WEBVTT - Power Grids: The Backbone of the Race to Net Zero 0:00:00.080 --> 0:00:02.640 This is Dana Perkins and you're listening to Switched on 0:00:02.880 --> 0:00:06.440 the BNAF podcast. As you know if you have listened 0:00:06.480 --> 0:00:09.400 to this show before. We speak with BNAF analysts about 0:00:09.400 --> 0:00:13.040 their research, and we really hear about those themes that 0:00:13.080 --> 0:00:15.560 cut across so many of the sectors that we cover. 0:00:16.000 --> 0:00:18.639 One of those themes is supply chains. While we have 0:00:18.680 --> 0:00:21.400 discussed that affair a few times, and then there are 0:00:21.520 --> 0:00:25.640 transmission grids, this critical part of infrastructure that enables the 0:00:25.720 --> 0:00:29.560 rollout of renewables. Whether it was our episode about India 0:00:29.600 --> 0:00:32.800 with our analyst row Hit, or the interview with Jiggershaw 0:00:32.840 --> 0:00:36.519 from the US government, or this previous week's episode on URKAT, 0:00:36.600 --> 0:00:40.400 it's clear that the grid is increasingly in focus. And 0:00:40.479 --> 0:00:42.959 then there are supply chains again, and today we get 0:00:43.000 --> 0:00:46.560 into the equipment required to build grid infrastructure and quite 0:00:46.560 --> 0:00:49.919 literally connect power generation to the companies and people that 0:00:50.080 --> 0:00:53.360 need those electrons. On today's show, I speak with benf's 0:00:53.400 --> 0:00:56.000 head of Clean Power, Meredith Annex, and the head of 0:00:56.040 --> 0:00:59.800 Grids and Utilities at BEENEF, Sunjeet Sangera. Together we just 0:01:00.000 --> 0:01:03.360 discuss the transmission grid, what it is, what purpose it serves, 0:01:03.360 --> 0:01:07.160 and why it's so important. We also discuss which countries 0:01:07.240 --> 0:01:11.080 are successful in implementing policy reforms that encourage grid rollout 0:01:11.440 --> 0:01:13.640 and which are not. And finally, we get to the 0:01:13.640 --> 0:01:17.080 components and materials required for upgrading the grid and how 0:01:17.160 --> 0:01:20.440 some countries are securing their supply chain. If you like 0:01:20.520 --> 0:01:23.520 this podcast, make sure to subscribe to receive updates on 0:01:23.600 --> 0:01:26.720 future episodes, and consider giving us a review on Apple 0:01:26.760 --> 0:01:29.960 Podcasts or Spotify to make us more discoverable by others. 0:01:30.520 --> 0:01:33.440 But right now, let's jump into our conversation with Meredith 0:01:33.440 --> 0:01:46.920 and sen Jeet about transmission grids. Hey, Meredith, thank you 0:01:47.000 --> 0:01:48.000 for joining us today. 0:01:48.160 --> 0:01:49.560 Hi Dana, thanks for having us. 0:01:49.600 --> 0:01:51.200 And Senji thank you for coming back. 0:01:51.280 --> 0:01:52.360 Hey Dana, how's it going. 0:01:52.640 --> 0:01:55.440 Well, it's going pretty well because we are about to 0:01:55.480 --> 0:02:00.200 have a conversation around grids, some very critical infrastructure. And 0:02:00.480 --> 0:02:03.200 let's start with just jumping right in on what are 0:02:03.200 --> 0:02:06.440 the problems and really transmission bottlenecks that we are seeing 0:02:06.560 --> 0:02:08.440 and you know, really, I guess why are we here 0:02:08.520 --> 0:02:10.560 to discuss this and why is it so critical? 0:02:10.800 --> 0:02:13.280 Look, I think grids is coming up more and more 0:02:13.280 --> 0:02:15.800 and more, not just within our research, but also within 0:02:15.840 --> 0:02:18.880 our client interactions here at BNF that's why we now 0:02:18.919 --> 0:02:21.640 have a full dedicated team to the topic within clean power, 0:02:22.000 --> 0:02:25.200 and what we're seeing is a change in the way 0:02:25.240 --> 0:02:28.080 that grids are being used. The grids that were built 0:02:28.200 --> 0:02:30.639 that we know and see today, those were built for 0:02:30.680 --> 0:02:33.919 the industrial revolution. What we're talking about now is a 0:02:34.000 --> 0:02:38.080 massive amount of electrification all being met by renewable power. 0:02:38.120 --> 0:02:40.440 It's a complete change in the system, and that means 0:02:40.440 --> 0:02:42.880 that we're going to have to effectively double the size 0:02:43.040 --> 0:02:45.440 of the global ectricity grid by twenty fifty and we're 0:02:45.440 --> 0:02:47.320 also going to have to change the way that it operates. 0:02:47.639 --> 0:02:50.760 It's going to have to become smart, flexible, responsive, and 0:02:51.280 --> 0:02:54.680 enable the renewable power to move around. Right now, we're 0:02:54.760 --> 0:02:57.000 kind of at the point where the grid of today 0:02:57.360 --> 0:02:59.480 is at its breaking point of what it can handle. 0:02:59.800 --> 0:03:03.760 That's starting to affect the development timelines for wind and solar. 0:03:03.960 --> 0:03:07.040 It's starting to affect the cost of new generation regardless 0:03:07.080 --> 0:03:10.200 of what the source is, and it's also affecting things 0:03:10.520 --> 0:03:13.800 like delivery of electrons to customers and the actual impact 0:03:13.840 --> 0:03:17.440 on people, especially when you look at natural disasters impacts 0:03:17.680 --> 0:03:18.040 on the. 0:03:18.000 --> 0:03:20.600 Grid, and actually when we think about the fact that 0:03:20.880 --> 0:03:24.520 grids for us is living within clean power. It says 0:03:24.560 --> 0:03:27.720 a lot about how critical it is to the rollout 0:03:27.800 --> 0:03:30.760 of the industries that live within that space, and argument 0:03:30.800 --> 0:03:33.320 can be made that maybe grids could also live within 0:03:33.400 --> 0:03:36.800 the advanced transportation side and what it is that we 0:03:36.880 --> 0:03:40.160 need to do in terms of rollout of charging infrastructure. 0:03:40.320 --> 0:03:42.720 So I guess make your best pitch right now as 0:03:42.720 --> 0:03:45.960 to why it firmly lives within clean power and why 0:03:46.040 --> 0:03:47.720 the two of you were on the show together as 0:03:47.760 --> 0:03:49.040 opposed to Senjeet with Colin. 0:03:49.240 --> 0:03:53.280 Look, you're absolutely right, but it's more than just ev charging. 0:03:53.320 --> 0:03:55.120 I think that's the thing that we're seeing taking off 0:03:55.200 --> 0:03:57.760 right now. But what's going to happen on distribution networks 0:03:57.760 --> 0:04:00.640 and well, we'll come to definitions of distribution transmission in 0:04:00.640 --> 0:04:04.560 a moment. It's not just electric vehicle charging. It's also 0:04:04.960 --> 0:04:09.240 heat pumps, it's other electric technologies, it's air conditioning, it's 0:04:09.280 --> 0:04:11.880 all of these new electricity demands that are coming into 0:04:11.880 --> 0:04:14.000 the system. And at the same time as that, you're 0:04:14.080 --> 0:04:17.320 changing the entire way that electricity is being generated because 0:04:17.320 --> 0:04:21.800 we're moving to more decentralized systems, more renewable electricity like 0:04:22.160 --> 0:04:24.839 solar and storage that's being connected at the household or 0:04:24.880 --> 0:04:28.520 at the end consumer, And because of that overarching impact, 0:04:28.560 --> 0:04:31.359 it really is a system's question, and it's really affecting 0:04:31.360 --> 0:04:33.360 the way that the supply side is being delivered as 0:04:33.360 --> 0:04:33.920 well well. 0:04:33.960 --> 0:04:36.200 So then let's get into that definition that we're going 0:04:36.200 --> 0:04:38.160 to come to. Senji, Maybe you could tell us a 0:04:38.160 --> 0:04:40.520 little bit about what are we going to talk about 0:04:40.520 --> 0:04:43.160 today When we say transmission grid, what does that mean? 0:04:43.200 --> 0:04:44.920 And paint a picture in my mind. 0:04:45.560 --> 0:04:48.200 Yeah, the word grid can be kind of ambiguous, so 0:04:48.240 --> 0:04:50.640 I think it's good to get the definitions upfront. So 0:04:50.920 --> 0:04:53.080 when we talk about the grid, what we're talking about 0:04:53.360 --> 0:04:55.960 is the piece of infrastructure that's going to move power 0:04:56.000 --> 0:04:58.880 from where it's being produced to where it's ultimately consumed. 0:04:59.120 --> 0:05:02.360 We tend to segment this into two major categories. One 0:05:02.400 --> 0:05:05.840 is transmission and one is distribution. So transmission you can 0:05:05.839 --> 0:05:09.360 think of the highways that connect cities together, and distribution 0:05:09.600 --> 0:05:12.280 you can think of the roads that connect from a 0:05:12.360 --> 0:05:14.960 highway back to a person's home. So these are two 0:05:15.040 --> 0:05:17.880 kind of segments that run together. Now, the real distinction 0:05:18.200 --> 0:05:21.640 is in voltage. So voltage is a characteristic of these 0:05:21.680 --> 0:05:25.360 power lines, and the distinction can be different for each markets. 0:05:25.400 --> 0:05:29.159 But it's meaningful because the companies in this space have 0:05:29.320 --> 0:05:32.080 aligned themselves with these definitions. So you tend to have 0:05:32.160 --> 0:05:35.240 companies that are transmission utilities, you have companies that are 0:05:35.279 --> 0:05:37.640 distribution utilities, and you have some that are both T 0:05:37.800 --> 0:05:40.200 and D, so they run both sides of the network 0:05:40.320 --> 0:05:42.520 in terms of what you're actually seeing when you're driving 0:05:42.520 --> 0:05:44.039 in a car on the side of the road. So yes, 0:05:44.120 --> 0:05:46.599 these are the wires and the poles, the pylons that 0:05:46.640 --> 0:05:49.919 are stringing together to move energy. The second major component 0:05:49.960 --> 0:05:53.720 that we typically see is transformers and circuit breakers. So 0:05:53.839 --> 0:06:00.400 transformers are not aliens, robots from another planet, So these 0:06:00.400 --> 0:06:03.600 are specialized devices that allow you to change that voltage 0:06:03.720 --> 0:06:05.400 up or down, which you need to be able to 0:06:05.480 --> 0:06:08.640 move power long distances. And circuit breakers are just switches 0:06:08.760 --> 0:06:11.640 and these when power lines come together at a certain point, 0:06:11.720 --> 0:06:14.680 you need to build a station. We call these substations, 0:06:14.839 --> 0:06:17.159 and these end up being the nodes for the power system. 0:06:17.520 --> 0:06:20.240 We're going to rely pretty heavily on our conversation today 0:06:20.279 --> 0:06:23.480 on thinking about different case studies, and before we get 0:06:23.520 --> 0:06:26.360 into those case studies, though again on the definition end 0:06:26.360 --> 0:06:30.080 of things. When we're talking about the transmission grid, and bottlenecks. 0:06:30.200 --> 0:06:33.160 Are we talking about a grid that largely needs to 0:06:33.200 --> 0:06:35.960 be retrofitted that's existing or is a lot of the 0:06:36.000 --> 0:06:39.000 activity and is a lot of the friction really in 0:06:39.120 --> 0:06:43.599 creating new infrastructure and assets on the energy generation side 0:06:43.600 --> 0:06:46.520 and then connecting that to the rest of the system 0:06:46.640 --> 0:06:48.000 that we all interact with. 0:06:48.400 --> 0:06:50.039 So we need to do a bit of both. We 0:06:50.080 --> 0:06:53.240 need to retrofit the existing grid because it's not really 0:06:53.240 --> 0:06:55.919 fit for purpose, and we also need to expand the 0:06:55.960 --> 0:06:58.520 grid that we have today, right, and so let me 0:06:58.520 --> 0:07:01.200 talk a bit about this expansion. So we've expanded the 0:07:01.240 --> 0:07:04.720 grid over history number of times. There's usually these cycles 0:07:04.760 --> 0:07:07.839 of build out that are very regionally confined. Now what 0:07:07.839 --> 0:07:11.680 we're seeing unfold is a global need to expand the 0:07:11.720 --> 0:07:14.640 grid to meet net zero targets. So the grid today, 0:07:14.760 --> 0:07:16.720 if you add up all the kilometers in the world 0:07:16.800 --> 0:07:20.800 both transmission and distribution, is about seventy two million kilometers, 0:07:20.960 --> 0:07:23.240 and when we do our modeling for net zero, we 0:07:23.400 --> 0:07:25.400 find that it needs to grow to about one hundred 0:07:25.400 --> 0:07:28.160 and fifty two million kilometers. One hundred and fifty two 0:07:28.160 --> 0:07:31.360 million kilometers happens to be the distance from the Earth 0:07:31.480 --> 0:07:33.640 to the Sun. Wow, right, which is I think a 0:07:33.640 --> 0:07:36.239 bit poetic given that solar has to play a critical 0:07:36.320 --> 0:07:38.600 role in the transition. But if we put this into 0:07:38.840 --> 0:07:42.120 mathematical terms, so that's a two point seven percent compound 0:07:42.280 --> 0:07:44.840 annual growth rate on the grid, and when we look 0:07:44.880 --> 0:07:47.360 back in time, the grid has really only been expanding. 0:07:47.360 --> 0:07:50.280 So if we look at like say the US transmission grid, historically, 0:07:50.360 --> 0:07:52.360 it's been growing at a rate of about one percent, 0:07:52.560 --> 0:07:54.120 and so you can see the kind of the step 0:07:54.200 --> 0:07:55.640 up that we need to do to get to two 0:07:55.680 --> 0:07:58.680 point seven percent. We do need to modernize the grid 0:07:58.760 --> 0:08:01.240 as well, and there's a numberumber of technologies it will 0:08:01.240 --> 0:08:04.080 inevitably have to pursue, just because building a grid that 0:08:04.200 --> 0:08:06.400 large is going to come with some challenges when it 0:08:06.400 --> 0:08:08.840 comes to permitting and dealing with stakeholder issues and the 0:08:08.920 --> 0:08:12.200 environmental impacts. So every bit of infrastructure that's there today 0:08:12.400 --> 0:08:15.880 will have to be reevaluated. We're looking at digitalizing the grid, 0:08:16.040 --> 0:08:18.960 so this is stuff like dynamic line ratings, where you 0:08:19.040 --> 0:08:22.800 have capacity on a transmission line that is being calculated 0:08:22.960 --> 0:08:25.840 our hour as opposed to just two numbers that we've 0:08:25.840 --> 0:08:29.880 conservatively picked. And looking forward, like looking further out, we're 0:08:29.960 --> 0:08:33.240 looking at a number of powerflow control devices as well 0:08:33.240 --> 0:08:36.440 that allow you to throttle the amount of energy that's 0:08:36.520 --> 0:08:39.800 moving through given transmission and distribution links as well. 0:08:40.040 --> 0:08:43.040 Now, when we're thinking about the new infrastructure and this 0:08:43.200 --> 0:08:45.880 kind of rapid rollout of clean energy that is actually 0:08:45.880 --> 0:08:48.840 coming online, certainly after you've built the project, you need 0:08:48.880 --> 0:08:51.079 to connect it. Hence why we're here talking about grids, 0:08:51.320 --> 0:08:54.000 and I'm aware that there's a waiting time, So what 0:08:54.200 --> 0:08:56.559 is the average waiting time for this sort of connection. 0:08:57.200 --> 0:09:00.880 What we're finding is that we have giga now not 0:09:01.200 --> 0:09:04.160 you know, a small number of literal gigawatts of solar 0:09:04.160 --> 0:09:07.240 and wind projects waiting to connect just within Europe and 0:09:07.320 --> 0:09:10.120 the US. But as Sanji said, this is a global problem. 0:09:10.240 --> 0:09:12.840 If we looked in Japan and Australia, you would see 0:09:12.840 --> 0:09:16.040 similar stories coming about. If we stick with Europe for second, 0:09:16.120 --> 0:09:19.040 since that's where we're recording, what our analysis finds is 0:09:19.080 --> 0:09:23.160 that in five markets the UK, Italy, Spain and Germany 0:09:23.320 --> 0:09:25.800 as well as France, there's a total of about six 0:09:25.880 --> 0:09:29.679 hundred gigawatts waiting for an interconnection at the moment for 0:09:29.760 --> 0:09:33.000 the grid. That's about twice as much installed capacity for 0:09:33.120 --> 0:09:35.480 win in solar as we have today and eighty percent 0:09:35.640 --> 0:09:38.000 of the twenty thirty targets for the European Union, So 0:09:38.200 --> 0:09:40.960 that just shows you the scale of what's currently waiting 0:09:41.000 --> 0:09:44.040 to connect now. The waiting times are also growing right 0:09:44.120 --> 0:09:48.320 so we're talking about anywhere from three to eight years 0:09:48.400 --> 0:09:51.840 usually just for the grid interconnection. That's not even including 0:09:51.880 --> 0:09:54.840 things like environmental and construction permits. When you get to 0:09:54.880 --> 0:09:58.000 that point, the development timelines now can be so long 0:09:58.000 --> 0:10:00.000 that it's putting twenty thirty targets at rest. 0:10:00.920 --> 0:10:03.480 So in which countries or general parts of the world 0:10:03.480 --> 0:10:06.559 if you prefer? But where are we finding these wait 0:10:06.679 --> 0:10:09.360 times to be the longest? And I guess the situation 0:10:09.480 --> 0:10:10.760 to be most dire So. 0:10:10.720 --> 0:10:13.160 In terms of wait times, parts of Europe are looking 0:10:13.280 --> 0:10:15.839 pretty hard right now. I think the UK is one 0:10:15.840 --> 0:10:17.920 of the worst markets that we've looked at in depth. 0:10:18.000 --> 0:10:22.280 The Nordics have antcdotally also heard are extremely long waiting times. 0:10:22.520 --> 0:10:24.680 But it's not just about the length of time that 0:10:24.720 --> 0:10:26.800 it takes to get the permit. It's also the cost 0:10:27.200 --> 0:10:30.080 of the great interconnection when that happens. And what we've 0:10:30.120 --> 0:10:33.200 seen is some recent data in the United States that 0:10:33.240 --> 0:10:36.400 came out earlier this year from the Lawrence Berkeley lapse, 0:10:36.640 --> 0:10:39.880 which is showing us that the costs are doubling now 0:10:40.120 --> 0:10:44.439 for interconnection for wind and solar in MISO, which is 0:10:44.480 --> 0:10:48.560 the Midwestern ISO independent system operator in the US, as 0:10:48.600 --> 0:10:52.640 well as PJM, So you're really talking about like Minnesota, Illinois, Pennsylvania, 0:10:52.679 --> 0:10:55.640 those types of states within the United States. What we're 0:10:55.679 --> 0:10:58.800 finding now is that the cost of these systems has 0:10:58.840 --> 0:11:01.439 gone up to the point that you're seeing them erase 0:11:01.480 --> 0:11:04.880 the benefits of the Inflation Reduction Act production tax credits. 0:11:04.880 --> 0:11:07.199 They're about equal in size the cost of a high 0:11:07.240 --> 0:11:10.160 grade connection and the benefit that you get from the 0:11:10.320 --> 0:11:14.200 new US tax credits. Now, median costs are still pretty low. 0:11:14.320 --> 0:11:16.880 The issue is that you have a lot of geographic 0:11:16.920 --> 0:11:21.199 clustering when it comes especially to wind, so you're finding 0:11:21.240 --> 0:11:25.280 wind industry being hit particularly hard by this new grade interconnection. 0:11:25.320 --> 0:11:28.680 Applications from wind are dropping in these markets because developers 0:11:28.720 --> 0:11:31.560 are having a harder time getting an economic connection, and 0:11:31.600 --> 0:11:34.480 then the risk to developers is also high. Another market 0:11:34.520 --> 0:11:36.720 where that's the case is in the UK. In the UK, 0:11:36.880 --> 0:11:39.400 if your project is going to connect and trigger an 0:11:39.480 --> 0:11:42.800 upgrade to the transmission system, you and any other project 0:11:42.880 --> 0:11:46.240 in that connection. Who's causing that upgrade need to share 0:11:46.320 --> 0:11:49.040 the cost of the upgrade. So if there's ten of 0:11:49.080 --> 0:11:52.360 you and the cost is say one hundred thousand, but 0:11:52.480 --> 0:11:54.600 one of those projects drops out all of a sudden, 0:11:54.640 --> 0:11:57.800 your individual project just got hit by a higher bill. 0:11:58.040 --> 0:12:00.640 So this is adding In markets where develop sloppers pay 0:12:00.720 --> 0:12:03.480 for the cost of interconnection, you're seeing a greater risk 0:12:03.520 --> 0:12:06.200 on development and the greater risk on the upfront cost 0:12:06.280 --> 0:12:07.320 of a project as well. 0:12:07.480 --> 0:12:10.000 So that risk is being borne by the developers, even 0:12:10.040 --> 0:12:12.680 if they've secured a really good price at auction, there's 0:12:12.679 --> 0:12:14.840 a lot of variables that they may not necessarily be 0:12:14.880 --> 0:12:16.840 able to see the future for correct. 0:12:16.720 --> 0:12:19.120 In markets like the UK and the US, Yes, that's 0:12:19.160 --> 0:12:19.559 the case. 0:12:19.880 --> 0:12:22.640 Are the cost of grade connection, which it seems like 0:12:22.679 --> 0:12:26.320 we are not able to get around. Is it discouraging 0:12:26.559 --> 0:12:30.040 companies and developers from wanting to go into some of 0:12:30.080 --> 0:12:30.800 these markets? 0:12:31.040 --> 0:12:35.200 Not always. What we're finding is that the threshold costs 0:12:35.320 --> 0:12:37.960 for a great connection in the Midwest ISO in the 0:12:38.040 --> 0:12:40.960 US is actually gone up before you'd see a project cancel. 0:12:41.240 --> 0:12:43.240 It used to be that in myso if a win 0:12:43.360 --> 0:12:46.840 project was hit by one hundred dollars per kilowatt grade 0:12:46.840 --> 0:12:49.080 connection fee. That would usually be the point where the 0:12:49.080 --> 0:12:52.840 project was deemed uneconomical by the developer. But now, according 0:12:52.880 --> 0:12:55.320 to the Lawrence Berkeley Lab data that we've been reviewing, 0:12:55.559 --> 0:12:59.280 that numbers nearly two hundred and fifty dollars per kilowatt, 0:12:59.360 --> 0:13:03.079 So you're fine finding basically the cost appetitive developers is 0:13:03.120 --> 0:13:05.120 going up because they need to bear it in order 0:13:05.160 --> 0:13:08.480 to build their projects. And oftentimes there's still an economic 0:13:08.520 --> 0:13:12.840 case because of policy programs that are encouraging additional renewables build, 0:13:12.880 --> 0:13:15.599 because of higher demand for power purchase agreements, because of 0:13:15.679 --> 0:13:18.640 higher wholesale power prices in Europe from the commodity crisis. 0:13:18.720 --> 0:13:21.080 All of these factors are still helping developers build this. 0:13:21.360 --> 0:13:24.079 But that's not to say that it's not causing a strain, right, 0:13:24.120 --> 0:13:27.240 it's a more expensive transition than you would have had otherwise. 0:13:27.600 --> 0:13:29.959 Let's talk about a case study that might be deemed 0:13:30.080 --> 0:13:33.560 a turnaround story or something mildly positive in this space. 0:13:33.840 --> 0:13:37.160 So Spain had a dysfunctional system, one might say that 0:13:37.320 --> 0:13:38.880 has actually turned out to be a bit of a 0:13:38.920 --> 0:13:41.720 success story when it comes to grids. Can we go 0:13:41.840 --> 0:13:44.160 into some detail on what has happened and what is 0:13:44.240 --> 0:13:47.679 now currently happening when it comes to Spain, and not 0:13:47.720 --> 0:13:50.280 only their clean energy roll out, but their transmission grid. 0:13:50.440 --> 0:13:52.800 I think Spain's a good case study because it shows 0:13:52.800 --> 0:13:55.640 this really comeback kid type of story. So Spain has 0:13:55.640 --> 0:13:59.120 an interconnection queue. It's about one hundred and forty four gigawatts, 0:13:59.160 --> 0:14:02.000 so those are projects with permission to connect as of 0:14:02.000 --> 0:14:05.520 March twenty twenty three. For contexts, Spain has a ninety 0:14:05.520 --> 0:14:09.680 three gigawatt solar and wind target for twenty thirty And 0:14:09.760 --> 0:14:12.560 Spain also has a few characteristics that are probably relevant 0:14:12.559 --> 0:14:16.080 to note. So developers can request a grid connection before 0:14:16.120 --> 0:14:19.320 they secure site planning permission. So what that means is 0:14:19.640 --> 0:14:22.080 the barrier to get nominated in the queue is kind 0:14:22.080 --> 0:14:23.840 of low, so you end up with a lot of 0:14:23.840 --> 0:14:26.960 these speculative projects that may not all get built sitting 0:14:26.960 --> 0:14:29.280 in the interconnection queue. And so that's been a problem 0:14:29.320 --> 0:14:31.720 for Spain historically, and so they did a number of 0:14:31.760 --> 0:14:34.880 things to try and address these issues. And the net 0:14:34.960 --> 0:14:36.680 result of this is that they've actually been able to 0:14:36.720 --> 0:14:39.080 keep the interconnection queue at this one hundred and forty 0:14:39.080 --> 0:14:42.320 four gigawatts for the last several years by implementing these measures. 0:14:42.360 --> 0:14:44.360 So one thing that they did is they started removing 0:14:44.440 --> 0:14:47.160 stalled projects from the queue, and so if the projects 0:14:47.160 --> 0:14:49.920 weren't progressing fast enough, they were removed. They started easing 0:14:49.960 --> 0:14:52.760 the environmental process, so that was allowing projects to move 0:14:52.800 --> 0:14:55.600 more quickly. But the most interesting thing that they actually 0:14:55.600 --> 0:15:00.000 did was they implemented this tender process to award grid capacity. 0:15:00.160 --> 0:15:02.480 It's kicked off in twenty twenty one, but the idea 0:15:02.600 --> 0:15:06.280 basically is to flip the whole interconnection process on its head, 0:15:06.400 --> 0:15:10.200 and so instead of developers applying for network capacity, operators 0:15:10.240 --> 0:15:14.880 are actually offering connection capacity in specific regions, and the 0:15:14.960 --> 0:15:18.560 developers are bidding in these competitive processes, and so the 0:15:18.720 --> 0:15:21.440 operator gets to choose what the criteria is for who 0:15:21.480 --> 0:15:24.000 gets to win. And this allows them to be much 0:15:24.040 --> 0:15:28.000 more proactive in creating grid capacity, where the old model 0:15:28.240 --> 0:15:30.520 you had to be very reactive. You'd wait for all 0:15:30.560 --> 0:15:32.640 the connection requests to come in and say, oh, okay, 0:15:32.680 --> 0:15:34.320 it looks like I need to upgrade this part of 0:15:34.360 --> 0:15:36.840 the system. Which point you already have all this demand 0:15:36.840 --> 0:15:38.480 and it's a little bit too late. So I think 0:15:38.560 --> 0:15:41.320 these solutions are not really a panacea. We can't apply 0:15:41.400 --> 0:15:44.240 them broadly across the world. That's part of what interconnection 0:15:44.480 --> 0:15:48.440 processes have been challenging. But being open to innovating and 0:15:48.480 --> 0:15:50.640 looking at different ways to do things is going to 0:15:50.640 --> 0:15:51.760 be critical moving forward. 0:15:52.120 --> 0:15:55.680 There's definitely something to be learned about taking something that 0:15:55.920 --> 0:15:58.960 has long wait times and lots of administrative burden and 0:15:59.000 --> 0:16:01.840 figuring out ways to streamline it. And there's one area 0:16:02.040 --> 0:16:05.320 that you brought up, so streamlining the environmental permitting process 0:16:05.400 --> 0:16:07.880 that I think can sometimes raise flags for people in 0:16:07.920 --> 0:16:11.760 this industry because invariably these processes exist for a good 0:16:11.800 --> 0:16:14.960 reason to protect certain parts of well the environment that 0:16:15.000 --> 0:16:17.520 we live in. That oftentimes some of the reason why 0:16:17.520 --> 0:16:20.080 people are building out clean energy infrastructure to begin with, 0:16:20.280 --> 0:16:23.440 when we come down to the basic fundamental premise that 0:16:23.520 --> 0:16:26.200 a drive to net zero is what is driving part 0:16:26.200 --> 0:16:30.320 of this industry. Have there been negative outcomes to streamlining 0:16:30.320 --> 0:16:33.320 that process or is it more of just a focus 0:16:33.360 --> 0:16:36.040 on making sure that things are processed in a timely 0:16:36.120 --> 0:16:39.120 fashion and that it's prioritized and it's more to do 0:16:39.160 --> 0:16:43.119 with government bureaucracy rather than loosening the reins on our standards. 0:16:43.480 --> 0:16:47.200 I've spoken about streamlining permitting processes before, and the feedback 0:16:47.280 --> 0:16:50.040 I get is that actually we made a lot of progress, 0:16:50.120 --> 0:16:53.000 like we've made a lot of environmental progress by creating 0:16:53.120 --> 0:16:56.200 habitats and making the rules stricter for these projects, and 0:16:56.240 --> 0:16:59.560 that's actually important to preserving the environment. And I would agree, 0:16:59.640 --> 0:17:02.080 but there is a tension here because we have these 0:17:02.120 --> 0:17:06.080 renewable energy targets and also to try and safeguard the environment, 0:17:06.160 --> 0:17:08.840 and there's really no way to realize these projects without 0:17:08.960 --> 0:17:11.680 also building out a power grid. And so I think 0:17:11.680 --> 0:17:15.520 the narrative needs to shift towards cumulative impacts assessment, where 0:17:15.520 --> 0:17:18.520 we're thinking holistically. So, yes, there's an impact to building 0:17:18.560 --> 0:17:21.320 a transmission line, there's also an impact to not building 0:17:21.320 --> 0:17:23.360 a transmission line, and so we need to make sure 0:17:23.359 --> 0:17:26.160 that we're thinking of this in a centralized way and 0:17:26.200 --> 0:17:28.280 that way we can manage impacts the best. 0:17:28.440 --> 0:17:30.600 I think this also spreads not just to the grid, 0:17:30.640 --> 0:17:33.480 but also to renewables development as well, where a lot 0:17:33.520 --> 0:17:35.760 of effort is being made not just on speeding up 0:17:35.800 --> 0:17:39.120 grid interconnections, but also environmental permits for wind and solar. 0:17:39.400 --> 0:17:42.359 And in some cases the way that that's being done 0:17:42.400 --> 0:17:45.960 is by putting a timestamp on how long an application 0:17:46.000 --> 0:17:48.640 can be open, or how long you can be fielding 0:17:48.880 --> 0:17:51.760 objections from the public for or how many objections can 0:17:51.760 --> 0:17:54.199 be fielded from the public. Other times it's saying that 0:17:54.240 --> 0:17:57.400 you can only take up an objection around certain criteria, 0:17:57.560 --> 0:18:00.560 so it's limiting rather than saying everything to the sun 0:18:00.840 --> 0:18:03.679 is acceptable as a complaint against this project, you have 0:18:03.720 --> 0:18:06.160 to look at limited things. I think where that balance 0:18:06.240 --> 0:18:09.879 falls in terms of helping to speed out renewable projects 0:18:10.119 --> 0:18:14.359 without overlooking important environmental impacts is still being figured out 0:18:14.440 --> 0:18:17.880 right now. The area where we're seeing perhaps the most 0:18:17.880 --> 0:18:21.520 innovative changes on this is with offshore wind auctions. There's 0:18:21.560 --> 0:18:23.159 a lot of data that we still need to be 0:18:23.200 --> 0:18:26.520 gathering on biodiversity within the oceans the impact that these 0:18:26.560 --> 0:18:29.159 site selections can have. So what you're starting to see 0:18:29.320 --> 0:18:32.080 in parts of the US and Europe is the introduction 0:18:32.200 --> 0:18:37.080 of biodiversity impacts in the original auctioning of the site, 0:18:37.280 --> 0:18:40.240 and that's quite cool. It means that you're having non 0:18:40.440 --> 0:18:45.000 cost impact considerations taken into account before the project's even awarded. 0:18:45.240 --> 0:18:48.320 That's really interesting because biodiversity and how we quantify it 0:18:48.359 --> 0:18:50.600 is certainly a topic under discussion right now, and I 0:18:50.640 --> 0:18:52.959 expect to see a lot of development in that space. 0:18:53.000 --> 0:18:56.399 Over the coming months and years. Sticking on this idea 0:18:56.520 --> 0:18:59.320 of let's talk about some positive case studies. There's another one, 0:18:59.359 --> 0:19:02.360 and let's stay in Europe for a minute. How about Germany? 0:19:02.600 --> 0:19:05.000 What have they done and what lessons can we learn 0:19:05.080 --> 0:19:06.560 about that on a global scale. 0:19:06.600 --> 0:19:09.280 So Germany is also an interesting case study. We don't 0:19:09.320 --> 0:19:12.160 have data on their interconnection cues because apparently they don't 0:19:12.200 --> 0:19:14.600 track it, but when we talk to developers, everyone's quite 0:19:14.720 --> 0:19:16.920 envious about what's going on in Germany. So there's a 0:19:16.920 --> 0:19:18.960 few key things that it can highlight. So the German 0:19:19.040 --> 0:19:21.240 grid is kind of unique because it's actually quite a 0:19:21.359 --> 0:19:24.200 dense grid. So if you just take the total kilometers 0:19:24.240 --> 0:19:26.439 of transmission and distribution grid and divide it by the 0:19:26.440 --> 0:19:29.080 total land area, you end up finding that they're anomalous 0:19:29.160 --> 0:19:31.720 compared to the European peers. And so we describe this 0:19:31.800 --> 0:19:34.600 as having a very capillary grid system. So capillary is 0:19:34.680 --> 0:19:36.920 kind of talk about bloodstreams. 0:19:36.640 --> 0:19:37.359 Checking out the body. 0:19:37.480 --> 0:19:39.439 Yeah, so it's like the grid's kind of similar, and 0:19:39.520 --> 0:19:42.040 so you have this very branched out network and what 0:19:42.080 --> 0:19:45.040 that means is if you have a renewable energy project 0:19:45.160 --> 0:19:47.560 you want to connect to the grid, likelihood that you'll 0:19:47.600 --> 0:19:50.720 have some viable connection spot that's close to you, that's 0:19:50.840 --> 0:19:53.960 robust is there. And so we're finding that that Germany 0:19:54.119 --> 0:19:56.119