SOLAR:

BrightSource IPO could spark clean-tech 'gold rush'

SAN FRANCISCO -- BrightSource Energy Inc.'s plan to go public this year could spur a wave of clean technology startups looking to follow suit if investors flock to the solar developer in large numbers, experts say.

The Oakland-based company recently filed with the Securities and Exchange Commission to start the initial public offering process, following the example of others in "clean tech" that have raised cash over the past few years for fledgling technologies that have yet to prove their mettle.

Last year's blockbuster IPO in the United States was Tesla Motors Inc., which saw its stock price surge 40 percent on its opening day to deliver more than $225 million to the electric carmaker on the first day of trading. Amyris, Gevo and Ameresco have also fared well, confirming a global trend that saw 93 clean-tech companies raise a combined total $16.3 billion worldwide in 2010, according to the Cleantech Group.

But many expect the BrightSource offering to surpass the pace set by Tesla, even if the company's executives have capped the stock available at $250 million. More important perhaps than the cash raised will be the tone a solid performance sets for other firms eyeing the same move, especially in the solar power space and for a company like the biofuels developer Solazyme Inc. also looking to go public this year.

Nat Goldhaber, managing director of Claremont Creek Ventures in Oakland, said a monster showing by BrightSource could spark a "Google effect" that leaves investors as enthusiastic about pioneering energy firms as they have been about information technology.

"I think it's going to be a hot one," Goldhaber said. "If it's very successful, I think perhaps we might get a little bit of a gold rush."

Goldhaber justifies his enthusiasm by citing the company's flush pipeline of projects to follow construction of a solar thermal plant in the Mojave Desert, which is backed by a $1.6 billion loan guarantee from the Energy Department. And though it looks like solar photovoltaics may have more of a future than concentrated solar, Goldhaber thinks BrightSource has the right technology to make large-scale renewables work.

"Their technology is interesting and unique and capital intensive," he said, noting that BrightSource has managed to weather a difficult permitting process, political pushback and other challenges. "I think it's starting to feel kind of warm and fuzzy."

Concentrated solar vs. PV

Though not quite as bullish, others agreed that the company will likely do well. Erik Straser, a general partner at Mohr Davidow, a top Silicon Valley venture firm, said BrightSource is positioned to help push along an IPO market that rebounded last year.

Straser cited the announcement last week by French oil producer Total SA that it had dropped $1.4 billion into SunPower Corp., a solar panel manufacturer based in San Jose, Calif. And he noted that BrightSource is among the first large-scale renewable producers to toy with going before investors, giving it a unique first-in-class status.

"This is a first-in-a-category company," Straser said. "To date, those in general seem to do well."

He added: "If you are a fund manager, and you have an allocation in this area, this could be one of the few ones you could buy."

Others expect BrightSource to show well but cautioned that the company's brand of sun-powered electricity -- what is called concentrated solar -- could be met with a less enthused response from Wall Street than some would anticipate.

Peter Asmus, a senior analyst at Pike Research in San Francisco, argued that the drop in prices for solar panels (PV) means distributed, rooftop solar has become increasingly attractive. And PV does not have to deal with the local headaches that utility-scale concentrated solar (CSP) has come face to face with land acquisition challenges, power line shortages, water supply problems, endangered species and vocal environmentalists.

BrightSource, Asmus said, "is one of the few [CSP] companies I am still optimistic about."

"I think it is going to be successful," he said, but only because its technology -- a centralized solar thermal tower -- departs from other CSP outfits looking to use rows and rows of parabolic troughs to generate power, he argued.

"There are some people now saying that maybe CSP has missed its opportunity," Asmus said. "There are some people sort of saying, 'You guys missed your window.'"

Still others suggested the combined cheapness of natural gas and dropping price of solar PV means gas-fired plants built in concert with solar panels might be the way to go. But even if that pattern emerges, every analyst interviewed for this article said BrightSource has separated itself through its unique technology and ability to build strong connections in the business community.

"This is a good company," said David Cheng, one of two directors of research at the Cleantech Group. "I think, generally speaking, good companies will go public no matter what."

Straser sees the same dynamic at work: "I think highly of this team. There are a lot of people rooting for this one to win."

Looking forward

Cheng also noted that solar thermal has storage capability where solar PV does not, so if BrightSource proves its model to be efficient, that could "validate a sector that can generate liquidity for investors and wealth for entrepreneurs."

"This is a marquee name and a marquee project," he said. "I think it's going to do well."

Goldhaber said another factor to watch is how BrightSource does in the months after the IPO. Tesla, for instance, fell back significantly after the initial rush but has lately settled well above its IPO asking price.

"It speaks well to the resilience of post-IPO values," he said. "At least Tesla does. If we see a good pop on the offering day and some resilience in the value of shares post-IPO, I believe we'll see renewed interest in additional IPOs."

Outside of BrightSource and Solazyme, a number of other U.S.-based clean-tech companies may be looking to file IPOs this year. Ice Energy, Silver Spring Networks, Fisker Automotive Inc. and Bloom Energy Corp. have been among the companies rumored to be eyeing a public offering, and Goldhaber listed SolarCity, SunRun or OPower as likely candidates.

More broadly, global activity seems likely to surpass movement in the United States. The largest IPO by far last year was for Enel Green Power, which is the renewable energy unit of Italian utility Enel. The company raised $3.6 billion on the Madrid Stock Exchange.

The Cleantech Group noted that the "vast majority" of IPO action was in China, which accounted for 63 of the IPOs (or 68 percent) completed in 2010. The second largest IPO of the year was for China Goldwind, a wind turbine manufacturer that raised $917 million on the Shenzhen Stock Exchange, the Cleantech Group said.