By Nina Chestney

LONDON (Reuters) - Renewable energy companies could still provide substantial returns for private equity investors this year as those with real growth potential are surviving the economic slowdown, investors said at a conference on Wednesday.

Shares in clean energy companies under performed other stocks in 2008 because of their dependence on growth, technology advances and high oil prices. More expensive debt since the financial crisis has curbed installation of clean energy projects, for example in wind and solar power.

Many clean energy companies' growth has been hindered as the economy has slowed down and capital has dried up. Larger ones are surviving because they downsized, cut costs and raised capital before the economic crisis hit, investors said at the Clean Investor 2009 conference in London.

But investors are still quite optimistic. Many clean technology private equity fund managers raised a large amount of capital through new funds which means there is still a pool of capital for clean technology available, they said.

"The fact that this pool of capital will be used more prudently and only to (re-)finance the real clean tech stars could in our opinion be beneficial to the long-term returns of clean tech investments," Stefan den Doelder, senior investment manager at Robeco Private Equity, said.

CHOOSE INVESTMENTS WISELY

Global investment in forms of clean energy such as wind or solar power fell in the second half of 2008 and is on track to fall in the first three months of 2009 compared with the same period last year, New Energy Finance said in March, after hitting a plateau last year at about $150 billion (100 billion pounds).

Despite this, many clean energy companies are still growing compared with firms in other sectors, although at a lower rate than before the financial crisis.

The main challenge for investors in the short term is to identify which undervalued stocks are in the best position to grow in the long term and which have near-term access to financing to weather the recession.

"Investing in undervalued, fundamentally sound, leading companies that are positioned to benefit from profitable long-term secular trends, is a tried and true recipe for long-term investment success," Steve Falci, vice president of sustainable investment at KBC Asset Management, said.

Half of institutional investors plan to increase their funding of clean energy compared with 12 months ago, a survey published in March showed.

"In the long run, we believe the attractiveness of clean tech will not be affected by this crisis," den Doelder said.

Many companies will also profit from subsidies and incentives. Britain unveiled 1.4 billion pounds of initiatives to encourage investment in clean energy last month.

The United States has introduced a raft of measures to support renewable energy in the past six months, from tax credits to about $30 billion spending under wider economic stimulus spending.

"As a result, the dark clouds over the economic system have a silver lining for clean tech," den Doelder said.

(Editing by Sue Thomas)