With Laurent's segal and from London and Gerard Reed from Berlin. This is redefining
energy minutes minutes. It is one twenty five and job, what's your number
this week? My number this week? And I give you a clue,
Lurn, It's not just a number. I'm going to add a metric unit
onto it. One hundred and thirty gigawatts and thirty kikia wetts can be only
sot out batteries. It's solar, and it's the guidance from one particular soda
company must be well, one of the Fab four, Like let's say Jinko
very good guidance for this year is one hundred and thirty gigawatts of a module
deliveries. It is not insane, it is it is. It's basically the
wool market three years ago. Yeah, it's one manufacturer. It's incredible,
absolutely incredible. I think that I think talking about the solar thing is interesting
because obviously if you look at Chinko just put out their numbers for Q four
and well, surprise, surprise, what happened? Gross margins collapsed? Yeah,
of course, see pricing is collapsed. Gross margins collapsed, so they're
down to the in Q four they were at guess what the gross margin is
in Q four eight and no, no, still two digits twelve percent good
good, but just about broke even. I mean like operating margin one percent.
I mean they used to be ten percent operating margin. Business. It
just gives you an idea that it was a stress in the market, a
present, right. Yeah, and there are rumors about Lungey getting rid of
one third of their workforce. Don't know if it's true or not. Yeah,
yeah, yeah, it's much clear as there's going to be a shakeout
and global solar And we've seen this before, right, it's what it seems
to happen every few years. Yeah, it's just the other Menutube are insane.
Yeah, it is. I mean it's hard to believe that if one
manufacturing firm has one hundred and ten of capacity that they have it is well,
I mean add numbers of so this week a lot, but the one
that strick me was in the middle of this week at some point in Belgium,
the cost of imbalance was minus four hundred europe and Maga what iur It's
all about flex It's all about batteries. If you had batteries. People would
have paid you four hundred europe and mage what I were to charge. Well,
when the air of volatility, We've been talking about this in the last
few days. Ear of volatility, that's we live in. So this week
there were three big conferences at the same time, all about energy. There
was one in Houston, Texas Sera Week, which is where all the oil
guys gather and massage themselves and oil themselves and everything is great. And what
I understood is that we're making a lot of money, there's still growth in
demand, and well, yes she's dead and energy transition is too expensive,
so let's go continue to drill. They used to pay lip service to the
Green but the Green movement or just pepper Tiger, so they're just going to
sail on. That's what I get from the echoes from Cera Week. I'd
like to hear the other conferences actually, because I think you're gonna leave out
one really important. I'm just gonna put up. I'm gonna I'm gonna bet
with myself that you're gonna leave out more. No. The second one is
Bill Boo when you're up, I didn't you didn't. I thought you're gonna
forget about the wind guys, you didn't a well on okay, god no,
I mean so many people who went there, and probably I would have
come if we didn't have to go to Berlin. And what my friends told
me is that the Mohala is a bit now, they're bouncing back. We'll
back baby, Supply chain getting better, and apparently permitting is getting easier,
and I think they've been through the worst. That's what I get. So
it's great to see some some optimism in the wind sector. But maybe you
heard something. No, no, I heard the exact same I heard the
exact same thing. So prices are beginning to come down again, the value
chains begin to sort itself out. Supply chain a lot better than it was
two years ago. Yeah, roads in future, it's good. We neededre
and offshore, yeah exactly. But let's talk about the important one, the
one we went to in Berlin, the Global Infrastructure Summit. So it's not
just energy, it's infrastructure. So you have also data centers, transmission,
road port bridges. And what I got is, well, first of all,
we were three thousand, which is insane compared to even last year two
thousand, five hundred, So it's really it's still going to continue to grow
fast. And for our listener, the Berlin conferences where in the jargon LPs
meet GPS, so LPs are investors in funds and GPS are fund manager,
limited partner, general partner. So this is really where they meet and they
discussed as strategians on The first thing I got is raising money into twenty three
was an absolute disaster. Well, one of the biggest, biggest, top
guy, they only raised four billion last year and they used to raise twenty
billion per quarter. Was the smaller one the raise zero. Now, the
good thing is since the beginning of the year, it has shift and we're
starting to raise money again. We see valuation getting better and we see transaction
happening. So the big freeze we had because of the supply chain issue and
especially the interest rate issue is beginning to ease. And somehow it's the mirror
of what's happened in Bilbao. Yeah, let's look at the positives this This
conference was jammed and there was lots of other people didn't even buy tickets.
I know. Let's say one large investment bank in Europe where there was one
particular character and he had three copies of his ticket. So the point about
it is there was actually much more on. I mean, you just couldn't
move within the event itself, and then you had all the side events,
and so that's you can say it's good because there's a lot going on.
But I thought, if you just want to take give me that, I'd
give you the summary of the different days, because it's not just about energies.
You said the property thing. There was a day of property, and
what I got out of that was property is very difficult. The general view
is commercial property in a difficult situation. So that was the property day.
The big boom was digitalization. Everyone's just talking about data centers, data centers,
AI data centers. That's where like there was so much activity, and
I thought, if I look at our own energy transition space, what I
got out of that was there was a big question on people's lists, which
was, well, listen, it's been really clear that this has been an
infrastructure as a class for the last ten fifteen years. The question is is
it still And I think that was a big question that people were asking me.
I had really big investors sort of saying this to me, so what
do you think you know? And I just think the market is changing.
I don't know what you think first about the data centers. Data centers is
just about energy. You used to connect data center with ten megawat or twenty
megawat, and then you go to fifty megawa, one hundred megawat, and
now people are talking about hyper scale at five hundred megawat. Even I heard
about a gigawat. So the old data center play isn't energy play, and
it's growing. So it's always easier to have a growing pie than a stable
pie where everybody fights for market share. That's number one, number two,
and you said it, well, the all revenue models were for twenty years,
you would have guaranteed government subsidies. This is gone. So in fact,
you have to be much more sophisticated in the reve new model. You
have new models and you're going to integrate portfolio, you're going to inteke grate
batteries, short term trading hedging PPAs tail risk. I mean, it's becoming
very, very sophisticated. So the question the infrastructure investors have to ask themselves
is can we educate ourselves and can we swallow a revenue model that's not going
to be as stable as before, So certain years you'll have less, other
years you'll have more. Probably on average you still have a good return,
but as you said, the volatility of the returns is going to increase.
Hence, infrastructure investors, is it still the type of return profile you're looking
for now? I believe that the bigger you digitize and the more diversified your
portfolio, you will level to good returns. But some smaller investors are not
as sophisticated. They're asking themselves that question. I have a question for you,
and I came out of this which was if we look at the last
fifteen years, the people who have built and who own still today renewable assets
are financial institutions and developers back by them. That's really what it is.
Our wonders are going to be the case in the future. In other words,
is it going to be companies that are on these assets and manage them
or is it going to be a funded answer? That's the question I have,
and I don't know the answer to wish, but I'd love to hear
your thoughts. That's an excellent question for another episode because we can we can
oh yeah yeah, yeah, yeah yeah. But what I got is that
better times are coming without a doubt. Yeah, yeah, okay, it's
linked to interest rates and supply chain and as you said, inalition to AI
and data centers. We are now short generation, well even shorter flex.
The power consumption is going to go up, which didn't happen in the past
twenty years, because of evs, because of AI, because of the eating
system, and even if they have new mothers are going to be more sophisticated.
There is a lot of opportunities in our sector. You made the point
the other day when we're talking, we have to answer the other question,
which is why is electricity demand not gone up in the last decade despite all
these digital devices lighting you very good, amazing people. Just think of it
is you've gone from one hundred what bulb to a six WAP bulb. Good,
as simple as that. But the world is changing going forward because what
we've got is energy demand is going to increase at a greater rate than energy
efficiency. Yeah, is electricity space Absolutely good? Seeing you, my friend,
I really enjoyed it. It was good fun and talk to you next
week. Thank you for listening to Redefining Energy. Don't forget to rate the
show and subscribe on Apple podcast, Spotify, or the platform of your choice.