HOUSTON, March 22 (Reuters) - Private equity firms are

increasing their direct oversight of energy transition companies

in their portfolios, taking on added duties to address runaway

costs from supply chain issues and preserve valuations,

executives said at the CERAWeek energy conference this week.

Excitement around new energy technologies saw billions of

dollars of investment poured in the last four years into those

aiming to shape the energy transition with biofuels, hydrogen,

solar, wind and carbon removal technologies.

But the COVID-19 pandemic, subsequent supply-chain shortages

of materials and equipment, slower-than-expected technological

developments, and soaring demand for fossil fuels have left many

new-energy firms in a precarious state.

Professional investors have reacted by taking a much more

hands-on approach, said private equity executives.

Carlyle Group ( CG ) has negotiated for key components on

behalf of its portfolio companies, Pooja Goyal, chief investment

officer at Carlyle Global Infrastructure, said at the CERAWeek

by S&P Global conference in Houston.

It put agreements in place with Chinese suppliers for solar

panels, electrical equipment and other components, often jumping

the queue on order books backed up for two or three years. This

ensured projects could remain on time.

"No matter how much procurement you're doing (at the

portfolio company level), you're going to be pretty much

irrelevant to the suppliers," Goyal told the conference.

It is not just procurement using economies of scale which

buyout firms can offer. Traditional tenets which private equity

firms push - such as leveraging their network of investments for

collaboration, and drawing on senior people to offer management

advice - are more important to startups hitting their first

rough patch.

"Beyond capital, companies and founders are looking for

investors like TPG that can deliver the full private equity

toolkit," Steven Mandel, business unit partner at TPG Rise

Climate, said in an interview.

While ensuring these startups can navigate market turbulence

and pursue climate goals, the money managers are also making

sure their investments achieve expected returns.

Since the start of 2022, the S&P Global Clean Energy index

has lost more than a third of its value, versus a

10% gain for the wider S&P 500. Valuations for private

companies, while harder to track, are generally believed to have

fallen by more than their publicly listed peers.

The correction also offers opportunities for buyout firms to

make new investments to ultimately benefit existing businesses.

This includes picking up assets or key engineering teams from

struggling energy transition firms, including those which went

public via blank-check firms during the boom time, and which

subsequently lost much of their value.

They could also buy out other investors in the portfolio

companies, thereby ensuring management teams have more time to

get concepts to market and to achieve profitability.

"In more complex operating environments, entrepreneurs and

founders become much more selective about the types of firms

they want to partner with," Gabriel Caillaux, head of climate at

equity investor General Atlantic, told Reuters.

"Managing geopolitical risk, navigating how to leverage AI,

scaling technologies, and ensuring you have a fully-funded

business plan" are all things which cleantech CEOs are seeking

help with, he added.