Cleantech investment suffers through another slow quarter

01 Cleantech investment suffers through another slow quarter

According to the Cleantech Group, a global market intelligence firm, worldwide clean technology venture investment in the quarter totaled $1.61 billion, falling 14 percent compared to the previous quarter ($1.88 billion) and off 25 percent from 2Q11 ($2.15 billion).

“Despite headwinds facing the sector and global economic instability, we continue to observe top tier funds such as Khosla Ventures, Kleiner Perkins, NEA, and others actively investing into cleantech,” said Cleantech Group CEO Sheeraz Haji. “While some may be ducking ‘cleantech’ as a label in North America, growth in technologies addressing resource and energy challenges remains strong and both corporate and investor interest remains high.”

The solar sector netted $253 million in 22 deals, transportation added $252 million in 10 deals, and the energy efficiency sector received $242 million in 35 deals. While worldwide investment in cleantech continues to slow down, China and other developing countries continues to grow at impressive rates.

The International Energy Agency (IEA) predicts that non-OECD countries will account for two-thirds of the expansion of renewable energy capacity in the next five years.  China alone is expected to install two-fifths of the total 710GW of new renewable energy capacity that will be installed globally. China’s government recently announced it will ratchet up its ambitious 2015 solar target four-fold to from 5GW to 21GW.

According to the Cleantech Group, there were 9 clean technology IPOs raising a total of $1.79 billion during the quarter, all of which took place in China. The largest IPOs were for Solareast, a developer and manufacturer of solar thermal water heaters, which raised RMB 2.15 billion in an IPO on the Shanghai Stock Exchange, and Huadian Fuxin Energy, the clean energy subsidiary of state-owned Huadian Corporation, which raised HK$ 2.5 billion on the Hong Kong Stock Exchange.

Chinese businesses and investors, typically with the governments support, are not only investing in their own country, but beginning to invest in cleantech throughout the world. The deals span technologies from cleaner ways to burn coal to cheaper ways to use renewable power. In one deal, GSR Ventures, a venture-capital firm that’s based in Beijing and has an office in Silicon Valley, has invested in Boston-Power Inc., a maker of batteries for electric cars. Boston-Power started in Massachusetts and hoped to ramp up manufacturing there, but began to look for outside investors when it failed to get federal stimulus funds.

The growth in China is due to both rapidly increasing electricity demand and robust renewable energy targets. These aggressive targets are providing certainty for the cleantech market in China, whereas inconsistency and uncertainty in government policies in both Europe and the US is placing downward pressure on cleantech investment by venture capital. For more info on the uncertainty surrounding US policy, see here, here, and here.

 

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