The theme of this year’s Renewable Energy World Conference in Austin, Texas, which we’re attending, is: “Power Shift.”
And indeed, over the past three-to-five years, a shift has occurred in the energy sector as renewable energy has evolved from a lifestyle into a growth sector. But the question remains: Will it become a long-term industry? It’s certainly on its way. However, a lingering issue is access to capital, something we’ve talked about before.
While the clean energy market is obviously more liquid than it was a year ago, anecdotal discussions we’ve been having with renewable energy developers here in Austin demonstrate that even for projects with good technology and strong partners, private financing remains elusive in this post-credit crash era.
Cindy Thyfault, a managing director with White Rock Advisors, a boutique investment bank in Dallas, pointed out during a panel we attended that one of her clients, a biomass developer looking for $5 million in debt financing, was recently asked by a bank to provide the equivalent of about $100 million in equity as collateral!
Thyfault says that today, getting serious long-term financing is extremely difficult without some sort of government support (investment tax credit or direct cash grants, for example).
The tight credit conditions are funneling new alternative funding routes, points out Mark Crowdis, CEO and founder of Think Energy, a consultancy in Silver Spring, Md. He says that over the past year, he’s been working with what he describes as “private finance groups,” individuals and institutions who pool their money to invest in renewable energy. Crowdis says he’s currently working with three such groups, which have $180 million in combined capital.
We later asked Crowdis for details on these private investment groups but he remained tight lipped.
So, what about those rice husks…
Lynn Tabernacki of the Overseas Private Investment Corp., (OPIC) a Washington agency that finances private sector businesses mostly in developing nations, talked about her experience with Husk Power Systems, which has developed a system that turns rice husks into biogas to fuel mini power plants, some currently operating in India.
OPIC invested $750,00 in the company launched by two University of Virginia MBA students, Tabernacki says. The Shell Foundation, the philanthropic arm of Royal Dutch Shell, also put some money into the startup.
Tabernacki says that Husk is now being courted by a number of cleantech-focused, U.S., -based venture capital funds. She declined to give names.