[The Vector] Venture Capital Investment Increases Substantially into Green Energy

Clean energy investment worldwide was up 30% in 2010, after a steep decline in 2009, says the Pew Charitable Trusts.  “The clean energy sector is emerging as one of the most dynamic and competitive in the world, witnessing 630 percent growth in finance and investments since 2004,” said Phyllis Cuttino, director, Pew Clean Energy Program.

Venture capital investment in U.S. green technology rose 46% in 2010 after a big decline in 2009, says Clean Edge, Inc. Clean tech companies took in 23% of all U.S. venture capital dollars in 2010, which tops the 2008 record of 22%.

Cascadia Capital, LLC confirms the trend, saying recently that global venture capital investment in clean tech increased in 2010 and only 2008 recorded a higher amount of investment worldwide. However, 2010 beat out previous records in the number of deals, at 729.  “We are seeing private equity funds, particularly energy focused private equity funds, eager to invest in the sector,” says the Cascadia team on their website.

China solidified its position as the number one powerhouse at $54.4 billion invested in 2010, says Pew; Germany ranked second and the U.S. third with $34 billion invested. The U.S. had held onto the top spot until 2008, then fell to third position in 2010. India made the top ten for the first time, and Italy moved up from eighth to fourth position.  Pew released its latest report in April of this year.

Why should the U.S. drop in the worldwide rankings? Look no further than national policy waffling. “Countries like China, Germany, Italy and India were attractive to financers because they have national policies that support renewable energy standards, carbon reduction targets and/or incentives for investment and production and that create long-term certainty for investors. However, there is ambiguity surrounding clean energy policies in the United States and the United Kingdom, which likely has caused investors to look elsewhere for opportunities,” states the Pew report.

Which clean tech area led in the investment dollars?

Wind power headed the pack worldwide, according to Pew, at $95 billion, but solar experienced the most significant growth – 53% as compared to 2009.  

Looking at China, the continuing lead in renewable energy investment, the 5 year growth rate of investment is at an amazing 88%, says Pew.  103 GW capacity from renewable sources is installed, with 43,410 MW in wind power, 56,000 MW in small hydropower and 800 MW in solar capacity.  72% of the 2010 investment dollars were to wind energy, and China has a fixed feed-in tariff for wind.  The U.S., by comparison, has 58 GW capacity installed from renewable sources (about half of China’s installed capacity.) Our 5 year growth rate of investment stands at 30% (as compared to 88%), with wind power garnering 43% of each investment dollar in 2010 (as compared to 72% in China.)

The largest U.S. venture capital deal in 2010 was the $350 million investment into electric vehicle infrastructure company Better Place, according to Reuters. The next four largest amounts of capital in the U.S. went to thin-film solar company Solyndra, solar thermal company BrightSource Energy, electric carmaker Fisker Automotive and solar company Amonix.