"The reason why those industries got venture capital is because there were government subsidies, artificial support to customers," said John Harbison, an active deal lead at Tech Coast Angels. "Those programs are going away. The political environment isn't there to support it."
@CNNMoney August 21, 2012: 5:51 AM ET
Green energy startups aren't getting the kind of government help they've had in the past, and investors say that's reason for them to stay away from the industry.
NEW YORK (CNNMoney) -- Green energy startups are feeling the sting of rejection by investors concerned about falling energy prices and the future of government support.
The boom in natural gas has hurt the competitiveness of alternative energy. And proposed budget cuts would force the government to dial back support of wind farms, solar panel manufacturers, ethanol producers and makers of alternative fuel cars.
In response, investors say they won't lend money to green energy companies, especially startups, because they haven't proven they can be profitable on their own.
Rosa McCormick, managing director of Wild Basin Investments in Austin, Texas, said that's particularly true for doomed solar panel makers, such as Solyndra and Abound Solar. U.S. companies can't lower prices enough to compete with solar panels imported from China, which provides big subsidies.
"The bottom fell out of that market," McCormick said. "No one wants to touch that. It's toxic from an investor point of view."
U.S. wind energy companies face a different set of problems.
A federal tax credit that pays 30% of costs for new wind farms is set to expire at the end of this year. If Congress doesn't renew it, new turbine construction could "dramatically slow," according to a recent Energy Department report.
Orders for new turbines for 2013 have already dropped, and the industry is in for "a significant shakeup," according to Matt Kaplan, associate director of IHS Emerging Energy Research in Cambridge, Mass.
Another headwind moving against that industry -- and the growth of green energy in general -- is the falling price of natural gas, which is less than half what it was just a few years ago. Why invest in alternative energy when natural gas is abundant and cheap?
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