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The chief reasons for this surge is due to the positive regulatory policies, environmental support for a lower carbon footprint, and innovation in renewable technologies.
The report also said that VCs are looking at emerging countries in South Asia and the Asia-Pacific regions of RE's development. The research covers VC investment opportunities in solar, wind, biofuels, geothermal and marine/hydro energy segments.
“2011 was a stellar year for renewables' deal making with the number of deals rising by two-thirds year-on-year, although the total deal value went down by one-third,” said Frost & Sullivan in the report.
“Europe, in particular, followed by the Asia-Pacific region, led this trend towards more but smaller deals. This was in contrast to North America, which had fewer deals of larger individual values,” the analysts said.
Presently, over half of VCs have ventured into clean energy investments. Solar technology received the most VC investments between 2006 and 2008 for new technologies and manufacturing capacity expansion. Other than green energy generation, investments in sustainable energy have also broadened to include energy storage, energy efficiency, and smart grid technologies.
However, the analyst also feels that there are couple of challenges in the market including high capital costs, continuous requirement of investments into technology and the economies of scale have not yet been reached. “Companies need to look at different ways to enhance the value chain,” mentioned the analyst.