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Energy storage and battery companies netted US$418 million in funding, while a further US$232 million changed hands in mergers and acquisitions (M&A) of battery or storage companies during 2014, according to a new report from Mercom Capital.

The findings are included in the “Smart grid funding and M&A: 2014 fourth quarter and annual report”, issued by the Texas-headquartered clean energy analysis, communications and consultancy firm.

Mercom chief executive officer and founder Raj Prabhu told PV Tech Storage the outlook is “very positive for battery and storage technology companies going into 2015”.

While the report focuses on the global market, much of the activity covered, especially in storage was to be found in the US, which Prabhu said was driven to a large extent by California’s AB2514 mandate for energy storage, which decrees the state's three main investor-owned utilities install 1.3GW of storage by 2020.

“California Public Utilities Commission’s (CPUC) mandate requiring the state’s largest utilities to collectively buy 1,325MW of energy storage by 2020 has provided a much needed spark for this market,” Prabhu said.

“Southern California Edison completed a 250MW storage procurement auction a few months ago as part of the CPUC mandate and ONCOR wants to invest billions towards energy storage. High demand charges for commercial customers is making energy storage a very viable option in parts of the US, especially when combined with photovoltaics (PV),” Prabhu added.

In addition to batteries and storage, which have been recently added to the scope of Mercom’s research, the report covers funding and M&A across the whole smart grid sector. Within that, there was US$383 million in venture capital (VC) funding across 73 deals last year, compared with US$410 million across 64 deals in 2013. This constituted a smaller portion of the total corporate funding into smart grids last year than in the previous year. Including debt and public market financings, this figure stood at US$844 million in 2014 and US$584 million in 2013. Home automation companies were the biggest winners among players in the smart grid sector last year.

US drives positive investment outlook for batteries and smart grids, says Mercom

Bloom Energy fuel cells installed at the offices of Japanese telecoms and renewable energy developer Softbank. Image: Bloom Energy.

The top VC funding round in batteries and storage was US$55 million in venture capital funding received by Aquion Energy at the beginning of 2014. The company produces the Aqueous Hybrid Ion (AHI) battery, which uses electrolytes based on a saltwater compound. The company attracted mainstream media headlines when it emerged Microsoft founder Bill Gates was among its investors.

Aquion’s January round was followed later in the year with rounds of US$25 million in September and US$36.8 million in November. The recipients of the next four highest VC rounds attracted investment per biggest round ranging between US$25 million and US$50 million and included solid oxide fuel cell maker Bloom Energy and Ambri, which was formerly known as the Liquid Metal Battery Corporation. The VC funding came from a total of 48 investors across the board.

Almost half a billion dollars, US$490 million, changed hands for battery and energy storage debt and public market financing deals. The total was made up of 19 deals, which included just one Initial Public Offering (IPO) in 2014, by Intelligent Energy, which raised US$94.3 million.

Mercom found there were 18 M&A transactions for battery and storage companies, for a total of US$232 million. Only six of those transactions were disclosed.

In all, makers of sodium-based batteries and storage systems earned the most in the sector across a range of technologies, receiving US$119 million for the year. The average deal size for storage meanwhile was US$13.1 million, according to Mercom.

Energy efficiency, the final market segment examined in the report, fared better for VC funding than storage, raising US$797 million across 80 deals. One company, View, raised US$100 million to take the spot for top funding deal, while there were also two IPOs in that sector, by Opower and Lumenpulse, which raised US$133 million and US$108 million respectively.

Tags: mergers and acquisitons, m&a, venture capital, vc, debt and public market financing, 2015 outlook, ipos