I worked over two decades for Buffett’s Iowa utility company, and ensuring low cost electricity prices was my top job. Iowa had a 16-year rate freeze (1995-2011), with rates ranging from 3 cents for industrial clients like Google (which signed up and built the world’s largest data center in Council Bluffs, across I29 from our 3GW of coal plants) to 8 cents per kWh for residential rates. Today almost half of Iowa’s electricity is coming from wind, but the rates have also surged to pay for the billions invested in MidAmerican Energy’s 6GW of new wind turbines. Going green is good, just not free.
I was on the team that did the due diligence when we bought PacifiCorp, which supplies all the cheap coal-fueled electricity (likely still under $0.10/kWh) for Tesla’s Gigafactory. I never understood Elon bragging about not running a natural gas line to GF, as I knew he was actually choosing lots of coal-fueled power instead. When GF was unveiled, all the pictures showed GF 100% covered in solar panels and surrounded by wind turbines. But it’s 2020 and GF still has few solar panels on the roof (that could be coming from GF2, on the cheap) and not a single wind turbine in sight.
GF3 will economically benefit from China’s cheap electricity, but 70% is coal-fueled (US is down to 25% and falling every year) with virtually no emissions controls for SOX, NOX, Hg, particulate matter, etc (vs US that has a strong EPA mandating all these emissions controls). So that’s disappointing.
Then the news of GF4 coming to Germany hit, and I was extremely surprised because Germany’s average electricity cost is among the highest in the world at ~$0.40/kWh (half of that is govt taxes, which could possibly be negotiated down?). Energy is one of the highest costs (up there with batteries) in producing a vehicle, so the cost of a Made in Germany 3 or Y will certainly be Tesla’s highest GF locations. On the upside, Tesla will save a few thousand in shipping costs to Europe. But I sure thought Elon would have chosen ANY European country other than Germany for GF4, given that it has the highest price for power.