By CLIFFORD KRAUSS

HOUSTON, Texas - Alternative energies like wind and solar are facing big new challenges because of the credit freeze and the plunge in oil and natural gas prices.
Shares of alternative energy companies have fallen even more sharply than the rest of the stock market in recent months. The struggles of financial institutions are raising fears that investment capital for big renewable energy projects will get tighter.
Advocates are concerned that if the prices for oil and gas keep falling, the incentive for utilities and consumers to buy expensive renewable energy will shrink. That is what happened in the 1980s when a decade of advances for alternative energy collapsed amid falling prices for conventional fuels.
“Everyone is in shock about what the new world is going to be,” said V. John White, executive director of the Center for Energy Efficiency and Renewable Technology, a California advocacy group. “Surely, renewable energy projects and new technologies are at risk because of their capital intensity.”
After years of rapid growth, the sudden obstacles mean the renewable energy industry will have to depend more heavily on government subsidies, mandates and research financing, at a time when Washington is overloaded with economic problems.
John Woolard, chief executive officer of BrightSource Energy, a solar company, said he believed the longterm future for renewables remained promising, though “right now we are looking at tumultuous and unpredictable capital markets.”
Venture capital financing for some solar projects and for experimental biofuels, like ethanol made from plant waste, is drying up, according to analysts who track investment flows.
At least two wind energy companies have had to delay projects because of trouble raising capital. Several corn ethanol projects have been delayed for lack of financing in Iowa and Oklahoma since September, and one plant operator in Ohio filed for bankruptcy protection in mid-October. Tesla Motors, the maker of battery-powered cars, announced that it had been forced to delay production of its allelectric Model S sedan, close two offices and lay off workers.
Investment analysts say stock offerings by clean-energy companies across global markets have slowed to a crawl since the spring, and for the full year could total less than half of the record $25.
4 billion for 2007.
Worldwide financing for new construction of wind, solar, biofuels and other alternative energy projects this year fell to $17.8 billion in the third quarter, from $23.2 billion in the second quarter, according to New Energy Finance, a research firm in London. The slide is expected to be sharper in the fourth quarter and next year.
Total worldwide investment in renewable energy increased to $148.4 billion last year, from $33.4 billion in 2004, according to Ethan Zindler, head of North American research at New Energy Finance. This year, he said, the upward momentum has halted and total investment for 2008 is likely to be lower than in 2007.
In the 1970s, just as in recent years, high prices for fossil fuels led to rising interest in renewables. But when oil prices collapsed in the 1980s, the nascent market for renewable energy fell apart, too. Congress eliminated tax credits for solar energy, ethanol could not compete with cheap gasoline and a boom in wind farms in California failed to catch on in the rest of the United States.
The epicenter of investment and development then moved to Europe, where government support for renewables is strong. It began shifting back to the United States only when heating oil and natural gas prices shot up again in recent years.
The central questions facing renewables now, experts say, are how long credit will be tight and how low oil and natural gas prices will fall. Oil and gas are still relatively expensive by historical standards, but the prices have fallen by half since July. Some economists expect further declines as the economy weakens.
Government mandates, including state rules requiring renewable power generation and federal requirements for production of ethanol, ensure that alternative energy markets will continue to exist , no matter how low oil and gas prices go. But the credit crisis means some companies that would like to build facilities to meet that demand are going to have problems.
“If you can’t borrow money, you can’t develop renewables,” said Kevin Book, a senior vice president at FBR Capital Markets.