Slowdown in Q1 2009 Funding of Cleantech Innovation Reflects Turbulent Economy

Energy Storage sector exhibits a bright spot with 41% of total quarterly
venture capital investment

SAN FRANCISCO, May 11 /PRNewswire/ -- Cleantech companies received markedly
less investment in Q1 2009 compared to previous quarters as the global
economic downturn caught up with investors across the sector. US venture
capital (VC) investments in cleantech, as with VC overall, dropped sharply in
Q1 09 after a record year in 2008, according to an Ernst & Young LLP analysis
based on data from Dow Jones Venture Source. The $277 million raised in 24
deals in Q1 09 represents a 63% decrease in terms of capital and 48% decline
in deals compared to Q1 08.

"Despite the intense challenges of raising capital during the past four
months, government initiatives and corporate commitments are points of light
for cleantech companies," says Joseph A. Muscat, Americas Director of
Cleantech, Ernst & Young LLP. "While the timing of the receipt of government
funding is uncertain, we expect that loan guarantees and other government
financing structures, as well as corporate adoption rates of clean
technologies, will be early indicators of an upward investment cycle."

Despite an overall down quarter, the Energy Storage cleantech segment more
then doubled the $50 million raised in Q1 08 to $114 million in Q1 09, making
it the largest category of investment last quarter. Battery storage companies
raised $69 million in the first quarter, a 37% jump from Q1 08. Fuel cell
companies did not follow far behind. They raised $45 million in Q1 09 compared
to no investment in Q1 08. Battery manufacturer A123 Systems, a lithium ion
battery supplier from Watertown, MA, completed the largest cleantech deal this
quarter with $69 million infusion.

Energy/Electricity Generation, the quarter's next-largest investment category,
raised $56 million in Q1 09, a 73% decrease compared to Q1 08. Solar companies
accounted for the majority of activity in this category, raising $48 million.
The largest solar deal, and second largest cleantech deal of the quarter, was
completed by eSolar, a provider of solar thermal power plants in Pasadena, CA,
that raised $40 million. The eSolar deal was completed jointly by two
strategic investors: NRG Energy, a power generation company in Princeton, NJ,
and Acme Group, an energy infrastructure company based in India. This is just
one of the four corporate deals that rounded out the top 10 VC deals of the
quarter.

While investment totals this quarter were driven by a few large later stage
rounds--the top five deals accounted for 62% of the capital raised--notable
early stage deals gave an indication of important emerging sectors. Oasys
Water, a Developer of engineered osmosis desalination and water treatment
technology based in Cambridge, MA, raised a $10 million first round co-led by
Advanced Technology Ventures and Flagship Ventures. EnergyHub, a producer of
residential smart grid products, based in Brooklyn, NY, also raised a first
round.

Q1 2009 cleantech market developments and drivers

Despite the difficult economic conditions, significant cleantech deals were
closed across transaction categories. New Energy Finance (NEF) recorded 28
completed asset financings in the US last quarter with a disclosed value of
$1.3 billion. This figure includes SunEdison's $20 million tax equity project
financing from Union Bank of California. NEF also tracked 10 private equity
deals with a disclosed value of $369 million.

Additionally, there were 18 US M&A transactions that raised $1 billion, which
included San Antonio-based, Valero Energy's acquisition of three biofuel
entities for a total of $477 million, according to J.S. Herold.

Corporate commitments to cleantech continued through a challenging quarter.
For example, Google and Google.org announced a prototype software of Google
PowerMeter, a consumer home smart grid application that is targeted for
completion by the end of 2009. Royal Dutch Shell Plc announced plans to
increase its stake in biofuel company Codexis, based in Redwood City, CA. AT&T
Inc. committed to investing $565 million over 10 years on alternative-fuel
vehicles for its corporate fleet. Similarly, Coca-Cola Enterprises pledged to
deploy 185 hybrid electric trucks across North Americas in 2009, bringing its
total number of hybrid electric delivery trucks to 327.

"This economic climate demands that cleantech companies think more creatively
about resources and partnerships, as government becomes an increasingly
important constituent in the cleantech market," explains Muscat.

Government funding has begun to enter the market as a Department of Energy
grant was recently rewarded to Fremont, California-based Solyndra Inc., a
cylindrical photovoltaic systems manufacturer that plans to use the $535
million loan to expand its solar panel manufacturing capacity in California.
More substantial funding is coming with the US American Reinvestment and
Recovery Act (ARRA), which contains over $100 billion of dollars in direct
spending, loan guarantees and incentives to promote the development of
cleantech in energy, water and environment.

Note to editors:

Ernst & Young uses the following definitions to classify the cleantech
industry and its sub-sectors:

Clean technology encompasses a diverse range of innovative products and
services that optimize the use of natural resources or reduce the negative
environmental impact of their use while creating value by lowering costs,
improving efficiency, or providing superior performance.

-- Alternative Fuels - Biofuels; natural gas (LNG)
-- Energy / Electricity Generation - Gasification, tidal/wave, hydrogen,
geothermal, solar, wind, hydro
-- Energy Storage - Batteries, fuel cells, flywheels
-- Energy Efficiency - Energy efficiency products, power and efficiency
management services, industrial products
-- Water - Treatment processes, conservation & monitoring
-- Environment - Air, recycling, waste
-- Industry Focused Products and Services - Agriculture, construction,
transportation, materials, consumer products

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