Business and Science of Clean Energy

 Lecture 3rd, March 27th, The Carbon footprint of an organization

Carbon footprint can be divided into three:
o Direct emission
o Indirect emission
o Other indirect emission

Activity Carbon footprint calculation

Manufacturing paper

Printing

Distribution

How would the carbon footprint of a product bought in a retail sore differ from the computation for a
newspaper? Does the design of the org. matter to its carbon footprint?

Complexities: Supply Chain

* Buying something from Amazon and buying from local store have a different footprint

Key Decisions

 How to improve operational efficiency

 What capacity to build & what kind of battery
 How to achieve coordination in the supply chain
 How to cement supplies to get material (rare material, Lithium)
 To improve technology or to get into price war with 2nd tier producers (China)

Whether to form a partnership and with whom

 How to reduce cost – manufacturing cost and Raw material
 Whether to expand globally; production capabilities
 do we have the technology available? – Is it competitive and whars over edge
o How do we determine viability?
 Prototype
 Building a business case
 Time-frame of decision making

Tesla: 60 KWH or energy of storage

Estimated mileage: 4-5 km/ kwh
Well-to-wheel efficiency
Power generation ---- charging efficiency ---  motor
50% 80-90% efficiency from gasoline is 20%

Comparison of specific energy

Lead-acid battery --- 0.035 kwh/kg
Gasoline 12 KWH/kg
NiMH battery 0.061 kWh/ Kg
Li-ion battery 0.15-0.21 kWh/kg

2008 Tesla 56 kWh ~ 454 kg battery

Toyota RAV4 EV ~ similar weigh weight delivers 27 kwh

How much demand?

 Pre-sell (early read on demand) – work with car manufacturers
 Market segment
 Government regulation
 Price point
o Scale of operations
o Gas price
o Productivity

Capacity creation
+ve -ve
High return if demand is high Risk to investment (return could be low)
Economies of scale to lower cost Over creation of capacity
 Low prices, low return
Larger market share
Minimizing lost sales from higher capacity
Faster learning curve

Tesla estimates an upfront investment of $5billion in a factory to produce 500K units annually
What is the risk in this investment?

Newsvendor model – capacity investment optimization (Case 1)

 Demand is uniformly distributed between 0 and 2 million units

 How much capacity should you create?