Cleantech may need to wait a bit longer for stimulus funds

Government-backed stimulus packages are expected to give a major boost to cleantech companies, supposedly starting in September. A total of $184.9 billion has been earmarked for green initiatives worldwide, and some 65.7 percent of that is going to energy verticals like solar and wind, says the New Energy Finance Group. But it may be a while longer before startups and their investors see any of that money.

“There’s only been a trickle of dimes and cents so far,” said Michael Liebreich, chief executive officer of the research group, at the HiT innovation summit in Barcelona. Only 15 percent of these stimulus grants is expected to be freed up by the fourth quarter of 2009, with the bulk of packages rolling out in 2010 and 2011, he said.

The delay is straining investment in the sector as venture capital firms pump more money into green portfolios to keep startups afloat. “Typically we would have done about eight deals already this year, but we haven’t done even one,” said Gina Domanig, a managing partner at Emerald Technology Ventures. “We’re really spending time taking care of our existing children rather than adopting more.”

There are signs that things are beginning to change — perhaps in anticipation of government action. Although overall bank lending to renewable energy could be down as much as 40 percent this year, the banks have now raised some capital and are gradually growing in confidence, said Liebreich.

Other key market indicators are pointing to more attention for cleantech: Oil prices are again going above $70 per barrel; and carbon prices are also sharply on the rise, he said.

Regionally, the U.S. is likely to be the main recipient of renewable energy finance in 2009, but other countries are also performing well. In 2008, U.S. companies in the green energy sector raised $27.8 billion, but he also called Spain a “superpower” — companies there brought in $21.9 billion. Emerging markets like China and Brazil are coming up swiftly, too. “People think of China in terms of coal fire and smokestacks but they have been doing a lot in wind energy,” he said. The country saw investment of $15.9 billion in 2008 while Brazil’s advances in ethanol totaled $11.7 billion in that period.