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Mercedes Plans to Invest $1 Billion in an Electric SUV-Plus-Battery Plant in Alabama

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Mercedes is investing more than $1 billion to upgrade a U.S. plant for assembling batteries and electric SUVs — putting a big bet on the market for larger battery-powered vehicles. 

The German automaker, owned by Daimler, made the announcement Thursday at its Tuscaloosa, Alabama plant, which makes its SUV models GLE, GLS and GLE Coupé.

Along with a nearby battery factory, Mercedes will upgrade factory lines to build its EQ brand electric SUV, the EQ C, starting sometime around 2020. 

The move comes as Mercedes prepares to launch its broader EQ line of EVs, starting with the EQ A midsize hatchback, and now the EQ C. Daimler CEO Dieter Zetsche said earlier this month that Mercedes will offer electric versions of all of its models by 2022, plus a new series of plug-in hybrids, for about 50 new models in all.

All told, Daimler plans to invest $11 billion in EVs over the next five years. 

The company told investors that profit margins may suffer in coming quarters as it ramps up sales of EVs — which come with roughly half the profit margins of its internal combustion engine vehicles — in order to prepare for a world market more focused on reducing vehicle emissions. 

Daimler’s moves are being matched by automakers around the globe, and not just early EV entrants like Nissan and General Motors.

Volvo announced in July that every new vehicle model released starting in 2019 will be either a hybrid or electric. Audi is scaling up EV production at its Brussels plant. Volkswagen has committed to investing $10 billion over the next five years to bring 25 new EV models to market by 2025. And Ford plans to invest $4.5 billion in electrification by 2020.

Meanwhile, the electric SUV market is mainly defined by Tesla’s Model X — a gull-winged, poorly reviewed vehicle. CEO Elon Musk described it as the “technology bandwagon of everything cool we could imagine all at once.” 

The Model X received Consumer Reports’ second-worst ranking in midsize luxury SUVs, and analysts report that vehicle registrations in the U.S. have been slipping over the past few quarters. Tesla recently dropped the price from $82,500 to $79,500.

Musk took a moment during a May earnings call to address the next SUV concept, the more fleshed-out Model Y. That vehicle, supposedly featuring a “genuine step change” in manufacturing, will “aspirationally” be out in 2019, or more likely in 2020, he said.

Battery prices are one of the most critical determinants in EV pricing, which has turned automakers into battery manufacturers.

Tesla’s Gigafactory in Nevada, as well as its foray into behind-the-meter energy storage through its Powerwall and Powerpack systems, has gotten much of the press attention.

But Mercedes has also launched a U.S. energy storage company making use of its automotive manufacturing capacity — in fact, the battery plant it’s building in Tuscaloosa will be its fifth around the world. 


Be the first to comment - What do you think?  Posted by Editor - September 22, 2017 at 6:35 am

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UK’s Drax to Join Growing List of Battery-Equipped Coal Plants

Drax, the U.K.’s largest power plant, this month applied to build a 200-megawatt battery system as part of a wider move away from coal.

Plans for the battery — which would be the largest in the U.K. and more than double the country’s current level of electrical storage — followed a June proposal to convert two of Drax’s six coal generation units into 3.6 gigawatts of gas-fired capacity.

Three units in the plant, located in Yorkshire, northeast England, are already burning biomass, mostly imported from the U.S. and Canada.

The plans “are subject to a positive investment decision and would need to be underpinned by a 15-year capacity market contract,” said Drax in a press statement.

“The upgrade would enhance Drax Power Station’s flexible and responsive capability, and make Yorkshire the home of large-scale battery technology,” according to the statement. “At this early stage in the planning process, these figures represent the maximum parameters of the project.”

It remains to be seen how Drax’s plans might be affected by U.K. government moves to adjust the way battery storage is treated within capacity markets. Until now, battery systems have been assumed to be able to deliver up 96 percent of nameplate capacity at any point in time.

But in July the U.K. Department for Business, Energy and Industrial Strategy announced a review of this derating value, related to the fact that many fast-discharge storage assets in the country’s enhanced frequency response market would be exhausted within an hour.

The exercise is expected to downgrade the derating value of short-term storage assets, because they can only provide limited support when the grid is stressed. Assets that can deliver energy for 4 hours or more are not likely to be affected.

Assuming Drax does eventually go ahead with its battery plan, it will be following in the footsteps of another European plant owner, Endesa. In February, Endesa unveiled proposals to add an unspecified amount of lithium-ion battery capacity to one of its biggest coal plants. 

The Spanish subsidiary of the Italian energy giant Enel was said to be pondering the installation of 30 minutes of storage in a bid to improve efficiency and flexibility at its 1,158-megawatt Carboneras coal plant, the third-largest source of pollution in the country.

Like Carboneras, Drax’s coal-fired generation activities are a major source of atmospheric pollution. This has led plant owner Drax Group to attempt various reboots since the power station was built in the early 1970s.

In 2006, for example, Drax studied adding carbon capture and storage technology to the plant. The work was dropped in 2015 after it was deemed too financially risky.

In the meantime, the company started switching half its generating units to biomass, taking advantage of green energy subsidies that the Financial Times says were worth £450 million ($607 million at today’s prices) in 2015 alone.

Today, the plant faces continued pressure to evolve because of faltering coal market dynamics. When it was built, with a maximum capacity of 36,000 tons of fuel per day, coal mining was a national industry that supported mass employment across Yorkshire.

Now, most of Drax’s fuel is imported from abroad, and support for coal is waning across Europe. In April, the U.K.’s electricity system made headlines after running for an entire day without any coal-fired generation, something that had not happened since the 1800s. 

The trend appears to be forcing operators such as Drax and Endesa to consider storage as a way of cutting emissions and remaining competitive in a low-carbon generation world.

This is also happening with gas, where, for instance, Southern California Edison and General Electric have developed hybrid electric turbines.

“Adding battery storage to a conventional plant can turn a slow-responding resource into a fast-responding resource — using the battery to meet immediate needs while ramping up fossil-fuel generation for longer-term operations,” said GTM Research analyst Daniel Finn-Foley.

“By sizing the project correctly and using the battery to simulate conventional operation, a plant can provide some form of spinning reserve without the traditional downside of burning fuel,” he said. 


Be the first to comment - What do you think?  Posted by Editor - at 6:25 am

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Energy Gang Live: Debating Local Climate Policy in the Trump Era

Donald Trump was in New York City this week. We left him some tickets for our live podcast at the box office, but he never showed up.

Still, we had a blast taping our latest episode at WNYC’s performance space in Manhattan. And this week, we’ve got that episode in its entirety. 

Special guest Mark Chambers, director of the mayor’s office of sustainability, joined us on stage for a lively discussion.

In this extended episode, we feature a variety of segments.

First, we tested the gang’s knowledge of New York’s energy scene with a little segment we called “Climate Week: The Game.”

Then, we interviewed Mark Chambers, who offered insight into the city’s climate action plan.

Then, we went deep. We had a debate about the importance of local climate and energy policy in the Trump era — with a little audience Q&A mixed in, too.

Finally, we completed a quick news circuit and analyzed some top energy stories in the news.

This podcast is sponsored by Mission Solar Energy, a solar module manufacturer based in San Antonio, Texas. You can find out more about Mission’s American-made, high-power modules at

A big thanks to Urban Future Lab, ACRE, Solar One, and NYSERDA for partnering with GTM on the Clean Energy Connections series.

The Gang with guest Mark Chambers. Photo credit: Urban Future Lab


Be the first to comment - What do you think?  Posted by Editor - at 6:15 am

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Have You Mastered the Utility Sales Cycle?

A new survey report from GTM Squared shines light on utility investment trends and sales cycles for solar, energy storage, and grid edge products. For vendors sitting across the table from utility buyers, the Mastering the Utility Sales Cycle report presents answers to questions about technology strategies, regulatory hurdles and competitive positioning.

The report reflects the perspective of more than 300 industry professionals, with roughly one-third from utilities, and two-thirds from vendors, consultants, regulators and researchers.

Below is a preview of the survey and some key takeaways. The complete report is now available to GTM Squared members here.

Preparing for the challenges of power m​arket evolution

Respondents from all demographics are making investments now to prepare for the future.

Concerns about recruiting a talented workforce have declined from the 2016 GTM Squared survey report; presumably companies are getting better candidates. Utilities are showing greater interest in consumer attitudes, while non-utility people are gearing up for greater involvement in regulatory proceedings. With DER proceedings underway in most states, it is little wonder.

Q: What is your organization investing in as it prepares for changes at the grid edge?

Source: Mastering the Utility Sales Cycle

All parties see room for improvement. Management and non-utility players report a spike in concern about regulatory issues — and the need to get on top of them. Ongoing struggles about net metering have rung alarm bells across the solar industry, and serve as a reminder to other technology sectors whose business models depend on favorable public policies.

The results reflect an industry in transition as it navigates the choppy waters of market reform.

Understanding the utility sales cycle for grid edge technologies

The survey confirms that energy policymakers and regulators are major factors in driving grid edge investment by utilities. States, especially, are encouraging demand response, net metering, and EV infrastructure, while distribution system planning policies are beginning to take shape in leading markets.

But policy is only successful if accompanied by falling technology prices and rising customer demand. It turns out that one of the biggest customers for DERs are the utilities themselves. Respondents ranked utility-facing technologies for operations and analytics as among the biggest opportunities over the next five years.

Interestingly, utilities ranked energy storage as the No. 1 investment in coming years, while non-utility people pointed to grid operations software and hardware. Advanced metering was another priority, as many utilities have yet to build out AMI.

Q: Rank the grid edge products that utilities will invest most in over the next 5 years

Source: Mastering the Utility Sales Cycle

Inside the minds of grid edge counterparties

Imagining the two dealmakers sitting across from the table from each other, we asked some questions to try to get in their minds. What do utilities want, and what should vendors offer them?

No other factor, not even price, ranked as high as seamless integration. Making the sale requires that new technologies dovetail with legacy systems.

Price, however, was much more important to utility buyers than to others. Non-utility people think having a trusted brand and innovative features are more important than do utility people. Given the novelty of many technologies, utilities may be looking at bottom-line cost and performance issues, and are less concerned about the history and reputation of vendors and their intriguing bells and whistles.

Q: What keeps utilities up at night when procuring physical DERs and grid edge assets?

Source: Mastering the Utility Sales Cycle

Whether the technologies are ready for action keeps all parties awake at night, none more than management positions (C-level, presidents and vice presidents). Utility and non-management people were equally concerned about high costs, and utilities have a bonus fear of regulatory disapproval for grid edge investments.

The vendors that fail to get traction with utilities are seen as not understanding utility operations — especially by non-utility people. Utilities also cite sub-standard products (not “utility grade”) as a cause of failure.


The survey’s results show that vendors and utilities are still seeking to understand each other across the deal table. The uncertainty found in last year’s GTM Squared survey has continued, perhaps even increased.

Utilities can have different concerns and priorities than vendors might think. They clearly put performance and cost first, especially in integrating new technologies into legacy systems. With so much sunk capital and so much riding on grid reliability, performance is not negotiable. 

But regulatory concerns rank high for utilities, perhaps more so than non-utility people appreciate. 

And little wonder, given the heavy influence of regulations in driving grid edge deployment. We are still some ways off from a “free market” in distributed energy technologies. The Trump administration has stoked rising concerns about the future of clean technologies, rolling back the Clean Power Plan and withdrawing from the Paris climate accord. Whether their reforms will reach down into distributed energy, typically the purview of state and regional policymakers, remains to be seen.

Meanwhile, state regulatory changes continue to be volatile. Nevada recently pulled the plug on distributed solar, only to plug back in as the legislature overruled the state commission on net metering. The New York REV proceeding, after years of effort, is still grinding toward implementation, despite losing REV champion Audrey Zibelman to Australia. Battery sales are booming, but residential solar in California, the largest state market, has slipped. Hanging over the solar industry is the threat of a trade war that could drive up hardware costs and scuttle some projects.

It’s clear from the survey and from developments in the industry that mastering the sales cycle means more than offering affordable plug-and-play solutions.

Click here to become a GTM Squared member and download Mastering the Utility Sales Cycle today!


Be the first to comment - What do you think?  Posted by Editor - at 6:10 am

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Corporations With 100% Renewable Energy Goals Now Account for 150 Terawatt-Hours per Year

Corporations continue to ignore President Trump’s charade over the Paris climate agreement.

During Climate Week NYC, the Climate Group announced a record number of companies have signed on to a 100 percent renewable power commitment by 2020. Major financial institutions Citi and JPMorgan Chase & Co. joined the pledge, bringing the group to 110 companies. Those corporations account for 150 terawatt-hours of energy per year.

The state of New York, where the event is taking place, consumes less energy than that in a year, according to the Energy Information Administration.   

“Their leadership will help to shape energy markets away from fossil fuels and deliver on the Paris Agreement at speed,” said Helen Clarkson, CEO of the Climate Group, which organizes Climate Week.

Also this week, General Motors committed to powering 20 percent of its global operations with renewables by next year. And 305 companies representing $6.5 trillion in market value agreed to set emissions standards through the Science Based Targets Initiative. 

In addition, the Ikea Foundation announced a $44.6 million grant for the We Mean Business coalition, which is dedicated to motivating the world’s most influential businesses to take action on climate change.

As Trump walks away from climate action, the rest of the global business community is rallying behind it.

Corporate renewable deals spiked to a cumulative 3.25 gigawatts in 2015, the year countries hashed out the Paris climate deal. According to the Rocky Mountain Institute, they fell back to 1.61 gigawatts the following year. This year is already looking brighter, with 2.09 gigawatts in deals announced through September 19. 

At the New York meeting, corporations took commitments a step further, announcing a new initiative through the Climate Group called EV100, to encourage the uptake of electric cars. According to its website, EV100 is “committed to accelerating the transition to electric vehicles (EVs) and making electric transport the new normal by 2030.”

The 10 companies leading the charge, including Ikea, HP Inc. and Pacific Gas and Electric (PG&E), have committed to promoting electric vehicle uptake in a few different ways: adding electric vehicles to corporate fleets, including electric-vehicle requirements in service contracts, or installing charging infrastructure for employees.

In the announcement, HP said it would expand its workplace charging plan internationally. PG&E said it would expand charging stations for customers and staff.  

Members of the new initiative will be helped along by policy and market forces. More automakers are building electric models, more countries are considering fossil-fuel car bans, and analysts and oil companies are revising electric vehicle projections upward.

One key aspect of EV100 is an attempt to “future-proof” operations while maintaining competitive edge.

The same is true for renewables. The 110 corporations now committed to the RE100 pledge represent $2.5 trillion in revenue — and they’re hoping to see a return.

“They’re not doing it out of the goodness of their hearts,” said Clarkson in September while announcing new RE100 members. “Renewable power makes business sense.”


Be the first to comment - What do you think?  Posted by Editor - at 6:05 am

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Feds probing Santee Cooper, SCE&G over failed nuclear project

The failure left nearly 6,000 people jobless


Be the first to comment - What do you think?  Posted by Editor - at 6:03 am

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Total Gets Deeper Into Renewables With Investment in EREN. Is Offshore Wind Next?

French oil giant Total is moving further into renewable energy, and may target the offshore wind market next, after this week’s investment in cleantech developer EREN Renewable Energy.

On Tuesday, Total said it took a 23 percent share in the company for €237.5 million ($284.9 million), with an option to buy the rest after five years. This week, Total also bought GreenFlex, a French energy efficiency player, for an undisclosed sum.

“Total integrates climate challenge into its strategy and is pursuing steady growth in low-carbon businesses, in particular in renewable energy,” said Patrick Pouyanné, chairman and CEO of Total, in a press release.

Philippe Sauquet, Total’s president of gas, renewables and power, added that “EREN RE’s momentum will allow us to accelerate our growth in solar energy and move us into the wind power market.”

According to one analyst, offshore wind is likely where Total will invest next.

“When we looked into renewable projects and compared them to oil and gas, it was offshore wind that was providing the scale and scalability on a par with upstream mega-projects,” said Valentina Kretzschmar, director of corporate research at GTM’s parent company, Wood Mackenzie.

“Offshore wind could be the next target for Total, simply because it is really the most attractive in terms of returns and the scale it offers,” she said. “It’s very comparable to the oil and gas projects that they have in their portfolio.”

So far, offshore wind remains absent from Total’s asset sheet, even though the company has perhaps gone further than any other oil major in its commitment to renewables, Kretzschmar said. Last year, the Paris-based company committed to have a fifth of its assets invested in low-carbon business ventures by 2035.

The company took an important stake in the solar sector in 2011, when it paid $1.4 billion for U.S. PV giant SunPower. In 2016, it acquired the French battery maker Saft, for $1.1 billion.

Earlier this year, the oil and gas giant set up a subsidiary, Total Solar, to develop commercial and industrial-scale PV plants. But this week’s investment in EREN Renewable Energy (EREN RE) signaled that Total mostly plans to achieve its 20 percent target through mergers and acquisitions.

EREN RE, which is due to be renamed Total Eren, has developed 650 megawatts of wind, solar and hydropower generation around the world, and is planning on a 3-gigawatt portfolio within half a decade.

Sources at EREN said that the developer is not active in the offshore wind market, but that Total’s investment will at least give the oil major more exposure to onshore projects.

In 2016, Total Energy Ventures acquired an interest in the U.S. small wind turbine leasing firm United Wind, but other than that its experience in the wind sector has been limited.

Getting to grips with onshore wind through EREN may be a precursor to a move into the riskier, but potentially more rewarding, offshore market, said Kretzschem said.

“I think all the majors are just finding their feet in this area,” she said. “It’s still very much a learning process for them. They are investing in different technologies because, ultimately, they do not know which technology is going to win.”

“Even though Total is committed to solar, now they are making a big point of diversifying into wind,” she added.

In offshore wind, the oil company to watch is Statoil, which has not only kick-started the floating foundation market with its Hywind project in Scotland but is also planning to add battery storage to the mix next year. 

Other European oil majors are jumping on the renewables bandwagon too. Shell, for example, owns 400 megawatts of wind generation and was said to be pondering a bid for Asian solar giant Equis Energy in July.  

Over the summer, Shell’s CEO said the company plans to spend up to $1 billion per year on its New Energies division by 2020. BP, meanwhile, owns almost 1.5 gigawatts of U.S. wind capacity. 

There is no indication that the oil firms will abandon their core business any time soon, though. Total’s biggest transaction in recent months, for example, was a $7.5 billion buyout of Maersk Oil & Gas.

The transaction will make Total the second-largest operator in northwest European waters, which make up the seventh-largest oil and gas-producing region in the world.


Be the first to comment - What do you think?  Posted by Editor - September 21, 2017 at 6:50 am

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Foreign Solar Manufacturers Weigh Opening US Facilities as Tariff Decision Looms

The pending U.S. solar trade case is about to hit a major crossroad.

On Friday, September 22, the U.S. International Trade Commission will determine whether or not the few remaining domestic solar manufacturers have sustained “serious injury” from imported solar products. If the answer is no, the case brought by petitioners Suniva and SolarWorld will be dismissed. If the answer is yes, the governing body will work on a proposed remedy. Ultimately, President Donald Trump will have the ability to accept, reject or reform the ITC’s recommended solution.

The Solar Energy Industries Association (SEIA), in partnership with utilities, solar supply-chain companies and free-market advocates, has been urging commissioners to oppose new trade barriers. Earlier this week, SEIA filed a letter with the ITC criticizing Sunvia and SolarWorld for not submitting a plan for how they’ll function as viable U.S. solar cell and panel manufacturers in the event they are granted trade relief.

Meanwhile, companies outside of the U.S. have been quietly making their own arrangements.

Several foreign solar cell and module makers said they’re exploring options to avoid potential trade restrictions by opening new solar manufacturing facilities in the U.S. — something President Trump would very likely want to see.

“It makes sense, right?” said Tom Zhao, managing director for global sales in BYD’s solar and energy storage division, in an interview last week at Solar Power International (SPI). “We follow Mr. Trump’s requirement about ‘Made in U.S.’ Win the jobs back for the U.S. Because the demand is here, our customer is here, our friend is here.”

According to Gagan Pal, chief marketing officer of Adani Solar, a fast-growing solar PV manufacturing business based in Ahmedabad, India, new tariffs aren’t necessarily a bad thing. While trade cases don’t align with free market principles, a policy that “puts everyone at par … is helpful,” he said. For Adani and others, the Suniva/SolarWorld trade case could help justify opening a new U.S.-based solar manufacturing facility. 

“If [new tariffs] come into effect, I think the clear direction that will emerge from this is that manufacturing in the U.S. will be incentivized, or supported by direct or indirect means,” Pal said.

The smartest or the dumbest guy in the room?

Adani Solar, a subsidiary of the Indian conglomerate Adani Group, could be well positioned to take advantage of tariffs on imported solar cells and a floor price on modules — should they be approved.

Two years ago, Adani Solar established an office in Florida and hired a small team to study the potential for expanding into the U.S. solar market. The effort initially focused on co-development, joint ventures and other opportunities, said Pal. Now, Adani is looking at whether or not to launch a full-fledged production facility for solar cells and modules.

The decision isn’t only tied to the Suniva/SolarWorld petition, “but truly related to the overall perspective within the Adani group to expand in global markets,” Pal said.

Expanding to the U.S. would fit into Adani’s broader business plan. The company recently built a 1.2 gigawatt solar cell and module factory in India and is in the process of expanding that plant to 1.5 gigawatts over the next three months. Pal noted that Adani was interested in expanding operations in the U.S. before the trade case emerged.

Still, Pal said his company is waiting for the final outcome of the ITC case to see if a U.S. factory would make commercial sense.

GTM spoke with several solar manufacturers and their partners at SPI who gave similar responses: they’re waiting on Friday’s ITC decision before making any big decisions. One major solar project developer indicated that a supply deal is already the works. Separately, a solar panel manufacturer said plans to open a U.S. factory are already underway. But in both cases, details could not be confirmed.

Companies were hesitant to address their plans on the record due to the sensitivity of the pending case. The overwhelming response among panel suppliers that did comment is that they’re keeping all options on the table.

“We’re being a prudent business and evaluating all options,” said a representative from Canadian Solar on the sidelines of SPI.

“We’re preparing for the contingencies and we will react, but you can’t take the first step because you don’t know what the tariff is going to be,” echoed John Dallapiazza, senior sales manager for the Rocky Mountain Region at Trina Solar, in an interview. “You would either be the smartest guy in the room for having reacted before the announcement or the dumbest guy in the room, but it’s a coin toss to know which one it would be.”

If the ITC finds injury, the next step is to hold a hearing on trade remedies on October 3. Suniva has requested a four-year tariff of 40 cents per watt on imported solar cells and 78 cents per watt floor price on imported modules. The ITC may come up with a different solution, which could also include quotas on solar products from other countries. Free trade countries may or may not receive favorable treatment.

While companies won’t know what the proposed remedies are until October, an injury finding on Friday may be enough of a signal for some players to publicize their U.S. manufacturing plans.

“Different companies and different management styles will definitely show themselves,” said Rhone Resch, former president and CEO of SEIA.

Trump campaigned on prioritizing U.S. manufacturing, and signed an executive order on the topic in April. (Image credit: The White House)

BYD: “Made in the U.S. may be a good solution”

China-headquartered BYD is among the companies considering a U.S. solar manufacturing plant — depending on the remedy. 

The industry might be able to absorb a small tariff without huge disruption, but Suniva’s proposed 78-cent floor price would be “real crazy,” said Zhao.

“Then the solar developers have no modules in the next two years in the U.S.,” he said.

Some clients have said they would have to suspend projects until the local supply chain is ready, should that level of obstacle arise, he added.

BYD, though, wouldn’t stand on the sidelines waiting for prices to come down.

“We are also thinking about putting a factory in the U.S. if the 201 case comes into place,” Zhao said. “’Made in U.S.’ may be a good solution to try to help our customers here. They have a very long pipeline of solar projects for the next few years, and they cannot really afford to pay the higher cost of modules.”

Exact locations are still in discussion, but the company already has a 1,000-person electric bus factory in Lancaster, California, so it could try to expand operations in that area.

Building a module factory would take about one year, Zhao said, whereas a cell factory, which requires more extensive environmental impact compliance, might take two years.

Recent statements from at least one major solar project developer show that there’s demand for a domestic manufacturing solution, even if it takes some time to set up. On NextEra Energy Partners’ most recent earnings call, management said they don’t see manufacturers giving up on the U.S. market.

“We’ll see what happens,” said James Robo, CEO, president and chairman of NextEra’s parent company Florida Power & Light Company. “Obviously, we’re following closely.”

“My own view on this is that markets adjust,” he continued. “This is a very competitive market out there for manufacturing panels that the panel manufacturers are not going to abandon .… They’ll figure out a way to compete. And it may take a little bit but, fundamentally, I’m not worried about the long term implications of whatever happens with the ITC.”

Robo’s comments suggest there could be a deal in the works. Could NextEra’s major module suppliers JinkoSolar or Hanwha Q CELLS — neither of which would comment on the record at SPI — be considering a new U.S. facility to avoid trade restrictions? Could Adani’s Florida-based team be positioning the company to meet the needs of Florida-based NextEra?

The “5D calculus”

If injury is determined, there’s a “5D calculus” that foreign manufacturers will have to work through, said GTM Research solar analyst MJ Shiao. The variables are the type of remedy (i.e. tariff, quota, etc.), the geographic scope (e.g., will free trade agreement countries be exempt?), the severity of the remedy (e.g., how high will a tariff be?), the length of the remedy (e.g., how many years?) and what other suppliers might do.

The type of remedy will determine a lot. For instance, if there are strict caps on how many solar modules can come from other countries, it could bolster the case for U.S. manufacturing. The tariff design will also affect where potential new U.S. factories get built. If a tariff makes importing modules untenable, but doesn’t address cells, then suppliers may quickly erect module assembly factories with easy access to international ports.

If the remedy addresses cells and modules, or specifies a certain amount of the finished product that needs to be made in the U.S., foreign manufacturers instead may need to invest in cell production, which is much more resource intensive.

The power and water requirements of such a facility would drive companies to build somewhere that has those resources in relatively cheap and abundant quantities. The Pacific Northwest fits the bill, and parts of the northeast.

The status of free trade partners in the tariffs would dictate other choices. If NAFTA partners escape a tariff, solar producers could flock to Mexico for cheaper labor, easy access to the eastern and western U.S. and proximity to the growing Latin American market.

The challenge doesn’t end when construction wraps up. It takes more work to ramp up to efficient, profitable production.

“Operational is one thing; scale and efficiency is another,” said Trina’s Dallapiazza. “The first modules out will be pricier than what scale can produce.”

Delays at Tesla’s highly anticipated solar cell and module manufacturing facility in Buffalo, New York are a testament to how difficult it is to launch such an operation in the U.S. SolarCity officially began construction of the plant in 2014 and anticipated starting production in early 2016. The facility finally produced it first PV cells at the end of August. Production is now expected to begin ramping by the end of the year.

Since the Buffalo plant broke ground, Tesla completed the acquisition of SolarCity, and the company decided to shift from Silevo’s “Triex” heterojunction cell technology to partner Panasonic’s Heterojunction Intrinsic Thin Film (HIT) solar cell solution. These developments likely caused some of the delay.

An established company that is already planning a to scale up production somewhere else in the world, and could pivot to the U.S. market, might have an easier time.

Meanwhile, at least one foreign manufacturer is already in the midst of setting up U.S. manufacturing facility. In February, China Sunergy, or CSUN, announced plans to build a 400-megawatt high efficiency PV module factory near Sacramento in response to earlier trade measures. While the plant features fully automatic production lines, it’s still expected to create more than 200 local job opportunities.

The timeline issue

For any company looking at U.S. manufacturing as a way to avoid trade penalties, understanding the timeline is key.

“At best, suppliers can speed through the manufacturing setup process within 18-24 months — but by then, you’re halfway through the four-year remedy period,” said Shiao, referring to the typical four-year duration of a Section 201 trade case. The president has the authority to extend the remedy for up to eight years, however.

“Worst case is that the supplier makes the investment and a World Trade Organization challenge or a change within the administration pulls the tariffs back before the end of the period,” he added.

If President Trump approves a new trade remedy for “injury” from imported solar products, it will likely take effect in January 2018. The solar industry is then expected to file a complaint with the WTO — which is what opponents did when the American steel industry brought a Section 201 nearly 17 years ago. The WTO could take another two years to rule on the case. And if the Suniva/SolarWorld 201 petition is found to be in conflict with the WTO — like in the steel case  — the WTO will reject it. 

The problem is, this two-and-a-half-year period probably doesn’t provide enough runway to make a U.S. facility feasible. A company that invests considerable capital in a U.S. factory, only to find the country re-opened to imports by the time it’s finished, would be at a disadvantage compared to others that don’t bother.

And then there’s the possibility that the Trump administration will choose to reject the WTO decision and keep the trade remedies in place. If that happens, it could spark an all-out trade war as countries start implementing tariffs on U.S. products in retaliation.

“It’s difficult to imagine that any supplier makes the plunge [in the U.S. market] until there’s a clear recommendation from the ITC and even more importantly, clear guidance from the Trump administration on what it wants,” said Shiao.

Thin-film solar manufacturers like Stion and First Solar were not included in Suniva’s request for tariffs.

“Buy American” could also be a factor

Despite the risks, the first mover to launch U.S. manufacturing would likely receive an enormous amount of publicity — and possibly win favor with the Trump administration.

Once the first mover acts, it’s likely to validate the tariffs in the eyes of the Trump team — to the dismay of tens of thousands of U.S. solar workers who would like to see the trade drama simply go away. The problem for solar panel manufacturers is that a PR boost doesn’t make opening a factory a wise long-term decision. No doubt some CEOs are going to want more market certainty than the first mover boost can provide.

One way the Trump team might seek to ensure that new tariffs are effective at bringing international manufacturers to the U.S. is to tie the 30 percent solar investment tax credit to the Buy America Act.

“You could easily see in a tax bill an effort to attach the ITC to the Buy American Act to make it more strict,” said Resch. In this hypothetical scenario, only panels made in the U.S. would benefit from the federal incentive — which offers tax breaks for solar projects placed in service before 2023.

“If you’re a Chinese manufacturer, between Solar One and Solar Two (nicknames for anti-dumping tariffs the U.S. previously put in place against China), Section 201, and a Buy American Act provision, it’s pretty difficult to see how you can fit into the U.S.,” Resch said. The combination of these forces and potentially other protectionist measures the Trump administration puts in place could be sufficient to justify an investment in U.S. manufacturing.

Trump talked a lot about the Buy American Act on the campaign trail and it continues to be a focus of his presidency. He signed the “Buy American, Hire American” executive order in April. Whether or not the administration can get a domestic product requirement for solar panels passed through Congress, though, is another matter.

Another solution: sell thin-film

Suniva claimed it was suffering from cheap solar imports from all over the world, but, curiously, it only requested protection against crystalline silicon products. That means the ITC could set back mainstream silicon pricing by a few years, but leave alternative solar technologies like thin-film untouched.

“Suniva and SolarWorld don’t really compete with thin-film, since their bread and butter is mostly commercial and residential, while thin-film is largely procured for utility scale,” said Jade Jones, an upstream solar analyst at GTM Research.

This is one of the ironies of this saga: two small-time producers could destabilize the market for the largest utility-scale projects, which they couldn’t compete for in the first place. It’s no surprise that several utilities with robust solar pipelines have come out against the trade case

If that happens, thin-film manufacturers who already produce at scale stand to benefit: theoretically, they could sell up to whatever the new minimum price is and keep that margin for themselves. Market leader First Solar is in the best position to expand market share in this scenario, as could Solar Frontier and (American made) Stion.

“Suppliers that have had a presence in the U.S. market will find it easier to access a potential uptick in thin-film demand,” Jones said.

As for the silicon manufacturers, they almost certainly wouldn not be able to pivot to thin-film production as a profitable workaround. Doing so would probably require buying a company that has developed the technology.

“Those are completely different technologies,” Jones said. “Most manufacturers want to focus on their core manufacturing business. To invest in a unique technology just for the U.S. market seems like pretty expensive gesture.”


Be the first to comment - What do you think?  Posted by Editor - at 6:45 am

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Lithium-Ion Battery Production Is Surging, but at What Cost?

In his first Tesla Motors master plan, Elon Musk wrote, “The overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution.”

Just over a decade later, it looks like that sustainable solution is within reach — solar deployments are booming and Tesla is leading the charge toward the greater proliferation of electric vehicles that can run on renewably generated electrons.

But as clean energy flourishes, the solutions from electric-vehicle companies and battery-makers have had a lot more to do with mining than Musk’s manifesto would suggest. Though an explosion in EVs and energy storage will allow countries to rely on less carbon-intensive energy, the extraction of essential ingredients to make cost-effective lithium-ion batteries generally leaves environmental and human devastation in its wake.

Industry leaders have come closer to solving how to store energy and power cars without fossil fuels on a large scale, but they’re just beginning to grapple with the moral implications of a clean energy industry supported by the ugly truths of child labor and pollution.

“It’s quite an interesting case, where you have the benefits of moving to green technology being outweighed, in some cases, when you look at the mine production,” said Stefan Sabo-Walsh, lead of commodities research at Verisk Analytics.

The lithium triangle

Australia and South America, specifically the “lithium triangle” of Argentina, Chile and Bolivia, currently dominate 80 to 90 percent of lithium production, according to James Whiteside, a managing consultant on Wood Mackenzie’s metal and mining consulting team.

South American production relies on brines pulled from deep inside the earth. At brine sites, the salty water is spread out over large surfaces at a level of a few feet deep and left to evaporate for months. Moved from pond to pond, the concentration of lithium slowly increases until it can be separated from the rest of the brine. The raw lithium is then processed into lithium chloride to be used in applications like batteries. In Australia, raw producers concentrate on the more energy-intensive and costlier hard rock mining, where lithium is crushed out of stones.

In 2016, lithium production grew by 16 percent over the previous year. Australia produced most of it, 14,300 metric tons, much of which is shipped to China for processing.

The so-called “white gold rush” has allowed battery producers to scale up production and keep plans for gigafactories in the pipeline. But its results haven’t been so positive for indigenous people like the Atacama community in South America, prompting protests with handwritten signs that read “We Don’t Eat Batteries,” as The Washington Post reports.

Indigenous people in the lithium triangle worry that the high levels of water needed to produce lithium — as much as half a million gallons per ton — may cut into the already limited water supply in the arid and drought-ridden areas where brine sites are located. These concerns have triggered protests against the exploitation of the resources by large companies. In 2012, 33 indigenous communities took calls for consultation about lithium development to Argentina’s Supreme Court. 

“No telling what kind of damage could be done”

Helle Abelvik-Lawson, a doctoral student and researcher at the University of Essex who focuses on the impacts of lithium mining in Bolivia and Argentina, said many — but not all — communities are learning to live with the activity and development that mining companies bring, because they’re also delivering jobs. “The main thing is that the communities, if they’re going to have this massive industry, want to be involved,” she said.

But there are also communities, she said, “that are dead against it.”

According to Abelvik-Lawson, the current impacts of small-scale lithium mining are relatively minimal. But as demand skyrockets, how companies grow production could change that. “There are concerns,” she said. “As soon as anything really scales up, there’s no telling what kind of large-scale damage could be done.”

Brine sites generally consume little energy because the sun processes lithium from the pools. But Whiteside said the recent uptick in demand has spurred the practice of “direct-shipping ore” from rock mining sites to China in the last three to six months. To speed up the process, more raw material is sent out before it is concentrated.

“That means that your energy consumption for transportation is much higher — roughly three times higher,” said Whiteside. “That’s not going to be cost-competitive in the long term, but currently with prices where they are, that sort of production is being incentivized.”

Lithium-based batteries also require raw materials like cobalt, nickel and graphite, which further complicate the supply chain. Labor injustices in the extraction of cobalt are well documented. Over 20 percent of exports from the Democratic Republic of Congo, the world’s top producer, come from unregulated artisanal mines that often employ children. For raw materials like nickel and graphite, producing countries cope with water contamination and deforestation.

Scaling and mass-production of lithium batteries is complex, but the human rights and environmental pitfalls of their production will make it even more so for producers and end users. Raw source material derives from mines around the world, and identifying its origin isn’t always easy. For companies peddling ethically branded cleantech products like electric cars and solar-plus-storage, it will be necessary to seek out better choices as battery use continues to explode — or risk facing blowback.

The battery boom

According to Bloomberg New Energy Finance, global battery-making capacity is set to double by 2021 to more than 278 gigawatt-hours per year. Lithium-ion batteries are also expected to be 43 percent cheaper by that same year.

While makers of alternative batteries have tried to give lithium models a run for their money in recent years, it’s been a losing battle, in part because of the simplicity and flexibility of the technology. Shockingly low prices for lithium-based batteries will remain the chief factor in driving the technology’s dominance into the future — as long as producers can keep the lithium coming.

The reserves-to-production ratio for lithium (the remaining amount of a non-renewable resource, expressed in time) is in the [magnitude] of hundreds, where for most mined commodities it’s in the tens,” said Whitehouse. “There are a lot of resources out there.”

“Over the next coming decade, there is definitely enough…lithium,” he added. “The question is how long it will take for those sources to come on-line.”

The concern doesn’t stem from known reserves, of which there are plenty. Whiteside, who is working on a Wood Mackenzie study on the lithium market, describes lithium’s supply-and-demand curve following a traditional path. Though battery prices are reaching new lows, prices are building (currently at around $12,000 per ton), as is demand. To meet that demand, manufacturers have planned projects around the world. But because extracting lithium is so time-consuming, and many of these projects won’t be complete for years, high demand and constrained supply is likely to continue for the time being, according to Whitehouse.

“There will be cycles in the market,” he added. “I’m sure that the market will move into oversupply at some point, simply due to the number of projects being developed.”

But, for now, battery-makers are hungry for all of the lithium they can get. The search for ethically mined lithium is likely only to increase demand and prices.

Another way forward

There are other ways to expand lithium production without relying on the dubious labor and environmental practices now endemic within the lithium mining process.

Companies including MGX Minerals, based in Canada, are working to find accessible and underutilized lithium stores. Beginning in 2016, MGX has been testing a nano-filtration system that uses a set of highly specialized membranes to passively sift lithium from wastewater. According to CEO Jared Lazerson, the MGX system returns 70 percent of lithium and takes just a day, rather than the traditional months-long time frame.

So far, MGX has partnered with companies like Canadian Natural Resources Limited in Alberta, and it is working on a commercial plant that could process 7,500 barrels of wastewater per day and yield a significant volume of lithium carbonate equivalent.

MGX’s process cleans the water left over from traditional oil operations, and it yields a return. An attractive side benefit could be bringing traditional energy majors into the fold.

“The oil companies are very, very traditional in their thinking, but they’re watching what’s going on,” said Lazerson. “It’s making them a little nervous, and it’s making them look at these [projects] very seriously.”

In terms of bringing accountability to traditional mining, that will likely fall to companies and corporate coalitions, said Sabo-Walsh. He said past examples surrounding the conflict minerals of gold, tungsten, tin and tantalum, which are regulated by the Dodd-Frank act, may hold lessons for industry-wide partnerships around sharing information on supplier practices, assessment questionnaires and environmental rankings. Consideration of where lithium goes after it’s used could also make manufacturers more mindful about the production process.

“There needs to be some conversations and planning by automotive companies about what the end of use for lithium-ion batteries will be,” said Whiteside. “It’s something that a lot of automotive companies aren’t even considering.”

Ultimately, as production ramps up, companies will need to make accountability a throughline of a battery’s lifetime. Though the world’s lithium stores will be enough to fuel a large-scale storage revolution, the current costs are anything but negligible.


Be the first to comment - What do you think?  Posted by Editor - at 6:35 am

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Utilities: Solar Trade Protections Do More Harm Than Good

Over the past several years, utilities and public power producers have increasingly diversified their portfolios for a variety of strategic reasons in a dynamic that echoes the U.S. government’s own “all of the above” energy strategy. Diversity in generation sources can enhance energy security, reliability and consumer protection, and it can improve the environmental profile of the fleet. 

As part of the effort to diversify, many power companies have developed solar projects or have purchased solar-generated power, or both. As a rule, power companies plan on a 20-year cycle and depend on predictable cost structures, particularly for their solar projects.

The strategic assessments of renewable projects are based, in part, on the continued viability of the US solar industry — a prospect that has looked increasingly sound over the past several years as U.S. solar has experienced tremendous growth. Solar today employs over 260,000 American workers, and was responsible for 1 out of every 50 new jobs created in the U.S. in 2016. Most importantly, solar is increasingly cost-competitive with wind and even natural gas. This achievement is not just good for solar; it’s a welcome development for our nation’s energy security as a whole.

Yet the imposition of trade remedies on solar technology sought by the two petitioners in this case, Suniva and SolarWorld, could fundamentally change those carefully calibrated assessments of grid stability — and do so without any consequent societal benefits.

Duke Energy commented before the International Trade Commission that if such a remedial floor price or tariff is imposed, it expects the installed cost of solar projects to increase 30 percent or more and that demand for modules would contract, perhaps even precipitously. “As solar energy is just approaching parity with the traditional grid resources in a number of states, a significant reduction in demand for new solar projects could deliver a serious blow to continuing development and evolution of this market,” Duke argued.

For utilities like Duke Energy, which must select cost-competitive resources (whether they be fuel-based or renewable) when selecting new generation resources to meet customer demand requirements, such cost increases may eliminate solar generation from its evaluation processes entirely.

Obviously, this cost spike in the price of key components in solar manufacturing would quickly ripple throughout the supply chain. As these price increases slash the growing demand for solar, they likewise disrupt the carefully planned investment decisions of this nation’s power providers. Conversely, the development of a reliable consumer base is critical for solar’s continued expansion in the years to come.

Determining that the solar company trade petitioners were harmed, and issuing protective remedies as a result, could lead to higher electricity prices and a disruption in the nation’s generation mix. Neither of these are acceptable outcomes for American electricity consumers. Modern electric markets work by combining a diverse array of generating resources, each with its own strength. Upsetting that balance through the imposition of unnecessary trade barriers not only puts the solar success story at risk, but also undercuts the strength of the entire electricity delivery system.

Appropriate planning and coordinating to maximize bulk reliability and resilience on the grid, all with an eye to dominance in energy production, consumer protection and security, are laudable goals. Ill-conceived energy protectionism in the guise of a trade remedy, on the other hand, will only do more harm than good. We would all do well to take heed of recent events and remember to prioritize the importance of maintaining a diverse and resilient electric grid. The government should say no to the Section 201 trade petition for solar.


Scott Segal is Director of the Electric Reliability Coordinating Council. ERCC is a coalition of utilities providing power to millions of consumers across the nation and is a part of the Energy Trade Action Council. ETAC comprises a group of utilities, retailers, cooperatives, manufacturers, developers, financial investors and free-trade proponents that oppose the Section 201 trade petition.


Be the first to comment - What do you think?  Posted by Editor - at 6:30 am

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