Solar thermal startup BrightSource Energy's abrupt decision to shelve its year-long plans for an initial public stock offering came amid a challenging year for solar stocks and a turbulent year for clean energy technologies.
On the day it was expected to price its stock for a Thursday launch on the Nasdaq, the Oakland, Calif.-based company issued a news release shortly late Wednesday night saying it had decided not to pursue its IPO due to "adverse market conditions." On Thursday, it withdraw the S-1 registration document that has been on file with the Securities and Exchange Commission -- a firm sign that company has abandoned plans to raise money on the public markets.
"While we received significant interest from potential investors, the continued market and economic volatility are not optimal conditions for an IPO," CEO John Woolard said in a statement. "As a company, we've consistently made decisions in the best interest of our shareholders, employees and customers, and we will continue to do so. Fortunately, we're in a strong financial position and have the support of world-class investors and partners."
Rather than the photovoltaic solar panels found on rooftops, BrightSource builds massive solar thermal power projects in desert locations. Along with competitors like Abengoa and SolarReserve, it is a leading player in what's known as "concentrating solar power," or CSP. But CSP faces growing competition from photovoltaic solar panels, which have drastically fallen in price, and CSP companies are racing to cut costs. The country is also awash in cheap natural gas, putting further pressure on renewable sources of energy.
Many analysts said Thursday that BrightSource now has two options: raise additional money from private investors or hope that they get acquired.
Shyam Mehta, a senior solar analyst with GTM Research in New York, saw BrightSource's about-face as a reflection of the company's particular challenges rather than a broad indictment of solar power's prospects on Wall Street. He noted that CSP technology is land-intensive and faces several permitting hurdles before it can be built in the desert.
"You have to make arrangements for transmission because you're in the middle of nowhere," said Mehta. "You have to mitigate impact on desert tortoise habitat."
BrightSource has strong support from investors like NRG and Google, as well as a loan guarantee from the U.S. Department of Energy.
"It's not like their future hinged on their being able to go public right now," said Mehta. "I'm sure they entertain notions of being able to take another shot at it. But in my opinion, I don't think it's going to get any better for CSP in the next couple of years."
Kathleen Smith of Renaissance Capital said that IPO investors probably were wary of BrightSource because it has yet to make a profit.
"IPO investors will not participate in the market unless there is some certainty about making money; they are not interested in providing venture capital," Smith said. "Companies losing money and lacking commercial operations -- such as BrightSource, interesting as it is -- are too far out on the risk curve for IPO investors at this point in time."
BrightSource, which is backed by VantagePoint Venture Partners, first registered with the SEC to begin its IPO process nearly a year ago, and its stock market debut had been eagerly awaited in the clean-technology community.
"With the exception of Tesla, there's been a dearth of companies in clean tech that are big enough to go public," said John Montgomery, a partner at Menlo Park, Calif., law firm Montgomery & Hansen. "We need another iconic IPO."
BrightSource's pioneering solar thermal technology concentrates the sun's rays with motor-driven, mirror-like "heliostats" and "power towers" that reflect heat to boil water. The steam from the boiling water turns turbines that generate electricity.
The company's flagship project is the massive 392-megawatt Ivanpah Solar Electric Generating System currently under construction on federal land in California's Mojave Desert. When completed in 2013, Ivanpah will be the largest solar thermal power plant in the world, generating enough electricity for about 140,000 homes.
BrightSource was awarded a $1.6 billion loan guarantee from the Department of Energy, whose loan program came under fierce attack from Republicans after Fremont, Calif.-based Solyndra, which was awarded a $535 million loan guarantee, filed for bankruptcy last year.
The guarantee attracted private investors to BrightSource, including NRG Solar, which invested $300 million in the Ivanpah project. Google also invested $168 million in the project.
