Green energy starving in a fallow credit market

Green energy developers are no exception when it comes to sourcing cash for their initiatives: everyone is starving. Prices are falling for wind turbines and solar panels, and factories workers are facing cutoffs. Industry experts are expecting drops in demand for installations by 30 to 50 percent.

That comes as a surprise to many who thought that the green energy movement would be a pillar of success amid a rotting economy. Banks are playing a large roll in that decline because they aren’t willing to provide financing. Losses in a variety of markets from housing to automotive have made financial institutions cautious about extending credit. But hoarding wealth isn’t the solution.

If banks don’t realize the potential for growth and profit, hopefully Obama does. Wind and solar power companies are hoping for a slice of his upcoming stimulus package, but they’ll need to survive the drought first.

Prices for turbines and solar panels, which soared when the boom began a few years ago, are falling. Communities that were patting themselves on the back just last year for attracting a wind or solar plant are now coping with cutbacks, according to the New York Times.

DMI Industries, a manufacturer of wind turbines in West Fargo, N.D. just announced a 20 percent cut in labor, citing plummeting sales numbers. Why the declining demand?

Wind and solar developers can’t get the cash to finance their initiatives and that financial freeze filters upward through the supply chain. Fundamentally our economy is driven by innovation and new technology, but wealth is what provides the launch pad for those forces.

While Obama may not be able to rewind the market back to the booming demand for solar and wind in 2007 and 2008, shifting tax credits to directly benefit developers may help. And, it may help remove banks as a bottleneck.

Of course, in the meantime social lending may become more prominent and make banks less necessary anyway. Though essentially, that’s what a loan from the government embodies anyway. After all, in the end we’re just investing in ourselves.

Photo credit: Wolfgang Staudt