Mercom: Energy storage funding fell off a cliff in Q1

Debt and public market finance for energy storage companies has plunged 90% year on year, according to Texan analyst Mercom Capital Group.

The business intelligence company’s latest quarterly funding and M&A report for the energy storage industry has recorded $1.1 billion of debt and public funding for companies in the sector, across 13 deals from January through March, down from $10.5 billion in six deals during the first quarter of last year.

Those figures are part of an overall 81% annual fall in energy storage funding and M&A activity, according to Mercom, which tracked $2.2 billion of activity across 31 deals during the latest quarter, down from $11.7 billion from 29 agreements in Q1, 2024. Mercom did note, however, the figure 12 months ago was swollen by a $5 billion funding round for Swedish battery manufacturer Northvolt, which has since filed for bankruptcy. Without the Northvolt number, total quarterly energy storage funding would be down 67%, year on year.

Energy storage materials companies landed the biggest deals of a drastically shrunken venture capital (VC) investment market during the first quarter, according to Mercom, with Californian miner KoBold Materials securing $537 million. German battery developer Green Flexibility secured $411 million of VC cash in the second biggest deal of the first quarter, with a big gap to the $28 million San Fran-based Equilibrium Energy earned for its energy storage optimizer technology. Sonocharge Energy secured $24 million for its product, a semiconductor it claims extends battery life, and German battery analytics company Accure Battery Intelligence landed $16 million.

Mercom said battery recycling companies also attracted VC investment during a first quarter which saw $1.1 billion of VC backing across 18 deals, down 8% from $1.2 billion in 23 agreements in Q1, 2024.

The analyst reported only one energy storage company was acquired in the January-to-March period, compared to eight a year earlier, but tracked the acquisition of 15 energy storage projects during the period, up from six in Q1, 2024.