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2011 US VC investment in cleantech steady at USD4.9 billion despite tough economy

US venture capital (VC) investment in cleantech companies reached USD4.9 billion in 2011, flat in terms of deals and down 4.5% in terms of capital invested compared to 2010, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource.

However, this represents a 29% increase from the USD3.8 billion raised in 2009. In Q4 2011 VC investment in cleantech reached USD940.5 million with 70 rounds of financing.

"Cleantech is still in the early stages of a long-term journey," says Jay Spencer, Ernst & Young LLP’s Americas Cleantech Director. "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 USD1.5 billion raised through a total of 71 rounds, representing a 5% decrease in dollars invested from 2010. The Solar sub-segment received the lion’s share of capital in Q4 2011 with USD284.5 million, accounting for 91% of the sector’s total investment of USD312.9 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 USD130.0 million.

The Industry Products and Services segment completed 2011 with the second largest amount raised at USD1.0 billion, down 34% from 2010. In Q4 2011, the segment raised USD256.2 million, with strong support from the Transportation sub-segment, which raised USD203.2 million or 79% of the Q4 2011 total, a 36% increase from the amount raised in Q4 2010. The largest deal was for the quarter was completed by Better Place, a Palo Alto-based provider of electric car networks, which raised USD201.0 million.

The Energy Storage segment ranked third in terms of total amount invested in 2011, with USD932.6 million through 28 deals representing a 253% increase from 2010 in dollars invested and a 47% increase in number of deals. In Q4 2011, the segment raised USD35.0 million, all of which can be attributed to the Batteries sub-segment. With USD30.0 million raised, VIA Motors Inc., a Utah-based electric vehicle development and manufacturing company, secured the largest battery transaction in Q4 2011.

Companies in the Energy Efficiency segment attracted USD646.9 million in 2011, a 29% decrease from 2010. The segment, however, led both the year and quarter in rounds of financing with 78 deals and 21 deals respectively. Q4 2011 investments in this segment were led by the Energy Efficiency Products sub-segment with USD57.5 million raised through 10 deals.

Cleantech companies in the revenue generation stage of development accounted for 69% of dollars invested, up from 50% in 2010. Total dollars invested in companies at this stage of development reached USD3.4 billion, a 31% annual increase.

Growth in the US cleantech market in 2011 was supported by five cleantech IPOs – up from three in 2010. Three of the 2011 deals were completed by companies focused on biofuels: Solazyme Inc., Gevo Inc. and KiOR Inc. Two more IPOs were completed in Q4 2011, one by Intermolecular Inc., a San Jose-based research and development company for the semiconductor and clean energy sectors that raised USD96.5 million, and another by Rentech Inc., a Los Angeles-based provider of clean energy solutions, that raised USD136.8 million. A total of USD688.3 million was raised through cleantech IPOs in 2011.

"There’s a strong appetite among cleantech companies to go public and we see tremendous opportunity as this industry continues to mature," says Spencer. "The growing IPO pipeline shows viable, long-term potential."
In terms of other capital market activity, there were 13 mergers and acquisitions (M&A) with a disclosed value of USD150.5 million in Q4 2011, according to Bloomberg New Energy Finance. Total M&A activity in 2011 reached 79 deals with a total disclosed value of USD2.8 billion.

Additionally, in Q4 2011, the US recorded 39 new-build clean energy asset financings with a total deal value of USD1.8 billion, according to Bloomberg New Energy Finance. New-build asset financing in 2011 totalled USD23.2 billion in 234 deals, of which the USD2.5 billion financing of the 855MW NRG Energy Project Amp PV plant was the largest.

Corporate activity was especially focused in two areas: solar and wind. In the solar market, Google Inc. and Kohlberg Kravis Roberts & Co. (KKR) invested USD189.0 million in four California solar farms totalling 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% of the USD1.8 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.

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. Honeywell is teaming up with AliphaJet to boost the development and eventual commercialization of renewable jet fuels from plant and animal matter. Mascoma is teaming up with Valero Energy to develop its first commercial-scale cellulosic ethanol plant at an expected cost of USD232.0 million.

Additionally, key players in the EV space are collaborating to expand the accessibility of EVs. Walmart will participate in ECOtality’s EV Project, which is tasked with overseeing the installation of 14,000 hosted charging stations at select stores in 18 metropolitan areas. ECOtality will integrate its Blink EV charging stations with Silver Spring Networks’ Smart Energy Platform to enable utilities to offer customers more EV charging options globally.

California continues to lead national cleantech investment in 2011 with USD2.8 billion raised. In Q4 2011 alone, California garnered 67% of all dollars with USD629.5 million through 26 deals. Massachusetts raised the second highest level of annual investments with USD465.1 million, a 63% increase from last year. Colorado had investments of USD363.3 million throughout 2011, a 28% increase from 2010, making it the state with the third highest level of investments.

 

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