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clean tech investment recovers strongly during second quarte

Analysts predict US stimulus cash means growth is likely to accelerate during second half of the year

Global venture capital investments in clean technology rose 73 per cent during the second quarter of the year, totalling $572m (£347m) across 48 deals, according to new data from Dow Jones VentureSource.

Investment levels are still well down on the $1.41bn invested across 57 deals during the second quarter of 2008, but the performance marks a dramatic recovery following the collapse in VC activity during the first three months of the year.

Joe Muscat, Ernst & Young LLP director of Cleantech for the Americas, said the expected release of stimulus funds in the form of clean tech grants and incentives meant that the recovery in investment levels is likely to continue during the rest of the year.

"Barring any unforeseen capital markets circumstances, I think we are in a period of growth here," he said. "People are looking at enacted legislation and at the broader climate change legislation that will be a major enabler for companies in the sector to grow."

The US Department of Energy has been increasingly active in recent months, releasing a range of clean tech incentives and most recently issuing $47m of grants to eight smart grid demonstration projects.

Energy secretary Steven Chu also announced yesterday that the department will provide up to $30bn in loan guarantees for renewable energy projects.

The report found that the largest amount of money invested in the quarter, $157m, went into energy and electricity generation, with the main focus being on solar deals.

Firms focused on energy efficiency and smart grid technologies secured second place in the investment rankings, pulling in $151.5m from venture capitalists - a near threefold increase on the $56.5m invested in the sector during the previous quarter.

Total investment in alternative fuels in the second quarter reached $52.6m, with biofuel company Gevo Inc seeing a $40m investment and Tesla Motors Inc raising $50m from Daimler AG for electric vehicles.

There was also further evidence that venture capitalists are turning their attention to more mature clean tech firms, with about two thirds of deals focused on companies with products already in the shipping stage, up from 54 per cent in the first quarter.

Meanwhile, product development-stage companies attracted only 27 per cent of the investment, down from 46 per cent during the first quarter.

The findings mirror a June report from London-based New Energy Finance, which found second-quarter global private investment in renewable energy projects totalled $24.3bn, up more than 80 per cent from $13.3bn in the first quarter.

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