Uptick In Cleantech Investment Driven By Large Deals; Solar Receives Most Capital

U.S. venture capital (VC) investment in cleantech companies in the second quarter reached $572 million – an increase of 73% in terms of capital compared to the first quarter of this year, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource.

Compared to the second quarter of 2008, the second-highest quarter for cleantech investment on record, the second-quarter 2009 results were 59% and 16% below those record levels in terms of capital and number of transactions, respectively.

VC investment in cleantech in the second quarter of this year was led by the energy/electricity generation category, which raised $157 million – a quarterly increase of 181% from the previous quarter. Within this category, solar deals received the lion's share of capital, with $148 million.

‘The quarterly uptick reflects investor confidence in the ability of cleantech companies to capitalize on market opportunities,’ says Joseph A. Muscat, Americas director for Ernst & Young LLP. ‘While enacted and anticipated government actions have helped bolster confidence and catalyze new capital, we believe that leading cleantech companies will be defined by their ability to execute on business plans and advance their technologies through commercialization and distribution, despite the challenging economy.’

The rebound in VC investment in cleantech was accompanied by a rise in private equity and asset-backed financings. New Energy Finance (NEF) tracked $240 million in clean energy private equity investments – an increase of 12%.

According to NEF, clean energy asset financings grew significantly, increasing from $307 million in the first quarter to $2.9 billion in the second quarter. Wind was the primary driver of asset-backed financing activity, with deals such as the $504 million financing secured by First Wind for a 203.5 MW project.

Government support continues to influence the growth of the U.S. cleantech market. For example, the Department of Energy released more than $47 million from the American Recovery and Reinvestment Act of 2009 to accelerate the completion of eight smart grid demonstration projects in seven states.

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SOURCE: Ernst & Young


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