All-time high private investment in renewable projects, report

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.