Elon Musk’s SolarCity Crashes

solarcity crashSolarCity is struggling. Tesla is struggling. Elon Musk is not the King Midas of making companies perfect. Musk’s magic can’t do everything anymore. –Ryan McQueeney, Nasdaq, 10 May 2016

Shares of SolarCity nose-dived on Tuesday after disclosing earnings results that cast gloom over the provider of solar systems. The big problems for the solar company: The quarterly report disclosed a loss that was bigger than expected, and management followed that up with a dismal outlook for future results. So far in 2016, SolarCity shares have plummeted 65 percent. –George Avalon, Silicon Beat, 10 May 2016

The real problem with Tesla cars is that no one actually buys them. Well, not directly. Their manufacture is heavily subsidized — and their sale is heavily subsidized. Tesla does not make money by selling cars, either. It makes money by selling “carbon credits” to real car companies that make functionally and economically viable vehicles that can and do sell on the merits — but which are not “zero emissions” vehicles. It is estimated that Musk’s various ventures — including his new SolarCity solar panel operation and SpaceX — have cost taxpayers at least $4.9 billion, with Tesla accounting for about half of that dole. –Eric Peters, The Detroit News, 9 May 2016

After their hot rally at the end of last year, shares of solar energy firms have turned ice cold as concerns about slower growth and regulatory uncertainties plague the group. SolarCity led the sell-off on Tuesday after the company cut its 2016 forecast for solar panel installations late on Monday and posted a larger-than-expected quarterly loss. Investors have been worried about the outlook for growth for the solar sector, especially following a pullback in an important Nevada solar support policy and uncertainty about pending regulatory decisions in other states. Nevada regulators this year announced changes that mean new tariffs that will raise fees solar customers pay to use electric grids. Reimbursements to users are also being cut and investors fear such moves could be repeated in other states. –Caroline Valetkevitch, Reuters, 11 May 2016

The attractions of Britain for investors in renewable energy projects are at an all-time low, an authoritative new report has found. The UK routinely topped the annual league table for attractiveness to clean energy companies, run by consultancy Ernst & Young (EY), in the mid-2000s. For the first time, however, it has slid to 13th in the global rankings. Investors in renewable energy are being put off the UK by political posturing hostile to renewables and green efforts, and the slashing of government support for clean power supplies, in favour of potentially more expensive alternatives such as shale gas and nuclear power. –Fiona Harvey, The Guardian, 10 May 2016

Does this sound familiar? A shiny new solar company comes onto the scene, satisfying the cries of the solar panel-obsessed clean energy fanatics. Somewhere along the way, Barack Obama and Congress indiscriminately award the solar company millions in taxpayer funds. A few years pass, and a slow but largely ignored descent into financial ruin ends in scandal. You may be thinking of the famed Solyndra debacle. Unfortunately for taxpayers, SunEdison, the self-proclaimed “largest green energy company,” filed for bankruptcy protection in late April. The latest solar scandal should come as no surprise because the entire industry is driven primarily by perverse incentives. —David Williams, Morning Consult, 10 May 2016

This morning I got out my little toy telescope and watched Mercury transiting the Sun. The striking fact was not the little black image of Mercury but the total absence of sunspots. I have seen many transits before this one, but never without sunspots. It seems the sun has gone to sleep as it did in the Maunder Minimum in the seventeenth century. In the seventeenth century we had the Little Ice Age and now we have the pause in global warming. Evidence getting stronger that the Sun is a big player in the climate story. –Freeman Dyson , 9 May 2016

Jeremy Grantham was so, so wrong. In GMO’s quarterly letter, the famed investor admitted that he simply whiffed on the latest commodity bubble popping. In 2005, Grantham said that there was a paradigm shift in oil, calling for “peak oil.” The idea was that the resource was drying up and OPEC controlled the supply. A strong cartel, diminishing supply, and increasing demand from emerging markets would all contribute to skyrocketing oil prices for decades. In early 2016, oil dipped to under $30 a barrel for the first time in over a decade. Grantham also said that long-term shifts in weather patterns would make grain hard to come by and drive up the price of foods. While droughts did cause prices to increase after his prediction in 2011, they have since dropped again. Grantham did conclude, however, that there are still reason to believe that all three of his predictions could still come true in the long-term. –Bob Bryan, Business Insider UK, 10 May 2016