Cheap Solar Makes a Big Bet in Nevada
(Bloomberg View) -- Two recent energy deals highlight innovations in technology, business and marketing.
Swiss asset manager Capital Dynamics AG will build a one-gigawatt portfolio of solar farms in Nevada, one of the largest such projects in the U.S., with technology infrastructure company Switch Inc. as an “anchor tenant.” The two companies expect the cost of power generated by Gigawatt 1 to be significantly lower than what the local utility charges.
The anchor tenant concept in energy isn’t unprecedented, but it hasn’t been done on this scale: Gigawatt 1 is 16 times larger than a 60-megawatt solar farm in North Carolina that signed on the Massachusetts Institute of Technology as its anchor tenant in 2016. Switch’s Northern Nevada data center will require more than 10 times as much electricity as MIT’s project could instantaneously provide.
There’s one other innovation at play in Gigawatt 1. Two years ago, three casinos accounting for more than 7 percent of power sales in Southern Nevada signed supply contracts with other parties that offered cheaper, cleaner power than they were getting from NV Energy Inc., the local utility. The state’s electricity regulator assessed an “exit fee” on those casinos -- nearly $87 million for MGM Resorts alone -- to be paid to NV Energy as a way of helping it recoup lost revenue. Switch is paying millions in such exit fees to join Gigawatt 1; Capital Dynamics says it offers financing options for those exit fees to companies looking to join the project.
The second deal highlights another market innovation, but in a very established industry: pumping gasoline. This week, Silicon Valley-based Yoshi Inc., one of several companies that delivers gas, oil changes, car washes and other services while customers' cars are parked and charges fees per delivery on a monthly basis, took on four new investors: General Motors Co.’s venture arm, a Y Combinator fund, Golden State Warriors star Kevin Durant’s foundation, and Exxon Mobil Corp.
Exxon Mobil says its investment in Yoshi will allow it “to shape a new channel in the market for its products.” In other words, using Yoshi’s service to deliver Exxon Mobil’s fuel and lubricants won't increase total demand for either product, but it could increase Exxon Mobil’s market share for them.
Delivering gasoline at $7 a pop might not sound lucrative, but as Bloomberg Gadfly’s Liam Denning noted last summer, oil majors generate significant revenue from service station sales of cigarettes, hot dogs and lottery tickets. Yet every person getting a gasoline delivery pays a fee; not everyone filling up buys Cokes or smokes at the same time.
Silicon Valley commuters might consider it worth a fee to avoid the trouble of exiting the highway to fuel up, or to make an appointment for another service. But Yoshi also offers corporate packages, because saving time for workers entices them to stay at their desks. In that sense, it’s much like an elaborately stocked corporate pantry: a treat and a nudge.
- Tesla Inc. says that 30 percent of all vehicle services are now provided by its mobile fleet, with a customer satisfaction rate of 98 percent.
- Uber Technologies Inc.’s Advanced Technologies Group makes a (fairly convincing) argument that automated trucking will increase demand for human truck drivers.
- Uber and Bell Helicopter will test their first air taxis in Dallas and Dubai in 2020.
- Uber and Alphabet Inc. subsidiary Waymo have settled their trade-secret theft lawsuit, with Uber agreeing to give about $245 million in stock to Waymo.
- Ninety percent of BMW electric vehicle owners say that they will not go back to owning cars with internal combustion engines.
- Land that was once part of the Bears Ears National Monument is now open for mining, but no one wants to mine it.
- A smart look at U.S. tariffs on washing machines shows that China is just the latest in a wave of countries to export major appliances to the U.S. Vietnam and Thailand are next.
- U.S. venture capital investment exceeded $80 billion in 2017.
- Computers can be hacked using their exhaust fans and blinking lights -- even if they’re not connected to a network and are electromagnetically shielded.
- Black lung is making a comeback in Appalachia, thanks to longer mining shifts and thinner, dustier coal seams.
- And speaking of anchor tenants, try your hand at Bloomberg’s retro-style game American Mall.
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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Nathaniel Bullard is an energy analyst, covering technology and business model innovation and system-wide resource transitions.
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