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Speaker 1: Welcome to Zero I am Akshatrati. This week wind Industry's

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Speaker 1: history and recovery. The world desperately wants to build more renewables,

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Speaker 1: but a mix of factors is causing the companies at

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Speaker 1: the heart of the energy transition to struggle. Few have

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Speaker 1: suffered as much as the big players in the wind industry.

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Speaker 1: Still there are notable exceptions. On last week's show, Jakab

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Speaker 1: Barruel Poulsen of Copenhagen Infrastructure Partners told me about the

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Speaker 1: one hundred and fifty gigawards of clean energy projects that

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Speaker 1: his company has in the pipeline all around the world.

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Speaker 1: For context, that number represents more than the electricity generation

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Speaker 1: capacity of the UK, and most of those projects are

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Speaker 1: wind farms. On this week's episode, we look at the

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Speaker 1: story of Vestus, another wind giant that has survived a

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Speaker 1: difficult period and is finally back to making profits again.

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Speaker 1: Vesters was founded more than a century ago. It went

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Speaker 1: all in on making wind turbines in the nineteen eighties,

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Speaker 1: but it operates in a volatile energy market and that's

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Speaker 1: made the job of the company's CEO anything but easy.

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Speaker 1: When Hendrik Anderson first joined vests as a board member.

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Speaker 1: A decade ago, the company had just recorded its biggest loss.

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Speaker 1: Shareholder confidence seemed shaky, Anderson's work to bring stability to

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Speaker 1: the company eventually led him to be made CEO in

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Speaker 1: twenty nineteen. Since then, WESTERS has experienced even bigger ups

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Speaker 1: and downs. In twenty twenty two, the company lost more

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Speaker 1: than a billion dollars. To make the company profitable again,

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Speaker 1: Hendrick was forced to make many changes, including raising prices

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Speaker 1: for wind turbines. For the first time, I spoke with

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Speaker 1: Hendrik about new ways to harvest wind more efficiently, the

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Speaker 1: barriers a company like Vestus must navigate, and why he

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Speaker 1: doesn't like the word subsidy. Henrick, welcome to the show.

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Speaker 2: Thank you so much, Thanks for having me.

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Speaker 1: Now, it's been quite the journey for Westus since eighteen

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Speaker 1: ninety eight, from making household appliances to agricultural equipment and

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Speaker 1: cranes to now making wind turbines. What I find remarkable

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Speaker 1: is that Vestus, even though it first made a turbine

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Speaker 1: in nineteen seventy nine, has been exclusively making wind turbines

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Speaker 1: since nineteen eighty nine. That's very early in what now

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Speaker 1: we call the energy transition, and it was a period

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Speaker 1: when climate change wasn't really even the biggest motivation to

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Speaker 1: try and go down the clean energy route. So tell

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Speaker 1: us why Westerns made that pivot so early.

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Speaker 2: No, and I think many many parts of Europe from

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Speaker 2: the time was at an agricultural level. With today in

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Speaker 2: talks and language we talk about either sort of minigrits

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Speaker 2: or enterity independence. But at that point in time, the

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Speaker 2: turbine in many ways was the one that helped the

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Speaker 2: farm have access to its own power. So for that

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Speaker 2: it's been almost developing through societies and especially also the

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Speaker 2: development from farming towards organization, and of course in today's

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Speaker 2: world it's very much now back to the climate. So

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Speaker 2: I think it has developed a.

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Speaker 1: Lot, and that pivot, even though it was that early,

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Speaker 1: you think that's been the right one because it's been

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Speaker 1: as profitable all through that period, even though really we

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Speaker 1: are now going through the energy transition today.

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Speaker 2: We went through a long period of time, especially the nineties,

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Speaker 2: the cerus and to some extent around twenty ten, the

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Speaker 2: industry was building, the industry was coming together. There was

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Speaker 2: many players in the industry, but they also disappeared again

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Speaker 2: because in those couple of decades, if you didn't get

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Speaker 2: a government subsidy. The levelized cost of entity was not competitive.

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Speaker 2: So that is, as I always say, the real thing

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Speaker 2: where the decade became a real game changer was actually

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Speaker 2: from twenty ten to twenty twenty. In those ten years

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Speaker 2: you reduced levelized cost of entity of the termine, which

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Speaker 2: somewhere between fifty to sixty five percent in major markets.

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Speaker 1: And so through the nineties and two thousands, those two

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Speaker 1: decades you required sort of subsidies coming from Denmark the

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Speaker 1: state to ensure that VEST is stuck around.

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Speaker 2: Yes, and you can see that it was from Denmark,

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Speaker 2: partly in Germany, partly in Spain, which are some of

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Speaker 2: the orittinenally founding members of it. And I think in

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Speaker 2: those decades it was also the decades where the countries

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Speaker 2: of Spain, Germany, Denmark actually made technology transfers to other

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Speaker 2: parts of the world and not least to China, which

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Speaker 2: was interesting that when you transferred to China it was

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Speaker 2: part of building, greening, transforming China. And today I can

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Speaker 2: probably say that technology transfer works quite a bit against

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Speaker 2: some of the originally thinking because now the competition through

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Speaker 2: the technology comes back to its origin.

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Speaker 1: And your entry into the wind industry is much more recent.

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Speaker 1: You've been on the board of Vestas since twenty thirteen,

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Speaker 1: you've been the CEO since twenty nineteen. But what brought

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Speaker 1: you to the wind industry and what from your past

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Speaker 1: helps you in your job today.

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Speaker 2: When I was invited into Vestas in twenty twelve, it

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Speaker 2: was on a little bit of an oblique background because

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Speaker 2: Vestas was throughout ten, eleven and twelve through a very

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Speaker 2: challenged financial time. You had in those years government away

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Speaker 2: the subsidies, and that meant that the Vestors was continuing

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Speaker 2: its capacity and had multiple factories and couldn't create the scale.

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Speaker 2: So how did I join the board? Probably because I

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Speaker 2: was known for doing restructuring, being part of executive teams

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Speaker 2: that put not so good order into order, and that

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Speaker 2: was what I joined the board for. And within thirteen

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Speaker 2: we changed an executive team. I think Vestors a great company,

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Speaker 2: but probably needed a bit of a stop and go

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Speaker 2: and reset when you do a turnaround. From that, since then,

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Speaker 2: executive management and board investors have always been more like

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Speaker 2: one team. No filters, what is good, what is bad?

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Speaker 2: Get six change between board and an executive team, and

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Speaker 2: I think that has been one of the strength in

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Speaker 2: also considering what we have now gone through in recent times,

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Speaker 2: that we find a solution, we all commit to it

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Speaker 2: and then we give management the time to execute. So

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Speaker 2: that was my part, and I always loved working in

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Speaker 2: global companies and you probably can't find a more global

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Speaker 2: company than Vestus.

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Speaker 1: Well. Also, you would expect an exciting industry right the

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Speaker 1: world is behind on its clean energy goals and by

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Speaker 1: a big margin, and you would expect renewable energy companies

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Speaker 1: right now would be going through a boom, but instead

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Speaker 1: the wind industry has had big problems in recent years,

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Speaker 1: especially around profitability, which is required if you want to

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Speaker 1: scale this industry as much as we need it. As

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Speaker 1: one of the largest wind turbine makers in the world,

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Speaker 1: if not the largest, you've had a front row seat

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Speaker 1: at this saga. When did you first think things had

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Speaker 1: started to sour and why?

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Speaker 2: I think from an industry point of view, I think

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Speaker 2: the industry is still developing into a maturing industry. I

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Speaker 2: think in some of our key markets we are still

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Speaker 2: relatively immature, and you can take the offshore as another

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Speaker 2: part of a market that is about too mature. We're

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Speaker 2: building scale and as long as there is not that maturity,

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Speaker 2: then you always will fight around the next project. What

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Speaker 2: started with the cod and the Old Sous crisis and

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Speaker 2: the lockdown of the global community, those bottlenecks in supply

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Speaker 2: chain probably show an industry very strongly that there is

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Speaker 2: no easy target and there is no easy fix to

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Speaker 2: your backlog, and that we can see today it has

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Speaker 2: questioned also the survival of some of the companies within

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Speaker 2: the wind industry, and that's what happens in the last

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Speaker 2: eight to ten years. Companies have come into troubles and disappeared.

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Speaker 1: So to be able to understand the troubles, let's just

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Speaker 1: talk through what's a little weird about renewable energy industry

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Speaker 1: in general, but wind industry specifically, is that most wind

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Speaker 1: farms even today are built by developers who sign long

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Speaker 1: term contracts generate electricity at a fixed price, and it

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Speaker 1: takes a few years before the wind farm is actually built,

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Speaker 1: and things can change in that period. Of course, what

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Speaker 1: you're hinting at is you had inflation, you had high

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Speaker 1: interest rates, and that caused you as a wind turbine maker,

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Speaker 1: but also developers to just have a much higher bill

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Speaker 1: to build the wind turbines and the wind farm, but

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Speaker 1: then they still had to sell the electricity at a

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Speaker 1: fixed price. Is there a way to fix this problem,

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Speaker 1: which is to renegotiate contracts when things change, and have

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Speaker 1: you tried to do that? Yes?

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Speaker 2: I think one of the things we always appreciate is

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Speaker 2: it's a solution that generates green electricity, which we all

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Speaker 2: want more for the next thirty years. But as you're

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Speaker 2: also pointing to and alluding to it, it doesn't come overnight.

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Speaker 2: So typically in an auDA backlog industry like hours, we

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Speaker 2: get to a customer developer, we see the permitting and

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Speaker 2: planning often goes on many years before you actually get

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Speaker 2: to the final So when you have the permitting, then

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Speaker 2: you try to apply for the project organization and you

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Speaker 2: get a binding offer from us, and then from a

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Speaker 2: binding offer to a full finance project and here comes

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Speaker 2: to thing. Sometimes you have to appreciate that the product

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Speaker 2: goes into an auction where you then with the government

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Speaker 2: agree on an electricity price for the coming ten twenty years.

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Speaker 2: You sometimes in countries say, yep, I now have a

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Speaker 2: great access and permitting and that means I can now

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Speaker 2: sell my electricity to a private company or anyone who

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Speaker 2: wants to secure the green electricity. The ramp up until

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Speaker 2: you have the first killer water hour generated from the

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Speaker 2: turbine solution is in many cases two or three years,

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Speaker 2: and it's in those two or three years, of course

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Speaker 2: vestors and the customer that our developer is exposed to

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Speaker 2: the year volatility, and the world saw volatility like the

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Speaker 2: world have never seen. Between end of twenty nineteen and

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Speaker 2: probably to around mid year twenty three, that was where

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Speaker 2: the society was open again, and we could see that

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Speaker 2: the backlock of bottlenecks in the supply chain took one

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Speaker 2: or two quarters to ease as well. So by end

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Speaker 2: of twenty three we seem to be back to a

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Speaker 2: society we can recognize that sat before twenty twenty.

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Speaker 1: But those kinds of things might happen in the future.

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Speaker 1: You know, we're going into a period where not just

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Speaker 1: climate change, but there are all sorts of other crises

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Speaker 1: in the world geopolitics that could bring another period of

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Speaker 1: this kind. Is there a permanent solution to deal with

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Speaker 1: it or are we stuck with the old way of

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Speaker 1: doing business, which is have these long term contracts and

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Speaker 1: then just deal with losses as you might have to make.

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Speaker 2: Sometimes I think the world has become a lot wiser

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Speaker 2: and probably also trusting each other, at least from our industry.

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Speaker 2: I generally meet most of our customers and partners around

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Speaker 2: the world, and I haven't met anyone who says we

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Speaker 2: will actually will actually be missing vestors if you were

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Speaker 2: not there. And therefore, of course for that reason, I

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Speaker 2: think it's fair that we spent a lot of time

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Speaker 2: in generally understanding where is it we have our risk,

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Speaker 2: and where is it we add the value and how

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Speaker 2: do we create that respectful partnership and contractual obligations so

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Speaker 2: we avoid having a situation where in reality in twenty

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Speaker 2: two we lost one point two or one point six

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Speaker 2: billion euros and by putting up thirty years renewable solution,

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Speaker 2: it's not great. So I think that we have learned,

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Speaker 2: and I think the parallel work tracks today as a

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Speaker 2: developer is that you work in parallel with the permitting,

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Speaker 2: You work in parallel with your partner in the turbine solution,

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Speaker 2: and you work in parallel with your financing partners, which

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Speaker 2: means you are literally concluding on the parallel tracks within

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Speaker 2: one or two.

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Speaker 1: Months after the break. I ask Henrik whether there is

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Speaker 1: a solution to the wind industry's long running woes. By

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Speaker 1: the way, if you find zero informative and helpful, please

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Speaker 1: do give us a rating and review on Apple Podcasts

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Speaker 1: or Spotify. Thanks right now. This is capitalism one oh

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Speaker 1: one right. Shareholders' perspective is that any big loss for

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Speaker 1: any substantial period of time is a bad thing. But

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Speaker 1: it is possible to convince shareholders to bear through some

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Speaker 1: losses because in the future you'll get greater returns. I'm

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Speaker 1: just going to pick two examples here. Just look at

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Speaker 1: shareholders of Tesla for the first decade of its existence,

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Speaker 1: or look at the shareholders of shale oil and gas

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Speaker 1: companies in the US. Wall Street absorbed those losses with

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Speaker 1: gritted teeth. Nobody was happy, But having done that, they

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Speaker 1: are now seeing the profits. So why is it that

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Speaker 1: you couldn't convince your shareholders that, look, this is an

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Speaker 1: industry that has a big future. Bear through the losses.

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Speaker 1: It will be worth.

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Speaker 2: It to some extent. I think shareholders will support you

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Speaker 2: through difficult times if you communicate that there is a

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Speaker 2: current status of where you are, but there's no shareholders

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Speaker 2: that will support you. If you're not able to pick

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Speaker 2: a pretty clear track of where is it you're going

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Speaker 2: to be in two or three years from now. And

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Speaker 2: I think that is probably one of the things I

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Speaker 2: appreciate most Throughout these difficult years. We have been able

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Speaker 2: to carry most of our top twenty five shareholders with us,

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Speaker 2: and they of course welcome today that we stock to

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Speaker 2: the plan. And the plan, by the way, worked, so

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Speaker 2: I wouldn't necessarily say that yearholders won't support you, but

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Speaker 2: I think it's important when you ask for a shareholder support,

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Speaker 2: for instance, of an understanding of losing one point six

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Speaker 2: billion that I've met no shareholders that didn't ask me,

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Speaker 2: so when is it going to stop? What are you

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Speaker 2: doing about it? And what prevents you from ending there

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Speaker 2: again in the future. And I think that's the positive

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Speaker 2: of where we are today. The plan worked, and of

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Speaker 2: course it is nice to sit with scheerholders today and

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Speaker 2: saying we're safely back in profit. But it's also now

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Speaker 2: start stage two because now we need to repay the

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Speaker 2: one point six billion we're born in twenty two from shareholders,

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Speaker 2: and that I'm adamant that we will also do.

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Speaker 1: So.

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Speaker 2: I think you're right. You create transparency, you avoid the

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Speaker 2: fields that gives seerholders confidence. There's nothing not to like

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Speaker 2: the industry maturity and the lack of discipline is probably

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Speaker 2: what we'll question shareholders and also force shareholders to do

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Speaker 2: their individual both stock and leadership pick.

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Speaker 1: But you also said, in this world, what the world

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Speaker 1: wants is clean energy and winterbines to make it, they

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Speaker 1: won't miss vest as if vesters are not making them.

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Speaker 1: But of course you have turned a corner and now

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Speaker 1: you are profitable again, but your competitors take semens or

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Speaker 1: g they're still losing money. Does that make you happy

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Speaker 1: or do you see that to be a problem given

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Speaker 1: the industry as a whole does require more than one

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Speaker 1: supplier for it to actually have the reliability to deal

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Speaker 1: with what's going to be a big industry as it grows.

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Speaker 2: Yeah, I think whenever you look at industries, they'll always

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Speaker 2: be industries where you will have different cycles. Often comes

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Speaker 2: by either change in management or different management approaches, or

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Speaker 2: different sizes of the business. We are late comer in

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Speaker 2: to offshore. We offshore business bag in in of twenty

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Speaker 2: when the world was almost close fully down, and I

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Speaker 2: think that's a testament of strengths of what we are

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Speaker 2: and how we operate vestas. So I think companies will

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Speaker 2: choose differently to their discipline, and we shouldn't forget to

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Speaker 2: talk about the customers. The customers still want more of

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Speaker 2: the solutions, and I think the governments of course want

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Speaker 2: more of the solution because they want to come closer

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Speaker 2: to their COEO two neutral targets, and they also for

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Speaker 2: other reasons today they also want to have a energy

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Speaker 2: independence and they want to build a more national endy supply,

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Speaker 2: which of course speaks highly for the turbine solutions.

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Speaker 1: So there are things that companies can do to make

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Speaker 1: sure that there are efficiencies. There's the right management, there's

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Speaker 1: the right vision, there's the right execution. But then there

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Speaker 1: are things that are outside your control which also make

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Speaker 1: a material impact on the industry. Just take the example

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Speaker 1: of what happened here in the UK where an auction

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Speaker 1: for your wind was run last year and no bids

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Speaker 1: came in because the price was too low. Government had

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Speaker 1: to learn from it, go back to the board and

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Speaker 1: this year they've committed to a higher price than last year.

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Speaker 1: In November twenty twenty two, in a Bloomberg interview, you

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Speaker 1: said some people made the wrong assumption that energy and

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Speaker 1: electricity should become free. We created that perception to some extent,

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Speaker 1: so we are to blame for it. That was a mistake.

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Speaker 1: Do you still stand by that observation that the renewable

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Speaker 1: energy industry made a mistake of promising ever following electricity prices.

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Speaker 2: It's not something that is going away easily overnight. And

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Speaker 2: I think the language still reflects it in many ways

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Speaker 2: because when we talk about the electricity coming from either

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Speaker 2: offshore solutions, the government always labeled it as subsidy. Interestingly enough,

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Speaker 2: that represents a market price for you and I as

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Speaker 2: consumers that are substantially higher. Maybe we should stop talking

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Speaker 2: about a subsidy because you and I we pay price

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Speaker 2: plus the VAT pros, the transmission plus all the other things.

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Speaker 2: But the base price coming from the turbine is not

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Speaker 2: a subsidy. It's actually a penalty to the developer that

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Speaker 2: are building it because the market price is substantially higher.

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Speaker 2: So we should stop talking about it as a subsidy,

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Speaker 2: because if we treat it and talk about it as

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Speaker 2: a subsidy, we assume that it starts from zero, and

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Speaker 2: electricity from a wind turbine is not cost zero. You

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Speaker 2: need to build and you develop a technology, you construct

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Speaker 2: it and you maintain it for thirty years and it

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Speaker 2: is not zero cost, and there are no desperate companies

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Speaker 2: that would take that chance to build something and give

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Speaker 2: the electricity for free to the government.

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Speaker 1: Well, let's break that down. So the CFD, the nice

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Speaker 1: thing about it is that it's a contracted price for

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Speaker 1: the long term. In the subsidy from the government side

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Speaker 1: is basically missing you. Regardless of what the market price

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Speaker 1: for electricity will be. The government will ensure that you

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Speaker 1: get at least forty four pounds per megawat are, which

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Speaker 1: is what the industry said it's not profitable. So now

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Speaker 1: they're coming back and they're saying, well, we'll give you

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Speaker 1: seventy one pounds per magowatar. Please bring in the bids

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Speaker 1: and maybe this year. There's already noises showing there will

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Speaker 1: be bids because the price may be right this time.

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Speaker 1: But the subsidy part is real because they're committing to

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Speaker 1: a fixed price plus inflation in that long term, right

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Speaker 1: years to come. So why do you think it should

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Speaker 1: not be a subsidy.

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Speaker 2: No, I think we should just talk about it as

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Speaker 2: a price of electricity rather than a subsidy, because if

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Speaker 2: you call it a subsidy. It gets a expression that

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Speaker 2: immediately in our ears to our brain tells us that

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Speaker 2: this is something that somebody else paying for, and it's

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Speaker 2: not a subsidy.

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Speaker 1: You don't want to call it subsidy, But that is

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Speaker 1: only being called because it's committing to a fixed price

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Speaker 1: for the long term and the government is involved. Are

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Speaker 1: you saying we are at that place now where pays

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Speaker 1: the market price because we understand we wind industry can

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Speaker 1: now produce electricity at a cheaper price than other alternatives,

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Speaker 1: and we will provide that and we will actually profit

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Speaker 1: from being market players. We don't want these contracts for differences,

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Speaker 1: these long term contracts. Just let us be pure market players.

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Speaker 2: I can show you the levelized cost of energy comparison

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Speaker 2: of against cold fossil gas, nuclear. We can show that

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Speaker 2: levelized cost of energy across country continents, and we can

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Speaker 2: show there is no cheaper alternative than to build renewable

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Speaker 2: So therefore, let's talk about the price of building new

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Speaker 2: entity sources and exploring new enity sources. Then just talk

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Speaker 2: about subsidies. So I think here we can happily conclude

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Speaker 2: and I will quote and no name politicians in the

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Speaker 2: UK who said it's really interesting now that ramping up

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Speaker 2: the capacity within renewable it is cheaper to save the

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Speaker 2: planet than it is to destroy it. And that's a

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Speaker 2: pretty pretty cool way of playing with levelized cost of

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Speaker 2: energy in saying this is what we want to achieve,

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Speaker 2: and actually we can say money in doing it. Hey,

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Speaker 2: what's not to lie?

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Speaker 1: Well, I'll take a compliment that you quoted my book

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Speaker 1: to me. But going back to it, are you saying

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Speaker 1: no long term contracts are needed now and the wind

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Speaker 1: industry can just be a market player like the gas

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Speaker 1: power plant industry is.

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Speaker 2: I don't know if we're saying it shouldn't be long

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Speaker 2: term contracts. I don't think anyone either fear or require

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Speaker 2: short or long term contracts. I think the merchant market

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Speaker 2: works well because we are also developing technologies that makes

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Speaker 2: the requirement or the storage opportunities, for instance, of electricity.

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Speaker 2: So the storage opportunities of electricity is substantially different today

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Speaker 2: than it was ten years ago. In twenty ten, the

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Speaker 2: turbine reality required some of the support in ninety nine

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Speaker 2: of the global markets. Today it's less than one percent

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Speaker 2: of the global markets where you required.

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Speaker 1: Now looking at the history of wind turbines few people

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Speaker 1: would know. But even today turbine manufacturing is kind of

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Speaker 1: a bootique industry, and that's not the case with solar

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Speaker 1: or batteries, for example, where if you walk through the

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Speaker 1: industry making them, there's so much automation. There's just robots everywhere.

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Speaker 1: So in your industry, what are the innovations that you've

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Speaker 1: seen in manufacturing and in technology that will help make

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Speaker 1: wind turbines even cheaper.

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Speaker 2: First of all, part of it is the ramping of

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Speaker 2: turbines and the parts of a turbine, whether it's the

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Speaker 2: blades or it's the nasil and other things, and there

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Speaker 2: are still so many things where it has to be manual,

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Speaker 2: and I don't think any future soon changes that because

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Speaker 2: there are parts of this where we are also now

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Speaker 2: embarking in dimensions where the small weak point in a

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Speaker 2: blade that is one hundred and sixteen meter makes a

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Speaker 2: blade either crack or being under that load. It's substantial

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Speaker 2: a challenge and sometimes compare a little bit between industries.

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Speaker 2: The Formula one cars are designed to run maximum two

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Speaker 2: hours and then three hundred kilometers an hour, but a

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Speaker 2: turbine is designed for thirty years and the tip speed

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Speaker 2: of a turbine is often in exist of three hundred

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Speaker 2: kilometers an hour, and they are out there and have

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Speaker 2: to be designed for that. So the load and the

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Speaker 2: pressure on some of these assets enormous, which I also

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Speaker 2: think is probably also why you will find still so

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Speaker 2: many hand carried things. But that doesn't mean that when

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Speaker 2: you do the first prototype and you see their turnover

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Speaker 2: time on either blades, on our selves, we are able

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Speaker 2: to bring that quite far down over a industrialization of

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Speaker 2: the process, So that's positive. So instead of only focusing

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Speaker 2: on the direct employee here, Yes, it will be nice

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Speaker 2: to do some uptimization. Tried many parts of bulls. We

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Speaker 2: won't stop innovating on it.

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Speaker 1: And what about technology innovation in making turbines bigger, more

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Speaker 1: efficient and the streaper.

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Speaker 2: Yeah, I think that's how we do the levelized cost

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Speaker 2: of entity down and we haven't stopped doing that. In

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Speaker 2: the last few years. We put up a new prototype

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Speaker 2: for offshore that is now a fifteen megawater, and our

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Speaker 2: previous largest turbine was a ten megawat, so that's a

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Speaker 2: much bigger one. I know industry players had maybe at

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Speaker 2: twelve or a thirteen megawatt turbine, so I think the

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Speaker 2: industry is constant changing, So now we will start talking

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Speaker 2: about what is in grid and what is potentially off

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Speaker 2: grid as solutions as well.

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Speaker 1: Now, one of the reasons why you've been able to

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Speaker 1: turn a corner is your order book has grown and

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Speaker 1: has exploded in the last year. Of course, it's on

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Speaker 1: the back of a lot of governments that are still

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Speaker 1: behind on their targets. I mean, if you just look

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Speaker 1: at Europe, by twenty thirty, Europe wants to build more

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Speaker 1: than one hundred gig awards of offshore wind. In the past,

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Speaker 1: when governments set those targets, they actually were underestimating and

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Speaker 1: the renewable energy industry was able to over deliver. But

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Speaker 1: now do you think governments are setting targets that are

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Speaker 1: just too ambitious and the industry won't be able to deliver.

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Speaker 2: Yeah, no, I think that the say and they do

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Speaker 2: gap unfortunately seem to widen rather than to narrowing in

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Speaker 2: the past couple of years. And I don't think voters

438
00:26:30,840 --> 00:26:35,000
Speaker 2: anymore will not have climate or for that match the

439
00:26:35,040 --> 00:26:38,359
Speaker 2: progress in energy as one of the key topics. So

440
00:26:38,400 --> 00:26:42,440
Speaker 2: therefore politicians are of course up for reelection, and most

441
00:26:42,440 --> 00:26:45,080
Speaker 2: politicians want to be re elected. And that's also why

442
00:26:45,160 --> 00:26:48,399
Speaker 2: you often see that target setting gets a little bit

443
00:26:48,440 --> 00:26:52,520
Speaker 2: of a kickoffwards every time you're in election mode, because

444
00:26:52,560 --> 00:26:55,560
Speaker 2: if you take the targets in EU, in the last

445
00:26:55,560 --> 00:26:58,720
Speaker 2: couple of years, we have had target setting that indicated

446
00:26:58,760 --> 00:27:01,439
Speaker 2: we should put up more than first GIGABO, and in

447
00:27:01,480 --> 00:27:04,880
Speaker 2: reality we have done just around half. We won't get

448
00:27:04,920 --> 00:27:08,520
Speaker 2: to carbon neutrality by fooling each other with targets that

449
00:27:08,560 --> 00:27:11,520
Speaker 2: are not being fulfilled. That I know the word green washing,

450
00:27:11,600 --> 00:27:13,919
Speaker 2: and no one wants to hear it, but please let

451
00:27:14,000 --> 00:27:15,960
Speaker 2: us not do that. I know one of the countries

452
00:27:16,000 --> 00:27:18,400
Speaker 2: I probably in the past have always given a little

453
00:27:18,440 --> 00:27:23,320
Speaker 2: bit of a hard time, which is Germany. The German

454
00:27:23,359 --> 00:27:27,920
Speaker 2: government has changed gear dramatically within the last eighteen months.

455
00:27:28,040 --> 00:27:32,680
Speaker 2: New government came in. They saw an energy dependence suddenly

456
00:27:32,760 --> 00:27:38,080
Speaker 2: becoming overly towards a gas from the east. They retired

457
00:27:38,160 --> 00:27:43,679
Speaker 2: nuclear without necessarily having exactly the resources available. But within

458
00:27:43,880 --> 00:27:47,040
Speaker 2: eighteen months they have re established first of all access

459
00:27:47,040 --> 00:27:51,080
Speaker 2: to terminals from liquid gas. And of course now they're

460
00:27:51,119 --> 00:27:55,240
Speaker 2: building and permitting a renewable entity at a rate I've

461
00:27:55,280 --> 00:27:58,040
Speaker 2: never seen before and I never thought was possible. And

462
00:27:58,080 --> 00:28:00,119
Speaker 2: we came from something where they were doing less than

463
00:28:00,160 --> 00:28:01,880
Speaker 2: a giga what a year, and when you now listen

464
00:28:01,920 --> 00:28:05,280
Speaker 2: to the run rate, they are in excess of probably

465
00:28:05,320 --> 00:28:07,960
Speaker 2: five giga wort this year. And that's something I would

466
00:28:07,960 --> 00:28:10,359
Speaker 2: have said eighteen months ago, and now it's impossible they

467
00:28:10,359 --> 00:28:12,199
Speaker 2: will not get to that. So, as I said, to

468
00:28:12,480 --> 00:28:16,280
Speaker 2: every EU twenty six countries, with Germany as the good example,

469
00:28:16,640 --> 00:28:19,959
Speaker 2: make a study trip to Germany and see how things

470
00:28:20,000 --> 00:28:24,040
Speaker 2: could actually work when you consider that, yes it is

471
00:28:24,080 --> 00:28:26,879
Speaker 2: in respect for the country, Yes it is in respect

472
00:28:27,200 --> 00:28:31,359
Speaker 2: for also the society, but it also sometimes have to

473
00:28:31,440 --> 00:28:34,840
Speaker 2: have that we do permitting at a faster pace.

474
00:28:35,119 --> 00:28:37,239
Speaker 1: And this is something my colleague Will Matis and I

475
00:28:37,280 --> 00:28:40,320
Speaker 1: have written about, which is that permitting has been a

476
00:28:40,360 --> 00:28:44,240
Speaker 1: real issue, especially in Europe, but just generally around the world.

477
00:28:44,560 --> 00:28:48,080
Speaker 1: I mean ten years required for permitting is not unheard of,

478
00:28:48,160 --> 00:28:52,120
Speaker 1: which seems ridiculous. But now you're saying some governments are learning.

479
00:28:52,320 --> 00:28:54,760
Speaker 1: Could you just talk through what are the things that

480
00:28:54,800 --> 00:28:57,680
Speaker 1: the German government got right and what others should learn

481
00:28:58,080 --> 00:28:59,760
Speaker 1: from what the Germans did?

482
00:29:00,400 --> 00:29:04,160
Speaker 2: Yeah, and I think sometimes change comes out of that.

483
00:29:04,200 --> 00:29:07,040
Speaker 2: You are getting into a difficult situation, so you are

484
00:29:07,080 --> 00:29:11,080
Speaker 2: forced to do something radically because I think here, when

485
00:29:11,120 --> 00:29:13,720
Speaker 2: you want to have access to energy, and you want

486
00:29:13,800 --> 00:29:16,600
Speaker 2: to have and you're maybe even on the brink of saying,

487
00:29:16,680 --> 00:29:19,920
Speaker 2: whoa if we potentially run the risk of not having

488
00:29:20,280 --> 00:29:24,880
Speaker 2: electricity available, which is called blackout, and under those circumstances,

489
00:29:24,920 --> 00:29:28,640
Speaker 2: you are actually threatening your own society, and that's where

490
00:29:28,720 --> 00:29:31,880
Speaker 2: then the balance tips towards Hey, now we need to

491
00:29:31,920 --> 00:29:35,080
Speaker 2: find that solution. And the good thing in Germany is

492
00:29:35,120 --> 00:29:41,280
Speaker 2: they have united the delegated local regional state with central government,

493
00:29:41,400 --> 00:29:46,640
Speaker 2: so there is not the central decentralized conflict that we

494
00:29:46,720 --> 00:29:50,720
Speaker 2: still see in many many countries where you over the

495
00:29:50,800 --> 00:29:55,960
Speaker 2: last couple of decades you decentralize the authority to mandate

496
00:29:56,240 --> 00:30:00,400
Speaker 2: or permit any disaucing. And actually any disourcing for any

497
00:30:00,400 --> 00:30:04,360
Speaker 2: country is a national matter, so you delegated to permitting

498
00:30:05,040 --> 00:30:10,160
Speaker 2: regionally or locally to municipalities, but your innerity dependency is

499
00:30:10,200 --> 00:30:13,120
Speaker 2: actually a national matter. So something has to give. I'm

500
00:30:13,280 --> 00:30:17,120
Speaker 2: usually encouraged to see how Germany Man is getting things done.

501
00:30:17,600 --> 00:30:20,440
Speaker 1: Now we are going into a year with a ton

502
00:30:20,560 --> 00:30:24,760
Speaker 1: of elections. Let's just talk about two of them this year,

503
00:30:24,840 --> 00:30:27,040
Speaker 1: which is the US, and then one next year, which

504
00:30:27,080 --> 00:30:29,600
Speaker 1: is Australia. And I bring those up because you've got

505
00:30:29,600 --> 00:30:33,840
Speaker 1: a big order book from US and Australia. What happens

506
00:30:33,880 --> 00:30:37,520
Speaker 1: if you get the Republican Party coming into power in

507
00:30:37,520 --> 00:30:42,480
Speaker 1: the US and then next year the Liberals in Australia,

508
00:30:43,080 --> 00:30:46,480
Speaker 1: both of them not particularly interested in climate goals. Maybe

509
00:30:46,480 --> 00:30:49,600
Speaker 1: they're interested in energy as long as it's cheap. But

510
00:30:49,960 --> 00:30:54,280
Speaker 1: do you think you'll have again those external factors weighing

511
00:30:54,360 --> 00:30:58,200
Speaker 1: down on an industry that's just back to its state

512
00:30:58,280 --> 00:31:00,400
Speaker 1: of growing at the rate needs to.

513
00:31:02,600 --> 00:31:04,960
Speaker 2: There's always a risk for that. There's always a risk

514
00:31:05,040 --> 00:31:07,440
Speaker 2: for what comes in an election. And I also think

515
00:31:07,480 --> 00:31:10,560
Speaker 2: there are some factual positives in the track we on

516
00:31:11,600 --> 00:31:14,480
Speaker 2: for the world, because I think the world is aligning

517
00:31:14,520 --> 00:31:17,800
Speaker 2: more and more about getting proper things done. And if

518
00:31:17,840 --> 00:31:20,920
Speaker 2: we go into the US, it is fair saying that

519
00:31:20,960 --> 00:31:25,160
Speaker 2: the US has contributed positively today. It's called IRA because

520
00:31:25,200 --> 00:31:28,840
Speaker 2: it's a bigger package of many things that got rolled

521
00:31:28,840 --> 00:31:31,160
Speaker 2: in as renewable energy, which.

522
00:31:32,040 --> 00:31:35,000
Speaker 1: Tax credits to build lots and lots of solar and wind.

523
00:31:35,120 --> 00:31:37,520
Speaker 2: It is meaning that you and I, if we were

524
00:31:37,560 --> 00:31:40,280
Speaker 2: living in the US, we would on average have a

525
00:31:40,320 --> 00:31:43,160
Speaker 2: more stable electricity price at a much lower level than

526
00:31:43,200 --> 00:31:45,840
Speaker 2: we will be experienced here in Europe. So you've actually

527
00:31:45,920 --> 00:31:49,280
Speaker 2: gained a huge thing. And if you go to Australia,

528
00:31:50,360 --> 00:31:54,360
Speaker 2: there is an approximately further giga of coal fired one

529
00:31:54,360 --> 00:31:59,280
Speaker 2: way or the other power plants in Australia. They have,

530
00:31:59,440 --> 00:32:02,680
Speaker 2: for obvious reason now set out attract to at least

531
00:32:02,720 --> 00:32:06,560
Speaker 2: start planning and retiring that. I think it's maybe more

532
00:32:06,600 --> 00:32:09,200
Speaker 2: a question around will it be with a different pace.

533
00:32:09,280 --> 00:32:11,800
Speaker 2: But for somebody to say we will just replace ferty

534
00:32:11,840 --> 00:32:15,320
Speaker 2: giga of coal fired power plants within six or seven

535
00:32:15,400 --> 00:32:20,040
Speaker 2: years is also an enormous steep curve. So maybe in

536
00:32:20,120 --> 00:32:23,280
Speaker 2: their election, I hope the topic to be discussed and

537
00:32:23,320 --> 00:32:25,880
Speaker 2: agreed on would rather be that the Parliament in the

538
00:32:25,960 --> 00:32:29,920
Speaker 2: election would agree on whomever wins will get the transition

539
00:32:30,080 --> 00:32:33,880
Speaker 2: done at a speed that is more the likely of the.

540
00:32:33,800 --> 00:32:38,200
Speaker 1: Actual One thing you mentioned was the conversation between the

541
00:32:38,200 --> 00:32:41,160
Speaker 1: industry and the UK government that allowed you to come

542
00:32:41,200 --> 00:32:45,800
Speaker 1: to a new place, a reset, so to speak. If

543
00:32:45,800 --> 00:32:48,160
Speaker 1: you look at another part of the energy industry, the

544
00:32:48,200 --> 00:32:52,200
Speaker 1: oil and gas industry, they've been very powerful in coming

545
00:32:52,240 --> 00:32:56,040
Speaker 1: together lobbying for outcomes that they want. Do you think

546
00:32:56,080 --> 00:33:00,520
Speaker 1: the renewable energy industry as a whole as industry groups

547
00:33:00,680 --> 00:33:04,160
Speaker 1: is strong enough to make clear what its demands are

548
00:33:04,360 --> 00:33:07,000
Speaker 1: for building out all this clean energy.

549
00:33:07,160 --> 00:33:09,240
Speaker 2: First of all, no is the right answer, because I

550
00:33:09,320 --> 00:33:13,480
Speaker 2: think too often we end up being either non representative

551
00:33:13,640 --> 00:33:17,400
Speaker 2: as an industry group. But I also think that comes

552
00:33:17,440 --> 00:33:19,200
Speaker 2: a little bit back to come on, we in the

553
00:33:19,240 --> 00:33:23,520
Speaker 2: early stage timing wise, of scratching the surface, you portrayed

554
00:33:23,560 --> 00:33:25,800
Speaker 2: it nicely. I mean we just come into out of

555
00:33:25,840 --> 00:33:29,400
Speaker 2: the first decade where we actually become a competitive alternative.

556
00:33:29,880 --> 00:33:33,600
Speaker 2: If we look at the energy demands and supply cycle

557
00:33:33,680 --> 00:33:37,200
Speaker 2: of the world, when energy is still one and a

558
00:33:37,200 --> 00:33:40,480
Speaker 2: half percent of the total energy supply, but as the

559
00:33:40,560 --> 00:33:44,440
Speaker 2: electrification increases, it's obvious that we will have a more

560
00:33:44,520 --> 00:33:48,600
Speaker 2: vocal voice and probably become a more mature industry. And

561
00:33:48,720 --> 00:33:51,360
Speaker 2: part of that is also that we will see a

562
00:33:51,680 --> 00:33:55,840
Speaker 2: further consolidation of fewer players in the industry, and I

563
00:33:55,840 --> 00:33:58,120
Speaker 2: think we are getting and we are fast approaching that,

564
00:33:58,280 --> 00:34:01,200
Speaker 2: and that will probably raise what you're calling a little

565
00:34:01,240 --> 00:34:04,080
Speaker 2: bit more. The insight too, that you don't have to

566
00:34:04,120 --> 00:34:07,040
Speaker 2: speak to many people, but you speak to a fewer

567
00:34:07,320 --> 00:34:10,680
Speaker 2: that can then get things done. Because it's not rocket

568
00:34:10,719 --> 00:34:13,480
Speaker 2: science to sit down and talk about what it takes

569
00:34:13,520 --> 00:34:14,839
Speaker 2: to get things built out.

570
00:34:15,719 --> 00:34:18,759
Speaker 1: Now that you've made vest as profitable, are you going

571
00:34:18,800 --> 00:34:20,839
Speaker 1: to quit now? Never?

572
00:34:21,440 --> 00:34:24,239
Speaker 2: For me, I have two daughters at twenty one and

573
00:34:24,280 --> 00:34:28,319
Speaker 2: twenty four. That will be too easy, as they say,

574
00:34:28,360 --> 00:34:32,040
Speaker 2: but it's a big milestone to get back. There's no

575
00:34:32,120 --> 00:34:34,680
Speaker 2: fun in working in a company that is not making

576
00:34:34,680 --> 00:34:37,439
Speaker 2: any money. The real journey starts now. This has been

577
00:34:37,680 --> 00:34:41,680
Speaker 2: two mots of emergency cure and trying to get it

578
00:34:41,719 --> 00:34:44,600
Speaker 2: back now also starts part of it. How do we

579
00:34:44,680 --> 00:34:48,560
Speaker 2: build the foundation to get vestors to the performance that

580
00:34:48,719 --> 00:34:53,000
Speaker 2: is reasonable for a company of our nature so far,

581
00:34:53,400 --> 00:34:55,440
Speaker 2: if I have the choice, I will continue for some

582
00:34:55,560 --> 00:34:56,439
Speaker 2: years yet to come.

583
00:34:57,400 --> 00:35:05,200
Speaker 1: Thank you, Hendrick, You're welcome, Thanks for having Thank you

584
00:35:05,239 --> 00:35:07,800
Speaker 1: for listening to Zero. If you liked this episode, please

585
00:35:07,840 --> 00:35:09,600
Speaker 1: take a moment to rate or review the show on

586
00:35:09,600 --> 00:35:13,120
Speaker 1: Apple Podcasts and Spotify. Share this episode with a friend

587
00:35:13,560 --> 00:35:16,239
Speaker 1: or with a Don Quixote fan. You can get in

588
00:35:16,280 --> 00:35:20,040
Speaker 1: touch at zero pod at Bloomberg dot Net. Zero's producers

589
00:35:20,080 --> 00:35:24,560
Speaker 1: are michy Le Rao, Magnus Hendrickson, and Somersadi. Our theme

590
00:35:24,640 --> 00:35:28,560
Speaker 1: music is composed by Wonderly Special. Thanks to Kira Pindrim

591
00:35:28,760 --> 00:35:32,399
Speaker 1: and will mathis I am Akshatrati back soon