Corporate funding in battery storage sector is on the rise

Are India and the world going greener by the day? Well, it would not be a wrong notion to believe this, at least going by few facts and figures. The first quarter (Q1), 2022 has turned out to be a very good time for the battery storage, smart grid, and energy efficiency sectors. Globally, corporate funding (including venture capital funding, public market, and debt financing) in the battery storage sector came to $12.9 billion in 26 deals compared to $4 billion in 27 deals in Q4 2021.Quite in line with the global trends, in India also, this period has turned out to be good for these sectors.

Consider these. Husk Power Systems, a distributed utility company that provides mini-grids to rural communities and businesses entirely from renewable energy sources, secured Rs310 million (nearly $4.2 million) in debt financing from the Indian Renewable Energy Development Agency (IREDA). The company will use the loan to finance 140 micro-grids in Uttar Pradesh and Bihar.

Exide Industries, a manufacturer of lead-acid batteries, invested Rs200 million (close to Rs2.68 million) in its lithium battery joint venture, Exide Leclanche Energy, with Swiss energy storage solutions company Leclanche.

Taqanal Energy, developer of the cloud-connected smart modular battery energy storage, raised Rs9.5 crores (nearly $1.3 million) in a pre-series round from JITO Angel Network along with KITVEN, Lets Venture, and Wellingdon Advisors.

Similarly, Offgrid Energy, a developer of rechargeable zinc-carbon batteries, raised undisclosed funds from energy solutions giant Shell, venture capitalists Ankur Capital, and APVC to take its flagship product, rechargeable zinc-based battery ZincGel, to the market.

And not just in terms of VC funding, but when it comes to M&A (Mergers & Acquisitions) deals, Reliance New Energy, a wholly-owned subsidiary of Reliance Industries, substantially acquired all assets of Lithium Werks, a provider of cobalt-free Lithium Iron Phosphate batteries, for $61 million, including funding for future growth.

Looking at globally, in Q1 2022, $1.6 billion was raised in VC funding by battery storage, smart grid, and energy efficiency companies, a 21 per cent increase compared to the $1.3 billion raised in Q1 2021.

Total corporate funding (including VC, Debt, and Public Market Financing) in Battery Energy Storage came to $12.9 billion in 26 deals compared to $4 billion in 27 deals in Q4 2021. Funding was up significantly year-over-year (YoY) compared to $4.7 billion in 18 deals in Q1 2021.

Mercom Capital Group, llc, a global research and consulting firm focused on cleantech, in its recent report also indicated that in Q1 2022, announced debt and public market financing for Battery Storage technologies were higher, with $11.7 billion in five deals compared to $2.4 billion in six deals in Q4 2021 and $3.7 billion in four deals in Q1 2021. Seventy-six VC investors participated in Battery Storage funding this quarter.

The top five VC funded Battery Storage companies this quarter were: Hydrostor, which raised $250 million from Goldman Sachs Asset Management; Sunfire raised $215 million from Copenhagen Infrastructure Energy Transition Fund I and Blue Earth Capital; Factorial Energy raised $200 million from Mercedes-Benz (DAI) and Stellantis; Viridi Parente raised $95 million from Thomas Golisano, Ashtead Group/Sunbelt Rentals, and National Grid Partners; and Our Next Energy (ONE) raised $65 million from BMW i Ventures, Coatue Management, Breakthrough Energy Ventures, Assembly Ventures, Flex, and Volta Energy Technologies.