The global economic crisis is trickling into various sectors, and it would appear alternative energy is not going to escape its wrath; however, Africa could gain positive attention as a result.
Increases in food prices, particularly corn, have proven damaging to many companies that depend on the feedstock. VeraSun, a South Dakota-based renewable company, filed for Chapter 11 bankruptcy protection with the hearing scheduled to take place today. The company said the main cause of its losses were a result of the dramatic hike in the cost of corn, which it uses to produce ethanol.
VeraSun also said that the capital markets and a tightening of trade credit placed strict constraints on its liquidity. With a Q3 loss of $63 million to $103 million in September, the company tried to shore up $20 million in a public offering; although several companies expressed an interest, they later backed out.
However, some alternative energy companies remain optimistic seeing this as a way in to gain more access in the field. Meghan Bartos, Managing Partner of Sustena Partners, told Alternative Energy Africa that this could create a larger drive to Africa for alternative/renewable finance. “Large companies will be looking at smaller projects and want much bigger returns. Smaller projects plus huge returns will make certain projects in certain areas of Africa attractive to companies that wouldn’t have bothered to look before.”
“I am unsure if these effects will be seen immediately, but in my opinion, I’m a true believer that as things settle, the effect will be more positive [toward Africa],” she added.