Smart Grid, Battery Storage And Efficiency Companies Bring In $102 Million In Venture Capital Funding In Q3 2016

Mercom Capital Group, llc, a global clean energy communications and consulting firm, released its report on funding and mergers and acquisitions (M&A) activity for the Smart Grid, Battery Storage and Energy Efficiency sectors for the third quarter of 2016.

Smart Grid, Battery Storage and Efficiency companies raised $102 million in venture capital funding (including private equity and corporate venture capital) in Q3 2016. The top funded company was an Efficiency company, 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.

Smart Grid

Venture capital (VC) funding (including private equity and corporate venture capital) for Smart Grid companies came 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 seven VC investors that participated in Smart Grid deals in Q3 2016, compared to 46 in Q2 2016.There was one debt financing deal announced in the third quarter of 2016 for $250,000, compared to $3 million in one debt financing deal in Q2 2016.There were eight M&A transactions for Smart Grid technologies in Q3 2016 (two disclosed) compared to three transactions (one disclosed) in Q2 2016.

Battery Storage

VC funding for Battery Storage companies declined sharply with $30 million in nine deals compared to $125 million in 10 deals in Q2 2016 as significant funding activity this quarter shifted to Battery Storage project funds this quarter. YoY funding in Q3 2016 was lower than Q3 2015, which had $96 million in nine deals.VC funding in Q2 2016 was spread across six Battery Storage sub-technologies: supercapacitor, lithium-based batteries, energy storage management software, energy storage systems, thermal energy storage and flow batteries.

Twenty-two investors participated in Battery and Storage funding in Q3 2016. There were 20 investors in Q2 2016.Announced debt and public market financing for Battery Storage technologies totaled $51.6 million in three deals this quarter, compared to $40 million in one deal in Q2 2016. FuelCell Energy raised $40 million through the sale of shares and warrants. Electrovaya secured a loan of $10 million, and Ixous raised $1.6 million in debt funding.It was a record quarter for Battery Storage residential and commercial project funds which totaled $625 million in four deals, compared to $175 million raised in two deals in Q2 2016. Tabuchi America raised $300 million in project financing for residential solar-plus-storage installations in the residential sector’s only project fund. On the commercial side, Advanced Microgrid Solutions secured $200 million in funding from Macquarie Capital. Stem, a provider of commercial behind-the-meter energy storage systems, announced an investment of up to $100 million from Starwood Energy Group. Sharp’s Energy Systems and Services Group, a division of Sharp Electronics Corporations (the U.S. subsidiary of Osaka-based Sharp Corporation) and a developer of a behind-the-meter energy storage system for peak demand reduction for commercial and industrial building owners, announced $25 million in funding for solar coupled with its SmartStorage energy storage solution.

Since 2013, $1.1 billion has been raised in Battery Storage project funds.

There were three M&A transactions from Battery Storage companies in Q3 2016, none of which disclosed financial details. In Q2 2016, there were four M&A transactions, two of which disclosed transaction amounts. In a YoY comparison, there were three transactions in Q3 2015.

Efficiency

VC funding for Energy Efficiency technology companies fell again this quarter with $61 million in five deals compared to $86 million in nine deals in Q2 2016. In a YoY comparison, VC funding for Efficiency companies in Q3 2015 was much higher with $316 million in 17 deals.

Seventeen investors participated in Energy Efficiency VC deals in Q3 2016 compared to 18 in the previous quarter.

Announced debt and public market financing in the Efficiency category came to $328.2 million in two deals in Q3 2016, one of which was Renovate America’s eighth securitization deal for $320.2 million. Renovate America is a provider of residential Property Assessed Clean Energy (PACE) financing in the U.S. for energy efficiency solutions. In Q2 2016 there were seven debt deals for $1.75 billion, including three securitization deals totaling $512 million.

There were two M&A transactions in the Energy Efficiency sector in the third quarter, compared to seven in Q2 2016. Both transactions were from lighting companies; they did not disclosed transaction details.