A weekly five-point roundup of critical events in the energy transition and the implications of climate change for business and finance.
1. Tesla Tries to Reinvent the Electric Car Again
What happened: Tesla has plans to build its biggest plant ever, breaking ground as early as next month. More importantly, that new plant might feature a radical redesign of how automobiles are put together, an “unboxed” process one expert described as “revolutionary.”
Why it’s important: Tesla can’t get the volume demand it wants without producing less expensive cars. In order to do that while maintaining margins to support its business, it needs to find more efficient ways to build those vehicles. Unboxed, modular assembly instead of the traditional line may be that way.
What’s next: “The assemblage of new techniques will not be fully tested until the system is installed in late 2024 at Tesla’s new $5 billion plant in Monterrey, Mexico, where the company plans to build a new generation of sub-$30,000 EVs.” (By Norihikou Shirouzu, Reuters)
2. Microsoft Just Made ‘The Most Audacious’ Clean Energy Bet Ever
What happened: Microsoft just signed an agreement to buy electricity. Normally not a big deal. Except for who it intends to buy from: Helion Energy, the makers of a new nuclear fusion generator.
Why it’s important: A theoretical physicist called it “the most audacious thing I’ve ever heard.” Why? Because thus far, consistent, efficient production of nuclear fusion has been unheard of. And while Microsoft hasn’t agreed to buy much, just 50 megawatts by 2028, the agreement has teeth: if Helion doesn’t deliver, it’ll incur financial penalties that will likely kill the company.
What’s next: Energy history, possibly. “Experts’ optimistic estimates for when the world might see its first nuclear fusion power plant have ranged from the end of the decade to several decades from now. Helion’s success depends on achieving remarkable breakthroughs in an incredibly short span of time and then commercializing its technology to make it cost-competitive with other energy sources.” (By Justine Calma, The Verge)
3. Public Renewables Time Has Finally Arrived
What happened: The IRA changed who was and wasn’t eligible for renewable energy tax credits. That means that the public utilities that power 14% of Americans with electricity are now eligible too.
Why it’s important: “Private investment in energy infrastructure is soaring, but public utilities were mostly priced out of the market because pre-IRA, tax credits for utility-scale wind and solar were only useful for entities with big federal income tax bills; public utilities generally have a relatively small customer base and are exempt from federal income taxes. As a result, only about 2% of the power generation owned by public utilities nationwide is non-hydropower renewables.”
What’s next: More states are likely to follow the New York model. The Empire State recently mandated that all public utilities eliminate fossil fuels by 2030. Expect the IRA tax tweaks to embolden more state legislatures. (By Tim McDonnell, Semafor)
4. How Australia’s Wildfires Led to Droughts in Africa
What happened: New research shows that wildfires in Australia three years ago were so intense they shifted a key tropical rainfall belt, leading to droughts in Africa and hurricanes in the Atlantic.
Why it’s important: The research highlights the complex relationship between aerosols produced by wildfires and the cooling effect it creates. “‘The wildfires set off this chain of events that lead to cooling in the eastern Pacific. It’s a chain reaction that we can expect more of in the future … because we expect wildfire emissions to go up. We expect Australia to get drier and for these wildfires to get worse.’”
What’s next: Climate experts were caught off guard by the super La Nina that came in the wake of the wildfires. Expect future predictions to be more accurate, even as the climate impacts get more extreme. (By Bob Berwyn, Inside Climate News)
5. The Department of Energy Has to Lend a Lot of Cash In Not a Lot of Time
What happened: “As part of last year’s Inflation Reduction Act, Congress supersized the office’s authority to arrange loans to companies trying to bring emerging energy technologies to market, increasing it tenfold from $40 billion to more than $400 billion.”
Why it’s important: The DOE’s Loan Programs Office has enough lending authority to make it one of the government’s most significant economic development catalysts. And it’s overseen by a man who thinks the massive shift to clean energy will represent “the largest wealth-creation opportunity of our lifetime.”
What’s next: The DOE’s loan overseer insists that handing out money for clean energy projects is the rare effort that can be bipartisan. But everyone is watchful for the next Soyndra: a failed project born of excess that can set back the movement for years. (By Brad Plumer and Lisa Friedman, The New York Times)