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Alternative energy depends more on financial tricks than simple engineering
Amid this withering contraction, at least one clean-energy company is booming. The 380 employees of SolarCity, based in Foster City, Calif., are working all-out on installing solar panels on homes, mostly in the Golden State. Business has doubled since the spring of 2008. The company, which has placed solar panels on 2,000 homes, is trying to fulfill 3,000 orders, and has an eight-month waiting list. Selling a big-ticket item (solar installations can cost $25,000 or more) in the midst of a credit bust, and at a time when the mantra "No projects" echoes in the corporate boardroom and the family room, would seem to be a recipe for disaster. But SolarCity is growing—and not because it has made a breakthrough in the design of solar panels. Rather, last year it developed a new model for selling the units, offering them for lease. Outside investors eager to take advantage of the tax credits and rebates associated with solar installation provide the cash, and homeowners are able to buy the electricity produced at a discount. "Customers pay no money down, and they save money from day one," says CEO Lyndon Rive. "People want to go solar, but they don't like to spend $30,000."
As Rive has discovered, the future of the alternative-energy industry now depends far more on financial engineering than mechanical engineering. Clean-tech trade publications are filled with breathless coverage of new innovations: thin-film solar, advanced batteries, cars powered by hydrogen fuel cells. But money has never been harder to come by, thanks to the struggling capital markets. "The alternative-energy sector is flat on its back," David Crane, CEO of giant energy producer NRG, tells NEWSWEEK. "There's no debt financing available from Wall Street." The Cleantech Group reported that in the first quarter of 2009, total green-energy venture investments fell 50 percent from the first quarter of last year.
Government policy has traditionally played a part in kick-starting the rollout of new technology, whether by providing land and financing for railroads or commissioning the first telegraph line. When the profit motive kicks in, the private sector begins to fund development. Both types of financial innovation will be needed for the fledgling alternative energy to thrive—and there are already signs of creative breakthroughs.
California, homeowners installing....
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