Corporate-backed investments in energy storage technology have quadrupled in value in the last quarter as energy prices soar.
The $30m fundraising this week by Dutch battery company Elestor — led by Norwegian energy company Equinor — was a sign of the times. Big corporate investors are becoming increasingly willing to take bets on emerging energy storage solutions as the energy crisis intensifies.
The value of corporate-backed investments in energy storage technology more than quadrupled between the second and third quarters of 2022, according to GCV data. Corporate-backed deals totalled $13.7bn in the third quarter of 2022, up from $2.6bn in the second quarter. There were few deals — just 13 compared to 30 deals in Q2 — but they are getting bigger in size, as there is an increasing focus on scaling up and commercialising the technologies.
Netherlands-based Elestor, for example, plans to use the fundraising accelerate the commercialisation of its hydrogen bromine flow battery technology, which unlike lithium-ion batteries can be scaled to an enormous size. The company plans to use the technology to store renewable energy from wind farms and solar power plants. The corporate venture arm of Norwegian energy company Equinor led the €30m ($30m) series A funding round, which also included Dutch tank storage company Royal Vopak and Dutch investment firms Invest-NL and Somerset Capital Partners.
Energy storage technology is critical for balancing renewable energy on the grid and transitioning away from natural gas-powered electricity. Natural gas plants have to be used to provide continuity of power when renewables do not produce electricity, as there is still not sufficient battery storage to store renewable energy.
The energy crisis is a strong incentive to accelerate investments in storage technologies as European gas prices continue to soar due to Russia reducing its natural gas flows to Europe in retaliation for the continent’s sanctions against the Kremlin following its invasion of Ukraine.
Soaring electricity prices across Europe are driving a consumer cost-of-living crisis and threatening energy-intensive industries with closure.
The crisis has prompted European utilities such as German Uniper and Austria’s Wien Energy to ask for government financial help as the increasing costs of gas and power threaten their ability to finance operations.
Oil and gas companies remain a small percentage of total investors in energy storage deals tracked by GCV. Of the total 73 energy storage investments so far in 2022, 10% are backed by oil and gas firms. Other corporates participating in deals include carmakers, mining companies and utilities.
The transition to electric vehicles is also driving a spurt in investments in lithium-ion battery storage. Several investments in the US and UK this year include a $13.6m series A round for Aceleron, a UK maker of reusable lithium batteries, which carmaker Toyota participated in; a $42m series A round for Brill Power, a UK maker of lithium batteries for stationary energy storage and electric vehicles, which counts Shell as an investor; and a $30m raise for Blue Current, a US maker of batteries for cars, consumer electronics and IoT devices, led by US conglomerate Koch Industries.
The total value of corporate-backed deals and exits in energy storage to date in 2022 stands at $23.2bn, which still dwarfs the $81.3bn invested in 2021. But, if the recent uptick in deals is anything to go by, 2022 could turn out to be an important growth year for the technology.