Investors seem to be souring on plugging their “green” into green energy start-ups.
There are a couple of factors at play in the growing hesitance to invest in green energy companies: Declining energy prices and uncertainty about future government backing of alternative energy sources, according to an article on CNNMoney.
“The bottom fell out of the market,” Rosa McCormick, managing director of Austin’s Wild Basin Investments, told CNNMoney. “No one wants to touch that. It’s toxic from an investor point of view.”
One of the major factors in the shift is the drop in the price of natural gas—which, according to the article, is “less than half what it was just a few years ago,” making investments in alternative technologies less comparatively valuable than in the past.
Previous reliance on the government by these companies has made investors reluctant to get involved with them, particularly as the future of government support for them is questionable, and to some, these companies have not yet proven themselves in terms of profitability without such government support.
Proposed budget cuts also threaten the funding of green technologies. For instance, a tax credit that pays for 30% of the costs for new wind farms is expiring at the end of the year. Solar energy and ethanol production are struggling in the current economic environment too, according to CNNMoney.