Renewables are facing a hard reality; the business models, even with big subsidies, just don’t make economic sense for consumers, government or investors.
Yesterday, the Wall Street Journal, often a fan of corporatist cronyism, had an interesting story about a SEC investigation into Elon Musk’s empire. That empire is built on the heady dreams of trendy trust-funders and other sycophants who Musk, the modern Wizard of Con, knows better than anyone how to court. He’s their “hero.”
Federal regulators are investigating whether solar-energy companies are masking how many customers they are losing, according to a person familiar with the matter.
The Securities and Exchange Commission is examining whether San Francisco-based Sunrun Inc. and Elon Musk’s San Mateo, Calif.-based SolarCity Corp. have adequately disclosed how many customers have canceled contracts after signing up for a home solar-energy system…
It is the latest in signals from those peeking around the curtain to see Musk’s business plan is little more than a sound machine intended to hawk investments in a bad business model that has served to do little more than employ Musk’s two cousins, while ripping off the State of New York.
One of our loyal Upstate New York readers here at NaturalGasNOW put together some additional news items on this score. He sent them along suggesting they indicate serious weaknesses in the renewables industry that offer a window for the natural gas industry to build demand as the cleanest and cheapest way to get the job done; both now as the alternative to renewables and down the road as their natural complement.
What are those bits of news? Well, first, there is the fact SolarCity (now part of Tesla, since Musk effectively adopted his cousins and took over their failing enterprise) is ending door-to-door sales. Articles here and here tell the story. This quote hits the salient point:
In its first financial report after its acquisition of SolarCity, Tesla reported a $121 million net loss. At the time, the company said it would “prioritize cash preservation over growth of MW deployed.”
The company plans to focus on profitability instead of growth, it said to investors, as well as ramp up its battery production. Part of that focus includes a reduction in advertising spending, selling SolarCity products in Tesla stores and shifting away from its leasing model, which accounted for more than half of the market share this year.
Sounds like that Buffalo Billion plant might stay vacant a bit longer than expected.
Then, there is the sale of Sungevity, complete with layoffs without notice and a name changed to Solar Spectrum. Call in “Under New Management” at a mega-scale. Here are some of the takeaway quotes from this bit of depressing news from the world of renewables:
“No-longer-bankrupt solar sales firm Sungevity has laid off two-thirds of its remaining technical staff, breaking the news at a company meeting today, according to sources. The company will provide no severance to the laid-off employees.”
“Data on Sungevity’s annual losses from 2007 to 2016 was recently added to the bankruptcy docket. It looks like the firm has lost almost half a billion dollars since its inception.”
“The San Francisco Chroniclerecently reported on claims that Sungevity held on to money meant for solar panel installers, who in turn had to place liens on customers’ homes.”
“A source tells GTM, “Bankruptcy provides a clean slate after a company bounces paychecks, steals earned vacation pay, and fails to warn employees about impending layoffs, but when the ill treatment extends to customers, the marketplace might prove less forgiving.”
Our reader notes this is, once again, more “about their business model and HR practices while burning through venture capital, than the technology itself. Some solar companies, such as FirstSolar, are run much more conservatively and seem to be doing OK.” Unfortunately, it seems there are more Musky Wizards of Con than conservative entrepreneurs with good ideas in the renewables industry.
There is, as well, yet another problem. It has to do with another aspect of the business model, which is based on attacking other resources and technologies on their own turf rather than carving out niches where success can be achieved and built upon. This is, of course, why Musk is a hero to so many ideological fractivists who view him as their Braveheart when he’s really just another Don Quixote tilting at windmills (or drilling rigs in this instance). His “island microgrids” represent but 36% of his storage capacity:
However, “there is little to suggest that Tesla is seeking to become a full-service microgrid operators in underserved regions,” the authors added. “Most of the islands where it has deployed its technology to date are well developed and served by local utilities.” Tesla does not appear to be installing distribution grid technology or managing retail electricity operations, both of which are crucial to the successful deployment microgrids in frontier markets (as we’ve covered).
Our reader observes from this that “the weak spots for both solar and wind are storage of local surplus production and microgrids to distribute it later. Until they can do that, natural gas has a comparative advantage over both other fossil fuels and renewables.” Even after storage and grids scale to utility level, as is expected sometime down the road, there will still be an advantage over fossil fuels and natural gas will still be needed to handle peak demand and make renewables practical. Yes, there will be disruptions along the way because that’s how economies and technologies progress.
This means we must use this time, however long or short it may be, to develop and meet domestic demand, if for no other reason than insurance in the event renewables don’t hit their overly optimistic time tables, storage is slower to scale than Tesla suggests (likely) and/or foreign suppliers scale up gas production as fast as Pennsylvania did in the last 10 years. “If the Russians frack Siberia, there will be very little market for US gas in either Europe or Asia; Putin is counting on it,” our reader suggests and all indications are he’s quite correct.