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<v Speaker 1>With Laurent segal And from London and Gerard Reed from Berlin.

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<v Speaker 2>This is redefining energy today on really finding energy. We

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<v Speaker 2>have a great guest on the front of the show,

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<v Speaker 2>Christian Ruby, Secretary General of your electric Yeah.

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<v Speaker 3>It was great to have him on the show. And

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<v Speaker 3>I just want to apologize for my sound quality. I'm

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<v Speaker 3>really sorry. I was in a car traveling through France.

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<v Speaker 2>And you are in a car because you're moving your

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<v Speaker 2>precious collection of where whiskeys from Germany to Ireland.

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<v Speaker 3>Exactly, That's what I've been doing.

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<v Speaker 2>Yeah, So with Christian, we're gonna discuss the state of

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<v Speaker 2>play of the European electricity sector with good news, not

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<v Speaker 2>so good news, but have a really open conversation about

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<v Speaker 2>what's going on.

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<v Speaker 3>Yeah, listen, I think it's at the end of the day.

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<v Speaker 3>Where as to Quotia, we are entering the era of strification.

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<v Speaker 2>Absolutely, but the question is when this Welcome Christian on

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<v Speaker 2>the show. Christian, welcome back to the show.

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<v Speaker 1>Thank you very much. It's a pleasure to be here.

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<v Speaker 2>Christian. You already think publishers a regular report called power

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<v Speaker 2>bart Metals, and this year your report's called zeroing in.

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<v Speaker 2>What are your main takeaways.

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<v Speaker 1>Yeah, so our power parameter came out some good week

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<v Speaker 1>ago and essentially that the key trends we're seeing are

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<v Speaker 1>quite mixed. Back. If we start with some good news,

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<v Speaker 1>electricity is decarbonizing at record pace, and this is literally

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<v Speaker 1>record pace. The carbon emissions of electricity are down fifty

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<v Speaker 1>percent from a two thousand and eight baseline, so very significantly.

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<v Speaker 1>We have as of this month this year, seventy four

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<v Speaker 1>percent carbon free electricity in the mix, fifty percent renewables,

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<v Speaker 1>twenty four percent nuclear, and we are seeing record amounts

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<v Speaker 1>of new capacity come online. We are talking in excess

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<v Speaker 1>of seventy gigawatts of new wind and solar joining the

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<v Speaker 1>grid last year. Those are the very encouraging trends. On

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<v Speaker 1>the demand side, the picture is a bit more depressing,

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<v Speaker 1>to be honest. Overall, the tendency is that we've seen

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<v Speaker 1>a significant drop in demand over the crisis years twenty

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<v Speaker 1>twenty one to twenty twenty three seven and a half percent.

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<v Speaker 1>And when we look into the drivers of electrification, the

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<v Speaker 1>electric cars, the heat pumps, we are seeing a stagnation

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<v Speaker 1>or even drop in the uptake of these technologies. If

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<v Speaker 1>we want to continue to increase the supply of clean electricity.

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<v Speaker 1>We need to see something happen to the demand side,

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<v Speaker 1>because already now with the trends that we're seeing, we

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<v Speaker 1>can see that we have headwinds ahead for renewables. We

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<v Speaker 1>have low capture rates, we have record instances of negative prices,

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<v Speaker 1>and we have a strong consolidation, i would say, of

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<v Speaker 1>power prices at lower levels compared to the crisis years.

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<v Speaker 1>So that's in a nutshell, the big picture that we

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<v Speaker 1>are capturing in this report. Thank you very very much

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<v Speaker 1>for that.

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<v Speaker 3>Over you. I just one quick statement as I look

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<v Speaker 3>at the market, the issue is that there is no

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<v Speaker 3>financial incentive for the consumer to electrify because electricity and

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<v Speaker 3>a lot of Europe is just too expensive compared to

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<v Speaker 3>gas and even oil if you're talking about the electrification

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<v Speaker 3>of an automobile. So surely that has a push going

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<v Speaker 3>forward or am I missing something?

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<v Speaker 1>You're definitely right on that. And just to pick out

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<v Speaker 1>one crazy policy that's under discussion for the moment in France,

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<v Speaker 1>they want to slap a fifty euro tax on every

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<v Speaker 1>megawatt of electricity mega what hour that is, and there

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<v Speaker 1>we just have to say, if that's what they're going

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<v Speaker 1>to do, well, for sure, the uptake of electricity is

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<v Speaker 1>going to stall. Of course, people are going to react

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<v Speaker 1>to such a strong disincentive, So we need to work

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<v Speaker 1>on the taxes, that's for sure. And we also need

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<v Speaker 1>to work outside of the electricity space, because the choice

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<v Speaker 1>between a gas solution and an electricity solution is going

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<v Speaker 1>to be, you know, dependent on the economics of either

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<v Speaker 1>of them. So we need to have some disincentives frankly

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<v Speaker 1>to use the gas solutions going forward, if we want

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<v Speaker 1>to continue our phase out of primarily the Russian imports

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<v Speaker 1>of gas, and in the longer term also than a

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<v Speaker 1>full transition to carbon free or carbon neutral gases.

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<v Speaker 3>I should say, Christian, I don't think there's one politician

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<v Speaker 3>in Europe that will make gas more expensive, and the

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<v Speaker 3>reason is because voters don't want us. So I think

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<v Speaker 3>we have to change that dialogue and say let's make

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<v Speaker 3>electricity cheaper. That's my view. Your French and after your pots.

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<v Speaker 2>Oh, EDF is a basket case. Let me give you

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<v Speaker 2>an example. So recently the government is so bankrupt they're

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<v Speaker 2>going to steal money from EDF without asking them. I

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<v Speaker 2>mean they're literally going to help themselves. And at the

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<v Speaker 2>same time DF needs more money to finish in clap

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<v Speaker 2>pointcy in the UK, so they need to tap some

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<v Speaker 2>private e quickly fund. We're gonna, you know, charge them

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<v Speaker 2>an absolute fortune. So I'm afraid that EDF is a

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<v Speaker 2>victim of too much government intervention. But that's just my

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<v Speaker 2>point of view. And I know, Christian you need to

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<v Speaker 2>stay very neutral and we're not going to open the

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<v Speaker 2>nuclear yes, no, and so on, because we only hear

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<v Speaker 2>twenty minutes. But I'm interested in the following view. Electricity

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<v Speaker 2>demand is going up literally everywhere. China has electlified, in

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<v Speaker 2>fact much more than you're in percentage of its energy consumption.

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<v Speaker 2>In the US, for the first time we see really

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<v Speaker 2>a pickup in energy demand. A lot of talks of

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<v Speaker 2>our AI that. So why is this not happening in

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<v Speaker 2>Europe or yet?

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<v Speaker 1>I think there's a whole range of reasons. The first,

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<v Speaker 1>very important reason is that there was a very significant

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<v Speaker 1>amount of demand reduction and demand destruction over the crisis

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<v Speaker 1>years when electricity prices went through the roof. That led

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<v Speaker 1>to shutdown of a number of big factories in Europe,

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<v Speaker 1>and it led to consumers starting to save both gas

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<v Speaker 1>and electricity. So there's definitely some aftermath of this, because

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<v Speaker 1>even if consumers have been forgetting about the energy efficiency measures,

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<v Speaker 1>some of those factories that shut down did not reopen.

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<v Speaker 1>And another key element is in this is that we

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<v Speaker 1>have very sluggish growth in Europe. In the US they

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<v Speaker 1>have decent, if not impressive growth rates, maybe close to

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<v Speaker 1>three percent. In China they're struggling to get past the

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<v Speaker 1>five percent growth mark. But in Europe where I mean

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<v Speaker 1>when we look at accricate Europe, we're less than one percent.

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<v Speaker 1>That's just very clear that that without some economic growth,

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<v Speaker 1>it's also difficult to see a significant increase in the

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<v Speaker 1>demand for electricity. And the other things are that we're

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<v Speaker 1>still waiting for the impact of the demand side policies,

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<v Speaker 1>the uptake of electric cars, the heat pumps are not

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<v Speaker 1>really beginning to work wonders when it comes to demand.

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<v Speaker 1>And this is also why one of our key messages

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<v Speaker 1>these days is we need to stimulate demand for electricity,

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<v Speaker 1>otherwise we're not going to be able to make the success,

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<v Speaker 1>the decarbonization success of electricity a broader societal success.

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<v Speaker 2>Everybody heard about last month's Mayo Druggy report on your

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<v Speaker 2>europe competitiveness, and they say, oh, now, the US are

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<v Speaker 2>so much more competitive than you'all. I've been on the

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<v Speaker 2>energy market for quite some time, so I know the history.

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<v Speaker 2>If you look back at the average power price in

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<v Speaker 2>your inflation ADS, that compared to twenty five years ago,

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<v Speaker 2>we have managed to reduce that price by fifty percent.

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<v Speaker 2>So in fact, if we CITI is much cheaper than

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<v Speaker 2>it was now. Because the US found shale gas, and

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<v Speaker 2>you know the equivalent of the Saudi Arabia and permium basin,

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<v Speaker 2>their prices have gone down times four. That's why we're

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<v Speaker 2>not competitive. We're not competitive because we don't make it false.

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<v Speaker 2>We're not competitive because the permium bason is not in Bavaria,

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<v Speaker 2>it's in Texas. Sometimes I think we get a bit

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<v Speaker 2>hard on us, knowing that we are a continent which

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<v Speaker 2>imports eighty percent of its energy and we're not blessed

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<v Speaker 2>by great resources, and we need to understand that we

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<v Speaker 2>are naturally in a difficult position. I don't want to

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<v Speaker 2>have a too gloomy conversation. We need to deal with

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<v Speaker 2>the cars that we have, which are not very good.

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<v Speaker 2>But I've seen so much podcast and you know, Jard

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<v Speaker 2>and I we invested in rooftop solar and so I

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<v Speaker 2>wonder how is it processing your statistics you count them

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<v Speaker 2>like solar production or negative demand, because you might have

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<v Speaker 2>a lot of official demand which just disappear by the

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<v Speaker 2>fact that people are doing a lot of self consumption,

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<v Speaker 2>or how do you process that?

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<v Speaker 1>Well, two things to take up here. First off, I

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<v Speaker 1>think part of the story about waning demand is exactly

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<v Speaker 1>what you say, that some of it in quotation mark

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<v Speaker 1>disappears behind the meter, and let's be very very clear

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<v Speaker 1>and articulate about that. There's absolutely no problem with that.

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<v Speaker 1>On the contrary, that's a good thing. That's why I

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<v Speaker 1>insist to distinguish between demand reduction and demand destruction. The

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<v Speaker 1>reduction piece we're absolutely fine with. It's the destruction piece

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<v Speaker 1>that we're concerned about. That's when factories shut down and

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<v Speaker 1>don't reopen. The second thing that you're bringing up is

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<v Speaker 1>incredibly important and it's one that I am actively making

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<v Speaker 1>to policy makers these days. We have to get the

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<v Speaker 1>analysis right when we talk about compar additiveness. As a

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<v Speaker 1>matter of fact, just explaining exactly what you did to

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<v Speaker 1>a journalist the other day, namely that holded power prices

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<v Speaker 1>are historically speaking fairly low for the moment and it

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<v Speaker 1>is a mistake to think that we should be going

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<v Speaker 1>to the price levels of twenty twenty for power, because

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<v Speaker 1>in twenty twenty nobody was making money and you were

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<v Speaker 1>not going to see sustained investments. If you have power

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<v Speaker 1>prices at you know, say thirty euros or something, that's

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<v Speaker 1>just not enough to have a proper business case. So

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<v Speaker 1>we need to be clear about the fact that, yes,

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<v Speaker 1>we have a competition situation for some specific industries and

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<v Speaker 1>we need to deal with this. But we need to

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<v Speaker 1>be very careful with this generic policy recommendation of lowering

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<v Speaker 1>energy prices. The risk is that we lower it so

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<v Speaker 1>much that that investments stop because it just doesn't make

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<v Speaker 1>sense to invest anymore. So there we need to find

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<v Speaker 1>a very very delicate.

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<v Speaker 3>Bal don't need to be cut across it. Where I'm

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<v Speaker 3>coming from a slightly different it's not about lowering the

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<v Speaker 3>wholesale power prices. It's actually lowering the cost to the

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<v Speaker 3>consumer of buying electricity. There is no incentive for the

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<v Speaker 3>consumer to decarbonize because gas is too cheap. Retail gas

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<v Speaker 3>is too cheap compared to electricity. That's where I'm coming from.

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<v Speaker 3>So if you get rid of taxes, if you maybe

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<v Speaker 3>even rethink the way grid charges work, et cetera, et cetera,

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<v Speaker 3>then actually you bring the costs down and automatically the

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<v Speaker 3>consumer down is going to put in heat punts, is

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<v Speaker 3>going to put in electric vehicles, etcetera.

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<v Speaker 1>Counter that's where I'm coming from. I think you have

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<v Speaker 1>a point as well, Gerard. We are very much in

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<v Speaker 1>agreement that we need to look at incentives for consumers

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<v Speaker 1>to take up the electric solutions. Grid charges can be

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<v Speaker 1>one element in this, passing through the benefits of cheap

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<v Speaker 1>renewables to customers via PPAs and see if these can

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<v Speaker 1>be another way. We just need to do it in

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<v Speaker 1>a way that's carefully crafted so that we don't get

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<v Speaker 1>the wrong policy outcome. Again here, for instance, the Draugi

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<v Speaker 1>report says, let's progressively cover all renewables with PPAs and CfDS.

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<v Speaker 1>If you cover hydro with a CFD, you're going to

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<v Speaker 1>turn a flexible resource into a baseload resource and that's

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<v Speaker 1>not going to be helpful for system costs. So yes,

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<v Speaker 1>let's work on ways of making it attractive for consumers

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<v Speaker 1>to decarbonize. Some elements in this are locational signals, not

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<v Speaker 1>locational markets, but locational signals, time of use signals. It

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<v Speaker 1>is flexibility signals, so that you activate your heat pump,

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<v Speaker 1>your car charging in a way so that it actually

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<v Speaker 1>helps the grid. And by the way, that there is

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<v Speaker 1>an economic premium potentially from owning these types of devices.

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<v Speaker 1>So those are definitely elements that we should be working

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<v Speaker 1>more on.

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<v Speaker 2>Recently, the IEA really is annual report which is very bullish.

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<v Speaker 2>They call it the age of electricity. So that's good.

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<v Speaker 2>The second good news is that's not coming from it.

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<v Speaker 2>It's coming from job. It's an energy transition up. Not

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<v Speaker 2>when you find a new source of energy, it's when

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<v Speaker 2>you find a new source of energy storage. And now

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<v Speaker 2>if you look at the price of batteries, I mean

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<v Speaker 2>I'm investing in batteries, the price is going down. It

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<v Speaker 2>is phenomenal. With the price going down, we're opening new

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<v Speaker 2>markets all the time, markets which are too expensive. And

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<v Speaker 2>now yes we can apply. And of course you can

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<v Speaker 2>always have the question of the docal floater. We need

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<v Speaker 2>to keep some fossil fuel backup and stuff so on,

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<v Speaker 2>develop capacity market. I mean into those type of conversations.

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<v Speaker 2>But I would say overall, the technology continue to improve.

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<v Speaker 2>Solar panel at eight cents per What Wow. Now the

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<v Speaker 2>way in the industry, what problems too three years ago

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<v Speaker 2>is fixing itself. Now you see again that the price

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<v Speaker 2>is going to attal stabilize, the LCUI is going to

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<v Speaker 2>go down, batteries so cheap crazy, that's good. These are

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<v Speaker 2>good news, These are tailways. So I also don't want

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<v Speaker 2>our listeners to end up in a bit of a

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<v Speaker 2>gloomy perspectively, I think there's a lot of stuff going

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<v Speaker 2>on in the posive direction for industry, I.

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<v Speaker 1>Would agree, And the one thing I picked out of

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<v Speaker 1>that I report was the forecast on solar that that

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<v Speaker 1>solar employment is going to continue to boom and also

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<v Speaker 1>towards the end of this decade, I agree with that

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<v Speaker 1>the combination of massive over capacity in production of panels

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<v Speaker 1>with the relatively lower amount of friction NIMBI friction is

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<v Speaker 1>really just making solar a winner. The one thing I

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<v Speaker 1>see in terms of challenges ahead, or the two things

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<v Speaker 1>perhaps for solar are one grid connections, because we really

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<v Speaker 1>see the connection cues expand at record pace. And the

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<v Speaker 1>second thing is a deteriorating business case because let's face it,

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<v Speaker 1>these panels are producing at the same time and therefore

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<v Speaker 1>the capture rates are going to be under increasing strain.

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<v Speaker 1>That's where your point about storage comes in, and I

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<v Speaker 1>think we need to look at the storage question from

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<v Speaker 1>a number of different angles. First of all, we need

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<v Speaker 1>to look at the different timeframes, what is it, what

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<v Speaker 1>type of timeframes do we need in the market. And secondly,

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<v Speaker 1>we need to look at the volumes, because the volumes

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<v Speaker 1>required are frankly humbling, even if technology costs are coming down.

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<v Speaker 1>We assess that we will need some one hundred and

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<v Speaker 1>fifty gigawatts to be added to the grid by twenty thirty.

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<v Speaker 1>And to put this in perspective, the existing amount of storage,

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<v Speaker 1>including all pumped hydro storages, that's around fifty so everything

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<v Speaker 1>we've ever built that is on line today, we need

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<v Speaker 1>to build three times as much in five years or so.

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<v Speaker 1>It is quite a daunting challenge and it's great to

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<v Speaker 1>hear that we increasingly have that merging business case. But

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<v Speaker 1>I think that if we look at utility scale storage

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<v Speaker 1>capacity markets is going to be a quite important element,

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<v Speaker 1>and this is for instance, what we see in the

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<v Speaker 1>UK where storage is taking off more than in other markets.

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<v Speaker 3>One thing I just want to add to that that

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<v Speaker 3>you're forgetting about is the rooftop market, and the rooftop

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<v Speaker 3>market is basically forty percent of all solar, and that

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<v Speaker 3>business case is getting better and better and better. The

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<v Speaker 3>reality is in a lot of countries across Europe today

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<v Speaker 3>you can put solar on your roof and you're generating

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<v Speaker 3>a third to a quarter of the price that you're

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<v Speaker 3>buying it from the power ber that and by the way,

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<v Speaker 3>then it makes sense to be able to put batteries

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<v Speaker 3>in alongside that, and you know they're going to be

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<v Speaker 3>in in droves. So I would look at that and

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<v Speaker 3>actually say, I hear what you say in terms of storage.

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<v Speaker 3>What my point is, it's common, but it's not large scale.

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<v Speaker 3>It's rooftop because the economics are just so good there.

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<v Speaker 1>That's good news in the sense that something is coming.

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<v Speaker 1>I would just say the figures I'm mentioning that one

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<v Speaker 1>hundred and fifty gigawatts is still of a magnitude that

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<v Speaker 1>is quite humbling, and therefore our biggest challenge for the

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<v Speaker 1>energy transition is going to be challenges to the system

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<v Speaker 1>and handling those on time. It's not going to be

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<v Speaker 1>that we lack the technology or so. It's about making

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<v Speaker 1>this stay stable as we fundamentally transform this. Some people

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<v Speaker 1>say it's like rebuilding a train while it's traveling at

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<v Speaker 1>ninety miles per hour or something, and that's a little

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<v Speaker 1>bit the task we have at hand. When we see

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<v Speaker 1>how the grid is being strained today. We need batteries

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<v Speaker 1>and storage flexibility arrangements at all voltage levels in order

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<v Speaker 1>to keep it stable.

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<v Speaker 2>Because I'm in a great mood, I want to end

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<v Speaker 2>up on a very positive initiative that's being taken around

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<v Speaker 2>the North Sea, and it's called the North Sea Windpower Hub.

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<v Speaker 2>And all the countries around the North Sea regarding the

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<v Speaker 2>fact that they are in the EU, or war in

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<v Speaker 2>the EU, or will never join the EU, so from

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<v Speaker 2>Norway to Denmark to Germany, Netherlands and the UK are

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<v Speaker 2>thinking together about using really the North Sea as a

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<v Speaker 2>gigantic source of power and sharing intelligently through nodes, hubs

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<v Speaker 2>and so on, so that each connection is not developed

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<v Speaker 2>one by one, but there's a there's a measure of

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<v Speaker 2>literally creating a new power system inside the North Sea.

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<v Speaker 2>And I see that as an extremely positive development, and

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<v Speaker 2>I'm sure You're Electric supports that initiative absolutely.

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<v Speaker 1>I believe we were the first trade association in the

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<v Speaker 1>world that came out with estimate of what we need

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<v Speaker 1>to build in the North Sea, which was on point,

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<v Speaker 1>and which is what the makers have kept, which is

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<v Speaker 1>the Bullpark figure of three to four hundred gigawads of capacity. Actually,

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<v Speaker 1>as it were, I'm seeing that built out potential not

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<v Speaker 1>only as a savior for the energy transition and the

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<v Speaker 1>power supply in northwestern Europe, but also as a basis

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<v Speaker 1>for closer cooperation between the UK and the EU twenty

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<v Speaker 1>seven Because in a world with more teopolitical strains, more

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<v Speaker 1>hostile neighbors, more aggressive industrial competition, I think eventually we'll

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<v Speaker 1>see that it makes sense to work together between the

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<v Speaker 1>European brothers and sisters, even if one of the siblings

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<v Speaker 1>decided to move out a.

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<v Speaker 2>Little bit of a temp to tent drug exactly.

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<v Speaker 1>So, Actually, we just wrote a letter to both the

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<v Speaker 1>Commission and to Downing Street to say it's time to

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<v Speaker 1>move on from the Brexit minimalism, the stalemate of Brexit

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<v Speaker 1>and come towards more mutually benefit official working arrangements because

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<v Speaker 1>the current trade framework is not going to be conducive

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<v Speaker 1>for the infrastructure build out and the trade for this

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<v Speaker 1>mega power plant. That we're building in the North Sea.

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<v Speaker 1>We need better rules when it comes to power trading,

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<v Speaker 1>to the use of our interconnectors if we want to

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<v Speaker 1>make the most of this both for the UK and

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<v Speaker 1>for the continent. So we see I to eye here.

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<v Speaker 2>Well, Christian, that's an excellent way to end this conversation

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<v Speaker 2>with a pleasure talking with you. We fully support your

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<v Speaker 2>electric and keep on the great work.

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<v Speaker 1>Thank you and likewise, thank you very much.

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<v Speaker 2>Take care. In conclusion, we just want to tell our

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<v Speaker 2>friends and listeners then Chard and I will both will

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<v Speaker 2>be present to twenty first of November at the Energy

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<v Speaker 2>Storage Awards and it's going to be a fantastic evening.

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<v Speaker 2>So I don't know how many remaining seats are, but

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<v Speaker 2>please take it out. We'll leave the coordinates in the

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<v Speaker 2>show notes.

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<v Speaker 3>Looking forward to my friend, looking forward to us.

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<v Speaker 2>Thank you for.

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<v Speaker 1>Listening to Redefining Energy.

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<v Speaker 3>Don't forget to rate the show and subscribe on Apple, Podcast,

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<v Speaker 3>Spotify or the platform of your choice.