|
Published November 28, 2007 at 3:40 PM
|
 Are clean energy investments reaching a bubble stage? That was the hot topic at the Alternative Energy Investment Symposium in New York on Tuesday, where 100 attorneys, bankers, investors and companies met to hear what the experts had to say.
There was hardly consensus. John McConomy, a partner at PricewaterhouseCoopers, seemed to question the industry's stability when he said government policy is playing a key role in keeping the alternative energy industry afloat. "It's a tax play," he said. However, lenders are still backing the industry. Chris Stolarski, senior vice president of power, renewables and infrastructure project finance at Japan's Mizuho Corporate Bank Ltd., the second-largest finance arranger for renewable energy, said the debt market for renewable energy is very robust, despite the problems in the subprime market. He also said he expects more entrants into the alternative energy credit markets.
"Many new investors are looking at this, so we'll see more competition," Stolarski said.
Those focused on biofuels, a sector that has received hundreds of millions in investment in the last three years, were on the fence about a potential bubble, with most arguing that it would contribute as an energy source over the long term, but wouldn't be the only solution.
"The market is there; it's just nascent. The rules of game are still being figured out," said Tammy Klein, executive director of global biofuels and the Americas for the International Fuel Quality Center. With rising corn and sugar prices, she said nonfood feedstocks are the way to go but cautioned t hat biofuels are not a "silver bullet." She also argued that using algae as a biofuel is at least two years away from viability.
The market for ethanol also was the subject of some disagreement. Bob Shults, a principal at ethanol trader IVG Green, said that despite headlines about ethanol's troubles, "There's a strong market, and policy is driving it." However, Scott Baxter, head of of the global energy group at Houlihan Lokey, argued that big refiners aren't taking a keen interest in ethanol because it's not economically viable.
Anup Jacob, partner at Richard Branson's Virgin Green Fund, came out on both sides of the ethanol argument, saying that his firm is negative on biofuels in the near term, but bullish on its long-term prospects. He also pointed to solar energy as "the next ethanol," given the amount of debt some companies are taking on.
Given the variety of technology in the clean energy pantheon, a bubble may burst for biofuels before wind power while completely passing solar technology by. However, the excitement around the industry as a whole and the money going into such deals can certainly whip up some froth. Steven Davis, a partner at Heller Ehrman LLP, may have summed it up best: "When the price of eggs is high enough, even roosters will lay them." - Claire Poole
See Alternative Energy Investment Symposium agenda
Continue reading below
|
