Cleantech enjoys another record quarter

Despite reports this week of funding difficulties for a number of high-profile clean tech projects - such as delays to T Boone Pickens' plans for the largest wind farm in the US and concerns over cashflow at electric car manufacturer Tesla – cleantech investment levels are continuing to climb.

That is the conclusion of the latest report from Ernst & Young, which found that venture capital investment in US cleantech firms reached a record $1.6bn (£0.9bn) during the third quarter, up 55 per cent on the previous three months.

The study, based on data from Dow Jones VentureSource, also revealed that a total of $3.3bn was invested in the first three quarters of the year, exceeding the figure for the first nine months of 2007 by 71 per cent.

However, the study provided evidence that some smaller cleantech firms could be finding it harder to attract funding, with the proportion of venture capital investment flowing into later stage firms, climbing from 36 per cent of the total in the second quarter to 55 per cent for the third quarter.

Joseph Muscat, US director of cleantech and venture capital at Ernst & Young, said the study suggested that the long term outlook for the cleantech sector remained upbeat.

"In light of challenging economic times, the US cleantech market may be entering a transitional period," he said. "However, the structural market drivers of the cleantech sector remain intact, suggesting that the prospect for long-term market development is positive. Factors such as technological advances, consumer demand and programmes at both the federal and state-level help to create the conditions needed for long-term growth in cleantech."

According to the study, solar continued to dominate the market, securing almost all the $1bn invested in the energy generation sector.

Meanwhile, firms specialising in energy efficiency also enjoyed a bumper quarter, with investment of $186m, representing a 48 per cent increase on the third quarter of 2007.