Total corporate funding in the solar sector reached $4.8 billion across 39 deals in Q1 2025—a 41% decline year-over-year (YoY) compared to $8.2 billion raised through 42 deals in Q1 2024. However, funding was up 20% quarter-over-quarter (QoQ) from the $4 billion raised in 40 deals in Q4 2024.

“The drop in funding this quarter reflects growing investor caution in response to policy reversals, tariff shocks, and regulatory uncertainties that have forced companies and investors to reassess their strategies. But the fundamentals remain strong, and the long-term case for solar is intact. What we need now is clarity and policy certainty to restore confidence in the markets. Despite headwinds in the broader funding environment, we did see an uptick in project M&A in Q1,” said Raj Prabhu, CEO of Mercom Capital Group.

Global VC funding for the solar sector in Q1 2025 came to $1.4 billion in 14 deals, a 237% increase YoY compared to $406 million raised in 13 deals in Q1 2024. Funding increased 40% QoQ compared to the $1 billion raised in 21 deals in Q4 2024. The QoQ increase was primarily driven by a single $1 billion raise.

The top VC/PE-funded companies in Q1 2025 were: Origis Energy, which raised $1 billion; Terabase Energy with $130 million; Mission Clean Energy with $55 million; AMPIN Energy Transition with $50 million; and Tandem PV also with $50 million.

Of the $1.4 billion in VC funding raised in 14 deals during Q1 2025, 96% went to solar downstream companies, with $1.3 billion in 12 deals. In Q4 2024, solar downstream companies raised $661 million in 16 deals (65% of VC funding).

Public market financing in the solar sector totaled just $20 million across two deals in Q1 2025, a 99% decline YoY compared to $1.4 billion raised through six deals in Q1 2024. Quarter-over-quarter, funding fell 98% from $933 million raised in five deals in Q4 2024.

In Q1 2025, debt financing for the solar sector reached $3.5 billion across 23 deals, a 45% drop compared to the $6.4 billion secured in the same number of deals in Q1 2024. On a QoQ basis, debt funding rose 67% from $2.1 billion across 14 deals in Q4 2024.

A total of 19 solar corporate M&A transactions were recorded in Q1 2025, compared to 20 transactions in Q4 2024, and 10% lower compared to 21 solar M&A transactions in Q1 2024.

Solar downstream companies led corporate M&A activity with 16 transactions, one each for the balance of system, materials, and service provider companies.

Approximately 13.6 GW of solar projects changed hands in Q1 2025, up from 10.8 GW in Q1 2024. On a QoQ basis, project acquisition volume also increased, compared to 9.4 GW in Q4 2024.

In Q1 2025, project developers and independent power producers led acquisition activity, securing over 8 GW of projects. They were followed by investment firms and funds, which acquired 2.5 GW. Telecommunications companies, integrated energy traders, insurance firms, and other undisclosed buyers picked up a combined 2.3 GW. Electric utilities acquired 485 MW, oil and gas majors took 245 MW, and installers accounted for the remaining 63 MW.