Month: October 2018

Tesla admits to cell supply constraints as energy storage ramps up

As well as Elon Musk remarking that the company may have had its “best ever quarter” for solar since the SolarCity takeover, Tesla’s energy storage deployments have enjoyed a ramp up, while a fellow exec hinted the stationary battery business is constrained by cell supply.

The solar roof tile remains delayed from reaching volume production until next year. Nonetheless, in an earnings call with analysts, Musk commented that “we saw higher revenues and better profitability in our energy business. In fact, it may have been our best quarter ever for solar”. Tesla CTO and self-professed battery tech fanatic JB Straubel said later in the call that cell supply is “somewhat tight” for the energy business which includes the Powerwall and Powerpack residential and grid storage products.

Tesla reported third-quarter energy storage deployments of 239MWh, an increase of 18% from the previous quarter (203MWh) and 118% compared to the prior year period. Energy storage continues to be the major catalyst in the segment revenue growth, which reached the second highest ever level of US$399.3 million. The company touted that due to the storage install growth, tripling of energy storage deployments in 2018, compared to 2017 was on track, despite expected seasonality issues in the fourth quarter of 2018. Supporting the growth claims was the eventual increase at Gigafactory 1 of its Powerwall production in the quarter, which was having an effect on reducing its order backlog. has reported on several grid-scale projects supplied or soon to be supplied with Tesla’s Powerpack battery systems during the quarter, including a contract to deliver a 52MWh storage system for a 280MW wind farm in Australia, the inauguration of New Zealand’s first grid battery storage facility and an order from Amazon for a 3.77MW system at the retail giant’s ‘fulfilment centre’ in Tilbury, England. Meanwhile the 129MWh battery Tesla put into operation in South Australia a few months ago is reportedly generating healthy revenues as well as network cost savings.

Julian Jansen, senior analyst, Energy Storage at IHS Markit pointed out that “strategically, it’s quite simple” for Tesla to serve both the C&I and front-of-meter market segments with the Powerpack, which is scalable to either or both sets of applications. This includes acting as supplier and integrator of Powerpack systems in the US C&I market for projects developed and operated by AMS (Advanced Microgrid Solutions). Jansen said that partnership alone equates to more than 100MWh of operational Powerpacks, based on publicly announced figures from AMS. 

Solar performance at peak

Tesla reported third-quarter 2018 total solar installations of 93MW, 11% higher than the previous quarter (84MW), which are the best installation figures since the fourth quarter of 2017, yet lower (107MW) than the prior year period.

Tesla expects solar installations in 2018 to have peaked in the third quarter, guiding lower solar mix and seasonality within its Energy generation segment to be lower in the fourth quarter.

The company claimed that its previous decision in early 2018, to change the way it sold residential PV systems from call centres and third-party leads to mainly online and Tesla automotive stores was working but reducing acquisition costs had been problematic.

However, without providing data, Tesla said: “We have significantly improved the time to install our solar and energy storage products and customers will continue to see faster installation”.

The company also reported that in the third quarter, cash and loan sales made up 80% of residential installations, up from 46% in the prior year and 68% in the second quarter of 2018.

Despite performance, earnings call mostly ignored storage business

There was the opening allusion to improved performance in the energy business and Musk stated later that “we’ve got to continue improving” Powerpack, Powerwall and other energy products. However the earnings call which followed the quarterly results report focused almost entirely on electric vehicles, as might have been expected. Vehicle safety and new autopilot features as well as expected production and sales volumes for the Model 3 and a newer, even more ‘affordable’ car launch next year were all discussed.

Dan Galves of Wolfe Research asked the Tesla representatives whether there was truth in “some noise about” battery cell supply being “tight” and whether “demand is outpacing supply”. Galves went on to ask what Tesla’s long-term expansion plans were, including thoughts on cell supply from China.

JB Straubel replied that there had been one brief period in the quarter when “supply was fairly tight” for Model 3 production, but that production had not been constrained in any meaningful way. Musk interjected that it had been less than a week of delays, which Straubel confirmed to be “a few days”.

“The impact was largely felt on the energy products,” Straubel added.

“And that still is somewhat tight. But we do, as we’ve pointed out in previous discussions, we do have third-party supplies of energy cells.”

Moving on, supplies from partner Panasonic are expanding. Straubel mentioned one cell production line which has just gone live, plus “another line coming on and then one other after that” while existing lines are “continuing to improve” their productivity.

CFO Deepak Ahuja and Musk did some quick arithmetic to claim that just over half the lithium-ion batteries tracked globally that went into EVs made in the last quarter – about 19GWh or 20GWh according to Ahuja – were in Tesla vehicles. Musk added that long-term, cell supply “would be produced in China. Short-term, we’re not certain of the short-term situation, but long-term certainly”.

Additional reporting by Mark Osborne. 

Conference call transcript by Seeking Alpha and audio via Tesla. 

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US solar feeling ‘invincible’ after navigating treacherous year

There’s nearly always a positive vibe at a trade show. A combination of the organisers’ best efforts and the virtuous circle of talking to like-minded people all day, which is great for your brain chemistry, leaves you feeling lighter than you may on an average day in the trenches. It doesn’t necessarily mean what’s happening beyond the showfloor warrants the smiles and backslapping taking place on it.

With that caveat at the forefront of my own mind, I have to say that Solar Power International 2018 felt extremely positive. I’m a dour, sceptical Scotsman. Provoking enthusiastic positivity for anything can be a slog.

Context could be king in this instance. The industry has dealt with steel tariffs, the Section 201 trade barriers, the drop in demand for tax credits and, just before the show began, 25% tariffs on Chinese inverters. Having ridden out all that and having conversations about new solar States opening up to deployment, module prices falling and trackers carrying on their march to higher latitudes, is fairly remarkable. New projects, new technologies and new opportunities.

“In general, there’s a really positive feeling of invincibility to the market,” says Steve Daniel, VP of sales and marketing at mounting and tracker manufacturer Solar FlexRack. “Back in March, I didn’t think we were going to feel this way in September. It’s been very difficult with the tariffs, we’ve just had to work through them but we haven’t seen much drop off because of module or steel tariffs.”

That’s not to say that there hasn’t been some pain but as Daniel describes it, this is being shared.

“Everyone has lowered their margins a little bit and their expectations, but the projects are still moving. There’s been a few delays, but there are always delays in solar projects. Anything can happen and I’ve seen everything. It doesn’t feel that different. It’s just another set of issues to work through,” he adds.

What’s next in the US calendar? Solar & Storage Finance USA returns to New York for its 5th time later this month and will be looking at raising capital for solar, storage and collocated solar and storage projects in the USA. The conference aims to help delegates understand how debt providers are evolving propositions for storage and how they can access projects for standalone and co-located projects. Meet debt providers, funders, utilities, corporate off takers and blue chip energy firms with capital to invest.

There is lots of talk about some of the lumpiest boom and bust markets (think Europe) heading towards a period of growth that is more sustainable. The testing year that the US has just ridden out is another example.

“I think there is a resiliency in the industry that people have built up. I’ve been doing this for eleven years now and every year there is something new and we just figure out a way to keep going,” says Daniel adding that the end demand for solar is contributing factor now the “economics are fantastic” and “undeniable”.

Joe Song, VP of project operations at the developer and investor Sol Systems is reluctant to make a prediction for the coming year. He sees one outside factor contributing to some of the positivity.

“The only that has ever been true is that whatever we expect to happen, will definitely not happen! We went into 2017 thinking all these projects were going to progress and then 201 came around and it paralysed the industry. Everyone went into this year thinking no projects were going to happen. Come May the China market pivoted and it opened up a whole lot of opportunities.”

In addition to the scope for using high-efficiency modules, off the back of those price reductions sparked by China’s policy shift, trackers, emerging US markets and an increasingly hard line on soft costs offer plenty of reason to cheer. Even for a dour Scotsman.

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The 2018 Virginia Energy Plan calls for 3GW of solar and wind installations by 2022

The Commonwealth of Virginia’s new energy plan has called for 3GW of solar and wind installations by 2022 as well as grid modernization to handle both solar and wind totalling 5GW by 2028.

Virginia’s Governor, Ralph Northam released the State’s ‘2018 Virginia Energy Plan’, which provides policy over the next 10 years that is intended to promote renewable energy, energy efficiency and grid modernization for renewables and the transition to electric vehicles. 

Virginia’s utility companies are expected to collectively invest US$115 million per-year in energy efficiency programs, alone.

The plan also calls for 3GW of solar and onshore wind to be deployed by 2022, and 2GW of offshore wind to be deployed by 2028.

“The clean energy sector has the power to create new business opportunities, expand customer access to renewable energy, and spark the high-demand jobs of the 21st century,” said Governor Northam. “Virginia can shift to a more modern electric grid that is reliable, affordable, resilient, and environmentally responsible—and the Commonwealth can lead this critical industry as a result. This plan sets an ambitious path forward for Virginia, and I am confident we will charge ahead towards progress over the course of my administration.”

According to the US Solar Energy Industries Association (SEIA), the 2018 Virginia Energy Plan was an important step for the state to expand solar energy installations over the next 10 years. 

“Governor Northam deserves credit for his leadership on clean energy and for establishing goals that are aligned with business and the public’s desire for energy that is affordable, creates jobs, protects the environment and grows Virginia’s economy,” noted Sean Gallagher, vice president of state affairs for the SEIA. “The solar industry will work with policy leaders, manufacturers and installers across Virginia to meet these benchmarks.”

The SEIA also noted that Virginia was currently ranked 17th in the US for its 635MW of installed solar capacity and supported more than 3,500 jobs and nearly 200 companies across the state.

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