* Access to capital cited as top challenge for industry
* Battery storage seen as most promising investment area
* Cleantech investment anticipated to grow overall
Oct 12 (Reuters) - Most investors and entrepreneurs in cleantech expect interest and financial backing in the sector will grow over the long term, even as they see short-term challenges ahead, according to a survey released by law firm Cooley LLP.
The results come as the cleantech industry is buffeted by poor investment returns, heavy competition from China, a struggling economy, and several high-profile failures.
Solar company Solyndra announced in August it was filing for bankruptcy liquidation after receiving hundreds of millions in investments, including a $535 million loan from the U.S. government. Evergreen Solar filed for bankruptcy reorganization earlier in August, and Norwegian electric-carmaker Think Global filed for bankruptcy in June.
Some 74 percent of respondents believed interest and investment would increase over the next five years, even as they anticipated significant hurdles to overcome before companies reach near- to mid-term growth and profitability. Cooley conducted the survey of 128 cleantech investors and entrepreneurs last week.
Respondents cited access to capital as the top challenge in the sector, followed by weak economic conditions and the need for stronger public policy and incentives to support cleantech in the United States.
About 42 percent of respondents believed the federal government's role would would remain relatively unchanged, while 40 percent said it would shrink. Only 18 percent of the group said it would expand.
But almost three-quarters of respondents said that for the U.S. to remain competitive in cleantech, the government needed to provide more tax credits and incentives. While such programs are coming under fire in Washington, supporters argue that China achieved dominance in solar-panel manufacturing in large part because of heavy industry support by Beijing.
The single biggest factor driving more investment would be more successful exits for companies, including initial public offerings and acquisitions, respondents said. A separate report released last week covering all investment sectors showed that just five companies held IPOs last quarter.