By RUSSELL GOLD
Investment in renewable energy has hit a lull as private-sector money is drying up, but the bulk of government funding has yet to arrive.
There was $13.3 billion in new investments in clean energy -- the term used to describe alternative energy such as wind farms, solar power and biofuels facilities -- in the first three months of 2009, down 53%, from a year earlier, according to a report Thursday from research firm New Energy Finance Ltd. The drop came mostly in bank-based financing for building new projects, the report says, as the credit crunch has caught up with this once high-flying sector.
Meanwhile, government stimulus money that promises to restart renewable-energy activity has been slow to materialize. About $150 billion in global government stimulus spending has been proposed for clean energy projects, about half from the U.S. for loan guarantees, research grants, tax incentives and other investments.
"We're officially now in the doldrums," says Ethan Zindler, head of North American research at New Energy Finance.
The sudden dearth in financing is hitting equipment manufacturers especially hard. OptiSolar Inc. of Hayward, Calif., laid off more than 100 workers in January, and Clipper Windpower Inc., a Carpinteria, Calif.-based maker of turbines, laid off 90 workers, mostly at its Cedar Rapids, Iowa, plant.
Investments by venture capitalists in early-stage companies also plunged 48% to $1 billion in the first quarter, according to Cleantech Group LLC. "There may be some good companies that might not get funded, but that doesn't mean they won't get funded six months from now or 12 months from now," says Cleantech research director Brian Fan. "For the industry as a whole, this is a pause."
Companies that were able to secure financing before last summer are in the best position to survive until government stimulus money becomes available, say industry executives.
"Having the best balance sheet may be the differentiator at the moment," says Joseph A. Muscat, a partner at Ernst & Young LLP and director of the firm's clean-technology advisory services in the Americas.
Companies are hoping that government stimulus money flows out of Washington, D.C., as quickly as possible, but some government support requires private lenders to step up -- a lot to ask in the current environment.
Investment in renewable-energy projects, such as wind farms and solar power, plunged 53% in the first quarter from a year earlier.
Last month, California-based solar module maker Solyndra Inc. said it was the first company to qualify for an Energy Department loan guarantee under a long-delayed clean energy program created in 2005. It plans to use the $535 million guarantee to expand solar-panel manufacturing capacity. But the loan is contingent on Solyndra raising about $100 million from private sources, estimates New Energy's Mr. Zindler. "That may not be easy to do at this point in time," he said.
Kelly Truman, vice president of marketing at Solyndra, declined to discuss the private company's financial situation. "If we do have to raise additional money, having the government loan offer will make that easier," he said.
Write to Russell Gold at russell.gold@wsj.com
Last month, California-based solar module maker Solyndra Inc. said it was the first company to qualify for an Energy Department loan guarantee under a long-delayed clean energy program created in 2005. It plans to use the $535 million guarantee to expand solar-panel manufacturing capacity. But the loan is contingent on Solyndra raising about $100 million from private sources, estimates New Energy's Mr. Zindler. "That may not be easy to do at this point in time," he said.
Kelly Truman, vice president of marketing at Solyndra, declined to discuss the private company's financial situation. "If we do have to raise additional money, having the government loan offer will make that easier," he said.
Write to Russell Gold at russell.gold@wsj.com
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