CLIMATE SPECTATOR: Musk’s triumphs and tribulations

Tesla’s first quarterly profit is closer than forecast despite a “-$100 million” review, GE looks to boost its Australian wind focus and a local solar firm may be on the cusp of collapse.

Climate Spectator

Green Deals is a weekly column covering the latest deals in the clean tech space. To read previous articles go to our Green Deals page

Tesla Motors, Elon Musk

Starting with a good news story and Tesla Motors, a pin-up of the clean tech sector, is closing in on its first quarterly profit.

The Elon-Musk led EV group has launched two cars, with the latest – the Model S – helping it record its first week of profit since becoming a public company (as we reported on in December). At the time a quarterly profit was expected in the second half of this year, but alas, that timeframe may need to be pushed forward.

In its latest accounts – Q4 2012, released last week – Tesla told investors it could edge into the black this quarter.

"We expect to be slightly profitable (excluding only non-cash option and warrant-related expenses) in Q1 2013,” the company reported, while also expecting to be "near breakeven on cash flow.”

The company has been ramping up expectations ahead of the launch of the Model S in Europe and Asia later this year.

Through all this, however, Musk and Tesla have been fighting back against a review in the New York Times. You can read Musk’s blog about the battle here, but put simply the review questioned the range of the Model S, with Tesla publicly confident the writer "fudged” his findings.

While Musk has since said his ‘faith in the New York Times has been restored’, it might take a little while for him to get over the story judging by an interview with Bloomberg TV over the weekend. In the interview the entrepreneur claimed the bad review may have cost Tesla as much as $100 million through the impact of lost orders and damaged reputation.

"It probably affected us to the tune of tens of millions, to the order of $100 million, so it's not trivial,” he said. "I would say that refers more to the valuation of the company. It wasn't as though there were 1,000 cancellations just due to The New York Times article. There were probably a few hundred."

Who knows, those cancellations just might stop the company making profit in Q1.

GE, Origin, AGL

Multi-national conglomerate GE is looking to expand its presence in the Australian wind sector, according to a report in The Australian.

The company’s global vice chairman told the paper "it was working very hard” on "two or three” infrastructure projects, but would not elaborate on specific projects.

The paper linked the company to Origin’s massive 157-turbine Stockyard Hill project, although there was a little confusion as the paper said GE was talking with AGL over this development. If the conglomerate really is talking to AGL over Stockyard Hill then perhaps they need to ‘work very hard’ to find out who actually owns it.

Stockyard Hill is consistently the subject of media speculation, with Origin inviting bidders last year. Last month, however, Origin said it would hang onto Stockyard Hill. Perhaps a possible deal with GE was part of the reason behind the decision not to sell.

Speaking of big wind developments, and the $1 billion Macarthur wind farm is due to be fully operational soon. Construction of the biggest wind farm in the southern hemisphere to date – at 420 MW – finished late last year, with the site expected to be fully operational in the first quarter of this year after the completion of testing.

We note with interest that in its half-year reports released today, AGL (which shares ownership with Meridian Energy) noted it was due to be complete in the "first half of 2013”. Whether that means there has been a hiccup or two we are not sure, but it is intriguing wording and a sign there may have been a delay.

Finally on Macarthur, and Meridian Energy has said it is still looking to offload its stake in the facility, with the only name linked to negotiations so far being AGL – but then again one expects they would have to be involved one way or another.

Unleash Solar

Further to a story we brought you about the possibility of financial troubles at Adelaide-based installer Unleash Solar, and it appears there was good reason to be concerned, with reports it may be close to entering administration.

It’s not a good sign when Consumer and Business Services (an SA government body) puts out a media release titled "Warning on Unleash Solar Pty Ltd”. And reading the release, the news gets no better.

"Consumer and Business Services has issued a public warning about Unleash Solar Pty Ltd after complaints about faulty equipment and warranty work not being completed,” it says.

Apparently 17 complaints have been received to-date, six of which come from outside SA.

It gets worse.

"Our investigators have spoken to the company's sole director Dionysios Perdikoyiannis,” Commissioner for Consumer Affairs, Paul White, said.

"He has informed us that the company doesn’t intend to address outstanding warranty claims for between three to six months, because he says it will take the company that long to obtain supply of new inverters from China.

"CBS considers this to be an excessive time for consumers to wait for warranty claims to be addressed and would constitute a major failure under the Australian Consumer Law, as the goods supplied are substantially unfit for the purpose and cannot easily be rectified, within a reasonable time.

"CBS is concerned that the company is not financially viable and any consumers who contract with Unleash Solar risk losing deposits.”

The major partner of A-League club Adelaide United, and former key sponsor of the Adelaide 36ers in the NBL, has certainly not shied away from the limelight with its heavy sponsorship outlays. But those may now be coming back to bite.

The company came onto the scene in 2010 and employs over 100 staff and contractors across the country.


Positive news is also hard to come by at EnergyAustralia, where operating earnings plunged 42.1 per cent lower in 2012. It’s not a great development for CLP Group, the owner of the energy retailer, which had been looking to float EnergyAustralia on the ASX sometime this year.

Read most media reports on the news and you would swear the IPO was about to be called off, for this year at least, but Green Deals isn’t quite so sure.

If there’s a show of improvement in the first quarter of 2013 and continued positivity in the market through the first half of the year, then don’t be surprised to see a float in the back half of the year, perhaps timed for just after the election – and a probable Tony Abbott win.

Acciona, Allendale wind farm

Acciona Energy has scrapped plans to build the 69 MW Allendale wind farm in South Australia. The company said a viable business case couldn’t be made for the 46-turbine wind farm to proceed to the development stage.

"After detailed investigations over a number of years, Acciona has made a decision that the wind farm was not commercially viable,” the company said in a statement.

"Acciona’s decision to not proceed with the Allendale wind farm has no bearing on the company’s other development projects.”

Pacific Hydro

Pacific Hydro’s Carmody’s Hill wind farm is under a cloud after the local council ruled against extending planning consent, according to the ABC.

Pacific Hydro has yet to submit a development application for the project, which has a proposed capacity of 140 MW. It has previously seen extensions to a planning permit received in 2009.

"The approval states that unless substantive work has commenced within 12 months of the approval, date to consent expires," Northern Areas Council Mayor Denis Clark told the ABC.

"It's ... very difficult for both sides because it'll have ramifications down the track for sure."

Panax Geothermal

ASX-listed Panax Geothermal has announced a capital raising of $225,000 through the issue of 150,000,000 shares to "sophisticated investors”. No, that isn’t a typo, 150 million shares new shares were created at the tragic price of just $0.0015 per share. You can’t get much lower than that.

It’s a far cry from the heady days of 2008, when the company almost hit 30 cents a share. Since then its share price performance has mirrored that of the Australian geothermal industry as a whole, which has been trending down in a major way.

Following the raising, Stephen Evans and Ian Reid have stepped down from the Panax board, replaced by Athan Lekkas, David Wildy and Michael Clarke.

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