This Newsweek article on alternative energy investment seems to suggest that the high oil prices which mean record profits for oil companies when combined with an uncertain regulatory environment for alternative energy may actually discourage investment in renewable energy.
There are some big multinationals like BP, Shell, Sharp, Kyocera, Sanyo
and Mitsubishi with divisions investing in alternative energy, these are companies that can afford to take risks and take a long-term view. The sums involved however are a drop in the ocean when compared to the amount of money spent on finding and extracting our declining fossil fuel reserves.
In my opinion the solar power industry in particular is attracting attention and investment from VCs as this is the area where it seems most likely at the moment that a technological breakthrough may come, which would allow low cost mass production of solar cells allowing them to become ubiquitous.
However while solar energy may hold the promise of the great technological breakthroughs and therefore the biggest profits, it seems to be grabbing most of the attention and therefore the investment away from other types of alternative energy.
Wind power is competitive now. However it requires major capital investment, has tight margins and doesn't currently hold the tantalising prospect of any technological breakthroughs.
First government has to stop subsidising fossil fuels and spend the money instead on encouraging genuinely clean and renewable energy technologies.
September 2004 Newsweek Article on Alternative Energy Investment
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