Interest in clean tech and efficiency rises in 2018

Investor interest in the battery storage, smart grid, and energy efficiency sector soared last year, with levels of venture capital (VC) funding almost doubling.

New figures from clean energy research specialist Mercom Capital Group released this week show that battery storage, smart grid, and energy efficiency companies raised $2.8bn last year from VCs, a sharp increase on the $1.5bn raised in 2017.

The latest report shows VC funding in Battery Storage companies increased 19 per cent last year, reaching $850m across 49 deals. Total corporate funding, including debt and public market financing, also rose sharply increasing to $1.3bn from $890m in 2017.

The most eye-catching deals included $100m for QuantumScape, the $80m raised by Stem, and the $71m investment in sonnen. Meanwhile, Bloom Energy's $270m IPO was the largest public market financing deal in the sector in 2018.

The smart grid sector delivered even more impressive growth, with smart grid companies raising $530m in VC funding across 29 deals last year, a 26 percent increase compared to the $422m raised in 2017. Total corporate funding, including debt and public market financing, also rose from $1.2bn to $1.8bn in 33 deals.

According to the report, EV charging network giant ChargePoint walked away with the largest single fund-raise, bringing in $240m.

"Smart Charging of plug-in hybrid electric vehicle (PHEV), vehicle-to-grid (V2G) companies, had the largest share of VC funding in 2018 with $348m in nine deals, followed by Grid Optimization companies with $59m in two deals," Mercom said.

However, it was the energy efficiency sector that dominated the category last year, with VC funding jumping to $1.5bn across 23 deals in 2018 compared to $384m in 38 deals in 2017.

In contrast, total corporate funding, including debt and public market financing, sliped back from $3.3bn in 2017 to around $1.7bn last year.

The top VC funded companies were View, which raised $1.1bn, followed by UrbanVolt with $64m, ecobee with $61m and $36m in two deals, and tado° with $50m, Mercom said.

The surge in VC funding comes amidst growing confidence across the sector that energy storage, smart grid, and energy efficiency technologies will play a critical role in the transition to cleaner energy systems, supporting the deployment of low cost variable renewables and electric vehicles, while curbing the overall cost of low carbon infrastructure.

The report also revealed some signs of consolidation in the market. There were 16 M&A transactions in the Battery Storage category in 2018 compared to just three deals in 2017, while the number of VC deals in each category fell even as total investment levels rose.

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