European venture capital continues to smile on the energy sector

This week’s edition of Smart Energy’s Power Playbook looks at recent data on venture capital financing in Europe, finding the energy sector taking the lion’s share, with e-mobility and hydrogen companies flourishing, specifically.

In the Power Playbook, I often talk about the immense amount of financing needed to fuel the energy transition. Arguably the biggest arena this cash can come from is that of venture capital. And in the first half of the year, this was clearly the case.

According to new data released from dealroom, a global provider of data and intelligence on startups and tech ecosystems, in the first half of the year energy was found to be the most funded sector in Europe.

Specifically, in this first half of the year, a total of $5.7 billion was raised from venture capital for Europe’s energy sector.

The figure is encouraging, not only for what it signals about the flow of venture capital and its priorities but also when we consider the competitive landscape between tech financing in the EU and the US.

According to dealroom, the figure for European VC is equal to that of investments for the US but makes up a higher proportion of total funding – 19% in Europe versus 6% in the US.

The company states that this marks a continued trend, when in each quarter of 2023 energy was the most funded industry.

However, it also marks a welcome shift from the pre-2023 scenario, when energy typically ranked behind fintech, health and enterprise software in terms of VC investment.

This year, fintech and health reeled in $5.3 billion while enterprise software secured $5 billion.

More from the Power Playbook:
Aggregators: The Ubers of energy financing?
The EV charging companies who dominated Q1 VC smart grid financing

Top deals

In energy, drilling down by segment, electric mobility was found to generate $1.4 billion, hydrogen $1.3 billion, EV charging $892.2 million, green buildings $835.7 million, stationary energy storage $614.7 million and solar energy $555.5 million.

Six deals stand out:

1. Highview Power

In mid-June, UK-based Highview Power, a long-duration energy storage developer specialising in liquid energy storage, announced a £300 million ($388 million) growth equity funding round led by the UK Infrastructure Bank (UKIB).

With backing from Centrica, Goldman Sachs, Rio Tinto, KIRKBI and Mosaic Capital, the investment will enable the construction of one of the world’s largest long duration energy storage (LDES) facilities in Carrington, Manchester.

Once complete, it will have a storage capacity of 300MWh and an output power of 50MW per hour for six hours. Construction will begin on the site immediately, with the facility operational in early 2026.

2. Hysetco

In April, France-based Hysetco announced €200 million ($237.6 million) from a group of investors led by Parisian investment company Hy24 to accelerate the deployment of its hydrogen mobility solutions.

The company’s mobility model combines hydrogen distribution infrastructures and fleet management.

With their announcement, Hy24 became the majority shareholder, joining existing shareholders Air Liquide, TotalEnergies, Toyota France and Kouros in supporting the company’s development.

The financing round also included RAISE Impact and Eiffel Investment Group as investors.

3. Tree Energy Solutions

Also in April, the Belgian developer of e-NG (electric natural gas from green hydrogen) announced a round of €140 million ($166.3 million) to develop their portfolio of large-scale e-NG production projects and an import terminal in Wilhemshaven, Germany.

During the round, the company received strong support from existing shareholders, including AtlasInvest, Reggeborgh, Zhero and Zodiac Maritime while attracting several new investors, including Azimut Group, Fortescue, E.ON, HSBC, O.G. Energy, Zhero and others.

4. Cloover

In May, Berlin-based startup Cloover, which develops embedded finance products for renewable energy installers, secured a $114 million seed round to fuel the growth of its operating system.

The company connects installers, prosumers, manufacturers, energy providers and investors through its software, finance and energy solutions.

The round was led by Lowercarbon Capital, founded by venture capitalist Chris Sacca, with participation from existing investors 9900 Capital and QED.

With the fresh capital, Cloover will be doubling down on its installer software development and strengthening its sales, payments, and financing offering.

5. Char.gy

Also in May, London-based EV charging company Char.gy secured an increase in commitment to £100 million ($129.4 million) to accelerate the rollout of their public on-street charging infrastructure throughout the UK over the next five years.

The investment from Zouk Capital will be used by char.gy to grow its network from over 3,000 charge points today to 100,000 by 2030, supporting the transition for up to 1 million drivers.

Currently, the UK has around 60,000 public charge points.

6. Kaluza

In early June, British energy software company Kaluza announced $100 million in a 20% acquisition by AGL Energy, one of Australia’s largest energy retailers.

Kaluza’s software platform enables energy utilities to reduce cost to serve by automating their customer operations and unlocking value streams through the optimisation of energy usage.

With the deal, their platform will be rolled out to AGL’s 4 million customer services as part of its Retail Transformation Program.

The multi-year licensing agreement and investment builds on a close working partnership with AGL that began in 2021, including a joint venture which saw the successful operational and technical integration of the OVO Energy Australia customer base on the Kaluza platform with market-leading results.

Another segment worth noting is, not limited to its use in the energy space, $3 billion into generative AI alone, This makes it by far the most invested segment, followed by GenAI Model Maker investments at $2.3 billion.

Commenting on the statistics over email was Gregory Dewerpe, managing partner and founder of noa, a world venture capital firm, who said: “Funding the energy transition requires deep, patient capital and the recognition that decarbonisation is a global challenge that no single company can solve on its own.”

As an investment firm looking into the energy sector, what have been interesting deals on your radar and what are your thoughts on the trajectory of venture capital across these segments?

Reach out and let me know so we can include your insights in the weekly Power Playbook.

Cheers,
Yusuf Latief
Content Producer
Smart Energy International

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