Lack of funding forces rethink

At least one prominent clean technology company has already made sweeping changes to its business model, as the credit crunch starts to force a broader rethink in the capital-hungry sector.

California-based Ausra has been the most ambitious of a new wave of large-scale solar thermal companies – technology that uses mirrors to concentrate the sun’s rays to heat water and drive turbines, generating electricity.

The technology is touted as cheaper than the more widespread photovoltaic panels that use silicon to convert sunlight to electricity.

Ausra had been planning to raise billions of dollars to build utility-scale solar plants in the US and had set its sights on becoming the biggest independent power producer in the US.

But those plans have had to be rethought, according to Bob Fishman, chief executive of Ausra. “The independent power-producer model requires us to raise a tremendous amount of capital and to a certain extent it would lead to us competing with our customers,” he told the Financial Times.

“Clearly, at the moment the project finance market would be very difficult to get into,” he added.

Utilities could finance large-scale roll-outs of renewable generation more easily, given their balance sheets, and they often preferred to hold assets rather than buy power under long-term agreements.

“Do we want to be an independent power producer or a technology provider? We want to be more of a General Electric than a Calpine,” he said, indicating that the company’s business model could change to that of a technology supplier rather than a generator.

“Being a pure [technology] supplier to utilities is a better way to get their business than sometimes being a supplier and sometimes a competitor,” he said.

Other companies are also considering changing their business plans. Jonathan Wolfson, chief executive of Solazyme, a US algae company that raised $45m in venture capital in August, said tighter credit markets meant his company would also rethink its plans.

Rather than building a new facility for biofuels from scratch, as planned, it might have to refit an existing facility.

Brent Goldman, partner at BDO Stoy Hayward, said other early-stage renewable companies would also have to reconsider their operations in the light of the tighter finance markets. “They will not be able to float and raise funds so they will have to carry on with what funding they have and would probably have to trim their plans as a result”.