Green Power, Google, and StatoilHydro's New High

If there were any doubts about the money-making potential for alternative energy and green power plants, the mega-rich folks at Google (GOOG) have laid those doubts to rest.The souring economy hasn’t dissuaded green tech investors from making big bets on renewable energy.

The Green Wombat at Fortune magazine, Todd Woody, wrote a fascinating piece on this topic which has green investors excited and has sparked rumors of even bigger green deals in the works.

On Wednesday, solar power plant builder BrightSource Energy announced it had raised $115 million from a group of investors that include Google.org, the search giant’s philanthropic arm, and oil giants Chevron and BP.

The investment in the Oakland, Calif.-based startup is Google’s (GOOG) second big solar energy play in the past two months. In April, Google.org joined a $130 million round for eSolar, a Pasadena solar power plant company whose chairman is Idealab founder Bill Gross.

BrightSource Energy, started by American-Israeli solar pioneer Arnold Goldman, has contracts to supply California utility PG&E (PCG) with up to 900 megawatts of solar electricity from power plants to be built in the Mojave Desert on the California-Nevada border. BrightSource has developed a new solar technology, dubbed distributed power tower, that focuses fields of sun-tracking mirrors called heliostats on a tower containing a water-filled boiler. The sun’s rays superheat the water and the resulting steam drives an electricity-generating turbine. (Artist rendering of BrightSource’s planned Ivanpah plant above.)

Given that a 500-megawatt solar power plant can cost more than $1 billion to build, $115 million is but a drop in the bucket. But it will allow BrightSource, which previously raised $45 million, to proceed with the development of its technology as it seeks project financing for construction of its first power plants.

And it can’t hurt to have such high-profile backers when you negotiate power purchase agreements with utilities. Besides Google, BP Alternative Energy (BP) and Chevron Technology Ventures (CVX), previous investors participating in the new round include Morgan Stanley (MS), VantagePoint Venture Partners, Draper Fisher Jurvetson and DBL Investors.

Another new BrightSource investor is Norweigan oil and gas behemoth StatoilHydro (STO). Apparently, even Big Oil has seen the light when it comes to hedging its bets with green energy.

By the way, StatoilHydro is still one of the cheapest, financially sound, low-debt, green-oriented big oil company in the world. It is the company that has gone "beyond petroleum" leaving British BP in its own confused dust. STO has today reached a new 52-week high and looks like it could go much higher with a forward PE ratio of around 10.

Disclosure: Long position.

Comments

[Mark Langner:]

I am not certain how much this investment can be considered a bellweather for all green investing. The firm discussed has cut a deal with PG&E (as part of PG&E fufilling its state mandate for purchasing green power) for a PPA which guarantees a buyer for its power at certain rates. Besides Google has always attached some social value to green issues when making investments.

That being said its good to see money continue to be invested in this sector.

2008 May 15 06:39 PM

[User 194445:]

They have definitely attached social value, but this investment I believe is worth making.
www.getsolar.com

2008 May 16 07:40 AM

[aquaculture:]

U.S. geothermal industry experiencing "dramatic growth surge" with expectations that total power production (currently 3 million homes) could triple over the next few years.
GEA together with Ormat (NYSE:ORA) and Glitnir bank will host a workshop on july 23 in NYC to introduce geothermal energy to the NYC financial community.
Among the present: Google.
Google announced that geothermal energy will be one of their focus areas for new investment.
For more info: geo-energy.org

2008 May 16 09:02 AM