Financing for solar and storage projects is experiencing a decline, yet deals and agreements are on the rise
Solar and Energy Storage Funding Trends Adjust Amid Policy Changes
The first half of 2025 saw a shift in the solar and energy storage funding landscape, with some challenges and opportunities emerging.
Corporate funding for solar companies dropped by 39% year-over-year, and energy storage funding decreased by 41%. This decline was not limited to venture capital and public market investment, which also saw substantial drops [1]. However, this trend was counterbalanced by an increase in mergers and acquisitions (M&A) activity. Solar and storage project acquisitions more than doubled, and the number of M&A deals picked up, possibly due to lower asset valuations [1].
One key factor influencing this change was the early phase-out of renewable energy tax credits from the "One Big Beautiful Bill Act," which created uncertainty in the market. However, with the final policy details now emerging, investors are expected to re-engage in the second half of 2025 as companies adapt to the changed rules and identify new opportunities [1][3].
On a global scale, the clean energy sector is projected to see a surge in investment. According to the IEA World Energy Investment Report 2025, global energy investment is expected to reach $3.3 trillion, with two-thirds ($2.2 trillion) going towards clean energy sectors such as solar and battery storage. This investment significantly outpaces that of fossil fuel spending, especially in advanced economies [2][5].
U.S. solar and storage manufacturing investments have also seen a boost, supported by federal manufacturing tax credits (Section 45X, 48C) and deployment incentives (ITC, PTC). These policies aim to bolster domestic production, reduce supply chain risks, and fuel deployment [3].
The sector is also witnessing technological innovation, with growing interest in alternative storage technologies like sodium-based batteries. Storage growth is expected to peak at 35% in 2025, with a strong long-term Compound Annual Growth Rate (CAGR) [1][4].
Despite the near-term financing dips, demand drivers such as data centers, AI, and the transition to electrification in transport, infrastructure, and industry, support long-term growth [1][2]. Debt financing in the solar sector slightly increased in the second quarter of 2025, suggesting that development plans are moving forward [6].
In summary, while early 2025 saw reduced funding volumes for solar and energy storage due to policy changes and market uncertainty, the sector is adjusting with increased deal activity, manufacturing investments, and technological adaptation. The clearer policy environment and sustained strong global clean energy investment momentum are expected to drive stabilization and growth in solar and energy storage funding in the second half of 2025 [1][2][3][4][5]. Understanding these changes early will likely define the next chapter of the U.S. and global solar industry.
References: [1] Wood Mackenzie, "Solar and Energy Storage Markets Quarterly Update: Q2 2025," Wood Mackenzie, 2025. [2] International Energy Agency, "World Energy Investment Report 2025," International Energy Agency, 2025. [3] U.S. Department of the Treasury, "Investment Tax Credit (ITC) and Production Tax Credit (PTC) Guidance," U.S. Department of the Treasury, 2025. [4] BloombergNEF, "Sodium-ion Battery Market Outlook 2025-2030," BloombergNEF, 2025. [5] IEA, "Global Energy Review 2025," International Energy Agency, 2025. [6] S&P Global Market Intelligence, "Solar Debt Financing Trends in Q2 2025," S&P Global Market Intelligence, 2025.
- In response to the policy changes outlined in the "One Big Beautiful Bill Act," the renewable-energy industry anticipates a resurgence in investments, with global energy investment expected to reach $3.3 trillion, primarily allocated towards clean energy sectors like solar and battery storage.
- As renewable-energy companies adapt to the altered rules and regulations, the finance industry is predicted to re-engage in the second half of 2025, with increasing investments in both the solar and energy storage sectors.
- In the U.S., the business landscape for renewable energy is showing signs of growth, with federal manufacturing tax credits and deployment incentives bolstering investments in domestic solar and storage manufacturing, contributing to technological innovation and long-term growth.
