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Cleantech Funding Hit Record $1.6 Billion in Q3

Sustainable Development
National Green News
October 30, 2008


Capital investments in U.S. cleantech companies reached a record $1.6 billion in
the third quarter, according to an Ernst & Young LLP analysis based on data from
Dow Jones VentureSource.

A total of $3.3 billion was invested in the first three quarters of 2008,
surpassing the figure for the same period last year by 71 percent, the report said.

Later-stage rounds, which increased 177 percent to $906 million in the third
quarter from the preceding quarter, were a major driver of the investment
growth. They accounted for 55 percent of total capital invested in the quarter,
the report said, and the increase comes as many cleantech companies move into
the capital intensive commercialization phase.

"In light of challenging economic times, the U.S. cleantech market may be
entering a transitional period. However, the structural market drivers of the
cleantech sector remain intact, suggesting that the prospect for long-term
market development is positive," said Joseph Muscat, Americas Director of
Cleantech and Venture Capital, Ernst & Young LLP.

Six of the 10 top deals incorporated private equity firms, hedge funds and
sovereign wealth funds as first time investors in the entity. Two deals included
initial investments by a strategic corporate investor.

Energy/electricity generation companies attracted the most investment of any
cleantech segment in the quarter -- $1 billion. Solar companies were by far the
largest component of this segment with $990 million invested in 14 rounds.
The energy efficiency segment also experienced continued growth with $186
million invested, an increase of 48 percent compared to same period last year.
The third largest segment was alternative fuels, which comprised 6 percent of
overall U.S. cleantech investment. The segment, made up entirely of biofuels,
attracted $95 million of investment.

The cleantech market received a significant boost from the Housing and Economic
Recovery Act of 2008, which extended tax credits for wind energy, geothermal,
biomass and other renewable energy projects. The solar investment tax credit for
utility-scale solar projects was extended for eight years. Qualified fuel cell
properties received the same incentive, a development that could position this
segment for additional investment.

 

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