German energy storage company Sonnen wants to ensure that one thing the future residents of an apartment complex in Herriman, Utah, never experience is a blackout.

That’s not a given in Utah where 1.8 million people were affected by 346 power outages between 2010 and 2017, according to the Blackout Tracker 2018 from Eaton, a power management company. It’s part of what makes the Herriman complex, called Soleil Lofts, so attractive to Sonnen.

In Herriman, Sonnen sees an opportunity to prove that a virtual power plant (VPP) could solve major energy problems in the US. A VPP is made up of connected solar roofs and batteries so that renewable energy can power the entire complex if the grid loses power. 

The first residents of the Soleil Lofts will move in this September, and the Wasatch Group, which is the company building the lofts, says the last building will be completed in 2020. Units in each of the 600 new rental apartments will be outfitted with Sonnen products to power the VPP. 

When complete, the community will be the largest operating VPP formed by residential batteries in the US, according to Rocky Mountain Power, the regional utilities, the Wasatch Group, and Sonnen. The completed project will have a planned 12.6MWh of solar energy storage.

Sonnen, which was founded almost 10 years ago in rural Germany, is one of the world’s largest manufacturers of residential energy storage systems. Sonnen says it has installed over 40,000 batteries worldwide, mostly in Europe. The company, which was acquired by oil and gas giant Shell in March, pioneered VPPs in Germany and the UK. Now, Sonnen wants to conquer the US. It even has a production site in Atlanta to help with that task.

The US is “a relatively young market for our products, still in its infancy,” Sonnen CEO Christoph Ostermann tells The Verge. “But it’s also a very large market.” In any case, it is a market with energy problems.

It’s not just Utah where millions of people have experienced blackouts recently. In most other states, the situation is no better — or even worse. The energy infrastructure is aging all over the country. In California, energy company PG&E has been responsible for more than 1,500 fires since 2014, so it has announced and implemented rolling blackouts to avoid sparking more fires.

The National Infrastructure Advisory Council (NIAC) warns of unprecedented mega blackouts, triggered by severe earthquakes as well as physical or cyberattacks on the energy grid, that could cut off entire regions from electricity for months. On top of this, power generation is responsible for a third of all US carbon dioxide emissions. 

Sonnen wants to help solve these problems, but its success depends on utilities, regulators, and consumers playing their part, experts say. This isn’t a given in the US, where President Donald Trump is withdrawing from the Paris climate accords, an international agreement that’s attempting to combat climate change.

“As one of the world’s largest producers of carbon dioxide, the US need solutions to promote renewable energies,” Ostermann says. “Politically, this may be controversial, but there are more and more consumers who recognize this.” Ostermann is convinced that his company’s technology can help relieve the strain on the outdated power grid in many states while protecting consumers from power outages at the same time.

It’s not that difficult to explain why solar systems with batteries might benefit the consumers who can afford them. “The hurricane or the cyberattack comes, the grid is gone, but you can continue to light and operate your house because you have a storage system and a solar system,” says Ostermann. 

But the advantage for the entire grid isn’t as obvious. When utilities have planned how efficient the power plants and lines they build must be, they planned around the system’s peak, says Ryan Hledik, a principal at research consultancy Brattle Group who focuses on distributed energy technologies. The US power grid is built around the hours in the year when people use the most electricity. In most places, those are hot summer afternoons when everyone turns on the air conditioning. But that infrastructure is aging, and energy consumption is reaching record highs.

Perhaps surprisingly, renewable energy can add more stress to the already creaky grid. Without a battery to store the energy, solar energy goes directly to the grid whether it’s needed or not. The sun also shines, of course, when the grid doesn’t need much energy. That means that some solar farms are told to shut down to prevent clean electricity from clogging the grid. This, too, can lead to power outages.

This is why batteries and VPPs are part of Sonnen’s plan. Tesla also has a VPP program with Green Mountain Power in Vermont. (Tesla’s solar energy projects stem from the acquisition of SolarCity in 2016.) Solar battery installation is also on the rise in California where almost 10,000 home battery systems were in place last year, which is 25 times more than in 2016, according to BloombergNEF. BloombergNEF has predicted that battery installations will rise “exponentially” worldwide.

A VPP is easier for a utility to deal with than individual solar panels because a VPP operates as one asset rather than several individual homes. If too much energy is produced from the solar panels, it can simply be stored in residents’ batteries. And because the energy from the solar panels is stored locally, the utilities can draw from batteries during peak hours, Ostermann explains.

The software associated with the batteries can also alleviate strain on the grid. For instance, the batteries can be set so that devices such as electric vehicles or air conditioners do not necessarily draw power at peak times, but before or after them. “We shave off peak consumption and supply, if you will,” Ostermann says. Ultimately, that may mean saving utility companies money: they won’t have to build new power lines because the peaks of usage are less drastic.

This sounds like a convincing plan to Gerbrand Ceder, a professor of materials science and engineering at the University of California, Berkeley. “Personally, I thought this was always the model that Tesla with SolarCity was going at,” he tells The Verge. “But they just haven’t been particularly good in executing it.” 

There are some hurdles to Sonnen’s plan, though. Specifically, it might not make money. Whether you can make money with a VPP has to do with regulations, Ceder says. Every state — even every utility — can draw up its own regulations, and a provider like Sonnen can’t avoid them if it wants to set up a VPP. “If the utility says, ‘No, the network belongs to us, and we are not up for your idea,’ then it won’t work,” says Ostermann.

There’s an even bigger economic hurdle: solar incentives. In many parts of the US, customers who add solar to the grid through solar panels can then consume just as much from the grid without paying a cent, says Hledik. Consumers, therefore, have no financial incentive to actually use the electricity they generate. They can feed superfluous clean power into the grid during the day and draw the same amount of conventional power out of it at night.

“The customer is basically using the grid as a virtual battery, and probably saving more money from the production of their solar facility than it’s really worth,” Hledik says. “That policy has prevented solar plus storage from becoming very common for residential customers in the US. They don’t need to consume the energy from the solar panel on site in order to avoid the full retail rate.” 

Ostermann points out that regulators in some states are already moving away from the net metering policy. Hledik agrees this is a trend, so the economic incentives against having a battery may not continue.

In the meantime, Sonnen is pursuing a strategy that worked for its project in Utah: finding utilities, housing companies, and consumers that want to give the technology a try. The best candidates for Sonnen projects are ones who are interested in both the financial benefits and protecting the climate. Ceder believes that strategy may be successful for Sonnen, in part, because batteries are far less expensive than most customers think.

But it’s also true that the US has lots of regional and local grid operators — it is, after all, a very large market. “Sonnen could probably for the next ten years just pick off the environments in which it is easiest to operate,” Ceder says. That means the Soleil Lofts in Utah might be just the beginning.

Germany is divided about the future of its most important industry: while some automakers pursue electric vehicles, a noisy group of diesel-energy enthusiasts are expressing their frustration through protests. These have gone on every weekend so far this year, since the first on January 11th.

The first protest took place in Stuttgart — the hometown of Daimler, Bosch, and Porsche — and was organized by Ioannis Sakkaros, who works as a mechatronics technician for Porsche. Since then, hundreds of protesters wearing yellow vests have gathered each weekend to rally against court-mandated driving bans for older diesel cars. The bans were put in place in response to excessive air pollution.

At a rally on February 9th in Munich, where BMW’s headquarters is located, dozens of people chanted a pro-diesel rhyme together, and cheered on speakers who accused “eco-fascists” and “green ideologists” of wanting to destroy the car industry. A man earned applause from the crowd for calling electric vehicles “hazardous waste.”

The debate about the future of cars — diesel or electric — is emotional for many Germans, as the auto industry and its dependent companies employ 1.8 million people, hundreds of thousands of whom work directly with internal combustion engines. But new carbon emission limits and pending bans on diesel and gasoline cars in major markets threaten their livelihoods. German cars are big business, bringing in almost $500 billion annually. And a successful switch to electromobility will cost 114,000 jobs in Germany by 2035, according to predictions from the Institute for Employment Research. After all, electric motors require significantly fewer components and less maintenance than internal combustion engines — which means an annual economic loss that will grow to reach $22 billion in 2035.

“The diesel is only the beginning,” Michael Haberland, who organized the protest in Munich, tells The Verge. “The gasoline engine is next.” Haberland is president of Mobil in Deutschland, a motor club. He feels the European emission limits for air pollution, which are responsible for driving bans, are nonsense. “Are we all supposed to drive electric vehicles now?” he asks. “They just don’t work. The diesel engine, on the other hand, has been a success story for more than 125 years.”

Volkswagen, the largest car manufacturer in Germany (and the world), disagrees with Haberland’s assessment. Last December, VW’s strategy chief surprised the industry when he announced that the company’s final generation of combustion engines will be launched in 2026. After 2040, Volkswagen wants to only sell electric vehicles. Other German manufacturers have not yet presented a deadline for their final traditional engines, but BMW, Daimler, and Porsche are also starting an EV offensive with dozens of new models lined up, investments in battery factories, and the development of rapid charging stations.

But the car industry isn’t united — many managers, especially from the supply industry, share the skepticism of the protesters. More than half of Western European car managers expect electric mobility to fail, according to a 2018 survey by KPMG, a consulting company with significant car world expertise.

Volkswagen announced in November that it would invest $34 billion in electric mobility, to support a plan of bringing 50 new EVs to market by 2025. By January, the CEO of the world’s second-largest supplier of automotive parts cast doubt on VW’s strategy in an interview with WirtschaftsWoche. According to Elmar Degenhart, the CEO of Continental, electric vehicles would only be priced competitively with diesel or gasoline cars sometime “after 2025.”

The division between combustion engine supporters and EV supporters runs through politics, unions and even science. While the conservative federal minister of transport predicts a great future for diesel and petrol cars, the popular Green Party calls for a rapid switch to electric vehicles. While some union leaders criticize emission limits for harming the industry, others demand the construction of battery factories in Germany. And while some scientists argue that electric vehicles are useless, others believe that there is no alternative.

“I think it is completely out of the question that electric vehicles will completely replace cars with internal combustion engines,” Jörg Wellnitz, a professor who specializes in lightweight car design at Technische Hochschule Ingolstadt, a technical college in Audi’s hometown, tells The Verge. “The investments are completely pointless.”

Wellnitz’s doubts about electric vehicles recently went viral when a local newspaper published an interview with him. He says electric cars are too expensive, the raw materials for the batteries are too difficult to obtain, the infrastructure is more than inadequate, and the electricity to charge them too dirty.

A quick switch to electric vehicles would be “the suicide of the German car industry,” Wellnitz says. Instead, he prefers continuing to use combustion engines with synthetic fuels. And when pressed about Volkswagen, Daimler, and BMW’s plans for electric vehicle expansion, he scoffs. “These are just statements to relieve political pressure,” he says.

Electric vehicles don’t always have a better carbon footprint than diesel cars due to their manufacturing process, according to ADAC, Germany’s most important automobile club. A different ADAC study shows that EVs aren’t always more expensive than traditional cars, either. The lack of charging infrastructure and the difficulty of procuring raw materials for batteries are problems that are actually still being worked on. It is, after all, still early days for electric vehicles.

Germany’s “car pope,” Ferdinand Dudenhöffer, professor of automotive economics at the University of Duisburg-Essen, completely disagrees with Wellnitz. He has no doubt that German car manufacturers will successfully switch to electric vehicles in the coming years, no matter what some politicians, managers of car suppliers, unionists, other scientists, or protesters in yellow vests say.

“They’re nostalgic,” Dudenhöffer tells The Verge. “Some have built their entire careers on combustion engines. Of course they will tell you that electric cars are bad. A postman doesn’t like emails, either.”

Many important markets — including China, India, the Netherlands, Sweden, Iceland, Ireland, France, Great Britain, and California — have already announced that they will no longer register cars with combustion engines after 2030 or 2040. The EU’s 2030 carbon dioxide emission limits can only be achieved with electric cars, too. “So, it doesn’t really matter what we’re discussing here in Germany,” Dudenhöffer said.

That’s also what analysts say. 2018 was the first year with more than 1 million pure electric vehicles being sold globally, according to PricewaterhouseCoopers. That’s only 2.8 percent of the global car market — but manufacturers are already spending 30 percent to 50 percent of their research and development budgets on EVs, says Christoph Stürmer, global lead analyst at PwC Autofacts. “So below the surface, electric cars are already very relevant,“ he says.

And although diesel cars have recently regained some market share in Germany, Stürmer thinks diesel cars are headed for extinction. But Stürmer isn’t worried about German car manufacturers. Though they weren’t the fastest to release competitive EVs, they have the money and market leverage to catch up.

If he’s right, Volkswagen, Daimler, and BMW will simply turn electric vehicles into the next thing they can be proud of for many decades. Even Ioannis Sakkaros, who started the pro-diesel protests, has said EV technology is “awesome” — he just doubts it’s really better for the climate. Sakkaros is convinced that his employer Porsche will not only catch up with Tesla, but will set completely new standards for electric vehicles.   

For years, Amazon customers in Europe have enjoyed the shopping giant’s ability to deliver everything from best-selling books to phone chargers within days, if not hours, at prices that brick-and-mortar retailers often cannot match. Much like in the United States, online sales are eating up physical retail market shares. By 2023, it’s predicted that 21 percent of all non-grocery retail sales in Europe’s biggest economies will be online, up from just 13 percent last year. But, increasingly, the large digital platforms, which also operate as marketplaces for third-party sellers, have come under fire for helping foreign retailers skirt taxes.

In the EU, practically all marketplace sellers are required to report and pay a sales tax called value-added tax, or VAT. In the UK, the standard VAT rate is 20 percent; in Germany, it’s 19 percent. But recent reports indicate that thousands of vendors that are selling on Amazon and eBay’s marketplaces, many of which are from China, are not paying their VAT, which allows them to undercut local physical and online retailers even further. Now, the UK, Germany, and the EU Commission are stepping forward to hold marketplace operators accountable for tax fraud amounting to around $5 billion a year across Europe, according to estimates by the EU Commission.

According to Mark Steier, a data analyst and e-commerce consultant who first revealed the scheme in Germany, there are approximately 15,000 Chinese traders registered on Amazon’s German Marketplace. But one-third of them have not indicated a VAT identification number in their profile, Steier told The Verge. And from his experience, many of the VAT identification numbers offered are not valid. Steier estimates that on Amazon alone, there are about 10,000 sellers from China withholding VAT from the German state. Research by public broadcaster WDR and daily Süddeutsche Zeitung shows similar numbers. According to Steier, there are over 10,000 more VAT-avoiding Chinese traders on eBay. Germany’s Ministry of Finance has suggested that the annual loss of tax revenue caused by online VAT fraud amounts to several hundred million euros.

A recent purchase exemplifies the problem. This August, a Munich-based Amazon user named Michael (who requested only his first name be used for this article), found printer cartridges at a bargain: a pack of four for €8,99 with, thanks to Prime, no additional shipping costs. Amazon indicated that the price already included German VAT. The order was processed and delivered by Amazon, but the actual seller was a company called Cseein. The next day, Amazon’s delivery service brought a padded envelope containing the cartridges but no invoice. Michael sent an email to Cseein asking for it. The company replied quickly.

At first glance, the document looked good. It included an invoice number, Michael’s Munich address, and the company’s address in Guangdong, China. But there was something missing. Usually, there are three lines at the end of an invoice: the first indicates the net amount, then the VAT, and the third states the actual price, which is the sum of the two other figures. Here, the VAT wasn’t mentioned, and the company did not provide a VAT identification number.

For lawyer Nathalie Harksen, a VAT expert at Frankfurt-based law firm AWB, the incomplete invoice is an indication that the company probably didn’t pay the VAT — although there are clear reasons why the company would have been obliged to do so. Even though Cseein does provide a VAT number on its Amazon Marketplace profile page, that’s of no use in this case, Harksen explained, as it’s a British VAT number. When asked whether the company paid VAT over email, a representative from Cseein replied: “we pay the VAT to UK, all we sell on EU and it will be accepted.” The company obviously assumed that the email came from a disappointed customer and made an offer: “we can refund you the VAT. can you accept it.” When shown the correspondence, Harksen said, “There doesn’t seem to be any knowledge of European tax law here.”

For governments, lost taxes can impact budgets. But for vendors who play by the rules and pay their VAT, competitors who undercut their prices by avoiding VAT are a threat to their very existence.

Martin, a German Amazon Marketplace retailer (who also asked that his real name be concealed), has been selling bags on Amazon and eBay for years. “When I see the students walking by, I immediately recognize this backpack is from China, this backpack is from China, and the next backpack is also from China,” he told The Verge.

Martin says he sold some of the same imported Chinese-made products as Chinese dealers on Amazon, but because he’s based in Germany, he’s forced to pay VAT or else risk fines or even a prison sentence. Meanwhile, he says Chinese vendors are avoiding their 19 percent VAT and spoiling his business. He cites the VAT fraud as the main reason for the lower prices of rivals from China that already benefit from cheaper procurement.

“We once developed our own toilet bag, of which we sold 10,000 to 12,000 units per year on Amazon Marketplace. Now, we only sell 400 a year.”

Although Martin mainly blames politicians and the government for failing to enforce VAT, he also criticizes Amazon and eBay. “The marketplace operators should have an interest in things being right there. But they don’t seem to care where their commission comes from,” he said. After all, many of the tax-fraudulent Chinese vendors use the Fulfillment By Amazon (FBA) service. That enables them to deliver just as quickly as German retailers because their goods are already stored in local Amazon warehouses.

VAT evasion is not unique to Germany. In 2014, a group of UK sellers formed an online initiative called “Campaign against VAT Fraud on Ebay & Amazon in the UK.” Thousands of Chinese dealers are suspected of not having paid the 20 percent VAT and thus harming domestic vendors. Due to online VAT fraud, UK taxpayers lost $1.3 billion to $1.9 billion in 2015 and 2016, according to estimates by a government agency.

Efforts to enforce online VAT in the UK have fallen short. In 2016, new powers to tackle the fraud were introduced, including making online marketplaces potentially liable for non-payment of VAT of overseas sellers that are using their platforms. “From these laws, thousands of non-compliant overseas businesses have been removed from online marketplaces, and over 40,000 overseas sellers have registered for VAT,” Ruth Stanier, director general for customer strategy and tax design at Her Majesty’s Revenue and Customs (HMRC), told The Verge. However, not everyone was satisfied with the way HMRC made use of its new powers.

In October 2017, the Public Accounts Committee of the British Parliament criticized the authorities for not doing enough to combat online VAT fraud. In a report, the committee described HMRC as “playing a game of cat and mouse” with companies based outside the UK. Since then, HMRC has further strengthened its rules and has also pushed online marketplaces to sign a voluntary agreement committing them to provide data about individual sellers to HMRC, including the volume and value of their sales. Amazon, eBay, and four other companies have already signed in. An eBay spokesperson told The Verge: “We work closely with HMRC to ensure our sellers comply with their VAT obligations.”

Germany is also taking legislative action. On August 1st, Angela Merkel’s cabinet passed a bill from the Ministry of Finance that, if approved by Parliament, will force online marketplaces to cooperate with tax authorities from 2019 onward. Starting January, they’ll have to report data about their seller, just like in the UK. If sellers still don’t pay their taxes, Amazon, eBay, and other marketplaces will be held accountable for lost funds. The bill is expected to pass into law.

Back in 2016, Amazon’s stance on the German VAT problem could be described as none of our business, or in the company’s own words: “Amazon dealers are independent companies and responsible for fulfilling their tax obligations.”

After two years of bad press and political debate, today, the company sounds more committed to enforcing sellers to pay VAT. Though Amazon didn’t want to comment on the government’s plans, the company told The Verge that it fully supports VAT compliance and offers extensive information, training, and tools to assist sellers. “If we are notified by a German tax authority that a seller is not VAT compliant, we will promptly block the account,” a spokesperson said.

Amazon and eBay marketplace vendors evading VAT could face even more pressure soon: the European Union is working on laws that will make online marketplaces responsible for ensuring VAT is collected on sales on their platform. The legislation should apply from 2021 on.

But the fixes could be short-lived: as Chinese e-commerce giant Alibaba expands in Europe, merchants could start placing cheap VAT-free offers there, too. European authorities have less control over Alibaba than Amazon and eBay.