Speaker 1: This is Dana Perkins and you are listening to Switched
Speaker 1: on the BNEF podcast. The first solar panel was invented
Speaker 1: at the end of the nineteenth century, but it took
Speaker 1: until nineteen fifty four for Bell Labs to create the
Speaker 1: first commercially viable solar cell. Today, many would consider it
Speaker 1: a cornerstone of the energy transition and a part of
Speaker 1: clean power rollout all over the world. In the twenty
Speaker 1: first century, we've seen solar adoption reaching new highs and
Speaker 1: module prices reaching new lows. To put things in perspective,
Speaker 1: global installed capacity of photovoltaics in twenty twelve was at
Speaker 1: one hundred and two gigawatts, and a decade later it
Speaker 1: grew till one point two terawatts, which brings us up
Speaker 1: to today. So what does the remainder of twenty twenty
Speaker 1: three have in store for solar? Will the industry reached
Speaker 1: new milestones and how might that differ in different parts
Speaker 1: of the world. On today's show, we're joined by BENAF
Speaker 1: solar specialist Jenny Chase, and she's going to talk to
Speaker 1: us about bnef's Q four twenty twenty three solar market outlook.
Speaker 1: She shares the current glopebal dynamics for solar, for example,
Speaker 1: how Europe's recent buying spree of modules has affected prices
Speaker 1: as well as the status of solar megabases in China,
Speaker 1: and how onshoring solar manufacture in the US has impacted
Speaker 1: module prices. I also ask Jenny what keeps her up
Speaker 1: at night? Is it price, cannibalization or trade wars? And
Speaker 1: just how much solar does she consider to be too
Speaker 1: much solar. BNF subscribers are going to be able to
Speaker 1: access BNF Solar Market Outlook for Q four twenty twenty
Speaker 1: three on BNF dot com, at BNF on the Bloomberg terminal,
Speaker 1: or on the BNF mobile app. Now, if you like
Speaker 1: this podcast, if you subscribe, you'll receive an update on
Speaker 1: your phone when a future episode is published, and if
Speaker 1: you provide us with a review or a rating, that'll
Speaker 1: make us more discoverable by others. But right now, let's
Speaker 1: jump into our conversation with Jenny about what's happening in
Speaker 1: solar any Great to have you back on the show today.
Speaker 2: Great to be here, Dana.
Speaker 1: So we're going to discuss solar. I mean, what else
Speaker 1: would we discuss? The fun thing about this is we're
Speaker 1: preparing for this show. Given that we've done this show,
Speaker 1: and you actually you write books on the topic of solar,
Speaker 1: you go on other people's shows, you're on TV about solar.
Speaker 1: So let's jump into this. But let's do this flash
Speaker 1: point of right now. We're going to talk about being
Speaker 1: a f solar market outlook looking into the future. We're
Speaker 1: also just going to discuss a bit of the COP goals,
Speaker 1: so COP twenty eight, stripling renewables by twenty thirty, and
Speaker 1: that solar element within there. But I want to know
Speaker 1: headed into this, is this going to be an uplifting
Speaker 1: show or do you have bad news for me?
Speaker 2: It's not a great time to be a solar manufacturer.
Speaker 2: On the other hand, all the installation numbers are going up.
Speaker 2: It's very easy to look at solar with a ten
Speaker 2: year overview and say, well, obviously solar is going to
Speaker 2: be massive, Solar is king, Solar is going to change
Speaker 2: the world, And I think that's probably true. The great
Speaker 2: thing about having to write a quarterly outlook is that
Speaker 2: you have to ground it in what's actually happening. And
Speaker 2: to be honest, there is some big news and there
Speaker 2: is some slightly not so exciting news. So the big
Speaker 2: news is that China is likely to install two hundred
Speaker 2: and forty gigawatts of solar panels this year. The reported
Speaker 2: numbers look a little bit lower because they're inn ac
Speaker 2: capacity from the grid, so that's the grid and a
Speaker 2: red capacity, not the panel capacity. But it's probably going
Speaker 2: to be about two hundred and forty gigawats of solar
Speaker 2: panels going into China, which is like last year the
Speaker 2: entire world installed two hundred and fifty two gigawats of
Speaker 2: solar panels, So this is quite an acceleration. And part
Speaker 2: of the reason for that, though, is that prices are
Speaker 2: super low. Yesterday I was updating the price index for
Speaker 2: solar modules, and right now your standard solar module in
Speaker 2: a free trade market cost twelve point eight cents per watch.
Speaker 2: That's below where anyone thought it would be. That's below
Speaker 2: where the experience curve so as it should be. I'm
Speaker 2: having real difficulty constructing the experienced curve in a way
Speaker 2: that makes any sense with twelve point eight sense per
Speaker 2: what it is if you look at the cost stack,
Speaker 2: possibly still slightly above the cost of every step of
Speaker 2: the value chain variable cost, but it is super low.
Speaker 2: I mean, these are really prices that not only have
Speaker 2: we never seen this anymore, but it also makes no sense.
Speaker 1: So this is an industry that can still, after all
Speaker 1: these years, surprise the hell out of you.
Speaker 2: I am so surprised. I think it's because I've been
Speaker 2: watching it for seventeen years eighteen years now that I
Speaker 2: am so surprised.
Speaker 1: And with these prices, does this therefore give it the
Speaker 1: most competitive l COE in most parts of the world globally,
Speaker 1: bar nine of any other technology.
Speaker 2: Solar is super cheap. If you've got a grid connection,
Speaker 2: then you've got land to put it on. Then if
Speaker 2: you can get someone to buy the power, then you
Speaker 2: can sell the power. But it's not really the price
Speaker 2: of modules that's driving solar economics anymore. And the challenges
Speaker 2: are something entirely different. That said, low module prices are
Speaker 2: a big problem if you're a manufacturer selling solar modules.
Speaker 1: Well, so let's then go into that. Let's talk about
Speaker 1: the module manufacturers. Why is this such a hard time
Speaker 1: Because it is so they're not getting the margins on
Speaker 1: the things that they're selling despite the demand. Is there
Speaker 1: a glut of supply or there too many manufacturers?
Speaker 2: Exactly I mean, there's always too many solar manufacturers. That's
Speaker 2: it's an industry with structural over capacity. Because everyone loves
Speaker 2: solar manufacturers. Everyone loves solar panels, so everyone is like,
Speaker 2: let's make solar panels, and then it turns out that
Speaker 2: the margins and making solar panels are terrible. It's a
Speaker 2: commodity business. The new generation of technology is always coming online,
Speaker 2: and it's more efficient, it's cheaper to make, it uses
Speaker 2: less materials. It's a great business to be buying solar modules.
Speaker 2: But even there, a lot of European markets have what
Speaker 2: they're calling a hangover. There is a huge inventory of
Speaker 2: solar moduels in Europe because last year there was the
Speaker 2: energy crisis, power prices went through the roof, everyone panicked,
Speaker 2: everyone put in orders for solar modules. And this year
Speaker 2: the pressure is off. Power prices have eased a bit.
Speaker 2: We've realized that some of the worst case scenarios for
Speaker 2: power prices are not going to happen. People are asking
Speaker 2: questions like do I want to put solar modules on
Speaker 2: my roof at any price right now? And there were
Speaker 2: installation there were bottlenecks in labor so essentially the European
Speaker 2: market has not grown ass as I think people buying
Speaker 2: modules in Europe expected, and there's probably about a year
Speaker 2: of inventory sitting around in the supply chain in Europe
Speaker 2: of solar modules.
Speaker 1: And it's that extra inventory that is what they're referring
Speaker 1: to as a hangover. Because I'm sorry, but using that term,
Speaker 1: I'm not sure I fully get why that is the
Speaker 1: term he used.
Speaker 2: So sellers are referring to this as a hangover because
Speaker 2: there was a huge party in twenty twenty two, a
Speaker 2: lot of demand. People who were going to buy solar anyway,
Speaker 2: bought solar systems and solar modules early, and this year
Speaker 2: they're like, no, no, thank you, no more this. We
Speaker 2: have a warehouse. We have warehouses full of solar modules.
Speaker 2: At this point, I love this.
Speaker 1: It was a party in twenty twenty two.
Speaker 2: That's amazing, and it's not like it's not a party
Speaker 2: in twenty twenty three, but it's more like a normal year,
Speaker 2: and normal year when you had a really big party
Speaker 2: previously doesn't feel so good. Or to put it another way,
Speaker 2: demand was pulled forward from twenty twenty three into twenty
Speaker 2: twenty two, and in consequence, is not necessarily materializing.
Speaker 1: Now, now we all have those friends that you know
Speaker 1: go home before midnight and those ones who miraculously make
Speaker 1: it after midnight. So let's talk about where the music's
Speaker 1: still blaring, where the party is still going. Let's talk
Speaker 1: about China, huge producer that we all know. Manufacturers of
Speaker 1: solar modules are coming out of China, additionally being installed.
Speaker 1: You had already touched upon the fact that there has
Speaker 1: been more installed in China than in the previous year
Speaker 1: across the world combined.
Speaker 2: What is dry less, It's slightly less than in the
Speaker 2: rest of the world. It's two hundred and forty in
Speaker 2: China versus two fifty two last year worldwide.
Speaker 1: Okay, so important clarification, but durn very very close, so
Speaker 1: we'll approximate there. So why is China? Why is China booming?
Speaker 1: It's such a rapid rate.
Speaker 2: Well, China has China has two main sectors. So it's
Speaker 2: got the rooftop sector, which is on a province by
Speaker 2: province basis, and most of the provinces have been encouraged
Speaker 2: to roll out government schemes to do bulk development of
Speaker 2: solar on roofs, and many of them have quite successfully.
Speaker 2: It's a major market. There are major markets in Shangdong,
Speaker 2: in Guangdong, basically where the people are. And there's also
Speaker 2: the only megabases where the government has allocated a grid
Speaker 2: connection out to a place with lots of land, and
Speaker 2: developers have to put up to ten gigawatts of solar
Speaker 2: on that one grid connection and often some wind batteries
Speaker 2: as well. And those megabases were auctioned off in the
Speaker 2: past few years and the developers were mostly waiting until
Speaker 2: the prices dropped to do them. There's also a deadline
Speaker 2: at the end of the year for some of those megabases,
Speaker 2: so the developers are now saying, Wow, finally cheap modules.
Speaker 2: We've got a deadline coming up. Let's build it.
Speaker 1: So's let's get it done. It's last call'st.
Speaker 2: Orders STI, Well, that's orders for that batch of megabases.
Speaker 2: But that will but there is another batch next year.
Speaker 1: You're referring to the megabases in China, which this is
Speaker 1: a term that I'm not hugely familiar with. So if
Speaker 1: there are other people listening, can you put this in context.
Speaker 1: Are these only found in China? Is this is it
Speaker 1: a scale that is really not often or maybe ever,
Speaker 1: found elsewhere in the world. And can you put the
Speaker 1: size into context for our listeners.
Speaker 2: So the good thing is we have an upcoming note
Speaker 2: from Chan Yi Shao in Beijing on China's energy megabases
Speaker 2: because they don't get talked about enough. So China's megabases
Speaker 2: are relatively unique, although there are some similar developments in India.
Speaker 2: It's the government finding a patch of land which can
Speaker 2: be developed for solar and wind, running a grid connection
Speaker 2: out there, and then just giving a stayt owned developer
Speaker 2: the right to do it. And these can be five, ten,
Speaker 2: twenty gigawatts. They've been auctioned off in batches, and the
Speaker 2: most recent lot will be co located solar, wind storage
Speaker 2: and sometimes some thermal as well, just to get the
Speaker 2: most out of that grid connection. But this is a
Speaker 2: really centralized planning, really low price development of a huge
Speaker 2: amount of renewable energy. And it is similar to some
Speaker 2: of India's twenty four to seven and big auctions in
Speaker 2: some respects, but they are even bigger.
Speaker 1: So let's pivot to the US for a second, because
Speaker 1: we recently did a sh on grids and that keeps
Speaker 1: wrapping up grid connectivity, is creating time lags for installing
Speaker 1: renewable energy. Wind solar, you name it. The grid is
Speaker 1: requiring additional work in order to facilitate new projects coming online.
Speaker 1: First of all, are we seeing the same grid connectivity
Speaker 1: issues in backlogs in China? Sounds like perhaps not. And
Speaker 1: then well we'll go to the US in just a
Speaker 1: second after that. But firstly, in China, is the grid
Speaker 1: able to handle all of this?
Speaker 2: So any renewable energy market in the world you go
Speaker 2: to at the moment, you can say, well, the big
Speaker 2: bottleneck right now is grid, and you will be right.
Speaker 2: You can go to a conference in Turkey and say
Speaker 2: here in Turkey the big bottle neck is grid, and
Speaker 2: everyone there will think you know so much about the
Speaker 2: Turkish show. In a market, you can do this anyway.
Speaker 2: So yes, it is a problem in China, and in
Speaker 2: China particularly, there's the problem that the areas with lots
Speaker 2: of land and lots of sun and wind are not
Speaker 2: the places where people live and use power. And China,
Speaker 2: more than any other country, has used ultra high altage
Speaker 2: transmission lines to take power across the country. But even
Speaker 2: the biggest transmission line is difficult to use fully with
Speaker 2: solar and wind, particularly with just solar, because of the
Speaker 2: low capacity factor of solar so yes, it is even
Speaker 2: a bottleneck in China, although China has certain structural advantages
Speaker 2: to building enormous projects to sort it out.
Speaker 1: So then let's do that pivot to the US as
Speaker 1: a completely different market. Have the timelines for getting new
Speaker 1: projects online been extensively elongated as of late, and can
Speaker 1: you just touch upon well the current state of play
Speaker 1: in terms of near shoring and domestic manufacturers of solar modules,
Speaker 1: because there has been a change to the way the
Speaker 1: US treats semiconductors over the last couple of years and
Speaker 1: that has changed how they go about purchasing solar panels.
Speaker 1: And what I really want to know is are they
Speaker 1: experiencing these same ultra low prices.
Speaker 2: Well, the US is a small solar market and difficult
Speaker 2: to do business in. One of the reasons is that
Speaker 2: the allocating grid is relatively difficult. It's very regional in
Speaker 2: the US, and so it is a bottleneck there. In fact,
Speaker 2: I don't think the problem is that the grid procedures
Speaker 2: have got worse. I think the problem is that you've
Speaker 2: got more projects trying to get grid connection, and so
Speaker 2: it is the bottleneck. Whereas economics and power pursures agreements
Speaker 2: are not the bottle neck anymore. So it's just found
Speaker 2: a new bottle neck. So on the supply side, things
Speaker 2: are easing up. On the US, prices for solar modules
Speaker 2: are still over twenty five cents or what which, considering
Speaker 2: we just said that the price is in the rest
Speaker 2: of the world were twelve point eight cents for what
Speaker 2: is quite difficult. But the US is used to having
Speaker 2: expensive modules. It always has had expensive modules, and the
Speaker 2: subsidy in the US is very generous, the Inflation Reduction
Speaker 2: Act in the US. The effect on clean energy of
Speaker 2: that is basically pushing down the accelerator on a market
Speaker 2: that has the handbrake firmly on, So the US is
Speaker 2: skidding around. Modules are cheaper, they're inventory there as well,
Speaker 2: and there is about fifty giga what's a year of
Speaker 2: module manufacturing capacity planned in the US to be added now?
Speaker 2: I don't know what will happen now. Modules in the
Speaker 2: rest of the world are so is so cheap. I suspect,
Speaker 2: just on a personal personally, I suspect someone that capacity
Speaker 2: will be canceled because why build a factory for something
Speaker 2: that's almost free, Even with the trade barriers and the
Speaker 2: trade barriers are significant. I mean, the Inflation Reduction Act
Speaker 2: is paying First Solar, the only fully integrated supplier, seventeen
Speaker 2: US cents per what to manufacture in the US, So
Speaker 2: the price elsewhere is twelve point eight. First Solder is
Speaker 2: getting seventeen just from manufacturing in the US. There's also
Speaker 2: a four or five cent per watts premium for domestic
Speaker 2: content in the US, so the US module industry is
Speaker 2: going to be very heavily subsidized, probably enough that it
Speaker 2: survives against competition from Southeast Asia and India, and increasingly
Speaker 2: those are the companies that are selling into the US.
Speaker 2: In the US, the economics are really good, but the
Speaker 2: bottlenecks are still getting your projects connected to the grid,
Speaker 2: and the independent system operators are working on making that easier,
Speaker 2: on finding the locations where they can safely be collected
Speaker 2: to the grid and letting those projects go ahead and
Speaker 2: then kicking everyone else out of the because there was
Speaker 2: no point in having a grid Q full of projects
Speaker 2: that are never going to get built.
Speaker 1: Now, I do want to continue our world tour, but
Speaker 1: before we leave the US is solar creating jobs.
Speaker 2: Yeah. The thing about having the accelerator on and the
Speaker 2: handbrake on is that it creates double the number of
Speaker 2: jobs because some of them work in the accelerator and
Speaker 2: some of them work in the handbreak. It's a great
Speaker 2: place to be a lawyer or a tax equity arranger.
Speaker 2: And yeah, some of the people are actually making solar
Speaker 2: modules and building solar systems as well.
Speaker 1: Okay, let's continue around the world tour, and I'd like
Speaker 1: to next go to Brazil. Brazil is at this point
Speaker 1: in time vying for third maybe not quite there, depending
Speaker 1: on when we're pulling the numbers. Is a very competitive
Speaker 1: space in terms of demand for solar. What is driving
Speaker 1: Brazil to become well, to be so interested in solar
Speaker 1: at this point in time.
Speaker 2: Subsidies. If you see a massive boom like that, it's
Speaker 2: usually subsidies. So it's a little more complicated than that.
Speaker 2: In Brazil, there's a net metering system where if you're
Speaker 2: a business or a company, you can build up to
Speaker 2: five megawatts of solar on your roofs and you can
Speaker 2: share that solar electricity between your different sites, and that
Speaker 2: solar when you feed it into the grid, it also
Speaker 2: runs your meta backwards. Effectively. Now, minus some grid costs,
Speaker 2: you have to pay some grid costs on that, but
Speaker 2: the grid costs are pretty minor considering the price of energy,
Speaker 2: and so yeah, essentially it's net metering for large commercial
Speaker 2: systems in Brazil.
Speaker 1: So continuing on, let's go now to another continent entirely,
Speaker 1: let's go to Africa. There have been grid reliability issues
Speaker 1: that have been well documented for many years in South
Speaker 1: Africa in Nigeria. Nigeria namely has a booming population, increasing
Speaker 1: demand for access to electricity. So is solar helping to
Speaker 1: alleviate this grid intermittency or is it feeding into it?
Speaker 1: And really what does the situation look like for solar
Speaker 1: growth in Africa right now?
Speaker 2: So yes, in both Nigeria and South Africa, solar is
Speaker 2: helping to solve the problems power access. I would say
Speaker 2: that in South Africa, the latest data suggests that I
Speaker 2: got a bit over excited. Last time I did a
Speaker 2: forecast for South Africa, I said it would be five
Speaker 2: gigawatts new bill this year, but it's actually slowed down
Speaker 2: quite a lot since May and June, and it's probably
Speaker 2: going to be more like three point five gigawatts. It's
Speaker 2: so hard to estimate these markets, but apparently May and
Speaker 2: June is when people have the worst blackouts, and so
Speaker 2: there was a peak of demand there which has not
Speaker 2: been sustained. It's quite down a bit, but three point
Speaker 2: five gigawats are still a lot, and there are increasingly
Speaker 2: commercial installations going in. So South Africa is booming. Nigeria
Speaker 2: we have even less data, but the exports from China
Speaker 2: to Nigeria are still going up. So in both these
Speaker 2: places we think that solar is having a meaningful impact
Speaker 2: on people's access to electricity. And of course we're watching
Speaker 2: the rest of Africa, or we're trying to watch the
Speaker 2: rest of Africa, because it's so important both for the
Speaker 2: solar industry to find new markets that are untapped and
Speaker 2: also for the people actually there that these countries can leapfrog,
Speaker 2: not go through the whole thing of building a fossil
Speaker 2: fuel powered grid, but go straight to something better and cheaper.
Speaker 1: Now, you said at the beginning of the show that
Speaker 1: these market outlooks force us to think about things in
Speaker 1: these kind of restricted timelines, which is actually quite useful
Speaker 1: for thinking about short, medium, long term because we do
Speaker 1: look at all of these different aspects of the industry.
Speaker 1: So over the course of the rest of this year
Speaker 1: and into next year, are we going to continue to
Speaker 1: see growth?
Speaker 2: So we absolutely do see growth in the solar industry.
Speaker 2: It will continue, it will be almost universal. I think
Speaker 2: when some people are forecasting, they want to just carry
Speaker 2: the line on the line up, and I've got to
Speaker 2: caution as a forecaster that you cannot just do that
Speaker 2: because exponential growth is a mathematically terrifying thing, and if
Speaker 2: you're forecast involved covering the entire world with solar panels,
Speaker 2: they are probably wrong. We're getting to the point as
Speaker 2: an analysis team where you have to start asking questions
Speaker 2: about when solar does slow down, and there are negative
Speaker 2: feedback mechanisms in solar. Once you get a certain amount
Speaker 2: of solar in the grid, power should cost less at
Speaker 2: midday on a Sunday Sunday day. Given the growth rates
Speaker 2: we're looking at, it should probably be free on a
Speaker 2: Sunday day during sunny hours by twenty thirty and that
Speaker 2: will affect the economics of solar and make people less
Speaker 2: plately to build more solar. Now there are a lot
Speaker 2: more batteries than we thought there would be as well.
Speaker 2: Batteries are also booming, and of course batteries can shift
Speaker 2: at least the daily generation to the evening when the
Speaker 2: sun goes down, which helps solar by propping up the
Speaker 2: prices in the middle of the day and meaning that
Speaker 2: solar projects get paid more for their output. But there
Speaker 2: are limits to integrating solar. We can work on those
Speaker 2: limits in many ways, but there are negative feedback mechanisms
Speaker 2: that do cause certain solar markets to slow down, and
Speaker 2: forecasting when they will is very, very difficult, and you
Speaker 2: can't just extrapolate an exponential line forever.
Speaker 1: Well, So let's talk about this growth then in light
Speaker 1: of the upcoming Climate Conference COP twenty eight, which will
Speaker 1: be in Dubai and the United Arab Emirates. And one
Speaker 1: of the things that the COP presidency has outlined is
Speaker 1: this concept of triplingles by twenty thirty as being a
Speaker 1: goal that we should be striving towards. And I know
Speaker 1: that we are publishing a report that looks at that
Speaker 1: specific goal and talks about various aspects of it, including
Speaker 1: whether or not we think it's attainable. So, Jenny, what
Speaker 1: are your views on tripling renewables by twenty thirty for solar?
Speaker 2: So we're expecting the pledge to be negotiated at COP
Speaker 2: twenty eight to be that the renewables capacity at the
Speaker 2: end of twenty twenty two worldwide will be triple to
Speaker 2: twenty thirty, which would take it to about eleven terrawatts
Speaker 2: of renewables capacity by twenty thirty. And this won't be homogeneous.
Speaker 2: I mean Brazil already Brazil has loads of renewables. Brazil
Speaker 2: gets about eighty five percent of its power from renewables,
Speaker 2: including large hydro, so it doesn't really make sense for
Speaker 2: Brazil to triple that, Whereas there are parts of the
Speaker 2: world like Africa, like Southeast Asia that wants to more
Speaker 2: than triple, not just for their own economic reasons, but
Speaker 2: also to be on a net zero pathway to twenty fifty.
Speaker 2: We think though as a global target, it's in line
Speaker 2: with our net zero pathway, and so that's probably a
Speaker 2: good thing, but it will have to be implemented differently
Speaker 2: in different countries. And the other thing is, as a
Speaker 2: solar analyst, don't make it all bloomin solar, because if
Speaker 2: you triple global renewables capacity with solar, solar capacity, factors
Speaker 2: structurally are at most thirty percent, and that's in a
Speaker 2: truly exceptionally sunny place, whereas wind capacity factors should be
Speaker 2: higher than forty percent, and hydrocapacity factors can be highest still.
Speaker 2: And also the wind blows at night and in the winter.
Speaker 2: So we must not take this tripling renewables capacity and
Speaker 2: say it'll be all solar. We should be building wind
Speaker 2: as well. As a solar analyst, my tea takeaway is
Speaker 2: we should be building wind.
Speaker 1: It should be an increasingly diversified grade. We need to
Speaker 1: lea see a lot of different things that are doing
Speaker 1: different things for the mix in order to handle intermittency.
Speaker 1: But as a solar analyst, then would you still say,
Speaker 1: assuming that it's not the only but part of the mix,
Speaker 1: should solar still be at the center and perhaps the
Speaker 1: dominant source of energy.
Speaker 2: Solar will get built whatever you do.
Speaker 1: So it's going to happen. Regarding because of web solar.
Speaker 2: You couldn't stop solar if you wanted to. What we
Speaker 2: need to be doing, what government should be focusing on
Speaker 2: is grids and wind.
Speaker 1: So on the range of things that could be keeping
Speaker 1: you up at night in the solar industry, you've already
Speaker 1: identified that we needed to be thinking about grids. We
Speaker 1: need to be thinking about the various sources that are
Speaker 1: going on to the grid. But I've got two things
Speaker 1: that I think we're often considering for the future, maybe
Speaker 1: even right now, and they are one the semiconductor trade
Speaker 1: wars that are taking place currently, and then also future
Speaker 1: land use constraints, which would you say you are watching
Speaker 1: most closely.
Speaker 2: I'm not that worried about land use constraints, to be
Speaker 2: absolutely honest, maybe except in city states where they literally
Speaker 2: do not have much land. Most countries could meet a
Speaker 2: sensible amount of their electricity supply with solar on the ground,
Speaker 2: and they could alternatively and probably should, put solo on
Speaker 2: the roofs instead. I think rooftop solar makes a huge
Speaker 2: amount of sense, and you should not build solo on
Speaker 2: land that is otherwise useful. But there does tend to
Speaker 2: be a lot of land. The difficulty as most of
Speaker 2: it doesn't have a grid connection, and some of it
Speaker 2: probably doesn't have space for a grid connection. I think
Speaker 2: there probably is. I think land use constraints are frankly
Speaker 2: probably overblown, and sometimes they're based on official data of
Speaker 2: what land is good for that doesn't reflect what the
Speaker 2: land is actually good for. Like a lot of land
Speaker 2: z owned as agricultural land kind of isn't it's not
Speaker 2: in use, and sometimes it can't be in use. But
Speaker 2: at the same time, like solar on roofs, is a
Speaker 2: no regrets option, So not so worried about land use.
Speaker 2: I am worried about trade wars making things difficult. Just
Speaker 2: the fact that China is selling modules for less than
Speaker 2: thirteen US censor while the US is trying to get
Speaker 2: people to pay for twenty five cents of what modules.
Speaker 2: It clearly is a bit of a problem. And it's
Speaker 2: not just a price thing. It's also it's quite difficult
Speaker 2: to get the paperwork to get modules into the US. However,
Speaker 2: companies are very, very ingenious and they have been managing,
Speaker 2: which is why there is now a massive inventory of
Speaker 2: solar modus in the US. So I am worried about
Speaker 2: trade war was because we did not want a situation
Speaker 2: where China is happily running on renewables, whereas the US
Speaker 2: refuses to use the latest tech and is therefore still
Speaker 2: burning fossil fuels when it doesn't have to.
Speaker 1: And you reference the fact that the latest tech is
Speaker 1: always coming out, what is the latest tech as of
Speaker 1: right now?
Speaker 2: In solar top con which stands for and you don't
Speaker 2: have to know this. I have trouble remembering it a
Speaker 2: lot of the time. Tunnel oxidated, pastivated contact cell.
Speaker 1: I promise you I'm not going to remember that.
Speaker 2: You don't have to. They're pop con cells and they
Speaker 2: replace the old perk cells pastivated emitter rear contact cells.
Speaker 2: They're about a percentage point more efficient. Everyone's built factories
Speaker 2: to make them. And all that means is what was
Speaker 2: a five hundred what solar module? The same size module
Speaker 2: is now sort of five hundred and twenty five? What
Speaker 2: you get a little bit more for your materials in
Speaker 2: your space. And this is how solar works. There is
Speaker 2: not a visible difference between the old model and the
Speaker 2: noon model. But if you don't have a factory for
Speaker 2: the new model, your old factory is obsolete. And if
Speaker 2: you're still paying debt on that, bad luck.
Speaker 1: So one of the things that happened in this most
Speaker 1: recent market outlook is you actually revised your numbers up.
Speaker 1: That doesn't happen all that often. Actually it does.
Speaker 2: Sadly, it happens all the time. Actually, see actually often
Speaker 2: then we revise it downwards.
Speaker 1: Well, so, but you've revised it up, and I want
Speaker 1: to know, then, why are we not seeing that reflected
Speaker 1: with publicly traded companies. Solar stock prices seem to be
Speaker 1: doing poorly across the board at the moment, but would
Speaker 1: demand so high, why is this not reflected?
Speaker 2: So we thought we last quarter, we thought that three
Speaker 2: hundred and ninety two gigawatts of solar models would be
Speaker 2: installed worldwide this quarter. We think this is in twenty
Speaker 2: twenty three, which bend mine. It's almost over, and we
Speaker 2: still don't know what was built, but we now think
Speaker 2: it's probably going to turn out to a B four
Speaker 2: hundred and ten, four hundred and fifteen gigawatts of solar
Speaker 2: modules worldwide, and that upwards revision is mostly China. But
Speaker 2: at the same time, supply is even more than that.
Speaker 2: We knew there's loads of supply. We know that there's
Speaker 2: over five hundred gigawats of modules being made this year,
Speaker 2: but suddenly it seems to have caught up with the market,
Speaker 2: and therefore the price is right down. So demand is high,
Speaker 2: but supply is higher, and in consequence, price is right down,
Speaker 2: and that's why solar stocks are suffering.
Speaker 1: So, Jenny, we came into this room with me very
Speaker 1: much looking at this market outlook and thinking about Okay, well,
Speaker 1: let's talk about what's in there, But I want to
Speaker 1: know what's not in there? Jenny, what have I missed?
Speaker 1: What question should I have asked? As the expert? What
Speaker 1: are you concerned about?
Speaker 2: So what you should have asked? Something about power price calonalization,
Speaker 2: because it is my opinion that everyone is worried too
Speaker 2: little about power price calonalization or hedging it with words
Speaker 2: about market structure and market design. It is not a
Speaker 2: market design thing. It is a problem that solar panels
Speaker 2: in one place or generate at the same time, which
Speaker 2: is when it's and that means that the power price
Speaker 2: when it's sunny is going to If the market is
Speaker 2: being at all rational, it should drop to zero. It
Speaker 2: makes no sense to add more solar to generate at
Speaker 2: sunny times when you've already covering the whole of your demand.
Speaker 2: Obviously that also helps at times when it's not as sunny,
Speaker 2: it's just a little bit sunny. But this is going
Speaker 2: to be fundamentally one of the major negative feedback mechanisms
Speaker 2: on solar build in the next ten years. And the
Speaker 2: things that I'm interested in are ways in which flexible
Speaker 2: demand is emerging. So demand for electricity that can usefully
Speaker 2: be used only on sunny days. This is actually way
Speaker 2: harder than it sounds, because most sources of demand are
Speaker 2: capex intensive, and so they need to be using cheap
Speaker 2: energy more often than just in sunny hours of sunny days.
Speaker 2: Like you can't make hydrogen just on the sunny hours
Speaker 2: of sunny days. The cost of building electricizers is too high.
Speaker 2: You can't make steel just on sunny day hours of
Speaker 2: sunny days. You can probably make your freezer extra cold,
Speaker 2: or pre cool your house with aircon, or load your
Speaker 2: electric vehicle. Those are all useful, and I'm interested in
Speaker 2: mechanisms to encourage users to do that. Even with all
Speaker 2: the batteries and even all the flexibility in the world.
Speaker 2: This is going to be the big challenge in the
Speaker 2: next ten years, integrating cheap power in the sunny hours
Speaker 2: so that both the thirds of the power to actually
Speaker 2: get some money for it, and also that it alleviates
Speaker 2: the later surge of demand for electricity at night when
Speaker 2: the sun goes down.
Speaker 1: Jenny, it has been a pleasure having you here as
Speaker 1: always to give us a snapshot of what's actually happening
Speaker 1: in the solar industry. We look forward to having you
Speaker 1: back and I look forward to reading your next book.
Speaker 2: Have a great day everyone.
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