SolarCity, a San Mateo, California-based solar energy company, calmed anxious investors last week when its discounted IPO surged on Wall Street. In a telephone interview with The Christian Science Monitor, SolarCity CEO Lyndon Rive outlined the company's holistic approach to solar power, to which he attributes the success. Though it's often depicted as a solar installer, SolarCity is just like any other energy company, Mr. Rive said – except the power plant is on your roof:
Question: After a rocky start last week, SolarCity shares soared 50 percent in its Wall Street debut. To what do you attribute the turnaround?
Answer: It just comes down to the fundamentals of the business. The product is super simplistic. It’s just cheaper, cleaner electricity ... Most people when given the option of paying more for dirty power or less for clean power will take paying less for clean power. There was tremendous headwind against the solar industry. I personally underestimated how deep the scars go and the amount of money the investors have lost ... In order to get the interest level to the high demand we had, we had to give a significant discount so that the investors knew there was no risk.
The energy industry has been around for a very long time of course, but it’s all centralized creation of energy. You create the energy at a centralized location and then you use transmission and distribution to get it to your house. Never before has there been an energy company that creates energy at the place where it’s needed. So these two concepts are disparate and haven’t been seen by investors.
There were good arguments on both sides to pull the IPO because the $8 number was just too low. But then Elon Musk, our chairman, reached out to a few of the institutional investors and started discussing the options with them. If the closest category is so new and no one has done this, you need to build the investor confidence. ( Continue… )
A judge in the southern state has ordered that TransCanada Corp., the company behind the building of the continent-spanning oil pipeline, must stop work on a stretch of the line that will run beneath property owned by Michael Bishop for two weeks, due to that man’s challenge of the pipeline’s intentions. (Read More: Obama Under Increasing Pressure to Make Keystone XL Decision)
While the documents Bishop signed allowing TransCanada to use his property for the line specifies that the pipes can carry crude oil, there is no mention of bitumen, the semi-solid form of petroleum that originates in Canada’s oil sands. Bitumen must be diluted or heated in order to liquify it for transport, requiring different pressure levels than the simple transport of liquid crude – something that Bishop says is not mentioned in the contract he signed with the company.
For its part, TransCanada suggests that the temporary restraining order issued by the judge is not a long-term concern. ( Continue… )
Edison Mission Energy, the power generation arm of Edison International, voluntarily filed for Chapter 11 bankruptcy protection Monday. The Santa Ana, Calif.-based holding company reported $5.13 billion in assets and $5.1 billion in debt in its filing with the US Bankruptcy Court. Midwest Generation, a Chicago-based subsidiary, was also included in the filing.
The company's financial woes reflect the obstacles coal faces in a energy market increasingly dominated by cheap natural gas and a shift towards renewables.
"Like other independent power generators, EME has been challenged by depressed energy and capacity prices and high fuel costs affecting its coal-fired facilities, combined with pending debt maturities and the need to retrofit its coal-fired facilities to comply with environmental regulations," read the company's press release.
When most people hear the phrase “fossil fuel subsidies” it conjures up images of governments giving their hard-earned tax dollars to already highly profitable oil companies. That’s what they have been conditioned to think by certain activists and politicians, and quite naturally this image evokes outrage.
On more than one occasion, I have pointed out that the vast majority of these so-called fossil fuel subsidies are really governments keeping fuel prices artificially low for consumers. This is a subsidy because consumers aren’t paying the true price of the fossil fuel, and the amount of the subsidy is the difference between what consumers pay and the market price. In most cases, the primary beneficiary of the subsidy is the consumer, and the secondary beneficiary is the fossil fuel company who gets to sell more product than they otherwise might.
In oil producing countries, the government is typically the entity providing the subsidy. They do this by giving up revenue. For example, in Venezuela consumers can buy gasoline for pennies a gallon. The state-owned oil company Petróleos de Venezuela, S.A. sells gasoline at well below the cost to make it, and the loss of revenue to the government is the amount of the fossil fuel subsidy to the consumer. ( Continue… )
Innovation is Central to Making Clean Energy Cheap
The United States and the world face an urgent imperative to transform its energy system by developing and deploying low or zero-carbon technologies on a dramatic scale. And while developed regions like the United States and Europe might be willing to change their consumption patterns and businesses to incorporate clean energy (though not significantly), developing nations can’t afford to pay the necessary premium for this access. And they shouldn’t have to, as they try to gain access to energy of any kind. As such, the only way the entireglobal energy system can transition to clean energy is if its cost is lower and its performance is equal to or greater than cheap fossil fuels like natural gas, coal, and oil.
Unfortunately, today’s clean energy technologies like wind, solar, electric vehicles, smart grids, and energy storage are more expensive and oftentimes performance-limited compared to their fossil competitors. Solar and wind power are intermittent without energy storage and still require significant advances in energy conversion efficiency. Electric vehicles are up to double the cost of comparable gasoline powered cars, and significant infrastructure build-out like smart grids, charging infrastructure, and transmission lines are barriers to rapid deployment as well. (Read More: An Introduction to Fueling Innovation)
Without a doubt today’s clean energy technologies have made dramatic progress and innovations have propelled a doubling of renewable energy in less than 5 years, but much more is needed. Today’s technologies won’t be able to propel the world to deep reductions in global carbon emissions, but improving on today’s technologies and developing new designs can. ( Continue… )
The US Environmental Protection Agency (EPA) introduced new standards Friday that aim to reduce the amount of soot released into the air by 20 percent.
The annual health standard will be lowered from 15 micrograms of fine-particle pollution per cubic meter down to 12.
The move may have broader implications, as well. Energy companies and environmental activists are watching closely to see if the new standard is the beginning of many bold environmental moves by President Obama in his second term. The administration has been tight-lipped on the subject.
“These standards are fulfilling the promise of the Clean Air Act. We will save lives and reduce the burden of illness in our communities, and families across the country will benefit from the simple fact of being able to breathe cleaner air,” said EPA Administrator Lisa P. Jackson in a statement. ( Continue… )
A new report released this week by fuel giant Exxon says the energy production revival in the United States will continue into the far future, confirming the U.S. Energy Information Administration’s (EIA) prediction that the country will become a new exporter of energy by 2025.
The annual long-term energy report outlines Exxon’s view of the surging American energy sector, taking into account new production in both the U.S. and Canada, along with increased energy efficiency and expanded distribution networks, in determining the country’s energetic future, with the report also noting that generally flat demand around the developed world is expected over the next 10-15 years. (Read More: U.S. Energy Production to Hit Record Highs)
“This competitive energy supply provides a strong foundation for increased economic output in the U.S., opening up many new and valuable opportunities in many regions and sectors of the U.S. economy,” said William Colton, Exxon Mobil’s vice president of corporate planning. “This includes not only the energy sector, but also chemicals, steel and manufacturing.” ( Continue… )
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… )