Leading American, Japanese clean-energy tycoons court petrodollars
Elon Musk and Masayoshi Son claim to seek a clean energy future. So why are they courting oil-rich Saudi Arabia?
Silicon Valley’s biggest names are tripping over themselves to forsake their governing mottos. “Don’t be evil” no longer works for Google now that the biggest search engine is embracing authoritarian, web-controlling China.
Facebook’s “bringing the world closer together” ethos has been eclipsed by bots, trolls and the vitriol dividing humankind being amplified over its platform.
The “one tiny drop changes everything” lie spun by Theranos only had the blood-testing startup’s founder indicted.
Petrodollars to fund clean energy?
Now Tesla is imperiling its mission “to accelerate the world’s transition to sustainable energy.” Elon Musk is doing so by turning to – wait for it – Saudi Arabia for cash.
The spectacle of a man out to hasten the demise of fossil fuels by courting billions of petrodollars takes cognitive dissonance to new levels. And Musk is not alone.
Across the Pacific, SoftBank’s Masayoshi Son is way ahead of him, tapping the fossil-fuel mecca of Riyadh to bankroll his US$100 billion Vision Fund. One of the key missions of that fund is, er, to replace the source of Saudi Arabia’s vast wealth with renewable energy. How does that work?
It depends on how you look at it. Are Son and Musk duping Saudi Prince Mohammed Bin Salman, using his oil money to bankroll clean energy? Or are they the dupes themselves, as they wade into one of corporate history’s most epic and bizarre conflicts of interest?
Sure, Saudi Arabia claims it wants to diversify its economy away from oil. But over time, Bin Salman’s government could change its mind and undermine Son’s and Musk’s best-laid plans.
One reality check: a delay in selling shares in its national oil company. That initial public offering formed the core of efforts to find an economic Plan B. Yet Riyadh appears to have pivoted to restructuring oil and petrochemical interests and tweaking sovereign wealth fund strategies.
One worry, of course, is that Tesla is engaged in the corporate version of a shotgun wedding. After tweeting that he had the financing to take Tesla private, Musk appears to be racing to make that so. Tesla has reportedly been subpoenaed by the US Securities and Exchange Commission. Might Musk’s haste to avoid legal woes put Tesla in bed with dubious partners?
Son’s reliance on Saudi investment is more diversified. Over the last year and a half, his Vision Fund has remade the global venture capital game. Saudi largess enabled Son to feed giant waves of liquidity into software designers, chip makers, robots, satellites, indoor farms, asset management and, of course, renewables.
He commandeered the ride-sharing space, taking big stakes in Uber, Didi Chuxing, Grab and Ola.
Son: Solar power prophet in nuclear land
Yet nothing dovetails with the fund’s “enabling the new-age of innovation” motto more than Son’s passion for solar power. In March, Son and Saudi Arabia agreed to build a $200 billion solar power plant, one that’s roughly 100 times larger than the next biggest project and will create 100,000 jobs.
Son’s solar journey began after the 2011 Fukushima nuclear crisis. Since then, he has invested heavily in wind and solar projects in Mongolia and helped launch the Asia Super Grid, a colossal transmission mechanism and storage scheme. In June, Son unveiled plans to invest as much as $100 billion in Indian power generation.
There is irony here. Few governments are more invested in nuclear reactors than Son’s. Japanese Prime Minister Shinzo Abe has spent considerable political capital since 2012 reopening nuclear power plants idled after the 2011 radiation crisis. At present, six of Japan’s 40 commercial reactors are operating.
The issue, though, is a political hot potato. Japan’s ongoing heatwave has Abe upping the ante for restarts – and opponents pushing back. Yet as we learned in 2011, a nation as seismically active as Japan should be racing to embrace cleaner, safer and cheaper energy sources.
Son is on the case, but facing pushback. Tokyo bureaucrats, for example, are slow-walking SoftBank’s requests to gain greater access to national power grids. And so, Son is turning his sights on India, a super grid connecting China, South Korea and Russia and, of course, Saudi Arabia.
This latter partner has its pros and cons. None more so than the paradox involved in Son and Musk tapping Saudi money to fund a mission to kill the lifeblood of its economy.
Good luck with that, gentlemen.