Solar industry heating up, again: VCJ

Investor interest in solar startups is swelling, again, thanks to an uptick in installations nationwide, a lowering of prices and such exits as SolarCity’s $158 million acquisition last fall of solar-module mounting startup Zep Solar, writes Mary Ann Azevedo, contributor to Reuters Venture Capital Journal.

Funding in solar startups slowed after the Solyndra bankruptcy filing in late 2011. But the industry appears to be in the midst of a comeback that many observers believe is just the beginning of a robust revival.

A total of $246 million globally was pumped into solar startups in seed, Series A and Series B rounds from September 2012 through mid-March 2014, according to the i3 Platform, the data source from the Cleantech Group.

The figure is considerably lower than what was raised during the height of solar startup investment frenzy. In 2010 and 2011, more than $1.3 billion of venture capital was invested in solar startups, according to Thomson Reuters. Prior to that, the venture industry pumped some $1.09 billion into the industry in 2007, more than double the $481 million that firms invested in 2006.

In 2003, the solar industry raised a mere $9.93 million in venture funding.

While numbers are still dramatically lower than what they were at the height before the Solyndra debacle, they do seem to be creeping back up, in part led by an increase in the number of solar installations.

At the end of 2013, there were nearly 13 gigawatts of solar installed nationwide, enough to power 2.2 million homes, according to the Solar Energy Industries Association, a national nonprofit trade group. That’s up 41 percent over 2012 and nearly 15 times the amount installed in 2008.

What’s more, 29 percent of all new electricity generation capacity added in 2013 in the United States came from solar, with seven states now harnessing 100 percent of their new generation from solar, the solar association said.

Sheeraz Haji, CEO of Cleantech Group, said the solar industry is “hot” and believes the Zep Solar/SolarCity deal is evidence of how publicly traded solar companies, such as SolarCity and SunPower, are performing and are looking to grow through acquisition.

San Mateo, Calif.-based SolarCity also made an acquisition last year, scooping up Paramount, a provider of solar-focused sales and marketing services, for $120 million in August 2013 in an effort to boost its homeowner outreach.

“They (solar stocks) are performing phenomenally,” Haji said. “That creates a halo effect. If SolarCity stock is doing well, the company has more access to capital and gives them the ability to acquire more startups, making those types of companies more attractive to investors.”

Mary Ann Azevedo is an Austin, Texas-based contributor to Reuters Venture Capital Journal, where this story first appeared. Subscribers can read the original story here. To subscribe to VCJ, please email [email protected].

Photo courtesy of Shutterstock

Find new deal opportunities, super-charge your fundraising efforts and track top managers with VCJ. Get your FREE trial! Or subscribe now!