Last week at the Renewable Energy Financing Forum there were some great data points given about the level of investment in renewable energy and clean tech. The rate of growth and the sheer amount of investment are overwhelming:

• 2006, the total venture investment was $2.4B – of that amount, $1B was invested for “steel in ground” projects
• 2007, Q1, the total venture investment was $0.9B – a run rate of $3.6B for the year
• 2006, mergers and acquisitions totaled $41B
• 2007, year-to-date, mergers and acquisitions totaled $43B
• 2006, initial public offerings raised $7.3B
• 2007, year-to-date, initial public offerings totaled $2.2B – it’s worth noting another $5.5B in value has filed for 2007 though has not yet been offered.

The numbers are staggering, particularly when one considers that the total venture investment in this space was a mere $400M in 2003. The source for this data generally is New Energy Finance.

If the personal energy and passion of the Assistant Secretary of Energy, for Energy Efficiency and Renewable Energy (EERE) could be harvested, we’d have quite a power source. In a marked style contrast to his boss, Sam Bodman, Karsner is engaged and enthusiastic – about the industry, its potential, and what can and should be done about it. He gives a good speech. Despite the stylistic differences, the messages were aligned in the DoE.

During the keynote session yesterday, he was very tough on Congress effectively foreshadowing the Energy Bill that was adopted late in the day yesterday by the Senate. Curiously, the Republican Administration and the Republican representatives in the Senate are not on the same page. Both Bodman and Karsner talked about the necessity of a stable policy toward renewable energy mentioning the incentives by name.

Karsner ripped the law makers for lack of vision and action on the energy bill and its proposed content – in a way that perhaps seemed overly harsh at the time. Not so now, Karsner was right.

Yesterday, the Senate passed a “do nothing energy” bill with a vote of 65-27.

The bill ignores the challenge from the Bush Administration to cut gasoline usage 20% by 2010 – adopting weak CAFE standards that won’t be in force until 2020. That’s what’s getting the ink this morning.

But, far more troubling to the renewable energy industry is the cut of $32 in production and investment tax credits. This means project developers are again in the midst of the boom/bust cycle of annual renewals (sometimes, expiration tends to happen before renewal.) Long term, these credits should not be necessary. But until and unless the fossil fuel industry has to work within a carbon cap or tax environment – which would begin to finally make the true cost of harnessing fossil fuel for power visible – the incentives are necessary to gain access to funding, both equity and debt.

This bill is worse the do nothing, it’s downright harmful. Senate Majority Leader Harry Reid has promised to take up the incentives in the next session. In the meantime, untold gigawatts of renewable energy projects have just pressed the hold button while Congress puts its head in the sand. We’re glad you’re all so concerned about: energy security (aka national security) and climate change. Way to hold the US to a high standard, the CAFE standard adopted would get the US to Europe’s present level – in more than a decade. Next up: The Senate’s boat building bill. After seeing the movie Evan Almighty over the recess, it occurs to the leaders in our Congress that boats are good. Let’s just spend another several hundred billion dollars building them, shall we? We’ll need it on the coasts and soon to be large inland sea (formerly known as the Great Plains – other things come from there too, right? Like food…nevermind, it can wait.)

Great leadership. Inspiring. Enjoy your summer vacation.

This opinion piece was authored by Mike Harding and does not necessarily reflect the views of Montara Energy Ventures or its other partners.

Today at the REFF conference, it’s been announced that the Republicans in the Senate Finance Committee are working to kill the production and investment tax credits for renewable energy projects. If you’d like to help, here is a link to the Finance Committee Members, write or call these Senate members and make your voice heard on this vital catalyst to renewable project development.

As not many anticipated, Calpine has filed its reorganization plan to emerge from bankruptcy. Most speculation revolved around private equity taking the company public as a means to emerge. The plan indicates the new company emerges with 72 plants, 22,500 MW of gas and geothermal generation, and 2,200 employees. The company believes it is worth $21.7B, but still has unsecured debt of up to $8.9B to settle before it emerges from bankruptcy.

Creditors will likely raise objections to this plan as it settles the debt with stock and potentially pays back up to 91% of what they are owed. Current shareholders could be left with nothing after the debt is cleared or have an upside that is capped at $3.53 a share depending upon the range of debt to be cleared as determined by the courts. Expect the stock to trade down sharply today as the market prices in this now quantified risk from the reorganization plan. Yesterday’s closing share price was $2.93.

Details of the reorganization plan are available in this article posted on Yahoo Finance. We will post a pointer to the SEC filing when it is available.

Update: Despite our take on the situation, the market thinks the reorganization announcement is good news. Calpine shares are up 7.5% at $3.21 per share. Regardless, we believe the downside risk will drag the share price down in due course.