Smart energy funding tops $3bn in Q3 2020, says Mercom

  • October 26, 2020
  • Steve Rogerson

Global corporate funding for the battery storage, smart grid and energy efficiency sectors in the third quarter of 2020 came to $3.2bn compared with $1.2bn in Q2, according to Mercom Capital Group.

This included venture capital funding, public market and debt financing and represented a 165% increase quarter-over-quarter (QoQ). Funding was also higher by 777% year-over-year (YoY) compared with the $365m raised in 20 deals the same quarter last year.

Despite Covid-19, total corporate funding for the battery storage, smart grid, and energy efficiency sectors in the first nine months of 2020 was 75% higher with $4.7bn raised compared with $2.7bn in nine months in 2019.

Global venture capital (VC) funding (venture capital, private equity and corporate venture capital) increased in Q3 2020 with $1.1bn in 22 deals compared with $605m in 26 deals in Q2 2020, 78% growth QoQ. Funding was higher by 249% YoY compared with $309m raised in 17 deals in Q3 2019.

Global VC funding for battery storage, smart grid and efficiency companies in the nine months in 2020 was slightly down with over $1.9bn compared to $2.1bn raised in the same period last year.

Battery storage

In the nine months of 2020, corporate funding for battery storage companies totalled $3.5bn in 35 deals, 62% higher compared with $2.2bn in 32 deals last year. Corporate funding in Q3 2020 came to $2.8bn in 16 deals, compared with $472m in ten deals in Q2 2020.

VC funding for battery storage companies in Q3 2020 was up 78%, with $661m in seven deals compared with $372m in eight deals in Q2 2020. The increase in funding was largely due to Northvolt’s $600m equity raise. In the nine months of 2020, funding was 25% lower with $1.2bn in 21 deals compared with $1.6bn in 25 deals last year.

VC funding in Q3 2020 was spread across five categories: lithium-based batteries, sodium-based batteries, metal-hydrogen batteries, energy storage systems, and thermal energy storage.

The top five VC funding deals in the nine months of 2020 were: Northvolt’s raise of $600m; QuantumScape, which raised $200m; ProLogium Technology raised $100m; Demand Power Group secured $71m; and Highview Power raised $46m. A total of 28 VC investors participated in battery storage funding in Q3 2020.

Announced debt and public market financing for battery storage technology companies came to $2.1bn in nine deals in Q3 2020. In the nine months of 2020, there was $2.3bn raised in 14 deals, compared with seven deals bringing in $560m last year.

There were three M&A transactions involving battery storage companies in Q3 2020 compared with four transactions in Q2 2020. In a YoY comparison, there were four transactions in Q3 2019. In the first nine months of 2020, there were 11 transactions compared with ten transactions last year.

Seven project M&A transactions involving battery storage companies were executed in Q3 2020 compared with four in Q2 2020. In a YoY comparison, there were four transactions in Q3 2019. In the first nine months of 2020, there were 15 transactions compared with eight transactions last year.

Smart grid

Smart grid VC funding in Q3 2020 was $368m in 11 deals compared with $194m in 14 deals in Q2 2020. In a YoY comparison, funding in Q3 2019 was $39m in six deals. $643m was raised in 32 deals in the first nine months of 2020, 231% higher than the $194m raised in 28 deals last year.

VC funding in Q3 2020 was spread across four smart grid technologies: smart charging, distributed generation and integration, smart grid communications, and data analytics.

The top five VC funding deals in the first nine months of 2020 were: ChargePoint with $127m; Star Charge with $125m; SmartRent with $60m; Probus Smart Things with $53m; and Smart Wires with $43m.

Announced debt and public market financing for smart grid companies came to $10m in three deals in the first nine months of 2020 compared with $45m in two deals last year.

There were 12 smart grid M&A transactions in Q3 2020 compared with one transaction in Q2 2020. In a YoY comparison, there were five transactions in Q3 2019. In the first nine months of 2020, there were 18 transactions compared with 23 transactions last year.

Energy efficiency

VC funding for energy efficiency technology companies increased in Q3 2020, with $48m raised in four deals compared with $40m in four deals in Q2 2020. In a YoY comparison, funding in Q3 2019 was $61m in three deals. $95m was raised in 11 deals in the first nine months of 2020, 65% lower than the $268m raised in eight deals last year.

VC funding in Q3 2020 was spread across three sub-technologies: energy monitors and dashboards, data centres, and efficient homes and buildings.

The top VC funding deals in the first nine months of 2020 were: Palmetto raised $29m; Juganu raised $18m; BrainBox AI secured $12 m; Virtual Power Systems raised $12m; and SmartAC raised $10m.

Announced debt and public market financing for energy efficiency companies in the first nine months of 2020 totalled $500m in one deal compared with the $56m raised in two deals last year.

There were three M&A transactions involving energy efficiency companies in Q3 2020. There were no M&A transactions in Q2 2020. In Q3 2019, there was one M&A transaction. In the first nine months of 2020, there were four transactions compared to nine transactions last year.