Soaring High: State of investments in the energy storage market
As energy storage gains prominence in the clean energy sector globally for its ability to help mitigate climate change, investments in this sector are expected to soar in the next few years.
Global investment outlook
The global energy storage sector is at an atypical stage of growth. With higher adoption of energy storage in e-mobility and renewable integration (rooftop solar+storage, solar+wind - storage hybrid), grid stability, commercial and industrial applications like telecom, data centers, microgrids and residential sector – Evs and residential energy storage is expected to account for most of the growth.
The industry has witnessed four-fold increase in venture capital (VC) investment in energy storage space from 2015- 2016 to 2019. With the emergence of innovative companies in energy storage space, VCs have started to look at this space as having a promising future as compared to the conventional internet-based companies. Given COVID-19 pandemic this year, we anticipate the total VC investments in 2020 to be similar to that as of 2019, unless it records a significant increase.
In 2018, lithium-ion based battery technology companies received the most funding ($236 million), followed by energy storage systems companies ($193 million). Li-ion based battery technology companies received the most funding in 2019 with $1.4 billion. Other categories that received funding included gravity storage, flow batteries, compressed-air energy storage, energy storage downstream, fuel cells, liquid metal batteries, thermal energy storage, solid-state batteries, sodium-based batteries, and zinc-air batteries. There were 10 mergers and acquisitions (M&A) in the battery storage category in 2019, of which only two disclosed transaction amounts. In 2018, there were 16 M&As, three of which disclosed transaction amounts. In 2020, increase in funding was largely on account of Northvolt's $600 million equity raise.
A few of the noteworthy investments in these sectors include:
- Primus Power — Chrysalix Venture Capital, Anglo American Platinum, Matador Capital Partners ($106 million raised)
- Vionx Energy — VantagePoint Capital Partners and Starwood Energy Group ($193 million raised)
- Malta Inc.— Breakthrough Energy Ventures, Alfa Lava, Concord New Energy Group ($26 million raised to date)
- Form Energy — Breakthrough Energy Ventures, The Engine, and Prelude Ventures ($9 million raised to date)
- Quidnet Energy — NXT Ventures, Breakthrough Energy Ventures, Evok Innovations ($8 million raised to date)
- Solid-state battery tech
- QuantumScape — Breakthrough Energy Ventures, Volkswagen, Kleiner Perkins, and Khosla Ventures ($297 million raised to date)
- Farasis Energy — Industrial Bank Company, Dongxing Securities, China V Fund, Soochow Asset Management ($815 million raised to date)
- SKIO Matrix — IDG Capital, Hua Ying Capital, Meridian Capital China, and Dingcang Capital ($307 million raised to date)
- Bill Gates leads $10 million investment in Quidnet Energy's long-duration geo-mechanical pumped storage
- Canada announces CAD590 million investment in Ford electric car plant: The Canadian government and the province of Ontario announced investments of CAD295 million ($223 million) in a Ford factory said to bethe largest EV plant in North America.
- BlackRock invests $118 million in UK e-vehicle startup Arrival: BlackRock Inc invested $118 million in British EV startup Arrival, engaged in the development of e-commercial vehicles, including buses and vans.
- Fiat Chrysler to invest up to $1.5 billion to build EVs at Canadian plant: Fiat Chrysler Automobiles NV will invest between $1.35 billion and $1.5 billion in its Windsor assembly plant in Canada to build EVs
- Avalon-redT's merged 'Transatlantic flow battery entity' to be called Invinity
According to a report from Lux Research, the global energy storage market is projected to grow to $546 billion by the year 2035. One of the largest markets is likely to be residential energy storage, with an expected compound annual growth rate of 76 percent and $8 billion revenue increase over the next three years. IHS Markit predicts that storage will rebound this year following its first year-on-year decline in 2019. The technology is being rolled out at pace despite COVID-19 with favorable State-level policies set to keep the US the global capital for the next five years.
Falling battery price is one of the reasons cited for the impressive growth of storage deployment, from a modest 9GW/17GWh deployed as of 2018 to 1,095GW/2,850GWh by 2040, according to the latest forecast from research company BloombergNEF (BNEF). This 122-fold boom of stationary energy storage over the next two decades will require $662 billion of investment, as per BNEF estimates. It will be made possible by further decline in the cost of Li-ion batteries, on top of an 85 percent reduction in the last decade.
Similarly, the EV industry is also catalyzing the growth of the energy storage industry. Hyundai Motor Group and SK Innovation announced to develop EV battery ecosystem. CATL announced it will enter the EV manufacturing space. After the US and China, Tesla forayed into Europe to set up its next Gigafactory. Tesla displaced Toyota Motor as the world's most valuable automaker in October 2020, underscoring investor enthusiasm for a company trying to transform an industry that has relied on internal combustion engines for more than 130 years. The shares of Tesla, which have more than doubled since the start of the year climbed and surpassed the valuation of Toyota Corporation. Tesla became the world's second-most valuable automaker in January this year when it surpassed Volkswagen AG. It is now worth more than twice the German giant.
Over the years, oil giants started investing in renewables, e-vehicle and energy storage companies. Shell acquired Sonnen and invested in New Motion and Total invested in EREN Renewable, Sun Power, SAFT, Go Electric over years. Other significant M&A deals include:
Over the years, Tesla acquired different companies to strengthen its upstream and downstream value chain such as SolarCity Corp., Maxwell Technologies, ATW Automation, Perbix Machine Co., Hibar Sytems Ltd and many more.
India investment outlook
Indian energy storage market is at a growth stage and with the announcement of various demand-side policies and manufacturing policies, both by the Central and State government. In November, Indian Cabinet approved the National Program for Advanced Chemistry Cell Battery Storage Manufacturing as part of the Production Linked Incentives (PLI) program for 10 sectors. To achieve this, NITI Aayog, on behalf of the government, issued draft Request for Proposal (RfP) documents for the selection of private entities to set-up manufacturing facilities that produce Advance Chemistry Cells (ACC). ACC battery has been approved a financial outlay of ₹ 18,100 crore, and automobiles and auto components have been approved ₹ 57,042 crore.
In India, the stationary storage market stood at 21 GWh in 2019.The India Energy Storage Alliance (IESA) projects that the market can grow to 328 GWh in the best-case scenario by 2027. IESA has been working closely with various government bodies to support the industry and to make India a global hub for manufacturing and adoption of energy storage and electric mobility technologies. The market potential will be majorly led by behind-the-meter (BTM) applications like distributed solar, diesel optimization, inverter backup, telecom, rural electrification and thermal energy storage. The potential of this space is huge and is projected to capture 70 percent of the market. With government of India's vision to have 450 GW of renewables by 2030, the penetration of energy storage in this arena is necessary. IESA also projects a cumulative market potential of $21 billion – $38 billion at a CAGR of 14 percent in the best-case scenario.
The cumulative battery demand from EVs during 2021-2030 is expected to hit 950 GWh. This includes Li-ion chemistry and others. The e-4W segment is expected to account for nearly half of this potential while e-2Ws will make for one-third of it. As e-cars hit cost parity with ICE vehicles due to the drop in battery prices and economies of scale, the adoption of e-cars is set to increase rapidly by 2025 and beyond.
India's Li-ion battery potential in EV and stationary storage is set to cross 60 GWh by 2025 and 360 GWh by 2030 annually, when set to meet the national RE target and EV target of 2030. The share of stationary and EV is expected to be equal till 2025, beyond which EVs are set to grow four times that of stationary potential by 2030.
There have been some major investment announcements in the energy storage and e-mobility space in India in the recent years.
Amperex Technology Limited (ATL), a Japan-based company owned by TDK Corp, acquired 180-acre land for ₹ 550 crore near Gurugram in Haryana from Haryana State Industrial and Infrastructure Development Corporation (HSIIDC). A global leader in supplying Li-ion phosphate (LIP) batteries across the world, ATL has two cell manufacturing facilities in China. It has decided to invest in an Indian manufacturing unit by the name of ATL India Technology Pvt Ltd. The company plans to invest ₹ 7,000 crore in the next few years to supply batteries to industries including smart phones, e-2Ws and e-3Ws. Epsilon Carbon, a coal tar derivatives company, is planning to invest ₹ 500 crore over the next five years to manufacture graphite anode materials for Li-ion batteries (50,000 ton anode material capacity by 2025).
Amara Raja Batteries has entered into an agreement with Gridtential Energy, to collaborate on bipolar battery technology. Gridtential Energy is the inventor of the silicon joule bipolar battery technology, which combines the traditional benefits of lead batteries with Li-ion batteries' performance and life cycle. As per the agreement, both the companies will assemble and test reference batteries using Amara Raja's active material and work on the improvements in their life cycle, energy density, efficiency, charging rates, and manufacturability.
Singapore-based ChargeXO and Greenko Energy Holdings planned to set up 1GW battery storage units each at investments of nearly ₹ 3,000 million per unit at Telangana. Grinntech, a start-up specializing in Li-ion batteries for EVs and energy storage systems, signed an MoU for ₹ 90 crore investment with the Tamil Nadu government to establish a battery as well as battery management system manufacturing facility in the State. In 2020, Li-Energy announced an investment of ₹ 300 crore for EV battery packs in Tamil Nadu. AEPPL, the joint venture between Japanese majors Toshiba, Denso, and Suzuki, announced it will invest ₹ 37.15 billion in the Gujarat plant between 2021-25, having pumped ₹ 12.5 billion into the first phase of development. EV-maker Evolet India, part of Rissala Group, is keen on setting up Li-ion assembly and manufacturing facilities in the State of Telangana with an investment of `500 crore. The company plans to create an assembly plant for e-2Ws to cater to domestic and export markets. There is scope to set up product lines for ancillaries such as EV motors, controllers, and batteries.
In November 2020, Exide Industries, India's largest lead-acid battery manufacturer increased stake in its lithium battery joint venture (JV), Nexcharge with Swiss energy storage solutions company Leclanché to 80.15 percent through an additional investment of ₹ 33.17 crore. The Burman family, promoters of Dabur India, have picked up a significant stake (8.48 percent) in the country's largest dry cell battery, Eveready Industries. The investments in Eveready were made by the promoter family in their personal capacities to acquire an additional 50 lakh shares and reportedly have nothing to do with the listed Dabur entity.
Some major investments in the Indian EV sector include:
- Hyderabad-based EV startup Etrio obtained funding worth $3 million for new EVs
- Bosch acquired 26 percent stake in SunMobility
- Electric ride-hailing platform BluSmart obtained $7 million ( ₹ 51 crore) in funding to further market penetration
- Bengaluru-based e-mobility technology company, Cell Propulsion which designs and manufactures EV powertrain and EV parts has raised pre-Series A funding from three investors growX, Micelio, and Endiya Partners
- Toyota announced to invest more than ₹ 2,000 crore in India
- EVage Ventures, a Chandigarh-based electric vehicle and mobility-technology startup, has raised undisclosed funding from Ola Electric Co-founder-Anand Shah, BryAir Director-Varun Pahwa and DMI Group partner, Anmol Nayyar
- Grinntech, an IIT Madras incubated EV and energy storage systems battery startup, has secured approximately $2 million ( ₹14.6 crore) in funding from four new investors including V Sumantran, former Vice-Chairman, Ashok Leyland, and V Lakshmi Narayanan, Co-Founder, Cognizant, UCAL Group and K S Manian, promoter of Radiance Group
- Edison Motors, South Korean based electric bus making company has expressed interest in investing almost ₹ 5,000 crore to set up its production facility in Uttar Pradesh. It has proposed to invest ₹ 500 core to ₹ 700 crore in Phase I, and ₹ 1,000 crore to ₹ 1,500 crore in Phase II and ₹ 2,000 crore to ₹ 3,000 crore in the third phase of its EV plant in Uttar Pradesh
- Revolt Motors, the EV venture of Micromax, plans to raise equity capital of up to $100 million (₹ 734.8 crore) to fund product development and expansion into more cities
- Ultraviolette Automotive Pvt Ltd, the Bangalore-based EV manufacturer has received ₹ 30 crore as part of its latest round (Series B) of funding from TVS Motor company
- Former NewMotion CEO invested an undisclosed amount in Mumbai-based EV charging company BrightBlu
- Hero MotoCorp, a leading manufacturer of motorcycles and scooters, has announced that it has invested ~$11.25 million (₹ 840 million) in Ather Energy. According to a BSE filing, Hero MotoCorp's share in Ather Energy has increased to 34.58 percent with this latest investment
- Ampere Vehicles, a fully owned electric mobility subsidiary of Greaves Cotton Ltd., announced the acquisition of Bestway Agencies Pvt Ltd (BAPL), a Noida-based e-3W company that sells e-rickshaws under the popular ELE brand
- Yulu, a Bangalore-based micro-mobility service provider, has announced that Rocketship VC has invested ~$3.95 million (₹ 300 million) in the company
- Euler Motors, a New Delhi-based EV manufacturer, raised $2.66 million (₹ 200 million) as part of its ongoing Series A funding led by Inventus Capital India, a Bengaluru-based venture capital firm
- RR Global, a prominent player in electrical goods industry, has forayed into EV segment with plans to invest ₹ 125 crore in the next three years in the venture. The Mumbai-based firm plans to launch two electric scooter models this year
- Mahindra & Mahindra has signed an MoU with Israel's REE Automotive to explore development and manufacturing of electric commercial vehicles (ECVs) for global markets. As per the agreement, Mahindra will leverage REE's EV corner module and platform technology of integrating powertrain, suspension and steering components in the arch of a vehicle wheel.
Apart from EVs and Li-ion-based battery technology, other technologies and hydrogen fuel cell are also getting tractions in Indian market. Indian clean tech startup h2e Power has acquired Swiss fuel cell specialist Hexis AG. The deal has been closed through its German subsidiary mPower GmbH from the German climate and energy solutions focused Viessmann Group. The company did not disclose the deal amount. The UK-based Faradion Ltd, a manufacturer of sodium-ion batteries, has announced a partnership with Infraprime Logistics Technologies (IPLTEC) to provide batteries for commercial vehicles in the Indian EV market.
As per industry sources, Greenko Energy Holdings has emerged as the preferred buyer for Massachusetts-based NEC Energy Solutions in a deal potentially valued at around $300 million. NEC Energy holds the intellectual property rights for megawatt-scale Li-ion batteries. The development will bring a huge opportunity and significance for Indian energy storage market. Earlier this year, Greenko signed a MoU with NTPC Vidyut Vyapar Nigam. This agreement will explore energy storage and renewable energy (RE) power supply solutions across India.
Distributed solar company, Fourth Partner Energy, has raised $15 million (₹ 1.1 billion) in debt funding from responsAbility, a Switzerland-based development asset manager.
Sunshot Technologies has been acquired by Berkeley Energy Industrial Commercial Solutions (BECIS), which has Siemens, Norfund and FMO Netherlands as its investor. BECIS is a leading distributed energy solutions provider serving commercial and industrial customers. Sunshot is a market leader in the Indian commercial and industrial solar sector with an extensive market presence, a full-service team including design, engineering, project management and asset management, and proprietary energy analytics solutions. BP to invest $70 million in India's Green Growth Equity Fund: UK-based oil and gas firm, BP is set to invest $70 million in India's Green Growth Equity Fund. Commercial and industrial-focused solar PV developer, Cleantech Solar announced that it has secured a $75 million green loans from ING Bank.
IESA expects a few more deals in the Indian energy storage and electricmobility market in the coming years. With government's push on policy, diversification interest of Indian conglomerates, the emergence of start-ups, and global companies' India market entry. With the Global Start-Up outreach Program, UNIDO Innovation Challenge on Energy Storage, Annual India Energy Storage – EV Investment Summit, Start-Up Competition, IESA Investors Circle, IESA catalyzing the growth.