BrightSource has signed 13 PPAs to deliver 2.4 gigawatts of concentrated solar energy

BrightSource Energy is looking to raise up to $182.5 million in its initial public offering. The Oakland-based solar energy firm plans to issue 7.9 million shares, at a price of $21 to $23 per share, according to an updated SEC filing, and plans to price the shares on April 12, almost a year after registering its S-1 with the SEC.

BrightSource is in the massive-scale concentrating solar power (CSP) business, a technology which addresses a common refrain about the limitations of photovoltaic solar power — that the technology only works when the sun is shining. CSP boasts the ability to store thermal energy long after the sun goes down. This ability improves CSP’s capacity factor and dispatchability, and has the potential to improve CSP’s levelized cost of energy (LCOE).

BrightSource’s power tower solar thermal system uses a field of software-controlled mirrors called heliostats to reflect the sun’s energy onto a boiler atop a tower to produce high-temperature and high-pressure steam. The steam is used to turn a conventional steam turbine to produce electricity. When paired with storage, the steam is directed to a heat exchanger, where molten salts are further heated to achieve a higher temperature, storing the heat energy for future use.

BrightSource has won more than $500 million in VC funding from VantagePoint Venture Partners, DBL Ventures, DFJ, Alstom, et al. BrightSource has also received project funding from NRG and Google, as well as $1.6 billion in DOE loan guarantees for the Ivanpah project.

CSP needs every advantage it can muster, given the plunging cost of PV and the exploding scale of the global photovoltaic market. In fact, a number of planned CSP plants have switched to PV because of the challenging economics of CSP, as well as financiers’ familiarity with PV.

GTM Research has looked at the LCOE economics of CSP in a recent report, Concentrating Solar Power 2011: Technology, Costs and Markets. GTM calculates that CSP towers with storage can earn higher revenue and profits per kilowatt-hour than PV. The analysis comparing the levelized cost by technology can be found here. The high-level finding is that power tower technology is cost-competitive with PV on a levelized cost basis, and that power tower with storage could represent the lowest cost per kWh solar option in 2016 and beyond.

BrightSource has signed 13 power purchase agreements (PPAs) to deliver approximately 2.4 gigawatts of installed capacity to two of the largest electric utilities in the U.S.: PG&E and Southern California Edison.

According to the S-1, BSE has a development site portfolio of approximately 90,000 acres under its control in California and the U.S. Southwest, with the potential to accommodate approximately 9 gigawatts of installed capacity. Two California sites are currently in advanced development: Rio Mesa Solar (6,600 acres) and Hidden Hills Ranch (10,000 acres).

The S-1 is not very forthcoming about the pricing that has been negotiated for these PPAs. This document from PG&E states, "The price of procurement under [Ivanpah] Projects 1 and 2 is equal to or less than the applicable 2008 MPR (Market Price Referent)." 2008 MPR numbers can be found here. A 25-year PPA starting in 2012 shows a 2008 MPR of $0.1251 per kilowatt-hour. The S-1 also doesn’t go into detail about the amount of transmission-buildout required for that "9 gigawatts of installed capacity."

The fate of the stock price will indicate institutional investors’ take on CSP technology — pitting massive scale at potentially low cost versus the exposure CSP faces in permitting, environmental and financing risk. For the year ended December 2011, BrightSource generated $159.10 million in revenues, and lost $110 million. Competitors in the CSP with storage market include SolarReserve and Abengoa.