Considering 2009 was a recession year, solar was only slightly up in 2010. After a good second quarter, VC investments trended down in Q3 and Q4. 2010 VC activity came in at US$1.67 billion in 65 transactions, up 18% over 2009 (US$1.4 billion). There was increased activity in large-scale solar project funding as well as debt and other funding types, pointing to an ease in the availability of credit after a challenging 2009. A total of 148 different investors participated in VC funding rounds in 2010. Credit facilities provided to Chinese companies by Chinese banks came in at an eye popping US$34 billion, dwarfing all other transactions in solar in 2010. Solar M&A transactions in 2010 totaled US$2 billion in 44 deals. Solar project M&A activity amounted to another US$450 million in 18 deals out of which only four were disclosed. Large-scale project funding came in at US$4.1 billion in 2010, while debt and other funding types logged in US$36 billion of which US$34 billion were in the form of credit facilities provided by Chinese Government Banks to Chinese companies, which included LDK Solar, Yingli Solar, JA Solar, Suntech and Trina Solar.
“It was a banner year for Smart Grid in terms of VC funding and M&A activity, with VC funding almost doubling compared to 2009. 87 different investors participated in VC rounds in 2010,” commented Raj Prabhu, Managing Partner at Mercom Capital Group. VC funding in the Smart Grid sector was at its highest compared to the previous two years with US$769 million in 51 deals, an 88% increase over 2009 (US$410 million). M&A activity was also robust for the Smart Grid sector in 2010 with 40 transactions. Only four were disclosed for a total of US$1.3 billion, of which US$1 billion was the acquisition of Ventyx by ABB.
Notable VC transactions for the solar sector in 2010 included BrightSource Energy VC raise of US$176 million, followed closely by Solyndra’s raise of US$175 million and Amonix, which secured a series B raise of US$129.4 million. Project funding transactions worth noting included, Torresol Energy (Valle 1 and Valle 2 CSP plants) for US$760 million, Abengoa Solar and JGC Corporation (CSP Plant) for US$451 million, SunPower (California Valley Solar Ranch Project) for US$450 million and Abengoa Solar and ITOCHU Corporation (CSP Plant) for US$448 million. 2010 top five investors in solar included Good Energies, New Enterprise Associates, Applied Ventures, Draper Fisher Jurvetson and Polaris Venture Partners. Project funding investments for 2010 were led by Mizuho Corporate Bank, Natixis, Unicredit Group, BNP Paribas and Centrobanca.
Among the top M&A transactions for Solar in 2010, the acquisition of Etimex Solar by Solutia for US$326 million followed by Recurrent Energy by Sharp Corp for US$305 million lead the list closely followed by NextLight Renewable Power by First Solar for US$285 million and SunRay by SunPower for US$277 million.
Total VC funding for the solar sector in Q4 came in at US$238 million for 16 transactions out of which 14 were disclosed compared to US$169 million for 11 disclosed transactions in Q3. Project funding came in at US$2.32B in 14 disclosed deals out of a total of 15 deals. Noteworthy project funding transactions included US$450 million for SunPower followed closely by US$448 million for Abengoa Solar and ITOCHU Corporation. Significant VC investments included US$110 million for Abound Solar, US$26 million for 1366 Technologies and US$25 million for SolarEdge Technologies.
At US$669 million, there was a surge in M&A activity during Q4 compared to US$586 million in Q3. Out of 27 M&A transactions in Q4, eight were disclosed, which was the same in Q3. Significant M&A transactions in the solar sector included the acquisition of Glory Silicon Technology Investments (Hong Kong Limited) by Suntech Power Holdings for US$127 million and the acquisition of Sino Light Investments by Solargiga Energy Holdings for US$108 million.
Top smart grid VC transactions included the US$165 million raise by Landis+Gyr, the US$106 million raise by Trilliant and the US$52 million raise by OpenPeak. The acquisition of Ventyx by ABB for more than US$1 billion remained the largest M&A transaction for the year. Other significant smart grid transactions included Maxim Integrated Products’ acquisition of Teridian Semiconductor for US$315 million and NXP Semiconductors’ acquisition of Jennic for US$20 million.
Top five investors in smart grid in 2010 included GE Energy Financial Services, Emerald Technology Ventures, Kleiner Perkins Caufield & Byers, Foundation Capital and RockPort Capital Partners. Smart Grid Q4
Funding activity in the smart grid sector during Q4 remained flat compared to Q3. Total disclosed investments in smart grid was US$188 million for 18 transactions out of which 17 were disclosed compared to US$187.25 million for nine transactions out of which seven were disclosed in Q3. Significant VC funding transactions in the sector included a US$50 million raise by OPower, a US$24 million Series B raise by AlertMe and a US$24 million Series C raise by Ice Energy.
Debt and other funding for the quarter totaled US$15 million for one transaction. Out of 15 Smart Grid M&A transactions, none were disclosed.