European Solar Energy Startups Witness 400% Surge in Investment: Report

A new research report by Avent Abacus reveals that total investment in European solar energy startups is up almost 400 per cent compared to last year. Reportedly, the companies received $6 billion in funding in the first five months of 2023 alone.

Key Insights

Avent Abacus notes that the total investment in European solar startups saw a gigantic increase compared to last year, up 398 per cent. By this point in May 2022, a total of about $1.2 billion was raised by the startups. Showing impressive growth, the solar startups of Europe have already drawn in about $6 billion, almost four times, in the first five months of this year.

The growth is significant also because the total funding received in the whole of year 2022 was $7.2 billion. This implies that Europe’s solar ventures have already raised about 83 per cent of the total funding received last year, before even reaching the midway point in the current year.

Comparatively, the investments in startups in the US have shown a downward trend with funding down 7 per cent in the country so far this year. Globally, the picture seems to be more positive with investment going up by about 47 per cent in the same period this year.

The Average Funding Rounds: Global, United States, and Europe

Average investment in European solar startups has reached a high of $166.1 million, surpassing the averages of $88.3 million in 2022 and $22.9 million in 2021. This remarkable increase comes despite the prevailing uncertainty in the venture capital market. Notably, the mean amount of venture capital allocated to European solar in the current year ($166.1 million) exceeds both the global average of $116.8 million and the US average of $113.8 million.

Rooftop Solar Panels and Consumer Market Driving Expansion

Wind energy generates twice the electricity compared to solar, and accounts for about 15.9 per cent versus solar’s 7.6 per cent of the total electricity production in the EU, the research report states. However, this doesn’t show the whole picture.

Surprisingly, there are nearly six times more startups in Europe focused on solar energy compared to wind energy. The expansion in the solar sector is primarily driven by the consumer market, highlighting the growing demand and interest in solar energy solutions.

Even within the solar sector, rooftop solar is leading in progress. Rooftop installations account for about 66 per cent of the EU’s current solar capacity, with commercial rooftop panels spreading faster than utility-scale ground-mounted projects. The trend shows that consumers who are keen to curb rising electricity prices are also looking toward solar, with Google searches about the cost of solar panels hitting an all-time high last summer. The search traffic went up over 300 per cent compared with the previous year.

“Rooftop solar panels could potentially produce 25 per cent 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. The fast deployment and decentralised integration of photovoltaic panels into the energy system are two main attributes that make them very attractive,” comments Dr Sara Ghaemi, Avnet Abacus’s Technical Director.

She adds, “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.”

Avnet Abacus, an electronics distributor that consults engineers when they’re designing new products, analysed Crunchbase data for companies listed in the solar energy category to provide insight on the level of funding going into the sector.