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SolarCity Wins Financing for Military Housing Plan

November 30, 2011 by Leave a Comment

The company, SolarCity, plans to announce Wednesday that Bank of America Merrill Lynch will lend it up to $350 million to put solar electric panels on roofs and other areas to power as many as 120,000 homes for military personnel over the next five years.

Under the program, which would roughly double the number of homes with solar power if fully carried out, SolarCity will install, operate and own the solar systems, said Lyndon Rive, the company’s chief executive. Customers will pay the company for the electricity they use, with any unused power feeding back to the military bases.

The San Mateo, Calif., company had originally hoped to serve up to 160,000 homes with the help of a loan guarantee from the Obama administration. In early September the energy secretary, Steven Chu, announced preliminary approval of a guarantee that would have covered $275 million of a $344 million loan from Bank of America Merrill Lynch for the program, called SolarStrong.

But the public uproar over the bankruptcy of Solyndra, a solar module maker that had received a $535 million loan guarantee from the same program, cast a pall over other companies’ applications even as the Energy Department was racing to evaluate them before the guarantee program expired on Sept. 30.

Near the end of September, the Energy Department told SolarCity it would not be able to approve the guarantee after all, having run out of time to finish the paperwork before the program’s deadline. At the time, Mr. Rive said that the scrutiny the program was under influenced the department’s decision.

However, the financial profile of the rooftop solar program was still attractive to Bank of America Merrill Lynch. The bank is lending up to $350 million for the scaled-back program without the guarantee. Its backing comes as other banks and companies including Google have been financing distributed solar programs at SolarCity and competitors like SunRun and Sungevity that make rooftop solar systems affordable to homeowners.

“It’s a huge leap forward for the distributed solar market because what we’ve done is create a financing model that can make distributed solar affordable on a huge scale without a guarantee from the federal government,” said Jonathan Plowe, a managing director at the bank.

A year ago, he said, debt financing was available only for large-scale, utility-based projects that did not face the challenges of distributed solar programs, which are by nature fragmented and have to negotiate differing local regulations and procedures.

But after Bank of America Merrill Lynch backed a distributed solar project by NRG and Prologis Inc. that did win a federal loan guarantee, it decided it had a process in place to handle the risks of proceeding without government backing, according to Mr. Plowe.

He said the bank decided the SolarCity project was a solid investment for several reasons: photovoltaic technology is proven, the diversity of installation sites reduces the risk of a failure everywhere at one time, the electricity is relatively easy to transmit, construction time is short and there are few negative environmental consequences.

Solar developers can also take advantage of a 30 percent investment tax credit.

SolarCity executives declined to say how much of a return their investors could expect or to predict how many developers of military housing would sign up to buy the solar power.

Article source: http://feeds.nytimes.com/click.phdo?i=04218d61a8ea05614ff6a89da1b9a2f5

Filed Under: Business News Tagged With: , ,

G.M. Aims the Volt at China, but Chinese Want Its Secrets

September 6, 2011 by Leave a Comment

But as G.M. prepares to start selling them here by the end of this year, the Chinese government is putting heavy pressure on the company to share some of the car’s core technology.

The Chinese government is refusing to let the Volt qualify for subsidies totaling up to $19,300 a car unless G.M. agrees to transfer the engineering secrets for one of the Volt’s three main technologies to a joint venture in China with a Chinese automaker, G.M. officials said. Some international trade experts said China would risk violating World Trade Organization rules if it imposed that requirement.

The government’s demand is the latest example of China’s willingness to use the leverage of Western access to the vast Chinese market to extract concessions on advanced technologies. Policies to force technology transfers from non-Chinese companies have already helped this nation build big industries in areas like wind turbines, high-speed trains and water purification.

Western companies have complained that the tactics create an uneven playing field for business ventures trying to compete with domestic Chinese industries.

The dispute over the Volt threatens to lead to another trade dispute with the West and could affect the dynamics of a visit to China this month by the American energy secretary, Steven Chu.

The consumer subsidies in question are considered crucial for helping electric and hybrid vehicles catch on in China, which became the world’s largest car market in 2009. The government has made a priority of moving beyond cars that burn fossil fuels and emit polluting exhaust. At an industry conference here in this port city near Beijing over the weekend, government officials called for Chinese automakers to put new emphasis on producing more fuel-efficient and technologically advanced models, including gasoline-electric hybrids and all-electric cars.

Right now, the subsidies are available for electric cars made by Chinese automakers, like the e6 made by BYD, giving them a huge competitive advantage. The Volt, if G.M. proceeds with plans to begin selling it in China by year’s end, will be the first mass-market predominantly electric car imported to China by a foreign manufacturer.

The Volt has not yet been priced in China. But the Chinese subsidies are nearly half the Volt’s suggested retail price in the United States of $41,000, before including a tax break of up to $7,500 that Washington offers.

The American tax break is not restricted to domestic cars, nor does it require technology transfers.

G.M. is pressing Chinese officials to let the Volt qualify for the subsidies and tax breaks without the technology transfer. “We’ll bring it up in every conversation we have,” said Raymond Bierzynski, the executive director of electrification strategy at G.M. China, which has headquarters in Shanghai. G.M. has a series of joint ventures with several Chinese automakers, but plans to import the Volt from Michigan.

Global companies like Ford, Nissan, Toyota, Volkswagen and Daimler have spent billions of dollars to develop electric and plug-in hybrid cars. They are eager to start earning a return on those investments by selling them in China, where 17 million cars — virtually all of them gasoline-powered — were sold last year.

But Japanese and European automakers in particular have held back for fear of losing trade secrets if they are forced to share their newest technologies with Chinese companies. The Volt would be the pioneer, with the subsidy issue shaping up as a crucial test case.

G.M.’s arch rival, Ford, already intends to accede to the Chinese demand, a Ford executive said. But Ford is still conducting only demonstration projects of electric cars in China, including an effort here in Tianjin, and has not set a date for commercial sales.

Chinese automakers may need technology assistance for advanced cars because their research budgets tend to be only a tiny share of sales by international standards. That is why the Chinese government wants to ensure that its automakers gain the technology to manufacture their own electric and hybrid cars.

“We have to break through and master the core technologies,” Chen Jiachang, a deputy director of the ministry of science and technology, said in a speech Saturday at the conference here.

At least five trade experts said that Chinese government policies making it uneconomical to sell an imported electric car in China without transferring technology could violate rules of the World Trade Organization, of which China is a member.

“The rules do not allow a country to impose a requirement affecting the internal sale, distribution or purchase of a product in a way that favors its own product over imports,” said Carolyn B. Gleason, a partner at McDermott Will Emery in Washington and longtime specialist in W.T.O. cases.

Article source: http://www.nytimes.com/2011/09/06/business/global/gm-aims-the-volt-at-china-but-chinese-want-its-secrets.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Economix: Renewing Support for Renewables

March 28, 2011 by Leave a Comment

Today's Economist

Nancy Folbre is an economics professor at the University of Massachusetts Amherst.

The biggest positive result of the accident at Fukushima Daiichi could be renewed public support for the development of renewable energy technologies.

Many influential policy makers, including President Obama, continue to insist that we must expand nuclear power to help meet our energy needs. But plenty of experts disagree.

As the chart below illustrates, renewable energy sources (including hydropower and biofuels) already account for almost the same share of total energy consumption in the United States as nuclear power.

United States Energy Information Administration, “Annual Energy Review 2009,” Table 1.3, “Primary Energy Consumption by Source, 1949-2009.

More important is the rate of change in the cost and utilization of these technologies, particularly those that rely on wind, water or solar power and will not contribute to global warming.

The cost per kilowatt hour of generating electricity from wind and solar power has declined steadily in recent years and is projected to decline further. Energy Secretary Steven Chu predicted that they would be no more expensive than oil and gas by the end of the decade.

The cost of nuclear power, by contrast, has increased, even without factoring in the huge social costs imposed by accidents. These costs include the disruptive effects of major evacuations such as those under way in the vicinity of Fukushima Daiichi, as well as ominous — and difficult to measure — health risks.

In “Nuclear Power: Climate Fix or Folly,” Amory Lovins, a physicist with the Rocky Mountain Institute, and two colleagues argued that expanded nuclear power does not represent a cost-effective solution to global warming and that investors would shun it were it not for generous government subsidies lubricated by intensive lobbying efforts.

In The Wall Street Journal, Prof. Benjamin K. Sovacool of the National University of Singapore recently argued, in “The Business Case Against Nuclear Power,” that subsidies for nuclear power during its first 15 years of use in civilian power generation far exceeded those provided to solar power and wind power in their initial years.

The private sector is clearly moving rapidly in the renewable direction. Clean Edge, a research and advisory group, asserts that the clean energy market grew 35 percent in 2010, and global installation of photovoltaics doubled.

Still, the big question remains. Can wind, water and solar power be scaled up in cost-effective ways to meet our energy demands, freeing us from dependence on both fossil fuels and nuclear power?

Yes, they can, say two highly respected scientists, Mark Z. Jacobson of Stanford University and Mark A. Delucchi of the University of California, Davis. In 2009 they published “A Plan to Power 100 Percent of the Planet With Renewables” in Scientific American.

The article persuasively addresses a number of concerns, such as the worldwide spatial footprint of wind turbines, the availability of scarce materials needed for manufacture of new systems, the ability to produce reliable energy on demand and the average cost per kilowatt hour.

A more detailed and updated technical analysis can be found in a two-part article (see Part I and Part II, recently published in the journal Energy Policy.

As Paul Krugman pointed out in his New York Times blog, projections of energy cost and supply are always hypothetical, based on assumptions that may or may not be borne out. This objection applies to all energy supply and demand projections.

The proven dangers of nuclear power amplify the economic risks of expanding reliance on it. Indeed, the stronger regulation and improved safety features for nuclear reactors called for in the wake of the Japanese disaster will almost certainly require costly provisions that may price it out of the market.

The role of the market, however, is small relative to political battles over relative levels of subsidy to fossil fuels, nuclear power and renewable energy. While both the fossil fuel and nuclear power industries are dominated by large companies with considerable political clout, renewable energy is a more decentralized, small-business-oriented sector that often finds itself outmaneuvered on Capitol Hill.

As Professors Jacobson and Delucchi put it, “The barriers to a 100 percent conversion to wind, water and solar power worldwide are primarily social and political, not technological or even economic.”

Research like theirs will help energize new efforts to overcome those barriers.

Article source: http://feeds.nytimes.com/click.phdo?i=c2ec0b90ce316320f0aaa30ea1b4bc9c

Filed Under: Economy News Tagged With: , ,