Funding of European solar startups up 400% in 2023

Funding of European solar startups up 400% in 2023

Market news |
By Nick Flaherty

Total investment in European solar startups is up 398% on last year, with firms receiving $6 billion in backing by the end of May 2023. This compares to $1.2bn raised by the same point in 2022 says research by distributor Avnet Abacus.

Globally, investment in solar startups is up 47%, with funding of the sector down 7% in the US so far this year. This may however be a lull before funding from the Inflation Reduction Act (IRA) cuts in.

Avnet Abacus analysed Crunchbase data for companies listed under solar and other renewable energy categories to provide insight on the level of funding going into these areas.

Although wind produces double the amount of the EU’s electricity as solar, generating 15.9% compared with solar’s 7.6%, there are almost 6 times more startups focused on solar than  energy in Europe, with the consumer market driving the solar expansion.

“Even though solar technology is relatively mature, there is still a lot of room for growth and innovation. There is growing demand around the world, and government policies and incentives continue to support investment in this area, with engineers continually seeking new ways to make solar more efficient,” said Dr Sara Ghaemi, Avnet Abacus’s Technical Director.

By the end of last year, Europe’s solar startups had drawn in $7.2 billion in funding, almost four  times higher than the previous year’s record of $1.9 billion. So far in 2023, Europe’s solar ventures have already raised $6 billion, 83% of last year’s total, before even reaching the midway point in the year.

However the US China trade war may impact on the growth, as China restricts the export of gallium for power devices and panels.

Investment in startups in the broader renewables category is up 27% worldwide compared to this time last year, but with a 25% ($4 billion) drop in Europe. And VC funding across all European startups, in any sector, decreased 66% year-on-year in Q1 of this year.

Despite the continued uncertainty in the venture capital market, average investment in European solar is at an all time high at $166.1m, compared with an average of $88.3m in 2022 and $22.9m in 2021. The mean amount of venture capital flowing into European solar so far this year ($166.1m) compares to the global average of $116.8m and US average of $113.8m.

Rooftop installations account for 66% of the EU’s current solar capacity, with commercial roof-top panels spreading faster than utility-scale ground-mounted projects. And consumers keen to curb rising electricity prices are also looking to the sun, with Google searches about the cost of solar panels hitting an all-time high last summer with search interest up over 300% compared with the previous year.

“Rooftop solar panels could potentially produce 25% of Europe’s annual electricity consumption. As well as the available rooftop surfaces, the facade of the buildings can also contribute to the generation of green energy,” said Ghaemi. “The fast deployment and decentralised integration of photovoltaic panels into the energy system are two main attributes that make them very attractive.”

“When looking for a replacement to fossil fuels, however, rooftop and facade panels will not be enough. This will require large scale photovoltaic farms, where you’re talking about megawatts of power generation. At such high power and high energy density, recent developments in silicon carbide and gallium nitride technologies are enabling power to be converted with greater efficiency than traditional silicon-based components,” she said.


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