Sources: BrightSource Raising $150M Mezzanine Round

The solar thermal player, fresh from $1.37B in Fed loans, needs to raise a mezzanine round. En route to IPO?

Eric Wesoff March 18, 2010

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

BrightSource Energy, the VC-funded solar thermal hopeful, is looking to raise a $150 million mezzanine round, according to sources. The effort has been going on for a few months -- the firm needs equity to match their DOE loan guarantee.

Investors in BrightSource have already put in more than $160 million into the firm. Their investment syndicate includes VantagePoint Venture Partners, Google.org, BP Alternative Energy, StatoilHydro Venture, Black River, Morgan Stanley, DBL Investors, Draper Fisher Jurvetson, and Chevron Technology.

BrightSource declined to comment.

The well-funded Concentrating Solar Power (CSP) firm is fresh from winning $1.37 billion in loan guarantees from the U.S. Department of Energy and receiving conditional approval for their Ivanpah project, which would be the first new solar thermal plant built in California in almost 20 years. The Ivanpah project is notable as one of the world's largest solar projects at hundreds of megawatts of power -- capable of electrifying more than 100,000 homes while providing hundreds of jobs and hundreds of millions in tax revenues over its 30-year lifetime.

The power generated from these solar plants will be sold under contracts with Pacific Gas and Electric (PG&E) and Southern California Edison (SCE).

Bechtel will serve as the engineering, procurement and construction (EPC) contractor for the Ivanpah Solar Electricity Generating System. Bechtel Enterprises, Bechtel's project development and financing arm, is also an equity investor in the Ivanpah solar power plants. When you hear the name Bechtel in the same breath as a solar startup, it's proof that solar has entered the realm of big money, big projects and utility-scale reality.

Electricity at Ivanpah is generated the same way as in traditional power plants -- high temperature steam turns a turbine. The plant differs in how the steam is produced. Thousands of mirrors are focused on a boiler filled with water that sits atop a tower. When 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. The flat mirrors, called heliostats, are cheaper than the traditional parabolic mirrors used in solar thermal power plants and the tower-style boiler can achieve higher temperatures than traditional systems.

Since the successful IPO of A123 Systems, there’s been a small flurry of VC-funded greentech startups filing to go public. Codexis, Solyndra, Fallbrook and Tesla Motors have filed their S-1s with the SEC, a prelude to an IPO. The S-1 doesn’t mean the IPO will occur -- companies can withdraw their offering, usually "because of market conditions." Other IPOs in the works are Silver Spring Networks which hired Morgan Stanley and Jefferies & Co. to underwrite an IPO as well as biofuel maker Amyris, expected to file in the second quarter.

Greentech VC Investor Vinod Khosla's concern in greentech is that "too many companies have filed and we will get a nanotech moment." He's "much more concerned about premature IPOs" and gives an example: Codexis recently filed their S-1 form in preparation for an IPO but according to Khosla, the company is "pretending to be a biofuels company when it is an R&D firm."