Speaker 1: You are listening to Redefining Energy.
Speaker 2: Your co hosts from Berlin Gerard Rein and from London
Speaker 2: Lauren Saga. Today on Reallyfer and Energy, we're going to
Speaker 2: talk about where to invest in energy transition.
Speaker 1: I don't want to talk about this topic because you
Speaker 1: didn't do it podcast.
Speaker 2: Well now I'm doing it a podcast.
Speaker 1: So there you become this investment girl, so you might
Speaker 1: as well tell us about your topology and why it's
Speaker 1: going to change the world.
Speaker 2: Well, I was invited a few weeks ago by Luca Peetti,
Speaker 2: with the CEO of Texas Park and now his own podcast,
Speaker 2: and I was very pleased and privileged to have a
Speaker 2: good discussion with him around my investment thesis.
Speaker 1: So go and let us know, tell us all about it.
Speaker 2: It's all in the conversation. So let's listen to me
Speaker 2: and Luca.
Speaker 1: Okay, very good, bring them out.
Speaker 3: Laura, welcome to the show.
Speaker 2: Welcome to your show. You've been already twice on our show,
Speaker 2: and you're going to come soon. Always very popular episodes,
Speaker 2: so I'm glad to be able to return a favor.
Speaker 3: Thank you, Laura. In the anticipation of this show, today,
Speaker 3: we were discussing about clean engine investments, your role in
Speaker 3: that there's a lot of doom and gloom, especially here
Speaker 3: in Europe. But what is personally exciting you in terms
Speaker 3: of investments in Europe.
Speaker 2: The investment that interests me are in a bit of
Speaker 2: a gray zone between trading and infrastructure. Trading because I've
Speaker 2: been a trader for more than ten years trading carbon electricity,
Speaker 2: and that's a universe I'm very accustomed to. And of
Speaker 2: course it's all digital, so that's number one. An infrastructure,
Speaker 2: which is a very very big universe. The part which
Speaker 2: interests me are more like a small infrastructure linked to energy,
Speaker 2: which you can replicate and scale easily. And of course
Speaker 2: I can go in the detail of both, but that's
Speaker 2: generally my playground. If you arrive with a super technical innovation,
Speaker 2: I'm lost because I'm not an engineer and I don't
Speaker 2: like to be the guy around the table who doesn't
Speaker 2: get a clue and surrounded by very enthusist people have
Speaker 2: no idea what they're talking about.
Speaker 3: Yeah, let's get specific. Most people think about energy transition,
Speaker 3: clean engine investment, think of wind parks, toler investment. That's infrastructure,
Speaker 3: as you mentioned, But maybe let's talk a bit about
Speaker 3: the digital side. Where do you see opportunities or where
Speaker 3: would you put your money?
Speaker 2: Well? Have I put my money? So about six years
Speaker 2: ago I had created a little platform where I was
Speaker 2: brokering Toller Park wind Farms. The platform was very active
Speaker 2: at a bit of monetizing it, and then I bump
Speaker 2: into some young kids wheneverbody's a young kid, considering I'm
Speaker 2: now more than sixty years old, up extraordinary RFP module
Speaker 2: for PPA, and I decided to invest and let them grow,
Speaker 2: and that became Zygo with GP Serda, and after a
Speaker 2: few years we managed to exit and sell it to
Speaker 2: Shlender Electric. And then one year later GP came back
Speaker 2: to me and said, ook, I've got a new idea
Speaker 2: for a new company. So his team was so good
Speaker 2: and it was such a great on topnet that I
Speaker 2: also invested in a new platform called Renewable, where we're
Speaker 2: going to track and trade print certificate but hourly re certificates.
Speaker 3: You mentioned to me a classification hierarchy how you look
Speaker 3: at investments. Maybe it would be interesting just to learn
Speaker 3: how you do that and how you would place those investments.
Speaker 2: Yeah, that's probably my copy right. So I've got my
Speaker 2: five categories from the lowers to the highers. The lowers
Speaker 2: would be I would call aspirational. So you're selling a
Speaker 2: product which is a bit of a service, which is
Speaker 2: a nice to have like in zero or those type
Speaker 2: of things you have to do that I'm not interested.
Speaker 2: Then you get the upper level, which I called the shoehorn.
Speaker 2: So the shoehorn is a concept where you have those
Speaker 2: guys selling technologies with a big Excel sheet and they say, oh, okay,
Speaker 2: Sola is going to do this, Wind is going to
Speaker 2: do that, Butter is going to do this. Oh there's
Speaker 2: a gap to go to zero, And of course they
Speaker 2: try to plug, they try to shoe on their technologies.
Speaker 2: And of course, because those technology that don't exist or
Speaker 2: totally uneconomical, they require a crazy amount of subsidies. So
Speaker 2: I'm going to list either gen SMRs, CCS, and I'm
Speaker 2: not interested. If people want to burn money, good for
Speaker 2: them making a green cement or green steel. It's very
Speaker 2: very very difficult. So that I'm not interested. Then I
Speaker 2: go up a notch. So number three is what I
Speaker 2: call the compliance product. Complaints product is okay, it's the law.
Speaker 2: You need to have it. Now, if you're this year
Speaker 2: and smart, you can make the complaints much cheaper. And
Speaker 2: somehow that's what Texa Park is doing, plus delivering other services.
Speaker 2: And it's not just a regulatory compliance. You can be
Speaker 2: market compliants marking your books and stuff like that. Now,
Speaker 2: only interest I see in those products is when you
Speaker 2: create such a database, such a client base, and it's
Speaker 2: quite sticky, and people are just gonna come again and
Speaker 2: again and again because they have to. And some of
Speaker 2: those products are really excellent, provided there's not too much competition.
Speaker 2: If I look at carbon accounting, there are the twenty
Speaker 2: five software doing carbon accountings. That's probably nineteen too much.
Speaker 3: At level three aspirational shoehorn compliance. So let's go one
Speaker 3: type higher.
Speaker 2: Oh that's the best one, right, not the second. Best
Speaker 2: one's second. The best one is profitable. It's very simple.
Speaker 2: There is this magic sentence in business, which is you
Speaker 2: will see your money back in three years. And I
Speaker 2: can tell you you can sell whatever thing you want
Speaker 2: if the magic sentence, if you can convince that whoever
Speaker 2: is buying that product's going to see the money back
Speaker 2: in three years. And a certain way is Zigo was
Speaker 2: a bit this idea that don't pay three hundred thousand
Speaker 2: euro fees for a PPA. You know, you can get
Speaker 2: a PPA below of fifty thousand, and it's all thanks
Speaker 2: to digitization and so on. But look, anything that pays
Speaker 2: itself in three years will sell. Don't arrive by saying okay,
Speaker 2: this product is the shoehorn product or operational product to
Speaker 2: say you'll see you back in three years. If you
Speaker 2: can't sell a product where people are going to see
Speaker 2: their money back in three years, what are you doing?
Speaker 2: You know, what are you doing?
Speaker 3: Final level?
Speaker 2: Ah, the best well Salvation, Salvation, Salvation. You buy this product,
Speaker 2: you're safe. If you don't buy this product, your factories
Speaker 2: goes down, your grid goes down, you're out of a job,
Speaker 2: you lose your bonus. That's not the chief operating officer
Speaker 2: is the CFO or the CEO. I need that.
Speaker 3: In the renewable space for that or the energy space.
Speaker 2: TEXA pack has reached such a level that there are
Speaker 2: now guys who come to see you know, oh it's
Speaker 2: nice to have, or you know I should have that,
Speaker 2: or maybe it's good say oh my god, I need
Speaker 2: to have it because you know, my competitor have it
Speaker 2: and I'm auditor skiing. So in fact, if I don't
Speaker 2: buy it out of a job.
Speaker 3: So what is the difference to compliance where you must
Speaker 3: basically have a certain product the competition level.
Speaker 2: Yeah, it's started by early movers. Then after you know,
Speaker 2: you've got the main peloton if I use to the
Speaker 2: post analogy, but then you've got your blackguards and those
Speaker 2: guys have a choice.
Speaker 3: Can you use this framework to classify let's say, as
Speaker 3: an example, investing in a standalone solar park in Spain.
Speaker 2: It has to be profitable. The question is how long
Speaker 2: it's going to take to become profitable? If you look
Speaker 2: at and I mean I love the industry of solar
Speaker 2: developers or wind developers, but you have identified at Texa
Speaker 2: Park the problem of containnabalization, capture prices and so on.
Speaker 2: And I don't know there what thirty gigawad of solar
Speaker 2: in Spain or something like this, and in Germany now
Speaker 2: it's one hundred giga awad, which is absolutely crazy. And
Speaker 2: the question is the value of an additional I would
Speaker 2: say Vanila solar at some point whatever asset you put
Speaker 2: on a grid as to create value for the system,
Speaker 2: especially in Europe, because you ask your problem were in
Speaker 2: Europe is that we're still with high prices. We are
Speaker 2: still doing energy efficiency or closing unfortunately some plants, which
Speaker 2: mean the demand has not picked up. Was in the US,
Speaker 2: Now you have a system that's going again, especially with
Speaker 2: data centers and AI. So the old US approached with
Speaker 2: a transition is extremely different than in your because in
Speaker 2: the US they have all that conucopy of gas which
Speaker 2: is like support cheap was in your hope, we see
Speaker 2: need to import it. So the question is not the same.
Speaker 3: No, I agree on the adding value. And your friend
Speaker 3: and co hosts from Redefining Energy Gerarity, he had the
Speaker 3: term energy intelligence and this is what you need to
Speaker 3: deliver today, not just a solar plant, but low system
Speaker 3: costs and somehow a green profile which covers more than
Speaker 3: just a solar profile. Maybe on the negative side, what
Speaker 3: would upset you in the clean energy investment space?
Speaker 2: What's upset me right now is the amount of money
Speaker 2: of taxpayers money that's given to hydrogen which has a
Speaker 2: track record of absolutely not working. And just lead the
Speaker 2: report on by lobbyists and they don't do the basic
Speaker 2: calculation that at the end of the day one dollar
Speaker 2: per kilo hydrogenical a nine dollars and met you of gas. Okay,
Speaker 2: So it means now they are targeting a five dollars
Speaker 2: or five year old. That's forty five dollars and BT,
Speaker 2: which means nothing to anybody. But if you multiply by six,
Speaker 2: you can have the equivalent in the bile of oil.
Speaker 2: And now we're talking about two hunrot and fifty dollars
Speaker 2: oil per barrel. It's just too expensive. It's just too
Speaker 2: expensive to use hydrogen as an energy source period. Plus
Speaker 2: you can't storey, you can't move it. I mean as
Speaker 2: well as batteries, really super superbolish in batteries. With the
Speaker 2: price going down, you can have more and more use
Speaker 2: of those batteries everywhere and pretty much where it goes.
Speaker 2: It's eating into gas. Gas was supposed to balance everything,
Speaker 2: and the gas plants are going to run less and less,
Speaker 2: but they will shot more and more those few hours
Speaker 2: that they will run.
Speaker 3: You also coined the statement of the energy transition is
Speaker 3: down deal by deal. Would you still stick to that
Speaker 3: or are we at the point of the transition hours
Speaker 3: back to Europe where we need regulatory policy changes or
Speaker 3: can we just let market players do their stuff?
Speaker 2: I mean, I greatori, I mean we've got a telephone
Speaker 2: book every months of new regulation. I think you hope
Speaker 2: should regulate a bit less. Now if I'm being a
Speaker 2: bit cynicl and I look at the zones where you
Speaker 2: have growth in energy and growth of pin energy. You
Speaker 2: have two zones. One is China, and I guess nobody
Speaker 2: wants to do it the Chinese way. But you have
Speaker 2: Texas and Texas which is not run by leftist in
Speaker 2: any shape or form. But the development is even faster
Speaker 2: than California, which is supposed to be politically more aligned
Speaker 2: with goals. And why it's because they're de regulated. And
Speaker 2: then for instance, they have a system of connecting to
Speaker 2: the grid which is basically okay, you connect at your
Speaker 2: own risk and then we'll manage it afterwards, whereas the
Speaker 2: old system of regulation and permitting in Europe is a
Speaker 2: bit antiquated. So in fact we are losing time just
Speaker 2: filling papers.
Speaker 3: I agree, And coming a bit to the end to
Speaker 3: the show, is there anything you want to plug which
Speaker 3: keeps you motivated going on in the clean energy investment space?
Speaker 2: Yeah? With Jerrard we have done. Three years ago we
Speaker 2: invested in a rooftop slam stall in Germany. We've been
Speaker 2: pretty lucky in term of timing because we came in
Speaker 2: we had fourteen employees and we managed to exit at
Speaker 2: three hundred employees, and I think the value was multiplied
Speaker 2: by five or six. So we're quite fortunate, especially now
Speaker 2: that the market is going down. It was an extraordinary
Speaker 2: entrepreneurial adventure with a great team in Manaim always an anecdote.
Speaker 2: I have talking to Daniel and I said, I mean
Speaker 2: your system is so, you know, wonderfully organized. So you
Speaker 2: have planned to export and I say, oh, yeah, yeah,
Speaker 2: we are considering export market and I say, which one?
Speaker 2: Verya Otherwise, the big horizons are the cable across the Atlantic.
Speaker 2: Now that's a long term dream, but we gather more
Speaker 2: and more support. Now it's going to take fifteen years.
Speaker 2: But I think it's really neat that you need to
Speaker 2: have some strategic assets, which are balancing assets, because when
Speaker 2: you have a Dunkel floater or when you have negative prices,
Speaker 2: it doesn't make any sense to try to manage those
Speaker 2: by hydrogen or you know, nuke or whatever. I love hydro,
Speaker 2: but the number of potential sites are very limited, so
Speaker 2: it makes a lot of sense. We have created, you know,
Speaker 2: a website called need to l dot org if you
Speaker 2: can want to overlook. So right now it's a bit
Speaker 2: of a concept, but we get out of support and
Speaker 2: technically look, the longest interconnector right now, so SA is
Speaker 2: between England and Denmark with the Viking Link eight hundred
Speaker 2: kilometers with a loss of two percent. So going to
Speaker 2: America is we need two times five. But when you
Speaker 2: talk to Itachi, when you talk to Prismian or g
Speaker 2: they say tough, but do ever in the ground scheme
Speaker 2: of things is going to be six times cheaper than
Speaker 2: a new Clubland. Yeah, we're working on that. We see
Speaker 2: where it goes.
Speaker 3: Yeah, and it fits very well with another saying that
Speaker 3: no transition without transmission or absolutely how it fits very well. Norah,
Speaker 3: thanks a lot for coming on the first show of
Speaker 3: this year. I wish you a great day.
Speaker 2: Thank you very much.
Speaker 1: I must have bitch, Laura. I like your phraseology you
Speaker 1: horr salvation. I like us. I mean like what you
Speaker 1: smoke a drugs or something when you came up with
Speaker 1: our southist.
Speaker 2: At least if some investors are this framework in mind,
Speaker 2: they would not have put that much money into hydrogen
Speaker 2: or sm mor or nuclear fusion or CCS or those
Speaker 2: type of things. You need to concentrate your investment where
Speaker 2: there are currently problems that we know and solve the problems.
Speaker 2: When your problem is okay, we need more capacity. You
Speaker 2: need to invest in transmission, you need to invest into batteries,
Speaker 2: because these solutions exists today and they can fix problem today.
Speaker 2: And I can understand people get very excited about tomorrow's
Speaker 2: problem theoretical, but you have problem today and the problem
Speaker 2: we need to fix them now. Not a lot of inspiration,
Speaker 2: but a lot of perspiration. That's the way I see it.
Speaker 1: I know you're right. I've always been captivated by the
Speaker 1: aspiration the dreamers. We need the dream. But I don't
Speaker 1: know if you make any money by investing in the aspirational.
Speaker 2: Yeah, and again, certain investment can change from category to
Speaker 2: the other. Look, if you want to develop the stabiliation fuel,
Speaker 2: is it a shoehorn? Is it as pirational? Because you
Speaker 2: want to have green flights. It's starting to become compliance
Speaker 2: in your hope that you need to blend a certain percentage.
Speaker 2: And at what point it's going to become profitable, I
Speaker 2: don't know. But salvation, Yeah, if the penalties are very high,
Speaker 2: definitely that's a purchase you have to do. Yeah, the
Speaker 2: typology is interesting, but sometimes the lines between different categories
Speaker 2: are a bit blur. Now there are some stuff like
Speaker 2: you're going to be in a zero, you're going to
Speaker 2: have green products that I think the ship has said.
Speaker 1: I like it around actually believe or not. I think
Speaker 1: it's actually I'm gonna actually look at my own portfolio
Speaker 1: and my own in lessons with the ion and we'll
Speaker 1: see what We'll see what comes of it, and we'll.
Speaker 2: Have a chat about it next year.
Speaker 1: Right if I have a good year.
Speaker 2: Or a bad year, Okay, but don't count on me because,
Speaker 2: as you say, very bad at predictions. Okay, job, talk
Speaker 2: to you next week. You look forward to.
Speaker 1: Thank you for listening to Redefining Energy.
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