IPO Preview: BrightSource Energy

| About: BrightSource Energy, (BRSE)

Based in Oakland, California, BrightSource Energy (proposed BRSE) scheduled a $152 million IPO with a market capitalization of $1 billion at a price range mid-point of $22 for Thursday, April 12, 2012. S-1

Eight IPOs are scheduled for this week. The full IPO calendar is here.

Manager, Joint Managers: Goldman; Citigroup; Deutsche. Co Managers: Barclays; Lazard; Baird; Raymond James.

BRSE beams & concentrates solar power to heat water to provide clean energy.

BRSE lost $111 million in 2011 and is heavily dependent on government subsidies and government mandates, and that's not a good place to be in this economic climate.

Overall trends

  • Natural gas is clean & plentiful and now very cheap.
  • Forcing California to pay for over the market rates for solar-powered electricity is a clear form of subsidy. That kind of 'subsidy' probably will not last in Europe & may not last in California over the longer term.
  • Where's the growth if governments continue to cut 'excessive subsidies for solar & wind power'?

As companies go bust, Europe rethinks solar power subsidies.
"This cascade of insolvencies comes after Germany decided last year to slash the above-market prices it forces utilities to pay for renewable energy sources and to cut the subsidies that have locked German taxpayers into €100 billion in handouts to the solar industry."

The Italian government appears to have taken note of these economic realities and last weekend said it would slash "excessive" subsidies for solar and wind power.
Source: Wall Street Journal, April 4, 2012

The BRSE IPO has too many problems in a problem filled industry to be an interesting investment at this time.


BRSE's growth plan is based on Power Purchase Agreements at rates significantly higher than electricity produced from natural gas powered generating plants

There's a competitive imbalance between 'green energy' prices forced on consumers compared to lower prices available from natural gas. Just as in Europe, we expect that the voters eventually will rebel against higher prices when lower clean natural gas produced electricity is more available.

Natural gas
"In recent years, the price of one fossil fuel - natural gas - has declined so much that solar panels are having difficulty competing…read more NPR April 10, 2012.

New technology may impact BRSE
Article: "Absolute Black' Solar Panels Absorb Almost All Sunlight"

Solar power remains a small part of the nation's energy mix, but high oil prices give it new visibility. Natcore hopes to be making solar panels from its new wafers in four to six weeks.

People have been trying to get black silicon to work for years now…

read more ABC News, March 28, 2012.

BRSE expects to receive net proceeds from this offering and the concurrent private placements of approximately $210.1 million, allocated for working capital, capital expenditures and general corporate purposes

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.