Cleantech M&A hasn’t sparkled in 2017

From river turbines to massive solar arrays, the tech behind cleantech has never been better. Sources of renewable energy have made significant inroads over the past decade, increasingly challenging conventional sources of power like coal on cost alone. No less a firm than Goldman Sachs is targeting $150 billion to finance and invest in companies that promote cleantech and renewable energy.

But M&A activity in cleantech is on track to post some of the softest numbers for the post-recession period, per the PitchBook Platform. After recording overall deal value of nearly $50 billion on 488 acquisitions last year, cleantech M&A in 2017 has dropped to a deal count reminiscent of 2009 and 2010 while deal value has fallen in line with levels last seen in 2013 and 2014.

Meanwhile, PE and VC investment in the space hasn’t fared much better in 2017.

Lightsource + BP = Lightsource BP

But the overall dip in acquisition and investment activity is part of what makes BP’s $200 million deal, announced Friday, to back Europe’s largest solar development company so significant. In exchange for a 43% stake in Lightsource, BP will support the company’s acquisition, development and long-term management of large-scale solar projects over the next three years.

Founded in 2010, Lightsource has commissioned 1.3 GW of solar capacity to date and manages approximately 2 GW of capacity under long-term contracts.

The deal puts BP back in the solar game, six years after its panel manufacturing unit failed to unseat competition from China, which forced the energy giant to write down billions on the failed investment after a 40-year run. But BP’s coming back at an opportune moment.

By the company’s own estimates, global installed solar capacity tripled in the past four years, growing by some 30% last year alone. BP’s Energy Outlook analysis pegs solar energy as the likely source of around a third of renewable power and up to 10% of total global power by 2035.

In the meantime, newly minted Lightsource BP will target the growing demand for large-scale solar projects worldwide with a focus on grid-connected plants and corporate power purchase agreements. The deal gives BP two seats on the Lightsource board, and BP plans on integrating solar alongside its existing alternative energy and gas business.