Global corporate funding for energy storage systems surged in the first quarter to $12.9bn versus $4.7bn a year earlier, as investors flock to a sector they expect to play a crucial role in accelerating the transition from carbon, according to a new report by Mercom Capital.
First quarter funding activity involving 26 deals was also more than triple $4bn done through 27 transactions in fourth quarter of last year, the research house recorded in its Q1 2022 Funding and M&A Report for Storage, Grid & Efficiency report, tracking debt, public market, and venture capital (VC) financing.
“Energy storage has always been the missing piece in the renewable growth story. We are now seeing investments match that level of importance,” Mercom CEO, Raj Prabhu, told Recharge.
First quarter debt and public market financing for energy storage technologies totalled $11.7bn compared with $3.7bn a year earlier and almost five times $2.4bn done in the prior quarter.
VC funding raised by energy storage companies in the first quarter came to $1.1bn over 21 deals, a 15% increase compared to about $1bn in 14 transactions a year earlier, according to the report.
The top VC-funded companies in the Mercom report were Hydrostor, which raised $250m from Goldman Sachs Asset Management; Sunfire ($215m) from Copenhagen Infrastructure Energy Transition Fund I and Blue Earth Capital, and Factorial Energy ($200m) from Mercedes-Benz and Stellantis.
Canadian Hydrostor is advancing a next-generation compressed air energy storage technology; Germany's Sunfire is developing industrial-scale hydrogen electrolysers; and Factorial Energy is hatching a line of solid-state batteries claimed to have a 50% longer range per charge and after than conventional lithium-ion batteries.
“Energy storage companies have received venture funding of at least $1bn in each of the past five quarters, which is a first for the sector,” said Prabhu.
“While we expect these higher levels of investments to continue, we are also wary of the recent antidumping investigation on solar panels, which could curtail momentum if tariffs are imposed,” he added.
The Department of Commerce is probing whether China is circumventing US tariffs on modules by delivering them from Cambodia, Malaysia, Thailand, and Vietnam. Some producers have suspended deliveries to the US out of concern President Joe Biden's administration may slap retroactive tariffs on their products.
Industry groups here claim that several dozen gigawatts of utility-scale PV projects are now at risk.
Mercom did not forecast 2022 corporate funding for battery energy storage. A record $19.5bn was raised last year which was more than double $8.1bn in 2020, according to its research.
· Updates with Mercom Capital CEO Raj Prabhu comments
