Clean tech report: Q2 venture capital investment hits $1.2bn

The Cleantech Group and Deloitte yesterday released the second report this week confirming that venture capital investment in the second quarter of the year rebounded following two consecutive quarters of decline.

The report found that clean technology venture investments in North America, Europe, China and India reached $1.2bn across 94 different companies during Q2, marking a 12 per cent improvement on the previous three months.

Celebrations were tempered by the fact that investment levels are still down 44 per cent on the second quarter of 2008, but Brian Fan, senior director of research at Cleantech, said that there were now signs of recovery right across the clean-tech sector.

"We are seeing initial signs of recovery in other clean-tech asset classes, including recent activity in solar-tax equity, increased M&A levels, as well as billions in government stimulus that are being allocated globally to the clean-tech sector over the next several quarters," he said.

"Additionally, new climate and energy legislation from governments worldwide and the upcoming Copenhagen climate negotiations continue to be strong drivers of investment and innovation."

The transport-related technologies attracted the highest level of VC backing during the quarter with $236m invested in vehicle technology, $206m in biofuel firms and $165m going to battery companies.

Meanwhile, the suspicion that investment in the solar sector has overheated was reinforced when the sector recorded its lowest quarterly level of VC backing in three years with just $114m invested.

However, Scott Smith, US leader of Deloitte’s clean-tech practice, downplayed any fears over the health of the solar sector, noting that any drop in VC investment had been at least partly compensated by increased investment from utility firms.

"Solar thermal was the leading energy source procured through power purchase agreements in the first half of 2009," he said. "New investment tax credits are playing a major role in making new solar thermal, solar PV, and wind projects more economically viable for utilities, which are bringing their access to capital to the sector."

The report also showed that the consolidation trend across the clean-tech sector is accelerating with 138 M&A deals noted in Q2.

The figures were released just days after a similar study from Greentech Media, whch also showed that VC investment levels rebounded during the second quarter to $1.2bn, albeit across a slightly smaller number of deals.