By Steve Gelsi
NEW YORK (Dow Jones) -- Companies in the business of alternative
energy and reducing industrial carbon footprints say the worldwide
economic crisis is putting their survival skills to the test.
Confronted by a slowing flow of venture capital and debt
financing, swooning stock prices, and negative economic growth in
the U.S., the so-called clean-tech sector faces far leaner funding
than this time a year ago, when an unprecedented spike in energy
and commodity prices made it one of the hottest fields for
investors.
Still, companies held out hope that the nearly $800 billion
federal economic stimulus package would provide a spark for the
industry in the coming months.
"There's a shake-out going on right now in this industry," said
David Miller, a group vice president for solar energy products at
DuPont (DD). "Not everyone can continue to invest, but we are
investing."
Cost-cutting, conserving cash, and restructuring debt were
recurring themes that surfaced in presentations by the 41 companies
appearing at Jefferies & Co.'s seventh annual clean technology
conference in New York.
For his part, Miller reaffirmed DuPont's plan to invest $200
million this year alone improving photovoltaics and solar film,
both core solar energy technologies. DuPont still expects its
annual sales to the solar power industry to top $1 billion by 2012,
up from $400 million in 2008.
Miller expects zero to 20% growth in the solar power sector this
year, slower than in past years, he said. Once the cost of solar
power reaches parity with traditional power generation, growth will
accelerate, he said.
Jeff Lipton, managing director at Jefferies (JEF), said
companies are more hopeful now than they were a couple of months
ago.
"People are trying to be more optimistic," Lipton said during a
break at the event. "They're surviving the near-term and
emphasizing the capital on their balance sheet to weather the
storm."
Lipton said he expects the effects of the U.S. economic stimulus
package to lift the clean-tech sector somewhat in the second half
of the year, with hopes of initial public offerings from the clean
tech sector resuming in the fourth quarter.
As for venture financing of clean technology companies, "the
deals are still happening, but the process is much longer," he
said.
Rory Macpherson, manager of investor relations for China-based
Suntech Power Holdings Co. (STP), said the company has been
renegotiating its silicon purchasing contracts with its suppliers
in the face of lower commodity prices.
Suntech Power is also in talks with its lenders in China on debt
payments due later this year, he said.
Meanwhile, Suntech took an investment impairment of $48.8
million in its fourth quarter for investments in materials maker
Hoku Materials and Nito Solar. It' no longer committed to providing
additional financing, he said.
"Even though it's a difficult market, Suntech has the potential
to gain share based on our lower cost structure," he said.
Erik Fyrwalk, CEO of Nalco Holding Co. (NLC), said the water
treatment specialist cut its work force in recent months in the
face of a challenging economy, but he did not mention a specific
figure.
Nalco has seen steady demand from Brazil and India so far this
year, but Russia and China markets remain difficult for now.
The company continues to use cash flow to cut down on its debt,
while eying smaller acquisitions to improve its growth.
"The credit markets are more open now than they were in the
fourth quarter," he said.
Kevin Walsh, managing director, Power & Renewable Energy
Group, at General Electric (GE), said the American Recovery and
Reinvestment Act provides a three-year extension of the production
tax credit, loan guarantees and billions for smart grid
applications.
Collectively, the credits will create demand and help provide
deployment funding for new technology in a boost for venture
capital. Nevertheless, project development is slow and
first-of-a-kind projects remain challenged.
However, more help from Washington may soon be on its way in the
form of an energy and climate bill being drafted, a national
renewable energy standard, a green bank, and assistance for
building transmission lines, he noted.