WEBVTT - Burnt by the Boom: Solar’s Growing Pains 0:00:00.200 --> 0:00:02.960 This is Tom Rowland's Reese and you're listening to Switched 0:00:03.000 --> 0:00:05.920 on the podcast brought to you by bn EF. In 0:00:05.960 --> 0:00:08.440 recent years, the world has been a wash, with cheap 0:00:08.480 --> 0:00:11.720 solar hammering the profits of PV manufacturers while at the 0:00:11.720 --> 0:00:14.960 same time opening up new export markets to developing nations 0:00:14.960 --> 0:00:18.960 seeking affordable energy sources. Demand growth for solar is still strong, 0:00:19.160 --> 0:00:22.200 with our global installation forecast for twenty twenty five set 0:00:22.200 --> 0:00:25.079 to reach six hundred and ninety five gigawatts, exceeding the 0:00:25.120 --> 0:00:27.720 five hundred and ninety nine gigawatts seen last year, but 0:00:27.800 --> 0:00:30.920 headwinds remain in some territories, especially in the US, where 0:00:30.960 --> 0:00:33.880 the Trump administration's tariffs have taken aim at the entire 0:00:33.960 --> 0:00:36.960 value chain for key parts originating from China and some 0:00:37.120 --> 0:00:38.440 Southeast Asian countries. 0:00:39.080 --> 0:00:40.360 So just how much. 0:00:40.240 --> 0:00:43.360 Longer can module prices continue to decline? What impact has 0:00:43.440 --> 0:00:46.560 large scale solar adoption had on energy markets, and could 0:00:46.560 --> 0:00:49.000 the US government's policy actually support the growth of a 0:00:49.000 --> 0:00:52.720 domestic PV manufacturing industry or harm it. Today I'm joined 0:00:52.720 --> 0:00:56.440 by BNF Solar specialist Jenny Chase as we discuss findings 0:00:56.480 --> 0:00:59.080 from her most recent PV market outlook, which b and 0:00:59.120 --> 0:01:00.960 EF clients can find at b and EF go on 0:01:00.960 --> 0:01:04.240 the Bloomberg terminal or on bnef dot com. All right, 0:01:04.319 --> 0:01:06.080 let's get to talking about the out look for SOLA 0:01:06.120 --> 0:01:19.400 with Jenny. So it is not very often that we 0:01:19.480 --> 0:01:22.840 have a bona fide celebrity on the podcast, but I 0:01:22.880 --> 0:01:25.840 said to my wife this morning that we are having 0:01:26.080 --> 0:01:28.399 Jenny as a guest on the podcast, and she said, 0:01:28.520 --> 0:01:33.319 who's Jenny? And I said, well, imagine if Sola was fashion, 0:01:33.760 --> 0:01:36.880 then maybe Jenny is Anna Wintle. And my wife said, well, 0:01:36.880 --> 0:01:39.520 does that mean she makes interns cry? And I said no, 0:01:39.880 --> 0:01:42.959 it's just that, you know, very highly respected opinion, but 0:01:43.160 --> 0:01:43.640 gives it. 0:01:43.560 --> 0:01:44.200 To you straight. 0:01:44.280 --> 0:01:46.600 And she said, oh, you mean Jenny Chaser. So that's 0:01:46.600 --> 0:01:48.640 why I mean that we have a bona fide celebrity. 0:01:48.760 --> 0:01:52.200 So everything there is to know about Sola is contained 0:01:52.240 --> 0:01:55.560 within the mind of Jenny. And so, Jenny, welcome to 0:01:55.600 --> 0:01:56.840 the show. Really glad to have you on. 0:01:57.120 --> 0:01:58.360 Hello Tom. 0:01:58.520 --> 0:02:01.040 So we were just talking actually before we started recording 0:02:01.320 --> 0:02:04.040 that today. You wanted to talk about, among other things, 0:02:04.120 --> 0:02:07.360 the global oversupply in solar. 0:02:07.080 --> 0:02:08.640 So tell us a little bit more. And I do 0:02:08.720 --> 0:02:11.840 have follow on questions around this, but yeah, what is it? 0:02:12.200 --> 0:02:14.400 Can you just describe to us the situation as you 0:02:14.440 --> 0:02:14.720 see it. 0:02:14.960 --> 0:02:17.520 So, solar manufacturing is a business in which it is 0:02:17.680 --> 0:02:20.360 very hard to make in the lock dawn. It is 0:02:20.760 --> 0:02:24.160 regularly the case that far more solar modules can be 0:02:24.160 --> 0:02:26.400 made in a year than are actually bought. And this 0:02:26.520 --> 0:02:28.800 is despite the fact that the volumes of solar modules 0:02:28.800 --> 0:02:31.480 being bought and installed are growing at really quite a 0:02:31.560 --> 0:02:33.600 rapid clip, and have been for the last twenty years. 0:02:33.680 --> 0:02:37.040 The thing is that the solar manufacturing industry consistently expands 0:02:37.080 --> 0:02:40.480 faster than demand. So even though demand is growing, you 0:02:40.600 --> 0:02:43.680 regularly get these periods of oversupply where all the manufacturers 0:02:43.760 --> 0:02:46.760 suffered negative profitability and quite a lot of them go bust. 0:02:46.880 --> 0:02:48.360 We have been in one of those phases for about 0:02:48.360 --> 0:02:50.160 a year now, and there's no sign of us coming 0:02:50.200 --> 0:02:50.600 out of it. 0:02:50.880 --> 0:02:53.200 I suppose the reason I have follow up questions is 0:02:53.560 --> 0:02:55.320 I sort of get it where you describe. I have 0:02:55.360 --> 0:02:57.560 this picture of, you know, two things that are growing 0:02:57.639 --> 0:03:00.760 really fast, the demand for solar and the supply of solar. 0:03:00.960 --> 0:03:03.440 And maybe if you're in the world of the supply 0:03:03.520 --> 0:03:05.920 of solar, it's kind of hard to judge the pace 0:03:06.000 --> 0:03:09.400 and so maybe the industry collectively sometimes overdoes it a 0:03:09.400 --> 0:03:11.799 little bit and needs to slow down, which is kind 0:03:11.800 --> 0:03:13.040 of how you're describing it. 0:03:13.120 --> 0:03:13.560 I suppose. 0:03:13.720 --> 0:03:16.040 The question I have is is I don't remember a 0:03:16.080 --> 0:03:20.120 time where you have ever said there's undersupply of solar. 0:03:20.240 --> 0:03:23.200 I you know, you're saying that the market's going through 0:03:23.200 --> 0:03:25.680 a really tough time, But I feel like whenever I 0:03:25.760 --> 0:03:27.600 talked about solo, you're saying them. 0:03:27.840 --> 0:03:30.119 Maybe I have a short memory, so it's both. 0:03:30.160 --> 0:03:32.760 Now you're pretty much right. I mean, so in twenty 0:03:32.800 --> 0:03:37.200 twenty two, demand actually group quite quickly, and prices the 0:03:37.240 --> 0:03:39.760 solar model actually rose for a little while. So there 0:03:39.800 --> 0:03:44.000 are periods where solar manufacturers can make fairly nice profits. 0:03:44.040 --> 0:03:46.320 They just tend to be quite short. And what tends 0:03:46.360 --> 0:03:49.400 to happen then is that they build new factories using 0:03:49.440 --> 0:03:52.440 the latest technology, and when they built the factories use 0:03:52.520 --> 0:03:55.480 the latest technology, the factories that are three years old, 0:03:55.520 --> 0:03:56.640 and how obsolete. 0:03:56.840 --> 0:03:58.560 So a question I have here, I mean, this is 0:03:58.640 --> 0:04:00.680 kind of almost like everything I've ever wanted to ask 0:04:00.760 --> 0:04:03.760 Jenny about some of these dynamics. 0:04:03.440 --> 0:04:05.880 Is why are people building these factories? Then? 0:04:06.000 --> 0:04:09.120 I mean, given what you're saying, why would anyone in 0:04:09.160 --> 0:04:12.600 their right mind be investing in solar manufacturing. 0:04:12.880 --> 0:04:16.120 Where you got me there, tom So, I think the 0:04:16.200 --> 0:04:19.840 dynamic here is that if you're a solar manufacturer, you 0:04:19.920 --> 0:04:22.559 always have a choice. You can expand you can build 0:04:22.560 --> 0:04:25.960 a new factory using the latest technology, so making the 0:04:26.040 --> 0:04:29.160 latest N type top con cels with the best efficiencies 0:04:29.200 --> 0:04:31.680 in the market, and you can survive another year. Or 0:04:32.040 --> 0:04:34.920 you can not do that. You can just run your 0:04:34.960 --> 0:04:38.440 current capacity and you will lose market share and eventually 0:04:38.440 --> 0:04:41.279 become obsolete. So you certainly have no choice but to 0:04:41.279 --> 0:04:43.279 shoot for the stars. And of course if you shoot 0:04:43.320 --> 0:04:45.560 for the stars, what happens to a great many of 0:04:45.560 --> 0:04:47.880 these companies is that they fail, they burn up, they 0:04:47.920 --> 0:04:50.680 go bankrupt. But there are always new investors willing to 0:04:50.680 --> 0:04:53.200 come in because everybody loves sold there so much. 0:04:53.839 --> 0:04:56.280 Is there an element because I've also been looking at 0:04:56.279 --> 0:04:59.360 this from you know, the perspective of some of the 0:04:59.560 --> 0:05:03.520 US efforts over the years to cultivate its own solar 0:05:03.520 --> 0:05:06.960 manufacturing business. And I remember saying on actually the first 0:05:06.960 --> 0:05:09.400 time I ever was a host on this podcast, we 0:05:09.480 --> 0:05:12.440 had one of our US solar analysts who was talking about, 0:05:12.600 --> 0:05:14.640 you know, the use of tariffs and incentives, and this 0:05:14.760 --> 0:05:19.080 predates Trump to stimulate manufacturing in the US and this 0:05:19.240 --> 0:05:21.640 kind of trying to fight it out with China, which 0:05:21.680 --> 0:05:23.920 is I mean, point number one is that seems like 0:05:23.960 --> 0:05:26.560 a battle that you're unlikely to win. But point number 0:05:26.600 --> 0:05:29.080 two I made was is this a battle you even 0:05:29.160 --> 0:05:29.719 want to win? 0:05:29.800 --> 0:05:30.440 It's like this. 0:05:30.560 --> 0:05:33.080 War over a little patch of desert where there is 0:05:33.600 --> 0:05:37.160 the least arable land ever, and so the only conclusion 0:05:37.520 --> 0:05:39.640 I could kind of come to was that some of 0:05:39.680 --> 0:05:44.200 this interest was from a more of a national security 0:05:44.320 --> 0:05:46.919 resilience point of view. Is that also a fact that 0:05:46.960 --> 0:05:50.279 it's encouraging or incentivizing some of this investment we see globally, 0:05:50.320 --> 0:05:53.640 particularly in China, is that it serves a strategic interest 0:05:53.800 --> 0:05:55.520 and is therefore being encouraged. 0:05:55.920 --> 0:05:56.920 Not in China. 0:05:57.000 --> 0:05:59.720 So around two thousand and eight, maybe even a bit 0:05:59.720 --> 0:06:02.080 before twenty and four to twenty ten or so, the 0:06:02.200 --> 0:06:06.800 Chinese federal government did support solar manufacturer. It particularly gave 0:06:06.920 --> 0:06:11.920 the provincial government a remit to give land and permits 0:06:11.920 --> 0:06:16.359 and suitable infrastructure to solar companies, and the big Chinese 0:06:16.440 --> 0:06:19.320 state banks were willing to back manufacturers. So yes, there 0:06:19.360 --> 0:06:23.039 was a period when for China solar manufacturing was strategically 0:06:23.080 --> 0:06:25.840 important and the central government was supporting it. 0:06:26.000 --> 0:06:28.400 That phase has long long ended. 0:06:28.560 --> 0:06:31.680 The Chinese solar industry is viciously capitalist, that is, dog 0:06:31.720 --> 0:06:34.800 eat dog, and the solar manufacturing industry is principally Chinese 0:06:34.839 --> 0:06:37.640 companies competing with one another. In fact, the Chinese PV 0:06:37.880 --> 0:06:42.560 Industry Association has tried to stop manufacturers selling at vices 0:06:42.600 --> 0:06:45.440 as low as the vices currently are, and it largely 0:06:45.480 --> 0:06:48.880 failed because it's very difficult to get five hundred companies 0:06:48.920 --> 0:06:51.920 to all sell at higher devices that they are naturally 0:06:51.920 --> 0:06:52.360 inclined to. 0:06:52.760 --> 0:06:55.600 So one of part of this cycle you've described is, 0:06:55.880 --> 0:06:59.440 you know, companies going bust and then also this idea 0:06:59.480 --> 0:07:03.400 of manufacturing capacity becoming obsolete. So when companies go bust, 0:07:03.480 --> 0:07:06.279 to other companies swoop in and buy their factories or 0:07:06.640 --> 0:07:09.840 is it by that stage those factories are worthless because 0:07:09.840 --> 0:07:12.160 they're obsolete. You know what happens there? 0:07:12.600 --> 0:07:16.560 They do often get picked up by other players, usually 0:07:16.640 --> 0:07:19.600 for quite small and absent money. And in China there 0:07:19.680 --> 0:07:21.880 is a dynamic where the local government will lost and 0:07:22.080 --> 0:07:24.480 back another company to take it over because it's a 0:07:24.480 --> 0:07:27.880 bit let embarrassed than just closing that entirely. The major 0:07:27.960 --> 0:07:31.080 Chinese module makers have also cut the number of employees 0:07:31.560 --> 0:07:34.840 by significant amounts in twenty twenty four, simply because they're 0:07:34.840 --> 0:07:38.320 reducing production and they're also increasing productivity per employee. 0:07:38.520 --> 0:07:42.120 I just find this whole phenomenon so interesting. It reminds 0:07:42.120 --> 0:07:44.160 me of that I don't remember the name of the 0:07:44.240 --> 0:07:48.200 guy that Greek legend about the guy who had to 0:07:48.680 --> 0:07:51.960 roll a stone up the hill, Cidyphus, Sisyphus. That's the 0:07:52.040 --> 0:07:54.840 one that's kind of like what the solar industry seems 0:07:54.880 --> 0:07:56.640 like to me. The way you describe it is you're 0:07:56.680 --> 0:07:59.440 either pushing the stone up the hill, which is hard work, 0:07:59.720 --> 0:08:02.600 or you're out of the game and back to the bottom. 0:08:03.000 --> 0:08:05.520 I think that's what makes that's what trying to make 0:08:05.560 --> 0:08:07.720 money and solar manufacturing is like. I mean, Cis of 0:08:07.760 --> 0:08:10.840 Firs was assigned that job as a punishment, and it 0:08:10.880 --> 0:08:13.400 wasn't really a job. There is a good side to this, 0:08:13.480 --> 0:08:19.000 which is the watch thank you. There is a good thing, 0:08:19.080 --> 0:08:23.120 which is is that worldwide, consumers are getting really cheap modules, 0:08:23.360 --> 0:08:27.440 and we see that even some quite poor countries like Pakistan, 0:08:27.720 --> 0:08:30.680 South Africa and Nigeria are starting to deploy large about 0:08:30.840 --> 0:08:33.080 sols now just because they are so cheap. 0:08:33.400 --> 0:08:34.480 Yeah, I mean obviously. 0:08:34.480 --> 0:08:36.360 I mean I sometimes think when people talk about over 0:08:36.400 --> 0:08:39.400 suppliers a problem like, well, whose problem is that? And 0:08:39.480 --> 0:08:41.360 clearly there is an upside to all of this, which 0:08:41.400 --> 0:08:45.640 is everywhere else benefits from this suffering that is happening 0:08:45.640 --> 0:08:47.920 in the Chinese industry. I still just trying to work 0:08:48.000 --> 0:08:50.880 out what's in it for Chinese solar manufacturers. 0:08:51.120 --> 0:08:53.000 Is there is there an upside for any of them 0:08:53.200 --> 0:08:53.920 or some of them. 0:08:53.840 --> 0:08:55.880 Will survive and go on to the next phase. 0:08:55.920 --> 0:08:56.400 I suppose. 0:08:56.400 --> 0:08:58.160 I don't know where the next phase will be, but 0:08:58.240 --> 0:09:01.040 sometimes they make money sometimes. I mean, what's the outside 0:09:01.080 --> 0:09:03.120 of your job, Tom? I think we just have to 0:09:03.120 --> 0:09:05.360 say sometimes these firms are doing what they do because 0:09:05.360 --> 0:09:05.920 it's their job. 0:09:06.120 --> 0:09:06.640 Fair enough. 0:09:06.640 --> 0:09:10.120 Fair enough, Let's go back to the topic around incredibly 0:09:10.240 --> 0:09:14.280 cheap solar everywhere in the world and what the knock 0:09:14.360 --> 0:09:17.160 on effects of that are. I remember when I joined 0:09:17.280 --> 0:09:20.920 n EF in two thousand and nine and you were 0:09:20.960 --> 0:09:24.000 still in London. I was still in London, and you 0:09:24.040 --> 0:09:28.160 were describing to me this Moore's law type decline in 0:09:28.240 --> 0:09:31.840 solar prices, and I remember thinking like, wow, that's going 0:09:31.920 --> 0:09:34.960 to completely change the world. It's like, so awesome, I 0:09:35.000 --> 0:09:36.840 want to be in the solar team. And I suppose 0:09:36.880 --> 0:09:39.200 now we're living in that world, that that sort of 0:09:39.280 --> 0:09:43.160 trend we were seeing promised of incredibly cheap solar everywhere. 0:09:43.200 --> 0:09:43.760 So can you. 0:09:43.760 --> 0:09:46.880 Describe a little bit about you know, what you're seeing 0:09:47.160 --> 0:09:50.200 and how that's changing the game generally? 0:09:50.640 --> 0:09:54.120 Yeah, So you call it Moore's law. Then Moore's law 0:09:54.200 --> 0:09:56.640 is just a special case of what we normally call 0:09:56.720 --> 0:09:59.560 the experienced curve. And the basics of the experience curve 0:09:59.720 --> 0:10:03.280 is every time the human race doubles its cumulative production 0:10:03.360 --> 0:10:06.880 of something, and it's a manufactured commodity like solar modules, 0:10:06.960 --> 0:10:10.559 like Brits, like semiconductor chips, we reduce the cost per 0:10:10.679 --> 0:10:13.800 unit by a fairly fixed amount, and you can calculate 0:10:13.840 --> 0:10:16.560 what that percentage is. Then it's usually around twenty percent 0:10:16.800 --> 0:10:19.679 now for solar modules, calculate We can calculate this back 0:10:19.720 --> 0:10:22.800 in nineteen seventy six. The trouble is, it depends wildly 0:10:22.880 --> 0:10:25.760 on your assumption about inflation over that period. How you 0:10:25.760 --> 0:10:28.320 normalize it, And right now the answer makes no sense 0:10:28.360 --> 0:10:30.760 because the experienced curve says that solar models should be 0:10:30.800 --> 0:10:32.920 significantly more offensive than they are, and they should be 0:10:32.960 --> 0:10:35.280 slightly more expensive than they are, but if everyone was 0:10:35.320 --> 0:10:38.000 making money in the value chain, but probably not that much. 0:10:38.120 --> 0:10:40.679 So right now we're kind of looking at the experienced 0:10:40.679 --> 0:10:43.280 curves suspiciously and saying, we'll see what happens when we 0:10:43.280 --> 0:10:45.600 get a few more data points. But yes, right now 0:10:45.679 --> 0:10:48.160 you can buy a solar module for nine then for 0:10:48.320 --> 0:10:51.520 what in normal markets? So normal markets mean not the 0:10:51.640 --> 0:10:54.480 US and not India either. This means that solar models 0:10:54.480 --> 0:10:57.680 are so cheap that they're basically cheaper than fences. You know, 0:10:57.679 --> 0:10:59.440 if you want to build a fence around your guards 0:10:59.679 --> 0:11:02.400 in US up or China or most of the world 0:11:02.400 --> 0:11:05.240 of that, you can use solar modules as fencing material, 0:11:05.280 --> 0:11:07.000 and even if you don't bother wiring them up, you'd 0:11:07.040 --> 0:11:09.680 probably save money versus buying some Liz Wold. 0:11:09.920 --> 0:11:14.880 This reminds me of in history, learning about hyperinflation in Viamar, Germany. 0:11:14.920 --> 0:11:18.760 I saw this picture that was someone using banknotes as 0:11:18.840 --> 0:11:22.880 wallpaper because that was cheaper than buying paper. So maybe 0:11:22.880 --> 0:11:25.720 people are going to have solar wallpaper inside, you know, 0:11:25.800 --> 0:11:29.720 completely pointless, but why not? So what consequences that having 0:11:29.800 --> 0:11:31.400 on the energy industry? 0:11:31.400 --> 0:11:32.040 That you're seeing. 0:11:32.400 --> 0:11:32.720 Well. 0:11:32.840 --> 0:11:35.080 The other thing is that it's not just cheap, there's 0:11:35.080 --> 0:11:37.840 also quite a lot of it. We estimate that five 0:11:37.880 --> 0:11:40.600 hundred and ninety nine gigawatts of solar modules were installed 0:11:40.600 --> 0:11:42.920 in twenty twenty four, and about six hundred and ninety 0:11:42.920 --> 0:11:45.760 five gigawatts would be installed this year in twenty twenty five. 0:11:46.040 --> 0:11:50.320 And just for contexts, the entire global power system, all 0:11:50.320 --> 0:11:54.040 the fossil field and everything, is approximately ten terra watts 0:11:53.920 --> 0:11:56.280 at the start of this year. So if we're adding 0:11:56.679 --> 0:11:59.240 like zero point seven terra watts a year to a 0:11:59.320 --> 0:12:01.800 ten terra wats system is quite a lot. And of 0:12:01.840 --> 0:12:05.040 course it's not evenly distributed. So what what's happening is 0:12:05.040 --> 0:12:08.199 that when the sun's out power is very readily available, 0:12:08.240 --> 0:12:11.120 it's very cheap, and in some cases there's actually more 0:12:11.160 --> 0:12:15.520 solar power being generated than total demand, which causes problems. 0:12:15.679 --> 0:12:18.200 I was just reading on the Solar News this morning 0:12:18.240 --> 0:12:21.040 that in Cyprus, which is obviously a quite a tiny 0:12:21.120 --> 0:12:22.760 part of the world and has now had quite a 0:12:22.760 --> 0:12:26.320 lot of solar, fifty eight percent of the renewables generated 0:12:26.360 --> 0:12:28.960 in the first five months of this year have been curtailed. 0:12:29.040 --> 0:12:31.440 That is thrown away because the grid can't take them. 0:12:31.679 --> 0:12:35.040 Wow, that is the highest curtailment numbers I've ever heard, 0:12:35.360 --> 0:12:36.280 I know, right. 0:12:36.400 --> 0:12:39.400 I mean this time of year in northern Northern Hemisphere 0:12:39.400 --> 0:12:43.160 you always get high solar catailment because it's it's sunny. 0:12:42.920 --> 0:12:45.959 Particularly since it's over like you know, you're not just saying, 0:12:45.960 --> 0:12:48.400 oh and this hour fifty eight percent with ktail, you're 0:12:48.440 --> 0:12:51.520 talking over a whole month. It's over five months. 0:12:51.880 --> 0:12:54.880 Yeah, so last year in total, twenty nine percent was katail. 0:12:55.000 --> 0:12:57.600 But that, I mean that's like economically a disaster. 0:12:58.200 --> 0:13:01.160 Well, not if you're an electricity cons well. 0:13:01.280 --> 0:13:04.480 I mean, first of all, those results are not being 0:13:04.520 --> 0:13:06.240 fed directly to electricity consumers. 0:13:06.280 --> 0:13:09.360 But yes, in sery, you're if you could use that. 0:13:09.480 --> 0:13:11.800 Electricity that would otherwise be wasted, it would not be 0:13:11.840 --> 0:13:14.439 a problem. That is not easy to do though, because 0:13:14.480 --> 0:13:16.040 it's all being generated at the same time. 0:13:16.400 --> 0:13:18.080 I mean, I look at power markets, So this is 0:13:18.080 --> 0:13:20.640 something I also think about a lot, is the disruptive 0:13:20.640 --> 0:13:23.680 effect of solar and how batteries can manage that. But 0:13:23.960 --> 0:13:26.199 I just want to step back to look at the 0:13:26.200 --> 0:13:30.840 big picture. It seems like there's this wave starting, you know, 0:13:30.880 --> 0:13:35.920 with upstream solar and those cost declines, and you know, 0:13:36.000 --> 0:13:38.320 the solar industry being a hard place to make money, 0:13:38.360 --> 0:13:41.839 and it then feeds into every subsequent step in the 0:13:41.920 --> 0:13:45.920 value chain and is now impacting power markets and power prices. 0:13:46.200 --> 0:13:48.520 And is this going to one day lead to a 0:13:48.559 --> 0:13:50.920 point in time where just how you're saying it's incredibly 0:13:50.960 --> 0:13:53.720 hard to make money manufacturing solar because it's just getting 0:13:53.760 --> 0:13:55.640 cheaper all the time, that we're also going to say 0:13:55.640 --> 0:13:58.720 it's incredibly hard to make money selling electricity because it 0:13:58.800 --> 0:14:01.199 essentially has no value because of all of this solar 0:14:01.240 --> 0:14:01.440 Do you. 0:14:01.400 --> 0:14:03.800 Think that that's where we're trending towards. 0:14:03.559 --> 0:14:06.520 Well, it's incredibly difficult to make money selling power in 0:14:06.640 --> 0:14:09.559 sunny hours already, that doesn't mean that there's no money 0:14:09.559 --> 0:14:13.280 in selling electricity. The obvious solution is batteries, but it's 0:14:13.360 --> 0:14:17.520 not actually trivial to solve all your solar time shifting 0:14:17.559 --> 0:14:18.760 problems with batteries. 0:14:19.160 --> 0:14:21.120 Why not in your opinion. 0:14:21.080 --> 0:14:23.760 So basically it's about utilization. If you're in a place 0:14:23.800 --> 0:14:25.680 where all the days are the same length and it's 0:14:25.680 --> 0:14:28.920 sunny every day, then you can charge your battery every 0:14:29.000 --> 0:14:30.840 day and discharge it every day, and you run that 0:14:30.840 --> 0:14:34.760 battery three hundred and sixty five times in a year, right, Yeah, However, 0:14:35.000 --> 0:14:37.479 most places are not like that. Most places have seasonality, 0:14:37.560 --> 0:14:40.360 they have variation in demand, and I mean, if it's 0:14:40.560 --> 0:14:42.800 northern Europe, we have winter, it is quite a long 0:14:42.840 --> 0:14:45.200 period where your solar panels don't generate much, and so 0:14:45.240 --> 0:14:48.800 your battery doesn't run every day. Your batteries it's empty 0:14:48.840 --> 0:14:52.480 all winter basically, and then it sits full all summer. 0:14:53.320 --> 0:14:54.200 I hear what you're saying. 0:14:54.920 --> 0:14:57.440 Are we setting an unrealistic bar here? It's a little 0:14:57.440 --> 0:15:02.920 bit where like when people who are skeptical about renewables say, oh, 0:15:02.960 --> 0:15:06.080 wind and solar aren't the solution, because you know, the 0:15:06.120 --> 0:15:09.040 sun isn't always shining, the wind isn't always blowing, and 0:15:09.400 --> 0:15:13.080 they're setting this bar of this thing is useless because 0:15:13.120 --> 0:15:15.760 you can't depend on it one hundred percent of the time, 0:15:16.080 --> 0:15:18.960 Whereas the reality is is, yes, it can get you, 0:15:19.080 --> 0:15:21.200 I don't know, depending on where you are, fifty to 0:15:21.240 --> 0:15:23.240 eighty percent of the I just pulled these numbers out 0:15:23.480 --> 0:15:24.520 out of thin air. 0:15:24.680 --> 0:15:27.560 Oh yeah, so it's not it's definitely not useless. I mean, 0:15:27.560 --> 0:15:30.600 it's already not useless, right. Twenty twenty two and twenty 0:15:30.680 --> 0:15:32.680 twenty three Europe was pretty glad of its solar because 0:15:32.720 --> 0:15:34.560 it meant we burnt less Russian gas. 0:15:34.720 --> 0:15:37.280 Yeah, and I guess I'm you know, I mean, I 0:15:37.320 --> 0:15:38.880 think I'm preaching to the choir here. I know that 0:15:38.920 --> 0:15:40.920 you don't think that solar is useless. I guess what 0:15:40.960 --> 0:15:44.080 I'm saying is, are we setting a like for anyone 0:15:44.120 --> 0:15:47.600 to expect that batteries would completely solve the problem of 0:15:47.800 --> 0:15:50.240 solar being at the wrong time that even in those 0:15:50.280 --> 0:15:53.120 northern climates you described, surely, up to a point, they're 0:15:53.120 --> 0:15:54.040 still very. 0:15:53.880 --> 0:15:56.800 Useful up to a point, yes, but bear by that 0:15:56.840 --> 0:15:59.560 the economics of those batteries gets very bad when you 0:15:59.600 --> 0:16:01.920 stop running them three hundred and sixty five times a 0:16:02.000 --> 0:16:04.560 year and you start running them past that. For example, 0:16:04.640 --> 0:16:06.480 I mean that instantly means that the costs can make 0:16:06.560 --> 0:16:08.960 what hour you're shifting doubles if you have the number 0:16:08.960 --> 0:16:11.600 of times it runs. And so that's why our new 0:16:11.720 --> 0:16:15.200 Energy Outlook modeling, which among the other scenarios we run, 0:16:15.280 --> 0:16:17.480 we have something called the net zero scenario, which is 0:16:17.480 --> 0:16:20.840 about how we totally get to net zero by twenty fifty. 0:16:21.080 --> 0:16:24.000 One of the things that that model doesn't actually rely 0:16:24.280 --> 0:16:25.960 that heavily on solar and store it. I think it 0:16:26.040 --> 0:16:29.200 ends up with about fifty percent solar in a literacy mix. 0:16:29.360 --> 0:16:31.480 That model really wants to build wind and the reason 0:16:31.560 --> 0:16:33.440 is that wind blows in the winter, which means that 0:16:33.440 --> 0:16:34.960 you can also charge your batteries in the winter. 0:16:35.600 --> 0:16:40.480 So kind of going back then to the fundamental question around, 0:16:40.720 --> 0:16:43.480 you know, we've got solar over capacity globally, and then 0:16:43.560 --> 0:16:48.040 it almost sounds like solar overbuild happening in certain places 0:16:48.160 --> 0:16:50.880 that you know you can't one hundred percent solved with batteries, 0:16:50.960 --> 0:16:52.640 and you know you need to bring in another time. 0:16:52.840 --> 0:16:54.480 I mean, at the moment, the levels we're at, we 0:16:54.520 --> 0:16:56.280 can solve that with batteries, and of course that's what 0:16:56.320 --> 0:16:58.440 people are doing. They're building lots of batteries. In fact, 0:16:58.800 --> 0:17:01.760 a quick calculation suggests that twenty percent of the utility 0:17:01.760 --> 0:17:04.280 scale PV built last year had a battery attached. 0:17:04.600 --> 0:17:06.960 I suppose I'm talking about like the example in Cypress. 0:17:07.280 --> 0:17:10.119 Is Cypress now at a stage where I suppose the 0:17:10.200 --> 0:17:12.040 question I was going to ask is why is anyone 0:17:12.080 --> 0:17:13.800 still building solar in Cypress? 0:17:14.000 --> 0:17:15.679 So I'm kind of I kind of hope they're not. 0:17:16.520 --> 0:17:18.840 I had a quick poke around on their Electricity operate 0:17:18.920 --> 0:17:20.800 a website and it looks like they still are, so. 0:17:21.640 --> 0:17:23.760 That rock up the hill as well via the sounds 0:17:23.760 --> 0:17:24.160 of things. 0:17:24.320 --> 0:17:27.440 Cyprus has something called a net billing where you can 0:17:27.520 --> 0:17:29.600 export power into the grid and be paid for it 0:17:29.640 --> 0:17:32.640 for your solar panels, and of course you're being paid 0:17:32.640 --> 0:17:34.440 for it, but that money has to come from somewhere 0:17:34.640 --> 0:17:37.480 and the money is not actually worse it's also not 0:17:37.640 --> 0:17:40.520 safe in so this is this is probably not a 0:17:40.520 --> 0:17:43.399 good policy. It's not sustainable and I don't think the 0:17:43.440 --> 0:17:45.080 Cypress Coop has removed it yet. 0:17:45.359 --> 0:17:48.280 So a lot of farmers in Cypress, I'm presuming, will 0:17:48.280 --> 0:17:51.360 have solar fencing at this point in time. 0:17:51.400 --> 0:17:52.760 Yeah, or solar roofs. 0:17:52.800 --> 0:17:55.800 And what they'll do next hopefully has put some batteries 0:17:55.800 --> 0:17:58.920 in and this will almost certainly alleviate a big part 0:17:58.960 --> 0:18:01.480 of the problem. But push into one hundred percent might 0:18:01.520 --> 0:18:03.800 be a bit difficult. I don't know the climate of 0:18:03.880 --> 0:18:04.639 Cyprus for some. 0:18:05.000 --> 0:18:07.800 No, but you would expect that you know ultimately that 0:18:07.880 --> 0:18:10.720 the market pull of batteries because it this represents a 0:18:10.840 --> 0:18:14.600 huge opportunity for batteries. I mean, my team looks at 0:18:14.720 --> 0:18:17.439 power market dynamics and one of the things I realized 0:18:17.440 --> 0:18:21.320 as we've modeled batteries and prices together, is the biggest 0:18:21.320 --> 0:18:24.919 opportunity for batteries is not the high prices in the 0:18:24.960 --> 0:18:28.159 summer when the sun goes down. It's the cheap prices 0:18:28.680 --> 0:18:31.720 when they can charge you know. I mean, obviously if 0:18:31.760 --> 0:18:34.200 you look at their daily revenues from the wholesale market, 0:18:34.200 --> 0:18:36.400 and obviously batteries make money in other ways. The most 0:18:36.480 --> 0:18:39.320 profitable seasons are not when power prices are highest. It's 0:18:39.359 --> 0:18:42.040 when power price is the lowest. So we're looking at Cyprus. 0:18:42.040 --> 0:18:46.640 That's a huge opportunity that will presumably rebalance itself at 0:18:46.640 --> 0:18:49.359