Report: Investors gamble on clean tech

By: By H. JOSEF HEBERT, Associated Press Writer
By: By H. JOSEF HEBERT, Associated Press Writer

WASHINGTON (AP) - Investors are gambling on green energy, pouring $4.1 billion into fledgling clean technology companies last year, an accounting firm concludes. But 2009 could produce a "crippling retrenchment" without government help.

The report by the accounting firm PricewaterhouseCoopers LLP said that despite the economic downturn, venture capital investments in upstart companies involved in solar, alternative fuels, energy storage and other clean energy ventures have soared from only $1.4 billion as recently as 2006.

Nevertheless, there are signs of trouble ahead.

"Urgency surrounds numerous clean tech companies, which saw a drying up of tax equity-structured financing in 2008," stalling solar, wind and biofuels programs and threatening some of the companies with bankruptcy, said the report obtained by The Associated Press.

Despite the overall growth in 2008, venture-backed investments in clean energy declined by 14 percent in the last three months of the year, reflecting the impact of tight credit markets, according to the report released Wednesday.

Tim Carey, clean energy technology leader at PricewaterhouseCoopers, said much of the 2008 investment growth - a 54 percent increase over 2007 - was spurred by recent government action, such as long-term extensions of investment tax credits for solar projects.

The solar industry, while still in the early stages of development, was by far the favorite of venture capitalists in 2008, accounting for nearly half of the investments in the clean energy projects tracked by the report.

Solar projects attracted nearly $1.9 billion in venture capital in 53 deals in 2008 - nearly triple the amount of such investments a year earlier. Eight of the top 10 venture-backed investments in clean energy technology involved solar, according to the report.

The other two projects were related to the "smart" electric transmission grid and to developing cellulosic ethanol.

Ironically, wind energy, which recorded a record 50 percent growth last year in terms of how much electricity is being produced from turbines, was shunned by venture capitalists. Investments in wind technology as a share of total clean energy venture-backed investments fell by 40 percent in 2008, according to the report.

Carey said help from the economic recovery plan recently approved by Congress may be needed within next four months to "inject a dose of adrenaline" and keep some of the cash-starved clean energy and smart grid projects from folding.

The $787 billion stimulus package signed by President Barack Obama on Feb. 17 includes about $83 billion for clean technology spending, tax relief and loan guarantees, according to the PricewaterhouseCoopers analysis.

The report includes findings from the MoneyTree Report, a quarterly survey produced by PricewaterhouseCoopers, and the National Venture Capital Association, based on data from Thomson Reuters.

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On the Net:
PricewaterhouseCoopers: http://www.pwc.com/


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