Energy Storage Driving Growth in U.S. Cleantech Investment

Energy Storage Driving Growth in U.S. Cleantech Investment

After a significant drop earlier this year, U.S. investment in cleantech companies was on the rise in the third quarter.

According to an Ernst & Young survey released yesterday, U.S. venture capital investment in cleantech firms totaled $1.1 billion in Q3 2011, an increase of 4 percent from Q2 2011. Compared to the same quarter last year, the $1.1 billion represents a 73 percent growth in dollars invested with the number of deals increasing by 36 percent to 76.

In a positive sign that corporate commitments to managing energy use is reaching a deployment phase, the Energy Storage segment led all cleantech investment during the third quarter of 2011. This segment raised $421 million during Q3 2011, representing a 1,932 percent increase during the same period last year and has raised a total of $865.2 million throughout 2011.

Among Energy Storage sub-categories, fuel cells led this segment with $225.5 million, representing nearly 54 percent of the overall investment. Energy Storage also had the top three transactions of the quarter, with the largest going to Bloom Energy which raised $150 million.

As a segment, Energy/Electricity Generation came in second place raising $255.1 million in Q3 2011. Solar, the dominant sub-segment here, accounted for 77 percent of the sector 's total investment with $195.8 million.

Energy Efficiency ranked third with $245.1 million, a 23 percent increase from Q3 2010. The segment, however, led the quarter in rounds of financing with 21 deals, a 31 percent increase from 16 deals in Q3 2010.

Regionally, California continues to be the national leader in cleantech investment. In the third quarter alone California garnered 52 percent of all dollars with $583.0 million bring the total to nearly $1.8 billion raised so far 2011. The next top states included Massachusetts ($170.4 million), Pennsylvania ($85.4 million) and Oregon ($73.5 million).

Notable U.S. government activity for the quarter included:

  • NRG Energy secured the largest transaction with a $1.2 billion loan guarantee from the US Department of Energy and $350.0 million in equity for the development of the 250MW High Plains Ranch II and III PV plants, forming the California Valley Solar Ranch.
  • The U.S. Departments of Energy and Agriculture and the U.S. Navy will invest as much as $510.0 million over the next three years to push the development of biofuels for commercial and military vehicles.

Corporate activity listed in the report highlighted some new long-term commitments:

  • NextEra Energy Inc., the largest US wind-energy producer, plans to spend as much as US$5.8 billion in the next three years to build wind and solar projects.
  • Pacific Gas & Electric (PG&E) has committed $1.3 billion to deploy smart grid technology to its coverage areas over the next two decades.
  • UPS has deployed 103 hybrid electric vehicles for its fleet this year.

Though there was no new IPO activity for cleantech firms during the quarter, the report listed several companies filing S-1 documents signaling their intention to go public soon. Among those included Intermolecular Inc., Silver Spring Networks, Renewable Energy Group, Genomatica, and Mascoma Corp.

Additional research and information can be found at Ernst & Young.

Solar panel photo provided by Shutterstock.