Another quarter, another set of dismal figures for smart grid venture capital investment -- and another double-digit-billion dollar figure for smart grid M&A.

That’s the news from Mercom Capital Group’s second-quarter 2012 report on smart grid financing, which tallied $66 million in VC spread across nine deals. While that’s slightly up from the first quarter’s $62 million in 10 deals, it’s just more than half the $112 million invested in the same quarter last year, and nearly one-fifth the $305 million invested in the second quarter of 2010.

The quarter’s smart grid VC deals, in order of value, include: $15 million raised by Power Plus Communications from Siemens, Climate Change Capital Private Equity and British Gas; $11.5 million for Tendril from Vantage Point Ventures, Good Energies, RRE Ventures, GE and Siemens, $10 million raised by On-Ramp Wireless from Energy Technology Ventures; $8 million raised by Gridco from North Bridge and General Catalyst Partners, $8 million raised by Navetas from Sensus; $4.4 million raised by GreenPocket from existing and new investors led by NRW Bank; and $2 million for Grid2Home from undisclosed investors.

The second-quarter tally looks even smaller if one excludes the two water technology companies that Mercom included in the mix. Those are Israel-based startup TaKaDu, which garnered $6 million from Swiss grid giant ABB in April, and WaterSmart Software, which landed a $1 million round in June. Take those out, and the second quarter’s smart grid tally stands at $59 million, marking a steady downward trend over the past 12 months.

What’s the explanation? Raj Prabhu, managing partner at Mercom, cited “shifting business models as the industry continues to struggle to understand customer needs and address customer misconceptions along with security concerns and other issues” in a Monday statement.

He might have also listed a lack of valuable exits from the smart grid startups now struggling to raise funds. Silver Spring Networks, which has managed to build up a U.S. smart meter networking market share to compete with longstanding meter giants Itron and Sensus, filed its S-1 last summer, but has yet to hold its IPO, although it has found new investors such as EMC and Hitachi to fill its coffers in the interim.

Nor has the track record for pure-play smart grid companies that have gone public been very reassuring, though the number of those companies is too small yet to draw any firm conclusions. In March, Comverge went private via a $49 million fire sale to private equity firm H.I.G. Capital, a deal that provided a mere fraction of the demand response provider’s market value of years past.

In the meantime, for startups in the smart grid space, disclosed M&A figures didn’t look nearly as good -- ZigBee chipmaker Ember, for instance, sold to Silicon Labs for only $72 million, little more than the $62 million it had raised from its many investors since its 2001 founding. That’s in keeping with the going prices for acquisitions in the smart grid space over the past year or so, which (at least for reported transactions, and for some rumored transaction values as well) haven’t approached the 5X-and-up returns that VCs tend to aim for.

To be sure, smart grid merger and acquisition spending has been going like gangbusters over the past several years, but that’s been led by multi-billion-dollar acquisitions by grid giants like General Electric, Siemens, ABB and Schneider Electric of startups and established companies alike.

In keeping with that trend, the second quarter’s smart grid M&A tally rose to a massive $14 billion, driven primarily by the $11.8 billion purchase of Cooper Industries by Eaton in May, a move that created a new smart grid powerhouse to match those giants. Other big M&A transactions with disclosed values included German smart meter giant Elster’s $2.3 billion purchase by private equity group Melrose in a move that took the company from public to private.

Undisclosed M&A activity in the second quarter included ABB’s acquisition of U.S. Wi-Fi smart grid networking startup Tropos Networks, Schneider Electric’s purchase of U.K.-based energy services company M&C Energy Group, Eaton’s acquisition of Gycom, a Scandinavian low-voltage power controls company; and Siemens’ purchase of Senergy Sistemas de Medição S.A., a Brazilian smart meter software company.

Tags: abb, comverge, demand response, elster, emeter, enernoc, finance, general electric, investors, itron, schneider electric, sensus, siemens, silver spring networks, smart grid