Tuesday, May 24, 2005

New study: Private equity in new and renewable energy technologies is growing quickly

According to Michael Liebreich and Bozkurt Aydinoglu of New Energy Finance Limited, the number and value of early stage, new or renewable energy technology private equity deals more than doubled from 2003 to 2004. According to their study, more than $950M went into angel, seed, expansion-stage, buy-out, spin-out, or PIPE investments in energy technologies last year.

The study's numbers are a bit at odds with Nth Power's numbers (discussed back in March), which totalled 2004 U.S. clean energy VC investments at $520M, and it would be interesting to figure out exactly why that is. For one thing, the Nth Power numbers only cover the U.S., while New Energy Finance's study covered at least the U.S. and Europe, possibly more. Another critical factor is that Nth Power's study only looked at venture investing, while New Energy Finance's looked at a much broader range of private equity deals.

But still, if these were the only differences then you would expect to see New Energy Finance's numbers consistently higher than Nth Power's, and yet looking back at what both studies said for 2003, the opposite is true. I suspect there are some large definitional differences between the groups as to what constitutes "clean energy" for one and "new and renewable energy" for the other. It would be good to better understand these differences, if only to understand why growth was 100%+ in one study and relatively low in the other. Does that mean that non-VC private equity investments in energy technology took off last year? Or that what really took off was investments outside of the U.S.? Inquiring minds want to know...

Regardless, the New Energy Finance study, as described in the linked article, has some fascinating data in it. The breakdowns by sector are particularly interesting.

UPDATE: In another set of related numbers, Carbon Trust has released a study showing that half a billion pounds has been invested by VCs into UK clean energy companies since 2000, with growth at around 30% per year. Here's a link to the pdf of their study.


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