MUSK: Hard Times Are Coming For Utilities

Elon Musk is warning fossil fuel-dependent utilities to prepare for hard times.

In comments made at a panel set up by the California Public Utilities Commission, Musk said addressing climate change depends on upending traditional power providers, and he called on regulators to help lower the cost for renewable providers to compete with them.

"There will be some amount of strife for existing utilities, particularly ones heavy into fossil rules," Musk said. "There will be bit of a hardship for them. But we have no choice. We have to decide if we're going to have clean, sustainable energy or not and if we decide want good future...and the only good future is one with [clean] energy."

Musk argued for a carbon tax, expressing disbelief at the ongoing presence of hydrocarbons for fuel use. "It's amazing that we burn oil - it has much higher value in plastics," he said. "It's like burning the furniture in your house instead of firewood."

SolarCity CEO Lyndon Rive warned of the danger that regulators would allow the current monopolistic and fossil fuel-heavy power company model to persist even as renewable energy grows.

"What don't we don't want to have happen is the innovation, and then old biz model still continues," he said. "We don't want two energy infrastructures. At some point someone has to shut down, and if you fast forward 10 or 20 years, I don't think we'll be shutting down cleaner energy."

It is perhaps telling that the panel, called "Innovation and the Impact of Regulation," did not feature a single representative from one of California's utilities. The only other member of the panel was Michael R. Peevey, the commission's president who also serves as chairman of the California Clean Energy Fund. The commission regulates privately owned electric and natural gas companies among other duties.

The panel comes one day after Tesla announced details for its Gigafactory, which by 2020 will produce 50 gigawatt hours-worth of battery packs. Panasonic, the principal partner in the Gigafactory, currently makes a total of only about 6-7 gigawatt hours-worth of batteries. Tesla's batteries will be used both in Tesla's fleet and will help bring the cost of batteries for SolarCity power storage units down. The batteries currently comprise at least 50% of the cost of other solar storage units.

Musk emphasized that regulators will have to prove flexible to work around what amounts to monopoly control of power by most utilities.

Peevey seemed to be game, suggesting utilities would be devolve into "wires companies" providing basic infrastructure if they don't invest early enough in renewables. "The race goes to the swift and to the clever," he said.