A wider range of investors are taking a stake in the battery storage industry, signalling a lower cost to finance, according to new figures from Mercom that also showed a hike in overall investments.

Mercom found that total corporate funding in the battery storage sector was significantly in 2020, with $6.6 billion in 54 deals. Venture capital (VC) funding remained steady with  $1.5 billion in 32 deals, compared to $1.7 billion raised in 32 deals in 2019.

Debt and public market financing for battery storage companies was up significantly, with $5 billion in 22 deals compared to $1.1 billion in 10 deals in 2019. The wider range of finance providers typicaaly lowers the cost of financing.

Raj Prabhu, chief executive of Mercom Capital Group, told New Power, “The increase in funding in categories other than VC (like debt and public market financing) shows the maturations of these sectors beyond early funding stages. Also, with cleantech stocks at an all-time high, companies are going public in record numbers, especially through reverse mergers, which contributed to significant funding raised in 2020.”

“In terms of funding by countries, The U.S. continues to attract the most investment in all categories. In battery storage, the US was followed by Sweden, Canada and the UK.”

Of venture capital investment in storage, around a third – $649 million – was invested in lithium-ion based battery technology companies, whose technology is now relatively familiar. Solid-state and flow batteries, downstream energy storage downstream and energy storage systems also attracted  VC investment.

 

Smart grid

Meanwhile VC interest in smart grid companies has grown, raising $748 million in 38 deals in 2020, compared to the $300 million raised in 38 deals in 2019. Total corporate funding, including debt and public market financing, reached almost $758 million in 41 deals, compared to $372 million in 41 deals in 2019. A total of 102 investors funded Smart Grid companies in 2020, compared to 78 in 2019.

Smart charging companies attracted the largest share of VC funding in 2020 with $324 million in 13 deals, followed by smart grid communications companies with $119 million in six deals, and demand response companies with $104 million in three deals.

 

Energy efficiency

Overall funding for energy efficiency companies also rose slightly,  reaching $791 million in 2020 compared to $670 million in 2019. VC made more small investments – $291 million in 16 deals in 2020, compared to $298 million in nine deals in 2019.

Prabhu told New Power that the UK was also fourth on the list of countries for smart grid investment and was third in efficiency funding