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Top 5 Green Energy US M&A Pipeline: Batteries charging ahead with government support

Activity in the battery sector is being sustained by increased government support over the last year as the Biden administration attempts to relocate production to the US in support of wider electric vehicle adoption.

An infrastructure bill passed in November 2021 included USD 3.1bn in funding for grants and other initiatives to boost battery manufacturing in the US. The Inflation Reduction Act (IRA), which was passed on 19 August, also provided tax incentives for companies to boost domestic extraction and processing of battery materials.

Sam Trinch, a president at materials manufacturer 6K who oversees the company’s battery materials division, said investment in the clean technology market has been active, particularly in the battery sector.

“We’re not seeing any slowdown in interest in battery technology,” regardless of slowdowns in investment and M&A in the wider dealmaking ecosystem, he added.

Trinch said the battery materials market is currently dominated by countries like China and Korea, which have supported their own domestic battery materials industries for decades.

Increased government support into the battery sector has helped stimulate investment, the executive said. “An investor is a lot more willing to give me USD 50m because I already have USD 50m from the government,” he explained. That support will lead to an increase in company valuations though Trinch said he doesn’t anticipate an uptick in consolidation in the near term. “There [are] partnerships, but it doesn’t feel like [consolidation] is happening yet,” he said.

In the public market, investor sentiment has been mixed. Valuations at renewable energy companies like FREYR Battery [NYSE:FREY], Piedmont Lithium [NASDAQ:PLL] and First Solar [NASDAQ:FSLR] remain elevated since August, while others like Brookfield Renewable [NYSE:BEP], NextEra Energy [NYSE:NEE] and Enphase Energy [NASDAQ:ENPH] saw corrections or declines.

Indexes and ETFs also reinforced the uneven nature of growth in renewables in recent months. The NASDAQ OMX Renewable Energy Generation [NASDAQ:GRNREG] index, which tracks companies that produce energy through renewable sources such as solar, wind and fuel cells, and the Global X Lithium & Battery Tech ETF [NYSEMKT:LIT] fund, which invests in companies that mine materials and manufacture batteries, both saw declines in value following peaks in August.