Energy storage companies raise $19.9 billion in corporate funding, with increased merger and acquisition activity.
In the recently published Annual and Q4 2024 Funding and M&A Report for Storage & Grid by Mercom Capital Group, it was revealed that corporate funding for energy storage companies experienced a 5% year-over-year increase. In 2024, a total of $19.9 billion was raised in 116 deals, compared to $19 billion in 120 deals in 2023. Despite this overall growth, Global Venture Capital (VC) funding in the energy storage sector saw a significant decrease of 60% YoY, with $3.7 billion raised in 84 deals in 2024 compared to $9.2 billion in 86 deals in 2023.
Raj Prabhu, the CEO of Mercom Capital Group, noted that the uncertainty in the US during Q4 of 2024, primarily due to elections and speculation surrounding potential policy changes, led many investors to adopt a cautious approach. While policies remained favorable until the end of the year, higher inflation, rising interest rates, labor shortages, increased labor costs, and rising component costs added to the challenges faced by the industry. Additionally, the looming threat of new tariffs further exacerbated the unpredictable situation for investors.
The report highlighted that lithium-ion-based battery technology received the highest amount of VC funding in 2024. Other top-funded categories included material and component providers, iron-air battery providers, battery recycling companies, and metal-hydrogen battery companies. Noteworthy VC deals in 2024 included Form Energy with $405 million, Sila Nanotechnologies with $375 million, and EnerVenue Holdings with $308 million.
In terms of debt and public market financing for energy storage companies, there was a 65% YoY increase in 2024. A total of $16.2 billion was raised in 32 deals, compared to $9.8 billion in 34 deals in 2023. Prabhu also highlighted the positive trend of increased mergers and acquisitions (M&A) activity in the energy storage sector, both at corporate and project levels. He emphasized the growing value of energy storage projects, driven in part by the increasing demand for reliable power sources for data centers and artificial intelligence (AI).
The report revealed that 38 energy storage projects were acquired in 2024, an increase from 28 project M&A transactions in 2023. Moreover, the number of companies acquired in 2024 also rose to 25, up from 15 in 2023. In the smart grid sector, VC funding increased by 13% in 2024, reaching $1.7 billion in 56 deals. However, corporate funding for smart grid companies decreased by 27% to $2.4 billion in 67 deals compared to $3.3 billion in 60 deals in 2023.
The focus of smart grid funding in 2024 was particularly on smart charging, including electric vehicle (EV) charging infrastructure. Notable VC deals in this sector included Electra with $330 million, Powerdot with $108 million, and FLO with $100 million. Additionally, 11 debt and public market financing deals were announced in 2024, totaling $718 million, down from $1.8 billion in 13 deals in 2023. Looking ahead to 2025, the industry is still navigating the implications of new administration actions, including potential policy changes that may impact different segments of the market.
