The solar sector is buzzing about its latest blockbuster IPO — and about some new questions raised about the company’s flagship Ivanpah project.
April 27, 2011 – The solar industry hasn’t had a blockbuster initial public offering for a while, underscoring the investors’ confidence in the long term prospect of solar. Could BrightSource Energy help change that? The company recently filed to go public and raise $250 million in order to complete a series of power plant projects and fulfill power delivery contracts to utilities.
Oakland, CA-based BrightSource had garnered a fair share of spotlight even before its IPO filing with the US Securities and Exchange Commission last Friday. The company began construction of its first commercial solar farm a 392MW Ivanpah project in California’s Mojave Desert, last October. The company has lined up a $1.6 billion federal loan guarantee and private money that includes a $300 million commitment from NRG Energy and $168 million from Google to help fund the project.
Ivanpah, set for completion in 2013, will be the largest concentrating solar thermal power plant in the country. BrightSource is using a new technology that relies on flat mirrors called heliostats to heat water inside a boiler atop a tower, from where the steam will be piped to run a turbine to generate electricity. The company is one of several firms, such as Abengoa Solar and SolarReserve, to work on this type of “power tower” technology. A more conventional approach is to use curved mirrors to heat fluid for steam production, and this parabolic trough design already is in use today in a series of power plants in California that were built in the 1980s and early 1990s.
Its ability to complete Ivanpah is crucial to demonstrate the company can be in the power project development business for the long haul. Many other solar developers have faltered because they couldn’t get the technology right or financial backing to carry out their projects. Aside from raising a huge amount of money for Ivanpah, it also has had to raise hundreds of millions of dollars for its corporate and project development expenses, including a $201.7 million round completed earlier this year and $176 million last year.
Ivanpah is one of a series of projects under development by BrightSource, which has contracts to deliver 2.6GW of power to two California utilities: Pacific Gas and Electric and Southern California Edison.
BrightSource’s Ivanpah project was one of the nine proposed solar farms that received approval from the California Energy Commission last year. Securing that state permit — and also federal permit because Ivanpah is being built on land overseen by the Bureau of Land Management — also enhanced the company’s profile. Rumors of BrightSource’s plan to do an IPO had been swirling for a year before the company’s filing with the SEC.
How well investors will embrace BrightSource’s stock remains to be seen though. The company has yet to price its shares, and there is no guarantee, of course, that there will be hiccups from now until the day of its public market debut. Solydra’s IPO filing drew a huge public attention and, despite winning many supply deals and a $535 million loan from the federal government to build a new factory to help drive down its manufacturing costs, the company couldn’t generate enough excitement for its IPO plan and decided to abandon it last year.
Already, a mention in BrightSource’s IPO filing has raised questions about the Ivanpah project. BrightSource mentioned that it received notice from the BLM earlier this month that it will need a revised biological opinion from the U.S. Fish & Wildlife Service before continuing with the phase 2 and 3 of the project. BLM issued a work suspension letter on April 15 after BrightSource reported finding more desert tortoises at its project site than anticipated.
The company had expected to find 40 tortoises during the construction of the entire project, but it had spotted 39 by the end of March, said Erin Curtis, a BLM spokeswoman. A preliminary estimate put the total tortoises that could be found for the entire project at 140, she said. Under the company’s current environmental mitigation plan, BrightSource would tag and relocate the tortoises to a piece of nearby land. Changes to this plan, which will certainly happen with the new biological opinion from the Fish & Wildlife Service, will likely cost the company more money.
BrightSource’s spokesman, Keely Wachs, said the company still expects to complete the project by 2013.
“We asked the BLM to reinitiate consultation at Ivanpah, and they have requested our EPC contractor to discontinue fencing activities and the use of a single road at Ivanpah units 2&3 while this review is underway. We continue to anticipate that the Ivanpah power plants will come online in 2013,” Wachs wrote in an email.
BrightSource reported a net loss of $71.6 million on a revenue of $13.5 million for 2010, according to its SEC filing. In 2009, it recorded a net loss of $43.8 million on a revenue of $11.6 million. In 2008, it posted a net loss of $44.6 million on a revenue of $7.1 million.
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