Friday, September 16, 2011

Silk Suits in Boardroom

The boardroom  -  or at least the conference room  -  at BrightSource Energy, Inc. (private) has been graced by a steady stream of “silk suited” investment bankers and venture capitalists.  The fledgling developer of solar thermal power plant systems has raised over $300 million from the likes of Vantage Point Capital Partners, Black River, DBL Investors and Morgan Stanley.  BP Alternative Energy, Google, Alstom and StatoilHydro Venture have also cut shceks to support BrightSource’s strategic plan.

Based in California, BrightSource is using the power of the sun instead of fossil fuel to heat water into steam.  Then just like in conventional power plants the steam drives turbines connected to electric generators.  Tracking mirrors called heliostats track the suns progress across the sky, concentrating the sun’s power on a boiler filled with water.  The boiler is perched on a tower immediately adjacent to turbines or other industrial machinery that can be driven by steam.

What is interesting about BrightSources boiler, which they also refer to as a “solar receive,” is that it is designed to be heated from the outside rather than by some internal flame.  Inside the boiler high-temperature, pressurized stream is generated as the heliostats focus the suns rays on the boilers exterior.  Then conventional systems take over generating steam for electricity or mechanical processes.

The heliostats and boiler are not the limits of BrightSource’s innovation.  The company is also using proven molten-salt storage technology.  The salts are also heated to high temperatures with some of the steam output, which then serve as a storage unit.  Storage some of the heat helps extend the period of electricity generation beyond sundown.

The company already has a demonstration plant installed in Israel at what they call the Solar Energy Development Center (SEDC).  The SEDC is located in the Rotem Industrial Park in Israel’s Negev Desert, about southeast of Jerusalem and produces 6 MW of thermal power using 1,600 glass mirrors.  BrightSource’s solar thermal system is to be installed at the Ivanpah Solar Electric Generating System (ISEGS) in California’s Mojave Desert.  The planned project is expected to yield 390 MW of electricity.

What probably has the “suits in the boardroom” particularly excited is another proposed project in California.  In August 2011, BrightSource Energy filed an application for construction with the California Energy Commission for the development of a two 250 megawatt solar power plants in Inyo County.  A big selling point for the application is apparently the claim that the land use requirement is 33% less than would be required for a solar photovoltaic plant with similar output.  BrightSource also claims the pedestal design of its heliostat units is more environmentally friendly and less disruptive for plants and animals.

We are adding BrightSource to the Solar Concentrating Group of our Electric Earth Index (recently rename from Earth, Wind and Fire Index).  It presents limited investment opportunity for the minority investor in as much as it appears the company might have already raised adequate capital to support the company through to profitability.  Indeed, an initial public offering is more likely at this point than another private round of financing.   

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.  BrightSource Energy is included in Crystal Equity Research’s Electric Earth Index (previously name the Earth, Wind and Fire Index) in the Solar Concentrating Group.

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