Venture capital investment in cleantech for 2007 hit new highs as deals in North America and Europe totaled $5.18 billion, according to data released today.

Energy generation took the lead in last year's cleantech investments, according to a year-end roundup from Ann Arbor, Mich.-based Cleantech Group, which has been tracking cleantech sector investment since 2001.

The report counted 172 deals in energy generation in 2007, totaling $2.75 billion invested into the sector. North American companies continue to receive the lion's share of cleantech venture investing, with North American-based companies receiving over 3x the investment of European-based companies.

Within the energy generation subsector, solar made a strong showing.

“In 2007, solar emerged as a significant investment theme, and it was notable to us that of the top five solar deals of the year, three of the largest were solar investments in China and India,” said Cleantech Group Managing Director of Global Marketing Kristina Messdaghi.

With three successful crystalline silicon IPOs, China attracted investor interest for solar companies, including Yingli Green Energy, which received $118 million, and Shunda Holdings, which received $82 million. In India, top cleantech investments of the year included solar company Moser Baer Photo Voltaic with $100 million.

"We always knew the emerging markets of China and India were going to be significant economic forces. It's clearly now happening," said Messdaghi.

Other high profile solar deals of the year were U.S. and European-based (for example, see Solar continues to take in cash, Solar and biofuels lead the day, and Sharp doubling solar production capacity in Europe. Follow all our weekly coverage of deals in cleantech in our deal and IPO watch).

The Cleantech Group noted 8 of the top 10 solar financing rounds since 1999 occurred in 2007, and is forecasting a significant drop in the price of materials for silicon photovoltaic solar due to increased refining capacity expected to come online in the next two years.

Across all sectors, North America and Europe produced stronger than expected growth in the fourth quarter, with total cleantech investment across the regions more than doubling to hit $1.38 billion, up from $676 million in the same period a year ago.

The total for 2006 was $3.6 billion, according to the company’s data.

Although the data is primarily North America and European-based, the Cleantech Group has begun counting deals in cleantech markets in other parts of the world.

Full results for China, India, Brazil and Australia are to be released at the Cleantech Group’s Cleantech Forum event in San Francisco in February, but preliminary results show continued and significant investment growth in 2007, according to the Cleantech Group's research.

The report said interest in the southern hemisphere is also increasing, with Brazil securing the largest deal with a $200 million round for sugarcane ethanol-producer Brazilian Renewable Energy, which does business under the name Brenco (see Another week, another three Khosla biofuel investments).

Back in North America and Europe, the deals got bigger in 2007. According to the Cleantech Group, the number of $100 million or larger rounds increased over 2006 levels.

Despite concerns about troubles in the overall economy, the outlook for cleantech remains promising, said the Cleantech Group’s Messdaghi.

“Venture investment into the cleantech sector is expected to continue to grow exponentially,” she said. “And venture investment is only the ‘leading edge of the wedge’ – large sums of other capital continue to be earmarked for the sector.”

The Cleantech Group is the parent company of Cleantech.com.