Report: Global cleantech investment down 22% in 3Q

DENVER — New global investment in clean-energy companies fell 22 percent in the third quarter as government financing was offset by tight credit markets, according to new research released Friday.

From July to September, new global investment totaled $25.9 billion, down 22 percent from a year ago and off 9 percent from the second quarter, according to London-based New Energy Finance, a global research firm.

But the sector appears to be heading toward a recovery, with investment nearly double what it was in the first quarter and investors growing more confident.

Many analysts think a turnaround will come in 2010 but caution that much depends on the U.S. economy, the health of the financial sector, natural gas prices and even electricity demand.

Asset financing, a key measure for solar and wind projects, fell 26 percent to $19.2 billion. Venture capital and private equity investment dropped 46 percent to $2.2 billion.

The third-quarter total, however, was nearly double the $13.3 billion recorded in the first quarter, said Ethan Zindler, who heads New Energy’s North American research arm.

“Activity has certainly bounced off of Q1 (the first quarter), which was just when things came to a grinding halt,” he said.

“I think the market has recognized that this industry is getting substantially more support from the federal government and other governments around the world,” he said. “I think that helps bolster confidence as well.”

Global public market financing rose 45 percent to $4.5 billion, yet shares of some companies still lag last year’s value.

For example, shares of solar-power module maker First Solar Inc. closed Thursday at $143.76, down about 24 percent from Sept. 30, 2008, and solar technology company SunPower Corp. closed at $28.47, down nearly 60 percent.

Renewable energy is a small fraction of all power used but has gained favor globally as governments and businesses seek to curb pollution and the use of fossil fuels.

The industry lost momentum as access to credit markets dried up, natural gas prices fell and electricity demand diminished. Some companies were forced into bankruptcy while others shelved plans and cut jobs.

Billionaire oilman T. Boone Pickens put his plan to build the world’s largest wind farm on hold last year amid the downturn and scrapped the plan altogether in July because of problems in getting power to a distribution system.

Many believe the industry will see immense growth in the coming years as utilities push to meet mandates to provide a percentage of electricity from renewable resources.

Governments worldwide have pledged to spend about $163 billion on stimulus programs to promote renewable energy, New Energy said.

The U.S. earmarked about $66 billion in stimulus money for renewable energy but more than 80 percent has yet to be allocated, New Energy Finance estimated.

In addition, the bulk of the money for announced allocations has yet to reach companies’ bank accounts, analysts said.

“As you see those dollars really start to get into the system, you’ll start to see some of the shovel-ready projects going first and a lot more jobs,” said Scott Smith, U.S. leader of Deloitte’s cleantech practice.

Some companies have found success by getting financing from both the government and investors.

For example, solar panel maker Solyndra Inc. received a $535 million loan guarantee from the federal government to complete a manufacturing facility in Fremont, Calif. It raised $198 million from investors.

Fuel cell maker Hoku Scientific of Hawaii delayed construction of a polysilicon plant in Idaho in June, citing financial woes. This week, it announced it signed an agreement to be acquired by TianweiNew Energy Holdings Co. Ltd., which will provide money to finish the plant.

A123 Systems of Watertown, Mass., which makes lithium-ion batteries, raised $380 million in an initial stock offering, received a $249 million Energy Department grant, secured $350 million in private capital and landed $100 million in refundable tax credits from the state of Michigan for a plant. Yet A123 Systems has never made money.

Horizon Wind Energy LLC considered using $1.2 billion it earmarked for U.S. investment this year on projects in other countries, but changed its mind and allocated $1.5 billion for U.S. projects because it can receive cash grants in lieu of tax credits.

“We are an example of a company that is now investing more in the U.S. than we were originally projected to,” CEO Gabriel Alonso said. “Therefore, the more investments we make, the more jobs we create.”

Cleantech Group LLC has forecast venture capital of about $5 billion to $6 billion for the sector this year, which roughly matches 2007 figures, Managing Director Dallas Kachan said.

He and Deloitte’s Smith believe technologies that focus on energy efficiency, such as lighting and insulation, power storage and advanced batteries will benefit over the next year.

New Energy Finance forecast overall investment in clean energy will be $105 billion to $115 billion this year. That compares with $155 billion in 2008 and $148 billion in 2007.