VC funding for battery, smart grid and efficiency tech tops $1bn in H1 2017, finds Mercom report

Another quarter, another encouraging period of battery storage and smart grid investment growth: the second quarter (Q2) of 2017 has seen venture capital (VC) funding reach $422 million for 10 deals in the battery storage sector, finds the latest VC funding report by Mercom Capital Group.

Almost the entirety of this figure was comprised of the $400 million raised by Microvast Power, which secured backing from CITIC Securities, CDH Investment, National Venture Capital and others. The remaining nine notable deals in the quarter included a $12.75 million VC investment in Vionx Energy, and a $3.2 million funding round raised by Moixa technology – the U.K.-based battery maker securing the financial support of the Greater Manchester Combined Authority, Tokyo Electric Power Company (TEPCO) and First Imagine! Ventures.

This welcome growth in battery storage backing is a continuation of a wider trend in the recovery of clean energy investment. Specifically, in Q1 the eight VC deals for battery storage raised a comparatively meager $58 million. Over both quarters, lithium-based battery companies raised the most in VC funds.

A further $107 million battery storage funding was raised in Q2 via seven debt and public market financing deals – a figure that, again, was significantly higher than Q1’s $22 million. Overall, this means that the first half (H1) of 2017 has seen $129 million raised for battery storage firms via this mechanism, while VC funding backed battery companies to the tune of $4809 millio n over the same period (up from $179 million in H1 2016).

Smart and efficient
Where solar needs storage, storage needs smarter grids and more energy efficient technology to augment and complement its efficacy. However, VC funding for smart grid companies contracted slightly in H1 2017 compared to the same period last year, falling from $331 million across 29 deals last year, to $304 million in 22 deals this year.

This is just a slight decline, and still a telling reflection of a healthy market sector that is still finding its feet – and audience – in the world of global finance. The leading VC deal in Q2 2017 was the $75 million Actility secured from Creadev, Bosch, Immarsat, Idinvest, Bpifrance, Ginko Ventures, KPN, Orange, Swisscom and Foxconn. Siemens, meanwhile, backed ChargePoint to the tune of $43 million.

Demand response-based technologies secured the lion’s share of VC funding in this space, the Mercom report shows. There was one debt and public market financing deal in the smart grid sector in Q2, totaling $9 million.

Energy efficiency companies saw their VC funding in Q2 fall even more sharply, stretching to just $29 million across six deals, down from $213 million in Q1 and $86 million over the same period last year. Comparing H1 2017 and H1 2016, however, and the contraction in funding is slight – $242 million against $297 million respectively.

The report shows that efficiency lighting companies were the chief beneficiary of VC funding in this space.

Where energy efficiency remains a compelling draw, however, is in the debt and public market financing sector. In Q2 2017, six deals raised a massive $1.4 billion, up from $301 million in Q1.