Speaker 1: Welcome to Zero I am Akshatrati. This week wind Industry's
Speaker 1: history and recovery. The world desperately wants to build more renewables,
Speaker 1: but a mix of factors is causing the companies at
Speaker 1: the heart of the energy transition to struggle. Few have
Speaker 1: suffered as much as the big players in the wind industry.
Speaker 1: Still there are notable exceptions. On last week's show, Jakab
Speaker 1: Barruel Poulsen of Copenhagen Infrastructure Partners told me about the
Speaker 1: one hundred and fifty gigawards of clean energy projects that
Speaker 1: his company has in the pipeline all around the world.
Speaker 1: For context, that number represents more than the electricity generation
Speaker 1: capacity of the UK, and most of those projects are
Speaker 1: wind farms. On this week's episode, we look at the
Speaker 1: story of Vestus, another wind giant that has survived a
Speaker 1: difficult period and is finally back to making profits again.
Speaker 1: Vesters was founded more than a century ago. It went
Speaker 1: all in on making wind turbines in the nineteen eighties,
Speaker 1: but it operates in a volatile energy market and that's
Speaker 1: made the job of the company's CEO anything but easy.
Speaker 1: When Hendrik Anderson first joined vests as a board member.
Speaker 1: A decade ago, the company had just recorded its biggest loss.
Speaker 1: Shareholder confidence seemed shaky, Anderson's work to bring stability to
Speaker 1: the company eventually led him to be made CEO in
Speaker 1: twenty nineteen. Since then, WESTERS has experienced even bigger ups
Speaker 1: and downs. In twenty twenty two, the company lost more
Speaker 1: than a billion dollars. To make the company profitable again,
Speaker 1: Hendrick was forced to make many changes, including raising prices
Speaker 1: for wind turbines. For the first time, I spoke with
Speaker 1: Hendrik about new ways to harvest wind more efficiently, the
Speaker 1: barriers a company like Vestus must navigate, and why he
Speaker 1: doesn't like the word subsidy. Henrick, welcome to the show.
Speaker 2: Thank you so much, Thanks for having me.
Speaker 1: Now, it's been quite the journey for Westus since eighteen
Speaker 1: ninety eight, from making household appliances to agricultural equipment and
Speaker 1: cranes to now making wind turbines. What I find remarkable
Speaker 1: is that Vestus, even though it first made a turbine
Speaker 1: in nineteen seventy nine, has been exclusively making wind turbines
Speaker 1: since nineteen eighty nine. That's very early in what now
Speaker 1: we call the energy transition, and it was a period
Speaker 1: when climate change wasn't really even the biggest motivation to
Speaker 1: try and go down the clean energy route. So tell
Speaker 1: us why Westerns made that pivot so early.
Speaker 2: No, and I think many many parts of Europe from
Speaker 2: the time was at an agricultural level. With today in
Speaker 2: talks and language we talk about either sort of minigrits
Speaker 2: or enterity independence. But at that point in time, the
Speaker 2: turbine in many ways was the one that helped the
Speaker 2: farm have access to its own power. So for that
Speaker 2: it's been almost developing through societies and especially also the
Speaker 2: development from farming towards organization, and of course in today's
Speaker 2: world it's very much now back to the climate. So
Speaker 2: I think it has developed a.
Speaker 1: Lot, and that pivot, even though it was that early,
Speaker 1: you think that's been the right one because it's been
Speaker 1: as profitable all through that period, even though really we
Speaker 1: are now going through the energy transition today.
Speaker 2: We went through a long period of time, especially the nineties,
Speaker 2: the cerus and to some extent around twenty ten, the
Speaker 2: industry was building, the industry was coming together. There was
Speaker 2: many players in the industry, but they also disappeared again
Speaker 2: because in those couple of decades, if you didn't get
Speaker 2: a government subsidy. The levelized cost of entity was not competitive.
Speaker 2: So that is, as I always say, the real thing
Speaker 2: where the decade became a real game changer was actually
Speaker 2: from twenty ten to twenty twenty. In those ten years
Speaker 2: you reduced levelized cost of entity of the termine, which
Speaker 2: somewhere between fifty to sixty five percent in major markets.
Speaker 1: And so through the nineties and two thousands, those two
Speaker 1: decades you required sort of subsidies coming from Denmark the
Speaker 1: state to ensure that VEST is stuck around.
Speaker 2: Yes, and you can see that it was from Denmark,
Speaker 2: partly in Germany, partly in Spain, which are some of
Speaker 2: the orittinenally founding members of it. And I think in
Speaker 2: those decades it was also the decades where the countries
Speaker 2: of Spain, Germany, Denmark actually made technology transfers to other
Speaker 2: parts of the world and not least to China, which
Speaker 2: was interesting that when you transferred to China it was
Speaker 2: part of building, greening, transforming China. And today I can
Speaker 2: probably say that technology transfer works quite a bit against
Speaker 2: some of the originally thinking because now the competition through
Speaker 2: the technology comes back to its origin.
Speaker 1: And your entry into the wind industry is much more recent.
Speaker 1: You've been on the board of Vestas since twenty thirteen,
Speaker 1: you've been the CEO since twenty nineteen. But what brought
Speaker 1: you to the wind industry and what from your past
Speaker 1: helps you in your job today.
Speaker 2: When I was invited into Vestas in twenty twelve, it
Speaker 2: was on a little bit of an oblique background because
Speaker 2: Vestas was throughout ten, eleven and twelve through a very
Speaker 2: challenged financial time. You had in those years government away
Speaker 2: the subsidies, and that meant that the Vestors was continuing
Speaker 2: its capacity and had multiple factories and couldn't create the scale.
Speaker 2: So how did I join the board? Probably because I
Speaker 2: was known for doing restructuring, being part of executive teams
Speaker 2: that put not so good order into order, and that
Speaker 2: was what I joined the board for. And within thirteen
Speaker 2: we changed an executive team. I think Vestors a great company,
Speaker 2: but probably needed a bit of a stop and go
Speaker 2: and reset when you do a turnaround. From that, since then,
Speaker 2: executive management and board investors have always been more like
Speaker 2: one team. No filters, what is good, what is bad?
Speaker 2: Get six change between board and an executive team, and
Speaker 2: I think that has been one of the strength in
Speaker 2: also considering what we have now gone through in recent times,
Speaker 2: that we find a solution, we all commit to it
Speaker 2: and then we give management the time to execute. So
Speaker 2: that was my part, and I always loved working in
Speaker 2: global companies and you probably can't find a more global
Speaker 2: company than Vestus.
Speaker 1: Well. Also, you would expect an exciting industry right the
Speaker 1: world is behind on its clean energy goals and by
Speaker 1: a big margin, and you would expect renewable energy companies
Speaker 1: right now would be going through a boom, but instead
Speaker 1: the wind industry has had big problems in recent years,
Speaker 1: especially around profitability, which is required if you want to
Speaker 1: scale this industry as much as we need it. As
Speaker 1: one of the largest wind turbine makers in the world,
Speaker 1: if not the largest, you've had a front row seat
Speaker 1: at this saga. When did you first think things had
Speaker 1: started to sour and why?
Speaker 2: I think from an industry point of view, I think
Speaker 2: the industry is still developing into a maturing industry. I
Speaker 2: think in some of our key markets we are still
Speaker 2: relatively immature, and you can take the offshore as another
Speaker 2: part of a market that is about too mature. We're
Speaker 2: building scale and as long as there is not that maturity,
Speaker 2: then you always will fight around the next project. What
Speaker 2: started with the cod and the Old Sous crisis and
Speaker 2: the lockdown of the global community, those bottlenecks in supply
Speaker 2: chain probably show an industry very strongly that there is
Speaker 2: no easy target and there is no easy fix to
Speaker 2: your backlog, and that we can see today it has
Speaker 2: questioned also the survival of some of the companies within
Speaker 2: the wind industry, and that's what happens in the last
Speaker 2: eight to ten years. Companies have come into troubles and disappeared.
Speaker 1: So to be able to understand the troubles, let's just
Speaker 1: talk through what's a little weird about renewable energy industry
Speaker 1: in general, but wind industry specifically, is that most wind
Speaker 1: farms even today are built by developers who sign long
Speaker 1: term contracts generate electricity at a fixed price, and it
Speaker 1: takes a few years before the wind farm is actually built,
Speaker 1: and things can change in that period. Of course, what
Speaker 1: you're hinting at is you had inflation, you had high
Speaker 1: interest rates, and that caused you as a wind turbine maker,
Speaker 1: but also developers to just have a much higher bill
Speaker 1: to build the wind turbines and the wind farm, but
Speaker 1: then they still had to sell the electricity at a
Speaker 1: fixed price. Is there a way to fix this problem,
Speaker 1: which is to renegotiate contracts when things change, and have
Speaker 1: you tried to do that? Yes?
Speaker 2: I think one of the things we always appreciate is
Speaker 2: it's a solution that generates green electricity, which we all
Speaker 2: want more for the next thirty years. But as you're
Speaker 2: also pointing to and alluding to it, it doesn't come overnight.
Speaker 2: So typically in an auDA backlog industry like hours, we
Speaker 2: get to a customer developer, we see the permitting and
Speaker 2: planning often goes on many years before you actually get
Speaker 2: to the final So when you have the permitting, then
Speaker 2: you try to apply for the project organization and you
Speaker 2: get a binding offer from us, and then from a
Speaker 2: binding offer to a full finance project and here comes
Speaker 2: to thing. Sometimes you have to appreciate that the product
Speaker 2: goes into an auction where you then with the government
Speaker 2: agree on an electricity price for the coming ten twenty years.
Speaker 2: You sometimes in countries say, yep, I now have a
Speaker 2: great access and permitting and that means I can now
Speaker 2: sell my electricity to a private company or anyone who
Speaker 2: wants to secure the green electricity. The ramp up until
Speaker 2: you have the first killer water hour generated from the
Speaker 2: turbine solution is in many cases two or three years,
Speaker 2: and it's in those two or three years, of course
Speaker 2: vestors and the customer that our developer is exposed to
Speaker 2: the year volatility, and the world saw volatility like the
Speaker 2: world have never seen. Between end of twenty nineteen and
Speaker 2: probably to around mid year twenty three, that was where
Speaker 2: the society was open again, and we could see that
Speaker 2: the backlock of bottlenecks in the supply chain took one
Speaker 2: or two quarters to ease as well. So by end
Speaker 2: of twenty three we seem to be back to a
Speaker 2: society we can recognize that sat before twenty twenty.
Speaker 1: But those kinds of things might happen in the future.
Speaker 1: You know, we're going into a period where not just
Speaker 1: climate change, but there are all sorts of other crises
Speaker 1: in the world geopolitics that could bring another period of
Speaker 1: this kind. Is there a permanent solution to deal with
Speaker 1: it or are we stuck with the old way of
Speaker 1: doing business, which is have these long term contracts and
Speaker 1: then just deal with losses as you might have to make.
Speaker 2: Sometimes I think the world has become a lot wiser
Speaker 2: and probably also trusting each other, at least from our industry.
Speaker 2: I generally meet most of our customers and partners around
Speaker 2: the world, and I haven't met anyone who says we
Speaker 2: will actually will actually be missing vestors if you were
Speaker 2: not there. And therefore, of course for that reason, I
Speaker 2: think it's fair that we spent a lot of time
Speaker 2: in generally understanding where is it we have our risk,
Speaker 2: and where is it we add the value and how
Speaker 2: do we create that respectful partnership and contractual obligations so
Speaker 2: we avoid having a situation where in reality in twenty
Speaker 2: two we lost one point two or one point six
Speaker 2: billion euros and by putting up thirty years renewable solution,
Speaker 2: it's not great. So I think that we have learned,
Speaker 2: and I think the parallel work tracks today as a
Speaker 2: developer is that you work in parallel with the permitting,
Speaker 2: You work in parallel with your partner in the turbine solution,
Speaker 2: and you work in parallel with your financing partners, which
Speaker 2: means you are literally concluding on the parallel tracks within
Speaker 2: one or two.
Speaker 1: Months after the break. I ask Henrik whether there is
Speaker 1: a solution to the wind industry's long running woes. By
Speaker 1: the way, if you find zero informative and helpful, please
Speaker 1: do give us a rating and review on Apple Podcasts
Speaker 1: or Spotify. Thanks right now. This is capitalism one oh
Speaker 1: one right. Shareholders' perspective is that any big loss for
Speaker 1: any substantial period of time is a bad thing. But
Speaker 1: it is possible to convince shareholders to bear through some
Speaker 1: losses because in the future you'll get greater returns. I'm
Speaker 1: just going to pick two examples here. Just look at
Speaker 1: shareholders of Tesla for the first decade of its existence,
Speaker 1: or look at the shareholders of shale oil and gas
Speaker 1: companies in the US. Wall Street absorbed those losses with
Speaker 1: gritted teeth. Nobody was happy, But having done that, they
Speaker 1: are now seeing the profits. So why is it that
Speaker 1: you couldn't convince your shareholders that, look, this is an
Speaker 1: industry that has a big future. Bear through the losses.
Speaker 1: It will be worth.
Speaker 2: It to some extent. I think shareholders will support you
Speaker 2: through difficult times if you communicate that there is a
Speaker 2: current status of where you are, but there's no shareholders
Speaker 2: that will support you. If you're not able to pick
Speaker 2: a pretty clear track of where is it you're going
Speaker 2: to be in two or three years from now. And
Speaker 2: I think that is probably one of the things I
Speaker 2: appreciate most Throughout these difficult years. We have been able
Speaker 2: to carry most of our top twenty five shareholders with us,
Speaker 2: and they of course welcome today that we stock to
Speaker 2: the plan. And the plan, by the way, worked, so
Speaker 2: I wouldn't necessarily say that yearholders won't support you, but
Speaker 2: I think it's important when you ask for a shareholder support,
Speaker 2: for instance, of an understanding of losing one point six
Speaker 2: billion that I've met no shareholders that didn't ask me,
Speaker 2: so when is it going to stop? What are you
Speaker 2: doing about it? And what prevents you from ending there
Speaker 2: again in the future. And I think that's the positive
Speaker 2: of where we are today. The plan worked, and of
Speaker 2: course it is nice to sit with scheerholders today and
Speaker 2: saying we're safely back in profit. But it's also now
Speaker 2: start stage two because now we need to repay the
Speaker 2: one point six billion we're born in twenty two from shareholders,
Speaker 2: and that I'm adamant that we will also do.
Speaker 1: So.
Speaker 2: I think you're right. You create transparency, you avoid the
Speaker 2: fields that gives seerholders confidence. There's nothing not to like
Speaker 2: the industry maturity and the lack of discipline is probably
Speaker 2: what we'll question shareholders and also force shareholders to do
Speaker 2: their individual both stock and leadership pick.
Speaker 1: But you also said, in this world, what the world
Speaker 1: wants is clean energy and winterbines to make it, they
Speaker 1: won't miss vest as if vesters are not making them.
Speaker 1: But of course you have turned a corner and now
Speaker 1: you are profitable again, but your competitors take semens or
Speaker 1: g they're still losing money. Does that make you happy
Speaker 1: or do you see that to be a problem given
Speaker 1: the industry as a whole does require more than one
Speaker 1: supplier for it to actually have the reliability to deal
Speaker 1: with what's going to be a big industry as it grows.
Speaker 2: Yeah, I think whenever you look at industries, they'll always
Speaker 2: be industries where you will have different cycles. Often comes
Speaker 2: by either change in management or different management approaches, or
Speaker 2: different sizes of the business. We are late comer in
Speaker 2: to offshore. We offshore business bag in in of twenty
Speaker 2: when the world was almost close fully down, and I
Speaker 2: think that's a testament of strengths of what we are
Speaker 2: and how we operate vestas. So I think companies will
Speaker 2: choose differently to their discipline, and we shouldn't forget to
Speaker 2: talk about the customers. The customers still want more of
Speaker 2: the solutions, and I think the governments of course want
Speaker 2: more of the solution because they want to come closer
Speaker 2: to their COEO two neutral targets, and they also for
Speaker 2: other reasons today they also want to have a energy
Speaker 2: independence and they want to build a more national endy supply,
Speaker 2: which of course speaks highly for the turbine solutions.
Speaker 1: So there are things that companies can do to make
Speaker 1: sure that there are efficiencies. There's the right management, there's
Speaker 1: the right vision, there's the right execution. But then there
Speaker 1: are things that are outside your control which also make
Speaker 1: a material impact on the industry. Just take the example
Speaker 1: of what happened here in the UK where an auction
Speaker 1: for your wind was run last year and no bids
Speaker 1: came in because the price was too low. Government had
Speaker 1: to learn from it, go back to the board and
Speaker 1: this year they've committed to a higher price than last year.
Speaker 1: In November twenty twenty two, in a Bloomberg interview, you
Speaker 1: said some people made the wrong assumption that energy and
Speaker 1: electricity should become free. We created that perception to some extent,
Speaker 1: so we are to blame for it. That was a mistake.
Speaker 1: Do you still stand by that observation that the renewable
Speaker 1: energy industry made a mistake of promising ever following electricity prices.
Speaker 2: It's not something that is going away easily overnight. And
Speaker 2: I think the language still reflects it in many ways
Speaker 2: because when we talk about the electricity coming from either
Speaker 2: offshore solutions, the government always labeled it as subsidy. Interestingly enough,
Speaker 2: that represents a market price for you and I as
Speaker 2: consumers that are substantially higher. Maybe we should stop talking
Speaker 2: about a subsidy because you and I we pay price
Speaker 2: plus the VAT pros, the transmission plus all the other things.
Speaker 2: But the base price coming from the turbine is not
Speaker 2: a subsidy. It's actually a penalty to the developer that
Speaker 2: are building it because the market price is substantially higher.
Speaker 2: So we should stop talking about it as a subsidy,
Speaker 2: because if we treat it and talk about it as
Speaker 2: a subsidy, we assume that it starts from zero, and
Speaker 2: electricity from a wind turbine is not cost zero. You
Speaker 2: need to build and you develop a technology, you construct
Speaker 2: it and you maintain it for thirty years and it
Speaker 2: is not zero cost, and there are no desperate companies
Speaker 2: that would take that chance to build something and give
Speaker 2: the electricity for free to the government.
Speaker 1: Well, let's break that down. So the CFD, the nice
Speaker 1: thing about it is that it's a contracted price for
Speaker 1: the long term. In the subsidy from the government side
Speaker 1: is basically missing you. Regardless of what the market price
Speaker 1: for electricity will be. The government will ensure that you
Speaker 1: get at least forty four pounds per megawat are, which
Speaker 1: is what the industry said it's not profitable. So now
Speaker 1: they're coming back and they're saying, well, we'll give you
Speaker 1: seventy one pounds per magowatar. Please bring in the bids
Speaker 1: and maybe this year. There's already noises showing there will
Speaker 1: be bids because the price may be right this time.
Speaker 1: But the subsidy part is real because they're committing to
Speaker 1: a fixed price plus inflation in that long term, right
Speaker 1: years to come. So why do you think it should
Speaker 1: not be a subsidy.
Speaker 2: No, I think we should just talk about it as
Speaker 2: a price of electricity rather than a subsidy, because if
Speaker 2: you call it a subsidy. It gets a expression that
Speaker 2: immediately in our ears to our brain tells us that
Speaker 2: this is something that somebody else paying for, and it's
Speaker 2: not a subsidy.
Speaker 1: You don't want to call it subsidy, But that is
Speaker 1: only being called because it's committing to a fixed price
Speaker 1: for the long term and the government is involved. Are
Speaker 1: you saying we are at that place now where pays
Speaker 1: the market price because we understand we wind industry can
Speaker 1: now produce electricity at a cheaper price than other alternatives,
Speaker 1: and we will provide that and we will actually profit
Speaker 1: from being market players. We don't want these contracts for differences,
Speaker 1: these long term contracts. Just let us be pure market players.
Speaker 2: I can show you the levelized cost of energy comparison
Speaker 2: of against cold fossil gas, nuclear. We can show that
Speaker 2: levelized cost of energy across country continents, and we can
Speaker 2: show there is no cheaper alternative than to build renewable
Speaker 2: So therefore, let's talk about the price of building new
Speaker 2: entity sources and exploring new enity sources. Then just talk
Speaker 2: about subsidies. So I think here we can happily conclude
Speaker 2: and I will quote and no name politicians in the
Speaker 2: UK who said it's really interesting now that ramping up
Speaker 2: the capacity within renewable it is cheaper to save the
Speaker 2: planet than it is to destroy it. And that's a
Speaker 2: pretty pretty cool way of playing with levelized cost of
Speaker 2: energy in saying this is what we want to achieve,
Speaker 2: and actually we can say money in doing it. Hey,
Speaker 2: what's not to lie?
Speaker 1: Well, I'll take a compliment that you quoted my book
Speaker 1: to me. But going back to it, are you saying
Speaker 1: no long term contracts are needed now and the wind
Speaker 1: industry can just be a market player like the gas
Speaker 1: power plant industry is.
Speaker 2: I don't know if we're saying it shouldn't be long
Speaker 2: term contracts. I don't think anyone either fear or require
Speaker 2: short or long term contracts. I think the merchant market
Speaker 2: works well because we are also developing technologies that makes
Speaker 2: the requirement or the storage opportunities, for instance, of electricity.
Speaker 2: So the storage opportunities of electricity is substantially different today
Speaker 2: than it was ten years ago. In twenty ten, the
Speaker 2: turbine reality required some of the support in ninety nine
Speaker 2: of the global markets. Today it's less than one percent
Speaker 2: of the global markets where you required.
Speaker 1: Now looking at the history of wind turbines few people
Speaker 1: would know. But even today turbine manufacturing is kind of
Speaker 1: a bootique industry, and that's not the case with solar
Speaker 1: or batteries, for example, where if you walk through the
Speaker 1: industry making them, there's so much automation. There's just robots everywhere.
Speaker 1: So in your industry, what are the innovations that you've
Speaker 1: seen in manufacturing and in technology that will help make
Speaker 1: wind turbines even cheaper.
Speaker 2: First of all, part of it is the ramping of
Speaker 2: turbines and the parts of a turbine, whether it's the
Speaker 2: blades or it's the nasil and other things, and there
Speaker 2: are still so many things where it has to be manual,
Speaker 2: and I don't think any future soon changes that because
Speaker 2: there are parts of this where we are also now
Speaker 2: embarking in dimensions where the small weak point in a
Speaker 2: blade that is one hundred and sixteen meter makes a
Speaker 2: blade either crack or being under that load. It's substantial
Speaker 2: a challenge and sometimes compare a little bit between industries.
Speaker 2: The Formula one cars are designed to run maximum two
Speaker 2: hours and then three hundred kilometers an hour, but a
Speaker 2: turbine is designed for thirty years and the tip speed
Speaker 2: of a turbine is often in exist of three hundred
Speaker 2: kilometers an hour, and they are out there and have
Speaker 2: to be designed for that. So the load and the
Speaker 2: pressure on some of these assets enormous, which I also
Speaker 2: think is probably also why you will find still so
Speaker 2: many hand carried things. But that doesn't mean that when
Speaker 2: you do the first prototype and you see their turnover
Speaker 2: time on either blades, on our selves, we are able
Speaker 2: to bring that quite far down over a industrialization of
Speaker 2: the process, So that's positive. So instead of only focusing
Speaker 2: on the direct employee here, Yes, it will be nice
Speaker 2: to do some uptimization. Tried many parts of bulls. We
Speaker 2: won't stop innovating on it.
Speaker 1: And what about technology innovation in making turbines bigger, more
Speaker 1: efficient and the streaper.
Speaker 2: Yeah, I think that's how we do the levelized cost
Speaker 2: of entity down and we haven't stopped doing that. In
Speaker 2: the last few years. We put up a new prototype
Speaker 2: for offshore that is now a fifteen megawater, and our
Speaker 2: previous largest turbine was a ten megawat, so that's a
Speaker 2: much bigger one. I know industry players had maybe at
Speaker 2: twelve or a thirteen megawatt turbine, so I think the
Speaker 2: industry is constant changing, So now we will start talking
Speaker 2: about what is in grid and what is potentially off
Speaker 2: grid as solutions as well.
Speaker 1: Now, one of the reasons why you've been able to
Speaker 1: turn a corner is your order book has grown and
Speaker 1: has exploded in the last year. Of course, it's on
Speaker 1: the back of a lot of governments that are still
Speaker 1: behind on their targets. I mean, if you just look
Speaker 1: at Europe, by twenty thirty, Europe wants to build more
Speaker 1: than one hundred gig awards of offshore wind. In the past,
Speaker 1: when governments set those targets, they actually were underestimating and
Speaker 1: the renewable energy industry was able to over deliver. But
Speaker 1: now do you think governments are setting targets that are
Speaker 1: just too ambitious and the industry won't be able to deliver.
Speaker 2: Yeah, no, I think that the say and they do
Speaker 2: gap unfortunately seem to widen rather than to narrowing in
Speaker 2: the past couple of years. And I don't think voters
Speaker 2: anymore will not have climate or for that match the
Speaker 2: progress in energy as one of the key topics. So
Speaker 2: therefore politicians are of course up for reelection, and most
Speaker 2: politicians want to be re elected. And that's also why
Speaker 2: you often see that target setting gets a little bit
Speaker 2: of a kickoffwards every time you're in election mode, because
Speaker 2: if you take the targets in EU, in the last
Speaker 2: couple of years, we have had target setting that indicated
Speaker 2: we should put up more than first GIGABO, and in
Speaker 2: reality we have done just around half. We won't get
Speaker 2: to carbon neutrality by fooling each other with targets that
Speaker 2: are not being fulfilled. That I know the word green washing,
Speaker 2: and no one wants to hear it, but please let
Speaker 2: us not do that. I know one of the countries
Speaker 2: I probably in the past have always given a little
Speaker 2: bit of a hard time, which is Germany. The German
Speaker 2: government has changed gear dramatically within the last eighteen months.
Speaker 2: New government came in. They saw an energy dependence suddenly
Speaker 2: becoming overly towards a gas from the east. They retired
Speaker 2: nuclear without necessarily having exactly the resources available. But within
Speaker 2: eighteen months they have re established first of all access
Speaker 2: to terminals from liquid gas. And of course now they're
Speaker 2: building and permitting a renewable entity at a rate I've
Speaker 2: never seen before and I never thought was possible. And
Speaker 2: we came from something where they were doing less than
Speaker 2: a giga what a year, and when you now listen
Speaker 2: to the run rate, they are in excess of probably
Speaker 2: five giga wort this year. And that's something I would
Speaker 2: have said eighteen months ago, and now it's impossible they
Speaker 2: will not get to that. So, as I said, to
Speaker 2: every EU twenty six countries, with Germany as the good example,
Speaker 2: make a study trip to Germany and see how things
Speaker 2: could actually work when you consider that, yes it is
Speaker 2: in respect for the country, Yes it is in respect
Speaker 2: for also the society, but it also sometimes have to
Speaker 2: have that we do permitting at a faster pace.
Speaker 1: And this is something my colleague Will Matis and I
Speaker 1: have written about, which is that permitting has been a
Speaker 1: real issue, especially in Europe, but just generally around the world.
Speaker 1: I mean ten years required for permitting is not unheard of,
Speaker 1: which seems ridiculous. But now you're saying some governments are learning.
Speaker 1: Could you just talk through what are the things that
Speaker 1: the German government got right and what others should learn
Speaker 1: from what the Germans did?
Speaker 2: Yeah, and I think sometimes change comes out of that.
Speaker 2: You are getting into a difficult situation, so you are
Speaker 2: forced to do something radically because I think here, when
Speaker 2: you want to have access to energy, and you want
Speaker 2: to have and you're maybe even on the brink of saying,
Speaker 2: whoa if we potentially run the risk of not having
Speaker 2: electricity available, which is called blackout, and under those circumstances,
Speaker 2: you are actually threatening your own society, and that's where
Speaker 2: then the balance tips towards Hey, now we need to
Speaker 2: find that solution. And the good thing in Germany is
Speaker 2: they have united the delegated local regional state with central government,
Speaker 2: so there is not the central decentralized conflict that we
Speaker 2: still see in many many countries where you over the
Speaker 2: last couple of decades you decentralize the authority to mandate
Speaker 2: or permit any disaucing. And actually any disourcing for any
Speaker 2: country is a national matter, so you delegated to permitting
Speaker 2: regionally or locally to municipalities, but your innerity dependency is
Speaker 2: actually a national matter. So something has to give. I'm
Speaker 2: usually encouraged to see how Germany Man is getting things done.
Speaker 1: Now we are going into a year with a ton
Speaker 1: of elections. Let's just talk about two of them this year,
Speaker 1: which is the US, and then one next year, which
Speaker 1: is Australia. And I bring those up because you've got
Speaker 1: a big order book from US and Australia. What happens
Speaker 1: if you get the Republican Party coming into power in
Speaker 1: the US and then next year the Liberals in Australia,
Speaker 1: both of them not particularly interested in climate goals. Maybe
Speaker 1: they're interested in energy as long as it's cheap. But
Speaker 1: do you think you'll have again those external factors weighing
Speaker 1: down on an industry that's just back to its state
Speaker 1: of growing at the rate needs to.
Speaker 2: There's always a risk for that. There's always a risk
Speaker 2: for what comes in an election. And I also think
Speaker 2: there are some factual positives in the track we on
Speaker 2: for the world, because I think the world is aligning
Speaker 2: more and more about getting proper things done. And if
Speaker 2: we go into the US, it is fair saying that
Speaker 2: the US has contributed positively today. It's called IRA because
Speaker 2: it's a bigger package of many things that got rolled
Speaker 2: in as renewable energy, which.
Speaker 1: Tax credits to build lots and lots of solar and wind.
Speaker 2: It is meaning that you and I, if we were
Speaker 2: living in the US, we would on average have a
Speaker 2: more stable electricity price at a much lower level than
Speaker 2: we will be experienced here in Europe. So you've actually
Speaker 2: gained a huge thing. And if you go to Australia,
Speaker 2: there is an approximately further giga of coal fired one
Speaker 2: way or the other power plants in Australia. They have,
Speaker 2: for obvious reason now set out attract to at least
Speaker 2: start planning and retiring that. I think it's maybe more
Speaker 2: a question around will it be with a different pace.
Speaker 2: But for somebody to say we will just replace ferty
Speaker 2: giga of coal fired power plants within six or seven
Speaker 2: years is also an enormous steep curve. So maybe in
Speaker 2: their election, I hope the topic to be discussed and
Speaker 2: agreed on would rather be that the Parliament in the
Speaker 2: election would agree on whomever wins will get the transition
Speaker 2: done at a speed that is more the likely of the.
Speaker 1: Actual One thing you mentioned was the conversation between the
Speaker 1: industry and the UK government that allowed you to come
Speaker 1: to a new place, a reset, so to speak. If
Speaker 1: you look at another part of the energy industry, the
Speaker 1: oil and gas industry, they've been very powerful in coming
Speaker 1: together lobbying for outcomes that they want. Do you think
Speaker 1: the renewable energy industry as a whole as industry groups
Speaker 1: is strong enough to make clear what its demands are
Speaker 1: for building out all this clean energy.
Speaker 2: First of all, no is the right answer, because I
Speaker 2: think too often we end up being either non representative
Speaker 2: as an industry group. But I also think that comes
Speaker 2: a little bit back to come on, we in the
Speaker 2: early stage timing wise, of scratching the surface, you portrayed
Speaker 2: it nicely. I mean we just come into out of
Speaker 2: the first decade where we actually become a competitive alternative.
Speaker 2: If we look at the energy demands and supply cycle
Speaker 2: of the world, when energy is still one and a
Speaker 2: half percent of the total energy supply, but as the
Speaker 2: electrification increases, it's obvious that we will have a more
Speaker 2: vocal voice and probably become a more mature industry. And
Speaker 2: part of that is also that we will see a
Speaker 2: further consolidation of fewer players in the industry, and I
Speaker 2: think we are getting and we are fast approaching that,
Speaker 2: and that will probably raise what you're calling a little
Speaker 2: bit more. The insight too, that you don't have to
Speaker 2: speak to many people, but you speak to a fewer
Speaker 2: that can then get things done. Because it's not rocket
Speaker 2: science to sit down and talk about what it takes
Speaker 2: to get things built out.
Speaker 1: Now that you've made vest as profitable, are you going
Speaker 1: to quit now? Never?
Speaker 2: For me, I have two daughters at twenty one and
Speaker 2: twenty four. That will be too easy, as they say,
Speaker 2: but it's a big milestone to get back. There's no
Speaker 2: fun in working in a company that is not making
Speaker 2: any money. The real journey starts now. This has been
Speaker 2: two mots of emergency cure and trying to get it
Speaker 2: back now also starts part of it. How do we
Speaker 2: build the foundation to get vestors to the performance that
Speaker 2: is reasonable for a company of our nature so far,
Speaker 2: if I have the choice, I will continue for some
Speaker 2: years yet to come.
Speaker 1: Thank you, Hendrick, You're welcome, Thanks for having Thank you
Speaker 1: for listening to Zero. If you liked this episode, please
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Speaker 1: are michy Le Rao, Magnus Hendrickson, and Somersadi. Our theme
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Speaker 1: and will mathis I am Akshatrati back soon