High-Powered Spending On Alternative Energy Tumbles

NEW YORK — Venture capitalists reined in spending on renewable energy to begin the year, with funding for research and startup projects falling 63 percent through March, according to an industry report released Monday.

It is the latest indicator of just how badly the global economic downturn has dampened the rush toward alternatives to fossil fuels. Oil and gas companies have also been hurt as overall demand for energy has fallen in the recession.

From January to March, venture capitalists spent $277 million on clean-energy projects, compared with $715.3 million in the same period last year, according to an Ernst & Young analysis based on data from Dow Jones Venture Source.

"Investors took a deep breath and paused," said Ernst & Young's Joseph Muscat. "The weak economy has caused demand for energy in general to go down."

There were already signs that traditional stock market investors had pulled back on clean energy spending. The report Monday showed how wealthy and institutional investors, some of the most ardent backers of alternative energy, have been forced to tamp down spending as well.

There were a few surprises, however, with some comparatively big money going toward the critical technology of storing energy. New investments more than doubled to $114 million, making energy storage the biggest lure among venture capitalists in early 2009.

The fuel cell sector attracted $45 million in the first quarter, compared with none a year earlier, according to the analysis released Monday.

BASF, the world's largest chemical company, recently spent more than $10 million to build and open a fuel cell plant in Somerset, N.J. The Germany-based company has spent more than $100 million on fuel cell research in recent years.

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"Fuel cell technology is one of the most important on the quest toward sustainability," said Horst-Tore Land, head of BASF's fuel cell division.

Battery storage companies raised $69 million in the first quarter, up 37 percent from a year earlier, according to the investment report.

A123 Systems, which makes lithium ion batteries for electric cars, signed a deal with General Electric this year.

While oil and gas companies have cut back spending as well, alternative energy startups can be more vulnerable because many rely heavily on venture capital.

It is not known if the first quarter represented the bottom for new investments in clean technology, though industry observers say conditions appear to have improved marginally.

The recently approved government stimulus package contains billions for research into renewable resources, funds that should help boost investment, said Muscat.

Large chunks of funding have been set aside for such measures as upgrading the nation's electrical-distribution system, tax cuts to promote alternatives to oil, and to make federal buildings and private homes more efficient.

"The long-term trends are still there for clean energy," said Ethan Zindler, head of North American research at New Energy Finance. "This is a period of doldrums, where we're stuck between the last massive wave of investment and waiting for some of the major support from stimulus packages around the world to kick in."

Comments

[j-rich]

So these people (Namely the Republicans) want to forget about renewable energy until gas prices jump back up to 4 bucks? It's already creeping to 2 dollars!I feel sorry for the people who truly believe the Republicans are trying to do what's best for the American people.

[nogimmicks]

There is only one serious solution to the CO2 problems, - the nuclear energy (plus zero population growth). It works, both in terms of scale and cost and it does not emit CO2. Electric cars without nuclear stations to power them is nonsense.

[research]

Rooftop Solar 3 cents per KWH.

Nuke power tech same as Bomb tech =

Apocalypse

for electricity we can get cheaper from solar, wind and biochar.

See my profile for proof.

Nuke power is insane.

[research]

nuclear energy is the same tech as nuke bombs:

Nuke power = the Apocalypse

For electricity we can get cheaper from rooftop solar.

see my profile for extensive proof.

[konst]

You are very misinformed about nuclear energy.

[Greenguy25]

Not to worry, gasoline prices will be hitting 3 dollars per gallon by the end of summer and RE investments will go back up.

If our government had any foresight they would apply a gas tax to keep prices at an artificial level which would provide a security to the developing industry and stop this silly rollercoaster. If we truly want a green energy future we must make the committments and hard choices now.

http://www.mygreenscene.com

[FormerReaganite]

Lee Iacocca was advocating a higher gas tax back in the 1980s. But no one was interested. If a tax of just 10 cents increase per year had been implemented in the oil crisis of 1979, we would now have a $3.00 tax, which would provide funding for alternative energy, better roads, etc. Here in Michigan, some of the roads have deteriorated to look like the lunar landscape, because people object to the (necessary) gas taxes. You get what you pay for...

[RTIII]

The - or at least A - vital element that's missing is a Federal Regulatory step to ensure that EVERY regulated energy monopoly is forced to take back consumer generated power at the same price they get paid for it.
.

[SeaKitten]

Gee, didn't these people know that Robert Redford is advocating these kinds of investments? All is possible in Hollywood and on the left side of the aisle in DC. What next? Is Jimmy Carter going to tell us that he's got a bunch of energy stored in his basement that we should all invest in? Algore telling us that his sighs are a good wind investment for venture capitalists?

[shockmagog]

Is reading comprehension beyond your grasp? Simply hoisting straw men to easily and conveniently knock down with vapid and loaded rhetorical questions? Do you just like to see how much of an i.d.i.o.t you are in print form?

[FormerReaganite]

SarcasticSeaKitten, what are your solutions to the energy situation? More oil and coal burning? If I had a time machine, I would invite you to transport back to the 19th century. (must leave your computer behind, though)

[mikefina]

But I still get to bring the time machine back with me, right? Becuase I want to see the future-time, too. You know, the one with windmills--like 15th century Holland.

[cjt1957]

I am sure Obama will kick in a few hundred Billion dollars to support inefficent energy....

[shockmagog]

He doesn't have that much money to "support inefficient energy." I guess he'll have to use some of YOUR money.

Oops, I forgot. You have been content to see billions and billions YOUR money spent on wasteful oil dependence and tragic phony wars.

[JnrNorman]

We need hemp diesel to powere the big-rigs already on the road.
Lealizing hemp will get the economy growing.

[SeaKitten]

Um, time to put down the "hemp" bong...

[Egalitare]

Just another reason that Washington needs to supply long term, consistent subsidization of alternative energy. The Private sector is simply quarterly report driven -- and that's the kindest thing I could think of to say.

[Chip W]

There you go.
One of the limitations of free-market (wonderful though it is) is that it won't move toward societal objectives. If an objective is to move towards greener energy, free-market won't do it unless money drives it in that direction. Which brings me to:
Another limitation of free-market (wonderful though it is) is that it's all about money. Money is the objective, and money is how it's measured. If values other than money are wanted, free-market won't do it.

[theubermensch]

I just can't figure out why capitalists wouldn't want Americans to have cheap energy that doesn't pollute. We could have cheap and efficient everything, yet oil prices go up, and the saga goes on. Everyone wants to keep everyhting in the private sector, yet they exploit us. If we get things cheap and efficient, they don't make money. The little men need to wake up, and take the power out of the powerful's hand, whether it is government or business. We have the ability to change things just as much as anyone else. We need to do more then just whine and vote. Don't wait for the powerful to take control of this, then it becomes expensive. Come one people, step up.

[SeaKitten]

Um, maybe because viable alternatives like nuclear power were regulated into the stratosphere in terms of cost?

[RTIII]

Um, maybe it's because viable alternatives like wind and solar power can't get a regulatory break? (Hint: EVERY regulated energy monopoly should be forced to take back consumer generated power at the same price they get paid for it.)
.

[FormerReaganite]

Would you prefer unregulated nuclear reactors?

[DesertDogAlpha]

The answer is obvious - more government subsidies for sources of energy that can't stand on their own two feet in the economic arena -- NOT.

Obama and Congressional Democrats are terrified of saying that their is a value to avoided CO2 and other greenhouse gases (a value that we'd all have to pay for - and they're scared that someone might call that value a "tax"). So while crying faux tears about climate and the environment, they avoid doing the one thing that would give clear running room in the form of money to be made to sources of energy that have little or no carbon footprint, ranging from natural gas (oh yeah, we won't produce many of our own natural gas resources in the country) to wind and solar, and especially carbon capture and storage for coal-fired electricity generation.

The government and politicians are horrible allocators of capital based on economic reality. Instead they want to pick winners and losers based on political expediency. Did anyone notice that the Secretary of Energy last week pulled the plug on hydrogen fuel cells? How long has it been since the government was saying that this was evironmental salvation - even though there never has been a realistic carbon-neutral source of hydrogen.

[OneVoiceInACrowd]

http://www.hydrogencarsnow.com/blog2/index.php/hydrogen-distribution/nasa-building-renewable-hydrogen-station-in-cleveland/

seems pretty neutral...

[DesertDogAlpha]

Questions:

Volume of hydrogen produced per unit of investment, and amount of gasoline it will displace? (My guess: almost infinitely high - more than $50/gallon of gasoline equivalent)

Potential for this sort of thing to be widespread enough to generate the hydrogen, on a carbon neutral basis, to displace 10 percent of gasoline demand in the US? (My guess - this could never displace 1/2 of 1 percent of US gasoline demand)

If you aren't for nukes as the energy source to make hydrogen, which does not occur as a pure element in nature, then you aren't for carbon neutral hydrogen.

[sjanus11]

Even George see's the need for oil I guess. Is this treason or something.­...LOL

George Soros’ hedge fund Soros Fund Management has disclosed a new position in Plains Exploration (PXP). In a 13G filed with the SEC, Soros Fund Management now shows a 5.38% ownership stake in PXP due to activity on April 21st, 2009. They now own 6,467,400 shares.
Plains Exploration & Production Company
PXP is an independent oil and gas company primarily engaged in the activities of acquiring, developing, exploring and producing oil and gas in its core …

[gladiator777]

Ya, I think its time to drill for some more oil and natural gas, doesn't look like were going to have any major energy changes. Now is not the time to sit around and not drill, we can't afford it, especially when there are seas of oil out there still waiting for us. Hope won't bring energy change, and until we do have new reliable sources of energy sitting around hoping won't do us any good.

[theubermensch]

Your joking right. Hey just give in to ridiculous ideas, and keep progress from happening.

[dizmo4]

This was predictable and shows exactly why there needs to be significant Federal funds devoted to alternative energy.

Just a shame that Republicans would kill anything that offered a chance at actually changing things....

[sjanus11]

Ummmm..jus­t where in this article does it say Republicans killed anything? It says investors have backed off. See my above post....Ev­en George Soros is investing in OIL.....LO­L now who's killing the investments.

[olmossy]

Wouldn't you have to be nuts to invest in Clean,Green Industry, WHEN you can plainly see that The Government of the United States , and ALL the International Investment Bankers are invested in and bailing out Wall Street that Is invested in Coal and Oil ?

[mikefina]

Perhaps the Venture Capitalists stuck their wet finger in the wind, and realized that the public appetite for energy cost increases was blowing in the face of Progressive opinion.

Perhaps they rightly sense that the supposed leaders of the alt-energy movement at the Fed Gov level, are shiftless and spineless.

Leaving the job to the likes of Mass. Rep. Malarkey and Calif Rep. Waxman is a recipe for failure. Neither is willing to take on the liabilities of energy producition or resource development, they only want the benefits. They expect Red State, nee flyover states to have the ugly infrastructure while they enjoy the luxury of out-of-sight, out-of-mind wind turbines, solar farms et. al.

When large off-shore wind farms and tidal-energy plants are visible from coastal CA and luxury lots on Cape Cod, then maybe I'll believe the hype. Until then, VC should, and will, keep their powder dry.