Money Shines on Israeli Solar Startup

BrightSource has raised $115 million from the likes of Google.org and BP to speed the delivery of electricity from solar-thermal plants

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by Jennifer L. Schenker

A conference organized by Israeli President Shimon Peres to mark the country's 60th anniversary kicked off May 13 with a showcase of 60 pioneering Israeli firms that have the potential to shake up medicine, biotech, clean energy, transportation, information technology, and communications. Among them was Luz II, a Jerusalem solar thermal energy company with more than one reason to celebrate its newfound recognition.

Early the next day, Luz II's parent company, Oakland (Calif.) based BrightSource Energy, announced that it had raised $115 million in financing from a high-profile group of investors including Google.org—the philanthropy offshoot of Internet giant Google (GOOG)—and Black River Asset Management, an asset management unit of agricultural giant Cargill. Also participating in the funding are the investment arms of two major oil companies, BP (BP) Alternative Energy and StatoilHydro Venture.

All of BrightSource's previous investors also kicked in to the latest round, including the Chevron Technology Ventures unit of Chevron (CVX), Silicon Valley venture firm Draper Fisher Jurvetson, Morgan Stanley (MS), and DBL Investors, a former unit of JP Morgan (JPM), bringing the company's total funding to date to more than $160 million.

Changing the Way Utilities Make Electricity

The new investment round comes on the heels of a huge deal signed in March between BrightSource and utility giant Pacific Gas & Electric (PCG) that calls for BrightSource to provide PG&E with up to 900 megawatts of solar electricity using the Luz II technology, one of the largest such contracts ever awarded. Unlike photovoltaic systems that convert sunlight directly into electricity, Luz II's solar thermal system uses concentrated heat from the sun to drive turbines that produce power.

BrightSource/Luz II is currently developing a number of solar thermal plants in Southern California's Mojave Desert, with construction of the first facility set to start in 2009. The new funding should let the startup accelerate delivery of utility-grade power at a time when many power companies are searching for reliable sources of renewable energy. "Our technology will change the way utilities generate electricity," promises Arnold Goldman, the U.S.-born chairman and founder of both BrightSource Energy and Luz II, and an attendee at the Jerusalem conference.

BrightSource's big news underscores the extent to which solar thermal energy is fast becoming one of the hottest renewable energy bets for investors. Some experts go as far as predicting that over 90% of the U.S.'s electrical needs someday could be met by solar thermal power—including even powering fleets of electric cars.