Global solar corporate funding dropped 41% year-on-year (YoY) in Q1 2025, says Mercom Capital Group, which attributes the decline to market uncertainty, including Donald Trump's presidential return in the US.
Solar companies raised $4.8 billion in corporate funding in 39 deals during the reporting quarter, compared to $8.2 billion they secured in 42 deals during Q1 2024.
However, the funding volume increased sequentially by 20% from $4 billion in Q4 2024, according to Mercom’s Q1 2025 Solar Funding and M&A Report.
“The decline in funding was anticipated due to the market conditions and the uncertainties that have persisted since President Trump took office. All the predictions and investor fears materialized after new tariffs were announced, followed by policy uncertainties that have continued to build up,” explained Mercom Capital Group CEO Raj Prabhu.
Global venture capital (VC) funding of $1.4 billion represented a 237% YoY jump with 14 deals, with Origis Energy alone raising $1 billion from Brookfield Asset Management and Antin Infrastructure Partners. Terabase Energy ($130 million), Mission Clean Energy ($55 million), AMPIN Energy Transition ($50 million), and Tandem PV ($50 million) were other notable ones in the pack.
Downstream solar companies attracted 96% of the total VC funding during the reporting quarter, securing $1.3 billion in 12 deals.
Public market financing saw the largest YoY decline of 99% from $1.4 billion funded through 6 deals in the previous year to $20 million in 2 deals. Even on a QoQ basis, it was a 98% drop from $993 million raised in 5 deals.
Mercom counts $3.5 billion in 23 deals under debt financing in the sector during Q1 this year, a 45% drop from $6.4 billion in Q1 last year. Nevertheless, the total was 67% higher than $2.1 billion in 14 deals in the previous quarter.
Activity in the merger and acquisition (M&A) deals was also down 10% YoY, with 19 transactions compared to 21 last year. With 16 transactions, solar downstream companies led M&A activity. The report writers believe around 13.6 GW of solar projects were secured, compared to 10.8 GW in Q1 2024 and 9.4 GW in Q4 2024.
More than 8 GW of project capacity was acquired by project developers and independent power producers (IPP), followed by investment firms and funds acquiring 2.5 GW. Another 2.3 GW capacity was secured by telecommunications, integrated energy trading companies and insurance providers, among others.
Despite the overall decline in funding, Prabhu remains optimistic about the industry’s prospects. He said the market now seeks clarity and policy certainty to restore confidence in the markets.
“Market conditions are expected to remain largely the same in the near term. The 90-day tariff stay has created additional uncertainty, and until there is more policy clarity, investors will likely remain cautious. We may see a few deals close, but overall, the market is still in wait and see mode,” added Prabhu.
