Bangalore: One of the highest numbers of deals in a single year with around $1.9 billion in 111 VC transactions in 2011, the year also witnessed rise in the M&A activity with around $4 billion in 26 disclosed transactions in the solar sector. Over $1 billion in Project Funding was raised by India in 2011, reports Mercom Capital Group, a global clean energy communications and consulting firm.

Raj Prabhu, Managing Partner, Mercom, said, “Investment activity in 2011 was robust. Whether you point to the dramatic module price declines, Europe’s diminishing incentives, or the so-called ‘Solyndra effect,’ solar continued to gain attention and dollars for technology and innovation through venture capital funding.”

With over $1.1 billion in large-scale project funding in 2011 in the solar industry, India succeeded in raising $95 million in VC funding. Among Indian companies, solar project developer Kiran Energy raised $30 million in Series A funding and $50 million in Series B funding. Birla Surya, a manufacturer of crystalline silicon wafers and cells, raised around $15 million in VC funding.

“As the nation’s solar policies take shape, India is finally on the world’s solar funding map. Most investors that participated in Indian large-scale solar projects were export banks, government or state-owned banks. For India, to truly thrive the solar sector, there needs to be a conductive environment to attract more robust participation from private financial institutios,” adds Prabhu.

The large-scale project funding deal in India was the $694 million loan raised by Maharashtra State Power Generation Co. for their 150 MW Dhule project and 125MW Sakri project solar power plants. Export-Import Bank of the United States was the top investor funding seven different large-scale solar projects in India, followed by Export-Import Bank of India with three transactions, KfG Group of Germany with two transactions and State Bank of India with two transactions.

The total VC investment in solar sector in 2011 was the highest deal when compared to 2010, where only 65 VC deals were made. 84 deals were made in 2009, 93 in 2008, and 71 in 2007. The most VC fund was raised by the Thin-film technology with around $595.5 million in 17 deals, beating downstream companies that raised around $339 million in 26 deals, PV that raised around $338 million in 20 deals, concentrated solar power that raised $308 million in 13 deals, and concentrated PV that raised $129 million in 10 deals.

The M&A activity in 2011 was more than double that of 2010 in terms of dollars and approximately 33 percent more in deals. Only 26 deals were disclosed out of the $4 billion M&A activity in 65 deals compared to just over $2 billion in 44 deals I 2010. The largest single M&A transaction was Total's 60 percent stake in the solar manufacturer SunPower, accounting for $1.4 billion of the $4 billion.