Speaker 1: With Laurent's segle and from London and Gerard read from Berlin.
Speaker 1: This is redefining Energy.
Speaker 2: Today on Relief Energy. Look, it's summertime, so we recycle
Speaker 2: old tapes and jahab that's your show. Explain what happened.
Speaker 1: Well, See, it's the first time that I've actually done
Speaker 1: a podcast that took an hour, and ultimately I was
Speaker 1: just interviewed for an hour in and around my views
Speaker 1: and energy disruption and what's going on in the energy space.
Speaker 1: I must have been enjoyed it, but I don't believe
Speaker 1: I could talk for an hour, but I did. There
Speaker 1: you go. I'm glad. I'm sorry that you had to
Speaker 1: go cut it from an hour down to twenty minutes.
Speaker 1: That must have been a painful process.
Speaker 2: No, No, I think I kept pretty much everything because
Speaker 2: it was good. So talk about your host.
Speaker 1: So, yeah, Lauren, it was for me interesting because it
Speaker 1: was on video. I taught to myself, I'll try something.
Speaker 1: And you know the name of the platform was called
Speaker 1: Clean Titans, available on YouTube. And yeah, if you want
Speaker 1: to see what I look like, you can look at
Speaker 1: it on YouTube or you can listen here on Spotify
Speaker 1: or Apple.
Speaker 2: Okay, let's listen to job.
Speaker 3: Welcome Gerard to Clean Titans. We're thrilled to have you
Speaker 3: here to share your expertise on energy transition, finance and geopolitics.
Speaker 3: To start, could you provide a brief overview of your
Speaker 3: background and what led you to focus on intersection of
Speaker 3: these critical periods.
Speaker 1: Be really honest and say it was called by accident.
Speaker 1: I was well first and foremost. I was always interested
Speaker 1: in politics, history. I actually wrote a history book I
Speaker 1: don't know, maybe thirty years ago. And I then actually
Speaker 1: ended up going to Germany and I worked in the
Speaker 1: finance industry, and at some point I had a client
Speaker 1: of mine. I said, Jared, look, I'm looking to invest
Speaker 1: in a solar company in Germany. Would you don't visit
Speaker 1: the factory? And I visited the factory and went back
Speaker 1: to him and said, forget about this solar stuff. It's
Speaker 1: just not going to work. Just the economics of it
Speaker 1: are so out of the money. Don't worry about He goes, oh, no, no, no, no,
Speaker 1: he said, we go and have a look at it again.
Speaker 1: The German governments are putting massive subsidies in and I
Speaker 1: was sort of still going, oh my god, why would
Speaker 1: I put money into all these subsidy based businesses make
Speaker 1: no sense. And then I met the founder of the
Speaker 1: business and a man called Alex Vogd, who found out
Speaker 1: he was a founder of I have quite a lot
Speaker 1: of renewable technology business but one being in business called
Speaker 1: Solo and the other one doing Q cells. And he
Speaker 1: persuaded me that Solo was going to revolutionize the world.
Speaker 1: And then my client invested, made lots of money, and
Speaker 1: I became the one eyed man in the land of
Speaker 1: the blind. But what I will say coming back to
Speaker 1: full circle was very interesting is if you look in
Speaker 1: the history, energy and geopolitics have always been very close, right,
Speaker 1: Wars have been fought for energy, and of law been
Speaker 1: lost because of lack of energy. Right and United States,
Speaker 1: for example, has spent a large part of the last
Speaker 1: seventy five years protecting key waterways for the transport of
Speaker 1: oil and increasingly gas. So it's always been there and thereabouts.
Speaker 1: But what I would say is the last twenty years
Speaker 1: we've sort of forgotten about the geopolitics of energy, and
Speaker 1: now suddenly we're rethinking about it. So that's why I
Speaker 1: say it's called full circle. So it's back to where
Speaker 1: I started. I've got this mixture of energy, technology and geopolitics.
Speaker 1: Know how, I'm having a lot of fun.
Speaker 3: You've worked across finance, technology, and energy. How has that
Speaker 3: interdisciplinary experience shaped your perspective on the challenges and opportunities
Speaker 3: we face today.
Speaker 1: Well, let me start with the finance side, because I
Speaker 1: think this is really important. When you look at something
Speaker 1: from a financial perspective, what you're trying to do is
Speaker 1: you're trying to match risk and reward, and so you're
Speaker 1: back to basics on this. You're looking at does it
Speaker 1: make economic sense? And is the risk? Is the return
Speaker 1: I'm going to receive enough for me to take the
Speaker 1: risk that's there? So the big bidding for me is
Speaker 1: it goes back to finance, and it goes back to economics.
Speaker 1: It's the ultimate driver of things. Now let me add
Speaker 1: to that is that what you've got is a very
Speaker 1: interesting thing going on in the energy space is which
Speaker 1: you've got massive technology change. And I'll talk a little
Speaker 1: bit about that. The first one of us. If we'd
Speaker 1: have sat here in two thousand and five, we'd be
Speaker 1: talking about peagal gas production and the United States being
Speaker 1: under a huge pressure. And here we are twenty twenty
Speaker 1: five in the US is now the largest producer phossiphy
Speaker 1: is in the world. Why because of drilling technologies. You know,
Speaker 1: real innovation in and around drilling technologies. Horizontal drilling, fracking
Speaker 1: have changed the whole landscape across the world. Now that's
Speaker 1: a one side. On the other side, we've seen massive
Speaker 1: innovation in and around electrical generation technologies, in particular wind
Speaker 1: and solar is the most interesting one because solar you
Speaker 1: can put solar panels anywhere. You don't even need an
Speaker 1: electrician anymore. They can use the power a village, you know,
Speaker 1: a garden, or even a city. So it's incredible and
Speaker 1: the speed of deployment is amazing. And so the result
Speaker 1: is we've never seen an energy technology come to market
Speaker 1: as quick as solar. So that's two exchanmes. Then in
Speaker 1: between that, it's all great, you have an energy, but
Speaker 1: you know we save energy, right, so you know we
Speaker 1: in a tank, we put gas in a cast. In
Speaker 1: a time, we put coal and a coal bunker. But
Speaker 1: now the question is what do you do electricity a
Speaker 1: surface electricity, Well, put it up a mountain, I put
Speaker 1: something like that. But increasingly we're putting them in batteries
Speaker 1: and those batteries and are being used to not just
Speaker 1: store the energy for when the surplus of power, but
Speaker 1: also it's been done because all our digital devices running increasingly,
Speaker 1: you know, and so on. So what we've got is
Speaker 1: huge innovation going on. And I wanted to make the
Speaker 1: point is the speed of innovation is accelerating. And this
Speaker 1: is very interesting for the energy space because the energy
Speaker 1: space is ultimately about infrastructure. Right on oil pipeline, it's
Speaker 1: going to there for seventy five years, right, So the
Speaker 1: huge pieces of infrastructure put on place, right, you need
Speaker 1: to make these big long term bets. I really need
Speaker 1: that grid connection there? Do I need this? And so
Speaker 1: suddenly we've also got risk in that area where we
Speaker 1: didn't see before. And in particular, I would say, also,
Speaker 1: it's not just by the way, when I say that,
Speaker 1: when I'm looking at the wrist side, it's not that
Speaker 1: I'm saying, Oh, the risks is all on the fossil
Speaker 1: fuel side, No, it's not. It's the risks is also
Speaker 1: on the renewable side. Right, Am I really going to
Speaker 1: build that extra wind turbine when on a windy day
Speaker 1: power prices are zero? Am I really going to that?
Speaker 1: But it's the same on the fossil fuel side. If
Speaker 1: we're very close to peak demand for oil across the world,
Speaker 1: am I really going to go to Venezuela and dig
Speaker 1: and I do exploration there when I might get a
Speaker 1: return on investment. So the result of what I'm trying
Speaker 1: to say is that we're in a very interesting environment
Speaker 1: from a financial perspective, an investment perspective, and energy it
Speaker 1: suddenlyeds become high risk.
Speaker 3: In your article The Cold Energy War, you highlight the
Speaker 3: complex geopolitical landscape, particularly for Europe. Could you elaborate on
Speaker 3: the key challenges Europe faces and maintaining energy security while
Speaker 3: transitioning to clean energy?
Speaker 1: Oh? Yeah, So the European situation is simple, which is
Speaker 1: that we just don't have enough fossil fuels, right, biggest
Speaker 1: importer of oil in the world. Why because we don't
Speaker 1: have any of it? Right? Whatever we had in the
Speaker 1: in ort Sea has now been taken out of the ground.
Speaker 1: So isn't there is some oil left there? But it's
Speaker 1: very expensive to take out, so you know you're probably
Speaker 1: taking it from the US or taking it. But it's
Speaker 1: not just that, it's also you look at, say in
Speaker 1: the in the gas area, you've also seen peak supply
Speaker 1: of that, and although again there is gas still left,
Speaker 1: what you've got is environmental concerns in around. And what
Speaker 1: I mean by that is, say take Gronnigan, which is
Speaker 1: in the Netherlands. There's definitely more gas off the coast
Speaker 1: of it, but we've had a right there's definitely gas,
Speaker 1: for example, off the Irish host, but again environmental concerns
Speaker 1: stopping us doing that. And it'd also make a point
Speaker 1: look of a take a cold just it's a dirty fuel, right,
Speaker 1: and it's staff on the ground, particularly in Eastern Europe,
Speaker 1: and to come of it out. But if you look
Speaker 1: at it all in all, it's really difficult for Europe
Speaker 1: to actually go on energy needs. We also have. I
Speaker 1: didn't talk about the whole nuclear thing. We've got pro
Speaker 1: nuclear countries France, we've got anti nuclear countries Germany, right,
Speaker 1: no consensus on that. And so the result of it
Speaker 1: then is that it's again from European very it's very
Speaker 1: difficult to meet our own energy needs.
Speaker 4: So I would also add as well that it was
Speaker 4: also a core part of i'd call it German dynamic
Speaker 4: strategy and they defense strategy, which was to integrate into
Speaker 4: the Russian economy.
Speaker 1: We'll sell them our cars, We'll buy oil, gas, uranium,
Speaker 1: some coal from them. That's sort of what happened, and
Speaker 1: obviously that's worked. Would say the Germans would argue that's
Speaker 1: worked very well because they got a pieceful reunification greed
Speaker 1: that did work for them, but it ain't working for
Speaker 1: them now right And so now what we've got in
Speaker 1: Europe is a bit of a scramble, which is how
Speaker 1: do we more energy independent? And I think what we
Speaker 1: also realize, which makes it very difficult for heavy industry,
Speaker 1: particular in Europe, is that we were getting cheap natural
Speaker 1: gas from Russia through a pipeline. Now, whatever way you
Speaker 1: look at it, we're taking gas, liquefying it, bringing it across,
Speaker 1: it's going to be much more expensive than in the US.
Speaker 1: That means we've certainly got a competitive disadvantage against the US,
Speaker 1: but against any other country that has natural gas. And
Speaker 1: as a result, what we're seeing is industry posing down
Speaker 1: across Europe. So it's difficult. That's why I say the
Speaker 1: geopolitics has come into it again. Because the geopolitics is
Speaker 1: uncertainty is there, and we can't do without energy. So
Speaker 1: we have to think about stuff right, and we are,
Speaker 1: certainly from European perspective, really really thinking about what we
Speaker 1: need to do over the next decade or so.
Speaker 3: And the technology is marching ahead really fast.
Speaker 1: And the technology is marshal. That's the good news because
Speaker 1: if you path forward for Europe is to electrify as
Speaker 1: much as we can in the energy system. And the
Speaker 1: reason I say that is from an energy independence point
Speaker 1: of view, you can become energy independent. I'm talking about
Speaker 1: Europe can become energy independent because of the fact that
Speaker 1: Europe has within its borders producing up for electricity to
Speaker 1: meet its own needs, okay, and also expand going forward,
Speaker 1: it'll also be able to continue meeting those needs. So
Speaker 1: that's really really important energy independence. But the second thing
Speaker 1: what's interesting about that is you've also had an opportunity
Speaker 1: to actually recreate the way the system works in designs
Speaker 1: because we've also got something else happening, which is that
Speaker 1: we're electrifying or other industries that have not been electrified.
Speaker 1: So very simple transport is electrifying means electricity demand goes up.
Speaker 1: It means that you know there's a demand there to
Speaker 1: have EV chargers, all that type of stuff. That's number one.
Speaker 1: Number two just to move to the digitalization of our
Speaker 1: economies and in particular the move to AI data centers, etcetera.
Speaker 1: They need electrictic they don't need coal, they don't need
Speaker 1: gas slot or oil. They electricity. So how do you
Speaker 1: get them electricity as quick as possible? That's another key charge.
Speaker 1: Now why I say that's very interesting because if you
Speaker 1: take a data center, if you really think about it,
Speaker 1: you can use the fact that you're building that infrastructure
Speaker 1: out for the data center for the society, and you
Speaker 1: can use, for example, the excess heat that is produced
Speaker 1: from this. You can actually begin to use the data
Speaker 1: center as flexibility play. When there's too much win in
Speaker 1: the system. Yes, what you ramp up their data centers.
Speaker 1: They may be put on some batteries. When there's not enough,
Speaker 1: you're slowing down the data centers. That's where I'm coming from.
Speaker 1: We have to really engage and look at this electrification
Speaker 1: from the demand side as an opportunity to rethink the
Speaker 1: whole system so that you can cost effectively get to
Speaker 1: a much more energy independent system than the one we
Speaker 1: have a present. Because Europe is zeopolitical to the point
Speaker 1: of view, it's really is stuck in the middle. That's
Speaker 1: what I would describe it. Right, it depends totally on
Speaker 1: international trade to keep the lights on.
Speaker 3: You mentioned the US is shifting stance on its impact
Speaker 3: on Europe's energy strategy. How should Europe balance its alliance
Speaker 3: with its need for energy independents.
Speaker 1: Well, if we really look at the strategy of Europe
Speaker 1: last two and a half decades, really is one. Russia
Speaker 1: is where we get our resources from, mainly again oil
Speaker 1: and gas. The United States where we get our technology
Speaker 1: from and our national security, our defense. And China is
Speaker 1: where we get our goods from. So that relationship is
Speaker 1: broken down, and that's multifaceted and highly complex. So just
Speaker 1: a very practical example is that European value chain for
Speaker 1: let's say, so wind turbines. Yes, we make our own
Speaker 1: wind turbines, yeah, absolutely, but there are core components that
Speaker 1: come from China. Right, if you look at an electric
Speaker 1: vehicle today, same thing. Core components can close come from Gina.
Speaker 1: You can go on and on and on about how
Speaker 1: we're integrated into China. On the other hand, then we've
Speaker 1: got United States, where you know, the majority of Europe
Speaker 1: cannot defend itself without the United States. Precarious position. The
Speaker 1: good news is we have wined ourselves off Russian fossil
Speaker 1: fuels over the last few years, and we've done this
Speaker 1: very very quickly. So there's a way forward, and the
Speaker 1: way forward is to be independent. I don't think anybody
Speaker 1: wants to be overly dependent on a third party. You
Speaker 1: want to be independent and you're in a much stronger
Speaker 1: situation then at this point in time, if you can
Speaker 1: stand up for yourself, and that's the path forward to
Speaker 1: you stand up. So it does mean that you need
Speaker 1: to have some form of independence in and around your production.
Speaker 1: You need to have independence in and around your development
Speaker 1: of technology, and you need to have independence in and
Speaker 1: around energy.
Speaker 3: But it's been costly for your to win itself from
Speaker 3: Russian fossil fuels. But the good thing is the cost
Speaker 3: and the efficiency of reable just keeps exponentially improving.
Speaker 1: Yes, so it's been incredibly expensive, and renewables and the
Speaker 1: very certain technologies right there are low cost. So the
Speaker 1: good news is the cost of the various different technologies
Speaker 1: to enable Europe to become more energy independent to have
Speaker 1: come tumbling down, in particular electric vehicles, solar panels, batteries,
Speaker 1: wind turbines, you know, power electronics to manage the software.
Speaker 1: All have come down. So that's the good news. The
Speaker 1: sort of badly news the power system that we have
Speaker 1: in place, the design sort in terms of how power
Speaker 1: markets work and fifty years ago, how the grid actually functions,
Speaker 1: in terms of how it's balanced, etcetera, etcetera. That was
Speaker 1: put in over one hundred years ago, and it is
Speaker 1: not fit for the twenty first century. So that requires
Speaker 1: significant change in the way we think about the grid.
Speaker 1: So give you very practical example is that if you
Speaker 1: look at say storage for natural gas, a country like
Speaker 1: Germany would have the ability to store at any one
Speaker 1: moment in time, maybe two months of supply of natural gas,
Speaker 1: so nothing something happens too more supply. Okay, how much
Speaker 1: energy or a French storage does Germany have for its
Speaker 1: electricity purposes?
Speaker 2: Yeah?
Speaker 1: Like maybe an hour? Right that pump storage and batteries.
Speaker 1: It's an hour now where I'm coming from, you and
Speaker 1: all of it is somebody might say, yeah, but actually
Speaker 1: what we do is we use the fossil fuel system
Speaker 1: for the storage for electricity. That's very true. But the
Speaker 1: point I'm making is more is that in a world
Speaker 1: where you have too much power, which is what you
Speaker 1: have as a renewable world. But you need energy storage
Speaker 1: and we need to build more energy storage. That's what
Speaker 1: I got to day again rethink what we did before.
Speaker 1: We built loads of energy storage fossil fuels, but now
Speaker 1: we need to do energy storage for storing not the
Speaker 1: excess natural gas, but storing the excess electricity. That's what
Speaker 1: we have to It's a red inking that needs to
Speaker 1: be put in there, and that means that you need
Speaker 1: to change the incentive structures and stuff like that. That's
Speaker 1: i'd say the challenge going forward. Right.
Speaker 3: I interviewed this Caldera last week. He has heat batteries
Speaker 3: to decarbonize industrial heat, which is like fifty percent of
Speaker 3: the energy for industries.
Speaker 1: Right. Sorry, and by the way, there's there's no doubt
Speaker 1: you talked to them doustrial use. What's very very clear
Speaker 1: I'm talking now from the European perspective is the way
Speaker 1: forward for heavy industry and actually just food processing and
Speaker 1: stuff like this is they electrify all the processes. And
Speaker 1: you're absolutely right. What you do is you use heat
Speaker 1: storage stuff like that. So again you have storage comes
Speaker 1: in different forms, but heat storage is going to be
Speaker 1: a really critical part of enabling energy independence going forward.
Speaker 3: Right, what role do you see China playing in the
Speaker 3: cold energy world, especially with this dominance and clean technology manufacturing.
Speaker 1: So let's take a step back, because I think what
Speaker 1: we need to do is understand what China is doing,
Speaker 1: why they're doing it, and then we should probably learn
Speaker 1: from them. Right. So what China is a country that
Speaker 1: at the end of the day is not energy independent,
Speaker 1: and in particular what it has has got loads of coal.
Speaker 1: Absolutely great, you burn loads of coal, and it's pretty
Speaker 1: bad in terms of local pollution if forget about climate change,
Speaker 1: just in terms of smog horrendous. Right, So they have
Speaker 1: to move away from and they've done a good job
Speaker 1: actually so far of if you look at cleaning up
Speaker 1: small levels and cities and stuff like this. Right, But
Speaker 1: the bigger issue that they have is they have to
Speaker 1: import fuel. So they're importing coal, right, and they're importing
Speaker 1: all their oil, right, and they're importing natural gas as well. Right.
Speaker 1: So this is from a strategic point of view, this
Speaker 1: is difficult for them.
Speaker 3: Right.
Speaker 1: They also realize that, and they realized very early on
Speaker 1: that there was significant technology change going to happen in
Speaker 1: the energy space, which if they embraced, could enable them
Speaker 1: to actually create a new industry. And I want to
Speaker 1: go back and say to you again, if we sat
Speaker 1: here fifteen years ago and you asked me the name
Speaker 1: of a Chinese company, I probably couldn't do it. And
Speaker 1: I say that because now we've got a whole while
Speaker 1: of companies that are global names, right, and there's going
Speaker 1: to be more and more of them, and a lot
Speaker 1: of them actually are in the energy space. Right, so
Speaker 1: people know BYD, they know CATL. Again, you were again
Speaker 1: fifteen years ago, you wouldn't been able to name one
Speaker 1: brand name. So they did it also from an economic
Speaker 1: point if they understood. They took a strategic view, there's
Speaker 1: going to be a technology revolution here. We need to
Speaker 1: dominate these technologies, right. So then when they do so
Speaker 1: today that seventy five percent of batteries worldwide come from China.
Speaker 1: If you look at the whole value chain from processing
Speaker 1: materials all the way down to the production of the battery,
Speaker 1: the Chinese control of value chain, they also go, let's
Speaker 1: say control, but there are certainly leaders in the technology
Speaker 1: development in all these different technologies, right, So China has
Speaker 1: done that. So what do we learn from that, Well,
Speaker 1: we have to learn that sometimes you have to take
Speaker 1: a strategic view on things and that we do have
Speaker 1: limited resources and I'm talking about limited brain power, limited
Speaker 1: capital or whatever, and sometimes you just have to really
Speaker 1: go I'm going to take a bet of this and
Speaker 1: I'm going to make it happen. And then the other
Speaker 1: thing that you learn from the town is when you
Speaker 1: do go at something, you go at a big all right,
Speaker 1: and you scale really quickly. And if you scale really quickly,
Speaker 1: then it's very difficult for people to catch up with you. Right,
Speaker 1: And we see this in other areas. Right. If you
Speaker 1: think of a Microsoft, it's basically got a global monopoly.
Speaker 1: That's just sort of what they're trying to drive. But
Speaker 1: you get to such scale that nobody can compete with you. Right.
Speaker 1: So that's what China has done very well, and we
Speaker 1: need to sort of learn from that, I think going
Speaker 1: forward and really make strategic decisions in and around what
Speaker 1: the future is and then create that future.
Speaker 3: I was looking at Ember's report and they have a
Speaker 3: slide or solar dependence is just you import in a
Speaker 3: ship year one and then you have twenty nine years
Speaker 3: of independence. So every thirty years. You're going to need
Speaker 3: to rid those solar panels back and batteries maybe twenty years.
Speaker 1: And by the way, I didn't see that slide, but
Speaker 1: I think that's a very good way of putting it,
Speaker 1: because what you're actually saying is that so one of
Speaker 1: you imported from China at low cost, because what you've
Speaker 1: just said is it's thirty years of that producing power.
Speaker 1: Fere Right, It's a completely different one if I'm importing oil,
Speaker 1: because that barrel of oil has to be imported tomorrow
Speaker 1: the day after, right, So I'm absolutely totally rich about this, right.
Speaker 1: And that's again back to technologies like that, which are
Speaker 1: again my criticism of the fossil fuel will bee. I
Speaker 1: just have to keep doing it, taking more and more
Speaker 1: out to meet that demand. Right, while electricity and with
Speaker 1: solar and wind, what you're doing is you're putting an
Speaker 1: acid in place, is there for at least twenty years,
Speaker 1: as opposed to something that you're burning, and then you
Speaker 1: have to go and reburn it again because once I
Speaker 1: burn it, I need more.
Speaker 3: Right, So they have that comparison side by side fossil
Speaker 3: fuels you have did you keep getting shipments.
Speaker 1: And we have to move beyond that. So I'm totally
Speaker 1: I prefer to go and import from the Chinese. And
Speaker 1: even if let's say worst case scenario, you have a
Speaker 1: twer war with them in two years time, Well, I
Speaker 1: don't care. I've just gone and I've already got my
Speaker 1: solar and wind and all that I need in there.
Speaker 3: Right. You advocate for energy efficiency, electrification and scaling renewabooths
Speaker 3: as crucial solutions for Europe. Which specific technologies or policies
Speaker 3: do you believe hold the most promise for rapid implementation?
Speaker 1: Right? So if I look at the challenge going forward,
Speaker 1: the biggest challenge that Europe has is how does it
Speaker 1: improve energy performance within buildings? And it's complex because our
Speaker 1: buildings are old. And the reason it's important is because
Speaker 1: there's a fury that one is by putting in measures
Speaker 1: in your home. So for example, putting in new windows, right,
Speaker 1: putting in a heat pump, putting in solar. What you're
Speaker 1: doing with this is your appropriate improving the performance of
Speaker 1: your building. It means that the amount that you have
Speaker 1: to import from the system is lower. So I think
Speaker 1: this is a really crucial part of what we're what
Speaker 1: we're looking at going forward is how do we ensure
Speaker 1: that the customer gets more and more involved in this?
Speaker 1: And to do that, we need to help the customers.
Speaker 1: And it starts with, for example, how do we incentivize
Speaker 1: heavy industry to electrify and to re equip itself? Okay,
Speaker 1: because think of it like this again, food processing plant.
Speaker 1: It might be there for twenty years. So how do
Speaker 1: we incentivize them to go and re equip with the
Speaker 1: most afficient and low cost all charges out there. Well,
Speaker 1: you can do a few things. The first thing is
Speaker 1: you can put in tax incentives. You can do accelerated
Speaker 1: appreciation and stuff like this. Now you might say, well,
Speaker 1: if it makes economic sense, they do it already. No,
Speaker 1: the reason they're not doing it is because they're concerned
Speaker 1: about the future. So what you've got is country comes
Speaker 1: in and says the future is heat pumps, and then
Speaker 1: a year later they say, no, no, no, we're still
Speaker 1: going to stick with those gas boilers. Oh, by the way,
Speaker 1: gas prices have gone up so much, it's so expensive.
Speaker 1: They industrial customer goes, well, I don't know if I
Speaker 1: can produce here going forward. So you got so many
Speaker 1: risks in and around it that the industry is sort
Speaker 1: of saying, hey, should we invest here or not, and
Speaker 1: they're making decisions not to invest, So we have to
Speaker 1: reincentivize them, and that's by showing the way forward, which
Speaker 1: is electrification, and number two just helping them in terms
Speaker 1: of incentive structures. So I think that's a crucial thing.
Speaker 1: I would also go and add you do the exact
Speaker 1: same thing with other types of customer, right, you get them,
Speaker 1: incentivize them to actually go and get involved in making
Speaker 1: their energy system lower cost. Right, And again that I
Speaker 1: think is crystal. That third thing very important. If we
Speaker 1: want to produce our dependence on the burning of natural
Speaker 1: gas in particular, we have to make electricity cheaper or
Speaker 1: natural gas more expensive. Now natural gas has already gone up,
Speaker 1: but it's still at the point where there are certain
Speaker 1: countries in Europe where it makes, for example, no economic
Speaker 1: sense to put in a heat pump because there's so
Speaker 1: much government charges on the electricity bill that is just
Speaker 1: too expensive. You just go and keep it natural gas. Now,
Speaker 1: let's go to the country with all the natural gas resources.
Speaker 1: No way, they don't heat with natural gas. They heat
Speaker 1: with electricity. They use heat pumps, all right, And that's
Speaker 1: sort of the way we have to look. We have
Speaker 1: to look at what the Nordics have done and really
Speaker 1: make sure that we put the incentive structures in to
Speaker 1: electrify and to electrify in particular heat. So I think
Speaker 1: they would be the key measures that I would think at.
Speaker 1: There is a lot of talk in and around the
Speaker 1: let's call it the wholesale power markets and energy markets
Speaker 1: that I need to reform there. I'm not if I
Speaker 1: was a fine I'm a finance person. I find an investor,
Speaker 1: I always want to reduce my risk. So if I
Speaker 1: want to reduce my risk, it's not put my build
Speaker 1: turbine or solar panel to sell into a power market
Speaker 1: where the risk of me getting zero is going to
Speaker 1: increase year after year after you're as a build more
Speaker 1: solar or wind. That's a little bit risky for me.
Speaker 1: But actually doing it beside the data center and having
Speaker 1: that data center company as a client to mine and
Speaker 1: as sell the powers, that's the way we have things.
Speaker 1: So I think we really have to there's a rethinking
Speaker 1: that has to go on within the industry. If you
Speaker 1: look the owners of renewable assets across Europe, if I
Speaker 1: may describe them as their druggies and What I mean
Speaker 1: by this is they're hooked on feeding tariffs and have
Speaker 1: been for the last twenty years. We're in a world
Speaker 1: where there is no feed in tariffs anymore. So people
Speaker 1: have to rethink the way they get their returns and
Speaker 1: how they match those returns and risks. And that's what
Speaker 1: we're going through a present, if I may say, in
Speaker 1: the market. And that makes it really exciting because what
Speaker 1: you have is the opportunity to reimagine the future of
Speaker 1: the energy system. You've talked about grid and modernization. What
Speaker 1: are the main obstacles to upgrading Europe's grid infrastructure and
Speaker 1: how can they be overcome. I'm going to say it's
Speaker 1: the grid operators. They won't like what I've just said.
Speaker 1: It's the grid operators. It's the incumbents, right, And let
Speaker 1: me dig into that a little bit. So let's take
Speaker 1: the case of family. There are eight hundred utilities in Germany.
Speaker 1: Do you really think that all of those eight hundred
Speaker 1: utilities have the pabilities to modernize their grids? You can't
Speaker 1: expect this, but that's the reality of what we have.
Speaker 4: Now.
Speaker 1: That's an extreme example, but I could look at most
Speaker 1: grid operators and most grib operators are still using measures
Speaker 1: for managing the grid that again they used fifty years ago.
Speaker 1: And we're moving into a world where it's not about
Speaker 1: having a big centralized power station where you predict what's
Speaker 1: going to happen with demand and you move up and
Speaker 1: down the power supply of that power station to match
Speaker 1: demand on a momentary basis with licking beavers and telephones. Right,
Speaker 1: that's how we're doing it. That world has changed, and
Speaker 1: the reason it's changed is because we've so much renewables
Speaker 1: in it and we've sort of moved along the way
Speaker 1: of doing this. But if you really look at the
Speaker 1: system going forward, what actually needs to happen is you
Speaker 1: need to connect everything together. So there's a whole pilot
Speaker 1: devices in the system that are not used within the system.
Speaker 1: So again we're beginning to have batteries in it. I
Speaker 1: can see so many grid operators resisting batteries. Again. I
Speaker 1: had this recent discussion of the day, which is grid
Speaker 1: opera say no, no, no, we think batteries in the
Speaker 1: system is bad for the system, and so go. But
Speaker 1: why is it bad for your system? Well, it's bad
Speaker 1: for the system because they don't have the controls to
Speaker 1: control it. And so then they're scared that somebody is
Speaker 1: using the battery to make money at the expense of
Speaker 1: the customer or whatever. They actually just don't understand, and
Speaker 1: then I how to control it. Now that's a very
Speaker 1: simple example. Now let me go and take that step
Speaker 1: beyond that and say, well, how about all those electric
Speaker 1: cars out there. There's a one hundred each of electric
Speaker 1: cars got seventy five kilo hours of a battery in it.
Speaker 1: I could use that for my home probably it could
Speaker 1: be five days of power. There's a power failure, I
Speaker 1: can use my car to power at home. I could
Speaker 1: actually use it in the grid. Well why aren't we
Speaker 1: Well we're not, because you can say the protocols are
Speaker 1: not in play the regulators and play there. Absolutely we're not.
Speaker 1: But that goes back to incumbents. So I would really
Speaker 1: clearly state in my mind that the biggest sort of
Speaker 1: restrictor in terms of what's going on in the power
Speaker 1: system is actually the incumbent grid operators, and they're totally
Speaker 1: slow to embrace technology. And in fact, it had to
Speaker 1: be clear why if you're working for Google and you
Speaker 1: come up with a new technology, you're incentivized to get
Speaker 1: that technology to market, right, that's what you've done. Grid
Speaker 1: operators not incentivized to bring new technologies to market none.
Speaker 1: So try and bring a new piece of software into
Speaker 1: the grid area. Just try it. Good luck to you, right. So,
Speaker 1: as I said, I'm being pretty sort of burished there
Speaker 1: when it comes to the grid operators, but I think
Speaker 1: it is really there needs to be a change of
Speaker 1: thinking there, and there needs to be openness not to
Speaker 1: just do trial projects because they all do trial projects
Speaker 1: or you do trial projects. There needs to be openness
Speaker 1: in there. And it also requires the regulators to become
Speaker 1: smarter and more innovative and also willing to take a risk. Right.
Speaker 1: And again I'm going back to China. China doing this already,
Speaker 1: so we're not right Australia.
Speaker 3: This started vehicle to grid.
Speaker 1: You're absolutely right, and so Australia. If you want to
Speaker 1: look at the future of the power markets, look in Australia.
Speaker 1: The reason I say that is because it's just big
Speaker 1: that the cost of generating rooftops or solar electricity with
Speaker 1: solar is just so low cost that you can't stop it.
Speaker 1: And the part of the issue Australia has is a
Speaker 1: big country, no population density, which means very high grid costs.
Speaker 1: So if you can avoid the grid cost by putting
Speaker 1: in SOLI, you're going to do it. So if you
Speaker 1: really want to look at what's going on terms the
Speaker 1: forefront of stuff, whether it's batteries, new business models, solar
Speaker 1: or pricing in the power markets, as you said, implementation
Speaker 1: of technologies like vehicle to grid. Look at Australia absolutely,
Speaker 1: by the way, it starts with a good regulator.
Speaker 3: How effectively are European governments and institutions addressing the regulatory
Speaker 3: hurdles and bureaucracy that is hindering the clean energy transition.
Speaker 1: I was going to laugh at your question because I
Speaker 1: was going to say that that's what regulators do, they
Speaker 1: just build bureaucracy, right, But I'm actually being a little
Speaker 1: bit harsh, so I'm not going to say that, right.
Speaker 1: What I will say is that it's tough to be
Speaker 1: a regulator or a politician in this space. And the
Speaker 1: reason is we're in a revolution, and in revolutions people
Speaker 1: companies die, and what you do to prevent yourself dying
Speaker 1: you block change in every way you can. So what
Speaker 1: you've got is a whole pile of incumbnence within the
Speaker 1: industry and incumbent be a gas company, could be a
Speaker 1: grid operator, and they are all blocking change because they're
Speaker 1: defending their businesses. That's what they're doing there. They're the
Speaker 1: business against change. They're scared. Can I just describe one
Speaker 1: I won't name which the utility is, but I know
Speaker 1: one particular utility that their chief government negotiator they put
Speaker 1: in basically somebody who was completely incompetent. Why because this
Speaker 1: guy just blocked change. He annoyed everybody, He was a pain,
Speaker 1: he would ask stupid questions, he would do this. It
Speaker 1: was a deliberate ploy under the power and part of
Speaker 1: that utility. They knew exactly what they were doing. This
Speaker 1: is on the CIA handbook, right, just drop meetings, just
Speaker 1: rub change. That's sorry, that's the reality, right, And that's
Speaker 1: why it is very difficult for these regulators and governments
Speaker 1: and policymakers to make decisions because the economic interests are
Speaker 1: so big. And maybe give a very practical example of
Speaker 1: that is gas Prom obviously the Russian gas operator. Right,
Speaker 1: this company, right, I could say this company had bought
Speaker 1: off a large part of the German political class. It did,
Speaker 1: that's a fact about it, right, Nothing innerality, and that's
Speaker 1: because there's so much money in energy, and then you
Speaker 1: had a company like bas Gas almost had a monopoly,
Speaker 1: and that power can be used in lots and lots
Speaker 1: of different ways. And again, if it's under trash, it's
Speaker 1: going to do it in lots different ways, right, They're
Speaker 1: going to use that economic power in lots of different ways.
Speaker 3: It's trillions or dollars of trade that they're Yeah. Of course,
Speaker 3: as you have extensive experience in advising investors on energy
Speaker 3: markets and infrastructure, what are the most attractive investment opportunities
Speaker 3: you see in the clean energy sector today?
Speaker 1: I would say to you that the moment, the most
Speaker 1: exciting place to be is what I call this area
Speaker 1: of flexibility. And I explain with flexibility is what do
Speaker 1: you do when there's too much power in the system,
Speaker 1: In other words, prices fall at that point in time,
Speaker 1: or there's not enough power in the system where prices
Speaker 1: go up. And so what we've got is we're living
Speaker 1: in the era of volatility, and all the most exciting
Speaker 1: things are in and around sturing the arbitrage opportunity between
Speaker 1: the high and the low prices, and that can be
Speaker 1: trading businesses that can be businesses that are helping industrial
Speaker 1: customers become more flexible on how they produce. It can
Speaker 1: be businesses that are using batteries in the market. It
Speaker 1: can also be backup power like reciprocal gas generators. It
Speaker 1: can be building data centers together with batteries and wind parks.
Speaker 1: These are the areas that I think are really interesting,
Speaker 1: and they're complex. And if something is complex, I'm talking
Speaker 1: from a financial pipe perspective. Returns are good if you
Speaker 1: just want to build a solar park. Remember back to
Speaker 1: the drugs. The drugs don't work anymore, and what you've
Speaker 1: got is low return, high risk. That's the future of it.
Speaker 1: So we have to rethink this in a different way.
Speaker 1: And that's me again exciting is the fact that the
Speaker 1: drugs don't work anymore. So that means that energy investors
Speaker 1: have to rethink things and a completely different way. And actually,
Speaker 1: what I spend a lot of my time now is
Speaker 1: just trying to explain to people the changes that are
Speaker 1: going on and getting to understand the risks. Right a
Speaker 1: very practical example, I had a CEO of a energy
Speaker 1: utility called me and he said, Jared, should I I'm
Speaker 1: looking at putting money into battery. Should I do it
Speaker 1: or not? And I said, a course, And he said,
Speaker 1: but if I look at all the different consultants that
Speaker 1: I've brought in, he says, they're completely different in the
Speaker 1: predictions in terms of what going on and whatnot. And
Speaker 1: it was interesting I look at them model it's the
Speaker 1: incredibly extreme differences in assumptions going forward. And all I
Speaker 1: could say was really simple, We're in an energy revolution
Speaker 1: and storage is a key technology and worst case that
Speaker 1: you learn by using this technology, best case, you'll have
Speaker 1: a great return on it.
Speaker 3: I don't understand why grid operators don't like battery storage,
Speaker 3: because wouldn't it actually give them merely second level demand
Speaker 3: management of the ups and downs in the grid.
Speaker 1: Firstly, it depends on whether you control the batteries or not,
Speaker 1: and they don't. So just just take battery of my
Speaker 1: home in Germany. Grid operator doesn't control it. I control
Speaker 1: it right, I'm using it for this solar on the
Speaker 1: roof that I don't need. I put my excess power
Speaker 1: in that system and then what I do is I
Speaker 1: use it within my home, so they don't control that,
Speaker 1: and at the end of the day that impacts their
Speaker 1: system because I'm using less power from that system, right,
Speaker 1: So as to say that number one, number two, they
Speaker 1: don't control any battery in a car, right, And a
Speaker 1: lot of the batteries that were put in there will
Speaker 1: put in not by the grid operator, put him by
Speaker 1: third parties who are trading them. They might be providing
Speaker 1: services as a grid operator, but the grid operators don't
Speaker 1: generally own these assets, right. And so again that's the
Speaker 1: big grid of Remember, we've also got most of the
Speaker 1: storage that's in place present is at the transmission grid level, right,
Speaker 1: the high voltage level. The real resistance has taken place
Speaker 1: now is the medium voltage area. As it says the
Speaker 1: distribution grid operators that a guy's resistant change because they
Speaker 1: don't see benefits to these systems and it's a pain
Speaker 1: for them as well. So if you don't see a
Speaker 1: benefit from it and somebody else is using it for
Speaker 1: their benefit, you go, well, why am I even supporting this?
Speaker 1: And generally in Europe, grid operators are not allowed on storage.
Speaker 1: That's another thing as well, because we have liberalization in
Speaker 1: the market and storage is most countries it's considered generation
Speaker 1: and so it's not considered grids, so they're not allowed all.
Speaker 1: So it's a little bit complicated. Storage is one of
Speaker 1: those funny asset classes where is it a grid asset
Speaker 1: or is it a generation asset, or is it an
Speaker 1: optimization asset in your home or you're building right, or
Speaker 1: does it part of your carperball.
Speaker 3: So if there is a very large number of electric
Speaker 3: vehicle batteries or home batteries, then it's a prediction problem,
Speaker 3: and it's an incentivization problem for the great operator to
Speaker 3: sufficiently incentivize you to keep it connected and plugged in
Speaker 3: and help them andage their demand peak times very good.
Speaker 1: So let's take that a step beyond what you send
Speaker 1: there and see if you look at a grid operator,
Speaker 1: he cannot see what's going on with the demand in
Speaker 1: somebody's building. He cannot see it. So he has to
Speaker 1: make these predictions, but he doesn't really have a clue.
Speaker 1: Now going forward, he should be able to have live
Speaker 1: data coming in and out of buildings to be able
Speaker 1: to see exactly what's going on, to be able to
Speaker 1: predict it, and also to be able to say, well, listen,
Speaker 1: I'm going to turn off that. I'm going to turn
Speaker 1: off your heating system. I'm going to turn it down,
Speaker 1: I'm going to do this, I'm going to do that,
Speaker 1: or are going to incentivize you to do this? Or
Speaker 1: are you going to do You could say that's the
Speaker 1: way we're going. Now, that's really complex for them to
Speaker 1: be able to do this. There's none of them equipped
Speaker 1: to do this. Again, my local grid operator in Germany,
Speaker 1: it is they're not a crypt to do this. They
Speaker 1: can maybe see what's going on at the substation, that's
Speaker 1: about it. There's no smart meters in place, so they
Speaker 1: don't even know what real time assumption I'm having. That's
Speaker 1: sort of I'm just being very practical on this. They're
Speaker 1: not digitalized in any way, so you have to enable
Speaker 1: them to be digitalized first and foremost to be able
Speaker 1: to see what's going on, right, because if you can
Speaker 1: see what's going on, then you can begin to control it.
Speaker 1: But actually, what this tell I'm also trying to say
Speaker 1: to you is the key thing grid operators need to do,
Speaker 1: whether they be transmission grid operators or distribution grid operators,
Speaker 1: they have to digitalize and they have to allow devices
Speaker 1: to be connected together because by connecting things together you
Speaker 1: also save a lot of money, right, because you're improving
Speaker 1: the efficiency of stuff. Right. That's what you do by
Speaker 1: connecting stuff. It's a real shame if you think you
Speaker 1: need to have one gig what hour of batteries storage,
Speaker 1: and somebody goes and invests in that, and you go, well, well,
Speaker 1: why do you not just take the one gig what
Speaker 1: hours of electric cars and connected? Wouldn't be cheaper to
Speaker 1: connect those to their right. So where I'm coming from
Speaker 1: is that there's a mindset of change that is needed.
Speaker 1: There is a significant invested in technology, and I also
Speaker 1: take a point that we have to be very concerned
Speaker 1: about cybersecurity, and the likes agree totally, But I just
Speaker 1: want to make a point that as a consumer, I'm
Speaker 1: more concerned about physical attacks on the system, and I'm
Speaker 1: more concerned about climate change risks in relation to that system.
Speaker 3: What are the key risks and uncertainties that investors should
Speaker 3: consider when allocating capital to clean energy projects.
Speaker 1: Well, the key point I would make is we're in
Speaker 1: a revolution. So in a revolution, it is really difficult
Speaker 1: to predict what's going to happen, and that makes it difficult.
Speaker 1: So investing in the space, what you're doing is you
Speaker 1: really are trying to look for opportunities where there is
Speaker 1: let's say a small amount of what I call cannibalization
Speaker 1: risk in other words, too much power in the system,
Speaker 1: and number two regulatory risk. So they're the two things
Speaker 1: that I be really focusing on is how can you
Speaker 1: do that right? And that, by the way, that's not easy.
Speaker 1: And the third thing I would do is I would
Speaker 1: also say you need to invest in technology to make
Speaker 1: sure that you are able to connect things together and
Speaker 1: also see and manage energy flows for yourself. I'm talking
Speaker 1: about energy service companies' utilities and stuff like that. I
Speaker 1: think that's they're the key things that are important. Why
Speaker 1: I say the third one is because remember I went
Speaker 1: back to my drug taking feeding tariff people. The drug
Speaker 1: takers have been taken feeding terriffs from which are basically
Speaker 1: fixed price agreements for twenty years, have not had to
Speaker 1: manage the assets in any way. And now suddenly you
Speaker 1: have to manage the asset right now they have to go, Oh,
Speaker 1: what happens for go zero? What happens to the parkers
Speaker 1: go minus?
Speaker 3: Oh?
Speaker 1: They will have to send it to someone else that
Speaker 1: do I hedge it? Oh, I've got a portfolio? What
Speaker 1: should I do? This suddenly creates a new world where
Speaker 1: they have to change the way they build assets and
Speaker 1: the way they manage and operate assets. That's the critical change.
Speaker 1: I would say that the third change, I would say,
Speaker 1: and I think that would be the major sort of
Speaker 1: things I would say in terms of risks for best.
Speaker 1: Now I'm talking about infrastructure. I would also add, if
Speaker 1: you talk about the t technology side, you have to
Speaker 1: realize that look, I said, it's earlier, but that a
Speaker 1: lot of the technology comes out of China. And so
Speaker 1: when you're investing in technology, you really have to have
Speaker 1: in your head that if you're building something in France,
Speaker 1: your competitor is not the Italian, it's the Chinese person. Right,
Speaker 1: it's China. So you have to see what's going on
Speaker 1: there and really have in your head had held going
Speaker 1: to compete with them. I think the other area which
Speaker 1: is of great interest is what I call these next
Speaker 1: generation utilities. In other words, what does the future utility
Speaker 1: look like? Well, I can tell you it doesn't look
Speaker 1: like the old utilities. The old utilities are really bad
Speaker 1: with their customers. They've got all systems in place that
Speaker 1: cost structures are bloated, they're not flexible, they're not fast.
Speaker 1: They're going to be under pressure in years to come right.
Speaker 1: There are and I will examples of businesses that would
Speaker 1: be let's call these the next generation Utilly is people
Speaker 1: like Octopus Energy in the UK. They're showing the way forward,
Speaker 1: which is, hey, the consumer is important. We're going to
Speaker 1: communicate what we're more in the customer. We're going to
Speaker 1: get them involved, right, We'll get to get them. We're
Speaker 1: going to treat them like a human being, right, rather
Speaker 1: than a number at the end of a line. That's
Speaker 1: the big changes I would say. Going on from an
Speaker 1: investing point of view, and I've called it a risk management.
Speaker 3: Point of view, how can financial institutions and capital markets
Speaker 3: play a more active role in accelerating the flow of
Speaker 3: investment into clean energy solutions?
Speaker 1: The capital is not the problem. And all you have
Speaker 1: to do is look at the record number of installations
Speaker 1: of wind and solar. So what was there twenty twenty forward?
Speaker 1: How much was there? There's probably SI one hundred and
Speaker 1: fifty kick AWA's worldwide, all right, that in terms of
Speaker 1: power production is the equivalent of Germany and France. So
Speaker 1: we've never scaled up electricity production as fast as we're
Speaker 1: doing it now. Try to buy gas turbine twenty thirty right,
Speaker 1: So we are hutting capital to work, no issues whatsoever.
Speaker 1: So for me, the capital is not the problem. The
Speaker 1: problem is the incentives. The question has to be asked
Speaker 1: is are the right incentives in place to enable that
Speaker 1: infrastructure to be built quickly and effectively. And that's not
Speaker 1: always the case, and I think that's the key challenge.
Speaker 1: The key challenge is that regulatory framework. And also when
Speaker 1: it comes back also to we've got an existing energy
Speaker 1: system and you're trying to replace that. That's not an
Speaker 1: easy thing to do. So you have one that you're
Speaker 1: trying to replace, an upgrade. You're replacing a fossil fuel
Speaker 1: by calling a molecule based system with aron based system,
Speaker 1: and you're upgrading the electron system. That's not that's our challenges.
Speaker 1: The challenges is the regulatory environment and the people and
Speaker 1: cultures of the incumbnance. That's what I would say, that's
Speaker 1: the challenges.
Speaker 3: I would say AI is a transformative technology. How do
Speaker 3: you see AI impacting the energy sector? And what are
Speaker 3: the potential benefits and risks?
Speaker 1: First and foremost, AI, I would definitely say is the
Speaker 1: biggest technology leap forward in the history of mankind. So
Speaker 1: it's critical for all of us to understand it and
Speaker 1: be involved with it. Now, what's clear is when you
Speaker 1: use any form of AI, you need electricity. So the
Speaker 1: more AAI we use, the more electricity demand is going
Speaker 1: to grow. Now we can argue over how much that
Speaker 1: electricity demand is going to be. I'm not going to
Speaker 1: go down that argument because what I would say to
Speaker 1: you is that if I was McKinsey and BCG and
Speaker 1: I looked at their predictions from a year year ago,
Speaker 1: they were telling us that car demand was going exponential,
Speaker 1: then outcomes the Chinese. We can do what you did
Speaker 1: at one sixth of the energy cost, and the world
Speaker 1: has changed again. Now. So I'm not going to get
Speaker 1: down that road because why I'm making the point is
Speaker 1: that it's the speed of technology change is immense. It's
Speaker 1: not a criticism BCG McKinsey. It's tough to predict the
Speaker 1: future when you've got a revolution. What I will add, though,
Speaker 1: is AI is not just about CHATGBT. AI is going
Speaker 1: to be about autonomous cars. That's going to be really
Speaker 1: the first big use of it. It's also about huge
Speaker 1: improvements in production of medical equipment and drugs and pharmaceutical products.
Speaker 1: It is also about robotics. Just think of it. You
Speaker 1: have all these robotics and the robots need electricity, so
Speaker 1: they have to be plugged in. They're going to have
Speaker 1: to be powered, there's going to be batteries in them.
Speaker 1: These are the big shifts that you've seen and it's
Speaker 1: so what this all means is power demand goes up.
Speaker 1: Now what you really want to have is intelligent powering
Speaker 1: of these devices. So take the case of the electric car.
Speaker 1: If we all decide to plug in at six o'clock
Speaker 1: at night on a small little street in a village
Speaker 1: in Western Ireland, you probably bring down the grid on
Speaker 1: that particular road, right, So what you need to have
Speaker 1: is intelligent charging in there. And intelligent charge is really
Speaker 1: good because intelligent charging means you don't need to overbuild
Speaker 1: a grid, and intelligent charging means that also you can
Speaker 1: take power when there's a surplus of all this type
Speaker 1: of off So we have to go to wards that
Speaker 1: area once do that. You need the intelligence to do this.
Speaker 1: I don't want to have to think about this, so
Speaker 1: I want my car to be able to go as
Speaker 1: the time to charge and you go don't have to
Speaker 1: think about it. So AI is really critical in that
Speaker 1: and again back to AI data set, it's the exact
Speaker 1: same thing. Yes, I understand at present they they want
Speaker 1: to run twenty four to seven because of course the
Speaker 1: chips are so expensive. Of course the chips comes down.
Speaker 1: They don't need to run twenty four seven. They can
Speaker 1: run maybe they run eighteen seven. But that eighteen seven
Speaker 1: gives significance flexibility in and around us. And you can
Speaker 1: also move loads. Guess what US is asleep where away
Speaker 1: Europe is awake? You move loads back and forth.
Speaker 5: So AI will have a big impact. And if we
Speaker 5: think about AI in the right way, it will enable
Speaker 5: us to faster electrify our power system. I would also say,
Speaker 5: because you're building all this new infrastructure around, it will
Speaker 5: also allow you to clean up the energy system as well.
Speaker 5: I think this is very important.
Speaker 3: As well, especially also in management of the grid. Important
Speaker 3: part in that distributed decentralized smart clients is smart grid.
Speaker 1: And I'm going to say one thing cure really be
Speaker 1: what I'm saying about secure is what's more secure? A
Speaker 1: power system that has one control room one or a
Speaker 1: power system that is made up of fifty thousand microgrids
Speaker 1: that are all connected together. Well it's obviously right. So
Speaker 1: where I'm going from is I'm going for the ladder.
Speaker 1: I want away from the former.
Speaker 3: Right beyond AI, what other emerging technologies sands, batteries, storage,
Speaker 3: green hydrogen do you believe will be critical in driving
Speaker 3: the energy transition?
Speaker 1: Well, I think one of the critical technologies is synthetic biofuels, right, sorry,
Speaker 1: synthetic and biofield And what I mean by that is
Speaker 1: there are very difficult and by the way, if we're
Speaker 1: talking about decop I'm talking about decarbonization now. If you
Speaker 1: really want to go and decarbonize, right, or even let's
Speaker 1: me maybe extremely if Europe decided it was going to
Speaker 1: wean itself off of all of its fossil fuels, how
Speaker 1: would do it? Well, how it would do it is
Speaker 1: one is you begin to use your biofuels for the
Speaker 1: really hard to electrify sectors. And the hard to electrified
Speaker 1: sectors are ultimately aviation. That's really the big one, and
Speaker 1: long distance aviation go take a long while, if ever
Speaker 1: to fully electroide. Sure, this is no problem. And I'd
Speaker 1: also add bolting into that, right, shipping, right, So you
Speaker 1: add the two of them in there. So you're going
Speaker 1: to use biofils. Yeah, maybe there's not enough bio fuels
Speaker 1: out there, so you need to go synthetic. Then what
Speaker 1: you're doing really is you're taking that excess electricity and
Speaker 1: you're converting it into some farm molecule. It's inefficient and
Speaker 1: it's expensive, but you would go that route. That's what
Speaker 1: I would say. They would be the two things. If
Speaker 1: you really wanted to go that way and had to
Speaker 1: go that way, you would do that. I don't believe
Speaker 1: we should be doing that at present. I just want
Speaker 1: to be clear. For me, what we should be focusing
Speaker 1: on is the easy to pick apples. And the easy
Speaker 1: to pick apples are the ones I've talked about, which
Speaker 1: is you electrify as much as you can of industry,
Speaker 1: electrify as much as you can, and transport electrify as
Speaker 1: much as you can of heating and cooling. Right, That's
Speaker 1: what we should be focused on. The reason is because
Speaker 1: the technologies are there already in the r in the money,
Speaker 1: the technologies in and around synthetic fuels, they're just not
Speaker 1: there at present. And again and go back to what's
Speaker 1: the best thing to do with surplus electricity, Well, the
Speaker 1: best thing to do with that surplus electricity is to
Speaker 1: use it converted into some things that we converted efficiently
Speaker 1: back into electricity. That's a battery, right round trip efficiency
Speaker 1: ninety percent, You lose ten percent we don't create a
Speaker 1: synthetic fuel out of it, and I'm going to lose
Speaker 1: seventy percent. I actually see more than that by the
Speaker 1: time of burn up to st healing. More so I
Speaker 1: probably lose eighty percent. Educate, do you really think that's
Speaker 1: a smart thing for me to do? So I'm being
Speaker 1: practical on that now. The challenge, and listen, is the
Speaker 1: challenge is how do we best go and reduce off
Speaker 1: fossil fuels in those two sectors. But that's that's a
Speaker 1: challenge for our innovators and for AI and for technologists
Speaker 1: in the future, and it's a great challenge to have.
Speaker 1: I have no doubt that the necessary challenges will come
Speaker 1: up there. And even if they don't, worst case scenario,
Speaker 1: what do you do. What you'll do is you'll just
Speaker 1: start storing the carbon, right, That's what you do. If
Speaker 1: you really want to know and get to nets here,
Speaker 1: you'll do that. But again, not focusing on it now
Speaker 1: is the wrong thing to focus on and I certainly
Speaker 1: people don't want to hear anymore about net zero and
Speaker 1: stuff like this, right, they just don't want to hear it,
Speaker 1: So let's not talk about it. Let's move on from it.
Speaker 3: Your focus is often on Europe. What lessons can other
Speaker 3: regents learn from Europe's energy transition experiences, both its successes
Speaker 3: and failures.
Speaker 1: So the failure has been industrial policy. We were in batteries,
Speaker 1: not there anywhere anymore on it. We were in no
Speaker 1: solar inn as your left. A few wind turbine manufacturers left,
Speaker 1: But then they have to learn from the failures. And
Speaker 1: by the way, we've made attempts try and catch back up.
Speaker 1: Northfold battery attempt completely just recently gone bankrupt. So you
Speaker 1: can learn from the mistakes. But let's look at what
Speaker 1: Europe has done very well. What Europe has done very
Speaker 1: well is it is gone and pop projects in place
Speaker 1: across the world. It is built solar, wind batteries, hydro
Speaker 1: across the world, power cables, you name it. This is
Speaker 1: what Europe is very good at and we've probably people
Speaker 1: could learn awful lot from that. And what I mean
Speaker 1: by that is they take some of the European utilities.
Speaker 1: Ibadola and l edp Eon or WA. All of these
Speaker 1: have gone across the world and built renewables, right, I
Speaker 1: don't compare that. Let's say to us, is there any
Speaker 1: US utility that's kind of broad right? So that experience
Speaker 1: is amazing. So I think that's what you learn from
Speaker 1: Europe is how to build and how to do it
Speaker 1: cost effectively across the world. I think that would be
Speaker 1: the main thing I would do it. I also think
Speaker 1: it's Europe. You would certainly look at certain economies in
Speaker 1: Europe and sort of say, well, who's been very innovative
Speaker 1: on the regulatory front. You could learn a lot from that.
Speaker 1: So you mentioned Australia earlier on Australia has been very innovative.
Speaker 1: If I look from European perspective, I look at what
Speaker 1: was going on a great Britain right, really done a
Speaker 1: really interesting job in and around the regulatory environment for
Speaker 1: allowing things like batteries into the market and stuff like that.
Speaker 1: They would be the major sort of takeaways I would have.
Speaker 3: How do you assess the progress of energy transition in
Speaker 3: other major economies compared to Europe.
Speaker 1: Well, listen, the country electrifying and renewabilizing faster than anyone
Speaker 1: else's China without a doubt right there by far like
Speaker 1: they're fifty percent of everything, fifty percent of electric cars worldwide,
Speaker 1: fifty pendla scooters, fifty percent electric trucks, fifty percent solar panels,
Speaker 1: fifty pin of wind turbines, fifty percent on top of
Speaker 1: deployment terms. So China is the king of renewables, right.
Speaker 1: If I then look at the next one, well it's
Speaker 1: the US, right. The US is very nucky to be
Speaker 1: endowed with incredible natural resources, great wind resources, rate hydro resources,
Speaker 1: great jail thermal resources, great solar resources, and great fosters
Speaker 1: to resources. So they are spoiled for choice. They can
Speaker 1: do whatever they want, right, and that makes the United
Speaker 1: States very interesting, right.
Speaker 3: Look.
Speaker 1: I think what is interesting though, is to look if
Speaker 1: you want to look about the future of renewables, what's
Speaker 1: going on, you do have to look at I'd look
Speaker 1: at say some Pakistan. This is a country that has
Speaker 1: thirty kigawat's worth of power demand on an average powery basis,
Speaker 1: and we think, we're not one hundred percent sure, but
Speaker 1: we think that over the last fifteen months they've installed
Speaker 1: about fifteen gigaworths of solar and this is unheard of,
Speaker 1: all right, we've never seen this anyway. So that like France,
Speaker 1: which has eighty gigawatts of demand, installing what the gigawatts
Speaker 1: in a year half of its power demand unbelievable. Now
Speaker 1: why this is important is it's not France. France. There's
Speaker 1: lots of money they could really put the mind to
Speaker 1: they probably could do it. This is a developing country
Speaker 1: and this did not happen because of subsidies. This happened
Speaker 1: because US bureaucracy was loosened. In other words, tariffs on
Speaker 1: Chinese solar imports where reduced to zero and the market
Speaker 1: took off. Why because of economics? As simple as that.
Speaker 1: So for me, it does come back to economics. And
Speaker 1: it's a point I make to anybody is you cannot
Speaker 1: block you can't.
Speaker 2: It's right.
Speaker 1: You can block technology change. You can be a lud eyed,
Speaker 1: but you're going to get run over by that technology
Speaker 1: very quickly. If you block block technology change long term,
Speaker 1: you just do the economic damage to yourself. So that's
Speaker 1: the message. I mean, there was in any form of
Speaker 1: global country, I'd be looking at, well, what is Pakistan doing?
Speaker 1: Why did it happen? How can I think about it
Speaker 1: in the other way. How can I sort of design
Speaker 1: my power system around low cost intermit and renewables. That
Speaker 1: would be the question I'd be asking myself. It's not oh,
Speaker 1: let's go and copy what the Europeans did. Now, don't
Speaker 1: copy what we did. Think about how you can build
Speaker 1: a system in a much better way than what we've done.
Speaker 1: So that's to be the challenge. I mean, i'd say we.
Speaker 1: I would say the whole of the OECD, this is Japan, China, Europe, US, Canada.
Speaker 1: You have to look and think energy. When you have
Speaker 1: any form of industrial revolution, the technology that wins is
Speaker 1: the low cost one. Right. Automobile revolution was one by
Speaker 1: its one by gasoline, right, diesel petrol gasoline right, industrial
Speaker 1: revolution was coal. The revolution right now is it's renewable energy, right?
Speaker 3: And it's intermittent, yes, and a lot of that in
Speaker 3: Pakistan was behind the meter solar with exactly every industry, agriculture,
Speaker 3: even small villages and communities they have their own micro
Speaker 3: grids now exactly.
Speaker 1: It was consumer driven. You're absolutely right, and that's again
Speaker 1: I want to say, this is unheard of. Right, when's
Speaker 1: the last time we had something like this? Well, maybe
Speaker 1: a few hundred years ago when the village decided, hey, listen,
Speaker 1: that's going all, you know, build a forest and you know,
Speaker 1: collect some firewood. This is the scale of what they're
Speaker 1: doing is unbelievable. It's not a government sort of saying, hey,
Speaker 1: we're going to do this, it's you said, it's the individual,
Speaker 1: the local community. I'm going to do it.
Speaker 3: You think their own money?
Speaker 1: Are most of their own money.
Speaker 3: I don't know why more islands do that because their
Speaker 3: energy is so expensive.
Speaker 1: Right, it'll it will happen. It will happen again. You
Speaker 1: have to integrate technologies together, right, you have to rethink
Speaker 1: the way your power system works. But it's common.
Speaker 3: What are the most promising examples of international collaboration that
Speaker 3: you've seen in accelerating the global shift to clean energy?
Speaker 1: Well, I actually going to say it's the Chinese European
Speaker 1: collaboration because if I look at just what happened, like
Speaker 1: take this the solar in the wind industry, right, I
Speaker 1: think Goldwyn Goldwyn is the biggest turbine manufacturer in the world. Right, Well,
Speaker 1: the founder studied in Denmark. He then was given Danish
Speaker 1: government money and he set up a win term and
Speaker 1: manufacturer in China and he used German technology which he licensed. Okay,
Speaker 1: the biggest of the world. That's deep cooperation, right, the
Speaker 1: thorough space exact same thing. Solar industry in Germany took off.
Speaker 1: The German equipment manufacturers took that technology, brought it to China,
Speaker 1: built their factories. They became really really strong and guess what,
Speaker 1: they scale the technology quicker and better than we do,
Speaker 1: and they enable us to actually have low cost solar panels. Right,
Speaker 1: that's collaboration. You're going to look back in history and go,
Speaker 1: They've done something really interesting there because what it enabled
Speaker 1: was these technologies to scale quicker. True collaboration. Right. I'm
Speaker 1: very much for this cooperation collaboration model. Yeah, you have
Speaker 1: to sometimes collaborate with you are competitors, but you also
Speaker 1: need to compete with them, right, and not forget that.
Speaker 1: And it's good for everybody when we do that. It's
Speaker 1: good for society when you do both of that.
Speaker 3: Looking ahead, what are the key trends that will shape
Speaker 3: the energy landscape in the next five to ten years
Speaker 3: and how should businesses and policy makers repair The first.
Speaker 1: Thing I would say is that we've got any We're
Speaker 1: going into an era of abundant energy, and abundant energy
Speaker 1: means prices will come down. And let me start with
Speaker 1: let's go through all the fossil fuels coal. Listen, we're
Speaker 1: moving away from coal across most of the world. So
Speaker 1: what this means is and there's loads of coal out there,
Speaker 1: So demand for coals going down, You've got a surplus
Speaker 1: of it. Prices got out, Okay, we're seeing falling prices
Speaker 1: that are going forward. Right. Oil exact same thing. What
Speaker 1: you've got is demand not really growing and too much
Speaker 1: supply out there. Same thing. Oil prices come down. Gas
Speaker 1: a little bit more complicated, but we cleared there is
Speaker 1: a surplus of gas out there right now. Issue is
Speaker 1: we can't supply it. It can transport us, right, that's changing.
Speaker 1: Massive LERG cap capacity is coming along, whether that's chips
Speaker 1: or the actual energy classification facilities themselves. Right, that's what's
Speaker 1: coming online. So what this means is this comes online,
Speaker 1: you then have excess of gas going forward. Right, So
Speaker 1: you've gotten your fossil fuels excess. Now let's go to electricity.
Speaker 1: Exact same thing, because in electricity, what you're going to
Speaker 1: have is too much sun, too much wind at certain
Speaker 1: parts of the day and that's only going to increase
Speaker 1: going forward. Because you go back to the example of Pakistan,
Speaker 1: the consumer is just going to put more sol on
Speaker 1: his roof because so cheap compared to buying it from
Speaker 1: the grid. Reality of it, So that what does that mean?
Speaker 1: It means that coal producer in Pakistan is going to
Speaker 1: have to switch off his barrow station when it's a
Speaker 1: sunny day. There's no way around it. Right, So we're
Speaker 1: going into a different world world, That's where I'm coming from,
Speaker 1: where you definitely have to think about this whole energy
Speaker 1: space in a completely different way than we've done about
Speaker 1: it before. That would be the big change I would say,
Speaker 1: as I said, the era of abundant energy. That's why
Speaker 1: I see where we're moving into and that's it's exciting,
Speaker 1: but it's going to be a difficult place as well.
Speaker 3: What quality recommendations would you give to government seeking to
Speaker 3: accelerate the energy transition while insuring energy security and economic stability.
Speaker 1: So what I think we need to do is incentivize
Speaker 1: the electrification of our world, and the best way to
Speaker 1: do that, in my opinion, is not by giving subsidies,
Speaker 1: because subsidies whatsodies end up doing is I'm getting something
Speaker 1: from my government and I'm spending it, and you overspend,
Speaker 1: which is not good for anyone. So from my opinion
Speaker 1: would be that what you really need to do is
Speaker 1: put in tax incentives all right. In other words, if
Speaker 1: you spend money, you can do write it off against
Speaker 1: tax or something like this type of accelerator bit. I
Speaker 1: think this is really ritical for pushing is particularly from
Speaker 1: as I said, industrial and commercial uses. We need to
Speaker 1: get them spending. And then this expenditure tends to be
Speaker 1: very local as well, so it's very wet for the economy.
Speaker 1: I think that's the first thing I would talk about.
Speaker 1: The second thing they have to think about is really
Speaker 1: what do they want the energy system to look like
Speaker 1: and have a picture of in ten years time. And
Speaker 1: when you understand what you want to get, then you
Speaker 1: can actually put in place the incentive structure for that.
Speaker 1: And what I mean by that is it's all great,
Speaker 1: then we're going to be zero in twenty and thirty
Speaker 1: five or forty or whatever year you want. These are
Speaker 1: all sort of they're just an unrealistic target, Okay, not
Speaker 1: really real helpful. Much more healthful is to say this
Speaker 1: is what we want to achieve and this is how
Speaker 1: we're going to get there. And that's a systemic view
Speaker 1: of the energy system going forward, and that's I think
Speaker 1: very very and I think the last thing I would
Speaker 1: say as well is that most people haven't a clue
Speaker 1: of the energy system at all, so they don't understand it.
Speaker 1: We take it totally for granted starts, but I ope,
Speaker 1: my fridge, take food out. People don't realize the extent
Speaker 1: of if I may say, the risk of power failures
Speaker 1: in the system and I saw from a catastrophic risk
Speaker 1: within the system. They don't understand this. So we need
Speaker 1: to get the consumer much more involved and educated in this.
Speaker 1: And this is a very critical thing because if people
Speaker 1: understand it, then they can make change happen. Right, If
Speaker 1: you don't understand it and it's just top down, it
Speaker 1: doesn't work. I think that's what I would say from
Speaker 1: a Westerner, I think what we see is that people
Speaker 1: are just fed up of what they see a left
Speaker 1: wing socialist view of futures that from a climate perspective
Speaker 1: or energy perspective, that's what I'm seeing resistant against and
Speaker 1: I like to see that changed. Just the narrative has
Speaker 1: to change. That's where I'm coming from because you need
Speaker 1: to bring people with you to have change, and we've
Speaker 1: lost the reality as we've lost a large part of
Speaker 1: our populations in and around the push to decombonization. So
Speaker 1: we have to change that messaging, and maybe that requires
Speaker 1: us as messenger givers to probably rethink what we've been
Speaker 1: saying and the language you've been using.
Speaker 3: What message of hope and action can you offer to
Speaker 3: our viewers who're working to advance the clean energy transition.
Speaker 1: I would say that we're in a once in a
Speaker 1: century industrial revolution, and that's incredibly exciting and it's full
Speaker 1: of enormous opportunity and at the same time it's full
Speaker 1: of threats. So opportunity, let's go back to the beginning
Speaker 1: of the twentieth century, Henry Ford, General Motors, Bosh, Daimler.
Speaker 1: You can go on and on in terms of all
Speaker 1: the great companies that were created at the beginning of
Speaker 1: the twentieth century in and around this industrial revolution. So
Speaker 1: what have we got today? Well, today we're in a
Speaker 1: similar one, right, but we're only at the beginnings. So
Speaker 1: what have we got. We've got a BYD, we got
Speaker 1: a Tesla, We've got to chat g BT that's only
Speaker 1: the beginning. So my message is really opportunity is in
Speaker 1: front of you. I would also say, and this is
Speaker 1: the technologist inside me, is that I'm not concerned about
Speaker 1: climate change anymore because we have so many great minds
Speaker 1: focusing on solutions. That's what engineers do, that's what the
Speaker 1: scientists do. We will find solutions to them. They'll be
Speaker 1: probably different than what we think they are at present,
Speaker 1: but we have to unleash the power of great minds
Speaker 1: across the world to come up with solutions to the
Speaker 1: problems around us, right, and key thing going for Without
Speaker 1: innovation and entrepreneurship, we're not going to solve that problem
Speaker 1: or the other world problems as well. Right. So I
Speaker 1: hope that's a message of hope because, as I said,
Speaker 1: I've never been as positive in my career.
Speaker 3: Amazing things that are happening with all these entrepreneurs. Batteries
Speaker 3: in appliances, induction cookers with built in batteries, or refraderators
Speaker 3: with built in batteries, lights with built in batteries. For
Speaker 3: the global seut there's going to be batteries everywhere. I
Speaker 3: like that Batteries everywhere is a good way to put it.
Speaker 2: Right.
Speaker 1: I think I count two hundred my home here, So
Speaker 1: there you go. Treats everywhere already, but now it's just
Speaker 1: going to increase. You're absolutely right. The big devices suddenly
Speaker 1: you have batteries in them, right there are.
Speaker 3: This has been an incredibly insightful conversation. Thank you for
Speaker 3: sharing your expertise and perspectives with their audience. How can
Speaker 3: our viewers follow your work and learn more about your insights?
Speaker 1: The best thing to do is just firstly, just look
Speaker 1: at me. Follow me on LinkedIn. That's probably the best
Speaker 1: thing to do. And if people want to reach out
Speaker 1: to me the same thing, just do it to LinkedIn,
Speaker 1: in chat functional LinkedIn. That's the best way to reach
Speaker 1: out to me.
Speaker 3: You have a podcast, Sorry, I forgot about that.
Speaker 1: Of course I have a podcast as well, Redefining Energy.
Speaker 1: I've been doing it with my friend Lauren saaland for
Speaker 1: the last I don't know, six years or something like that.
Speaker 1: You know, it's brilliant. Tell when we're very near to
Speaker 1: the two million download mark, which is pretty mad, right,
Speaker 1: I believe it's been six years, but I think that
Speaker 1: somebody who's listened to me two million times, it's like
Speaker 1: pretty scary.
Speaker 3: I listen to it religiously every time it comes up.
Speaker 1: It's very informative. Listen. Thank you very much for having
Speaker 1: me on this. It's been great. I've actually very much
Speaker 1: enjoyed it. I didn't prepare first.
Speaker 3: Thank you, Gerared, Thank you.
Speaker 1: For listening to Redefining Energy. Don't forget to read the
Speaker 1: show and subscribe on Apple Podcast, Spotify, or the platform
Speaker 1: of your choice.