1 00:00:01,560 --> 00:00:02,360 Speaker 1: Welcome to zero. 2 00:00:02,640 --> 00:00:18,440 Speaker 2: I'm Akshatrati. This week wind industry struggles and victories. If 3 00:00:18,480 --> 00:00:21,280 Speaker 2: you've heard anything about the wind industry in recent years, 4 00:00:21,720 --> 00:00:25,919 Speaker 2: it's mostly bad news. Building projects is becoming more expensive, 5 00:00:26,360 --> 00:00:30,240 Speaker 2: getting government permission to build wind farms is taking much longer, 6 00:00:30,800 --> 00:00:35,320 Speaker 2: and big companies like Oorstered, Vestas and Semens are struggling. 7 00:00:37,280 --> 00:00:40,520 Speaker 2: But it's not all bad news. There are still big 8 00:00:40,560 --> 00:00:44,000 Speaker 2: players winning at the win game. One of them is 9 00:00:44,040 --> 00:00:45,919 Speaker 2: Copenhagen Infrastructure Partners. 10 00:00:46,280 --> 00:00:47,040 Speaker 1: It's not as. 11 00:00:46,880 --> 00:00:50,840 Speaker 2: Famous as other companies, but it's a big player. Since 12 00:00:50,880 --> 00:00:55,400 Speaker 2: twenty twelve, CIP has raised twenty eight billion dollars and 13 00:00:55,600 --> 00:00:58,760 Speaker 2: it now has one hundred and fifty gigawards of clean 14 00:00:58,960 --> 00:01:02,760 Speaker 2: energy projects in the pipeline. That's roughly the size of 15 00:01:02,760 --> 00:01:09,240 Speaker 2: the UK's electricity generation capacity under one company. CIP is 16 00:01:09,280 --> 00:01:11,759 Speaker 2: so big, in fact, that the company is now even 17 00:01:11,800 --> 00:01:15,399 Speaker 2: talking about building artificial islands out in the sea to 18 00:01:15,520 --> 00:01:19,600 Speaker 2: further speed up the deployment of offshore wind power. To 19 00:01:19,680 --> 00:01:23,000 Speaker 2: understand how CIP is managing to navigate the challenges of 20 00:01:23,040 --> 00:01:25,640 Speaker 2: the wind industry, I spoke to one of its founders, 21 00:01:26,000 --> 00:01:29,480 Speaker 2: Jakub Baruel Poultsen. He got to start building offshore wind 22 00:01:29,480 --> 00:01:32,440 Speaker 2: projects in what used to be Danish oil and natural 23 00:01:32,480 --> 00:01:35,880 Speaker 2: gas and is now Orsted. You can hear more of 24 00:01:35,920 --> 00:01:39,000 Speaker 2: that story in a previous episode of Zero with Ostered 25 00:01:39,080 --> 00:01:43,280 Speaker 2: CEO Mad Snipper. Yakub benefited from the initial wave of 26 00:01:43,319 --> 00:01:47,319 Speaker 2: government subsidies given to offshore wind projects by countries like 27 00:01:47,360 --> 00:01:51,120 Speaker 2: the UK and Denmark, and then he used that success 28 00:01:51,200 --> 00:01:54,840 Speaker 2: to create CIP and bring in big investors such as 29 00:01:55,080 --> 00:01:59,440 Speaker 2: pension funds and insurance companies to build even bigger offshore 30 00:01:59,480 --> 00:02:03,080 Speaker 2: wind project. I spoke to Yakub at the World Economic 31 00:02:03,120 --> 00:02:06,320 Speaker 2: Forum meeting this year in Tavos to understand how the 32 00:02:06,360 --> 00:02:09,679 Speaker 2: wind industry is dealing with the many challenges it faces, 33 00:02:10,160 --> 00:02:13,720 Speaker 2: why CIP has been so profitable, and what will be 34 00:02:13,800 --> 00:02:27,120 Speaker 2: needed to keep deploying off your wind to meet climate goals. 35 00:02:28,400 --> 00:02:29,600 Speaker 1: Yakub, welcome to the show. 36 00:02:30,000 --> 00:02:30,440 Speaker 3: Thank you. 37 00:02:31,480 --> 00:02:34,959 Speaker 4: CIP was founded in twenty twelve, but before that you 38 00:02:35,120 --> 00:02:38,120 Speaker 4: work for Dong Energy for a decade or more. That 39 00:02:38,200 --> 00:02:41,400 Speaker 4: company is now called Orsted and is a giant in 40 00:02:41,440 --> 00:02:42,840 Speaker 4: the offshore wind industry. 41 00:02:43,440 --> 00:02:44,040 Speaker 1: So could you. 42 00:02:44,000 --> 00:02:47,320 Speaker 4: Talk me through that period of working for Dong Energy 43 00:02:47,680 --> 00:02:51,560 Speaker 4: and what made you leave Dong Energy to create CIP. 44 00:02:52,160 --> 00:02:54,960 Speaker 3: Well, I started already in two thousand and one. Actually 45 00:02:55,160 --> 00:02:58,960 Speaker 3: my first job was to consolidate six Danish energy companies 46 00:02:58,960 --> 00:03:02,400 Speaker 3: into what became Dong Energy and what is now astel 47 00:03:03,639 --> 00:03:06,400 Speaker 3: And a few years after we did that six way merger, 48 00:03:06,560 --> 00:03:09,920 Speaker 3: I became head of offshore wind in astel and in 49 00:03:10,040 --> 00:03:12,639 Speaker 3: two thousand and seven and grew the company or the 50 00:03:12,800 --> 00:03:16,440 Speaker 3: offshore wind division from around fifty people to around fifteen 51 00:03:16,560 --> 00:03:20,160 Speaker 3: hundred people. So that was a really really interesting experience 52 00:03:20,200 --> 00:03:22,799 Speaker 3: for me. And when I left in twenty twelve, quite 53 00:03:22,800 --> 00:03:24,800 Speaker 3: a few of those people I had worked with in 54 00:03:24,840 --> 00:03:28,280 Speaker 3: the offshore wind division followed me to the CIP company 55 00:03:28,919 --> 00:03:31,200 Speaker 3: and are still there. So we have been working together 56 00:03:31,240 --> 00:03:33,600 Speaker 3: for almost the twenty years, many of us. 57 00:03:34,400 --> 00:03:37,280 Speaker 4: But let's be honest, you were known as the golden 58 00:03:37,400 --> 00:03:41,080 Speaker 4: birds in Dong Energy. You were building these offshore wind 59 00:03:41,160 --> 00:03:43,960 Speaker 4: projects and making a ton of money for the company, 60 00:03:44,000 --> 00:03:48,320 Speaker 4: but also for yourself and Denmark. You know, the state 61 00:03:48,400 --> 00:03:52,040 Speaker 4: prefers that the executives of its state owned companies did 62 00:03:52,040 --> 00:03:56,400 Speaker 4: not personally profit so much, and so was having CIP 63 00:03:56,680 --> 00:04:00,960 Speaker 4: as an independent company just allow you to grab opportunities 64 00:04:00,960 --> 00:04:02,000 Speaker 4: that you could. 65 00:04:01,720 --> 00:04:04,840 Speaker 1: Not have at Dong Energy, which of course became austered. 66 00:04:06,240 --> 00:04:09,560 Speaker 3: I think the reason why we established CIP was that 67 00:04:09,600 --> 00:04:13,960 Speaker 3: we wanted to give access to many, many more investors 68 00:04:13,960 --> 00:04:17,800 Speaker 3: than just the Danish state into the offshore wind space. 69 00:04:17,960 --> 00:04:20,960 Speaker 3: So we saw that offshore wind would not only be 70 00:04:21,000 --> 00:04:24,360 Speaker 3: a Danish or north sea phenomenon, but it would be 71 00:04:24,480 --> 00:04:29,280 Speaker 3: potentially become a global thing, which it tells Subsequently, we 72 00:04:29,360 --> 00:04:33,320 Speaker 3: wanted to give access to many investors. So today we 73 00:04:33,400 --> 00:04:37,360 Speaker 3: have two hundred institutional investors in CIP who are investing 74 00:04:37,400 --> 00:04:41,760 Speaker 3: into our offshore projects across Europe, Asia and the US. 75 00:04:42,440 --> 00:04:46,599 Speaker 4: And since twenty twelve when you created CIP, you've gone 76 00:04:46,600 --> 00:04:51,320 Speaker 4: on to raise twenty eight billion US dollars, which makes 77 00:04:51,360 --> 00:04:54,440 Speaker 4: you one of the largest spenders on clean energy in 78 00:04:54,480 --> 00:04:54,920 Speaker 4: the world. 79 00:04:55,720 --> 00:04:57,040 Speaker 1: But you don't just. 80 00:04:57,120 --> 00:05:00,440 Speaker 4: Raise money and invest in projects. CIP actually goes out 81 00:05:00,480 --> 00:05:04,080 Speaker 4: and builds energy projects. Could you talk me through the 82 00:05:04,240 --> 00:05:07,040 Speaker 4: idea of having CIP as the body that raises money 83 00:05:07,279 --> 00:05:10,960 Speaker 4: and then working with Copenhagen Offshore Partners that's the body 84 00:05:11,000 --> 00:05:13,240 Speaker 4: that goes out and builds these projects. 85 00:05:13,880 --> 00:05:17,760 Speaker 3: We see ourselves as a hybrid between a financial company 86 00:05:17,800 --> 00:05:20,040 Speaker 3: and an energy company, so we try to do the 87 00:05:20,080 --> 00:05:23,040 Speaker 3: take the best from both worlds. We have a very 88 00:05:23,120 --> 00:05:27,000 Speaker 3: very strong financial muzzle because of our fund structure, et cetera, 89 00:05:27,160 --> 00:05:30,320 Speaker 3: so we can always attract money on an ongoing basis, 90 00:05:30,360 --> 00:05:32,599 Speaker 3: on a very flexible basis, in a way that suits 91 00:05:32,640 --> 00:05:35,400 Speaker 3: our investors very well. But on the other hand, we 92 00:05:35,480 --> 00:05:39,039 Speaker 3: have around two thousand people working in our system doing 93 00:05:39,080 --> 00:05:42,279 Speaker 3: practic development all over the world's twenty four to seven 94 00:05:42,960 --> 00:05:47,440 Speaker 3: in the thirty something countrys SO. I think it's a 95 00:05:47,520 --> 00:05:50,240 Speaker 3: very good combination. So it's a hybrid model between a 96 00:05:50,279 --> 00:05:52,480 Speaker 3: fund setup and an energy company set up, and I 97 00:05:52,520 --> 00:05:55,640 Speaker 3: think it's quite unique actually, but it works very very well. 98 00:05:56,360 --> 00:06:01,240 Speaker 4: But on Copenhagen Offshore Partners, the body that build these projects, 99 00:06:01,360 --> 00:06:04,320 Speaker 4: you're not involved in the management of that company. So 100 00:06:04,400 --> 00:06:07,320 Speaker 4: when you say it's a hybrid structure, what exactly is 101 00:06:07,360 --> 00:06:10,400 Speaker 4: the connection between CIP and cop SO. 102 00:06:10,560 --> 00:06:14,360 Speaker 3: Copenhagen Offshore Partner is a service company which is owned 103 00:06:14,400 --> 00:06:18,720 Speaker 3: by some of our former colleagues from Ustor who established 104 00:06:18,760 --> 00:06:22,839 Speaker 3: an engineering company, if you will, who are then servicing 105 00:06:23,120 --> 00:06:26,159 Speaker 3: our projects across the world. And we have a number 106 00:06:26,160 --> 00:06:29,960 Speaker 3: of other similar companies who are servicing us in different 107 00:06:30,080 --> 00:06:33,080 Speaker 3: fields and we work on an exclusive basis with all 108 00:06:33,120 --> 00:06:36,280 Speaker 3: these companies and have a very long term relationship with 109 00:06:36,560 --> 00:06:39,360 Speaker 3: most of these people were working with for fifteen or twenty. 110 00:06:39,160 --> 00:06:44,000 Speaker 4: Years and in building so many projects and raising billions 111 00:06:44,000 --> 00:06:45,760 Speaker 4: of dollars. Could you just talk us through some of 112 00:06:45,800 --> 00:06:48,799 Speaker 4: the biggest projects that you've worked on since twenty twelve. 113 00:06:48,880 --> 00:06:51,320 Speaker 4: What are the challenges that you faced as you tried 114 00:06:51,320 --> 00:06:54,680 Speaker 4: to build this industry because when you started, yes, offshore 115 00:06:54,720 --> 00:06:57,320 Speaker 4: when was something that was starting to scale, but it 116 00:06:57,440 --> 00:07:00,480 Speaker 4: was still very early days. It was, and say, it 117 00:07:00,560 --> 00:07:04,880 Speaker 4: required subsidies and support from government to become commercial. Even 118 00:07:04,920 --> 00:07:07,920 Speaker 4: now there are subsidies around the world for offshore and 119 00:07:07,960 --> 00:07:11,280 Speaker 4: so it's not quite price competitive. Of course, it's become 120 00:07:11,320 --> 00:07:14,360 Speaker 4: much cheaper in recent years. So yeah, talk us through 121 00:07:14,480 --> 00:07:16,240 Speaker 4: the projects and the challenges. 122 00:07:16,600 --> 00:07:21,480 Speaker 3: No, you're absolutely right. So fifteen twenty years ago, offshore 123 00:07:21,520 --> 00:07:27,560 Speaker 3: wind was heavily subsidized sector. Nowadays it's in most countries 124 00:07:27,640 --> 00:07:30,520 Speaker 3: it's actually a sector which can compete with other energy 125 00:07:30,560 --> 00:07:34,120 Speaker 3: sources on a grand scale. So in Europe there are 126 00:07:34,120 --> 00:07:38,640 Speaker 3: not really any subsidies anymore. It's actually the energy sector 127 00:07:38,680 --> 00:07:41,680 Speaker 3: pays monitor governments for the right to build offshore winds. 128 00:07:42,160 --> 00:07:44,280 Speaker 3: In other countries it's a little bit different, but it 129 00:07:44,360 --> 00:07:47,600 Speaker 3: has been a very very interesting development and I think 130 00:07:47,640 --> 00:07:51,800 Speaker 3: something that we will see continue in the future. It's 131 00:07:51,960 --> 00:07:55,200 Speaker 3: offshore wind is unique in the sense that there's actually 132 00:07:55,240 --> 00:07:58,480 Speaker 3: no limit for how big you can do the projects. 133 00:07:58,600 --> 00:08:01,720 Speaker 3: So that's where it differs quite a bit from onshore wind, 134 00:08:01,760 --> 00:08:06,800 Speaker 3: where some natural physical limitations usually for how big you 135 00:08:06,800 --> 00:08:07,480 Speaker 3: can do the. 136 00:08:07,440 --> 00:08:11,360 Speaker 4: Projects, and some projects that you've built and what challenges 137 00:08:11,400 --> 00:08:11,880 Speaker 4: you faced. 138 00:08:12,080 --> 00:08:16,920 Speaker 3: Our daily life is to face challenges, physical challenges, regulatory challenges, 139 00:08:16,960 --> 00:08:20,080 Speaker 3: So we've had hundreds, if not thousands of challenges in 140 00:08:20,120 --> 00:08:23,000 Speaker 3: all our projects. So I think that the two projects 141 00:08:23,040 --> 00:08:27,000 Speaker 3: are mostly proud of. Recently is our wind Yard wind 142 00:08:27,000 --> 00:08:29,720 Speaker 3: project in the US, which will be the first it's 143 00:08:29,760 --> 00:08:33,040 Speaker 3: almost being finished now and it will be the first 144 00:08:33,160 --> 00:08:37,360 Speaker 3: commercial scale offshore wind project in North America. And I'm 145 00:08:37,480 --> 00:08:42,120 Speaker 3: also very proud about our Changfang Seda our project in Taiwan, 146 00:08:42,840 --> 00:08:46,680 Speaker 3: which is the first offshore wind project in Asia outside 147 00:08:46,720 --> 00:08:49,640 Speaker 3: of mainland China. So these two I think are on 148 00:08:49,720 --> 00:08:54,080 Speaker 3: a global scale, actually landmark projects. We have had issues 149 00:08:54,120 --> 00:08:56,880 Speaker 3: in both cases, but the projects has ended up being 150 00:08:56,880 --> 00:08:58,360 Speaker 3: built on time and on budget. 151 00:08:59,080 --> 00:09:02,800 Speaker 4: And what kind of challenges to do face as you 152 00:09:02,840 --> 00:09:05,160 Speaker 4: were trying to build these first of a kind for 153 00:09:05,280 --> 00:09:07,320 Speaker 4: those regions at least projects. 154 00:09:07,720 --> 00:09:11,120 Speaker 3: So there have been a practic specific challenges. For instance, 155 00:09:11,200 --> 00:09:15,080 Speaker 3: in Taiwan, which is very very far away from the 156 00:09:15,120 --> 00:09:18,440 Speaker 3: European supply chain, so a lot of stuff has We've 157 00:09:18,440 --> 00:09:21,200 Speaker 3: had to export that to Taiwan. We've had to build 158 00:09:21,400 --> 00:09:24,960 Speaker 3: an industry in Taiwan to build the foundations and things 159 00:09:25,000 --> 00:09:27,800 Speaker 3: like that. We've had to have many minute discussions with 160 00:09:27,920 --> 00:09:31,880 Speaker 3: government about the regulatory framework for offshore wind in Taiwan, 161 00:09:31,920 --> 00:09:34,640 Speaker 3: et cetera. So it has been a very very long 162 00:09:34,720 --> 00:09:37,960 Speaker 3: journey over the past six or seven years since we 163 00:09:38,000 --> 00:09:40,680 Speaker 3: started back in two thousand and fifteen or sixteen. 164 00:09:41,200 --> 00:09:43,920 Speaker 4: And same thing I assume in the US, which is 165 00:09:43,960 --> 00:09:47,280 Speaker 4: only just really getting into the offshore wind game and 166 00:09:47,520 --> 00:09:51,480 Speaker 4: already many of the developers are either walking back or 167 00:09:51,760 --> 00:09:54,640 Speaker 4: having to take billion dollar write downs exactly. 168 00:09:54,679 --> 00:09:58,280 Speaker 3: So I personally started going to the US twelve years 169 00:09:58,320 --> 00:10:02,040 Speaker 3: ago looking for offshore possibilities and the first practic we 170 00:10:02,760 --> 00:10:06,200 Speaker 3: attempted to do never happened. Actually, that was the Cape 171 00:10:06,200 --> 00:10:11,959 Speaker 3: Wind project that was ultimately abandoned before it was even started. 172 00:10:12,360 --> 00:10:14,640 Speaker 3: So it has been a long journey also in the US. 173 00:10:14,720 --> 00:10:18,680 Speaker 1: And one of the challenges that you face is regulatory certainty. 174 00:10:18,920 --> 00:10:22,119 Speaker 1: I mean, in the US, even if there is incentive 175 00:10:22,240 --> 00:10:27,719 Speaker 1: to build, subsidy to build, regulatory challenges such as permitting 176 00:10:28,280 --> 00:10:30,920 Speaker 1: or governments deciding yes it's okay to build and then 177 00:10:30,960 --> 00:10:34,719 Speaker 1: suddenly deciding no, no, there are challenges there. Whales might 178 00:10:34,760 --> 00:10:38,120 Speaker 1: be affected, as some tried to say, so how do 179 00:10:38,160 --> 00:10:38,800 Speaker 1: you deal with that? 180 00:10:40,040 --> 00:10:43,199 Speaker 3: We tried to have some serious conversations with the relevant 181 00:10:43,440 --> 00:10:48,520 Speaker 3: regulatory bodies before we even consider building, so in the 182 00:10:48,600 --> 00:10:51,200 Speaker 3: early stage, in the development phase, and really try to 183 00:10:51,600 --> 00:10:55,000 Speaker 3: map out any possible issues that could be And I 184 00:10:55,040 --> 00:10:59,120 Speaker 3: think it actually generally works quite well in most cases. 185 00:10:59,160 --> 00:11:02,240 Speaker 3: I think that's a good metrodology now in the industry 186 00:11:02,320 --> 00:11:06,960 Speaker 3: for identifying, for instance, environmental issues such as the whale 187 00:11:07,000 --> 00:11:11,000 Speaker 3: issue in North America and Ada. Now also set there's 188 00:11:11,040 --> 00:11:13,440 Speaker 3: a good toolbox for dealing with the issue so that 189 00:11:13,480 --> 00:11:17,000 Speaker 3: we don't just disturb the whales in critical periods, et cetera. 190 00:11:17,520 --> 00:11:19,440 Speaker 3: So I think all in all, we see that the 191 00:11:19,520 --> 00:11:23,280 Speaker 3: amount of issues are going down because the industry is 192 00:11:23,280 --> 00:11:27,360 Speaker 3: simply becoming more and more experienced. On the other hand, 193 00:11:27,400 --> 00:11:30,120 Speaker 3: of course, a new set of issues have arised in 194 00:11:30,160 --> 00:11:33,480 Speaker 3: the supply chain because of the big volumes and the 195 00:11:33,840 --> 00:11:37,000 Speaker 3: congestions and the supply chain, and so there's always something 196 00:11:37,000 --> 00:11:39,120 Speaker 3: we need to look after, and lately it has been 197 00:11:39,280 --> 00:11:43,240 Speaker 3: a lot supply chain related. What we have been focusing on. 198 00:11:43,559 --> 00:11:46,320 Speaker 4: Well, I mean, let's get specific there, because one thing 199 00:11:46,360 --> 00:11:48,880 Speaker 4: that's happened because of the supply chain issues is that 200 00:11:49,160 --> 00:11:50,760 Speaker 4: prices of offshore. 201 00:11:50,400 --> 00:11:51,160 Speaker 1: Wind have gone up. 202 00:11:51,760 --> 00:11:54,240 Speaker 4: And as prices have gone up, some of the governments 203 00:11:54,240 --> 00:11:57,200 Speaker 4: have decided not to go ahead with an auction or 204 00:11:57,320 --> 00:12:01,360 Speaker 4: not to build a project. And then when companies have 205 00:12:01,440 --> 00:12:04,760 Speaker 4: had to do write downs, the overall profitability of this 206 00:12:04,840 --> 00:12:09,400 Speaker 4: industry is under question. You're seeing not just companies like 207 00:12:09,440 --> 00:12:13,439 Speaker 4: Osted or Vestas or Semens Energy phace challenges, but also 208 00:12:13,559 --> 00:12:17,800 Speaker 4: oil companies which we're thinking about becoming big players in 209 00:12:17,840 --> 00:12:20,720 Speaker 4: the offshore space are taking a step back and they're 210 00:12:20,800 --> 00:12:24,400 Speaker 4: questioning whether it's an industry we should enter. So, given 211 00:12:24,480 --> 00:12:27,400 Speaker 4: your exposure to off your win and given your history 212 00:12:27,440 --> 00:12:30,960 Speaker 4: of building these projects, how do you think the industry 213 00:12:31,040 --> 00:12:35,640 Speaker 4: can overcome this real big challenge Because it's clear we 214 00:12:35,679 --> 00:12:38,400 Speaker 4: need a lot more wind power in the world. 215 00:12:38,840 --> 00:12:41,120 Speaker 3: I'm actually not so concerned about it. I've been an 216 00:12:41,160 --> 00:12:43,400 Speaker 3: offshore win for more than twenty years now, and we've 217 00:12:43,440 --> 00:12:47,240 Speaker 3: seen this happening a couple of times before. For instance, 218 00:12:47,280 --> 00:12:51,600 Speaker 3: around the financial crisis, we had a similar situation as 219 00:12:51,679 --> 00:12:54,680 Speaker 3: what we see now, so I think it will work out. 220 00:12:54,960 --> 00:12:58,880 Speaker 3: We have seen recently that some of the PPA prices 221 00:12:58,960 --> 00:13:00,360 Speaker 3: have increase. 222 00:13:00,240 --> 00:13:06,599 Speaker 2: Against PPA stands for power Purchasing Agreement and it's a 223 00:13:06,679 --> 00:13:11,040 Speaker 2: contract a company that consumes electricity signs with another company 224 00:13:11,200 --> 00:13:15,439 Speaker 2: producing electricity. The key detail in the contract is what 225 00:13:15,600 --> 00:13:19,040 Speaker 2: fixed price that renewable energy will be sold for and 226 00:13:19,400 --> 00:13:20,080 Speaker 2: for how long. 227 00:13:22,240 --> 00:13:25,679 Speaker 3: So, for instance, the latest US allocation of PPAs were 228 00:13:25,800 --> 00:13:28,280 Speaker 3: at a higher price level than previously. We have seen 229 00:13:28,480 --> 00:13:32,280 Speaker 3: also in Ireland, for instance, that the prices have increased, 230 00:13:32,280 --> 00:13:35,640 Speaker 3: and the UK government also has told me that they 231 00:13:35,679 --> 00:13:38,760 Speaker 3: are considering a new auction instead of the failed one 232 00:13:38,800 --> 00:13:41,880 Speaker 3: et CE. So I think the industry will move on. 233 00:13:42,160 --> 00:13:46,240 Speaker 3: So I don't see this as a fundamental issue in 234 00:13:46,280 --> 00:13:51,280 Speaker 3: the industry. It is a natural reaction to the cost increases. 235 00:13:51,720 --> 00:13:55,760 Speaker 3: We should remember that offshore wind is still a relatively 236 00:13:55,880 --> 00:14:00,480 Speaker 3: cheap energy resource in most areas compared to fust fuel 237 00:14:00,600 --> 00:14:02,400 Speaker 3: based electricity production. 238 00:14:03,040 --> 00:14:06,640 Speaker 4: So do you think the era of falling costs for 239 00:14:06,760 --> 00:14:08,480 Speaker 4: offshore wind is over. 240 00:14:08,679 --> 00:14:11,439 Speaker 3: A period of time, hya there will be an adjustment, 241 00:14:11,520 --> 00:14:15,600 Speaker 3: so the cost level will lead to the revenue label 242 00:14:15,640 --> 00:14:18,199 Speaker 3: will need to adjust so it can cover the costs. 243 00:14:18,640 --> 00:14:22,680 Speaker 3: But I'm confident it will be way cheaper than fossil 244 00:14:22,680 --> 00:14:26,280 Speaker 3: fuel based. And then I'm sure as we see new 245 00:14:26,400 --> 00:14:31,320 Speaker 3: technological progress sort of happen, we will in the long 246 00:14:31,400 --> 00:14:34,960 Speaker 3: run see a continued downwards trend again. 247 00:14:35,280 --> 00:14:39,040 Speaker 4: Right, so you expect that you're going to see price 248 00:14:39,120 --> 00:14:42,160 Speaker 4: declines happening soon, But of course, right now we're in 249 00:14:42,200 --> 00:14:45,280 Speaker 4: that environment of price increases. When do you start seeing 250 00:14:45,320 --> 00:14:47,520 Speaker 4: the trend reverse to what used to be. 251 00:14:48,000 --> 00:14:51,119 Speaker 3: It's very, very hard to say, because it's a combination 252 00:14:51,480 --> 00:14:57,440 Speaker 3: of technological aspects and some macro economic energy market aspects, 253 00:14:57,480 --> 00:15:01,600 Speaker 3: so oil prices, gas prices, and things like that. So 254 00:15:01,640 --> 00:15:04,000 Speaker 3: it's hard for me to come with a firm estimate here. 255 00:15:04,040 --> 00:15:06,960 Speaker 3: But I clearly see that we have a short run 256 00:15:07,600 --> 00:15:10,800 Speaker 3: adjustment so that that revenues and cost align, and then 257 00:15:10,840 --> 00:15:14,480 Speaker 3: we have a longer run fundamental decrease in the cost 258 00:15:14,520 --> 00:15:15,840 Speaker 3: of renewable energy. 259 00:15:17,120 --> 00:15:21,760 Speaker 4: Now, one model that companies building clean energy projects use 260 00:15:22,720 --> 00:15:26,320 Speaker 4: is to build a project, then sell off a portion 261 00:15:26,520 --> 00:15:29,800 Speaker 4: of that project, or to sell off the entire project 262 00:15:30,000 --> 00:15:34,400 Speaker 4: to infrastructure investors bigger holders of capital. 263 00:15:35,120 --> 00:15:35,840 Speaker 1: That way they. 264 00:15:35,680 --> 00:15:39,000 Speaker 4: Don't hold as much debt on their books and can 265 00:15:39,200 --> 00:15:42,800 Speaker 4: use that capital to go and build more projects. Does 266 00:15:42,880 --> 00:15:44,280 Speaker 4: CIP use the same model. 267 00:15:45,160 --> 00:15:49,760 Speaker 3: Our key value creation process is to develop and construct 268 00:15:50,040 --> 00:15:54,240 Speaker 3: renewable energy projects and then we actually seek a good 269 00:15:54,280 --> 00:15:57,360 Speaker 3: long term buyer for the projects. And in some cases 270 00:15:57,400 --> 00:15:59,480 Speaker 3: we sell one hundred percent of the equity and an 271 00:15:59,520 --> 00:16:02,600 Speaker 3: other cases we sell, for instance, forty nine percent, and 272 00:16:02,640 --> 00:16:05,880 Speaker 3: that depends a little bit on the buyer preferences, so 273 00:16:05,920 --> 00:16:08,240 Speaker 3: it's a little bit decided from case to case. 274 00:16:10,040 --> 00:16:12,760 Speaker 4: And when you go out and raise funds, which you 275 00:16:12,880 --> 00:16:16,120 Speaker 4: do and have done so much of what different types 276 00:16:16,120 --> 00:16:18,400 Speaker 4: of funds do you create to be able to attract 277 00:16:18,400 --> 00:16:21,440 Speaker 4: these large investors and just talk us through what type 278 00:16:21,440 --> 00:16:24,040 Speaker 4: of investor is interested in what type of fund? 279 00:16:24,720 --> 00:16:29,120 Speaker 3: So we create funds which are regulated by the Danish FSA, 280 00:16:29,320 --> 00:16:32,880 Speaker 3: so it's a regulated financial product we are doing. And 281 00:16:32,920 --> 00:16:37,360 Speaker 3: it's relevant for primarily for big institutional investors, so primarily 282 00:16:37,960 --> 00:16:41,400 Speaker 3: pension funds, and it can also be family officers and 283 00:16:41,520 --> 00:16:45,720 Speaker 3: insurance companies and other financial investors. Even the nuclear industry 284 00:16:45,720 --> 00:16:49,000 Speaker 3: has actually invested money in our funds, which I'm very 285 00:16:49,000 --> 00:16:52,640 Speaker 3: proud of. So it's really relevant for people who want 286 00:16:52,680 --> 00:16:56,080 Speaker 3: to invest capital for ten fifteen years and who has 287 00:16:56,120 --> 00:16:59,520 Speaker 3: a positive view on the renewal energy transition and who 288 00:16:59,600 --> 00:17:04,800 Speaker 3: we leave in our ability to develop and construct projects. 289 00:17:07,480 --> 00:17:10,200 Speaker 2: We'll be back with more from the conversation after the break. 290 00:17:20,160 --> 00:17:22,800 Speaker 4: And are there some of your backers that you can 291 00:17:22,840 --> 00:17:25,800 Speaker 4: talk about, because I think you started with one investor 292 00:17:26,119 --> 00:17:28,639 Speaker 4: and now you said you have two hundred who have 293 00:17:28,720 --> 00:17:30,679 Speaker 4: been the consistent ones we have. 294 00:17:30,880 --> 00:17:34,679 Speaker 3: Our biggest investor is still Pension Denmark, who sort of 295 00:17:34,720 --> 00:17:38,160 Speaker 3: invested in our first fund, is still our biggest investor. 296 00:17:39,040 --> 00:17:41,719 Speaker 3: We have I would say most of the Danish pension funds, 297 00:17:41,800 --> 00:17:43,720 Speaker 3: and in Denmark we are very blessed to have a 298 00:17:43,800 --> 00:17:46,960 Speaker 3: very very strong pension sector where all Danes are forced 299 00:17:47,000 --> 00:17:49,960 Speaker 3: to invest into the pension funds basically, and we have 300 00:17:50,080 --> 00:17:55,359 Speaker 3: many German clients, many Scandinavian clients, quite a few Asian 301 00:17:55,400 --> 00:18:00,880 Speaker 3: investors also including several sovereign Welsh funds. Also, we are 302 00:18:01,000 --> 00:18:05,280 Speaker 3: still quite the small in terms of US investors, but 303 00:18:05,359 --> 00:18:08,679 Speaker 3: that's growing and the US is the biggest capital market 304 00:18:08,720 --> 00:18:10,880 Speaker 3: in the world, so it's a big priority for us 305 00:18:10,880 --> 00:18:12,920 Speaker 3: to get more exposure to US clients. 306 00:18:13,560 --> 00:18:16,040 Speaker 4: Now, the oil industry is famous for its boom and 307 00:18:16,080 --> 00:18:20,000 Speaker 4: bus cycle. Oil prices rise, more people invest in trying 308 00:18:20,000 --> 00:18:22,800 Speaker 4: to supply oil, that causes too much supply, and then 309 00:18:23,200 --> 00:18:28,240 Speaker 4: oil prices fall, then demand starts to rise, oil prices 310 00:18:28,280 --> 00:18:29,119 Speaker 4: rise again. 311 00:18:28,960 --> 00:18:30,400 Speaker 1: And the cycle just repeats. 312 00:18:31,880 --> 00:18:35,080 Speaker 4: Is clean energy also becoming a victim of the boom 313 00:18:35,080 --> 00:18:35,840 Speaker 4: and bus cycle? 314 00:18:36,440 --> 00:18:38,760 Speaker 3: I think we see an element of that also. I 315 00:18:38,760 --> 00:18:42,000 Speaker 3: think what is quite clear in the renewable energy sector 316 00:18:42,040 --> 00:18:44,960 Speaker 3: is that quite a few of the investors who want 317 00:18:45,000 --> 00:18:51,119 Speaker 3: to invest into renewable energy are only allowed formally or 318 00:18:51,160 --> 00:18:56,240 Speaker 3: implicitly to invest into brown field assets, so essentially assets 319 00:18:56,280 --> 00:18:59,800 Speaker 3: that has been brought into operation. It's basically investors who 320 00:18:59,840 --> 00:19:03,520 Speaker 3: can not take development and construction risks. So when we 321 00:19:03,600 --> 00:19:07,239 Speaker 3: see these boom and bust cycle sits primarily because a 322 00:19:07,280 --> 00:19:12,880 Speaker 3: lot of money are chasing a scars number of brownfield assets, 323 00:19:12,920 --> 00:19:15,960 Speaker 3: and the prices are then increased a lot and then 324 00:19:16,080 --> 00:19:18,720 Speaker 3: returns fall for those investors. 325 00:19:18,359 --> 00:19:20,920 Speaker 1: And brownfield being already existing. 326 00:19:20,600 --> 00:19:23,880 Speaker 3: Already existing assets exactly. So the point I'm making here 327 00:19:24,000 --> 00:19:28,480 Speaker 3: is that the investment starting returns for brownfield investments can 328 00:19:28,600 --> 00:19:31,840 Speaker 3: be a little bit volatile, but for greenfield assets. It's 329 00:19:31,880 --> 00:19:35,760 Speaker 3: actually remarkably stable in the twenty five years I've been 330 00:19:35,800 --> 00:19:37,399 Speaker 3: in this business. 331 00:19:37,160 --> 00:19:39,720 Speaker 4: And greenfield investments is where you actually go and build 332 00:19:39,720 --> 00:19:43,400 Speaker 4: these things. And what's the rough stable return that you've 333 00:19:43,440 --> 00:19:44,560 Speaker 4: seen in that then. 334 00:19:44,440 --> 00:19:47,119 Speaker 3: I would say it has been around ten percent. That 335 00:19:47,160 --> 00:19:50,760 Speaker 3: has been the return level we have seen for greenfield 336 00:19:50,760 --> 00:19:53,600 Speaker 3: returns over in many years. Of course it's going up 337 00:19:53,600 --> 00:19:55,680 Speaker 3: and down a little bit, but it has much less 338 00:19:55,720 --> 00:19:59,120 Speaker 3: to do with financial markets and speculation. It has much 339 00:19:59,160 --> 00:20:04,160 Speaker 3: more to do with technological progress, power prices sometimes also, 340 00:20:04,480 --> 00:20:07,560 Speaker 3: but it has been remarkably stable. And the way we 341 00:20:07,600 --> 00:20:10,520 Speaker 3: work in CIP is that we have a very very 342 00:20:10,520 --> 00:20:15,080 Speaker 3: big portfolio of investment opportunities. So we're developing around one 343 00:20:15,160 --> 00:20:20,720 Speaker 3: hundred and fifty gig award of renewable energy products, so 344 00:20:20,760 --> 00:20:25,439 Speaker 3: that's comparable to all of Germany's renewable eddy So a 345 00:20:25,480 --> 00:20:28,879 Speaker 3: massive portfolio, and it means that we always have some 346 00:20:28,960 --> 00:20:31,840 Speaker 3: products which are mature where we can take the decision 347 00:20:31,920 --> 00:20:35,359 Speaker 3: to invest, and we also have the opportunity to say, okay, 348 00:20:35,880 --> 00:20:38,960 Speaker 3: this project does not attractive right now, let's defer a 349 00:20:38,960 --> 00:20:41,639 Speaker 3: little bit and then focus on other products. And that 350 00:20:41,760 --> 00:20:44,800 Speaker 3: gives us quite a bit of stability because we can 351 00:20:44,840 --> 00:20:47,720 Speaker 3: always just focus on the best projects and let the 352 00:20:47,760 --> 00:20:51,600 Speaker 3: other products develop until they become as good as we 353 00:20:51,680 --> 00:20:52,320 Speaker 3: want them to be. 354 00:20:52,760 --> 00:20:54,639 Speaker 4: And if you didn't want to do just one number, 355 00:20:54,680 --> 00:20:56,359 Speaker 4: what other numbers would you talk about? 356 00:20:57,160 --> 00:21:00,240 Speaker 3: We are usually investing at around the ten percent. Then 357 00:21:00,240 --> 00:21:03,280 Speaker 3: we very often sell in the brownfield space at a 358 00:21:03,520 --> 00:21:06,040 Speaker 3: return level of maybe six percent or something like that. 359 00:21:06,160 --> 00:21:08,800 Speaker 3: So there's a quite good value pick up from the 360 00:21:08,880 --> 00:21:12,080 Speaker 3: activity we do. And that's that's the key attraction for 361 00:21:12,240 --> 00:21:15,400 Speaker 3: the investors in GOP, that that we can we can 362 00:21:15,480 --> 00:21:18,159 Speaker 3: underwrite products usually at around ten percent, and we can 363 00:21:18,280 --> 00:21:20,520 Speaker 3: usually sell them when they have been constructed, and we 364 00:21:20,560 --> 00:21:23,720 Speaker 3: have taken the risks, usually at around six percent. 365 00:21:24,480 --> 00:21:26,199 Speaker 4: And so if we talk about it in sort of 366 00:21:26,359 --> 00:21:30,120 Speaker 4: a billion dollar valuation, say you build a project that's 367 00:21:30,480 --> 00:21:33,239 Speaker 4: worth one billion dollars, when you sell it to a 368 00:21:33,320 --> 00:21:35,520 Speaker 4: large investor, how much are you charging them? 369 00:21:35,920 --> 00:21:38,639 Speaker 3: Then it can sometimes happen that weich asked them two billion. 370 00:21:38,920 --> 00:21:41,359 Speaker 1: Well that sounds like a pretty good rate of return. 371 00:21:42,119 --> 00:21:44,760 Speaker 3: Yeah, but we take some risks and some you know, 372 00:21:45,000 --> 00:21:48,199 Speaker 3: there's some costs also, and it's so it's not just 373 00:21:48,280 --> 00:21:50,560 Speaker 3: a free lunch, right, it's we actually do quite a 374 00:21:50,560 --> 00:21:53,200 Speaker 3: bit of work for that or several years. Sometimes it's 375 00:21:53,240 --> 00:21:55,439 Speaker 3: also less than two billion, right, it can also be 376 00:21:55,480 --> 00:21:58,080 Speaker 3: one and a half or something, but it's it has 377 00:21:58,119 --> 00:21:59,480 Speaker 3: never happened. It's less than one. 378 00:21:59,560 --> 00:22:02,720 Speaker 4: Let me say like this, And if we are in 379 00:22:02,760 --> 00:22:05,879 Speaker 4: a bus cycle right now, given the state of the 380 00:22:05,880 --> 00:22:10,320 Speaker 4: wind industry, how do you take advantage as an investor 381 00:22:10,400 --> 00:22:11,959 Speaker 4: with plenty of cash to spend? 382 00:22:12,520 --> 00:22:14,720 Speaker 3: No, but we have had a period now where we 383 00:22:14,800 --> 00:22:20,680 Speaker 3: have bought, acquired, developed quite a number of development projects. 384 00:22:20,720 --> 00:22:24,360 Speaker 3: So we have expanded our development portfolio. So I think 385 00:22:24,400 --> 00:22:26,440 Speaker 3: over the past two or three years we have probably 386 00:22:26,440 --> 00:22:30,720 Speaker 3: expanded the development portfolio from around ninety two hundred gigawatts 387 00:22:30,760 --> 00:22:33,320 Speaker 3: to around one hundred and fifty gigawats. So you could 388 00:22:33,359 --> 00:22:37,320 Speaker 3: say that our inventory, or our wine sellar so to speak, 389 00:22:38,000 --> 00:22:41,800 Speaker 3: has grown. I think there could be a good possibility 390 00:22:41,800 --> 00:22:45,240 Speaker 3: that we see into now a boom cycle and then 391 00:22:45,240 --> 00:22:47,560 Speaker 3: we will sell out a little bit and the wine 392 00:22:47,600 --> 00:22:49,919 Speaker 3: cellar will diminish a little bit. Again, that would be 393 00:22:49,960 --> 00:22:50,679 Speaker 3: my expectation. 394 00:22:51,480 --> 00:22:53,600 Speaker 4: And you've built a lot of offshore wind projects. What 395 00:22:53,680 --> 00:22:56,320 Speaker 4: are some of the exciting innovations that you've seen over 396 00:22:56,359 --> 00:23:00,200 Speaker 4: the years beyond just the fact that the more you deploy, 397 00:23:00,440 --> 00:23:03,320 Speaker 4: the cheaper it is to build these turbines out in 398 00:23:03,359 --> 00:23:03,680 Speaker 4: the sea. 399 00:23:04,400 --> 00:23:07,760 Speaker 3: No, but I think the exciting things are actually all 400 00:23:07,840 --> 00:23:10,800 Speaker 3: the on exciting things. So it's a number of quite 401 00:23:10,800 --> 00:23:15,680 Speaker 3: cycnical and quite boring things. So there's not one big, fancy, 402 00:23:15,960 --> 00:23:19,159 Speaker 3: moonshot thing that has changed the whole world here. It 403 00:23:19,160 --> 00:23:21,560 Speaker 3: has been a number of smaller things. 404 00:23:21,920 --> 00:23:25,240 Speaker 4: But recently you've created a new company that's going to 405 00:23:25,320 --> 00:23:30,240 Speaker 4: build energy islands off Sure, now that sounds like a 406 00:23:30,520 --> 00:23:32,040 Speaker 4: James Bond movie set. 407 00:23:32,600 --> 00:23:33,520 Speaker 1: What is it really? 408 00:23:33,840 --> 00:23:35,840 Speaker 3: Yeah, that was not the plan to do to do 409 00:23:35,960 --> 00:23:40,760 Speaker 3: James Bond movies. We actually see this idea about building 410 00:23:40,920 --> 00:23:45,840 Speaker 3: artificial eyelanes in the North Sea and certain places in Asia. Also, 411 00:23:46,040 --> 00:23:50,560 Speaker 3: there's a natural prolongation of the development of offshore wind 412 00:23:50,600 --> 00:23:54,840 Speaker 3: in the last thirty years. So thirty five years ago 413 00:23:55,000 --> 00:23:57,920 Speaker 3: the first project was built in Denmark that was five megawat. 414 00:23:58,760 --> 00:24:02,199 Speaker 3: Then a few years after one hundred megabater project was built, 415 00:24:02,240 --> 00:24:05,320 Speaker 3: and now most of the products we're doing one thousand 416 00:24:05,359 --> 00:24:08,199 Speaker 3: megawat projects. We hope that seven to ten years from 417 00:24:08,240 --> 00:24:11,400 Speaker 3: now it will be ten thousand megabot projects. And there 418 00:24:11,440 --> 00:24:15,040 Speaker 3: we need eyelanes for the electrical infrastructure for power to 419 00:24:15,320 --> 00:24:18,480 Speaker 3: x for the service facilities, et cetera. Eight CE. So 420 00:24:18,520 --> 00:24:22,560 Speaker 3: we see it actually as prolonging the exponential growth we 421 00:24:22,640 --> 00:24:27,080 Speaker 3: have seen over the last thirty five years. Whether James 422 00:24:27,080 --> 00:24:30,159 Speaker 3: Bond movies will be done on the islandes also I 423 00:24:30,200 --> 00:24:32,960 Speaker 3: cannot say. But so most of the stuff that will 424 00:24:33,000 --> 00:24:35,320 Speaker 3: take place there will be pretty boring, right. That will 425 00:24:35,320 --> 00:24:38,040 Speaker 3: be you know, electrical engineers who will run around and 426 00:24:38,160 --> 00:24:40,640 Speaker 3: make sure that the wind turbines are connected properly. 427 00:24:41,920 --> 00:24:44,359 Speaker 4: Well, that could be an extra source of revenue if 428 00:24:44,400 --> 00:24:46,359 Speaker 4: you can sell it to a James Bond movie. But 429 00:24:47,640 --> 00:24:51,359 Speaker 4: just to understand the concept right now, you have these 430 00:24:51,800 --> 00:24:55,720 Speaker 4: offshore wind turbines that are typically anchored to the seafloor. 431 00:24:55,760 --> 00:24:57,359 Speaker 1: There's a big base. 432 00:24:57,119 --> 00:24:59,400 Speaker 4: That is built on top of which there's a big pole, 433 00:24:59,480 --> 00:25:02,840 Speaker 4: and then you have these turbines which can be sometimes 434 00:25:02,880 --> 00:25:05,400 Speaker 4: as big as the Eiffel Tower just out in the sea. 435 00:25:05,480 --> 00:25:07,879 Speaker 4: Of course, then you have to take a big long cable, 436 00:25:08,640 --> 00:25:11,280 Speaker 4: and perhaps you bring many of those turbines into one 437 00:25:11,280 --> 00:25:14,320 Speaker 4: cable at a substation, and then you have to take 438 00:25:14,400 --> 00:25:19,159 Speaker 4: another long cable back out to the land where this 439 00:25:19,320 --> 00:25:23,639 Speaker 4: electricity is consumed. So all you're saying now, is as 440 00:25:23,720 --> 00:25:28,240 Speaker 4: this industry grows and you have many, many more wind 441 00:25:28,280 --> 00:25:31,280 Speaker 4: turbines than there are out there, instead of having so 442 00:25:31,400 --> 00:25:34,960 Speaker 4: many cables going out directly to land, you create a 443 00:25:35,040 --> 00:25:39,719 Speaker 4: hub where those cables come in, and then from that 444 00:25:39,840 --> 00:25:43,040 Speaker 4: hub you still have to take a cable back to Yeah. 445 00:25:42,880 --> 00:25:46,480 Speaker 3: But the whole point here is that wind power is 446 00:25:46,520 --> 00:25:51,159 Speaker 3: an intermittent resource. So around half of the time the 447 00:25:51,200 --> 00:25:54,119 Speaker 3: window is blowing an the other half it's blowing lists. 448 00:25:54,880 --> 00:25:57,199 Speaker 3: So it means that if we do an energy island, 449 00:25:57,240 --> 00:25:59,920 Speaker 3: as we call it, and we connect all the wind 450 00:26:00,040 --> 00:26:02,679 Speaker 3: turbines to the island, and they sent the power to 451 00:26:02,720 --> 00:26:05,800 Speaker 3: the island, then we only need a smaller cable from 452 00:26:05,840 --> 00:26:09,200 Speaker 3: the island to show than we would otherwise have needed. 453 00:26:09,320 --> 00:26:12,000 Speaker 3: But that cable will then be full all of the 454 00:26:12,080 --> 00:26:15,639 Speaker 3: time instead of only being full half of the time. 455 00:26:15,840 --> 00:26:18,920 Speaker 3: So that's the purpose of the island is to facilitate 456 00:26:19,560 --> 00:26:23,600 Speaker 3: energy storage power to X facilities so that when we 457 00:26:23,680 --> 00:26:27,919 Speaker 3: have surplus power, it will be exported in a pipeline 458 00:26:27,960 --> 00:26:32,679 Speaker 3: as hydrogen to show and exporting energy in a pipeline 459 00:26:32,840 --> 00:26:36,280 Speaker 3: is only caused a fraction, a small fraction of what 460 00:26:36,400 --> 00:26:39,360 Speaker 3: it costs to export it in a power cable. So 461 00:26:39,400 --> 00:26:43,320 Speaker 3: the big driver for the island thinking is that it's 462 00:26:43,480 --> 00:26:46,320 Speaker 3: very very expensive to build all these electricity cables, so 463 00:26:46,359 --> 00:26:49,440 Speaker 3: we try to save a lot of billions and billions 464 00:26:49,440 --> 00:26:53,720 Speaker 3: of euros on that. And we also by doing that, 465 00:26:53,760 --> 00:27:00,600 Speaker 3: we create a more stable, almost a flat production profile power. 466 00:27:00,640 --> 00:27:03,480 Speaker 3: So the power cable that we do build is then 467 00:27:03,960 --> 00:27:05,720 Speaker 3: almost one hundred percent utilized. 468 00:27:05,920 --> 00:27:08,520 Speaker 4: But if the power cable is one hundred percent utilized, 469 00:27:08,520 --> 00:27:10,320 Speaker 4: that's good because then you're going to get a higher 470 00:27:10,400 --> 00:27:14,639 Speaker 4: rate of return on that power cable. Except the hydrogen 471 00:27:14,640 --> 00:27:17,720 Speaker 4: electrolyzers that you will install will not be running at 472 00:27:17,720 --> 00:27:21,480 Speaker 4: one hundred percent power, and so they will be half utilized, 473 00:27:21,480 --> 00:27:23,879 Speaker 4: and so they won't have the kind of return. And 474 00:27:23,920 --> 00:27:26,800 Speaker 4: so how do you balance Because of course, yes, cables 475 00:27:26,800 --> 00:27:29,440 Speaker 4: are expensive, but they're also kind of simple, right, they're 476 00:27:29,440 --> 00:27:33,040 Speaker 4: made of copper and electricizers. Much more complicated. You need 477 00:27:33,040 --> 00:27:35,400 Speaker 4: more precious metals, and of course the price of green 478 00:27:35,520 --> 00:27:38,640 Speaker 4: hydrogen hasn't quite come down. So you want to use 479 00:27:38,680 --> 00:27:40,959 Speaker 4: those electrolyzers one hundred percent of the time. 480 00:27:41,280 --> 00:27:45,040 Speaker 3: Yeah, but our calculation shows that there's a very clear 481 00:27:45,920 --> 00:27:51,879 Speaker 3: economic benefit from having more electoralizers and less cable and 482 00:27:51,920 --> 00:27:54,800 Speaker 3: there will also be an element most likely of better 483 00:27:54,840 --> 00:27:58,400 Speaker 3: restoration on the island, also to some extent in order 484 00:27:58,440 --> 00:28:00,800 Speaker 3: to fully stabilize the sport of power. 485 00:28:00,920 --> 00:28:03,080 Speaker 4: And just so we have numbers on how much money 486 00:28:03,080 --> 00:28:05,880 Speaker 4: this saves, I would make a case for how big 487 00:28:05,920 --> 00:28:07,919 Speaker 4: a project and how much money would be, say. 488 00:28:07,720 --> 00:28:12,280 Speaker 3: One island, So one island would probably anger around tin 489 00:28:12,359 --> 00:28:15,639 Speaker 3: gigawats of wind power, so the total capex of that 490 00:28:15,680 --> 00:28:21,399 Speaker 3: would be around thirty billions or more. Only maybe one 491 00:28:21,480 --> 00:28:24,160 Speaker 3: or two billions will be the island itself, so that's 492 00:28:24,200 --> 00:28:27,240 Speaker 3: actually a quite small investment. Many people think the artificial 493 00:28:27,280 --> 00:28:31,880 Speaker 3: island is expensive, but it's actually relatively cheap. That transmission 494 00:28:32,160 --> 00:28:36,439 Speaker 3: investments will probably be five or seven billion euros lower 495 00:28:36,440 --> 00:28:37,800 Speaker 3: than they would otherwise have been. 496 00:28:38,000 --> 00:28:39,640 Speaker 4: You're right, I mean it doesn't have to be that 497 00:28:39,720 --> 00:28:43,480 Speaker 4: expensive to build artificial islands. Of course, to buy has 498 00:28:43,520 --> 00:28:48,400 Speaker 4: built entire maps and different designs with artificial islands just 499 00:28:48,440 --> 00:28:51,320 Speaker 4: off the coast of Dubai, so it's not that expensive. 500 00:28:51,320 --> 00:28:54,440 Speaker 4: But you know, just looking at it from a technology perspective, 501 00:28:54,720 --> 00:28:57,160 Speaker 4: from a risk perspective, there are two big things that 502 00:28:57,600 --> 00:29:02,080 Speaker 4: this creates. One the benefit of renewables is that they're 503 00:29:02,120 --> 00:29:06,760 Speaker 4: decentralized and if you attack a nuclear power plant, that 504 00:29:06,800 --> 00:29:09,160 Speaker 4: could be a big danger. But if you attack a 505 00:29:09,440 --> 00:29:14,280 Speaker 4: wind farm, you know, the damage isn't that much. Now 506 00:29:14,320 --> 00:29:17,440 Speaker 4: you create a central hub where all this power comes in, 507 00:29:17,880 --> 00:29:22,200 Speaker 4: just becomes a very easy target. From a geopolitics perspective, 508 00:29:22,600 --> 00:29:26,200 Speaker 4: how are you going to tackle the challenges that brings 509 00:29:27,000 --> 00:29:27,240 Speaker 4: As a. 510 00:29:27,240 --> 00:29:32,200 Speaker 3: Starting point, Renewable energy is improving Europe's security of supply situation. 511 00:29:33,160 --> 00:29:36,800 Speaker 3: If you think about offshore projects, it's a little bit 512 00:29:36,800 --> 00:29:39,800 Speaker 3: similar to the existing oil and gas projects we have 513 00:29:39,880 --> 00:29:42,520 Speaker 3: in the North. See. I don't think the energy island 514 00:29:42,560 --> 00:29:46,920 Speaker 3: will be more vulnerable for an attack compared to a 515 00:29:46,960 --> 00:29:51,080 Speaker 3: guess installation, for instance, So we have that vulnerability already. 516 00:29:51,680 --> 00:29:54,360 Speaker 3: I think we will, of course, when we suggest islands, 517 00:29:54,360 --> 00:29:56,479 Speaker 3: we will of course have a debate with the various 518 00:29:56,480 --> 00:29:59,880 Speaker 3: governments about how can we improve the security for the 519 00:30:00,000 --> 00:30:02,960 Speaker 3: those installations from the start, So I'm sure there will 520 00:30:02,960 --> 00:30:06,560 Speaker 3: be various technologies available for that for surveillance and protection. 521 00:30:07,120 --> 00:30:09,320 Speaker 4: You will also have to manage sea level rise. Building 522 00:30:09,320 --> 00:30:11,320 Speaker 4: an artificial island in a world that's warming. 523 00:30:11,440 --> 00:30:14,120 Speaker 3: We have for many years taken that into account when 524 00:30:14,160 --> 00:30:17,520 Speaker 3: we build it. The offshore wind projects that there wasn't 525 00:30:17,600 --> 00:30:19,840 Speaker 3: expectations for sea level rise. 526 00:30:20,640 --> 00:30:23,080 Speaker 4: And then you'll have to of course contend with the 527 00:30:23,880 --> 00:30:27,280 Speaker 4: difficult guessing game that everybody is in right now, which 528 00:30:27,320 --> 00:30:31,120 Speaker 4: is whether the hydrogen demand will appear or not. Because 529 00:30:31,520 --> 00:30:34,080 Speaker 4: the way you make your economics of this energy island 530 00:30:34,080 --> 00:30:36,840 Speaker 4: work is that you have this hydrogen production and that. 531 00:30:36,840 --> 00:30:39,280 Speaker 1: Is piped back to the ground. 532 00:30:39,720 --> 00:30:43,160 Speaker 4: And for all the interest in hydrogen, and yes, there 533 00:30:43,200 --> 00:30:46,400 Speaker 4: are applications for it in many places, and there's also 534 00:30:46,480 --> 00:30:49,360 Speaker 4: lots of subsidies that governments want to give, it hasn't 535 00:30:49,360 --> 00:30:53,080 Speaker 4: actually ended up being used at scale in many many places. 536 00:30:53,200 --> 00:30:55,920 Speaker 3: I think what is important in relation to hydrogen in 537 00:30:55,920 --> 00:31:01,200 Speaker 3: a European context is that I don't think many people 538 00:31:01,200 --> 00:31:04,440 Speaker 3: in Europe would doubt that we need electricity ten, twenty, 539 00:31:04,560 --> 00:31:06,440 Speaker 3: thirty or fifty years from now. I think most people 540 00:31:06,520 --> 00:31:09,080 Speaker 3: would agree with that. And we see very very high 541 00:31:09,080 --> 00:31:13,200 Speaker 3: electricity prices right now, and the main product from the 542 00:31:13,240 --> 00:31:16,720 Speaker 3: islands and from all offshore wind paths that will be 543 00:31:16,760 --> 00:31:20,920 Speaker 3: the electricity produced, so the hydrogen will be a by product. 544 00:31:21,360 --> 00:31:24,800 Speaker 3: And it means also that most of the revenues for 545 00:31:24,840 --> 00:31:27,360 Speaker 3: these projects will come from the electricity side, and it 546 00:31:27,440 --> 00:31:30,120 Speaker 3: actually means that the necessary price we need for the 547 00:31:30,680 --> 00:31:34,560 Speaker 3: hydrogen will be relatively low, so it will be relatively 548 00:31:34,680 --> 00:31:38,640 Speaker 3: competitive also with other sources of hydrogen because it's a 549 00:31:38,680 --> 00:31:41,240 Speaker 3: by product, so we don't need that much money. We 550 00:31:41,320 --> 00:31:43,560 Speaker 3: will earn most of the money, or the projects will 551 00:31:43,560 --> 00:31:46,400 Speaker 3: earn most of their money on the electricity side. 552 00:31:46,640 --> 00:31:50,040 Speaker 4: So the company is called Copenhagen Energy Islands and your 553 00:31:50,080 --> 00:31:52,560 Speaker 4: plan is to spend something like one hundred and fifty 554 00:31:52,600 --> 00:31:56,240 Speaker 4: billion euros over the next decades to be. 555 00:31:56,200 --> 00:31:59,800 Speaker 1: Able to build multiple of these islands. I do hope there. 556 00:31:59,680 --> 00:32:01,920 Speaker 4: Is a James One movie set on one of these 557 00:32:01,920 --> 00:32:03,600 Speaker 4: islands if it does get built. 558 00:32:03,720 --> 00:32:04,520 Speaker 1: Thank you, Yakob. 559 00:32:04,720 --> 00:32:05,520 Speaker 3: Yeah, you're welcome. 560 00:32:11,480 --> 00:32:12,640 Speaker 1: Thank you for listening to Zero. 561 00:32:13,080 --> 00:32:15,240 Speaker 4: If you like this episode, please take a moment to 562 00:32:15,320 --> 00:32:18,280 Speaker 4: rate or review the show on Apple Podcasts and Spotify. 563 00:32:19,080 --> 00:32:21,640 Speaker 4: Share this episode with a friend or with someone who 564 00:32:21,760 --> 00:32:23,000 Speaker 4: likes being out at sea. 565 00:32:23,760 --> 00:32:26,080 Speaker 1: You can get in touch at zero pod at Bloomberg 566 00:32:26,120 --> 00:32:26,600 Speaker 1: dot Net. 567 00:32:27,520 --> 00:32:32,960 Speaker 4: Zero's producers are Tiffany Choi, Magnus Hendrickson, and Somarsadi. Our 568 00:32:33,000 --> 00:32:36,520 Speaker 4: theme music is composed by Wonderly Special thanks to Kirra 569 00:32:36,600 --> 00:32:41,280 Speaker 4: Bindrim and Will Mathis. I'm Akshatrati until next time.