As promised, we asked the smart team at New Energy Finance to provide a bit more information about their returns study that we mentioned earlier in the week. Michael Liebreich, Chairman and CEO at NEF, was kind enough to provide some additional explanation of their methodology, for those interested: "Hi, Rob - Your calculations are correct: the group has put in EUR 283.6m into 129 portfolio companies. It has had exits totaling EUR 390.4m. It is sitting on unrealized value of EUR 339.0m. Total value = EUR 729.4m. The unrealized holdings have indeed been held at book unless there has been a revaluation event. So we have the following: · 53 of the portfolio companies are held at exactly book value. · There have been 15 IPOs and 10 trade sales · 21 have been revalued upwards at subsequent rounds (with at least one external investor). We do not accept self-reported write-ups or valuations based on comparables etc. · 19 have been revalued down, some significantly, some only marginally. This we do either at subsequent rounds, or if companies self-report a write-down · There have been 11 liquidations, with most but not always all money lost It is the group of 21 valued upwards that are driving the unrealized gains. Of these gains, a reasonably significant proportion is held in what are now public equities, to which we give a 15% liquidity haircut, to be on the conservative side. I can’t comment on what proportion of the invested funds went into the exited companies as opposed to the others – the steering committee didn’t choose to release that information. The conclusion of the study was exactly as you understood it: "great returns, but not yet in the bag." Hence the use of the phrase "on track" in various places." Thanks much to Michael and his team for the helpful explanations... Other news and notes: Here's a great interview by Jennifer Kho, of A123's David Vieau... And finally, two interesting market data points on concentrated PV market adoption -- first, 24 gigawatts of CPV projects under development in California? And second, floating solar islands in the Persian Gulf?

That's the conclusion of New Energy Finance in a new analysis they released today. They studied 129 clean energy investments in Europe by 37 investors and found 15 IPOs, 10 trade sales, 21 up rounds, 19 down rounds or write-downs, and 10 liquidations. All told, they estimated a 54.9% gross annualized return across the portfolio of 129 companies. The study period covered 1998 to the present, and included an estimate of 1.2x valuation on unrealized gains on funds invested. It's a very positive study, certainly, and helps further illustrate why investors are so keen on this sector right now. It's also a very useful analysis -- but it's important to note a lot of caveats involved. The methodology is hard to figure out from the press release alone, but it's clear there's a lot of potential for some data bias (while it's impressive that 37 investors participated, it looks like the study only covered about half of relevant investments; and as well, it appears the study relies somewhat upon self-reported data from the investors). I'd also like to see more information about the way that "unrealized holdings, calculated on an industry-standard, conservative basis, are valued at 1.2 times the total funds invested." It's unclear, but in light of the statements that 35 exits have returned 1.4x the funds invested, and the total estimated gains are 2.6x (1.4x + 1.2x), it seems like there's an implication that the ~75% of funds invested that have NOT led to exits may be assumed to have seen some pretty nice paper gains. We may ask the good folks at NEF to write up their methodology for benefit of readers at some point... Before we all pat ourselves on the back about the healthy returns in this sector, in any case, consider the following:

• Neal has some cautionary words about solar...
• These researchers have some cautionary words about cellulosic ethanol...
• Here's a cautionary tale for anyone who's planning on generating a lot of value out of carbon offsets, and planning on today's carbon market pricing in their financial modeling...
• And here are some cautionary words about VCs stretching their investment approach to do quasi project finance (something we've discussed on this site a bit)

One funding announcement so far this week: Pentadyne has closed on a $14mm round of financing, led by Loudwater Investment Partners. GTM's Rachel Barron reports that the capital will go toward sales channel and product development. Jonathan Shieber at Dow Jones pointed out in CTI that the PR described it as a "recapitalization," and wondered about the company's previously-announced AIM IPO plans. It's unclear from the PR whether existing investors participated in the latest financing, which brought total investments in the company to about $60mm. Other news and notes: Cleantech is heating up in Australia, too... And finally, it's not cleantech, really, but how about $20mm to put a robot on the moon?