Energetica India Magazine - September 2022

Corporate Funding in Energy Storage Up Significantly with $12.9 Billion in Q1 2022 Energy & Battery Storage Total corporate funding (including VC, Debt, and Public Market Financing) in Battery Energy Storage came to $12.9 billion in 26 deals compared to $4 billion in 27 deals in Q4 2021. Funding was up significantly year-over-year (YoY) compared to $4.7 billion in 18 deals in Q1 2021. Venture capital (VC) funding (including private equity and corporate venture capital) raised by Battery Storage com- panies in Q1 2022 came to $1.1 billion in 21 deals a 15% in - crease compared to $1 billion in 14 deals in Q1 2021. Quar - ter-over-quarter (QoQ) funding was 28% lower compared to $1.6 billion in 21 deals in Q4 2021. The top five VC funded Battery Storage companies this quar - ter were: Hydrostor, which raised $250 million from Gold - man Sachs Asset Management; Sunfire raised $215 million from Copenhagen Infrastructure Energy Transition Fund I and Blue Earth Capital; Factorial Energy raised $200 mil - lion fromMercedes-Benz (DAI) and Stellantis; Viridi Parente raised $95 million from Thomas Golisano, Ashtead Group/ Sunbelt Rentals, and National Grid Partners; and Our Next Energy (ONE) raised $65 million from BMW i Ventures, Coatue Management, Breakthrough Energy Ventures, As- sembly Ventures, Flex, and Volta Energy Technologies. Seventy-six VC investors participated in Battery Storage funding this quarter. Financing the green energy–banks need to take giant steps to enhance their exposure in the sector RES expansion would require a funding of INR 20 trillion (US$262bn) to meet the desired goal: HDFC Securities With considerable capacity additions anticipated in the re- newable space to meet the set climate goals, access to cap- ital and funding will be critical in determining the success of RES in India. The sector has been attracting increasing investments in the form of debt and equity through various channels like NBFC, NBFC—infrastructure debt funds, pri- vate equity, domestic and international bonds, institutional capitals such as pension funds and insurance companies, pri- vate equity, government entities, foreign funds, and banks. Furthermore, development financial institutions such as the Asian Development Bank, the Asian Infrastructure Invest- ment Bank, and their consortiums have also joined the inter- national bond market for financing RES projects worldwide. These institutions provide long-term funds with negligible interest rate fluctuation risks, which bode well for RES proj - ects that already face a volatile generation risk due to un- avoidable seasonal variations. The battery storage is expected to be around INR3.7 trn (US$48bn), taking the sector’s overall debt requirement to ~INR16.7 trn (US4217bn). Over the next eight years, RES would require ~INR3.5 trn in equity capital (US$45.5bn). Source: HDFC Securities Financing will be a key challenge for building these large assets A number of Indian renewable energy developers have suc- cessfully managed to access foreign equity and debt capital. But there is a larger pool of ESG and sustainability-linked funds available that could be accessed, such as through gov- ernment-backed sovereign green bonds. For dollar-denom- inated green bonds, the currency risk adds to the cost of capital. The Indian renewables financing market also needs to access domestic capital. There is a scope to raise domestic capital through rupee-denominated green bonds to expand the pool of financing for renewables. But it will only happen if the government, academia, and the private sector—finan - 54 energetica INDIA- September_2022 STORAGE