Funding and mergers and acquisitions (M&A) activity was down in the Battery Storage, Smart Grid, and Energy Efficiency sectors in 2019 compared to 2018, according to a new report from Mercom Capital Group.
Chart: Global VC funding Battery Storage, Smart Grid, and Efficiency
Global VC funding (venture capital, private equity, and corporate venture capital) for Battery Storage, Smart Grid, and Efficiency companies in 2019 was 18% lower with $2.3 billion compared to $2.8 billion raised in 2018. The decreases come mostly in the smart grid sector.
Total corporate funding (including venture capital funding, public market, and debt financing) for the Battery Storage, Smart Grid, and Energy Efficiency sectors in 2019 was down by 22% with $3.8 billion compared to $4.9 billion in 2018.
Chart: Battery Storage, Smart Grid, and Energy Efficiency Top VC Funded Deals in 2019
Battery Storage funding up
In 2019, VC funding into Battery Storage companies increased by 103% to $1.7 billion in 32 deals compared to $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 to $1.3 billion in 2018.
Lithium-ion based battery technology companies received the most funding in 2019 with $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.
Seventy-eight VC investors participated in Battery Storage deals in 2019 compared to 73 in 2018. BASF Venture Capital, Breakthrough Energy Ventures, and Macquarie Capital were the top investors in 2019. Utilities and oil and gas companies were involved in seven battery storage funding deals in 2019.
In 2019, announced debt and public market financing for Battery Storage companies increased to $1.1 billion in 10 deals compared to $494 million in 12 deals in 2018. Northvolt’s $393 million loan was the largest debt financing deal in 2019.
There were 10 M&A transactions in the Battery Storage category in 2019, of which only two disclosed transaction amounts. In 2018, there were 16 M&A transactions, three of which disclosed transaction amounts.
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.
Chart: Battery Storage, Smart Grid, Efficiency Top Disclosed M&A Transactions in 2019
Smart Grid funding down
Smart Grid companies raised $300 million in VC funding in 38 deals in 2019, a 43% decrease compared to 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 to $1.8 billion in 33 deals in 2018.
The top VC funded companies in 2019 were Smart Wires, which brought in $75 million, eSmart Systems, which received $34 million, SmartRent, which secured $32 million, CleanSpark with $20 million, and Volta Charging with $20 million.
Seventy-eight investors funded Smart Grid companies in 2019, compared to 69 in 2018. The top VC investor in 2019 was Shell, which was involved in four funding deals followed by Energy Impact Partners with three deals. Other prominent investors included Total and Centrica with two deals each.
Grid Optimization companies had the largest share of VC funding in 2019 with $85 million in four deals, followed by Data Analytics companies with $58 million in six deals and Smart Grid Communications companies with $52 million in five deals.
In 2019, three debt and public market financing deals totaling $72 million were announced compared to $1.3 billion in four deals in 2018. There were no IPOs announced for Smart Grid companies in 2019.
In 2019, there were 29 M&A transactions (one disclosed) recorded in the Smart Grid sector. In 2018, there were 12 undisclosed transactions.
Efficiency flat
VC funding for Energy Efficiency companies in 9M 2019 was flat with $268 million compared to the $265 million raised in 9M 2018.
The Top 5 VC funding deals in 9M 2019 were: Kinestral Technologies raised $100 million, Budderfly raised $55 million, Cimcon Lighting raised $33 million, Carbon Lighthouse secured $33 million, and 75F received $18 million. A total of 33 VC investors participated in Energy Efficiency funding in 9M 2019.
Announced debt and public market financing activity in the first nine months of 2019 ($56 million in two deals) was 74% lower compared to 9M 2018 when $212 million went into two deals.
In 9M 2019, there were a total of nine Efficiency M&A transactions (two disclosed), compared to three transactions (all undisclosed) in 9M 2018.
