a third lower than installations in 2018, due to changes to policy and regulation at the state level.

For 2020, the report had predicted a bounce-back for capacity additions in India – the country has a development pipeline of almost 2 GW for corporate renewable PPAs, with a significant proportion expected to be installed in the next financial year.