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No. [EDIT: headline here fixed to not include the words "death spiral"] The article is a (lousy) summary of a report from Fitch. It has no new content, and its

by powera 10y ago

No. [EDIT: headline here fixed to not include the words "death spiral"] The article is a (lousy) summary of a report from Fitch. It has no new content, and its regurgitation of the report confuses most of the fundamentals of the energy and credit industries.

quantumhobbit 10y ago
So what does the report from Fitch say? I agree that the article was very click baity, but I am curious about how energy utilities will be affected by cheap batteries. These are some of the most entrenched and connected industries, so disruption, if it happens, won't be easy or fast.
- sunstone 10y ago
  What you say is true but, one thing they usually cannot do is affect whether not individuals put solar panels on their roofs and batteries in their garages. When the price of these two components become cheap enough for consumers to comfortably go 'off the grid' utilities will have little recourse.
tptacek 10y ago
This is by itself a very useful kind of HN comment, but just so you know, it leaves me hungry for a lot more detail. In case having a waiting audience motives you to write more... well, you've got one.
- powera 10y ago
  Here's the Fitch release about their report: https://www.fitchratings.com/site/pr/1013282 https://www.fitchratings.com/site/pr/1013282 Most egregiously, Bloomberg is cherry-picking the words "death spiral" out of somewhere in the middle of the report and putting it in the headline.
  - tptacek 10y ago
    This is useful, but I'm actually more interested in your opinions and analysis.
    - powera 10y ago
      I don't have enough time to write a thorough post, but the most obvious flaw in their logic is that utilities and auto-makers are unlikely to be disrupted completely by switching from fossil-fuel technologies to renewable+battery technologies. Since the switch will take an estimated 20 years, they have plenty of time to invest in renewables. A few things (like shale oil drilling investments) might be impacted in a "death spiral" way, but I don't believe that is anywhere near the 25% they claim by invoking everything that touches oil. Also, bonds have a finite lifetime and are often for equipment with depreciation. Even if 25% of bonds today were for oil infrastructure, many would be re-paid before the disruption had significant financial implications. TLDR: the headline is egregious clickbait of a regurgitated article.
    - SomeStupidPoint 10y ago
      Just to chime in, I too value when community members can provide more detailed arguments on things. There's a lot of very interesting topics on here that are simply WAY outside my domain of knowledge. The modern world is complex, and while I have opinions on a lot of topics I'm barely qualified to, there's a very real limit on how much we can even have any kind of view about. I enjoy the comments on places like HN, because it provides a good accompaniment to Wikipedia: where Wikipedia is a summary of the topic, as it stands, comments on HN are a summary of the discussion about the topic, as it stands. (Well, when we get at least two different perspectives contributing and discussing, which is why we should be careful with groupthink and downvoting dissenting views.)
- fab13n 10y ago
  I haven't access to the Fitch article, and I'm no specialist of the automotive market at large. I know even much less about oil. However, here are a couple of guesses about how things are likely to go wrong for car makers. In a vertical market like cars, you've got many actors, from iron ore mining to the "going from A to B reliably" service, going through part makers (who actually make most of the car), car maker (brands), repairmen, dealers, etc. Very often in those markets, one actor controls a key level, protected by entry costs, secrets, regulations, exclusive customer relationship, whatever. By leveraging this stronghold, this actor extracts most of the margins, leaving just enough to other levels to let them survive. You want all other levels in your vertical market to be commoditised: Microsoft wants PC hardware commoditised, Über wants driving to be commoditised (through underpaid drivers first, unpaid robots ASAP), etc. It seems that for cars, mastering the engine is the way to control the whole vertical market. Moreover, ever-more-stringent emission + fuel efficiency regulations keep it hard to make engines, despite technical progress. Electrical cars change that, because it's (comparatively) very easy to make an electrical engine. Another asset held by carmaker is the brand and consumer relationship, and this one's probably doomed as well. Cars stay parked for 95%+ of their lives, the only reason you buy one (and it's your most expensive possession after your house) is because you want it to be reliably available whenever you want. Once cars drive themselves, it stops making economical sense to own one: for a fraction of the price, you'll rather subscribe to a fleet of autonomous cars which reliably deliver one on your front door 10 minutes after you summoned it with your smartphone. That not only means fewer cars driving a higher percentage of time: it makes obsolete the car-makers' genuine expertise in making individuals want to buy their models. I'd bet that selling hundreds of thousands of units to Kalanick is significantly tougher than making some hillbilly lust for a Canyonero. It looks like mastering level-4 autonomy will be the new way to lock that vertical market, and current car-makers don't look better positioned than the Silicon Valley to secure that stronghold. Cue the famous last words by the then Palm CEO, saying about the iPhone “PC guys are not going to just figure this out. They’re not going to just walk in”. Yes, in radical changes, it typically is an incumbent who figures it out.
  - angstrom 10y ago
    It also does 2 other things as we've seen with other automation. The maintenance schedule can be forecast with higher accuracy (humans really make this difficult). Second, it lowers the insurance premiums as a result of higher predictability (humans REALLY screw this one up). As a comparison to existing solutions there's no room for competition if your company can't cross the moat.
cscurmudgeon 10y ago
Bloomberg's standards have dropped a lot in the last four years. I see a lot of confused articles with typos and misinformation. Don't know if it is intentional.
wmeredith 10y ago
Well, enlighten us or provide a link or something :)

by powera 10y ago

quantumhobbit 10y ago

So what does the report from Fitch say? I agree that the article was very click baity, but I am curious about how energy utilities will be affected by cheap batteries. These are some of the most entrenched and connected industries, so disruption, if it happens, won't be easy or fast.

sunstone 10y ago
What you say is true but, one thing they usually cannot do is affect whether not individuals put solar panels on their roofs and batteries in their garages. When the price of these two components become cheap enough for consumers to comfortably go 'off the grid' utilities will have little recourse.

tptacek 10y ago

This is by itself a very useful kind of HN comment, but just so you know, it leaves me hungry for a lot more detail. In case having a waiting audience motives you to write more... well, you've got one.

powera 10y ago
Here's the Fitch release about their report: https://www.fitchratings.com/site/pr/1013282 https://www.fitchratings.com/site/pr/1013282 Most egregiously, Bloomberg is cherry-picking the words "death spiral" out of somewhere in the middle of the report and putting it in the headline.
- tptacek 10y ago
  This is useful, but I'm actually more interested in your opinions and analysis.
  - powera 10y ago
    I don't have enough time to write a thorough post, but the most obvious flaw in their logic is that utilities and auto-makers are unlikely to be disrupted completely by switching from fossil-fuel technologies to renewable+battery technologies. Since the switch will take an estimated 20 years, they have plenty of time to invest in renewables. A few things (like shale oil drilling investments) might be impacted in a "death spiral" way, but I don't believe that is anywhere near the 25% they claim by invoking everything that touches oil. Also, bonds have a finite lifetime and are often for equipment with depreciation. Even if 25% of bonds today were for oil infrastructure, many would be re-paid before the disruption had significant financial implications. TLDR: the headline is egregious clickbait of a regurgitated article.
  - SomeStupidPoint 10y ago
    Just to chime in, I too value when community members can provide more detailed arguments on things. There's a lot of very interesting topics on here that are simply WAY outside my domain of knowledge. The modern world is complex, and while I have opinions on a lot of topics I'm barely qualified to, there's a very real limit on how much we can even have any kind of view about. I enjoy the comments on places like HN, because it provides a good accompaniment to Wikipedia: where Wikipedia is a summary of the topic, as it stands, comments on HN are a summary of the discussion about the topic, as it stands. (Well, when we get at least two different perspectives contributing and discussing, which is why we should be careful with groupthink and downvoting dissenting views.)
fab13n 10y ago
I haven't access to the Fitch article, and I'm no specialist of the automotive market at large. I know even much less about oil. However, here are a couple of guesses about how things are likely to go wrong for car makers. In a vertical market like cars, you've got many actors, from iron ore mining to the "going from A to B reliably" service, going through part makers (who actually make most of the car), car maker (brands), repairmen, dealers, etc. Very often in those markets, one actor controls a key level, protected by entry costs, secrets, regulations, exclusive customer relationship, whatever. By leveraging this stronghold, this actor extracts most of the margins, leaving just enough to other levels to let them survive. You want all other levels in your vertical market to be commoditised: Microsoft wants PC hardware commoditised, Über wants driving to be commoditised (through underpaid drivers first, unpaid robots ASAP), etc. It seems that for cars, mastering the engine is the way to control the whole vertical market. Moreover, ever-more-stringent emission + fuel efficiency regulations keep it hard to make engines, despite technical progress. Electrical cars change that, because it's (comparatively) very easy to make an electrical engine. Another asset held by carmaker is the brand and consumer relationship, and this one's probably doomed as well. Cars stay parked for 95%+ of their lives, the only reason you buy one (and it's your most expensive possession after your house) is because you want it to be reliably available whenever you want. Once cars drive themselves, it stops making economical sense to own one: for a fraction of the price, you'll rather subscribe to a fleet of autonomous cars which reliably deliver one on your front door 10 minutes after you summoned it with your smartphone. That not only means fewer cars driving a higher percentage of time: it makes obsolete the car-makers' genuine expertise in making individuals want to buy their models. I'd bet that selling hundreds of thousands of units to Kalanick is significantly tougher than making some hillbilly lust for a Canyonero. It looks like mastering level-4 autonomy will be the new way to lock that vertical market, and current car-makers don't look better positioned than the Silicon Valley to secure that stronghold. Cue the famous last words by the then Palm CEO, saying about the iPhone “PC guys are not going to just figure this out. They’re not going to just walk in”. Yes, in radical changes, it typically is an incumbent who figures it out.
- angstrom 10y ago
  It also does 2 other things as we've seen with other automation. The maintenance schedule can be forecast with higher accuracy (humans really make this difficult). Second, it lowers the insurance premiums as a result of higher predictability (humans REALLY screw this one up). As a comparison to existing solutions there's no room for competition if your company can't cross the moat.

cscurmudgeon 10y ago

Bloomberg's standards have dropped a lot in the last four years. I see a lot of confused articles with typos and misinformation. Don't know if it is intentional.

wmeredith 10y ago

Well, enlighten us or provide a link or something :)