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Billionaires Battle for Solar Power Supremacy

4 May 2015
Elon Musk Warren Buffett Two of America's most storied billionaires - Elon Musk and Warren Buffett - are battling this week for solar power supremacy. Surprisingly Musk, who owns no utilities, has a new advantage over Buffett, whose Berkshire-Hathaway owns NV Energy in Nevada. Lately NV Energy has taken major PR hits as it tries to monopolize solar power in Nevada. Musk's latest foray may have doomed those plans forever.

With all the publicity this week about Baltimore and related subjects, you can be forgiven if you missed Musk's announcement. After all, who would expect a small car company to revolutionize our use of solar power in America and throughout the world? The question of battery storage technology, while not served perfectly, has been largely laid to rest by Elon Musk's Tesla, now no longer merely a car company.

Tesla has announced a line of industrial-strength batteries (no doubt to be produced at its new “gigafactory” outside Reno) for use in the home and, one assumes, cars. Their high-end product is a 10kWh item for $3,500. How good is that? Layman to layman, it’s hard to explain, but think of this: 10kW is 10,000 watts. An average light bulb once took 40 to 100 watts; today it’s more like 10 to 25. Plenty of households will get all they need with 10 kilowatts per hour, especially since it will be a backup, not primary, electrical source.

Speaking of backup, let’s back up and talk about what battery tech does for solar power and how it revolutionizes the industry. Among other things, Warren Buffett and everyone else who owns an electric utility just took a big hit. In Nevada this means Berkshire Hathaway’s NV Energy, which has been duking it out with the Nevada solar power industry in an attempt to re-establish its near-monopoly of electricity.

Solar power works because sunlight, when it strikes certain metal alloys, creates an electric current. We call this the photovoltaic, or photoelectric, effect. It is the basis for “seeing eye” technology. Albert Einstein wrote the seminal paper that described the effect in 1905, and it was the reason for his 1921 Nobel Prize in physics.

Since sunlight is free, why has solar power cost so much? Is it a conspiracy by the oil companies, like some of my friends darkly suspect? No, not at all. Sunlight may be free but building the equipment to make it work in an industrial-strength capacity is much more difficult than observing an “effect” in the laboratory, as Einstein and his peers did. The efficiencies required to make solar power cost-effective have taken decades to perfect, and we’re not done yet. But now that we have begun to leap the efficiency hurdle, the next problem is – storage technology.

The next problem with solar power is that it is feast and famine. Solar power works during the daytime, and only when the sun’s shine is not impeded by clouds, volcanic eruptions, or Republican elections. During such times we need another electricity source. And during the sunny-shine Mohave Desert day it may well generate more electricity than is needed at the time, so what do we do with it?

The answer to date has been called net metering. Since the battery technology has not existed that would allow us to store our solar power and save it quite literally for a rainy day, the solution has been to turn that electricity over to The Grid (in Nevada, NV Energy). And since we are providing The Grid with a commodity that it will turn around and re-sell, it is only fair that we be compensated as any fuel supplier would be compensated. Hence we have net metering, which is essentially a market access tool.

Net metering has allowed solar power to flourish. It solves the problem of what to do with excess solar power. Home users can stay attached to The Grid and thus have a source of power when the sun is hiding behind things, like the other side of the world.

In Nevada net metering has been capped by the state legislature at 3% of total users, which once seemed like a lot, but in the last few years solar power installers have devised some creative financing schemes for home rooftop solar panels. As a result the industry is flourishing and has pushed it close to the 3% limit. This has resulted in a call during the current legislative session to increase or even eliminate the cap. NV Energy is fighting the solar power installers on this tooth and nail. NV Energy wants to establish a monopoly on solar power for residential users. It is completely in favor of building its own solar power plants and selling the electricity back to home users, but absolutely hates the idea of homeowners doing it for themselves. If Buffett’s boys can effectively abolish net metering, they must figure, home electricity users will have no choice but return to good old NV Energy. Polls taken in the last week show Nevada voters supporting the solar power installers over Buffett by a 2-to-1 margin. Click here to read more about net metering & NV Energy in Nevada.

Which is where Tesla fits in. With battery tech like Tesla's, net metering becomes a moot point because access to the grid will, for many, become a thing of the past, like land line telephones. To be honest, Tesla’s battery technology is no more revolutionary than Apple’s iPod was. Each has taken a boring tech, made it cool, and put a lot of hot marketing into it. The popularity of Tesla’s tech will take off, further lowering costs, furthering accelerating the trend. It will be a real example of a rising tide (Tesla) lifting all boats (its battery competitors). That's the rosy scenario: as usual the truth is less stellar, though still impressive Click here to Scientific American's objective assessment of Tesla's announcement. Even though Tesla's announcement is not revolutionary, just the same the NV Energys of the world could well see their gross power numbers decline, even as home users use more and more electricity. Too bad!

You may also like this related article: The Future, by Al Gore (2013) (164)
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