US cleantech investment plunges 44 per cent

The second quarter of 2010 was a record-breaking period for investment in clean technology companies, which makes this year's numbers seem all the worse.

According to just-published research from Ernst & Young, investment in clean technologies companies dropped by a whopping 44 per cent in the second quarter of 2011, although there is still plenty of activity in the market.

A total of $1.1bn was invested in cleantech firms between April and June 2011 in companies in the following seven categories:

• Alternative Fuels: biofuels, natural gas;
• Energy/Electricity Generation: gasification, tidal/wave, hydrogen, geothermal, solar, wind, hydro;
• Energy Storage: batteries, fuel cells, flywheels;
• Energy Efficiency: energy efficiency products, power and efficiency management services, industrial products;
• Water: treatment processes, conservation and monitoring;
• Environment: air, recycling, waste;
• Industry Focused Products and Services: agriculture, construction, transportation, materials, consumer products

California remained the nation's hotspot for cleantech investment, taking in $548.8m, or 51 per cent of the total investment. That sum was due in large part to five big deals for California-based companies in the past quarter. Otherwise, California took a bigger hit than the national average, northern California dropping 63 per cent year over year.

The biggest deals in the past three months include:

• Energy/Electricity Generation: BrightSource Energy $168m
• Industry Products and Services: Fisker Automotive $115m
• Alternative Fuels: Kior $55m
• Energy Storage: General Compression $54.5m
• Energy Efficiency: Hara Software $25m

The drop in cleantech venture capital activity is due in part to revived interest in cleantech IPOs; investors are putting their money into internet companies in the hopes of cashing in on the new dot-com boom.

There is still plenty of activity on the cleantech front, as the number of large deals noted above indicates. And Ernst & Young's research offers a few more examples of announcements which suggest that the next few quarters will continue to see steady activity in cleantech.

In mid-June, the US Department of Energy announced loans and guarantees or offered conditional loan guarantees totalling more than $32bn to support 32 clean-energy projects, including more than $10bn in loan guarantees for solar projects.

On the private investor side, a group of 11 wealthy US families formed The Cleantech Syndicate, an investment fund to support renewable energy and power-efficiency companies at all stages of development. The families intend to invest up to $1.4bn over five years, according to Bloomberg New Energy Finance.

In the solar market, Google announced a partnership with SolarCity to create a $280m fund to provide solar panel leases and power purchase agreements to households, making it the largest residential solar financing scheme to date.

Bank of America, Merrill Lynch, Prologis and NRG Energy are jointly financing the installation of $2.6bn worth of commercial and industrial rooftop solar arrays, the largest distributed solar deal in history.

And GE announced a $600m investment to manufacture solar panels in a factory slated to be the largest in the US.

This article first appeared at GreenBiz.com