WEBVTT - Solar Supply Glut Crushes Margins But Buildout Booming 0:00:00.160 --> 0:00:03.080 This is Dana Perkins and you are listening to Switched 0:00:03.120 --> 0:00:06.880 on the BNEF podcast. The first solar panel was invented 0:00:06.920 --> 0:00:08.959 at the end of the nineteenth century, but it took 0:00:09.039 --> 0:00:12.159 until nineteen fifty four for Bell Labs to create the 0:00:12.200 --> 0:00:15.800 first commercially viable solar cell. Today, many would consider it 0:00:15.920 --> 0:00:18.439 a cornerstone of the energy transition and a part of 0:00:18.520 --> 0:00:22.000 clean power rollout all over the world. In the twenty 0:00:22.000 --> 0:00:25.600 first century, we've seen solar adoption reaching new highs and 0:00:25.680 --> 0:00:29.320 module prices reaching new lows. To put things in perspective, 0:00:29.400 --> 0:00:33.319 global installed capacity of photovoltaics in twenty twelve was at 0:00:33.400 --> 0:00:36.159 one hundred and two gigawatts, and a decade later it 0:00:36.240 --> 0:00:39.879 grew till one point two terawatts, which brings us up 0:00:39.880 --> 0:00:42.680 to today. So what does the remainder of twenty twenty 0:00:42.680 --> 0:00:45.240 three have in store for solar? Will the industry reached 0:00:45.280 --> 0:00:48.600 new milestones and how might that differ in different parts 0:00:48.640 --> 0:00:51.360 of the world. On today's show, we're joined by BENAF 0:00:51.479 --> 0:00:54.600 solar specialist Jenny Chase, and she's going to talk to 0:00:54.680 --> 0:00:58.440 us about bnef's Q four twenty twenty three solar market outlook. 0:00:58.720 --> 0:01:01.960 She shares the current glopebal dynamics for solar, for example, 0:01:02.160 --> 0:01:05.680 how Europe's recent buying spree of modules has affected prices 0:01:05.840 --> 0:01:08.960 as well as the status of solar megabases in China, 0:01:09.040 --> 0:01:12.800 and how onshoring solar manufacture in the US has impacted 0:01:12.840 --> 0:01:15.480 module prices. I also ask Jenny what keeps her up 0:01:15.480 --> 0:01:18.720 at night? Is it price, cannibalization or trade wars? And 0:01:19.000 --> 0:01:21.679 just how much solar does she consider to be too 0:01:21.800 --> 0:01:24.480 much solar. BNF subscribers are going to be able to 0:01:24.520 --> 0:01:27.679 access BNF Solar Market Outlook for Q four twenty twenty 0:01:27.680 --> 0:01:31.080 three on BNF dot com, at BNF on the Bloomberg terminal, 0:01:31.360 --> 0:01:33.720 or on the BNF mobile app. Now, if you like 0:01:33.760 --> 0:01:37.039 this podcast, if you subscribe, you'll receive an update on 0:01:37.080 --> 0:01:39.759 your phone when a future episode is published, and if 0:01:39.760 --> 0:01:42.080 you provide us with a review or a rating, that'll 0:01:42.080 --> 0:01:45.240 make us more discoverable by others. But right now, let's 0:01:45.319 --> 0:01:49.080 jump into our conversation with Jenny about what's happening in 0:01:49.160 --> 0:02:02.040 solar any Great to have you back on the show today. 0:02:02.200 --> 0:02:03.240 Great to be here, Dana. 0:02:03.480 --> 0:02:05.800 So we're going to discuss solar. I mean, what else 0:02:05.840 --> 0:02:08.920 would we discuss? The fun thing about this is we're 0:02:08.919 --> 0:02:11.200 preparing for this show. Given that we've done this show, 0:02:11.200 --> 0:02:13.919 and you actually you write books on the topic of solar, 0:02:13.960 --> 0:02:16.520 you go on other people's shows, you're on TV about solar. 0:02:16.600 --> 0:02:19.160 So let's jump into this. But let's do this flash 0:02:19.240 --> 0:02:22.520 point of right now. We're going to talk about being 0:02:22.560 --> 0:02:25.000 a f solar market outlook looking into the future. We're 0:02:25.000 --> 0:02:28.280 also just going to discuss a bit of the COP goals, 0:02:28.280 --> 0:02:30.960 so COP twenty eight, stripling renewables by twenty thirty, and 0:02:31.000 --> 0:02:33.280 that solar element within there. But I want to know 0:02:33.560 --> 0:02:36.000 headed into this, is this going to be an uplifting 0:02:36.040 --> 0:02:37.680 show or do you have bad news for me? 0:02:38.320 --> 0:02:40.839 It's not a great time to be a solar manufacturer. 0:02:41.000 --> 0:02:44.000 On the other hand, all the installation numbers are going up. 0:02:44.240 --> 0:02:46.840 It's very easy to look at solar with a ten 0:02:46.960 --> 0:02:49.400 year overview and say, well, obviously solar is going to 0:02:49.400 --> 0:02:51.960 be massive, Solar is king, Solar is going to change 0:02:51.960 --> 0:02:54.080 the world, And I think that's probably true. The great 0:02:54.080 --> 0:02:56.400 thing about having to write a quarterly outlook is that 0:02:56.440 --> 0:02:59.040 you have to ground it in what's actually happening. And 0:02:59.200 --> 0:03:01.640 to be honest, there is some big news and there 0:03:01.720 --> 0:03:05.080 is some slightly not so exciting news. So the big 0:03:05.120 --> 0:03:07.800 news is that China is likely to install two hundred 0:03:07.840 --> 0:03:11.120 and forty gigawatts of solar panels this year. The reported 0:03:11.200 --> 0:03:13.239 numbers look a little bit lower because they're inn ac 0:03:13.400 --> 0:03:15.639 capacity from the grid, so that's the grid and a 0:03:15.680 --> 0:03:18.519 red capacity, not the panel capacity. But it's probably going 0:03:18.600 --> 0:03:20.959 to be about two hundred and forty gigawats of solar 0:03:20.960 --> 0:03:24.200 panels going into China, which is like last year the 0:03:24.360 --> 0:03:27.000 entire world installed two hundred and fifty two gigawats of 0:03:27.000 --> 0:03:30.480 solar panels, So this is quite an acceleration. And part 0:03:30.520 --> 0:03:32.720 of the reason for that, though, is that prices are 0:03:32.800 --> 0:03:36.160 super low. Yesterday I was updating the price index for 0:03:36.200 --> 0:03:39.200 solar modules, and right now your standard solar module in 0:03:39.240 --> 0:03:42.760 a free trade market cost twelve point eight cents per watch. 0:03:43.080 --> 0:03:45.440 That's below where anyone thought it would be. That's below 0:03:45.480 --> 0:03:47.480 where the experience curve so as it should be. I'm 0:03:47.520 --> 0:03:50.400 having real difficulty constructing the experienced curve in a way 0:03:50.440 --> 0:03:53.080 that makes any sense with twelve point eight sense per 0:03:53.120 --> 0:03:55.360 what it is if you look at the cost stack, 0:03:55.640 --> 0:03:58.560 possibly still slightly above the cost of every step of 0:03:58.600 --> 0:04:01.360 the value chain variable cost, but it is super low. 0:04:01.560 --> 0:04:03.640 I mean, these are really prices that not only have 0:04:03.640 --> 0:04:06.160 we never seen this anymore, but it also makes no sense. 0:04:06.520 --> 0:04:08.680 So this is an industry that can still, after all 0:04:08.680 --> 0:04:10.640 these years, surprise the hell out of you. 0:04:11.240 --> 0:04:13.400 I am so surprised. I think it's because I've been 0:04:13.400 --> 0:04:16.160 watching it for seventeen years eighteen years now that I 0:04:16.240 --> 0:04:17.360 am so surprised. 0:04:17.839 --> 0:04:21.479 And with these prices, does this therefore give it the 0:04:21.520 --> 0:04:25.000 most competitive l COE in most parts of the world globally, 0:04:25.200 --> 0:04:27.320 bar nine of any other technology. 0:04:27.400 --> 0:04:30.000 Solar is super cheap. If you've got a grid connection, 0:04:30.080 --> 0:04:31.760 then you've got land to put it on. Then if 0:04:31.760 --> 0:04:33.840 you can get someone to buy the power, then you 0:04:33.839 --> 0:04:36.200 can sell the power. But it's not really the price 0:04:36.200 --> 0:04:40.920 of modules that's driving solar economics anymore. And the challenges 0:04:40.960 --> 0:04:44.479 are something entirely different. That said, low module prices are 0:04:44.520 --> 0:04:46.960 a big problem if you're a manufacturer selling solar modules. 0:04:47.120 --> 0:04:50.040 Well, so let's then go into that. Let's talk about 0:04:50.160 --> 0:04:53.720 the module manufacturers. Why is this such a hard time 0:04:53.760 --> 0:04:56.240 Because it is so they're not getting the margins on 0:04:56.279 --> 0:04:58.440 the things that they're selling despite the demand. Is there 0:04:58.480 --> 0:05:01.359 a glut of supply or there too many manufacturers? 0:05:01.760 --> 0:05:05.400 Exactly I mean, there's always too many solar manufacturers. That's 0:05:05.720 --> 0:05:10.080 it's an industry with structural over capacity. Because everyone loves 0:05:10.120 --> 0:05:13.359 solar manufacturers. Everyone loves solar panels, so everyone is like, 0:05:13.560 --> 0:05:15.640 let's make solar panels, and then it turns out that 0:05:15.640 --> 0:05:18.080 the margins and making solar panels are terrible. It's a 0:05:18.080 --> 0:05:22.160 commodity business. The new generation of technology is always coming online, 0:05:22.200 --> 0:05:24.560 and it's more efficient, it's cheaper to make, it uses 0:05:24.640 --> 0:05:28.240 less materials. It's a great business to be buying solar modules. 0:05:28.320 --> 0:05:31.159 But even there, a lot of European markets have what 0:05:31.200 --> 0:05:33.800 they're calling a hangover. There is a huge inventory of 0:05:33.839 --> 0:05:36.039 solar moduels in Europe because last year there was the 0:05:36.160 --> 0:05:39.680 energy crisis, power prices went through the roof, everyone panicked, 0:05:39.680 --> 0:05:43.080 everyone put in orders for solar modules. And this year 0:05:43.320 --> 0:05:46.240 the pressure is off. Power prices have eased a bit. 0:05:46.279 --> 0:05:49.039 We've realized that some of the worst case scenarios for 0:05:49.160 --> 0:05:51.119 power prices are not going to happen. People are asking 0:05:51.200 --> 0:05:53.279 questions like do I want to put solar modules on 0:05:53.360 --> 0:05:55.600 my roof at any price right now? And there were 0:05:55.640 --> 0:05:58.800 installation there were bottlenecks in labor so essentially the European 0:05:58.839 --> 0:06:01.680 market has not grown ass as I think people buying 0:06:01.720 --> 0:06:04.240 modules in Europe expected, and there's probably about a year 0:06:04.279 --> 0:06:07.400 of inventory sitting around in the supply chain in Europe 0:06:07.640 --> 0:06:08.840 of solar modules. 0:06:08.960 --> 0:06:12.080 And it's that extra inventory that is what they're referring 0:06:12.120 --> 0:06:14.920 to as a hangover. Because I'm sorry, but using that term, 0:06:14.960 --> 0:06:17.159 I'm not sure I fully get why that is the 0:06:17.240 --> 0:06:18.120 term he used. 0:06:18.760 --> 0:06:22.360 So sellers are referring to this as a hangover because 0:06:22.400 --> 0:06:24.640 there was a huge party in twenty twenty two, a 0:06:24.680 --> 0:06:27.320 lot of demand. People who were going to buy solar anyway, 0:06:27.480 --> 0:06:31.560 bought solar systems and solar modules early, and this year 0:06:31.600 --> 0:06:35.000 they're like, no, no, thank you, no more this. We 0:06:35.080 --> 0:06:37.960 have a warehouse. We have warehouses full of solar modules. 0:06:37.960 --> 0:06:40.400 At this point, I love this. 0:06:40.920 --> 0:06:42.440 It was a party in twenty twenty two. 0:06:42.480 --> 0:06:45.920 That's amazing, and it's not like it's not a party 0:06:45.960 --> 0:06:49.239 in twenty twenty three, but it's more like a normal year, 0:06:49.400 --> 0:06:51.919 and normal year when you had a really big party 0:06:52.080 --> 0:06:54.760 previously doesn't feel so good. Or to put it another way, 0:06:54.839 --> 0:06:57.400 demand was pulled forward from twenty twenty three into twenty 0:06:57.440 --> 0:07:00.600 twenty two, and in consequence, is not necessarily materializing. 0:07:00.680 --> 0:07:02.960 Now, now we all have those friends that you know 0:07:03.000 --> 0:07:05.600 go home before midnight and those ones who miraculously make 0:07:05.640 --> 0:07:07.839 it after midnight. So let's talk about where the music's 0:07:07.880 --> 0:07:09.800 still blaring, where the party is still going. Let's talk 0:07:09.800 --> 0:07:13.280 about China, huge producer that we all know. Manufacturers of 0:07:13.320 --> 0:07:16.640 solar modules are coming out of China, additionally being installed. 0:07:16.680 --> 0:07:19.040 You had already touched upon the fact that there has 0:07:19.120 --> 0:07:21.560 been more installed in China than in the previous year 0:07:21.840 --> 0:07:23.400 across the world combined. 0:07:23.960 --> 0:07:27.040 What is dry less, It's slightly less than in the 0:07:27.400 --> 0:07:28.960 rest of the world. It's two hundred and forty in 0:07:29.040 --> 0:07:31.160 China versus two fifty two last year worldwide. 0:07:31.560 --> 0:07:35.600 Okay, so important clarification, but durn very very close, so 0:07:35.760 --> 0:07:40.600 we'll approximate there. So why is China? Why is China booming? 0:07:40.640 --> 0:07:42.440 It's such a rapid rate. 0:07:42.920 --> 0:07:46.480 Well, China has China has two main sectors. So it's 0:07:46.480 --> 0:07:49.120 got the rooftop sector, which is on a province by 0:07:49.160 --> 0:07:53.160 province basis, and most of the provinces have been encouraged 0:07:53.440 --> 0:07:56.480 to roll out government schemes to do bulk development of 0:07:56.520 --> 0:07:59.480 solar on roofs, and many of them have quite successfully. 0:07:59.760 --> 0:08:02.960 It's a major market. There are major markets in Shangdong, 0:08:03.040 --> 0:08:06.080 in Guangdong, basically where the people are. And there's also 0:08:06.200 --> 0:08:09.600 the only megabases where the government has allocated a grid 0:08:09.600 --> 0:08:12.000 connection out to a place with lots of land, and 0:08:12.080 --> 0:08:14.760 developers have to put up to ten gigawatts of solar 0:08:14.960 --> 0:08:17.560 on that one grid connection and often some wind batteries 0:08:17.600 --> 0:08:21.480 as well. And those megabases were auctioned off in the 0:08:21.520 --> 0:08:25.240 past few years and the developers were mostly waiting until 0:08:25.280 --> 0:08:27.600 the prices dropped to do them. There's also a deadline 0:08:27.640 --> 0:08:29.400 at the end of the year for some of those megabases, 0:08:29.480 --> 0:08:33.480 so the developers are now saying, Wow, finally cheap modules. 0:08:33.640 --> 0:08:36.000 We've got a deadline coming up. Let's build it. 0:08:36.679 --> 0:08:44.800 So's let's get it done. It's last call'st. 0:08:42.000 --> 0:08:45.640 Orders STI, Well, that's orders for that batch of megabases. 0:08:45.679 --> 0:08:47.680 But that will but there is another batch next year. 0:08:47.800 --> 0:08:51.000 You're referring to the megabases in China, which this is 0:08:51.000 --> 0:08:54.640 a term that I'm not hugely familiar with. So if 0:08:54.640 --> 0:08:56.920 there are other people listening, can you put this in context. 0:08:56.960 --> 0:08:59.160 Are these only found in China? Is this is it 0:08:59.200 --> 0:09:03.280 a scale that is really not often or maybe ever, 0:09:03.400 --> 0:09:05.680 found elsewhere in the world. And can you put the 0:09:05.760 --> 0:09:07.640 size into context for our listeners. 0:09:08.080 --> 0:09:11.040 So the good thing is we have an upcoming note 0:09:11.040 --> 0:09:15.040 from Chan Yi Shao in Beijing on China's energy megabases 0:09:15.080 --> 0:09:18.559 because they don't get talked about enough. So China's megabases 0:09:18.760 --> 0:09:22.359 are relatively unique, although there are some similar developments in India. 0:09:22.400 --> 0:09:25.600 It's the government finding a patch of land which can 0:09:25.640 --> 0:09:28.199 be developed for solar and wind, running a grid connection 0:09:28.280 --> 0:09:30.960 out there, and then just giving a stayt owned developer 0:09:30.960 --> 0:09:33.400 the right to do it. And these can be five, ten, 0:09:33.640 --> 0:09:36.960 twenty gigawatts. They've been auctioned off in batches, and the 0:09:37.040 --> 0:09:40.920 most recent lot will be co located solar, wind storage 0:09:40.920 --> 0:09:42.960 and sometimes some thermal as well, just to get the 0:09:42.960 --> 0:09:44.920 most out of that grid connection. But this is a 0:09:44.960 --> 0:09:49.120 really centralized planning, really low price development of a huge 0:09:49.120 --> 0:09:51.640 amount of renewable energy. And it is similar to some 0:09:51.720 --> 0:09:55.040 of India's twenty four to seven and big auctions in 0:09:55.080 --> 0:09:56.640 some respects, but they are even bigger. 0:09:57.000 --> 0:09:59.080 So let's pivot to the US for a second, because 0:09:59.120 --> 0:10:01.679 we recently did a sh on grids and that keeps 0:10:01.679 --> 0:10:05.680 wrapping up grid connectivity, is creating time lags for installing 0:10:06.240 --> 0:10:09.719 renewable energy. Wind solar, you name it. The grid is 0:10:09.920 --> 0:10:14.600 requiring additional work in order to facilitate new projects coming online. 0:10:14.760 --> 0:10:17.920 First of all, are we seeing the same grid connectivity 0:10:17.960 --> 0:10:22.160 issues in backlogs in China? Sounds like perhaps not. And 0:10:22.440 --> 0:10:25.000 then well we'll go to the US in just a 0:10:25.000 --> 0:10:27.400 second after that. But firstly, in China, is the grid 0:10:27.440 --> 0:10:28.480 able to handle all of this? 0:10:29.040 --> 0:10:32.520 So any renewable energy market in the world you go 0:10:32.600 --> 0:10:35.400 to at the moment, you can say, well, the big 0:10:35.400 --> 0:10:37.720 bottleneck right now is grid, and you will be right. 0:10:37.800 --> 0:10:39.840 You can go to a conference in Turkey and say 0:10:39.960 --> 0:10:42.480 here in Turkey the big bottle neck is grid, and 0:10:42.600 --> 0:10:44.640 everyone there will think you know so much about the 0:10:44.679 --> 0:10:47.120 Turkish show. In a market, you can do this anyway. 0:10:47.520 --> 0:10:49.960 So yes, it is a problem in China, and in 0:10:50.040 --> 0:10:52.920 China particularly, there's the problem that the areas with lots 0:10:52.920 --> 0:10:54.880 of land and lots of sun and wind are not 0:10:54.920 --> 0:10:57.800 the places where people live and use power. And China, 0:10:57.880 --> 0:11:00.360 more than any other country, has used ultra high altage 0:11:00.400 --> 0:11:03.520 transmission lines to take power across the country. But even 0:11:03.520 --> 0:11:07.320 the biggest transmission line is difficult to use fully with 0:11:07.400 --> 0:11:10.280 solar and wind, particularly with just solar, because of the 0:11:10.320 --> 0:11:12.840 low capacity factor of solar so yes, it is even 0:11:12.840 --> 0:11:16.480 a bottleneck in China, although China has certain structural advantages 0:11:16.600 --> 0:11:19.000 to building enormous projects to sort it out. 0:11:19.559 --> 0:11:21.640 So then let's do that pivot to the US as 0:11:22.080 --> 0:11:26.160 a completely different market. Have the timelines for getting new 0:11:26.200 --> 0:11:30.640 projects online been extensively elongated as of late, and can 0:11:30.679 --> 0:11:32.960 you just touch upon well the current state of play 0:11:33.000 --> 0:11:38.000 in terms of near shoring and domestic manufacturers of solar modules, 0:11:38.080 --> 0:11:40.360 because there has been a change to the way the 0:11:40.520 --> 0:11:43.560 US treats semiconductors over the last couple of years and 0:11:43.600 --> 0:11:46.800 that has changed how they go about purchasing solar panels. 0:11:46.840 --> 0:11:48.520 And what I really want to know is are they 0:11:48.559 --> 0:11:50.600 experiencing these same ultra low prices. 0:11:51.080 --> 0:11:53.600 Well, the US is a small solar market and difficult 0:11:53.640 --> 0:11:56.600 to do business in. One of the reasons is that 0:11:56.640 --> 0:12:00.640 the allocating grid is relatively difficult. It's very regional in 0:12:00.640 --> 0:12:03.080 the US, and so it is a bottleneck there. In fact, 0:12:03.120 --> 0:12:05.080 I don't think the problem is that the grid procedures 0:12:05.080 --> 0:12:07.200 have got worse. I think the problem is that you've 0:12:07.240 --> 0:12:09.760 got more projects trying to get grid connection, and so 0:12:09.920 --> 0:12:13.240 it is the bottleneck. Whereas economics and power pursures agreements 0:12:13.320 --> 0:12:15.320 are not the bottle neck anymore. So it's just found 0:12:15.360 --> 0:12:17.920 a new bottle neck. So on the supply side, things 0:12:17.960 --> 0:12:21.120 are easing up. On the US, prices for solar modules 0:12:21.280 --> 0:12:24.320 are still over twenty five cents or what which, considering 0:12:24.360 --> 0:12:25.679 we just said that the price is in the rest 0:12:25.679 --> 0:12:27.280 of the world were twelve point eight cents for what 0:12:27.640 --> 0:12:31.040 is quite difficult. But the US is used to having 0:12:31.080 --> 0:12:35.720 expensive modules. It always has had expensive modules, and the 0:12:35.760 --> 0:12:38.800 subsidy in the US is very generous, the Inflation Reduction 0:12:38.920 --> 0:12:41.640 Act in the US. The effect on clean energy of 0:12:41.679 --> 0:12:44.920 that is basically pushing down the accelerator on a market 0:12:44.960 --> 0:12:47.280 that has the handbrake firmly on, So the US is 0:12:47.320 --> 0:12:50.679 skidding around. Modules are cheaper, they're inventory there as well, 0:12:50.880 --> 0:12:53.200 and there is about fifty giga what's a year of 0:12:53.240 --> 0:12:56.959 module manufacturing capacity planned in the US to be added now? 0:12:57.040 --> 0:12:59.120 I don't know what will happen now. Modules in the 0:12:59.120 --> 0:13:02.199 rest of the world are so is so cheap. I suspect, 0:13:02.400 --> 0:13:05.320 just on a personal personally, I suspect someone that capacity 0:13:05.320 --> 0:13:07.640 will be canceled because why build a factory for something 0:13:07.640 --> 0:13:10.400 that's almost free, Even with the trade barriers and the 0:13:10.440 --> 0:13:13.160 trade barriers are significant. I mean, the Inflation Reduction Act 0:13:13.320 --> 0:13:17.160 is paying First Solar, the only fully integrated supplier, seventeen 0:13:17.600 --> 0:13:21.040 US cents per what to manufacture in the US, So 0:13:21.080 --> 0:13:24.360 the price elsewhere is twelve point eight. First Solder is 0:13:24.360 --> 0:13:27.680 getting seventeen just from manufacturing in the US. There's also 0:13:27.760 --> 0:13:30.520 a four or five cent per watts premium for domestic 0:13:30.559 --> 0:13:34.480 content in the US, so the US module industry is 0:13:34.520 --> 0:13:37.880 going to be very heavily subsidized, probably enough that it 0:13:37.920 --> 0:13:41.760 survives against competition from Southeast Asia and India, and increasingly 0:13:41.800 --> 0:13:43.760 those are the companies that are selling into the US. 0:13:44.080 --> 0:13:46.520 In the US, the economics are really good, but the 0:13:46.520 --> 0:13:49.400 bottlenecks are still getting your projects connected to the grid, 0:13:49.600 --> 0:13:53.319 and the independent system operators are working on making that easier, 0:13:53.800 --> 0:13:56.680 on finding the locations where they can safely be collected 0:13:56.679 --> 0:13:58.560 to the grid and letting those projects go ahead and 0:13:58.600 --> 0:14:00.880 then kicking everyone else out of the because there was 0:14:00.960 --> 0:14:03.000 no point in having a grid Q full of projects 0:14:03.040 --> 0:14:04.120 that are never going to get built. 0:14:04.400 --> 0:14:06.360 Now, I do want to continue our world tour, but 0:14:06.400 --> 0:14:10.000 before we leave the US is solar creating jobs. 0:14:10.600 --> 0:14:13.880 Yeah. The thing about having the accelerator on and the 0:14:13.960 --> 0:14:16.440 handbrake on is that it creates double the number of 0:14:16.480 --> 0:14:18.240 jobs because some of them work in the accelerator and 0:14:18.280 --> 0:14:20.160 some of them work in the handbreak. It's a great 0:14:20.160 --> 0:14:23.440 place to be a lawyer or a tax equity arranger. 0:14:23.600 --> 0:14:26.120 And yeah, some of the people are actually making solar 0:14:26.160 --> 0:14:28.760 modules and building solar systems as well. 0:14:29.280 --> 0:14:32.760 Okay, let's continue around the world tour, and I'd like 0:14:32.840 --> 0:14:35.840 to next go to Brazil. Brazil is at this point 0:14:35.840 --> 0:14:38.840 in time vying for third maybe not quite there, depending 0:14:38.880 --> 0:14:41.320 on when we're pulling the numbers. Is a very competitive 0:14:41.320 --> 0:14:44.640 space in terms of demand for solar. What is driving 0:14:44.760 --> 0:14:48.360 Brazil to become well, to be so interested in solar 0:14:48.400 --> 0:14:49.320 at this point in time. 0:14:49.920 --> 0:14:52.560 Subsidies. If you see a massive boom like that, it's 0:14:52.640 --> 0:14:56.440 usually subsidies. So it's a little more complicated than that. 0:14:56.560 --> 0:14:59.840 In Brazil, there's a net metering system where if you're 0:14:59.840 --> 0:15:01.760 a business or a company, you can build up to 0:15:01.760 --> 0:15:04.800 five megawatts of solar on your roofs and you can 0:15:04.880 --> 0:15:08.600 share that solar electricity between your different sites, and that 0:15:08.680 --> 0:15:10.600 solar when you feed it into the grid, it also 0:15:10.680 --> 0:15:15.160 runs your meta backwards. Effectively. Now, minus some grid costs, 0:15:15.320 --> 0:15:16.680 you have to pay some grid costs on that, but 0:15:16.680 --> 0:15:19.560 the grid costs are pretty minor considering the price of energy, 0:15:19.760 --> 0:15:23.960 and so yeah, essentially it's net metering for large commercial 0:15:23.960 --> 0:15:25.120 systems in Brazil. 0:15:25.760 --> 0:15:30.040 So continuing on, let's go now to another continent entirely, 0:15:30.240 --> 0:15:33.520 let's go to Africa. There have been grid reliability issues 0:15:33.800 --> 0:15:36.560 that have been well documented for many years in South 0:15:36.600 --> 0:15:41.320 Africa in Nigeria. Nigeria namely has a booming population, increasing 0:15:41.360 --> 0:15:45.680 demand for access to electricity. So is solar helping to 0:15:46.200 --> 0:15:49.360 alleviate this grid intermittency or is it feeding into it? 0:15:49.440 --> 0:15:52.160 And really what does the situation look like for solar 0:15:52.240 --> 0:15:53.720 growth in Africa right now? 0:15:54.080 --> 0:15:58.040 So yes, in both Nigeria and South Africa, solar is 0:15:58.160 --> 0:16:01.760 helping to solve the problems power access. I would say 0:16:01.880 --> 0:16:04.680 that in South Africa, the latest data suggests that I 0:16:04.720 --> 0:16:07.280 got a bit over excited. Last time I did a 0:16:07.280 --> 0:16:09.600 forecast for South Africa, I said it would be five 0:16:09.640 --> 0:16:12.120 gigawatts new bill this year, but it's actually slowed down 0:16:12.200 --> 0:16:14.960 quite a lot since May and June, and it's probably 0:16:15.000 --> 0:16:17.560 going to be more like three point five gigawatts. It's 0:16:17.560 --> 0:16:20.120 so hard to estimate these markets, but apparently May and 0:16:20.240 --> 0:16:22.840 June is when people have the worst blackouts, and so 0:16:22.960 --> 0:16:24.680 there was a peak of demand there which has not 0:16:24.720 --> 0:16:27.520 been sustained. It's quite down a bit, but three point 0:16:27.520 --> 0:16:30.720 five gigawats are still a lot, and there are increasingly 0:16:30.840 --> 0:16:35.040 commercial installations going in. So South Africa is booming. Nigeria 0:16:35.080 --> 0:16:37.560 we have even less data, but the exports from China 0:16:37.600 --> 0:16:40.720 to Nigeria are still going up. So in both these 0:16:40.760 --> 0:16:44.760 places we think that solar is having a meaningful impact 0:16:44.960 --> 0:16:48.360 on people's access to electricity. And of course we're watching 0:16:48.400 --> 0:16:50.520 the rest of Africa, or we're trying to watch the 0:16:50.520 --> 0:16:53.840 rest of Africa, because it's so important both for the 0:16:53.840 --> 0:16:56.920 solar industry to find new markets that are untapped and 0:16:57.040 --> 0:17:00.840 also for the people actually there that these countries can leapfrog, 0:17:01.280 --> 0:17:03.800 not go through the whole thing of building a fossil 0:17:03.800 --> 0:17:06.560 fuel powered grid, but go straight to something better and cheaper. 0:17:06.880 --> 0:17:08.560 Now, you said at the beginning of the show that 0:17:08.840 --> 0:17:11.320 these market outlooks force us to think about things in 0:17:11.400 --> 0:17:14.639 these kind of restricted timelines, which is actually quite useful 0:17:14.680 --> 0:17:17.639 for thinking about short, medium, long term because we do 0:17:17.680 --> 0:17:19.800 look at all of these different aspects of the industry. 0:17:19.880 --> 0:17:21.720 So over the course of the rest of this year 0:17:21.760 --> 0:17:24.280 and into next year, are we going to continue to 0:17:24.280 --> 0:17:25.080 see growth? 0:17:25.440 --> 0:17:28.400 So we absolutely do see growth in the solar industry. 0:17:28.560 --> 0:17:32.280 It will continue, it will be almost universal. I think 0:17:32.359 --> 0:17:34.959 when some people are forecasting, they want to just carry 0:17:34.960 --> 0:17:37.280 the line on the line up, and I've got to 0:17:37.359 --> 0:17:39.679 caution as a forecaster that you cannot just do that 0:17:39.760 --> 0:17:44.359 because exponential growth is a mathematically terrifying thing, and if 0:17:44.400 --> 0:17:48.000 you're forecast involved covering the entire world with solar panels, 0:17:48.119 --> 0:17:50.760 they are probably wrong. We're getting to the point as 0:17:50.800 --> 0:17:53.200 an analysis team where you have to start asking questions 0:17:53.240 --> 0:17:56.560 about when solar does slow down, and there are negative 0:17:56.560 --> 0:17:59.320 feedback mechanisms in solar. Once you get a certain amount 0:17:59.359 --> 0:18:01.920 of solar in the grid, power should cost less at 0:18:01.920 --> 0:18:04.640 midday on a Sunday Sunday day. Given the growth rates 0:18:04.640 --> 0:18:06.439 we're looking at, it should probably be free on a 0:18:06.440 --> 0:18:09.560 Sunday day during sunny hours by twenty thirty and that 0:18:09.640 --> 0:18:12.120 will affect the economics of solar and make people less 0:18:12.119 --> 0:18:14.480 plately to build more solar. Now there are a lot 0:18:14.480 --> 0:18:16.639 more batteries than we thought there would be as well. 0:18:17.119 --> 0:18:19.760 Batteries are also booming, and of course batteries can shift 0:18:19.760 --> 0:18:22.520 at least the daily generation to the evening when the 0:18:22.520 --> 0:18:25.159 sun goes down, which helps solar by propping up the 0:18:25.160 --> 0:18:27.080 prices in the middle of the day and meaning that 0:18:27.119 --> 0:18:30.359 solar projects get paid more for their output. But there 0:18:30.400 --> 0:18:33.240 are limits to integrating solar. We can work on those 0:18:33.240 --> 0:18:36.360 limits in many ways, but there are negative feedback mechanisms 0:18:36.359 --> 0:18:39.399 that do cause certain solar markets to slow down, and 0:18:39.440 --> 0:18:43.119 forecasting when they will is very, very difficult, and you 0:18:43.240 --> 0:18:46.479 can't just extrapolate an exponential line forever. 0:18:47.119 --> 0:18:49.720 Well, So let's talk about this growth then in light 0:18:49.800 --> 0:18:53.280 of the upcoming Climate Conference COP twenty eight, which will 0:18:53.320 --> 0:18:55.879 be in Dubai and the United Arab Emirates. And one 0:18:55.920 --> 0:18:58.399 of the things that the COP presidency has outlined is 0:18:58.560 --> 0:19:02.119 this concept of triplingles by twenty thirty as being a 0:19:02.280 --> 0:19:04.800 goal that we should be striving towards. And I know 0:19:04.880 --> 0:19:07.359 that we are publishing a report that looks at that 0:19:07.480 --> 0:19:11.160 specific goal and talks about various aspects of it, including 0:19:11.400 --> 0:19:14.280 whether or not we think it's attainable. So, Jenny, what 0:19:14.400 --> 0:19:17.879 are your views on tripling renewables by twenty thirty for solar? 0:19:18.200 --> 0:19:21.720 So we're expecting the pledge to be negotiated at COP 0:19:21.720 --> 0:19:25.119 twenty eight to be that the renewables capacity at the 0:19:25.200 --> 0:19:28.679 end of twenty twenty two worldwide will be triple to 0:19:28.680 --> 0:19:31.600 twenty thirty, which would take it to about eleven terrawatts 0:19:31.880 --> 0:19:35.400 of renewables capacity by twenty thirty. And this won't be homogeneous. 0:19:35.480 --> 0:19:38.040 I mean Brazil already Brazil has loads of renewables. Brazil 0:19:38.080 --> 0:19:40.919 gets about eighty five percent of its power from renewables, 0:19:40.920 --> 0:19:43.720 including large hydro, so it doesn't really make sense for 0:19:43.760 --> 0:19:46.000 Brazil to triple that, Whereas there are parts of the 0:19:46.040 --> 0:19:49.200 world like Africa, like Southeast Asia that wants to more 0:19:49.240 --> 0:19:51.639