Funding for energy efficiency projects doesn’t just come from the government. Energy efficiency projects receive funding from a bevy of sources including venture capital investments. In 2009, venture capital investments in the cleantech industry took a significant hit, dropping 50 percent over 2008 levels. Although overall cleantech funding declined, energy efficiency projects saw an increase in funding.

According to a report from Ernst & Young, $2.6 billion in venture capital was invested in the cleantech sector in 2009. In contrast to prior years, the energy efficiency category received the most in venture capital funding, now accounting for 32 percent of funding in the cleantech sector.

As 2009 came to a close, energy efficiency projects saw a big jump in investments and this trend may very well carry over to 2010. In the third quarter of 2009, 14 venture capital deals led to $133.7 million in funding for energy efficiency projects. In the fourth quarter, 22 deals were made for a total of $252.8 million in energy efficiency venture capital funds.

Spring Networks Inc, a smart grid infrastructure company based in Redwood City, Calif., received the largest investment across all categories —$105 million. Other awards made during Q4 2009 include $38 million to Nordic Windpower Holdings and $82.5 million to electric car company, Tesla.

via [Green Inc]

Venture capital investments in energy efficiency rise
Venture capital investments into energy efficiency projects rose in 2009 despite an overall decline in cleantech funding.