1 00:00:00,560 --> 00:00:03,560 Speaker 1: This is Dana Perkins, and you're listening to Switched on 2 00:00:03,920 --> 00:00:07,240 Speaker 1: the B and EF podcast, and today we're talking about 3 00:00:07,280 --> 00:00:10,319 Speaker 1: the state of the global wind industry. Now, one could 4 00:00:10,400 --> 00:00:13,440 Speaker 1: say that wind has been stuck in the doldrums. For 5 00:00:13,520 --> 00:00:15,960 Speaker 1: those of you who are not familiar with this term, 6 00:00:16,040 --> 00:00:19,920 Speaker 1: the doldrums is actually a nautical term referring to parts 7 00:00:19,960 --> 00:00:22,799 Speaker 1: of the ocean where sailing ships could get stuck for 8 00:00:22,960 --> 00:00:25,960 Speaker 1: long periods because of a lack of wind. Apart from 9 00:00:26,000 --> 00:00:28,680 Speaker 1: it being a clever pun, maybe this is an apt 10 00:00:28,680 --> 00:00:31,480 Speaker 1: description of where the wind industry has been for the 11 00:00:31,520 --> 00:00:32,640 Speaker 1: past few years. 12 00:00:32,960 --> 00:00:33,440 Speaker 2: To put this. 13 00:00:33,479 --> 00:00:37,800 Speaker 1: Idea into numbers, year on year wind capacity installations grew 14 00:00:37,920 --> 00:00:40,760 Speaker 1: by six percent in twenty twenty four. This is far 15 00:00:40,880 --> 00:00:43,840 Speaker 1: short of the average annual growth rate of twenty five 16 00:00:43,880 --> 00:00:47,080 Speaker 1: percent that is needed between now and twenty thirty to 17 00:00:47,159 --> 00:00:50,280 Speaker 1: stay on track with net zero goals. Wind is simply 18 00:00:50,440 --> 00:00:53,680 Speaker 1: not moving fast enough. But on the other hand, the 19 00:00:53,720 --> 00:00:56,560 Speaker 1: one hundred and twenty four gigawatts of wind that we 20 00:00:56,760 --> 00:00:59,200 Speaker 1: expect to see installed by the end of this year 21 00:00:59,480 --> 00:01:03,080 Speaker 1: represents an annual record, So arguably, if wind has been 22 00:01:03,080 --> 00:01:05,880 Speaker 1: in the doldrums, maybe now it's coming out of them. 23 00:01:06,120 --> 00:01:09,520 Speaker 1: The answer to this question really lies and what has 24 00:01:09,560 --> 00:01:13,039 Speaker 1: been done by policymakers to accelerate the market and how 25 00:01:13,120 --> 00:01:16,360 Speaker 1: the wind industry is evolving, and then what role technology 26 00:01:16,400 --> 00:01:20,120 Speaker 1: can play and unlocking new opportunities so that record breaking 27 00:01:20,200 --> 00:01:24,200 Speaker 1: years are also aligned with net zero goals on policy. 28 00:01:24,400 --> 00:01:27,280 Speaker 1: Certain countries are beginning to figure out the puzzle of 29 00:01:27,360 --> 00:01:30,600 Speaker 1: how to scale wind and overcome barriers such as permitting 30 00:01:30,640 --> 00:01:33,240 Speaker 1: that has held many markets back. On the topic of 31 00:01:33,280 --> 00:01:36,560 Speaker 1: evolution of the industry, we look to China which is 32 00:01:36,640 --> 00:01:40,960 Speaker 1: not only pioneering onshore wind it previously unheard of scales. 33 00:01:41,120 --> 00:01:45,480 Speaker 1: Their turbine manufacturers are also increasingly becoming a factor in 34 00:01:45,520 --> 00:01:49,400 Speaker 1: the global market, and in India, wind manufacturers are beginning 35 00:01:49,440 --> 00:01:52,320 Speaker 1: to achieve traction on a significant scale. When it comes 36 00:01:52,360 --> 00:01:56,440 Speaker 1: to technology, the prospect of floating wind could unlock opportunities 37 00:01:56,480 --> 00:02:01,559 Speaker 1: to expand capacity in previously inaccessible location. So on today's show, 38 00:02:01,680 --> 00:02:04,600 Speaker 1: Tom Rowland's Reese takes over hosting duties where he is 39 00:02:04,680 --> 00:02:08,920 Speaker 1: joined by bnaf's head of Wind Oliver Metcalf. Oliver talks 40 00:02:08,960 --> 00:02:11,280 Speaker 1: about some of the work his team has been doing, 41 00:02:11,320 --> 00:02:16,160 Speaker 1: particularly in recent reports titled Unlocking Investment to triple renewables 42 00:02:16,200 --> 00:02:19,600 Speaker 1: by twenty thirty, alongside the third quarter twenty twenty four 43 00:02:19,840 --> 00:02:24,639 Speaker 1: wind turbine ordered data set, volume surges and floating offshore 44 00:02:24,639 --> 00:02:28,680 Speaker 1: wind Big Potential but Big Price tag. BNF subscribers can 45 00:02:28,720 --> 00:02:32,120 Speaker 1: access these reports at BNAF go on the Bloomberg terminal, 46 00:02:32,280 --> 00:02:35,480 Speaker 1: or at BNF dot com. Right now, let's hear Tom 47 00:02:35,639 --> 00:02:38,760 Speaker 1: and Oliver's conversation about wind. Where we are now and 48 00:02:38,800 --> 00:02:40,639 Speaker 1: where the wind is blowing. 49 00:02:50,440 --> 00:02:54,040 Speaker 2: Ollie, Hi, Hi Tom. So I'm going to start by 50 00:02:54,520 --> 00:02:58,120 Speaker 2: maybe putting a little bit of pressure on you as 51 00:02:58,280 --> 00:03:01,600 Speaker 2: the head of wind. And so I was looking at 52 00:03:01,680 --> 00:03:05,160 Speaker 2: some of the output from our new energy outlook, which 53 00:03:05,200 --> 00:03:08,720 Speaker 2: of course is not a forecast, it's a scenario modeling exercise. 54 00:03:08,880 --> 00:03:11,680 Speaker 2: And we have two main scenarios. One is the economic 55 00:03:11,680 --> 00:03:15,960 Speaker 2: transition scenario, where if there's no new policies and economics 56 00:03:15,960 --> 00:03:19,799 Speaker 2: plays out what happens. And then there's our net zero scenario, 57 00:03:19,880 --> 00:03:22,640 Speaker 2: where we add this constraint that the world has to 58 00:03:22,919 --> 00:03:26,840 Speaker 2: get to net zero by twenty fifty, consistent with heating 59 00:03:27,040 --> 00:03:30,560 Speaker 2: of one point seventy five degrees. So I looked at 60 00:03:30,680 --> 00:03:33,000 Speaker 2: the role of solar and wind, and this is important 61 00:03:33,040 --> 00:03:35,000 Speaker 2: because I know that often the conclusion of these kinds 62 00:03:35,000 --> 00:03:37,240 Speaker 2: of studies is like, oh, there's no silver bullet to 63 00:03:37,280 --> 00:03:40,120 Speaker 2: climate change. It's an all of the above solution. And 64 00:03:40,160 --> 00:03:43,440 Speaker 2: I think it's not that that's wrong, but everything relies 65 00:03:43,480 --> 00:03:46,640 Speaker 2: on the decarbonization of the power sector because so much 66 00:03:46,680 --> 00:03:50,560 Speaker 2: of the other stuff requires clean electricity. And clean electricity 67 00:03:51,000 --> 00:03:53,040 Speaker 2: the bulk of the heavy lifting is that's going to 68 00:03:53,080 --> 00:03:55,320 Speaker 2: be done. There is going to be done by two technologies, 69 00:03:55,480 --> 00:03:58,040 Speaker 2: wind and solar. This is I don't think this is controversial. 70 00:03:58,120 --> 00:04:01,040 Speaker 2: So wind and solar, it is an all of above world. 71 00:04:01,040 --> 00:04:03,080 Speaker 2: But wind and solar are like lynch pins to the 72 00:04:03,080 --> 00:04:05,440 Speaker 2: whole things. If they don't deliver what they need to deliver, 73 00:04:05,520 --> 00:04:08,480 Speaker 2: then the whole pack of cards falls down. So I 74 00:04:08,520 --> 00:04:12,160 Speaker 2: looked at the neo net zero scenario and it says 75 00:04:12,240 --> 00:04:14,840 Speaker 2: that in that world of net zero, by twenty to 76 00:04:14,920 --> 00:04:18,560 Speaker 2: fifty on an annual basis, we should be generating twenty 77 00:04:18,680 --> 00:04:22,320 Speaker 2: nine percent of our electricity from solar, and in our 78 00:04:22,360 --> 00:04:26,360 Speaker 2: economic transition scenario, actually twenty eight percent of our electricity 79 00:04:26,520 --> 00:04:28,880 Speaker 2: will be getting generated by solar. So this is if 80 00:04:28,880 --> 00:04:31,520 Speaker 2: the economic transition scenario is saying that's the track we're on, 81 00:04:31,600 --> 00:04:34,000 Speaker 2: and we're almost on the right track for solar. Solar 82 00:04:34,080 --> 00:04:37,680 Speaker 2: is doing its bit wind net zero scenario forty four 83 00:04:37,720 --> 00:04:40,720 Speaker 2: percent of our electricity generated by wind, so a bigger 84 00:04:40,800 --> 00:04:43,880 Speaker 2: role than solar, but in our economic transition scenario only 85 00:04:43,960 --> 00:04:46,440 Speaker 2: thirty one percent. That's telling us that we're not on 86 00:04:46,520 --> 00:04:49,800 Speaker 2: track for wind. So it would seem that wind, on 87 00:04:49,880 --> 00:04:52,599 Speaker 2: the trajectory we're on, is the weak link in the 88 00:04:52,720 --> 00:04:56,080 Speaker 2: energy transition. I suppose my first question to you with 89 00:04:56,120 --> 00:04:59,760 Speaker 2: that framing is where is the wind industry today and 90 00:04:59,800 --> 00:05:02,799 Speaker 2: the wind market today, And with this kind of thought 91 00:05:02,800 --> 00:05:06,520 Speaker 2: in mind, that it's not on track, what needs to change? 92 00:05:06,240 --> 00:05:10,280 Speaker 3: We've seen a difficult couple of years for the wind industry. 93 00:05:10,400 --> 00:05:13,720 Speaker 3: I think given the cost inflation we saw after the pandemic, 94 00:05:14,000 --> 00:05:17,840 Speaker 3: high interest rates and supply chain bottlenecks that slowed down 95 00:05:17,880 --> 00:05:21,120 Speaker 3: the growth of the wind sector on shore and offshore. 96 00:05:21,120 --> 00:05:24,840 Speaker 3: It's still having effect today. So equipment costs are still 97 00:05:25,120 --> 00:05:28,839 Speaker 3: much higher for wind turbines, for example, when you compare 98 00:05:28,839 --> 00:05:32,160 Speaker 3: it to solar or battery technology, where we've seen costs 99 00:05:32,160 --> 00:05:34,280 Speaker 3: start to fall again after the cost inflation we saw 100 00:05:34,320 --> 00:05:38,080 Speaker 3: after the pandemic. So the wind sector is still stumbling 101 00:05:38,120 --> 00:05:40,520 Speaker 3: through this period of higher costs there are some kind 102 00:05:40,520 --> 00:05:43,400 Speaker 3: of non economic factors that are really hitting the sector hard. 103 00:05:43,520 --> 00:05:47,360 Speaker 3: So some grid connection constraints, permitting constraints tend to affect 104 00:05:47,400 --> 00:05:51,080 Speaker 3: wind more than it affects solar. So that means that 105 00:05:51,240 --> 00:05:55,239 Speaker 3: we've seen more sluggish growth for wind technology compared with solar, 106 00:05:55,279 --> 00:05:57,320 Speaker 3: where we're seeing this boom and like you say, solar 107 00:05:57,440 --> 00:06:00,040 Speaker 3: is roughly on track for net zero. We did a 108 00:06:00,080 --> 00:06:03,279 Speaker 3: bit of modeling recently looking at the tripling renewables pledge 109 00:06:03,320 --> 00:06:04,840 Speaker 3: that was outlined at the end of the COP twenty 110 00:06:04,880 --> 00:06:08,440 Speaker 3: eight summit in twenty twenty three. The result of that analysis, 111 00:06:08,480 --> 00:06:11,720 Speaker 3: where we were contextualizing that goal and then benchmarking progress, 112 00:06:11,880 --> 00:06:14,400 Speaker 3: was that if we do manage to triple renewables by 113 00:06:14,400 --> 00:06:17,120 Speaker 3: twenty thirty, that puts us roughly in line with our 114 00:06:17,240 --> 00:06:20,520 Speaker 3: net zero scenario from our New Energy Outlook analysis. Or 115 00:06:20,560 --> 00:06:22,880 Speaker 3: tripling renewables by twenty thirty would put us on a 116 00:06:22,920 --> 00:06:25,000 Speaker 3: path to net zero by twenty fifty. 117 00:06:25,240 --> 00:06:26,560 Speaker 2: So that's the right goal. 118 00:06:26,880 --> 00:06:31,760 Speaker 3: Solars on track for that tripling renewables, and we're predicting 119 00:06:31,800 --> 00:06:33,880 Speaker 3: that the wind sectors only just going to just of 120 00:06:33,960 --> 00:06:37,280 Speaker 3: a double by twenty thirty, and that speaks to those 121 00:06:37,440 --> 00:06:40,520 Speaker 3: economic constraints that we're seeing those continued high costs, but 122 00:06:40,600 --> 00:06:43,040 Speaker 3: also some of those non economic factors that in some 123 00:06:43,120 --> 00:06:46,760 Speaker 3: markets with significant support that's available to wind, it's not 124 00:06:46,800 --> 00:06:49,040 Speaker 3: the economic stuff that's this holding the sector back, it's 125 00:06:49,080 --> 00:06:52,279 Speaker 3: these non economic factors like grid connections and permitting. They're 126 00:06:52,320 --> 00:06:55,120 Speaker 3: kind of boring regulatory stuff that needs to get sorted 127 00:06:55,120 --> 00:06:57,560 Speaker 3: from a policy perspective to see the kind of growth 128 00:06:57,560 --> 00:06:59,080 Speaker 3: that would be required for the wind sector. 129 00:07:00,240 --> 00:07:03,039 Speaker 2: Like your answer, because you know, I was talking about 130 00:07:03,080 --> 00:07:05,800 Speaker 2: a twenty fifty horizon and actually you've bought it much 131 00:07:06,000 --> 00:07:10,200 Speaker 2: closer with this tripling renewables and twenty thirty, so expecting 132 00:07:10,200 --> 00:07:12,080 Speaker 2: a doubling of wind where what we need is a 133 00:07:12,080 --> 00:07:16,320 Speaker 2: tripling of wind. So these issues that you've highlighted definitely 134 00:07:16,320 --> 00:07:20,320 Speaker 2: carry through and effect the market through to twenty thirty. 135 00:07:20,560 --> 00:07:24,040 Speaker 2: Do you think they're chronic problems? Is there a way 136 00:07:24,080 --> 00:07:26,120 Speaker 2: that these might get resolved in the longer term? 137 00:07:26,280 --> 00:07:28,880 Speaker 3: I think that the good news is that we are 138 00:07:28,960 --> 00:07:31,520 Speaker 3: expecting growth in the wind market. So in terms of 139 00:07:31,680 --> 00:07:35,280 Speaker 3: annual installations by twenty thirty, we're expecting seventy percent more 140 00:07:35,480 --> 00:07:38,520 Speaker 3: annual installations of wind than we're expecting this year. At 141 00:07:38,520 --> 00:07:40,680 Speaker 3: the moment in terms of the really hot markets, we're 142 00:07:40,720 --> 00:07:45,120 Speaker 3: kind of seeing star markets rather than a growth geographically 143 00:07:45,160 --> 00:07:47,520 Speaker 3: spread around the world. The good news is that we're 144 00:07:47,520 --> 00:07:50,600 Speaker 3: seeing examples of markets that are beginning to resolve these constraints. 145 00:07:50,880 --> 00:07:54,080 Speaker 3: So looking at a market like Germany is really starting 146 00:07:54,120 --> 00:07:56,800 Speaker 3: to resolve. It's on shore wind permitting constraints that really 147 00:07:56,880 --> 00:07:59,080 Speaker 3: hit the market a few years ago, and now Germany 148 00:07:59,120 --> 00:08:01,880 Speaker 3: is permitting an increase amount of onshore wind capacity every 149 00:08:01,960 --> 00:08:04,320 Speaker 3: year and we're really seeing the result of that in 150 00:08:04,400 --> 00:08:06,640 Speaker 3: terms of the amount of projects the government is willing 151 00:08:06,640 --> 00:08:09,560 Speaker 3: to support, getting closer to their goals, and we're expecting 152 00:08:09,600 --> 00:08:12,480 Speaker 3: really strong growth over the next few years. India is 153 00:08:12,480 --> 00:08:15,760 Speaker 3: another market that was mired in many difficulties, whether that 154 00:08:15,880 --> 00:08:19,200 Speaker 3: was land use issues and fragmented land ownership in the country, 155 00:08:19,240 --> 00:08:23,000 Speaker 3: permitting constraints, under investment in the grid. There again, we've 156 00:08:23,000 --> 00:08:26,600 Speaker 3: seen regulation go in to resolve some of those constraints 157 00:08:26,640 --> 00:08:29,280 Speaker 3: and now we're expecting really strong growth in the market 158 00:08:29,320 --> 00:08:32,040 Speaker 3: over the next few years. So there are countries that 159 00:08:32,080 --> 00:08:34,080 Speaker 3: are beginning to resolve some of these issues, but it 160 00:08:34,160 --> 00:08:36,400 Speaker 3: is a chronic issue around the world because we're seeing 161 00:08:36,480 --> 00:08:41,000 Speaker 3: a lot of governments and officials announcing really high targets 162 00:08:41,200 --> 00:08:45,240 Speaker 3: plans to install more wind capacity, but the chronic issues 163 00:08:45,240 --> 00:08:48,440 Speaker 3: they're not putting in the supportive legislation that's required, the 164 00:08:48,679 --> 00:08:50,760 Speaker 3: kind of boring regulatory stuff that I was talking about 165 00:08:50,800 --> 00:08:53,600 Speaker 3: before to realize those goals. It's easy to say a number, 166 00:08:53,720 --> 00:08:56,760 Speaker 3: it's less easy to put in place that regulation to 167 00:08:56,800 --> 00:08:58,560 Speaker 3: cut the red tape that needs to be cut to 168 00:08:58,840 --> 00:09:01,760 Speaker 3: realize fast growth for the wind sector globally. 169 00:09:01,840 --> 00:09:04,160 Speaker 2: I mean, this is, by the way, just a reflection 170 00:09:04,480 --> 00:09:09,319 Speaker 2: a classic example of the dilemma when you're working in 171 00:09:09,400 --> 00:09:12,000 Speaker 2: a climate related sector of how to feel because I 172 00:09:12,000 --> 00:09:14,120 Speaker 2: don't think most industries are expecting. What did you say 173 00:09:14,160 --> 00:09:17,080 Speaker 2: it was seventy percent growth? Did I hear that right? 174 00:09:17,160 --> 00:09:20,320 Speaker 3: Was it seventeen in terms of annual installations seventy percent 175 00:09:20,400 --> 00:09:23,240 Speaker 3: higher in twenty thirty compared with twenty twenty four. 176 00:09:23,400 --> 00:09:25,480 Speaker 2: Yeah, I mean that's huge, and then you know, doubling. 177 00:09:26,320 --> 00:09:28,280 Speaker 2: Most industries don't get that. So on the one hand, 178 00:09:28,320 --> 00:09:30,640 Speaker 2: if you're sort of a cheerleader for the wind industry, 179 00:09:30,679 --> 00:09:33,599 Speaker 2: you'll be out celebrating, But then you have people like 180 00:09:33,679 --> 00:09:36,760 Speaker 2: me saying, oh, that's not enough. From a climate perspective, 181 00:09:37,160 --> 00:09:39,480 Speaker 2: it's really interesting to hear that there's these countries like 182 00:09:39,559 --> 00:09:42,000 Speaker 2: Germany and India who beginning to figure it out. I 183 00:09:42,040 --> 00:09:44,280 Speaker 2: know we're both based in the US, and I think 184 00:09:44,280 --> 00:09:47,480 Speaker 2: the US has had some success with wind in certain 185 00:09:47,559 --> 00:09:50,280 Speaker 2: markets and is still figuring it out in other regions. 186 00:09:50,360 --> 00:09:53,240 Speaker 2: Do we see any evidence where there's some sort of 187 00:09:53,440 --> 00:09:57,000 Speaker 2: global harmonization, like different countries are learning on what does 188 00:09:57,080 --> 00:09:59,280 Speaker 2: work and doesn't work in resolving these issues. 189 00:09:59,480 --> 00:10:03,200 Speaker 3: I think victually there is a wide consensus, and it's 190 00:10:03,280 --> 00:10:05,560 Speaker 3: what the wind industry has been saying for a long time. 191 00:10:05,640 --> 00:10:08,120 Speaker 3: But I think policymakers are beginning to notice that these 192 00:10:08,160 --> 00:10:10,640 Speaker 3: are common problems in many markets around the world, these 193 00:10:10,720 --> 00:10:15,560 Speaker 3: issues around transmission, issues around permitting. Progress has been patchy 194 00:10:15,840 --> 00:10:19,320 Speaker 3: in many cases. The EU has been encouraging member states 195 00:10:19,320 --> 00:10:21,840 Speaker 3: to resolve some of these issues, in trying to implement 196 00:10:21,960 --> 00:10:25,560 Speaker 3: some targeted changes in order to resolve some of these constraints. 197 00:10:25,640 --> 00:10:27,560 Speaker 3: I think the difference between Germany and many of the 198 00:10:27,559 --> 00:10:30,480 Speaker 3: rest of the EU countries is Germany almost immediately started 199 00:10:30,480 --> 00:10:33,439 Speaker 3: implementing some of those EU suggestions and turn that international 200 00:10:33,559 --> 00:10:36,079 Speaker 3: level policy, whereas many other markets around the EU have 201 00:10:36,120 --> 00:10:39,240 Speaker 3: been dragging their heels. Other markets like Brazil are facing 202 00:10:39,280 --> 00:10:43,719 Speaker 3: significant transmission constraints, but they've held very successful transmissional auctions, 203 00:10:43,840 --> 00:10:47,040 Speaker 3: bringing the private sector in to build really long distance, 204 00:10:47,120 --> 00:10:51,920 Speaker 3: high voltage transmission lines. So while those transmission issues are 205 00:10:52,120 --> 00:10:55,800 Speaker 3: hitting the market today, we're expecting increasing installations towards the 206 00:10:55,840 --> 00:10:58,240 Speaker 3: end of the decade as they begin to resolve. Some 207 00:10:58,280 --> 00:11:02,120 Speaker 3: of those constraints are very well understood, and we're beginning to, 208 00:11:02,200 --> 00:11:04,720 Speaker 3: like I say, see some markets resolve some of those issues, 209 00:11:04,760 --> 00:11:09,240 Speaker 3: but it really takes active policy making because these issues 210 00:11:09,280 --> 00:11:11,440 Speaker 3: just don't fix themselves on their own. And so I 211 00:11:11,480 --> 00:11:13,640 Speaker 3: think those markets where we're really seeing that growth are 212 00:11:13,640 --> 00:11:15,920 Speaker 3: the ones that have set those targets, but now they're 213 00:11:16,000 --> 00:11:21,400 Speaker 3: really doing the additional work to build the regulation so 214 00:11:21,520 --> 00:11:24,520 Speaker 3: that those targets turn into reality, rather than arriving at 215 00:11:24,559 --> 00:11:26,360 Speaker 3: twenty thirty way off that goal. 216 00:11:26,600 --> 00:11:29,960 Speaker 2: What's really interesting here as well, is there's this perception 217 00:11:30,120 --> 00:11:34,360 Speaker 2: that pushing renewables, pushing a cleaner agenda is all about subsidies. 218 00:11:34,559 --> 00:11:36,679 Speaker 2: This is a problem that has nothing to do with subsidies. 219 00:11:36,679 --> 00:11:39,199 Speaker 2: You can't subsidize your way out of this issue. It's 220 00:11:39,240 --> 00:11:43,280 Speaker 2: a non economic factor. It's to do with untangling a 221 00:11:43,360 --> 00:11:47,120 Speaker 2: lot of local regulations and laws and having to do 222 00:11:47,160 --> 00:11:49,559 Speaker 2: it over and over again in not just different countries, 223 00:11:49,600 --> 00:11:51,520 Speaker 2: but even within the same country. Probably a lot of 224 00:11:51,559 --> 00:11:52,440 Speaker 2: those laws are different. 225 00:11:52,800 --> 00:11:56,280 Speaker 3: Yeah, a really good example is the US, which has 226 00:11:56,679 --> 00:11:59,960 Speaker 3: very generous subsidies in the Inflation Reduction Actor extended those 227 00:12:00,080 --> 00:12:02,559 Speaker 3: subsidies until at least the end of the decade. The 228 00:12:02,640 --> 00:12:06,160 Speaker 3: problem in the US isn't an economic one for wind projects. 229 00:12:06,400 --> 00:12:10,680 Speaker 3: It's around project supply, so it's getting more expensive and 230 00:12:10,720 --> 00:12:13,280 Speaker 3: you have to wait longer for a grid connection agreement. 231 00:12:13,320 --> 00:12:17,120 Speaker 3: In many US markets, permitting is incredibly fragmented, so some 232 00:12:17,240 --> 00:12:20,199 Speaker 3: permitting is done on a federal basis, some permitting rules 233 00:12:20,360 --> 00:12:22,360 Speaker 3: are on a state level, and in some cases it 234 00:12:22,400 --> 00:12:24,480 Speaker 3: goes right down to the county level, and there's different 235 00:12:24,520 --> 00:12:27,720 Speaker 3: permitting requirements depending on which county the wind project is 236 00:12:27,720 --> 00:12:30,800 Speaker 3: getting built in. That's really difficult if you're a developer 237 00:12:30,920 --> 00:12:33,880 Speaker 3: trying to navigate all of these different systems, some of 238 00:12:33,920 --> 00:12:36,680 Speaker 3: which are stricter than others. In some there may be 239 00:12:36,760 --> 00:12:40,280 Speaker 3: moratoria against new wind development, and in a county next 240 00:12:40,320 --> 00:12:42,400 Speaker 3: door that might not be the case. And so yeah, 241 00:12:42,640 --> 00:12:45,360 Speaker 3: those things are non economic. They're these really general federal 242 00:12:45,400 --> 00:12:48,360 Speaker 3: subsidies available, but they make no difference if there aren't 243 00:12:48,400 --> 00:12:50,720 Speaker 3: projects coming through the pipeline to use those subsidies. 244 00:12:50,960 --> 00:12:53,400 Speaker 2: It's really interesting hearing about, you know, some of the 245 00:12:53,440 --> 00:12:55,880 Speaker 2: developments in Europe, some of the developments in India and 246 00:12:55,920 --> 00:12:58,000 Speaker 2: the US. Of course, we can't really talk about the 247 00:12:58,000 --> 00:13:02,000 Speaker 2: global picture without talking about what's happening in China with 248 00:13:02,080 --> 00:13:05,440 Speaker 2: regards wind, So how are things developing there? 249 00:13:05,760 --> 00:13:08,880 Speaker 3: So China is by far the largest wind market globally. 250 00:13:09,120 --> 00:13:12,920 Speaker 3: For onshore wind, it represents over half of global annual 251 00:13:12,920 --> 00:13:16,240 Speaker 3: additions every year. Wow, offshore wind, it's almost that kind 252 00:13:16,240 --> 00:13:18,000 Speaker 3: of depends on the year, but it's a really really 253 00:13:18,000 --> 00:13:20,600 Speaker 3: big chunk of the market. So yeah, we can't talk 254 00:13:20,600 --> 00:13:23,559 Speaker 3: about the global wind industry without talking about China. The 255 00:13:23,600 --> 00:13:26,400 Speaker 3: sectors moving really fast there. So we forecast that China 256 00:13:26,600 --> 00:13:30,280 Speaker 3: will add seventy one gigawatts of onshore wind capacity in 257 00:13:30,280 --> 00:13:34,000 Speaker 3: twenty twenty four, seventy nine gigawats in twenty twenty five, 258 00:13:34,080 --> 00:13:36,880 Speaker 3: but really really rapid growth in China compared with where 259 00:13:36,920 --> 00:13:39,480 Speaker 3: we were just a few years ago. Part of the 260 00:13:39,520 --> 00:13:42,480 Speaker 3: story in China is they're building these mega projects, they 261 00:13:42,480 --> 00:13:46,680 Speaker 3: call them megabases, So that's really large scale projects built 262 00:13:46,400 --> 00:13:49,000 Speaker 3: in the north of the country, typically for wind where 263 00:13:49,000 --> 00:13:52,319 Speaker 3: it's really windy in desert areas. We're talking about projects 264 00:13:52,600 --> 00:13:55,160 Speaker 3: at the gigawatts scale. Typically, projects we only really see 265 00:13:55,160 --> 00:14:00,480 Speaker 3: offshore in other markets using really large turbines, so they 266 00:14:00,880 --> 00:14:03,680 Speaker 3: getting scale not only on the project side, but also 267 00:14:03,760 --> 00:14:06,320 Speaker 3: the kind of technology scale as well. We recently saw 268 00:14:06,360 --> 00:14:09,680 Speaker 3: a Chinese turbine manufacturer now so fifteen megawatt turbine for 269 00:14:09,840 --> 00:14:12,560 Speaker 3: use onshore in northern China. Now, it's really difficult to 270 00:14:12,600 --> 00:14:16,360 Speaker 3: install turbines that big on shore usually because they're logistical constraints. 271 00:14:16,400 --> 00:14:19,120 Speaker 3: You've got to ship these really long blades for a 272 00:14:19,280 --> 00:14:21,480 Speaker 3: turbine that size, they might be over one hundred meters 273 00:14:21,920 --> 00:14:25,360 Speaker 3: through small towns, up mountains and things like that. They're 274 00:14:25,360 --> 00:14:27,200 Speaker 3: building these projects in deserts, so there are a few 275 00:14:27,240 --> 00:14:30,400 Speaker 3: of those logistical constraints, so they can use those larger 276 00:14:30,440 --> 00:14:33,520 Speaker 3: turbines that when you're using a higher capacity turbines, it 277 00:14:33,560 --> 00:14:35,400 Speaker 3: means you need fewer of them for a project of 278 00:14:35,400 --> 00:14:38,320 Speaker 3: the same capacity. Basically, that means that using a bigger 279 00:14:38,320 --> 00:14:42,200 Speaker 3: turbine cuts costs because you also need fewer foundations, fewer cables, 280 00:14:42,240 --> 00:14:45,160 Speaker 3: fewer days hiring a crane to install the things. So 281 00:14:45,320 --> 00:14:49,160 Speaker 3: China's kind of realizing this scale in terms of project 282 00:14:49,440 --> 00:14:52,200 Speaker 3: and turbines that are driving down the costs. That's really 283 00:14:52,280 --> 00:14:55,680 Speaker 3: helping to drive growth across the market. But also there 284 00:14:56,360 --> 00:14:59,640 Speaker 3: they've really pushed down the price of wind to a 285 00:14:59,680 --> 00:15:02,960 Speaker 3: stop levels. So last time we did an analysis of 286 00:15:03,000 --> 00:15:06,160 Speaker 3: wind turbine prices, the average price of a turbine delivered 287 00:15:06,160 --> 00:15:08,240 Speaker 3: in China in the first half of twenty twenty four 288 00:15:08,400 --> 00:15:11,680 Speaker 3: was three hundred thousand dollars per megawatt. That's around a 289 00:15:11,720 --> 00:15:15,520 Speaker 3: third of the cost of the average turbine price delivered 290 00:15:15,520 --> 00:15:18,000 Speaker 3: in other markets around the world. That's partly due to 291 00:15:18,000 --> 00:15:20,880 Speaker 3: those impacts around scale that I was talking about before, 292 00:15:20,960 --> 00:15:24,480 Speaker 3: but also the Chinese market is very fragmented. There are 293 00:15:25,000 --> 00:15:28,720 Speaker 3: around twelve major turbine suppliers there and over the past 294 00:15:28,760 --> 00:15:32,040 Speaker 3: few years they built up a huge over manufacturing capacity 295 00:15:32,160 --> 00:15:35,239 Speaker 3: for wind turbines. For the the selles of wind turbines 296 00:15:35,400 --> 00:15:38,800 Speaker 3: during this fragmented market, they've got an over capacity and 297 00:15:38,840 --> 00:15:42,240 Speaker 3: these turbine makers are fighting for market share rather than 298 00:15:42,440 --> 00:15:46,080 Speaker 3: necessarily focusing on the profitability of the contracts they're signing. 299 00:15:46,120 --> 00:15:47,880 Speaker 3: So it means that the profitability of some of these 300 00:15:47,960 --> 00:15:50,080 Speaker 3: Chinese suppliers have really suffered over the last couple of 301 00:15:50,160 --> 00:15:53,040 Speaker 3: years as we've seen this astonishing reduction in price. So 302 00:15:53,160 --> 00:15:55,120 Speaker 3: that is great news if you're a developer of a 303 00:15:55,120 --> 00:15:58,760 Speaker 3: wind project in China. But for the Chinese turbine makers themselves, 304 00:15:58,800 --> 00:16:01,800 Speaker 3: they're now looking at ways to boost profitability, and one 305 00:16:01,840 --> 00:16:04,160 Speaker 3: way they're doing that is looking to export market. 306 00:16:04,480 --> 00:16:06,680 Speaker 2: We're going to come back to the export markets. I 307 00:16:06,720 --> 00:16:10,360 Speaker 2: had so many questions to ask along the way there. Firstly, 308 00:16:10,560 --> 00:16:12,960 Speaker 2: I just want to dive into understand these like mega 309 00:16:13,000 --> 00:16:15,960 Speaker 2: projects a little bit better. What you're describing is almost 310 00:16:16,080 --> 00:16:20,080 Speaker 2: like onore offshore wind in that they're qualitatively different from 311 00:16:20,120 --> 00:16:23,560 Speaker 2: your typical onshore wind, and they're I mean quantitatively as 312 00:16:23,560 --> 00:16:26,520 Speaker 2: well in terms of the scale of the projects. Presumably 313 00:16:26,520 --> 00:16:31,440 Speaker 2: there's a reliance on HVDC infrastructure, which is high voltage 314 00:16:31,480 --> 00:16:36,520 Speaker 2: direct current transmission. Is this a new frontier for wind, 315 00:16:36,560 --> 00:16:38,920 Speaker 2: not just in terms of scale, but because it's suddenly 316 00:16:39,000 --> 00:16:41,240 Speaker 2: qualitatively different. Now you can almost describe this as a 317 00:16:41,240 --> 00:16:43,640 Speaker 2: different category in the same way that your typical onshore 318 00:16:43,680 --> 00:16:47,240 Speaker 2: wind is different from offshore wind. This sounds like something 319 00:16:47,280 --> 00:16:50,640 Speaker 2: else again, this model that is being developed in China 320 00:16:50,800 --> 00:16:53,160 Speaker 2: in the same way that certain markets were pioneers for 321 00:16:53,200 --> 00:16:55,720 Speaker 2: offshore wind. Do you think that they are pioneering a 322 00:16:55,800 --> 00:16:58,360 Speaker 2: model that could be replicated elsewhere. 323 00:16:58,000 --> 00:17:01,440 Speaker 3: Potentially, and these mega based projects are becoming a crucial 324 00:17:01,880 --> 00:17:04,399 Speaker 3: growth driver in the way we see it for the 325 00:17:04,520 --> 00:17:07,600 Speaker 3: overall Chinese wind sector. We're expecting four tyike gig whats 326 00:17:07,640 --> 00:17:09,760 Speaker 3: of these wind projects to come online in twenty twenty 327 00:17:09,760 --> 00:17:12,640 Speaker 3: four and twenty twenty five, but we're expecting a further 328 00:17:12,680 --> 00:17:14,520 Speaker 3: one hundred and six gig what's of these projects to 329 00:17:14,520 --> 00:17:16,399 Speaker 3: come online from twenty twenty six to the end of 330 00:17:16,440 --> 00:17:19,440 Speaker 3: the decade. Part of the reason that China can deliver 331 00:17:19,520 --> 00:17:22,760 Speaker 3: these large projects is that they're building these projects where 332 00:17:22,880 --> 00:17:25,760 Speaker 3: land is ample and there are a few permitting restrictions. 333 00:17:25,840 --> 00:17:28,520 Speaker 3: Usually these are being built by big state owned developers 334 00:17:28,520 --> 00:17:30,080 Speaker 3: as well, so there are kind of fewer of these 335 00:17:30,119 --> 00:17:34,840 Speaker 3: regulatory barriers to building these projects those kind of areas, 336 00:17:35,080 --> 00:17:37,399 Speaker 3: and that situation is harder to come by in other market. 337 00:17:37,520 --> 00:17:41,800 Speaker 3: So we are seeing some really large projects under construction 338 00:17:41,880 --> 00:17:45,400 Speaker 3: in the US. So there's a couple of projects being 339 00:17:45,400 --> 00:17:48,879 Speaker 3: built in the US, one in Wyoming, one in Arizona. 340 00:17:49,040 --> 00:17:51,040 Speaker 3: At the moment that are a similar scale to these 341 00:17:51,040 --> 00:17:54,560 Speaker 3: megabased projects we're seeing in China, And while the turbine 342 00:17:54,560 --> 00:17:56,720 Speaker 3: capacity aren't as large as the project's examples we're seeing 343 00:17:56,720 --> 00:17:59,760 Speaker 3: in China, they're still realizing those economic benefits you get 344 00:17:59,760 --> 00:18:02,720 Speaker 3: from pure project scale. But in other markets, it's hard 345 00:18:02,760 --> 00:18:05,360 Speaker 3: to find those locations in those situations where you can 346 00:18:05,400 --> 00:18:07,000 Speaker 3: build projects of that kind of scale. 347 00:18:07,080 --> 00:18:09,520 Speaker 2: Got it. I mean that's super interesting, and I do 348 00:18:09,640 --> 00:18:14,199 Speaker 2: wonder if if over time there might be other opportunities uncovered, 349 00:18:14,280 --> 00:18:16,800 Speaker 2: you know, because it's it's not maybe as easy to search. 350 00:18:16,800 --> 00:18:19,240 Speaker 2: When you're thinking about offshore wind. You look at coastline, 351 00:18:19,240 --> 00:18:21,479 Speaker 2: you look at water depth, you look at wind speed, 352 00:18:21,600 --> 00:18:25,040 Speaker 2: and you can already, like without too much research, identify 353 00:18:25,359 --> 00:18:28,240 Speaker 2: all of the places where there's decent offshore wind potential. 354 00:18:28,359 --> 00:18:30,080 Speaker 2: We are going to come back to offshore wind as well, 355 00:18:30,119 --> 00:18:32,200 Speaker 2: actually in a moment. But you said made this point 356 00:18:32,240 --> 00:18:36,240 Speaker 2: about Chinese turbine manufacturers. So if I understand correctly, the 357 00:18:36,640 --> 00:18:41,040 Speaker 2: picture painted is the Chinese market is big. It's growing, 358 00:18:41,280 --> 00:18:43,800 Speaker 2: I believe, Or is it always that big? 359 00:18:44,400 --> 00:18:46,760 Speaker 3: No, it's big, it has grown and it will continue 360 00:18:46,800 --> 00:18:47,240 Speaker 3: to grow for this. 361 00:18:47,240 --> 00:18:50,520 Speaker 2: Rest Okay, So it's always been big, it's getting bigger, 362 00:18:50,600 --> 00:18:52,480 Speaker 2: and it's going to get even bigger than that. But 363 00:18:52,600 --> 00:18:56,359 Speaker 2: Chinese turbine manufacturers have maybe got too big too fast, 364 00:18:56,800 --> 00:18:59,960 Speaker 2: and now there's overcapacity. And I remember, whenever I've looked 365 00:19:00,080 --> 00:19:03,320 Speaker 2: at this, it's always seemed like there's two separate worlds. 366 00:19:03,359 --> 00:19:06,680 Speaker 2: There's Chinese wind, which is a Chinese market served by 367 00:19:06,760 --> 00:19:10,040 Speaker 2: Chinese manufacturers, and that's about half the global market. And 368 00:19:10,040 --> 00:19:12,919 Speaker 2: then there's the rest of the world, served by a 369 00:19:13,000 --> 00:19:16,840 Speaker 2: number of international companies, none of which are Chinese. So 370 00:19:16,880 --> 00:19:19,240 Speaker 2: it's kind of been China and everyone else, both as 371 00:19:19,280 --> 00:19:21,760 Speaker 2: a market and an industry. But you mentioned now that 372 00:19:21,960 --> 00:19:25,560 Speaker 2: Chinese manufacturers are starting to make inroads into other markets 373 00:19:25,760 --> 00:19:27,760 Speaker 2: around the world, So tell us a bit more about 374 00:19:27,840 --> 00:19:30,000 Speaker 2: what that looks like and what's actually happening at the moment. 375 00:19:30,280 --> 00:19:33,360 Speaker 3: Yeah, So the Chinese tab i maker's home market has 376 00:19:33,440 --> 00:19:36,840 Speaker 3: historically been huge. It's meant that there was less of 377 00:19:36,880 --> 00:19:41,240 Speaker 3: a drive for them to really target export aggressively. So 378 00:19:41,640 --> 00:19:44,760 Speaker 3: there has historically been some progress that they've made, but 379 00:19:44,800 --> 00:19:47,800 Speaker 3: that's really rapidly started to change over the last couple 380 00:19:47,840 --> 00:19:50,080 Speaker 3: of years as pricing pressure has been so intense at 381 00:19:50,080 --> 00:19:52,800 Speaker 3: home that they're now looking to export markets, where they're 382 00:19:52,800 --> 00:19:56,240 Speaker 3: typically able to sell turbines at a much higher rate 383 00:19:56,560 --> 00:19:59,520 Speaker 3: and earn a higher profit margin on those sales. Still, 384 00:19:59,800 --> 00:20:03,080 Speaker 3: by our calculations, a turbine delivered outside of China, if 385 00:20:03,080 --> 00:20:05,680 Speaker 3: it's supplied by a Chinese turbine maker, that's around twenty 386 00:20:05,680 --> 00:20:08,680 Speaker 3: eight percent cheaper than an equivalent turbine supplied by a 387 00:20:08,840 --> 00:20:12,040 Speaker 3: US or European manufacturer, And in many markets around the world, 388 00:20:12,119 --> 00:20:15,600 Speaker 3: that price difference is very attractive, and particularly in emerging 389 00:20:15,600 --> 00:20:18,400 Speaker 3: markets that are just kind of looking at wind more seriously. 390 00:20:18,440 --> 00:20:21,719 Speaker 3: At the moment, we're seeing the influx of Chinese turbine 391 00:20:21,720 --> 00:20:25,399 Speaker 3: technology and those cheaper turbines begin to drive up installations 392 00:20:25,400 --> 00:20:28,280 Speaker 3: and increase the pace of wind market growth in those markets. 393 00:20:28,400 --> 00:20:30,959 Speaker 3: So Chinese turbine makers are having more success in places 394 00:20:31,000 --> 00:20:34,359 Speaker 3: like Central Asia, Southeast Asian countries like Vietnam, they started 395 00:20:34,400 --> 00:20:37,359 Speaker 3: selling a lot of turbines. Some markets in the Middle 396 00:20:37,359 --> 00:20:40,200 Speaker 3: East and Africa as well are starting to move from 397 00:20:40,200 --> 00:20:43,160 Speaker 3: a situation where the market was completely dominated by US 398 00:20:43,160 --> 00:20:47,600 Speaker 3: and European turbine manufacturers are now pretty much exclusively purchasing 399 00:20:47,840 --> 00:20:50,639 Speaker 3: Chinese turbines in some cases, but there are also some 400 00:20:51,000 --> 00:20:53,359 Speaker 3: kind of more established markets that are now making a 401 00:20:53,359 --> 00:20:56,000 Speaker 3: similar switch. So I was talking about the Indian market before. 402 00:20:56,119 --> 00:20:57,160 Speaker 2: Yeah, I was just going to ask. 403 00:20:57,400 --> 00:20:59,879 Speaker 3: So the Indian market is a really exciting one for 404 00:21:00,320 --> 00:21:02,720 Speaker 3: the wind industry at the moment. It's one of those 405 00:21:02,760 --> 00:21:05,960 Speaker 3: markets with the highest rates of growth. But it's moving 406 00:21:05,960 --> 00:21:08,280 Speaker 3: from a place where back in twenty twenty one, the 407 00:21:08,359 --> 00:21:13,640 Speaker 3: vast majority of turbines commissioned were being manufactured by European 408 00:21:13,680 --> 00:21:17,520 Speaker 3: and US manufacturers like Siemens Gamesa. Now it's local Indian 409 00:21:17,560 --> 00:21:20,360 Speaker 3: manufacturers that were in real dire financial straits a few 410 00:21:20,440 --> 00:21:22,360 Speaker 3: years ago, and now they've kind of turned that situation 411 00:21:22,440 --> 00:21:25,199 Speaker 3: around and those domestic players are winning a lot of orders, 412 00:21:25,400 --> 00:21:28,760 Speaker 3: but also Chinese turbine makers are making serious inroads there 413 00:21:28,800 --> 00:21:31,680 Speaker 3: as well. Indian has some local content requirements which really 414 00:21:31,680 --> 00:21:36,320 Speaker 3: favor companies that have local manufacturing capacity in the Indian market, 415 00:21:36,520 --> 00:21:39,320 Speaker 3: and Envision, which is a Chinese turby maker, has set 416 00:21:39,400 --> 00:21:41,520 Speaker 3: up a factory in the market and is really benefiting 417 00:21:41,560 --> 00:21:42,480 Speaker 3: from securing. 418 00:21:42,200 --> 00:21:44,560 Speaker 2: A lot of orders there over the last few years. 419 00:21:44,640 --> 00:21:48,440 Speaker 3: So we track turbine orders secured by turbi makers around 420 00:21:48,440 --> 00:21:51,159 Speaker 3: the world outside of China every quarter, and we've really 421 00:21:51,200 --> 00:21:53,679 Speaker 3: seen over the last three years, that complete switch in 422 00:21:53,720 --> 00:21:57,520 Speaker 3: the Indian market from being dominated by EU and US 423 00:21:57,680 --> 00:22:00,159 Speaker 3: players to in twenty twenty four, almost all all of 424 00:22:00,160 --> 00:22:02,920 Speaker 3: the orders we tracked have been for Chinese or Indian 425 00:22:02,960 --> 00:22:04,040 Speaker 3: manufactured turbines. 426 00:22:04,200 --> 00:22:06,959 Speaker 2: That's super interesting, and I guess there's two factors at 427 00:22:06,960 --> 00:22:11,840 Speaker 2: play there. One is that Chinese manufacturers having to look 428 00:22:11,880 --> 00:22:15,399 Speaker 2: beyond China because their domestic market, although huge, was not 429 00:22:15,520 --> 00:22:18,640 Speaker 2: quite huge enough of them. And then also India's wind 430 00:22:18,680 --> 00:22:20,960 Speaker 2: industry beginning to pick up. And I'm really interesting because 431 00:22:21,080 --> 00:22:24,359 Speaker 2: I mean, you've identified India is this exciting place for 432 00:22:24,440 --> 00:22:27,119 Speaker 2: wind right now, a growth market, and given the local 433 00:22:27,119 --> 00:22:30,359 Speaker 2: content requirements, we know that a certain part of that 434 00:22:30,480 --> 00:22:33,119 Speaker 2: is going to be going to Indian manufacturers. Can you 435 00:22:33,200 --> 00:22:36,679 Speaker 2: ever see a scenario or a pathway forward where we 436 00:22:36,800 --> 00:22:42,280 Speaker 2: might start seeing Indian wind manufacturers exporting, competing with Chinese manufacturers, 437 00:22:42,280 --> 00:22:45,359 Speaker 2: competing with the US and European manufacturers potentially. 438 00:22:45,560 --> 00:22:47,560 Speaker 3: I think some of those Indian manufacturers I was talking 439 00:22:47,600 --> 00:22:51,320 Speaker 3: about before have been in real financial difficulty a few 440 00:22:51,400 --> 00:22:53,400 Speaker 3: years ago, and so they've been getting back on their 441 00:22:53,400 --> 00:22:56,120 Speaker 3: feet in their home market. But speaking to some of them, 442 00:22:56,119 --> 00:22:59,240 Speaker 3: they've definitely got plans in the future to export more 443 00:22:59,240 --> 00:23:02,840 Speaker 3: of their turbines. So yeah, there's definitely potential in the 444 00:23:02,880 --> 00:23:06,720 Speaker 3: market to see this slight diversification of the global turbine 445 00:23:06,720 --> 00:23:10,240 Speaker 3: supply market rather than this in India specific story that 446 00:23:10,720 --> 00:23:14,040 Speaker 3: we've we've been noticing. So far, we haven't seen much 447 00:23:14,119 --> 00:23:16,679 Speaker 3: progress in terms of actual turbine sales or orders come 448 00:23:16,720 --> 00:23:19,080 Speaker 3: in for those Indian turbine manufacturers, so it's kind of 449 00:23:19,080 --> 00:23:22,560 Speaker 3: plans rather than evidence that we're seeing so far. But yeah, 450 00:23:22,680 --> 00:23:24,240 Speaker 3: there's definite potential there. 451 00:23:24,640 --> 00:23:27,800 Speaker 2: It makes me think of another question that springs to mind, 452 00:23:27,800 --> 00:23:30,880 Speaker 2: a related question, because if you're looking at any country 453 00:23:30,960 --> 00:23:36,320 Speaker 2: to develop their industry, whether through economic planning or you know, 454 00:23:36,400 --> 00:23:39,119 Speaker 2: industrial planning or any other means, you want to look 455 00:23:39,160 --> 00:23:42,680 Speaker 2: at like what is the global capacity. So, for example, 456 00:23:42,880 --> 00:23:45,240 Speaker 2: it is very well known that solar at the moment, 457 00:23:45,280 --> 00:23:48,760 Speaker 2: there's global overcapacity of manufacturing. So I have often said, 458 00:23:48,840 --> 00:23:50,680 Speaker 2: I don't think it makes that much sense for the 459 00:23:50,800 --> 00:23:53,719 Speaker 2: US to be trying to develop its own solar supply chains, 460 00:23:53,760 --> 00:23:57,920 Speaker 2: even with all the geopolitical considerations there, because fundamentally that's 461 00:23:58,000 --> 00:23:59,879 Speaker 2: never going to be something you can export from. And 462 00:24:00,240 --> 00:24:02,600 Speaker 2: I'm kind of thinking I was thinking the same thing 463 00:24:02,640 --> 00:24:04,960 Speaker 2: in relation to you know, as I asked the question 464 00:24:05,000 --> 00:24:07,479 Speaker 2: about India, is would it make sense for them to 465 00:24:07,520 --> 00:24:10,760 Speaker 2: do that if there's global oversupply. Now you mentioned that 466 00:24:10,760 --> 00:24:15,439 Speaker 2: there's overcapacity in China, which is half the market, So 467 00:24:15,760 --> 00:24:18,320 Speaker 2: would you say that there is a global overcapacity in 468 00:24:18,359 --> 00:24:19,639 Speaker 2: wind manufacturing at the moment. 469 00:24:19,840 --> 00:24:22,560 Speaker 3: So wind of really complex machines. They're made up of 470 00:24:22,800 --> 00:24:25,720 Speaker 3: loads of different components, and it's really a component by 471 00:24:25,720 --> 00:24:28,680 Speaker 3: component story we're looking at is whether there's overcapacity where 472 00:24:28,680 --> 00:24:31,480 Speaker 3: there needs to be more supply chain investment. So when 473 00:24:31,480 --> 00:24:34,480 Speaker 3: we talk about there being overcapacity in China, that's definitely 474 00:24:34,480 --> 00:24:37,680 Speaker 3: the case for mis cells, for example, so those boxes 475 00:24:37,720 --> 00:24:40,199 Speaker 3: that sit on top of a wind turbine tower that 476 00:24:40,320 --> 00:24:44,240 Speaker 3: house the generator, the gearbox, the main bearing, and all 477 00:24:44,280 --> 00:24:47,320 Speaker 3: of those important subcomponents. But the other thing I'd say, 478 00:24:47,359 --> 00:24:51,399 Speaker 3: when we're talking about an overcapacity for Nicell manufacturing in China, 479 00:24:51,640 --> 00:24:54,840 Speaker 3: wind components are so large that once a market reaches 480 00:24:54,880 --> 00:24:57,520 Speaker 3: a certain level of scale, it doesn't necessarily make sense 481 00:24:57,600 --> 00:24:59,679 Speaker 3: to build those nes cells in China and ship them 482 00:24:59,680 --> 00:25:03,439 Speaker 3: all over the world to manufacturer blades which are eighty 483 00:25:03,600 --> 00:25:06,440 Speaker 3: one hundred meters long, and ship them from China everywhere else, 484 00:25:06,520 --> 00:25:10,720 Speaker 3: like it might make sense for solar or battery equipment. 485 00:25:10,359 --> 00:25:13,320 Speaker 2: Right, it's not as modular I suppose. 486 00:25:13,000 --> 00:25:16,639 Speaker 3: Exactly, and the components are just just bigger. So it 487 00:25:16,760 --> 00:25:19,879 Speaker 3: means that actually we're seeing some Chinese turbine manufacturers that 488 00:25:19,880 --> 00:25:24,120 Speaker 3: are targeting specific markets are setting up local facilities despite 489 00:25:24,119 --> 00:25:26,040 Speaker 3: the fact that they've got this over capacity at home. 490 00:25:26,160 --> 00:25:30,200 Speaker 3: So Goldwyn, the largest Chinese turbine manufacturing actually the largest 491 00:25:30,200 --> 00:25:32,720 Speaker 3: turbine maker in the world in terms of commissioned capacity 492 00:25:32,800 --> 00:25:35,399 Speaker 3: last year according to our Wind Turby Market Shares report, 493 00:25:35,680 --> 00:25:39,600 Speaker 3: just opened manufacturing facility in Brazil for example. I mentioned 494 00:25:40,080 --> 00:25:42,880 Speaker 3: Envision has its factory in India, and we've seen some 495 00:25:43,000 --> 00:25:46,360 Speaker 3: Chinese turby makers talk about opening manufacturing facilities in Europe. 496 00:25:46,440 --> 00:25:49,360 Speaker 3: So even though we've got this over capacity in China itself, 497 00:25:49,480 --> 00:25:52,760 Speaker 3: it doesn't necessarily mean that that capacity will or can 498 00:25:52,800 --> 00:25:55,600 Speaker 3: be used to service the global market, got it. 499 00:25:55,680 --> 00:25:58,239 Speaker 2: So it's not with wind, It's not as simple as 500 00:25:58,359 --> 00:26:00,720 Speaker 2: adding up all the capacity in the world and then 501 00:26:00,800 --> 00:26:02,760 Speaker 2: comparing it to the needs it's always going to be. 502 00:26:02,920 --> 00:26:04,320 Speaker 2: It's inherently more local. 503 00:26:04,560 --> 00:26:07,879 Speaker 3: Yes, yeah, that's true, And like I said before, it's 504 00:26:08,040 --> 00:26:12,239 Speaker 3: inherently kind of component based as well. Right, So there 505 00:26:12,280 --> 00:26:15,040 Speaker 3: are some parts of the supply chain that are in 506 00:26:15,240 --> 00:26:18,160 Speaker 3: significant under supplies. So if you look to offshore wind, 507 00:26:18,200 --> 00:26:21,159 Speaker 3: for example, if you speak to the developer today, if 508 00:26:21,200 --> 00:26:23,760 Speaker 3: you want to secure an installation vessel that can install 509 00:26:23,760 --> 00:26:27,280 Speaker 3: the really heavy foundations or the turbines offshore, these are 510 00:26:27,280 --> 00:26:30,600 Speaker 3: really specialized vessels, and as turbines get bigger, the number 511 00:26:30,640 --> 00:26:33,359 Speaker 3: of vessels in the fleet that can install these heavy components, 512 00:26:33,359 --> 00:26:35,720 Speaker 3: these tall components is shrinking. So if you speak to 513 00:26:35,760 --> 00:26:38,680 Speaker 3: a developer today, you're looking much later in the decade 514 00:26:38,760 --> 00:26:40,439 Speaker 3: if you're looking to book one of these vessels to 515 00:26:40,480 --> 00:26:44,000 Speaker 3: install turbines or foundations at your project. So we're looking 516 00:26:44,000 --> 00:26:47,400 Speaker 3: at a situation where there's massive overcapacity for some components 517 00:26:47,440 --> 00:26:49,960 Speaker 3: in the market, but for other supply chain services, we're 518 00:26:49,960 --> 00:26:52,680 Speaker 3: looking at a really really tight market. So it's really 519 00:26:52,760 --> 00:26:55,320 Speaker 3: component by component when you look at the wind supply chain. 520 00:26:55,720 --> 00:26:58,359 Speaker 2: Speaking of offshore wind, this whole framing i've given of 521 00:26:58,640 --> 00:27:00,760 Speaker 2: wind in a way needing to step up so that 522 00:27:00,840 --> 00:27:02,840 Speaker 2: it isn't the weakest link. And you've provided lots of 523 00:27:02,880 --> 00:27:06,879 Speaker 2: examples of, you know, reasons to be optimistic, things that 524 00:27:06,960 --> 00:27:09,399 Speaker 2: are exciting, that are happening. We haven't talked about new 525 00:27:09,400 --> 00:27:12,120 Speaker 2: technologies at all, and I know that your team has 526 00:27:12,240 --> 00:27:16,040 Speaker 2: been looking a little bit at floating offshore wind. So 527 00:27:16,560 --> 00:27:18,879 Speaker 2: just tell us a little bit more about what the 528 00:27:18,960 --> 00:27:22,080 Speaker 2: role of floating offshore wind could be and where it's 529 00:27:22,119 --> 00:27:24,080 Speaker 2: at right now as a technology. 530 00:27:24,280 --> 00:27:26,720 Speaker 3: Yes, so floating off your wind could be a really 531 00:27:26,760 --> 00:27:29,760 Speaker 3: exciting new avenue of growth for the wind sector. It's 532 00:27:29,760 --> 00:27:32,760 Speaker 3: a much more nascent technology. So whereas the vast majority 533 00:27:32,800 --> 00:27:35,800 Speaker 3: of projects up until now, turbines have been installed on 534 00:27:35,920 --> 00:27:38,560 Speaker 3: foundations that are fixed to the seabed, and we're seeing 535 00:27:38,840 --> 00:27:43,200 Speaker 3: some demonstrator projects, much smaller projects so far of turbines 536 00:27:43,240 --> 00:27:45,840 Speaker 3: that are installed on floating platforms that are then more 537 00:27:45,840 --> 00:27:48,159 Speaker 3: than anchored to the seabed. At the moment, this is 538 00:27:48,359 --> 00:27:51,320 Speaker 3: a much newer technology, it's much more expensive, and it's 539 00:27:51,359 --> 00:27:52,639 Speaker 3: just at a demonstrator scale. 540 00:27:52,800 --> 00:27:54,919 Speaker 2: So when you say it's much more expensive, can we 541 00:27:54,960 --> 00:27:56,760 Speaker 2: put a number on that? I think you said that 542 00:27:56,840 --> 00:28:00,000 Speaker 2: an onshore wind turbine from China is a three hundred 543 00:28:00,000 --> 00:28:02,600 Speaker 2: one thousand dollars per megawatt. So what are we looking 544 00:28:02,640 --> 00:28:05,560 Speaker 2: at for the kind of state of the art floating 545 00:28:05,600 --> 00:28:06,439 Speaker 2: wind turbine? 546 00:28:06,520 --> 00:28:08,240 Speaker 3: I think rather than looking at just the cost of 547 00:28:08,240 --> 00:28:10,280 Speaker 3: the turbine, it's you sort of look at the project 548 00:28:10,320 --> 00:28:14,000 Speaker 3: as a whole. Today, floating wind is well over two 549 00:28:14,040 --> 00:28:16,520 Speaker 3: times as expensive for one of those kind of early 550 00:28:16,520 --> 00:28:19,880 Speaker 3: demonstrated projects than an equivalent bottom fix off your wind 551 00:28:19,960 --> 00:28:22,679 Speaker 3: project that we're seeing being installed at the industrial scale. 552 00:28:22,720 --> 00:28:25,520 Speaker 3: So the largest project on the construction at the moment 553 00:28:25,600 --> 00:28:28,000 Speaker 3: around the world is in UK waters so at bottom 554 00:28:28,000 --> 00:28:31,440 Speaker 3: fixed project, and that's three point seven gigawatts. We're expecting 555 00:28:31,440 --> 00:28:33,080 Speaker 3: that to come online over the next couple of years. 556 00:28:33,160 --> 00:28:36,600 Speaker 3: If you compared that to the largest operational floating wind 557 00:28:36,640 --> 00:28:40,120 Speaker 3: project today, that's eighty eight megawatts or less than nine 558 00:28:40,120 --> 00:28:43,520 Speaker 3: point one gigawatt. So the sectors are at completely different 559 00:28:43,520 --> 00:28:46,360 Speaker 3: stages at the moment. So floating wind projects at the 560 00:28:46,360 --> 00:28:49,600 Speaker 3: moment today, those early demonstrator scale projects are coming in 561 00:28:49,640 --> 00:28:52,320 Speaker 3: markets that are willing to pay the cost premium needed 562 00:28:52,360 --> 00:28:54,960 Speaker 3: to bring the cost of this new technology down. So 563 00:28:55,040 --> 00:28:59,040 Speaker 3: that's markets in Europe. We've had seen some early demonstrators 564 00:28:59,040 --> 00:29:01,640 Speaker 3: in Japan, but beginning to see the sector look to 565 00:29:01,960 --> 00:29:04,600 Speaker 3: make that next step up in scale. So I mentioned 566 00:29:04,800 --> 00:29:07,360 Speaker 3: the largest project so far, it's off the coast of Norway. 567 00:29:07,400 --> 00:29:10,880 Speaker 3: It's it's eighty eight megawats owned by Equanor called the 568 00:29:10,960 --> 00:29:14,760 Speaker 3: High Wind Tampon project. This year we've seen France hand 569 00:29:14,760 --> 00:29:17,800 Speaker 3: out a revenue support contract to a floating wind project 570 00:29:17,880 --> 00:29:19,800 Speaker 3: or will be just over two hundred and fifty megawatts. 571 00:29:19,920 --> 00:29:22,000 Speaker 3: The UK has handed out a subsidy contract a couple 572 00:29:22,040 --> 00:29:24,640 Speaker 3: of months ago to a project that will be four 573 00:29:24,720 --> 00:29:25,800 Speaker 3: hundred megawatts. 574 00:29:25,840 --> 00:29:27,520 Speaker 2: So beginning to see these. 575 00:29:27,360 --> 00:29:30,479 Speaker 3: Projects just beginning to reach that stage of commercial scale, 576 00:29:30,520 --> 00:29:32,800 Speaker 3: and reaching that scale is going to be crucial for 577 00:29:32,880 --> 00:29:35,880 Speaker 3: the sector to make those learnings to bring down the 578 00:29:35,920 --> 00:29:38,720 Speaker 3: cost of the technology and to learn how to go 579 00:29:38,800 --> 00:29:42,120 Speaker 3: from the very specialized process of manufacturing one of these 580 00:29:42,160 --> 00:29:45,520 Speaker 3: floating platforms to the serial manufacturer of lots of these 581 00:29:45,560 --> 00:29:48,440 Speaker 3: things to build a large scale project. So the sectors 582 00:29:48,480 --> 00:29:51,680 Speaker 3: going through that process today, which means that we forecast 583 00:29:52,160 --> 00:29:56,760 Speaker 3: the overall capex for a floating wind project from between 584 00:29:56,960 --> 00:29:59,080 Speaker 3: kind of six to eight million dollars for megawat today 585 00:29:59,160 --> 00:30:02,120 Speaker 3: to decrease to four point four million to five million 586 00:30:02,160 --> 00:30:05,080 Speaker 3: dollars from megawatt by twenty thirty. A lot depends on 587 00:30:05,120 --> 00:30:08,000 Speaker 3: the characteristics of the project site. So floating wind is 588 00:30:08,120 --> 00:30:11,160 Speaker 3: built in deep waters usually above seventy meters water depth, 589 00:30:11,440 --> 00:30:14,160 Speaker 3: but we're seeing some projects going at around seventy to 590 00:30:14,160 --> 00:30:16,680 Speaker 3: one hundred meters. If you're looking off the coast of California, 591 00:30:16,800 --> 00:30:19,520 Speaker 3: you're looking at projects that will be installed in waters 592 00:30:19,560 --> 00:30:22,160 Speaker 3: over one thousand meters water depth. So there's a big 593 00:30:22,280 --> 00:30:25,680 Speaker 3: range in costs depending on the site specific characteristics. But 594 00:30:25,720 --> 00:30:27,560 Speaker 3: we are expecting to see costs come down, which is 595 00:30:27,560 --> 00:30:29,800 Speaker 3: going to be crucial if the floating wind sector is 596 00:30:29,840 --> 00:30:33,360 Speaker 3: going to go from a really subsidy driven phase today 597 00:30:33,520 --> 00:30:35,960 Speaker 3: to being at all competitive with other technologies. 598 00:30:36,160 --> 00:30:39,280 Speaker 2: I suppose there's a more fundamental question I have to 599 00:30:39,320 --> 00:30:43,000 Speaker 2: ask about floating offshore wind is why you know you 600 00:30:43,040 --> 00:30:45,760 Speaker 2: mentioned it's it's way more expensive than fixed bottom off 601 00:30:46,160 --> 00:30:49,440 Speaker 2: offshore wind, which is in turn more expensive than onshore wind. 602 00:30:49,760 --> 00:30:52,080 Speaker 2: So yes, these costs can come down, you know, and 603 00:30:52,120 --> 00:30:54,880 Speaker 2: that would be driven by subsidies together get that scale. 604 00:30:54,880 --> 00:30:57,680 Speaker 2: But why is anyone talking about floating offshore wind. 605 00:30:57,920 --> 00:30:59,640 Speaker 3: So there are a lot of markets around the world 606 00:30:59,640 --> 00:31:03,200 Speaker 3: that have limited seabed areas with shallow enough waters to 607 00:31:03,200 --> 00:31:06,120 Speaker 3: build bottom fixed projects. So while in many of those 608 00:31:06,160 --> 00:31:10,120 Speaker 3: markets they're building bottom fixed projects today, markets like South 609 00:31:10,200 --> 00:31:12,920 Speaker 3: Korea like Japan, we're expecting if they want to make 610 00:31:13,080 --> 00:31:16,840 Speaker 3: offshore wind a crucial part of their wider energy transition strategy, 611 00:31:16,960 --> 00:31:19,400 Speaker 3: they're going to have to start to look towards floating wind. 612 00:31:19,600 --> 00:31:22,440 Speaker 3: And another key example is the west coast of the US, 613 00:31:22,600 --> 00:31:25,240 Speaker 3: where the continental shelf drops off very quickly, so you 614 00:31:25,280 --> 00:31:27,000 Speaker 3: get very deep waters very quickly. 615 00:31:27,040 --> 00:31:28,200 Speaker 2: As you move further offshore. 616 00:31:28,440 --> 00:31:31,560 Speaker 3: It's very difficult in California, for example, to secure a 617 00:31:31,600 --> 00:31:35,520 Speaker 3: permit for an onshore wind farm, and you've got grid 618 00:31:35,840 --> 00:31:39,880 Speaker 3: today that's getting increasingly dominated by solar. Solar generation and 619 00:31:39,920 --> 00:31:42,760 Speaker 3: wind generation tends to be quite complementary. But if they 620 00:31:42,800 --> 00:31:45,560 Speaker 3: can't build an onshore wind project, and they don't have 621 00:31:45,800 --> 00:31:48,640 Speaker 3: waters shallow enough to build a bottom fixed offshore wind project, 622 00:31:48,640 --> 00:31:50,880 Speaker 3: then they're going to have to look towards floating wind. 623 00:31:51,040 --> 00:31:52,640 Speaker 3: So we see a few of these markets around the 624 00:31:52,680 --> 00:31:55,160 Speaker 3: world that need to add wind to their mix. They're 625 00:31:55,160 --> 00:31:57,640 Speaker 3: struggling to build on shore projects and so they're going 626 00:31:57,680 --> 00:31:59,600 Speaker 3: to have to look towards floating wind at some point. 627 00:32:00,000 --> 00:32:02,080 Speaker 3: I think those are the markets we're expecting to see 628 00:32:02,120 --> 00:32:04,959 Speaker 3: an increasing number of commercial scale projects, probably as we 629 00:32:04,960 --> 00:32:07,520 Speaker 3: move into the early twenty thirties and floating. 630 00:32:07,160 --> 00:32:09,320 Speaker 2: Off sure, I mean you mentioned it. It is moored 631 00:32:09,400 --> 00:32:12,400 Speaker 2: to the seabird, so I presume that rather than it 632 00:32:12,440 --> 00:32:16,160 Speaker 2: being the water depth just no longer matters. It more 633 00:32:16,480 --> 00:32:19,200 Speaker 2: opens up a range of depths. Is that a fair 634 00:32:19,640 --> 00:32:21,480 Speaker 2: way to describe it? Or is it that you could 635 00:32:21,640 --> 00:32:23,600 Speaker 2: literally build this anywhere? 636 00:32:23,880 --> 00:32:25,800 Speaker 3: I think when you get to those really deep waters 637 00:32:26,200 --> 00:32:29,440 Speaker 3: it brings its own challenges. There are certain technical gaps 638 00:32:29,440 --> 00:32:31,320 Speaker 3: at the moment for floating wind that see the still 639 00:32:31,360 --> 00:32:33,800 Speaker 3: need to get resolved so it's not just a cost issue, 640 00:32:33,840 --> 00:32:37,400 Speaker 3: and one of those is around electrical infrastructure, and for 641 00:32:37,600 --> 00:32:40,640 Speaker 3: projects in really deep waters, they still haven't really resolved 642 00:32:40,640 --> 00:32:44,120 Speaker 3: all the technical constraints around building an offshore wind substation 643 00:32:44,520 --> 00:32:48,080 Speaker 3: that collects all the generation from each of the individual 644 00:32:48,120 --> 00:32:50,880 Speaker 3: turbines and then exports it back to shore with a 645 00:32:51,520 --> 00:32:54,520 Speaker 3: really large cable. Now, many of the larger projects, even 646 00:32:54,560 --> 00:32:58,920 Speaker 3: if they use floating turbines, they've either run the cables 647 00:32:58,960 --> 00:33:01,920 Speaker 3: from each individual string of turbines all the way back 648 00:33:01,960 --> 00:33:04,440 Speaker 3: to shore, so you have multiple cables running back to shore, 649 00:33:04,800 --> 00:33:08,320 Speaker 3: or they've built a bottom fixed offshore wind substation, usually 650 00:33:08,360 --> 00:33:11,280 Speaker 3: with a kind of really deep jacket foundation or picked 651 00:33:11,480 --> 00:33:13,640 Speaker 3: a point of the site that does have slightly shallower 652 00:33:13,680 --> 00:33:16,280 Speaker 3: waters to build that bottom fixed substation, even if the 653 00:33:16,320 --> 00:33:17,240 Speaker 3: turbines are floating. 654 00:33:17,400 --> 00:33:18,440 Speaker 2: That doesn't become possible. 655 00:33:18,440 --> 00:33:20,720 Speaker 3: If you're looking off the coast of California and the 656 00:33:20,760 --> 00:33:22,760 Speaker 3: waters are one thousand meters deep, you just can't build 657 00:33:22,760 --> 00:33:25,920 Speaker 3: a bottom fixed foundation for your substation there. So there 658 00:33:25,920 --> 00:33:29,560 Speaker 3: are some technical gaps for the electrical equipment that needs 659 00:33:29,560 --> 00:33:33,080 Speaker 3: to go in that in that floating substation, and those 660 00:33:33,120 --> 00:33:35,200 Speaker 3: haven't really been resolved or there hasn't been a solution. 661 00:33:35,320 --> 00:33:39,000 Speaker 3: So some companies have been proposing, for example, underwater substations, 662 00:33:39,000 --> 00:33:41,520 Speaker 3: which is just a completely wacky and new concept for 663 00:33:41,560 --> 00:33:44,680 Speaker 3: the industry. Some have been looking at floating foundations, but 664 00:33:44,720 --> 00:33:47,280 Speaker 3: some of the equipment that goes into these substations don't 665 00:33:47,320 --> 00:33:49,440 Speaker 3: deal too well with the small movements you'd get with 666 00:33:49,480 --> 00:33:52,000 Speaker 3: being on a floating platform. And also some of the 667 00:33:52,040 --> 00:33:54,520 Speaker 3: cables that will be required to run the power from 668 00:33:54,560 --> 00:33:57,440 Speaker 3: this substation down to the seabed they have to be 669 00:33:57,520 --> 00:34:00,719 Speaker 3: dynamic cables that can deal with kind of mooing loads, 670 00:34:00,880 --> 00:34:03,600 Speaker 3: and for those really high capacity cables, some of the 671 00:34:03,640 --> 00:34:07,120 Speaker 3: technical constraints still haven't been worked out. And so yeah, 672 00:34:07,160 --> 00:34:10,640 Speaker 3: there are some significant difficulties that might make delivering one 673 00:34:10,680 --> 00:34:13,040 Speaker 3: of those projects in a really deep water market like 674 00:34:13,080 --> 00:34:17,080 Speaker 3: California significantly more difficult than the early, smaller scale demonstrators 675 00:34:17,160 --> 00:34:20,000 Speaker 3: we've seen coming online in the UK, in Norway and 676 00:34:20,040 --> 00:34:22,719 Speaker 3: that we're expecting to see in East Asian markets like 677 00:34:22,760 --> 00:34:23,480 Speaker 3: South Korea. 678 00:34:23,520 --> 00:34:26,040 Speaker 2: I mean, one of the things that being in this 679 00:34:26,160 --> 00:34:29,520 Speaker 2: sector has taught me is to never bet against human 680 00:34:29,680 --> 00:34:32,320 Speaker 2: ingenuity time and time again, whether it's with the scale 681 00:34:32,560 --> 00:34:35,160 Speaker 2: of wind or whether it's with the costs of things 682 00:34:35,239 --> 00:34:38,239 Speaker 2: like batteries and photovoltaic solar. You know, things that were 683 00:34:38,239 --> 00:34:42,400 Speaker 2: problems can get solved. So if those technical problems with 684 00:34:42,840 --> 00:34:45,520 Speaker 2: floating offshore wind can be resolved, do you have a 685 00:34:45,680 --> 00:34:50,040 Speaker 2: rough view of how big an addition to the market 686 00:34:50,120 --> 00:34:51,600 Speaker 2: it could be. So you know, if we're looking at 687 00:34:51,640 --> 00:34:55,840 Speaker 2: say twenty fifty, what percentage of wind could be floating 688 00:34:55,920 --> 00:34:56,720 Speaker 2: offshore wind. 689 00:34:57,080 --> 00:34:58,880 Speaker 3: Well, we forecast the offs your wind market out to 690 00:34:58,920 --> 00:35:02,560 Speaker 3: twenty forty and our viewers that floating turbines could make 691 00:35:02,640 --> 00:35:05,760 Speaker 3: up more than ten percent of the cumulative operating offshore 692 00:35:05,800 --> 00:35:08,440 Speaker 3: wind fleet by that year. But yeah, the cost of 693 00:35:08,440 --> 00:35:11,680 Speaker 3: floating wind has to dramatically fall in order to see 694 00:35:11,719 --> 00:35:14,280 Speaker 3: that scale of installations. 695 00:35:13,680 --> 00:35:16,320 Speaker 2: And when you calculated that ten percent, do you think 696 00:35:16,400 --> 00:35:19,080 Speaker 2: that you were you know, in terms of how these 697 00:35:19,120 --> 00:35:21,400 Speaker 2: technical problems get solved. Do you think that you are 698 00:35:21,560 --> 00:35:26,040 Speaker 2: being sort of sober realists or techno optimists. Could this 699 00:35:26,160 --> 00:35:28,799 Speaker 2: be bigger or do you think that's like an upper limit. 700 00:35:28,840 --> 00:35:31,800 Speaker 3: At the moment. There's a lot of potential for floating wind, 701 00:35:31,880 --> 00:35:35,320 Speaker 3: but some of these early projects have been running into difficulties. 702 00:35:35,719 --> 00:35:38,720 Speaker 3: Costs have been spiraling for some of these early scale demonstrators. 703 00:35:39,239 --> 00:35:41,480 Speaker 3: Some of these things could be teething issues, but I 704 00:35:41,480 --> 00:35:45,960 Speaker 3: think we've always been quite pessimistic on floating wind, and 705 00:35:46,120 --> 00:35:48,520 Speaker 3: I think we're beginning to see some of our forecasts 706 00:35:48,520 --> 00:35:50,719 Speaker 3: we made a few years ago start to come true 707 00:35:50,760 --> 00:35:53,640 Speaker 3: compared with what some other market experts were saying. 708 00:35:53,680 --> 00:35:56,719 Speaker 2: So maybe I should better against human ingenuity a little 709 00:35:56,760 --> 00:35:57,360 Speaker 2: bit more often. 710 00:35:57,560 --> 00:36:01,799 Speaker 3: Yeah, I think everything's possible from engineering perspective. It's a 711 00:36:01,840 --> 00:36:04,880 Speaker 3: case of whether things make sense from a cost perspective. 712 00:36:05,000 --> 00:36:07,000 Speaker 3: The good thing is that we forecast costs are going 713 00:36:07,040 --> 00:36:10,480 Speaker 3: to come down, So by twenty thirty, we're expecting around 714 00:36:10,480 --> 00:36:13,480 Speaker 3: a forty percent cost reduction compared with those early scale 715 00:36:13,520 --> 00:36:16,520 Speaker 3: demonstrated projects we've seen to date, so that's going to 716 00:36:16,520 --> 00:36:19,319 Speaker 3: be crucial. But we're still expecting by twenty thirty and 717 00:36:19,360 --> 00:36:22,560 Speaker 3: by twenty forty for floating wind projects to be significantly 718 00:36:22,560 --> 00:36:25,320 Speaker 3: more expensive than bottom fixed So we're probably going to 719 00:36:25,360 --> 00:36:29,040 Speaker 3: see floating wind projects not necessarily compete directly on a 720 00:36:29,080 --> 00:36:32,040 Speaker 3: cost basis with bottom fixed off your wind, but like 721 00:36:32,080 --> 00:36:33,680 Speaker 3: I say, they're going to come in markets that kind 722 00:36:33,680 --> 00:36:35,160 Speaker 3: of have to look to floating wind if they want 723 00:36:35,160 --> 00:36:38,680 Speaker 3: to scale their offs your wind sector earlier. So those 724 00:36:38,719 --> 00:36:42,439 Speaker 3: are the markets where we're expecting growth, and we're still 725 00:36:42,480 --> 00:36:46,120 Speaker 3: expecting it to be a really policy subsidy driven sector 726 00:36:46,320 --> 00:36:48,600 Speaker 3: in those markets all the way out to twenty forty. 727 00:36:48,719 --> 00:36:52,000 Speaker 3: So that's the growth driver here, and significant cost reductions 728 00:36:52,040 --> 00:36:55,720 Speaker 3: could accelerate that progress, but we're not expecting to see 729 00:36:56,000 --> 00:36:58,400 Speaker 3: such quick cost reductions that floating wind is going to 730 00:36:58,400 --> 00:37:01,040 Speaker 3: be a competitive technology when we think about the other 731 00:37:01,160 --> 00:37:02,640 Speaker 3: technologies available it. 732 00:37:02,640 --> 00:37:04,000 Speaker 2: It's going to be in the mix, but it's not 733 00:37:04,040 --> 00:37:06,239 Speaker 2: going to be a game changer, I think, is what 734 00:37:06,280 --> 00:37:06,760 Speaker 2: I'm hearing. 735 00:37:06,960 --> 00:37:10,080 Speaker 3: Yeah, that's why I think that ten percent number still 736 00:37:10,080 --> 00:37:12,319 Speaker 3: assumes that we resolve some of those technical constraints. We 737 00:37:12,400 --> 00:37:15,759 Speaker 3: resolve some of those cost constraints, but it's still only 738 00:37:15,800 --> 00:37:18,240 Speaker 3: represents kind of a small proportion of the market. 739 00:37:18,640 --> 00:37:23,040 Speaker 2: So, Ollie, I started by saying that in the energy transition, 740 00:37:23,239 --> 00:37:26,719 Speaker 2: maybe wind is in danger of being the weaklink. And 741 00:37:27,080 --> 00:37:29,799 Speaker 2: I think from having talked to you, I feel less 742 00:37:29,880 --> 00:37:33,160 Speaker 2: pessimistic about wind. It seems to me that the although 743 00:37:33,200 --> 00:37:36,920 Speaker 2: it's not maybe necessarily a technology solution like floating offshore 744 00:37:36,960 --> 00:37:39,160 Speaker 2: wind that's going to resolve this, it sounds more like 745 00:37:39,200 --> 00:37:42,840 Speaker 2: it's human persistence. So some of these examples you've given 746 00:37:42,880 --> 00:37:45,680 Speaker 2: where countries are working out some of the thorny regulatory 747 00:37:45,760 --> 00:37:49,239 Speaker 2: questions to try and help wind maximize its potential. We're 748 00:37:49,280 --> 00:37:52,640 Speaker 2: also just seeing some of the scaling that's happening in China. 749 00:37:52,680 --> 00:37:55,040 Speaker 2: Are you feeling optimistic about the market? Do you think 750 00:37:55,040 --> 00:37:57,160 Speaker 2: I was unfair when I said it was in danger 751 00:37:57,160 --> 00:37:59,560 Speaker 2: of being the weaklink? Or as someone who looks at 752 00:37:59,560 --> 00:38:02,160 Speaker 2: this small clily, do you feel that maybe the neo 753 00:38:02,480 --> 00:38:06,200 Speaker 2: picture that I painted doesn't really capture the full potential 754 00:38:06,600 --> 00:38:08,840 Speaker 2: and momentum that's happening in this market. 755 00:38:08,960 --> 00:38:12,759 Speaker 3: So I think things desperately need to accelerate. If you 756 00:38:12,800 --> 00:38:15,839 Speaker 3: look at what my team forecasts for the next ten 757 00:38:15,920 --> 00:38:18,880 Speaker 3: years or so. Like I say, we're still expecting a doubling, 758 00:38:19,160 --> 00:38:22,799 Speaker 3: not a tripling, by twenty thirty and that tripling only 759 00:38:22,880 --> 00:38:25,760 Speaker 3: comes by twenty thirty five. So comparing where we stand 760 00:38:25,760 --> 00:38:27,680 Speaker 3: today to where we need to be, we need to 761 00:38:27,760 --> 00:38:31,400 Speaker 3: accelerate rapidly. But I am filled with confidence that we 762 00:38:31,480 --> 00:38:34,760 Speaker 3: are starting to see incidences of good practice. We're starting 763 00:38:34,760 --> 00:38:37,319 Speaker 3: to see countries resolve some of these constraints that are 764 00:38:37,360 --> 00:38:40,359 Speaker 3: chronic across the global industry. So if some markets can 765 00:38:40,360 --> 00:38:43,319 Speaker 3: solve these issues around permitting and grid, then there's no 766 00:38:43,440 --> 00:38:46,120 Speaker 3: reason why we can't start to see things start to 767 00:38:46,200 --> 00:38:48,719 Speaker 3: change in other markets. And hopefully my team's outlook gets 768 00:38:48,800 --> 00:38:51,560 Speaker 3: rosier and rosier as we see some of this kind 769 00:38:51,560 --> 00:38:54,880 Speaker 3: of necessary legislation start to come in place. So I 770 00:38:54,920 --> 00:38:58,319 Speaker 3: think you painted an accurate picture that WIND isn't where 771 00:38:58,360 --> 00:39:00,120 Speaker 3: it needs to be to get the world on track 772 00:39:00,239 --> 00:39:03,600 Speaker 3: for net zero. But I think if markets start to 773 00:39:03,600 --> 00:39:07,800 Speaker 3: implement some of those solutions that we're seeing in some cases, 774 00:39:07,920 --> 00:39:10,120 Speaker 3: then we might see a kind of acceleration that would 775 00:39:10,120 --> 00:39:11,359 Speaker 3: be required to get us on track. 776 00:39:11,520 --> 00:39:15,040 Speaker 2: And if this stuff was easy, would have already done it. Ollie, 777 00:39:15,080 --> 00:39:16,720 Speaker 2: thank you so much for joining today. 778 00:39:16,960 --> 00:39:18,160 Speaker 3: Thanks very much for having me on. 779 00:39:27,040 --> 00:39:30,160 Speaker 1: Today's episode of Switched On was produced by Cam Gray 780 00:39:30,360 --> 00:39:34,040 Speaker 1: with production assistance from Kamala Shelling. Bloomberg NEIF is a 781 00:39:34,080 --> 00:39:37,200 Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This 782 00:39:37,280 --> 00:39:40,480 Speaker 1: recording does not constitute, nor should it be construed, as investment, 783 00:39:40,520 --> 00:39:43,960 Speaker 1: a vice, investment recommendations, or a recommendation as to an 784 00:39:43,960 --> 00:39:47,160 Speaker 1: investment or other strategy. Bloomberg ANIFF should not be considered 785 00:39:47,200 --> 00:39:50,520 Speaker 1: as information sufficient upon which to base an investment decision. 786 00:39:50,600 --> 00:39:53,560 Speaker 1: Neither Bloomberg Finance LP nor any of its affiliates makes 787 00:39:53,600 --> 00:39:57,319 Speaker 1: any representation or warranty as to the accuracy or completeness 788 00:39:57,360 --> 00:39:59,920 Speaker 1: of the information contained in this recording, and any life 789 00:40:00,000 --> 00:40:03,040 Speaker 1: ability as a result of this recording is expressly disclaimed.