Venture capital and private equity invested a record amount in renewables and storage projects in the first half of the year as public financing worsened, a Bloomberg analysis finds.
Why it matters: Venture capital and private equity groups are more than happy to step in and fill the gaps where public financing fell through.
Zoom out: Project financing, whether via power purchase agreements, loans or private funding, is one the key levers investors can use to de-risk otherwise capital-intensive, long-term projects.
- Many companies struggle to reach economies of scale without outside project financing.
By the numbers: VC and PE investment rose 63% YOY to a record $9.6 billion in renewable and storage projects in the first half of 2022.
- The amount was driven by a handful of large financings, including Silicon Ranch’s $755 million deal and BrightNight’s $500 million financing.
- Public financings, however, fell 65% YOY to $10.5 billion for renewable and storage projects. With just $3.9 billion in project financing, Q2 2022 was the least active since early 2020.
Yes, and: When combined with corporate M&A, acquisition activity across the renewables and storage sectors hit a record $29.3 billion for the first half of 2022, up 25% from last year’s $23.5 billion.
Quick take: First-half deal activity doesn’t necessarily capture the volatility of market conditions given the lead time of such major deals.
- Second-half figures will be more telling of current market conditions.
