Speaker 1: With Laurent's segal and from London and Gerard read from Berlin.
Speaker 1: This is redefining energy.
Speaker 2: Do they on Rethink and Energy job. We're going to
Speaker 2: talk about the financial structure which has been very popular
Speaker 2: last a decade but have been more challenged in through twenties,
Speaker 2: and that's what we call the yield gos.
Speaker 3: Absolutely, ron I think it's probably a good idea to
Speaker 3: explain to people what yel CODs are. The idea of
Speaker 3: a yield cod really is that what you do is
Speaker 3: you buy and you manage renewable assets and you pay
Speaker 3: a dividend on it. Hence the idea you had a
Speaker 3: yield and these vehicles were listed on the stock market
Speaker 3: and actually to describe the best way just going their funds.
Speaker 3: So what you have as a fund and they pay
Speaker 3: this returnout and then they actually have a management company
Speaker 3: that takes care of the assets and stuff like that.
Speaker 3: So in the case of say, just example of who
Speaker 3: are going to invite someone in from Greencoat, what green
Speaker 3: Coat would have the will be the yel CoA just
Speaker 3: called green Coat Renewables and that is managed by Greencoat Schroeders.
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Speaker 3: And this has been very popular, particularly in the UK
Speaker 3: for the last decade, as you said, as a large
Speaker 3: amount of renewables that are sitting in these eel cores
Speaker 3: and allows people to the public markets to invest I
Speaker 3: suppose in these renewable asses in return and get a dividend.
Speaker 2: So if we take the case of Shodog Green and
Speaker 2: there are various funds, they have invested more than thirteen
Speaker 2: billion euro over the past decade and they managed four
Speaker 2: hundred energy set across Europe, Americas and Asia. And I
Speaker 2: guess today managers one of the funds chard it's a
Speaker 2: good friend of yours.
Speaker 3: Yep, and that's Paul O'Donnell from Greencoat Renewables which is
Speaker 3: the name of the eel Co And yeah, looking forward
Speaker 3: to the conversation in and around the future of VEHICO.
Speaker 2: Let's bring Paul on the show. Paul, welcome to the show.
Speaker 4: Thank you, Lauren, thank you Gerard. It's great to be
Speaker 4: here with you this morning.
Speaker 3: Yeah, looking forward to this conversation. Well, let's maybe kick
Speaker 3: off Paul. You've been investing in renewable infrastructure for well
Speaker 3: over a decade now at this point in time, would
Speaker 3: you give us all a sense of what's changed and
Speaker 3: what's different than when you started.
Speaker 4: So, when we started the business in Greencoat, looking back
Speaker 4: in twenty twelve twenty thirteen, there was no long term
Speaker 4: capital in the renewable infrastructure space. At that time. You
Speaker 4: had short dated private equity funds, and by creating some
Speaker 4: of the listed investment trusts that we did, we allowed
Speaker 4: investors to get exposure to the renewable energy asset class.
Speaker 4: At that time, the sector was really about long drating
Speaker 4: government contracts, inflation protection, very stable power grids, and investors
Speaker 4: were really getting a chance to get the benefits of
Speaker 4: stable dividends and businesses that had growth and embedded in
Speaker 4: the asset class. And so I would say the first
Speaker 4: six to seven years were really about allowing that type
Speaker 4: of long term capital to be mobilized into the sector,
Speaker 4: a sector that was going to need a lot of
Speaker 4: long term capital to support the investment that we can
Speaker 4: see clearly a lot has changed over the last five years.
Speaker 4: We've seen an energy crisis in Europe, We've seen a
Speaker 4: focus towards energy security, We've seen a lot of policy
Speaker 4: change in terms of the rise and the demand, and
Speaker 4: then the recent changes that have come out of the
Speaker 4: US and interesting we've also seen a significant rat interest
Speaker 4: rate environment change where the cost of capital changes have
Speaker 4: made material impacts in terms of how capital is allocated.
Speaker 4: All of that has created a more complex and a
Speaker 4: more challenging energy and environment in which we invest into today,
Speaker 4: but one also where you can see significantly new areas merging.
Speaker 4: You can see the opportunity within storage and how that
Speaker 4: interplays with the renewable infrastructure. You can see the growth
Speaker 4: of demand and in particular the AI impact that's going
Speaker 4: to require renewables to play a much greater role. And finally,
Speaker 4: there's a more complex need today in terms of how
Speaker 4: we all trade and manage power assets in an environment
Speaker 4: where the grid challenges are much more significant than they
Speaker 4: were previously.
Speaker 2: So pout ten fifteen years ago, your job was to
Speaker 2: buy one wind park at the time, one sort of
Speaker 2: park of the time, and now as you introduce it's
Speaker 2: getting more and more complex. Before we go into the
Speaker 2: new sectors, talk about how you we can take rate
Speaker 2: does spot for you. From a management perspective.
Speaker 4: We've been very active over the last ten years. We've
Speaker 4: invested about thirteen and a half billion into the sector.
Speaker 4: We manage at just under eight gigawatts of renewable assets
Speaker 4: and that's about four hundred and forty five assets in total.
Speaker 4: And we're active globally, so we've assets in all across Europe,
Speaker 4: in the US, and more recently we've been investing into China.
Speaker 4: Each of those markets provides a sort of different challenge
Speaker 4: in terms of asset management, in terms of how we
Speaker 4: manage the integration of them as a business overall, and
Speaker 4: at times we take different approaches. We have in some
Speaker 4: cases very large joint venture partners with some of the
Speaker 4: biggest global utilities. Those can be large offshore WinForms in Germany,
Speaker 4: in the UK, etc. But then we also have our
Speaker 4: own asset management team, who are the guys who are
Speaker 4: on the ground, who are the engineers who can work
Speaker 4: with different asset management teams to make sure the project's
Speaker 4: run well, that we have the right availability, that with
Speaker 4: the right trading arrangements, and ultimately that the projects can
Speaker 4: deliver the output that we expect from them.
Speaker 3: Paul, if I look from the outside, and I look
Speaker 3: and I go, and it's not just looking at you,
Speaker 3: it's just looking if I look at the whole renewables.
Speaker 3: You know, renewables have basically been financed and owned by
Speaker 3: funds for the last fifteen years, and then suddenly you're
Speaker 3: in a world where you're not able to manage your
Speaker 3: power plant with an Excel sheet anymore.
Speaker 2: You have to.
Speaker 3: Really go and do it actively. And what I see
Speaker 3: is just a huge amount of stress in the market
Speaker 3: because there's lots of people who can't do it. And
Speaker 3: if I look at what you're doing, you seem to
Speaker 3: be at the front foot of it, which is that
Speaker 3: what you're doing is you're hiring yourself for it. And
Speaker 3: I'd be interesting to hear just your view of how
Speaker 3: you see that landscape and what that means in terms
Speaker 3: of an opportunity for you. Guys.
Speaker 4: It's very true Jared. For the first ten fifteen years
Speaker 4: of this industry, we've basically benefited from selling our power
Speaker 4: under government back contracts and so the need for trading expertise,
Speaker 4: the need to manage that risk was limited, so we
Speaker 4: weren't as dependent on trading within the market to essentially
Speaker 4: manage that risk. But a lot has changed in the
Speaker 4: last five years as we move out of that government
Speaker 4: backed regime, and so we've been taking a couple of
Speaker 4: different approaches to make sure we are well positioned. We
Speaker 4: are now directly selling our power to tech companies, so
Speaker 4: we enter into long term PPAs with the new industrial
Speaker 4: companies to sell them the power. We're looking at ways
Speaker 4: that we can hybridize our assets, so not just have
Speaker 4: a single technology operating on our sites, but adding storage,
Speaker 4: adding different technologies to make sure we've a more balanced
Speaker 4: set of power coming from that asset. And we're working
Speaker 4: closely with the new providers of off take ultimately who
Speaker 4: are the tech companies, to see how we can solve
Speaker 4: their needs. Because it's very clear as you move this
Speaker 4: asset class out of being one that was dependent or
Speaker 4: work on long term government contracts into one that's playing
Speaker 4: more into a more trading environment that you need to
Speaker 4: have relationships with your often akers, You need to have
Speaker 4: capability to understand the trading that will be needed on
Speaker 4: these assets, and you need to be ultimately much more
Speaker 4: active in terms of how humanite these assets day to day.
Speaker 2: Well, can you give a bit of an examples, and
Speaker 2: especially I'm interested in your hybridization talk about batteries, talk
Speaker 2: about probly your relationship with COTL. Yeah.
Speaker 4: Most recently we've been looking at a number of partnerships
Speaker 4: I guess to extend our capability, both in terms of
Speaker 4: hybridization and in terms of who we also sell our
Speaker 4: power to. One of those partnerships that we've recently created
Speaker 4: is a joint venture with Coato. We see them as
Speaker 4: one of the best players in the battery storage market,
Speaker 4: and I think they've recently won something like eighty percent
Speaker 4: of the Italian options, so they are clearly one of
Speaker 4: the leading global technology companies. What that allows us to
Speaker 4: do is to have access to the best pricing and
Speaker 4: the best innovation in the storage market. We think that
Speaker 4: plays really really well to our existing asset portfolio. It
Speaker 4: gives us the chance to hybridize them to essentially allow
Speaker 4: us to have a more different shape of power that
Speaker 4: we will generate. It also allows us to use the
Speaker 4: existing infrastructure that we have, the existing grid, the existing land,
Speaker 4: to make sure we're optimizing the sites and optimizing the
Speaker 4: grid for the overall and we think that will ultimately
Speaker 4: provide a better shape of generation that we can then
Speaker 4: sell on our long term ppa to our clients.
Speaker 3: Paul, just dig a little bit more into the whole
Speaker 3: storage area, because what I think myself and Lauran obviously
Speaker 3: been very active in that space for many years, and
Speaker 3: what we sense is really it's just a complexity in
Speaker 3: and around the revenue models of this. So I'd love
Speaker 3: to just look at how you, as an infrastructure investor,
Speaker 3: how you look at storage. In other words, do you
Speaker 3: base your pricing on the worst case scenario in terms
Speaker 3: of revenues? How could price these assets? And then you
Speaker 3: have to go to your investment committee and say, hey, guys,
Speaker 3: I need money for this, So what do you tell them?
Speaker 4: For a long time, we stayed out of storage because
Speaker 4: we didn't think the returns were attractive enough of the
Speaker 4: early stage to support an investment case. And I think
Speaker 4: the second aspect that we could see was that essentially
Speaker 4: the revenue mix that you were going to be generating
Speaker 4: was going to be less about contracted cash flows and
Speaker 4: was going to have a higher degree of volatility in that.
Speaker 4: And so I think you can see on both the
Speaker 4: pricing in terms of the access point of adding storage
Speaker 4: to your portfolio, but in addition to that the revenue
Speaker 4: streams that you can generate today, that the business case
Speaker 4: is starting to make sense.
Speaker 2: So if I just.
Speaker 4: Developed that out, when you think today of the costs
Speaker 4: down that we're seeing in the price of storage, availabilities
Speaker 4: of batteries and also the cost of development, particularly when
Speaker 4: you're adding it to your existing sites, that you have
Speaker 4: a very low incremental capex cost to add that storage
Speaker 4: into your existing portfolio. If I then take the example
Speaker 4: in Ireland where we have been adding storage to our assets,
Speaker 4: you're starting to build out a more diversified revenue base case.
Speaker 4: So you're no longer just dependent on essentially revenue streams
Speaker 4: from the grids, so for providing flexibility services, capacity services,
Speaker 4: but ultimately you're benefiting from strong trading revenues where you
Speaker 4: have the ability to arbitrage the low prices that we
Speaker 4: can see in Arland's case at Night, I guess in
Speaker 4: Spain's case, during the day and then you're able to
Speaker 4: release that power back into the grid when prices are higher.
Speaker 4: That's what's ultimately underpinning our long term investment case. We
Speaker 4: can see the arbitrage revenues that are going to exist
Speaker 4: both in terms of the day ahead market, in terms
Speaker 4: of the balancing market, and also the ability to provide
Speaker 4: different types of services as a more integrated solution to
Speaker 4: the grid in terms of flexibility and capacity. And you
Speaker 4: have to take a much more informed view across each
Speaker 4: of those revenue streams to allow you to capture what
Speaker 4: we think will be a higher long term return for
Speaker 4: the assets.
Speaker 2: Well, but it's a good segue to enter into the
Speaker 2: eight hundred pound gorilla sector, which are data sentels. When
Speaker 2: did you first started to look into it, and probably
Speaker 2: because of your client and what type of services are
Speaker 2: you developing a wrong.
Speaker 4: We've been looking at the data center sector really since
Speaker 4: we listed Greencoat Renewables in twenty seventeen. At that stage
Speaker 4: we could see in Ireland that data centers were going
Speaker 4: to be the largest energy user and that has turned
Speaker 4: out to be the case where today data centers represents
Speaker 4: twenty two to twenty three percent of all electricity used,
Speaker 4: and when you step back and think about the consequences
Speaker 4: of that, it essentially means that you need to have
Speaker 4: a very very clear policy around how you're going to
Speaker 4: allow data centers to operate alongside the renewables and into
Speaker 4: the grid system. For a long time, we were seeing
Speaker 4: this as as an opportunity to sell power directly to
Speaker 4: the data centers, so just as an off taker allowing
Speaker 4: us to provide that. But increasingly we could see a
Speaker 4: need for investors like ourselves to take a further step
Speaker 4: and to start to create the type of projects that
Speaker 4: data center owners or technology companies would need, which are
Speaker 4: much more integrated solutions in terms of provide them access
Speaker 4: to sites as well as selling the power that they're
Speaker 4: going to need to them.
Speaker 2: Because at the beginning, the data center of thelopower or
Speaker 2: mostly a real estate guys, So you come to that
Speaker 2: sector with a probably much more better understanding of the
Speaker 2: energy component of the data sitel.
Speaker 4: If you look at the data center sector, historically, it
Speaker 4: has been the capital that's flown into the data center
Speaker 4: sector has come from either real estate investors or it
Speaker 4: has come from digital investors. So we haven't really up
Speaker 4: until now had a role for energy investors to play
Speaker 4: into that. When you look at what's happened in Ireland
Speaker 4: as an example, where the policy has moved towards requiring
Speaker 4: data centers to both provide eighty percent new renewable power
Speaker 4: but also to provide backup capacity plans to manage and
Speaker 4: operate with the grid. What you now have today is
Speaker 4: a different type of requirement in terms of the development
Speaker 4: of the new sites, and they are going to be
Speaker 4: much more dependent on people who can understand the renewable
Speaker 4: energy system, but people who also can understand the smart
Speaker 4: rood system. We think that creates a significant opportunity for
Speaker 4: investors like ourselves to play a more leading role in
Speaker 4: unlocking the type of sites that technology companies are going
Speaker 4: to needy.
Speaker 3: Jump in there, just ask when you're doing this, is
Speaker 3: your business model only going to be providing the energy
Speaker 3: solution going forward or do you also integrate into the
Speaker 3: data center zone. And where I'm coming from this is
Speaker 3: I'd have a view that at some point they do integrate.
Speaker 3: And the reason they integrate is because if you think
Speaker 3: I have an AI data center, you're actually putting storage
Speaker 3: almost at the chip level at this point in time
Speaker 3: right in the form of a capacitor, and you're doing
Speaker 3: it at the rack level. So it will be more
Speaker 3: more integrated going forward than has been in the past.
Speaker 3: Or am I seeing it wrong?
Speaker 4: No, I totally agree with you, jerv. This is going
Speaker 4: to continue to integrate much further into the power system.
Speaker 4: And when we look forward, the type of sites that
Speaker 4: we're going to see data centers developed on will need
Speaker 4: to have full integrated energy systems. Fully integrated energy centers,
Speaker 4: we'll need to understand how to trade power. Whether there's
Speaker 4: a low carbon power grid system, the data centers will
Speaker 4: take that sort of power, and you have a high
Speaker 4: carbon intensity on the grid system, they should be able
Speaker 4: to release their own power and use that. So the
Speaker 4: way we see this moving as a much more energy
Speaker 4: dependent and a much more trading dependent solution as we
Speaker 4: look forward today is only the starting point of where
Speaker 4: that journey is going to go in the next ten years.
Speaker 4: And when you talk to the technology companies today, they're
Speaker 4: looking for partners who can help them to solve that problem.
Speaker 4: We think that creates significant opportunities also for companies like
Speaker 4: us to partner. We're not going to be able to
Speaker 4: provide a full end to end solution on this ourselves,
Speaker 4: and that's why we're partnering with storage companies, It's why
Speaker 4: we're partnering with trading companies who can help us to
Speaker 4: unlock that solution. And part of our solution is to
Speaker 4: be able to offer that end to end solution to
Speaker 4: the tech companies that they are going to need to have.
Speaker 3: Why don't you just virtually integrate and do it all
Speaker 3: in house.
Speaker 4: The scale of capital there that's going to be needed
Speaker 4: is just off the charts. Take for example, one hundred
Speaker 4: mag work data center. It roughly needs about one point
Speaker 4: five billion of capital to build the data center, put
Speaker 4: the racks in, and that will always be a real
Speaker 4: estate type solution. But when you look around the enabling
Speaker 4: infrastructure that is going to be needed, you probably have
Speaker 4: someone in the region of three to five hundred million
Speaker 4: of infrastructure assets that will be needed alongside that. Where
Speaker 4: we see our value add is essentially unlocking and developing
Speaker 4: those energy enabling infrastructure, energy assets that can feed into
Speaker 4: the data center. And we see that our capability to
Speaker 4: be able to partner with those people like the storage companies,
Speaker 4: like the utilities who today aren't in a position to
Speaker 4: offer that end to end solution. So we are in
Speaker 4: essence offering a platform solution to the tech companies, but
Speaker 4: we think we will do so alongside other players in
Speaker 4: the industry.
Speaker 2: Well, you're sitting in Dublin, which really has one of
Speaker 2: the biggest concentration of data centers in yourb so do
Speaker 2: you see the same type of solution that you're developing
Speaker 2: in other European countries.
Speaker 4: Absolutely, we're already seeing this happening in other markets the UK,
Speaker 4: for example, when you look at the recent partnership between
Speaker 4: Amazon and or We the disposal of old thermal plants
Speaker 4: and turning those into digital data centers. When you look
Speaker 4: at Spain as an example, what's happening down is Alaborta
Speaker 4: and the partnerships that we're seeing between utilities and real
Speaker 4: estate companies down there. When you look at what's happening
Speaker 4: in the Nordics today and the significant growth in data
Speaker 4: centers in those markets because of the access to low
Speaker 4: cost and low carbon renewable electricity in those countries, this
Speaker 4: is becoming increasingly pan European solution. But the solution is
Speaker 4: essentially embedded in the fact that you need access to
Speaker 4: renewable power and you need to deeply understand the grids
Speaker 4: where these projects will be located.
Speaker 3: Well, just change the team tinly bit in an erect
Speaker 3: but it is still relate to AI. Just can you
Speaker 3: give me your view in and around the whole hype
Speaker 3: in and around this in the sense that when you're
Speaker 3: deploying a billion euros into a data center, huge amounts
Speaker 3: of money going forward, do you, as an infrastructure investor
Speaker 3: do you look closely at these whether this is a
Speaker 3: reality or not? Or how do you measure the risk
Speaker 3: and deal with the risk of a really bit a
Speaker 3: bubble that sort of implodes.
Speaker 4: It's a great question and I guess for us when
Speaker 4: we think about the risk for us is the pace
Speaker 4: at which AI will emerge and the countries in which
Speaker 4: we're developing that does that happen. We spend a lot
Speaker 4: of time with the technology companies today, Jared, so we're
Speaker 4: talking directly to their infrastructure teams, was talking to their
Speaker 4: sustainability teams. Now what we see is the commitment both
Speaker 4: in terms of growing into Europe, but in addition to that,
Speaker 4: the growth being linked to having access to some mounstantial
Speaker 4: amounts of renewable electricity. So we think the solution that
Speaker 4: we're offering is one that is exactly where the technology
Speaker 4: companies need to go by not just having access to
Speaker 4: sites and then making those investments, but more importantly having
Speaker 4: access to rebel energy enabled sites and sites that have
Speaker 4: the grid flexibility that they will need to get projects
Speaker 4: both quickly. If you look at this sector two three
Speaker 4: years ago, people felt that the growth would emerge in
Speaker 4: the European cities, so this growth would all be driven
Speaker 4: across London, Paris, Amsterdam, Frankfurt, Dublin. But what we're actually
Speaker 4: seeing is the opposite trend happening, that the growth is
Speaker 4: now happening outside of those regions. And once you take
Speaker 4: yourself outside of those urban regions, you're looking for areas
Speaker 4: which have the right type of enabling infrastructure to allow
Speaker 4: the projects to happen quickly. While there is some questions
Speaker 4: at the pace of growth in AI, there's no question
Speaker 4: that we're going to continue to see data centers being
Speaker 4: a strategic gaser class across each of the European countries,
Speaker 4: and one that is critical not just from the technology
Speaker 4: company's perspective, but also as a critical piece of national
Speaker 4: industrial policy. And so When you link that back together,
Speaker 4: you essentially have industrial policy supporting the investment in this space.
Speaker 4: You have climate policy linking the need for newble electricity,
Speaker 4: and you have grid and regulatory policy saying that the
Speaker 4: technologies in the data centers must not be damaging the grids,
Speaker 4: They must provide flexibility and must provide balance those grids.
Speaker 4: So we think that is a new sector and creating
Speaker 4: a new set of opportunities for us to consider.
Speaker 3: Can I maybe just ask one other question that data
Speaker 3: center which is in and around the whole area of
Speaker 3: off grade as opposed to on grid, and particularly seeing
Speaker 3: this trend in the United States, and I know it's
Speaker 3: surely not off grade because usually what happens is you're
Speaker 3: connected into a gas grid and then you're providing the
Speaker 3: power with gas and renewable. So how do you see
Speaker 3: that developing across Europe just as a trend.
Speaker 4: There's very very few places in Europe today where you
Speaker 4: can go off grid and to use just purely renewable
Speaker 4: electricity to support your data center. We don't believe that
Speaker 4: essentially using a gas driven solution is where the technology
Speaker 4: companies want to go in Europe. And we also don't
Speaker 4: believe it's where regulators will allow that to happen, or
Speaker 4: the technology companies will allow their sustainability for that to happen.
Speaker 4: So the idea that you work off grid is one
Speaker 4: that is of perhaps possible in the US, but is
Speaker 4: less likely to be the case in Europe. And so
Speaker 4: what you're therefore looking for is locations that have significant
Speaker 4: access to renewable electricity, have a grid policy that can
Speaker 4: support the exposure to data centers and can handle that,
Speaker 4: and then the sites themselves are able to integrate into
Speaker 4: the energy system overall and work in a much more
Speaker 4: flexible situation as opposed to moving to a fully off
Speaker 4: grid solution that perhaps you've seen a bit more of
Speaker 4: in the US.
Speaker 2: Well, you work with listedly I Gels. How did the
Speaker 2: market value your entry into the data center space.
Speaker 4: Now, Lauren, it's gone down really well. We announced our
Speaker 4: new strategy at the start of March to the market
Speaker 4: which set out how we see renewables and digital infrastructure
Speaker 4: working side by side, and in addition to that, how
Speaker 4: we see the addition of storage into our existing assets
Speaker 4: creating greater long term value. And since then the share
Speaker 4: price is up about twenty percent. We think The reason
Speaker 4: for that is the sector has been looking for a
Speaker 4: clear growth plan and also looking for ways that we
Speaker 4: can unlock value in the renewable energy space and move
Speaker 4: the story on from one that was about dividends and
Speaker 4: essentially only long term assets to one where it's a
Speaker 4: much more integrated solution and a service provider to the
Speaker 4: sector overall. So we've been really pleased. You know, we
Speaker 4: think the listed sector has shrunk in recent years. You've
Speaker 4: seen a lot of companies been taken private on the
Speaker 4: IPPs going off market, but the public market still provides
Speaker 4: a substantial opportunity for growth and to create growing companies,
Speaker 4: and that's what we'd like to do. We'd like to
Speaker 4: grow our business and to become a pan European platform
Speaker 4: solution to renewable sector, but also the integrated data center.
Speaker 3: So bad then maybe just to wrap it up here,
Speaker 3: give us a view of sort of what you want
Speaker 3: to achieve in the next five years.
Speaker 4: We're at a really interesting point in the sector. We've
Speaker 4: come from the world where we provided long term income
Speaker 4: to investors for a long period of time and we
Speaker 4: scaled our business substantially in that space. What you can
Speaker 4: see today is as a significant opportunity to create value
Speaker 4: now in this sector, and the opportunities that are opening
Speaker 4: up across the difference in new asset classes create the
Speaker 4: chance for a much more integrated solution, and we're looking
Speaker 4: to do that both in terms of creation of new
Speaker 4: platforms providing a more integrated solution and also providing different
Speaker 4: ways for investors to access the space, both in terms
Speaker 4: of continuing to benefit from owning and operating assets, creating
Speaker 4: the new type of assets are going to be needed
Speaker 4: that we see integrating alongside the renewbles that we are.
Speaker 2: Well, Paul, thank you very much for this very interesting
Speaker 2: conversation and how investment fund into Honorable is more thing
Speaker 2: into a much more I don't know how to call it,
Speaker 2: but I would say it integrated the energy solution provider,
Speaker 2: and I guess as a fund you you must be
Speaker 2: much more nimble and flexible than those big utilities trying
Speaker 2: to do the same thing. So thank you very much
Speaker 2: for coming on the show.
Speaker 4: Thank you both really enjoyed.
Speaker 3: Thanks a lot, Paul, good luck with everything. Rather on
Speaker 3: what do you think.
Speaker 2: Well, I think that spoilers explained it was a very
Speaker 2: successful model, but recently it has been hurt by rising
Speaker 2: interest rates, so everybody's competing for the same yield. And
Speaker 2: of course last decade the interest was was solow that
Speaker 2: you'll cover a very interesting proposition. But now they have
Speaker 2: to compete with other type of assets. So as a
Speaker 2: iniquity story, it has been kind of lackluster recently. The
Speaker 2: fact that they are doing the pivot from yield to
Speaker 2: growth and interesting in data centers. That's for me, a
Speaker 2: very interesting solution. And who invests in data center's development
Speaker 2: right now it was real estate guy or digital infrast
Speaker 2: your guys, and their knowledge of energy was kind of thin.
Speaker 2: So it's great to see that people who have the
Speaker 2: expertise of energy are entering into the data center space.
Speaker 3: I like the phrase you use there, which was yield
Speaker 3: to growth. That's exactly what these guys are doing. And
Speaker 3: actually the first yel codst to do this, because if
Speaker 3: you actually look at a lot of the yel CODs,
Speaker 3: what they're doing is they're selling assets. They're financially restructuring,
Speaker 3: so everything is about sort of trying to keep the dividend,
Speaker 3: but at the same time, sorry, shareholders are selling. That's
Speaker 3: the reality of it. So after recently announced the decision
Speaker 3: to go in that data cent I mean, the share
Speaker 3: price went on and that sort of tells you something.
Speaker 3: I definitely see this as a way going forward. And
Speaker 3: I think we've talked around before that in the whole
Speaker 3: area of renewables there is a big change going on.
Speaker 3: And because before it was almost like a band like project,
Speaker 3: and today that's changing. You know, you're going to have
Speaker 3: to look at can I get more yield out of
Speaker 3: these assets? And if so, how and it goes into
Speaker 3: a different mode. And as I said that that praise
Speaker 3: you used is really appropriate risk to growth.
Speaker 2: It's a playbook used by a lot of people who
Speaker 2: admire like Queen Brook and so many others. But the
Speaker 2: great thing is that over the past ten years they
Speaker 2: have are quite the discipline to deliver some yield when
Speaker 2: the market they're going to realize that not only they
Speaker 2: are not a growth product, but they keep the discipline
Speaker 2: of delivering yield. I think they are on their way
Speaker 2: for a good reinvention.
Speaker 3: And yeah, I agree with you that. I suppose. The
Speaker 3: only question I have over is whether it's the correct
Speaker 3: structure to go forward with. And what I mean by
Speaker 3: that is it's a fond. At the end of the
Speaker 3: day you're investing in and I think we know from
Speaker 3: most investors they want to say everybody fully aligned. And
Speaker 3: what I mean by fully aligned is that you're in
Speaker 3: the same boat. In other words, Paul isn't actually part
Speaker 3: of Gyeoreer. What he is is they are managing the
Speaker 3: assets for the shareholders of Gwyne Coolrio. But I wonder
Speaker 3: if you end up with these businesses becoming real independent
Speaker 3: power producers.
Speaker 2: Which is a subject we've been facing over and over
Speaker 2: and over again. So it's really the transformation the management
Speaker 2: of those wind farms solar parks into a much more
Speaker 2: integrated and sophisticated model. It's also what the big funds
Speaker 2: are doing the Kick, the Carlisle and the Blackstone. The
Speaker 2: philosophy behind the Yield Go was, look, not only we're
Speaker 2: going to deliver a yield, but we're going to give
Speaker 2: you the daily liquidity because the shares are listed. And
Speaker 2: in fact you realize that investors are patient, they are
Speaker 2: happy to commit money when it comes to infrastructure, to
Speaker 2: the book Fields or the Macquarie, I mean, all those
Speaker 2: big funds who have really a lot of firepower.
Speaker 3: The issue though, and let me just go back to
Speaker 3: if you've got this type of fund structure in the market,
Speaker 3: it's much easier for the investors now because they have
Speaker 3: to mark the market. That means if we're reporting to
Speaker 3: if I'm a big shareholder on these guys, I have
Speaker 3: to report every quarter and actually my valuation is going
Speaker 3: up and down, up and down well, and when it's
Speaker 3: in the private market, I don't have that, and that
Speaker 3: makes it much easier for investors. And I know that
Speaker 3: worked in the past. So what you end up with
Speaker 3: was who are the people are investing in these yar couse,
Speaker 3: these are just private individuals that really want to have
Speaker 3: return on investment. And I think you said it earlier
Speaker 3: on what ends up happening is there are other alternatives.
Speaker 3: I can put money into government bonds right where returns
Speaker 3: of yels have gone up over the last few years.
Speaker 3: So that's part of the issue that they not just
Speaker 3: stay but just the YEL cold in general.
Speaker 2: Howd okay job to be for Owed, But I think
Speaker 2: it was very nice to have put on the show.
Speaker 2: Very competent team. We wish them the best.
Speaker 3: Yeah, thanks Paul, and again Ron, good speaking. Looking forward
Speaker 3: to chatting next week.
Speaker 2: Bye.
Speaker 3: Thank you for listening to redefining energy. Don't forget to
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