Another Oil Crash Is Coming, and There May Be No Recovery

http://bloom.bg/1OubYHH (See Video)

Superior electric cars are on their way, and they could begin to wreck oil markets within a decade.

February 24, 2016 — 4:45 AM ES Bloomberg

 

It’s time for oil investors to start taking electric cars seriously.

In the next two years, Tesla and Chevy plan to start selling electric cars with a range of more than 200 miles priced in the $30,000 range. Ford is investing billions, Volkswagen is investing billions, and Nissan and BMW are investing billions. Nearly every major carmaker—as well as Apple and Google—is working on the next generation of plug-in cars.

This is a problem for oil markets. OPEC still contends that electric vehicles will make up just 1 percent of global car sales in 2040.Exxon’s forecast is similarly dismissive.

QUICKTAKEOil Prices

The oil price crash that started in 2014 was caused by a glut of unwanted oil, as producers started cranking out about 2 million barrels a day more than the market supported. Nobody saw it coming, despite the massively expanding oil fields across North America. The question is: How soon could electric vehicles trigger a similar oil glut by reducing demand by the same 2 million barrels?

That’s the subject of the first installment of Bloomberg’s new animated web series Sooner Than You Think, which examines some of the biggest transformations in human history that haven’t happened quite yet. Tomorrow, analysts at Bloomberg New Energy Finance will weigh in with a comprehensive analysis of where the electric car industry is headed.

Even amid low gasoline prices last year, electric car sales jumped 60 percent worldwide. If that level of growth continues, the crash-triggering benchmark of 2 million barrels of reduced demand could come as early as 2023. That’s a crisis. The timing of new technologies is difficult to predict, but it may not be long before it becomes impossible to ignore.

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The Musk Family Plan for Transforming the World’s Energy

It’s all about ending Global Warming.

So buy a Tesla and install a Solar City panel on your house to support an end to Global Warming

Hedge against Electricity BlackOuts from storms like Hurricane Sandy or Hot Summers.

By CHRISTOPHER MIMS
Elon Musk and his cousin, Lyndon Rive, have always been close. Their mothers are twins, and Messrs. Musk and Rive grew up together.
“We’ve known each other for as long as we’ve been conscious,” said Mr. Musk, speaking at a panel this week at a private conference in New York.
There is an obvious, almost brotherly affection between the two men. Mr. Musk says Mr. Rive “is an awesome guy and really hardworking and driven, and you can trust him with anything.” And when Mr. Rive recounts the drive to Burning Man in 2004 when Mr. Musk told him his next venture should be in solar power, Mr. Rive says that when Mr. Musk tells you what area to get into next, you get into it.
Their closeness continues, and if Messrs. Musk and Rive can achieve their shared vision, the result will be a transformation of the world’s, or at least America’s, energy infrastructure.
The companies the two men run—Tesla Motors Inc. and solar energy system provider SolarCity Corp.—are uniquely compatible. It isn’t just a product of the affiliation of their founders, but is also a consequence of Mr. Musk sitting on the board of SolarCity and being its largest individual shareholder.
Tesla makes cars, but it also—in the not too distant future—will make batteries. Lots of them. Tesla is building a $5 billion “gigafactory” in Nevada for batteries, one so large that it will, says Mr. Musk, be larger than the whole of earth’s current capacity for manufacturing lithium-ion batteries, most of which currently go into phones, tablets, laptops and other mobile devices.
At the conference Wednesday, Mr. Musk disclosed that a portion of the gigafactory’s capacity will be set aside for building “grid-scale storage.”
In other words, Tesla is going to continue its tradition of manufacturing battery packs for SolarCity, only on a much grander scale.
Up to now, SolarCity has sold Tesla-built battery packs to a handful of corporate and residential customers. The rationale is simple: The sun doesn’t always shine, so the best way to manage solar power on-site is to save it up for cloudy days and overnight.
SolarCity’s revenue has been growing 100% a year since its founding in 2006, and Mr. Rive says his goal is to maintain that pace for as long as possible. To that end, SolarCity announced in June the acquisition of Silevo, a Silicon Valley-based maker of solar panels that Mr. Rive insists is capable of producing at scale the most efficient solar panels on the market.
Mr. Musk said that while his gigafactory won’t exclusively sell grid-storage batteries to SolarCity, conversations with the company are “our best feedback as to deciding what the product would look like.”
Mr. Musk went even further, describing “the product” as a bank of batteries that “looks good,” is about 4-inches thick and can be mounted on the wall of the garage in a home.
Thanks to the economies of scale that will come from Tesla’s gigafactory, within 10 years every solar system that SolarCity sells will come with a battery-storage system, says Mr. Rive, and it will still produce energy cheaper than what is available from the local utility company.
Mr. Musk also noted that in any future in which a country switches fully to electric cars, its electricity consumption will roughly double. That could either mean more utilities, and more transmission lines, or a rollout of solar—exactly the sort that SolarCity hopes for.
America’s solar energy generating capacity has grown at around 40% a year, says Mr. Rive. “So if you just do the math, at 40% growth in 10 years time that’s 170 gigawatts a year,” says Mr. Rive. That’s equivalent to the electricity consumption of about 5 million homes, which is still “not that much,” he says, when compared with overall demand for electricity. “It’s almost an infinite market in our lifetimes.”
There are almost innumerable barriers to the realization of Messrs. Musk and Rive’s plan. For Tesla, there is the possibility that a superior battery technology could come to market soon after Tesla and its partner, Panasonic Corp., build their gigafactory, rendering their $5 billion investment obsolete. And SolarCity has almost the exact same problem with its ambition to build its own solar panels. While Mr. Rive says that Silevo’s technology is “next generation” and can compete with the cheap panels that China has been exporting to the rest of the world, the oughts are littered with the carcasses of U.S. solar panel manufacturers who claimed they could do the same, including Solyndra Inc.
And while this is a threat to shareholders rather than his aims, there is also the risk that Mr. Musk will find other, more efficient routes to reaching his stated goals, which include moving the world onto electric transport and solar power generation as quickly as possible.
For example, when asked whether or not the U.S. should erect trade barriers designed to protect American solar-panel manufacturers, Mr. Musk said: “If the Chinese government wants to subsidize the rollout of solar power in America, OK, it is kind of like ‘thank you’ is what we should be saying.” And in a subsequent interview at The Wall Street Journal’s offices in New York, Mr. Musk emphasized that “the reason I created Tesla was to accelerate the transition to sustainable transport. And I made that clear to investors.”
Despite the dumping of solar panels by China representing a substantial threat to SolarCity’s $750 million bet on Silevo—which includes a $350 million acquisition cost and an estimated $400 million to build a solar panel manufacturing plant in Buffalo, N.Y.—Mr. Rive agrees with Mr. Musk that there should be no barriers to trade in solar panels.
“Any extra tax on solar is just bad,” says Mr. Rive. “We have a big problem to solve—let’s solve that problem.”
That “big problem” is climate change. And Mr. Rive has been no less public than Mr. Musk about the purpose of his company being more than turning a profit. It’s one more thing their companies—and the two men—have in common.
—Follow Christopher Mims on Twitter @Mims or write to him at christopher.mims@wsj.com.
Christopher Mims

Why SolarCity and Tesla are going to replace your utility

POWER PLAY

Why SolarCity and Tesla are going to replace your utility

By Todd Woody @greenwombat 9 hours ago

The power plant in your garage. Tesla Motors

 

Millions of California homeowners and businesses have installed solar panels on their roofs to generate their own electricity. Now a small but growing number of them want to pull the plug on their utilities by storing that energy in batteries and tap that power when the sun isn’t shining. And that has set off a fight over who will ultimately control the state’s power grid—California’s three big monopoly utilities or their customers empowered by companies like SolarCity and Tesla Motors.

SolarCity, the Silicon Valley solar installer, has quietly begun to offer some homeowners a lithium-ion battery pack made by electric carmaker Tesla to store electricity generated by their rooftop photovoltaic arrays. Stem, another Silicon Valley company, will sell or lease a $100,000, 54-kilowatt-hour battery pack to businesses so they can arbitrage the grid by storing electricity when rates are cheap and then using that energy when they’re high.
 
The state’s utilities, however, are refusing to hook up solar-powered batteries and other home energy storage systems to the grid without charging connection fees that can run $800 or more. Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric argue that homeowners that cut the cord will saddle other customers with the cost of maintaining the transmission system.  (In a preliminary ruling issued in October, regulators ordered the utilities to connect solar battery systems for free while the issue is sorted out.)
 
But SolarCity customers like Marco Krapels pose a far more existential threat to a century-old power system. Six years ago Krapels put a 2.4-kilowatt solar panel array on the roof of his Marin County, California home. Last April, SolarCity installed a 10-kilowatt-hour Tesla battery in his garage to store electricity generated by the panels. “I should technically be able to function with solar and just the battery indefinitely as long as the sun shines,” Krapels, a renewable energy financer, told me as he stood by his Tesla Model S electric sports sedan. “I don’t want to have to buy power from PG&E at peak rates, I want to use my own power. You see this power line going from the street to my house? I look forward to the day when I cut that wire.”
 
It certainly makes economic sense for Krapels to do that, especially as a hedge against rising electricity rates. State subsidies pay 60% of the cost of the Tesla battery and Krapels leases the system for less than $40 a month. That’s even less than his lease payments to SolarCity for his solar array. So far SolarCity has signed up more than 300 customers for its solar battery system, according to Peter Rive, the company’s co-founder. As of July 1, there were 667 applications for energy storage systems in California that could store 33 megawatts of electricity, according to the state Public Utilities Commission.
 

“The long term goal for us is to basically integrate storage systems with solar power systems by default,” says Rive. “Over the next five years you’ll find an increasing percentage of our customers will be getting solar with battery storage.”

So just how much a threat do SolarCity and Tesla pose to utility hegemony? Time will tell but a look at the companies combined market cap compared to those of the parent companies of California’s Big Three utilities should give utility executives pause. So should the fact that a Tesla Model S battery pack can store six to eight times the electricity of the Tesla home unit. It’s relatively simple to engineer car batteries to store solar electricity and provide power to a home on demand, say at night, when the car is parked in the garage.

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SolarCity:Tesla:utilities

“I see the solar companies and companies like Tesla converging,” says Krapels. “Soon their market value will exceed that of utilities that are fighting them. That’s when it’s going to get interesting.”

 
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Algae Could Fuel Cleaner Road to Future

September 20, 2013

Algae Could Fuel Cleaner Road to Future

by Jan Sluizer

Richard Battersby knows alternative vehicle fuels. As fleet director at the University of California-Davis, he has replaced gasoline-powered cars with hybrid and electric ones, as well as with vehicles that run on compressed gas or biodiesel.

He is especially excited about biodiesel, which he says could help wean America off foreign oil.

“It may not seem as big of an impact, but when you’re talking about potentially millions or billions of gallons in the United States, even a five percent reduction or a 20 percent reduction, is significant,” Battersby said. “So, the more of the bio part of the biodiesel that we can bring in, the better off our nation is.”

The use of alternative fuels is growing in the United States. About twice as many electric vehicles were sold in the first half of 2013 compared to the first half of 2012, and sales of hybrid cars continue to rise. Since 2005, the federal government has required refiners to add ethanol – usually from corn – to gasoline.

Biological sources

Diesel made from a biological source like soybeans or corn oil, or used cooking oil from restaurants, is an important part of the alternative fuel mix.

Algae is another promising source of biodiesel fuel. Among the American companies making biodiesel is Propel Fuels, based in Redwood City, California.

“We think the key to transformation in the United States to changing the fuel mix is engaging those consumers, giving them options, educating them about fuels, and then people take care of the rest,” said Matt Horton, CEO of Propel Fuels. “What Propel’s really about is giving people new choices. Bringing new kinds of fuels, alternative fuels, cleaner fuels to retail stations everywhere.”

Propel products are available at 29 gas stations nationwide. Last year, it partnered with Solazyme, another local company with similar goals and philosophy. For 10 years, Solazyme has been working to find replacements for petroleum. Bob Ames, the company’s vice president in charge of fuels, says what they’ve come up with is unique.

“It all starts in the lab where what we do is we grow a proprietary strain of algae that are actually optimized to produce an oil that is a perfect oil, an algae oil, to make into fuel,” Ames said.

Algae oil technology

Solazyme has patented its algae-oil technology. Ames says the possibilities for the fast-growing aquatic plant are just beginning to be discovered, but Solazyme is especially excited about its algae-derived fuel because of its environmental benefits.

“It’s significantly cleaner,” Ames said. “So, things like the particulate matter, the black soot coming out the back of a diesel pipe, that’s significantly reduced when you use an algae-based fuel.”

To test its marketability, Propel installed algae-based fuel pumps at four of its seven stations in the San Francisco Bay area. It was the first time Solazyne’s new biodiesel was offered to the public. The companies were pleased to see a 35 percent increase in biodiesel sales over the month-long test-run.

“Basically, it was offered at exactly the same price as the competing fuel, and what consumers told us by buying more of it is that they were willing to buy it because of the better environmental benefits,” Ames said.

Coming down to economics

Horton says the technology is ready, the fuel works, and consumers want it. A plus for algae is that it can be densely grown. So what’s the problem? Horton says it comes down to economics.

“You have to be able to produce these fuels in very, very large quantities to drive the prices down so that they are competitive,” he said.

Large quantities of Solazyme’s algae oil are being produced at its plant in Peoria, Illinois, as well as at a much smaller facility near San Francisco. A much larger facility expected to be in operation by the end of the year is currently under construction in Brazil in partnership with a Brazilian company.

Battersby is watching closely because during Solazyme and Propel’s 30-day experiment, algae-based fuel was also available for the diesel-powered vehicles at U.C. Davis. Battersby says drivers reported that it worked just fine.

“Solazyme has definitely set the bar very high,” he said. “They’ve had spectacular success, and if they continue to grow the business as they seem to be, I think we’ll see algae-based biodiesel on retail pumps within the next five or 10 years.”

While no one expects algae to replace petroleum, those who believe in its potential say it could help put the world on a cleaner, more energy efficient road to the future.

http://www.voanews.com/content/algae-could-fuel-cleaner-road-to-the-future/1752131.html