Tesla Model 3, Model S & X Refresh, & Coal Killing Natural Gas (Cleantech Talk #24)

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

Matthew Klippenstein and I tackled the Tesla Model 3 unveiling, Tesla Model 3 reservation estimates (before and after the unveiling), the Tesla Model S and Model X refresh, and the odd case of coal potentially helping to kill natural gas.

You can listen to the show via the embedded player below, on iTunes, or on SoundCloud. Below the embedded player, you can read Matthew’s helpful show notes. And you can check out our Cleantech Talk archives for previous shows if you haven’t listened to them yet.


We started this episode of TeslaTech Talk… er, CleanTech Talk 🙂 discussing Fremont’s Model 3. And while some people online think the now-400,000+ reservations are relatively non-committal, the CTT consensus was that they’re pretty sticky. After all, if you’re putting money down on a future Tesla … well, chances are you’re doing it because you want to buy a Tesla, and not just any electric vehicle!

Thinking more generally, one would be inclined to think that reservations are the most “sticky” for luxury consumer products: a Rolex, a limited-edition champagne or whiskey, perhaps some Harry Winston jewelry. The Tesla Model 3 is probably similar to the iPhone in that both are aspirational products which happen to be affordable enough to drive massive sales volume.

Reservations would probably be less “sticky” for commodity products, where the customer doesn’t care about the brand, and simply needs the service(s) the products offer. The Tesla Powerpack would probably be in this category — the purchasers will mainly be utilities or commercial power users whose main goal is to save money. If they can save a dollar by going to a different vendor, they’ll do so.

(The Tesla Powerwall probably fits in between the Model 3 and the Powerpack, in that many people putting down reservations will specifically be doing so because it’s a Tesla product, but many others will probably be price-sensitive, and be willing to go to another vendor, if they can find a cheaper price, or a more convenient service.)

The “mutually assured destruction” of Coal and Natural Gas

simpsons coal nat gas

Bloomberg’s Liam Denning recently put out a great article pointing out that, far from natural gas benefiting from coal’s collapse, coal was liable to pull natural gas down with it. Which, oddly enough, brought to mind an episode from season 3 of the Simpsons (“Homer Alone”) in which Mayor Quimby threatens Chief Wiggum:

“Now listen to me, if Marge Simpson goes to jail, I can kiss the chick vote goodbye. And if I go down, you’re gonna break my fall.”

Well, coal is going down, and natural gas will be (almost certainly unwillingly) breaking its fall.

As Denning explains, since utilities are now burning less coal, their existing on-site inventories actually represent more days’ worth of fuel supply than the tonnage itself would indicate. And with environmental legislation (finally!) on the way, the time to burn that coal is now. (Burning the coal would also improve the companies’ balance sheets, because it’s probably already been paid for.)

In this scenario, natural gas consumption could be lower than expected. That would be welcome news if natural gas stockpiles were low and needed replenishing — but instead, natural gas stockpiles are at historic highs. (At least, in terms of recent history.) Which means that — like an elegant trick shot in pool/billiards — coal’s trouble could stagger the natural gas industry for a year or two as well.
That year or two may not seem like much in the big picture, but with solar and wind continuing their relentless cost reductions, that extra time allows renewables to become that much more competitive, putting us in a better position to outmuscle both fossil fuels when they get a temporary second wind, and to facilitate our energy transition!

Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.

CleanTechnica Holiday Wish Book

Holiday Wish Book Cover

Click to download.

Our Latest EVObsession Video

I don't like paywalls. You don't like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong — and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it!! So, we've decided to completely nix paywalls here at CleanTechnica. But...
Like other media companies, we need reader support! If you support us, please chip in a bit monthly to help our team write, edit, and publish 15 cleantech stories a day!
Thank you!

CleanTechnica uses affiliate links. See our policy here.

Zachary Shahan

Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], ChargePoint [CHPT], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], Albemarle Corporation [ALB], Nouveau Monde Graphite [NMGRF], Talon Metals [TLOFF], Arclight Clean Transition Corp [ACTC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.

Zachary Shahan has 7145 posts and counting. See all posts by Zachary Shahan

44 thoughts on “Tesla Model 3, Model S & X Refresh, & Coal Killing Natural Gas (Cleantech Talk #24)

  • Uh . . . can you add a convention RSS podcast feed and/or Stitcher? We don’t all used iTunes. And Soundcloud is kind wonky.

    • conventional RSS podcast feed? not sure if I understand.

      not sure what Stitcher is, but will look. i like SoundCloud 😀 what do you find wonky about it?

      • Well the above link to it does not work on Chrome, I have to try later on a Mac. Also the embedded now show “connection reset”

  • Re coal displacing natgas: the current inventory of coal at US utes is 101 and 94 days for subbituminous and bituminus coal, up 32 and 13 days (respectively) from last year (YoY January, per EIA). That is indeed a lot of inventory!

    That said, I suspect the root cause is some combination of accountant frame dragging (long term historical burn rates used to inform purchasing decisions rather than recent activity) and CFO hedging decisions (buy and stockpile when prices are low to weather temporary price spikes and profit from reversion to the mean).

    Will this inventory really depress natgas prices? Only 38% of natgas in the USA is used to produce electricity. Coal inventory burndown is therfore unlikely to cause any substantive impact unless there was a nationwide coordinated burndown (unlikely IMO).

    Realistically, the inventory buildup is most likely to pummel coal producers going forward.

      • Power is #1, followed by industrial uses at #2 (these are the least likely to go away), followed by residential heating at #3, then commercial heating at #4. (Cooking is included in the residential and commercial numbers but it’s insignificant.)

        • OK, so residential + commercial is 7818346 mcf.

          That’s 2,291,331 GWh.

          Oh-kay. That does sound like a lot of heating usage. Probably about 80% of this is waste which could be dealt with by proper insulation, but we can’t expect people to do that. Heat pumps can conservatively be considered to have a COP of 2 (averaging the ultra-cold days when they don’t work and you have to switch to resistive heating against the warmer days when tey have a better COP).

          Yearly electricity production is about 4 million Gwh.

          So if we replaced the heating gas in the totally stupid way, we’d add 2.3 million Gwh of demand. Add in the 10% for electric cars,about 0.4 million Gwh, and we’re at 168% of current electrical demand.

          With insulation and heat pumps, we would instead add 0.23 million Gwh from heating and 0.4 million from cars, getting us to about 116% of current electrical demand.

          I figured this out just to see whether there was really going to be a significant growth in electrical demand from the Big Switchover. There isn’t. With exponential growth in solar, this is just a couple more years on the growth curve.

          I’m not sure what to do about the industrial use of natural gas; it’s mostly a chemical feedstock which has replaced oil. Since it’s not just used for power, it can’t be replaced with power alone.

          • True. Though IMO actual demand may be much less than that with the amounts of thermal generation inefficiency, conversion losses and systemic waste energy, and fuel plus energy lost in pipelines and the delivery system.

          • You could combine the heat pumps with an underground thermal reservoir that balances out temperature extremes. Works better in dry places, of course. I wonder if a time will come when people stop migrating to dry places because they no longer expect water on demand.

          • Space heating is the problem. Most homes gas heated and hot water. Not much alternatives.

          • Yes, that’s what I was assessing.

            The alternative to gas heating is an electric heat pump, with either (a) resistive backup for temperatures below -4F, or (b) ground-source aka geothermal.

            Most of the gas heating is wasted due to terrible insulation. Proper superinsulation can cut the heating load to roughly 20% of the typical heating load. I’m not kidding, and I’m actually underestimating the waste. My heating bill is about *10%* of what a typical heating bill for a house my size in my area is, and my house isn’t even properly superinsulated (they did a half-assed job).

          • alternatives= Solar hot water, Geo-Thermal , heat pump and other choices.

    • You know, there probably will be a nationwide coordinated burndown. Coal plants are shutting down, and you always want to shut them down with zero coal on hand — the plants scheduled to close which still have coal on hand will try to burn it as fast as possible to make sure they burn it before closure. The ones stuck with coal after closure may leave it in place, but the plant owners may also ship it to a different power plant which they own (since they *have* already paid for it).

  • Natgas has flooded the market and the frackers are starting to hit the bankruptcy wall. A drop in electric power demand for natgas will help them hit bankruptcy faster.

    Should be interesting…

    • That’s my impression. I thought it would happen sooner. We’ll see.

      • Gas demand for electricity is rising, not falling. Gas demand for heating and industry is rock-solid, stable. Much work remains to be done. Renewables will eventually cut in to day to day gas demand, but play the curves out to see how many years it will take as we add 50 GW – 100 GW of solar per year on a 5 TW worldwide grid. Exponential growth is key and even then, it’s going to be some time.

        • Yes, I just thought natural gas companies was a bubble industry ready to pop — selling for lower-than-sustainable prices and financed in a pyramid-scheme way that would collapse.

          • You’re certainly right in the financial mess – plenty of bankruptcies in gas, and oil too. And the gas and oil keep flowing at record rates right through the bankruptcies. Some players will end up picking up some bargains and the market will stabilize. Hence, CleanTechnica has years of rich coverage lying ahead as the difficult work of going beyond the low lying fruit begins.

            (We’re just all giddy, myself included, that PV and EVs really don’t seem like fragile technologies that could blow away at a moments notice any more. They’re really going to happen. But theyre only part of the picture. )

          • Gas is plentiful because it goes with excess oil production. Too many wells. Many are capped. That keeps a steady supply. Until they are tapped. When they do get tapped, they will deplete fast. They depend on constant drilling to keep the flow.
            But we might just keep it in the ground when solar and wind clobber it. How much will it go up because of the huge gas leak in California. How much more will it cost because the Feds clamped down on fugitive emissions?

          • The natgas frackers were not in the gas business. Their business was land-flipping and defrauding integrated oil companies.

            Here’s how it worked. Lease land. Drill. Frack. Announce high first year production numbers. Sell immediately (land flipping) to an integrated oil company. The integrated oil company prices it as if the gas will last for 20 years or more. Then let the integrated oil company discover that the gas runs out in 18 months — while you retire to the Cayman Islands.

            That was the business model of Cheseapeake Energy and most of the others.

        • Perhaps not demand at this moment, but solar and wind have just beat gas out of the new electric generation market. Gas will have to find new markets to pick up the slack. I have a feeling gas demise has just started while everyone stopped looking. Did you read about the huge gas leak in California and the fire and explosion in San Bruno. California doesn’t like it anymore. Fracking is getting more backlash everywhere. So is gas.

          • “I have a feeling gas demise has just started while everyone stopped looking.”
            -Same here.

        • Gas demand for industry is solid. Gas demand for heating is NOT solid.

          I can give you anecdotal reports of people ripping out their gas heating systems in favor of electric heating systems, which has been going on for several years now. I’m going to do it myself soon, but I’ve been waiting for a couple of key things to happen in the industry — one is cold-weather air-to-water heat pumps, which only *just this year* became readily available in the US. (This makes a huge difference.) New houses are routinely electric-only.

          I’ve run the price comparison. Gas loses to electric on price sometime between $4/mmbtu and $6/mmbtu (depending on how you look at it, see above).

          For heating, winter (December-February) prices are the only ones which matter. They’ve been above $4 in Jan/Feb 2001, 2003-2011 inclusive, and 2014. They’ve been above $6 in Jan/Feb 2001, 2003-2008 inclusive, and 2014. December 2005 featured $13 natgas.

          With the collapse of the fracking boom, the current dirt-low prices will go back up. Based on a 2013 analysis, fracking breakevens range from $2.65 to $8.10, with a median at $4.85. $2.65 sets a long-term floor on the natgas price. The numbers I gave above — somewhere between $4 and $6 — set a long-term *ceiling* on the natgas price because above that, people switch to electric.

          So about half of the fracking has breakevens which depend on prices which will never, ever be sustained thanks to switching to electric. The other half might conceivably come back as natgas prices go up to a level between $3-4.

          Basically $3..$4 is the only stable range for natgas prices for the next few years. Above $4 and demand destruction kicks in. Below $3 and supply destruction kicks in.

  • The pronouncement of the demise of natural gas might be considerably premature. Most natural gas is used in applications that haven’t even begun to convert to renewables. There hasn’t even been discussion on the table about converting heating, water heating, and especially industrial processes to renewables.

    We are in a very easy stage right now and renewables will face some very difficult challenges in coming years as the easy first 30% will have been taken by renewables and the next 70% becomes technically and economically challenging. CleanTechnica will have ample opportunities for topics beyond tesla and PV. IMHO The sooner the analysis and dialog begins the better.

    • Actually, heating’s pretty well understood.
      — The ancient option is electric resistive. Works everywhere all the time.
      — The modern option is electric heat pumps.
      — Ground-source (geothermal) heat pumps work anywhere, but they have a high upfront costs so they’re only reasonable for large high-energy-usage buildings.
      — Air-source heat pumps work very well as long as the temperature is above freezing, and the most recent ones work down to -4F (-20C). Below that, you need resistive heating.
      — Heating load can be cut by up to 90% just by proper use of Superinsulation techniques and an Energy Recovery Ventilator.

      Industrial processes are a significantly harder problem, but heating is well-understood.

      • Very good points, neroden. I would like to add to your input that state-of-the-art air-to-air heat pumps can give a COP of 3-5 when outside air temps are 28-45 degrees F (or -2 to +6 degrees C), which are the conditions of most people where heating is installed, at least some months of the year. These same heat pumps produce COP=2 for outside air temps of 15-20 degrees F (or -10 to -6 degrees C).

      • Technically, heating options are pretty well understood, just like lithium ion batteries and automobiles are very well understood now as a technical concept. What’s missing in heating is any meaningful dialog or incentives or movement off the status quo. Virtually all equipmenon the market is geared toward maintaining the status quo. Manufacturers are not changing their product mixes at all.

        And this equipment stays in place 40-60 years in many cases, unlike automobiles, which turn each 20 years. We will be very disappointed in 2030 if cars have gone EV and we look and ask – gee, why is there still so much carbon going into the atmosphere? Oh and I didn’t get into shipping, construction, etc. Point being, we can hardly declare victory just because of Tesla and PV’s momentum today.

        • It’s true that people are very very slow to change their heating systems. There are still fools using “heating oil”. But the price of switching to air-source heat pumps is low. They’re now well-understood mass-market products — *finally* — they weren’t ten years ago. So wholesalers really *have* changed their product mix. (The manufacturers of the heat pumps are often not the same companies which manufacture gas boilers, but they do go through the same wholesalers.)

          At gas prices above $6/mmbtu, this switch becomes an overwhelming economic choice.

          (It took me a crazy amount of time to figure out that switchover price. I think it’s an important number.)

          • Good stuff. Part of the challenge with converting buildings is that there are over a hundred million of them in the US alone, most with economically “irrational” owners who don’t care much their bills are, or for 1/3rd of them, what their tenants’ bills are. Getting them to act will be difficult. At least owners of the hundreds of coal power plants behave economically rationally after a couple years of losses and shut them.

            Not so much an economic issue or a technical issue ( heat pumps work great) but a human motivation and governance issue. Much harder problem to solve.

            Oh and folks in the northeast have saved boatloads converting old oil boilers to ductless heat pumps. And get AC too. And yet most oil boilers remain year after year.

          • We need a good article on heat pumps. How about writing one?

            Resistance heating with heat pumps. Is it just a matter of installing a resistance heater in the heat pump system? And add-on.

            As I vaguely recall from living in Michigan decades ago there were nights of -4F and less, but not on a regular basis. I wonder if there’s any sort of a “if you live here you’ll need to add resistance heating” map.

  • It comes down to how close frackers really are to defaulting on debts. If they’re really one bad bank meeting away, then any bad news could trigger a panic. Also, I don’t know if these are the kinds of operations that actually shut down when they’re broke, or if they’re among the many industries where bankruptcy is a normal operating condition. Like airlines.

    • Worse thing is they leave all those holes in the ground leaking methane.

    • I like the airline comparison. I think you nailed it there. The banks would rather see these folks bumble along running the equipment that’s bought and sitting there getting some revenue rather than none at all. And stronger players will scoop up assets at bargain basement prices and come out strong.

      • I don’t think so. The banks will probably scoop up the existing wells, but the question is whether they’ll be willing to finance the huge costs of additional drilling. And I think they will refuse.

    • The thing about fracking is that each well runs out of gas in less than 5 years. The decline rate is horrendous.

      When the operations are broke, they keep pumping from existing wells, to generate cash. They do this even if they’re selling the gas at a loss.

      But they stop drilling *new* wells because that requires great wads of cash and doesn’t pay back for a year.

      So after they all go broke (which is happening now), we have to wait for the existing wells to run out (which takes a few years) before the gas price jumps back up again.

      The thing about airlines is that there seems to be a constant stream of dumb money to refinance airlines, even though the industry is permanently unprofitable. With the frackers, it seems to me (though I can’t be sure) that a lot of investors got badly burned in the last round of debt-fueled fracking and it’s much less likely that the frackers will get refinanced for the next several years, as long as investors still remember this crash. (And they need *new* financing to drill more wells.)

      • So what’s your guess as to when the price of NG starts a serious move upward? If someone wanted to get money invested in wind/solar/storage it might be a good idea to get positioned before things heated up.

      • “The thing about fracking is that each well runs out of gas in less than 5 years. The decline rate is horrendous.” It’s virtually identical for fracked oil. In a year or two, US produced oil will start running down as very few new wells being drilled right now.

Comments are closed.