Why Elon Musk's Batteries Scare the Hell Out of the Electric Company

As reported by Bloomberg: Here’s why something as basic as a battery both thrills and terrifies the U.S. utility industry.

At a sagebrush-strewn industrial park outside of Reno, Nevada, bulldozers are clearing dirt for Tesla Motors Inc. battery factory, projected to be the world’s largest.

Tesla’s founder, Elon Musk, sees the $5 billion facility as a key step toward making electric cars more affordable, while ending reliance on oil and reducing greenhouse gas emissions. At first blush, the push toward more electric cars looks to be positive for utilities struggling with stagnant sales from energy conservation and slow economic growth.

Yet Musk’s so-called gigafactory may soon become an existential threat to the 100-year-old utility business model. The facility will also churn out stationary battery packs that can be paired with rooftop solar panels to store power. Already, a second company led by Musk, SolarCity Corp. (SCTY), is packaging solar panels and batteries to power California homes and companies including Wal-Mart Stores Inc. (WMT)

“The mortal threat that ever cheaper on-site renewables pose” comes from systems that include storage, said Amory Lovins, co-founder of the Rocky Mountain Institute, a Snowmass, Colorado-based energy consultant. “That is an unregulated product you can buy at Home Depot that leaves the old business model with no place to hide.” 

J.B. Straubel, chief technology officer for Palo Alto, California-based Tesla, said the company views utilities as partners not adversaries in its effort to build out battery storage. Musk was not available for comment.

The Tesla systems are arriving just as utilities begin to feel increasing pressure worldwide from the disruption posed by renewable energy.

Lima Meeting

In Germany, the rapid rise of tax-subsidized clean energy has undermined wholesale prices and decimated the profitability of coal and natural gas plants. Germany’s largest utility EON SE (EOAN) said this week it will spin off its fossil-fuel plant business to focus on renewables in part because of new clean energy competitors coming onto its turf.

Threats to the traditional utility model come as energy and environment take the world stage at the latest round of United Nations climate talks that began Dec. 1 in Lima. Delegates, backed by global environmental groups, want to leave the conference with a draft agreement to tackle climate change by lowering carbon-dioxide emissions -- something that has eluded them for years.

The Rocky Mountain Institute’s Lovins has installed solar on his house in Snowmass and uses it to power his electric car. His monthly electric bill: $25. He has a lot of company.

100,000 Plug-ins

In California, where 40 percent of the nation’s plug-in cars have been sold, about half of electric vehicle owners have solar or want to install it, according to a February survey by the Center for Sustainable Energy, a green-energy advocate. More than 100,000 plug-ins have been sold in California, according to data from HybridCars.com and Baum & Associates, though EVs make up less than 1 percent of all U.S. car sales.

Few homes and businesses use solar and back-up-battery storage, proof for some utilities that the systems remain a hard sell outside of states like California or markets like Hawaii where high power costs make solar competitive.

Still, the Edison Electric Institute, a trade group representing America’s investor-owned utilities, recently announced that its members will help to encourage electric vehicle use by spending $50 million annually to buy plug-in service trucks and invest in car-charging technology.

“Advancing plug-in electric vehicles and technologies is an industry priority,” said EEI President Thomas Kuhn.

Charging Stations

Analysts think the industry has been slow to react. Tesla, SolarCity and green-energy companies are already moving aggressively into unoccupied space. “Some of the more nimble companies that think and move more quickly, they are beating the utilities to the punch,” said Ben Kallo, a San Francisco-based analyst for Robert W. Baird & Co.

Tesla has installed 135 solar-powered fast-charging stations across North America where its Model S drivers can refuel for free. NRG Energy Inc. is building a network of public charging stations in major cities that drivers can access on a per-charge basis or for a flat monthly fee of about $15.

And then there’s the home front. In a July report, Morgan Stanley said Tesla’s home and business energy-storage product could be “disruptive” in the U.S. and in Europe as customers seek to avoid utility fees by going “off-grid.”

‘Sufficient Appreciation’

“We believe there is not sufficient appreciation of the magnitude of energy storage cost reduction that Tesla has already achieved, nor of the further cost reduction magnitude that Tesla might be able to achieve once the company has constructed its ‘gigafactory,’” Morgan Stanley analysts wrote.

Tesla sees itself taking on a grand mission -- not just to lower emissions from cars and trucks, but to have a societal impact. “If we only do it on the transportation side, we ignore the utility side, and we are probably ignoring half of our responsibility,” said Mateo Jaramillo, director of powertrain business development at Tesla Motors, at the recent Platts California Power and Gas Conference in San Francisco.

Tesla and Oncor Electric Delivery, owner of the largest power-line network in Texas, have discussed a $2 billion investment in stationary battery storage to solve the problem of fluctuating output from wind and solar. Tesla and SolarCity are separate entities and only share management at the board level.

Smart Home

A glimpse of that future can be seen in Davis, California, where Honda Motor Co. has developed a “smart home” that produces more energy than it uses while charging a plug-in car. The home was designed in collaboration with SolarCity, PG&E Corp. and the University of California at Davis to showcase energy-efficient and renewable technologies. It will serve as a home for a member of the UC Davis community and a lab for the study of new businesses and technologies.

SolarCity rival SunPower Corp. is offering its solar and storage systems to buyers of electric cars from Audi AG and rebates for solar-panels to Ford Motor Co. plug-in customers. SunPower also has struck a partnership with homebuilder KB Home to begin installing solar and storage systems in California.

The time when residents can charge their electric cars with excess solar stored in their home batteries is “not decades away, that is years away,” said SunPower CEO Tom Werner.

Holy Grail

Both SolarCity and SunPower say their goal isn’t to move customers completely off-grid, just to reduce their dependence on it. “Grid storage has been the Holy Grail for renewables because the energy is intermittent,” Kallo said. “Finding a way to store that is very powerful.”

For the power companies, the stakes are high.

In June, EEI issued a call to action, saying converting people from gasoline cars to electric vehicles is nearly essential for survival. The report concluded: “The bottom line is that the electric utility industry needs the electrification of the transportation sector to remain viable and sustainable in the long run.”

To that point, executives at some of the nation’s largest utilities from New York to California say they are preparing their grids for more plug-in cars, reaching out to automakers and working with regulators to make sure customers as well as the utilities benefit from the trend.

Natural Partnership

“I read a lot of articles about Elon Musk versus the utility companies,” said John Shipman, who heads electric vehicle programs at New York-based Consolidated Edison Co. “I don’t see it that way at all. There is a natural partnership that can exist there.”

In California, where electric vehicle adoption is the highest in the nation, and Governor Jerry Brown has set a goal of having 1.5 million zero-emission vehicles on the road by 2025, utilities are already in the game.

“The electric grid will be just as important in the years to come because the grid is becoming the platform that makes it possible for people to plug in solar panels, batteries and charging stations,” said Ellen Hayes, a PG&E spokeswoman. “Having a solar panel that isn’t connected to the grid is like having a computer that’s not connected to the Internet.”

Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric have proposed investing about $500 million in car charging stations. Along with PG&E, they are backing a proposal that would loosen restrictions on utilities owning charging facilities.

Grid Upgrades

There is yet another side to the argument -- can utilities manage the load?

“Electric vehicles can be the best thing to ever happen to our industry or the worst thing to ever happen to our industry,” said James Avery, a senior vice president at San Diego Gas & Electric.

Avery doesn’t foresee most customers leaving the grid, but does see the risk of an influx of electric cars that overtaxes the network. SDG&E, whose territory has the highest penetration of plug-ins in the U.S., plans to spend as much as $3.2 billion to upgrade its grid. It already offers cheaper rates for EV owners to charge overnight when power demand is lowest.

Southern California Edison is planning to spend about $9.2 billion through 2017 to allow the two-way flow of electricity on its system, said Edison International CEO Ted Craver.

“We are certainly big supporters of electric transportation,” Craver said.

He added: “That electric car isn’t just going to stay at home. It’s going to go other places. It’s going to need to get charged in other places. And I think our ability to provide that glue for all those things that are going to plug into that network is really how we see our core business.”

Shifting Landscape

Some utilities are more amendable to the shifting landscape than others. Last year, Pinnacle West Capital Corp.’s Arizona Public Service raised the ire of its customers and the solar industry by tacking on a monthly fee of about $5 for residents with solar systems. Adding fixed connection charges or additional fees to such customers may cause more of them to defect, said Lovins of the Rocky Mountain Institute.

“Utilities should look at Elon as a brilliant entrepreneur and innovator who is helping create the new electricity industry and betting against him hasn’t worked so well,” Lovins said. “I would look at ways to benefit from what he is bringing to the market.”

Orion Capsule Leaving High Radiation Zone in the Van Allen Belt

As reported by NASA and NBC News: After a sunrise launch, NASA's Orion deep-space capsule was performing perfectly during its first test flight on Friday, mission managers said.

Liftoff came at 7:05 a.m. ET, one day after a series of snags forced a scrub of the first launch attempt at Cape Canaveral Air Force Station. On Thursday, gusty winds and a balky fuel valve kept the United Launch Alliance Delta 4 Heavy rocket grounded, but nothing went wrong on Friday.

"Liftoff at dawn! The dawn of Orion, for a new era of American space exploration!" launch commentator Mike Curie said as the rocket blasted through the clouds just after sunrise.

 
NASA and its commercial partners are designing Orion to take astronauts to a near-Earth asteroid in the 2020s, and to Mars and its moons in the 2030s. For that reason, NASA portrays Friday's 4.5-hour test flight as a first step toward deep-space exploration. The mission is known as Exploration Flight Test 1, or EFT-1.

"I would describe it as the beginning of the Mars era," NASA Administrator Charles Bolden said on NASA TV.

Orion's flight marks the first time since the Apollo 17 moon mission in 1972 that NASA has sent a vehicle that's being designed to carry humans beyond low Earth orbit.

Far-out trip

Mission managers said the rocket and capsule performed perfectly during the initial phases of the test. "It was just a blast to see how well the rocket did," said Mark Geyer, NASA's Orion program manager.

After Orion made its first circuit around the planet, the rocket's upper stage kicked it into a second, highly eccentric orbit that will loop 3,600 miles from Earth. That's 15 times farther away than the International Space Station.

The space station crew huddled around monitors to watch Orion's launch. "Awesome!!!" NASA astronaut Terry Virts tweeted from the orbital outpost.

After hitting the top of its orbit, Orion is due to come screaming back into Earth's atmosphere at a speed of 20,000 mph — 80 percent of the velocity that a spacecraft returning from the moon would experience.

NASA  Exploration Flight Test 1 is due to send a test Orion crew module as far as 3,600 miles from Earth.

This particular Orion is missing a lot of the components that would be needed for a crewed flight, and it's not carrying humans. Instead, it's outfitted with more than 1,200 sensors to monitor how its communication and control systems deal with heightened radiation levels, how its heat shield handles re-entry temperatures that are expected to rise as high as 4,000 degrees Fahrenheit, and how its parachutes slow the craft down for a splashdown in the Pacific Ocean.

Two Navy recovery ships, plus a complement of smaller boats and helicopters, are standing by 600 miles west of Baja California to pick up the capsule and bring it in to Naval Base San Diego. From there, Orion would be trucked cross-country, back to NASA's Kennedy Space Center in Florida.

Although there are no humans aboard Orion, NASA packed a few personages in the payload — including Sesame Street characters and a Captain Kirk action figure. Other mementos flown on the capsule include a Tyrannosaurus rex fossil, an oxygen hose from an Apollo spacesuit and a wide variety of recordings, photos, patches, pins and poems.

Data collected during and after the flight would be analyzed to help the Orion team prepare for the next uncrewed test flight in 2018. A more advanced version of Orion would be launched by NASA's giant Space Launch System rocket, or SLS, which is currently under development. During the 2018 flight, known as Exploration Mission 1 or EM-1, Orion would fly around the moon and back.

The ride ahead

The first crewed Orion flight is scheduled for 2021, and that could involve sending astronauts around the moon for the first time since Apollo. Farther-out expeditions, including the trip to an asteroid and the buildup to Mars missions, would follow every year or so.

This week's test is being managed by Orion's prime contractor on NASA's behalf, Lockheed Martin, at a cost of $370 million. Geyer said developing the Orion spacecraft costs NASA about $1 billion per year, and NASA estimates that work on the SLS rocket will cost roughly $7 billion between now and its 2018 test flight.

NASA has not yet settled on the designs for the landers and space habitats that would be required for a Mars mission, but officials say they expect those components will be ready to go by the 2030s.

NASA TV A video view from the Orion test capsule shows a curving Earth below.

Critics have targeted the multibillion-dollar price tag for Orion and SLS, as well as the long development schedule and the anticipated flight schedule. "Committing to Orion is committing to an Apollo-like replay, just as with SLS: Few people, infrequent and high cost," space industry consultant Charles Lurio told NBC News in an email.

At the same time that NASA is funding the development of Orion and SLS, it's also supporting the commercial development of less expensive "space taxis" that would carry astronauts to and from the International Space Station, starting in 2017 or so. In September, the agency set aside $6.8 billion to help SpaceX and Boeing build such space taxis.

SpaceX's billionaire founder, Elon Musk, has said his company's Dragon capsule could eventually be used for missions to Mars as well as for shorter flights.

Some pictures of the successful launch are shown below:

   

  

Is Package Delivery Using Drones Feasible?

As reported by RoboHub: Just over one year ago, Amazon announced that it is developing a drone delivery service – Prime Air – in a bid to get packages into customers’ hands within 30 minutes. How feasible is this from a cost perspective? Kiva Systems co-founder indicates drone delivery could cost as low as 20 cents/package.

In the early summer I wrote an article about the economics of Amazon’s drones where I highlighted the cost of logistics to Amazon and some back-of-the-envelope calculations about the likely costs of drone delivery. In the article I indicated that Amazon would require pilots for their drones, especially in the early years of operation, and it seems far-fetched that we will have fully autonomous delivery drones in our cities within the next ten years or so without some sort of human oversight. Backing up my calculations, a recent job advert by Amazon indicates that they are looking for drone pilots, whilst similar jobs attract annual salaries of approximately $100,000 per year.
Earlier this year Helen Greiner CEO of CyPhy Works outlined her vision of delivery drones in 5 years. Meanwhile DHL have started testing the use of delivery drones to transport medicine to the small North Sea island of Juist.

So is it economically feasible to deliver packages by drones?
ETH Zurich professor Raffaello D’Andrea thinks it is economically feasible to deliver small packages by drone . D’Andrea is responsible for the Flying Machine Arena (“a space where flying robots live and learn”) and is co-founder of Kiva Systems, the company acquired by Amazon for US$ 775 million in cash that innovated the robotic fulfillment system that Amazon is now implementing in many of its warehouse facilities.

In a guest editorial for IEEE Automation Science and Engineering, D’Andrea detailed some calculations he had previously used to assess the cost of drone delivery for Matternet (whose vision was to “create a transportation network based on flying machines, and to initially address niche markets such as medicine delivery in underdeveloped and hard to reach areas”), and compared these figures to those that he had previously used for Kiva Systems’ business plan.

To assess the costs, D’Andrea initially uses two assumptions:

• Payload of up to 2 kg.
• Range of 10 km with headwinds of up to 30 km/h.

To arrive at the likely costs of drone delivery, D’Andrea analyzes the power consumption in kW, payload mass of 2 kg; a vehicle mass of 4 kg (battery weight of 2kg); the lift-to-drag ratio; 
power transfer efficiency for motor and propeller; power consumption of electronics, in kW, electricity costs and cruising velocity, in km/h, air speed and headwinds.

After analyzing the weight of the drone, payload (parcel) drag, headwinds, etc. D’Andrea states:

“So, is package delivery using flying machines feasible? From a cost perspective, the numbers do not look unreasonable: the operating costs directly associated with the vehicle are on the order of 10 cents for a 2 kg payload and a 10 km range. I compare this to the 60 cents per item that we used over a decade ago in our Kiva business plan for the total cost of delivery, and it does not seem outlandish.”

Via email correspondence, D’Andrea points out that the ten cent cost described in the IEEE guest editorial was for energy (including battery replacement), and not for the amortized cost of the vehicles and vehicle maintenance. Assuming a vehicle cost of $1000 per unit (this is reasonable if Amazon is buying in the thousands), adding 20% per year for maintenance, and amortizing this over 5 years, this would amount to an additional $400/per year, or roughly $1/day. If each vehicle ran 10 missions per day, that’s an additional 10 cents per package on top of the 10 cents in energy costs calculated previously, for a total cost of about 20 cents per package.

20 cents per delivery is far less than what Amazon is currently paying. According to shipping-industry analysts, Amazon typically pays between about $2 and $8 to ship each package, and the possible cost of drone delivery as laid out by D’Andrea would go a long way to reducing Amazon’s annual shipping-related losses of US$3.538 billion (shipping costs incurred in 2013) and the US$ 8.829 billion in cumulative shipping losses between the 2011 and 2013 fiscal years.

In addition to regulatory hurdles and privacy concerns, D’Andrea also outlines several technical obstacles to drone delivery, indicating that additional automation research is needed to address three main challenges:

• vehicle design,
• localization and navigation,
• vehicle coordination.

Elaborating on these issues, he writes:

"Vehicle design encompasses creating machines that are efficient, (most probably) can hover, can operate in a wide range of conditions, and whose reliability rivals that of commercial airliners; this is a significant undertaking that will require many iterations, and the ingenuity and contributions from folks in diverse areas.

Localization and navigation may seem like solved problems because of the many GPS-enabled platforms that already exist, but delivering packages reliably, in different operating conditions, in unstructured and changing environments, will require the integration of low-cost sensors and positioning systems that either do not yet exist, or are still in development.

Finally, thousands of autonomous agents in the air, sharing resources such as charging stations, will require robust co-ordination which can be studied in simulation."

D’Andrea expects that delivery by drones is a real probability and concludes his opinion piece by writing that, for better or for worse, “goods being delivered by flying machines will result in packages flying above our heads in the not so distant future.”