Clean energy investments by venture capital and private equity firms totaled around $1.24 billion in China last year and are set to see substantial growth this year on the back of favorable policies, said a study from PricewaterhouseCoopers.

There were about 96 VC and PE investments made in China's clean energy and technology industry, the global consultancy firms said in the report published on Tuesday. It said the environmental protection industry was the major beneficiary and accounted for more than 50 percent of the total deal amount and investment value.

The clean energy and technology industry mainly includes environmental protection (such as smart power grids, new energy automobiles and water treatment plants), new energy (such as solar and wind power) and new materials.

"The outlook for the clean energy and technology industry remains bright this year and the industry is expected to benefit from a series of environmental protection acts rolled out in 2014 and 2015," said Gavin Chui, leader for energy, utilities and mining industry at PwC China.

"VC and PE investors will certainly increase investments this year. The good investment environment and availability of funds will act as positives for the long-term development of the industry," Chui said.

A water pollution prevention and control action plan was released in April to improve the water quality of major waterways in China by 2020 and achieve overall improvement in water quality control and conservation across the country by 2030.

In December, the Ministry of Finance rolled out 30 projects worth about 180 billion yuan ($29.32 billion) in the clean energy and technology industry to attract private capital, mainly as a public-private partnership.

The PwC report said wind power will see renewed focus this year as outlined during the national energy conference in December. Industries like smart power grids, new energy automobiles are also expected to see fresh momentum.

However, some sectors like new materials are facing challenges as companies are not too keen to innovate. In addition, the sector is also facing problems due to unreliable supplies of key materials, it said.

The study showed 12 Chinese clean energy and technology companies launched initial public offerings last year, raising $4.1 billion in total. Nine firms received VC and PE investment, it said.

Avin Liu, leader for the renewable & cleantech industries at PwC China, said that the VC and PE contributions have played an important role in getting the companies listed.

Liu said that financing can be done through capital markets in the later stages to enable full integration of technology and capital and to facilitate VC and PE exits.

According to a survey released by the Global Electricity Initiative on Tuesday, energy storage technologies have been an important factor for the growth in renewable energy sources.

Philippe Joubert, executive chairman of the Global Electricity Initiative at the World Energy Council, said that advanced storage technologies are crucial for the development of new energy in China.

"The advanced battery technologies for wind and solar power help integrate clean energy into the electric grid," he said.

In addition, water supply will be a top concern for China's utility companies seeking to develop clean energy, Joubert said, as alternatives to coal such as gas, nuclear and hydropower are all constrained by the availability of water.