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Summary:

The story behind why solar thermal company BrightSource Energy pulled its IPO: basically because it could.

The tower at the Chevron, BrightSource solar oil plant

The tower at the Chevron, BrightSource solar oil plant

When solar thermal company BrightSource Energy withdrew its IPO plans last month there was a collective groan from greentech and solar industry watchers. The company was the strongest out of the handful of greentech IPO hopefuls last month, and if BrightSource had gone public it would have made history as the first venture-backed solar thermal startup to go public and could have potentially paved the way for other greentech IPOs.

But in an interview on Tuesday, BrightSource CEO John Woolard tells me that because of the weak public markets, particularly for solar and greentech companies, BrightSource was looking at a market transaction that wasn’t necessarily at the terms that the company and its investors wanted. Instead of lowering its price range and raising less money — which other firms like solar inverter maker Enphase Energy have done recently — BrightSource simply decided to withdraw the IPO.

“In a strange way, I was very proud of the board and the investor base and it took about an hour to make the decision. Everybody said we like the company and we’ll continue to support the company,” said Woolard.

Chevron, BrightSource solar oil plant, the tower and the mirrors

BrightSource filed for the IPO about a year ago, but as soon as the company was about ready to go public, the markets imploded for about a six month period, said Woolard. Then in March BrightSource met with their bankers and they said as long as the markets are stable or up, the company should go ahead with the IPO. The first three days of the IPO roadshow were stable and up and things were looking fine, says Woolard, but then we hit what turned out to be the worst two weeks of the market of the last 6 months.

The analogy is, even if you’re Michael Phelps, if you’re swimming against a major current in the Bay of Fundy then it doesn’t matter. The macro forces can be too powerful, said Woolard.

BrightSource doesn’t necessarily need the money right now. The company already has its first solar thermal plant Ivanpah fully funded with project financing from

BrightSource CEO John Woolard

NRG Energy and Google, and the funds from the IPO would have gone toward things like continued research and development, project development (permitting work) and international expansion.

BrightSource will be doing a lot more project finance fund raising in the coming years. It has thirteen solar thermal power plants that it’s going to construct and build between now and late 2016 or early 2017, says Woolard. BrightSource builds large farms in the deserts that use mirrors to concentrate sun rays onto a central tower that captures the heat and runs a turbine and produces electricity.

Ivanpah is the company’s first commercial scale solar thermal farm, and Woolard says that the following farms will be much cheaper to build because through scale the costs will be able to come down dramatically.

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  1. Sasa Marinic Wednesday, May 2, 2012

    While Brightsource decides not to file for IPO, SolarCity decides to do just that. Regardless of possible scenarios when funding a company and decisions made, the difference between the two is that SolarCity works on residential market and Brightsource does not. I wonder if there is a connection between the markets and decisions regarding the IPO. What do you think?

  2. Katie Fehrenbacher Wednesday, May 2, 2012

    @Sasa Marinic, For sure. BrightSource also focuses on solar thermal tech while SolarCity uses solar photovoltaic panels. The drop in panel and cell prices that are making it so hard for solar cell manufacturers are actually a boon to SolarCity, because they can just buy the product they put on rooftops for that much cheaper.

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