Economic Crisis Dims Alternative Energy Plans
RENEE MONTAGNE, host:
And when it comes to renewable energy, presidential candidates John McCain and Barack Obama sometimes sound like they're on the same ticket.
Senator JOHN MCCAIN (Republican, Arizona; Republican Presidential Candidate): Alternative fuels, wind, tide, solar, natural gas, clean-coal technology...
Senator BARACK OBAMA (Democrat, Illinois; Democratic Presidential Candidate): We create a new energy economy, we can create 5 million new jobs...
Senator MCCAIN: So that we can clean up our environment and at the same time, get our economy going by creating millions of jobs.
MONTAGNE: Congress just gave a boost to companies that provide cleaner energy by slipping tax credits into the government's financial rescue package. As NPR's Elizabeth Shogren reports, some renewable energy companies are being pummeled by the financial crisis.
ELIZABETH SHOGREN: A year ago, John Plaza's biodiesel company was on the verge of a major expansion. Imperium Renewables of Seattle already had one of the country's largest plants for turning vegetable oil into diesel. And it was planning three new ones. Not anymore.
Mr. JOHN PLAZA (President, Imperium Renewable): We've had to sort of batten down the hatches and weather this tremendous storm.
SHOGREN: Imperium was hit by a triple whammy. It planned to raise capital through an IPO, but stock-market troubles made that impossible. Next, a European bank canceled its credit line. Then the price of vegetable oil skyrocketed.
Mr. PLAZA: We've had to the completely retrench and fight our way out of a very severe economic crisis that I don't believe many people realized we were in until just this last 30 days.
SHOGREN: Things looked really grim until earlier this month, when Imperium's original investors came through with a new injection of capital.
Mr. PLAZA: We definitely were very, very concerned for a number of months, but luckily our investors re-upped.
SHOGREN: Still, Imperium's expansion plans are on hold, at least until the credit crisis abates. The clean-energy industry has being growing rapidly in the last few years, and many companies say times still are good. For example, the leading producer of the drive trains that power wind turbines told me he's sold out until 2011 and hasn't had any cancellations. But there's another big challenge beyond the financial crisis. The price of oil is half what it was at its peak in July. Brady Berg is a lawyer who represents investors in clean energy. He says those falling oil prices take off the pressure to find alternatives.
Mr. BRADY BERG (Lawyer, Wilson Sonsini Goodrich & Rosati): A bigger impact would be felt if the price of oil were to drop to $50 a barrel than what's going on in the current credit market.
SHOGREN: But the financial crisis is already taking a toll. In the past month, the biggest solar power companies saw their stocks plunge. Some midsize companies can't get loans.
Mr. RICHARD HARKRADER (CEO, Carolina Solar Energy): Next year was going to be very big. Now, that's uncertain.
SHOGREN: Richard Harkrader is the CEO of Carolina Solar Energy. He was in intense negotiations on several big projects for next year, but they've come to a screeching halt. Solar projects need lots of upfront capital, and they involve complicated financing. Finding a partner that needs tax credits is crucial, and like when you're buying a house, interest rates are essential to knowing whether the project makes economic sense. Harkrader says the banks he has approached say they can't even tell him what the interest rates will be.
Mr. HARKRADER: We just don't know about having a line of credit, working capital, and also the long-term financing of these projects is all up in the air right now.
SHOGREN: Harkrader says the only silver lining is that he's heading out for a fishing trip that he'd never be able to take if the economy were in better shape. Elizabeth Shogren, NPR News, Washington.