PG&E Braces for Power Cuts, and Rival Providers See an Opening

Date : 07/15/2019 @ 1:49PM
Source : Dow Jones News
Stock : Tesla Inc (TSLA)
Quote : 243.49  -1.3 (-0.53%) @ 12:46AM

PG&E Braces for Power Cuts, and Rival Providers See an Opening

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By Katherine Blunt 

PG&E Corp.'s plan to pre-emptively turn off power in parts of California to limit wildfire risks is creating business opportunities for alternative energy companies that say they can keep the lights on.

Home solar, battery and fuel cell providers including Tesla Inc. and Bloom Energy Corp. are targeting customers in Northern California and appealing to state regulators to boost incentives for the rollout of their technology. While some acknowledge that new energy projects aren't a universal solution to controlled blackouts, they are using PG&E's struggles to highlight alternative possibilities.

PG&E has said it would selectively pull the plug in an area home to 5.4 million people for as long as five days when hot, dry winds sweep its service territory, heightening the risk of its power lines sparking more fires. State investigators tied its equipment to 19 major wildfires in 2017 and 2018, and the company sought bankruptcy protection in January, citing more than $30 billion in potential liability costs.

Companies seeking to capitalize on PG&E's strategy say it is too early to quantify its effect on business but expect interest to increase as the blackouts become more frequent.

Rooftop solar company Sunrun Inc., based in San Francisco, anticipates a slow but steady increase in the adoption of its solar and storage products. More than 40% of the company's customers live in California, and it is advertising in high-risk fire areas, where PG&E has warned residents to prepare for dayslong outages, Sunrun Chief Executive Lynn Jurich said.

"It's going to be a very good long-term tailwind for the business," Ms. Jurich said.

In an article on its website, Sunrun points to PG&E's strategy as a reason to install solar and battery systems. It also has asked PG&E to feature those options in its communications with customers about purchasing backup generation in preparation for potential outages.

PG&E isn't the only California utility with plans to cut power as a means of stemming wildfire risk, but it is the only one to propose doing so on such a large scale. Edison International's Southern California Edison and Sempra Energy's San Diego Gas & Electric have both deployed the strategy in parts of their service territories in recent years. As a result, many utility customers have already sought to outfit their homes and businesses with generators, which typically run on propane, natural gas or diesel fuel.

Now, clean energy companies are touting their products as greener, more advanced options. Batteries such as those offered by Tesla and Sunrun have been slow to catch on in California's residential solar market, in part because they are relatively costly. But the companies say they have seen an uptick in interest in recent months.

Justin Montague, 37 years old, decided to install Tesla solar panels and batteries called Powerwalls at his home north of Calistoga, Calif., earlier this year, after receiving a letter from PG&E warning that he could be without power for days this wildfire season.

He and his wife had weathered that once before, when the utility cut power to his home as part of its first pre-emptive blackout last October. The company's decision left several small communities in the dark for about two days and Mr. Montague said it forced him, his wife and their children, ages 5 and 2, to seek refuge in a hotel about an hour away in Santa Rosa.

To prevent a repeat of that experience, he opted to purchase the solar and battery system for about $54,000, partially offset by a federal tax credit. He anticipates the system will pay for itself in a matter of years and keep the electricity and air conditioning running in the event of a blackout.

"We just can't function without that," he said. "With two little kids and the temperatures up here, how are you supposed to live?"

Bloom Energy, which supplies fuel cells powered by natural gas and biogas to companies such as Alphabet Inc.'s Google and Adobe Inc., is pitching a different solution primarily aimed at large businesses in need of round-the-clock power for data and manufacturing centers. The company's fuel cells, which hook into the natural-gas pipeline system, can operate as islands of electricity when the surrounding area goes dark.

"We have never dealt with the paradigm of days' worth of outages," said Bloom Energy CEO KR Sridhar.

Tesla, Sunrun and Bloom have asked the California Public Utilities Commission to expand a state incentive program for individually generated power technology.

Tesla, which said it has been fielding more interest in its solar and battery systems, told the CPUC in May that expanding the program could help the state "grapple with the extraordinary challenges associated with California wildfires."

In late May, PG&E weighed in, acknowledging that batteries and other sources of power generation could "help address California's most pressing issue, wildfire resiliency." It recommended that regulators adopt extra incentives for utility customers most vulnerable to the effects of a pre-emptive shut-off.

PG&E pulled the plug for the first time this year in June, blacking out 22,000 customers in wine country and the Sierra Nevada foothills after the National Weather Service issued a red-flag warning signaling high fire danger.

Bloom, which went public last year, recently appealed to business owners with a post on its website warning them that they could be next in line for a shut-off.

"How would you keep your business running if you had no electricity for five days or more?" it read. "That's a question every California business leader should be thinking about."

Write to Katherine Blunt at Katherine.Blunt@wsj.com

 

(END) Dow Jones Newswires

July 15, 2019 08:34 ET (12:34 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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