Clean energy investors shrug off economic difficulties

[Karl]

Environmental Finance, 7 August 2008 –

Clean energy companies have continued to attract record investment at a troubled time for the world economy, according to figures from New Energy Finance (NEF). Venture capital and private equity investment in the sector hit a record $5.8 billion in the three months from April to June, up from $2.6 billion in the first quarter, the London-based analysis firm said. The increase was driven by a massive $2.5 billion inflow of funds in the form of private equity expansion capital, and also by a strong showing from private equity buy-outs. The message was that investors are keen to put to work the money they raised last year, while other investors are looking for exits. Asset financing also looked ‘healthy’ with total investments of $21.9 billion against $24.4 billion in the second quarter last year, the firm said. However, acquisitions have dropped off and refinancing activities have slumped to $400 million from $2.5 billion in Q2 2007. NEF said one of the hottest sectors was solar thermal electricity generation, where companies are looking to provide utility-scale solar energy. US developers BrightSource and eSolar raised $115 million and $120 million respectively. US technology developer Sopogy raised $9.1 million.

Despite negative public sentiment, biofuels companies were able to raise significant sums. Osage Bioenergy, a US-based ethanol plant developer, received $300 million from private equity firm First Reserve Corporation. US producer Range Fuels attracted $158 million for its cellulosic ethanol plant, while US biofuels-from-algae firm Sapphire Energy raised $50 million. In the public markets, clean energy firms raised $5.2 billion in the second quarter, equalling the figure for the same period last year and significantly more than the first quarter's $1 billion. Solar energy firms received much of the support, but almost half of the $5.2 billion came from one flotation, that of renewable energy company EDP Renovaveis, which raised €1.57 billion ($2.4 billion). However, merger and acquisition activity in the public markets slumped, with just $3.7 billion of deals, well down on the first quarter's $7.7 billion.

Source: World Business Council for Sustainable Development (WBCSD)