1
00:00:00,200 --> 00:00:02,960
Speaker 1: This is Tom Rowland's Reese and you're listening to Switched

2
00:00:03,000 --> 00:00:05,920
Speaker 1: on the podcast brought to you by bn EF. In

3
00:00:05,960 --> 00:00:08,440
Speaker 1: recent years, the world has been a wash, with cheap

4
00:00:08,480 --> 00:00:11,720
Speaker 1: solar hammering the profits of PV manufacturers while at the

5
00:00:11,720 --> 00:00:14,960
Speaker 1: same time opening up new export markets to developing nations

6
00:00:14,960 --> 00:00:18,960
Speaker 1: seeking affordable energy sources. Demand growth for solar is still strong,

7
00:00:19,160 --> 00:00:22,200
Speaker 1: with our global installation forecast for twenty twenty five set

8
00:00:22,200 --> 00:00:25,079
Speaker 1: to reach six hundred and ninety five gigawatts, exceeding the

9
00:00:25,120 --> 00:00:27,720
Speaker 1: five hundred and ninety nine gigawatts seen last year, but

10
00:00:27,800 --> 00:00:30,920
Speaker 1: headwinds remain in some territories, especially in the US, where

11
00:00:30,960 --> 00:00:33,880
Speaker 1: the Trump administration's tariffs have taken aim at the entire

12
00:00:33,960 --> 00:00:36,960
Speaker 1: value chain for key parts originating from China and some

13
00:00:37,120 --> 00:00:38,440
Speaker 1: Southeast Asian countries.

14
00:00:39,080 --> 00:00:40,360
Speaker 2: So just how much.

15
00:00:40,240 --> 00:00:43,360
Speaker 1: Longer can module prices continue to decline? What impact has

16
00:00:43,440 --> 00:00:46,560
Speaker 1: large scale solar adoption had on energy markets, and could

17
00:00:46,560 --> 00:00:49,000
Speaker 1: the US government's policy actually support the growth of a

18
00:00:49,000 --> 00:00:52,720
Speaker 1: domestic PV manufacturing industry or harm it. Today I'm joined

19
00:00:52,720 --> 00:00:56,440
Speaker 1: by BNF Solar specialist Jenny Chase as we discuss findings

20
00:00:56,480 --> 00:00:59,080
Speaker 1: from her most recent PV market outlook, which b and

21
00:00:59,120 --> 00:01:00,960
Speaker 1: EF clients can find at b and EF go on

22
00:01:00,960 --> 00:01:04,240
Speaker 1: the Bloomberg terminal or on bnef dot com. All right,

23
00:01:04,319 --> 00:01:06,080
Speaker 1: let's get to talking about the out look for SOLA

24
00:01:06,120 --> 00:01:19,400
Speaker 1: with Jenny. So it is not very often that we

25
00:01:19,480 --> 00:01:22,840
Speaker 1: have a bona fide celebrity on the podcast, but I

26
00:01:22,880 --> 00:01:25,840
Speaker 1: said to my wife this morning that we are having

27
00:01:26,080 --> 00:01:28,399
Speaker 1: Jenny as a guest on the podcast, and she said,

28
00:01:28,520 --> 00:01:33,319
Speaker 1: who's Jenny? And I said, well, imagine if Sola was fashion,

29
00:01:33,760 --> 00:01:36,880
Speaker 1: then maybe Jenny is Anna Wintle. And my wife said, well,

30
00:01:36,880 --> 00:01:39,520
Speaker 1: does that mean she makes interns cry? And I said no,

31
00:01:39,880 --> 00:01:42,959
Speaker 1: it's just that, you know, very highly respected opinion, but

32
00:01:43,160 --> 00:01:43,640
Speaker 1: gives it.

33
00:01:43,560 --> 00:01:44,200
Speaker 2: To you straight.

34
00:01:44,280 --> 00:01:46,600
Speaker 1: And she said, oh, you mean Jenny Chaser. So that's

35
00:01:46,600 --> 00:01:48,640
Speaker 1: why I mean that we have a bona fide celebrity.

36
00:01:48,760 --> 00:01:52,200
Speaker 1: So everything there is to know about Sola is contained

37
00:01:52,240 --> 00:01:55,560
Speaker 1: within the mind of Jenny. And so, Jenny, welcome to

38
00:01:55,600 --> 00:01:56,840
Speaker 1: the show. Really glad to have you on.

39
00:01:57,120 --> 00:01:58,360
Speaker 3: Hello Tom.

40
00:01:58,520 --> 00:02:01,040
Speaker 1: So we were just talking actually before we started recording

41
00:02:01,320 --> 00:02:04,040
Speaker 1: that today. You wanted to talk about, among other things,

42
00:02:04,120 --> 00:02:07,360
Speaker 1: the global oversupply in solar.

43
00:02:07,080 --> 00:02:08,640
Speaker 2: So tell us a little bit more. And I do

44
00:02:08,720 --> 00:02:11,840
Speaker 2: have follow on questions around this, but yeah, what is it?

45
00:02:12,200 --> 00:02:14,400
Speaker 2: Can you just describe to us the situation as you

46
00:02:14,440 --> 00:02:14,720
Speaker 2: see it.

47
00:02:14,960 --> 00:02:17,520
Speaker 4: So, solar manufacturing is a business in which it is

48
00:02:17,680 --> 00:02:20,360
Speaker 4: very hard to make in the lock dawn. It is

49
00:02:20,760 --> 00:02:24,160
Speaker 4: regularly the case that far more solar modules can be

50
00:02:24,160 --> 00:02:26,400
Speaker 4: made in a year than are actually bought. And this

51
00:02:26,520 --> 00:02:28,800
Speaker 4: is despite the fact that the volumes of solar modules

52
00:02:28,800 --> 00:02:31,480
Speaker 4: being bought and installed are growing at really quite a

53
00:02:31,560 --> 00:02:33,600
Speaker 4: rapid clip, and have been for the last twenty years.

54
00:02:33,680 --> 00:02:37,040
Speaker 4: The thing is that the solar manufacturing industry consistently expands

55
00:02:37,080 --> 00:02:40,480
Speaker 4: faster than demand. So even though demand is growing, you

56
00:02:40,600 --> 00:02:43,680
Speaker 4: regularly get these periods of oversupply where all the manufacturers

57
00:02:43,760 --> 00:02:46,760
Speaker 4: suffered negative profitability and quite a lot of them go bust.

58
00:02:46,880 --> 00:02:48,360
Speaker 4: We have been in one of those phases for about

59
00:02:48,360 --> 00:02:50,160
Speaker 4: a year now, and there's no sign of us coming

60
00:02:50,200 --> 00:02:50,600
Speaker 4: out of it.

61
00:02:50,880 --> 00:02:53,200
Speaker 1: I suppose the reason I have follow up questions is

62
00:02:53,560 --> 00:02:55,320
Speaker 1: I sort of get it where you describe. I have

63
00:02:55,360 --> 00:02:57,560
Speaker 1: this picture of, you know, two things that are growing

64
00:02:57,639 --> 00:03:00,760
Speaker 1: really fast, the demand for solar and the supply of solar.

65
00:03:00,960 --> 00:03:03,440
Speaker 1: And maybe if you're in the world of the supply

66
00:03:03,520 --> 00:03:05,920
Speaker 1: of solar, it's kind of hard to judge the pace

67
00:03:06,000 --> 00:03:09,400
Speaker 1: and so maybe the industry collectively sometimes overdoes it a

68
00:03:09,400 --> 00:03:11,799
Speaker 1: little bit and needs to slow down, which is kind

69
00:03:11,800 --> 00:03:13,040
Speaker 1: of how you're describing it.

70
00:03:13,120 --> 00:03:13,560
Speaker 2: I suppose.

71
00:03:13,720 --> 00:03:16,040
Speaker 1: The question I have is is I don't remember a

72
00:03:16,080 --> 00:03:20,120
Speaker 1: time where you have ever said there's undersupply of solar.

73
00:03:20,240 --> 00:03:23,200
Speaker 1: I you know, you're saying that the market's going through

74
00:03:23,200 --> 00:03:25,680
Speaker 1: a really tough time, But I feel like whenever I

75
00:03:25,760 --> 00:03:27,600
Speaker 1: talked about solo, you're saying them.

76
00:03:27,840 --> 00:03:30,119
Speaker 2: Maybe I have a short memory, so it's both.

77
00:03:30,160 --> 00:03:32,760
Speaker 4: Now you're pretty much right. I mean, so in twenty

78
00:03:32,800 --> 00:03:37,200
Speaker 4: twenty two, demand actually group quite quickly, and prices the

79
00:03:37,240 --> 00:03:39,760
Speaker 4: solar model actually rose for a little while. So there

80
00:03:39,800 --> 00:03:44,000
Speaker 4: are periods where solar manufacturers can make fairly nice profits.

81
00:03:44,040 --> 00:03:46,320
Speaker 4: They just tend to be quite short. And what tends

82
00:03:46,360 --> 00:03:49,400
Speaker 4: to happen then is that they build new factories using

83
00:03:49,440 --> 00:03:52,440
Speaker 4: the latest technology, and when they built the factories use

84
00:03:52,520 --> 00:03:55,480
Speaker 4: the latest technology, the factories that are three years old,

85
00:03:55,520 --> 00:03:56,640
Speaker 4: and how obsolete.

86
00:03:56,840 --> 00:03:58,560
Speaker 1: So a question I have here, I mean, this is

87
00:03:58,640 --> 00:04:00,680
Speaker 1: kind of almost like everything I've ever wanted to ask

88
00:04:00,760 --> 00:04:03,760
Speaker 1: Jenny about some of these dynamics.

89
00:04:03,440 --> 00:04:05,880
Speaker 2: Is why are people building these factories? Then?

90
00:04:06,000 --> 00:04:09,120
Speaker 1: I mean, given what you're saying, why would anyone in

91
00:04:09,160 --> 00:04:12,600
Speaker 1: their right mind be investing in solar manufacturing.

92
00:04:12,880 --> 00:04:16,120
Speaker 4: Where you got me there, tom So, I think the

93
00:04:16,200 --> 00:04:19,840
Speaker 4: dynamic here is that if you're a solar manufacturer, you

94
00:04:19,920 --> 00:04:22,559
Speaker 4: always have a choice. You can expand you can build

95
00:04:22,560 --> 00:04:25,960
Speaker 4: a new factory using the latest technology, so making the

96
00:04:26,040 --> 00:04:29,160
Speaker 4: latest N type top con cels with the best efficiencies

97
00:04:29,200 --> 00:04:31,680
Speaker 4: in the market, and you can survive another year. Or

98
00:04:32,040 --> 00:04:34,920
Speaker 4: you can not do that. You can just run your

99
00:04:34,960 --> 00:04:38,440
Speaker 4: current capacity and you will lose market share and eventually

100
00:04:38,440 --> 00:04:41,279
Speaker 4: become obsolete. So you certainly have no choice but to

101
00:04:41,279 --> 00:04:43,279
Speaker 4: shoot for the stars. And of course if you shoot

102
00:04:43,320 --> 00:04:45,560
Speaker 4: for the stars, what happens to a great many of

103
00:04:45,560 --> 00:04:47,880
Speaker 4: these companies is that they fail, they burn up, they

104
00:04:47,920 --> 00:04:50,680
Speaker 4: go bankrupt. But there are always new investors willing to

105
00:04:50,680 --> 00:04:53,200
Speaker 4: come in because everybody loves sold there so much.

106
00:04:53,839 --> 00:04:56,280
Speaker 1: Is there an element because I've also been looking at

107
00:04:56,279 --> 00:04:59,360
Speaker 1: this from you know, the perspective of some of the

108
00:04:59,560 --> 00:05:03,520
Speaker 1: US efforts over the years to cultivate its own solar

109
00:05:03,520 --> 00:05:06,960
Speaker 1: manufacturing business. And I remember saying on actually the first

110
00:05:06,960 --> 00:05:09,400
Speaker 1: time I ever was a host on this podcast, we

111
00:05:09,480 --> 00:05:12,440
Speaker 1: had one of our US solar analysts who was talking about,

112
00:05:12,600 --> 00:05:14,640
Speaker 1: you know, the use of tariffs and incentives, and this

113
00:05:14,760 --> 00:05:19,080
Speaker 1: predates Trump to stimulate manufacturing in the US and this

114
00:05:19,240 --> 00:05:21,640
Speaker 1: kind of trying to fight it out with China, which

115
00:05:21,680 --> 00:05:23,920
Speaker 1: is I mean, point number one is that seems like

116
00:05:23,960 --> 00:05:26,560
Speaker 1: a battle that you're unlikely to win. But point number

117
00:05:26,600 --> 00:05:29,080
Speaker 1: two I made was is this a battle you even

118
00:05:29,160 --> 00:05:29,719
Speaker 1: want to win?

119
00:05:29,800 --> 00:05:30,440
Speaker 2: It's like this.

120
00:05:30,560 --> 00:05:33,080
Speaker 1: War over a little patch of desert where there is

121
00:05:33,600 --> 00:05:37,160
Speaker 1: the least arable land ever, and so the only conclusion

122
00:05:37,520 --> 00:05:39,640
Speaker 1: I could kind of come to was that some of

123
00:05:39,680 --> 00:05:44,200
Speaker 1: this interest was from a more of a national security

124
00:05:44,320 --> 00:05:46,919
Speaker 1: resilience point of view. Is that also a fact that

125
00:05:46,960 --> 00:05:50,279
Speaker 1: it's encouraging or incentivizing some of this investment we see globally,

126
00:05:50,320 --> 00:05:53,640
Speaker 1: particularly in China, is that it serves a strategic interest

127
00:05:53,800 --> 00:05:55,520
Speaker 1: and is therefore being encouraged.

128
00:05:55,920 --> 00:05:56,920
Speaker 3: Not in China.

129
00:05:57,000 --> 00:05:59,720
Speaker 4: So around two thousand and eight, maybe even a bit

130
00:05:59,720 --> 00:06:02,080
Speaker 4: before twenty and four to twenty ten or so, the

131
00:06:02,200 --> 00:06:06,800
Speaker 4: Chinese federal government did support solar manufacturer. It particularly gave

132
00:06:06,920 --> 00:06:11,920
Speaker 4: the provincial government a remit to give land and permits

133
00:06:11,920 --> 00:06:16,359
Speaker 4: and suitable infrastructure to solar companies, and the big Chinese

134
00:06:16,440 --> 00:06:19,320
Speaker 4: state banks were willing to back manufacturers. So yes, there

135
00:06:19,360 --> 00:06:23,039
Speaker 4: was a period when for China solar manufacturing was strategically

136
00:06:23,080 --> 00:06:25,840
Speaker 4: important and the central government was supporting it.

137
00:06:26,000 --> 00:06:28,400
Speaker 3: That phase has long long ended.

138
00:06:28,560 --> 00:06:31,680
Speaker 4: The Chinese solar industry is viciously capitalist, that is, dog

139
00:06:31,720 --> 00:06:34,800
Speaker 4: eat dog, and the solar manufacturing industry is principally Chinese

140
00:06:34,839 --> 00:06:37,640
Speaker 4: companies competing with one another. In fact, the Chinese PV

141
00:06:37,880 --> 00:06:42,560
Speaker 4: Industry Association has tried to stop manufacturers selling at vices

142
00:06:42,600 --> 00:06:45,440
Speaker 4: as low as the vices currently are, and it largely

143
00:06:45,480 --> 00:06:48,880
Speaker 4: failed because it's very difficult to get five hundred companies

144
00:06:48,920 --> 00:06:51,920
Speaker 4: to all sell at higher devices that they are naturally

145
00:06:51,920 --> 00:06:52,360
Speaker 4: inclined to.

146
00:06:52,760 --> 00:06:55,600
Speaker 1: So one of part of this cycle you've described is,

147
00:06:55,880 --> 00:06:59,440
Speaker 1: you know, companies going bust and then also this idea

148
00:06:59,480 --> 00:07:03,400
Speaker 1: of manufacturing capacity becoming obsolete. So when companies go bust,

149
00:07:03,480 --> 00:07:06,279
Speaker 1: to other companies swoop in and buy their factories or

150
00:07:06,640 --> 00:07:09,840
Speaker 1: is it by that stage those factories are worthless because

151
00:07:09,840 --> 00:07:12,160
Speaker 1: they're obsolete. You know what happens there?

152
00:07:12,600 --> 00:07:16,560
Speaker 4: They do often get picked up by other players, usually

153
00:07:16,640 --> 00:07:19,600
Speaker 4: for quite small and absent money. And in China there

154
00:07:19,680 --> 00:07:21,880
Speaker 4: is a dynamic where the local government will lost and

155
00:07:22,080 --> 00:07:24,480
Speaker 4: back another company to take it over because it's a

156
00:07:24,480 --> 00:07:27,880
Speaker 4: bit let embarrassed than just closing that entirely. The major

157
00:07:27,960 --> 00:07:31,080
Speaker 4: Chinese module makers have also cut the number of employees

158
00:07:31,560 --> 00:07:34,840
Speaker 4: by significant amounts in twenty twenty four, simply because they're

159
00:07:34,840 --> 00:07:38,320
Speaker 4: reducing production and they're also increasing productivity per employee.

160
00:07:38,520 --> 00:07:42,120
Speaker 1: I just find this whole phenomenon so interesting. It reminds

161
00:07:42,120 --> 00:07:44,160
Speaker 1: me of that I don't remember the name of the

162
00:07:44,240 --> 00:07:48,200
Speaker 1: guy that Greek legend about the guy who had to

163
00:07:48,680 --> 00:07:51,960
Speaker 1: roll a stone up the hill, Cidyphus, Sisyphus. That's the

164
00:07:52,040 --> 00:07:54,840
Speaker 1: one that's kind of like what the solar industry seems

165
00:07:54,880 --> 00:07:56,640
Speaker 1: like to me. The way you describe it is you're

166
00:07:56,680 --> 00:07:59,440
Speaker 1: either pushing the stone up the hill, which is hard work,

167
00:07:59,720 --> 00:08:02,600
Speaker 1: or you're out of the game and back to the bottom.

168
00:08:03,000 --> 00:08:05,520
Speaker 4: I think that's what makes that's what trying to make

169
00:08:05,560 --> 00:08:07,720
Speaker 4: money and solar manufacturing is like. I mean, Cis of

170
00:08:07,760 --> 00:08:10,840
Speaker 4: Firs was assigned that job as a punishment, and it

171
00:08:10,880 --> 00:08:13,400
Speaker 4: wasn't really a job. There is a good side to this,

172
00:08:13,480 --> 00:08:19,000
Speaker 4: which is the watch thank you. There is a good thing,

173
00:08:19,080 --> 00:08:23,120
Speaker 4: which is is that worldwide, consumers are getting really cheap modules,

174
00:08:23,360 --> 00:08:27,440
Speaker 4: and we see that even some quite poor countries like Pakistan,

175
00:08:27,720 --> 00:08:30,680
Speaker 4: South Africa and Nigeria are starting to deploy large about

176
00:08:30,840 --> 00:08:33,080
Speaker 4: sols now just because they are so cheap.

177
00:08:33,400 --> 00:08:34,480
Speaker 2: Yeah, I mean obviously.

178
00:08:34,480 --> 00:08:36,360
Speaker 1: I mean I sometimes think when people talk about over

179
00:08:36,400 --> 00:08:39,400
Speaker 1: suppliers a problem like, well, whose problem is that? And

180
00:08:39,480 --> 00:08:41,360
Speaker 1: clearly there is an upside to all of this, which

181
00:08:41,400 --> 00:08:45,640
Speaker 1: is everywhere else benefits from this suffering that is happening

182
00:08:45,640 --> 00:08:47,920
Speaker 1: in the Chinese industry. I still just trying to work

183
00:08:48,000 --> 00:08:50,880
Speaker 1: out what's in it for Chinese solar manufacturers.

184
00:08:51,120 --> 00:08:53,000
Speaker 2: Is there is there an upside for any of them

185
00:08:53,200 --> 00:08:53,920
Speaker 2: or some of them.

186
00:08:53,840 --> 00:08:55,880
Speaker 4: Will survive and go on to the next phase.

187
00:08:55,920 --> 00:08:56,400
Speaker 3: I suppose.

188
00:08:56,400 --> 00:08:58,160
Speaker 4: I don't know where the next phase will be, but

189
00:08:58,240 --> 00:09:01,040
Speaker 4: sometimes they make money sometimes. I mean, what's the outside

190
00:09:01,080 --> 00:09:03,120
Speaker 4: of your job, Tom? I think we just have to

191
00:09:03,120 --> 00:09:05,360
Speaker 4: say sometimes these firms are doing what they do because

192
00:09:05,360 --> 00:09:05,920
Speaker 4: it's their job.

193
00:09:06,120 --> 00:09:06,640
Speaker 2: Fair enough.

194
00:09:06,640 --> 00:09:10,120
Speaker 1: Fair enough, Let's go back to the topic around incredibly

195
00:09:10,240 --> 00:09:14,280
Speaker 1: cheap solar everywhere in the world and what the knock

196
00:09:14,360 --> 00:09:17,160
Speaker 1: on effects of that are. I remember when I joined

197
00:09:17,280 --> 00:09:20,920
Speaker 1: n EF in two thousand and nine and you were

198
00:09:20,960 --> 00:09:24,000
Speaker 1: still in London. I was still in London, and you

199
00:09:24,040 --> 00:09:28,160
Speaker 1: were describing to me this Moore's law type decline in

200
00:09:28,240 --> 00:09:31,840
Speaker 1: solar prices, and I remember thinking like, wow, that's going

201
00:09:31,920 --> 00:09:34,960
Speaker 1: to completely change the world. It's like, so awesome, I

202
00:09:35,000 --> 00:09:36,840
Speaker 1: want to be in the solar team. And I suppose

203
00:09:36,880 --> 00:09:39,200
Speaker 1: now we're living in that world, that that sort of

204
00:09:39,280 --> 00:09:43,160
Speaker 1: trend we were seeing promised of incredibly cheap solar everywhere.

205
00:09:43,200 --> 00:09:43,760
Speaker 2: So can you.

206
00:09:43,760 --> 00:09:46,880
Speaker 1: Describe a little bit about you know, what you're seeing

207
00:09:47,160 --> 00:09:50,200
Speaker 1: and how that's changing the game generally?

208
00:09:50,640 --> 00:09:54,120
Speaker 4: Yeah, So you call it Moore's law. Then Moore's law

209
00:09:54,200 --> 00:09:56,640
Speaker 4: is just a special case of what we normally call

210
00:09:56,720 --> 00:09:59,560
Speaker 4: the experienced curve. And the basics of the experience curve

211
00:09:59,720 --> 00:10:03,280
Speaker 4: is every time the human race doubles its cumulative production

212
00:10:03,360 --> 00:10:06,880
Speaker 4: of something, and it's a manufactured commodity like solar modules,

213
00:10:06,960 --> 00:10:10,559
Speaker 4: like Brits, like semiconductor chips, we reduce the cost per

214
00:10:10,679 --> 00:10:13,800
Speaker 4: unit by a fairly fixed amount, and you can calculate

215
00:10:13,840 --> 00:10:16,560
Speaker 4: what that percentage is. Then it's usually around twenty percent

216
00:10:16,800 --> 00:10:19,679
Speaker 4: now for solar modules, calculate We can calculate this back

217
00:10:19,720 --> 00:10:22,800
Speaker 4: in nineteen seventy six. The trouble is, it depends wildly

218
00:10:22,880 --> 00:10:25,760
Speaker 4: on your assumption about inflation over that period. How you

219
00:10:25,760 --> 00:10:28,320
Speaker 4: normalize it, And right now the answer makes no sense

220
00:10:28,360 --> 00:10:30,760
Speaker 4: because the experienced curve says that solar models should be

221
00:10:30,800 --> 00:10:32,920
Speaker 4: significantly more offensive than they are, and they should be

222
00:10:32,960 --> 00:10:35,280
Speaker 4: slightly more expensive than they are, but if everyone was

223
00:10:35,320 --> 00:10:38,000
Speaker 4: making money in the value chain, but probably not that much.

224
00:10:38,120 --> 00:10:40,679
Speaker 4: So right now we're kind of looking at the experienced

225
00:10:40,679 --> 00:10:43,280
Speaker 4: curves suspiciously and saying, we'll see what happens when we

226
00:10:43,280 --> 00:10:45,600
Speaker 4: get a few more data points. But yes, right now

227
00:10:45,679 --> 00:10:48,160
Speaker 4: you can buy a solar module for nine then for

228
00:10:48,320 --> 00:10:51,520
Speaker 4: what in normal markets? So normal markets mean not the

229
00:10:51,640 --> 00:10:54,480
Speaker 4: US and not India either. This means that solar models

230
00:10:54,480 --> 00:10:57,680
Speaker 4: are so cheap that they're basically cheaper than fences. You know,

231
00:10:57,679 --> 00:10:59,440
Speaker 4: if you want to build a fence around your guards

232
00:10:59,679 --> 00:11:02,400
Speaker 4: in US up or China or most of the world

233
00:11:02,400 --> 00:11:05,240
Speaker 4: of that, you can use solar modules as fencing material,

234
00:11:05,280 --> 00:11:07,000
Speaker 4: and even if you don't bother wiring them up, you'd

235
00:11:07,040 --> 00:11:09,680
Speaker 4: probably save money versus buying some Liz Wold.

236
00:11:09,920 --> 00:11:14,880
Speaker 1: This reminds me of in history, learning about hyperinflation in Viamar, Germany.

237
00:11:14,920 --> 00:11:18,760
Speaker 1: I saw this picture that was someone using banknotes as

238
00:11:18,840 --> 00:11:22,880
Speaker 1: wallpaper because that was cheaper than buying paper. So maybe

239
00:11:22,880 --> 00:11:25,720
Speaker 1: people are going to have solar wallpaper inside, you know,

240
00:11:25,800 --> 00:11:29,720
Speaker 1: completely pointless, but why not? So what consequences that having

241
00:11:29,800 --> 00:11:31,400
Speaker 1: on the energy industry?

242
00:11:31,400 --> 00:11:32,040
Speaker 2: That you're seeing.

243
00:11:32,400 --> 00:11:32,720
Speaker 3: Well.

244
00:11:32,840 --> 00:11:35,080
Speaker 4: The other thing is that it's not just cheap, there's

245
00:11:35,080 --> 00:11:37,840
Speaker 4: also quite a lot of it. We estimate that five

246
00:11:37,880 --> 00:11:40,600
Speaker 4: hundred and ninety nine gigawatts of solar modules were installed

247
00:11:40,600 --> 00:11:42,920
Speaker 4: in twenty twenty four, and about six hundred and ninety

248
00:11:42,920 --> 00:11:45,760
Speaker 4: five gigawatts would be installed this year in twenty twenty five.

249
00:11:46,040 --> 00:11:50,320
Speaker 4: And just for contexts, the entire global power system, all

250
00:11:50,320 --> 00:11:54,040
Speaker 4: the fossil field and everything, is approximately ten terra watts

251
00:11:53,920 --> 00:11:56,280
Speaker 4: at the start of this year. So if we're adding

252
00:11:56,679 --> 00:11:59,240
Speaker 4: like zero point seven terra watts a year to a

253
00:11:59,320 --> 00:12:01,800
Speaker 4: ten terra wats system is quite a lot. And of

254
00:12:01,840 --> 00:12:05,040
Speaker 4: course it's not evenly distributed. So what what's happening is

255
00:12:05,040 --> 00:12:08,199
Speaker 4: that when the sun's out power is very readily available,

256
00:12:08,240 --> 00:12:11,120
Speaker 4: it's very cheap, and in some cases there's actually more

257
00:12:11,160 --> 00:12:15,520
Speaker 4: solar power being generated than total demand, which causes problems.

258
00:12:15,679 --> 00:12:18,200
Speaker 4: I was just reading on the Solar News this morning

259
00:12:18,240 --> 00:12:21,040
Speaker 4: that in Cyprus, which is obviously a quite a tiny

260
00:12:21,120 --> 00:12:22,760
Speaker 4: part of the world and has now had quite a

261
00:12:22,760 --> 00:12:26,320
Speaker 4: lot of solar, fifty eight percent of the renewables generated

262
00:12:26,360 --> 00:12:28,960
Speaker 4: in the first five months of this year have been curtailed.

263
00:12:29,040 --> 00:12:31,440
Speaker 4: That is thrown away because the grid can't take them.

264
00:12:31,679 --> 00:12:35,040
Speaker 1: Wow, that is the highest curtailment numbers I've ever heard,

265
00:12:35,360 --> 00:12:36,280
Speaker 1: I know, right.

266
00:12:36,400 --> 00:12:39,400
Speaker 4: I mean this time of year in northern Northern Hemisphere

267
00:12:39,400 --> 00:12:43,160
Speaker 4: you always get high solar catailment because it's it's sunny.

268
00:12:42,920 --> 00:12:45,959
Speaker 1: Particularly since it's over like you know, you're not just saying,

269
00:12:45,960 --> 00:12:48,400
Speaker 1: oh and this hour fifty eight percent with ktail, you're

270
00:12:48,440 --> 00:12:51,520
Speaker 1: talking over a whole month. It's over five months.

271
00:12:51,880 --> 00:12:54,880
Speaker 4: Yeah, so last year in total, twenty nine percent was katail.

272
00:12:55,000 --> 00:12:57,600
Speaker 4: But that, I mean that's like economically a disaster.

273
00:12:58,200 --> 00:13:01,160
Speaker 2: Well, not if you're an electricity cons well.

274
00:13:01,280 --> 00:13:04,480
Speaker 4: I mean, first of all, those results are not being

275
00:13:04,520 --> 00:13:06,240
Speaker 4: fed directly to electricity consumers.

276
00:13:06,280 --> 00:13:09,360
Speaker 3: But yes, in sery, you're if you could use that.

277
00:13:09,480 --> 00:13:11,800
Speaker 4: Electricity that would otherwise be wasted, it would not be

278
00:13:11,840 --> 00:13:14,439
Speaker 4: a problem. That is not easy to do though, because

279
00:13:14,480 --> 00:13:16,040
Speaker 4: it's all being generated at the same time.

280
00:13:16,400 --> 00:13:18,080
Speaker 1: I mean, I look at power markets, So this is

281
00:13:18,080 --> 00:13:20,640
Speaker 1: something I also think about a lot, is the disruptive

282
00:13:20,640 --> 00:13:23,680
Speaker 1: effect of solar and how batteries can manage that. But

283
00:13:23,960 --> 00:13:26,199
Speaker 1: I just want to step back to look at the

284
00:13:26,200 --> 00:13:30,840
Speaker 1: big picture. It seems like there's this wave starting, you know,

285
00:13:30,880 --> 00:13:35,920
Speaker 1: with upstream solar and those cost declines, and you know,

286
00:13:36,000 --> 00:13:38,320
Speaker 1: the solar industry being a hard place to make money,

287
00:13:38,360 --> 00:13:41,839
Speaker 1: and it then feeds into every subsequent step in the

288
00:13:41,920 --> 00:13:45,920
Speaker 1: value chain and is now impacting power markets and power prices.

289
00:13:46,200 --> 00:13:48,520
Speaker 1: And is this going to one day lead to a

290
00:13:48,559 --> 00:13:50,920
Speaker 1: point in time where just how you're saying it's incredibly

291
00:13:50,960 --> 00:13:53,720
Speaker 1: hard to make money manufacturing solar because it's just getting

292
00:13:53,760 --> 00:13:55,640
Speaker 1: cheaper all the time, that we're also going to say

293
00:13:55,640 --> 00:13:58,720
Speaker 1: it's incredibly hard to make money selling electricity because it

294
00:13:58,800 --> 00:14:01,199
Speaker 1: essentially has no value because of all of this solar

295
00:14:01,240 --> 00:14:01,440
Speaker 1: Do you.

296
00:14:01,400 --> 00:14:03,800
Speaker 2: Think that that's where we're trending towards.

297
00:14:03,559 --> 00:14:06,520
Speaker 4: Well, it's incredibly difficult to make money selling power in

298
00:14:06,640 --> 00:14:09,559
Speaker 4: sunny hours already, that doesn't mean that there's no money

299
00:14:09,559 --> 00:14:13,280
Speaker 4: in selling electricity. The obvious solution is batteries, but it's

300
00:14:13,360 --> 00:14:17,520
Speaker 4: not actually trivial to solve all your solar time shifting

301
00:14:17,559 --> 00:14:18,760
Speaker 4: problems with batteries.

302
00:14:19,160 --> 00:14:21,120
Speaker 2: Why not in your opinion.

303
00:14:21,080 --> 00:14:23,760
Speaker 4: So basically it's about utilization. If you're in a place

304
00:14:23,800 --> 00:14:25,680
Speaker 4: where all the days are the same length and it's

305
00:14:25,680 --> 00:14:28,920
Speaker 4: sunny every day, then you can charge your battery every

306
00:14:29,000 --> 00:14:30,840
Speaker 4: day and discharge it every day, and you run that

307
00:14:30,840 --> 00:14:34,760
Speaker 4: battery three hundred and sixty five times in a year, right, Yeah, However,

308
00:14:35,000 --> 00:14:37,479
Speaker 4: most places are not like that. Most places have seasonality,

309
00:14:37,560 --> 00:14:40,360
Speaker 4: they have variation in demand, and I mean, if it's

310
00:14:40,560 --> 00:14:42,800
Speaker 4: northern Europe, we have winter, it is quite a long

311
00:14:42,840 --> 00:14:45,200
Speaker 4: period where your solar panels don't generate much, and so

312
00:14:45,240 --> 00:14:48,800
Speaker 4: your battery doesn't run every day. Your batteries it's empty

313
00:14:48,840 --> 00:14:52,480
Speaker 4: all winter basically, and then it sits full all summer.

314
00:14:53,320 --> 00:14:54,200
Speaker 2: I hear what you're saying.

315
00:14:54,920 --> 00:14:57,440
Speaker 1: Are we setting an unrealistic bar here? It's a little

316
00:14:57,440 --> 00:15:02,920
Speaker 1: bit where like when people who are skeptical about renewables say, oh,

317
00:15:02,960 --> 00:15:06,080
Speaker 1: wind and solar aren't the solution, because you know, the

318
00:15:06,120 --> 00:15:09,040
Speaker 1: sun isn't always shining, the wind isn't always blowing, and

319
00:15:09,400 --> 00:15:13,080
Speaker 1: they're setting this bar of this thing is useless because

320
00:15:13,120 --> 00:15:15,760
Speaker 1: you can't depend on it one hundred percent of the time,

321
00:15:16,080 --> 00:15:18,960
Speaker 1: Whereas the reality is is, yes, it can get you,

322
00:15:19,080 --> 00:15:21,200
Speaker 1: I don't know, depending on where you are, fifty to

323
00:15:21,240 --> 00:15:23,240
Speaker 1: eighty percent of the I just pulled these numbers out

324
00:15:23,480 --> 00:15:24,520
Speaker 1: out of thin air.

325
00:15:24,680 --> 00:15:27,560
Speaker 4: Oh yeah, so it's not it's definitely not useless. I mean,

326
00:15:27,560 --> 00:15:30,600
Speaker 4: it's already not useless, right. Twenty twenty two and twenty

327
00:15:30,680 --> 00:15:32,680
Speaker 4: twenty three Europe was pretty glad of its solar because

328
00:15:32,720 --> 00:15:34,560
Speaker 4: it meant we burnt less Russian gas.

329
00:15:34,720 --> 00:15:37,280
Speaker 1: Yeah, and I guess I'm you know, I mean, I

330
00:15:37,320 --> 00:15:38,880
Speaker 1: think I'm preaching to the choir here. I know that

331
00:15:38,920 --> 00:15:40,920
Speaker 1: you don't think that solar is useless. I guess what

332
00:15:40,960 --> 00:15:44,080
Speaker 1: I'm saying is, are we setting a like for anyone

333
00:15:44,120 --> 00:15:47,600
Speaker 1: to expect that batteries would completely solve the problem of

334
00:15:47,800 --> 00:15:50,240
Speaker 1: solar being at the wrong time that even in those

335
00:15:50,280 --> 00:15:53,120
Speaker 1: northern climates you described, surely, up to a point, they're

336
00:15:53,120 --> 00:15:54,040
Speaker 1: still very.

337
00:15:53,880 --> 00:15:56,800
Speaker 4: Useful up to a point, yes, but bear by that

338
00:15:56,840 --> 00:15:59,560
Speaker 4: the economics of those batteries gets very bad when you

339
00:15:59,600 --> 00:16:01,920
Speaker 4: stop running them three hundred and sixty five times a

340
00:16:02,000 --> 00:16:04,560
Speaker 4: year and you start running them past that. For example,

341
00:16:04,640 --> 00:16:06,480
Speaker 4: I mean that instantly means that the costs can make

342
00:16:06,560 --> 00:16:08,960
Speaker 4: what hour you're shifting doubles if you have the number

343
00:16:08,960 --> 00:16:11,600
Speaker 4: of times it runs. And so that's why our new

344
00:16:11,720 --> 00:16:15,200
Speaker 4: Energy Outlook modeling, which among the other scenarios we run,

345
00:16:15,280 --> 00:16:17,480
Speaker 4: we have something called the net zero scenario, which is

346
00:16:17,480 --> 00:16:20,840
Speaker 4: about how we totally get to net zero by twenty fifty.

347
00:16:21,080 --> 00:16:24,000
Speaker 4: One of the things that that model doesn't actually rely

348
00:16:24,280 --> 00:16:25,960
Speaker 4: that heavily on solar and store it. I think it

349
00:16:26,040 --> 00:16:29,200
Speaker 4: ends up with about fifty percent solar in a literacy mix.

350
00:16:29,360 --> 00:16:31,480
Speaker 4: That model really wants to build wind and the reason

351
00:16:31,560 --> 00:16:33,440
Speaker 4: is that wind blows in the winter, which means that

352
00:16:33,440 --> 00:16:34,960
Speaker 4: you can also charge your batteries in the winter.

353
00:16:35,600 --> 00:16:40,480
Speaker 1: So kind of going back then to the fundamental question around,

354
00:16:40,720 --> 00:16:43,480
Speaker 1: you know, we've got solar over capacity globally, and then

355
00:16:43,560 --> 00:16:48,040
Speaker 1: it almost sounds like solar overbuild happening in certain places

356
00:16:48,160 --> 00:16:50,880
Speaker 1: that you know you can't one hundred percent solved with batteries,

357
00:16:50,960 --> 00:16:52,640
Speaker 1: and you know you need to bring in another time.

358
00:16:52,840 --> 00:16:54,480
Speaker 4: I mean, at the moment, the levels we're at, we

359
00:16:54,520 --> 00:16:56,280
Speaker 4: can solve that with batteries, and of course that's what

360
00:16:56,320 --> 00:16:58,440
Speaker 4: people are doing. They're building lots of batteries. In fact,

361
00:16:58,800 --> 00:17:01,760
Speaker 4: a quick calculation suggests that twenty percent of the utility

362
00:17:01,760 --> 00:17:04,280
Speaker 4: scale PV built last year had a battery attached.

363
00:17:04,600 --> 00:17:06,960
Speaker 1: I suppose I'm talking about like the example in Cypress.

364
00:17:07,280 --> 00:17:10,119
Speaker 1: Is Cypress now at a stage where I suppose the

365
00:17:10,200 --> 00:17:12,040
Speaker 1: question I was going to ask is why is anyone

366
00:17:12,080 --> 00:17:13,800
Speaker 1: still building solar in Cypress?

367
00:17:14,000 --> 00:17:15,679
Speaker 3: So I'm kind of I kind of hope they're not.

368
00:17:16,520 --> 00:17:18,840
Speaker 4: I had a quick poke around on their Electricity operate

369
00:17:18,920 --> 00:17:20,800
Speaker 4: a website and it looks like they still are, so.

370
00:17:21,640 --> 00:17:23,760
Speaker 2: That rock up the hill as well via the sounds

371
00:17:23,760 --> 00:17:24,160
Speaker 2: of things.

372
00:17:24,320 --> 00:17:27,440
Speaker 4: Cyprus has something called a net billing where you can

373
00:17:27,520 --> 00:17:29,600
Speaker 4: export power into the grid and be paid for it

374
00:17:29,640 --> 00:17:32,640
Speaker 4: for your solar panels, and of course you're being paid

375
00:17:32,640 --> 00:17:34,440
Speaker 4: for it, but that money has to come from somewhere

376
00:17:34,640 --> 00:17:37,480
Speaker 4: and the money is not actually worse it's also not

377
00:17:37,640 --> 00:17:40,520
Speaker 4: safe in so this is this is probably not a

378
00:17:40,520 --> 00:17:43,399
Speaker 4: good policy. It's not sustainable and I don't think the

379
00:17:43,440 --> 00:17:45,080
Speaker 4: Cypress Coop has removed it yet.

380
00:17:45,359 --> 00:17:48,280
Speaker 1: So a lot of farmers in Cypress, I'm presuming, will

381
00:17:48,280 --> 00:17:51,360
Speaker 1: have solar fencing at this point in time.

382
00:17:51,400 --> 00:17:52,760
Speaker 3: Yeah, or solar roofs.

383
00:17:52,800 --> 00:17:55,800
Speaker 4: And what they'll do next hopefully has put some batteries

384
00:17:55,800 --> 00:17:58,920
Speaker 4: in and this will almost certainly alleviate a big part

385
00:17:58,960 --> 00:18:01,480
Speaker 4: of the problem. But push into one hundred percent might

386
00:18:01,520 --> 00:18:03,800
Speaker 4: be a bit difficult. I don't know the climate of

387
00:18:03,880 --> 00:18:04,639
Speaker 4: Cyprus for some.

388
00:18:05,000 --> 00:18:07,800
Speaker 1: No, but you would expect that you know ultimately that

389
00:18:07,880 --> 00:18:10,720
Speaker 1: the market pull of batteries because it this represents a

390
00:18:10,840 --> 00:18:14,600
Speaker 1: huge opportunity for batteries. I mean, my team looks at

391
00:18:14,720 --> 00:18:17,439
Speaker 1: power market dynamics and one of the things I realized

392
00:18:17,440 --> 00:18:21,320
Speaker 1: as we've modeled batteries and prices together, is the biggest

393
00:18:21,320 --> 00:18:24,919
Speaker 1: opportunity for batteries is not the high prices in the

394
00:18:24,960 --> 00:18:28,159
Speaker 1: summer when the sun goes down. It's the cheap prices

395
00:18:28,680 --> 00:18:31,720
Speaker 1: when they can charge you know. I mean, obviously if

396
00:18:31,760 --> 00:18:34,200
Speaker 1: you look at their daily revenues from the wholesale market,

397
00:18:34,200 --> 00:18:36,400
Speaker 1: and obviously batteries make money in other ways. The most

398
00:18:36,480 --> 00:18:39,320
Speaker 1: profitable seasons are not when power prices are highest. It's

399
00:18:39,359 --> 00:18:42,040
Speaker 1: when power price is the lowest. So we're looking at Cyprus.

400
00:18:42,040 --> 00:18:46,640
Speaker 1: That's a huge opportunity that will presumably rebalance itself at

401
00:18:46,640 --> 00:18:49,359
Speaker 1: some point. And this is maybe a question, and you know,

402
00:18:49,680 --> 00:18:52,560
Speaker 1: I just say this more speculatively because this goes beyond

403
00:18:52,640 --> 00:18:55,840
Speaker 1: both of our own teams. I always wonder why we're

404
00:18:55,880 --> 00:19:00,040
Speaker 1: not seeing more industries popping up that make use of

405
00:19:00,080 --> 00:19:04,399
Speaker 1: insanely cheap or even negatively priced electricity that is available

406
00:19:04,720 --> 00:19:06,639
Speaker 1: some of the time. You know, I don't know what

407
00:19:06,720 --> 00:19:10,800
Speaker 1: this creative application is, but there has to be something

408
00:19:10,920 --> 00:19:13,320
Speaker 1: someone can do with free energy.

409
00:19:13,840 --> 00:19:18,080
Speaker 4: I presume, well, it's a capex pub isn't it, Because

410
00:19:18,520 --> 00:19:19,359
Speaker 4: it is if.

411
00:19:19,240 --> 00:19:21,920
Speaker 1: We're thinking in terms of all of the industrial applications

412
00:19:21,920 --> 00:19:24,040
Speaker 1: we can think of. I'm just saying there must be

413
00:19:24,080 --> 00:19:26,800
Speaker 1: some use for free energy that is only available some

414
00:19:26,840 --> 00:19:27,320
Speaker 1: of the time.

415
00:19:27,600 --> 00:19:29,560
Speaker 2: I'm just I'm not asking expect.

416
00:19:29,560 --> 00:19:33,480
Speaker 4: This question to be very low capex, because yes, you

417
00:19:33,520 --> 00:19:35,800
Speaker 4: can run a data center or something, but data centers

418
00:19:35,800 --> 00:19:37,320
Speaker 4: don't run for three or four hours a.

419
00:19:37,359 --> 00:19:40,000
Speaker 1: Day, right, So data centers aren't the answer. I guess

420
00:19:40,040 --> 00:19:42,640
Speaker 1: what I'm saying is we have kind of scoped out

421
00:19:42,640 --> 00:19:44,399
Speaker 1: what this has to look like. Has to be a

422
00:19:44,400 --> 00:19:48,320
Speaker 1: low capex industry that can benefit from free energy. Maybe

423
00:19:48,320 --> 00:19:52,199
Speaker 1: this industry doesn't yet exist. So listeners, especially those of

424
00:19:52,240 --> 00:19:54,560
Speaker 1: you at the start of your careers, you can come

425
00:19:54,640 --> 00:19:56,680
Speaker 1: up with something you can might get super rich.

426
00:19:57,000 --> 00:19:59,199
Speaker 4: I mean, to make this electricity into heat, all you

427
00:19:59,240 --> 00:20:01,639
Speaker 4: need is a big one with some resistance. Right, So

428
00:20:01,720 --> 00:20:04,600
Speaker 4: if hardware is actually negative, you could probably make money

429
00:20:04,600 --> 00:20:06,600
Speaker 4: out of just having a really big wire and forcing

430
00:20:06,640 --> 00:20:08,920
Speaker 4: it down it. But you could also, for example, eat

431
00:20:09,000 --> 00:20:11,399
Speaker 4: up a big pile of salt or a pile of

432
00:20:11,440 --> 00:20:14,240
Speaker 4: water and store it for winter to run your district

433
00:20:14,320 --> 00:20:17,520
Speaker 4: heat it. That's being tried in some of the Scandinavian countries.

434
00:20:17,800 --> 00:20:18,520
Speaker 2: That makes sense.

435
00:20:19,240 --> 00:20:21,880
Speaker 4: There's also power to gas, but that is also quite

436
00:20:21,960 --> 00:20:24,120
Speaker 4: high topics for the futical companies.

437
00:20:24,440 --> 00:20:27,120
Speaker 1: Yeah, and I also wonder if power to gas, from

438
00:20:27,119 --> 00:20:30,439
Speaker 1: my understanding, does it have the flexibility to be ramping

439
00:20:30,520 --> 00:20:32,240
Speaker 1: up and down all the time, which is a key

440
00:20:32,280 --> 00:20:33,600
Speaker 1: parameter here, I mean.

441
00:20:33,440 --> 00:20:36,000
Speaker 4: Potentially, Yes, A hydrogen team seems to think that you

442
00:20:36,080 --> 00:20:39,000
Speaker 4: could have electoralizers that run for sort of four hours day,

443
00:20:39,280 --> 00:20:40,920
Speaker 4: so you could make hard I mean, you can make hydrogen,

444
00:20:40,920 --> 00:20:43,040
Speaker 4: but electoralizers are really expensive.

445
00:20:43,240 --> 00:20:47,080
Speaker 1: Yeah, that it violates the capex parameter that you put

446
00:20:47,119 --> 00:20:48,560
Speaker 1: in place exactly.

447
00:20:48,600 --> 00:20:50,840
Speaker 4: But if you if you could make a really cheap,

448
00:20:50,880 --> 00:20:55,720
Speaker 4: even quite low efficiency electoralizer and trickle generate hydrogen, that

449
00:20:55,880 --> 00:20:57,800
Speaker 4: might be something work all right.

450
00:20:57,840 --> 00:21:00,640
Speaker 1: Well, anyway, putting it out there for everyone who's again,

451
00:21:00,760 --> 00:21:03,560
Speaker 1: particularly those of you who are entering into this space,

452
00:21:04,000 --> 00:21:07,880
Speaker 1: very cheap electricity some of the time represents a huge

453
00:21:07,920 --> 00:21:12,080
Speaker 1: opportunity for someone, so get creative. So I'm in the

454
00:21:12,200 --> 00:21:16,120
Speaker 1: US right now, and the US has a relatively new

455
00:21:16,160 --> 00:21:21,120
Speaker 1: government that has lots of ideas about the energy industry

456
00:21:21,240 --> 00:21:26,200
Speaker 1: and global trade, and this is manifesting itself in potentially

457
00:21:26,280 --> 00:21:31,240
Speaker 1: the rescinding of tax credits for various technologies, including solar.

458
00:21:31,400 --> 00:21:35,280
Speaker 1: Also in tariffs on imports, particularly anything that has been

459
00:21:35,320 --> 00:21:38,520
Speaker 1: touched by China. So, from your point of view of

460
00:21:38,560 --> 00:21:41,440
Speaker 1: someone looking at solar globally, how much of a big

461
00:21:41,480 --> 00:21:43,840
Speaker 1: deal is this? You know, seeing here it feels like

462
00:21:44,040 --> 00:21:48,320
Speaker 1: the deglobalization of solar is that to.

463
00:21:48,280 --> 00:21:51,560
Speaker 4: A beretrant tom or people who are in America. So

464
00:21:51,600 --> 00:21:54,399
Speaker 4: the US market is about fifty two gigawats, the global

465
00:21:54,440 --> 00:21:57,200
Speaker 4: market is six hundred and ninety five gigawats this year.

466
00:21:57,440 --> 00:22:00,359
Speaker 4: China of that is three hund and sixty eighty. What's

467
00:22:00,800 --> 00:22:03,880
Speaker 4: so whether the US buys or not is not of

468
00:22:04,000 --> 00:22:06,560
Speaker 4: primary importance to people outside.

469
00:22:06,119 --> 00:22:07,400
Speaker 2: The US, does it?

470
00:22:07,440 --> 00:22:11,359
Speaker 1: Because my understanding of the situation prior to some of

471
00:22:11,359 --> 00:22:13,320
Speaker 1: these tariff changes is that, I mean, there were already

472
00:22:13,320 --> 00:22:14,679
Speaker 1: tariffs on Chinese solar.

473
00:22:14,760 --> 00:22:17,119
Speaker 4: There were, So the US has had tariffs on Chinese

474
00:22:17,160 --> 00:22:20,159
Speaker 4: solar imports since twenty twelve, and in consequence, most of

475
00:22:20,200 --> 00:22:23,200
Speaker 4: the direct imports of solar components to the US don't

476
00:22:23,200 --> 00:22:26,520
Speaker 4: come from China at all. They came from South Southeast Asia,

477
00:22:27,520 --> 00:22:32,159
Speaker 4: four countries specifically, and recent rounds of tariffs, which were

478
00:22:32,160 --> 00:22:36,159
Speaker 4: actually proposed under the previous US government, put tariffs on

479
00:22:36,160 --> 00:22:39,360
Speaker 4: those four countries. So they're Malaysia, Cambodia, Thailand, and Vietnam,

480
00:22:39,480 --> 00:22:41,720
Speaker 4: and that does push up probably the price of supply

481
00:22:41,760 --> 00:22:44,440
Speaker 4: to the US market, but there are also more sweeping

482
00:22:44,440 --> 00:22:45,960
Speaker 4: import tariffs on everything.

483
00:22:46,160 --> 00:22:50,440
Speaker 1: I suppose this whole Southeast Asia as being a channel

484
00:22:50,520 --> 00:22:54,280
Speaker 1: for solar to come into the US from China via

485
00:22:54,400 --> 00:22:58,040
Speaker 1: Southeast Asia effectively, and these are Chinese companies operating in

486
00:22:58,119 --> 00:23:02,399
Speaker 1: Southeast Asia. My understand was that this little kind of

487
00:23:02,640 --> 00:23:06,080
Speaker 1: anomaly in the global industry was one of the few

488
00:23:06,240 --> 00:23:09,040
Speaker 1: areas where there was actually a healthy profit margin for

489
00:23:09,160 --> 00:23:12,760
Speaker 1: the solar manufacturers involved. So I suppose a question I

490
00:23:12,800 --> 00:23:15,679
Speaker 1: have is if that sort of loophole is now being closed,

491
00:23:15,720 --> 00:23:18,640
Speaker 1: does that have a significant impact on the solar industry.

492
00:23:18,880 --> 00:23:20,840
Speaker 4: Well, a lot of these factory eat in Southeast Asia

493
00:23:20,840 --> 00:23:24,240
Speaker 4: will disclose on the companies that will take lots on them,

494
00:23:24,280 --> 00:23:27,200
Speaker 4: because it is true the US people love to pay

495
00:23:27,240 --> 00:23:29,760
Speaker 4: for things, and so solar modules in the US cost

496
00:23:29,840 --> 00:23:32,639
Speaker 4: about twenty seven US sense per what versus nine cents

497
00:23:32,720 --> 00:23:35,680
Speaker 4: outside the US. So yes, even though the costs slightly

498
00:23:35,760 --> 00:23:38,520
Speaker 4: higher to manufacturer in South East Asia, these were some

499
00:23:38,560 --> 00:23:39,920
Speaker 4: of the more profitable businesses.

500
00:23:40,400 --> 00:23:44,080
Speaker 1: So stepping back, so I hear your message, This doesn't

501
00:23:44,080 --> 00:23:46,760
Speaker 1: really affect the global industry for solar that much.

502
00:23:47,000 --> 00:23:49,040
Speaker 2: How do you see it affecting solar in the US.

503
00:23:49,400 --> 00:23:52,160
Speaker 4: Well, I think it's going to hurt because, first of all,

504
00:23:52,200 --> 00:23:54,719
Speaker 4: there were a bunch of manufacturers who were setting up

505
00:23:55,680 --> 00:23:58,960
Speaker 4: sell factory EAT in the US because the Inflation and

506
00:23:58,960 --> 00:24:02,399
Speaker 4: Reduction app had some very specific, quite generous incentives for

507
00:24:02,520 --> 00:24:05,760
Speaker 4: manufacturing the US, which first of all could go away,

508
00:24:05,960 --> 00:24:08,800
Speaker 4: and secondly could be affected by one possible provision in

509
00:24:08,920 --> 00:24:12,560
Speaker 4: the latest One Big Beautiful Bill if it goes forward

510
00:24:12,640 --> 00:24:16,640
Speaker 4: as currently anticipated, in that it looks as if components

511
00:24:16,680 --> 00:24:20,760
Speaker 4: and materials from China might not be allowed for important

512
00:24:20,760 --> 00:24:24,720
Speaker 4: into the USS. And depending on how extensively that is prosecuted,

513
00:24:24,760 --> 00:24:27,639
Speaker 4: it may be quite difficult to make a solar module

514
00:24:27,720 --> 00:24:28,800
Speaker 4: using nothing contract.

515
00:24:29,480 --> 00:24:33,119
Speaker 1: Right, So, if the goal is to and I'm not

516
00:24:33,160 --> 00:24:35,399
Speaker 1: saying that this is a realistic goal before you shoot

517
00:24:35,440 --> 00:24:37,560
Speaker 1: it down, but let's just say, if the goal is

518
00:24:37,600 --> 00:24:42,840
Speaker 1: to cultivate a US solar manufacturing industry, there is maybe

519
00:24:43,359 --> 00:24:47,119
Speaker 1: a goldilocks zone of just the right amount of tariffing

520
00:24:47,480 --> 00:24:51,320
Speaker 1: where you create a dependence on stuff manufactured in the US,

521
00:24:51,480 --> 00:24:55,520
Speaker 1: but you still don't completely shut off that manufacturing having

522
00:24:55,520 --> 00:24:57,639
Speaker 1: what it needs, and what you're saying is it looks

523
00:24:57,680 --> 00:25:00,119
Speaker 1: like we might be going beyond that Goldilock zone at

524
00:25:00,119 --> 00:25:00,480
Speaker 1: the moment.

525
00:25:00,800 --> 00:25:04,199
Speaker 4: Absolutely, it's also so unpredictable. You know, if you're a

526
00:25:04,200 --> 00:25:06,960
Speaker 4: company who's trying to decide whether to proceed with building

527
00:25:07,000 --> 00:25:09,200
Speaker 4: a high tapics factory in the US, you want to

528
00:25:09,240 --> 00:25:11,280
Speaker 4: be able to predict what the environment it's going to

529
00:25:11,280 --> 00:25:13,600
Speaker 4: be like in two to three years time. And the

530
00:25:13,640 --> 00:25:16,760
Speaker 4: country that's done that much better is India. India is

531
00:25:17,840 --> 00:25:21,720
Speaker 4: much more successful, it's establishing a domestic manufacturing industry US

532
00:25:21,800 --> 00:25:23,200
Speaker 4: just through being much more predictable.

533
00:25:23,400 --> 00:25:23,760
Speaker 2: Got it.

534
00:25:23,840 --> 00:25:26,440
Speaker 1: That's such an important point. And I think something that

535
00:25:26,600 --> 00:25:29,400
Speaker 1: you know at bn EF, I know, since I joined,

536
00:25:29,560 --> 00:25:34,960
Speaker 1: we've been saying policy consistency is key. Policy inconsistency just

537
00:25:35,040 --> 00:25:38,720
Speaker 1: renders all policy ineffective unless the policy is to kill

538
00:25:38,800 --> 00:25:42,760
Speaker 1: something off. And I suppose that's maybe a real danger

539
00:25:42,800 --> 00:25:46,040
Speaker 1: for the US is the potential flip flopping means it's

540
00:25:46,040 --> 00:25:48,879
Speaker 1: impossible to incentivize anything exactly.

541
00:25:48,920 --> 00:25:51,080
Speaker 4: I mean, in some respects, the US has quite a

542
00:25:51,119 --> 00:25:54,879
Speaker 4: predictable business environment, as the Investment Tax Credit was guaranteed

543
00:25:54,920 --> 00:25:58,040
Speaker 4: for periods that frankly European product developers.

544
00:25:57,560 --> 00:25:58,440
Speaker 3: Would love to have.

545
00:25:58,840 --> 00:26:02,440
Speaker 4: But it well, the latest government has just thrown everything

546
00:26:02,640 --> 00:26:05,000
Speaker 4: into the air, and who knows where the cars will

547
00:26:05,040 --> 00:26:05,440
Speaker 4: come down.

548
00:26:05,800 --> 00:26:07,880
Speaker 2: Well, we shall surely see.

549
00:26:09,200 --> 00:26:11,640
Speaker 4: So Tom, I have a question for you. Since you've

550
00:26:11,680 --> 00:26:16,280
Speaker 4: been tracking US power markets, we see California as world

551
00:26:16,359 --> 00:26:20,119
Speaker 4: leading in terms of adoption. California has got what eleven

552
00:26:20,160 --> 00:26:23,040
Speaker 4: gigawatsa batteries, and a grid with peak demand it's about

553
00:26:23,080 --> 00:26:27,040
Speaker 4: fifty gigwatts that's got to be helping to integrate all this. Solda, right,

554
00:26:27,119 --> 00:26:28,320
Speaker 4: what's going on in California?

555
00:26:28,520 --> 00:26:32,080
Speaker 1: I mean, it's really interesting what you see, and some

556
00:26:32,160 --> 00:26:34,560
Speaker 1: of this is more what we've seen in our modeling,

557
00:26:34,760 --> 00:26:38,000
Speaker 1: and we gradually see it taking shape in the market.

558
00:26:38,040 --> 00:26:40,639
Speaker 1: But you know, California is famous for its duck curve,

559
00:26:41,160 --> 00:26:44,159
Speaker 1: the shape of the power price throughout the day. And

560
00:26:44,480 --> 00:26:46,200
Speaker 1: I'm not going to be able to describe a duck

561
00:26:46,400 --> 00:26:49,160
Speaker 1: over the you know, let's just say that the power

562
00:26:49,160 --> 00:26:51,159
Speaker 1: price goes down, and then it goes up, and then

563
00:26:51,200 --> 00:26:52,160
Speaker 1: it goes down again.

564
00:26:52,480 --> 00:26:53,600
Speaker 2: It kind of peaks in the.

565
00:26:53,960 --> 00:26:57,159
Speaker 1: Late afternoon, and that apparently looks like the head of

566
00:26:57,200 --> 00:26:58,280
Speaker 1: a duck when you put it.

567
00:26:58,240 --> 00:26:58,720
Speaker 2: On a truck.

568
00:26:58,760 --> 00:27:02,080
Speaker 3: Because everyone's using air and after the sun goes down.

569
00:27:02,280 --> 00:27:04,960
Speaker 2: Yeah, absolutely, so, yeah, that's the typical profile.

570
00:27:05,040 --> 00:27:08,480
Speaker 1: And the other country in my world, because I also

571
00:27:08,560 --> 00:27:10,600
Speaker 1: have the now the European Power Team reports to me,

572
00:27:10,880 --> 00:27:13,240
Speaker 1: it's very similar in Spain, which is the one country

573
00:27:13,240 --> 00:27:15,200
Speaker 1: in Europe where there's a decent amount of air conditioning.

574
00:27:15,359 --> 00:27:16,359
Speaker 2: They have their own version of this.

575
00:27:16,480 --> 00:27:18,600
Speaker 1: And the thing you see in markets like this as

576
00:27:18,640 --> 00:27:21,639
Speaker 1: you add in more storage to go with your solar

577
00:27:21,840 --> 00:27:25,440
Speaker 1: is the price throughout the day. It just becomes like binary.

578
00:27:25,560 --> 00:27:27,600
Speaker 1: There's a high price period and a low price period.

579
00:27:27,640 --> 00:27:31,160
Speaker 1: It's kind of flat because batteries like balance everything out

580
00:27:31,240 --> 00:27:34,000
Speaker 1: even within those places if you're assuming they're cycling once

581
00:27:34,040 --> 00:27:36,080
Speaker 1: a day, so you get a cheap period of the

582
00:27:36,119 --> 00:27:38,800
Speaker 1: day which is when solar is generating, and then a

583
00:27:38,840 --> 00:27:41,639
Speaker 1: more expensive period of the day when it's not. And

584
00:27:41,640 --> 00:27:43,840
Speaker 1: that's because if you were to add more batteries to

585
00:27:43,840 --> 00:27:46,359
Speaker 1: make it just an even price throughout the whole day,

586
00:27:46,520 --> 00:27:49,560
Speaker 1: then batteries wouldn't make any money, so no one would

587
00:27:49,560 --> 00:27:51,879
Speaker 1: add those batteries, So you're never going to have this

588
00:27:51,960 --> 00:27:54,280
Speaker 1: situation where it's just a consistent price throughout the day.

589
00:27:54,280 --> 00:27:57,560
Speaker 1: But it becomes just much more a two tone situation.

590
00:27:57,800 --> 00:27:58,560
Speaker 2: The thing that's.

591
00:27:58,680 --> 00:28:03,479
Speaker 1: Interesting, though, is even in our forecast, we still see

592
00:28:03,800 --> 00:28:06,479
Speaker 1: days where there's not enough batteries to lap up all

593
00:28:06,480 --> 00:28:08,400
Speaker 1: the solar, and so I mean, I suppose what you'll

594
00:28:08,440 --> 00:28:11,120
Speaker 1: see is curtailment. So even with a lot of batteries,

595
00:28:11,119 --> 00:28:12,919
Speaker 1: you still have and this this goes back to what

596
00:28:12,920 --> 00:28:14,920
Speaker 1: I'm saying, You're still going to have those times where

597
00:28:14,920 --> 00:28:16,840
Speaker 1: electricity is insane nee che.

598
00:28:16,640 --> 00:28:20,560
Speaker 4: But also times when it's the same expensive simply not really.

599
00:28:21,000 --> 00:28:23,399
Speaker 1: I suppose this is the point is that I mean,

600
00:28:23,440 --> 00:28:26,880
Speaker 1: because let's say you've got enough batteries to soak up

601
00:28:27,080 --> 00:28:30,359
Speaker 1: the majority of an entire day's worth of solar, and

602
00:28:30,400 --> 00:28:33,320
Speaker 1: then you might have a period of a few hours

603
00:28:33,320 --> 00:28:36,080
Speaker 1: where prices would be really high. Well, then that's going

604
00:28:36,119 --> 00:28:38,480
Speaker 1: to be the hours where the majority of batteries is

605
00:28:38,520 --> 00:28:41,360
Speaker 1: going to be discharging to push that price down to

606
00:28:41,960 --> 00:28:44,920
Speaker 1: the level because they're always going to prioritize concentrating their

607
00:28:44,960 --> 00:28:48,000
Speaker 1: discharge in those hours. So I suppose what I'm saying

608
00:28:48,040 --> 00:28:51,600
Speaker 1: is batteries will make price dynamics a little bit less explosive.

609
00:28:51,600 --> 00:28:53,680
Speaker 1: They'll be a bit more boring, but it's going to

610
00:28:53,840 --> 00:28:55,960
Speaker 1: go from being all over the place and then maybe

611
00:28:56,040 --> 00:28:58,440
Speaker 1: a really high peak in the afternoon, which is what

612
00:28:58,480 --> 00:29:00,200
Speaker 1: you see in the sort of duck curve scenario to

613
00:29:00,280 --> 00:29:02,240
Speaker 1: just like on time and off time.

614
00:29:02,640 --> 00:29:05,160
Speaker 3: That also been the batteries cannibalized there.

615
00:29:05,560 --> 00:29:08,720
Speaker 1: Great point, and yeah, and that's exactly right. It's like

616
00:29:09,160 --> 00:29:12,960
Speaker 1: the total demand in a market sets a in a way,

617
00:29:13,000 --> 00:29:16,400
Speaker 1: a ceiling on how much solar you can take before

618
00:29:16,440 --> 00:29:19,680
Speaker 1: price cannibalization takes over. And then the total amount of

619
00:29:19,720 --> 00:29:23,680
Speaker 1: solar in the market creates a ceiling for how much

620
00:29:23,920 --> 00:29:27,040
Speaker 1: batteries the market can take. And so you know, this

621
00:29:27,080 --> 00:29:29,320
Speaker 1: is what you know batteries when you see them build anywhere.

622
00:29:29,360 --> 00:29:31,720
Speaker 1: It's like it follows on from solar. Solar creates the

623
00:29:31,760 --> 00:29:34,640
Speaker 1: opportunity for those batteries, and ultimately the amount of solar

624
00:29:34,640 --> 00:29:37,000
Speaker 1: you have in the market is the amount of opportunity

625
00:29:37,000 --> 00:29:39,320
Speaker 1: there is for batteries. You now, what the ideal ratio

626
00:29:39,320 --> 00:29:42,520
Speaker 1: between the two is is kind of depends on your assumptions.

627
00:29:42,640 --> 00:29:44,520
Speaker 1: But that's kind of how I see it from what

628
00:29:44,560 --> 00:29:47,320
Speaker 1: I'm seeing in markets. But yeah, the cannibalization of batteries

629
00:29:47,640 --> 00:29:48,560
Speaker 1: is a thing as well.

630
00:29:48,680 --> 00:29:50,080
Speaker 2: I suppose what you could say with.

631
00:29:50,080 --> 00:29:52,760
Speaker 1: Batteries and that the price dynamics you see there is

632
00:29:52,840 --> 00:29:54,520
Speaker 1: it almost traces all the way back to where we

633
00:29:54,560 --> 00:30:00,160
Speaker 1: started the conversation. Solar is getting insanely cheap as manufacturers

634
00:30:00,240 --> 00:30:03,200
Speaker 1: are cannibalizing their own revenues, and the knock on effect

635
00:30:03,320 --> 00:30:05,480
Speaker 1: is that solar then is really cheap and getting built

636
00:30:05,520 --> 00:30:08,360
Speaker 1: in a lot of markets and therefore cannibalizing its own revenues,

637
00:30:08,360 --> 00:30:11,440
Speaker 1: which creates an opportunity for storage, which can pile in

638
00:30:11,640 --> 00:30:15,760
Speaker 1: and in turn cannibalize its own revenues, which means that

639
00:30:15,840 --> 00:30:18,560
Speaker 1: it's good in any of these spaces to either be

640
00:30:18,680 --> 00:30:20,760
Speaker 1: early or to have been early, because it might be

641
00:30:20,800 --> 00:30:22,360
Speaker 1: too late in some instances.

642
00:30:22,760 --> 00:30:24,440
Speaker 2: And ultimately, I.

643
00:30:24,400 --> 00:30:26,600
Speaker 1: Would say all of this is, if this gets passed

644
00:30:26,600 --> 00:30:30,480
Speaker 1: down to consumer, a good thing, because more electricity will

645
00:30:30,560 --> 00:30:33,920
Speaker 1: cost less. Jenny, thank you very much for joining us.

646
00:30:33,920 --> 00:30:36,480
Speaker 1: Today's has been a really fascinating discussion.

647
00:30:36,680 --> 00:30:46,360
Speaker 3: Thank you very much. Tom.

648
00:30:46,560 --> 00:30:49,680
Speaker 1: Today's episode of Switched On was produced by Cam Gray

649
00:30:49,880 --> 00:30:53,560
Speaker 1: with production assistance from Kamala Shelling. Bloomberg NEF is a

650
00:30:53,600 --> 00:30:56,720
Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This

651
00:30:56,840 --> 00:30:59,479
Speaker 1: recording does not constitute, nor should it be construed as

652
00:30:59,520 --> 00:31:00,400
Speaker 1: investment advice.

653
00:31:00,480 --> 00:31:04,160
Speaker 2: Investment recommendations, or a recommendation as to an investment or

654
00:31:04,200 --> 00:31:07,400
Speaker 2: other strategy Bloomberg ANIAF should not be considered as information

655
00:31:07,520 --> 00:31:10,800
Speaker 2: sufficient upon which to base an investment decision. Neither Bloomberg

656
00:31:10,840 --> 00:31:14,040
Speaker 2: Finance LP nor any of its affiliates makes any representation

657
00:31:14,280 --> 00:31:17,040
Speaker 2: or warranty as to the accuracy or completeness of the

658
00:31:17,080 --> 00:31:19,280
Speaker 2: information contained in this recording, and any

659
00:31:19,320 --> 00:31:22,600
Speaker 3: Liability as a result of this recording is expressly disclaimed