Musk Bulks Up Tesla Batteries in Leap Beyond Cars to GridBy Mark Chediak and Dana Hull – Apr 28, 2015, 7:51:59 PM Bloomberg 

Musk Bulks Up Tesla Batteries in Leap Beyond Cars to Grid

Elon Musk, co-founder and chief executive officer of Tesla Motors Inc., smiles during the GPU Technology Conference (GTC) in San Jose on March 17. Photographer: David Paul Morris/Bloomberg

Billionaire Elon Musk thinks he can pave the way to a better energy future by turning the mattress-shaped batteries in Tesla’s electric car into upright pillars so they can be used to power homes, businesses and even utilities.

Musk will lift the veil Thursday on a new generation of batteries designed to store growing volumes of solar and wind energy. If he gets it right, Tesla Motors Inc. will have spun a significant second business off the technology originally designed for its electric vehicles — and will gain a toehold in a business projected to generate tens of billions of dollars in a decade.

Nobody in the power industry has yet been able to come up with a cost-effective way to store large volumes of energy for later distribution. Tesla is making a bet that its huge $5 billion “gigafactory” currently under construction near Reno, Nevada, will enable the mass production needed to drive down the cost of batteries and make them competitive for a broad range of customers, including traditional suppliers of electricity.

Tesla has scheduled an event Thursday at its design studio in Hawthorne, California, to announce both a Tesla home battery and what it called last week in a note to investors “a very large utility scale battery.”

Eagerly Awaiting

“Whatever Tesla announces on Thursday is just the beginning,” said Peter Rosegg, spokesman for Hawaiian Electric Co., where 12 percent of the utility’s customers have rooftop solar panels. “Tesla doesn’t have to go after the market — the market will come to them. We’re very eager to see what they have to say.”

Tesla, based in Palo Alto, California, has its eye on a business that’s poised for tremendous growth. As homes, businesses and utilities use more renewable energy generated by sun and wind, the need to provide for reliable power grows. Batteries can be used to store electricity during peak production times, and then dispense it later when the sun isn’t shining or the wind isn’t blowing.

Musk tweeted a teaser about their Thursday announcement: “For the future to be good, we need electric transport, solar power and (of course) … the missing piece,” he posted on Twitter Tuesday. Tesla fell 0.8 percent to $228.63 at 10:58 a.m. in New York.

Global Growth

A January report from Navigant Research estimates that worldwide revenue from grid-scale energy storage could total more than $68 billion by 2024 as renewable resources multiply and electricity grid operators seek ways to balance their mix of generation assets.

Tesla is already supplying batteries to homes and commercial businesses such as Wal-Mart Stores Inc. through pilot projects and a supply agreement with SolarCity Corp., a relationship that generated $2.7 million in revenue for Tesla in 2014, according to a recent regulatory filing. That’s less than 1/10 of 1 percent of the automaker’s total for last year.

But Tesla is thinking much bigger, saying in job postings that its energy-storage business will soon grow to billions in sales. Musk plans to combine the strengths of the company’s patented lithium-ion batteries, which currently can run a car for about 265 miles (426 kilometers) per charge, with its expertise in power management software.

Green Trio

Musk’s green power ambitions involve three inter-connected enterprises: SolarCity, where he serves as chairman, the battery factory in Nevada, and the Tesla car business. With the move into energy storage, Tesla can help green the grid that fuels its cars while offering solar customers a way to store any excess electricity in batteries for use during hours of less sunlight and greater demand.

An even larger potential market will be utilities that have traditionally generated power with coal and natural gas.

“Tesla isn’t just going to sell batteries to SolarCity,” said Ben Kallo, an analyst with R.W. Baird & Co. “They are going to sell to project developers, wind and solar developers, and directly to utilities. The residential product isn’t going to be a huge needle mover in the near term, but the numbers are very big on the utility side.”

Tesla will face competition from other battery makers such as Korea’s LG Chem Ltd. and legacy U.S. power providers such as AES Corp. and startups such as JLM Energy Inc. It will have to navigate regulatory hurdles in a state-by-state market with varying degrees of subsidies and incentives for the technology.

Moving Slowly

Utilities, more cautious by nature, have been slow to adopt storage on their own.

“Storage doesn’t neatly fit into transmission, distribution or generation categories so it can be tough for utilities to justify investing in storage projects,” said Brian Warshay, an analyst for Bloomberg New Energy Finance. “Some utilities, like the California investor-owned companies, are getting into storage because their regulator basically told them they have to.”

In Tesla’s home state, a groundbreaking energy-storage mandate requires PG&E Corp., Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric to collectively buy 1.3 gigawatts of energy storage capacity by the end of 2020. New York is also pushing utilities to use storage to relieve congestion on transmission lines and plans for the retirement of the Indian Point nuclear power plant.

All these companies are potential customers for Tesla. The automaker has been in talks to provide its batteries to Oncor Electric Delivery Co., the largest power-line owner in Texas.

“Batteries really are kind of a panacea for the grid,” said Don Clevenger, senior vice president of strategic planning for Oncor. “They provide better reliability.”

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Solar and Wind Energy Start to Win on Price vs. Conventional Fuels NOVEMBER 23, 2014 AT 7:57 PM NYT > Business Day / By DIANE CARDWELL

For the solar and wind industries in the United States, it has been a long-held dream: to produce energy at a cost equal to conventional sources like coal and natural gas.

That day appears to be dawning.

The cost of providing electricity from wind and solar power plants has plummeted over the last five years, so much so that in some markets renewable generation is now cheaper than coal or natural gas.

Utility executives say the trend has accelerated this year, with several companies signing contracts, known as power purchase agreements, for solar or wind at prices below that of natural gas, especially in the Great Plains and Southwest, where wind and sunlight are abundant.

Those prices were made possible by generous subsidies that could soon diminish or expire, but recent analyses show that even without those subsidies, alternative energies can often compete with traditional sources.

In Texas, Austin Energy signed a deal this spring for 20 years of output from a solar farm at less than 5 cents a kilowatt-hour. In September, the Grand River Dam Authority in Oklahoma announced its approval of a new agreement to buy power from a new wind farm expected to be completed next year. Grand River estimated the deal would save its customers roughly $50 million from the project.

And, also in Oklahoma, American Electric Power ended up tripling the amount of wind power it had originally sought after seeing how low the bids came in last year.

“Wind was on sale — it was a Blue Light Special,” said Jay Godfrey, managing director of renewable energy for the company. He noted that Oklahoma, unlike many states, did not require utilities to buy power from renewable sources.

“We were doing it because it made sense for our ratepayers,” he said.

According to a study by the investment banking firm Lazard, the cost of utility-scale solar energy is as low as 5.6 cents a kilowatt-hour, and wind is as low as 1.4 cents. In comparison, natural gas comes at 6.1 cents a kilowatt-hour on the low end and coal at 6.6 cents. Without subsidies, the firm’s analysis shows, solar costs about 7.2 cents a kilowatt-hour at the low end, with wind at 3.7 cents.

“It is really quite notable, when compared to where we were just five years ago, to see the decline in the cost of these technologies,” said Jonathan Mir, a managing director at Lazard, which has been comparing the economics of power generation technologies since 2008.

Mr. Mir noted there were hidden costs that needed to be taken into account for both renewable energy and fossil fuels. Solar and wind farms, for example, produce power intermittently — when the sun is shining or the wind is blowing — and that requires utilities to have power available on call from other sources that can respond to fluctuations in demand. Alternately, conventional power sources produce pollution, like carbon emissions, which face increasing restrictions and costs.

But in a straight comparison of the costs of generating power, Mr. Mir said that the amount solar and wind developers needed to earn from each kilowatt-hour they sell from new projects was often “essentially competitive with what would otherwise be had from newly constructed conventional generation.”

Experts and executives caution that the low prices do not mean wind and solar farms can replace conventional power plants anytime soon.

“You can’t dispatch it when you want to,” said Khalil Shalabi, vice president for energy market operations and resource planning at Austin Energy, which is why the utility, like others, still sees value in combined-cycle gas plants, even though they may cost more. Nonetheless, he said, executives were surprised to see how far solar prices had fallen. “Renewables had two issues: One, they were too expensive, and they weren’t dispatchable. They’re not too expensive anymore.”

According to the Solar Energy Industries Association, the main trade group, the price of electricity sold to utilities under long-term contracts from large-scale solar projects has fallen by more than 70 percent since 2008, especially in the Southwest.

The average upfront price to install standard utility-scale projects dropped by more than a third since 2009, with higher levels of production.

The price drop extends to homeowners and small businesses as well; last year, the prices for residential and commercial projects fell by roughly 12 to 15 percent from the year before.

The wind industry largely tells the same story, with prices dropping by more than half in recent years. Emily Williams, manager of industry data and analytics at the American Wind Energy Association, a trade group, said that in 2013 utilities signed “a record number of power purchase agreements and what ended up being historically low prices.”

Especially in the interior region of the country, from North Dakota down to Texas, where wind energy is particularly robust, utilities were able to lock in long contracts at 2.1 cents a kilowatt-hour, on average, she said. That is down from prices closer to 5 cents five years ago.

“We’re finding that in certain regions with certain wind projects that these are competing or coming in below the cost of even existing generation sources,” she said.

Both industries have managed to bring down costs through a combination of new technologies and approaches to financing and operations. Still, the industries are not ready to give up on their government supports just yet.

Already, solar executives are looking to extend a 30 percent federal tax credit that is set to fall to 10 percent at the end of 2016. Wind professionals are seeking renewal of a production tax credit that Congress has allowed to lapse and then reinstated several times over the last few decades.

Senator Ron Wyden, the Oregon Democrat, who for now leads the Finance Committee, held a hearing in September over the issue, hoping to push a process to make the tax treatment of all energy forms more consistent.

“Congress has developed a familiar pattern of passing temporary extensions of those incentives, shaking hands and heading home,” he said at the hearing. “But short-term extensions cannot put renewables on the same footing as the other energy sources in America’s competitive marketplace.”

Where that effort will go now is anybody’s guess, though, with Republicans in control of both houses starting in January.

Companies Unplug From the Electric Grid, Delivering a Jolt to Utilities

BUSINESSSeptember 17, 2013, 11:05 p.m. ET

Companies Unplug From the Electric Grid, Delivering a Jolt to Utilities

By REBECCA SMITH and CASSANDRA SWEET CONNECT

Michal Czerwonka for The Wall Street Journal

At Kroger’s food-distribution center in Compton, Calif., a tank system converts organic waste into biogas to produce electricity used by the facility

On a hill overlooking the Susquehanna River, two big wind turbines crank out electricity for Kroger Co.’s Turkey Hill Dairy in rural Lancaster County, Pa., allowing it to save 25% on its power bill for the past two years.

Across the country, at a big food-distribution center Kroger also owns in Compton, Calif., a tank system installed this year uses bacteria to convert 150 tons a day of damaged produce, bread and other organic waste into a biogas that is burned on site to produce 20% of the electricity the facility uses.

These two projects, plus the electric output of solar panels at four Kroger grocery stores, and some energy-conservation efforts are saving the Cincinnati-based grocery chain $160 million a year on electricity, said Denis George, its energy manager. That is a lot of money that isn’t going into the pockets of utilities.

From big-box retailers to high-tech manufacturers, more companies across the country are producing their own power. Since 2006, the number of electricity-generation units at commercial and industrial sites has more than quadrupled to roughly 40,000 from about 10,000, according to federal statistics.

Experts say the trend is gaining momentum, spurred by falling prices for solar panels and natural gas, as well as a fear that power outages caused by major storms will become more common.

Michal Czerwonka for The Wall Street Journal

Organic waste

“The battle cry is Hurricane Sandy,” said Rick Fioravanti, vice president of energy-storage technology at DNV Kema, a Netherlands-based consulting company.

The growing number of companies that are at least partly energy self-sufficient is sending a shudder through the utility industry, threatening its revenues and growth prospects, according to a report earlier this year by the Edison Electric Institute, a trade association for investor-owned electric companies.

State and federal regulators say they are worried that utilities could end up with fewer customers to pay for costly transmission lines and power plants.

Utility executives, meanwhile, are asking themselves a disquieting question: “Am I going to just sit here and take it and ultimately be a caretaker of a museum, or am I going to be part of that business” that’s emerging, said Nick Akins, chief executive of American Electric Power Co., a big Ohio-based utility. AEP is considering helping its customers install their own generating facilities.

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How Fuel Cells Work

On-site generation still accounts for less than 5% of U.S. electricity production. But it is peeling off some of the bulk sales that utilities find especially profitable. And some of the companies getting into the business think it is approaching a tipping point called “grid parity,” at which point power would be as cheap to make as to buy from a utility.

Since 2007, when the first solar arrays went up on its store roofs in California, the installed costs of Wal-Mart Stores Inc.’s solar systems have dropped from $6 or $8 per watt of capacity to about $3.50 per watt, said David Ozment, the company’s senior director of energy management. He said he expects the retailer to be paying as little for solar power as utility power “in less than three years,” opening the floodgates to solar expansion.

Wal-Mart produces about 4% of the electricity it uses but intends to make 20% by 2020, taking advantage of idle acreage on thousands of store rooftops.

On-site generation isn’t a new idea. It existed before the electric grid—the interconnected system of power plants, substations and transmission lines that ferry power thousands of miles—was stitched together beginning in the 1920s.

But for most of the past 50 years, the practice was associated mostly with remote locations like Alaska fish canneries or industrial facilities like oil refineries that generated lots of waste heat that could be harnessed for power production.

Almost overnight, that niche market has gone decidedly mainstream. Six years ago, Google Inc. attracted attention by installing big solar arrays atop its Silicon Valley complex in California. Other tech companies followed suit, worried about ensuring power supplies for energy-hungry server farms and achieving sustainability objectives.

Apple Inc. now gets 16% of its electricity from solar panels and fuel cells that run on biogas. Apple’s data center in Maiden, N.C., makes all the power it consumes, a company spokeswoman said.

BMW AG’s assembly plant in South Carolina, which made 300,000 vehicles last year, gets half its electricity from an on-site energy center that burns methane piped to it from a nearby garbage dump. Drugstore chain Walgreen Co., which has solar panels at 155 stores, plans to install them at 200 more.

Falling equipment prices make on-site generation increasingly attractive. From 2002 to 2012, the cost of installed solar systems fell by half, according to an August report from the Lawrence Berkeley National Lab. Companies also have the option of leasing big solar systems, rather than incurring the capital cost of buying them.

Many “clean energy” projects also qualify for federal and state subsidies. In the case of solar installations, there is a 30% federal tax credit, which is set to drop to 10% in 2017. Government officials say a shift to greener energy resources is good since it reduces the output from coal-fueled power plants, which produce about 40% of the nation’s electricity and are the most polluting.

But analysts say the importance of subsidies has been waning, overshadowed by steep declines in the cost of power-generating equipment. For example, the cost of solar modules—the biggest single component in a rooftop solar system—has dropped about 80% in the past four years, to about 65 cents a watt from about $4 a watt, said Galen Barbose, a senior researcher at the lab.

Companies also are turning to wind turbines and technologies like fuel cells, batteries, small natural-gas turbines and reciprocating engines, which are natural-gas-fueled cousins of the auto’s internal combustion engine.

Engineering and technology company SAIC Inc. is installing enough generating capacity at a data center outside New York to meet the center’s core needs, with batteries for backup power. The system uses reciprocating engines burning natural gas, an option considered reliable in storms because gas pipelines are buried.

A report released by the White House in August estimated that power outages caused by bad weather cost the U.S. economy $18 billion to $52 billion a year in lost productivity from 2003 to 2012.

Demand for fuel cells in the U.S. is coming primarily from telecom companies, hotels and universities, said David Wright, CEO of ClearEdge Power Inc., a manufacturer in Hillsboro, Ore. Many buyers want reliable on-site generation as a hedge against storm-related outages.

By next year, Verizon Communications Inc. plans to install $100 million worth of fuel cells from ClearEdge and Bloom Energy, as well as solar panels, at 19 data centers and other facilities in seven states, including New York and New Jersey.

Some traditional utility companies are edging into the on-site generation business.

Edison International, which owns big utility Southern California Edison, recently bought a Chicago-based developer of rooftop solar projects, SoCore Energy LLC, and it is an investor in solar-finance company Clean Power Finance.

As power production becomes more decentralized, “I want to make sure the company is deeply involved,” said Edison CEO Ted Craver.

Write to Rebecca Smith at rebecca.smith@wsj.com and Cassandra Sweet at cassandra.sweet@dowjones.com

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Coal at Risk as Global Lenders Drop Financing

Coal at Risk as Global Lenders Drop Financing on Climate

By Mark Drajem – Aug 6, 2013 10:56 AM ET

Tomohiro Ohsumi/Bloomberg

An employee stands in front of stockpiles of coal inside a storage yard at the Joban Joint Power Co. coal-fired power station in Iwaki City, Japan.

The world’s richest nations, moving to combat global warming, are cutting government support for new coal-burning power plants in developing countries, dealing a blow to the world’s dominant source of electricity.

Obama Unveils Climate Plan Focused on Power Plants 48:10

June 25 (Bloomberg) — U.S. President Barack Obama speaks about his plan to address climate change. Obama, speaking at Georgetown University in Washington, proposed a sweeping plan that sets goals to reduce carbon emissions and bolster renewable energy while also preparing the country for the impacts of a warming planet. (Source: Bloomberg)

Enlarge image Coal at Risk as Global Lenders Drop Financing on Climate

A coal-fired power station stands in the distance behind a disused coal dredger in the town center in Morwell, Australia, on July 25, 2013. Photographer: Carla

Gottgens/Bloomberg

First it was President Barack Obama pledging in June that the government would no longer finance overseas coal plants through the U.S. Export-Import Bank. Next it was the World Bank, then the European Investment Bank, dropping support for coal projects. Those banks have pumped more than $10 billion into such initiatives in the past five years.

“Drawing back means there is less capital for these projects,” Richard Caperton, managing director for energy at the Center for American Progress in Washington, said in an interview. “I don’t expect private capital to move in and fill the void, either, because there is a real risk that these plants will be turned off early.”

Demand for coal in developing nations has taken on increasing importance as the combination of stricter environmental regulations in the U.S., increasing deployment of subsidized renewable resources and a drop in the price of natural gas have pushed utilities to shutter coal plants.

Among the three government-backed lenders, the World Bank has provided $6.26 billion for coal-related projects over the past five years, according to data from Oil Change International. The Ex-Im bank provided more than $1.4 billion to two coal projects, one in South Africa and another in India.

Curb Investments

While the pull back is unlikely to have a direct impact on China, the world’s top user of coal, it could curb construction of new plants in countries such as South Africa and Vietnam and dampen new export markets for coal mined in the U.S., Indonesia or Australia by companies such as Peabody Energy Corp. (BTU) and Alpha Natural Resources Inc. (ANR)

“We’ve never seen a cascading sentiment that coal is not acceptable like we’re seeing happen right now,” Justin Guay, the head of the Sierra Club’s international climate program, said in an interview. “It’s a snowball running downhill.”

Environmental groups such as the Sierra Club are fighting coal plants and coal mines, because coal releases the most carbon dioxide per unit of energy of any major fuel source. Scientists say carbon emissions are to blame for warming Earth’s temperatures, increasing the number and severity of storms and melting polar ice.

Supporters of the fuel source say it’s a low-cost way for poor nations to provide light, refrigeration and air conditioning to their people.

‘Our Backs’

The move by lenders against coal turns “our backs on millions without electricity and chooses not to help them achieve a better standard of living,” said Nancy Gravatt, a spokeswoman for the National Mining Association in Washington, which represents producers such as Alpha and

Arch Coal Inc. (ACI)

Analysts are divided about long-term global coal demand.

The U.S. Energy Information Administration, in a July 25 report, projected world coal use would increase by a third — to more than 200 quadrillion British thermal units a year — by 2040 as developing nations boost its use.

The cut-back in the financing isn’t causing a reassessment of that outlook, said Greg Adams, the team leader for coal at EIA. “The capacity that is going to be affected is going to be limited,” he said.

Gregory Boyce, chief executive officer of Peabody, the largest U.S. coal producer, noted that German and Japanese coal use is climbing as they cut nuclear-power generation.

China, India

“China and India imports have risen year-to-date and are on a pace to increase 15 percent this year to new record levels as the trends to urbanize, industrialize and electrify continue,” Boyce said in a conference call with analysts on July 23.

Goldman Sachs Group Inc. offers a less buoyant outlook.

“We believe that thermal coal’s current position atop the fuel mix for global power generation will be gradually eroded,” Christian Lelong, an analyst at Goldman Sachs in Australia, said in a report on July 24. “Most thermal coal growth projects will struggle to earn a positive return.”

Coal is now used to generate 40 percent of the world’s electricity, and its use has grown more than 50 percent in the past decade, according to EIA. The U.S. is the world’s second-largest producer of coal, after China, followed by India, Australia and Indonesia. China is the world’s top importer of coal as well, followed by Japan, according to the World Coal Association.

1,200 Plants

According to an analysis by the World Resources Institute in Washington, 1,200 coal-fired plants are proposed globally, with more than three-quarters of those planned for India and China alone. If all are built, which WRI says is unlikely, that would add more than 80 percent to existing capacity.

China can finance its projects on its own, and India has only relied on export financing in a few cases. As a result, the recent changes are likely to impact other nations in Africa and Asia, which don’t have the same access to credit. Each group said in some instances it would still finance coal, and activists are worried about those exceptions.

“The implementation of all three of those initiatives is yet to be fleshed out,” Doug Norlen, the policy director of Pacific Environment, which is fighting these kinds of fossil-fuel projects, said in an interview. “These will be huge steps, if properly implemented.”

That implementation is still an open question.

Project Rejected

For example, as part of Obama’s climate action plan released on June 25, the U.S. pledged to end support of foreign coal-fired power plants, unless they are in the poorest nations or have expensive carbon-capture technology. The U.S. Export-Import Bank is only now developing the procedures to implement that policy, and its board will consider those changes in the coming weeks. The lender shot down a bid to finance a coal plant in Vietnam, its only pending application for coal, just three weeks after Obama’s announcement.

Norlen’s group and other environmentalists filed a lawsuit against the Export-Import Bank last week to try to block its financing of coal exports. That support is separate from the policy change Obama announced.

The European Investment Bank set an emission performance standard that would prevent lending to new coal-fired plants unless they also burn biomass. The European Bank for Reconstruction and Development is also under pressure to limit support.

Japan Support

Even after the World Bank said it would help nations transition from coal to natural gas or renewables, it’s still considering support for a coal project in Kosovo.

There’s also the possibility that other lenders, especially export-credit agencies from Japan or China, could step in and replace the World Bank, U.S. and Europe. Japan’s Bank for International Cooperation, its export financing body, has provided more than $10 billion in financing for overseas coal projects, more than any other individual nation, according to the WRI report.

And now China, which wants to export coal-plant technology, may ramp up support as well, said Ailun Yang, the author of the WRI report.

“It is a real concern” that “some of the funding gap for coal-fired plants would simply be filled by the Chinese banks,” she said.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net