Speaker 1: With Laurent's segle and from London and Gerard read from Berlin.
Speaker 2: This is redefining energy today.
Speaker 1: On Redefining Energy, Laurno. We're going to bring an old
Speaker 1: friend back on the show, aren't we.
Speaker 3: Yes, it's David's Casebrook, the Brook in queen Brook and
Speaker 3: reading on the show five years ago, very popular episode
Speaker 3: episode sixty six. The things have changed so much so
Speaker 3: it was probably time to bring in and discuss all
Speaker 3: this data center and the revolution of twenty fourteen power development.
Speaker 1: Yeah. I think that's what I love about David is
Speaker 1: these guys have been at the forefront of this renewable
Speaker 1: stuff for twenty five years over and I mean always
Speaker 1: at the forefront of that. They're not just an infrastructure
Speaker 1: investor really are. They're local and sort of saying, well,
Speaker 1: where's the future going? And that's creator. Yeah, we need
Speaker 1: to have Drap back on again. Yeah.
Speaker 3: And for the people who don't know queen Brook, it's
Speaker 3: a mid size specialties fun They have executed twenty seven
Speaker 3: billion dollars two hundred and forty projects. They've built more
Speaker 3: than forty gigawad operating across US, UK and Australia, and
Speaker 3: they're so good. Definitely punching above their weight. And of
Speaker 3: course at some point we're going to enter in the
Speaker 3: data center realm. And here they've developed out of thin
Speaker 3: air a company called Rowan, so you can hear about Rowan,
Speaker 3: which is one of the top three successful data centered
Speaker 3: developer in America. And they just signed a Chinamos did
Speaker 3: with Blackstone one billion dollars. Very very impressive. I'm keen
Speaker 3: to hear what David is to.
Speaker 1: Say, So let's bring another show.
Speaker 3: David, Welcome back to the show.
Speaker 2: It's so nice to see you guys again. I can't
Speaker 2: believe it's been this long. Always a pleasure to talk
Speaker 2: to you too.
Speaker 1: Well, David, maybe just kick off this and I think
Speaker 1: actually the last half another show was almost five years ago. Yes,
Speaker 1: you've been in this renewable space for almost a quarter
Speaker 1: of us and shit at this point in time. But
Speaker 1: I'd love to hear what's changed over the last five
Speaker 1: years for you, and then you know, we can probably
Speaker 1: dig a little bit deeper into Quinn Brock and what
Speaker 1: you're doing differently and then really talk a little bit
Speaker 1: more about the future. Now, that's what we'd love to
Speaker 1: sort of go through today. But startup, and what are
Speaker 1: the big things that you look at and say, wow,
Speaker 1: this is what's changed. Yeah.
Speaker 2: Look, I would say if I go back five years,
Speaker 2: I'm thinking, you know, twenty one, twenty two. Back then,
Speaker 2: the big things that we were pondering were getting out
Speaker 2: of wind on shore wind and into solar and storage
Speaker 2: in a fairly big way. And the projects that we
Speaker 2: were doing were persuading us in that direction, largely because
Speaker 2: on the solar and storage side, you know, with our
Speaker 2: Gemini project in Nevada, which it was just cost based,
Speaker 2: we were looking at the potency of those two technologies
Speaker 2: combined together. There have been a lot cheaper since then,
Speaker 2: but of course both in time of day, but in
Speaker 2: overall Lcoe they were unbeatable. And on the other hand,
Speaker 2: we were finishing up about a five year build of
Speaker 2: our Scout wind platform and it was occurring to us
Speaker 2: that we saw that the fund was going out of
Speaker 2: on sure wind from a risk adjusted return perspective. For
Speaker 2: a couple of reasons, particularly in the US, we saw
Speaker 2: it as a cluster technology, which means everyone develops it
Speaker 2: in the same location, and that Tier one wind sites
Speaker 2: and then did Tier two, etc. But that particularly in
Speaker 2: the US with the production tax credits led to price cannibalization,
Speaker 2: and so it was a very very difficult period to
Speaker 2: think about sort of consistent returns with so much volatility
Speaker 2: being driven by too much capacity going into the same
Speaker 2: node or into the same connection. And of course then
Speaker 2: we started to see price separation between your connection point
Speaker 2: and irrelevant pricing node from a customer point of view,
Speaker 2: So to us, you can't really diversify yourself out of that.
Speaker 2: Very difficult back then to contract your way out of
Speaker 2: that from a hedging perspective, and so there was really
Speaker 2: a really huge turning point for us was the decision
Speaker 2: to get out of on shore wind and into solar
Speaker 2: battery storage, which at the time and in the five
Speaker 2: years since, we saw it back then as the engine
Speaker 2: room of the energy transition. We were a pioneer of
Speaker 2: solar and DC coupled storage, and that was with four
Speaker 2: hour solution back then. Everything that's happened since then, I mean,
Speaker 2: it's more than eighty percent of most grid cues. It's
Speaker 2: now the dominant technology combination, and certainly in the markets
Speaker 2: where we're active. And so I would say that technology
Speaker 2: trend based on cost. The sheer cost competitiveness and the
Speaker 2: time of day service that solar and storage could deliver
Speaker 2: because turned out to be absolutely right.
Speaker 3: So in the past five years, the financing condition, so
Speaker 3: you've seen more investors come in, the risk profile changing.
Speaker 3: How has it evolved because at the same time the
Speaker 3: interest rates have gone up.
Speaker 2: Yeah, I'd say it. In the early days, the novelty
Speaker 2: was in being in the sector itself, and so there
Speaker 2: was reasonable return capture through the whole development cycle. And
Speaker 2: when money was cheap, M and A strategies and renewables
Speaker 2: attracted a lot of institutional capital. There's a lot of
Speaker 2: new entrants coming in. I mean, generalists were turning into
Speaker 2: renewable infrastructure. Generalists were having renewables represent the largest component
Speaker 2: of their funds, of their core and their core plus funds,
Speaker 2: and so money started to flow into the sector. Generalists
Speaker 2: took significant amount of that capital. M and A strategies
Speaker 2: really dominated a lot of the capital flows that went
Speaker 2: into the sector, and there were reasonable returns I mean,
Speaker 2: in a relative sense, reasonable chance to be had through
Speaker 2: those M and A strategies. I think in that time
Speaker 2: we've seen a lot of capacity build, a lot of
Speaker 2: capital flow, both on the equity and debt side to
Speaker 2: a point where where we are today, a lot of
Speaker 2: the institutional capital that we speak to around the world
Speaker 2: has kind of got their allocation of what they would
Speaker 2: sort of refer to as generic megawatts or the sort
Speaker 2: of the more or maybe the core plus strategies that
Speaker 2: have suffered a lot with interest rates given these discounter
Speaker 2: cash flow assets. As interest rates go up, wax go up,
Speaker 2: navs go down, that's put a lot of pressure on
Speaker 2: some of those historic sort of M and A strategies,
Speaker 2: particularly things that were bought aggressively in competitive auctions. They
Speaker 2: haven't performed very well. That's been a little bit of
Speaker 2: appall over renewables sitting in their portfolios. That has tempered
Speaker 2: appetite for more. Fast forward to kind of where we
Speaker 2: are today, I'd say from where we sit, particularly a
Speaker 2: lot of institutional capital looking for differentiation in the strategy.
Speaker 2: They're looking for differentiation in the returns. They're looking for
Speaker 2: new ways to play infrastructure within the energy transition. So
Speaker 2: we're kind of in the age of the specialist and
Speaker 2: we're in the age of differentiation. And the other thing
Speaker 2: I would say is you look at the evolution of
Speaker 2: investment product that's been created and offered to the capital
Speaker 2: that flows into the sector back not that maybe five
Speaker 2: years ago you had solar funds and you had very
Speaker 2: technology specific investment funds that we're doing kind of one
Speaker 2: thing in either one country or a number of countries.
Speaker 2: And I think over that time what we've seen is
Speaker 2: investors now are attracted more to either technology agnostic, multi
Speaker 2: technology or diversified strategies that are across more than one
Speaker 2: way to play the energy transition. So that's part of
Speaker 2: that differentiation, and I think it's also a function of
Speaker 2: the fact that the return on investment and return on
Speaker 2: equity across technologies has largely commoditized. And so whilst we
Speaker 2: know that there are significant differences technologically and performance wise
Speaker 2: in the way these assets behave and a lot of cases,
Speaker 2: a lot of stres srategies, you're not getting rewarded for
Speaker 2: that differential. And so the choice in terms of the
Speaker 2: fundamental risk beta, whether it's construction, whether it's operational, you're
Speaker 2: not getting compensated for that, particularly using sort of M
Speaker 2: and A strategies. And so the market has sort of
Speaker 2: tended to shift towards more value add where the investor
Speaker 2: is investing more for sponsors that are differentiated in the
Speaker 2: way they go about creating a higher return and sort
Speaker 2: of mitigating their risk position on the downside, and moving
Speaker 2: away from those generic megawats that sort of still necessary
Speaker 2: for decarbonization. It's just not as interesting for investors to
Speaker 2: deploy a lot more capital in that direction. It's far
Speaker 2: more going into the value add strategies.
Speaker 1: David May, I just follow on this because the one
Speaker 1: thing that I would see when I'm looking at a
Speaker 1: lot of your competitors is exactly what you said, I'm
Speaker 1: going to be more brutal than what you said. Is
Speaker 1: all they've done is they have run power plans from
Speaker 1: Excel sheets for the last fifteen to twenty years. Now.
Speaker 1: You've been very different now because I even just go
Speaker 1: back to the fact that you bought a flexibility platform,
Speaker 1: you realize that you had to sort of become an
Speaker 1: energy services company, and you didn't use that phrase, and
Speaker 1: I'm just curious why you didn't have that phrase energy
Speaker 1: such system.
Speaker 2: That's a great question. I mean, it probably touched on
Speaker 2: something I should have mentioned in response to Laurren's question earlier,
Speaker 2: which is what's happened in the last five years for
Speaker 2: US is we're thinking thematically these days, and we're investing
Speaker 2: thematically because at the end of the day, our job
Speaker 2: is to deliver the same thing from an investment outcome
Speaker 2: and performance perspective. It's a rinse and repeat exercise. But
Speaker 2: of course, in terms of our return targets and what
Speaker 2: we're offering for our investment services doesn't really change from
Speaker 2: decade to decade mid teens plus, but what we have
Speaker 2: to do to achieve it has changed fundamentally a year
Speaker 2: to year, vintage to vintage, fund to fund, market to market.
Speaker 2: We have to to reinvent our strategy each time thematically,
Speaker 2: and so we've learned to invest now more by choosing
Speaker 2: a select number of thematics which are directionally where we
Speaker 2: think we can apply our skills and generate these value
Speaker 2: add returns. And so we don't think in market terms,
Speaker 2: or we don't think specifically in market or country terms.
Speaker 2: We think thematically and we try to apply those thematics
Speaker 2: across all of the markets where we are active. And
Speaker 2: the most significant part of that is that our strategic
Speaker 2: focus has shifted entirely to being customer centric, so we
Speaker 2: are solving problems and to solve problems for customers. Customers
Speaker 2: don't care what technology choices you make. They care about reliability,
Speaker 2: they care about impact, they care about cost, and so
Speaker 2: when we think about the tools we need in our toolkit,
Speaker 2: they are all the things you mentioned. Yes, of course,
Speaker 2: we have to have full suite development capability across all
Speaker 2: all the bank of all proven technologies. We need to
Speaker 2: be able to mix them and compliment them to achieve
Speaker 2: a supply profile that matches what the customer needs. But
Speaker 2: then we need to do more than that. We need
Speaker 2: to algorithmically optimize batteries using AI. We need to do
Speaker 2: that through the whole project development suite, and we need
Speaker 2: access to flexibility. We need to fill in the gaps
Speaker 2: going back to what I said in twenty two, the
Speaker 2: missing hours problem. Since then, we've developed an eight hour battery,
Speaker 2: now working on a twelve hour battery. It's purely designed
Speaker 2: to be able to deliver that twenty four to seven
Speaker 2: profile to data centers or steel mills or smelters, because
Speaker 2: that's the problem we're increasingly trying to solve. We're not
Speaker 2: trying to develop mega watts just to stick into the grid.
Speaker 2: We're trying to develop a services and a solutions project.
Speaker 2: Or combination of projects that solve a customer's problem. So
Speaker 2: I'd say over the last five years we have pivoted
Speaker 2: entirely to being thematically driven solutions business in the energy transition.
Speaker 1: Can I just dig on that a little bit and
Speaker 1: after question? Yeah, cool and again a bit a bit provocative.
Speaker 1: Here does that really sit in a fund structure? And
Speaker 1: where I'm coming from ante is at the end of
Speaker 1: the day, you've got a fund. At some point you're
Speaker 1: trying to get a return to someone to that song, right,
Speaker 1: So tell me how does that of fit in? And
Speaker 1: where is the secret SAP and all of our.
Speaker 2: The secret source is that the capital lives in the
Speaker 2: fund and that's where it belongs because that's our fiduciary business.
Speaker 2: But we have an equivalent number of people over one
Speaker 2: hundred and hour in our project development, construction, design, operations, procurement.
Speaker 2: That's the secret source. We are finding over time. The
Speaker 2: only way we can consistently deliver differentiated value add returns
Speaker 2: with proprietary thematics that we are thinking about every day
Speaker 2: that solve customer problems is we have to be able
Speaker 2: to deliver those solutions ourselves increasingly, and so today across
Speaker 2: the Quinnrook pipeline. Even compared to say, five years ago,
Speaker 2: we were way more dependent on portfolio businesses that we
Speaker 2: were creating ourselves to execute a certain thematic. These days,
Speaker 2: we're still doing that, but more than half of our
Speaker 2: portfolio now is things that Quimrook itself is developing, site acquisition,
Speaker 2: grid connections, permitting, design, procurement.
Speaker 1: Now.
Speaker 2: Not only that gives us the ability to retain a
Speaker 2: lot of value and offer that value back up to
Speaker 2: our investors, but we're pursuing proprietary thematics that we don't
Speaker 2: want the market to know about, necessarily because we want
Speaker 2: to continue to be a first mover. So to answer
Speaker 2: your question, if you were just a fund manager, I
Speaker 2: don't think you can do all of that that needs
Speaker 2: to be done. That when I say we are thematically driven,
Speaker 2: we're customer centric. We can solve problems and create solutions.
Speaker 2: As just as a fund manager, it's very very difficult
Speaker 2: to do that. You can do it via portfolio company
Speaker 2: and assemble portfolio companies, but of course you've got to
Speaker 2: sell those portfolio companies at some point in time and
Speaker 2: then you lose all that capability. We still do that,
Speaker 2: you know, we still turn over our portfolio companies, but
Speaker 2: what we've done internally is create the enduring capability, the
Speaker 2: enduring skill set from project development side, acquisition grid. These
Speaker 2: are things that are common to everything that we do,
Speaker 2: and so being able to have that in perpetuity I
Speaker 2: think is really really critical. It's a critical differentiator for us.
Speaker 3: Let's talk about the elephant in the rumor, well, not
Speaker 3: the different the herb of elephants, which well she was
Speaker 3: not pronounced four years ago, a Berlin pass data sentels
Speaker 3: and that has been a fantastic driver of your gross recently.
Speaker 3: Rather just shoveling make out what our work to the
Speaker 3: grid and let the grid take care of it more
Speaker 3: or less, let's talk about the past five years and
Speaker 3: our integration in the hyperscalar universe.
Speaker 2: Yeah, it is the biggest topic today, wasn't back in
Speaker 2: twenty one when we were on the blackboard trying to
Speaker 2: figure out I mean, in twenty one was obvious that
Speaker 2: hyperscale data centers were the largest virtual buyers of renewable power. Right,
Speaker 2: they all had net zero commitments, they were all doing
Speaker 2: the biggest PPAs. But one of the things that we
Speaker 2: noticed was that data centers were getting bigger. I mean,
Speaker 2: Gemini was supporting a two hundred megawatt data center in
Speaker 2: twenty twenty one for Google in Nevada. That was monstrous
Speaker 2: in twenty twenty one and in the desert, and we
Speaker 2: were like, what's going on. We had just like this
Speaker 2: light bulb moment where we said, the hierarchy of needs
Speaker 2: for data centers is changing to power first, and that's
Speaker 2: right up our street. So we looked across the landscape
Speaker 2: of the US industry, which hadn't gone hyper scale really,
Speaker 2: and AI wasn't a thing. Post COVID five G was
Speaker 2: a thing. Netflix was a thing, Zoom was a thing,
Speaker 2: Teams thing, and that was driving a lot of growth
Speaker 2: in power need and their full capacity of data centers.
Speaker 2: But we saw beyond that. We just thought, this is
Speaker 2: an exorable trend. And we looked across the industry landscape
Speaker 2: and they were mostly property businesses, like there were real
Speaker 2: estate trusts, and they were triple net lease where power
Speaker 2: was a pass through and they just signed up to
Speaker 2: the local utility and passed the costs onto the data
Speaker 2: center operator. So what occurred to us was we just
Speaker 2: need to expand our development capability. We're already finding sites
Speaker 2: that can host massive gigawattscale supply solutions. Why don't we
Speaker 2: expand our ability to find sites that also host these
Speaker 2: data center Think back to what I said before, We
Speaker 2: needed to get physical because the world was virtual, and
Speaker 2: in a virtual ppa world, you don't get paid for
Speaker 2: quality and you don't have any bargaining leverage when you're
Speaker 2: negotiating price and terms. But you do when you're physically
Speaker 2: delivering out of site where a customer needs access to
Speaker 2: all the things you're developing at that site. So, if
Speaker 2: you think about that collectively, we needed to go physical.
Speaker 2: We needed to expand our development capability to include places
Speaker 2: where you'd put a hyperscale data center that needed massive
Speaker 2: power supply, particularly renewables at the time, and needed to
Speaker 2: be well developed in the right location, at the right
Speaker 2: timing and the right price point. And so that's what
Speaker 2: gave us a huge conviction to go hard into the
Speaker 2: hyperscale data center Thematic empowered Land providing a customer solution
Speaker 2: for hyperscale data centers. Now, at the time, everyone said
Speaker 2: we were learning. They said, you guys are kidding. How
Speaker 2: can you waltz into the US data center industry and
Speaker 2: sort of crack it open with this idea of yours,
Speaker 2: and that inspires us being told we're mad or we
Speaker 2: can't do something. So I think our conviction wasn't wavered,
Speaker 2: and we went and did what we not know. We
Speaker 2: didn't know really about hyper scale data center busyesers and
Speaker 2: the customer perspective, and so we hired a whole bunch
Speaker 2: of people from the customer and we didn't need to
Speaker 2: be taught out to develop projects, but we needed to
Speaker 2: acquire the customer mindset to know what was the right
Speaker 2: thing to do at the right time. And that was
Speaker 2: really an important initiative that we took. So we started
Speaker 2: Rowan back in twenty twenty one in the US. I'm
Speaker 2: proud to say that from dollar one employee number one
Speaker 2: in that five years, Rowan is now number three data
Speaker 2: center developer in the United States, one of the fastest growing,
Speaker 2: has got three hundred and fifty people. You saw the
Speaker 2: deal we announced with Blackstone. But importantly, over that time,
Speaker 2: the power first is now obvious to everybody. It's obvious
Speaker 2: you've got data center company's buying power developers. It's the
Speaker 2: only thing that matters. It's the only thing that gets
Speaker 2: you a lease with any of the compute firms is
Speaker 2: power and timing of power, and so now it's obvious.
Speaker 2: But importantly, the delivery of the power solution, together with
Speaker 2: the land solution and the permit solution hasn't changed. It's
Speaker 2: become more acute and more obvious. And so the power
Speaker 2: element to the strategy is now more critical than ever.
Speaker 2: And actually people are paying big money and I'm paying
Speaker 2: a lot of value away to acquire that power capability
Speaker 2: along with the data center development piece. Probably it's our
Speaker 2: most successful investment. Is showing no signs of letting up.
Speaker 2: But I guess the most important thing beyond Quinbrook, of course,
Speaker 2: is it's entirely changed the supplied demand paradigm. And five
Speaker 2: years ago, no one was seeing the demand curve tilt
Speaker 2: up as aggressively as we're now seeing it, and we
Speaker 2: are in supply demand equilibria markets. From a pricing perspective,
Speaker 2: that's what drives the price and value of electricity in particular,
Speaker 2: and therefore data centers are having the single largest impact
Speaker 2: on affordability on available of capacity. Competition for capacity. You're
Speaker 2: seeing it in acute political reaction, in community reaction, in
Speaker 2: places where capacity is being saturated or is overbuilt. So
Speaker 2: this is really the issue of our age. Because it
Speaker 2: affects everything, you can't ignore it. Fortunately for us, we're
Speaker 2: in the middle of it up to our eyeballs. That's
Speaker 2: where we'd rather view the game from inside the tent
Speaker 2: because it is so fundamentally important and influential to everything
Speaker 2: in the sector.
Speaker 1: David, I'm sort of curious about how far you go
Speaker 1: into this energy value chain within data centers and where
Speaker 1: I'm coming from, and this is I can understand what
Speaker 1: you're doing is you're bringing power to the meter, But
Speaker 1: if you look between the meter and the chip, it's
Speaker 1: all electrics at the end of the day, power electron acity.
Speaker 1: You've got capacitors in there, you've got batteries in there.
Speaker 1: Do you vertically integrate more into that or do you
Speaker 1: just leave the hyperscalers through that or how do you
Speaker 1: see that?
Speaker 2: Well, people talk about the hyperscale is like they're amorphous.
Speaker 1: They're not.
Speaker 2: Every single one of them is different in how they
Speaker 2: approach their power strategy. But the pressures of time forcing expediency,
Speaker 2: which means the more you're able to do, the more
Speaker 2: valuable you are at this moment in time and So
Speaker 2: if you have long lead equipment that they don't have,
Speaker 2: if you have development capability, if you're able to provide
Speaker 2: behind the meda capacity, whether that's truck mounded gts or
Speaker 2: its batteries, or you've got a track record in you've
Speaker 2: got a long duration battery, you've got any of these things,
Speaker 2: you've got, the more tools you've got in your bag
Speaker 2: to solve their power issue, because they still think of
Speaker 2: it like as a customer should power to the chip
Speaker 2: or power at the chip. That's what drives their business.
Speaker 2: That's what they need, and so they don't want to
Speaker 2: have to compromise on that journey. But now the next
Speaker 2: single biggest shift in the industry because of grid can
Speaker 2: community opposition is you've got to bring your own power.
Speaker 2: So now we're going through another evolution of the solution required,
Speaker 2: which I think is a partial answer to your question
Speaker 2: that the hyperscalers can't just think about power at the
Speaker 2: chip anymore. They have to be accommodating to now some
Speaker 2: of the constraints of behind the meta solutions for power acceleration.
Speaker 2: They may get grid power five years from now, but
Speaker 2: the behind the meta solution has imperfections. The power quality
Speaker 2: isn't necessarily as reliable as grid power, but that's Ford
Speaker 2: seeing compromises, and so that's changing the nature of the
Speaker 2: engagement between the behind the meta power supplier and the hyperscaler.
Speaker 2: Some of the hyper scalers are massively building out their
Speaker 2: internal power teams because they need their own delivery capability.
Speaker 2: That doesn't make the solution any different to whether it's
Speaker 2: a third party solution or any how solution. You're still
Speaker 2: constrained by the art the possible technologically behind the meta
Speaker 2: at a certain point. But technology is evolving in a
Speaker 2: way that's helping that, so real time power management, algorithmic
Speaker 2: optimization of the interface between the load and the supply point.
Speaker 2: But again, come back, I'll like to take the conversation
Speaker 2: all the way back to episode sixty six, the missing
Speaker 2: hours and being behind the meter in twenty four seven.
Speaker 2: Our challenge right now and a lot of the projects
Speaker 2: that we're developing is we're getting very close to twenty
Speaker 2: four to seven power. It isn't the way we thought
Speaker 2: we would be there. Necessarily, long duration batteries have taken
Speaker 2: a bit longer to get there, but we're probably at
Speaker 2: the cutting edge of that. But the urgency of the
Speaker 2: power needs, particularly of the data center industry at the moment,
Speaker 2: for particularly AI compute means you don't have time for
Speaker 2: a lot of that evolution, and you have to be
Speaker 2: more expedient in that solution, and that's why you're seeing
Speaker 2: this move to short term gts. Eventually we think they'll
Speaker 2: be and they're still doing backup generators in a lot
Speaker 2: of their projects. They don't have the time to experiment
Speaker 2: with some of these new solutions, so expediency has forced
Speaker 2: us to fall back on what we know. But the
Speaker 2: innovation really is in the software and the control systems
Speaker 2: that are able to do multi technology combinations of integrated
Speaker 2: solution behind the meta. That's the next biggest shift that
Speaker 2: we're seeing. What they say, necessity is the mother of invention,
Speaker 2: and so now we're seeing a whole plethora of solutions
Speaker 2: claiming to solve that problem for behind the meta supplied
Speaker 2: to energy intensive load. That's I think one of the
Speaker 2: most fascinating developments we'll see over the next couple of.
Speaker 1: David, maybe just one last question, because you're working internationally,
Speaker 1: can you talk about the differences in the markets here
Speaker 1: in particular, I'm sort of looking at the difference between
Speaker 1: the you know, the US market and obviously the urine market,
Speaker 1: but you're also in the Australian market as well.
Speaker 2: Yeah, we can pursue the same thematics with different gusto
Speaker 2: in each one at any given particular point in time.
Speaker 1: But look, the.
Speaker 2: US is still a very very attractive market if you
Speaker 2: can pivot, strategically, pivot and tactically pivot. Putting the data
Speaker 2: center thing aside, which of course is the most acute
Speaker 2: in the US, we're still doing a lot of solar
Speaker 2: and batteries, and we're still doing a lot of particularly
Speaker 2: green fuels we find very attractive in the United States.
Speaker 2: Despite the tariff profile they're making construction costs and procurement
Speaker 2: cost more expensive, but there are still very fertile territories
Speaker 2: to be exploring in the US market. So I would
Speaker 2: say we have slightly detuned our focus there in terms
Speaker 2: of overall capital allocation. It's far more specific in the
Speaker 2: things that we're doing. Liquid fuel solutions, for decarbonizing, data
Speaker 2: center backup generation, things like that we find fascinating, and
Speaker 2: we're going all in on those sectors, which we think
Speaker 2: the US is probably the best market in the world
Speaker 2: I'd say in Europe the overall return profile has improved
Speaker 2: for what we do anyway from what it was five
Speaker 2: years ago, where we stuck to our needing in the UK.
Speaker 2: UK it's a tougher market to develop to the return
Speaker 2: targets that we seek. We're seeing some pockets of opportunity
Speaker 2: now merging into Coloneal Europe that wouldn't have met our
Speaker 2: return targets before, and I think that's partly out of
Speaker 2: necessity as well. And so I think that the opportunity
Speaker 2: set is broadening in Europe, it's still not quite at
Speaker 2: the same level of return opportunity for the sectors that
Speaker 2: we're pursuing in the United States. And the one big
Speaker 2: change in the last five years I also should have
Speaker 2: mentioned the first conversation is Australia. In our opinion for
Speaker 2: what we do right now, Australia is the most attractive
Speaker 2: market in the OECD for US to develop these customer
Speaker 2: centric solutions aimed at industrial decarbonization. At this moment in time,
Speaker 2: Australia is top of the pops for US across all
Speaker 2: of our markets. And so the ability to pivot and
Speaker 2: refocus your efforts from your thematic focus and the capital
Speaker 2: deployment in the markets that are offering you that value
Speaker 2: added returnal opportunities are hugely employed. It has always been
Speaker 2: important because this market, as you know we met back
Speaker 2: in the nineties, has moved in a series of closing
Speaker 2: and opening windows and doors, and whether that's technologically or regulatory,
Speaker 2: or market or customer driven, it's really the ability to
Speaker 2: anticipate those openings and anticipate those closings. And right now
Speaker 2: it's actually a very fertile time to be investing in
Speaker 2: all of those markets, but very subject to what you
Speaker 2: choose to do.
Speaker 1: David, can I just ask you very quick about Australia.
Speaker 1: There is the Australian opportunity there specifically because the fact
Speaker 1: that just solar and batteries makes economic sense given just
Speaker 1: the high levels of radiation or is it something else.
Speaker 2: It's a combination of things.
Speaker 1: You know.
Speaker 2: Firstly, they're closing a huge amount of coal plant in
Speaker 2: Australia and it just needs to be replaced. Number two,
Speaker 2: we don't tariff solar and batteries in Australia. We import
Speaker 2: them all from China pretty much, but we get them
Speaker 2: at wholesale compare they're triple the cost in the United States. Yeah,
Speaker 2: we've got one of the best solar radiances anywhere in
Speaker 2: the world. That solar irradiance and the land and now
Speaker 2: transmission system in certain areas can be developed at scale.
Speaker 2: In areas where we have a carbon intensive, electricity intensive
Speaker 2: industry that's desperately seeking to decarbonize, located right next to
Speaker 2: deepwater export ports to law Asia, it's just got a
Speaker 2: lot going for it. And I give this speech at
Speaker 2: conferences going back to Adam Smith and the Wealth of
Speaker 2: Nations where we talked about a country's factor endowment and
Speaker 2: you think about what is wealth at a national level? Really,
Speaker 2: where's its genesis? These days it's no different And that's
Speaker 2: what really where Australia is coming into its own at
Speaker 2: the moment. It's got everything, It's got an abundance of everything.
Speaker 2: Its endowment is all of the above and a little
Speaker 2: bit like the US as well, very different to Europe,
Speaker 2: very different to the UK, very different islands, very different
Speaker 2: to Colonel Europe. It isn't and all of the above abundance.
Speaker 2: But I think if you think about how you exploit
Speaker 2: the energy transition profitably critical minerals supply chains, Australia sits
Speaker 2: right at the very intersection of this next era of
Speaker 2: industrial resiliency and self sufficiency.
Speaker 3: David, it's a treat to have you. Unfortunately you need
Speaker 3: to wait another five years to come back.
Speaker 2: Fair enough, we'll do another retrospective.
Speaker 1: No, it's really great.
Speaker 3: So congratulation on your work and we always learn a
Speaker 3: lot and I like the fact that you are a
Speaker 3: first mover. That's great. So congratulations and thank you for
Speaker 3: coming on the show.
Speaker 2: Thank you, Jess Pleasure as always, thanks for having me.
Speaker 1: Yeah, thanks for that, Dave Lauren. I'm always blown away
Speaker 1: by David because listen, my job is also to look
Speaker 1: in the future and see what's going on. But I
Speaker 1: talk about it, he doesn't. It's just very impressive, you know.
Speaker 1: That's all. I would just say.
Speaker 3: Superb that's the title of the episode, and it's probably
Speaker 3: the most important things that he has said. It's this
Speaker 3: world of virtual we need to go physical.
Speaker 1: Absolutely, we need to go physical. Well set exactly.
Speaker 2: Thank you for listening to Redefining Energy.
Speaker 1: Don't forget to read the show and subscribe on Apple Podcasts, Spotify,
Speaker 1: or the platform of your choice.