Energy attracts investment

Private equity is providing around 8.8% of all investment volume worldwide in clean energy, according to New Energy Finance, a specialist provider of financial information and services to investors in clean energy. New Energy Finance has published a report, entitled Cleaning Up, looking at recent rapid growth in venture capital and private equity investment in the clean energy industry worldwide. It analyses $15bn of transactions over the past five years, showing total investment volume has more than doubled, from $2.8bn in 182 transactions in 2004, to $6.7bn from 220 transactions in 2005.

Deal volume eased in the first five months of 2006 (except in the area of venture and technology investments) but New Energy Finance still expects full-year deal volume for 2006 to exceed that for 2005. The report identifies the most dynamic sectors, countries and investment types. It also identifies issues that may hold back further growth, such as limited numbers of technology-driven deals, bottlenecks in the clean energy equipment supply industry and a shortage of entrepreneurs with energy industry experience.

The report also contains a forecast of future growth in venture capital and private equity finance in the clean energy sector. New Energy Finance expects the total deal value to grow from $6.9bn in 2006 to $22.3bn. Total venture capital and private equity deal value between 2006 and 2012 is predicted to come in at just over $100bn, with just under $64bn of that expected to be equity.

Michael Liebreich, CEO and founder of New Energy Finance, said: “Our research has shown that around $49bn was invested in clean energy worldwide in 2005. Private equity and venture capital investment drove $6.7bn of this, or nearly 14%. It is vital for anyone investing in energy today, or making policy for the sector, to understand who is making these investments and why.”