Calum Chisholm is frustrated.

The founder of alternative power startup Superprotonic Inc., Chisholm believes his company can revolutionize the power business with its improved fuel cells for homes, office buildings and maybe even vehicles. Five years ago, when the alternative energy industry was heating up, investors eagerly poured $14 million into the Pasadena startup.

But then the economy turned sour and investor enthusiasm for alternative energy waned. Now, Chisholm can’t get a whiff of new funding, and Superprotonic is running out of cash. Recently, the company cut its employee count from 17 to 10 to stay afloat.

“It’s been a disaster,” said Chisholm. “If something doesn’t change, pretty soon our staff will be down to zero.”

Superprotonic is not alone. The high price of oil and natural gas in the past led to a boom for efficient energy companies in Los Angeles as businesses drew on the region’s expertise in engineering, automotive and aerospace to find better, greener ways to drive cars and power homes. Now, due to the lower prices of traditional fuels over much of the past year, those companies are facing brownouts as some of the energy goes out of alternative power.

“The real key for clean tech companies right now is to ensure they survive so that they can reach the end of this tunnel,” said Rahul Iyer, chief strategy officer at Primafuel Inc., a Long Beach startup that is helping to develop alternative fuels.

Last year, Primafuel had little trouble selling its product, which recycles waste from alternative fuel runoff, to eager customers. Now, Iyer said, business has slowed to a crawl.

Just a year ago, alternative power was the industry du jour among investors and pundits who predicted a boom in solar, wind and other cleaner sources of power. The enthusiasm was driven in part by the skyrocketing cost of natural gas, whose futures price hit $14 per million British Thermal Units last summer, up from $3.50 in the fall of 2002.

That raised the cost of operating natural gas power plants, and sparked interest in other sources of energy. Even oil tycoon T. Boone Pickens jumped into alternative energy with his 2007 announcement of plans to build the largest wind farm in the world in Texas.

The boom benefited Los Angeles, which became an industry hub. In 2000, the California Energy Commission tallied just 20 alternative energy companies in Los Angeles County. While no one has done a firm count since then, the number easily increased by dozens, including solar industry leaders such as Cerritos-based Solar Integrated Technologies Inc. and Santa Monica-based SolarReserve LLC.

But when the economy seized up last fall, it drove down the price of natural gas to $4 a drop of more than 70 percent. That decreased the perceived urgent need for alternative energy, tempering investor enthusiasm.

This summer, Pickens pulled the plug on his wind venture. Some saw that as a bellwether for the industry.

Huge dollars

Investment in alternative energy worldwide, which hit a high of $41.2 billion in fourth quarter 2008, fell to just $13 billion in the first quarter this year, according to New Energy Finance, an industry research firm.

That drop-off was especially damaging because alternative energy companies typically require millions of dollars upfront to develop technology.

“The dollars needed to build or commercialize a renewable energy project are huge, and it requires debt and equity,” said Lee Bailey, managing director at U.S. Renewables Group, a Santa Monica-based venture company that’s invested in 17 alternative power companies around the world, including four in Los Angeles. “And that’s a problem, because debt and equity simply are not available.”

As a result, many companies across the county have cut internal financial projections, scaled back ambitious projects and laid off workers.

Chisholm’s company finds itself on the extreme end of that spectrum. Superprotonic, which builds fuel cells that are more efficient and flexible than those currently on the market, drew some queries from the U.S. military, and a few large fuel cell companies in Europe and Asia.

But the economy killed those potential deals.

“We had a business plan that investors were all keen on before,” said Chisholm. “But now because it looks like another three or four years before we can break even, it’s too much risk for them.”

Even established companies that are well past the startup stage have not been immune.

Take Solar Integrated, which builds and installs solar panels for commercial buildings. Since its launch six years ago, the company has grown at a rapid clip, increasing its revenue from $38 million in 2006 to more than $90 million last year and raising its employee count to almost 200.

Then the downturn put the brakes on its growth. Solar Integrated recently laid off 10 percent of its work force. It was the first time the company had to cut jobs.

“Obviously, the last 12 months have been pretty extraordinary,” said Chief Executive Randall MacEwen. “We went from a position where there was excess demand and a supply challenge to today where there’s demand constraint and there’s oversupply.”

Swinging back?

ESolar Inc., a Pasadena startup that launched in 2007 to build solar energy plants, has also had some recent layoffs. Shortly after its inception, the IdeaLab spinoff secured more than $140 million in funding from prominent sources including Google Inc. and Oak Investment Partners.

But this year the company cut some of its roughly 200 employees, though Rob Rogan, eSolar’s senior vice president for North America, declined to specify how many. Rogan also noted that eSolar is currently hiring and that, in spite of the slowdown, it is still seeing growth.

Industry executives and investors insist alternative energy will rebound once the economy comes back. Some even said they are investing. In addition, the federal government is expected to pour billions of dollars into alternative energy research.

“The demand for power and electricity and fuels is only going to continue to increase in the future,” said Bailey of U.S. Renewables. “And in California especially, where it’s almost impossible to build a coal or nuclear plant, that power is going to have to come from somewhere.”

That optimism was palpable in Lancaster last week, when eSolar inaugurated what it calls the first solar towers in the United States to generate power for commercial distribution.

Surrounded by a desert plain dotted with stunted shrubs and mobile homes, the eSolar plant is on 20 acres covered by rows and rows of rectangular mirrors that shift angles during the day as they track the sun. The towers rise in the center of the field of mirrors, which reflect sunlight to the tower tops. The concentrated sunlight heats water that circulates in the towers, and that generates steam to drive a turbine. When operating at full capacity, the towers will produce enough electricity to power 4,000 local homes.

Last Wednesday, dozens of dignitaries, city officials and environmentalists gathered in air-conditioned tents to watch Bill Gross, eSolar’s chief executive and IdeaLab’s founder, flip a switch and activate the facility.

Gross said his company’s prospects are bright, despite the recent difficulties in alternative energy.

“This year and next year, there’s a lot of opportunity for a huge solar build,” he said. “We’re still big believers in solar.”