Cleantech investments in North America, Europe and Israel slipped for the second quarter in succession during the first three months of the year, according to new figures from analyst firm The Cleantech Group.

Investment in cleantech firms fell 20 per cent compared with the fourth quarter of 2007 to $1.25bn in a move that is likely to prompt speculation that global financial instability is beginning to impact venture capitalists' appetite for the cleantech sector.

However, the research confirmed that despite the sequential downturn, investment climbed 42 per cent year-on-year with first quarter investment breaking the $1bn mark for the first time.

The Cleantech Group noted that far from indicating a downturn, the fall in investment compared with the fourth quarter simply suggested we are now seeing "possible seasonality in the sector".

Martin Gibson of venture capitalists Atlas Venture agreed there was no evidence to suggest the downward trend would continue in the longer term. "Any set of metrics will have some volatility and as such it is possible to present any step back as the beginning of a slide," he said. "But what we're talking about with clean tech is huge shifts in the very nature of many big industries, which means it is a long term play."

However, the situation was less encouraging for some cleantech fields, with the research suggesting that several high-profile investment waves have now peaked.

"While the long-term investment trend shows continued expansion of the category as a whole, we are seeing contraction in what had been the market-leading sectors of first generation biofuels and second generation solar, " said John Balbach, managing partner at The Cleantech Group. "This healthy minor correction indicates exuberance is giving way to tempered optimism."

The report claims that investment in ethanol and wind energy peaked at $1.52bn in the third quarter of 2006 and has declined steadily since, while investment in thin-film solar firms peaked at $1.83bn during the third quarter of last year and has contracted sharply over the last two quarters.

Overall, these sectors continue to pull in high levels of investment with biofuel and solar firms still attracting the highest levels of investment in North America during the fourth quarter. However, previously lower profile areas, such as solid state lighting and energy storage, are now attracting increasing levels of investor interest.

Gibson agreed that wind and to a lesser extent ethanol were approaching maturity and as such could expect investment levels to tail off slightly, but rejected the idea that investment in thin film solar had peaked. "Thin film solar is still very early in its development," he said. "We will see peaks and troughs along the way, but until you get to a stage where you can paint solar cells ontop your house it is too early to say investment has peaked."