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"Many VCs [have] felt burned by the fits and starts in renewables generally, especially wind, and have been reticent to put money in again," said Phil Totaro, founder and CEO of renewable energy consultancy Totaro & Associates.

"They have more recently focused on energy storage, solar and smart grid, because wind investments have become riskier and more expensive in the maturing market."

Even so, Totaro predicts that VC wind investment will increase again: "As the global market turns around in 2015–17, we are likely to see future investment from VCs and major wind supply chain players in ... groundbreaking technologies, but it will take some time before we get back there."

The high-profile winding down of Boulder Wind Power in October — following the company's failure to find a partner for its innovative generator designs — put VC funding in the spotlight.

In 2011, Boulder clinched $8 million in Series A Preferred Stock VC financing from New Enterprise Associates (NEA), which had previously provided it early-stage funding; and from James Maguire, an individual investor focused on early-stage funding of renewables technologies.

Then in 2012, Boulder Wind Power announced it had $35 million in Series B Preferred Stock-financing from rare earth producer Molycorp and VC investment from NEA. As is typical, Molycorp joined NEA on the board of the Colorado-based wind firm.

California's Modular Wind Energy (ModWind) had similarly been founded in 2008 with VC backing. Its segmented rotor design had sparked excitement, as did Boulder's technology. But by 2013, ModWind's VC investors — Kleiner Perkins Caufield & Byers, as well as Battery Ventures and General Catalyst Partners — put the firm on the block. Neither ModWind nor, apparently, its intellectual property (IP) were sold, and it has since folded.

No commercial partners

There are parallels. "Boulder had the same problem as ModWind — they did not get a commercial launch partner to prove their technology," said Totaro. "OEMs [original equipment manufacturers] were unwilling to bank on an unproven technology at a time of cost cuts and profit stabilisation."

VCs tend to look for a high rate of return and a relatively short-term exit, whether through an IPO or acquisition. The VC volume in wind is low because most technological innovation is now in-house at the major OEMs and key components makers.

Cash is thus often unavailable for external technology buys, a trend on the up as the industry matures and consolidates. None of the VC investors in Boulder or ModWind could be reached for comment. In the first three quarters of 2014, VC investment in wind power was around $10 million globally, according to Bloomberg New Energy Finance (BNEF).

That compares with a relatively healthy $113 million in 2013, although even that was lower than the $200 million or more in each of the banner years of 2008 and 2010, when financial markets and clean-tech optimism were buoyant.

Drop in the ocean

To put the VC volume in perspective, just over $76 billion was invested in wind overall in 2013, and almost $60 billion in the first three quarters of 2014, mostly project finance. So this year's $10 million VC investment is not even the equivalent of a rounding error in the total wind investment, noted BNEF's Amy Grace.

Still, the 2013 VC investments give a glimpse into innovation in the wind sector, which nowadays is mostly in finance. The lion's share of VC money — $84 million — went to Irish developer Gaelectric, which also works on integrated storage.

An investment of $27-plus million was made in Leosphere, the French designer, maker and seller of Lidar remote sensing technology. Other recipients in 2013, according to BNEF, were: US-based developers Apex Clean Energy, B&H Wind and Champlin “uåX˜äŠÊ˜·³Ç; Pentalum Technologies, another Lidar company; Ideol, the French floating foundation tech company; French developer Quadran; and Romo Wind, a Swiss tech firm specialising in operation and service.

However, with the need to drive down costs through innvoation in the wind industry, a chicken and egg scenario could arise if VCs are awaiting a resurgence of the market before they invest significantly.