Frost & Sullivan sees renewable VC funding tripling by 2020

Nov 22, 2012 - Venture capital (VC) funding in the renewable energy sector will triple by 2020, driven by regulatory policies, support for carbon footprint reduction and technological innovations, Frost & Sullivan projects in a recent report.

The report, named Venture Capital Funding in Renewable Energy in Europe, studies VC investment opportunities in the solar, wind, biofuels, geothermal and marine and hydropower sectors. It notes that Europe and North America have been the leading markets for renewable sector VC funding, but investors are also interested in South Asia and Asia-Pacific as emerging renewable energy markets.

According to Frost & Sullivan's financial analyst Vinod Cartic, the number of deals rose by two-thirds on the year in 2011, and yet, total deal value went down by one-third. More deals but of smaller values were signed in Europe, followed by Asia-Pacific, while deals in North America were fewer but of larger values, Cartic said.

The most attractive green energy technologies for investment are new technologies such as thin-film solar and advanced biofuels such as cellulosic biofuels and from algae. Investments in sustainable energy have expanded, including energy storage, energy efficiency and smart-grid technologies.

The high capital costs, the constant investments needed in technology and the fact that economies of scale have not yet been reached are some of the main constraints in the renewable VC funding market, according to the report.

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