Brightsource raises $80 million – More Money Down the Drain?

I had profiled Brightsource energy as one of the their best solar startups in USA earlier, however things have changed dramatically in the interim with solar panel prices crashing to absurdly low levels. This has put question marks on the survival of each of these three with two of them eSolar and Brightsource being solar thermal companies. Note a number of CSP companies have already gone bust as crystalline silicon solar technology has left others in the dust. It is not surprising given that even 2 years ago Solar PV was winning against Solar Thermal Technology on a number of fronts. Read below:

Solar PV vs Solar Thermal

1) High Costs – Solar Thermal costs Euro 3.5/watt with another Euro  50c/watt cost for High Voltage Transmission. However these costs are too high  as Solar PV already costs Euro 3.5/watt and even on a conservative basis will have its costs reduced by 5% in the next 10 years making it attain half the cost of Solar Thermal Technology by 2020.

2) Water Issue – Solar Thermal Plants use lots of Water which is Major Problem in Desert Areas. Using non-water cooling raises the cost of CSP projects too much. While using Sea Water has been proposed it remains to be seen if it possible to implement this solution as this would imply building Plants very near the Coastline.

3) Ecological and Cultural Issues – The Usage of Massive Arrays of Mirrors is noted to heavily impact the Desert Wildlife endangering the endangered species. California has already seen a massive fight on this issue with Project Developers curtailing the size of their Plants and spending money to move the wildlife. Don’t think this would receive too much attention in the African countries. They are also cultural issues with some of these Muslim countries might have in Exporting so much Energy to Christian Countries.

In the Current Climate when experienced industrial companies like Siemens are abandoning solar thermal technology, it seems difficult to believe that a startup like Brightsource can succeed. Note Siemens had bought the best solar thermal company Solel Energy and failed. Solar Thermal plants require a high level of project expertise besides an equally big balance sheet. Brightsource does not have either of those. The company has raised more than $500 million including the latest $80 million round. However it still has a long way to go before earning its $1 in profit. Solyndra had raised more than a billion dollars. The similarities seem uncanny.

Will Brightsource go the Solyndra way

Solar Thermal Startup Brightsource Energy has managed to raise $420 million in multiple rounds of financing from top PE firms as well as Alstom. The latest round being $100 million as it moves to start its first plant at Ivanpah which has got the backing of the US government. The Ivanpah plant got a further boost when NRG Energy, USA’s largest renewable energy utility invested $300 million of its money into the plant. Note Solar Thermal Technology is facing a huge challenge from the falling costs of Solar PV Technology. Low cost Chinese production has led to a dramatic fall in Solar Energy costs leading to a Solar Boom in 2009 and 2010. Recently Tessera Energy with two Solar Thermal Plants in the US approved by the government was forced to sell one of its plants while the second remains in limbo.

Solyndra is one of the most hyped solar startups which has managed to raise $1 billion in funding and coming out with surprisingly little for the money. Not only did it postpone its IPO but also shut down its first factory as prices keep diving faster than it can cut costs. Brightsource Energy on the other hand seems to have a brighter future with its unique CSP technology. Also with backers like Alstom and Bechtel,  it has the heavy engineering support to construct the massive 392 MW plant. Note other Solar Thermal startups like Ausra and Soliel Systems were bought up by giant engineering conglomerates Areva and Siemens. Brightsource along with eSolar remain the only pure play CSP companies still surviving.

Brightsource Energy – Quick Snapshot

BrightSource Energy’s proprietary LPT 550 energy system uses heliostats (mirrors) to focus Solar Energy to a Power Tower. The Heat in the Power Tower is converted to Steam which powers Steam Turbines just like a conventional Thermal Power Plant. Thousands of Heliostats are controlled by Computers and they Track the Movement of the Sun throughout the Day to maximize the Power Output. Note most of the top Management of Brightsource is drawn from the Luz Industries which built the massive 354 MW SEGs Solar Thermal Plant in Los Angeles in the 1980s and which is still the largest Solar Thermal Power Plant in the world. LUZ II was founded by Mr. Arnold Goldman, who was also the founder of the original Luz. In December 2008, Luz II changed its name to BrightSource Industries (Israel), Ltd. (BSII).

Brightsource has no commercial CSP Plant working till now though it has a pilot plant called Solar Energy Development Center (SEDC) in Israel with 4 MW capacity.

Brightsource Energy Investors

BrightSource Energy has raised more than $300 million in financing from top companies worldwide. Here is a list of those companies:

1. BP
2. Alstom
3. Google
4. Statoil
5. Chevron

The company has also got PE and VC investors like Draper Fisher, Vantage Point, Calstrs, Blackriver and DBL

Ivanpah Solar Thermal Plant

The 392 MW Ivanpah Solar Electric Generating System (ISEGS) is being built in California’s Mojave Desert. The Concentrating Solar Power (CSP) Project is being built approximately 50 miles northwest of Needles, California (about five miles from the California-Nevada border) on federal land managed by the Bureau of Land Management. The complex is comprised of three separate plants to be built in phases between 2010 and 2013, and will use BrightSource Energy’s LPT 550 technology.

Initial Public Offering (IPO) Plans

In 2010, BrightSource hired Morgan Stanley and Goldman Sachs to begin preparations for a public offering that is likely to happen in 2011. Its fourth round of equity financing in May netted $150 million, bringing total equity financing to $330 million to date. There has been no official word about the IPO or when the stock listing might happen.

Solar Thermal Companies (Note Three in this List are gone Now – Try guessing which ones)

1) Brightsource Energy – Solar Thermal Startup Brightsource Energy has managed to raise $420 million in multiple rounds of financing from top PE firms as well as Alstom. The latest round being $100 million as it moves to start its first plant at Ivanpah which has got the backing of the US government. The  Ivanpah plant got a further boost when NRG Energy, USA’s largest renewable energy utility invested $300 million of its money into the plant. Brightsource Energy  seems to have a brighter future with its unique CSP technology. Also with backers like Alstom and Bechtel, it has the heavy engineering support to construct the massive 392 MW plant.

2) Solar Millennium – The company is one of the most aggressive players in the Solar Thermal Energy Sector. The company is in the process of building CSP plants in Africa, Europe, India and USA. This German company has won several project approvals to build CSP plants in California through its JV Solar Trust with Ferrostaal Inc. The company has running plants at Andasol in Spain. In 2009, Solar Millennium entered into a joint venture with Suryachakra Power Venture for joint development of solar power projects in India. The company uses parabolic tough technology and is able to provide a turnkey solution from Technology to Design to EPC.

3) Abengoa – Abengoa is one of the most well known suppliers of Solar Thermal Equipment in the world and is a proven developer of large scale Solar Plants in Spain and USA. This Spanish giant has signed a JV with India’s largest capital equipment company BHEL to manufacture components for Solar Thermal Plants..t has managed to win a large DOE grant for constructing another large Solar Thermal Plant in the USA. It has also signed a JV with Abu Dhabi promoted Masdar to build a 100 MW Shams 1 plant near Madinet Zayed in UAE.

4) Areva – Another Giant Global Electrical Equipment Conglomerate which entered the Solar Thermal Energy area by acquiring a struggling CSP startup Ausra. The company is planning like the others to make a major investment of around $3 billion to build 1000 MW capacity in India. The company is the biggest nuclear equipment supplier in the world and has interests in biomass energy as well.

5) Siemens – The world’s largest green company is quite weak in the Solar Energy area. Like other conglomerates and competitor Areva, it acquired Israeli CSP company Solel Energy to make its foray into the Solar Thermal Energy sector. The company is looking to expand in India where the JNNSM has given equal importance to Solar Thermal Technology.

6) Acciona – Acciona the Spanish Renewable Energy Giant is one the most experienced in the Solar Thermal Category. The company has not been aggressively expanding in the CSP category lately. It recently backed out of bidding for the Solar Flagships program in Australia. The company built one of the large solar thermal plants in the US named Nevada Solar One in the 1980s.

7) eSolar – eSolar is one of the most exciting startups in the US Solar Technology. The company uses a unique Concentrating Solar Power (CSP) Technology which utilizes small, flat mirrors which track the sun with high precision and reflect the sun’s heat to a tower-mounted receiver, which boils water to create steam. This steam powers a traditional turbine and generator to produce solar electricity. The company has won contracts to build its CSP plants in USA, Greece and China.

8) SolarReserve is a US company which uses integrated molten salt thermal energy storage technology in conjunction with solar power towers licensed from United Technologies Corporation (UTC). The company has got approvals to build CSP plants in Arizona and California. The company has tied up with Chinese solar wafer giant GCL to build solar projects across the USA and holds 1100 MW of projects in development.

9) Schott – This German company is a provider of parabolic receivers used in CSP plants. The German Glass Maker is a big component supplier to the CSP industry but does not provide a turnkey solution. Schott is also involved in the Solar PV Technology area producing both crystalline silicon panels as well as thin film panels.

Brightsource raises another $80 million

But Oakland-based concentrating solar company BrightSource Energy has just provided a bit of contrary data, with an announcement today that it’s secured another round of equity financing totaling more than $80 million dollars.

“Today’s capital raise reflects the important role of our solar thermal power tower technology in meeting the world’s growing demand for cost-effective power that is not only clean, but reliable as well,” said John Woolard, Chief Executive Officer of BrightSource. “With these funds we will continue to build solar power plants for our U.S. customers, while significantly increasing our presence around the globe.”

The French energy and mass transportation company Alstom led the round of investment, along with former MySpace backer VantagePoint Capital Partners, which has made previous investments in BrightSource. Other investors in this round include Draper Fisher Jurvetson, the state teachers’ pension fund CalSTRS, DBL Investors, Goldman Sachs, and Chevron Technology Ventures and BP Ventures, subsidiaries of the well-known clean energy companies Chevron and BP.