Cleantech Trends Positive

Bill Opalka | Feb 01, 2012

 

Clean energy policy may be a muddle at the federal level but investors are still willing to commit billions to the sector given the long-term global needs for new sources of energy.

That’s the upshot from a conversation I had with Jay Spencer, Ernst & Young LLP’s Americas Cleantech Director.

Ernst & Young just released its fourth-quarter report, which showed that reached $4.9 billion in 2011, flat in terms of deals and down 4.5 percent in terms of capital invested compared to 2010.

Quarter-to-quarter fluctuations are quite common, Spencer said, and aren’t really indicative of any long-term trend or loss of appetite for investors. He has charted investment since 2003. “It really is a series of peaks and valleys.”  And clean tech’s highs and lows are more pronounced because it is more capital intensive than other sectors.

In the fourth quarter, VC investment in cleantech reached $940.5 million with 70 rounds of financing. The total amount invested decreased by 41 percent compared to the $1.6 billion raised in the previous year’s fourth quarter.

This year we’re down a little under five percent, but in my view, we’re still holding steady in still-challenging economic times,” Spencer said.

However, this represents a 29% increase from the $3.8 billion raised in 2009. In the fourth quarter of 2011 VC investment in cleantech reached $940.5 million with 70 rounds of financing.

“Cleantech is still in the early stages of a long-term journey,” Spencer added. “We’ve reached a point where new products and services are ready to be launched, and as these products come to market, we’re seeing renewed interest, innovation and opportunity in cleantech.”

The Energy/Electricity Generation segment led investment in 2011 with $1.5 billion raised through a total of 71 rounds, a 5 percent decrease in dollars invested from 2010. The solar sub-segment received the lion’s share of capital in the fourth quarter with $284.5 million. The top solar deal for this quarter was completed by Stion Corp., a San Jose-based a manufacturer of high-efficiency, thin-film solar panels, which raised $130 million.

Corporate activity was especially focused in two areas: solar and wind. In the solar market, Google Inc. and Kohlberg Kravis Roberts & Co. (KKR) invested $189.0 million in four California solar farms totaling 88 MW of capacity. The projects will be built by Recurrent Energy Inc., a unit of Sharp Corp.  Additionally, NRG Energy Inc. acquired solar-power developer Solar Power Partners, deepening NRG's involvement in the solar power market.

On the wind front, MidAmerican Energy bought 49 percent of the $1.8 billion 290 MW Agua Caliente project based in Yuma County, Arizona, which is being developed by NRG Energy.

Duke Energy Corp. and American Transmission Co. bought a power line project to bring wind energy from Wyoming to the US Southwest.  MidAmerican Energy acquired three wind power projects with a combined capacity of 404.8 MW in Iowa.

In partnerships across different segments, Vestas is teaming with IBM to improve return on wind power investment by using the IBM BigInsights analytics software and an IBM Firestorm supercomputer to increase energy output.

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