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Global corporate funding for energy storage companies declined 19 per cent year-on-year to $16.2 billion in 2025, even as deal activity remained resilient and venture capital investment rose sharply, according to a report released by Mercom Capital Group on funding and mergers and acquisitions (M&A) in the energy storage and smart grid sector.
The reported the total funding in energy storage reached $16.2 billion across 119 deals in 2025, compared with $19.9 billion raised through 116 deals in 2024. While overall capital inflows fell, the number of transactions increased 3 per cent year-on-year, reflecting steady investor interest despite a more challenging policy and financing environment. Mercom noted that 2024 funding levels were boosted by a handful of outsized debt transactions, which did not repeat in 2025.
“Energy storage clearly emerged as a winner under the OBBB, with the preservation of investment tax credits for standalone battery storage and production tax credits supporting continued investment amid rising data centre-driven power demand. Project M&A activity also remained strong, reinforcing sustained demand for energy storage assets,” said Raj Prabhu, CEO of Mercom Capital Group.
Venture capital funding in the energy storage sector, however, rose 30 per cent year-on-year to $4.8 billion across 75 deals, up from $3.7 billion across 84 deals in 2024. Downstream energy storage companies attracted the largest share of VC funding during the year, followed by materials and components providers, energy storage systems companies, battery recycling firms and lithium-based battery developers.
Debt and public market financing for energy storage companies declined 30 per cent year-on-year to $11.4 billion across 44 deals in 2025, compared with $16.2 billion across 32 deals in 2024. Despite the lower capital raised, deal activity in this segment increased 38 per cent year-on-year. Corporate M&A activity in energy storage softened slightly, with 22 companies acquired in 2025 versus 25 in 2024. In contrast, project-level M&A transactions surged, with 65 deals announced in 2025, a 71 per cent increase from 38 transactions in 2024.
The five largest energy storage VC deals in 2025 were raised by Base Power ($1 billion), KoBold Metals ($537 million), Group14 Technologies ($463 million), green flexibility ($411 million) and Redwood Materials ($350 million).
In the smart grid segment, corporate funding rose 38 per cent year-on-year to $3.3 billion across 84 deals in 2025, up from $2.4 billion across 67 deals in 2024, with deal activity increasing 25 per cent. Venture capital funding for smart grid companies increased 6 per cent to $1.8 billion across 68 deals, compared with $1.7 billion across 56 deals a year earlier.
Smart charging companies accounted for the majority of smart grid VC funding in 2025, while grid optimisation, distributed generation and integration, smart grid communications and data analytics also attracted investment. The largest smart grid VC deals during the year included Believ ($410 million), GRIDSERVE ($135 million), WAAT ($116 million), and Connected Kerb and Hubber, which each raised $81 million.
Announced debt and public market financing in the smart grid sector more than doubled to $1.5 billion across 16 deals in 2025, compared with $718 million across 11 deals in 2024, as deal activity rose 45 per cent. Corporate M&A activity in the smart grid sector remained broadly stable, with nine transactions recorded in 2025 versus 10 in the previous year.
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