One of Silicon Valley’s most ambitious “green” start-ups looks like it’s about to join the consolidation that’s sweeping through the solar industry.
Ausra, which was backed by more than $90m in equity from blue-blooded venture capital firms like Kleiner Perkins and Khosla Ventures, is in talks with three potential acquirers, according to a person familiar with the situation. Possibilities range from a full buy-out of the firm to a majority investment, this person says.
Originally from Australia (hence the name), Ausra’s founders were lured to California two years ago by the flood of VC money that was pouring into solar at the time. Their company is founded on concentrated solar thermal (CST) technology, which uses mirrors to focus the sun’s rays in order to heat water and drive a turbine.
Were it to happen, a buy-out would mark an early exit for Ausra’s backers after an eventful period. The company initially set out to become a builder and operator of utility-scale power plants, the sort that cover whole square miles of desert in places like California and Australia. Typical was its first announced deal, to construct a 177 megawatt facility for PG&E in central California.
This was a highly capital-intensive business model. Early last year the company also raised $30m in debt to fund its plans, but the project financing needed to support its expansion would have have been huge.
So it wasn’t a great surprise late last year when, with the credit crisis biting, it scaled back its ambitions, opting instead to become an equipment supplier to other power producers. Bob Fishman, chief executive, said at the time that becoming a pure technology company would remove potential conflicts, since Ausra would no longer be in competition with its customers, the power producers.
In the past two months the results of that strategy have started to become apparent. Ausra has signed deals in Australia and Jordan, and last week it sold off the planned California solar farm it had agreed to build for PG&E.
That appears to have cleared the way for the acquisition discussions to pick up momentum. The three companies that are studying Ausra are all international conglomerates with a heavy presence in traditional power generation that are looking to add solar capacity, according to the person familiar with the discussions.
An exit under these circumstances may still count as a victory for Ausra’s backers, but the company has not turned into the power industry giant they originally envisaged.
