In what can only be described as good news for Polaris Geothermal, the dispute that began in February of this year over the legality of their Nicaraguan geothermal concession has been resolved. Polaris’ Nicaraguan operation, PENSA, retains full control over the concession and plans to continue development on the site in August. This will lead to the eventual operation of a gross 75MW, net 66MW facility.

Based on this news, a nice pop in the share price is in the cards for today. Polaris was most recently trading at $1.15/share.

In a deal announced this morning, Ormat has formed a new subsidiary, OPC LLC, with Morgan Stanley and Lehman Brothers. Under the terms of the deal, Ormat will transfer the Desert Peak 2, Steamboat Hills, and Galena 2 geothermal facilities to the subsidiary and upon completion, Galena 3. The equity investors will receive the benefits of the production tax credits at the geothermal plants and Ormat will gain cash proceeds from plant operations and will continue to operate the facilities.

Under the terms of the deal, Ormat will gain $118.4M from the asset transfer in two tranches, $71.2M now and $46.6 when Galena 3 is operational and transferred into the new entity. Upon reaching ROI thresholds for the equity investors, Ormat will have the option of repurchasing the assets from the subsidiary and will continue to harvest operating income until the capital investment of plant development is repaid in any case.

This is a smart use of excess production tax credits that benefits shareholders over the long term. At prices under $35/share, we continue to believe that Ormat presents an attractive investment opportunity.

Despite persistent rumors of various groups working to take Calpine private, it looks as though the company will try to make a go of it alone. The June 20 target to emerge from bankruptcy is fast approaching meaning one window for this decision is about to close, of course, another will open thereafter but the terms and situation will be vastly different.

One has to wonder if the run up in the stock price will be sustained with the changing view point on going private? Will investors be patient enough to see what the impact of Calpine’s relatively clean power can bring on the market? Given that the company has some 25,000MW of generation (700MW geothermal the balance natural gas) it is positioned as a clean energy provider in a time that coal generation is under attack. The company has made progress on restructuring its debt and streamlining its portfolio. But it’s unclear if the resulting company will be consistently profitable.

But is that enough? Prices of natural gas continue to rise squeezing margins. The geothermal bit of the portfolio is very interesting and productive, but is less than 1/25th the entire company’s generation capability. Yes, the fuel is “free”, but the cost of accessing the fuel over the lifetime of the plant is paid up front with exploration and drilling costs. Clean energy will command a premium price, that’s clear. How much of their portfolio can take advantage of that market trend? We shall see.

It’s unclear what Calpine is really worth at this point and we can’t tell if the issue provides good value or not. But, we’ll watch with interest as Calpine emerges from bankruptcy and as we can determine a fair valuation for the company, we’ll share it. Right now, it’s chock full of unknowns and potential upside.

Today in an orchestrated press event in Middletown, California, Calpine announced a few more details about it’s plan to bring up to 80MW more power online at the Geysers. The plan calls for a multi-rig, two-year drilling program and refurbishment of 8 steam turbines. Many dignataries were in attendance and spoke well of the plans.

This announcement is somewhat disappointing though as it doesn’t give any indication that Calpine will use waste heat for bottom cycling and preservation of mass on the property (we estimate Calpine could get as much as 70MW just from that activity with no drilling required.) Nor were there any other forward thinking aspects announced with this plan.

On the positive side, it’s nice to see Calpine investing in the Geysers, the crown jewel of their portfolio. Who knows, if they see some success with this program, perhaps they’ll decide to take another step. One thing is sure, 80MW more of capacity will be welcome in terms of climate impact (and it can’t hurt Calpine’s financials much either in the long term.)

In a brief press release today, Calpine announced its intent to add 80MW of capacity to the existing 725MW already in production at the Geysers. Details of the expansion program are to be announced on Thursday.