The global economic crisis have led to massive lay offs and drastic budget cuts but one things that’s emerging relatively unscathed is the amount of money companies in the U.S. and abroad are planning to invest in cleantech over the coming years, according to a survey released yesterday by Ernst and Young.
The survey polled 308 executives working across all industry sectors and for companies with revenues raging between $1 billion and over $5 billion.
Two-thirds of the survey’s respondents indicated that investments in cleantech are championed by senior management, and 85 percent reported accelerating their company’s response to climate change issues compared with two years ago. Read More »
A number of reports released in the past few days are confirming that the investment drought hitting the clean energy sector is likely to last. The latest one, released Thursday by New Energy Finance, showed that global investments in the clean energy sector plummeted to $13.3 billion in the first quarter of 2009, a 44% drop from the fourth quarter of 2008 and a 53% drop from the same time last year.
The biggest single drop was investments,mostly in the form of project finance bank loans, supporting the construction of new wind or solar power projects. These totaled $11.5 billion during the first three months of 2009, which was down 44% from the fourth quarter of 2008.
Investments by venture capital funds fell to $1.8 billion during the first quarter, down 22% from to the fourth quarter. This contrast with data released yesterday by the Cleantech Group, a competing research firm, which showed $1 billion in venture investment during the first quarter. Unlike the Cleantech Group, New Energy Finance’s data includes private equity investment.
Global investments in clean clean energy reached $155 billion for the whole of 2008.
Commenting on these latest figures, New Energy Finance’s chief executive Michael Liebreich said the sector was hit “by an oncoming train” and called for greater government support:
“These figures highlight the need for policy-makers and administrators in the U.S. and elsewhere to ensure that stimulus funds start flowing immediately…. There is also a strong case for further measures, such as requiring state-supported banks to raise lending to the sector, providing capital gains tax exemptions on investments in clean technology, creating a framework for Green Bonds and so on, all targeted at getting investment flowing.”
Governments across the globe have already approved large, green-focused stimulus monies but these funds have yet to reach companies. The U.S. Treasury Department is drafting rules to distribute a large chunk of the stimulus money but has not offered a specific timeline on when it would start distributing funds. Liebreich does not expect stimulus money in the U.S. and abroad to reach companies for at least another year.
In the U.S., which has been adding the largest amount of wind and solar projects in the past couple of years, financing of greenfield projects totalled just $500 million during the first quarter, four times as less as the $2 billion invested in the previous quarter or the $5billlion invested during the same quarter a year ago.
Although not a source of direct investment capital, mergers and acquisition activity also took a hit, with about $8.8 billion in new deals registered for the first quarter, compared to $17.3 billion during the fourth quarter of 2008 and $18.8 billion in the year -ago period.
New Energy Finance does not expect a rebound anytime soon. “It will take a very sharp acceleration in investment in the remaining three quarters for this year to match 2008 levels,” it says.
Figures put together by research firm New Energy Finance, tracking venture and debt financing and mergers and acquisition activity for the first quarter of 2009, will show a big fall in activity compared to the same quarter in 2008.
The findings, which will be released later this week, are not surprising. As previously reported here, the credit freeze has all but dried up funding supporting the construction of clean energy projects. This includes tax equity financing, which were widely used in boom times, (2007- to – 2008), by wind developers, who in exchange for project financing would swap the tax credit with financial institutions with large enough profits to benefit from these tax shelters.
But now, as Greenwire reports, “the big boys no longer have cash to bankroll projects or the means to pull the profits to get credits, so the tax-equity space has turned into a financial dead zone.“
Things are being done to kick start funding. Washington is putting together a government grant system that would see clean energy projects be directly financed by the Treasury Department. The grant are part of the recently passed stimulus package. GER has written about theme here. Treasury expected to distribute the first of these much awaited funds soon.
But with financing for renewable energy remaining “as scarce as white heather on both sides of the Atlantic” the hope, New Energy Finance writes, is for: “G20 leaders gathering in London on Thursday to discuss action to drag the world economy out of recession… [and that] the… meeting might push other countries into taking similarly decisive moves to trigger investment in clean energy.”
3M, the Minnesota company behind the yellow Post-it notes, has formed a renewable-energy division in a bid to increase its presence in the growing solar generation and clean-energy space.
Company CEO George W. Buckley, has forecasted that the solar market could grow to $50 billion in 2012, from $20 billion in 2008. In September he told investors that cleantech “is..a [quite] massive opportunity for 3M.”
3M already generates about $200 million annually from its solar- related products, a figure that is growing 20% annually, Buckley told Dow Jones.
3M named company executive Michael Roman to lead the new business.
The division includes an Energy Generation unit that will develop technologies to reduce the cost of renewable energy and an Energy Management unit that will concentrate on energy efficiency solutions.
The announcement comes a week after 3M reported a 37% drop in fourth-quarter net income and cut its 2009 outlook because of economic uncertainty.
Today, in his first weekly radio and video address as president, Barack Obama promoted an ambitious stimulus package that he says will:
“Double our capacity to generate alternative sources of energy like wind, solar and biofuel over the next three years. We will begin to build a new electricity grid that lays down more than 3,000 miles of transmission lines to convey the new energy from coast to coast. ”
For more details, watch the video address:
The Saturday address capped a good week for the sector, which finds itself at the heart of the Obama administration’s economic recovery plan.
Only four days earlier, an estimated 1.4 million people gathered on the mall in Washington to witness the historic inauguration, and listened as Obama said the country could not “consume the world’s resources without regard to effect.”
In his inaugural address he promised to “restore science to its rightful place,” and pledged to build electric grids, “harness the sun and the winds and the soil to fuel our cars and run our factories.”
The President’s commitment comes as the green sector is feeling the pain of the economic slump, resulting in downsizing at a number of clean energy companies.
The Mercury News reports that in the recent months jobs have been cut at all of the following companies:
• HelioVolt, a Texas maker of thin-film solar panels that opened a 122,000-square-foot factory in Austin only three months ago. At that time, the company said it would ultimately employ 160 workers. But it recently announced a round of layoffs, though it wouldn’t say how many.
• SpectraWatt, an Intel spinoff, said in June that it had raised $50 million and would open a plant in Oregon to make photovoltaic cells starting in mid-2009. But, according to recent press reports, the company suspended factory construction for six months and threatened to consider building the plant in another state that offers more incentives for green businesses. SpectraWatt did not return an e-mail seeking comment.
• Evergreen Solar, a Massachusetts maker of solar cells, recently closed one of its two factories, which led to layoffs. Other solar companies confirming layoffs include GT Solar, which makes solar equipment in New Hampshire, and SunEdison, a Maryland company that finances and manages solar-electricity projects.
On Thursday, only a couple of days after the inauguration, the House Committee on Energy and Commerce approved an estimated $54 billion economic stimulus package set to finance clean energy projects.
The next day the Senate’s Finance Committee announced its part of an economic stimulus plan. The Senate plan gives $30 billion in tax incentives to producers of renewable energy.
But at odds with this newfound political goodwill for everything green are the recent findings of a poll by the nonpartisan Pew Research Center, released Thursday, that shows a dip in interest by Americans for environmental issues, who cite the economy, jobs and terrorism as primary concerns.
The New York Times says the poll may indeed “pose a challenge for Mr. Obama.”
A number of reports released in the past few days are confirming that the investment drought hitting the clean energy sector is likely to last. The latest one, released Thursday by 
