Battery storage project funding booms as smart grid schemes hit

October 27, 2016 // By Nick Flaherty
Funding for smart grid projects has collapsed in the third quarter of the year as record amounts have moved to battery storage systems, says a new report.

Smart grid, battery and energy efficiency companies raised $102 million in venture capital funding last quarter, according to the report from Mercom Capital Group, while battery storage systems saw a boom to $625m (see graph above).

VC funding for smart grid companies collapsed to $11 million in seven deals in the third quarter of 2016, the lowest amount of VC funding for a quarter since Mercom began tracking funding activity. In Q2 2016, $222 million went into 15 deals. In a year-over-year (YoY) comparison, $81 million went into 12 deals in Q3 2015. There were just seven VC investors that participated in Smart Grid deals in Q3 2016, compared to 46 in Q2 2016, with eight M&A transactions compared to three a year ago.

The top funded company in the sector was ecobee, a manufacturer of a Wi-Fi-enabled smart thermostat, with $35 million raised from Amazon Alexa Fund, Thomvest and Relay Ventures. Skeleton Technologies, a developer and manufacturer of ultracapacitors, raised $14.5 million from FirstFloor Capital, UP Invest and Harju Elekter in the second largest deal. Sense, a developer of a home energy monitoring system, rounded out the top three, with $14 million raised from Shell Technology Ventures, Energy Impact Partners, Capricorn Investment Group, Prelude Ventures, CRV and Bolt.

VC funding for battery storage companies declined sharply with $30 million in nine deals compared to $125 million in 10 deals in the revious quarter and $96m from nine deals a year ago as significant funding activity this quarter shifted to storage project funds this quarter. The funds were spread across six sub-technologies: supercapacitor, lithium-based batteries, energy storage management software, energy storage systems, thermal energy storage and flow batteries with backing from 22 investors, up from 20 in Q2 2016.