Lithium-ion startups attract lion’s share of energy storage venture capital in 2019

Venture capital firms poured nearly $2 billion into battery storage companies in 2019.

The new report by Mercom Capital keeps tabs on how publicly known VC funding was allocated to energy storage, smart grid and energy efficiency companies. These transactions would include mergers and acquisition activity, as well.

Mercom reported that battery storage attracted $1.7 billion worth of investment last year, compared to $300 million for smart grid companies and $298 million for energy efficiency entities.

The global funding picture include venture capital, private equity and corporate VC investments. The total for the combined storage, smart grid and efficiency sectors was down 22 percent compared with the $3.9 billion moved in 2018, according to Mercom.

Battery storage, however, doubled year over year even though the $1.7 billion was spread out over fewer deals than in 2018. The increased investment was buoyed by Volkswagen’s $1 billion capitalization in Northvolt, a battery startup founded by two former Tesla executives, in the second quarter.

Lithium-ion battery technology companies accounted for 80 percent of the energy storage VC picture. Venture capital also put money in other storage technologies such as flow batteries, fuel cells, solid-state and zinc-air, among others.

See Clarion Energy content director Jennifer Runyon interview Todd Kerschbaum of JERA Americas on the need for safety and communication in energy storage development.

Other battery startups attracting VC funding including Sila Nanotechnologies with more than $200 million over two separate deals; Energy Vault with $110 million and Romeo Power with $89 million.

Debt and public market financing for battery storage companies more than doubled to $1.1 billion in 2019. Northvolt’s $393 million transaction was the largest debt financing deal in the sector last year, Mercom Capital reported.

Energy storage investment continues to grow exponentially as many utilities and other power generator shift toward renewables and seek battery backup for resiliency. Ameresco completed work on a 16-MWh energy storage system in Ontario, Canada, while the Los Angeles Department of Water and Power approved long-term power purchase agreements with a 1.2-GWh solar-storage combination project in California’s Central Valley.

Wood MacKenzie Power & Renewable has forecast that energy deployments will grow 13-fold from 2018-2024. The investment would total close to $71 billion just in deployment spending, according to the report.

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