Article
A Chill Wind - Wall Street Journal 9 March
The wind industry is feeling the chill of the recession, as the struggles of would-be investors make less funding available.
The industry depends heavily on so-called tax equity investors -- companies that provide funding because it earns them a tax credit. For some of those investors, there's no longer any taxable income to offset. The extreme case is the failed Lehman Brothers Holdings Inc., which had been a major investor.
The Journal Report
See the complete ECO:nomics report."There were 14 active [tax equity] investors at the beginning of 2008; now there are four active investors," said Michael Ware, managing director of Good Energies, a private-equity firm that invests in renewable energy and energy efficiency, at the end of last year. "When they're uncertain whether they'll have taxable income, they've pulled out of the market and liquidity dried up."
That's good news for the remaining investors, though, because it gives them more leverage in negotiating the returns on their investments. "Equity returns today have increased by a significant amount," says Adam Umanoff, a partner at Chadbourne & Parke LLC, a law firm involved in renewable-energy deals.
Many of the companies still receiving capital are those with a major parent company, such as San Francisco wind-energy project developer and operator NaturEner USA LLC, whose parent is Spain's Grupo NaturEner SA. The U.S. company recently received $156 million in funding from Morgan Stanley.
Among other wind investments announced this year, Chicago-based Invenergy Wind LLC secured an undisclosed amount of equity funding from a consortium led by J.P. Morgan Capital Corp. And GE Energy Financial Services, a unit of General Electric Co., and GE's private-equity arm together invested $20 million in TPI Composites Inc. of Scottsdale, Ariz., which makes blades for wind turbines. The investment will allow TPI to proceed with expansion plans it had put on hold as financing dried up in recent months. One of TPI's customers is GE Energy, General Electric's wind-turbine manufacturing arm.
There is some good news for wind funding. The federal stimulus bill has introduced changes to the tax credit, making it possible to get the equivalent amount of money for renewable-energy projects through grants. But it isn't yet clear what impact the change will have.
The Smart Money
Utilities' efforts to cut costs are fueling the market for so-called demand-response services, which aim to relieve the stress on utility grids by reducing energy consumption, especially at times of peak demand.
"We have seen an uptick in our business," says Tim Healy, chairman and chief executive of EnerNOC Inc., a Boston-based provider of demand-response services.
What Else Is New
Here's a look at other recent deals reported by Clean Technology Insight:
Bright Automotive Inc. -- a company conceived at the Rocky Mountain Institute, a nonprofit organization that promotes energy efficiency -- raised $11.1 million in a Series A round of funding to help develop its planned 100-mile-per-gallon electric vehicle.Air Products & Chemicals Inc. signed an agreement with Alter NRG Corp. to use Alter's biomass and waste-gasification technologies for biomass and waste-to-energy power plants in Europe and North America.Wheelabrator Technologies Inc. was named by the Northeast Maryland Waste Disposal Authority as the preferred vendor to develop a waste-to-energy plant to supply power for municipal buildings.EnerNOC and other companies like it work with utilities and their commercial, industrial and institutional customers to set up systems that automatically reduce power consumption when a grid approaches full capacity. For instance, thermostats in buildings might be automatically adjusted to lessen energy demand.
The company recently signed deals with Minneapolis-based Xcel Energy Inc. and Phoenix-based utility Salt River Project to trim power use, and with the city of Boston to cut energy consumption at some of its buildings.
EnerNOC's deal with Xcel was partly the result of pressure on the utility from state regulators to reduce energy demand. "There is without a doubt a regulatory tailwind associated with promoting and instituting more and more demand-side management," says EnerNOC's Mr. Healy.
Other demand-response companies that have been picking up business include Comverge Inc., based in East Hanover, N.J., which recently signed deals with Progress Energy Carolinas Inc. of Raleigh, N.C. and Pepco Holdings Inc. of Washington, D.C.
Silver Spring Networks, a venture-backed wireless-networking firm in Redwood City, Calif., was awarded a contract by Pepco to provide networking hardware and services related to the "smart" meters that will be installed as part of the utility's agreement with Comverge. The meters provide the utility and its customers with real-time information on power usage and cost, and can be used to control consumption.
Another venture-backed company, eMeter Corp. of San Mateo, Calif., recently contracted with Houston-based utility CenterPoint Energy to provide data-management software and services. That will allow CenterPoint to keep track of the information streaming in from approximately two million smart meters it plans to install starting this year. The utility hopes to use the information to offer consumers differential pricing, to encourage reduced consumption during peak hours.
—Ms. Krieger is a reporter and Ms. Lemos Stein a special writer in Jersey City, N.J., for Clean Technology Insight, a newsletter published by Dow Jones & Co. They can be reached at sari.krieger@dowjones.com and mara.lemos-stein@dowjones.com.
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