During the period 1 February to 28 March the WilderHill New Energy Global Innovation Index fell a further 18%, on top of the 15% fall of the previous two months. While in the bull market run of 2006 and 2007 the index consistently outperformed the FTSE and S&P 500, as investor sentiment has turned defensive in 2008, sector losses in clean energy have exceeded those of the major indices, which both lost around 3% and 5% respectively over the same period.

The only sector in the NEX to impress was power storage – which comprises mainly advanced battery technologies – gaining 22% on average, reflecting the investors' position that the relatively large market capitalisations in the sector make it one of the safer places to be in a downturn. Wind also made small gains, climbing 3.8% on average, indicating the increasing maturity of the industry.

The riskier sectors such as hydrogen and fuel cells (which are treated as one sector) and solar suffered, falling 8.6% and 3.8% respectively. Smaller capitalisations and valuations, based on growth forecasts as opposed to assets or cash flow, are among the factors that may have worried the already nervous market.

Energy efficiency companies closed the period down by 3.7%, in contrast to the previous two months where they had looked some of the more resilient stocks. Big individual falls from US firms Comverge – a smart metering and power management manufacturer which was down more than 40% – and grid management company EnerNOC – the period's worst performer crashing 67% – dragged the performance down significantly.

The top gainer for February and March was Japan Wind Development, rising 66%, followed by electronics giant Sanyo Electric. It led the power storage gainers with a rise of 49%, after announcing it would sell off older divisions such as its mobile phone business in order to expand its solar and battery arms.

Unusual in their sector, Capstone Turbine and Power-One (both energy efficiency companies) gained 42% and 35% respectively. Capstone bagged a large order for its energy efficient micro-turbines and Power-One, which makes power conversion products for the telecommunications and solar markets, is beginning to recover after a bad 2007 with a series of board changes and improved results.

The worst performer was EnerNOC, whose shares plummeted following the announcement that its Q4 results were far below analysts' expectations. The results were followed by the filing of a class action lawsuit against the company over statements made by the management.

Second and third worst performers were Aventine Renewable Energy Holdings and Verbio – US and German biofuel companies, with falls of 46% and 41% respectively. Although biofuel and biomass companies as a whole stayed fairly stationary during February and March, casualties in this sector are not hard to find, with rising feedstock prices and increasing political wariness giving biofuels, in particular, an increasingly unpopular image.

These figures do not include NEX's quarterly re-balancing which took place on 31 March. Seven companies came in to the index, and four were removed. Joining the index were UK-based carbon-credit exchange operator Climate Exchange; Epistar, the Taiwan-listed maker of high-brightness light-emitting diodes; US waste-to-energy group Covanta Holding; New York Stock Exchange listed, Chinese biodiesel producer Gushan Environmental Energy; Sao Martinho, the Brazilian ethanol producer; the Frankfurt-listed Centrotherm Photovoltaics, a maker of manufacturing equipment for photovoltaic cells; and Chinese wind turbine maker Xinjiang Goldwind Science & Technology.

Leaving the index were Shenzen-listed bioethanol producer Anhui BBCA Biochemical; Pacific Ethanol, the Nasdaq-listed US bioethanol producer; Verbio, the German biodiesel and bioethanol producer, and UK utility Scottish & Southern Energy.

New Energy Finance summit

While the NEX was wobbling, New Energy Finance was holding its inaugural Summit in London. The Summit included an Awards Dinner for New Energy Finance's 2007 Clean Energy League Tables, now in their third year (see box above, ‘NEF clean energy league tables 2007’).

The landmark event was designed to bring together a select group of thought-leaders and key investors to debate the implications of the seismic shifts taking place in clean energy and the carbon markets, as Governments and companies realise that they must adjust from high to low carbon energy sources.

150 industry executives and investors from around the world attended the Summit, designed to be as engaging and participatory as possible. Panel debates between industry experts were followed by floor discussions within each of 25 tables of delegates. Key points from these table discussions were then summarised in real time before being distilled centrally and fed back to the room by a recognised industry commentator.

Michael Liebreich, ceo and founder of New Energy Finance, opened the Summit with a presentation on Financing the Low Carbon Revolution. New money flowing into the industry in 2007 was 60% higher than in 2006. Investment has soared from less than US$30 billion in 2004 to almost US$150bn in 2007, equivalent to 19% of total energy infrastructure investment. More than half of this – US$84.5bn – went into financing new renewable energy assets. The wind sector continued to dominate, attracting just over US$50bn, although solar investment grew strongly in 2007 to US$28.6bn, nearly three times more than in 2006.

However, current investment will have to treble to US$450bn by 2012 if CO2 emissions are to be brought under control – an ambitious target, but one considered feasible by those present. “The smart money absolutely anticipates a change in the regulatory environment in the
he US. I believe we will see consistent policy that will support investment,” said one senior investor.US.

Day one – industry developments and policy

The Summit then moved to the first of its panel debates, exploring the challenges facing clean energy's growth. Highlights included fragmentation in carbon pricing, a lack of joined-up renewable energy policy, competition from other energies (including nuclear and clean coal) and bottlenecks in everything from silicon to executive talent.

Nuclear energy threatened to take centre stage on the second panel debate, Developments in Energy Infrastructure. If decommissioning continues at its current rate, nuclear energy's share of the global energy mix will fall from around 15% currently to just 2% by 2020. Nuclear's proponents argued that there is a huge difference between old nuclear and new nuclear; however, others favoured energy efficiency and new forms of heat generation as exciting (and nearer-term) opportunities.

In the third session, on Effective Policy, Abu Dhabi's futuristic green city, Masdar, was showcased as an example of how renewable energy initiatives can be jump-started with the right political support. Masdar, a walled city designed by Foster & Partners, will be the world's first zero-carbon, zero-waste, car-free city.

Overall, the policy outlook looks promising, with a new US Administration expected to show more leadership on clean energy. It was striking that policymakers were upbeat and committed, while investors and financiers were less cheerful, reporting choppier market conditions in 2008 and increased competition from other energies.

Awards dinner

An atmosphere of anticipation dominated The Awards Dinner, held at the Wallace Collection. Goldman Sachs took two awards, for venture capital investment (US$443 million invested in 2007) and as top financial advisor to an M&A target. Citigroup topped the M&A acquirer advisor table, while Credit Suisse was the top lead manager of clean energy public market transactions, in terms of both number of deals and dollars raised. In 2007, the bank underwrote 13 IPOs, secondary offerings and convertibles with a total market value of US$2.8bn. Good Energies was the leading venture capital investor, with 20 deals worth US$100.6mn completed in 2007.

This year, for the first time, New Energy Finance included the burgeoning carbon credits market in its rankings, supported by its New Carbon Finance team. EcoSecurities led the deal table, with 402 carbon off-take projects, while Natsource brokered the largest number of contracted credits – 101 million tonnes of CERs.

“We were extremely pleased that so many investors, lenders and others were so forthcoming,” said Michael Liebreich. “As a result, these league tables present the most complete snapshot of the top players in clean energy in 2007.”

Day two – finance and carbon markets

The second day kicked off with a high-powered debate on private equity, which agreed that now was not an easy time for renewable energy companies to go public – although there was disagreement over how this might affect the renewables industry. Private equity financiers argued that there was plenty of later-stage private financing available, while investment bankers believed that the right companies could still go public in spite of the downturn.

The next session focused on carbon markets. Panellists suggested that if and when a true global carbon trading market is established, it could be larger than the current global oil market. There was also talk of Europe taking the lead in forming an institution that could oversee such a market.

In his keynote speech, Lord Browne, former BP ceo and now the European managing partner of Carlyle Group/Riverstone Holdings, warned that there was a lot of work to be done on the regulatory framework before technologies such as carbon capture and storage (CCS) made a serious dent in CO2 emissions.

Lord Browne highlighted the many barriers that stood in the way of low carbon technologies, including the complex approval process, subsidies for conventional energy and general resistance to change. “Big companies will do their own thing. No company will do something that is not their core purpose unless they are regulated to do it.”

Lord Browne, who described the Summit as “the new Davos”, believes that CCS is closer than some other technologies such as nuclear fusion. However, he argued that without a developed regulatory framework that would see large demonstration projects, progress would be slow. “Like any innovation, there needs to be something specific in place to innovate,” he said.

The Summit was very well-received by delegates, who praised the open format and the speakers' calibre. One described the event as “really exceptional. It was a pleasure and an honour to take part. I learned a great deal and met all sorts of interesting people – what more can one ask?” And in the words of a senior investor: “In over 25 years of attending endless finance conferences all over the planet, I can honestly say that this was by far the best I have ever attended.”