Decline in Corporate Funding for Energy Storage Companies in 2023
The year 2023 saw a significant decline in corporate funding for energy storage companies, according to a report by Mercom Capital. The total sum of corporate funding decreased by 28% year-on-year, with only $19 billion raised across 120 deals, compared to $26.4 billion raised in 2022 from 124 deals.
VC Funding Surges for Energy Storage Companies in 2023
While corporate funding may have declined, venture capital (VC) funding for energy storage companies experienced a significant boost in 2023. VC funding rose by 59% year-on-year, with $9.2 billion raised across 86 deals, compared to $5.8 billion raised across 96 deals in the previous year. The increase in VC funding can be attributed to industry-specific tailwinds, such as the US Inflation Reduction Act (IRA) tax credits for clean energy technologies.
Debt and Public Market Financing Decline in Energy Storage
In addition to the decline in corporate funding, the energy storage sector also saw a decrease in the level of debt and public market financing. Debt and public market financing fell by 52%, with only $9.8 billion committed through 34 deals in 2023, compared to $20.6 billion from just 28 transactions in 2022. The decline may be attributed to general headwinds, such as high interest rates.
M&A Transactions Decrease in Energy Storage
Mercom’s report also highlighted a decline in the volume of mergers and acquisitions (M&A) transactions within the energy storage sector. While there were 28 M&A deals in 2022, the number dropped to just 15 in 2023. High asset valuations, elevated interest rates, and investor caution were cited as reasons for the decline in M&A activity.
Top Five VC Funding Recipients in Energy Storage
Mercom Capital also provided rankings for the top five VC funding recipients in the energy storage sector in 2023. Zenobē Energy, an infrastructure investor and developer in battery energy storage systems, remained at the top of the list, raising a total of $1.084 billion. Other companies on the list included Redwood Materials, SK, Verkor, and Hithium.
Solar PV Corporate Financing Sees Increase
While energy storage corporate funding declined, the solar PV sector experienced a notable increase in corporate financing. Solar PV corporate financing recorded a 42% increase in 2023 compared to the previous year.
Analyst comment
Heading 1: Decline in Corporate Funding for Energy Storage Companies in 2023 – Negative news. The market for energy storage companies is expected to face challenges due to a 28% decrease in corporate funding. This could hinder their growth and development.
Heading 2: VC Funding Surges for Energy Storage Companies in 2023 – Positive news. The increase in venture capital funding by 59% suggests a positive outlook for energy storage companies. This boost can be attributed to industry-specific tailwinds, such as tax credits, indicating potential growth opportunities.
Heading 3: Debt and Public Market Financing Decline in Energy Storage – Negative news. The decrease in debt and public market financing by 52% highlights potential obstacles for the energy storage sector. This decline may be due to general headwinds, such as high-interest rates.
Heading 4: M&A Transactions Decrease in Energy Storage – Negative news. The decline in mergers and acquisitions within the energy storage sector indicates a lack of investor confidence and caution. This could hamper the industry’s growth and consolidation.
Heading 5: Top Five VC Funding Recipients in Energy Storage – Positive news. The ranking of top VC funding recipients suggests a positive market sentiment for energy storage companies. This recognition can attract more investments and foster growth.
Heading 6: Solar PV Corporate Financing Sees Increase – Positive news. The notable increase in corporate financing for the solar PV sector indicates growth opportunities in the renewable energy market. This positive trend may also indirectly benefit energy storage companies as they complement each other.
