C&I Solar in the US: PE firms dominated M&A activity in 2023 while developers adopt a cautious approach

published on 01 December 2023

PE firms capitalize on tax credits, customer demand for lease-based solar installations: Amid the growing popularity of the lease-based model, where the installer finances and owns the systems while customers benefit from long-term PPAs, PE firms are making significant strides in the market through strategic investments and takeovers. Leading this activity are companies such as BlackRock and Arclight Capital, leveraging their financial capabilities to support these lease programs and cater to a broader customer base seeking to reduce emissions and electricity costs. Furthermore, the availability of 30% investment Tax Credit (ITC) for these leased systems, along with upto 20% in potential tax credits adders and the ability to claim interconnection costs in the ITC, enhances the economic viability of these projects.

C&I developers take cautious approach for M&A, raises capital to fund their organic expansion: Over the past few years, there has been a consistent decline in the activity for the acquisitions of C&I systems and platforms by developers in the market. This decline can be attributed to the recent rise in interest rates, which has hindered the ability of highly leveraged developers to raise tap the debt market for acquisitions. Instead, Enerdatics observes that developers such as Altus Power and SunPower, who have displayed a history of value accretive M&A, are now focussed on organic expansion in new markets. This move enables them to sidestep the competition in mature regions and develop projects for leasing, avoiding the high upfront capital required to acquire operating installations.

To gain a deeper insight into M&A trends at the corporate and asset level globally, request a trial of the Enerdatics Energy Transition M&A database today.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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