Sitting in his company's offices overlooking the Oakland shipyards, BrightSource's CEO, John Woolard, still uses the word fortunate to describe his start-up's predicament. "I can't say I predicted anything that's happened," he says. But the company's luck, as the market disintegrated around it, appeared to hold. BrightSource still had plenty of cash in the bank, and the Ivanpah project, scheduled to begin construction this fall, wouldn't need any major infusion of capital until this summer. "I have good friends in the wind business who were in the middle of financing plants [when the market collapsed]," says Woolard. "All project financing just stopped. Nothing happened in the industry. It was a complete freeze for months."
Holding fast. The lack of credit began to inflict casualties across renewable energy. One of BrightSource's major competitors, Ausra, a well-funded Silicon Valley start-up that had been touted as a leader in the race to build the next generation of solar power plants,decided the market simply wouldn't allow it, opting to become an equipment supplier instead. Start-ups began letting employees go, hoping to stay solvent until more funding appeared. BrightSource, with 30 employees in Oakland and nearly 100 in Israel, held fast.
Outside analysts were busy trying to gauge who would survive and who would not. "These companies are all in a tricky spot," says Reese Tisdale, research director for solar power at Emerging Energy Research in Cambridge, Mass. "They've raised the capital to start their projects, but the next step is to cross the valley of death to get to commercial delivery. Some of them should be able to get through this, but there's a lot of shuffling going on."
The biggest hurdle for companies like BrightSource is the amount of money a start-up in the energy industry eventually requires. "Power plants are costly things," says Alan Salzman, CEO of VantagePoint Venture Partners, one of BrightSource's original investors. "This isn't three guys with a couple of servers who can scale by buying a few used Dells." Outside analysts believe the Ivanpah facility alone will cost over $1 billion, more than 20 percent of the total investment venture capitalists made across all of clean tech last year. And it could be just the first of dozens of solar power plants that might pop up in the Southwest over the next decade. "Venture capital is small dollars," says Woolard. "Power plants are big dollars." With the banks in deep freeze, though, exactly where the big dollars would come from was a mystery.
Through the first few months of this year, BrightSource turned its attention, instead, to what it could control. One team worked on permits for the Ivanpah site; another made preparations to link the plant to nearby power lines. Others were scouting new locations for future plants. BrightSource announced a few more deals, including a contract with Siemens to build its first solar-powered steam generator, which will be the largest machine of its kind ever built. The company also found another customer: Southern California Edison, the utility that supplies electricity to Los Angeles, agreed to purchase 1,300 megawatts from BrightSource—enough energy to power 850,000 homes.
The mood in the solar industry may have been somber, but Woolard and Jenkins-Stark were keeping their chins up. "This is one of those things where I went from thinking it was a 10,000-foot mountain to climb and realizing it was 29,000 feet," says Woolard. Still, he felt his company was in good shape, so long as the credit markets opened up again. "You can get up Everest," he insists, "if you prepare, you plan, you think, and you do it right."
Especially, it turns out, if the federal government offers a helping hand. When the $787 billion stimulus bill was signed in February, there were more than a few sighs of relief at BrightSource. The bill showered renewable energy with new funds, including $60 billion in loan guarantees for companies building wind and solar plants. BrightSource was among a small group of start-ups that had already been selected for Department of Energy loans, but the stimulus vastly increased the funds available. It also loosened rules governing tax credits, greatly expanding the pool of potential investors. After months of wondering where to turn for funding, BrightSource had been given a reprieve. "Now, all of a sudden," says Jenkins-Stark, "I have a very different worry proposition for half the capital of our project."