This week industry groups released a slew of optimistic reports that highlighted the robust health of the U.S. clean energy sector. In 2009 U.S. solar capacity grew by 29 percent, according to the Solar Energy Industry Association. Wind according to the American Wind Energy Association was up by 40 percent. Geothermal capacity increased by a more modest six percent for the year, said the Geothermal Energy Association.
Those positive numbers were largely expected considering the unprecedented stimulus money that flowed into the sector since the Obama administration took over, more than a year ago. Wind and solar developers (and project finance banks) have flocked to Programs like the 1603 direct cash-grants, implemented in lieu of the investment tax credits. Indeed with bank credit committees more selective, having government dollars helps.
The first quarter of 2010L also saw growing cleantech investments from private equity and venture capital funds. According to Bloomberg New Energy Finance venture capital and private equity funds invested $2.9 billion in renewable energy companies, from $1.7 billion in the last quarter and $1.6 billion in the first quarter of 2009. Of concern, however, is that overall, across all industries, venture and private equity funds are raising less and less money. According to the National Venture Capital Association VC funds raised $3.6 billion, down 31 percent from the first quarter of 2009. If this trend continues, it could become harder for clean energy startups to secure early-stage funding.
So, how do we keep this upward momentum going? Crucial is expanding the various stimulus-funded government incentives. Renewable energy developers have been at pains to explain to some stimulus skeptics that the government program is working. Earlier, in the week G.E.R. guestbloger Michael Zimmer outlined 10 policy ideas that he felt should be included in any comprehensive clean energy law. They included: Extending the direct cash grants and the cleantech manufacturing tax credits; Establishing a government-funded green bank to provide cleantech developers access to capital at competitive rates.
With key provisions of the stimulus law set to expire at the end of the year, Washington has begun churning the legislative wheel this week to make these green stimulus program more permanent. Joe Romm of the Center for American Progress’s Climate Progress blog, in a testimony to the House Ways and Means Committee on Tuesday, urged for a five – to – 10-year extension of the cleantech manufacturing tax incentive, which of all the stimulus program has been one of the most successful.
The double-digit growth of the wind and solar industry over the past year, underscores the sector’s steep capital needs. It’s undeniable that void of government dollars the sector would have likely flat-lined. This crucial need for a steady capital has fueled a wave of consolidation, which continued this week with the announced buyout of wireless smart grid developer Eka Systems by Cooper Industries. This week Maxim Integrated Products, announced that it would pay $315 million for Teridian Semiconductor, a developer of power monitoring devices “[smartgrid and cleantech] companies with promising technologies can unlock more value by being part of a larger industrial,” explained Craig Wellen, a partner at specialty investment bank Greentech Capital Advisors, which advised Eka in its acquisition by Cooper Industries.
VC Watch:
According to Bloomberg New Energy Finance’s latest figures, combined, during the first quarter venture capital and private equity funds invested $2.9 billion in renewable energy companies, compared to $1.7 billion in the last quarter and $1.6 billion in the first quarter of 2009.
Element Partners hired named Sujit Banerjee as a managing director at the firm’s Philadelphia headquarters. Banerjee had been a part-time operating partner last year.
The International Finance Corporation (IFC), the World Bank’s private investment arm, is close to announcing a $1.5 million investment in Husk Power Systems, a developer of rice-powered electricity.
Rambling
This week Senator Kerry (D-Mass.) said he and his co-sponsors — Senators Joe Lieberman (I-Conn.) and Lindsey Graham (R-S.C.) — would unveil the much-anticipated Senate version of the climate change and energy law on April 26th. The legislation will be debated by the full Senate a little less than a year after the House passed its own version of the bill, the Waxman – Markey bill. Will it include a cap -and -trade provision? What’s more likely is a diluted carbon-pricing scheme, like the CLEAR act proposed earlier this year.
At G.E.R. we’ve repeatedly urged for a long-term renewable energy policy. And it seems that given some of the actions this week in Washington, the heavy legislative mechanics needed to enact such a policy, are greased up and are finally turning, what the end-product will be remains an open question.
Image: Wikimedia Commons