Battery, smart grid and efficiency companies raise $1.5 bn in VC funding in 2017 – Mercom

The latest yearly report on funding and merger and acquisition (M&A) activity by Mercom Capital Group has found that in 2017, venture capital (VC) funding into battery storage companies almost doubled, the smart grid sector saw a moderate investment increase, while energy efficiency companies captured much less funding than in the year prior.

Battery storage

In the battery storage sector, 2017 was a year of big deals. The industry saw VC funding nearly double to $714 million across 30 deals, up from the $365 million raised in 38 deals in 2016.

A vast portion of this figure came from the Microvast deal, which raised $400 million in the first part of the year, followed by Battery Energy Storage Solutions (BESS) with $66 million, Forsee Power with $65 million, Advanced Microgrid Solutions (AMS) with $34 million, and Primus Power, which brought in $32 million.

Energy storage downstream companies received the most funding with $68 million, followed by lithium-based battery companies with $65 million. The overall number of investors, which gathered around the battery storage sector in 2017, went up from 62 in 2016, to 86 in 2017.

Compared to $540 million raised in 2016, total corporate funding saw a significant increase to $890 million. Meanwhile, debt and public market financing remained steady year-on-year, at $177 million raised across 12 deals compared to $175 million generated by eight deals in 2016.

In 2017, project funds amounted to $446 million across three deals, compared to $820 million raised in 2016 in seven deals, while big announcements were made on nine battery storage funding deals totaling $2.1 billion, compared to just $33 million raised in four deals in 2016.

There were six merger and acquisition (M&A) transactions in the 2017 battery storage category, of which only two disclosed transaction amounts, down from 11 in 2016, three of which disclosed transaction amounts.

Smart Grid

The smart grid sector saw a more moderate increase in VC funding, from $389 million raised across 42 deals in 2016, to $422 million across 45 deals in 2017.

The top VC funded companies in 2017 were ChargePoint, which brought in $82 million and $43 million in two separate deals; Actility, which received $75 million; Brilliant, which secured $21 million; and Particle and Urjanet, each raising $20 million.

Total corporate funding, including debt and public market financing, recoded a marked growth of $1.2 billion, compared to $613 million in 2016.

The number of investors increased on a yearly base from 82 to 88, including among them: ABB Technology Ventures, Braemar Energy Ventures, Chrysalix Venture Capital, Clean Energy Finance Corporation, Energy Impact Partners, EnerTech Capital, GE Ventures, innogy, National Grid, Obvious Ventures, and Siemens.

The largest share of VC funding in 2017 went to smart charging of plug-in hybrid electric vehicle (PHEV) and vehicle-to-grid (V2G) companies, with $155 million across 10 deals, followed by demand response companies with $94 million across four deals.

Last year, five debt and public market financing deals totaling $774 million were also announced, compared to $224 million raised across the same number of deals in 2016.

There were 27 M&A transactions recorded in the smart grid sector (just seven of these deals disclosed transaction amounts) in 2017, totaling $2.5 billion, compared to 15 transactions in 2016 (four disclosed) for $2.4 billion.

Efficiency

The energy efficiency sector saw a sharp drop in VC funding to $384 million in 38 deals in 2017, compared to $528 million in 33 deals in 2016; whereas total corporate funding, including debt and public market financing, declined to $3.3 billion, compared to $3.8 billion in 2016.

The list of leading VC funded companies includes: View, which raised $100 million, followed by Kinestral Technologies with $65 million, RENEW Energy Partners with $40 million, Power Survey and Equipment brought in $24 million, and Stack Lighting with $16 million.

The most attractive were efficient home/building companies, which captured $172 million across five deals in 2017, while the number of investors dwindled from 72 in 2016, to 51 in 2017.

In 2017, debt and public market financing also declined to $2.9 billion across 16 deals, compared to the $3.2 billion raised across 16 deals in 2016. Furthermore, seven PACE financing deals brought in more than $1.6 billion in 2017, compared to 12 deals amounting to $2.3 billion in 2016.

There were two securitization deals in 2017 for nearly $581 million compared to nine securitization deals for $1.8 billion in 2016.

M&A activity for the efficiency sector in 2017 dropped to 10 transactions, three of which disclosed transaction amounts, compared to 14 M&A transactions in 2016, five of which disclosed transaction amounts.