Business Achievement: Finance


Gold MedalCannon Power (San Diego) for closing the sale of a 20-year, $547 million pre-paid power purchase agreement (PPA) with Southern California Public Power Authority (SCPPA), which sold tax-exempt bonds to buy the power on behalf of two of its 12 member agencies: Los Angeles Department of Water and Power and the City of Glendale. The PPA represents over approximately 70% of the expected annual production from Cannon Power's 262 MW Wind Flats wind project in Goldendale, Wash. SCPPA obtained a discounted power price for the pre-paid block of power, and the agency will buy the balance of the wind farm's output at a formula-based price. SCPPA also received an option to purchase the project after five years.

The project, an expansion of an existing wind farm called Windy Point, also received $220 million in ARRA stimulus funding; it is slated to enter commercial operation in 2011. "This uniquely structured transaction is a true win-win for both parties," Cannon President Gary Hardke said in a statement. "It combined SCPPA's low-cost, tax exempt bond financing with the federal stimulus grant program to produce a very attractive long-term cost of renewable power." Cannon Power Group has developed wind energy projects in the U.S., India, Switzerland, Spain, Italy, Turkey, Greece and Croatia. In addition to Windy Point/Wind Flats, Cannon Power's other major project in development is the 1,000 MW Aubanel wind project in Baja California.

Silver MedalTesla Motors (Palo Alto, Calif.) for a year of financial accomplishments that included in January finalizing its loan guarantee agreement with U.S. DOE for up to $465 million, its $226 million IPO in July, an approximately $60 million deal with Toyota to develop a powertrain system for an electric version of the RAV4, and receiving a $30 million investment from long-time battery technology collaborator Panasonic in November. Tesla also completed the $42 million purchase of the former New United Motors Manufacturing plant in Fremont, Calif. where it will make its mass-market Model S.

Tesla's IPO was the first by an American automaker since Ford went public in 1956. After closing its first day at $24 per share, Tesla's stock has been on a wild ride but ended the year around $28 per share. While its financing merits award, some analysts are skeptical about Tesla's long-term prospects. In late December 2010, Capstone Investments analyst Carter Driscoll warned that "premium cost and range anxiety" would limit adoption of EVs in general, and that Tesla is further handicapped by the high sales price ($110,000 less $7,500 in tax credits) of its Roadster model. He also questioned whether the firm can hold onto its edge in battery technology. "Their battery packs are among the best and lowest cost in the industry [but] we are skeptical Tesla can drive the next leg of growth as they must convince OEMs to utilize their powertrain technology as well as battery packs."

Tesla has made no secret that it will lose a lot more money before it makes a profit, noting in its Q3 report that operating costs will "increase significantly in future periods as we, among other things, design, develop and manufacture our planned Model S and electric powertrain components, build and equip new manufacturing facilities to produce the Model S and electric powertrain components, open new Tesla stores with maintenance and repair capabilities, incur costs for warranty repairs or product recalls, if any, increase our sales and marketing activities, and increase our general and administrative functions to support our growing operations." All of the above underscores that the automobiles business is one of the toughest around, and Tesla deserves credit at least for getting this far.

Bronze MedalBetter Place (Palo Alto, Calif.), a provider of electric vehicle services, for raising $350 million in a Series B funding round led by HSBC, valuing Better Place at $1.25 billion. New investors in the round were Morgan Stanley Investment Management and Lazard Asset Management, and returning investors include Israel Corp., VantagePoint Venture Partners, Ofer Hi-Tech Holdings, Morgan Stanley Principal Investments, and Maniv Energy Capital. Better Place is developing an electric car network in which customers will be able to lease batteries for a monthly fee and be able to charge their batteries at home for free or swap out batteries at designated locations. The company says it's on track to launch two test projects in Israel and Denmark in 2011. Better Place's first major round of private financing was in October 2007 when it raised $200 million.