Venture capital funding in batteries and smart grids declines sharply in Q3: Mercom report

The global smart grid, battery storage and energy efficiency sectors attracted just $102 million in venture capital (VC) funding in the third quarter (Q3) of the year, according to the latest quarterly report by Mercom Capital.

In Q2, that figure was $433 million as venture capitalists rowed back their investment in these technologies.

Funding in the smart grid sector was a meager $11 million, which Mercom reports is the lowest quarterly figure it has recorded since it began tracking funding activity. There were just seven deals in Q3, compared to 15 deals in Q2 that raised $222 million. Year on year the trend is the same – Q3 2015 saw $81 million raised in 12 deals.

Battery storage companies also experienced a tightening of the VC belt, with $30 million raised across nine deals. This is in stark contrast to Q2, when 10 deals saw $125 million raised during a busy summer period of investment. Equally, year on year Q3’s figures were anemic next to 2015, when $96 million was raised across nine deals.

The key areas of activity within battery funding focused on six sub-technologies, Mercom said: supercapacitor, lithium-based batteries, energy storage management software, energy storage systems, thermal energy storage, and flow batteries.

Debt and public market financing for storage amounted to $51.6 million in three deals, which was higher than the $40 million raised in Q2. The bulk of this capital was raised through a $40 million sale of FuelCell Energy’s shares and warrants, while Canada’s Electrovaya secured a $10 million loan.

There was further positive movement in project fundraising for residential and commercial batteries – Q3 saw $625 million raised across four deals (compared to $175 million in Q2). Tabuchi America raised almost half of that figure ($300 million) for its solar+storage residential project, while Advanced Microgrid Solutions secured $200 million in funding to augment its commercial storage activities.

Stem, which also operates in the commercial space, attracted $100 million in investment from Starwood Energy Group, while a division of Japan’s Sharp Electronics Corporation – Sharp Energy Systems and Services Group – garnered $25 million in funding for its solar and Smartstorage battery solution.

Mercom adds that some $1.1 billion in project funds for battery storage has been raised since 2013.

In the energy efficiency space, VC funding fell once more from $86 million in Q2 to $61 million in Q3.