A sign of just how capital intensive it is building new solar thermal infrastructure – was revealed today when BrightSource Energy filed with the US Securities and Exchange Commission to raise $250 million in an initial public offering of its shares. BrightSource already has some high profile investors. Google has invested $168 million, and NRG Energy is lending up to $300 million over the next few years in order to complete the BrightSopurce Ivanpah solar thermal project in California. The 392 MW project cleared the permitting process by the end of last year.
With these two investments, BrightSource has now successfully closed the deals needed for financing the Ivanpah project.This public offering comes as a way of raising additional money for future projects.
Bechtel, which is doing the engineering broke ground on the project at the same time as the NRG Energy financing was finalized. Other early investors include top Silicon Valley VC funders like VantagePoint Capital Partners and Draper Fisher Jurvetson. DBL Investors, CalSTRS, BP Alternative Energy and StatoilHydro Venture. Alstom, Morgan Stanley and Chevron Technology Ventures have also invested.
Last week, the company also finalized the US Department of Energy loan guarantee offered last year – initially at up to $1.4 billion. In a surprising move, given the new US congress, the final amount guaranteed by the DOE actually ticked up to $1.6 billion.
But the DOE is hardly going out on a limb with this guarantee. These are hardly risky deals. Two California utilities have signed contracts to buy all the power produced for the next twenty to thirty years. In most businesses, there is no such guarantee that a product has customers, let alone for the next thirty years.
The technology is based on the design of the original Luz SEGS project in the California desert. This was pioneered by the President of Israel’s BrightSource Industries; Israel Kroizer, who is now VP of Engineering and R&D at California-based BrightSource Energy.
Thousands of mirrors reflect sunlight onto a boiler filled with water that sits atop a tower. When the sunlight hits the boiler, the water inside is heated and creates high temperature steam. The steam is then piped to a conventional turbine which generates electricity. This fully integrated approach produces low-cost solar power, while providing similar reliability characteristics found in conventional power plants.
The big difference between this thermal energy and traditional power plants being that the fuel, sunlight, is free. That makes for a pretty sound investment in my view!