2008 Annual Review Highlights Slowdown in Cleantech Investments

2008 Annual Review & 4Q08 Quarterly Investment Monitor

2008 Annual Review
Cleantech Investment Monitor
Volume 7 / Issue 4
& 4Q08 Quarterly

www.cleantech.com

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© 2009 Cleantech Group LLC www.cleantech.com


Table of Contents
Foreword 4

Key Conclusions 5

Key Findings 8

1. 4Q08 Results 8
2. 2008 Results 8
3. Results by Geography 9
4. Round Size 10
5. Venture Investor League Table 11
6. Solar 12
a. Thin-film PV 13
b. CST 13
c. Service Providers 14
d. c-Si 14
e. CPV 15
7. Biofuels 16
a. Cellulosic Ethanol 17
b. Algae 17
c. Biomass 18
d. Biodiesel 18
8. Transportation 19
a. Vehicles & Components 20
b. Batteries & Fuel Cells 21
c. Other Technologies 23
9. Wind 24
Principal Author 10. Green Buildings 26
11. Smart Grid 28
Brian Fan 12. Water 29
Senior Director of Research 13. Europe 30
14. China 33
+1 415-684-1020 ext. 6100 15. India 35
brian@cleantech.com 16. M&A 40
17. IPOs 42

Additional Data and Charts 43

Data and Charts Data: Global 43

David Koren Data: North America 45
Research and Data Specialist
Data: Europe 52
+1 810-224-4310 ext. 7174
Data: China & India 59
david.koren@cleantech.com
North America Deal Tracking – 4Q08 Deals 63

Europe Deal Tracking 69

China & India Deal Tracking 73

M&A Deal Tracking 74

Our Sponsors 79

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Foreword
Cleantech in 2009: new players
2008 represented another record year for cleantech venture investing; however, a slowdown in
drive a new perspective
fourth quarter investments reflects the breadth of the global economic crisis. As many cleantech
projects approach production-readiness and require substantial investments to move forward,
traditional sources of capital are suddenly becoming challenging to locate, stalling some capital-
intensive projects. Most analysts predict this trend will continue until capital availability improves.
In the interim, venture capitalists are examining the business models of their existing investments
in order to drive new innovations and wait out the capital freeze and high interest rates.

While capital-intensive investments have decreased over the past few months, a familiar player
has entered more prominently into the cleantech arena, particularly where renewables are
involved. Established utilities, which are traditionally more recession-proof than other industries,
have started to leverage their balance sheets to invest in and/or test new clean technologies. The
role of utilities doesn’t end with testing new concepts, as many are incentivized to purchase
these technologies, or even acquire the businesses themselves. In fact, utilities’ desire to own
cleantech assets has increased significantly due to an attractive return on investment and the
extension of tax credits previously not available. Ultimately, the goal is to incorporate the assets
into the utilities’ rate bases. This alternate form of investment outlay augments more traditional
funding methods, and can help keep cleantech moving forward in the coming year.

A recent Electric Power Research Institute (EPRI) initiative is an example of “traditional” utilities
playing key roles in the evolution of cleantech. EPRI’s goal is to test the addition of solar thermal
collectors to fossil-fueled power plants, in an effort to reduce the amount of fuel that these plants
need to burn for generating electricity. The test involves power plants operated by well known
coal-based utilities, which are not generally known for their focus on alternative energies. While
cost reduction is an obvious driver (in the form of lower per-kilowatt-hour variable costs) for
these utilities, the fact that new technologies are being tested is a “win-win” for the utilities and
the public – lower supplier costs mean improved efficiency and reliability, higher profits for the
utilities, and a cleaner environment. Indeed, such initiatives touch all aspects of society, helping
to ensure that these projects continue to proliferate even during tough economic times.

The expanded role of regulated utilities in cleantech investments frees up investors to refocus
some of their priorities in the coming year. Many investors will reexamine business models of
portfolio companies and attempt to reduce the companies’ capital spending, or sell technologies
to utilities. Capital-efficient investments in areas such as software, semiconductor technologies,
batteries, and other innovations should continue to attract significant investor interest. Facing
scarce capital from traditional sources, capital-intensive projects may succeed by leveraging a
“build to sell” model (using operations & maintenance agreements) as opposed to an
owner/operator holding a power purchase agreement with the utility.

The administration’s energy and environment blueprint should spur additional investment in
cleantech. Clean coal technologies and reduced emissions are two stated goals, and
government funding could take the form of grants for research and development, new
technology testing, tax credits for renewable investments, and other efforts. What is most
intriguing about this scenario is that entities outside of VCs that traditionally have not been key
players are getting involved – regulated utilities, established companies in software, private
equity, and even foreign governments have backed up their interest in cleantech with hard
dollars.

In summary, cleantech businesses will continue to face some daunting challenges in attracting
funding for infrastructure and other capital-intensive projects. However, the availability of non-
traditional funding through other sources, coupled with the availability of capital to acquire assets
and even entire companies (including distressed businesses), will provide a unique mechanism
to drive new cleantech initiatives while forming new touchpoints between utilities, software
companies, government, private investors, health care companies, and other entities. 2009
should be an exciting, if unpredictable, year for the cleantech industry.

Scott Smith Mark E. Jensen
Partner Managing Partner, U.S. Venture Capital Services Group
U.S. Cleantech Practice Leader Audit & Enterprise Risk Services Technology,
Deloitte & Touche LLP Media & Telecommunications Industry Leader
Deloitte & Touche LLP

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Key Conclusions
1. The end of the first Over the past six years, the cleantech investment category has grown from an obscure niche to
cleantech boom. Valuations a mainstream growth sector. Investors across all asset classes – venture capital, private equity,
reset as venture capital project finance, public equity – and in all geographies, from Brussels to Beijing – have entered
becomes scarce. Companies the space.
and investors hunker down for
a long downturn. The next few 2008 witnessed the end of this first cleantech boom – fueled by the easy availability of private
years will be nothing like the capital. As the economy enters into a severe, synchronized global recession, exacerbated by a
last few years, but the sector protracted banking crisis, capital for clean technology companies, once plentiful across all asset
will survive. classes, is now scarce. Venture capital, so critical to early growth companies, will continue to be
constrained by a lack of exits, while project finance, essential for scaling up plants and facilities,
is hamstrung by the ongoing credit crisis.

Valuations – private and public - will take a hard reset, as the slowdown is not isolated to private
equity; solar and wind turbine vendors, who until recently sported multi-year backlogs in orders,
now find themselves cutting production capacity due to collapsing demand.

We are confident that the cleantech sector, a group of 3,000 companies worldwide across
product sectors as diverse as silicon to software to services, will survive this downturn.
Innovative companies and resourceful entrepreneurs will a find way through, as they always
have.

2. Momentum shifts to the President Obama, who made investing in the clean energy economy one of his top campaign
policymakers. Attention turns priorities, has followed up with significant federal support for clean technologies, energy
efficiency and transmission, as part of the ARRA stimulus bill. This decisive and substantive
to Washington DC and Beijing,
action, on top of impressive Cabinet appointments, has energized the clean technology
with an eye towards community. American businesses and investors, long used to inaction and delay on clean energy
Copenhagen. and environmental issues, now look to engage with government to influence policy and
appropriations.

China, keenly aware of the fragility of its energy supply, is becoming increasingly aware of the
impacts of global warming, especially on its water supply. While China fears social unrest due to
rising mass unemployment, it has the benefit of the world’s strongest balance sheet.

The successor to the Kyoto Protocol, Copenhagen 2009, looms at the end of this year, and it
remains to be seen whether the US – long the world’s largest consumer of fossil fuels – and
China, the world’s largest emitter of greenhouse gases, in absolute terms - can find common
ground, with both nations facing serious domestic problems.

3. Venture investors should We encourage venture investors, currently overweight solar, to reallocate capital towards
shift focus from thin-film solar efficiency technologies, especially in the smart grid and green buildings sectors. Currently, smart
grid and green buildings account for only 8% of all cleantech venture dollars, while solar claims
to efficiency technologies as a
40%.
solution to the joint challenges
of energy security and global The McKinsey global greenhouse gas abatement cost curves v2 identifies potential opportunities
warming. in 10 sectors and 21 world regions, providing a rigorous, analytical roadmap for business
opportunities in energy efficiency. (Note to our global clients: 70% of the opportunity is in the
developing world, while 30% is in the developed world.) Additionally, the stimulus bill allocates
20 billion dollars on energy efficiency efforts, seeding end-markets for companies selling
efficiency solutions.

As our colleagues at Deloitte note, utilities will be key players in enabling the shift towards a more
energy-efficient economy – not simply as customers and investors in renewable generation
assets, but also to solve thorny regulatory and business issues that discourage efficiency, such
as decoupling profits from generation.

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4. There is a need for alternative
This downturn is demonstrating, all too painfully, the gap in the financial markets for capital-
financing structures in the
intensive companies in the cleantech space that need financing to cross the ‘valley of death.’
cleantech sector to enable
Ausra, an innovative concentrated solar thermal company, recently abandoned its original
companies to cross the ‘valley of
business plan of creating utility-scale solar plants using low cost Fresnel lens reflectors and a
death,’ analogous to what the
saturated steam process, partly due to, we presume, the dearth of project financing due to
biotech community has
technology risk. Given project finance’s aversion to any kind of technology risk, and the inability
developed.
of most venture investors to provide massive, late stage rounds, we believe that more innovative
companies will likewise be unable to cross the chasm. (This is not to say that Ausra will not be a
smashing success selling solar plants and components to utilities, or competing with Abengoa in
the process heat market.)

The biotech community, facing similar challenges two decades ago, developed various vehicles
such as SWORD financing (Stock and Warrant Off-Balance Sheet Research & Development), a
special purpose entity that enables small biotech companies access capital to fund R&D.

We call on financial institutions , startups, utilities and regulators to work together to develop a
financial vehicle to diversify a cleantech startup’s risk – especially in the biofuels, CST, and CCS
sectors.

We believe that investors with available capital will find opportunities to finance high-quality
5. It is a great time for investors companies with good technology and quality management teams, at bargain valuations. Of the
with capital to go bargain-hunting. various asset classes, we believe that private equity funds are likely in the strongest position to
take advantage of this opportunity. Of course, the famous market adage “liquidity is a coward,
when you need it the most it runs away and hides” comes to mind. Nevertheless, we have heard
from a number of venture partners and company CEOs that firms with strong IP assets and
stellar management teams that commanded billion-dollar valuations last fall, can now be had for
valuations in the tens of millions. While many valuations were inflated, we believe the market has
over-corrected to the downside.

6. The secular, long-term drivers We believe the long-term drivers for cleantech remain as strong as ever.
for cleantech investing remain
First and foremost is the challenge of energy supply.
intact.
Although oil is currently trading at $40/barrel, the long-term supply outlook is daunting. The IEA
forecasts the need to bring online 64 million barrels per day, or six Saudi Arabia’s worth, of new
production, by 2030 – just 20 years away – to meet increased demand and to offset declines
from existing fields. Canterell, once the world’s second largest oil field, continues its production
freefall, down 38% from a year ago, and down 63% from its peak 5 years ago – equivalent to 1
mbpd of supply, permanently off the market, in 5 short years. (It’s quite a relief that the recent
IEA field-by-field analysis, if accurate, reports that Ghawar, the world’s largest oil field that is
responsible for 5% of the world oil production, is not in imminent danger of peaking,)

Nonetheless, the need to reduce our dependence on petroleum, which provides 37% of total
energy consumed worldwide and 90% of all transportation fuel, is an imperative if we are to
sustain the modern industrial economy that depends critically on cheap transport.

Second is the related challenge of global warming, which is directly and primarily caused by the
burning of coal for power generation and the burning of oil for transportation. Coal and oil directly
and indirectly account for around two-thirds of the CO2 emissions that cause global warming. If
we are to stabilize CO2 levels in the atmosphere at 450ppm, we must develop sources of
renewable power generation and renewable liquid transport fuels. Given that coal is responsible
for over a quarter of the world’s power generation, and half of US power generation (and almost
all of its baseload generation), it will take decades, not years, to wean ourselves off coal.

Third and lastly is the continued economic development of China and India. In virtually every
developed country in the world, energy demand is strongly and positively correlated to an
increase in per-capita income. Energy makes our lives easier, more convenient, healthier, less
hungry, and more entertained. The development aspirations of the next billion people are
dependent on increased energy consumption, and our colleagues at the World Bank argue that it
is unconscionable to suppress the development aspirations of the world’s poor by denying them
access to energy.

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What is the solution to these three intertwined problem of energy supply, climate change, and
economic development?

Develop renewable alternatives to coal and oil: renewable power generation (solar, wind, etc.)
and biofuels.

Develop efficiency technologies to extend the timeframe that we have to scale up production of
renewables and reduce the ultimate level of production.

Develop mitigation technologies to reduce the impacts of our continuing, but hopefully
decreasing, fossil fuel usage.

And develop technologies to deal with the impacts of global warming that are happening – the
loss of water and arable land being the most urgent.

In other words, the solution is each and every cleantech market opportunity that we cover.

For these reasons, we believe cleantech is still the sector invest in – now, more than ever.

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Key Findings
1. 4Q08 Results

4Q08 cleantech investment totaled
$1.7 billion, down 38% from 3Q08
– the sharpest quarter-on-quarter
decline recorded since we began
tracking the space.

Declines in total deals (-24%),
average round size (-19%), and
number of investors (-21%).

Only three $100M+ rounds in
4Q08, down from six each in 2Q08
and 3Q08.

In 4Q08, cleantech venture investments in North America, Europe (including Israel), China and
India totaled $1.7 billion, down 38% from $2.7B in 3Q08. We recorded 127 total deals, down
24% from 167 deals in 3Q08. The average round size contracted to $17M, from $21M last
quarter.

We recorded three $100M+ financing rounds, down from six each in 3Q08 and 2Q08.

2. 2008 Results

In spite of the 4Q08 drop-off, 2008
was the sixth consecutive record
year for clean technology venture
capital investment and deals.

2008: $8.4 billion invested across
541 rounds (432 disclosed) in
North America, Europe, China and
India.

Cumulative total invested since
2002: $24.6 billion

Since 2002: 46% CAGR
Since 2005: 59% CAGR

Cleantech venture capital investing totaled a record $8.4 billion in 2008. Even with the 4th quarter
decline, 2008 saw an increase of 38% from the previous record of $6.1 billion in 2007. The
number of investment rounds hit an all-time high in 2008, totaling 541 (432 disclosed and 109
undisclosed). Since 2002, cleantech venture investment has grown by a CAGR (compound
annual growth rate) of 46%, and since 2005, a CAGR of 59% - reflecting the influx of new capital
and investors into the category over the past three years.

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3. By Geography
North America: 69%
Europe & Israel: 22%
China: 5%
India: 4%

North American companies raised $5.9 billion in 2008, up 44% from 2007. NA companies closed
300 financing deals in 2008, down from 307 in 2007. North America accounts for close to 70% of
the investment total and 55% of the deal total. The average (disclosed) deal size in North
America increased from $13.4 million to $22.5 million.

Companies in the Silicon Valley/Northern California region accounted for almost 30% of the
global investment total, but only 20% of the deals, reflecting a tendency of Valley VCs to put
more support behind fewer companies.

Companies in Europe and Israel accounted for one-fifth of the total venture capital raised, or $1.8
billion, up almost 40% from 2007. The number of transactions grew from 144 to 200, resulting in
average deal size remaining constant, at approximately $9 million. The European venture
community’s tendency to support a greater number of smaller companies, with smaller amounts
of capital (and at lower valuations), is reflected in European/Israeli companies accounting for
21% of the total invested, but 37% of total deals.

China and India remain emerging powers in the cleantech space, with companies in those
markets raising $430 million and $277 million invested, respectively, accounting for a combined
9% of total. We believe that given the limited coverage and greater opacity of startup companies
in China and India, that there are likely a significant number of unreported and undisclosed deals.
If so, the true total is likely higher.

Cleantech Group does not yet cover Asia beyond China and India (including Japan, Korea,
Singapore, Malaysia, Taiwan, and others), South America (including Brazil, which has significant
biofuels activity), or Africa. We estimate that these uncovered markets may add up to another
10-15% of the total. However, given our practice of including only verified, discrete financing
deals to our database, we have not added these estimates to our ‘global’ totals.

Additional detail on Europe, China and India can be found later in this report.

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4. Round Size Average round sizes have increased significantly over the last several years. Since 2004, the
average seed round has increased up 300% - although in absolute terms, that is only an
increase from $1 million to $3 million. More notably, the average first round increased from $4 to
$13 million, while the average follow-on round increased from $7 to $26 million.

From 2004 to 2008
• Seed rounds up from $1M to $3M
• First rounds up from $4M to $13M
• Follow-on rounds up from $7M to $26M

Round size inflation has been driven primarily by several sectors, including solar, biofuels,
advanced batteries, and wind. In solar, first rounds more than tripled from $7M to $23M, and
follow-on rounds more than quadrupled from $12M in 2004 to a whopping $53M in 2008.

Driven primarily by first round and
follow-on round inflation in solar:

From 2004 to 2008, solar
• Follow-on rounds from $12M to $53M

In the biofuels sector, as first rounds increased from $2M in 2004 to $14M in 2008, while follow-
on rounds increased from $6M in 2004 to $27M in 2008. While 2008 round sizes are up from
2007, they are still down from 2006, which reflects the peak of investment in large, first-
generation ethanol and biodiesel refineries.

As well as in biofuels:

From 2004 to 2008, biofuels
• Follow-on rounds from $6M to $27M

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5. Venture Investor League Table The most active investors from 2008, as measured by rounds participated in, are listed below. As
many investors jointly participate in a single financing round, there is no accurate way to estimate
or impute the amount invested by each investor (unless the investor or company tells us). In lieu
of amounts, we measure rankings by rounds participated in.

Investor Rounds Companies invested in 2008
Top Investors in 2008, # rounds
1. Khosla Ventures, 21 Khosla Ventures 21 Ausra (2), Coskata (2), AltaRock Energy, NanoH2O, Neersorb,
Amyris Biotechnologies, EcoMotors, Firefly Energy, Gevo, Range
2. Kleiner Perkins Caulfield & Byers, 19
Fuels (2), Sakti3, Codon Devices, Infinia Corp, Lumenz, Mascoma,
3. Quercus Trust, 16 PAX Streamline, SJS Technology, Transonic Combustion
4. RockPort Capital, 14 Kleiner Perkins 19 Ausra (2), Kotak Urja, Luca Technologies, Silver Spring Networks,
5. Draper Fisher Jurvetson, 13 Caufield & Byers Sriya Innovations, AltaRock Energy, Fisker Automotive (2),
6. Emerald Technology Ventures, 11 Flodesign Wind Turbine, Amyris Biotechnologies, Lehigh
7. VantagePoint Venture Partners, 10 Technologies, MachFlow Energy, Segway, Verdiem Corp, Codon
Devices, GMZ Energy,Mascoma Corp, RecycleBank
8. Chrysalix Energy Venture Capital, 8
PCG Asset Management, 8 Quercus Trust 16 Lightwave Power, Open Energy Corp, Promethean Power, ReGen
Power Systems, Sencera International (3), Cyrium Technologies,
Oak Investment Partners, 8
Firefly Energy, Hydro Green Energy, Standard Renewable,
Advanced Technology Ventures, 8 Colorep, Glacier Bay, GridPoint, Nanoptek, Suniva
Google, 8
RockPort Capital 14 ISE Corp, Project FROG, Second Rotation, Soliant Energy,
Partners Solyndra, Deerpath Energy, Eka Systems, Enphase Energy,
Hycrete, Northern Power Systems, Sustainable Spaces, Aspen
Aerogels, Achates Power, NanoGram Corp
Draper Fisher 13 d.light design, Planet Metrics, SolarCity Corp, Attero Recycling,
Jurvetson Genomatica, Kaiima, Primet Precision Materials, BrightSource
Energy, EdeniQ, EoPlex Technologies, GreenFuel Technologies,
Deeva Energy, Luminous Devices
Emerald 11 FMI NewCoal, Oceanlinx, Pelamis Wave Power, Emergya Wind
Technology (2), EnOcean, Pressure Pipe Inspection Company, Xunlight Corp
Ventures (2), Senscient, Arxx Building Products
VantagePoint 10 Adura Technologies, Chemrec AB (2), Cobalt Biofuels, iWatt,
Venture Partners Miasole, Ostara Nutrient Recovery Technologies, Bridgelux,
BrightSource Energy, Mascoma Corp
Chrysalix Energy 8 Brammo Motorsports, Cyrium Technologies, H2Scan, Bridgelux,
Venture Capital Epyon, ReliOn (2), Fat Spaniel Technologies
PCG Asset 8 SolarReserve, Allied Resource Corp, Range Fuels (2), ReliOn,
Management SpectraWatt, Fat Spaniel Technologies, Odersun
Oak Investment 8 GreenVolts, NanoH2O, Plastic Logic, Aurora BioFuels, eSolar,
Partners ReliOn (2), Boston Power
Advanced 8 CaliSolar, Coskata (2), AltaRock Energy, Nuventix, Rive
Technology Technology, Wakonda Technologies, Sub-One Technology
Ventures
Google 8 Actacell, AltaRock Energy, Aptera Motors, Makani Power, Potter
Drilling, BrightSource Energy, eSolar (2)
Venrock Associates 7 Qteros, Second Rotation (2), Sapphire Energy (2), Boston Power,
Orecon
Foundation Capital 7 Azure Power, Silver Spring Networks (2), SunRun (2), Control4
Corp, eMeter Corp
Polaris Venture 7 Infinite Power Solutions, SiOnyx, Athenix Corp, Living Proof,
Partners Wakonda Technologies, Greenfuel Technologies, 1366
Technologies

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6. Solar Solar technology companies raised $3.3 billion in venture capital in 2008 - a full 40% of all
cleantech venture capital raised.
In 2008, solar was the leading
cleantech investment sector. Solar has become the leading investment theme of venture investors, with total investment
growing 83% from 2007, while the number of transactions grew by 24%. This reflects the growth
in round sizes, especially in follow-on rounds, detailed above.

In 2008, solar companies raised
$3.3 billion, up 83% from 2007.

Solar’s share of cleantech VC has grown dramatically since 2006, when solar accounted for 15%
of total investments (in that year, biofuels was the leading VC investment theme, accounting for
22% of total). Despite the pullback in total cleantech VC in 4Q08, solar’s share remained
consistent at around 40% throughout all quarters of the year.

Solar took 40% of all cleantech VC
dollars in 2008, up from 30% in
2007 and 15% in 2006.

Within solar, thin-film PV was the Within the solar sector, thin-film companies raised almost $1.6B (48% of the solar total), followed
dominant investment theme, by concentrated solar thermal (CST) companies which raised $645M (19%), solar service
followed by CST and solar service providers (systems) raised $510M (15%), crystalline PV vendors (including polysilicon) raised
providers. c-Si investments $487M (15%), and concentrated photovoltaic (CPV) startups raised $92M (3%).
continue to decline, while CPV
remains a niche.

 Thin Film PV: $1.6B
 CST: $645M
 Service Providers: $510
 c-Si: $487M
 CPV: $92M

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6. Solar (cont.)
Almost half of solar venture investment in 2008 went to thin film startups. Sixteen firms raised
almost $1.6 billion, with just six firms – Nanosolar ($350M), Solyndra ($219M), OptiSolar
a. Thin-Film PV ($210M), SoloPower ($200M), AVA Solar ($145M), and Sulfurcell Solartechnik ($134M) –
raising a combined $1.26 billion. Five of these firms (all except OptiSolar, a vertically-integrated
a-Si manufacturer) are attempting to commercialize production of CIGS (copper indium gallium
diselenide) thin-film solar cells.

2008: $1.6 billion invested in 16
thin film solar startups, with six
CIGS firms raising $1.26 billion.

In 4Q08, investment in thin film startups fell to $267M, from $620M in 3Q08. The largest thin-film
round we recorded in 4Q was $219M in Silicon Valley startup Solyndra, disclosed in an SEC
4Q08: notable thin-film PV rounds filing on Dec 31st (it is unclear whether this is fresh capital raised in 4Q08, or capital raised earlier
 Solyndra (US), $219M in the year). Solyndra, which came out of stealth mode in October with its unique cylindrical thin-
 Trony Solar (China), $20M film solar panel, recently lost its technical lead and Chief Scientist, Markus Beck, to First Solar.
 Solexant (US), $18M
Other thin-film rounds of note in the 4th quarter include a $20M investment by Intel Capital in
Trony Solar, a leading Chinese solar manufacturer. Trony is one of Intel Capital’s first two
Chinese cleantech investments - the other being Shenzhen-based NP Holdings, which is
developing massive electricity storage systems. Solexant, a Silicon Valley-based startup that is
developing a nanostructured solar cell using quantum dots that harvests light from the entire
solar spectrum, raised $18 million in a Series B from Trident Capital and others.

CST attracted considerable investor interest in 2008. In total, eight companies - SolarReserve
($140M), eSolar ($140M), BrightSource Energy ($115M), Solel ($105M), Ausra ($61M), Infinia
($57M), SkyFuel ($17M) and Sopogy ($9M) – raised $645 million in venture capital, while a ninth
b. Concentrated Solar Thermal company, Stirling Energy Systems, was acquired by Irish infrastructure firm NTR plc for $100
million. In 2007, CST companies raised less than $100M in venture capital.
2008: $645M VC invested in eight
CST companies, plus a $100M
M&A deal.

2009: unlikely to see the same
level of investment in CST as
venture investors pursue capital-
efficient business models.

After the rush into the space, which peaked in 2Q08, venture investment fell significantly in 3Q08
and 4Q08. We have heard that several top CST companies are trying to raise additional venture
4Q08: notable CST rounds rounds, as availability of project finance has dried up due to the ongoing credit crunch.
 Ausra (US), $36M
Kleiner Perkins-backed Ausra, which raised the only CST financing round recorded in 4Q08, a
$36 million round, recently announced that it was abandoning its original capital-intensive
strategy of building utility-scale power plants, and was instead going to pursue the industrial
process heat market (a market also pursued by Abengoa and Sopogy, among others), as well
as sell its technology and components to other power plant developers.

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6. Solar (cont.) Downstream solar – companies that provide financing, installation and maintenance services for
end customers – raised $510 million in venture capital in 2008, as investors funded 36 total
c. Solar Service Providers rounds (27 disclosed).

In 2008, the seven largest rounds totaled $424M, or 83% of the total, and were raised by
SunEdison ($131M), Himin Solar Energy Group ($100M), Recurrent Energy ($75M),
Mainstream Energy (parent of AEE Solar and REC Solar; $40M), SolarCity ($30M), Solaire
Direct ($25M), and SolarEdge Technologies ($23M).

2008: solar service providers
raised $510M.

Investor interest in downstream solar remained resilient in the face of the economic downturn, as
11 firms raised a combined $211M in 4Q08.
4Q08: notable solar service
provider rounds The largest round, $100M in Shandong-based Himin Solar Energy Group, was raised from
 Himin Solar Energy Group Goldman Sachs and CDH Investments. Himin is China’s largest manufacturer of solar water
heaters, with an estimated 10% global market share.
(China), $100M
 Solar City (US), $30M
Silicon Valley-based SolarCity, a residential-focused service provider that specializes in whole-
 Solaire (France), $25M neighborhood systems, and has become California’s largest residential solar-panel installer in a
 SolarEdge Technologies few short years, raised a $30M round. Notably, $25M came from strategic investor and CdTe
(Israel), $23M behemoth First Solar, which is looking to expand into the residential market, with the balance
from DFJ and DBL Investors.

Paris-based Solaire Direct raised $25M from Demeter Partners, Schneider Electric Ventures
and TechFund. Solaire Direct is a vertically integrated solar power provider that manufactures
solar panels, as well as installs, maintains and operates large-scale solar installations. Solaire
Direct has a pipeline of 300MW in projects, and is looking to become the third major solar
developer in France, behind EDF and GDF Suez.

Israeli startup SolarEdge Technologies raised $23M from Israeli VC Vertex Venture Capital,
along with Genesis Partners, Walden International, and Opus Capital. SolarEdge is
developing chipsets and software that improves the power conversion of PV systems.

Crystalline silicon companies – including polysilicon manufacturers, and c-Si cells and module
companies, raised $487 million in venture capital in 2008, down 41% from the $834 million
raised in 2007, as venture investors shifted focus away from traditional c-Si PV technologies to
d. c-Si: Polysilicon, Wafers, Cells thin-film PV.
and Modules

… while traditional c-Si module
manufacturing continues to ramp
up in China.

14


6. Solar (cont.) In 2008, we saw three large venture investments in Chinese c-Si companies. This continues a
trend that began in 2007, when Shunda Holdings and Yingli Green Energy Holding Co raised
d. c-Si: Polysilicon, Wafers, Cells $82M and $118M, respectively. China already accounts for over 1/3 of global module
and Modules (cont.) manufacturing, and these investments accelerate the move of Chinese solar companies up the
value chain, into ingot and wafer cell manufacturing.
China continues to move
upstream into ingots and wafers, Nanjing-based ET Solar, a vertically integrated ingot, wafer, module and system manufacturer,
while strengthening its raised $50M over two rounds: a round led by China Environment Fund, and a subsequent
downstream presence in module round led by institutional investor NewMargin Growth Fund and European private equity house
manufacturing.
China Equity Links. Jiangxu province-based module manufacturer Feida Group PV raised
$50M from Chinese VC China New Enterprise Investment Co, while Shangrao-based Jinko
Solar Energy, a producer of monocrystalline and multicrystalline silicon wafers, raised $35
4Q08: notable c-Si rounds
 CaliSolar (US), $102M million from the city of Shangrao, China Israel Value Capital, Shenzhen Capital Group, and
 Jinko Solar Energy (China), Israeli investor Pitango.
$35M
In 2008, we saw two major investments in upgraded metallurgical silicon: Silicon Valley-based
CaliSolar, which raised $100 million in 4Q08 from VantagePoint, and Canadian company 6N
Silicon, which raised $20M from Good Energies, Yaletown Venture Partners and Ventures
West.

Other notable financings in 2008 include Italian polysilicon producer Silfab ($79M), American cell
manufacturer Suniva ($50M), Intel spin-off SpectraWatt ($50M), monocrystalline cell
manufacturer Confluence Solar ($13M), and multi-crystalline cell manufacturer 1336
Technologies ($12M).

CPV startups raised $92 million in 2008, down from $128 million in 2007.
e. Concentrated PV (CPV)

CPV remains a niche investment
category.

2008 down close to 30% from
2007.

San Francisco-based GreenVolts raised $30 million from Oak Investment Partners for its
utility-scale, two-axis tracking triple-junction gallium arsenide cell field; Cool Earth Solar raised
$21 million for its pole-mounted solar balloons which use low-cost materials; and Montreal-
based Cyrium Technologies raised $15M from Quercus Trust, Chrysalix, Pangaea Ventures,
and the Business Development Bank for its quantum dot technology, which captures
additional light wavelengths than traditional solar cells.

4Q08: notable CPV rounds The one notable CPV deal in 4Q08 was Soliant Energy, which raised $21M from Convexa
 Soliant Energy (US), $21M Capital, GE Energy Financial Services, RockPort, Nth Power, Trinity Ventures and Rincon
Venture Partners. Soliant features a rooftop-mounted gallium arsenide cells with Fresnel lens
concentrators.

15


Biofuels companies raised $904 million in venture capital in 2008, up 37% from 2007. Despite
7. Biofuels the strong growth, biofuels investment is still below 2006 levels, which saw a number of large,
late-stage investments in first-generation ethanol and first-generation biodiesel companies.
In 2008, biofuels was a distant
second to solar as an investment
Investor focus has shifted to next-generation fuels, especially cellulosic ethanol and algae
theme.
biodiesel. However, these technologies are at an earlier stage of development than the first-gen
biofuels, and the average round fell from $24M in 2006 to $11M in 2007, while total investment
fell from $991M in 2006 to $681M in 2007. 2008 saw a rebound in round size, to $21M, even
though total investment is still below 2006 levels.

In 2008, biofuels companies raised
$904 million, up 37% from 2007.

Biofuels has been supplanted by solar as the leading investment theme of venture investors. In
2006, biofuels accounted for 22% cleantech VC, ahead of solar at 15%, while in 2008, solar
captured 40% investment share, while biofuels received only 11%.

Biofuels accounted for 11% of all
cleantech VC dollars in 2008, flat
with 2007, but down from 22% in
2006.

Within the biofuels sector, cellulosic ethanol companies raised almost $400M (44% of the
biofuels total), followed by algae biodiesel companies which raised $195M (22%), biomass raised
$150M (17%), biodiesel vendors raised $125M (14%), grain ethanol startups raised $21M (2%),
Within biofuels, cellulosic ethanol while biogas raised $18M (2%)
was the dominant investment
theme, followed by algae.
Biomass grew significantly, while
biodiesel declined significantly.
Biogas remains a niche play, while
grain ethanol investments have
declined to almost zero.

 Cellulosic Ethanol: $396M
 Algae Biodiesel: $195M
 Biomass: $150M
 Biodiesel: $125M
 Grain Ethanol: $21M
 Biogas: $18M

16


7. Biofuels (cont.) In 2008, sixteen cellulosic ethanol startups raised a combined $396 million, with eight firms
accounting for 98% of the total, or $390 million – Range Fuels ($158M), Mascoma ($61M),
a. Cellulosic Ethanol Coskata ($60M), EdeniQ ($33M), Cobalt Biofuels ($25M), Qteros/SunEthanol ($25M), Sriya
Innovations ($15M), and Fulcrum Bioenergy ($14M).

2008: $390 million invested in 8
cellulosic ethanol companies.
Cellulosic ethanol breaks out as
firms raise sizable follow-on
rounds.

In 4Q08, cellulosic ethanol startups raised $106 million, up from $0 in 3Q08, but down from 1Q08
and 2Q08. The largest round in the quarter, $40M, was raised by Illinois-based Coskata, led by
Blackstone Group, with participation from existing investors Advanced Technology Ventures,
Globespan, Greatpoint Ventures, and Khosla Ventures. Coskata is developing a fermentation
process that uses a variant of Clostridium bacteria to produce fuel-grade ethanol from syngas.

Silicon Valley-based Cobalt Biofuels raised a $25 million round co-led by LSP and Pinnacle
Ventures, and is also using Clostridium bacteria to break down cellulose, hemicellulose and
starch to produce butanol, acetone and ethanol. Biobutanol’s advantages include high energy
4Q08: notable cellulosic ethanol density (85% of gasoline on a volumetric basis, whereas ethanol is 70% of gasoline), and does
rounds not mix with water at high concentrations, thus does not require construction of parallel
 Coskata (US), $40M infrastructure. However, in addition to the standard challenge of high feedstock costs, butanol
 Cobalt Biofuels (US), $25M inhibits microbial growth.
 Qteros (formerly SunEthanol)
(US), $25M Boston-based Qteros (formerly known as SunEthanol) raised $25 million from Venrock, Battery
 Sriya Innovations (US), Ventures, BP and others. Qteros is using Costridium phytofermentans bacteria to consolidate
$15M the hydrolyzation of cellulose and fermentation of the resulting sugars to ethanol in one step,
similar to Mascoma, thus avoiding the cost of enzymes (typically one of the two most expensive
components in producing biofuels, in addition to feedstock).

Other notable transactions include Atlanta area startup Sriya Innovations, which raised $15M
from Kleiner Perkins, which is developing a fractionation process to break down cellulosic
feedstocks without enzymes, to produce ethanol.

2008 was a breakout year for the algae sector, as five companies – Sapphire Energy ($100M),
Solazyme ($45M), Aurora Biofuels ($20M), Solix Biofuels ($15.5M), and GreenFuel
Technologies ($14M) - raised a combined $195 million, up from $34 million in 2007.

b. Algae

2008: $195M invested in 5
companies.

Sapphire Energy kicks off the
algae financing wave in 2Q08 with
a ‘blank check’ from Bill Gates’
Cascade Investment. Sapphire
has raised over $100M to-date.
In 4Q08, there was only one algae investment, in Denver-based Solix Biofuels, from London-
based I2BF Venture Capital, Bohemian Investments, Valero, and others. Solix uses a unique
transparent photobioreactor system, which uses weighted rollers to continually circulate algae
within the reactor, allowing photosynthesis to occur beyond the top layer. As a result, fluid depth
4Q08: notable algae rounds is far greater than traditional photobioreactors, significantly reducing cost. Algae is then
 Solix (US), $40M harvested using a centrifuge, from which oil is extracted and refined into biodiesel through
traditional transesterification processes.

17


7. Biofuels (cont.) In 2008, 13 biomass-to-biofuels companies raised a combined $150 million, up from $56 million
in 2007. Six companies – EnerTech Environmental ($42M), Avantium ($23M), Chemrec
c. Biomass ($20M), Gevo ($17M), LandEnergy Ltd ($10M), and Renewable Zukunft ($10M) - accounting
for 80% of the total.

2008: $150 million invested in 13
biomass-to-biofuels companies.

The biomass sector is focused on using waste streams – sewage sludge (EnerTech
Environmental), agricultural waste (Avantium), wood pulp (Chemrec), steel mill exhaust (Gevo)
– to produce biofuels or bioplastics.
4Q08: notable biomass rounds
 Avantium (Netherlands), In 4Q08, Netherlands-based Avantium, an R&D firm specializing in energy, chemicals and
$23M
pharmaceuticals, raised $23 million from Aescap Venture, Capricorn, ING, and Navitas Capital
 Chemrec (Sweden), $20M
to develop and commercialize Furanics, a fuel additive manufactured from glucose sourced from
a cellulose base, using a chemical process. Avantium recently signed a partnership with Royal
Cosun, a Dutch foodstuff producer, in which Cosun will provide waste agricultural streams, such
as sugarbeet pulp and waste from potato production, as a feedstock for Avantium. Furanics can
be blended with diesel, gasoline, or jet fuels.

Chemrec, a Swedish company, raised $20 million from VantagePoint and Volvo. Chemrec aims
to use black liquor, the toxic waste byproduct of the kraft process used during the production of
paper in pulp mills, and through a proprietary gasification process, create biofuels: synthetic
diesel, methanol, and DME (dimethyl-ether; similar to LPG). Volvo has developed a third-
generation DME engines for use in trucks and buses, hence its strategic investment. However,
like LPG, DME requires a pressurized tank for storage as a liquid, as well as a new distribution
infrastructure. Since Sweden and Finland account for 1/3 each of the European paper pulp
industry, the supply and cost of black liquor feedstock should be favorable in those markets.

In 2008, venture investment in biodiesel fell to $125 million, down 54% from 2007. We do not
believe that investors have lost interest in biodiesel – rather, their interest has shifted to algae
technologies for biodiesel, which promise to overcome many of the high-feedstock cost, land
d. Biodiesel and water use, and food-vs.-fuel issues around earlier-generation biodiesels. On a combined
basis, biodiesel plus algae investments totaled $320M in 2008 – up from the $307M invested in
2008: $195M invested in 5 2007.
companies.

4Q08: no notable biodiesel rounds

18


7. Biofuels (cont.) In 2008, four firms accounted for 99% of the financing – Amyris Biotechnologies ($44M),
Roshini International Bio Energy Co (RIBEC) ($39M), Greenline Industries ($20M), Innovation
Fuels ($10.5M), and Galten Biodiesel ($10M).

In 4Q08, we recorded only a single, small financing. However, Amyris which raised an
undisclosed round, is a Khosla Ventures portfolio company that uses a genetically engineered
yeast that metabolizes sugar into a designer diesel fuel. And Imperium Renewables, which
pulled its IPO filing in August 2008, underwent a recapitalization in 4Q08 with existing investors,
including Technology Ventures and Nth Power, to satisfy its secured project financier Société
Générale, and other creditors.

8. Transportation: Vehicles & In 2008, venture capital firms invested $693 million in transportation technologies – vehicles
Components, Advanced Batteries
(electric and hybrid vehicles, engines, vehicle components, motorcycles & scooters, bicycles),
& Fuel Cells, Other Transportation
Technologies advanced batteries, fuel cells, fuel infrastructure and fuel improvement technologies, and
logistics (fleet/driver tracking and management, traffic monitoring, transportation efficiency).

2008: $693 million VC invested in
transportation technologies,
across 61 financing rounds.

Decline of 23% from 2007, due to
decreased investment in vehicles The 2008 investment total was down 23% from 2007, and was primarily a result of decreased
and fuel cells. investment in two sub-sectors: Vehicles and Fuel Cells.

 Vehicles: $308M (45% of total)
 Advanced Batteries: $289M
(42%)
 Fuel Cells: $54M (8%)
 Logistics: $31M (4%)
 Fuels Technologies: $11M (2%)
 (Fuel) Structures: $0 (0%)

As a percent of total cleantech investment, transportation has declined steadily since 2004, as
growth in advanced batteries has leveled off, and investment has fallen in fuel cells and vehicles
(along with extraordinary growth in solar).

19


8. Transportation (cont.)

Transportation decreasing as a
percent of total cleantech VC.

In 2008, vehicle & components companies raised $308 million, or 45% of the investment in the
transportation sector. (We define ‘vehicle & components’ as electric vehicles, hybrids, bicycles &
a. Vehicles & Components scooters, engines, and vehicle components.)

2008: $308M VC invested in Seven companies raised a combined $285M – Fisker ($85M), Tesla ($80M), Segway ($40M),
vehicles & components Miles Electric Vehicles ($28M), Aptera Motors ($24M), Brammo Motorsports ($10M), and ISE
companies Corp ($17.5M). All of these companies, except Brammo Motorsports, are based in California.

Fisker, Tesla, and Aptera Motors are building plug-in hybrid electric vehicles; Miles Electric
Vehicles is building all-electric vehicles, while Brammo Motorsports is building an electric
motorcycle.

VC investment in vehicles peaked in 2007 at $396M, receding to $308M in 2008. On a quarterly
basis, 4Q07 was the high-water mark, driven by an extraordinary $200 million round by
VantagePoint, Morgan Stanley, Israel Cleantech Ventures and others in Shai Agassi’s Better
Place electric vehicle infrastructure provider.

2007 and 4Q07 outperformance
driven by $200M investment in
Shai Agassi’s Better Place.

In 4Q08, investment in vehicles totaled $70.5M. Tesla, the beleaguered maker of the Tesla
Roadster electric sports car, reportedly raised $40M in convertible debt from existing investors,
4Q08: notable vehicle & including CEO/Chairman Elon Musk,VantagePoint, and DFJ, bringing total financing to $185M.
components rounds
In December, Musk revealed in a town hall meeting that Tesla was virtually insolvent. The $40M
 Tesla (US), $40M (reported)
cash infusion (when closed) will sustain operations until a $350M loan from USDOE comes
 ISE Corp (US), $17.5M
 Miles EV (US), $13M through. Tesla also raised prices on existing customers awaiting delivery, as the price that it had
initially charged customers resulted in a loss on each sale.

ISE Corp raised a $17.5M Series D led by Siemens Venture Capital, with participation by
Australia’s Macquarie Clean Technology Fund, Michigan-based DTE Energy Ventures, as
well as previous investors RockPort and Texas energy private equity firm NGP Energy
Technology Partners. ISE Corp is a manufacturer of hybrid electric drive trains for heavy-duty
vehicles, such as buses and trucks. ISE’s ThunderVolt drive system consists of a hybrid electric
engine (diesel or gasoline), electric drive train, energy storage (batteries or ultra-capacitors),
vehicle controls, and electric power steering, braking and air-conditioning systems.

20


Miles Electric Vehicles raised a $13 million Series B from Series A investor Angeleno Group,
8. Transportation (cont.) an LA-based private equity firm focused on energy. Miles’ strategy is to produce low-cost, all-
electric vehicles, beginning with the XS500, a highway speed 4-door electric sedan due to
launch in 2009. Miles is using an adapted chassis design and manufacturing in China to reduce
b. Advanced Batteries & Fuel costs and offset the high cost of the lithium ion battery pack.
Cells
Advanced batteries and fuel cells continued to attract significant interest from VCs in 2008.
Battery and fuel cell companies raised $343 million across 28 rounds in 2008, down from $454
million across 46 rounds in 2007.

2008: $343M VC invested in
advanced batteries and fuel cells

The decline came mostly from a significant decrease in investments in fuel cells.

Advanced Batteries: $289M
Fuel cells: $54M

In 2008, on the battery side, investors focused overwhelmingly on lithium-ion technologies:
By battery technology
 LiOn: $187M
 NiZn: $30M
 Thin Film: $16M
 Advanced pb-acid: $15M
 Flow batteries: $15M
 Charging & Mgmt: $14M
 Ultra-Capacitors: $13M

21


8. Transportation (cont.) However, half of the financing in advanced batteries was raised by just two companies: A123
Systems, the innovative LiOn manufacturer, and nickel zinc battery vendor PowerGenix.

b. Advanced Batteries & Fuel A123 raised $118.5M over two rounds: a $16.5M Series D in 1Q08, from investors including
Cells (cont.) Sequoia Capital, Qualcomm Ventures, Unicorn Trust, P&G, and Motorola Ventures, and a
$102M Series E in 4Q08, from investors including GE, OnPoint Technologies, Alliance
Bernstein, Masthead Venture Partners. The post-money valuation after the Series E was
reportedly $1.1 billion. In January 2009, A123 lost the Chevy Volt contract to South Korea’s LG
Chem in January 2009, due in part to LG Chem’s deeper experience in manufacturing and
systems integration. A123 recently applied for $1.84 billion in loans from the USDOE’s Advanced
Technology Vehicles Manufacturing Incentive Program to build battery factories in Michigan,
near its automotive customers.

PowerGenix, a developer of rechargeable NiZn batteries, which promise to replace NiCd and
NiMH batteries in power tools and other high-drain applications such as digital photography,
raised a $30M Series D in 3Q08 from Bessemer Venture Partners, as well as existing investors
Advent International, Angeleno Group, Braemar Energy Ventures, Granite Ventures,
OnPoint Technologies and Technology Partners.

4Q08: notable advanced battery Another significant financing in 2008 was Boston Power’s $45M Series D, led by Oak
rounds Investment Partners, with participation from Venrock, Granite Global Ventures, and Gabriel
 A123 Systems (US), $102M Venture Partners. Boston Power manufactures an advanced lithium-ion battery for use in
 Infinite Power Solutions laptops, and in December, announced HP as its first major customer. Boston Power’s battery
(US), $13M charges faster (80% charge in 30 minutes), and lasts longer (1,000 charge/discharge cycles,
 APowerCap Technologies versus 300) than standard LiOn laptop batteries.
(US), $12.5M
Other notable rounds in 4Q08 (besides A123) include Infinite Power Solutions, which raised a
$13M Series B led by DE Shaw Ventures and Polaris Venture Partners, as well as previous
investors Core Capital Partners, Applied Ventures, and In-Q-Tel. IPS produces a solid-state
rechargeable thin-film battery for use in military, aerospace, smart card, RFID, medical device,
and wireless sensor markets.

On the fuel cells side, we recorded only two rounds in excess of $10M in 2008 – both for PEM
fuel cells for use in utilities, aerospace and defense, telecom, and government customers. In
1Q08, Washington-based ReliOn raised a $23 million Series B from Robeco, Oak investment
Partners, and others. In 3Q08, UK-based Intelligent Energy PLC, raised $13.6M from
undisclosed investors.

4Q08: notable fuel cell rounds In 4Q08, the only fuel cells round of note was UK-based ACAL Energy, which raised $5M from
 A123 Systems (US), $102M Carbon Trust, Solvay and others. ACAL is developing a non-PEM fuel cell which uses low
temperature cathode technology, eliminating the need for a precious metal catalyst.

Advanced Batteries investments
have grown steadily from 2002,
but plateaued in 2008

Fuel Cells investments peaked in
2006, and have declined sharply
over the past two years

22


8. Transportation (cont.) Other transportation-related technologies – logistics, fuel infrastructure technologies, and fuel
improvement technologies, raised $42 million in 2008.

c. Other transportation-related
technologies: logistics, fuel
infrastructure, fuel improvement
technologies

Logistics systems accounted for almost 60% of the total:

 Israel-based GreenRoad Technologies raised $17.5M across two rounds. GreenRoad
Technologies is a fleet and driver management system which improves driver safety,
reduces crashes, high-risk driving behavior and fuel consumption, through a set of in-
vehicle sensors and feedback systems, combined with online Web reporting. GreenRoad
raised two rounds in 2008, a $14.5M round led by Virgin Green Fund, Benchmark Capital
and Balderton Capital in the 1st quarter, and a $3M round in the 3rd quarter from new
investor Amadeus Capital Partners and existing investors.

 UK-based Lysanda Ltd raised $2.4M from Swiss investor Logispring Management
Company for its real-time emissions measurement system using on-board diagnostics in
the power train.

 Berkeley, CA-based Sensys Networks raised $5M from Voyager Capital and others in
July 2008. Sensys manufactures wireless vehicle detection sensors, deployed in 30 states
and 10 countries. The 2-inch-square wireless sensor cubes are embedded in roads or
freeway pavement, and detect and transmit location, speed and class of vehicle rolling over
it. This technology is superior to traditional loop detectors, which cost more, are larger, are
easily broken, and cannot be repaired without digging up pavement. Sensys’ sensors
transmit their data over existing traffic monitoring networks or the Internet.

There was one fuel improvement technology of note:

 Cambridge, UK-based VAIREX International raised an $8M Series A in 3Q08 to develop its
advanced air management system for diesel emission control. Investors include London-
based Entrepreneurs Fund and Conduit Ventures Limited.

23


Wind companies raised $502 million in venture capital in 2008, up 64% from 2007.
9. Wind

2008: $502 million invested in
wind companies.

In 2008, wind accounted for 6% of cleantech VC. On a quarterly basis, wind share of total
cleantech VC has been historically lumpy. In 2008, the bulk of wind investments were made in
3Q08, totaling almost $400 million, while 4Q08 saw three investments, of which only one was
disclosed, for $2.5 million.

Wind claimed 6% of total
cleantech VC dollars in 2008.

Excluding 2006’s extraordinary
Airtricity financing, wind’s share
of cleantech VC has grown
steadily from 4% in 2003-04 to
6% in 2008.
Although it appears that 2007 and 2008 investment in wind are well below the 2006 level, we
note that 2006 included the extraordinary $395 million financing in Irish wind farm developer
Airtricity by London-based investment house Ecofin, which manages four funds focused on the
global utility and infrastructure sectors.

When we separate out investments in wind farms from investments in wind technologies, we see
that investments in wind technologies – turbines, gearboxes and components – have been
growing quickly since 2006. In 2008, wind technology investments increased 124% from 2007.

Venture investments in wind
technologies (turbines, gearboxes
and components) have grown
strongly since 2006: up 333% in
2007 and up 124% in 2008.

24


9. Wind (cont.) Wind has not generally been considered an interesting sector by venture investors, as on the
supply side, the top 10 turbine manufacturers account for over 90% of the market, while on the
Historically, wind not seen as
demand side, the top 10 wind farm developers now account for around 30% of the market.
attractive venture sector given
Additionally, state-of-the-art, large wind turbines are over 50% efficient, versus a theoretical
scale of incumbents, increasing
concentration on demand side, maximum efficiency of 59.6%. Increasing efficiency, even incrementally, has required significant
and high capex requirements. R&D expenditures. Given these market characteristics, wind has been seen as a ‘big boys’
game.

However, significant innovation However, in 2008, we witnessed a significant innovative in wind technologies: new blade
now being seen in wind designs, new transmission designs (hydraulic; slow-speed; direct drive; others), generators that
technology. Entrepreneurs focus require significantly less maintenance, etc. We also saw entrepreneurs targeting markets not
on small turbines for distributed addressed by wind turbine superpowers – specifically, small and medium-size wind turbines for
generation.
distributed power generation.

As a result, we saw renewed and increased investor interest in wind technology companies. In
2008:
2008, nine wind technology companies raised a combined $400 million in financing: WinWinD
 $416M invested in turbine,
gearbox and components Oy ($176.5M), SE Forge ($85M), Emergya Wind Technologies ($44M), Northern Power
companies Systems ($37M), Baoding Tianwei Baobian Electric Co ($22M), Knight & Carver Wind Group
 $86M invested in wind farm ($12M), Quiet Revolution ($11M), TechnoSpin ($8M), and Flodesign ($6M).
developers
In 4Q08, the sole tracked round was a $2.5 million investment in Weole Energy, a French
manufacturer of small and medium wind turbines for residential customers, farmers, and small
businesses. The capital was provided by Crédit Agricole Private Equity and strategic investor
Direct Energie, formerly a subsidiary of the Louis Dreyfus Group, and a leading alternative
4Q08: notable wind rounds
energy supplier in France.
 Weole Energy (France),
$2.5M

On a quarterly basis, wind
investments are especially lumpy

3Q06
 Airtricity ($350M)

3Q08
 WinWinD Oy ($177M)
 SE Forge ($85M)
 Emergya ($44M)
 Northern Power ($37M)
 Valorem ($23M)

25

2008 Annual Review Highlights Slowdown in Cleantech Investments

2008 Annual Review Highlights Slowdown in Cleantech Investments

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