Government funding fuels green energy

Clean Energy Investments 2009 saw global cleantech funding dip as IPO markets weakened and VC cutbacks hit, while solar, wind, and biofuels revenues rose on stimulus programs in the U.S., China, and South Korea.

Government stimulus funds will provide some needed fuel to a cleantech sector buffeted by the global recession and sharp declines in solar prices, says a new report.

Total investment in clean technology last year fell 6.5% worldwide to $145 billion, partly due to a weak market for initial public offerings and investment cutbacks by venture capital firms. So says the "Clean Energy Trends 2010" report released by research firm Clean Edge.

Still, the three major clean energy fields — solar photovoltaic power, wind power and biofuels — had an 11% increase in total revenue last year, to $139 billion, says Clean Edge. It projects revenue will rise to $326 billion in 2019, with revenue expected to triple over ten years.

The revenue rise was spurred by many regional and federal governments investing in clean energy as part of stimulus and economic recovery programs. According to the report, about $100 billion of the $787 billion U.S. economic stimulus package signed into law last year targeted clean technology investments such as smart grid and energy storage and related activities. The report estimates that South Korea will commit $84 billion to cleantech by 2013. It says China has indicated it could end up spending $440 billion to $660 billion toward its clean energy programs.

"In 2009, more money was invested globally, as clean tech investments soared worldwide in new, clean-energy generation capacity than in traditional fossil fuels," said Ron Pernick, Clean Edge's managing director.

Cleantech investments by U.S. venture capital firms fell 3% last year to $2.2 billion. But that outpaced total VC investments, which fell 26%. Thus, the energy sector's total share of investment hit an all-time high of 12.5% in 2009, up from 11.4% in 2008.

Among the hardest-hit sectors in cleantech is solar. Solar energy companies have struggled as prices for solar cells and panels fell as much as 50% last year due to excess supply, with many stressed solar firms looking beyond Wall Street for funding. Three solar startups that had recently planned U.S. initial public offerings, all companies based in China, postponed their IPOs.

Trony Solar Holdings shelved its IPO in November as the recession cast a shadow on solar power worldwide. Daqo New Energy postponed its IPO in late January, while JinkoSolar did the same last month.

The outlook for cleantech IPOs remains tough, but is improving, says Matt Therian, an analyst at Renaissance Capital. The Greenwich, Conn.-based firm provides IPO market analysis.

"The door is not open to everyone," he said, "but it is looking better."

Recent IPO activity suggests investors are finding an appetite for young growth companies again, with a gold rush in green technology emerging in some segments, which could signal an opening for cleantech companies.

"We aren't seeing people shy away form riskier stories like biotech, though (the IPO is going out) at lower prices (than if the economy were stronger)," Therian said. "Investors aren't shutting the door on early-stage companies."

Recent examples of startup IPOs include Ironwood Pharmaceuticals (IRWD) and Anthera Pharmaceuticals (ANTH), which came public on February 3 and March 1, respectively. Another is Aveo Pharmaceuticals (AVEO), which just went public.

One closely watched cleantech firm is Solyndra, which filed for an IPO in December but hasn't yet set a date. The maker of solar photovoltaic systems for commercial rooftops garnered lots of attention last year for winning a $535 million federal loan to build a second factory near its headquarters in Fremont, Calif.

Solyndra has raised a total of $970 million in financing. In the first nine months of 2009, it reports revenue of $58.8 million, up from just $6 million for all of 2008, according to it IPO registration statement.

Top picks by Clean Edge for potential IPOs include BrightSource Energy, based in Oakland, California, with a BrightSource Energy IPO anticipated, which builds, owns and operates large solar plants. Another is solar products firm MiaSole, based in Santa Clara, Calif.

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