Smart Grid funding drops $46m in a year

Venture capital funding in the Smart Grid sector has dropped $46m in a year, from $112m in the second quarter of 2011 to $66m in the same period this year.

The number of deals also fell in line with the total figures, from 16 to nine.

The biggest venture capital deal done in the second quarter (Q2) of 2012 was $15m raised by Germany’s Power Plus Communications, which provides broadband communications systems for smart meters and Smart Grids. The funding came from Siemens, British Gas and Climate Change Capital Private Equity.

Siemens is the only company to be involved in two deals carried out in Q2 2012: it was one of five backers of $11.3m raised by US firm Tendril.

Raj Prabhu, managing partner at Mercom Capital – which compiled the second quarter figures – said that the “extremely weak” funding levels were the results of “shifting business models as the industry continues to struggle to understand customer needs and address customer misconceptions, along with security concerns and other issues”.

Meanwhile, the value of merger and acquisition deals in the sector increased by $10bn between the two quarters.

In Q2 2012, seven deals with a total value of $14bn were signed, compared to nine deals worth $4.3bn a year earlier.

Of these, six were in Europe and only one in the US. The biggest transaction by far was the $11.8bn acquisition by Irish power management group Eaton of grid company Cooper Industries.


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