1 00:00:00,560 --> 00:00:03,520 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:04,040 --> 00:00:08,320 Speaker 1: the BNF podcast. It's been a year of dramatic headlines 3 00:00:08,360 --> 00:00:11,760 Speaker 1: for the clean energy industry, with tariffs, trade wars, and 4 00:00:11,880 --> 00:00:15,120 Speaker 1: major cuts to subsidies and credits in the US, all 5 00:00:15,240 --> 00:00:19,400 Speaker 1: seemingly undermining the energy transition. So you might be surprised 6 00:00:19,440 --> 00:00:23,000 Speaker 1: to hear it that energy transition investment is still rising. 7 00:00:23,320 --> 00:00:27,360 Speaker 1: Renewable energy projects attracted three hundred and eighty six billion 8 00:00:27,440 --> 00:00:30,280 Speaker 1: dollars during the first half of this year, a jump 9 00:00:30,320 --> 00:00:33,760 Speaker 1: of ten percent from the same period in twenty twenty four. 10 00:00:34,360 --> 00:00:37,680 Speaker 1: Solar investment keeps growing, and despite some major hurdles in 11 00:00:37,720 --> 00:00:41,479 Speaker 1: the US, global wind investment hit its second highest figure 12 00:00:41,600 --> 00:00:44,479 Speaker 1: on record. But the devil, as they say, is always 13 00:00:44,520 --> 00:00:48,120 Speaker 1: in the details. Fortunately, here at BNF we like to 14 00:00:48,159 --> 00:00:51,160 Speaker 1: look at the details, so we took a granular level 15 00:00:51,200 --> 00:00:54,920 Speaker 1: look at the capital flows behind the headline figures. The 16 00:00:55,040 --> 00:00:58,279 Speaker 1: year so far has seen some fascinating shifts in investment 17 00:00:58,320 --> 00:01:02,920 Speaker 1: trends in different regions and technologies. For example, while solar 18 00:01:02,960 --> 00:01:06,120 Speaker 1: investment as a whole continued to grow, asset finance for 19 00:01:06,280 --> 00:01:09,920 Speaker 1: utility scale solar actually fell by twenty two percent when 20 00:01:09,920 --> 00:01:12,360 Speaker 1: compared to the first half of twenty twenty four. This 21 00:01:12,560 --> 00:01:16,880 Speaker 1: was fueled by concerns over curtailment and price cannibalization. While 22 00:01:16,920 --> 00:01:19,560 Speaker 1: the investment landscape in the US has become more turbulent, 23 00:01:19,720 --> 00:01:23,679 Speaker 1: European renewable energy investment figures are booming, So could a 24 00:01:23,840 --> 00:01:28,120 Speaker 1: transatlantic relocation of capital be on the horizon. Today I 25 00:01:28,160 --> 00:01:31,959 Speaker 1: am joined by BNF's head of Clean Power, Meredith Annex, 26 00:01:32,200 --> 00:01:35,600 Speaker 1: and we discuss findings from her team's research. Note two 27 00:01:35,800 --> 00:01:40,160 Speaker 1: h twenty twenty five. Renewable Energy Investment Tracker record high. 28 00:01:40,440 --> 00:01:43,080 Speaker 1: BNAF clients can find it at BNF go on the 29 00:01:43,120 --> 00:01:46,720 Speaker 1: Bloomberg terminal or BNF dot com. All right, let's get 30 00:01:46,760 --> 00:01:50,280 Speaker 1: to talking about the global landscape for renewable energy investment 31 00:01:50,520 --> 00:02:03,200 Speaker 1: with Meredith. Meredith, thank you for coming on the show. 32 00:02:03,440 --> 00:02:04,880 Speaker 2: Thank you so much for having me. Dana. 33 00:02:05,160 --> 00:02:08,359 Speaker 1: We're talking about the Renewable Energy Investment Tracker today and 34 00:02:08,600 --> 00:02:11,880 Speaker 1: when looking at this piece of research, it really takes 35 00:02:11,919 --> 00:02:15,360 Speaker 1: me back to bn EF's origin story, where you know, 36 00:02:15,400 --> 00:02:17,280 Speaker 1: a lot of what we were focused on as a 37 00:02:17,320 --> 00:02:21,160 Speaker 1: business was tracking the investment in and then the installations 38 00:02:21,240 --> 00:02:24,760 Speaker 1: of renewable energy around the world, and a lot of 39 00:02:24,760 --> 00:02:28,320 Speaker 1: the discussion about renewable energy has been about the economics 40 00:02:28,320 --> 00:02:31,840 Speaker 1: of it invariably, but it's not all new technologies. There 41 00:02:31,840 --> 00:02:34,720 Speaker 1: are some very established technologies in this space which we 42 00:02:34,800 --> 00:02:37,360 Speaker 1: will come to and in some respects in parts of 43 00:02:37,400 --> 00:02:41,320 Speaker 1: the world, this is about execution of known quantities understood 44 00:02:41,320 --> 00:02:46,160 Speaker 1: capacity factors in certain locations. So why is tracking renewable 45 00:02:46,240 --> 00:02:48,760 Speaker 1: energy investment around the world important? 46 00:02:49,200 --> 00:02:53,440 Speaker 2: Asley This is one of our original reports as a company. Actually, 47 00:02:53,480 --> 00:02:55,600 Speaker 2: we have been tracking the substance two thousand and four 48 00:02:55,639 --> 00:02:58,239 Speaker 2: when we were founded, So you're not wrong. This is 49 00:02:58,320 --> 00:03:01,040 Speaker 2: something we've done for very, very long time. I think 50 00:03:01,080 --> 00:03:03,400 Speaker 2: that length of time that we've been doing it really 51 00:03:03,440 --> 00:03:05,360 Speaker 2: adds to its value. The fact that we can be 52 00:03:05,480 --> 00:03:09,239 Speaker 2: showing over all of these years, how the industry is changing, 53 00:03:09,240 --> 00:03:13,000 Speaker 2: how it's evolving, what's becoming the new normal, is incredibly powerful. 54 00:03:13,120 --> 00:03:15,200 Speaker 2: I'd also say that what BEATF does well is we 55 00:03:15,280 --> 00:03:18,560 Speaker 2: track things, We put numbers on things, and financing is 56 00:03:18,560 --> 00:03:21,239 Speaker 2: a leading indicator of where the industry's going. Anything that's 57 00:03:21,280 --> 00:03:24,520 Speaker 2: getting financial commitments today, it's in theory going to get 58 00:03:24,560 --> 00:03:26,119 Speaker 2: built in the next couple of years. So it gives 59 00:03:26,120 --> 00:03:28,040 Speaker 2: you an indication are we heading up or we're heading down, 60 00:03:28,200 --> 00:03:31,200 Speaker 2: how confident our investors feeling, how confident our developer's feeling, 61 00:03:31,480 --> 00:03:35,400 Speaker 2: and tracking this has become more complicated as the sector 62 00:03:35,480 --> 00:03:36,360 Speaker 2: is matured. 63 00:03:36,160 --> 00:03:36,760 Speaker 1: Not less. 64 00:03:37,040 --> 00:03:38,880 Speaker 2: Back in the day, a new solar project or a 65 00:03:38,920 --> 00:03:41,800 Speaker 2: new entra wind project that was big news. It got headline, 66 00:03:41,800 --> 00:03:44,520 Speaker 2: press releases, everyone trying to make a splash. Nowadays as 67 00:03:44,520 --> 00:03:46,520 Speaker 2: business as usual, so you might not even announce it. 68 00:03:46,800 --> 00:03:50,560 Speaker 2: So us finding that data, finding any disclosure that's out there, 69 00:03:50,880 --> 00:03:53,880 Speaker 2: learning what's not being disclosed as well, and trying to 70 00:03:53,880 --> 00:03:55,960 Speaker 2: put estimations around that is a huge part of the 71 00:03:56,000 --> 00:03:56,960 Speaker 2: value add we have as a. 72 00:03:56,960 --> 00:04:00,800 Speaker 1: Business now when looking at renewable energy. Different ways that 73 00:04:00,840 --> 00:04:03,080 Speaker 1: we can look at these numbers. So one is the 74 00:04:03,160 --> 00:04:07,440 Speaker 1: numbers themselves are showing record breaking volumes, but as the 75 00:04:07,520 --> 00:04:13,040 Speaker 1: industry matures, the growth and the percentage of increase certainly changes. 76 00:04:13,400 --> 00:04:15,760 Speaker 1: Where are we at within this, because you know, one 77 00:04:15,760 --> 00:04:18,599 Speaker 1: of the headline takeaways is that the first half of 78 00:04:18,640 --> 00:04:21,560 Speaker 1: twenty twenty five there was a record volume of investment 79 00:04:21,600 --> 00:04:25,120 Speaker 1: into renewables. What do you think is more important to 80 00:04:25,279 --> 00:04:28,480 Speaker 1: evaluate during this round of the tracker? Is it the 81 00:04:28,600 --> 00:04:31,760 Speaker 1: aggregate numbers or is it that percentage of growth I think. 82 00:04:31,600 --> 00:04:35,520 Speaker 2: The aggregate number is actually really exciting. So we saw 83 00:04:35,720 --> 00:04:38,800 Speaker 2: three hundred and eighty six billion of investment on the 84 00:04:38,800 --> 00:04:41,080 Speaker 2: first half of this year. It's up about ten percent 85 00:04:41,160 --> 00:04:43,440 Speaker 2: from the first half of last year, and it's only 86 00:04:43,520 --> 00:04:45,960 Speaker 2: slightly ahead of the second half of last year, but 87 00:04:46,000 --> 00:04:48,480 Speaker 2: that's pretty normal. Second half of the year usually gets 88 00:04:48,600 --> 00:04:50,680 Speaker 2: a higher value than the first half anyway, because people 89 00:04:50,760 --> 00:04:53,960 Speaker 2: kind of rush to finish budgets. Ultimately, that almost surprises 90 00:04:53,960 --> 00:04:55,880 Speaker 2: me because of some nuances that are going to come up. 91 00:04:56,000 --> 00:04:58,720 Speaker 2: But renewables is facing a bigger headwind now than they 92 00:04:58,720 --> 00:05:02,040 Speaker 2: ever have before in recent years. Right, it's kind of 93 00:05:02,120 --> 00:05:06,400 Speaker 2: been an easier story for renewables developments since twenty twenty 94 00:05:06,400 --> 00:05:09,360 Speaker 2: with the rise of net zero commitments globally, maybe twenty 95 00:05:09,440 --> 00:05:11,960 Speaker 2: nineteen as those things really start to take off. I 96 00:05:11,960 --> 00:05:13,880 Speaker 2: think we're now returning to a time where there's a 97 00:05:13,920 --> 00:05:17,200 Speaker 2: lot more scrutiny going into renewable energy investments, and so 98 00:05:17,600 --> 00:05:20,200 Speaker 2: in some ways we're seeing this number of this record 99 00:05:20,200 --> 00:05:22,240 Speaker 2: three hundred and eighty six billion, up ten percent from 100 00:05:22,240 --> 00:05:26,320 Speaker 2: the year before, was a very positive surprise. Now when 101 00:05:26,360 --> 00:05:28,480 Speaker 2: you dig into the details of it, it is too 102 00:05:28,560 --> 00:05:31,839 Speaker 2: stories here because the reason we saw records was from 103 00:05:32,200 --> 00:05:35,520 Speaker 2: not the traditional sources of investment. So usually when we 104 00:05:35,640 --> 00:05:39,200 Speaker 2: do this, utility scale solar and ontrawind are around two 105 00:05:39,279 --> 00:05:42,320 Speaker 2: thirds of the total money being spent on renewable energy, 106 00:05:42,360 --> 00:05:45,640 Speaker 2: whether that's from asset financing or consumer spend. This year 107 00:05:45,680 --> 00:05:47,000 Speaker 2: it was less than fifty percent. 108 00:05:47,360 --> 00:05:48,800 Speaker 1: So where else is it coming from? 109 00:05:49,160 --> 00:05:52,040 Speaker 2: So we saw thirteen percent drop in asset finance for 110 00:05:52,080 --> 00:05:54,720 Speaker 2: the utility scale solar and ontra wind. What we did 111 00:05:54,760 --> 00:05:57,880 Speaker 2: see was a growth in offstrawind and small scale solar. 112 00:05:58,040 --> 00:06:00,720 Speaker 2: So the offshore wind story, probably to some people by 113 00:06:00,760 --> 00:06:02,880 Speaker 2: surprise because the offshore wins having a pretty hard time 114 00:06:02,880 --> 00:06:03,279 Speaker 2: of things. 115 00:06:03,440 --> 00:06:06,440 Speaker 1: I mean, in the United States, it's definitely this kind 116 00:06:06,440 --> 00:06:10,000 Speaker 1: of icon of a failed renewable energy transition, or at 117 00:06:10,040 --> 00:06:12,760 Speaker 1: least that's how it's being presented. But in other parts 118 00:06:12,800 --> 00:06:15,120 Speaker 1: of the world you're seeing this to essentially be a 119 00:06:15,240 --> 00:06:16,000 Speaker 1: very different story. 120 00:06:16,080 --> 00:06:18,960 Speaker 2: Yeah, and absolutely there was no new investment in US 121 00:06:18,960 --> 00:06:22,520 Speaker 2: offshore win during this report, that's probably worth saying. But 122 00:06:22,560 --> 00:06:24,800 Speaker 2: what we are seeing is, first of all, offshore when 123 00:06:24,880 --> 00:06:28,240 Speaker 2: is it's a lumpy industry, right, you get these singular, 124 00:06:28,560 --> 00:06:31,720 Speaker 2: really big projects that become ready to finance at very 125 00:06:31,720 --> 00:06:34,720 Speaker 2: specific points in time when they cleared the auction at 126 00:06:34,760 --> 00:06:37,320 Speaker 2: the right point, when they have their revenue structure locked in, 127 00:06:37,400 --> 00:06:39,760 Speaker 2: or when they have their equipment signed something like that 128 00:06:39,839 --> 00:06:42,279 Speaker 2: signals it and you get the investment. And so that 129 00:06:42,360 --> 00:06:45,159 Speaker 2: means that it is prone to really really sizeable gaps. 130 00:06:45,200 --> 00:06:47,400 Speaker 2: We just happen to have a lot of assets in 131 00:06:47,480 --> 00:06:50,240 Speaker 2: this year versus last year that we're ready to finance 132 00:06:50,279 --> 00:06:52,720 Speaker 2: and ready to build, and took that decision. Now I 133 00:06:52,800 --> 00:06:55,880 Speaker 2: think that the twenty twenty four headwinds were real. You 134 00:06:55,960 --> 00:06:57,880 Speaker 2: did see a drop last year. The fact that we 135 00:06:57,920 --> 00:07:00,840 Speaker 2: got thirty nine point three billion invested this year, which 136 00:07:00,880 --> 00:07:03,000 Speaker 2: is more than was invested in the entirety of last 137 00:07:03,040 --> 00:07:05,080 Speaker 2: year already in the first half of this year's comes 138 00:07:05,120 --> 00:07:07,360 Speaker 2: down to a few things. It comes down to those projects, 139 00:07:07,360 --> 00:07:09,359 Speaker 2: as I said, just happened to be ready at that 140 00:07:09,400 --> 00:07:11,640 Speaker 2: point in time. It also does come down to the 141 00:07:11,680 --> 00:07:14,080 Speaker 2: rising costs that we're seeing for AUSHRA win. So you know, 142 00:07:14,120 --> 00:07:17,240 Speaker 2: but these are dollar values, not capacity values, so each 143 00:07:17,400 --> 00:07:20,320 Speaker 2: capacity being financed is costing a little bit more right now. 144 00:07:20,400 --> 00:07:22,680 Speaker 2: And the other big thing was in China, where for 145 00:07:22,720 --> 00:07:25,560 Speaker 2: a little while now we've been seeing disputes over seabed 146 00:07:25,720 --> 00:07:28,960 Speaker 2: use with the Chinese military. Those were slowing projects down, 147 00:07:29,040 --> 00:07:30,760 Speaker 2: leading to delays. We're starting to see some of those 148 00:07:30,760 --> 00:07:33,520 Speaker 2: projects moving again in certain regions, and so that meant 149 00:07:33,520 --> 00:07:35,840 Speaker 2: that we got a few more projects moving forward but 150 00:07:35,920 --> 00:07:37,640 Speaker 2: in China than we would have last year. 151 00:07:37,880 --> 00:07:40,520 Speaker 1: All of these renewable energy technologies need to be in 152 00:07:40,560 --> 00:07:44,400 Speaker 1: the right location. I get that, but geothermal has a 153 00:07:44,480 --> 00:07:47,880 Speaker 1: limited number of locations around the world where it can really, 154 00:07:48,160 --> 00:07:50,600 Speaker 1: you know, I guess, be producing at its best. That 155 00:07:50,720 --> 00:07:53,800 Speaker 1: was one of the technologies that actually had a pretty 156 00:07:54,120 --> 00:07:57,080 Speaker 1: large investment number this year on a relative basis compared 157 00:07:57,120 --> 00:07:59,960 Speaker 1: to previous years. What's going on in geothermal. 158 00:07:59,520 --> 00:08:02,080 Speaker 2: Still action of our total, But geothermal is close to 159 00:08:02,120 --> 00:08:04,720 Speaker 2: my heart. I used to lead that analysis within the 160 00:08:04,720 --> 00:08:08,280 Speaker 2: company at one point in time, and obviously my team 161 00:08:08,320 --> 00:08:12,960 Speaker 2: still analyzes geothermal regularly and manages that. I think conventional 162 00:08:12,960 --> 00:08:15,480 Speaker 2: geothermal what you said is correct, you need to have 163 00:08:15,600 --> 00:08:18,480 Speaker 2: a geothermal reservoir that you can tap into. The difference 164 00:08:18,520 --> 00:08:20,760 Speaker 2: here is that what we're starting to see is enhance 165 00:08:20,840 --> 00:08:24,720 Speaker 2: geothermal projects starting to move forward. This is a newer technology. 166 00:08:24,720 --> 00:08:27,960 Speaker 2: It's advanced. It allows you to do geothermal in a 167 00:08:27,960 --> 00:08:31,880 Speaker 2: lot more places using just the natural temperature under the 168 00:08:31,920 --> 00:08:35,640 Speaker 2: surface rather than a specific reservoir scheme that you're tapping into. 169 00:08:35,800 --> 00:08:37,800 Speaker 2: And so the investments that we saw this time around 170 00:08:37,800 --> 00:08:40,520 Speaker 2: were related to Cape Station, which is a fervo energy 171 00:08:40,559 --> 00:08:43,400 Speaker 2: project in the United States. A lot of this stuff 172 00:08:43,440 --> 00:08:46,000 Speaker 2: is coming from interest in California, so it could either 173 00:08:46,040 --> 00:08:48,840 Speaker 2: be data center related or California has a specific carve 174 00:08:48,880 --> 00:08:51,520 Speaker 2: out in its twenty thirty man dates that targets these 175 00:08:51,559 --> 00:08:54,320 Speaker 2: newer technologies like geothermal, and so you are seeing this 176 00:08:54,640 --> 00:08:58,040 Speaker 2: sweet spot. Geothermal is not caught on for power purchase 177 00:08:58,080 --> 00:09:01,400 Speaker 2: agreements to the same degree as nuclear has in the 178 00:09:01,520 --> 00:09:03,720 Speaker 2: recent months in the United States, where we're just seeing 179 00:09:03,720 --> 00:09:06,480 Speaker 2: tons of announcements whether or not they'll be real in 180 00:09:06,520 --> 00:09:09,000 Speaker 2: the long term coming out around nuclear, do you have 181 00:09:09,000 --> 00:09:11,839 Speaker 2: They're most kind of been like sidling along quietly in 182 00:09:11,880 --> 00:09:15,560 Speaker 2: the background, but ultimately probably delivering more than nuclear has. 183 00:09:15,840 --> 00:09:18,080 Speaker 1: So while it's a small percentage of the overall total, 184 00:09:18,120 --> 00:09:21,520 Speaker 1: when we're looking at renewable energy, it is whoa Essentially, 185 00:09:21,559 --> 00:09:24,960 Speaker 1: how these projects, these next projects go with this innovative 186 00:09:25,000 --> 00:09:28,520 Speaker 1: technology may mean that it has higher adoption or lower 187 00:09:28,559 --> 00:09:30,640 Speaker 1: depending upon how successful they are. 188 00:09:30,840 --> 00:09:34,600 Speaker 2: Absolutely, and in the meantime, when it's an early stage technology, 189 00:09:34,880 --> 00:09:36,760 Speaker 2: for every megaade, it's going to cost a lot more 190 00:09:36,920 --> 00:09:39,400 Speaker 2: because it's the first time you've done it, it's riskier. 191 00:09:39,600 --> 00:09:41,600 Speaker 2: Everything about that leads to a higher cost, and so 192 00:09:41,679 --> 00:09:43,680 Speaker 2: you will start to see it showing up even and 193 00:09:43,760 --> 00:09:46,640 Speaker 2: it's a small project making a real difference in those numbers. 194 00:09:46,800 --> 00:09:49,240 Speaker 1: And then you reference that this projects in the United States, 195 00:09:49,320 --> 00:09:52,000 Speaker 1: which then brings us to an elephant in the room, 196 00:09:52,040 --> 00:09:55,280 Speaker 1: if you will, where we did a show a couple 197 00:09:55,320 --> 00:09:58,319 Speaker 1: of weeks ago that was focused on the One Big, 198 00:09:58,360 --> 00:10:01,280 Speaker 1: Beautiful Bill Act, and and in there we are seeing 199 00:10:01,480 --> 00:10:05,120 Speaker 1: the cutting of subsidies and tax credits for clean energy 200 00:10:05,160 --> 00:10:08,080 Speaker 1: technologies in the United States. So when we start to 201 00:10:08,080 --> 00:10:10,720 Speaker 1: look at this as a regional picture, where does the 202 00:10:10,840 --> 00:10:13,880 Speaker 1: US fit now and kind of how do they stack 203 00:10:14,000 --> 00:10:17,880 Speaker 1: up against renewable energy adoption compared to the rest of 204 00:10:17,920 --> 00:10:21,960 Speaker 1: the world, Because one of them takeaways from that podcast 205 00:10:22,120 --> 00:10:24,680 Speaker 1: is that even though this is happening, there is a 206 00:10:24,840 --> 00:10:27,559 Speaker 1: very much nuanced view in the United States where if 207 00:10:27,559 --> 00:10:31,160 Speaker 1: you rewind the clock to before the Inflation Reduction Act, 208 00:10:31,360 --> 00:10:34,400 Speaker 1: in many respects, the United States is much further along 209 00:10:34,480 --> 00:10:37,199 Speaker 1: in this transition than it was before them, So it 210 00:10:37,280 --> 00:10:40,199 Speaker 1: may be one step back, but it's not two steps back. 211 00:10:40,520 --> 00:10:43,040 Speaker 2: That's another really interesting thing that this report shows. This 212 00:10:43,080 --> 00:10:46,760 Speaker 2: is the first hard numbers that we have on what 213 00:10:46,800 --> 00:10:49,960 Speaker 2: investors are thinking about in the United States since the 214 00:10:50,240 --> 00:10:54,040 Speaker 2: second Trap administration began, and it's very telling. So we 215 00:10:54,040 --> 00:10:57,040 Speaker 2: saw a thirty six percent drop in investments in the 216 00:10:57,160 --> 00:10:59,880 Speaker 2: United States compared to the first half of twenty twenty four. 217 00:11:00,080 --> 00:11:00,600 Speaker 1: That's stark. 218 00:11:00,880 --> 00:11:03,360 Speaker 2: It is stark, and there's a really really clear story 219 00:11:03,360 --> 00:11:06,479 Speaker 2: of what's going on. It's also not equal across technologies. 220 00:11:06,880 --> 00:11:09,400 Speaker 2: So the first thing is that we saw a rush 221 00:11:09,679 --> 00:11:12,400 Speaker 2: of financing at the end of last year. So twenty 222 00:11:12,480 --> 00:11:15,040 Speaker 2: twenty four second half of the year was a bit 223 00:11:15,120 --> 00:11:17,160 Speaker 2: higher than normal. I don't think it was the record, 224 00:11:17,160 --> 00:11:19,760 Speaker 2: but it was pretty high. And that was an indication 225 00:11:19,840 --> 00:11:24,000 Speaker 2: of after the elections, developers and financers trying to lock 226 00:11:24,120 --> 00:11:27,880 Speaker 2: in tax credits and safe harboring early before the next 227 00:11:27,920 --> 00:11:30,800 Speaker 2: administration came in to ensure that they were safe. So 228 00:11:30,920 --> 00:11:33,400 Speaker 2: any project that they had that was able to get 229 00:11:33,480 --> 00:11:36,559 Speaker 2: to the point of the five percent construction or capex 230 00:11:37,360 --> 00:11:40,200 Speaker 2: proof of point for tax credit, they got there in 231 00:11:40,240 --> 00:11:42,720 Speaker 2: this first half of this year. Then there were going 232 00:11:42,760 --> 00:11:44,680 Speaker 2: to be fewer projects that you would be moving forward. 233 00:11:44,720 --> 00:11:47,320 Speaker 2: There was more uncertainty as well. Not only did we 234 00:11:47,360 --> 00:11:51,000 Speaker 2: have threats to the tax credit structure from the budget process, 235 00:11:51,040 --> 00:11:54,520 Speaker 2: which ultimately led to the One Big Beautiful Bill Act 236 00:11:54,840 --> 00:11:57,920 Speaker 2: and an earlier revoking of those tax credits that we 237 00:11:57,920 --> 00:12:01,000 Speaker 2: would have otherwise. We've also had unser and te around tariffs. 238 00:12:01,000 --> 00:12:04,960 Speaker 2: We've had uncertainty around foreign entities of concern definitions and 239 00:12:05,000 --> 00:12:08,440 Speaker 2: how those will be accredited to receive tax credits. We've 240 00:12:08,440 --> 00:12:12,600 Speaker 2: had concerns around physical work requirements to receive the tax credits. 241 00:12:12,640 --> 00:12:14,320 Speaker 2: All sorts of things that have come up in the 242 00:12:14,320 --> 00:12:15,960 Speaker 2: first half of this year that led to that thirty 243 00:12:16,000 --> 00:12:19,080 Speaker 2: six percent drop relative to this time last year. But 244 00:12:19,120 --> 00:12:21,400 Speaker 2: when you look at it, that's mostly been on wind, 245 00:12:21,600 --> 00:12:25,040 Speaker 2: not solar, So actually solar investment was flat. It was 246 00:12:25,120 --> 00:12:27,280 Speaker 2: wind where we really saw this drop. And that's both 247 00:12:27,320 --> 00:12:30,800 Speaker 2: offshore obviously, as we already discussed, as well as an onshore. 248 00:12:31,240 --> 00:12:33,840 Speaker 2: Onshore ruin's a lot more sensitive in terms of its 249 00:12:33,880 --> 00:12:38,200 Speaker 2: economics to tax credits. It's very location specific because the 250 00:12:38,240 --> 00:12:42,520 Speaker 2: location sets the resource, which means moving your wind plans 251 00:12:42,559 --> 00:12:45,440 Speaker 2: a little bit can really change your expended capacity factor 252 00:12:45,559 --> 00:12:48,000 Speaker 2: and therefore your level is cost of electricity. The tax 253 00:12:48,040 --> 00:12:51,680 Speaker 2: credits help make more land available and possible for when development. 254 00:12:51,880 --> 00:12:53,840 Speaker 2: It also is harder to cite and permit and get 255 00:12:53,840 --> 00:12:57,280 Speaker 2: a great connection for because of that site specificity and 256 00:12:57,320 --> 00:13:00,760 Speaker 2: concentration of resource, and so there's just it's less easy 257 00:13:00,840 --> 00:13:03,600 Speaker 2: to bulk up the pipeline. Solar is a much easier 258 00:13:03,640 --> 00:13:06,040 Speaker 2: thing to do that for, and it's more sensitive in 259 00:13:06,080 --> 00:13:07,400 Speaker 2: terms of its break Even. 260 00:13:08,040 --> 00:13:11,839 Speaker 1: So you've seen this drop, it's impacted when disproportionately when 261 00:13:11,880 --> 00:13:14,520 Speaker 1: compared to solar. Do you expect in the second half 262 00:13:14,520 --> 00:13:16,880 Speaker 1: of this year? And it's time will tell, But do 263 00:13:16,920 --> 00:13:19,720 Speaker 1: you expect to see a further drop that may impact solar? 264 00:13:19,960 --> 00:13:24,160 Speaker 1: Or have we essentially seen the market reaction and now 265 00:13:24,200 --> 00:13:25,160 Speaker 1: we're in the new normal. 266 00:13:25,480 --> 00:13:29,040 Speaker 2: There's still so much uncertainty left in the US that 267 00:13:29,160 --> 00:13:31,240 Speaker 2: it really does depend on what comes out of that 268 00:13:31,320 --> 00:13:35,199 Speaker 2: and how much developers are willing to wade through it. So, 269 00:13:35,600 --> 00:13:38,840 Speaker 2: even though we know that the tax credits will be removed, 270 00:13:39,080 --> 00:13:42,520 Speaker 2: we do not know yet how the Treasury or the 271 00:13:42,559 --> 00:13:46,520 Speaker 2: IRS is going to weigh in eligibility. We're still waiting 272 00:13:46,559 --> 00:13:48,959 Speaker 2: on more guidance. There was some guidance that came out 273 00:13:49,000 --> 00:13:52,400 Speaker 2: in August after OBBBA, it wasn't nearly as bad as 274 00:13:52,440 --> 00:13:56,360 Speaker 2: the industry thought. That could restore some investor confidence. However, 275 00:13:56,400 --> 00:13:59,480 Speaker 2: it's incredibly likely that we're going to get more feedback 276 00:13:59,720 --> 00:14:03,920 Speaker 2: and guidances on how tax credits can be accrued coming up, 277 00:14:03,960 --> 00:14:05,840 Speaker 2: and that those might be worse than what people are 278 00:14:05,920 --> 00:14:07,960 Speaker 2: hoping for or expecting, and it might shift the other way. 279 00:14:08,160 --> 00:14:10,720 Speaker 2: So what really comes down to is there's a strong 280 00:14:10,800 --> 00:14:12,840 Speaker 2: need for electricity in the US right now. There's a 281 00:14:12,840 --> 00:14:16,040 Speaker 2: lot of demand out there, and our investors willing to 282 00:14:16,320 --> 00:14:19,120 Speaker 2: kind of ride that uncertainty, whether it's around terrorist or 283 00:14:19,120 --> 00:14:22,000 Speaker 2: tax credits, and still find those projects where they know 284 00:14:22,040 --> 00:14:24,600 Speaker 2: that demand can absorb that risk or can it not. 285 00:14:24,800 --> 00:14:27,600 Speaker 2: And we just don't know yet how that response is 286 00:14:27,600 --> 00:14:28,200 Speaker 2: going to play out. 287 00:14:28,440 --> 00:14:32,720 Speaker 1: So OBBBA is one of those circumstances where an acronym 288 00:14:32,840 --> 00:14:35,480 Speaker 1: is faster to say than the phrase. But that triple 289 00:14:35,520 --> 00:14:36,680 Speaker 1: B is a bit of a chrunk twister. 290 00:14:36,840 --> 00:14:38,000 Speaker 2: It's only barely faster. 291 00:14:38,320 --> 00:14:40,920 Speaker 1: It's only barely at least the way I said it. 292 00:14:41,320 --> 00:14:44,080 Speaker 1: So zooming out then, thinking about this global picture again, 293 00:14:44,120 --> 00:14:46,840 Speaker 1: because you brought up the resilience of solar in this 294 00:14:46,960 --> 00:14:49,920 Speaker 1: particular first half of the year. There were some changes 295 00:14:49,960 --> 00:14:52,720 Speaker 1: to also what the overall investment looked like in the 296 00:14:52,920 --> 00:14:55,800 Speaker 1: split of what types of solar. So talk to me 297 00:14:55,840 --> 00:14:59,560 Speaker 1: a little bit about utility scale solar versus small scale solar. 298 00:14:59,720 --> 00:15:01,560 Speaker 2: Yes, And this comes back to what we said earlier, 299 00:15:01,600 --> 00:15:04,360 Speaker 2: which is that utility scale solar and entrwind, which are 300 00:15:04,480 --> 00:15:07,440 Speaker 2: usually two thirds of investment, more less than half. This year. 301 00:15:07,560 --> 00:15:09,440 Speaker 2: We saw that thirteen percent drop, and a lot of 302 00:15:09,480 --> 00:15:14,000 Speaker 2: that was actually driven by utility scale solar solar investment 303 00:15:14,200 --> 00:15:17,040 Speaker 2: overall rows so we saw two hundred and fifty two 304 00:15:17,040 --> 00:15:19,960 Speaker 2: billion in one h twenty twenty five. That was the 305 00:15:20,040 --> 00:15:23,440 Speaker 2: tenth straight half annual record that we have marked. It 306 00:15:23,480 --> 00:15:26,040 Speaker 2: gets a little boring sometimes to just talk about how 307 00:15:26,040 --> 00:15:28,720 Speaker 2: it keeps rising, but it's also a good thing that 308 00:15:28,760 --> 00:15:31,800 Speaker 2: it keeps rising. But we are seeing markets now where 309 00:15:31,840 --> 00:15:34,880 Speaker 2: solar penetration is so high that it's having a meaningful 310 00:15:34,960 --> 00:15:38,680 Speaker 2: impact on the revenues in return expectations of projects, and 311 00:15:39,000 --> 00:15:43,600 Speaker 2: investors are putting a lot more rigor and attention around 312 00:15:43,680 --> 00:15:46,080 Speaker 2: their expected returns and the risks of those returns and 313 00:15:46,120 --> 00:15:48,520 Speaker 2: the investments that they're making right now, and so that 314 00:15:48,600 --> 00:15:50,720 Speaker 2: means that we did see a drop in investment in 315 00:15:50,840 --> 00:15:54,000 Speaker 2: utility scale solar in markets where those revenues or returns 316 00:15:54,040 --> 00:15:56,400 Speaker 2: are deemed at risk. Those are markets when they have 317 00:15:56,440 --> 00:16:00,440 Speaker 2: wholesale power prices that are seeing frequent and growing negative pricing. 318 00:16:00,560 --> 00:16:03,440 Speaker 2: That usually happens when you've got more generation during the 319 00:16:03,480 --> 00:16:05,640 Speaker 2: middle of the day, when solar is on, then the 320 00:16:05,680 --> 00:16:07,880 Speaker 2: grid can absorb and therefore there's a risk that you 321 00:16:07,920 --> 00:16:10,720 Speaker 2: won't see the benefits of that generation as a project owner. 322 00:16:11,000 --> 00:16:12,480 Speaker 1: What are some of the parts of the world where 323 00:16:12,520 --> 00:16:13,120 Speaker 1: we're seeing that. 324 00:16:13,280 --> 00:16:16,360 Speaker 2: Yeah, so Spain obviously will come to mind for everybody. 325 00:16:16,360 --> 00:16:19,680 Speaker 2: We had the big blackout in April that was not 326 00:16:19,720 --> 00:16:23,120 Speaker 2: necessarily fully driven by solar, but certainly didn't help from. 327 00:16:22,960 --> 00:16:24,560 Speaker 1: Solar, and curtailment was a part of that. 328 00:16:24,640 --> 00:16:26,880 Speaker 2: Curtailment was a part of that. Most likely it had 329 00:16:26,880 --> 00:16:28,160 Speaker 2: to do with the fact that you had so much 330 00:16:28,200 --> 00:16:30,360 Speaker 2: solar on the system that you were running pretty close 331 00:16:30,360 --> 00:16:32,760 Speaker 2: to the edge. So Spain is one, We're seeing more 332 00:16:32,760 --> 00:16:35,320 Speaker 2: of it in Greece and Poland as well. Brazil is 333 00:16:35,320 --> 00:16:37,600 Speaker 2: another market that's getting a lot of headlines around this 334 00:16:37,720 --> 00:16:40,160 Speaker 2: right now. You saw up to twenty one percent curtailment 335 00:16:40,240 --> 00:16:43,840 Speaker 2: for solar this year. That's an incredible rise all time 336 00:16:43,920 --> 00:16:46,240 Speaker 2: highs in this market and really makes an impact on 337 00:16:46,280 --> 00:16:48,920 Speaker 2: the expected returns of a project. The other market where 338 00:16:48,920 --> 00:16:51,800 Speaker 2: you're seeing this is in China actually, So China's undergoing 339 00:16:51,800 --> 00:16:55,760 Speaker 2: a big policy change that was leaked in December of 340 00:16:55,880 --> 00:16:59,400 Speaker 2: last year. Essentially, we've always known that China was intending 341 00:16:59,440 --> 00:17:03,240 Speaker 2: to move towards wholesale power prices and competitive pricing for 342 00:17:03,280 --> 00:17:05,880 Speaker 2: its generation. In the past, it was fixed tariffs from 343 00:17:05,880 --> 00:17:08,400 Speaker 2: the grid. But in December, developers found out that move 344 00:17:08,440 --> 00:17:10,240 Speaker 2: was going to happen earlier than anticipated. 345 00:17:10,440 --> 00:17:11,720 Speaker 1: Roughly when will that take place? 346 00:17:11,760 --> 00:17:14,560 Speaker 2: So a number of provinces moved into the system actually 347 00:17:14,600 --> 00:17:15,359 Speaker 2: on June first. 348 00:17:15,760 --> 00:17:19,200 Speaker 1: Oh, so we're living in this new paradigm for China 349 00:17:19,240 --> 00:17:21,040 Speaker 1: when it comes to solar, which has been such a 350 00:17:21,160 --> 00:17:23,919 Speaker 1: dominant for us of both manufacturing of solar panels but 351 00:17:23,960 --> 00:17:25,040 Speaker 1: also installations. 352 00:17:25,080 --> 00:17:28,400 Speaker 2: Absolutely. I mean China we always joke as half of everything. 353 00:17:28,440 --> 00:17:31,520 Speaker 2: When it comes to our renewvalle energy investment trend numbers, 354 00:17:31,520 --> 00:17:34,160 Speaker 2: it's usually about forty percent for solar. Now I think 355 00:17:34,160 --> 00:17:36,800 Speaker 2: it was still around forty percent this year, but that's 356 00:17:36,840 --> 00:17:40,600 Speaker 2: because developers figured out ways to get online before that 357 00:17:40,720 --> 00:17:43,320 Speaker 2: change would happen, So before you would have had a 358 00:17:43,359 --> 00:17:45,600 Speaker 2: fixed price for your solar. Now you're going to be 359 00:17:45,720 --> 00:17:49,439 Speaker 2: exposed to wholesale market. You're going to face curtailment risks, 360 00:17:49,560 --> 00:17:51,920 Speaker 2: you're going to face negative price risks. We are seeing 361 00:17:52,040 --> 00:17:55,320 Speaker 2: higher levels of solar penetration in these markets and therefore 362 00:17:55,359 --> 00:17:58,040 Speaker 2: those impacts happening on parts of the grid. Depends on 363 00:17:58,080 --> 00:18:01,120 Speaker 2: the province, but it certainly is is a concern that 364 00:18:01,200 --> 00:18:05,200 Speaker 2: caused developers and investors to reevaluate the projects in their pipeline. 365 00:18:05,240 --> 00:18:07,439 Speaker 2: You saw a bit of a rush in December to 366 00:18:07,480 --> 00:18:10,040 Speaker 2: start moving projects forward as soon as that news came out. 367 00:18:10,119 --> 00:18:11,840 Speaker 2: There was a chance you could still build your project 368 00:18:11,920 --> 00:18:14,679 Speaker 2: in time to hit that connection deadline. Some more in 369 00:18:14,720 --> 00:18:16,520 Speaker 2: the first quarter of this year, and then a real 370 00:18:16,600 --> 00:18:19,800 Speaker 2: drop afterwards. And the reason why Chinese investment in solar 371 00:18:19,880 --> 00:18:22,000 Speaker 2: didn't drop in the first half of this year is 372 00:18:22,040 --> 00:18:24,919 Speaker 2: because you can do distributed projects instead. So you just 373 00:18:24,960 --> 00:18:27,639 Speaker 2: do a large number of panels that spread over a 374 00:18:27,640 --> 00:18:30,439 Speaker 2: lot of space, a lot of roofs et cetera. And 375 00:18:30,640 --> 00:18:33,000 Speaker 2: you're able to move much faster with those projects than 376 00:18:33,000 --> 00:18:35,719 Speaker 2: you could, like a gigawatt size project in the desert, 377 00:18:36,280 --> 00:18:39,679 Speaker 2: and those are the projects, those decentralized, your distributed projects 378 00:18:39,720 --> 00:18:42,280 Speaker 2: are the ones that really moved forward and kept pushing 379 00:18:42,320 --> 00:18:44,560 Speaker 2: because they could make that June first cut off. 380 00:18:44,840 --> 00:18:47,240 Speaker 1: When I think of the size of projects that tend 381 00:18:47,240 --> 00:18:51,080 Speaker 1: to go in in China, though they are huge and 382 00:18:51,280 --> 00:18:53,719 Speaker 1: not just in this space. When we think about battery 383 00:18:53,760 --> 00:18:58,040 Speaker 1: manufacturing or the electric vehicle manufacturer that has the most 384 00:18:58,080 --> 00:19:01,320 Speaker 1: sales and a year after year all based in China. 385 00:19:01,359 --> 00:19:06,520 Speaker 1: So are they then adopting a different strategy for domestic installations? 386 00:19:06,560 --> 00:19:09,280 Speaker 1: And are you seeing a trend towards small scale solar 387 00:19:09,320 --> 00:19:11,919 Speaker 1: in China like you are in other parts of the world. 388 00:19:12,160 --> 00:19:14,240 Speaker 2: So I think this trend towards small scale has been 389 00:19:14,240 --> 00:19:16,480 Speaker 2: going on in China for a while, and I think 390 00:19:16,560 --> 00:19:18,120 Speaker 2: a large part of what we saw in one Age 391 00:19:18,119 --> 00:19:20,119 Speaker 2: twenty twenty five was more around how do we get 392 00:19:20,160 --> 00:19:23,200 Speaker 2: our projects online because we want to make those lucrative 393 00:19:23,200 --> 00:19:25,600 Speaker 2: returns that we used to be accustomed to. Whether that 394 00:19:25,640 --> 00:19:27,480 Speaker 2: continues into the second half of the year remains to 395 00:19:27,480 --> 00:19:29,520 Speaker 2: be see, because now small scale solder is also going 396 00:19:29,560 --> 00:19:32,560 Speaker 2: to have those market impacts that utility scale does. So 397 00:19:32,600 --> 00:19:34,480 Speaker 2: I think the teams there are expecting to see a 398 00:19:34,560 --> 00:19:36,879 Speaker 2: drop and investment for both wind and solar in the 399 00:19:36,920 --> 00:19:38,800 Speaker 2: second half of this year from China. 400 00:19:38,880 --> 00:19:42,440 Speaker 1: So wind is down in the US, but globally it's 401 00:19:42,520 --> 00:19:44,600 Speaker 1: not down. Can you talk a little bit about what's 402 00:19:44,640 --> 00:19:48,280 Speaker 1: happening with wind? Absolutely, So globally wind was not down. 403 00:19:48,280 --> 00:19:50,560 Speaker 2: We saw one hundred and twenty six billion invested in 404 00:19:50,600 --> 00:19:53,520 Speaker 2: the first half of this year. It's a second highest 405 00:19:53,560 --> 00:19:57,600 Speaker 2: period on record for wind investment overall, and up significantly 406 00:19:57,680 --> 00:19:59,800 Speaker 2: from the first half of last year. A lot of 407 00:19:59,800 --> 00:20:02,800 Speaker 2: that was the offshore story that we already told, but 408 00:20:02,880 --> 00:20:06,280 Speaker 2: we're also actually seeing a bit of a revival for 409 00:20:06,359 --> 00:20:10,680 Speaker 2: European WIN, particularly from Germany. So European ontra win has 410 00:20:10,720 --> 00:20:14,240 Speaker 2: long been a tough story. It's been struggling to grow 411 00:20:14,520 --> 00:20:18,080 Speaker 2: kind of stable at best, maybe small declines each year, 412 00:20:18,400 --> 00:20:20,720 Speaker 2: and that's because it's been stuck in these permitting and 413 00:20:20,800 --> 00:20:24,720 Speaker 2: grid challenges that are making projects sometimes take decades to 414 00:20:24,760 --> 00:20:27,679 Speaker 2: bring online. What we've seen is the EU provide a 415 00:20:27,680 --> 00:20:30,199 Speaker 2: lot of guidance on how permitting reforms could be enacted, 416 00:20:30,240 --> 00:20:32,760 Speaker 2: and Germany has actually gone through and enacted a lot 417 00:20:32,760 --> 00:20:36,239 Speaker 2: of those. So in Germany we're seeing records amount of 418 00:20:36,560 --> 00:20:39,760 Speaker 2: ento wind projects getting permitted. We're starting to finally see 419 00:20:39,800 --> 00:20:42,160 Speaker 2: that being unlocked, and this means that we now get 420 00:20:42,200 --> 00:20:45,680 Speaker 2: over subscription for German wind auctions. Again, We're getting more 421 00:20:45,720 --> 00:20:50,080 Speaker 2: repowering projects moving forward as well, and Germany actually saw 422 00:20:50,280 --> 00:20:53,920 Speaker 2: a massive increase as a result for Entra Wind. Overall, 423 00:20:54,160 --> 00:20:57,720 Speaker 2: European investment actually rose sixty three percent, mostly because of 424 00:20:57,720 --> 00:20:59,840 Speaker 2: this Entra Wind story and offtro Win story. 425 00:21:00,200 --> 00:21:03,400 Speaker 1: So we're kind of hopscotching around the world. But as 426 00:21:03,440 --> 00:21:06,200 Speaker 1: we've gone through kind of the main technologies, let's talk 427 00:21:06,280 --> 00:21:09,320 Speaker 1: a little bit more about the financing end of things 428 00:21:09,400 --> 00:21:12,399 Speaker 1: and the decisions being made by those who are allocating 429 00:21:12,440 --> 00:21:15,720 Speaker 1: this capital. If these investment numbers are down in the US, 430 00:21:16,160 --> 00:21:20,360 Speaker 1: are these investors ultimately sitting on this money due to uncertainty? 431 00:21:20,560 --> 00:21:23,040 Speaker 1: Are they looking for other parts of the world like 432 00:21:23,480 --> 00:21:26,439 Speaker 1: Europe to actually invest this money, or are they looking 433 00:21:26,480 --> 00:21:30,040 Speaker 1: at different technologies? So where is the money going? 434 00:21:30,400 --> 00:21:34,520 Speaker 2: So what this report does is tracking the actual investments. 435 00:21:34,560 --> 00:21:37,840 Speaker 2: It doesn't quite go into the strategy side. Unfortunately, this 436 00:21:38,000 --> 00:21:39,800 Speaker 2: is one of the biggest questions asked, is are we 437 00:21:39,800 --> 00:21:42,640 Speaker 2: seeing capital reallocation. There's some sectors where I can say 438 00:21:42,640 --> 00:21:46,520 Speaker 2: explicitly yes, Offstra Wind for instance, we have seen actual 439 00:21:46,560 --> 00:21:52,239 Speaker 2: statements from Totel and RWE during their investor conferences and 440 00:21:52,320 --> 00:21:57,200 Speaker 2: agms stating that they are deprioritizing US projects in favor 441 00:21:57,200 --> 00:21:59,800 Speaker 2: of the North Sea. That is explicit reallocation from the 442 00:21:59,880 --> 00:22:03,840 Speaker 2: US to Europe everywhere else it could easily be there, 443 00:22:03,880 --> 00:22:06,480 Speaker 2: but we don't know. People are very circumspect about saying 444 00:22:06,520 --> 00:22:09,920 Speaker 2: it aloud. What we do know is that there are 445 00:22:10,080 --> 00:22:12,480 Speaker 2: less products moving forward in the US, less investment going 446 00:22:12,480 --> 00:22:15,159 Speaker 2: into the US, and more investment going into Europe. I 447 00:22:15,200 --> 00:22:17,639 Speaker 2: think at the end of the day, you're not just 448 00:22:17,680 --> 00:22:19,840 Speaker 2: going to see capital move for the sake of it. 449 00:22:20,000 --> 00:22:23,560 Speaker 2: Investors are really looking for those returns. If they think 450 00:22:23,560 --> 00:22:25,160 Speaker 2: that they're going to hit the return that they want 451 00:22:25,160 --> 00:22:27,600 Speaker 2: in a different market, they're going to invest in that project. 452 00:22:27,640 --> 00:22:30,080 Speaker 2: There's no shortage of capital out there is something that 453 00:22:30,080 --> 00:22:32,560 Speaker 2: we're finding. But just because you have less investment going 454 00:22:32,600 --> 00:22:34,800 Speaker 2: on in one market does not necessarily mean there will 455 00:22:34,840 --> 00:22:37,200 Speaker 2: be more in another unless you can find those returns. 456 00:22:37,600 --> 00:22:41,639 Speaker 1: So policy uncertainty in some respects has paused things while 457 00:22:41,720 --> 00:22:45,159 Speaker 1: looking and assessing at maybe other adjacent opportunities. 458 00:22:45,440 --> 00:22:47,360 Speaker 2: Yeah, and it's showing you the opportunities that you get 459 00:22:47,359 --> 00:22:49,440 Speaker 2: in markets where you do have those returns as well. 460 00:22:49,480 --> 00:22:52,480 Speaker 2: We talked about the challenges for utility scale solar when 461 00:22:52,520 --> 00:22:56,040 Speaker 2: you've got curtailment, negative price risk, all of that coming on, 462 00:22:56,200 --> 00:22:57,880 Speaker 2: But what we didn't also get a chance to say 463 00:22:58,000 --> 00:22:59,880 Speaker 2: was that you are seeing growth stories there as well 464 00:23:00,240 --> 00:23:03,880 Speaker 2: or stability. So there's markets like Italy who's offering they've 465 00:23:03,920 --> 00:23:07,040 Speaker 2: redesigned their auction to provide negative price support for projects 466 00:23:07,040 --> 00:23:11,000 Speaker 2: that clear, Romania, India, Philippines. These are markets that have 467 00:23:11,359 --> 00:23:14,800 Speaker 2: strong auction schemes available, and in those markets we are 468 00:23:14,920 --> 00:23:19,040 Speaker 2: seeing growth in utility scale investments. You've also got markets 469 00:23:19,080 --> 00:23:21,160 Speaker 2: like Japan where you've got a really healthy corporate power 470 00:23:21,200 --> 00:23:23,879 Speaker 2: purchase agreement market going on, and there's lots of demand 471 00:23:23,920 --> 00:23:26,120 Speaker 2: out there, and that means that that demand's and market 472 00:23:26,160 --> 00:23:29,000 Speaker 2: has been kind of continuously declining for US and actually 473 00:23:29,160 --> 00:23:31,560 Speaker 2: with stable or growing it looks like for this year 474 00:23:31,600 --> 00:23:33,760 Speaker 2: as a result of that corporate demand. 475 00:23:34,520 --> 00:23:37,720 Speaker 1: Now, often there are specialist investors who look at emerging 476 00:23:37,720 --> 00:23:40,560 Speaker 1: markets and developing economies. So this may not be a 477 00:23:40,600 --> 00:23:43,280 Speaker 1: direction that capital may go, but if we're looking at 478 00:23:43,320 --> 00:23:46,680 Speaker 1: emerging markets and developing economies, there is a move towards 479 00:23:46,720 --> 00:23:49,960 Speaker 1: electrification in many of them, and quite a bit of 480 00:23:49,920 --> 00:23:53,679 Speaker 1: a way from the curtailment story that is showing up 481 00:23:53,720 --> 00:23:56,880 Speaker 1: in other parts of the world. Are we seeing growth 482 00:23:57,080 --> 00:24:01,160 Speaker 1: in areas that are trying to essentially allow doctrify parts 483 00:24:01,200 --> 00:24:02,240 Speaker 1: of their grid right now. 484 00:24:02,640 --> 00:24:04,760 Speaker 2: So I think the report that we did at the 485 00:24:04,880 --> 00:24:07,000 Speaker 2: end of last year, that published in January, which is 486 00:24:07,040 --> 00:24:09,840 Speaker 2: looking at twenty twenty four numbers, this other market story 487 00:24:10,040 --> 00:24:12,200 Speaker 2: was a huge part of it. Right We were seeing 488 00:24:12,280 --> 00:24:14,800 Speaker 2: massive growth in other markets. A lot of that came 489 00:24:14,840 --> 00:24:17,040 Speaker 2: in the second half of last year. By and large, 490 00:24:17,040 --> 00:24:19,520 Speaker 2: we've not seen other markets shrink. We've seen them hold 491 00:24:19,840 --> 00:24:21,600 Speaker 2: at where they were in the second half of last year. 492 00:24:21,640 --> 00:24:25,040 Speaker 2: So it's clearly not the same growth rate that we 493 00:24:25,040 --> 00:24:27,440 Speaker 2: were seeing the year prior. It's not shrinking, but it's 494 00:24:27,440 --> 00:24:29,840 Speaker 2: also not increasing. It's kind of staying still. There's a 495 00:24:29,880 --> 00:24:33,080 Speaker 2: couple of exceptions to that. Southeast Asia is one where 496 00:24:33,119 --> 00:24:36,640 Speaker 2: we already mentioned the Philippines, but pretty much every market 497 00:24:36,800 --> 00:24:39,600 Speaker 2: is seeing some amount of growth overall. That region iscy 498 00:24:39,640 --> 00:24:42,760 Speaker 2: and growth. The other one is other Latin American markets, 499 00:24:42,960 --> 00:24:46,000 Speaker 2: partially because Brazil shrunk, but also because there was more 500 00:24:46,040 --> 00:24:48,720 Speaker 2: activity in the kind of like non major markets in 501 00:24:48,760 --> 00:24:51,240 Speaker 2: Latin America or non traditional markets of Latin America. 502 00:24:51,320 --> 00:24:53,600 Speaker 1: So just coming back to the other technologies that are 503 00:24:53,600 --> 00:24:56,240 Speaker 1: being discussed at the moment, and you could debate whether 504 00:24:56,320 --> 00:25:00,480 Speaker 1: this is clean or not is natural gas, So what 505 00:25:00,640 --> 00:25:03,560 Speaker 1: is that interplay and what can we expect from natural 506 00:25:03,640 --> 00:25:08,240 Speaker 1: gas projects as they maybe cannibalize or maybe not some 507 00:25:08,280 --> 00:25:11,560 Speaker 1: of the capital that traditionally had gone to renewable energy. 508 00:25:11,840 --> 00:25:14,200 Speaker 2: This is something in the US that our power teams 509 00:25:14,200 --> 00:25:16,639 Speaker 2: are regularly tracking, is how much capacity is in the 510 00:25:16,720 --> 00:25:19,639 Speaker 2: queue to be connected, and it is still heavily renewables 511 00:25:19,680 --> 00:25:22,840 Speaker 2: right now. That's really worth noting. We are working on 512 00:25:23,160 --> 00:25:26,520 Speaker 2: more analysis on the gas turbine supply chain side, but 513 00:25:26,840 --> 00:25:30,440 Speaker 2: as of right now, you know, companies haven't fully updated 514 00:25:30,480 --> 00:25:33,800 Speaker 2: their plans. But it's also not easy to get a turbine, 515 00:25:33,840 --> 00:25:36,080 Speaker 2: and so renewables still are the thing that's easy to 516 00:25:36,119 --> 00:25:38,040 Speaker 2: do if you've got the project that's ready to build. 517 00:25:38,400 --> 00:25:41,520 Speaker 1: It's lovely to talk about the economics of an industry 518 00:25:41,800 --> 00:25:46,520 Speaker 1: without the forces of policy and politics, but they certainly 519 00:25:46,560 --> 00:25:49,480 Speaker 1: play an important role on the feasibility and a lot 520 00:25:49,520 --> 00:25:52,360 Speaker 1: of the numbers that you're talking about right now, So 521 00:25:52,680 --> 00:25:55,440 Speaker 1: when we think about security of supply, I want to 522 00:25:55,520 --> 00:25:59,119 Speaker 1: understand from your perspective, how important do you think it 523 00:25:59,320 --> 00:26:02,679 Speaker 1: ranks in terms of priorities with a lot of the 524 00:26:02,720 --> 00:26:05,280 Speaker 1: countries you're talking about in security of supply When it 525 00:26:05,280 --> 00:26:08,160 Speaker 1: came to renewables, I had historically really thought about it 526 00:26:08,240 --> 00:26:13,560 Speaker 1: as installations and having energy supply from renewable energy. But 527 00:26:13,640 --> 00:26:17,679 Speaker 1: increasingly that conversation, and historically actually in China, that conversation 528 00:26:17,720 --> 00:26:21,879 Speaker 1: has really been about also manufacturing what is required in 529 00:26:21,960 --> 00:26:24,720 Speaker 1: order to create the goods for then security of supply. 530 00:26:25,320 --> 00:26:29,159 Speaker 1: And you see conflicts impacting the movement of commodities like 531 00:26:29,240 --> 00:26:32,040 Speaker 1: natural gas around the world, and certainly that's not the 532 00:26:32,040 --> 00:26:36,760 Speaker 1: only one. How have you seen that aspect really change 533 00:26:37,160 --> 00:26:41,359 Speaker 1: investment numbers and also just how projects are evaluated? I 534 00:26:41,359 --> 00:26:42,800 Speaker 1: mean in a very open ended way. 535 00:26:43,160 --> 00:26:44,960 Speaker 2: Yeah, is kind of where are we in the energy 536 00:26:45,040 --> 00:26:49,200 Speaker 2: trifecta right now? So the energy trifecta has been secure, cheap, 537 00:26:49,440 --> 00:26:53,000 Speaker 2: and sustainable meaning low carbon, and at various points in 538 00:26:53,040 --> 00:26:56,000 Speaker 2: time you get different emphasis either on the cost, on 539 00:26:56,040 --> 00:26:59,200 Speaker 2: the security or on the decarb side of this stuff. 540 00:26:59,440 --> 00:27:01,960 Speaker 2: Right now already is definitely back in vogue. I would 541 00:27:01,960 --> 00:27:04,720 Speaker 2: add one more definition into there. Of the two that 542 00:27:04,760 --> 00:27:06,520 Speaker 2: you listed, so there's the idea of like is it 543 00:27:06,720 --> 00:27:10,600 Speaker 2: locally produced generation, there's the question of whether it is 544 00:27:11,359 --> 00:27:14,760 Speaker 2: locally manufactured as well for its components. But then the 545 00:27:14,800 --> 00:27:17,840 Speaker 2: other one, which is being slightly misused is around grid 546 00:27:17,880 --> 00:27:21,320 Speaker 2: reliability and dispatchability. So if you look at the US 547 00:27:21,400 --> 00:27:24,440 Speaker 2: right now, when you hear about secure supply, it's essentially 548 00:27:24,520 --> 00:27:27,640 Speaker 2: code to try and create more coal and gas because 549 00:27:27,800 --> 00:27:29,760 Speaker 2: it can be available at any point and you're not 550 00:27:29,800 --> 00:27:32,200 Speaker 2: going to have a blackout. Is the statement now that one, 551 00:27:32,400 --> 00:27:35,639 Speaker 2: ultimately we don't really think is right. There's plenty of 552 00:27:35,680 --> 00:27:38,679 Speaker 2: ways to manage a grid with large amounts of renewables. 553 00:27:38,680 --> 00:27:41,159 Speaker 2: In some ways, forcing that type of generation onto the 554 00:27:41,160 --> 00:27:44,040 Speaker 2: grid can make it more challenging to keep the grid online, 555 00:27:44,119 --> 00:27:47,360 Speaker 2: not less. All depends on where you are, But it's 556 00:27:47,359 --> 00:27:49,000 Speaker 2: not always the case that you need to shove more 557 00:27:49,080 --> 00:27:51,520 Speaker 2: nuclear coal and gas into a system in order to 558 00:27:51,560 --> 00:27:54,200 Speaker 2: keep it online. Although that is certainly because of the 559 00:27:54,200 --> 00:27:56,880 Speaker 2: stuff we're used to. The stuff that's getting attention from 560 00:27:56,920 --> 00:27:58,960 Speaker 2: a lot of governments these days, not just in the 561 00:27:59,040 --> 00:28:01,840 Speaker 2: US but also in Spain. The supply chain side is 562 00:28:01,840 --> 00:28:05,159 Speaker 2: certainly a big topic, right now tariffs are everywhere, they're proliferating. 563 00:28:05,280 --> 00:28:09,920 Speaker 2: We're still seeing lots of conversations around that. Ultimately, oftentimes 564 00:28:09,920 --> 00:28:12,760 Speaker 2: solar is still the cheapest solution, even with high tariffs 565 00:28:12,760 --> 00:28:15,280 Speaker 2: being put on this. The delta between solar and the 566 00:28:15,280 --> 00:28:17,800 Speaker 2: next technology is usually still pretty much there, and so 567 00:28:17,880 --> 00:28:19,520 Speaker 2: that is a big deal. It is a big part 568 00:28:19,520 --> 00:28:21,679 Speaker 2: of the story right now, it will continue to be. 569 00:28:21,720 --> 00:28:24,920 Speaker 2: We're always analyzing what impact that has on project development 570 00:28:24,960 --> 00:28:27,720 Speaker 2: cost and where factories will be located. And then the 571 00:28:27,760 --> 00:28:31,440 Speaker 2: last bit is more of that traditional on site question, 572 00:28:31,880 --> 00:28:34,320 Speaker 2: like if you're talking about this from a data center perspective. 573 00:28:34,480 --> 00:28:36,520 Speaker 2: For them, they don't care where the power is coming from. 574 00:28:36,560 --> 00:28:39,040 Speaker 2: They just need the power, right and if the fastest 575 00:28:39,040 --> 00:28:41,200 Speaker 2: way to get that power in a firm way is 576 00:28:41,680 --> 00:28:44,160 Speaker 2: solar and storage and a little bit of on site 577 00:28:44,160 --> 00:28:46,280 Speaker 2: gas generation, that's what they're going to do. And so 578 00:28:46,360 --> 00:28:48,400 Speaker 2: that can lead you to more on site rather than 579 00:28:48,440 --> 00:28:50,840 Speaker 2: grid connection as well in terms of what you deploy, 580 00:28:50,840 --> 00:28:54,160 Speaker 2: which tends to favor renewable energy actually because it's easier 581 00:28:54,200 --> 00:28:56,160 Speaker 2: to deploy solar and storage behind the meter. 582 00:28:56,600 --> 00:28:59,640 Speaker 1: Well, thanks for giving me another really good podcast idea, 583 00:28:59,640 --> 00:29:03,240 Speaker 1: which is essentially as focusing in on that balance between 584 00:29:03,520 --> 00:29:08,280 Speaker 1: really low prices for solar kit but curtailment, and where 585 00:29:08,280 --> 00:29:11,520 Speaker 1: the perfect balance potentially could be to create grid security 586 00:29:11,760 --> 00:29:14,280 Speaker 1: solar Team. I hope you're listening, Meredith. Thank you very 587 00:29:14,320 --> 00:29:15,000 Speaker 1: much for joining. 588 00:29:15,320 --> 00:29:24,480 Speaker 2: Thank you so much for having me, Dana. 589 00:29:25,640 --> 00:29:28,760 Speaker 1: Today's episode of Switched On was produced by Cam Gray 590 00:29:29,000 --> 00:29:32,680 Speaker 1: with production assistance from Kamala Shelling. Bloomberg NIF is a 591 00:29:32,720 --> 00:29:35,840 Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This 592 00:29:35,960 --> 00:29:38,640 Speaker 1: recording does not constitute, nor should it be construed as 593 00:29:38,680 --> 00:29:42,600 Speaker 1: investment advice, investment recommendations, or a recommendation as to an 594 00:29:42,640 --> 00:29:45,800 Speaker 1: investment or other strategy. Bloomberg ANIF should not be considered 595 00:29:45,840 --> 00:29:49,160 Speaker 1: as information sufficient upon which to base an investment decision. 596 00:29:49,240 --> 00:29:52,240 Speaker 1: Neither Bloomberg Finance LP nor any of its affiliates makes 597 00:29:52,240 --> 00:29:56,000 Speaker 1: any representation or warranty as to the accuracy or completeness 598 00:29:56,000 --> 00:29:59,000 Speaker 1: of the information contained in this recording, and any liability 599 00:29:59,040 --> 00:30:10,640 Speaker 1: as a result of this recording is expressly disclaimed. MMM