Li-Ion and Mechanical Storage Lead Europe’s €2.14bn ESS Funding: Report

The growing importance of energy storage systems in managing curtailment and meeting on-demand energy requirements is paving the way for market expansion in the European region.

In addition, the increasing role of storage in supporting the renewable energy sector, enhancing grid resilience, and strengthening energy security has further contributed to the rising demand for energy storage.

Addressing the question of energy storage sourcing, Avnet Silica, a specialist division of Avnet and a European semiconductor and global technology distributor, shared a report. The company, through an analysis of Crunchbase data, found that total equity funding for European startups involved in energy storage hardware manufacturing (for commercial, industrial, and grid-scale applications) has topped €2.14 billion. Avnet Silica’s research also revealed that 46.7% of this funding was raised in the last three years and 84.4% in the last five.

Here are some of the key trends that are shaping up in the energy storage segments:

#1 Li-Ion BESS Takes Major Chunk Of Private Funding 

The report noted that BESS startups in Europe received a total of €331.8 million in financial backing. It added that the vast majority of private funding for BESS is directed toward lithium-based batteries (€236 million), including €221 million for Li-ion battery manufacturing and €15 million for lithium–sulphur technology.

#2 Mechanical Storage Raises Lion's Share of Equity Funding 

Mechanical storage has garnered the lion’s share of equity funding in the energy storage market, at €696.7m, more than double that of BESS (€331.8m), despite considerably fewer companies entering the mechanical storage space and fewer still reaching commercial maturity.

#3 Thermal energy storage gets €105.9 Mn injection

The study also saw a brewing interest in the thermal energy storage market. Based on its findings, €105.9 million in private funding is warming up the thermal energy storage (TES) market. From this total funding, €80.4 million has been invested in sensible heat storage. Companies are storing heat in a variety of materials, including glass, ceramic, rock, gravel, and salt.

A further €24.5 million of investment is helping to transform latent heat storage (phase change materials). A little over €20 million has been raised by companies focusing on specific applications with in-built thermal storage – €4.9 million for manufacturers of industrial heat pumps with TES, €1.1 million for solar and TES combinations and €14.5 million for refrigeration with TES. 

#4 Supercapacitors, hydrogen and power-to-X draw in €146.5 million

Rounding out the range of energy storage providers, €18.4 million has been raised by companies producing supercapacitors, €73.7 million has been invested in companies developing hydrogen energy storage.

A further €54.4 million has been allocated to those offering power-to-x energy storage. This specifically refers to companies promoting hydrogen and power-to-X as a form of energy storage, rather than solely as a means of fuel production.

#5 EV Charging with in-built ess secures €435.5 million

Companies offering EV charging with in-built ESS (for off-grid and remote locations or battery-buffered high-power charging) have received €435.5 million in funding.

Three European startups have secured a total of €127.1 million in funding for their portable energy storage solutions, aiming to power the events industry, construction sites, and other use cases.

#6 ESS Supply Chain & Recycling Startup

The report also noted that over a quarter of a billion in funding (€259.4 million) has gone into startups specifically focused on the energy storage supply chain. It also noted that about 78% of which has been funnelled into two particular areas – next gen battery chemistry (€113.2 million), and the production of cells & modules/packs (€89.0 million).

Furthermore, the report associated this surge with the recent rise in the circular economy. Two companies have raised money for battery recycling – Luxembourg's Circu Li-ion, taking in €4.5 million and Germany’s tozero, gathering €14.5 million. This is in addition to the 14 BESS startups promoting the use of second-life batteries in their product line (some exclusively, and others as an available option).

#8 Startups and Power Suppliers Rising to the Challenge

Harvey Wilson, Senior Manager Industrial Vertical Markets EMEA at Avnet Silica, comments, “While there are some well-established players leading the way in energy storage, it’s exciting to see startups offering solutions to the multitude of energy storage challenges that exist within different industries.

"There’s the challenge of EV charging in locations that can’t be easily powered by the grid. There’s a need for portable energy in temporary locations, such as events and construction sites. There’s a demand for industrial heat, which largely relies on fossil fuels at present. And beyond battery storage, there’s the issue of long-duration energy storage, the predominant solution for which is currently pumped hydro; however, other options are being developed and offered to the market as well.

He further added, "It’s also exciting to see startups focusing on the next-generation of materials, components and battery chemistry. The major suppliers of power electronics are also investing heavily in R&D, and we’re seeing lots of innovative technologies coming down the pipeline, enabling the next wave of power products, with higher performance and greater efficiency in energy storage, which will definitely be required if we’re to meet the demands of renewable energy, AI data centres, electrified industries, and our collective climate targets.”