Speaker 1: You are listening to Redefining Energy.
Speaker 2: Your co hosts from Berlin Gerard Raid and from London
Speaker 2: Laurent Segalam. Today on Redefining Energy, we're going to talk
Speaker 2: about decarbonizing buildings, Laura.
Speaker 3: Yes, Jaden. There's a lot of action going on. Probably
Speaker 3: first award from my.
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Speaker 3: Yes, Jada. It's an important topic because the sector of
Speaker 3: buildings accounts for thirty seven percent of all emission, so
Speaker 3: it's a third pilar of decarbonization next to a generation
Speaker 3: and transportation.
Speaker 2: Yeah, and it's always been the one that has been
Speaker 2: regarded as really hard to decarbonize. And my own view
Speaker 2: is that's changing, and it's changing because of rapid technology
Speaker 2: change which actually enables us to decarbonize buildings. But that's
Speaker 2: only my opinion. So we decided let's bring on an expert.
Speaker 3: And that expert you met him at the World Economic Forum,
Speaker 3: and I will explain in the conclusion why you are invited,
Speaker 3: but never me.
Speaker 2: I got to know Vincent Petite, who is senior vice
Speaker 2: president at Schneider and he's really in charge of their
Speaker 2: sustainability research institute, and we've we've been talking for a long,
Speaker 2: long while in and around what's needed, and what he
Speaker 2: felt was needed was just a publication of data in
Speaker 2: and around buildings, and no better company to do that
Speaker 2: than Schneider given the fact that they've got energy management
Speaker 2: systems and buildings across the world.
Speaker 3: Good Look, it's a good moment because there are a
Speaker 3: lot of regulation coming online. In Europe. We have something
Speaker 3: called as usual in Europe, it's a mouseful, the Energy
Speaker 3: Performance of Building Directive EPBD. What do you want to
Speaker 3: say about that?
Speaker 2: Well, I think this is a game changer. The reason
Speaker 2: I think it's a game changer is because what you've
Speaker 2: got is a binding target across Europe to reduce carbon
Speaker 2: emissions by sixteen percent by twenty thirty and up to
Speaker 2: twenty two percent by twenty thirty five. So it's a
Speaker 2: little bit like we had before a row on this
Speaker 2: redewble energy target, but now it's in buildings and that
Speaker 2: means you have to invest in energy performance, whether that's
Speaker 2: solar batteries, artificial intelligence, energy management systems, you name it.
Speaker 2: That's where we're going.
Speaker 3: Okay, so let's bring versus Computy on the show to
Speaker 3: discuss that regulation and a lot of other things. Vincent,
Speaker 3: Welcome to the show.
Speaker 1: It'll all so Vincent first, it is great to have
Speaker 1: you on the show.
Speaker 2: We're really interested to sort of dig into building efficiency
Speaker 2: and what we can do there in terms of decarbonization.
Speaker 5: And what you seem to see is huge.
Speaker 2: Change going on in the building area, where what you're
Speaker 2: seeing is a current approach, which is governments are incentivizing changes,
Speaker 2: but there's also a stick. You know, your carbon tax
Speaker 2: is coming in, etcetera. So it feels as if the
Speaker 2: next part of the energy transition is all going to
Speaker 2: be about buildings. Do you agree with that or how
Speaker 2: do you see the future there in terms of the
Speaker 2: energy transition and the role of buildings in it.
Speaker 1: Yes, buildings. I think the next two pick we've seen
Speaker 1: tre among those progress will either as decayed or saw
Speaker 1: in some sectors like boil generation and mobility and the
Speaker 1: next order of business buildings. My view is that it's
Speaker 1: not completely started yet. It's started, but it's not completely
Speaker 1: started to run up yet. However, the route is pretty
Speaker 1: clear because we see a lot of things emerging. And
Speaker 1: if you walk by the strait of where you live,
Speaker 1: you start to see more and more households equipped with
Speaker 1: solar panels. You start to see evs on the road, which,
Speaker 1: by the way, are charging inside the homes and the buildings.
Speaker 1: You start to see a lot of new solutions to
Speaker 1: electrify buildings, to remove fussy fuels from buildings. You live
Speaker 1: in buildings, and you have more and more digital capabilities
Speaker 1: inside buildings. So all those things are here and they're
Speaker 1: starting to perlate the building market, and when you start
Speaker 1: to combine them, you see really buildings transforming in the
Speaker 1: foreseeable future.
Speaker 2: I was very struck by recently being in Japan and
Speaker 2: if the Japanese approaches, you just knock the building down
Speaker 2: and restart.
Speaker 5: While we in Europe and North America we.
Speaker 2: Have a different approach, which is we say, let's keep
Speaker 2: us and renovations. It seems to be expensive and difficult.
Speaker 1: Yeah, you're right. I mean, if we look at the
Speaker 1: global landscape, we tend to say in the Western world
Speaker 1: that seventy percent of the buildings will still be here
Speaker 1: in twenty fifty or something like that. It's actually a
Speaker 1: Western perspective. I mean, if you look at it at
Speaker 1: global level, it's not exactly the figures figure is more
Speaker 1: around thirty to forty percent. Why because in many regions
Speaker 1: of the world, the building stuck is actually about to
Speaker 1: considerably increase, So it's going to be buildings of the
Speaker 1: future versus buildings of the past that we try to renovate. Now,
Speaker 1: coming to your point on renovation and the fact that
Speaker 1: we traditionally consider that renovation is expensive, it's true, but
Speaker 1: it depends on what renovation we're talking about. If we're
Speaker 1: talking about rebuilding the walls, rebuilding the roof, rebuilding all
Speaker 1: the insulation inside the building, that's true that it's expensive.
Speaker 1: It brings a lot of efficiency, and don't get me wrong,
Speaker 1: but it's true it's expensive. Now, what I was saying
Speaker 1: right before about deploying period deploying electric solutions and on
Speaker 1: integrating EV's and so on is a very different story.
Speaker 1: And we could talk about this right because we've been
Speaker 1: doing a lot of projects around the world and so
Speaker 1: we have a little bit of experience on that. We
Speaker 1: were also doing some research, some modeling research, on the topic.
Speaker 1: So we see the benefits and the paybags and actually
Speaker 1: well some issues, but the bottom line is it's not
Speaker 1: that expensive.
Speaker 5: Then that's a very good point to start with.
Speaker 2: So you've done obviously a lot of research and modeling,
Speaker 2: as you said, in this area. Maybe you could just
Speaker 2: talk a little bit about your findings are. In other words,
Speaker 2: if I want to go and renovate or upgrade a
Speaker 2: building in terms of its energy grade, what should I.
Speaker 1: Do To walk around the street? What do you see?
Speaker 1: You see more and more homes with PVY, more and
Speaker 1: more homes with hitt bombs, more and more home with
Speaker 1: TV's and so so the interesting question is if you
Speaker 1: combine all those changes together, what are the economics. Let
Speaker 1: me talk about the research and the modeling we've done,
Speaker 1: because it's interestingly enough, there's not been a lot of
Speaker 1: research from the topic. Most of the result is actually
Speaker 1: focused on the old way of doing things, and in fact,
Speaker 1: what are the finding So long story short, when you
Speaker 1: look at your annual bills, how much energy you pay,
Speaker 1: what's the savings you make once you've clubbed all those
Speaker 1: transformations together. Well, the savings you get range between twenty
Speaker 1: and eighty percent across different types of buildings and across
Speaker 1: different regions. In the research we do, we look at
Speaker 1: commercial buildings and residential buildings, and we look at that
Speaker 1: across different regions in US, in Europe, in China. Mostly
Speaker 1: this is what we've been looking at so far. There
Speaker 1: are obviously a lot of differences across regions and building
Speaker 1: types because the buildings are not the same, so the
Speaker 1: capacities are not the same, the regions are not the same,
Speaker 1: the weather is different on the tariffs are different on,
Speaker 1: the local tonations are different. The cost of the technology
Speaker 1: is also different. But overall you save up to eighty
Speaker 1: percent of your bill. In the lower range you will
Speaker 1: find a very large, tall buildings, like large office buildings
Speaker 1: that you see in city centers. And in the higher range,
Speaker 1: toward the eighty person, you will find your single family
Speaker 1: household or big retail street mall and that kind of
Speaker 1: thing that's for the bill. Now, if you look at
Speaker 1: the payback, because obviously all this as a cost, it's
Speaker 1: interesting already when we start discussing about payback to differentiate
Speaker 1: about new construction and renovation, because you still have new
Speaker 1: constructions happening even in Western economies. Even if it's a
Speaker 1: small portion, but like I was saying before, you've got
Speaker 1: a lot in new economies going on. When you look
Speaker 1: at new constructions, the additional cost on the total cost
Speaker 1: of construction is between two and eight percent, So that's
Speaker 1: the bottom line, and actually the capex is going down,
Speaker 1: so it's probably going to go further down going forward.
Speaker 1: And when you look at renovations, the payback vary quite
Speaker 1: greatly today between five years for some applications like for instance, hotel,
Speaker 1: strip malls, schools, and so. Commercial buildings are actually much
Speaker 1: better paybacks, and you have paybacks that are much higher.
Speaker 1: For residential they can go up to twenty years or above.
Speaker 1: In certain conditions. It varies, but in general the paybacks
Speaker 1: remain quite acceptable. And we see as well happening and
Speaker 1: you know that much better than I do, JR. Is
Speaker 1: that actually the capex for all those technologies is going
Speaker 1: down at rapid pace. On top of that, the value
Speaker 1: chain is not yet completely structured to tackle those projects,
Speaker 1: and the hassle factor, as we say, is still pretty important.
Speaker 1: So you can expect those paybacks to improve dramatically.
Speaker 3: Can you give me one or two example of major
Speaker 3: renovation you've done and I guess I'm changing the light bulbs.
Speaker 3: That's probably an easy one, but it's all about the
Speaker 3: h FI heating system probably where there is the most
Speaker 3: energy demand.
Speaker 1: There's this project we did in Finland a couple of
Speaker 1: years ago, so Biso and not necessarily the sunniest place
Speaker 1: in the world in a city in nam Lipula, Java.
Speaker 1: What it is is a net zero city center, so
Speaker 1: it's a city center, so it's retail offices all together,
Speaker 1: and they built it net zero and the payback was
Speaker 1: five years. And with this the actual source fifty percent
Speaker 1: of their energy demand from what they've got on their howtop.
Speaker 1: So that's one example. I could give you another one.
Speaker 1: It's also about the speed of chain. Those projects can
Speaker 1: go very fast. So there's this project so this time
Speaker 1: in US that we've done in the Montgomery County of Marylands.
Speaker 1: You've got the city which has all these bus fleets,
Speaker 1: so they've got like eighty public buses. They wanted to
Speaker 1: decarbonize and to electrify their buses, which they did in
Speaker 1: less than a year. We were actually able to have
Speaker 1: them electrify their bus fleet and then to create a
Speaker 1: full micro gride on their bus depot, which means that
Speaker 1: probably all their charging is done with solar panels that
Speaker 1: are on the canopies of the bus depot. And that
Speaker 1: was a project that was done in a very short timeframe, right,
Speaker 1: and then maybe a last one also because those are
Speaker 1: relatively smaller applications, but that this is actually quite scalable
Speaker 1: to build larger applications. We're currently working with the gfkare Port.
Speaker 1: They're rebuilding their terminal one. The terminal one's going to
Speaker 1: you full of microgrids, even megawats micro grids, but eight
Speaker 1: megawetts of panels. They've got five megawets of storage. And
Speaker 1: the target, which has been model simulated, validated one is
Speaker 1: a reduction of emissions of about forty percent. And obviously
Speaker 1: there will be fully resilient. There was a reason why
Speaker 1: they did that was not a medical organization. Was also
Speaker 1: resiliency in case you have a storm, they want the
Speaker 1: terminal to still be operting and so on, and so
Speaker 1: with this there sure this happens.
Speaker 2: So I really understand this, and when I'm listening to
Speaker 2: what you're talking about is really putting generation behind the
Speaker 2: meatia And I understand you might say heat pumps is
Speaker 2: not because it's a place is obliged.
Speaker 5: But could you explain the energy efficiency benefits?
Speaker 2: After all, you know, I can understand from a like
Speaker 2: I'm a sharp I put soll on my roof, I
Speaker 2: reduce my carbon emissions. But when I think of it
Speaker 2: efficiency for me, it's lorentzop. Maybe earlier on it's LEDs.
Speaker 2: You put LEDs in reduce consumption. So does the technology
Speaker 2: talk about reduce consumption or the reducing emissions there as
Speaker 2: a power?
Speaker 1: It's both in fact, but probably I insisted a bit
Speaker 1: on the generation behind the meter as you put it,
Speaker 1: because I think it's a game changer. But in what
Speaker 1: we do, it's a combination of things. It's about local generation,
Speaker 1: but it's also about the hitt pont as you mentioned, which,
Speaker 1: by the ways, bringing efficiency. And it's also about the
Speaker 1: digital infrastructure because anyhow, once you've put that in place,
Speaker 1: you know those two components, you need some level of
Speaker 1: control locally in order to be able to manage that.
Speaker 1: And those controls they do not only manage the generation,
Speaker 1: they also manage the demand and the uses in a
Speaker 1: whom the benefits are what they are. The are typically
Speaker 1: between eight to ten percent of energy efficiency. But if
Speaker 1: you go in a commercial building, if you go in
Speaker 1: an office building, is the savings are actually much larger.
Speaker 1: They are own ound twenty to thirty percent of energy demand.
Speaker 1: And this is fairly simple because what you do people
Speaker 1: leave a meeting, hold, you shut down the light, you
Speaker 1: shut down the AC not everyone is coming at the office.
Speaker 1: Nowadays we have some chromofice and so on not to
Speaker 1: shut down parts of the buildings. That way you make
Speaker 1: actually very significant energy efficiency saving. And by the way,
Speaker 1: it's a different form of savings than you were mentioning
Speaker 1: in the introduction Real insulation work and traditional renovation. Traditional
Speaker 1: renovation is really about its passive efficiency if you want so,
Speaker 1: it's really about braining down the baseline. What we're talking
Speaker 1: about here is more active energy efficiency. So it's complementary,
Speaker 1: but it's making sure that you optimize the uses of
Speaker 1: the given building, getting to the law the minimum of
Speaker 1: the baseline. And it's also about preventing rebond effects right,
Speaker 1: which we have upseller with traditional efficiency measures as well. Well.
Speaker 3: Vincent, listening to you, I believe that we have all
Speaker 3: the necessary tools, whether it's heat pumps, hevise, solar batteries,
Speaker 3: digital your name made, so can you expand a bit
Speaker 3: on solar place.
Speaker 1: Yes, thanks Lauren for the question, And I think that
Speaker 1: ties up well with the previous questions from there or deficiency,
Speaker 1: because there are other efficiencies beyond what you can actually
Speaker 1: get inside the building. There are efficiencies that are more
Speaker 1: at a system level, and PV is a good example
Speaker 1: because we are in a race of supply and demand,
Speaker 1: So how much fast can we ramp up the supply,
Speaker 1: how much fast can we decarbanize the demand or electrifize
Speaker 1: the demands. So we've got all this thing going on,
Speaker 1: but the potent shoal of distributed generation, so host of
Speaker 1: PV is much larger than we think in some research
Speaker 1: we've done. But it's not only US. We've seen some
Speaker 1: research in the US saying that forty percent of current
Speaker 1: electricity demand could be provided by distributed generations. Imagine that.
Speaker 1: In some studies we've done, we're thinking that we at
Speaker 1: global level it's about twenty twenty five percent of electricity
Speaker 1: demand that could be provided by distributed generation. So this
Speaker 1: is a big accelerator of the transition. And coming back
Speaker 1: to efficiency is also efficiency of use, lend use and
Speaker 1: more very the role of distributed generation in the realm
Speaker 1: of the electrification of building. You know, there are a
Speaker 1: lot of discussions and people claiming that we're gonna need
Speaker 1: to electrifize those buildings if we want to take organize them. Okay,
Speaker 1: fair enough, but when we do that, we're going to
Speaker 1: have a massive impact on the power raid because obviously
Speaker 1: the demand for electricity is going to rise very significantly.
Speaker 1: When in fact, when you start to put PIV on
Speaker 1: your rooftop to a large extent, you mitigate that issue.
Speaker 1: And we've done some simulation about this and it's clear
Speaker 1: that in some areas you will face problems and there
Speaker 1: may be local areas where you need to upgrade the
Speaker 1: distribution in crastal jobs. But one thing that came up
Speaker 1: in our work and that was actually quite a surprise
Speaker 1: to us, is typically for commercial buildings, what we found
Speaker 1: out is that for commercial buildings, if you've got the
Speaker 1: right amount of PV, you actually mitigate the impact of
Speaker 1: the electrification from the standpoint of the power raid. And
Speaker 1: that's another big, big efficiency gainst for the system.
Speaker 3: As all, I can now introduce one of my favorite
Speaker 3: concepts jars and all of it the Jevons paradox.
Speaker 5: You like that job, don't you we do the rebound effect.
Speaker 3: Yeah, exactly. So the Gevens paradox means the more energy
Speaker 3: efficiency you put in a system, the.
Speaker 1: More energy is being consumed.
Speaker 3: And I empathize with your thesis that discribution grid is
Speaker 3: going to be okay because we're going to do a
Speaker 3: lot of local generation. But when the suns are shining,
Speaker 3: if you not have enough batteries, it's probably going to
Speaker 3: work eighty percent of the time or eighty percent of
Speaker 3: the time. But the problem are always the last ten percent.
Speaker 3: And I don't think we have a problem on average,
Speaker 3: but that system needs to work twenty four seven, three
Speaker 3: sixty five, And of course the problem is it's the
Speaker 3: total heat wave or the blizzard, and maybe it's going
Speaker 3: to happen thirty days a year. That's how big the
Speaker 3: system needs to be designed, plus a little margin. So
Speaker 3: are we just running on a treadmill?
Speaker 1: Appear on your point on a rebound effect, which is
Speaker 1: a very good point because I look a bit at
Speaker 1: the history of past energy transitions. You've always had a
Speaker 1: rebound and at least a nature of things. That's very
Speaker 1: very true. Two points maybe on that when we discuss
Speaker 1: on energy efficiency The point on using digital technologies, which
Speaker 1: are modern technologies to manage the energy used, is really
Speaker 1: a way to prevent rebound effects in energy among inside buildings.
Speaker 1: So that's one point I think we should keep in mind.
Speaker 1: And this is very different from traditional uncontrolled efficiency solutions
Speaker 1: which do not prevent you from a remom. But that's
Speaker 1: a very specific point. I fit. Your question about rebund
Speaker 1: is larger than that, and you're right, if you deploy
Speaker 1: more generation capacity, well you may have more energy uses.
Speaker 1: But this is also a synonym of abundance law. We
Speaker 1: feel we live in a period of scarcity, but nothing
Speaker 1: prevents us from living in a period of abundance. If
Speaker 1: we develop enots energy and clean energy obviously supply the
Speaker 1: topic of rebond it's a complicated one. I think there
Speaker 1: are technologies that can help you to prevent it on
Speaker 1: specific aspects. After the larger question, which is the one
Speaker 1: you're raising, is the one of building a society of
Speaker 1: abundance of energy, and to do that we need to
Speaker 1: deploy a lot of energy capacities, and beyond the meter
Speaker 1: or behind the meter, we've got a huge reservoir that
Speaker 1: we can tap into a new question of residence, which
Speaker 1: is also a very good one. You're absolutely right, law,
Speaker 1: and if it's not going to be a one hundred
Speaker 1: person residience. Now, in some of the examples they give you,
Speaker 1: like the JFK Terminal one airport, why did they build it.
Speaker 1: They did not build it only because they wanted to
Speaker 1: reduce emissions. They built it because they wanted to increase
Speaker 1: the resilience of the airport of the terminal in case
Speaker 1: of large weather incident. And you know that in these
Speaker 1: regions it happens that there are quite a few over winter.
Speaker 1: The way they see this kind of technology and particularly
Speaker 1: generations behind the meter, is a way to increase their
Speaker 1: residience because by the way they have that, they have
Speaker 1: some local generation capacity may not work one hundred of
Speaker 1: the time, but if they don't, they rely on the
Speaker 1: power grade and there are incidents on power grids as well,
Speaker 1: especially when there are harsh weathers. So actually you could say,
Speaker 1: for shots, I'm going to solve one hundred percent of
Speaker 1: the issue. No one is saying that, but it's actually
Speaker 1: improving the residience of the total system.
Speaker 2: Vincent, can I ask you a little bit of a
Speaker 2: cheeky question, what we've got in Europe is we've got
Speaker 2: a new energy performance directive in the buildings area, and
Speaker 2: what this means is that governments across Europe have to
Speaker 2: go and look at their building stock and decide how
Speaker 2: best to decarbonize them. My question to you is, you're
Speaker 2: the minister in charge of buildings in France. What's your
Speaker 2: policy is going to be to actually ensure that we
Speaker 2: improve efficiencies in buildings over the next decade?
Speaker 1: Thank you, Ah, that's a cheeky question.
Speaker 3: Or I can answer. I can answer second million bureaucrats.
Speaker 1: Let me frame my own self this way. So there
Speaker 1: are two things. The first one in French, right, So
Speaker 1: it's a good question about the Minister of Francis. I
Speaker 1: also live in Boston in the US, and I walk
Speaker 1: by the streets on the weekends with my daughters and
Speaker 1: my girls, and I look at the new homes being built,
Speaker 1: and I'm getting nervous because what I see is that
Speaker 1: they're installing a lot of gas boilers. So I have
Speaker 1: a first recommendation, which is, when you build a new home,
Speaker 1: and you build a new building, how come that we
Speaker 1: continue to build them with technologies from the twentieth century
Speaker 1: that we know that we don't want anymore by twenty fifty,
Speaker 1: So are we serious or are we're not serious? So
Speaker 1: my first thing would be what do we do about
Speaker 1: new construction. My subbumn thing is more looking at it
Speaker 1: from the standpoint of company corporation which is involved in
Speaker 1: the field, and it's a case of Snider Rectrick that
Speaker 1: it's a case of many others. Sometimes I'm inside meetings
Speaker 1: where people discuss about why is it not happening faster,
Speaker 1: what's blocking? Why is it that companies are not getting
Speaker 1: into this failed and so there's a lot of discussions
Speaker 1: and reflection training with government or on what to be
Speaker 1: done in terms of incentive, carrot and sticks. Like you
Speaker 1: said earlier, the are what the private sector. It is
Speaker 1: a business case. They need customers. When you start to
Speaker 1: have customers, you have the private sector that get in
Speaker 1: and that invests. And the reality is in many regions
Speaker 1: of the world we still don't have that market or
Speaker 1: it's still not structure. And so this is probably where
Speaker 1: I would could focused rather than you're putting a lot
Speaker 1: of money on the table, but other focus on how
Speaker 1: do we cread the condition of the market. There are
Speaker 1: also a lot of discussions around skills. Okay, do we
Speaker 1: have the skills available, where the technology is available, with
Speaker 1: the manufacturing capacity available. All of this can be solved
Speaker 1: by the private sector. This is what the private sector
Speaker 1: is doing. They're scaling stuff. That's what the private sector
Speaker 1: is known for. But in order to scale, you first
Speaker 1: need to start. In order to start, we need to
Speaker 1: have a business case insight, and so maybe a recommendation
Speaker 1: I would make in order to create that market is
Speaker 1: maybe also to show the way, what do we do
Speaker 1: about public buildings as an example, Maybe we could start
Speaker 1: with public buildings and that would be a market.
Speaker 5: Incent That probably leads to a good end question, which
Speaker 5: is about the market. How do we createe and scale
Speaker 5: up the mark?
Speaker 1: It's a fundamental question. So I think we have to
Speaker 1: create that demand. So regulation, by the way you were
Speaker 1: mentioning the IPIBID, I did not extend on that. But
Speaker 1: that's going definitely into this way, right, So it's helpful.
Speaker 1: Is it going to be enough? Well, time will tell.
Speaker 1: But like I was saying, in new constructions, public buildings,
Speaker 1: there's a lot of things that could be done in
Speaker 1: order to launch that market and make the case. It's
Speaker 1: a little bit like what happened in the mobility sectors
Speaker 1: and when it starts to romp up that after its scales.
Speaker 1: We are just at this moment and we need to
Speaker 1: be attentive to that. Now. When the market is here
Speaker 1: and starting to grow, then it's the time to scale up.
Speaker 1: And here the private sector will have to play a
Speaker 1: key role. It's about structuring the value chain, training the channel,
Speaker 1: recruiting people. It's going to take a lot of people.
Speaker 1: We did a study with Boston University the Institute of
Speaker 1: Global Sustainability last year about the specific set of solutions.
Speaker 1: We found out that it would require two million jobs
Speaker 1: across the US and Europe in the coming years. That's
Speaker 1: what it's going to take. So there are a lot
Speaker 1: of positive sides to this kind of transition as well,
Speaker 1: by the way, but it's going to take a lot
Speaker 1: of effort from the private sector to grow his competency,
Speaker 1: creates the channel structure, revalue channel, and as we do that,
Speaker 1: as the private sector manages to do that, costs are
Speaker 1: going to go down. You can better it because all
Speaker 1: of the administrative burden will probably disappear.
Speaker 5: And what you're saying is there's a great opportunity and
Speaker 5: growth opportunity in front of us.
Speaker 1: Yeah, it's actually the future. I don't think it's an opportunity.
Speaker 1: I think it's inevitable. I think it's inevitable. Question is
Speaker 1: the time it will take to get there and how
Speaker 1: early we want to be in there, you know, in
Speaker 1: different regions, and we could draw a parallel with mobility
Speaker 1: and electric bakers on that way.
Speaker 5: Very interesting, keep very much, vincent.
Speaker 1: Really, that was excellent you guys, very much. It's a pleasure, pleasure, super.
Speaker 3: Super so job. I guess you had a great moment
Speaker 3: with that discussion.
Speaker 5: You have to tell me why.
Speaker 1: I'm laughing, because I don't know. I never know what's
Speaker 1: compable with you.
Speaker 3: You really want to have my opinion?
Speaker 1: Yes, okay.
Speaker 3: At first I found the conversation uninspiring. That's why I
Speaker 3: crack stupid jokes, you know about French bureaucrats. Then I
Speaker 3: really listened to the interview and I had an epiphany. Yeah,
Speaker 3: I understood something. So let me share my thoughts with
Speaker 3: you all that the commonization of buildings are great solutions,
Speaker 3: but looking for an economic model, and the problem with
Speaker 3: these engineers, in my opinion, is that they build nice products,
Speaker 3: but you know, the guys say, you need twenty years
Speaker 3: to amortize this, so in fact they need ether enormous
Speaker 3: sticks or enormous carrots to go to market.
Speaker 5: Agreed, Absolutely great.
Speaker 3: Yeah, And sometimes I go to conferences and I see
Speaker 3: those type of engineers with those technology, and I ask
Speaker 3: the simple question, what is the most powerful sentence in
Speaker 3: business when you are selling a new tech? What is
Speaker 3: that sentence?
Speaker 5: Jihad, I have no idea.
Speaker 3: Tell me that sentence is you'll see your money back
Speaker 3: in three years. But the problem is with those decarbonization
Speaker 3: of buildings, you don't see your money back in three years.
Speaker 3: So it requires a very very strong external push. Now,
Speaker 3: of course, when putting in wades, price goes through the
Speaker 3: roof and bank everybody is installing a roof top solar.
Speaker 3: But there are a lot of those cases where technology
Speaker 3: is great, but nobody wants to pay for it unless
Speaker 3: you've got those supercards or the superstixel. Of course, we
Speaker 3: talked about the energy directive, and I'm sure there are
Speaker 3: a lot of states in the US, mostly democrat I guess,
Speaker 3: have this type of strategy. But let's talk about the carrots,
Speaker 3: and I have a good example of the carrots. Is
Speaker 3: a program which was launching Italy called the superb Bonus
Speaker 3: one hundred and ten, So ern tell.
Speaker 5: Us a little bit about that pall us.
Speaker 3: That program was launed in to twenty one and it
Speaker 3: was a tax credit scheme aimed at making homes more
Speaker 3: energy efficient. So the Superbonus one hundred and ten entitled
Speaker 3: the home owners to a tax credit up to one
Speaker 3: hundred and ten percent of the cost of upgrading their property.
Speaker 3: That's a great idea, that's the best scrut. But guess
Speaker 3: what after three years, dared to scrap it because do
Speaker 3: you know how much it costs? That program cost one
Speaker 3: hundred and ten billion euro. Okay, there were a lot
Speaker 3: of upgrades to be done, but guess what the cost
Speaker 3: of building went through the roof because everybody cheated on
Speaker 3: the pogut and there were frods and everything. So you
Speaker 3: have a great program, but it's a super car out
Speaker 3: and guess what the Superbonus hundred and ten cost one
Speaker 3: hundred and ten billion. That demonstrate that it is not
Speaker 3: simple to put together an incentive which gives society a
Speaker 3: reasonable amount of value for the money which is invested.
Speaker 2: Let's go back fifteen years ago and I was listening
Speaker 2: to a fossil fuel relic and I was talking about
Speaker 2: renewables and how we were going to put in feed
Speaker 2: in tariffs and we're going to put tax credits in place,
Speaker 2: and that. The other thing what I would have got
Speaker 2: back was all the economics of it. This don't make sense. Oh,
Speaker 2: it's really difficult. And and and actually what you saw
Speaker 2: was the exact tops you saw that actually freedom tariffs
Speaker 2: very expensive, kicked off, the Markush call went down, and
Speaker 2: you suddenly put yourself in a different situation. And I
Speaker 2: want to say that start with that, because if I
Speaker 2: just take what the numbers for example that Schneider gave,
Speaker 2: what there is is there's a lot of very interesting
Speaker 2: that's called under five year payback without any form of
Speaker 2: incentive scheme in place. And you take the case of
Speaker 2: just taking the shopping center and putting sola on the roof.
Speaker 2: There's loads and loads of these. Now, the interesting thing
Speaker 2: about it is these technologies are getting cheaper and cheaper
Speaker 2: and cheaper. So for me, that economic side of it
Speaker 2: is much about the playback periods are coming down basically
Speaker 2: right across the world because of you know, massive technology improvement.
Speaker 5: So that's the first point. The second thing I would
Speaker 5: say is there's no doubt we need a carrot.
Speaker 2: And you just gave a very good example of the
Speaker 2: Italian situation where they didn't give you just a carrot,
Speaker 2: They basically gave you a goal.
Speaker 5: Line and the rest is history didn't work out. But
Speaker 5: if I.
Speaker 2: Do look at the United States, all their renewables have
Speaker 2: been based on tax credits and whatever, and you have
Speaker 2: to put the proper systems in place to incentivize that.
Speaker 2: And I do believe countries will do that the next
Speaker 2: few years. In Europe, we will make mistakes like the Italians.
Speaker 2: But I give you the really simple or if I
Speaker 2: really wanted to decarbonize buildings, I do one thing, and
Speaker 2: that is I make electricity everywhere as low costs as possible.
Speaker 2: That means get rid of the taxes. Make a statement
Speaker 2: to all of Europe and say, guys, from now on,
Speaker 2: there's no vat, there's no government taxes on it. Electricity
Speaker 2: is going to be your cheapest way to actually have
Speaker 2: energy in the buildings. Now why do I say that,
Speaker 2: Because the opposite approach is what we've been trying for
Speaker 2: the last ten years, which is we make fossil fuels
Speaker 2: more expensive and nobody likes that.
Speaker 5: So that for me is the carrot that you would
Speaker 5: need to do this.
Speaker 2: And I believe these cars will come wrong, but I
Speaker 2: will furnish about the stick because there's a stick which
Speaker 2: is very interesting. The stick is the amount of regulations
Speaker 2: that have come in across Europe in the last few
Speaker 2: years is just so big that we don't realize the impact.
Speaker 2: But I'll tell you who does. It's property owners. So
Speaker 2: if I look at the German numbers actually this morning,
Speaker 2: is that last year there is a difference between a
Speaker 2: Grade A building and a gray building of twenty five
Speaker 2: percent in evaluation.
Speaker 5: And it's getting bigger and bigger and bigger.
Speaker 2: Because the point about it is, did the property owner goes,
Speaker 2: oh God, if somebody buys that building, they're going to
Speaker 2: have to revamp it, or.
Speaker 5: I is the property older have to revamp?
Speaker 2: But so I think that also, although you might say
Speaker 2: is a stick, it's also a carrot as well, because
Speaker 2: you have to decide what to do with those buildings
Speaker 2: that are there. So that's why I think there's a
Speaker 2: pivotal moment.
Speaker 3: John, what is a great looking to you? We thank
Speaker 3: a Mundi for supporting the show. We thank Zombouti for
Speaker 3: coming and how it took to you. Next week, Thank you, guys.
Speaker 5: Thank you for listening to Redefining Energy. Don't forget to
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