Global funding activity in the energy storage sector slowed in the first nine months of 2025, as total corporate funding (including venture capital, debt, and public market financing) reached $11.2 billion across 85 deals, marking a 36 percent year-over-year (YoY) decline compared to $17.6 billion in 83 deals during the same period in 2024, according to Mercom Capital Group’s Energy Storage Funding and M&A Report.
Venture Capital Funding Shows Modest Growth
Venture capital (VC) investment in energy storage companies increased slightly by 4 percent YoY, reaching $2.8 billion in 56 deals during the first nine months of 2025, compared to $2.7 billion in 61 deals in 2024.
Among the various segments, materials and components providers attracted the largest share of VC capital, raising $1.1 billion. This category includes companies developing next-generation battery materials, electrolytes, and anode/cathode technologies that aim to improve energy density and lower production costs.
Other top-funded segments in 2025 included:
Energy storage downstream companies (focused on integration, software, and grid management)
Energy storage system providers
Lithium-based and sodium-based battery companies, reflecting growing diversification beyond traditional lithium-ion chemistry.
Debt and Public Market Financing Falls Sharply
While venture investment remained stable, debt and public market financing for energy storage technology companies experienced a significant 44 percent decline YoY.
In 9M 2025, these companies raised $8.4 billion across 29 deals, compared to $15 billion in 22 deals during 9M 2024. The drop reflects a broader tightening of capital markets and investor caution amid fluctuating commodity prices and shifting renewable energy policies in major markets such as the U.S., Europe, and China.
M&A Activity Strengthens Despite Funding Slowdown
The energy storage sector saw increased merger and acquisition (M&A) activity in 2025, signaling ongoing consolidation and strategic partnerships.
20 corporate M&A transactions were announced in 9M 2025, up from 18 deals in the same period of 2024.
Additionally, project-level M&A transactions involving energy storage companies surged to 45 deals, more than double the 22 transactions recorded in 9M 2024.
This increase underscores strong appetite for operational energy storage assets as utilities, investors, and infrastructure funds seek to strengthen their portfolios in response to the global clean energy transition.
Outlook for 2026: Efficiency, Scale, and Diversification
Despite the decline in total corporate funding, the energy storage market remains a vital pillar of the clean energy ecosystem. As governments and industries push toward net-zero targets, funding is expected to shift toward high-efficiency battery chemistries, long-duration storage, and circular battery recycling technologies.
The industry’s M&A momentum and steady VC inflows highlight investor confidence in the long-term value of energy storage — a cornerstone for renewable integration, grid stability, and electric mobility.
Baburajan Kizhakedath