Clean-Tech Investing Rises Sharply, Say New Studies
Clean-tech venture capital investing in North America realized its eighth consecutive quarter of growth, with a record $843 million invested in clean-tech in the second quarter of 2006, according to research by Cleantech Venture Network. The energy segment led the way with $594 million, a 69% increase over the $352 million invested in the previous quarter.
According to data, the $843 million in venture capital invested in clean technology during Q2 2006 represented a 64% increase over the $514 million invested in Q1 2006 and a 129% increase over Q2 2005. Clean-tech investments reached 13.4% of all venture capital invested in all categories for the quarter. In the first half 2006, energy investment tripled to $946 million, from same time last year.
Another study, by New Energy Finance, found that global venture capital and private equity investment in clean energy companies rebounded strongly in the second quarter of 2006 after a slow start to the year. More than $2 billion is estimated to have flooded into the sector, three times the amount invested the previous quarter and more than double the figure for the same quarter in 2005.
Particularly noteworthy, said New Energy Finance, was the surge in Private Investment in Public Equity, or PIPEs, and the rush of enthusiasm for California's solar sector.
PIPEs have been around for a decade, but Q2 2006 saw them take centre stage in the clean energy industry. The quarter saw $556m in PIPE investments, compared with just $21m the previous quarter and $28m in the same period in 2005. Traditionally, PIPEs were a fund-raising last resort for public companies, but small- and micro-cap companies increasingly use them to fund expansion without going to the effort of a full secondary offering.
U.S. proton exchange membrane fuel cell developer Plug Power attracted $217m from one of the largest private investment companies in Russia, Interros, and Norilsk Nickel, the world's largest producer of palladium and nickel, and the fourth-largest platinum producer. Pacific Ethanol, the NASDAQ-listed bioethanol producer completed two PIPEs to raise a total of $229m.
"The last two years have seen an extraordinary ramp-up in the value of the solar PV sector," said New Energy Finance. "This was driven initially by extremely (some would say overly) generous tariffs paid in Germany for electricity from solar power. Now it is California’s turn to drive the market. The California Solar Initiative, agreed in January 2006, will put $3.2 billion of subsidies into the sector over 11 years, aiming to create “a million solar roofs" on homes and businesses, equivalent to 3GW of distributed energy generation. The $75 million venture funding for California-based thin-film PV cell and panel maker Nanosolar was one of the largest VC investments in the US across all sectors, while solar PV concentrator technology company SolFocus has attracted funds from investors including New Enterprises Associates, a US VC firm traditionally focused on IT and healthcare.”
According to the Cleantech Venture Network, clean tech surged ahead of the two previously dominant venture investment categories, telecommunications and medical, during the most recently reported quarter. It now ranks third behind biotech and software, indicating its shift into the mainstream, said the group.
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