The speed of innovation outside the walls of utilities outstrips the speed of innovation within. As new and disruptive vendors, technologies, and business models enter the market, many utilities have seemed unsure about what their role is or should be. In the third in our four-part series (See Part I by Mat McDermid, Finding the Regulated Utility Role in a Shifting Energy Landscape; and Part II by Sam Shrank, How Behavioral Science Can Increase Energy Efficiency Adoption), we discuss how utilities can and should leverage their unique position to accelerate and manage the deployment of innovations for the benefits of all customers.
Here are three roles utilities can play to better manage innovation in a changing market.
The ambassador: help customers understand the benefits of new innovations
Technology advancements are broadening customer access to a wide range of new energy services. But technology alone is never enough: customers must feel comfortable incorporating these advancements into their daily lives. Utilities are well-suited to providing customers with answers on a wide range of energy services and moving them up the adoption curve. They have already achieved significant success in areas such as energy efficiency, where the average cost per kWh saved through utility energy efficiency programs is just 2.5 cents. Areas such as electric vehicles are opportunities for utilities to build on this success as ambassadors for new energy services.
Many customers are already somewhat familiar with the host of benefits promised by electric vehicles, such as lower fuel costs, greater energy independence, and reduced emissions. However, as new charging technologies and batteries enter the market, customers have many questions about adoption expense, reliability, and technical feasibility. ( Continue… )
A day after lowering expectations by cutting the price of its shares, SolarCity Corp. saw its initial public offering make a soaring Wall Street debut.
SolarCity's shares opened at $9.25 on Nasdaq, up 16 percent from its IPO price. By Thursday's close, it had gained $3.79 per share, a stunning rise of nearly 50 percent.
What a difference a day makes.
The change of fortune is a sign investors may be warming to the "buy side" of the solar industry. As an installer, SolarCity does not compete with the proliferation of cheap Chinese panels arriving on US shores. It instead capitalizes on the flooded market. ( Continue… )
The business outlook for SolarCity Corp. dimmed this week.
The installer of residential solar systems postponed its much-anticipated announcement of its initial public offering Tuesday, only to sharply reduce its share price in announcing its IPO the following day.
Instead of the $13 to $15 per share price it previously expected, SolarCity now says it will sell its IPO shares at $8 apiece, according to a filing with the US Securities and Exchange Commission Wednesday. The San Mateo, Calif.,-based company also announced it would offer 11.5 million shares of stock, up from 10.1 million shares. The IPO could be floated later this week.
The price reduction cuts the company's previously estimated value of nearly $1 billion almost in half, to about $584.6 million. ( Continue… )
Energy firm Enbridge has announced that it has received support from shippers and will go ahead with its investment of $6.28 billion in expanding the system of pipelines that transport crude from locations in Canada and the United States around North America.
The project, dubbed the Light Oil Market Access Program, will see improvements made to several pipeline systems spanning the continent in order to boost their capacity, including the North Dakota regional system, the United States mainline system, and the Canadian mainline terminal capability system.
This expanded ability to move light crude around the continent will have benefits for many refineries, notably those on the east coast, allowing Enbridge to increase fuel access by 400,000 barrels per day of light oil to markets in the Canadian provinces of Quebec and Ontario, as well as many areas in the midwestern United States. (Read More: Obama Under Increasing Pressure to Make Keystone XL Decision)
The announcement comes as Enbridge works to improve its penetration in delivering crude to North American markets, beginning with the launch of the so-called Eastern Access Program announced in May 2012, and a similar program intended to help ship oil produced in the Gulf of Mexico; all money invested so far has improved the mainlines that ship oil throughout the continent. ( Continue… )
The auction sale to a Chinese company of bankrupt advanced battery maker A123 Systems, which received millions in US taxpayer support, is drawing heavy fire for both national and economic security concerns.
On Sunday, the US-based auto parts subsidiary of China's Wanxiang Group, outbid US-based Johnson Controls, Japan's NEC, and Germany's Siemens by paying $256.6 million for the assets of the company. A Delaware bankruptcy court was weighing the deal Tuesday.
If approved by the bankruptcy judge, the sale of A123 still must go through one more hoop. The Committee on Foreign Investment in the United States (CFIUS), a federal advisory group led by Treasury Secretary Timothy Geithner, still must approve any sale of a US business to a foreign company.
Under normal circumstances, sale of assets of a bankrupt auto-parts supplier would draw little attention. Not so for Waltham, Mass.-based A123, which makes lithium-ion batteries for next-generation plug-in hybrid and all-electric battery-powered cars. The reason: its $249 million clean-energy grant from the Obama administration. ( Continue… )
At the end of November, the U.S. Department of Energy announced that it had selected Argonne National Laboratory in suburban Chicago to host the Joint Center for Energy Storage Research (JCESR), and bestowed upon it a $120 million grant over 5 years, alongside a $35 million commitment for a new 45,000 square foot facility from the State of Illinois.
As noted in this article in the Chicago Tribune, the goal for the JCESR is to improve battery technologies by a factor of five — five times cheaper, with five times higher performance — within five years.
One of the nation’s Energy Innovation Hubs just being launched, the JCESR has an impressive list of collaborators. In addition to Argonne, four other national laboratories – Lawrence Berkeley, Pacific Northwest, Sandia and SLAC National Accelerator – will also conduct research under the JCESR umbrella. University research partners include Northwestern University, the University of Chicago, the University of Illinois at Chicago, the University of Illinois at Urbana-Champaign, and theUniversity of Michigan. A long list of the leading venture capital firms active in the cleantech arena – including ARCH Ventures, Khosla Ventures, Kleiner Perkins, Technology Partners and Venrock – will serve on an advisory panel to help focus the research on commercially-interesting opportunities. Corporate titans Applied Materials (NASDAQ: AMAT), Dow Chemical (NYSE: DOW)and Johnson Controls (NYSE: JCI) have loaned their names to the effort. ( Continue… )
If an employer wants to maximize profits, it will want to leverage its use of high-priced energy sources. From an employer’s point of view, there are basically three kinds of energy, from most to least expensive:
- Human energy
- Petroleum energy
- Everything else
If an employer wants to keep its costs low, it needs to minimize its use of expensive energy sources. The primary way it does this is by leveraging expensive energy sources with cheaper energy sources that help keep overall energy costs in line with what competitors (including overseas competitors) are paying. Thus, employers will want to use as little human and petroleum energy as possible, instead using cheap energy to substitute.
Human energy is the most expensive form of energy. It is very expensive because an employer needs to pay the employee enough to live on. This amount includes the cost of energy to fulfill the human’s needs, plus enough extra to cover taxes to cover the cost of energy for those who for some reason cannot work, plus taxes for maintenance of public infrastructure. An employer can keep his cost of human energy low by ( Continue… )
It’s getting hard to justify using oil heat, even in the Northeast, where the fossil fuel is making its last stand in the home-heating market.
The gap between heating oil and natural gas prices has grown so large – the biggest in at least a decade – that the incentive to convert to cheaper natural gas keeps growing. While it can cost $10,000 or more for a homeowner to make the switch, conversions appear to be on the rise. Some states are trying to make it easier for homeowners to convert, touting efficiency gains and emissions reductions. But the oil-heat industry isn't giving up without a fight.
The latest battleground is Connecticut. Gov. Dannel Malloy wants to extend gas lines to provide more than 300,000 customers the option to stick with oil or switch to natural gas, which would more than halve winter heating costs. Oil service companies, often small family-owned concerns, call his plan favoritism.
"They're using state resources to eliminate jobs, delivery drivers, customer service representatives," Stephen G. Rosentel, head of a family-owned home heating business in Danbury, told the Associated Press. "These are real jobs and real people, and they matter." ( Continue… )
Americans are warming to an old-fashioned technology to heat their homes: wood-burning stoves.
Some people are looking for cheap heat. Others prefer wood because it can free them from the energy grid. Wood consumption for home heating has risen steadily over the past decade in the United States, reversing a decline in the 1980s and '90s, according to the Energy Information Administration (EIA). The number of homes using wood as a primary heat source has risen 24 percent since 2006, and is projected to rise another 3 percent this winter.
But just as wood is going mainstream, its growth as a heating source is under threat. Environmental groups point to troublesome airborne particulates created by burning wood. Several groups, including the Environmental Defense Fund, the Natural Resources Defense Council, and Clean Air Watch, sent a letter this month to the Environmental Protection Agency (EPA) asking that federal wood-burning standards, set in 1988, be made more stringent.
"[T]he stuff we've learned about particles since the 1990s is voluminous," says Janice Nolen, assistant vice president of national policy at the American Lung Association in Washington. "We have had thousands of studies since then that are not addressed in the evidence the EPA has on the requirement book because they simply didn't exist." ( Continue… )
Freeport-McMoRan Copper & Gold Inc., one of the world’s largest copper producers, announced Wednesday it will purchase a pair of oil and gas companies in a deal totaling $20 billion.
The Phoenix-based mining company will pay $3.4 billion in cash to purchase its sister company, McMoRan Exploration Co., which was spun off from Freeport-McMoRan in the 1990s. Also, Plains Exploration, a Houston-based oil and gas company, will be acquired for about $6.9 billion in cash and stock. Freeport-McMoRan will assume an additional $11 billion in debt as part of the deal.
The move is the second attempt at diversification beyond metals for Freeport-McMoRan and a lifeline for McMoRan Exploration, which has been struggling to persuade investors that its clogged, ultra-deep oil well in the Gulf of Mexico will soon come online. McMoRan shares have fallen 46 percent in the past year and dropped 9.7 percent early Monday as the company announced the well was restricted by skin or formation damage.
"The transaction offers significant values to the [McMoRan] and [Plains Exploration] shareholders and will enable [Freeport-McMoRan] to build on these values through a much larger, well capitalized platform," James R. Moffett, chairman of the board of Freeport-McMoRan, said in a statement. ( Continue… )