WEBVTT 1 00:00:04.240 --> 00:00:07.799 With Laurent's segle and from London and Gerard read from Berlin. 2 00:00:08.279 --> 00:00:10.919 This is redefining energy today. 3 00:00:10.960 --> 00:00:13.759 On Redefining Energy, Laurno. We're going to bring an old 4 00:00:13.800 --> 00:00:15.000 friend back on the show, aren't we. 5 00:00:15.359 --> 00:00:20.079 Yes, it's David's Casebrook, the Brook in queen Brook and 6 00:00:20.519 --> 00:00:24.079 reading on the show five years ago, very popular episode 7 00:00:24.120 --> 00:00:27.079 episode sixty six. The things have changed so much so 8 00:00:27.239 --> 00:00:29.800 it was probably time to bring in and discuss all 9 00:00:29.839 --> 00:00:34.119 this data center and the revolution of twenty fourteen power development. 10 00:00:34.719 --> 00:00:36.679 Yeah. I think that's what I love about David is 11 00:00:36.960 --> 00:00:39.719 these guys have been at the forefront of this renewable 12 00:00:39.799 --> 00:00:43.280 stuff for twenty five years over and I mean always 13 00:00:43.320 --> 00:00:46.439 at the forefront of that. They're not just an infrastructure 14 00:00:46.479 --> 00:00:49.119 investor really are. They're local and sort of saying, well, 15 00:00:49.159 --> 00:00:52.799 where's the future going? And that's creator. Yeah, we need 16 00:00:52.840 --> 00:00:54.679 to have Drap back on again. Yeah. 17 00:00:54.880 --> 00:00:57.799 And for the people who don't know queen Brook, it's 18 00:00:57.840 --> 00:01:03.399 a mid size specialties fun They have executed twenty seven 19 00:01:03.439 --> 00:01:07.159 billion dollars two hundred and forty projects. They've built more 20 00:01:07.200 --> 00:01:14.159 than forty gigawad operating across US, UK and Australia, and 21 00:01:14.239 --> 00:01:18.439 they're so good. Definitely punching above their weight. And of 22 00:01:18.480 --> 00:01:20.799 course at some point we're going to enter in the 23 00:01:20.920 --> 00:01:25.280 data center realm. And here they've developed out of thin 24 00:01:25.359 --> 00:01:29.319 air a company called Rowan, so you can hear about Rowan, 25 00:01:29.439 --> 00:01:32.840 which is one of the top three successful data centered 26 00:01:32.959 --> 00:01:36.959 developer in America. And they just signed a Chinamos did 27 00:01:37.000 --> 00:01:41.599 with Blackstone one billion dollars. Very very impressive. I'm keen 28 00:01:41.719 --> 00:01:43.359 to hear what David is to. 29 00:01:43.359 --> 00:01:45.439 Say, So let's bring another show. 30 00:01:45.719 --> 00:01:47.640 David, Welcome back to the show. 31 00:01:48.040 --> 00:01:50.079 It's so nice to see you guys again. I can't 32 00:01:50.120 --> 00:01:52.760 believe it's been this long. Always a pleasure to talk 33 00:01:52.799 --> 00:01:53.200 to you too. 34 00:01:53.719 --> 00:01:55.799 Well, David, maybe just kick off this and I think 35 00:01:55.799 --> 00:01:58.760 actually the last half another show was almost five years ago. Yes, 36 00:01:59.079 --> 00:02:02.439 you've been in this renewable space for almost a quarter 37 00:02:02.439 --> 00:02:03.959 of us and shit at this point in time. But 38 00:02:04.040 --> 00:02:07.239 I'd love to hear what's changed over the last five 39 00:02:07.319 --> 00:02:09.400 years for you, and then you know, we can probably 40 00:02:09.439 --> 00:02:12.319 dig a little bit deeper into Quinn Brock and what 41 00:02:12.479 --> 00:02:14.840 you're doing differently and then really talk a little bit 42 00:02:14.840 --> 00:02:16.560 more about the future. Now, that's what we'd love to 43 00:02:16.599 --> 00:02:18.879 sort of go through today. But startup, and what are 44 00:02:18.879 --> 00:02:20.639 the big things that you look at and say, wow, 45 00:02:21.080 --> 00:02:23.280 this is what's changed. Yeah. 46 00:02:23.280 --> 00:02:25.719 Look, I would say if I go back five years, 47 00:02:25.719 --> 00:02:28.039 I'm thinking, you know, twenty one, twenty two. Back then, 48 00:02:28.400 --> 00:02:31.520 the big things that we were pondering were getting out 49 00:02:31.560 --> 00:02:35.000 of wind on shore wind and into solar and storage 50 00:02:35.000 --> 00:02:37.080 in a fairly big way. And the projects that we 51 00:02:37.080 --> 00:02:41.520 were doing were persuading us in that direction, largely because 52 00:02:41.759 --> 00:02:43.520 on the solar and storage side, you know, with our 53 00:02:43.560 --> 00:02:46.159 Gemini project in Nevada, which it was just cost based, 54 00:02:46.159 --> 00:02:49.840 we were looking at the potency of those two technologies 55 00:02:49.840 --> 00:02:52.159 combined together. There have been a lot cheaper since then, 56 00:02:52.240 --> 00:02:55.240 but of course both in time of day, but in 57 00:02:55.319 --> 00:02:58.840 overall Lcoe they were unbeatable. And on the other hand, 58 00:02:58.919 --> 00:03:01.800 we were finishing up about a five year build of 59 00:03:01.840 --> 00:03:05.280 our Scout wind platform and it was occurring to us 60 00:03:05.319 --> 00:03:07.240 that we saw that the fund was going out of 61 00:03:07.319 --> 00:03:10.280 on sure wind from a risk adjusted return perspective. For 62 00:03:10.280 --> 00:03:13.199 a couple of reasons, particularly in the US, we saw 63 00:03:13.240 --> 00:03:15.840 it as a cluster technology, which means everyone develops it 64 00:03:15.879 --> 00:03:18.479 in the same location, and that Tier one wind sites 65 00:03:18.520 --> 00:03:21.400 and then did Tier two, etc. But that particularly in 66 00:03:21.439 --> 00:03:25.080 the US with the production tax credits led to price cannibalization, 67 00:03:26.039 --> 00:03:28.879 and so it was a very very difficult period to 68 00:03:29.280 --> 00:03:32.840 think about sort of consistent returns with so much volatility 69 00:03:32.879 --> 00:03:35.639 being driven by too much capacity going into the same 70 00:03:35.759 --> 00:03:37.840 node or into the same connection. And of course then 71 00:03:37.840 --> 00:03:42.120 we started to see price separation between your connection point 72 00:03:42.199 --> 00:03:45.000 and irrelevant pricing node from a customer point of view, 73 00:03:45.520 --> 00:03:48.439 So to us, you can't really diversify yourself out of that. 74 00:03:48.879 --> 00:03:50.800 Very difficult back then to contract your way out of 75 00:03:50.800 --> 00:03:54.520 that from a hedging perspective, and so there was really 76 00:03:54.520 --> 00:03:57.240 a really huge turning point for us was the decision 77 00:03:57.280 --> 00:03:59.840 to get out of on shore wind and into solar 78 00:04:00.080 --> 00:04:03.280 battery storage, which at the time and in the five 79 00:04:03.360 --> 00:04:06.080 years since, we saw it back then as the engine 80 00:04:06.159 --> 00:04:09.439 room of the energy transition. We were a pioneer of 81 00:04:09.560 --> 00:04:12.560 solar and DC coupled storage, and that was with four 82 00:04:12.560 --> 00:04:15.879 hour solution back then. Everything that's happened since then, I mean, 83 00:04:15.919 --> 00:04:18.959 it's more than eighty percent of most grid cues. It's 84 00:04:19.040 --> 00:04:22.639 now the dominant technology combination, and certainly in the markets 85 00:04:22.639 --> 00:04:26.040 where we're active. And so I would say that technology 86 00:04:26.079 --> 00:04:31.240 trend based on cost. The sheer cost competitiveness and the 87 00:04:31.319 --> 00:04:34.920 time of day service that solar and storage could deliver 88 00:04:35.079 --> 00:04:37.199 because turned out to be absolutely right. 89 00:04:38.199 --> 00:04:41.600 So in the past five years, the financing condition, so 90 00:04:41.720 --> 00:04:45.920 you've seen more investors come in, the risk profile changing. 91 00:04:46.439 --> 00:04:48.680 How has it evolved because at the same time the 92 00:04:48.680 --> 00:04:49.839 interest rates have gone up. 93 00:04:50.600 --> 00:04:53.319 Yeah, I'd say it. In the early days, the novelty 94 00:04:53.680 --> 00:04:57.600 was in being in the sector itself, and so there 95 00:04:57.759 --> 00:05:02.439 was reasonable return capture through the whole development cycle. And 96 00:05:02.519 --> 00:05:05.399 when money was cheap, M and A strategies and renewables 97 00:05:05.399 --> 00:05:08.240 attracted a lot of institutional capital. There's a lot of 98 00:05:08.240 --> 00:05:11.279 new entrants coming in. I mean, generalists were turning into 99 00:05:11.360 --> 00:05:17.480 renewable infrastructure. Generalists were having renewables represent the largest component 100 00:05:17.639 --> 00:05:20.600 of their funds, of their core and their core plus funds, 101 00:05:21.040 --> 00:05:24.399 and so money started to flow into the sector. Generalists 102 00:05:24.480 --> 00:05:28.319 took significant amount of that capital. M and A strategies 103 00:05:28.360 --> 00:05:31.480 really dominated a lot of the capital flows that went 104 00:05:31.519 --> 00:05:34.480 into the sector, and there were reasonable returns I mean, 105 00:05:34.480 --> 00:05:37.519 in a relative sense, reasonable chance to be had through 106 00:05:37.560 --> 00:05:39.839 those M and A strategies. I think in that time 107 00:05:39.920 --> 00:05:42.920 we've seen a lot of capacity build, a lot of 108 00:05:42.959 --> 00:05:46.720 capital flow, both on the equity and debt side to 109 00:05:46.759 --> 00:05:49.600 a point where where we are today, a lot of 110 00:05:49.600 --> 00:05:52.720 the institutional capital that we speak to around the world 111 00:05:53.120 --> 00:05:55.639 has kind of got their allocation of what they would 112 00:05:55.720 --> 00:05:59.199 sort of refer to as generic megawatts or the sort 113 00:05:59.240 --> 00:06:03.000 of the more or maybe the core plus strategies that 114 00:06:03.240 --> 00:06:07.639 have suffered a lot with interest rates given these discounter 115 00:06:07.639 --> 00:06:11.240 cash flow assets. As interest rates go up, wax go up, 116 00:06:11.759 --> 00:06:14.160 navs go down, that's put a lot of pressure on 117 00:06:14.759 --> 00:06:17.680 some of those historic sort of M and A strategies, 118 00:06:17.759 --> 00:06:21.800 particularly things that were bought aggressively in competitive auctions. They 119 00:06:21.839 --> 00:06:24.680 haven't performed very well. That's been a little bit of 120 00:06:24.680 --> 00:06:29.920 appall over renewables sitting in their portfolios. That has tempered 121 00:06:29.959 --> 00:06:33.079 appetite for more. Fast forward to kind of where we 122 00:06:33.120 --> 00:06:36.800 are today, I'd say from where we sit, particularly a 123 00:06:36.839 --> 00:06:40.480 lot of institutional capital looking for differentiation in the strategy. 124 00:06:40.800 --> 00:06:44.639 They're looking for differentiation in the returns. They're looking for 125 00:06:44.720 --> 00:06:49.040 new ways to play infrastructure within the energy transition. So 126 00:06:49.439 --> 00:06:51.800 we're kind of in the age of the specialist and 127 00:06:51.839 --> 00:06:55.480 we're in the age of differentiation. And the other thing 128 00:06:55.519 --> 00:06:57.879 I would say is you look at the evolution of 129 00:06:58.199 --> 00:07:03.519 investment product that's been created and offered to the capital 130 00:07:03.759 --> 00:07:06.920 that flows into the sector back not that maybe five 131 00:07:07.000 --> 00:07:10.759 years ago you had solar funds and you had very 132 00:07:10.839 --> 00:07:15.480 technology specific investment funds that we're doing kind of one 133 00:07:15.600 --> 00:07:19.079 thing in either one country or a number of countries. 134 00:07:19.680 --> 00:07:22.759 And I think over that time what we've seen is 135 00:07:23.680 --> 00:07:29.439 investors now are attracted more to either technology agnostic, multi 136 00:07:29.920 --> 00:07:35.279 technology or diversified strategies that are across more than one 137 00:07:35.519 --> 00:07:38.120 way to play the energy transition. So that's part of 138 00:07:38.120 --> 00:07:42.160 that differentiation, and I think it's also a function of 139 00:07:42.199 --> 00:07:45.279 the fact that the return on investment and return on 140 00:07:45.360 --> 00:07:50.959 equity across technologies has largely commoditized. And so whilst we 141 00:07:51.120 --> 00:07:56.560 know that there are significant differences technologically and performance wise 142 00:07:56.759 --> 00:07:59.519 in the way these assets behave and a lot of cases, 143 00:07:59.519 --> 00:08:01.639 a lot of stres srategies, you're not getting rewarded for 144 00:08:01.720 --> 00:08:04.759 that differential. And so the choice in terms of the 145 00:08:04.800 --> 00:08:08.839 fundamental risk beta, whether it's construction, whether it's operational, you're 146 00:08:08.879 --> 00:08:11.839 not getting compensated for that, particularly using sort of M 147 00:08:11.879 --> 00:08:14.759 and A strategies. And so the market has sort of 148 00:08:14.879 --> 00:08:18.560 tended to shift towards more value add where the investor 149 00:08:18.680 --> 00:08:21.600 is investing more for sponsors that are differentiated in the 150 00:08:21.600 --> 00:08:25.360 way they go about creating a higher return and sort 151 00:08:25.360 --> 00:08:27.959 of mitigating their risk position on the downside, and moving 152 00:08:28.000 --> 00:08:31.199 away from those generic megawats that sort of still necessary 153 00:08:31.279 --> 00:08:36.360 for decarbonization. It's just not as interesting for investors to 154 00:08:36.399 --> 00:08:38.759 deploy a lot more capital in that direction. It's far 155 00:08:38.840 --> 00:08:40.960 more going into the value add strategies. 156 00:08:41.559 --> 00:08:44.000 David May, I just follow on this because the one 157 00:08:44.080 --> 00:08:45.879 thing that I would see when I'm looking at a 158 00:08:45.879 --> 00:08:49.120 lot of your competitors is exactly what you said, I'm 159 00:08:49.120 --> 00:08:50.840 going to be more brutal than what you said. Is 160 00:08:51.000 --> 00:08:54.679 all they've done is they have run power plans from 161 00:08:54.679 --> 00:08:57.320 Excel sheets for the last fifteen to twenty years. Now. 162 00:08:57.440 --> 00:09:00.840 You've been very different now because I even just go 163 00:09:01.000 --> 00:09:04.639 back to the fact that you bought a flexibility platform, 164 00:09:05.039 --> 00:09:07.559 you realize that you had to sort of become an 165 00:09:07.679 --> 00:09:12.000 energy services company, and you didn't use that phrase, and 166 00:09:12.039 --> 00:09:15.559 I'm just curious why you didn't have that phrase energy 167 00:09:15.600 --> 00:09:16.240 such system. 168 00:09:17.799 --> 00:09:20.639 That's a great question. I mean, it probably touched on 169 00:09:20.679 --> 00:09:23.559 something I should have mentioned in response to Laurren's question earlier, 170 00:09:23.559 --> 00:09:26.399 which is what's happened in the last five years for 171 00:09:26.639 --> 00:09:31.200 US is we're thinking thematically these days, and we're investing 172 00:09:31.399 --> 00:09:33.919 thematically because at the end of the day, our job 173 00:09:34.080 --> 00:09:37.600 is to deliver the same thing from an investment outcome 174 00:09:37.840 --> 00:09:42.000 and performance perspective. It's a rinse and repeat exercise. But 175 00:09:42.120 --> 00:09:44.240 of course, in terms of our return targets and what 176 00:09:44.559 --> 00:09:48.960 we're offering for our investment services doesn't really change from 177 00:09:49.000 --> 00:09:52.200 decade to decade mid teens plus, but what we have 178 00:09:52.320 --> 00:09:55.679 to do to achieve it has changed fundamentally a year 179 00:09:55.720 --> 00:09:59.440 to year, vintage to vintage, fund to fund, market to market. 180 00:09:59.600 --> 00:10:03.000 We have to to reinvent our strategy each time thematically, 181 00:10:03.480 --> 00:10:07.840 and so we've learned to invest now more by choosing 182 00:10:08.519 --> 00:10:11.840 a select number of thematics which are directionally where we 183 00:10:11.919 --> 00:10:15.759 think we can apply our skills and generate these value 184 00:10:15.799 --> 00:10:19.840 add returns. And so we don't think in market terms, 185 00:10:19.919 --> 00:10:22.600 or we don't think specifically in market or country terms. 186 00:10:23.080 --> 00:10:25.720 We think thematically and we try to apply those thematics 187 00:10:25.759 --> 00:10:29.440 across all of the markets where we are active. And 188 00:10:29.480 --> 00:10:33.159 the most significant part of that is that our strategic 189 00:10:33.240 --> 00:10:37.639 focus has shifted entirely to being customer centric, so we 190 00:10:37.720 --> 00:10:42.480 are solving problems and to solve problems for customers. Customers 191 00:10:42.480 --> 00:10:46.879 don't care what technology choices you make. They care about reliability, 192 00:10:46.879 --> 00:10:50.480 they care about impact, they care about cost, and so 193 00:10:50.639 --> 00:10:53.679 when we think about the tools we need in our toolkit, 194 00:10:53.960 --> 00:10:56.799 they are all the things you mentioned. Yes, of course, 195 00:10:56.840 --> 00:10:59.879 we have to have full suite development capability across all 196 00:11:00.039 --> 00:11:02.519 all the bank of all proven technologies. We need to 197 00:11:02.519 --> 00:11:05.279 be able to mix them and compliment them to achieve 198 00:11:05.480 --> 00:11:08.960 a supply profile that matches what the customer needs. But 199 00:11:09.039 --> 00:11:11.000 then we need to do more than that. We need 200 00:11:11.000 --> 00:11:15.679 to algorithmically optimize batteries using AI. We need to do 201 00:11:15.759 --> 00:11:18.679 that through the whole project development suite, and we need 202 00:11:18.799 --> 00:11:21.320 access to flexibility. We need to fill in the gaps 203 00:11:21.879 --> 00:11:24.000 going back to what I said in twenty two, the 204 00:11:24.039 --> 00:11:28.639 missing hours problem. Since then, we've developed an eight hour battery, 205 00:11:28.720 --> 00:11:32.679 now working on a twelve hour battery. It's purely designed 206 00:11:32.679 --> 00:11:34.559 to be able to deliver that twenty four to seven 207 00:11:34.759 --> 00:11:39.879 profile to data centers or steel mills or smelters, because 208 00:11:39.879 --> 00:11:42.600 that's the problem we're increasingly trying to solve. We're not 209 00:11:42.639 --> 00:11:45.639 trying to develop mega watts just to stick into the grid. 210 00:11:46.080 --> 00:11:49.639 We're trying to develop a services and a solutions project. 211 00:11:49.960 --> 00:11:53.600 Or combination of projects that solve a customer's problem. So 212 00:11:53.639 --> 00:11:56.879 I'd say over the last five years we have pivoted 213 00:11:57.120 --> 00:12:02.039 entirely to being thematically driven solutions business in the energy transition. 214 00:12:02.919 --> 00:12:04.799 Can I just dig on that a little bit and 215 00:12:04.799 --> 00:12:07.759 after question? Yeah, cool and again a bit a bit provocative. 216 00:12:07.759 --> 00:12:11.200 Here does that really sit in a fund structure? And 217 00:12:11.240 --> 00:12:13.720 where I'm coming from ante is at the end of 218 00:12:13.759 --> 00:12:16.679 the day, you've got a fund. At some point you're 219 00:12:16.720 --> 00:12:19.159 trying to get a return to someone to that song, right, 220 00:12:19.799 --> 00:12:21.840 So tell me how does that of fit in? And 221 00:12:22.039 --> 00:12:23.919 where is the secret SAP and all of our. 222 00:12:24.440 --> 00:12:26.600 The secret source is that the capital lives in the 223 00:12:26.639 --> 00:12:30.080 fund and that's where it belongs because that's our fiduciary business. 224 00:12:30.879 --> 00:12:33.679 But we have an equivalent number of people over one 225 00:12:33.759 --> 00:12:38.919 hundred and hour in our project development, construction, design, operations, procurement. 226 00:12:39.799 --> 00:12:43.720 That's the secret source. We are finding over time. The 227 00:12:43.759 --> 00:12:48.759 only way we can consistently deliver differentiated value add returns 228 00:12:49.440 --> 00:12:52.879 with proprietary thematics that we are thinking about every day 229 00:12:53.360 --> 00:12:55.759 that solve customer problems is we have to be able 230 00:12:55.759 --> 00:13:00.480 to deliver those solutions ourselves increasingly, and so today across 231 00:13:00.480 --> 00:13:04.159 the Quinnrook pipeline. Even compared to say, five years ago, 232 00:13:04.279 --> 00:13:08.000 we were way more dependent on portfolio businesses that we 233 00:13:08.000 --> 00:13:11.799 were creating ourselves to execute a certain thematic. These days, 234 00:13:11.799 --> 00:13:14.080 we're still doing that, but more than half of our 235 00:13:14.120 --> 00:13:20.679 portfolio now is things that Quimrook itself is developing, site acquisition, 236 00:13:20.960 --> 00:13:24.039 grid connections, permitting, design, procurement. 237 00:13:24.120 --> 00:13:24.279 Now. 238 00:13:24.279 --> 00:13:27.919 Not only that gives us the ability to retain a 239 00:13:27.960 --> 00:13:30.720 lot of value and offer that value back up to 240 00:13:30.759 --> 00:13:35.720 our investors, but we're pursuing proprietary thematics that we don't 241 00:13:35.759 --> 00:13:38.200 want the market to know about, necessarily because we want 242 00:13:38.240 --> 00:13:41.600 to continue to be a first mover. So to answer 243 00:13:41.600 --> 00:13:44.879 your question, if you were just a fund manager, I 244 00:13:44.919 --> 00:13:47.360 don't think you can do all of that that needs 245 00:13:47.399 --> 00:13:50.360 to be done. That when I say we are thematically driven, 246 00:13:50.399 --> 00:13:54.200 we're customer centric. We can solve problems and create solutions. 247 00:13:54.720 --> 00:13:57.600 As just as a fund manager, it's very very difficult 248 00:13:57.639 --> 00:13:59.960 to do that. You can do it via portfolio company 249 00:14:00.679 --> 00:14:03.000 and assemble portfolio companies, but of course you've got to 250 00:14:03.000 --> 00:14:06.240 sell those portfolio companies at some point in time and 251 00:14:06.240 --> 00:14:09.559 then you lose all that capability. We still do that, 252 00:14:09.759 --> 00:14:12.960 you know, we still turn over our portfolio companies, but 253 00:14:13.080 --> 00:14:16.519 what we've done internally is create the enduring capability, the 254 00:14:16.639 --> 00:14:21.919 enduring skill set from project development side, acquisition grid. These 255 00:14:21.960 --> 00:14:24.679 are things that are common to everything that we do, 256 00:14:25.240 --> 00:14:28.639 and so being able to have that in perpetuity I 257 00:14:28.679 --> 00:14:32.120 think is really really critical. It's a critical differentiator for us. 258 00:14:32.919 --> 00:14:35.679 Let's talk about the elephant in the rumor, well, not 259 00:14:35.759 --> 00:14:40.200 the different the herb of elephants, which well she was 260 00:14:40.240 --> 00:14:45.200 not pronounced four years ago, a Berlin pass data sentels 261 00:14:45.600 --> 00:14:50.440 and that has been a fantastic driver of your gross recently. 262 00:14:51.720 --> 00:14:54.399 Rather just shoveling make out what our work to the 263 00:14:54.440 --> 00:14:56.600 grid and let the grid take care of it more 264 00:14:56.679 --> 00:14:59.879 or less, let's talk about the past five years and 265 00:15:00.000 --> 00:15:02.679 our integration in the hyperscalar universe. 266 00:15:03.279 --> 00:15:06.399 Yeah, it is the biggest topic today, wasn't back in 267 00:15:06.600 --> 00:15:09.679 twenty one when we were on the blackboard trying to 268 00:15:09.720 --> 00:15:12.559 figure out I mean, in twenty one was obvious that 269 00:15:12.720 --> 00:15:17.679 hyperscale data centers were the largest virtual buyers of renewable power. Right, 270 00:15:17.720 --> 00:15:20.159 they all had net zero commitments, they were all doing 271 00:15:20.159 --> 00:15:22.840 the biggest PPAs. But one of the things that we 272 00:15:22.960 --> 00:15:26.000 noticed was that data centers were getting bigger. I mean, 273 00:15:26.080 --> 00:15:28.840 Gemini was supporting a two hundred megawatt data center in 274 00:15:28.879 --> 00:15:32.080 twenty twenty one for Google in Nevada. That was monstrous 275 00:15:32.120 --> 00:15:34.799 in twenty twenty one and in the desert, and we 276 00:15:34.799 --> 00:15:36.559 were like, what's going on. We had just like this 277 00:15:36.679 --> 00:15:40.519 light bulb moment where we said, the hierarchy of needs 278 00:15:40.639 --> 00:15:45.039 for data centers is changing to power first, and that's 279 00:15:45.120 --> 00:15:48.840 right up our street. So we looked across the landscape 280 00:15:48.879 --> 00:15:52.799 of the US industry, which hadn't gone hyper scale really, 281 00:15:52.799 --> 00:15:56.559 and AI wasn't a thing. Post COVID five G was 282 00:15:56.600 --> 00:15:59.480 a thing. Netflix was a thing, Zoom was a thing, 283 00:15:59.519 --> 00:16:02.320 Teams thing, and that was driving a lot of growth 284 00:16:02.360 --> 00:16:05.159 in power need and their full capacity of data centers. 285 00:16:05.559 --> 00:16:07.960 But we saw beyond that. We just thought, this is 286 00:16:08.000 --> 00:16:12.679 an exorable trend. And we looked across the industry landscape 287 00:16:12.679 --> 00:16:15.759 and they were mostly property businesses, like there were real 288 00:16:15.840 --> 00:16:19.000 estate trusts, and they were triple net lease where power 289 00:16:19.039 --> 00:16:21.720 was a pass through and they just signed up to 290 00:16:21.759 --> 00:16:24.840 the local utility and passed the costs onto the data 291 00:16:24.879 --> 00:16:27.679 center operator. So what occurred to us was we just 292 00:16:27.759 --> 00:16:32.919 need to expand our development capability. We're already finding sites 293 00:16:32.919 --> 00:16:38.039 that can host massive gigawattscale supply solutions. Why don't we 294 00:16:38.080 --> 00:16:42.240 expand our ability to find sites that also host these 295 00:16:42.360 --> 00:16:45.279 data center Think back to what I said before, We 296 00:16:45.360 --> 00:16:48.960 needed to get physical because the world was virtual, and 297 00:16:49.000 --> 00:16:51.480 in a virtual ppa world, you don't get paid for 298 00:16:51.600 --> 00:16:55.399 quality and you don't have any bargaining leverage when you're 299 00:16:55.440 --> 00:16:59.360 negotiating price and terms. But you do when you're physically 300 00:16:59.399 --> 00:17:03.080 delivering out of site where a customer needs access to 301 00:17:03.120 --> 00:17:05.640 all the things you're developing at that site. So, if 302 00:17:05.680 --> 00:17:08.640 you think about that collectively, we needed to go physical. 303 00:17:09.160 --> 00:17:12.519 We needed to expand our development capability to include places 304 00:17:12.519 --> 00:17:15.920 where you'd put a hyperscale data center that needed massive 305 00:17:16.000 --> 00:17:19.640 power supply, particularly renewables at the time, and needed to 306 00:17:19.680 --> 00:17:22.839 be well developed in the right location, at the right 307 00:17:23.079 --> 00:17:26.079 timing and the right price point. And so that's what 308 00:17:26.359 --> 00:17:30.079 gave us a huge conviction to go hard into the 309 00:17:30.160 --> 00:17:35.920 hyperscale data center Thematic empowered Land providing a customer solution 310 00:17:36.039 --> 00:17:38.920 for hyperscale data centers. Now, at the time, everyone said 311 00:17:38.960 --> 00:17:41.839 we were learning. They said, you guys are kidding. How 312 00:17:41.880 --> 00:17:45.279 can you waltz into the US data center industry and 313 00:17:45.359 --> 00:17:48.559 sort of crack it open with this idea of yours, 314 00:17:48.720 --> 00:17:51.759 and that inspires us being told we're mad or we 315 00:17:51.799 --> 00:17:55.240 can't do something. So I think our conviction wasn't wavered, 316 00:17:55.319 --> 00:17:57.880 and we went and did what we not know. We 317 00:17:57.920 --> 00:18:00.440 didn't know really about hyper scale data center busyesers and 318 00:18:00.480 --> 00:18:03.400 the customer perspective, and so we hired a whole bunch 319 00:18:03.400 --> 00:18:05.599 of people from the customer and we didn't need to 320 00:18:05.640 --> 00:18:07.880 be taught out to develop projects, but we needed to 321 00:18:08.680 --> 00:18:11.640 acquire the customer mindset to know what was the right 322 00:18:11.680 --> 00:18:13.880 thing to do at the right time. And that was 323 00:18:13.960 --> 00:18:16.559 really an important initiative that we took. So we started 324 00:18:16.640 --> 00:18:20.480 Rowan back in twenty twenty one in the US. I'm 325 00:18:20.519 --> 00:18:23.799 proud to say that from dollar one employee number one 326 00:18:24.039 --> 00:18:27.000 in that five years, Rowan is now number three data 327 00:18:27.039 --> 00:18:30.359 center developer in the United States, one of the fastest growing, 328 00:18:30.559 --> 00:18:32.960 has got three hundred and fifty people. You saw the 329 00:18:32.960 --> 00:18:36.799 deal we announced with Blackstone. But importantly, over that time, 330 00:18:37.279 --> 00:18:42.880 the power first is now obvious to everybody. It's obvious 331 00:18:42.960 --> 00:18:45.920 you've got data center company's buying power developers. It's the 332 00:18:45.960 --> 00:18:49.119 only thing that matters. It's the only thing that gets 333 00:18:49.160 --> 00:18:52.680 you a lease with any of the compute firms is 334 00:18:52.799 --> 00:18:55.839 power and timing of power, and so now it's obvious. 335 00:18:56.400 --> 00:19:00.519 But importantly, the delivery of the power solution, together with 336 00:19:00.599 --> 00:19:03.839 the land solution and the permit solution hasn't changed. It's 337 00:19:03.920 --> 00:19:07.200 become more acute and more obvious. And so the power 338 00:19:07.279 --> 00:19:11.079 element to the strategy is now more critical than ever. 339 00:19:11.119 --> 00:19:15.240 And actually people are paying big money and I'm paying 340 00:19:15.279 --> 00:19:18.599 a lot of value away to acquire that power capability 341 00:19:18.720 --> 00:19:22.240 along with the data center development piece. Probably it's our 342 00:19:22.279 --> 00:19:26.680 most successful investment. Is showing no signs of letting up. 343 00:19:27.279 --> 00:19:30.799 But I guess the most important thing beyond Quinbrook, of course, 344 00:19:31.119 --> 00:19:36.000 is it's entirely changed the supplied demand paradigm. And five 345 00:19:36.079 --> 00:19:39.960 years ago, no one was seeing the demand curve tilt 346 00:19:40.039 --> 00:19:43.599 up as aggressively as we're now seeing it, and we 347 00:19:43.640 --> 00:19:47.559 are in supply demand equilibria markets. From a pricing perspective, 348 00:19:47.559 --> 00:19:51.279 that's what drives the price and value of electricity in particular, 349 00:19:51.920 --> 00:19:56.799 and therefore data centers are having the single largest impact 350 00:19:57.119 --> 00:20:04.119 on affordability on available of capacity. Competition for capacity. You're 351 00:20:04.160 --> 00:20:09.160 seeing it in acute political reaction, in community reaction, in 352 00:20:09.279 --> 00:20:13.799 places where capacity is being saturated or is overbuilt. So 353 00:20:13.960 --> 00:20:16.960 this is really the issue of our age. Because it 354 00:20:17.000 --> 00:20:20.559 affects everything, you can't ignore it. Fortunately for us, we're 355 00:20:20.559 --> 00:20:22.720 in the middle of it up to our eyeballs. That's 356 00:20:22.759 --> 00:20:25.200 where we'd rather view the game from inside the tent 357 00:20:25.759 --> 00:20:29.960 because it is so fundamentally important and influential to everything 358 00:20:30.160 --> 00:20:30.799 in the sector. 359 00:20:31.559 --> 00:20:35.200 David, I'm sort of curious about how far you go 360 00:20:35.319 --> 00:20:38.759 into this energy value chain within data centers and where 361 00:20:38.759 --> 00:20:41.640 I'm coming from, and this is I can understand what 362 00:20:41.680 --> 00:20:44.599 you're doing is you're bringing power to the meter, But 363 00:20:44.640 --> 00:20:47.039 if you look between the meter and the chip, it's 364 00:20:47.079 --> 00:20:50.200 all electrics at the end of the day, power electron acity. 365 00:20:50.240 --> 00:20:53.119 You've got capacitors in there, you've got batteries in there. 366 00:20:53.359 --> 00:20:55.960 Do you vertically integrate more into that or do you 367 00:20:56.039 --> 00:20:58.519 just leave the hyperscalers through that or how do you 368 00:20:58.519 --> 00:20:58.799 see that? 369 00:20:59.680 --> 00:21:03.559 Well, people talk about the hyperscale is like they're amorphous. 370 00:21:03.720 --> 00:21:04.000 They're not. 371 00:21:04.920 --> 00:21:07.000 Every single one of them is different in how they 372 00:21:07.039 --> 00:21:12.200 approach their power strategy. But the pressures of time forcing expediency, 373 00:21:12.279 --> 00:21:15.720 which means the more you're able to do, the more 374 00:21:15.839 --> 00:21:18.720 valuable you are at this moment in time and So 375 00:21:19.559 --> 00:21:22.160 if you have long lead equipment that they don't have, 376 00:21:22.279 --> 00:21:26.880 if you have development capability, if you're able to provide 377 00:21:27.039 --> 00:21:31.000 behind the meda capacity, whether that's truck mounded gts or 378 00:21:31.079 --> 00:21:34.279 its batteries, or you've got a track record in you've 379 00:21:34.319 --> 00:21:37.319 got a long duration battery, you've got any of these things, 380 00:21:37.319 --> 00:21:39.319 you've got, the more tools you've got in your bag 381 00:21:39.440 --> 00:21:42.880 to solve their power issue, because they still think of 382 00:21:42.920 --> 00:21:45.960 it like as a customer should power to the chip 383 00:21:46.039 --> 00:21:49.759 or power at the chip. That's what drives their business. 384 00:21:49.759 --> 00:21:52.880 That's what they need, and so they don't want to 385 00:21:52.920 --> 00:21:56.680 have to compromise on that journey. But now the next 386 00:21:56.720 --> 00:21:59.920 single biggest shift in the industry because of grid can 387 00:22:00.519 --> 00:22:02.640 community opposition is you've got to bring your own power. 388 00:22:03.279 --> 00:22:08.000 So now we're going through another evolution of the solution required, 389 00:22:08.599 --> 00:22:10.799 which I think is a partial answer to your question 390 00:22:11.559 --> 00:22:14.680 that the hyperscalers can't just think about power at the 391 00:22:14.759 --> 00:22:18.240 chip anymore. They have to be accommodating to now some 392 00:22:18.400 --> 00:22:22.519 of the constraints of behind the meta solutions for power acceleration. 393 00:22:23.160 --> 00:22:26.319 They may get grid power five years from now, but 394 00:22:26.640 --> 00:22:31.079 the behind the meta solution has imperfections. The power quality 395 00:22:31.200 --> 00:22:35.559 isn't necessarily as reliable as grid power, but that's Ford 396 00:22:35.559 --> 00:22:40.279 seeing compromises, and so that's changing the nature of the 397 00:22:40.319 --> 00:22:44.839 engagement between the behind the meta power supplier and the hyperscaler. 398 00:22:45.279 --> 00:22:47.680 Some of the hyper scalers are massively building out their 399 00:22:47.720 --> 00:22:52.319 internal power teams because they need their own delivery capability. 400 00:22:52.680 --> 00:22:55.720 That doesn't make the solution any different to whether it's 401 00:22:55.759 --> 00:22:58.640