Missing spark: Corporate funding for battery storage,smart grid, energy efficiency companies down in 2019

At $2.3 billion, global VC funding that flowed into battery storage, smart grid and energy efficiency companies in 2019 was down 18% compared with $2.8 billion in 2018.

Funding pattern

According to a report by Mercom Capital, total corporate funding — including venture capital funding, public market and debt financing — in the battery storage, smart grid and energy efficiency sectors in 2019 was down by 22 per cent at $3.8 billion compared with $4.9 billion in 2018.

In 2019, VC funding for battery storage companies increased by 103% to $1.7 billion in 32 deals compared with $850 million raised in 49 deals in 2018. This increase was primarily due to Northvolt’s $1 billion deal in Q2 2019. Total corporate funding, including debt and public market financing, increased to $2.8 billion in 2019 compared with $1.3 billion in 2018. Lithium-ion based battery technology companies received the most funding in 2019 at $1.4 billion. Other categories that received funding included gravity storage, flow batteries, CAES, energy storage downstream, fuel cells, liquid metal batteries, thermal energy storage, solid-state batteries, sodium-based batteries and zinc-air batteries.

The most prominent M&A transaction in the battery storage space was the acquisition of Sonnen by oil major Shell, early on in the year.

Smart-grid companies raised $300 million in VC funding in 38 deals in 2019, a 43% decrease compared with the $530 million raised in 29 deals in 2018. Total corporate funding, including debt and public market financing, came to $372 million in 41 deals, compared with $1.8 billion in 33 deals in 2018.

In 2019, there were 29 M&A transactions (one disclosed) recorded in the smart grid sector. In 2018, there were 12 undisclosed transactions. VC funding for energy efficiency companies fell sharply with $298 million in nine deals in 2019 compared with $1.5 billion in 23 deals in 2018, an 80% decrease largely due to the $1.1 billion raised by architectural dynamic glass developer, View, in Q4 2018.

In 2019, debt and public market financing announced by Energy Efficiency companies rose to $371 million in three deals compared with $277 million raised in the same number of deals in 2018.

In 2019, there were three Property Accessed Clean Energy (PACE) financing deals, bringing in $709 million compared with the same number of deals that brought in $694 million in 2018.

M&A activity for ‘efficiency’ companies in 2019 increased with nine transactions, two of which disclosed the transaction amount. In 2018, there were seven M&A transactions with one that disclosed the transaction amount.

India update

In India, LivGuard Energy Technologies, a company that straddles batteries to automotive products, raised $32 million from ChrysCapital and Ncubate.

Greenko Energy Holdings raised $495 million from an affiliate of General Insurance Corporation (GIC) and an entity that is wholly owned by the Abu Dhabi Investment Authority to develop two 1.2 GW storage projects in Andhra Pradesh and Karnataka.

And Husk Power Systems, a distributed utility company that provides minigrids to rural communities and businesses entirely from renewable energy sources, received $5 million in an amended funding round.