Greentech Media: Headlines
Power In The Desert: Ivanpah On The Verge
-
The giant Ivanpah solar thermal project in the Mojave Desert is now 92 percent complete, developers said this week. The 377-megawatt project consists of three 459-foot-tall towers encircled by arrays of garage-door-sized mirror sets. Those computer-controlled “heliostats” – 153,990 out of 173,500 of which are in place – will reflect the sun onto the receiving towers, heating water to create steam that will drive turbines that produce electricity.
The government-backed project has drawn criticism from some environmentalists, most notably for its impact on fragile endangered desert tortoise habitat and recently for dust problems linked to the development. But others view it as a remarkable step forward in the search for clean, sustainable energy. Click on the photos below, all taken in early April and provided by developer BrightSource Energy, and see what you think.
{article-slideshow}
***
Editor's note: This article is reposted in its original form from EarthTechling. Author credit goes to Pete Danko.
Grid-Scale Energy Storage on the Cusp of True Market Entry
-
Energy storage is often called the holy grail of renewable energy. The problem with the "grail" language is that the grail was never located. At least not with a compelling business case.
There is a lot to report from this week's Energy Storage Association meeting and the approximately 400 engineers, developers, researchers, and utility experts it attracted to Santa Clara, California. This is the kickoff article for me in a series of energy storage articles. GTM's Jeff St. John attended and has already written about energy storage pioneer AES's integration software and a related move to standardization and plug and play batteries from software vendor 1Energy.
I've attended this event over the years. Grid-scale energy storage, which is this event's focus, is still a developing market and the exhibition floor reveals a market and supply chain still very much in formation.
But, despite the early-stage of this industry and its players, I would suggest that the energy storage industry took a noticeable step forward this year. Instead of technical papers on electrolytes, anodes, and hysteresis -- the panels and hallway chatter was dominated by:
- Lessons learned from energy storage pilots and initial commercial deployments
- Integrating energy storage with solar and wind and connecting to the grid
- The necessity for big data analytics to effectively peak shave and smooth renewable generation
- The need for standards, modeling, software integration and cyber-security awareness
Confronting these issues, rather than running a technology love-fest, is indicative of an industry coming to grips with its place in the energy ecosystem.It's been slow going -- but the pilot programs are yielding information. Equipment crews at vendors and utilities are gaining experience at deploying substation-sited storage, co-locating with renewables, as well as Community Energy Storage (CES) and Residential Energy Storage (RES). Regulators at the state and federal level are listening. And the case studies are starting to show some actual monetizable value from energy storage.
The "behind the meter" energy storage firms such as Stem, Demand Energy, and Silent Power are beginining to post their compelling case studies. We'll be profiling those firms as well as SolarCity, Isentropic Energy, Beacon Power and many others in the coming days. Stay tuned, there's a lot to cover.
In the meantime here are a few stray observations:
- Solar is interested in storage; First Solar and SunPower technologists were in attendance
- I did not see a single VC investors at the event. And I couldn't find one on the attendee list either. Are VCs done with energy storage? Vinod Khosla did not show.
- Darrell Hayslip was named the next Chair of ESA. Hayslip headed development of the the 36-megawatt storage system for Xtreme Power at the Duke Notrees Windpower project
- The two largest installers of on-grid residential and consumer energy storage in California are not pure-play energy storage firms. Who are they?
Microgrids: A Utility’s Best Friend or Worst Enemy?
-
Defenders of the electric grid status quo have long argued that always-on baseload power generators like coal and nuclear plants are essential, and that variable renewables like wind and solar will remain bit players in power generation.
They argue this for several reasons: The grid isn’t designed to accommodate them. They’re too expensive. Or they aren’t reliable enough, so they require 100% backup from conventional power plants at all times. An essay by former utility CEO Charles Bayless in the September 2010 issue of the Edison Electric Institute’s Electric Perspectives magazine details the utility view of these issues nicely.
But one by one, those arguments are being knocked down.
A recent data roundup by renewable energy industry analyst Paul Gipe shows that variable renewables are meeting much larger percentages of grid power than previously thought possible in some European countries. Wind provided nearly 20 percent of Portugal’s power and 30 percent of Denmark’s in 2012. Wind and solar combined contributed more than 18 percent of Spain’s power and 11 percent of Germany’s in 2011. (More recent data shows that renewables now provide about 25 percent of Germany’s total grid power, and as much as 50 percent of its peak power.) A study by German engineers found that its grid can handle up to a 40 percent share of renewable power without needing much storage or baseload power for backup.
The price argument is falling too, with various banks and researchers forecasting that solar will be cost-competitive in much of the world by 2020.
Now the reliability and stability arguments, which were the main focus of Bayless’ essay referenced above, may be about to lose their potency too, as large facilities and small communities start looking to microgrids to supply a level of service that utilities have been unable to provide.
A microgrid is simply an independent power grid that is able to balance generation and consumption within itself -- just like the big grid does, only on a much smaller scale. It could be as small as an offshore oil rig, or as large as a military base or a small town. It might use storage to buffer renewable generation, or it might simply fire up a fuel-burning generator.
Some microgrids are replacing expensive and polluting fuels like diesel and kerosene in places that have never had access to reliable grid power, like Africa, India, Brazil, and Haiti. Others, like the ones at Fort Bliss, Texas and the Food and Drug Administration’s White Oak research facility in Maryland, are being built where grid power is available, but where the cost or risk of an outage is high enough to justify the expense of being able to “island” from the main grid and be self-reliant.
Several university microgrids have served as critical disaster recovery havens in the aftermath of natural disasters, including a 13.4-megawatt system at New York University-Washington Square Park, a 3.6-megawatt system at Utica College in New York, a 1-megawatt system at Tohoku Fukushi University in Japan, and a 37-megawatt microgrid at Cornell University in Ithaca, New York. The Cornell system is powered by a dual-fuel combined heat and power (CHP) plant that can burn natural gas or diesel, plus a 1-megawatt hydropower generator and a small solar installation.
Microgrids are big-ticket items, but for those who can afford them, they seem to be reasonable investments. The $71 million White Oak project is expected to save the FDA about $11 million a year. The return on the roughly $60 million Cornell University project [PDF] is expected to be “consistent with the long-term rate of return of the endowment and in the range of 8 percent to 10 percent.” For a military base, of course, being self-reliant is “priceless.”
Despite the new buzz about microgrids, the market is just getting started. Microgrid expert Peter Asmus of Pike Research has identified 405 projects in the pipeline globally, and he expects deployment to rise from $10 billion in 2013 to more than $40 billion annually by 2020.
In addition to universities and military bases, islands are natural microgrid candidates because they’re typically dependent on expensive liquid fuels to run their generators. At the recent Pathways to 100% Renewables Conference, Asmus noted that as of 2011, solar is cheaper than diesel for any island, and mentioned two islands that are now pursuing the microgrid strategy. El Hierro, a Spanish Canary Island off the coast of Africa, has become the world's first 100 percent renewable energy island by replacing its diesel generators with a microgrid powered by an 11.5-megawatt wind farm, 11.3 megawatts of pumped hydro storage, and solar PV and solar thermal systems. And Graciosa Island, off the coast of Portugal, expects to have a microgrid on-line by the end of 2013, with 65 percent of its supply provided by renewables.
A new threat, or a new business model?
Microgrids represent another aspect of a theme I have been exploring at Greentech Media: the transformation of utilities (see “Can the Utility Industry Survive the Energy Transition?” and “Adapt or Die?”). Like distributed generation, microgrids present both an opportunity and a threat to the way utilities do business.
“While utilities have shown institutional biases against the entire concept of microgrids for decades, extreme weather events and the growing recognition of microgrids as potential sources of demand response resources are building engineering and cultural support for these systems in a variety of settings,” Asmus said in April.
Utilities may be more friendly to what Asmus calls “virtual power plants” (VPPs). VPPs may or may not have generation or storage capacity, so they cannot island, but they do have software to remotely and automatically dispatch and optimize generation, demand response, and storage in a single, secure web-connected system.
VPPs and microgrids could become valuable partners for utilities by relieving overstressed and congested points on the grid, reducing the need for building new generation and transmission capacity, and making it easier to manage voltages at grid extremities. Integrating VPPs, microgrids, and more renewable power into the grid requires more advanced grid management software, but it can squeeze a lot more utility out of both conventional and renewable generators, which is cost-efficient.
On the other hand, if deployed at scale with storage capacity, microgrids could reduce the need for large amounts of baseload overcapacity sitting idle just in case it’s suddenly needed. Instead of needing to suddenly ramp up 1,000 megawatts of power to compensate for an outage elsewhere in the grid, a network of microgrids could simultaneously reduce demand and export power to the grid in a distributed fashion, while maintaining the required frequency and voltage parameters.
In other words, microgrids could meet both the reliability and stability criteria that Bayless argues can only be met by baseload generators. This would cut into the generation and the distribution revenue streams that are critical to the calcified utility business model, as well as the profit associated with constructing large capital projects.
“When we propose a microgrid, we consider four business case scenarios,” Steve Pullins, CEO of Tennessee-based Horizon Energy, a microgrid design and development company, told Fortnightly magazine. “We consider maximum savings, maximum renewables, grid independence, and maximum diversity. The difference in cost between the maximum savings and grid independence scenarios isn’t very large.”
With the virtues of favorable economics and self-reliance at their backs, microgrids seem poised to gain market share and become a competitive threat that utilities can neither bury nor ignore. Pullins sees 24,000 sites in the United States as potential prospects, with perhaps 300 microgrids being built by the end of 2015.
But utilities will have to consider carefully how best to address that threat. If they try to foist their stranded asset and network maintenance costs on a declining user base, it could prove counterproductive by pushing more consumers to consider microgrids.
As Pullins observed, “This isn’t microgrids challenging the regulatory model; it’s customers challenging that model. Utilities shouldn’t have misplaced aggression against microgrids.”
Instead, utilities should actively encourage microgrid development and seek to integrate it into their business models as a low-cost way of ensuring reliability, grid stability, capacity, and energy. Instead of delivering as much power as possible at the lowest possible cost, they should refocus on delivering the service levels customers want, with appropriate dynamic pricing mechanisms.
Ultimately, the transformation to distributed generation and grid management will require regulatory reform as well, so that groups of businesses and residents can create microgrids. In that, too, the utilities will need to be active and supportive participants.
***Chris Nelder is an energy analyst and consultant who has written about energy and investing for more than a decade. He is the author of two books (Profit from the Peak and Investing in Renewable Energy) and hundreds of articles, and has been published by Scientific American, Slate, the Harvard Business Review blog, Financial Times Alphaville, Quartz, the Economist Intelligence Unit, and many other publications.
In Seattle, Librarians Are Energy Sippers and Police Are Energy Guzzlers
-
New York City got a surprise last year after an energy disclosure report showed that some of its 80-year-old buildings were outperforming LEED-rated buildings. The report illustrated why energy benchmarking laws can be effective tools to help municipalities and building owners target how they take action. Sometimes the target is not what was initially expected.
Seattle is the latest city to issue data on its buildings. Officials just logged data on 94 of Seattle's municipal buildings, including City Hall, libraries, police stations and the 62-story Municipal Tower. While not earth-shattering in its conclusions, the report showed some interesting variations in how municipal facilities are operating.
One of the more interesting facts from the report: Seattle's libraries are 42 percent more efficient than the average U.S. library. And the city's downtown central library uses 50 percent less energy than the nationwide average.
The city's police stations and fire stations are a different story. The report shows that Seattle's fire stations use 10 percent more energy than the U.S. average, and that police stations are using almost double the energy that an average police station does.
Overall, however, many of the city's buildings are performing quite well. The Seattle Municipal Tower, a downtown office building hosting more than 3,000 people, uses 40 percent less energy than similar-sized buildings in the U.S. The entire downtown campus, which features the Municipal Tower, City Hall, the Justice Center and the central library, is also performing better than the national average.
Here's a breakdown of how all the facilities being tracked compare to the national average:
This is the first time that Seattle's building energy consumption has been made public. The city's 2010 benchmarking law requires private building owners to disclose energy data with tenants and during real estate transactions. More than 90 percent of building owners with facilities more than 50,000 square feet in size are reporting their consumption so far. And starting in April, buildings with 20,000 square feet or more are now required to report energy consumption to the city.
Seattle is one of a number of cities that now require building owners to disclose energy use. Austin, Boston, the District of Columbia, Minneapolis, New York, Philadelphia and San Francisco have all passed similar benchmarking laws.
Seattle's mayor has set a target to reduce energy use in municipal buildings by 20 percent over the next seven years. Since 30 percent of the city's buildings were constructed before 1980 and there will be very few new large buildings through 2050, Seattle's focus will be on retrofitting existing building stock. This report gives the city a much better understanding of which facilities to retrofit.
And if Seattle's mayor wants to enforce his 20 percent target, he now knows one major culprit to target: the police.
Plug-and-Play Grid Batteries Thanks to 1Energy’s Software
-
Why do batteries for the grid cost so much more, on a per-kilowatt-hour basis, than batteries for laptops, or even for electric vehicles? It’s not the cost of the battery technologies themselves, or even necessarily what grid customers are demanding from them.
Instead, it’s that today’s grid-scale battery projects are almost all designed, built and operated as standalone projects, with mostly proprietary and sometimes single-source technologies. If automakers and computer companies tried to build products that way, they’d go out of business. What’s more, the mass market for reliable, standardized, battery-powered laptops would have never developed (the jury is still out on the mass market for EVs).
David Kaplan, CEO of Seattle-based startup 1Energy, believes that software can unlock the same kind of scale and interoperability opportunities for grid-scale batteries -- at least, in terms that battery makers and their utility customers can relate to.
“We envision a future when there are various storage sockets, if you will...and battery manufacturers can sell energy storage in the same way a transformer manufacturer would sell catalog products to the utility today,” Kaplan said at Wednesday’s Electricity Storage Association (ESA) annual conference in Santa Clara, Calif.
Founded in 2011, the internally funded startup signed up public utility Snohomish PUD as a test customer last year, along with French grid giant Alstom. This week, it added inverter maker Parker-Hannifin to its list of partners. The project underway isn’t that big -- it consists of one substation, with a set of batteries from yet-to-be announced suppliers, aimed at providing an eventual 1 megawatt of storage.
But underlying it is a software platform designed to add five, ten, or twenty more substations, or to add new batteries to each in different combinations, as the need arises, Kaplan said. 1Energy will provide software and system engineering to the project, as well as lead selection of future partners for batteries, inverters and other components. While 1Energy’s list of battery and power systems partners is still small today, the firm is in talks with different vendors, as well as participating in the various standards bodies (IEEE, IEC, etc.) involved, he said.
As for creating the interconnections between these future standardized storage systems, utility SCADA systems and back-office platforms, and to third parties like energy traders and demand response aggregators, “There’s room for a software supplier to tie it all together,” Kaplan said.
From V2G to MESA
A former Microsoft software developer who helped build SQL Server, Access, and the company's internet services platform, Kaplan brings an interesting perspective to the grid-battery nexus. In 2006, he started V2Green, which built software to manage the charging and discharging of EV batteries based on power pricing, owner preferences and grid requirements. V2Green tested its software with partners like Seattle City Light and Xcel Energy before it was acquired in 2008 by GridPoint, the well-funded startup that has since bought several other startups, only to let their technology languish without any visible growth.
While his relationship with GridPoint ended in a lawsuit, the acquisition did give Kaplan the financial wherewithal to pursue other green interests for a while, Kaplan told me Wednesday. That included spending time working as a grid technologist for Snohomish PUD, where he turned his attention to the battery-grid connection.
That work led to 1Energy, as well as the idea for its Modular Energy Storage Architecture (MESA), which is being tested in the Snohomish PUD project. In simple terms, MESA installs software at each energy storage endpoint, integrates with utility grid operations systems such as SCADA and DMS, and manages the combination of the two via a cloud-based platform, he said.
At the energy storage endpoint, MESA collects voltage, current, temperature and other standard data from the battery, inverter and other components, he said. But the architecture should also allow extensibility and customization, to give “any vendor the ability to sell value-added portions of the interface that are unique to their equipment,” he said.
On the utility side, MESA incorporates all the different energy storage endpoints into a series of operating modes, such as load firming, peak shaving, load following, economic dispatch and the like, he said. Again, the underlying architecture is meant to support upgrades and customization for individual utilities, he said.
“One of the key things you want is the notion of an energy brick,” Kaplan noted -- a generic energy storage unit (ESU) that, regardless of its internal chemistry or operating characteristics, presents itself to the utility as a clear set of capabilities, costs, tradeoffs, probabilities and the like. Storage systems are just one of many means utilities have to choose from to solve various problems, he noted.
Getting to that point is a complicated affair, however. “You need a series of defined interfaces that are specific to the ESU, or energy brick, specific to the power conversion components, and ancillary services that can talk to other automation points in the system,” he said. “These interfaces need to address the physical, electric, and communications capacities of connecting these various components.”
Software for Grid Storage Heats Up
1Energy isn’t the first to target the software side of grid storage, of course. To start with, every modern battery and inverter comes with its own software on board, which utilities can tap for supervision and control. Battery makers like A123, General Electric, Johnson Controls, Saft, LG, Panasonic, NGK, Samsung, Xtreme Power and others have built from there to add more sophisticated interfaces and controls aimed at meeting grid needs. In fact, startup Xtreme Power is selling off its battery factory in hopes of making battery management software its specialty.
Grid giants like GE, Siemens, S&C, ABB and Schneider Electric are all involved in battery energy storage, though they’re coming at it from different angles, and working with different partners -- GE is using Xtreme’s software to support its Durathon sodium-metal batteries, for example. Other players in the space include BYD, the Chinese automaker and solar panel manufacturer, which has also built one of the world’s biggest battery storage projects in China.
Many of these projects could support a more modular approach to energy storage. Greensmith is providing its battery-agnostic energy storage management software for utilities including San Diego Gas & Electric, Hawaii Electric and Southern Co., to name one example, and S&C Electric has built an energy storage product line, built around other vendors’ batteries, that scales from cargo-container-sized utility substation units to refrigerator-sized community energy storage units.
Software also helps tie energy storage into the IT platforms that run the grid’s energy markets. AES Energy Storage, which has deployed 120 megawatts of grid battery-based storage projects around the world, recently unveiled its internal Storage Operating System (sOS) software that includes market modules that match batteries to the specific programs and economic incentives available across Texas, New York, New England and the mid-Atlantic region. (AES said that it built its own software because it couldn’t find what it wanted in the marketplace.)
Grid-scale storage can also be building-scale storage, by the way. We’ve got a host of startups (Stem and GELI are two notable ones) working on software to optimize on-site energy storage systems to avoid peak demand charges, meet demand response calls, or keep the lights on during emergencies -- or, perhaps, all three at different times. Linking batteries with rooftop solar panels is also a growing trend.
Just how a startup like 1Energy fits into this equation is hard to predict. Certainly it has set its sights on a lofty goal. As Dan Rastler of the Electric Power Research Institute noted in a Q&A after Kaplan’s presentation, the industry as a whole is slowly moving from proprietary to standards-based technologies, leaving 1Energy with the challenge of scaling to meet that growth.
“I think the biggest [challenge] we see is that nobody’s tried it before,” Kaplan said in response. The Snohomish PUD project is set to start next year, and represents the first chance for the company to test the software’s capabilities, leaving it very early indeed in the race to become the operating system of grid energy storage everywhere. At the same time, the industry has been talking about this problem for years, so maybe 1Energy is right on time.
US Offshore Wind Fact Sheet
-
There are thirteen U.S. offshore wind projects in ten states on the Atlantic, Pacific, Great Lakes and Gulf of Mexico coasts, representing 5,100-plus megawatts. None of the projects have started construction.
Here's an update on the status of those projects:
- Cape Wind: The fully permitted 468-megawatt project is planned for construction in Massachusetts’ Nantucket Sound by the end of 2013. It has PPAs for 77.5 percent of its nameplate capacity and the state is investing in port facilities.
- Block Island: Deepwater Wind’s 30-megawatt pilot project off Rhode Island’s Block Island has a PPA for 100 percent of its output and is now going through the permitting and approvals process. Construction could begin by the end of 2013.
- Wind Energy Center: Deepwater Wind’s proposed 1,000-megawatt project, twenty miles out to sea between Massachusetts and Rhode Island, has a lease application pending with the Department of the Interior's Bureau of Ocean Energy Management (BOEM).
- Hywind Maine Pilot Project: Statoil (STO)’s 12-megawatt pilot project will place four floating 3-megawatt turbines in 400-foot-deep Gulf of Maine waters 13.8 miles off the state’s coast. It has been approved by the Maine Public Utilities Commission and BOEM, and has a grant from the Department of Energy (DOE).
- Aqua Ventus: The University of Maine’s 12-megawatt pilot project will place two floating 6-megawatt turbines in the Gulf of Maine three miles off the coast of Maine’s Monhegan Island. It is supported by a DOE grant.
- Atlantic City Wind Farm: Fishermen’s Energy’s 25-megawatt pilot project located 2.8 miles off the coast of Atlantic City has all necessary state and federal permits and a DOE grant. It does not yet have a PPA, but New Jersey has an Ocean Renewable Energy Credit (OREC) system in place that is strong enough to support 1,100 megawatts of offshore wind. Construction will begin when financing is completed.
- Mid-Atlantic Wind Park: The NRG Energy-owned lease for a 300-megawatt to 450-megawatt project 13.2 miles off Delaware’s Rehoboth Beach had a 200-megawatt PPA, but it was canceled in 2011, and NRG is looking for investors or a buyer.
- Long Island-New York City Offshore Wind Project: The 350-megawatt to 700-megawatt project would be thirteen miles off the Long Island coast and co-funded by the Long Island Power Authority, Con Edison, and the New York Power Authority. It has an application pending with BOEM.
- Virginia Offshore Wind Technology Advancement: The Dominion Virginia Power-funded pilot project will install two 6-megawatt turbines 22 miles off Virginia Beach. It has a DOE grant.
- Icebreaker: The privately held Lake Erie Energy Development Corporation (LEEDCo)-funded, 27-megawatt pilot project will have nine 3-megawatt turbines seven miles into Cleveland Bay, in sight of the city’s shoreline. LEEDCo has a DOE grant and a lease-option from the State of Ohio, and just began installing its data-gathering tower.
- Gulf Offshore Wind: The Baryonyx Corporation, run by veterans of Europe’s wind energy industry, will build an 18-megawatt pilot project four to five miles off Texas’ Port Isabel in the Gulf of Mexico, with five 6-megawatt turbines.
- Rio Grande (North & South) Project: The Baryonyx Corporation also has development leases from the Texas General Land Office for a 2,000-megawatt to 2,400-megawatt project five to ten miles off Texas’ South Padre Island.
- WindFloat Pacific Demonstration Project: Principle Power plans a 30-megawatt pilot project for its floating turbines ten to fifteen miles off Coos Bay on the Oregon coast. It will start with three 6-megawatt turbines and is supported by a DOE grant.
- Atlantic Wind Connection: The 7,000-megawatt-capacity backbone transmission system for offshore wind projects will run from New Jersey to Virginia. It will be built by Trans-Elect, the Atlantic Grid Development coalition that includes Google, Inc. It has been cleared by BOEM, and New Jersey just announced a port facility renovation to streamline its construction.
Three of the thirteen projects have power purchase agreements in place:- Cape Wind in Massachusetts (National Grid and NStar, 363 megawatts of 468 megawatts)
- Deepwater Wind in Rhode Island (National Grid, 30 megawatts)
- Statoil in Maine (Central Main Power Co., 12 megawatts)
Value of offshore wind:- It provides high capacity-factor renewable energy adjacent to huge population centers.
- Its highest productivity is at peak demand periods.
The U.S. lags behind Europe and Asia:- Europe: Europe has built 55 offshore wind projects in ten countries with 1,662 turbines and an installed nameplate capacity of 4,995 megawatts. There are fourteen projects just completed or under construction, which will bring Europe’s total to 8.3 gigawatts. It has set long-term goals of 40 gigawatts by 2020 and 150 gigawatts by 2030.
- Asia: China and Japan have operational projects with a combined estimated installed capacity of 544 megawatts. China completed a 150-megawatt project in late 2012. Japan’s offshore wind target is 8 gigawatts by 2030. China’s is 5 gigawatts by 2015 and 30 gigawatts by 2020. South Korea is targeting 600 megawatts by 2016 and 2.5 gigawatts by 2019. Taiwan has a goal of 3 gigawatts installed or under construction by 2020. Its government just approved three projects totaling 300-plus megawatts.
U.S. offshore wind costs:- A U.S. utility-scale offshore project will likely have an average of 100 3-megawatt to 6-megawatt turbines and a nameplate generation capability of 300 megawatts to 600 megawatts. It will be built at an estimated cost of $1.5 billion to $3 billion.
Tesla Motors Repays Its Government Loan in Full
-
In a much-anticipated development, Tesla Motors said today that it had fully paid the government back for a $465 million loan it received in 2010 from the Department of Energy (DOE).
The company announced it had wired $451 million to the government, which accounted for the entire loan and interest. Tesla founder Elon Musk said earlier this spring at a DOE-sponsored conference that the company would be able to pay off the loan five years earlier than expected. Turns out, the loan was repaid nine years earlier.
The half-billion-dollar loan was used to build two manufacturing plants in California -- one for the Model S sedan and another for battery, motor and electrical equipment assembly. Accessing the loan meant that Tesla had to hit certain production milestones and raise private matching funds.
After meeting its targets, the loan was repaid through $1 billion raised in last week's stock offering.
Tesla became a negative target during the 2012 presidential election, when Mitt Romney called the company a "loser" during a debate.
In a statement, Musk thanked the Energy Department, Congress and taxpayers for helping the company. “I hope we did you proud," he wrote.
Earlier this week, the 100,000th plug-in electric vehicle was sold in the U.S. -- a number far below expectations for EVs, but proof that the market is starting to accelerate.
Below is Eric Wesoff's article on Tesla's latest quarterly earnings:
Tesla shares surged 12 percent in after-hours trading on news that the company reached profitability in Q1 for the first time in its ten-year history, with a profit of $15 million on sales of $562 million for the quarter -- a record for the EV producer.
Tesla produced 400 or more Model S vehicles per week and a total of 5,000 units in the quarter, beating estimates. All sales, so far, are in North America.
Revenue for Q1 was $562 million at a 17 percent gross margin. Sales of zero-emission vehicle (ZEV) credits, as covered yesterday, accounted for $68 million, but will not be anticipated in the future nor expected for the company's Q4 guidance of 25 percent gross margin. (Note that Q1 margins would be in the 5 percent range absent the ZEV credits.)
Tesla raised its 2013 guidance to selling 21,000 electric vehicles (instead of 20,000) this year.
According to reports, California provides Tesla with $35,000 in zero-emission vehicle credits, which Tesla sells to automakers. In addition, Tesla receives other state and federal monies.
Tesla expects operational expenses and R&D expenses to increase next quarter as more dealerships and service centers are built.
Barclays writes that the investment bank is "agnostic as to whether Tesla can break into the mass affluent Gen III market, and downright skeptical of its ability to become a true mass-market automaker," adding, "In addition, GAAP revenue and EPS will likely be faced with a headwind from GAAP accounting around the new loan product, which will lead to some revenues being deferred."
In the meantime, Tesla is beating guidance and making money.
ECOtality Steps Out of the EV Project Bubble
-
For more than three years, ECOtality (NASDAQ: ECTY) has been basking in the warmth of about $100 million federal dollars. Now, as the U.S. Department of Energy’s EV Project winds down, the electric transportation technologies company is back out in the cold, faced with the harsh reality of selling its wares to the people on the open marketplace.
ECOtality introduced a new family of home electric vehicle chargers on Wednesday to compete in the wider market. The charger comes with a membership to the larger Blink charging network and $100 charging credit with purchase. Most of the participants in the EV Project received their Blink chargers at no cost.
The product offerings include two new programmable level 2 home chargers, which can be set to delay charging when rates are lowest. Another charger with remote access capabilities is also coming. The products will be sold online through retailers.
The initial price point is lower than most level 2 chargers at $599, but not as low as Bosch’s $450 offering that recently came to market. The $100 credit is good for six months and can be used at any of the approximately 3,000 public Blink chargers, which are concentrated in about fifteen cities.
“Our premiere line of Blink HQ home charging products offer EV drivers exactly what they’ve been asking for: connection to the Blink Network, freedom to charge at home at their convenience and unprecedented value,” Ravi Brar, CEO of ECOtality, said in a statement.
The question of cost versus software and controls will be sorted out in the market in coming years, as more automakers introduce all-electric and plug-in hybrids into the market. Bosch and ECOtality hover around $500 as an entry point, which is about half of what most level 2 chargers go for today. Other charging companies will likely roll out lower-priced chargers to compete.
Another consideration is relationships with dealerships. AeroVironment (NASDAQ:AVAV) announced earlier this year that its charger can be bundled with Nissan Leaf (NASDAQ:NSANY) at the point of purchase, so the cost can be rolled into financing. ECOtality does not have any deals with carmakers at this point.
ECOtality is hoping that its extensive Blink network will be a selling point for drivers. “Having Blink HQ home charging products in EV drivers’ homes, bundled with a membership, will help support our growth and generate an annuity base as the number of EV drivers grows,” added Brar.
In some regions, it will have to compete with other charging networks, such as NRG’s Freedom Charging network in Texas and another proposed network in California. ECOtality has also partnered with ChargePoint in a joint venture called Collaboratev that will make the two companies’ customer management and RFID card payment systems compatible with one another.
Most of ECOtality’s revenue came from the EV project in 2012, and so the company has an uphill battle to generate sales from paying customers. It hopes there will be enough EV drivers looking for charging networks to ensure that they will seek out the Blink chargers rather than use one of its competitors' chargers, and then will continue using the charging networks for years to come.
A challenge will be the stores and other commercial locations that are putting in free fast chargers to lure EV customers, as Walgreens is doing. If people know the bulk of their charging is happening at home, they might not immediately jump into a charging membership if they think they can get it for free. It is also a bit of a chicken-and-egg conundrum. If enough drivers choose Blink, stores like Kroger could be more apt to choose Blink as a partner for its charging stations (as it already has done).
Home charging is just one portion of ECOtality’s business. The company also has a fast charger for industrial and commercial fleets, called Minit Charger, and an R&D arm, eTec Labs. The new level 2 chargers will be shipped in early summer.
Reuters: Fisker Acquisition Offer From Wanxiang and Ex-GM Exec Bob Lutz
-
We've observed the slow-motion luxury hybrid car crash that has been Fisker's path to market for the past few years.
Reuters is now reporting that Wanxiang Group, China's largest auto parts supplier, has joined with former vice-chairman of GM Robert Lutz to make an offer for venture-backed electric hybrid car builder Fisker.
Lutz led the development of the extended-range plug-in Volt at Chevrolet.
Wanxiang recently purchased A123 Systems, the bankrupt lithium-ion battery maker that supplies batteries for the Fisker Karma. Wanxiang intends to keep A123's grid battery business alive in the form of A123 Energy Solutions, a division which has already deployed in excess of 100 megawatts in grid projects from Hawaii to Chile.
Wanxiang could restart production to fill Fisker’s needs. Fisker said in late January that it was awaiting the opening of A123’s Livonia, Mich. battery plant to restart Karma production.
Fisker has been struggling amidst a very public set of troubles, including production delays, storm-related losses, bad reviews and recalls of its $100,000-plus Karma plug-in sports car. It’s also been denied ongoing access to a $539 million Department of Energy loan meant to build a factory for the startup’s promised $55,000 plug-in sedan, the Atlantic. Fisker has drawn down about $192 million of that loan, but it has stopped work at the Delaware site and laid off about half its workforce.
Founder and namesake Henrik Fisker left in March, amidst reports that China’s Zhejiang Geely Holding Group was leading in bidding to take a majority stake in Fisker.
Most recently, we've seen the pain of layoffs and restructuring and the descent of bankruptcy lawyers.
Fisker raised nearly $1.2 billion in private investment since its 2007 founding. Much of that has come in the last year and a half, including $380 million from KPCB and NEA in the first half of 2012, as well as now-defunct investment firm Advanced Equities (Fisker raised $103 million of a $150 million round from Advanced Equities in the third quarter, according to this SEC filing). Fisker's $1.2 billion in private investment makes it one of the largest VC-funded implosions in history.
About 1,500 Karma models have been sold to date, but Fisker has not built a car since last July.
Jalopnik wrote that the Fisker has "an interior the size of a Geo Metro, build quality that has a real Pyongyang sort of charm, and, of course, a crippling lack of money. But holy crap, is that a pretty car." Jalopnik suggests that Fisker abandon any pretense of battery power and just put an internal combustion engine in the beautiful body of the Fisker.
Jalopnik's hopes have been answered.
Lutz and partner Gilbert Villarreal launched the VL Destino at the Detroit Car Show earlier this year. The Destino mates the Fisker shell with the drivetrain of a Chevrolet Corvette ZR1. It reportedly sells for $180,000 compared to the Fisker's $110,000 price tag, although Fisker's models are now reportedly selling for half that.
Green Car Reports notes that the Destino might not be significantly less fuel-efficient than the 20-mile-per-gallon Fisker.
Fisker's position remains shaky, and sources warned that efforts to revive Fisker are ongoing.
New York ‘Consumer Alert’ About Car Sharing Is a Wake-Up Call
-
RelayRides, one of the leaders in the emerging peer-to-peer car-sharing market, skidded to a stop in New York last week. The company shut down service in the state after officials issued a consumer alert about its insurance policies, calling them "illegal and inadequate."
Benjamin Lawsky, New York's superintendent of financial services, issued a damning statement about the company's policies.
“RelayRides sold New Yorkers a false bill of goods. Despite RelayRides’ assurances to the contrary, their New York customers could get left holding the bag financially for an accident because the company’s insurance is illegal and inadequate.”
RelayRides operates a sharing service in seventeen cities that allows car owners to rent their vehicles to anyone for short periods of time, bypassing traditional car rental services. RelayRides' closest competitor, Getaround, offers a very similar service in five cities.
With a presence in twelve more cities than its competitor, RelayRides got out ahead in the race to expand to new markets. But its problems in New York show why expanding too quickly can create major headaches.
The problem, according to New York officials, is that RelayRides assumed vehicle owners were covered under its $1 million insurance policy through a local insurance company. So the company told people renting out their cars that they would be reimbursed for any damages and would not have to bring their own insurer into a claim.
However, New York law says that anyone driving a vehicle -- renter or owner -- must be considered under a car owner's personal insurance. So when RelayRides told customers they would be protected by its own insurance policy if anything bad happened, the company was engaging in false advertising, according to New York officials.
On May 16, RelayRides shut down its service in the state.
"Innovation, by its nature, does not always fit within existing structures. Although we’ve been careful to ensure the protections offered to our member community comply with legal frameworks around the country, we learned in conversations with the NY Department of Financial Services that it believes there is noncompliance with certain unique aspects of NY insurance law," said CEO Andre Haddad in a statement.
The news came just one day after RelayRides acquired a competitive car-sharing service, Wheelz, which increased the company's size by 20 percent and gave it some interesting new technology plays for connecting renters and car owners. The company's spokesman, Steve Webb, declined to comment beyond the official statement. But Webb did say that "every state is different, and we're working on a case-by-case basis to understand the difference."
Car sharing firms are saying little about these problems publicly. For example, before RelayRides abruptly ended service in New York, a spokeswoman at the competitor firm Getaround was eager to do an interview. Shortly after the news broke, however, the company avoided all of Greentech Media's requests for an interview on the subject.
Companies operating sharing services are no strangers to controversy -- particularly in New York. Just yesterday, New York City banned the room-sharing company Airbnb from facilitating short-term rentals, saying it violated a law preventing landlords from running illegal hotels. Also last week, SideCar, a company that uses a mobile app to create peer taxi services, was forced to suspend services in New York after a judge found it violated taxi laws.
So are these examples of companies expanding too quickly without truly understanding the law, or are they examples of archaic regulations that aren't keeping up with innovative business models in the sharing economy?
Robin Chase, the founder of Zipcar, thinks it's both.
"I'm not surprised RelayRides got kicked out of New York," said Chase in an interview. "The company's expansion was breathtaking to me. In many states, the car owner is unprotected, and they were putting car owners' insurance at risk. New York is a particularly bad state to operate in."
Chase, who co-founded the pioneering car-sharing firm Zipcar in 2000, started GoLoco, a ridesharing company in 2007. (Since all passengers are going to the same place and the service is not a "taxi," the company does not violate insurance laws).
In 2011, Chase started the peer-to-peer car company Buzzcar in France. One of the main reasons for the shift to France was her ability to get an insurance policy that would actually cover all parties. Since only California, Oregon and Washington state have adopted insurance laws to accommodate car sharing, Chase worried about the legal implications of expansion in the U.S.
As a long-time entrepreneur in the car-sharing space, Chase is extremely excited about the potential for new business models. But she worries that some startups are either naive or deliberately hiding the reality of insurance regulations.
"I'm all for transportation innovation. And we need to change insurance laws so that it can happen. But right now some companies are basically lying about what will happen with a customer's insurance, or they don't know -- and that's creepy. I'm stunned at some of the VCs that are backing them."
Leading car-sharing companies have been raking in the venture capital. RelayRides brought in $13 million from a range of firms, including Google Ventures and General Motor Ventures; Wheelz, the company just acquired by RelayRides, raised $14 million from Fontinalis Partners and Zipcar; and SideCar recently closed a Series A round with Google Ventures and Lightspeed Venture Partners for $10 million.
Of course, Zipcar faced its share of problems when starting out as well. The company received some complaints from homeowners worried about a business operating on the street in their neighborhoods. But people eventually became comfortable with the concept, and those complaints faded.
Zipcar was able to avoid many of the regulatory headaches other firms are currently dealing with because it operated its own fleet of vehicles. The new wave of peer-to-peer services cuts out the middleman -- making car sharing more efficient, but also making insurance liability much more complicated. Since insurance laws are set on a state-by-state basis, putting the regulations in place to make the sharing economy easier to implement will be more difficult than overcoming simple perception barriers.
“I have no doubt that shared cars are 100 percent the future. But right now it’s illegal in some states,” said Chase. “We need to enable people to share their cars, and something needs to change legally to allow that to happen.”
Startup peer-to-peer car-sharing companies will need to spend precious time sorting through these regulatory issues if they are going to protect their customers and continue expanding. Although some question the prudence of expanding into markets where the law is unaccommodating, the strategy has spurred a needed debate about regulatory reform as the lines between consumers and traditional companies blurs. It may just take this kind of legal scuffle to create change.