On Our "Virtual Route 66" : On the Week That Was.....

 On this day, remember we've been as we present a snapshot of the week that was while traveling on our "Virtual Route 66" This Week: 

To make a swift transition to a cleaner grid, the United States needs to set records for renewable electricity generation pretty much every single quarter. So far in 2022, the numbers are encouraging.  From January to March, U.S. renewable energy power plants generated 242,956 gigawatt-hours, which was 23.5 percent of U.S. electricity generation, both records—an increase from 19.5 percent in the first quarter of 2021, and 20.8 percent in the full year. The growth was thanks in part to more than 80 new wind and solar plants that went online during the quarter. But before you celebrate, it’s important to note that reaching new highs is expected in our rapidly changing energy economy. The thing to pay attention to is the size of the gains, said Michelle Solomon, a policy analyst for the think tank Energy Innovation. “What we really need to do is accelerate the deployment of renewables over time,” she said.

I spoke with Solomon and her colleague, Dan Esposito, a senior policy analyst, about the latest numbers. Esposito said the growth in wind and solar came in spite of various challenges faced by developers, including shortages of some parts and long waits to get approval to connect to the grid. The share of renewables almost definitely would have been larger without those obstacles. “It’s been a very challenging environment over the last year or two for development in general,” he said. As renewables gained ground, coal lost a little. Coal was at 21.2 percent for the quarter, down a fraction of a percentage point, both from the same quarter last year and the prior year. Natural gas remains the country’s leading fuel for power plants, with gas-fired plants producing 35.2 percent of U.S. electricity generation in the first quarter. This was a slight increase from 34.7 percent in the first quarter of last year, and a decrease from 38.3 percent in all of 2021. Natural gas prices have spiked this year, but that hasn’t yet translated into a substantial decrease in the use of gas to produce electricity. I was expecting to see a decrease in hydropower, considering the many reports of declining water levels at major hydroelectric plants. But hydropower was up, with 7.4 percent of the U.S. total for the quarter compared to 7 percent in the first quarter of last year and 6.3 percent in an unusually low 2021. The main reason for the increase was that the two leading states for hydropower, Washington and Oregon, reported large gains from their plants, and most other states reported at least some increase. This is one to watch as we head into a hot summer. More than 120 new power plants began operating in the first quarter, most of which were wind or solar farms. The new wind farms were on the large side, with 11 projects producing a total of 2,469.8 megawatts. Solar projects came in a wide variety of sizes, with 71 projects and a total of 2,196.7 megawatts.

Four coal-fired power plants closed during the quarter, including two big ones: Avon Lake plant near Cleveland, which went online in 1970, and had capacity of 680 megawatts; and Cheswick Generating Station near Pittsburgh, which also went online in 1970, and had capacity of 637 megawatts. Whenever we talk about the capacity of various types of power plants, it’s important to specify that a megawatt of a plant that can run around the clock is not the same as a megawatt of intermittent sources like wind and solar. For example, the country’s nuclear plants run almost all the time, so a 500-megawatt plant is going to generate close to its maximum possible output of 12,000 megawatt-hours in a day (500 megawatts multiplied by 24 hours). Coal and gas plants are capable of running around the clock, but in practice they run much less based on many factors, including the availability of lower-cost alternatives. Solar and wind have some of the lowest operational costs, but they also generate some of the least electricity relative to capacity. A 500-megawatt wind farm generates about 4,200 megawatt-hours in a day, and a 500 megawatt solar farm generates about 3,000 megawatt-hours, based on national averages. So it’s going to take a lot of wind and solar to replace older plants as they reach the end of their lives. Power system planners understand this, but I don’t think the public yet grasps the magnitude of construction that needs to take place. (For more detail, Energy Innovation and the University of California, Berkeley, issued a report last year that looked at scenarios for getting to 80 percent carbon-free electricity by 2030.)

The system also needs a mix of other resources, which could include new geothermal, nuclear and other technologies, plus lots of energy storage to help fill in any gaps. That’s part of how to make carbon-free electricity grow at the pace required to help avoid the worst effects of climate change. And we’re getting there—if we keep accelerating. Photo Credit: Irfan Khan / Los Angeles Times via Getty Images

Other stories about the energy transition to take note of this week: Los Angeles Is Banning Most Gas Appliances in New Homes: The Los Angeles City Council has voted to ban most natural gas appliances in new construction. The council is leaving it to city agencies to spell out how to implement the policy and create a plan for the council to approve by the end of 2022, as Sammy Roth reports for the Los Angeles Times. Friday’s vote “puts us in line with climate leaders across the country,” said Nithya Raman, the council member who is the policy’s lead author. California has led the nation in local governments taking actions to limit the use of natural gas in buildings, starting with Berkeley in 2019. Wyoming Has Become a Test Case for Carbon Capture, but Utilities are Balking at the Pricetag: In 2020, Wyoming Gov. Mark Gordon signed a first-in-the-nation law that requires electrical utilities to generate some of their power from coal plants fitted with carbon capture equipment. But two years later, Wyoming may be no closer to willing this coal-friendly climate solution into being, as my colleague Nicholas Kusnetz reports. In March, utilities covered by the law submitted filings to regulators saying that carbon capture was not economically feasible. Retrofitting their plants would cost hundreds of millions of dollars, at the least, they said, forcing them to raise customers’ electricity bills. “There are so many other cheaper and cleaner ways to decarbonize electricity that I don’t see carbon capture as likely to have a big role,” said Dan Cohan, an associate professor of environmental engineering at Rice University. “The economics just don’t make sense.”   Utility Gets Approval to Build 416-mile Power Line Across US West: The federal government has given the utility PacifiCorp approval to proceed with building a transmission line that would connect wind farms in eastern Wyoming with customers in Utah and elsewhere in the West. The project, called Energy Gateway South, is part of a larger plan by PacifiCorp to build 2,000 miles of new transmission lines across the West, as the Associated Press reports. These interstate power lines, nearly all of which are overhead lines, are an essential part of transporting electricity from rural wind farms and solar arrays to the population centers where most electricity is consumed.   The Race to Mine Lithium in America’s Backyard: Piedmont Lithium, a mining company initially incorporated in Australia, is running into local opposition in its push to open a mine in North Carolina. Demand for lithium is high for use in lithium-ion batteries that power electric vehicles and battery storage systems. But many people who live near the proposed mine don’t like the idea of their community being transformed by the noise, dust and potential hazardous runoff from an open-pit mine, as Aime Williams reports for The Financial Times.

What a difference a few months makes. In February, as storm clouds were beginning to form over the economy, Coinbase announced a plan to hire 6,000 new employees, which would have more than doubled its head count. That ambitious plan came to a screeching halt on Thursday, when the cryptocurrency exchange announced it would freeze hiring “for the foreseeable future.” Even more extraordinary, Coinbase said it will rescind some job offers it recently made to people who haven’t started yet. And, Coinbase said, it will share the bad news with those people by…email. Ouch. 

The news shouldn’t be a total shock. Coinbase began backing away from its hiring goals in May, when it announced a two-week hiring pause. Even with its retrenchment, it has hired 1,200 employees this year. Still, Coinbase’s U-turn adds to the gloom in the crypto sector, which has seen a 43% drop in the collective market value of cryptocurrencies since the beginning of the year. In April, Robinhood, which relies heavily on crypto trading volumes, said it would cut 9% of its workforce.

The announcement compounded the gloom over the crypto sector cast earlier Thursday when Gemini, the cryptocurrency exchange run by brothers Tyler and Cameron Winklevoss, said it was laying off 10% of its workers. As of October, the company said its head count was close to 600; LinkedIn suggests the current total is closer to 1,000. “This is where we are now, in the contraction phase that is settling into a period of stasis—what our industry refers to as ‘crypto winter,’” the Winklevii wrote in a message to Gemini employees Thursday. 

Some crypto employers, especially smaller ones, say they don’t foresee a need for job cuts. Sam Bankman-Fried’s crypto exchange FTX, which has about 175 employees, said in a statement it has no current plans to lay anyone off or implement a hiring freeze. And Barry Silbert, CEO of crypto investment firm Digital Currency Group, pointed out on Twitter Thursday that his firm and its portfolio companies are still hiring.

 

Microsoft’s Exceptionalism on Unions

At a moment when many of its peers in big tech, including Amazon, Apple and Alphabet, are resisting their employees’ efforts to form labor unions, Microsoft president Brad Smith published a blog post on Thursday offering an olive branch to labor organizations. While Smith stopped short of encouraging employees to unionize, he promised that Microsoft would work with unions and employees who want to join them.

Smith didn’t mention any other tech companies by name, but it’s not hard to read between the lines of his blog post. By broadcasting to the world that a $2 trillion tech giant can get along with labor unions, he’s making it harder for others—especially Amazon and Apple, whose warehouse and retail operations make them especially attractive to organized labor—to say they can’t. No one in big tech is better than Microsoft at this tech good-guy routine. In fact, Smith in February published a blog post with a very similar tone committing to a set of “open app store principles,” which was effectively a long subtweet that took aim at Apple’s App Store policies.  

Microsoft has a good reason to zig while others in tech are zagging. It’s trying to get regulatory approval of its $68.7 billion acquisition of videogame publisher Activision Blizzard, where some employees are seeking to organize. A deal of that size would be very challenging for any of its largest competitors to pull off. But Microsoft, which isn’t facing the same level of antitrust scrutiny as its peers, may be able to get the Activision acquisition and other big deals done if it can convince regulators it’s not a tech bogeyman.—Nick Wingfield   

In Other News…

• Microsoft lowered its financial forecasts for the quarter ending June 30 due to foreign currency fluctuations, it disclosed in a regulatory filing. It now expects its revenue to be between $51.94 billion and $52.74 billion for the period, compared to a previous forecast of $52.4 billion to $53.2 billion. It said net income will be between $16.85 billion and $17.43 billion, compared to a previous range of $17.1 billion to $17.67 billion. 
• Tiger Global Management’s hedge fund fell 14.2% last month and 52% since the start of the year. “We take very seriously that our recent performance does not live up to the standards we have set for ourselves over the last 21 years and that you rightfully expect,” Tiger said in a letter to investors, as reported by Bloomberg. 
• IRL, a social app backed by SoftBank, laid off roughly 20 employees on Thursday, or around 20% of its workforce. Last month, The Information reported that IRL employees have questioned the validity of its active monthly user figures. 
• Meta Platforms announced a shakeup of its artificial intelligence organization, shifting employees involved in AI efforts to product groups at the company and out of research units, Axios reported. One of Meta’s AI executives, Vice President Jerome Pesenti, plans to leave the company later this month. 

New From Our Reporters

Vice Media Makes Cost-Cutting Push as It Eyes Sale Options

Why China’s Influencers Are Losing Their Influence

Opinion: Democracy Deserves Better Algorithms

This Stripe Competitor Says the Future of Payments Is on the Phone

What We’re Reading

Why a Not-So-Hot Economy Might Be Good News

Tech Valuations Tumble, but Business Software Stocks Are Cushioned by the Cloud

Volodymyr Zelensky on War, Technology and the Future of Ukraine

‘Stranger Things’ Won’t Save Netflix

Publicly traded companies typically disclose big personnel announcements outside of normal trading hours, with the hope that investors will think twice before they trade. But not Meta Platforms. It rolled out a series of coordinated announcements on its top executives’ Facebook pages, alongside an interview with Bloomberg, about 30 minutes before the close of trading to announce that longtime COO Sheryl Sandberg was stepping down from that post. 

Why bother waiting? Despite Sandberg’s 14-year tenure, mostly as Facebook’s second-most powerful executive after co-founder and CEO Mark Zuckerberg, her departure had seemed increasingly inevitable over the last few years. She was too closely bound to Facebook’s unsavory dealings, such as its delayed disclosures that Russian operatives had used Facebook to manipulate the 2016 U.S. presidential election, as well as Facebook’s efforts to contain the fallout from the Cambridge Analytica data-breach scandal. She seemed sidelined as Zuckerberg shifted management of his favored projects, such as virtual reality, to top lieutenants like Andrew Bosworth. Then last year, the company’s crown jewel, its automated ad system, buckled as Apple’s privacy changes made its ad targeting less effective. 

Was Sandberg responsible for all of Meta’s, nee Facebook’s, stumbles? Of course not. The buck ultimately stops with the CEO. But as our Facebook org chart from 2021 showed, she had been responsible for quite a lot—from advertising and business partnerships to communications and policy response. The role was so expansive that Zuckerberg had already been carving up her responsibilities among several deputies, including global affairs head Nick Clegg (A more updated org chart of Meta shows how her role has changed.)

These executives now have to reinvigorate a core business that has shifted into lower gear, a rival in TikTok that has been winning the hearts of young users, and an enduring skepticism from policy makers that has already stymied efforts to pursue projects including an Instagram kids app and a cryptocurrency. Sylvia and Amir have a smart take on the hurdles the new guard faces.

The challenges are also well known to investors, who have been dumping Meta shares since the fall as more signs of its slowing growth emerged. Meta’s stock has dropped 51% since a September high, worse than the Nasdaq’s 26% decline. On Wednesday, shares ended down 2.6%. As Zuckerberg wrote in his Facebook post, Sandberg’s departure marks “the end of an era.” It was one that was long anticipated.

Back to the Office, or Else

“If you don’t show up, we will assume you have resigned.” 

That’s how Tesla CEO Elon Musk is viewing workers who balk at his return-to-the-office policy, which he laid out in two staff emails. Tesla employees must spend at least 40 hours a week in person at the office or risk losing their jobs, he said. 

“There are of course companies that don’t require this, but when was the last time they shipped a great new product? It’s been a while,” according to one email viewed by The Information. 

After a year of reading corporate blog posts riddled with jargon on flex work and hybrid routines, statements like Musk's stand out for their clarity. That may be because they’re as much meant for public consumption (and would-be Tesla owners) as Tesla employees—and for that matter the staff at Twitter, which Musk is trying to buy.

Will such a stance stick? Other CEOs, such as Morgan Stanley’s James Gorman, have had to backtrack after new Covid-19 variants laid waste to their return-to-office ultimatums. These false starts haven’t stopped the return-to-the-office brigade from trying again. Most recently Gorman quipped that remote workers would be stuck in “jobland” while office workers were bound for “careerland.”

In Other News..

• Fidelity Investments lowered its valuations of some late-stage technology startups in April, including payments firm Stripe and news aggregator and online forum Reddit, Bloomberg News reported.
• The venture arm of Binance, the largest crypto exchange by trading volume, announced it has raised a $500 million investment fund from investors including venture capital firms DST Global Partners and Breyer Capital (Read more in Crypto Global)
• Federal prosecutors in New York charged Nathaniel Chastain, a former head of product at non-fungible token marketplace OpenSea, of insider trading, in the first such case involving digital assets.
• The online ticket platform Seatgeek and blank-check special acquisition company RedBall scrapped a plan to go public via a merger, the firms announced Wednesday.

New From Our Reporters

The People With Power at Cisco Amid Revenue Crisis, Flagging Employee Morale

What Sheryl Sandberg’s Replacements Are Up Against

What We’re Reading

Tech experts urge Washington to resist crypto industry’s influence

How median pay at tech companies rose last year

Legal victory for Johnny Depp after he and Amber Heard found liable for defamation