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Mercom: VC funding for batteries and energy storage almost doubled in Q2

Top 5 VC funded deals, Q2 2015, as found in Mercom report. Image: Mercom.
Venture capital (VC) funding for battery and energy storage companies totalled US$126 million in the second quarter of this year, almost doubling Q1’s US$69 million total raised, according to a report from Mercom Capital Group.

In total, Mercom found that 13 VC funding deals went through in Q2, making up the US$126 million total, compared to seven deals in Q1. In those Q2 funding rounds, 24 investors participated.

One notable investment that made mainstream headlines was the US$8.8 million raised by Advanced Microgrid Solutions (AMS), a company which has been awarded contracts by utility Southern California Edison for projects and has struck a deal with Tesla for up to 500MWh of batteries. Perhaps of more interest to newspapers and online gossip columns was the news that actor Arnold Schwarzenegger was among the investors. Despite this high profile interest, however, AMS’ deal was only the fifth biggest in the space, Mercom said.

Major deal activity was focused on a variety of technologies and applications. Top of the deal tree was VionX Energy, a maker of vanadium redox flow batteries, which raised US$58.1 million, with carbon nanotube product maker Cnano Technology coming in second – although not close – with US$15 million. The other two making the top five, meanwhile, were Stem, which has gained attention for its peak-shaving commercial storage and raised US$12 million and ultra-capacitor maker Skeleton Technologies, which raised US$10.7 million.

Despite the strong second quarter for VC funding, however, batteries and energy storage, according to Mercom, raised US$194 million in the first half of this year, while in the first half of 2014 the sector raised US$282 million.

Mercom also noted that across seven debt and public market financing deals, battery and storage companies raised US$69 million in the second quarter of 2015. Meanwhile there was just one merger & acquisition (M&A) transaction, with Electrovaya’s purchase of lithium-ion cell manufacturer Evonik Litarion. The value of that deal was not disclosed.

The latest Mercom report also covers the energy efficiency and smart grid sectors. In short, smart grids raised US$289 million in the first half of this year, compared to US$183 million in the first half of last year, although VC funding was down US$81 million on the previous quarter. In the first half of this year, energy efficiency firms meanwhile brought in US$351 million, an increase on H1 2014, when the sector raised US$269 million.  

The finance and communications firm monitors activity in several areas, with the company’s report on solar sector funding in Q2 out earlier this month. That report showed that with the exception of yieldcos, funding in utility-scale solar has been somewhat quiet this year as VC funded deals dipped to US$142 million in 24 deals, compared to US$195 million in 27 deals in Q1 2014. Commercial and residential solar, however, continued “to attract record funding”, Mercom CEO Raj Prabhu said. Interestingly, a few days ago SunEdison said its yieldco TerraForm Power is set to become the first yieldco to own and operate energy storage assets, in an expected deal which is yet to go through.

Advanced Microgrid Solutions has a deal in place with Tesla for up to 500MWh of batteries. Image: Tesla.

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