Venture capital funding in energy storage reached a record high in 2023, increasing by 59% year-over-year, according to a report by Mercom Capital. The report stated that smart grid companies received a total of $3.3 billion in corporate funding in 2023. Despite this positive trend, corporate funding in the energy storage sector, including venture capital and private equity funding, decreased by 28% year-over-year, with $19 billion raised in 120 deals compared to $26.4 billion raised in 124 deals in 2022. The report also highlighted that lithium-ion-based battery technology companies received the most venture capital funding in 2023. Other key categories that received significant funding included battery recycling, nickel-based battery technology, energy storage downstream, and materials and components companies.
The report noted that announced debt and public market financing for energy storage companies in 2023 decreased by 52% year-over-year, with $9.8 billion in 34 deals compared to $20.6 billion in 28 deals in 2022. The decline in corporate funding and financing was attributed to factors such as high asset valuations, elevated interest rates, and investor caution. However, the report also highlighted that government incentives, such as the Inflation Reduction Act’s Investment Tax Credit, played a significant role in driving venture capital funding for energy storage companies in 2023.
