Two recent energy deals highlight innovations in technology, business and marketing.
Swiss asset manager Capital Dynamics AG will build a one-gigawatt portfolio of solar farms in Nevada, one of the largest such projects in the U.S., with technology infrastructure company Switch Inc. as an “anchor tenant.” The two companies expect the cost of power generated by Gigawatt 1 to be significantly lower than what the local utility charges.
The anchor tenant concept in energy isn’t unprecedented, but it hasn’t been done on this scale: Gigawatt 1 is 16 times larger than a 60-megawatt solar farm in North Carolina that signed on the Massachusetts Institute of Technology as its anchor tenant in 2016. Switch’s Northern Nevada data center will require more than 10 times as much electricity as MIT’s project could instantaneously provide.
There’s one other innovation at play in Gigawatt 1. Two years ago, three casinos accounting for more than 7 percent of power sales in Southern Nevada signed supply contracts with other parties that offered cheaper, cleaner power than they were getting from NV Energy Inc., the local utility. The state’s electricity regulator assessed an “exit fee” on those casinos—nearly $87 million for MGM Resorts alone—to be paid to NV Energy as a way of helping it recoup lost revenue. Switch is paying millions in such exit fees to join Gigawatt 1; Capital Dynamics says it offers financing options for those exit fees to companies looking to join the project.
The second deal highlights another market innovation, but in a very established industry: pumping gasoline. This week, Silicon Valley-based Yoshi Inc., one of several companies that delivers gas, oil changes, car washes and other services while customers’ cars are parked and charges fees per delivery on a monthly basis, took on four new investors: General Motors Co.’s venture arm, a Y Combinator fund, Golden State Warriors star Kevin Durant’s foundation, and Exxon Mobil Corp.
Exxon Mobil says its investment in Yoshi will allow it “to shape a new channel in the market for its products.” In other words, using Yoshi’s service to deliver Exxon Mobil’s fuel and lubricants won’t increase total demand for either product, but it could increase Exxon Mobil’s market share for them.
Delivering gasoline at $7 a pop might not sound lucrative, but as Bloomberg Gadfly’s Liam Denning noted last summer, oil majors generate significant revenue from service station sales of cigarettes, hot dogs and lottery tickets. Yet every person getting a gasoline delivery pays a fee; not everyone filling up buys Cokes or smokes at the same time.
Silicon Valley commuters might consider it worth a fee to avoid the trouble of exiting the highway to fuel up, or to make an appointment for another service. But Yoshi also offers corporate packages, because saving time for workers entices them to stay at their desks. In that sense, it’s much like an elaborately stocked corporate pantry: a treat and a nudge.