Q3: Best Quarter Ever for Cleantech, So What’s the Worry?

greenitlogoThanks to strong backing from the U.S. government, cleantech investing actually delivered a solid third quarter compared to the rest of the venture-backed sectors, including information technology and biotech. So what happens once the millions from the stimulus package dry up? The third-quarter wrap-up on Green IT from GigaOm Pro looks at what happened this quarter as stimulus funds rolled out, cleantech became the largest venture investment sector for the first time ever and talk of a bubble around the current darling of the space—smart grid—loomed large.

But the quarter wasn’t all about the smart grid. Battery companies — focused both on vehicles and consumer electronics — fared well, drawing attention from venture capitalists, the government and larger companies looking at batteries as a good business to be in. A123 Systems’ IPO was the big story in batteries this quarter, and it actually exceeded expectations. Lithium-ion batteries — the technology of choice for the upcoming generation of electric vehicles — have gained enough momentum to spark concerns about limited lithium resources.

Talk of going “beyond lithium” began in earnest this quarter, too. As companies race to bring down costs and boost the performance of li-ion, others are looking ahead to other technologies (such as the experimental lithium-air tech discussed at IBM’s conference).

Stimulus funds also gave a big boost to plug-in electric vehicles this quarter as several hundred million dollars were allocated for charging infrastructure projects, and new smart charging technologies were unveiled. Meanwhile, Big Oil was going nuts for algae, with Exxon (s xom), Chevron (s cvx) and BP (s bp) all making major investments in algae-based fuels. Biofuels in general seem to be coming back from the dead a bit; in addition to all the algae interest, several venture firms made funding announcements this quarter tied to the space.

While everyone’s a little concerned about what happens “beyond stimulus,” solar and wind have the most to worry about: When federal funds and state grants leave town, there’s still no one standing there willing to take on the financial burden of project financing for large-scale renewable energy projects.

A more in-depth look at these trends and others is available in the latest Quarterly Wrap-ups in our five focus areas — NewNet, Mobile, Green IT, Connected Consumer, and Infrastructure. These quarterly reviews are available to GigaOM Pro subscribers, along with dozens of detailed research briefings and in-depth articles on specific topics in each of these areas. You can subscribe here.