To honor Earth Day here at The Motley Fool, we convened a roundtable of experts focusing on businesses trying to make green by being green. Like the day itself, a lot of these cleantech businesses are relatively young enterprises and subject to increased risk. That said, the ultimate payoff for picking green technology winners could be the stuff of legends. Below, four Fools discuss challenges facing green companies and green investors, and suggest some names to put on your watch list.

John Rosevear, Fool contributor: The biggest challenge is simply that these are emerging technologies. Right now it's looking like electric cars, either as plug-in hybrids or as pure stand-alone products, are where the auto industry's going, and there it's battery life, weight, and cost that have been key challenges.

A tremendous amount of money is being spent all over the world right now to develop different flavors of lithium-ion car batteries, and it's still early to pick winners. There aren't a ton of pure plays -- most automakers are partnering with established suppliers -- but there are a few smaller companies worth watching, like A123 Systems (Nasdaq: AONE).

Toby Shute, Fool contributor: A123 Systems demonstrates the challenges faced by bleeding-edge greentech companies pretty well. The lithium-ion battery company had a barn burner of an IPO back in September, running up above $20 on the first day of trading. This was based on hype regarding the firm's technology, which is great, and projections about future demand for such batteries, which, based on Senate testimony by Johnson Controls, appear wildly optimistic.

Shares of A123 hit fresh lows under $13 today. It seems that the market has taken a "show me" stance when it comes to early stage ventures like this. That could make unprofitable companies like Solyndra and Tesla Motors, which are seeking IPOs of their own, a tough sell. 

Rosevear: While I think they're more likely an acquisition candidate than a long-term proposition, Tesla's upcoming IPO will be worth watching, if only from a distance.

Shute: Fortunately, there are greentech companies out there like solar encapsulant specialist STR Holdings (NYSE: STRI) that are solidly profitable. My advice is to focus on this sort of firm, and to leave the early stage stuff to the venture capitalists.

David Williamson, Fool editor: Agreed, Toby; while it's possible to strike it rich gambling on a business with questionable profitability, at the end of the day it's still a gamble. You mentioned the collapse of A123 shares, but readers don't even need to change letters of the alphabet to find a similarly volatile example.

A-Power (Nasdaq: APWR) is down 50% from its December highs, just about the time you took an in-depth look at the company. A-Power isn't substantially growing earnings per share despite its aggressive expansion, and it isn't afraid to tap the capital markets to raise funds, highlighting another serious risk for investors in the space: dilution.

At the end of the day I'm hesitant to invest in any business that has trouble standing on its own and is largely dependent on government loans -- no matter how good the story is.

Rich Duprey, Fool contributor: Even with significant government subsidies, greentech companies have to overcome the higher cost to consumers their products and services present. Solar energy, for example, costs three times as much as coal and natural gas, and relies upon a 30% investment tax credit to bring it closer to grid parity with fossil fuels.

The industry is looking to be self-sufficient by 2016 when the credit expires, yet First Solar (Nasdaq: FSLR) looks like it might hit that goal sooner, rather than later. The thin-film solar front-runner cracked the $1-per-watt floor two years ago and some even thought it reached nirvana a year ago with its El Dorado project for Sempra Energy. While that notion was quickly dispelled (costs were more than double the grid parity estimate) First Solar seems on track to outshine the competition.

It better hurry, though. General Electric (NYSE: GE), already a wind energy powerhouse, is looking at solar's thin-film photovoltaics as an additional alternative energy investment. But with its head start, specialized knowledge, and use of lower cost cadmium telluride panels, I'd say First Solar wins the next heat.

Williamson: It's not just GE, other well-capitalized major players like 3M (NYSE: MMM) are also eying the solar space. Conglomerates are going to start moving into these industries once the markets mature. I think it will only be a matter of time until the smaller companies are either gobbled up or fail in the face of increased competition. My parting advice: Try to find businesses that are well-capitalized and have at least some sort of moat.

Rosevear: In that vein, one final investment idea is BYD, a pink-sheet-traded Chinese maker of cell phone batteries that launched a car-making subsidiary a few years ago and says it's bringing its electric E6 to the U.S. sometime in the next year. BYD's long-term goal is to be a global auto leader -- and they're serious enough to have attracted Berkshire Hathaway (NYSE: BRK-B), which isn't exactly known for investing in emerging technologies, to take a 10% stake in the company.

Are there any cleantech companies we missed? Sound off in the comments below and share which companies are on your radar.

David Williamson owns shares of General Electric, 3M, and Berkshire Hathaway. Berkshire Hathaway and 3M are Motley Fool Inside Value recommendations. First Solar is a Motley Fool Rule Breakers selection. Berkshire Hathaway is a Motley Fool Stock Advisor pick. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy is carbon neutral.