Corporate funding for energy storage companies totaled $8.9 billion across 73 deals in the first half (1H) of 2026, down 2% year-over-year (YoY) from $9.1 billion across 55 deals in 1H 2025, according to Mercom Capital Group’s 1H and Q2 2026 Funding and M&A Report for Energy Storage. Deal activity increased 33% during the period.

 

 

 

Raj Prabhu, CEO at Mercom Capital Group, said the near-flat funding level, alongside the increase in deal count, reflected strong investor interest tempered by uncertainty over policy clarity, particularly Foreign Entity of Concern rules. Rising electricity demand from data centers and the ability to deploy solar-plus-storage projects quickly continued to support bullish sentiment.

Venture capital (VC) funding for energy storage companies totaled $1.6 billion across 51 deals in 1H 2026, down 6% YoY from $1.7 billion across 36 deals in the same period last year. However, deal count increased by over 40%, reflecting sustained investor interest across a broader range of companies.

Energy storage downstream companies attracted the largest share of VC funding among 15 categories in 1H 2026. Metal-hydrogen battery companies, lithium-based battery companies, battery recycling firms, energy storage system providers, and materials and components companies were also among the leading recipients.

Prabhu said downstream companies, particularly project developers, continued to attract the largest share of capital because near-term demand was concentrated in deployable projects that could address grid requirements and data center-driven electricity demand.

The top five VC funding rounds in 1H 2026 included EnerVenue Holdings, which raised $300 million; terralayr, with $223 million; Liminal Energy, with $200 million; Waaree Energy Storage Solutions, with $111 million; and Lunar Energy, which raised $102 million.

Debt and public market financing for the energy storage sector reached $7.3 billion across 22 deals, a marginal 1% decline from $7.4 billion across 19 deals in 1H 2025.

Corporate mergers and acquisitions (M&A) activity increased sharply, with 15 transactions announced during the first half of 2026, up 275% from four transactions in the corresponding period last year. Transactions spanned downstream platforms, battery technologies, and materials businesses.

Battery storage project acquisitions also accelerated significantly, with approximately 14 GW of storage capacity being procured across 63 transactions, compared to 6.1 GW across 31 transactions in 1H 2025. Standalone battery storage accounted for 45 transactions totaling 10 GW, while solar-plus-storage projects represented 18 transactions totaling 3.8 GW of acquired storage capacity, more than double the 1.6 GW acquired during all of 2025.

According to Prabhu, incentive deadlines supported activity in solar-plus-storage projects, although they did not apply to standalone battery projects. He said demand remained strong across solar, solar-plus-storage, and standalone storage projects, particularly in the U.S. and parts of Europe, supporting corporate M&A and project acquisitions.

Smart Grid

Corporate funding for smart grid companies rose 36% YoY to $1.9 billion across 41 deals in 1H 2026, from $1.4 billion across 48 deals in 1H 2025, according to Mercom Capital Group’s 1H and Q2 2026 Funding and M&A Report for Smart Grid. Deal activity declined 15% during the period, while larger transactions drove the increase in funding.

VC funding for smart grid companies declined 35% YoY to $711 million across 34 deals in 1H 2026, compared to $1.1 billion across 41 deals a year earlier.

Smart grid communications companies secured the largest share of VC funding, followed by smart charging companies and distributed generation and integration firms.

The largest VC funding rounds included SPAN, securing $163 million, plus an additional $75 million financing from Eaton; verse, securing $54 million; metiundo, securing $48 million; and InCharge Energy, securing $46 million.

Debt and public market financing rose 267% YoY to $1.1 billion across seven deals, compared to $300 million across the same number of deals in 1H 2025. Deal activity remained flat, while the increase in funding was driven by larger transactions completed during the first quarter of 2026.

Prabhu commented that smart grid companies benefited from favorable public market conditions, enabling larger fundraises at higher valuations.

Corporate M&A activity in the smart grid sector increased 75% YoY to seven transactions in 1H 2026 from four transactions in the corresponding period of 2025.

Prabhu said rising electricity demand from data centers and the rapid addition of solar and storage capacity were increasing the need for technologies that support grid stability.

Investor attention was shifting from electric-vehicle smart charging to grid-stabilizing solutions, while these system-level requirements continued to support M&A activity across smart-grid segments, he said.

The 1H and Q2 2026 Funding and M&A Report for Energy Storage covers 254 companies and investors. The report is 60 pages in length and contains 44 charts, graphs, and tables.

To learn more about the energy storage report, visit: https://mercomcapital.com/product/1h-2026-funding-ma-report-energy-storage/

The 1H and Q2 2026 Funding and M&A Report for Smart Grid covers 110 companies and investors. The report is 36 pages in length and contains 32 charts, graphs, and tables.

To learn more about the smart grid report, visit: https://mercomcapital.com/product/1h-2026-funding-ma-report-smart-grid/