Cleantech companies received less than half venture capital (VC) investments in the first quarter of 2009 than they did a year ago, but the industry looks forward for government funds for recovery, according to industry analysts.

During the period through March, venture capitalists invested in 24 clean energy deals raising $227 million, a decline of 63 percent in capital and 48 percent in terms of deals compared to the same period of 2008, according to an Ernst & Young LLP analysis.

Despite the intense challenges of raising capital during the past four months, government initiatives and corporate commitments are points of light for cleantech companies, said Joseph A. Muscat, Americas Director of Cleantech, Ernst & Young LLP.

In some cleantech areas, investments surged. Such was the case of the energy storage category which raised $114 million, more than double the $50 million raised in the first quarter of the previous year. Within this sector, battery manufacturer A123 Systems had the largest deal this quarter with a $69 million infusion.

Investments in solar companies within the electricity generation segment dropped as much as 73 percent to $56 million in the first quarter compared to the same period a year ago, even when these had the majority of activity in the category.

Government funding from the U.S. stimulus package is expected to pour more than $100 billion dollars in direct spending, loan guarantees and incentives into cleantech in energy, water and environment, Ernst & Young noted.

Investment