By Jonathan Shieber

Of DOW JONES NEWSLETTERS

NEW YORK (Dow Jones)--Renewable energy company SolarReserve LLC has raised

$140 million to commercialize a technology that stores solar energy to be used

at any time, not just when the sun is shining.

Traditionally, utilities have to use solar power as it's generated, which

can be a hassle because the prime time for solar power generation doesn't

align with the hours of peak demand. So power companies are scouring the

country for innovations that allow them to store solar and wind power and

dispatch the energy as it is needed.

Realizing this demand, private equity investors including Citi Sustainable

Development Investments, Good Energies, US Renewables Group, PCG Clean Energy

& Technology Fund, Nimes Capital LLC, and the Credit Suisse Customized Fund

Investment Group put aside fears of unstable financial markets to inject

enough capital into SolarReserve to bring the new solar thermal technology to

market.

(This story also appeared in Clean Technology Investor, a newsletter and

information service published by Dow Jones & Co.)

Using innovations designed by scientists at Hartford, Conn.-based United

Technologies Corp. (UTX) subsidiary Hamilton Sundstrand, Santa Monica,

Calif.-based SolarReserve uses molten salt to store solar power and then

dispatch that power as needed. The system pumps molten salt through a tower

heated by the sun's rays. Insulated containers store the hot salt and when

needed, water is used to create steam that turn turbines to generate

electricity.

"You can take the energy that's hitting the earth and put it into a thermos

bottle and use it on demand," SolarReserve Chief Executive Terry Murphy said.

Numerous Projects Eyed

None of the capital raised in the company's Series B round of financing will

be used for technology development, which has all been handled by Hamilton

Sundstrand, Murphy said. "United Technologies is making the (technology)

investments and providing the molten salt loop and the solar island, and their

business model is to provide equipment to us."

SolarReserve will probably contract with Fairfield, Conn.-based General

Electric Co. (GE) or Munich-based Siemens AG (SI) for its gas turbines, he

added.

For SolarReserve, the funding is all about putting steel in the ground, and

the significant capital raise means the company doesn't need to go back to the

financial community for capital every few months, Murphy said. That gives the

company the freedom to work on multiple projects at once.

The solar thermal company has acquired rights to approximately 300 square

miles of land, with 50% of those holdings in the U.S., and the remainder

scattered throughout the world.

Murphy and his investors indicated that SolarReserve would have its first

one or two projects underway before the end of 2010, and, according to Murphy,

there are already 50 projects in SolarReserve's pipeline.

"We'll start with one or two projects (and) more than likely they will be in

the Mediterranean and maybe in the American Southwest," Murphy said. In Europe

the company is already considering Italy or Spain as possible sites for its

solar power plants. SolarReserve will either develop its own greenfield

projects, or in some cases, partner with existing project developers to

complete solar projects.

Developers that could represent potential partners would be firms such as

FPL Energy LLC, a Juno Beach, Fla.-based power project development subsidiary

of FPL Group Inc. (FPL), or Electricite de France SA (1024251.FR), the French

power giant that owns 50% of Paris-based EDF Energies Nouvelles, a renewable

energy power developer.

Project Debt Financing Vital

SolarReserve needs large partners and financiers because its projects don't

come cheap. Each facility the company builds will cost between $600 million

and $700 million. These units can generate anywhere from 50 megawatts to 200
or 300 megawatts for a peaking power plant, according to a statement from the

company.

"These are large projects that require debt project financing," said R.

Andrew DePass, managing director of Citi Sustainable Development Investments,

which co-led the round with Good Energies. "Project debt financing is crucial

for these ever to get built. A big differentiator for SolarReserve is that the

technology is proven and it's being backed by a Fortune 50 company. It was

critical for us in our analysis that these projects that can be well in excess

of $700 million each be able to get debt financing even in these turbulent

markets."

At $3,000 per kilowatt, SolarReserve's costs are roughly double what a

gas-fired peaking power plant would cost, Murphy said, but he noted that with

a gas plant, "you have to pay for the gas."

"I can guarantee you will know the price of power for our facility 10 years

out," he said. "You can't predict what the price of gas will be in the next

five years."

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