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BrightSource IPO Tests Post-Solyndra Appetite For Solar Power

By Cassandra Sweet Of DOW JONES NEWSWIRES California solar-power developer and federal-loan recipient BrightSource Energy plans to go public this week, despite a tepid market for solar companies and an uncertain outlook for renewable-energy firms. BrightSource, of Oakland, Calif.,is building a 392-megawatt solar-thermal power plant in the California desert and plans to build several similar facilities in the U.S. Southwest. The company plans to offer 6.9 million shares at $21 to $23 apiece, in hopes of raising as much as $182.5 million, according to a regulatory filing in March. The stock would be listed on the Nasdaq Stock Market under the ticker symbol BRSE, with pricing scheduled for Wednesday after the markets close, after which trading would start Thursday. BrightSource, unlike some less-fortunate renewable-energy companies, hasn't been ensnared in the Solyndra LLC scandal to date. Solar firm Solyndra received $528 million in U.S. government loans from the U.S. Energy Department before it filed for bankruptcy protection last September. The filing raised questions over whether the Energy Department rushed to approve alternative-energy loans. It also raised concerns about the viability of renewable-energy companies not yet operating at commercial scale, particularly in the crowded solar market. Still, some IPO market watchers say the company's debut could suffer from a lack of investor interest as solar-power company stocks hit fresh lows amid steep price declines for solar panels - a rival technology - and amid uncertainty about U.S. renewable-energy policy, and as the Solyndra scandal remains fresh in some people's minds. "These types of companies are very much out of vogue," said Scott Sweet, senior managing partner of IPO market research firm IPO Boutique. "There's little to no buzz about BrightSource, which means very little demand, and one can certainly attribute that to its competitors and the market for those companies." Sweet gave the BrightSource IPO a rating of 2, out of a possible 5, with 5 being a high-demand offering and 1 being lackluster. Sweet also said he could see the IPO being postponed due to insufficient demand. Rival IPO analyst IPO Scoop.com rated BrightSource's IPO a 1. Unlike solar panels that use a semiconductor material to convert sunlight into electricity, BrightSource's solar-thermal technology uses fields of mirrors, called heliostats, to concentrate sunlight onto a central boiler that produces steam. The steam is used to drive power turbines to generate electricity and also can be used for other industrial applications, such as enhanced oil recovery. Although BrightSource is still working to complete its first commercial-scale solar-power plant and generate revenue from sales, the company's technology appears to be sound and it has several big corporate names among its investors and customers. U.S. power company NRG Energy Inc. (NRG) has pledged to invest up to $300 million in the Ivanpah power plant and Internet giant Google Inc. (GOOG) has pledged $168 million, according to documents BrightSource filed with the Securities and Exchange Commission. BrightSource backers include VantagePoint Capital Partners, Alstom S.A. unit Alstom Power Inc., Morgan Stanley (MS), Los Angeles Advisory Services Inc., Draper Fisher Jurvetson, the venture capital arms of BP PLC (BP.LN, BP) and Chevron Corp. (CVX), Statoil ASA (STL.OS, STO), Black River Asset Management, California State Teachers Retirement System and DBL Investors. California utilities owned by PG&E Corp. (PCG) and Edison International (EIX) have signed long-term contracts with BrightSource to purchase the electricity from the Ivanpah plant and other facilities. BrightSource said it expects revenue of $672 million from the utility contracts. In 2011, BrightSource generated revenue of $159.1 million, up from $13.5 million in 2010. The company booked net losses of $111 million and $71.6 million in each of those years, respectively. BrightSource has never been profitable, although the company has predicted that its 2,400-megawatt pipeline of solar projects could generate $4 billion of revenue when all the plants are built and sold. In 2010, BrightSource issued shares to private investors for roughly $20 apiece, according to a document the company filed with the SEC last month. In 2011, BrightSource said it planned to sell up to $250 million in stock. But things have changed since then. Two BrightSource rivals, solar-thermal power developers Solar Millennium AG and Stirling Energy Systems, filed for bankruptcy last year. Both companies went through the grueling process of obtaining construction permits to build large solar-power plants in California, and both had contracts with large utilities to sell the electricity. Germany-based Solar Millennium won a $2.1 billion loan guarantee to build one of the plants. But the company turned down the loan, saying that falling prices and increasingly fierce competition in the solar-panel market made its technology uneconomic. Stirling Energy Systems and its development affiliate Tessera Solar didn't get a loan guarantee and the companies ran out of money. They sold their projects to other developers, who have been attempting to redevelop them using solar panels instead of Stirling's solar-thermal technology. The markets haven't spared the solar giants. Market leader First Solar Inc. (FSLR), of Arizona, which makes solar panels and also builds large solar farms, has seen its stock plummet from about $145 a year ago to $21.38 at Tuesday's close. California solar-panel maker and solar-farm developer SunPower Corp. (SPWR) also has seen its stock price fall to a fraction of where it traded a year ago. Chinese solar giants Suntech Power Holdings Co. Ltd. (STP), Yingli Green Energy Holding Co. (YGE) and Trina Solar (TSL) also have seen their shares slide as prices and revenues have declined amid a glut of solar-panel manufacturing capacity. Germany-based Q-Cells SE (QCE.XE) filed for insolvency last week, following Solon SE's (SOO1.XE) December filing. Both companies struggled against price declines and an oversupply of solar panels driven primarily by the rapid expansion of China's large, well-funded solar-panel manufacturing industry. Despite the difficulties, investors have continued backing renewable-energy companies. Venture capital and other private investment in clean-technology companies around the world totaled $1.81 billion in the first quarter, down 31% from a year ago, according to consulting firm Cleantech Group. Solar firms attracted $249 million of that amount, according to the group. Top recipients included California solar-panel installer SolarCity, which raised $81 million, and California solar-panel maker MiaSole, which raised $55 million. Cleantech Group Chief Executive Sheeraz Haji says he's bullish on clean-technology firms and is optimistic about BrightSource's IPO, despite the tough solar market and leaner times for clean technology firms. "It feels like a good one," Haji said. "Obviously, we'll have to wait and see what happens." Haji and other renewable-energy market participants predict that if the BrightSource IPO is successful it could help other solar firms that aspire to go public or find a corporate buyer. The BrightSource IPO is likely to be a "bellwether," or signal of investor appetite for clean-technology IPOs, said Tim Keating, chief executive of Keating Capital, a fund that has investments in BrightSource and other privately held companies that plan to go public. Keating noted that Enphase, which makes electrical inverters for solar-panel systems, successfully went public last week, while a group of other renewable-energy companies is waiting in the wings to go public. -By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; Cassandra.sweet@dowjones.com -Lynn Cowan contributed to this article

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