WEBVTT 1 00:00:04.759 --> 00:00:07.599 With a rund segle end from London and Gerard read 2 00:00:07.679 --> 00:00:08.320 from Berlin. 3 00:00:08.800 --> 00:00:10.720 This is redefining. 4 00:00:10.199 --> 00:00:15.080 Energy today on refin Energy, George, we're going to talk 5 00:00:15.119 --> 00:00:19.039 about deal trends in MNA and energy financing. 6 00:00:19.559 --> 00:00:21.839 Absolutely, this is very important because we have a nice 7 00:00:21.879 --> 00:00:24.320 saying in the finance world follow the money. 8 00:00:24.480 --> 00:00:28.079 And here we're really following the money. But first of all, 9 00:00:28.120 --> 00:00:29.239 from our partner. 10 00:00:29.440 --> 00:00:32.799 A Bloco Energy is Europe's premier leaser of ten foot 11 00:00:32.880 --> 00:00:37.880 container mobile batteries built in Europe with COTL best LFP cells. 12 00:00:38.439 --> 00:00:43.759 A Bloco Energy serves fourteen European countries, including France, Germany 13 00:00:43.840 --> 00:00:47.039 and the UK. Our Bloco's batteries can be leased for 14 00:00:47.079 --> 00:00:50.280 any duration between six weeks and six years, and they 15 00:00:50.320 --> 00:00:54.079 are monitored by the Dutch award winning platform school a 16 00:00:54.200 --> 00:00:57.560 block O Energy. Make your life easier, make your business 17 00:00:57.560 --> 00:00:58.240 more flexible. 18 00:00:58.479 --> 00:01:02.000 Back to the show, and we have a wonderful guest 19 00:01:02.359 --> 00:01:05.400 that we loved a lot and came. Would you believe 20 00:01:05.400 --> 00:01:09.079 it's six years ago when we were just amateur podcaster. 21 00:01:11.000 --> 00:01:12.959 It was right at the beginning, just six years ago 22 00:01:13.000 --> 00:01:16.280 and we started. Yeah, unbelieva. Yeah, so I can't believe 23 00:01:16.319 --> 00:01:19.120 time flies that so much. Anyway, it's great to have 24 00:01:19.480 --> 00:01:22.680 Natasha Luther Jones again on the podcast. 25 00:01:23.079 --> 00:01:26.680 And for those few who don't know who Natasha is, 26 00:01:27.439 --> 00:01:32.439 she's partner Global Culture, Energy and Natural Resources at the 27 00:01:32.519 --> 00:01:37.480 law firm DLA Piper. But she's mostly known for a nickname, 28 00:01:37.680 --> 00:01:38.200 which is. 29 00:01:38.560 --> 00:01:41.959 The the quit a PPAs. 30 00:01:42.000 --> 00:01:44.680 But you're going to see we're gonna go much further 31 00:01:44.840 --> 00:01:46.040 than just PPAs. 32 00:01:46.319 --> 00:01:49.560 Yeah, that was the old nickname from six years ago. 33 00:01:51.120 --> 00:01:53.640 The world has changed anyway. It's actually great to have 34 00:01:53.719 --> 00:01:56.879 her to come on to talk about what has changed 35 00:01:57.120 --> 00:01:58.480 and what's hard and what's not. 36 00:01:59.120 --> 00:02:02.239 So a bit of music and then we bring her 37 00:02:02.319 --> 00:02:11.240 on the show. 38 00:02:16.879 --> 00:02:18.599 Natashet, it's great to have you on the show again. 39 00:02:18.639 --> 00:02:19.400 It's been a long while. 40 00:02:19.719 --> 00:02:21.879 Oh thank you for having me. It's nice to be 41 00:02:22.039 --> 00:02:23.520 back on the show with you both. 42 00:02:23.759 --> 00:02:27.240 Natasha. We look into the archive. You came episode twenty 43 00:02:27.240 --> 00:02:30.520 eight in June to or twenty and now we're episode 44 00:02:30.719 --> 00:02:34.319 to twenty two or something, So I mean, what a journey. 45 00:02:35.159 --> 00:02:38.159 And before you comment, I found a speech by Winston 46 00:02:38.280 --> 00:02:42.479 Churchill talking about six years. We may allow ourselves a 47 00:02:42.520 --> 00:02:46.080 brief payod of rejoicing, but let's us not forget for 48 00:02:46.159 --> 00:02:49.879 a moment the toilet efforts lie ahead. We have come 49 00:02:49.919 --> 00:02:54.599 through the worst of six years of suffering and peril, 50 00:02:55.400 --> 00:02:58.599 so that's a bit dramatic, but six years that's the 51 00:02:58.680 --> 00:02:59.759 length of World War Two. 52 00:03:01.159 --> 00:03:04.400 I have to say that a really interesting intro, Lauren. 53 00:03:04.680 --> 00:03:07.680 But you're absolutely right. A lot has changed since the 54 00:03:07.759 --> 00:03:10.439 last time I was on this podcast six years ago, 55 00:03:10.560 --> 00:03:13.800 including actually you two, and I'm not talking about the 56 00:03:13.800 --> 00:03:17.000 fact that we've all aged. I'm talking about how you 57 00:03:17.080 --> 00:03:20.080 two now become this sort of celebrity podcaster as it's 58 00:03:20.120 --> 00:03:22.960 some more professional than it was back during COVID in 59 00:03:23.000 --> 00:03:23.759 twenty twenty. 60 00:03:24.280 --> 00:03:26.360 I can't believe it's six years ago. I really can't. 61 00:03:26.360 --> 00:03:29.000 It's just unbelievable. Time flies when you haven't done. It's 62 00:03:29.000 --> 00:03:32.240 a pity about Lauren's Winston Churchill accent, doesn't it, because 63 00:03:32.240 --> 00:03:33.319 it was a really lovely quolt. 64 00:03:34.159 --> 00:03:34.360 Yeah. 65 00:03:34.400 --> 00:03:35.000 I agree. 66 00:03:35.479 --> 00:03:39.800 Let's dive into what's happening and how the market is changing, 67 00:03:39.919 --> 00:03:42.840 because you are in the art of it and you 68 00:03:42.960 --> 00:03:45.039 used to be the queen of PPA but now it's 69 00:03:45.199 --> 00:03:50.039 so much more complex sophisticated. So what are the trends 70 00:03:50.159 --> 00:03:53.639 you're seeing right now in terms of deal structure, deal 71 00:03:53.719 --> 00:03:55.759 financing all over Europe. 72 00:03:55.800 --> 00:03:58.479 If you look back over the last six years, a 73 00:03:58.520 --> 00:04:01.680 lot has changed globally, and many of your episodes have 74 00:04:01.800 --> 00:04:04.159 covered some of the things that we've all faced. I 75 00:04:04.199 --> 00:04:07.400 suppose what hasn't changed from a DLA Piper perspective is 76 00:04:07.400 --> 00:04:10.800 that I'm still here and I'm still running the energy practice. 77 00:04:11.039 --> 00:04:14.680 But DLAs now firmly established itsself as one of the 78 00:04:14.800 --> 00:04:18.680 largest global law firms in revenue terms, and over the 79 00:04:18.720 --> 00:04:21.040 last four or five years we've managed to move up 80 00:04:21.040 --> 00:04:23.839 to the league table, so we're like either number one 81 00:04:23.959 --> 00:04:27.399 or two for energy transition deals on M and A 82 00:04:27.519 --> 00:04:30.639 and PS. So it's allowed us to really see how 83 00:04:30.680 --> 00:04:36.000 the landscape operates globally. Where are those priorities now they 84 00:04:36.040 --> 00:04:40.519 are BEZ. Wow, it's mind blowing. Over the last couple 85 00:04:40.519 --> 00:04:44.120 of years, the growth in BEZ we've seen, that's so 86 00:04:44.360 --> 00:04:46.639 client wise. If you look at the figures, fifty percent 87 00:04:46.720 --> 00:04:49.959 growth on installation last year. Actually that's just mirrored in 88 00:04:50.000 --> 00:04:52.519 the legal sector and advisors sector as well. It's been 89 00:04:52.560 --> 00:04:54.480 our biggest growth we are now for the last couple 90 00:04:54.519 --> 00:04:56.879 of years. What we've seen in the M and A 91 00:04:57.160 --> 00:04:59.839 is six years was a long time. We still had 92 00:04:59.879 --> 00:05:03.199 a ready to build model then, which was super popular. 93 00:05:03.240 --> 00:05:06.959 We had a single asset buying and selling model. We've 94 00:05:06.959 --> 00:05:11.879 now moved into the Wilder's platform, investments developers moving into 95 00:05:11.920 --> 00:05:15.480 that world of IPPs. And then I suppose what follows 96 00:05:15.480 --> 00:05:19.079 that is then that move of financing in the whole 97 00:05:19.199 --> 00:05:22.480 code structures we're seeing rather than the single asset financings. 98 00:05:22.600 --> 00:05:26.279 And final trend I have to say is data centers, 99 00:05:26.360 --> 00:05:31.759 hyperscalers AI the impact that's having on renewable energy electricity. 100 00:05:32.079 --> 00:05:33.759 Those would be my top key trend one. 101 00:05:34.279 --> 00:05:36.639 Now, Natasha, maybe let's dig into each of them because 102 00:05:36.800 --> 00:05:40.319 they're really really interesting. Let's start with the battery energy 103 00:05:40.360 --> 00:05:42.720 storage area. I just only want to say from my 104 00:05:42.759 --> 00:05:44.839 own cor perspective and a Lexa perspective, we did our 105 00:05:44.879 --> 00:05:47.800 first financing ten years ago in the space and nobody 106 00:05:47.879 --> 00:05:51.000 was doing anything, and now suddenly it's the heart of 107 00:05:51.040 --> 00:05:53.879 this energy transition. And the thing I love about it 108 00:05:53.920 --> 00:05:56.040 is it's complex. But I'd love to hear your views 109 00:05:56.040 --> 00:05:57.639 and what you see in best and what you see 110 00:05:57.639 --> 00:05:59.120 the trends are across Europe. 111 00:05:59.360 --> 00:06:02.079 You are right, it's complex, but it's only complex because 112 00:06:02.120 --> 00:06:04.720 it's new and we're figuring it all out. We've been 113 00:06:04.720 --> 00:06:07.519 doing solar and wind for years, so there are tried 114 00:06:07.600 --> 00:06:10.399 and tested positions for that, and I suppose BEZ does 115 00:06:10.439 --> 00:06:14.240 bring in that more element of technical knowledge when you're 116 00:06:14.279 --> 00:06:17.920 trying to optimize it. So what have we genuinely seen. 117 00:06:17.959 --> 00:06:21.040 You've got very mature markets now with the UK has 118 00:06:21.120 --> 00:06:24.480 been really successful and developing out the Bears market with 119 00:06:24.600 --> 00:06:27.920 all the revenue stacks available there and the co location 120 00:06:28.160 --> 00:06:32.079 of Bez under CSDS in the UK. Two. I suppose 121 00:06:32.120 --> 00:06:35.920 what I've found really interesting is going into the new 122 00:06:35.959 --> 00:06:39.920 markets and then seeing how we can finance and develop 123 00:06:40.000 --> 00:06:43.319 Bears in different markets. I know Germany's very close to 124 00:06:43.360 --> 00:06:45.759 your heart, Gerards, So I don't know if you saw 125 00:06:45.800 --> 00:06:47.759 the deal we did a couple of months ago that 126 00:06:47.920 --> 00:06:51.279 was super interesting because it combines all sorts of different 127 00:06:51.600 --> 00:06:53.319 parts of bed Natasha. 128 00:06:53.399 --> 00:06:55.000 That's the one random berg you're talking about in the 129 00:06:55.000 --> 00:06:57.360 old airport. Yeah, it's amazing. Yeah, maybe talk a little 130 00:06:57.399 --> 00:06:57.879 bit about it. 131 00:06:58.279 --> 00:07:01.600 Five hundred mega walk of Bear, one hundred and fifty 132 00:07:01.800 --> 00:07:05.720 megawatts of so co located. But what you're doing is 133 00:07:05.759 --> 00:07:10.920 you're taking Brownfield's an old military airport, developing that and 134 00:07:10.959 --> 00:07:13.759 then having a data center development on it as well, 135 00:07:13.839 --> 00:07:16.480 so we work with Prime Capital on that, and that's 136 00:07:16.480 --> 00:07:18.839 the sort of deal that's really exciting because it's not 137 00:07:18.920 --> 00:07:22.079 Bears on its own, it's Colo and we all love Colo. 138 00:07:22.199 --> 00:07:25.680 But actually it's also encouraging data centers to come there 139 00:07:25.720 --> 00:07:27.079 and then buy the green power. 140 00:07:28.079 --> 00:07:30.279 Yes, Nata Sha, I mean, there's so much stuff to 141 00:07:30.360 --> 00:07:34.000 say about Germany and people ask us all the time, 142 00:07:34.319 --> 00:07:38.480 but it's not just there. Because you've seen markets like Italy, Finland. 143 00:07:38.600 --> 00:07:41.680 Can you go in certain structure? Are they the same? 144 00:07:41.720 --> 00:07:43.759 Aw they different? How do you see in? 145 00:07:44.560 --> 00:07:48.000 What's really interesting in both of the markets that you've mentioned, 146 00:07:48.040 --> 00:07:50.879 and this is the same in quite a few different markets, 147 00:07:51.000 --> 00:07:53.839 is the deals can be structured and the deals are 148 00:07:53.920 --> 00:07:56.800 very different, even if as they're in the same country. 149 00:07:56.959 --> 00:07:59.199 So if you take Italy for example, that's the real 150 00:07:59.240 --> 00:08:03.199 boom area. The amount of clients who wanting to do 151 00:08:03.319 --> 00:08:07.560 deal in italy's really really increased recently, and a lot 152 00:08:07.600 --> 00:08:09.680 of people when they talk about Bears in Italy talk 153 00:08:09.720 --> 00:08:12.120 about the max result. You know, oh, well you've got 154 00:08:12.120 --> 00:08:15.680 the max there. That's great. Well, actually you can finance MAXI. 155 00:08:15.800 --> 00:08:18.240 I'm sure we'll see a whole pipeline of projects coming 156 00:08:18.279 --> 00:08:22.120 through financing MAX. But we actually project financed last month 157 00:08:22.399 --> 00:08:26.040 the first ever Bears facility in Italy and that didn't 158 00:08:26.040 --> 00:08:29.399 have a MAXA that that basically got finance and it 159 00:08:29.439 --> 00:08:32.519 was the Air for a transaction two fifty megawatts where 160 00:08:32.679 --> 00:08:35.559 we got a tolling agreement with Shell and that's what 161 00:08:35.799 --> 00:08:39.519 enabled the financing on that project rather than the government 162 00:08:39.519 --> 00:08:42.679 auction of MAX. But you could see them both Finland again, 163 00:08:42.799 --> 00:08:46.000 different model. You don't have a government auction like the 164 00:08:46.039 --> 00:08:50.360 MAX there, but we've seen financing structures where we've project 165 00:08:50.440 --> 00:08:55.000 financed assets there where we've had contracted revenue with tolling agreement, 166 00:08:55.279 --> 00:08:59.000 but we've actually also financed on a merchant basis. They're 167 00:08:59.039 --> 00:09:03.200 clearly different finance structure. But seeing the likes of these 168 00:09:03.240 --> 00:09:06.519 new tech players that come in and facilitate it, like Capello, 169 00:09:07.080 --> 00:09:09.879 that enables the financing. So that structure that deal is 170 00:09:09.960 --> 00:09:12.440 very different to a deal that then has a tolling agreement. 171 00:09:12.799 --> 00:09:15.120 I think that's what's really interesting about the best market. 172 00:09:15.159 --> 00:09:16.679 It's not one size fits all. 173 00:09:17.559 --> 00:09:20.600 Natasha, can we dig into the financing there, because that's 174 00:09:20.639 --> 00:09:23.600 for me, the biggest trend since we'd asked spot Woken 175 00:09:24.039 --> 00:09:26.080 is that if you think of a lot of what 176 00:09:26.080 --> 00:09:28.720 we've been doing for twenty years, renewables has just been 177 00:09:28.720 --> 00:09:30.840 financed with a government PPA at the end of the 178 00:09:30.879 --> 00:09:33.600 day a CFDA or a feeling TERV and now you're 179 00:09:33.639 --> 00:09:36.799 going into having to take merch and risk, and then 180 00:09:36.799 --> 00:09:39.200 you've got these so called tolls and stuff like that. 181 00:09:39.440 --> 00:09:41.360 Maybe talk about what you're seeing out there and what 182 00:09:41.440 --> 00:09:44.080 the trends are and how you see it going forward. 183 00:09:44.720 --> 00:09:46.960 It's a really interesting question. And again on a country 184 00:09:46.960 --> 00:09:50.519 by country basis, it does depend and it also depends 185 00:09:50.559 --> 00:09:53.600 if you've got co location as well, because that hybrid 186 00:09:53.759 --> 00:09:58.320 solution for a co location facility in Spain will look 187 00:09:58.440 --> 00:10:01.480 very different to a co location facility in the UK, 188 00:10:01.679 --> 00:10:04.039 where maybe you don't have a gate to offer for 189 00:10:04.080 --> 00:10:06.240 your bears in co location, but you have been given 190 00:10:06.240 --> 00:10:09.200 a gate to offer for solar. But generally, i'd say 191 00:10:09.600 --> 00:10:12.960 most lenders prefer a toll, maybe not for the full output, 192 00:10:13.000 --> 00:10:16.159 it might be a certain percentage. But we do see 193 00:10:16.240 --> 00:10:21.279 also financings taking place with optimization agreements. Now clearly it 194 00:10:21.320 --> 00:10:25.360 does affect the gearing and different positions on the covenants, 195 00:10:25.360 --> 00:10:28.120 and it will depend what the project owner wants to 196 00:10:28.159 --> 00:10:32.120 achieve and it there isn't one approach for financings. You 197 00:10:32.159 --> 00:10:36.200 don't tend to see standalone financings for solar anymore. That's 198 00:10:36.279 --> 00:10:38.919 moved definitely into the hold co financing because it's tried 199 00:10:38.960 --> 00:10:41.840 and tested and the lenders are really comfortable with it. 200 00:10:42.039 --> 00:10:45.039 Subject to clearly like say standalone solar in Spain and 201 00:10:45.080 --> 00:10:47.799 the need to bring on BEZ for that. But you 202 00:10:47.919 --> 00:10:51.000 tend to see hold co structures more for the solar 203 00:10:51.039 --> 00:10:54.759 with BEZ maybe coming in. I still see that stand 204 00:10:54.799 --> 00:10:58.000 alone financing for BEZ being quite an active market because 205 00:10:58.320 --> 00:11:00.879 people are trying to figure out what the right revenue 206 00:11:00.879 --> 00:11:01.679 and ric model is. 207 00:11:02.279 --> 00:11:04.240 It's just going to get more complex, to tell you 208 00:11:04.279 --> 00:11:08.840 the truth, because now that people run BESS or operate bes, 209 00:11:08.919 --> 00:11:13.080 it's a totally different animal from Winner Solar case. Between these, 210 00:11:13.120 --> 00:11:17.960 it's any what I kepture prices, but the best You 211 00:11:18.120 --> 00:11:21.320 decide every day what you're going to do. You're in charge, 212 00:11:21.879 --> 00:11:24.799 you and all the algos who are managing the best 213 00:11:25.320 --> 00:11:27.799 and plus you've get your own new stack. So am 214 00:11:27.840 --> 00:11:31.159 I charging? Am I discharging? Am I putting option? And 215 00:11:31.240 --> 00:11:34.679 you know, do I work on the physical market? Do 216 00:11:34.759 --> 00:11:38.320 I work on the congestion market? Do I sell premiums 217 00:11:39.120 --> 00:11:43.200 the level of sophistication, and weirdly the guy who start 218 00:11:43.279 --> 00:11:47.600 to master best management are former gas operators. 219 00:11:48.039 --> 00:11:50.879 Yeah, what's interesting, Lauren. As you see this market develop, 220 00:11:51.000 --> 00:11:54.039 you'll see the hyperscale's coming into this market. So I 221 00:11:54.080 --> 00:11:56.519 totally agree at the moment, take if you take a 222 00:11:56.559 --> 00:11:59.759 hybrid asset, you need a very sophisticated player to take 223 00:11:59.799 --> 00:12:02.679 a ibrid asset and then optimize that. But we are 224 00:12:02.799 --> 00:12:05.240 seeing signs that some of the hyperscalas are now moving 225 00:12:05.279 --> 00:12:07.559 into this market too, So I think that's a watch 226 00:12:07.600 --> 00:12:08.039 the space. 227 00:12:09.320 --> 00:12:11.720 Let's follow up on that. So how are they going 228 00:12:11.759 --> 00:12:13.960 to come into that minor market? In other words, are 229 00:12:13.960 --> 00:12:17.440 they going to sign PPAs, Are they going to go 230 00:12:17.519 --> 00:12:21.440 and actually vertically integrate, are they going to partner with people? 231 00:12:21.559 --> 00:12:24.159 How do you see them sorting out that energy side 232 00:12:24.200 --> 00:12:24.840 going forward? 233 00:12:24.879 --> 00:12:28.120 Basically, I don't think it will be one size fits 234 00:12:28.159 --> 00:12:30.600 all for all of them. And this is me kind 235 00:12:30.639 --> 00:12:35.559 of anticipating where the market will go. Signing pure PPAs 236 00:12:35.679 --> 00:12:40.600 for Bears probably needs this GEO protocol to come in 237 00:12:40.600 --> 00:12:44.519 in Europe which will allow that transfer of certificates attaching 238 00:12:44.559 --> 00:12:48.039 to when generation occurs to actually time shifting it to 239 00:12:48.120 --> 00:12:51.080 when it dispatches, and I think so some of them 240 00:12:51.480 --> 00:12:53.960 will need to wait for that to happen before PPAs 241 00:12:54.000 --> 00:12:56.480 are signed. So I think it will be the latter 242 00:12:56.559 --> 00:13:00.480 that you mentioned, which is partnership working CLIs mostly with 243 00:13:00.559 --> 00:13:03.279 people then to try and help firm and provide a 244 00:13:03.279 --> 00:13:04.960 better profile for them. 245 00:13:05.039 --> 00:13:06.600 Just the other trend that you said that I thought 246 00:13:06.639 --> 00:13:10.759 was quite interesting, which was you talked about whole co financing, 247 00:13:11.200 --> 00:13:14.000 and I'm totally with you on this because I just 248 00:13:14.000 --> 00:13:16.480 I'm coming from a copper finance point of view where 249 00:13:16.639 --> 00:13:18.559 you would normally what you would do is you would 250 00:13:18.600 --> 00:13:21.360 just finance something at a project level, right, That's how 251 00:13:21.399 --> 00:13:23.480 you did it in the past. But as you said, 252 00:13:23.519 --> 00:13:25.720 now what you're doing is you're not doing it at 253 00:13:25.720 --> 00:13:27.480 that level. You're doing it at at the whole co 254 00:13:27.679 --> 00:13:30.240 level that has a whole portfolio list. Talk a little 255 00:13:30.279 --> 00:13:32.799 bit about why this is happening and also just how 256 00:13:32.840 --> 00:13:36.360 you see the trends going forward in terms of financing. 257 00:13:36.440 --> 00:13:38.519 As I said, these type of platforms does call them 258 00:13:38.559 --> 00:13:38.879 like that. 259 00:13:39.559 --> 00:13:42.279 It starts off with with the trends that we've seen, 260 00:13:42.720 --> 00:13:46.080 which is the m and A market consolidation and the 261 00:13:46.200 --> 00:13:52.200 move for investors actually investing in developers and turning developers 262 00:13:52.240 --> 00:13:57.360 into IPPs and then building these platforms, and it's far 263 00:13:57.600 --> 00:14:03.200 more flexible. It's a to deal financially to provide a 264 00:14:03.200 --> 00:14:06.159 bigger facility for that whole co platform than to be 265 00:14:06.200 --> 00:14:09.320 able to draw down to fund construction on a multiple 266 00:14:09.440 --> 00:14:12.080 project basis. So I think it goes hand and hand 267 00:14:12.240 --> 00:14:15.960 in the trend of the consolidation of these big players 268 00:14:16.000 --> 00:14:19.600 investors investing in developers and IPPs. 269 00:14:19.120 --> 00:14:22.639 Which means that if you had missed the boat three 270 00:14:22.720 --> 00:14:27.360 four years ago creating this platform, so not only owning assets, 271 00:14:27.399 --> 00:14:31.600 but managing them and optimizing them and doing what I 272 00:14:31.679 --> 00:14:34.519 used to do twenty years ago when I was training commodities, 273 00:14:34.559 --> 00:14:39.360 which is called cross collateralization. Maybe it's a new world 274 00:14:39.440 --> 00:14:41.759 for the arulnerable energy, but I can tell you it 275 00:14:41.840 --> 00:14:45.240 was done twenty years ago in the fossil fuel area. 276 00:14:45.759 --> 00:14:50.799 Assets are natural hedge one against another, and of course 277 00:14:50.840 --> 00:14:53.639 if they are natural hedge, it's much cheaper because they 278 00:14:53.799 --> 00:14:58.320 complement themselves, which means that going from a single asset 279 00:14:58.360 --> 00:15:02.720 to a portfolio level requires a level of knowledge and 280 00:15:02.759 --> 00:15:06.279 sophistication not only on the operators, but on the lenders 281 00:15:06.320 --> 00:15:10.000 and even the lawyers like you or organized. So what 282 00:15:10.080 --> 00:15:13.600 you see is you said conceliation. Have those people improved 283 00:15:13.600 --> 00:15:16.559 the same way or some really got it and others 284 00:15:16.600 --> 00:15:18.879 have totally missed the boat and they end up with 285 00:15:18.919 --> 00:15:22.480 a series of assets, and maybe they're weaker than the 286 00:15:22.559 --> 00:15:26.159 one who conceited better. So question is long, but the 287 00:15:26.200 --> 00:15:27.080 problem is complex. 288 00:15:27.919 --> 00:15:29.960 It is indeed if I pick up that sort of 289 00:15:30.000 --> 00:15:33.960 cross collateralization point though, and people get it in this market, 290 00:15:34.039 --> 00:15:37.320 and this is a whole move to hybridization of renewable 291 00:15:37.440 --> 00:15:39.799 energy assets, and in a way it applies equally to 292 00:15:40.120 --> 00:15:43.799 the whole co portfolio financings that are occurring. This does 293 00:15:43.840 --> 00:15:47.080 allow lenders to take a more sort of pragmatic view 294 00:15:47.120 --> 00:15:49.679 across the whole portfolio. So if you think about Bears 295 00:15:49.720 --> 00:15:53.440 and Solo, you might agree a certain percentage of merchant 296 00:15:53.480 --> 00:15:56.399 revenues and then you might agree a certain percentage of 297 00:15:56.440 --> 00:15:58.919 contracted revenues. So you look at it from a whole 298 00:15:59.000 --> 00:16:02.679 portfolio base is and a hybrid solution and really set 299 00:16:02.720 --> 00:16:05.799 out those parameters at the top which allow then the 300 00:16:05.840 --> 00:16:10.480 IPPs that you believe in, the sophisticated IPPs to build 301 00:16:10.519 --> 00:16:12.679 that ideal platform that they can. 302 00:16:12.559 --> 00:16:16.759 Do Lauran actually an attached to both here. Really, I 303 00:16:16.759 --> 00:16:19.600 think it's a really interesting talking point here because I 304 00:16:19.600 --> 00:16:23.679 think we're only at the beginnings of these financing structures 305 00:16:24.440 --> 00:16:27.840 and I actually don't believe that the renewable industry has 306 00:16:27.879 --> 00:16:31.840 that capabilities internally, which means and Lauren, you pointed to 307 00:16:31.840 --> 00:16:33.440 it earlier when you sort of talked about, you know, 308 00:16:33.480 --> 00:16:35.639 the whole area and the whole gas trading area, et cetera, 309 00:16:35.720 --> 00:16:38.559 et cetera. I suppose my question to both here and 310 00:16:38.639 --> 00:16:41.960 Laurn obviously this you're a commodity trader for many years. 311 00:16:42.279 --> 00:16:44.639 How do you see this market going? For a start, 312 00:16:44.799 --> 00:16:46.840 and then the Natasha, I'd be interested also to hear 313 00:16:46.879 --> 00:16:48.399 your thoughts on it as well well. 314 00:16:48.480 --> 00:16:50.879 John, I'm supposed to ask questions, so. 315 00:16:52.720 --> 00:16:55.080 You are, but you're an expert in that area given 316 00:16:55.120 --> 00:16:57.639 what you did beforehand, right, so you can see boat worlds. 317 00:16:57.679 --> 00:16:59.759 That's where I'm coming from, anot. 318 00:16:59.320 --> 00:17:04.920 It's a different mindset. Some infrastucture investors are smart, and 319 00:17:05.079 --> 00:17:06.960 I know a lot of them, and they will adapt, 320 00:17:07.519 --> 00:17:11.359 but it's a different mindset portfolio management. It's like, at 321 00:17:11.359 --> 00:17:14.400 some point you go to BP, who's processing all those 322 00:17:14.440 --> 00:17:19.480 molecules we're gonna do electron, Man, it's not simple. An 323 00:17:19.519 --> 00:17:24.039 electron is not virtual molecule. It reacts differently. And if 324 00:17:24.079 --> 00:17:27.039 your model was AK twenty year feed in tariff, which 325 00:17:27.079 --> 00:17:29.799 is the equivalent of a government bond plus or minus 326 00:17:29.839 --> 00:17:33.039 at the capture rate or the lot factor, you're gonna 327 00:17:33.079 --> 00:17:36.640 have a really tough time not only understanding what's happening 328 00:17:36.680 --> 00:17:39.559 in your portfolio, but also the way you're going to 329 00:17:39.720 --> 00:17:43.519 raise fund because if your slides are ten years old, 330 00:17:43.839 --> 00:17:46.920 you are gonna be hurt. That's my view now, not 331 00:17:47.079 --> 00:17:48.759 a shure you're in the in think of it. 332 00:17:48.920 --> 00:17:51.920 Please, I've got a more optimistic view than you, and 333 00:17:51.960 --> 00:17:54.039 it's probably because I've got these three deals on the 334 00:17:54.079 --> 00:17:57.359 table currently. By the time this podcast gets released, one 335 00:17:57.400 --> 00:17:58.960 of them will have closed and it'll be out in 336 00:17:59.000 --> 00:18:02.319 the press. I think you'll be pleasantly surprised to see 337 00:18:02.359 --> 00:18:04.759 depending on how much of it is disclosed, man, how 338 00:18:04.839 --> 00:18:06.920 much of it's confidential. But I think there are plenty 339 00:18:06.960 --> 00:18:09.160 of players who have the mindset and we're moving into 340 00:18:09.200 --> 00:18:10.240 that world quite quickly. 341 00:18:11.039 --> 00:18:14.519 Exciting times ahead. Indeed, I'm always. 342 00:18:14.160 --> 00:18:17.400 The guy's bearing venues and you're always optimistic, But that's 343 00:18:17.440 --> 00:18:24.079 the dynamics. The one who really get it will consolidate 344 00:18:24.359 --> 00:18:26.079 with the one who don't get it. 345 00:18:26.920 --> 00:18:30.359 That's not how I would phrase it. I phrase it 346 00:18:30.440 --> 00:18:35.640 as consolidation is happening, and the people looking to invest 347 00:18:35.720 --> 00:18:40.319 in see the technical experience and that in country knowledge 348 00:18:40.319 --> 00:18:42.799 that they may not have. And we've seen a huge 349 00:18:42.799 --> 00:18:46.119 amount of consolidation in the energy sector generally. And what 350 00:18:46.240 --> 00:18:48.599 was interesting when we looked back at the M and 351 00:18:48.640 --> 00:18:52.799 A figures for last year, you had actual deal amounts 352 00:18:52.839 --> 00:18:56.480 going down, but you had deal value growing by twenty percent, 353 00:18:56.519 --> 00:18:59.640 which shows you the deals are bigger and they're more strategic. 354 00:19:00.079 --> 00:19:02.359 And if I just look across the p for some 355 00:19:02.400 --> 00:19:05.359 of the clients we've worked at working with Elgin Energy 356 00:19:05.400 --> 00:19:10.400 for ten years, seeing their development from developer IPP, investment 357 00:19:10.480 --> 00:19:17.279 by CIP, working with BEV startup Octopus Energy Financing, now 358 00:19:17.319 --> 00:19:21.759 buying the UK EV charging business from stack Craft, that's 359 00:19:21.799 --> 00:19:23.720 what we're seeing. We're seeing that sort of journey and 360 00:19:23.759 --> 00:19:25.759 I think that development will continue. 361 00:19:26.000 --> 00:19:27.839 By the way, I think it's even got to go 362 00:19:27.960 --> 00:19:30.160 well beyond what we're talking here in terms of best 363 00:19:30.160 --> 00:19:31.799 and renewables. I think you're also going to see it 364 00:19:31.799 --> 00:19:34.599 in the utility space as well, because it's the same 365 00:19:34.799 --> 00:19:37.799 trends we're talking about, and it's the same complexities that 366 00:19:37.839 --> 00:19:40.000 they have to deal with. And if you don't have 367 00:19:40.119 --> 00:19:43.599 the capabilities or the scale needed, whether you're you're renewable 368 00:19:43.680 --> 00:19:46.160 or customers are grid to' in trouble going forward. 369 00:19:46.440 --> 00:19:48.200 Oh, you've hit the nail on the head. Actually, one 370 00:19:48.240 --> 00:19:51.200 deal I didn't mention, which we signed this year we 371 00:19:51.279 --> 00:19:55.720 sold Flexitricity for Quinbrook to Drax. That's exactly the point 372 00:19:55.759 --> 00:19:58.880 you're making. Drax decided they needed that sort of business 373 00:19:58.920 --> 00:20:02.480 within their portfolio and now they're offering some new products 374 00:20:02.519 --> 00:20:04.039 because of that exactly. 375 00:20:04.400 --> 00:20:07.400 In other words, what we're saying also is we're seeing 376 00:20:07.400 --> 00:20:10.400 this the m and a consolidation taking place. The question 377 00:20:10.599 --> 00:20:13.319 is is it going to accelerate now? In other words, 378 00:20:13.319 --> 00:20:14.960 have we reached the peak or is the peak in 379 00:20:15.000 --> 00:20:17.319 twelve months eighteen months? How do you see that? 380 00:20:18.160 --> 00:20:20.720 I don't think we've seen the peak. We're seeing any 381 00:20:20.759 --> 00:20:23.960 increase on I hate to mention the US in this 382 00:20:24.000 --> 00:20:26.119 podcast because we've managed to get to like twenty five 383 00:20:26.119 --> 00:20:29.000 minutes without Lauren mentioning it. So this is my bad 384 00:20:29.039 --> 00:20:32.519 everyone forry, But we've seen because of what's going on. 385 00:20:32.640 --> 00:20:36.559 We've seen that European investment come back into Europe, and 386 00:20:36.599 --> 00:20:39.000 then we're seeing the investment from the Middle East and 387 00:20:39.039 --> 00:20:41.079 from the US coming into Europe. So I think, particularly 388 00:20:41.119 --> 00:20:45.079 from a European basis consolidation, I don't think we've seen 389 00:20:45.119 --> 00:20:46.880 the peak. I think we've still got lots to come. 390 00:20:47.240 --> 00:20:49.680 I'm certainly looking forward to an even busier year this. 391 00:20:49.640 --> 00:20:53.119 Year, Natasha. A lot of the consolidation has taken place 392 00:20:53.200 --> 00:20:55.240 is because a lot of the smaller players just don't 393 00:20:55.279 --> 00:20:57.759 have the capabilities. Now, what you're also saying, I agree 394 00:20:57.759 --> 00:20:59.759 with you totally. What you've got is a lot of 395 00:20:59.759 --> 00:21:02.240 small our players who realize and now's the time to 396 00:21:02.240 --> 00:21:05.640 actually really scale the business and have an impact, right. 397 00:21:06.920 --> 00:21:10.559 Sham, We've really been good so far. We haven't talked 398 00:21:10.559 --> 00:21:16.680 about hyperscalers yet, so it's time to dive into hyperscalers 399 00:21:16.759 --> 00:21:18.640 that are centers. And of course it's all the range 400 00:21:18.640 --> 00:21:22.240 in the US, but it's fever is coming also in Europe. 401 00:21:22.440 --> 00:21:23.359