Prodigal ray of sunshine

Herald Sun
Thursday 2/10/2008 Page: 71

FINALLY, Australian venture capital has seen the (sun) light and invested in Ausra's solar energy plan. Melbourne-based Starfish Ventures yesterday joined a handful of major offshore investors to deliver a combined $76.7 million into Ausra's coffers. With $385 million under management, mostly superannuation funds, Starfish Ventures is possibly the nation's largest venture capital firm. But it had to wait until this second private capital raising by Ausra to get a piece of its homegrown, but now expatriate, technology.

About a year ago Ausra secured more than $US40 million from Silicon Valley heavyweights Khosla Ventures and Kleiner Perkins Caufield & Byers. Ausra's founder, the former NSW academic David Mills, had to travel to the US to find investors who shared his vision for large-scale, cost-competitive solar thermal power plants after being spurned by local financiers.

Like the prodigal son, he returned Down Under recently as Ausra chairman to hawk a "Big Solar" project to eastern seaboard politicians, and perhaps shore up Starfish Ventures support. Starfish Ventures investor director Aaron Fyke told BNW yesterday that this time he was not going to let Dr Mills walk away without tipping some loot into his pockets. "We approached Ausra before they went looking for US funds, but at that stage we didn't have the mandate to invest in clean technology, even though we were interested," Mr Fyke said.

Starfish Ventures finally got the mandate, through a $20 million injection from VicSuper, but it was too late. Just months earlier Ausra had already done a seed funding deal with Vinod Khosla, founding chief executive of Sun Microsystems. Starfish Ventures had to wait more than a year before another opportunity to buy into Ausra. The latest raising was led by Canadian company KERN Energy Partners and includes Britain's Generation Investment as well as the Khosla and Kleiner outfits.

Mr Fyke would not reveal Starfish Ventures stake, for which it has secured equity in Ausra, but it is believed to be about $10 million. Ironically, Dr Mills would have needed just half that amount a couple of years ago to set up shop in Australia. But California called and now Ausra has begun building a small solar thermal installation there. It will be the blueprint for a larger 177-megawatt plant Ausra has already been commissioned to install for Pacific Gas and Electric Company, also in California. But the end-game is much vaster than that.

Ausra is believed to have briefed our politicians on a proposal to supply three states with peak solar energy from an installation at Moree in northern NSW. The plan to supply reliable annual power for Victoria, NSW and Queensland would become feasible with the development of storage technology in the not-too-distant future. But for the present, Dr Mills' technology is ready to replace diesel fuelled power plants at remote mining sites and he is expected to sign numerous deals to this effect with resources companies in coming weeks.

BNW has also learned that Ausra has received lead inquiries for about 4500 megawatts worth of other projects, some of which are in advanced talks. But the potential that has captured Starfish Ventures interest the most is based on an existing Ausra plant that is piggybacking on capital already invested in the Liddell coal-fired generator in NSW. The solar plant preheats water used by the generator's boilers, reducing the amount of coal that needs to be burnt to produce electricity.