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Investment in Alternative Energy Drying Up

Published 10/22/08 Dustin Ensinger - Print Article
E-mail - editor@economyincisis.org

As the price of oil plunged over the course of the financial crisis, so have the stock prices of alternative energy companies. With stock prices plummeting, alternative energy companies have found it difficult to raise capital from investors. This has hampered progress in the industry by delaying the building of new plants and forcing companies to spend less on research.

“Everyone is in shock about what the new world is going to be,” said V. John White, executive director of the Center for Energy Efficiency and Renewable Technology, a California advocacy group. “Surely, renewable energy projects and new technologies are at risk because of their capital intensity.”

It is expected that the full-year investment in alternative energies will pale in comparison to the $25.4 billion spent in 2007. Investment in projects in the industry fell to $17.8 billion for the third quarter from $23.2 billion in the second quarter.

In light of these circumstances it is likely that the industry will look to the government for subsidies and research financing as money from the private sector continues to dry up.

“Government funding for renewables is now going to have to compete with levels of government funding in other areas that were unimaginable six months ago,” Mark Flannery, an energy analyst for Credit Suisse, said.

Without a concrete plan to lessen America’s dependence on foreign oil we will continue to fill the coffers of rogue states that turn around and use the petro-dollars to buy us out, piece by piece.

Source The New York Times

Shares of alternative energy companies have fallen even more sharply than the rest of the stock market in recent months. The struggles of financial institutions are raising fears that investment capital for big renewable energy projects is likely to get tighter.

Advocates are concerned that if the prices for oil and gas keep falling, the incentive for utilities and consumers to buy expensive renewable energy will shrink. That is what happened in the 1980s when a decade of advances for alternative energy collapsed amid falling prices for conventional fuels.

…

But after years of rapid growth, the sudden headwinds facing renewables point to slowing momentum and greater dependence on government subsidies, mandates and research financing, at a time when Washington is overloaded with economic problems.

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