SolarCity’s per share range was priced at $13 and $15 per share at the end of November, and at the midpoint of that range SolarCity could raise $141 million in an IPO. Musk already said that he’ll buy $15 million of the stock.

Solar industry watchers had the same questions for solar thermal BrightSource Energy, which was planning to IPO back in April of this year. But BrightSource ended up pulling its IPO plans days before the debut as it didn’t get the pricing valuation that it wanted. The company later raised a large round of money from existing investors instead of turning to the public markets.

But SolarCity is very different from BrightSource Energy. While BrightSource is building large solar power plants in the deserts and selling the power to utilities, SolarCity is providing installation and financing to put solar panels on rooftops. The advantages of its business model and markets are that:

1). The price of solar panels is at a historic low.

2). Much of its business is around providing financing to cover the upfront cost of panels. There’s not much technology risk there.

Though, there are still some open questions in SolarCity’s future. GigaOM Pro’s Adam Lesser points out that SolarCity’s business model is based on maintaining two things that could face an uncertain future:

1). A low cost of capital: SolarCity has already raised $1.57 billion in “tax equity” funds to fund solar installations, where investors put up cash and in return receive the 30 percent tax credit that the federal government provides for renewable energy projects. But those incentives could easily be cut in the coming years, and then the company needs to find low cost capital elsewhere.

2). Cheap natural gas: Lesser also points out that “if natural gas maintains its incredibly cheap pricing, then the market could get more difficult for SolarCity.” SolarCity depends on utility rates being higher for its customers than the electricity prices it can offer through solar systems. If super cheap natural gas used in power plants by utilities actually lowers electricity prices, that could mess with SolarCity’s markets.

In addition, there’s these other risks I wrote about this year — 5 things to know about SolarCity’s IPO, and it’s not all good.

But if SolarCity does manage to debut in its expected range, it would represent one of the rare venture-backed cleantech IPOs that have emerged over the years. SolarCity is backed by Draper Fisher Jurvetson, DBL Investors, Generation Investment Management and Musk. Much of this crew — DBL, DFJ and Musk — also took electric car maker Tesla public, which was another one of those rare cleantech IPOs. Maybe entrepreneurs and investors should just copy what these guys do.

A new publicly-traded solar company could help prove that there are smart investments and sizable exits for those entrepreneurs and investors that bet on the right side of the economic trends in cleantech. Solyndra and many of the next-gen solar manufacturers out there bet on the price of silicon going up and now are struggling (or not around anymore). In actuality the price of silicon dropped, making solar panels super cheap, so if your business model — like SolarCity’s — is based on that cost curve, there’s money to be made.

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The staff of California Public Utilities Commission is recommending a “no” vote for two power purchase agreements in which SCE will buy power from BrightSource’s yet-to-be-built Rio Mesa solar project. The staff said the two agreements are too expensive and noted that the power plants for the contracts won’t have ways to store electricity for later use. The three remaining power purchase agreements between the two companies involve other power plants that will have energy storage, which will give Edison more flexibility to manage supply and demand.

The commission was originally scheduled to vote on the five power purchase agreements today but opted to postpone the decision until next month. The postponement request came from commission president Michael Peevey, who often pushes and wins approval for controversial projects from his fellow commissioners by coming up with alternative proposals that contain compromises.

The commission staff said in the report that storage is a “unique attribute” that “decreases renewable integration risk and provides more value to ratepayers.” With energy storage, a utility could bank electricity when demand is low and release the power when demand is high. It makes a solar power plant act more like conventional fossil fuel power plants, which can produce power any time of the day. California utilities are under mandates to increase the amount of renewable energy they serve to their customers, and they are turning to solar and wind energy to meet the requirements.

Solar and wind farms only produce power when the sun is out or the wind is blowing, so they won’t be able to send electricity to the grid consistently in ways that fossil fuel power plants can. An electric grid runs smoothly when there is a balance of supply and demand, however, and that makes managing solar and wind energy a tricky business. The ability to bank solar or wind electricity will help solve this dilemma. In fact, the commission is considering whether to require utilities to pay for energy storage as more solar and wind energy flows into the grid.

The cost of adding energy storage doesn’t always make sense, especially in the case of using newer storage technologies, such as batteries. But it does for BrightSource, which announced last August that it would start designing storage into its power plants. The Oakland company then revealed last November that it would add energy storage in some of the power plants that would serve Edison’s customers. The announcement mentioned three contracts to sell power to Edison, the same contracts that are now under review by the commission.

Edison actually sought approval for all five contracts back in 2009, when energy storage played no part. Then it re-negotiated the contracts with BrightSource in 2011 after BrightSource had modified those power plant proposals to reduce their environmental impact.  This time around, energy storage made its way into three of the contracts.

The two contracts that won’t benefit from storage are part of the proposed Rio Mesa project, which is under review by California Energy Commission. BrightSource applied for Rio Mesa’s approval last October, and ideally it would have approved contracts to sell power from the project in hand once it gets the permits to build it. Lining up those contracts also will be important for convincing investors to finance the project.

BrightSource plans to use tanks of molten salt for storing the thermal energy produced by its fields of mirrors. The mirrors concentrate and direct sunlight to heat up a water-containing boiler atop of a tower. The steam from the heated water runs the turbine and generator to produce electricity. If the steam isn’t going to be used to generate electricity, then it will be piped to heat the molten salt, which is good at trapping heat. Power plant operators can then use the hot molten salt to produce steam for electricity generation whenever that is needed.

BrightSource isn’t alone in finding out the necessity of offering storage to attract utility customers. Areva Solar told me a few months ago that it had finally decided on using molten salt for storage for its power plants. Areva also uses mirrors to harness the sun’s heat to produce electricity, but the mirror and power plant design is quite different from BrightSource’s.

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My destination is Chevron’s oldest oil field in California, located near the town of Coalinga, which has a population 18,000 and gets its name from having been a coal supply depot for trains that ran on coal-generated steam power. I’m visiting the oil field to check out a project that is demonstrating a way to use the sun’s energy to produce steam to increase oil production. Chevron pipes steam down the wells to pry loose oil that is stuck in rock fissures and this makes it easier to pump the oil back to the surface (see my photo slide below).

Where fossil fuels and solar power meet

BrightSource Energy, which counts Chevron as an investor, built the project and completed it last fall. The 29 MW project includes a field of 3,822 heliostats – each of which is made up of two, 10-foot by 7-foot mirrors – on 65 acres (the entire project takes up 100 acres). The mirrors track the sun’s movement to direct sunlight onto a series of panels containing water pipes at the top of a 327-foot tower.

The sun’s energy heats the water to generate steam that reaches 700 degrees Fahrenheit, says Ray Guidry, a construction supervisor from Chevron Technology Venture who shows me and other visitors around the solar mirrors and takes us up to the tower for a close look at the steam production system.  The steam goes to a heat exchanger near the bottom of the tower to transfer that heat to another water-containing pipe to generate the steam that then fans out across the oil field.

Cleantech proponents may not see oil production as an ideal use of solar energy. They probably would much prefer the world to cut its reliance on oil and other sources of fossil fuels. But Chevron isn’t running the solar steam project to earn good will from its critics. The company sees solar steam as a potentially good alternative for oil fields that don’t have ready access to natural gas because of their locations or geopolitics.

Certainly, if natural gas prices go up significantly, then a solar steam project also could become a cost-effective choice. For now, natural gas is cheap and Chevron actually produces most of the natural gas it needs for its Coalinga operation from the Coalinga oil field.

No solar for you

With rain in the morning in the San Francisco Bay Area and big pillows of clouds over Coalinga when I arrive, it becomes clear that the day isn’t ideal for seeing the solar field in action. The wind is kicking up and is set to really blow after dark, so most of the mirrors are in a rest position that places them parallel to the ground. The spot atop the tower that would normally shine brightly from being a receiver of the concentrated sunlight is dark.

“The rule of thumb is if you can’t see your own shadow, then you can’t” put the solar mirrors to work, Guidry says as we stand amid a forest of heliostats.

Guidry wants to show us the mirror washing equipment. Some of the mirrors already are perpendicular to the ground and ready for a mop down. Fine dust coasts the mirrors, requiring them to be cleaned. A big truck rolls toward us as it tackles each mirror with a big roller brush.

New technology

Chevron has only been operating the solar field for about seven months, so the company is in the early days of collecting field data to see if the technology will perform as promised. How often the mirrors should be cleaned is one of the questions that the field data will help answer – the current estimate is once a month.

So far, the field is producing 10 percent more steam than what the company expects based on its daily performance model, Guidry says. BrightSource took on the project knowing it would incur losses, but it accepted the contract to showcase its technology anyway because the project was to be its first installation in the United States. But the company ended up losing more money than it anticipated in 2008, when it thought the losses would amount to $10.5 million. The figure actually reached $67.3 million by the end of 2011, the company said in a regulatory filing. The value of the contract was $27.8 million.

BrightSource is now focusing on a bigger project that will generate solar electricity in the desert near Las Vegas that is a third completed. The company expects to finish the project in 2013. BrightSource more recently made headlines for withdrawing its IPO plan.

A bright view

An elevator ride to the top of the tower gives us a breathtaking view of the solar field and, beyond that, the vast scrubbed land dotted with pumpjacks, the rocking horse-like structures that pump oil out of each well. Regardless of whether the project will work out as planned over the coming decades, the gleaming solar mirror field and tower are impressive and worth a stop if you pass through the area. Its construction certainly has drawn many curious residents nearby.

“We did a lot to make sure they know this is not an Area 51 thing,” says Morgan Crinklaw, a Chevron spokesman who accompanies us on the tour. “People would drive out here, tailgate, drink beer and watch this.”

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But does this necessarily mean that greentech startups eying the public markets in 2012, shouldn’t waste their time? Well, take a look under the hood of most of these companies, and the problem isn’t really about being green or selling into the energy sector, it’s the lack of profits and even revenues in some cases.

As the co-founder of Lux Capital, Peter Hébert, tweeted Friday morning (@peterjhebert):

“Lot of hand-wringing about #cleantech IPOs. No morals in mkts. Should not expect willing buyers of unsustainable, profitless businesses.

So true. I was wondering just how few revenues and profits these firms have been taking in, so I decided to table ‘em up. The ugly truth:

The reality is that Enerkem and Luca Technologies had really no business going public with their current financials — the moves seemed like attempts to raise money to build their operations, and the markets just didn’t want to do that. As soon as BrightSource pulled their IPO plans, likely Luca and Enerkem just saw the writing on the wall.

BrightSource on the other hand, has a growing, though clearly, for the time being, a money-losing business. When (and if) the company builds out its first solar plant, Ivanpah on time and budget, then the firm will start moving into a more financially lucrative position. BrightSource was likely also hampered by the fact that the solar panel markets are really struggling, even though BrightSource builds solar thermal plants and doesn’t make solar cells or panels.

Enphase Energy was the one company that actually went through with their IPO and it’s not surprising that they have the most sound 2011 year financials. Enphase Energy is growing pretty dramatically, but that firm, too, has a lot of new competition in the marketplace, so has a big year ahead of them.

Image courtesy of angusf.

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As I pointed out when Luca withdrew its IPO filing, the hope that there was a greentech IPO revival brewing is now officially debunked. An investor in BrightSource, DBL Investor’s Nancy Pfund, lamented in an op-ed this week the sad state of a society and marketplace that won’t allow a solar thermal to go public at the valuation it wants, but in the same week can support a large secondary offering from Dunkin’ Donuts.

Solar inverter company Enphase Energy was the only greentech company that had intended to go public in recent weeks, and which actually did. On May 30 the startup sold nearly 9 million shares at $6 a piece, raising about $54 million. The company is currently trading at $6.86 per share, slightly above its debut price.

Enerkem is a Canadian company, founded in 2000, that develops technology that turns waste into biofuel. The company has won federal government backing — a conditional commitment for an $80 million loan guarantee from the USDA — and also counts giant trash hauler Waste Management, oil refiner Valero, Rho Ventures, Braemer Energy Ventures and the Westly Group as investors.

Enerkem gasifies various forms of waste — everything from old telephone poles to mixed municipal garbage — and then turns that syngas into various fuels including methanol and ethanol. Enerkem has inked non-binding agreements with Waste Management and Valero to sell its equipment, and those deals give Enerkem the option to co-own refineries with Waste Management and Valero.

Since 2008, Enerkem has been running a pilot plant in Sherbrooks, Canada, that can process 4.8 metric tons of feedstock a day, and its demonstration plant, in Westbury, Canada, was built to produce 1.3 million gallons of fuels per year. The company is now building a commercial refinery, located in Edmonton, Canada, that will be able to make 10 million gallons per year. It expects to get ready for producing methanol at the Edmonton facility in the first quarter of 2013; ethanol production should follow in the second half of 2013, says the company.

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Earlier this month solar thermal company BrightSource Energy also withdrew its IPO plans citing poor market conditions. Looks like the greentech IPO revival is just not panning out. Luca’s CEO Bob Cavnar said in a statement:

The current market, depressed natural gas prices and ongoing economic instability do not support an environment for us to complete an IPO even though we were well received by potential investors.

Cavnar also said “we believe there are more attractive opportunities for us to finance our growth strategy.” Which points to one of the problems with this crop of greentech IPO-hopefuls: they’ve been looking to go public as a fund raising mechanism. And their lack of revenues and profits just might not be attractive enough to investors.

Luca filed to go public back in the Summer of 2011 and planned to raise as much as $125 million. But the company is in an early commercial stage and only generated $1.06 million in operating revenues for 2011, with a net loss of $18.02 million in 2011. Luca says in its S-1 that “as of December 31, 2011, we had an accumulated deficit of approximately $81.9 million.”

If the tech ever is moved to a large scale it could be interesting. Essentially there are tiny microbes already found in the water of coal beds, and Luca identifies these environments and boosts the conditions to get the microbes to produce as much methane as possible. Then Luca collects the gas — called gas farming — and sells it.

There are companies already targeting farming natural gas from coal beds, but Luca says its technology, which it developed in 2003, is a whole lot cheaper than the standard. Luca said last year that it will be selling the natural gas into the $700 billion global natural gas market.

Investors in Luca Technologies include Kleiner Perkins Caufield & Byers, Oxford Bioscience Partners, mRNA Fund, and BASF Venture Capital.

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The Oakland, Calif., company had previously planned to do the IPO this week. The company filed the S-1 registration a year ago, and in a March regulatory filing it said it was set to sell 6.9 million shares at $21 to $23 per share.

The decision to ditch the IPO plan reflects poorly on the prospect of solar companies in general to attract interest from investors. An analyst told Dow Jones Wednesday that BrightSource’s IPO wasn’t getting a lot of interest partly because so many solar companies have posted losses and suffered a big drop in their stock prices over the past year, even though they were mostly equipment manufactures rather project developers.

The demise of Solyndra and the criticism about a federal loan guarantee that Solyndra received – BrightSource got a loan guarantee from the same program for a power plant it’s building – also have made solar stocks less than desirable. If BrightSource was able to make its market debut, it would have been a big vote of confidence for not only the company’s technology and future but for the solar sector overall.

BrightSource’s IPO would’ve been the second solar IPO in two weeks. Enphase Energy, which makes power conversion electronics for solar panels, made its public market debut on the Nasdaq late last month. Before that, there was a drought of U.S. solar IPOs for over a year. Incidentally, Solyndra also withdrew a plan for an IPO in June 2010.

“While we received significant interest from potential investors, the continued market and economic volatility are not optimal conditions for an IPO,” said John Woolard, CEO of BrightSource, 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.”

BrightSource builds power plants using a type of concentrating solar thermal technology that relies on mirrors to direct sunlight onto a water boiler atop of a tower. The steam produced from the process then goes to a turbine to generate electricity. The company is building its first power plant, a 392 MW project in California’s Mojave desert, that is scheduled for completion in 2013. Power from the project will go to Pacific Gas & Electric and Southern California Edison.

Photo courtesy of BrightSource Energy

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How, you ask? For one thing, the Oakland, Calif., company is managing to accomplish something that few (if any?) solar startups have done: raising massive amounts of money to build a massive solar power plant in California. The two other solar technology developers who also have become major power plant developers are SunPower and First Solar, and both entered and built their first big solar farm after they had built up their core manufacturing business and gone public.

Here are five reasons BrightSource’s IPO is important:

1). A success story for cleantech VCs: The public market debut will deliver BrightSource’s venture capitalists a return on their investment — something few cleantech startups have managed to deliver. The solar sector in general is too young to have many successful IPOs, and the amount and time and money it’s taken for some solar companies to commercialize their technologies already have forced some VCs to reconsider their investment strategies.

2). Technology validation: BrightSource’s ability to go public at the valuation it wants represents a vote of confidence for the company’s next-generation solar power technology. The tech uses flat mirrors to direct sunlight to heat water in a boiler atop of a tower, while older solar thermal technology uses trough-shaped mirrors and no tower. When completed,  the 392 MW Ivanpah will be the largest concentrating solar thermal power plant in the world and it is fully financed to the tune of $2 billion.

3). Loan guarantee success: With BrightSource on its way to compete Ivanpah and now going public, it will serve as a success story for one of its big sponsors: the federal government. To build Ivanpah, BrightSource snagged a $1.6 billion loan guarantee from a U.S. Department of Energy program that has been maligned for funding Solyndra’s factory construction. That loan guarantee makes it possible to borrow money and raise additional money from investors including NRG Energy, and Google.

4). Meeting clean power mandate: Let’s not forget one big reason why so much money has been pumped into solar technology and power plant development. States such as California are requiring their utilities to buy a growing amount of renewable electricity. BrightSource’s success with Ivanpah and other projects will help California meet its aggressive target to get 33 percent of renewable energy by 2020. Ivanpah will ship its power to Pacific Gas & Electric and Southern California Edison.

5). A big boost for a beleaguered industry: The solar industry is going through a dark period. An oversupply of solar panels has caused a collapse in prices and forced many manufacturers to file for bankruptcies. Some developers of concentrating solar thermal power projects have filed for bankruptcies or decided to switch technologies, and that switch requires them to amend or get new permits. BrightSource’s ability to do an IPO is a good piece of news for a business that has endured financial difficulties and political attacks lately.

Photo courtesy of BrightSource Energy

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The California company said it’s sold nearly 9 million shares at $6 a piece, raising about $54 million. That was at the low end of the $6-$7 price range that it announced only earlier this week, and Enphase initially set its share price at between $10 and $12 per share, aiming to sell 7.3 million shares.

The last solar IPO before Enphase was the October 2010 debut of Daqo New Energy on the New York Stock Exchange. Daqo makes silicon that is found in most of the solar panels today. Jinko Solar, a solar panel maker, went public on the New York Stock Exchange in May 2010. Solyndra was planning an IPO that year as well, but it ditched the plan in June that year.

Does Enphase’s IPO bode well for other solar or other cleantech companies that want to go public soon? Hard to say. It certainly raises hopes. Goldman Sachs’ head of renewable energy business, Stuart Bernstein, told a cleantech crowd in San Francisco this week that the market is in recovery and things are looking up. Solar power plant developer BrightSource Energy is expected to carry out its IPO in the next few weeks.

Enphase develops microinverters, which are attached to each solar panel to monitor power output and convert the direct current from the solar cells inside the panel to alternating current for feeding the grid. The company is a pioneer in carving out a market for microinverters, which also has gained more converts thanks to a growing number of microinverter makers. The conventional design of a solar electric system calls for pairing an inverter with about a dozen solar panels, which is a centralized approach that Enphase and other microinverter developers say is less effective at tracking and improving the power output of each solar panel.

Microinverters are more expensive than central inverters, so a key to popularizing them involves convincing installers that adding the cost of microinverters is a worthy upfront investment because they can get more power out of the solar electric system during its lifetime.

Since its IPO filing last year, Enphase has raised a private round of $21.86 million to support its expansion plans while waiting for an optimal time to go public. Though it was early to the market with an innovative product, it’s since facing a growing challenge from not just startups but also major inverter makers such as SMA Technology and Power-One. SMA plans to launch a microinverter this year. Power-One introduced its own version last year.SunPower plans to package microinverters from SolarBridge Technologies to its solar panels starting this year.

Enphase doubled its sales in 2011 but has yet to make a profit. Investors RockPort Capital Partners and Bay Partners agreed to purchase 2.5 million shares of common stock in the IPO.

Photo courtesy of Enphase Energy

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