2011 was a difficult year for the US solar industry, but venture capital activity in the sector did more than hold its own. Oversupply, a precipitous price drop and high-profile bankruptcies notwithstanding, venture capital (VC) investments in the US solar sector set a record in 2011, with 182 different VC firms participating in 111 transactions. Conditions might well get worse before they get better, however, according to Mercom Capital Group’s “2011 Solar Funding and M&A” report.
2011 VC investment in the solar sector also rose in terms of dollar amount, with VC firms investing $1.9 billion in 2011, up from $1.7 billion in 2010 and $1.4 billion in 2009. “The United States was the top venture capital investment destination in the world, with $1.5 billion in venture capital investment in 84 deals. All VC investments in other countries combined to $340 million in 24 deals,” according to Mercom’s in-depth report.
Strong finish to 2011
VC activity continued strong despite the Solyndra ‘scandal’ and subsequent bankruptcies. VCs invested more than $700 million in over 40 solar industry deals since Solyndra announced its bankruptcy filing in August last year. The year closed out strong, with VCs investing more than $511 million spanning 29 deals.
Thin-film photovoltaic (PV) investment was far and away the leading technology category, with VCs investing $600 million total, $467 million invested in copper indium gallium (di)selenide (CIGS). Concentrated solar thermal power (CSP) BrightSource Energy attracted the most of any company in the US solar power sector.
Kleiner, Perkins, Caufield & Byers (KCBP) participated in eight VC deals, the most among VC firms. Bessemer Venture Partners was the top VC investor in solar in Q4, with three transactions. CMEA Capital, Generation Investment Management, 12BF Venture Capital, Hudson Clean Energy Partners, KPCB, Lightspeed Venture Partners and OVP Venture Partners all had two deals each in Q4. Chinese loans, credit facilities, strategic financing and framework agreements totaled more than $15.5 billion in 2011. That compares to $32.6 billion in 2010, according to Mercom Capital’s report.
Mergers and acquisitions (M&A) activity surged, doubling to over $4 billion spread across 65 transactions. Overcapacity and the sharp, steep price drop in solar PV cell and panel prices spurred M&A activity and industry consolidation.
French oil and gas company Total raised its stake in California’s SunPower to 60 percent, making it the largest M&A transaction in 2011. Looking at project-specific M&A, Mercom found that a total $3.6 billion went into project mergers and acquisitions. Berkshire Hathaway’s MidAmerican Energy Holdings $2 billion acquisition of First Solar’s 550-MW Topaz Solar project was the largest transaction of its type in 2011, accounting for the majority of activity in this segment of the market.
The number of investment funds focused on solar and cleantech also continued to grow in 2011. There were 29 new cleantech fund launches for the year in which more than $18 billion was raised. Eleven solar-specific fund launches garnered $1.6 billion of the total.
About a week ago, Ernst & Young reported https://www.triplepundit.com/2012/02/vc-cleantech-investments-down-45-2011/ that the number of US VC investments in cleantech overall increased, total dollars invested declined 4.5% year-over-year in 2011.