PC: Mercom India
New Delhi: Money from corporates flooded the energy storage sector that reported $17.6bn in 83 deals till 27 September 2024 as per a report compiled from Mercom Capital Group showing a 15 per cent increase in the corresponding time last year. However, the VC landscape of energy storage companies has dramatically changed, with VC funding plummeting by 69% to $2.7 billion in 61 deals, as compared to $8.6 billion across 68 deals in 2023.
The report does show one big trend: corporate funding is increasing, but the trend is now decidedly debt and public market financing rather than venture capital. Debt and public market financing for energy storage companies jumped by a remarkable 125% to $15 billion in 22 deals, a big leap from $6.6 billion in 2023. This shows that companies are opting for more stable and less volatile funding sources amid changing market dynamics.
Large Energy Storage VC Rounds for 2024 include Sila Nanotechnologies, which garnered $375 million, while EnerVenue Holdings has attracted $308 million in investment. Other notable deals comprised $189 million for Natron Energy, $162 million for Ascend Elements, and $150 million raised by Antora Energy. It is evident that continued new technology interest in energy storage is still being addressed as VC funding declines by every other measure.
The M&A activity went higher for the energy storage sector as the number of deals that were announced increased to 18 deals in 2024 from 11 in the previous year. As far as the project’s M&A activity was concerned, it remained stable within both 2023 and 2024 at about 22 transactions each year as there was continued interest towards consolidation of assets and capabilities with the industry.
The Smart Grid area lost investment from corporations due to falling 33% year-over-year to $2 billion via 53 transactions from a record of $3 billion in 2023 on 48. The deal count in this space related to VC jumped by 13% from $1.4 billion over 43 transactions in this round. VC-led headlines among the deals done on the list include $330 million, which was achieved by Electra; for Powerdot, the count reached at $108 million, while FLO $100 million. The last headline serves as proof toward more investing in the market in search of solutions supporting smart technologies.
Despite the growth in VC funding for Smart Grid technology, debt and public market financing dropped sharply to $568 million in 10 deals from $1.7 billion in 11 deals in 2023. This indicates that venture capitalists still find it worthwhile to invest in Smart Grid technologies but the traditional funding routes are not as attractive.
M&A transactions in the Smart Grid sector also had a slight decline, now standing at seven deals for 2024 compared with eight deals in the earlier year. This can be interpreted as companies slowing on acquisitions, an effect of the general macroeconomic environment and funding scenarios.
In summary, the energy storage sector is well funded with robust corporate funding and debt financing, but venture capital faces severe challenges. The two sectors, energy storage and Smart Grid, illustrate how the landscape of financing energy technology is changing with changing market conditions and investor preferences.
