It hasn’t sounded very promising for cleantech startups lately. As even the big guys fail and falter (think Evergreen Solar’s bankruptcy or Vestas’ lay-offs), one begins to wonder whether the little guys can weather the economic storm of this recession, not to mention Congress’ generally allergic reaction to any sort of federal renewable energy standards or goals.

Furthermore, the budget and debt crises here and abroad have led many venture capitalists (VCs) and investors to hunker down and hold on to their money. Some federal policies encouraging renewables have similarly slowed or are in danger of slowing: The production tax credit (PTC) for wind expires at the end of this year, as does the 1603 Treasury grant program that provides cash support to solar start-ups.

After reading all of this negativity, I figured cleantech startups were doomed…right?

But startups are nothing if not nimble.

Some mid-sized companies are taking extreme measures, like moving operations to China: The Chinese not only have a very friendly cleantech business environment, but are the top global market for solar power.

Some analysts predict a wave of buy-outs, mergers, and acquisitions in cleantech markets like solar, especially among panel manufacturers.

And still other start-ups are sitting in somewhat of a cleantech sweet-spot, being small and nimble enough to adjust to the downturn while taking advantage of the stimulus funds Congress invested earlier in the recession. Of course, we can all point to Solyndra as the poster child for what can go wrong, but there are many examples of what can go right when the government invests in an industry hungry for innovators.

Silent Power is a distributed energy storage systems company that manufactures and markets backup power systems for renewable energy, typically solar power. Located in perhaps the unlikely locale of northern Minnesota, the company has developed a battery that can store power for renewable energy and release it back onto the grid during peak demand times, and is one of the few companies that has a system compatible with an advanced battery chemistry, such as lithium-ion.

“The stimulus money invested in the solar and smart grid sectors has created a lot of projects that will keep us busy through 2012 and beyond,” explained Todd Headlee, CEO of Silent Power. “Many of the customers for our renewable energy storage units have been the smaller utilities, like the municipals and co-ops. They can move more quickly to create and implement cleantech pilot projects than the big investor-owned utilities.”

Headlee went on to explain that these storage pilot projects aren’t just free money from the government: Oftentimes utilities have to match half of the project cost. But the desire for renewable energy storage is great and utilities are willing to experiment. As these projects pan out and the successful ones get noticed, more and more utilities have shown interest in smart grid products like Silent Power’s.

Although funding is a priority and a challenge for any startup, Headlee is optimistic about the future because of a few key policies and because of utilities’ hunger for a more efficient grid. For example, Californians are now able to apply for a $2-per-watt rebate for an energy storage unit. This is a huge incentive in a critical solar market that will keep the demand for products like Silent Power’s going. Although it has fewer than 20 employees, the company counts an impressive list of partners and customers, including the Sacramento Municipal Utility District (SMUD).

So although many cleantech start-ups have fallen victim to the recession, it’s not all doom and gloom. Many sectors will look very different coming out of the recession than they did going in, while others are able to corner a market supported by government investment, helpful policies and a returning optimism from VCs in particular areas like the smart grid and battery storage. The future indeed may still be bright.

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