Private venture capital may have cooled, relatively speaking, on energy storage in 2022, but the corporate world was backing batteries in a big, big way.
Total corporate funding in the energy storage sector drove upward to a record high of nearly $27 billion last year, according to the annual Funding and M&A Report by Mercom Capital. VC funding for energy storage companies decreased 34% with $5.8 billion in 2022 compared to $8.8 billion in 2021.
Overall, a total of 28 energy storage companies were acquired last year, the biggest M&A activity in that sector since 2014.
Smart grid companies also raised an all-time high of $3.3 billion in 46 deals for 2022, according to Mercom. Almost $500 million of venture capital was poured into energy efficiency companies during the same 12 months.
“Funding into energy storage continued to grow at record levels in 2022,” Raj Prabhu, CEO of Mercom Capital Group, said. “However, some of the funding activity shifted from venture capital and private equity to public market and debt financing. . . The global energy transition, with the shift toward EVs, along with the Inflation Reduction Act, provided strong tailwinds for energy storage companies.”
The private equity sector was still busy, despite the shift mentioned by Prabhu. For instance, U.S. investment giant Blackstone acquired Australian battery storage developer Akaysha Energy for 1 billion Australian dollars (about $700 million U.S.) in a deal announced last summer.
Other companies receiving high-level venture capital included Eolian with some $925 million in funding. Global Infrastructure Partners owns Eolian.
In addition, more than a dozen battery manufacturing firms announced plans to set up or contract for new production facilities in the U.S. to tighten the supply chain around domestic, utility-scale energy storage and electric vehicles. Those include LG Energy Solutions, Factorial Energy, Microvast, Fluence Energy, Envison AESC, FREYR Battery, Canoo and KORE Power.
Six energy storage firms went public on the trading markets in 2022, two more than in the previous year. LG Energy Solutions raised close to $100 billion in its own public offering on the South Korean exchange early in the year.
Corporate funding in the energy storage sector was up 55% compared to $17 billion in 2021.
Lithium-ion-based battery technology companies received the most VC funding in 2022. Other categories that received funding included battery recycling, iron-air batteries, solid-state batteries, and energy storage systems.
-- -- --
(Rod Walton, senior editor for EnergyTech, is a 15-year veteran of covering the energy industry both as a newspaper and trade journalist. He can be reached at [email protected]).
Follow us on Twitter @EnergyTechNews and @rodwaltonelp and on LinkedIn.