Clean technology stays hot as new investment pours in

By JENNIFER BOLLENSeptember 1, 2008

Despite the economic downturn, investment in so-called clean technology keeps on growing.
The clean-technology sector received a record level of investment from venture-capital and private-equity firms this year, according to data published by researcher New Energy Finance.
Clean technologies are technologies that go some way to reducing environmental harm, and range from wind farms to devices that help companies monitor their energy usage.
Total global clean-technology investments of $8.4 billion in the first half represented a 17% rise from the $7.2 billion invested in the sector in the year-earlier period.
Deal sizes have grown, too. Investment bank Jefferies & Co. said that in the second quarter, nine companies raised more than $1 billion from private-equity funds. Ethanol producer Osage Bioenergy LLC, a U.S.-based producer of barley-derived ethanol, raised the most, with $300 million.
The rising activity in clean technology came as regulation to tackle climate change has increased, said Adam Black, head of sustainability at private-equity firm Doughty Hanson.
"A lot of the things that are currently seen as nice add-ons will become core to the investment rationale," said Mr. Black.
In terms of investment in clean-tech businesses, Stephan Gueorguiev, an associate at venture-capital firm Advent Ventures, said water-treatment, recycling and power-consumption technology will prove attractive over the next few years.
Private-equity deals in the alternative-energy sector alone have reached $343.8 million so far this year, compared with $227 million for all of last year, according to research provider Thomson Reuters.
Tom Murley, head of renewable energy at HgCapital, said: "It is also of the few growth areas amid a broader economic slowdown. With high energy prices, a consensus about climate change and increasing demand for energy, clean tech and renewables are areas that will continue to grow."
Wind- and solar-energy businesses have attracted the most interest from private-equity firms, Mr. Murley said, as have biofuels. But he said interest in the latter had waned because of rising corn prices and the food-versus-fuel debate.
Sebastian Waldburg, managing partner of SI Capital, said solar technology will boom over the next 10 years. The sector would be partly driven by cost reductions and feed-in tariffs, which ensure electricity providers pay for renewable energy at a higher price than the market rate to compensate for generation costs, he added.
• From Financial News at www.efinancialnews.com.