(Yicai Global) June 6 -- Investment institutions still favor the new energy field, even if the CSI New Energy index rose four times from 2019 to 2021 but later nearly halved, as investors often have funds in hand waiting to pick startups.

The CSI New Energy index [SHE: 399808] closed 1.2 percent lower at 2,805.72 today, down from a record high of 5,128.19 in 2021. But many ‘star startups’ have emerged in the new energy field, with investors finding it hard to grab a spot in related fundraisers since last year.

“We had four funding rounds and bagged more than CNY7 billion (USD1 billion), excluding original capital, with several well-known domestic investment institutions joining,” the chairman of a Hubei-based lithium battery materials maker told Yicai Global at the end of last year. “Although the amount of money raised is large, it is very difficult for investors to inject the funds.”

“Everything in the secondary market can affect stock prices, including macro and geopolitical factors, the stock market volume, competition between companies, and the price movements of upstream and downstream products and raw materials,” said Liu Erhai, founder and managing partner of Beijing-based venture capital firm Joy Capital. “The specific reasons behind these short-term fluctuations and adjustments are difficult to explain.”

In the new energy industry, energy storage is a more special sector because of a business model that has not been fully developed yet. It directly affects the survival and profitability of related companies. But in the long term, with the large-scale integration of wind power and solar into the power grid, energy storage has become a must.

This is directly reflected in the investment and financial markets. Although overall investment and financing in China's primary market have declined in recent years, investment and the enthusiasm for financing in the energy storage industry has risen since 2021.

Investment in energy storage in the primary market was about CNY40.5 billion (USD5.7 billion) in the past three years, according to data provided by Zhang Peng, director of energy transition research at a think tank of China Great Wall Securities. In the first quarter of this year, investment and financing stood at about CNY9.6 billion, close to the figure for the whole of 2021.

Editor: Martin Kadiev