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Smart grid and solar leverages VC funding

Smart grid and solar leverages VC funding

While VC funding in smart grid jumped to $185 million globally in the first quarter of 2015, the solar sector drew the maximum attraction with $6.4 billion funding in the same period. What´s more, there was a record growth in residential and commercial solar funds to the tune of $1.9 billion.

According to a report by Mercom Capital, in the first quarter of FY 15, Venture Capital (VC) funding for the smart grid sector globally rose to $185 million in 15 deals, compared to $59 million in 13 deals in Q4 2014.

In all, there were 37 VC investors, including an accelerator, who participated in VC funding rounds this quarter. Within Smart Grid, Smart Grid Communications Technology companies received the most funding. EnerTech Capital was the only investor participating in multiple deals this quarter with three deals in its kitty.

The top VC funded deal in Q1 2015 was the $115 million raised by SIGFOX, a wireless connectivity solutions provider for smart metering, building intelligence and M2M using ultra narrow band technology. Other top deals for the quarter were the $15 million raised by Tempered Networks, a cyber-security company; the $14 million raised by Blue Pillar, a provider of software-based solutions for real-time visibility and control into distributed energy assets; the $11 million raised by Enbala Power Networks, a provider of demand-side grid optimization services for commercial and industrial large-scale electricity users; and the $8.4 million raised by TROVE Predictive Data Science, a provider of applications for load forecasting, revenue protection, demand-side management and program planning for utilities.

There were seven Smart Grid M&A transactions (four disclosed) amounting to $196 million. The top disclosed transaction was the acquisition of AlertMe- a home automation platform, energy monitoring and control, and analytics provider- by British Gas (part of the Centrica plc group) for $100 million. Bluegiga Technologies, a Finland-based provider of short-range wireless connectivity and software solutions for home automation and industrial automation, was acquired by Silicon Labs for $61 million. RadioPulse- a Seoul-based developer of ZigBEE for AMR, wireless automation, home network and high technology markets- was acquired by IXYS for $22.5 million. Detectent, a provider of utility data analytics solutions, was acquired by Silver Spring Networks for $12 million.

Battery Storage
VC funding for battery storage companies came to $69 million in seven deals, compared to $47 million in seven deals in Q4 2014. The top deals include the $20 million raised by Boston Power, a manufacturer of lithium-ion batteries for electric vehicles and stationary energy storage, and the $20 million raised by Sakti3, a developer of solid-state rechargeable lithium-ion battery technology. Eos Energy Storage, a developer and manufacturer of zinc hybrid cathode energy storage solutions for electric utilities, raised $15 million. TAS Energy, an energy storage solutions provider that combines turbine chilling with thermal energy storage tanks, raised $10 million, and ZAF Energy Systems, a developer of nickel-zinc and zinc-air battery technologies, raised $2.2 million.

There was just one debt and public market financing deal announced for battery storage technology- the $130 million raised by Bloom Energy, a manufacturer of solid oxide fuel cell technology products.

Energy efficiency
VC funding for the efficiency sector came to $140 million in 15 deals, compared to $192 million in 25 deals in the previous quarter. The top VC deal was by Verne Global- a developer of energy efficient data centres- securing $98 million, followed by Terralux- a designer and manufacturer of LED lighting and building intelligence solutions- which raised $11 million. RayVio, a solid state ultraviolet LED solutions provider, raised $9.3 million. Tendril- a provider of an open, cloud-based energy services management software platform that delivers the infrastructure, analytics and understanding required to personalize energy usage- raised $7.2 million; and Lucid Design Group- a provider of a building operating system platform for intelligent buildings that connect hardware, software and people through a collaborative interface- raised $5.9 million.

Efficiency companies also raised $183 million in debt and public market financing in three deals in Q1 including an Initial Public Offer (IPO). MLS, a Chinese LED manufacturer and the parent company of USA-based Forest Lighting, raised $154 million through its initial public offer and began trading on the Shenzhen Stock Exchange in China in March 2015.

There were 11 merger and acquisition (M&A) transactions in the efficiency sector, of which five were disclosed details totalling to $3.1 billion, compared to 10 transactions disclosed for $131 million in Q4 2014. The largest disclosed transaction was the $2.8 billion acquisition of an 80.1 per cent interest in Lumileds, a Royal Philips LED lighting components business, by GO Scale Capital Investment Consortium- an invest¡ment fund sponsored by GSR Ventures and Oak Investment Partners.

Solar funding
Total global corporate funding in the solar sector, including venture capital/private equity, debt financing, and public market financing raised by public companies, almost doubled with $6.4 billion, compared to $3.4 billion in Q4 2014.

According to Raj Prabhu, CEO, Mercom Capital Group, ´There was record fundraising this quarter by residential and commercial solar funds as the Investment Tax Credit (ITC) expiration draws closer. Project acquisition activity remained strong with yieldcos acquiring almost 20 percent of the total projects.´

Meanwhile, VC funding in solar sector globally fell to $189 million in 26 deals, compared to $315 million in 16 deals in Q4 2014. Solar downstream companies continued to attract most of the VC funding with $112 million in 12 deals.

Among the top 5 VC deals in Q1 2015, the largest was the $45 million raised by Conergy- a solar-downstream company providing project development, financing, EPC and O&M services- from RWE Supply & Trading and Kawa Capital Management. Other top deals included the $25 million raised by NEXTracker, a designer and manufacturer of single axis PV trackers, from SJF Ventures, Tennenbaum Capital Partners, Sigma Partners and DBL Investors. Fenix International, a manufacturer of mobile payment-enabled solar charging systems to off-grid African communities, raised $12.6 million from GDF Suez, Schneider Electric, Orange France Telecom, clean tech entrepreneurs Tom Dinwoodie and Warner Philips, and other investors.

M-KOPA Solar, an asset financing company that sells solar home systems to off-grid households on a mobile money payment plan in Kenya, Tanzania and Uganda, raised $12.45 million from LGT Venture Philanthropy, Lundin Foundation, Treehouse Investments and Blue Haven Initiative. Oxford Photovoltaics, a spinoff from Oxford University and a developer of thin-film perovskite solar cell technology, raised over $12.3 million from Oxford University, MTI Partners, Longwall Venture Partners, Parkwalk Advisors and other angel investors.

A total of 33 VCs invested in Q1 2015, with DBL Investors and Tenaska participating in two deals each. Public market financing came to $1.3 billion compared to $1.6 billion in Q4 2014. There was one IPO this quarter: SolarEdge, a balance-of-system company, raised $126 million and was listed on Nasdaq. In addition to the VC funding, debt financing increased substantially this quarter with almost $5 billion, compared to $1.5 billion in Q4 2014. Two billion of that went to SunEdison and its yieldco Terraform Power.

Large-scale project funding
Large-scale project funding witnessed a modest drop with 29 deals garnering $2.5 billion as compared in the same period mentioned above as against 33 deals worth $3.4 billion in the last quarter of 2014. The top 5 large-scale project funding deals included the $660 million secured by Abengoa for its 100 MW Xina Solar One CSP project located in South Africa, followed by the $344 million loan raised by ACWA Power for its 200 MW Mohammed bin Rashid Al Maktoum Phase II Solar Project in Dubai. Solairedirect´s $194.4 million in financing for the construction of a portfolio of 13 solar projects of 136.8 MW in France, Shams Ma´an Power Generation PSC´s raise of $129 million for its 52.5 MW Shams Ma´an Solar PV Project located in Jordan, and Penn Energy Renewables´ $125 million for its three projects in Canada, with an aggregate capacity of 37 MW were the other deals in the top five slots. This was a record quarter for residential and commercial solar funds with $1.9 billion raised in 10 deals, the highest amount in a quarter. Of this total, $200 million went to a loan fund while the rest went to third-party lease or PPA funds. SolarCity accounted for a major portion of this total. In Q4 2014, residential and commercial solar funds raised $1 billion in eight deals.

M&A
There were 29 corporate M&A transactions in the solar sector in Q1, compared to 21 transactions in Q4 2014. Solar downstream companies accounted for most of the M&A transactions with as many as 20.

The largest disclosed M&A transactions by dollar amount were led by the $265 million acquisition of Recurrent Energy, a solar project developer, by Canadian Solar, followed by the $198 million acquisition of Hanergy Thin-Film Power Group´s 600 MW Business Integrated Photovoltaic production line by Macrolink New Resources.

EGCO Group acquired an additional 33.33 per cent stake in Natural Energy Development (NED), a solar project developer, from Diamond Generating Asia for $37 million, making EGCO Group the majority shareholder of NED with 66.66 per cent of the shares. SPI China (HK) acquired 80 per cent of Solar Juice, an Australian solar PV wholesale distributor, for $25.5 million. Global EcoPower acquired NOVA Power, a solar project developer, for $15.4 million.

There were 44 large-scale solar project acquisitions totalling $953 million with about 2 GW changing hands, compared to 49 transactions in Q4 2014 for $898 million. The top disclosed project acquisition by dollar amount was Lightsource Renewable Energy´s acquisition of 14 UK solar assets totalling 34.2 MW for $155 million.

TerraForm Power acquired solar projects totalling 168 MW from SunEdison for $110 million. Capital Stage acquired a 53.4 MW PV portfolio consisting of seven solar projects in the UK for $104.3 million. Bluefield Solar Income Fund acquired a 49.9 MW solar PV project based in Norfolk for $84 million from Trina Solar Luxembourg (EU) Systems, and three UK-based solar projects totalling 48 MW for $83 million from WIRSOL Energy.

Mercom also tracked 190 large-scale project announ¡ce¡ments worldwide in Q1 2015 representing 7 GW.

Notable Indian transactions in Q1 2015:
VC Funding:

Orb Energy- a company that designs, manufactures, installs and services solar energy systems- raised Rs 12.3 crore equity investments from FMO, Netherland´s development finance institution.

Project Funding:
ACME Solar secured a loan of Rs 622 crore from the Asian Development Bank for construction of solar projects with capacity of 200 MW in India.
Solairedirect secured Rs 310 crore in financing for the construction of three PV projects totalling 53 MW in the states of Punjab and Rajasthan from PTC Financial and Axis Bank.

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