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Warren Buffett vs. Sheldon Adelson Over Nevada’s Energy

in Business/Local News

Sheldon Adelson and his company Las Vegas Sands have funneled more than $20 million into supporting a constitutional amendment which would allow Nevada customers to choose their own power providers.

 

Ethan Miller/Getty Images

By DARIUS DIXON and ERIC WOLFF 10/27/2018 06:43 AM EDT

Warren Buffett's Nevada energy utility is clobbering Republican megadonor Sheldon Adelson in a power struggle over the fate of the state's electricity supply.

The Omaha investor and the Las Vegas gambling magnate are on opposite sides of a Nevada ballot measure that could rattle the electric power industry: Buffett's Berkshire Hathaway owns NV Energy, a government-regulated monopoly that ranks as the state's largest utility. And Adelson is bankrolling a campaign to break up the company and take control of where his power-hungry casinos buy electricity.

The fight has drawn more political money than Nevada's fiercely contested Senate race, while scrambling political partnerships in the state: Allies of former Senate Democratic leader Harry Reid are working with Adelson, while local environmentalists have joined forces with Buffett's utility.

Adelson and his company Las Vegas Sands have funneled more than $20 million into supporting the Energy Choice Initiative, a constitutional amendment which would allow Nevada customers to choose their own power providers. In addition to Adelson's eight-figure contribution, making him its largest patron, the data storage company Switch has also contributed $12 million to the cause, according to state campaign finance records. But NV Energy has thrown roughly twice as much money into its efforts to kill the amendment, which will appear on the November ballot as Question 3.

Both sides are offering a similar pitch — promising lower energy prices and more opportunities for renewable power — but the “No” campaign seems to be doing a better job drawing voters to its side.

“It's clear that Buffett has decided to loosen the purse strings,” said Nevada political expert Jon Ralston. “They’ve way outspent [proponents] and they’re going to win.”

The $62 million NV Energy has put toward defeating Question 3 has gone into branding the initiative as a “new, unknown system” and a “risky experiment” that echoes the Western energy crisis in the early 2000s.

“On top of higher rates, electricity deregulation in other states has led to less reliable power and even rolling blackouts,” a firefighter says in one anti-amendment ad, as newspaper clips about California power outages in 2001 zip by the screen.

Marc Spitzer, a former regulator in Arizona and at FERC, said reminders of the California crisis remain potent in the region. “The West is different in that regard and they have longer memories for the California implosion,” he said.

Jon Wellinghoff, a former FERC chairman close to Reid, has been working on the pro-amendment campaign for several months. He blasted NV Energy’s attacks as “scare tactics” and “total garbage,” but acknowledged they were having some success.

“The bear is fighting for its life, basically,” Wellinghoff said. He says their investment to date is “probably the tip of the iceberg.”

Question 3 supporters have responded with commercials featuring Jonathan Scott, co-star of home renovation show “Property Brothers,” and a series of “telephone townhalls” that have included former Republican FERC Chairman Pat Wood to help answer questions about how the electricity market in Texas has worked.

But that campaign appears to have started too late to prevent voters from abandoning the measure. Only 32 percent of likely voters supported it compared with 51 percent opposed, according to a September poll from the Reno Gazette-Journal and Suffolk University. The measure won 72 percent of the vote when it first appeared on the ballot in 2016; Nevada law requires initiatives to pass twice to amend the state's constitution.

Adelson's forces “certainly should not have let the other side have the field for so long and outspend them the way they did,” Ralston said.

With more than $95 million raised by both sides, the ballot fight outstrips the spending in the race that could unseat Sen. Dean Heller, one of the most endangered Republicans this fall. Heller and his Democratic opponent Jacky Rosen have raised less than $30 million combined as of the end of September, according to FEC records, and outside groups have spent another $38 million, the Nevada Independent reports.

More than a dozen states have broken up their electric monopolies over the past quarter century in favor of competitive markets, but Nevada would be the first to do so by ballot initiative. Squashing the amendment in Nevada could help stave off similar challenges to utilities in other states where regulated monopolies have dominated — and made steady cash — for a century.

Inside ‘The Gigafactory’ Tesla’s Mission to Utilize Energy Usage

in Business/Local News
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About 14 percent of the Gigafactory in Nevada has been built so far. At 5.8 million square feet, it will be a building with one of the biggest footprints in the world.

Originally published on April 18, 2016, 3:56 pm

Outside Reno, in Nevada's high desert, Tesla is building what it says is the world's largest battery factory. The Gigafactory, as it's called, will churn out batteries for the company's electric cars. But it's also making something new — a battery for the home.

Tucked away in a dusty valley near Sparks, Nev., the Gigafactory is kind of like Willy Wonka's chocolate factory: It's mysterious, it's big and few people have been inside.

Actually, “big” may not do it justice.

“It's really hard to get a sense of scale. I mean, it's huge,” JB Straubel, Tesla's chief technical officer, says while standing on the roof of the factory — the 14 percent of the Gigafactory that's been built, at least.

We're looking down at a flat stretch of land where the rest of the Gigafactory — with an estimated price tag of $5 billion — will go.

Like Willy Wonka's factory, there's a lot of hype around this place. People have been caught sneaking onto the property to see what Straubel says, at 5.8 million square feet, will be a building with one of the biggest footprints in the world.

“I'm not a huge football fan, but I think it's on the order of around 100 football fields,” he says.

Nevada beat out several states by offering an incentive package worth more than $1 billion. State lawmakers are watching like hawks for the economic benefits, such as making sure Nevadans make up a big part of the factory's 6,000 workers.

Inside the factory, in room after room after room, workers are welding steel, pouring concrete and installing highly specialized machines, shrouded in plastic.

One room is filled with huge metal tanks, like an insanely large industrial kitchen. It's where the raw materials are mixed together. In other rooms, the fully formed pieces of the battery, called the anode and cathode, are baked in huge ovenlike machines, several hundred feet long.

According to Straubel, the equipment in the factory will double the world's capacity to make lithium-ion batteries. Tesla hopes to produce 35 gigawatt-hours of energy storage annually, which could supply 500,000 of its electric cars.

“It's not just about building a lot more batteries but it's about reducing the cost,” Straubel says.

Tesla is known for pricey electric cars, and batteries are a big part of the sticker price. And that, Straubel says, is why this factory is all about scale. Scaling up could drive down the cost of batteries 30 percent or more, he says. Battery packs in most electric cars are estimated to cost more than $10,000 today.

“Our vehicles can be more affordable. More people can have access to them,” Straubel says.

That's the company's goal with the new Model 3, Tesla's first mass market car, announced last month. The Model 3 will start at about $28,000 after the federal tax credit.

“We have today over 325,000 reservations for Model 3, representing this enormous backlog of orders,” Straubel says.

Those are orders that Tesla can't fill if this factory isn't up and running.

One room over, part of the factory is running, but it's making something else: the Powerwall. The flat battery, about 4 feet tall and 3 feet wide, is Tesla's first battery for residences.

“If someone has solar on their house and they install a Powerwall, what this lets you do is store your surplus solar energy,” Straubel explains.

This is Tesla's ultimate vision: an electric car in your driveway and a Powerwall — priced starting at $3,000 — in your garage. It's a future free of fossil fuels, Straubel says.

Tesla is also making a larger version of these batteries called Powerpacks, about the size of a refrigerator, that can be used to store electricity at factories, industrial sites, or by electric utilities.

“That's changing the transportation landscape. It's changing the energy landscape. It's changing the world,” Straubel says.

Severin Borenstein, an energy economist at the University of California, Berkeley, agrees that it would be “a game changer for reducing greenhouse gas emissions.” The question, he says, is whether consumers will buy into Tesla's vision.

Take that $3,000 home battery. Electric rates in many states make it hard to actually save money storing your own electricity.

Some solar customers are paid by their electric utilities for the extra solar power they put onto the grid, a policy known as “net energy metering.” That creates little incentive to store solar energy at home.

A battery could help someone save money if his electricity costs a lot more at night than it does during the day. Borenstein says few states have those kinds of electricity prices.

“Average households are not going to get much or any value from these batteries,” Borenstein says.

Early adopters may not care, though.

“They're people who like that and feel good about it and they're mostly pretty darn rich,” he says.

Tesla CEO Elon Musk is betting that cheaper batteries will make everyone else want a home battery and electric car, too, which could finally lead the company to profitability.

“Is Elon Musk far-seeing and investing in the future?” Borenstein asks. “Or is he making big bets that could all collapse at once?”

The Gigafactory is exactly that gamble. If Tesla stays on schedule, it'll be fully open in four years.

Copyright 2017 KQED Public Media. To see more, visit KQED Public Media.

KELLY MCEVERS, HOST:

Today on All Tech Considered, an energy revolution.

(SOUNDBITE OF MUSIC)

MCEVERS: In the high desert of Nevada outside Reno, Elon Musk's company, Tesla, is building a massive battery factory, the largest on the planet. It's called the Gigafactory, and it'll turn out batteries for the company's electric cars. But it's also making something new, a battery for your house. Lauren Sommer from member station KQED got a rare tour.

LAUREN SOMMER, BYLINE: Tesla's Gigafactory is kind of like Willy Wonka's chocolate factory. It's mysterious, it's big and few people have been inside. Actually, big may not do it justice.

JB STRAUBEL: It's really hard to get a sense of scale. I mean, it's huge.

SOMMER: JB Straubel is Tesla's chief technical officer. And we're up on the roof of the Gigafactory – the part that's been built, at least.

STRAUBEL: So you can see the sort of building footprint that would be in front of us to the north.

SOMMER: We're looking down at a flat stretch of land where the rest of the Gigafactory will go. It's tucked away in a dusty valley near Sparks, Nev. Like Willy Wonka's factory, there's a lot of hype around this place. People have been caught sneaking onto the property to see what will be one of the biggest buildings in the world, Straubel says, almost 6 million square feet.

STRAUBEL: I'm not a huge football fan, but I think it's on the order of around 100 football fields.

SOMMER: Nevada beat out several states by offering an incentive package worth more than $1 billion. Lawmakers here are watching like hawks for the economic benefits, like making sure Nevadans make up a big part of the factory's 6,000 workers.

STRAUBEL: We have to, you know, watch a little bit where we walk.

SOMMER: Inside the factory, workers are welding steel, pouring concrete and installing highly specialized machines shrouded in plastic in room after room after room.

STRAUBEL: So this is a pretty exciting room.

SOMMER: It's filled with huge metal tanks, almost like an insanely large industrial kitchen.

STRAUBEL: This is where we will actually mix the materials. So the raw materials, we mix them into what's called a slurry.

SOMMER: Straubel says all this equipment will double the world's capacity to make lithium-ion batteries.

STRAUBEL: You know, it's not just about building a lot more batteries, but it's about reducing the cost.

SOMMER: Tesla is known for pricey electric cars, and batteries are a big part of the sticker price, which is why, Straubel says, this whole factory is about scale. Scaling up could drive down the cost of batteries 30 percent or more, he says.

STRAUBEL: Our vehicles can be more affordable, more people can have access to them.

SOMMER: That's what the company is going for with the new Model 3, its first mass-market car announced last month. It'll run around $28,000 after the federal tax credit.

STRAUBEL: We have today, you know, over 325,000 reservations for Model 3, you know, representing, you know, this enormous backlog of orders.

SOMMER: Those are orders Tesla can't fill if this factory isn't up and running. Just one room over, part of the factory is running, but it's making something else.

STRAUBEL: That's a Powerwall, actually. Do we want to walk through a little bit…

SOMMER: …The Powerwall is a flat battery, about 4 feet tall, 3 feet wide, coming off the production line. It's Tesla's first battery for your house.

STRAUBEL: And if someone has solar on their house and they install a Powerwall, what this lets you do is store your surplus solar energy.

SOMMER: This is Tesla's ultimate vision – an electric car in your driveway and a Powerwall in your garage. It's a future free of fossil fuels, Straubel says.

STRAUBEL: It's changing the transportation landscape. It's changing the energy landscape. It's changing the world.

SEVERIN BORENSTEIN: It would really be a game changer for reducing greenhouse gas emissions.

SOMMER: Severin Borenstein is an energy economist at UC Berkeley. He says the question is whether consumers will buy into Tesla's vision. Take that $3,000 home battery. Electric rates in many states make it hard to actually save money storing your own electricity.

BORENSTEIN: Average households are not going to get much or any value from these batteries.

SOMMER: Early adopters may not care, though.

BORENSTEIN: There are people who like that and feel good about it, and they're mostly pretty darn rich.

SOMMER: Borenstein says Tesla CEO Elon Musk is betting that cheaper batteries will make everyone else want one, too.

BORENSTEIN: Is Elon Musk sort of far-seeing and investing in the future, or is he just making big bets that could all collapse at once?

SOMMER: The $5 billion Gigafactory is exactly that gamble. If Tesla stays on schedule, it'll be fully open in four years.

For NPR News, I'm Lauren Sommer outside Sparks, Nev. Transcript provided by NPR, Copyright NPR.

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