We were just preparing a story for the Mercury News today about how clean-technology is very hot right now.

It is a cliche to jump to the word “bubble” anytime a sector heats up, but this is an area that is seeing special excitement for various reasons — oil prices, middle east conflict, the recent heat-wave on Sand Hill Road, and the accompanying power outages, to name a few. Energy investments reached record levels during the second quarter.

We’ll have more details on the frenzy over SolFocus, the Palo Alto solar firm tomorrow — and we think you may agree that the bubbly is now flowing. But right now, it is Altra‘s 15 minutes of fame. The Los Angeles biofuel company has raised $120 million in a second round of funding, one of the largest rounds of funding ever raised by a renewable fuel company.

We will wait to see how things go from here. Right now, there are real economic fundamental supporting many of these investments — but there is also enormous pressure for private equity firms these days to put their treasure troves to work, which can distort things.

Silicon Valley firms Kleiner Perkins Caufield & Byers and Khosla Ventures are two the leading investors. Others include Omninet Private Equity, Sage Capital Partners, Angeleno Group, Duff Ackerman and Advanced Equities.

The company has now raised $250 million in equity and debt financing. It seeks to build 500 million gallons per year of biofuel production capacity across the nation “through the acquisition of existing operating assets as well as the development of strategically located and permitted sites with state-of-the-art biofuel refining technology,” the company said in a statement.

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