Venture Capital in Energy Storage Soars 59% in 2023, Driven by Tax Incentives Despite M&A Slowdown.

Venture capital funding in energy storage increased by 59% year over year in 2023, according to Mercom Capital. The report stated that U.S. firms invested $9.2 billion in energy energy ventures throughout the year, a 59% increase from the previous year. This increase was largely due to the Inflation Reduction Act’s Investment Tax Credit and other incentives like manufacturing credits for battery components. Despite this trend, Mercom noted that merger and acquisition activity lagged due to high asset valuations, elevated interest rates, and investor caution. Corporate funding in the energy storage sector decreased 28% year-over-year, with $19 billion raised compared to $26.4 billion in 2022. Lithium-ion based battery technology companies remained the top VC-funded business in the sector.