NEW YORK -- Clean tech needs the government's help to move from the laboratory to the commercial market, according to a study released yesterday by a California venture capital group.

The reason is that many promising new technologies are having trouble bridging the "valley of death," or the period from development to market delivery when financing typically dries up, says the new industry survey by the California Clean Energy Fund (CalCEF).

To correct this, the nonprofit CalCEF -- created from the 1999-2000 California energy crisis -- and other clean-tech industry experts say the federal government needs to step in and bankroll development projects as they move toward commercialization. In particular, they say, lawmakers in Washington need to urgently create a new Clean Energy Deployment Administration (CEDA) to oversee the task.

Insurance products designed to normally fill this role can't effectively help to nurture emerging alternative energy innovations, CalCEF President Dan Adler told reporters on the side of this year's Renewable Energy Finance Forum-Wall Street, which concluded yesterday.

"There are challenges in doing that on an insurance basis given the nature of the technology risk," said Adler.

Though venture capital can usually help untested technologies transform into commercially viable projects, this expensive source of financing isn't always appropriate for renewable energy and clean technology, CalCEF entrepreneur in residence Eliot Jamison writes in the report.

Many such projects have large infrastructure requirements to demonstrate their applicability to sell the technology to other investors and customers. Traditional alternative energy project finance can often handle that, but not in a recession, when investors are steering scarce cash to time-tested technologies.

"Many emerging clean energy companies risk falling into the chasm between these two financing regimes," writes Jamison. Venture capital or private equity funds can usually carry a certain technology up to the pilot project stage, often with the help of existing government grants or tax credits.

However, to ultimately compete with better-established renewable sources in gaining business from utilities, "clean energy companies must be able to rapidly structure and execute deployments at the utility or refinery scale," he added.

And that's the point where private capital fears to tread.

A 'risk-return challenge'

"It's fundamentally a risk-return challenge for us," said Kassia Yanosek, a finance expert with the private equity group Hudson Clean Energy Partners.

The creation of a strong, well-funded CEDA, a new federal agency that would be independent of the existing Department of Energy, could get promising new clean energy technologies to emerge from the "valley of death" and into the mainstream, experts said.

CEDA could also be a temporary creation designed just to address the needs of the industry during a time of economic difficulty, proponents say, deflecting worries over the creation of yet another layer of government bureaucracy.

CEDA "doesn't need to be a stand-alone entity that exists into perpetuity," said Will Coleman of the early-stage venture capital group Mohr Davidow Ventures.

Clean-tech financiers gathered in New York for the renewable energy finance conference said they prefer language in a draft Senate version of energy legislation that recommends the creation of CEDA. The industry also wants the continuance of the Department of Energy's loan guarantee program, something they suggest CEDA could also do to back up emerging technologies.

Alternative energy financiers and project developers are also eager for Congress to pass an extension of DOE's cash grant program, through which projects can claim federal money in lieu of the tax credits banks would normally have received in a healthy financing environment. The grant program is scheduled to expire at the end of this year, but insiders say allowing it to do so would mean deep trouble for an industry still struggling to recover from the 2008 market crash.

The creation of CEDA should also come along with any new congressional energy legislation, they say. Otherwise, the United States runs the risk of losing ceding new technological innovation to other countries.

"It has not gotten any easier to cross that valley," said Ken Locklin at the nonprofit advocacy organization Clean Energy Group.