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Speaker 1: This is Cobald Barblergrie and you're listening to Switched on

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Speaker 1: the podcast brought to you by bloomberg ENIF. Wind energy

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Speaker 1: has been a key driver of the global clean energy

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Speaker 1: transition for more than two decades, but as the first

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Speaker 1: generation of wind turbines reach the end of their design lives,

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Speaker 1: the industry now faces a critical question what happens next.

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Speaker 1: Around the world, wind assets are aging. Developers in countries

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Speaker 1: like Germany and Spain were already managing fleets that are

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Speaker 1: more than twenty years old, while China and the United

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Speaker 1: States host the largest number of turbines approaching fifteen to

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Speaker 1: twenty years in operation. Wind asset owners have to decide

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Speaker 1: whether to extend repower or decommission their projects, and those

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Speaker 1: choices are becoming increasingly complex with rising costs, new turbine technologies,

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Speaker 1: and shifting policy incentives all reshaping what it means to

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Speaker 1: keep wind power spinning. So just how are these factors

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Speaker 1: influencing the economic decision making of developers and how could

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Speaker 1: these end of life choices shape the next generation of

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Speaker 1: wind power. On today's show, I'm joined by my co

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Speaker 1: host Dana Perkins, and together we review findings from the

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Speaker 1: research note wind End of Life twenty twenty five Global

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Speaker 1: repowering surges by twenty thirty five, along with BNF's head

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Speaker 1: of Wind Research, Oliver Metcalf. BNF clients can find this note,

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Speaker 1: along with our other wind research by heading to BNF

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Speaker 1: go on the Bloomberg terminal ORBNF dot com. If you'd

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Speaker 1: like to learn more about how BNF approaches strategic research

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Speaker 1: on the energy transition, including developments in commodity markets, trends

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Speaker 1: across different sectors, and the cross cutting technologies shaping the future,

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Speaker 1: you can find more information on BNF dot com. If

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Speaker 1: you'd like to speak with a member of our team

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Speaker 1: about becoming a client, email US at Sales dot BNF

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Speaker 1: at Bloomberg dot net. So let's dive in to the

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Speaker 1: future of aging turbines and what happens when the world's

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Speaker 1: first waive of windfarms reaches the end of the line.

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Speaker 2: So we have a guest and a co host here today.

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Speaker 2: I'm used to hosting by myself. I haven't done co

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Speaker 2: hosting in a long time, but super excited to have

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Speaker 2: you here today.

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Speaker 1: Cobad, thank you, Dana, very good to be here.

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Speaker 2: And then Ali, welcome back. As a guest.

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Speaker 3: Hi, Dana, good to be here.

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Speaker 2: So you represent the wind team today and we have

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Speaker 2: a lot to talk about, but it's less about what's

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Speaker 2: new in wind and more about what's old in wind

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Speaker 2: and then how we bring it up to the next decade.

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Speaker 1: So Ollie, your research note is about end of life

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Speaker 1: for turbines.

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Speaker 3: We're talking retirement.

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Speaker 1: What is What does end of life for a wind

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Speaker 1: turbine mean?

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Speaker 3: Well, most early turbines were designed with a twenty year

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Speaker 3: lifetime in mind, and we actually track the first grid

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Speaker 3: connected utility scale wind projects in the early nineteen eighties.

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Speaker 3: So end of life for wind has been a thing

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Speaker 3: for a long time. Now we're seeing this wave of

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Speaker 3: aging assets started to come off line all around the

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Speaker 3: same time, and that poses a difficult problem for developers. Ideally,

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Speaker 3: they don't want just a decommission that's quite an expensive process.

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Speaker 3: They want to eke out some additional value from these

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Speaker 3: turbines or these sites, and so developers typically have to

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Speaker 3: choose between life extension working out how long they can

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Speaker 3: run these aging machines, or what we call a repower

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Speaker 3: and that is effectively a complete project replacement. So taking

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Speaker 3: out all of the old turbines, older technology and installing new,

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Speaker 3: usually much larger turbines in its place.

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Speaker 1: Can you give us the sense of the scale of this,

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Speaker 1: How many turbines, how much capacity are we talking about?

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Speaker 3: So a huge amount. So there's over one hundred gig

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Speaker 3: watts that is reaching the end of life over the

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Speaker 3: next five years or so. And it's those markets that

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Speaker 3: were the earliest wind markets globally where we're seeing most

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Speaker 3: of these turbines coming offline, So places like Spain, Germany,

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Speaker 3: and in certain parts of the US like California, we're

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Speaker 3: beginning to see some of the oldest wind farms globally

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Speaker 3: start to reach that point where developers have to make

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Speaker 3: that difficult decision. And a lot of the earliest companies

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Speaker 3: that supported win that are the ones making these choices.

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Speaker 3: So that's European utilities that have gone on to build

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Speaker 3: projects around the world, companies like Eberdrola NL, which is

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Speaker 3: an Italian utility. But we're also beginning to see some

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Speaker 3: Chinese companies having to make these choices as well. As

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Speaker 3: the Chinese wind industry picked up a little later, but

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Speaker 3: it picked up at a scale that we didn't see

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Speaker 3: anywhere else, and so we're beginning to see the first

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Speaker 3: wave of these Chinese assets reached that end of life point.

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Speaker 1: Right, and so that's really what is driving this big

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Speaker 1: wave of end of life retirements is the rival of

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Speaker 1: Chinese assets.

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Speaker 3: Yeah, I think so. So it's been a European and

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Speaker 3: to a certain extent, us story until now we're beginning

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Speaker 3: to see that center of power shifting from the sector

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Speaker 3: from Europe to China as we see these early Chinese

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Speaker 3: turbines start to reach that end of life point.

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Speaker 2: I mean this is only going to become a more

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Speaker 2: important issue as we go forward, because as you pointed out,

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Speaker 2: these are some of the first turbines that were installed

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Speaker 2: when the offshore industry was very nascent, and as we

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Speaker 2: go along in time, all of the you know, more

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Speaker 2: installed capacity is going to be an up for this

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Speaker 2: renewal phase I guess, this regeneration phase in its life cycle.

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Speaker 2: Can you talk a little bit about the extending option,

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Speaker 2: so the option to keep something going beyond its initial

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Speaker 2: twenty year time horizon. What goes into that you'll be

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Speaker 2: essentially really replacing all of the pieces or is it

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Speaker 2: just kind of turning, you know, closing your eyes and

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Speaker 2: pretending like it's still working for a win.

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Speaker 3: That's that you do replace a lot of the key

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Speaker 3: components twice, sometimes even three times throughout the lifetime of

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Speaker 3: the project, so it's likely that you're using different or

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Speaker 3: very updated set of blades, gearbox, that kind of thing.

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Speaker 3: Some of the more structural components, it's much more rare

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Speaker 3: to change, so you're not changing your steel tower or

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Speaker 3: your concrete foundation throughout the lifetime of the project. But

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Speaker 3: the business case for a repower one of these complete

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Speaker 3: project replacements is little different to greenfield project, So it

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Speaker 3: depends on the subsidies that are available in the market,

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Speaker 3: the how high power prices are projected out into the future.

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Speaker 3: If there's not a really convincing business case for a

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Speaker 3: new project, that's when we start to see owners go

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Speaker 3: towards this life extension route. But it's a very project

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Speaker 3: by project, even turbine by turbine question, because you have

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Speaker 3: to look at each individual turbine, usually each individual component,

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Speaker 3: trying to model the conditions they've experienced over the lifetime

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Speaker 3: in order to estimate the wear on certain components that

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Speaker 3: have been operating for a long time. And then it's

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Speaker 3: a very physical thing. So then technicians have to go

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Speaker 3: and inspect a gearbox and see how much what they

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Speaker 3: call remaining useful life they predict that this component has,

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Speaker 3: and you basically have to go turbine by turbine across

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Speaker 3: your wind farm to estimate, Okay, how long do we

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Speaker 3: think we can run this thing? If we invest a

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Speaker 3: little bit upfront into replacing a couple of components or

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Speaker 3: making some repairs, then can we eke out an extra

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Speaker 3: few years? And you're basically running another mini financial mode.

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Speaker 3: You've got very low upfront costs because you've already got

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Speaker 3: the kit there, but as you can imagine, the ongoing

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Speaker 3: expenditures of these really old machines are a little bit higher,

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Speaker 3: and so you're basically working out for how long can

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Speaker 3: I profitably run this a set? So say your gearbox breaks,

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Speaker 3: then an owner has to make that decision again, so

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Speaker 3: how much for a replacement cost will that make sense?

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Speaker 3: How many more useful years can I get out of

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Speaker 3: this asset? It becomes a very hands on process where

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Speaker 3: you're making business decisions year by year, failure by failure.

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Speaker 1: So it's pretty similar to owning a car. That comes

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Speaker 1: a time in a car's life where the gearbox starts

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Speaker 1: to give up or the engine is croaking, and you're like,

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Speaker 1: is it time to just scrap this thing and go new?

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Speaker 1: Is it sounds kind of like that.

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Speaker 3: Well, I've definitely bought a used car before, and it

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Speaker 3: definitely feels like that sometimes where the thing is complete

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Speaker 3: is breaking down all the time and you're working out

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Speaker 3: whether it's time to finally make that jump and purchase

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Speaker 3: a new new asset.

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Speaker 1: At the same stroke. Is it kind of like those

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Speaker 1: taxes you see on the road that have you know,

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Speaker 1: driven a million kilometers? Because is that just everything gets

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Speaker 1: replaced if something breaks and then they just drop in

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Speaker 1: a new one. Could these turbines just keep going or

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Speaker 1: is there a critical moment where you're like, that's it

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Speaker 1: can't come anymore.

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Speaker 2: Yeah, because you are identifying how like the gearbox and

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Speaker 2: the blades, those things get replaced, which is in many

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Speaker 2: respects like the meat of the turbine. But then it's

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Speaker 2: the tower and perhaps the tower heights have changed for

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Speaker 2: that particular model over time. So what point is it

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Speaker 2: a full tear down versus a renovation.

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Speaker 3: It really depends on the project. Often things like towers

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Speaker 3: foundations are overdesigned, those kind of structural things that are

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Speaker 3: critical for safety, so you don't really want to be

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Speaker 3: working on the margins there. But yeah, it's a project

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Speaker 3: by project decision that developers have to make on whether

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Speaker 3: they're going to completely rip out the old project and

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Speaker 3: install something new or try and operate these things for

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Speaker 3: a bit longer.

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Speaker 2: Okay, So what decisions are they starting to make now

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Speaker 2: that we've all been in this industry long enough that

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Speaker 2: we're seeing these retirements those first blades that went on

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Speaker 2: when we were just newbies in the energy transition. What's

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Speaker 2: happened now? Are the decisions mostly to extend? Are you

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Speaker 2: seeing really a strong wave of these full complete overhauls.

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Speaker 3: It really depends by market, and as I hinted that before,

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Speaker 3: it depends on the business case as available for new projects.

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Speaker 3: So ideally, if you're an owner of one of these

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Speaker 3: sites and there's an attractive subsidy available for new onshore

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Speaker 3: wind farms in a market, so that that is a

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Speaker 3: case in a country like Germany, which has subsidies available

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Speaker 3: for onsore wind farms, it's holding subsidy auctions regularly, then

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Speaker 3: the attractive business proposition is to build a completely new project.

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Speaker 3: Many of these projects were installed on the best wind

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Speaker 3: sites available in the market. You can imagine you build

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Speaker 3: your first wind farm where it's absolutely windiest, and so

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Speaker 3: the opportunity to reuse some of these sites with brand

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Speaker 3: new technology is a really compelling one. And so where

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Speaker 3: there is that business case, we're seeing developers take that route.

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Speaker 3: And so that's why we're seeing a boom in repowering

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Speaker 3: in Germany at the moment.

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Speaker 1: It's that a bit of a perverse incentive though if

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Speaker 1: without that subsidy would they have done a refurbishment rather

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Speaker 1: than a tear down and a new build. So it

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Speaker 1: was the taxpayer putting money into this for you know,

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Speaker 1: a not significantly better outcome for.

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Speaker 2: Maybe five years earlier. That's you know, then maybe necessarily

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Speaker 2: require Yeah.

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Speaker 3: So you're talking about an extension of five years versus

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Speaker 3: a new project that will last thirty. Right, So yes,

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Speaker 3: there's probably a point where you may be repowering something

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Speaker 3: that could have operated a few years longer. But usually

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Speaker 3: with one of these repowers you're getting a greatly increased

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Speaker 3: project capacity. Often projects increase in size by double in

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Speaker 3: terms of generating capacity.

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Speaker 1: Wow.

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Speaker 3: And then also you're drastically reducing the number of turbines

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Speaker 3: so often you read stories about projects going from two

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Speaker 3: hundred tiny turbines as they were when they're installed back

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Speaker 3: in the early two thousands being replaced by seven or

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Speaker 3: eight turbines, and the project that has a higher generating

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Speaker 3: capacity despite that drastic reduction in the number of turbines.

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Speaker 3: So there are technical benefits that come with these. The

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Speaker 3: overall power of a project tends to write well. And

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Speaker 3: then also modern turbines are more efficient, so they generate

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Speaker 3: more energy for each unit of power that's installed, and

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Speaker 3: so you get this big increase in the generation from

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Speaker 3: these projects. So all in all, it tends to be

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Speaker 3: a benefit despite the fact that you may be giving

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Speaker 3: up on three, four, five, and maybe slightly longer years

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Speaker 3: of generation from these older wind assets.

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Speaker 2: Presumably from the government standpoint when they're thinking about the

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Speaker 2: subsidies as well, it's about security of supply and you'll

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Speaker 2: have some sort of depreciating reliability with aging farms. Is

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Speaker 2: that the case.

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Speaker 3: Yes, So operational costs tend to rise as as a

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Speaker 3: project gets older, even during it's planned lifetime. And then

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Speaker 3: like I say, these older assets, you're effectively running older

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Speaker 3: and older machines, and so yes, they're more likely to

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Speaker 3: break down. The costs of running them are a little

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Speaker 3: bit higher, and so these things are slightly less reliable,

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Speaker 3: and they're operating for less of the time. They're just

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Speaker 3: older machines, older technology, and so you do get more

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Speaker 3: consistent output with a modern turbine. So there are a

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Speaker 3: lot of benefits to doing one of these wee powers.

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Speaker 2: So the new flashy turbines that are now being put

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Speaker 2: in on these sites where we have got great wind

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Speaker 2: speed data, now that you've had them operational for a

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Speaker 2: couple of decades, how quickly is the technology in the

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Speaker 2: wind industry actively changing now? Because between twenty years ago

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Speaker 2: and now, this fully makes sense that the newer turbines

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Speaker 2: are going to be just dramatically more efficient, can generate

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Speaker 2: quite a bit more. But as we look ahead for

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Speaker 2: the next twenty to twenty five years, do you think

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Speaker 2: that that decision to make those replacements will be as easy.

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Speaker 1: It's a million dollar question.

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Speaker 3: And as turbines get larger and larger, it becomes more

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Speaker 3: and more difficult to ship these new huge components to sites,

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Speaker 3: so blades have got much longer. If you're thinking about

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Speaker 3: densely populated markets like Germany, like France. Getting a blade

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Speaker 3: that's almost one hundred meters through a tiny French town

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Speaker 3: is an incredibly difficult problem. So at the moment, we

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Speaker 3: have seen technology continue to increase in size and turbines

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Speaker 3: increase in capacity, and we haven't actually seen that slow,

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Speaker 3: if anything, we've seen that accelerate. But many people assume

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Speaker 3: that at some point there will be a limit to

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Speaker 3: these things, particularly for onshore turbines that you do have

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Speaker 3: to ship across land to have some of these logistics constraints.

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Speaker 3: But at the moment, we've seen technology continue to evolve

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Speaker 3: pretty rapidly in the wind industry.

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Speaker 2: For those who are only academically engaged in this industry

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Speaker 2: and haven't actually seen these be installed, go online and

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Speaker 2: look at these blades on semis or lorries or whatever

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Speaker 2: you call them in the country you're listening from, because

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Speaker 2: it is a site to behold to see these really

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Speaker 2: huge blades on these trucks moving their way through sometimes

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Speaker 2: very rural areas, sometimes kind of what windy roads.

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Speaker 1: So I mean there can be as big as an

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Speaker 1: a three eighty or a jumbo gener or even bigger

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Speaker 1: run Yeah, exactly, particularly some of the offsho wind turbines

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Speaker 1: today are taller than the Statute of Liberty.

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Speaker 3: The latest models are getting towards the height of the

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Speaker 3: shard if you're thinking about the very tip of.

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Speaker 1: The blade the tallest building in London exactly.

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Speaker 3: Yes, so those are offshore turbines, So on shore turbines

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Speaker 3: tend to be a little bit shorter. But yeah, these

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Speaker 3: are really really big pieces of kit these days.

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Speaker 1: So does that mean as we're going through this repowering

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Speaker 1: that we're going to see a large increase at doubling

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Speaker 1: in the amount of generation or capacity that we're getting

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Speaker 1: out of these existing sites.

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Speaker 3: Yeah, we often see a very big increase in the

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Speaker 3: capacity at these sites. So in a market like Germany,

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Speaker 3: we tend to see projects more than double in generating capacity.

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Speaker 3: In other markets, the benefit of doing one of these

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Speaker 3: repowers can be to reuse a grid connection that you

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Speaker 3: already had for the previous project. Many markets across Europe

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Speaker 3: are really struggling with long interconnection cues, so you have

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Speaker 3: to wait years before the grid operator will allow you

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Speaker 3: to connect to a project. And so the benefit of

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Speaker 3: doing one of these repowers is that you've already got

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Speaker 3: one of these sites with a grid connection that you

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Speaker 3: can reuse. The problem there for a developer is that

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Speaker 3: you can't drastically increase the project capacity because the grid

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Speaker 3: operator knows this site, knows this site at its current

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Speaker 3: generating capacity. So some time time you can boost the

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Speaker 3: project capacity by around five percent that's the case in Spain,

303
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Speaker 3: while still reusing that grid connection. But it's such a

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Speaker 3: big part of a value proposition that developers limit the

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Speaker 3: increase in size. So again there's a bit of a

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Speaker 3: market specific angle that we see for the amount of

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Speaker 3: technology increase or project generating capacity increased that we see.

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Speaker 1: Yeah, so the capacity of that grid connection is a

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Speaker 1: constraint to how much more you can get out of

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Speaker 1: a repowering So that's kind of like the size of

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Speaker 1: the pipe, the diameter of the pipe. But because these

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Speaker 1: turbines are new where they're also generating more, so you're

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Speaker 1: pushing water for more hours of the day through that pipe, right,

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Speaker 1: so we're still getting much more energy out.

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Speaker 3: Exactly exactly, So the what we call capacity factor, or

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Speaker 3: the amount that these turbines generate for a given unit

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Speaker 3: of installed capacity, is higher, and so you're still getting

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Speaker 3: more generation out of each of those turbines that you install.

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Speaker 2: One would think that this is a factor that would

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Speaker 2: be in favor of extending the life of a farm

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Speaker 2: because you would then sit there and try and get

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Speaker 2: into that interconnection queue to increase the amount they could

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Speaker 2: actually go through. If you could then at the end

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Speaker 2: of it, whether it's three years down the line, increase

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Speaker 2: the number of wind turbines and total generation on a

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Speaker 2: really good site, if you could manage to line up

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Speaker 2: all of these different things. And I know the grid

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Speaker 2: is actually one of the most complicated parts of the

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Speaker 2: whole energy transition and is you know, not just when

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Speaker 2: it comes to the wind industry, but one would think

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Speaker 2: that if you could line that all up, that might

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Speaker 2: be the perfect situation.

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Speaker 3: Yeah, so when we spoke to developers, a developer that's

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Speaker 3: planning very well, we'll start thinking about that end of

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Speaker 3: life strategy from around year ten to twelve of operation.

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Speaker 3: So that's a good kind of eight to fifteen years

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Speaker 3: longer than we typically see a wind farm retire. But

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Speaker 3: in reality, often we see wind farms change hands multiple

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Speaker 3: times across their lifetime, and so it may have moved

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Speaker 3: from the original developer and it may have been bought

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Speaker 3: by infrastructure fund sold to another one. Half of the

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Speaker 3: project might have been sold to another buyer, and so

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Speaker 3: you're looking at this situation where you may not have

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Speaker 3: perfect records on the operation of this wind farm, or

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Speaker 3: the previous owner may not have been thinking about that

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Speaker 3: next twenty five year project. And so yes, ideally started

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Speaker 3: thinking about these things very early, but sometimes that's not

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Speaker 3: the case.

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Speaker 1: Okay, So Ollie, let's unpack the economics a bit here,

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Speaker 1: because we're sort of established that the at the end

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Speaker 1: of the day, repowering is or what you do it

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Speaker 1: at the end of life, is an economic decision. So

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Speaker 1: what are the key factors here? What does a cost?

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Speaker 1: What are the things a developer needs to weigh up?

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Speaker 3: Well, actually doing a repower often is slightly more expensive

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Speaker 3: than building a green field as set. That's because you

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Speaker 3: can usually use very little from the previous project to

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Speaker 3: the new one. These turbines are so much bigger that

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Speaker 3: you need new foundations, you need new cabling. Usually you

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Speaker 3: even need new access roads because the trucks that are

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Speaker 3: bringing in these larger components is so much bigger than

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Speaker 3: what you had before.

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Speaker 2: Again, Google it, it's so amazing exactly.

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Speaker 3: So sometimes you can reuse some of the substation the

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Speaker 3: electrical equipment that collects the generation from all of the turbines.

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Speaker 3: But a project substation represents usually less than five percent

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Speaker 3: of total capex, So you're basically spending the money that

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Speaker 3: you would need to for a completely new project. But

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Speaker 3: you've also got decommissioning costs, which can be pretty expensive.

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Speaker 3: So we collected some data on decommissioning costs and found

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Speaker 3: that for a project retiring today, decommissioning costs range between

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Speaker 3: forty thousand and around one hundred and fifty thousand per turbine.

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Speaker 3: So this isn't a small amount of money, and yeah,

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Speaker 3: it can drive up the cost of repower. You've got

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Speaker 3: to remember that. Then you're getting this increased capacity factor,

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Speaker 3: a higher generation, and there are some things that balance

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Speaker 3: that out. But yeah, it's not a massive cost saving

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Speaker 3: by doing one of these projects.

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Speaker 1: So it is much more like a knockdown and rebuild.

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Speaker 1: You're flattening the old farm and you're starting.

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Speaker 3: Fresh, taking out all the old stuff and putting in

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Speaker 3: completely new kit.

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Speaker 2: Yeah, which then brings us to what do you do

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Speaker 2: with all of the old stuff Because the carbon fiber,

385
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Speaker 2: the fiberglass or in some of these blades aren't currently

386
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Speaker 2: not really recycle the ball, right, where do they go?

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Speaker 2: Are they recyclable? Is there some sort of use case

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Speaker 2: that I'm not aware of?

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Speaker 3: Well, the vast majority of stuff is recyclable, so steel towers,

390
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Speaker 3: a lot of the kit that comes from inside the

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Speaker 3: turbine you can recycle to a certain extent. So actually,

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Speaker 3: when we ran the numbers, we found that you can

393
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Speaker 3: usually recover around twenty to sometimes up to eighty percent

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Speaker 3: of the decommissioning costs through recycling. So the vast majority

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Speaker 3: of a turbine is recyclable, but that is some of

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Speaker 3: the kit that still poses a problem in terms of

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Speaker 3: end of life for the industry, and the blades are

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Speaker 3: the components that are really the hardest to recycle. So

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Speaker 3: until recently, many retiring wind turbine blades were sent to landfill. Effectively,

400
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Speaker 3: this was a bit of a reputational risk for the

401
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Speaker 3: industry and countries beginning to cotton on. It's not a

402
00:19:48,920 --> 00:19:51,439
Speaker 3: good look to see what looks like fishbones when you

403
00:19:51,480 --> 00:19:53,760
Speaker 3: see these aerial shots of landfills, and it's hundreds of

404
00:19:53,760 --> 00:19:55,200
Speaker 3: wind turbine blades, so.

405
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Speaker 1: Itig it's fishbones. You'll ever see.

406
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Speaker 3: The biggest fishbones you'll ever see. But lots of companies

407
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Speaker 3: are now beginning to look into how they can recycle

408
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Speaker 3: these things coming off, or at least use them for

409
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Speaker 3: something that has They call it downcycling, So it's not

410
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Speaker 3: reusing it to make a new wind turbine blade, but

411
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Speaker 3: it's using it for some kind of valuable purpose rather

412
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Speaker 3: than just sending it to landfill. So the one that's

413
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Speaker 3: in operation at scale today is cement coprocessing. So you

414
00:20:20,040 --> 00:20:22,719
Speaker 3: grind down these old blades and then use it as

415
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Speaker 3: a partial feedstock for the cement making process. That means

416
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Speaker 3: you need less of the traditional feedstocks and it cuts

417
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Speaker 3: the carbon dioxide output from cement processing. But there's kind

418
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Speaker 3: of newer technologies that companies are looking into today, So

419
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Speaker 3: how to kind of truly recycle these old turbines. And

420
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Speaker 3: it's kind of a two pronged problem. So people are

421
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Speaker 3: thinking about how you recycle the oldest wind turbine blades,

422
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Speaker 3: which are really hard to separate it through its constituent parts.

423
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Speaker 3: These are components that were designed to survive in the

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Speaker 3: harshest windiest conditions out there, and so when you come

425
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Speaker 3: to try and split these components back apart, it require

426
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Speaker 3: a lot of energy, and it's very difficult, but there

427
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Speaker 3: are companies looking at chemical processes or thermal processes in

428
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Speaker 3: order to split out these composite materials to be able

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Speaker 3: to re use them to make new wind turbine blades.

430
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Speaker 3: And in the other end of the picture, you're seeing

431
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Speaker 3: turbine makers trying to design these blades to be recyclable

432
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Speaker 3: from the beginning. So often now when you're installing a

433
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Speaker 3: new onsore and off your wind farm, then you can

434
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Speaker 3: pare a little bit more for so called recyclable blades.

435
00:21:26,040 --> 00:21:28,600
Speaker 3: So in twenty five years time, it'll be easier to

436
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Speaker 3: recycle these things and kind of complete that circularity for

437
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Speaker 3: the incenter.

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Speaker 1: And so the recycling is it mostly a recovery and

439
00:21:38,400 --> 00:21:42,080
Speaker 1: reuse of the material or is there an aftermarket for

440
00:21:42,280 --> 00:21:46,280
Speaker 1: wind turbine components or do they get sent to another

441
00:21:46,320 --> 00:21:50,719
Speaker 1: country where the standards are a lot as stringent, you know,

442
00:21:50,760 --> 00:21:53,000
Speaker 1: and installed over there. What's the spectrum of things that

443
00:21:53,040 --> 00:21:53,480
Speaker 1: can happen.

444
00:21:53,680 --> 00:21:57,240
Speaker 3: So the aftermarket for complete turbines is fairly small. You

445
00:21:57,320 --> 00:22:01,679
Speaker 3: do see some countries that import old turbines from very

446
00:22:01,760 --> 00:22:04,920
Speaker 3: established wind markets, some countries in Africa, for example, where

447
00:22:04,920 --> 00:22:08,080
Speaker 3: we see small wind farms spring up using turbines that

448
00:22:08,640 --> 00:22:11,600
Speaker 3: had a previous life somewhere else, but there is an

449
00:22:11,640 --> 00:22:15,240
Speaker 3: aftermarket for components. One of the things that limit how

450
00:22:15,280 --> 00:22:18,359
Speaker 3: long you can extend the life of existing wind turbines

451
00:22:18,480 --> 00:22:21,280
Speaker 3: is the availability of spare parts. Wind turbine makers aren't

452
00:22:21,280 --> 00:22:25,119
Speaker 3: manufacturing those tiny turbines that populate the earliest wind farms

453
00:22:25,119 --> 00:22:27,560
Speaker 3: out there, and so often if you're looking to do

454
00:22:27,600 --> 00:22:29,600
Speaker 3: a life extension in your turbine, one of the key

455
00:22:29,600 --> 00:22:32,399
Speaker 3: considerations is what does a spare part market look like?

456
00:22:32,520 --> 00:22:34,360
Speaker 3: How am I going to sort a new gearbox if

457
00:22:34,359 --> 00:22:36,760
Speaker 3: that fails? So, if you've got a gearbox in very

458
00:22:36,800 --> 00:22:40,040
Speaker 3: good condition, then there is a limited market for kind

459
00:22:40,080 --> 00:22:42,160
Speaker 3: of aftermarket sales for some of these things as well.

460
00:22:42,240 --> 00:22:45,040
Speaker 3: So it's not just recycling of the material itself, but

461
00:22:45,119 --> 00:22:47,280
Speaker 3: in some cases you may find a second life some of.

462
00:22:47,280 --> 00:22:51,080
Speaker 1: These Again, so it's really much like a car, where

463
00:22:51,200 --> 00:22:54,680
Speaker 1: certain cars are great for aftermarket support and there are

464
00:22:54,720 --> 00:22:58,040
Speaker 1: lots of vendors where you can buy non original parts.

465
00:22:58,720 --> 00:23:00,960
Speaker 1: Does the same thing exist for twoes? Are there certain

466
00:23:01,080 --> 00:23:04,760
Speaker 1: manufacturers who have a deeper pool of spare parts so

467
00:23:04,840 --> 00:23:08,480
Speaker 1: that the project can run longer and be refurbished easily

468
00:23:08,560 --> 00:23:11,800
Speaker 1: and others that don't have that. After project support and

469
00:23:11,960 --> 00:23:12,800
Speaker 1: spare part.

470
00:23:13,080 --> 00:23:15,480
Speaker 3: You speak to some developers and they speak to you

471
00:23:15,480 --> 00:23:18,640
Speaker 3: about specific models which are great candidates for lifetime extension

472
00:23:18,840 --> 00:23:21,320
Speaker 3: just for that reason. And then because the wind industry

473
00:23:21,359 --> 00:23:23,359
Speaker 3: is quite a young industry, you've also got all of

474
00:23:23,359 --> 00:23:26,679
Speaker 3: these technology providers that existed twenty years ago maybe and

475
00:23:26,800 --> 00:23:29,880
Speaker 3: are no longer in operation, and so it's very difficult

476
00:23:29,920 --> 00:23:33,040
Speaker 3: to find any company that will service your asset if

477
00:23:33,080 --> 00:23:36,359
Speaker 3: it's using those turbines, let alone provide you with brand

478
00:23:36,400 --> 00:23:38,919
Speaker 3: new parts if you have a gearbox failure or a

479
00:23:38,920 --> 00:23:41,280
Speaker 3: blade failure or something like that. So there's a big

480
00:23:41,320 --> 00:23:45,639
Speaker 3: difference between different projects and different technology types in terms

481
00:23:45,640 --> 00:23:48,600
Speaker 3: of how suitable they are for a lifetime extension. And

482
00:23:48,640 --> 00:23:50,800
Speaker 3: so one of the end of life options is a

483
00:23:50,880 --> 00:23:55,560
Speaker 3: complete decommissioning and site remediation back to the original condition

484
00:23:55,640 --> 00:23:58,880
Speaker 3: of that land. Why would that ever be something that's

485
00:23:58,960 --> 00:24:02,560
Speaker 3: chosen if that land has got valuable wind resource, why

486
00:24:02,640 --> 00:24:06,440
Speaker 3: we do ever do a complete decommissioning. Sometimes the productivity

487
00:24:06,480 --> 00:24:09,760
Speaker 3: of the site might not be what you initially were hoping,

488
00:24:09,960 --> 00:24:12,960
Speaker 3: and so if the capacity factors you can achieve on

489
00:24:13,000 --> 00:24:15,600
Speaker 3: a site are lower than expected, then you may not

490
00:24:15,720 --> 00:24:18,200
Speaker 3: be interested in installing a new project in its place.

491
00:24:18,240 --> 00:24:20,800
Speaker 3: I would say more often it's a regulatory thing, and

492
00:24:20,840 --> 00:24:25,640
Speaker 3: so these larger turbines are much taller. Often a repower

493
00:24:25,680 --> 00:24:29,199
Speaker 3: gets less local pushback than a greenfield project because locals

494
00:24:29,240 --> 00:24:32,120
Speaker 3: are already used to living around these turbines. But you're

495
00:24:32,160 --> 00:24:35,960
Speaker 3: often more than doubling the height of turbines, so that

496
00:24:36,119 --> 00:24:38,920
Speaker 3: has a different kind of visual impact. It can also

497
00:24:38,960 --> 00:24:43,400
Speaker 3: impact on things like radars for aviation or military. So

498
00:24:43,440 --> 00:24:46,240
Speaker 3: in some cases, just from a regulatory perspective, you're not

499
00:24:46,359 --> 00:24:49,359
Speaker 3: able to replace these projects. And as I said at

500
00:24:49,359 --> 00:24:54,240
Speaker 3: the beginning, complete decommission is usually the last resort for

501
00:24:54,480 --> 00:24:56,520
Speaker 3: a owner of one of these assets because you're not

502
00:24:56,520 --> 00:24:59,240
Speaker 3: getting any more value out of that site. But sometimes

503
00:24:59,240 --> 00:25:00,960
Speaker 3: it is necessary from those perspectives.

504
00:25:01,040 --> 00:25:04,080
Speaker 2: From a policy standpoint, we're almost seeing a three track

505
00:25:04,160 --> 00:25:06,560
Speaker 2: transition across the world, so we're seeing those parts of

506
00:25:06,600 --> 00:25:10,080
Speaker 2: the world that are opponents to the energy transition. And

507
00:25:10,440 --> 00:25:13,080
Speaker 2: as you had mentioned, there are subsidies for wind farms

508
00:25:13,080 --> 00:25:15,680
Speaker 2: in certain areas. There are those areas where you see

509
00:25:15,800 --> 00:25:19,760
Speaker 2: the levelized cost of electricity being the guiding light and

510
00:25:20,040 --> 00:25:23,160
Speaker 2: largely hands off and so these technologies stand on their own.

511
00:25:23,240 --> 00:25:24,880
Speaker 2: And then there are parts of the world that are

512
00:25:25,200 --> 00:25:29,119
Speaker 2: really actively pulling back from renewables. And I think in

513
00:25:29,160 --> 00:25:32,080
Speaker 2: this case, the US stands out. They're the only market

514
00:25:32,119 --> 00:25:36,040
Speaker 2: to see a drop in future repowering versus their historical data.

515
00:25:36,080 --> 00:25:38,320
Speaker 2: Can you talk a little bit about the state of

516
00:25:38,440 --> 00:25:41,560
Speaker 2: the energy transition and I guess wind on the whole,

517
00:25:41,680 --> 00:25:46,640
Speaker 2: But in this context the repowering conversation, you know, it's

518
00:25:46,640 --> 00:25:49,240
Speaker 2: one thing not to build new wind farms, it's another

519
00:25:49,280 --> 00:25:52,439
Speaker 2: thing entirely to not maintain or at least use the

520
00:25:52,520 --> 00:25:55,359
Speaker 2: sites that already exist and think about the long term

521
00:25:55,560 --> 00:25:58,480
Speaker 2: life cycle of those those particular sites.

522
00:25:58,720 --> 00:26:02,320
Speaker 3: Well, the business case for a repower is a little

523
00:26:02,359 --> 00:26:05,200
Speaker 3: different to a new project. So if that business case

524
00:26:05,280 --> 00:26:07,800
Speaker 3: is becoming less attractive in a market like we're seeing

525
00:26:07,800 --> 00:26:10,359
Speaker 3: in the US, which is cutting back tax credits that

526
00:26:10,359 --> 00:26:13,359
Speaker 3: are available for renewable energy projects, then we're going to

527
00:26:13,400 --> 00:26:16,920
Speaker 3: see fewer repowers. So in other markets where we are

528
00:26:16,960 --> 00:26:19,600
Speaker 3: seeing the support for a new project start to drop

529
00:26:19,720 --> 00:26:21,880
Speaker 3: or seeing a hiatus, So Spain is one of those

530
00:26:21,920 --> 00:26:24,560
Speaker 3: markets we tend to see asset towners try and extend

531
00:26:24,600 --> 00:26:27,360
Speaker 3: the life of their assets for as long as possible

532
00:26:27,520 --> 00:26:30,000
Speaker 3: to try and earn money from their aging assets if

533
00:26:30,000 --> 00:26:32,360
Speaker 3: the business case for a new project isn't there. But

534
00:26:32,640 --> 00:26:36,200
Speaker 3: the worrying thing is when you look Spain as an example,

535
00:26:36,320 --> 00:26:39,160
Speaker 3: you actually then start to see the cumulative operating capacity

536
00:26:39,200 --> 00:26:43,040
Speaker 3: of wind potentially decreasing as more assets start to retire

537
00:26:43,240 --> 00:26:45,640
Speaker 3: than are getting replaced. We're not quite at that point

538
00:26:45,720 --> 00:26:48,199
Speaker 3: in the US, but that is a risk if we

539
00:26:48,280 --> 00:26:51,280
Speaker 3: don't see the industry recover significantly, and there's kind of

540
00:26:51,480 --> 00:26:55,720
Speaker 3: a continuation of a really difficult policy environment for the

541
00:26:55,720 --> 00:26:56,720
Speaker 3: wind sector in the US.

542
00:26:56,960 --> 00:26:59,960
Speaker 2: There's the pulsy environment that impacts the economics of a project,

543
00:27:00,040 --> 00:27:01,600
Speaker 2: but then there are also the permits and just the

544
00:27:01,600 --> 00:27:04,280
Speaker 2: ability to operate on that site. At this point in time,

545
00:27:04,359 --> 00:27:08,280
Speaker 2: are we seeing any changes to permits for existing firms

546
00:27:08,400 --> 00:27:10,560
Speaker 2: that would then impact you know, you get to the

547
00:27:10,640 --> 00:27:12,880
Speaker 2: end of that life cycle and maybe you can't repower

548
00:27:13,000 --> 00:27:15,199
Speaker 2: because you don't have the ability to continue on.

549
00:27:15,920 --> 00:27:18,399
Speaker 3: It's very rare to see a permit revoked for an

550
00:27:18,440 --> 00:27:22,360
Speaker 3: already operational project. That would be terrible for the business

551
00:27:22,359 --> 00:27:25,240
Speaker 3: confidence in a market, whichever industry you're looking at. But

552
00:27:25,560 --> 00:27:27,520
Speaker 3: in some markets it is very difficult to get a

553
00:27:27,520 --> 00:27:30,120
Speaker 3: new permit, and if you think about the US, sometimes

554
00:27:30,119 --> 00:27:32,520
Speaker 3: that's in red states. Sometimes that can be in blue

555
00:27:32,520 --> 00:27:35,400
Speaker 3: states as well. There's a big pushback to new onshore

556
00:27:35,440 --> 00:27:38,639
Speaker 3: wind permits in California, for example, and so there's not

557
00:27:38,720 --> 00:27:40,760
Speaker 3: a rush of projects that are able to kind of

558
00:27:40,760 --> 00:27:44,520
Speaker 3: secure that new permit for turbines that are much taller,

559
00:27:44,960 --> 00:27:48,440
Speaker 3: because some people still have this kind of nimbia attitude

560
00:27:48,480 --> 00:27:50,800
Speaker 3: to new wind projects. So it's always a bit of

561
00:27:50,800 --> 00:27:53,000
Speaker 3: a lottery in terms of whether you can secure a

562
00:27:53,160 --> 00:27:56,159
Speaker 3: new permit for your wind farm. And so we are

563
00:27:56,160 --> 00:27:59,560
Speaker 3: seeing repowering activity in California and in other parts of

564
00:27:59,600 --> 00:28:02,160
Speaker 3: the US. But yeah, if you can't get your permit,

565
00:28:02,200 --> 00:28:03,159
Speaker 3: you can't build your project.

566
00:28:03,400 --> 00:28:05,640
Speaker 2: Well, so I actually love that you pointed it out

567
00:28:05,880 --> 00:28:08,200
Speaker 2: that it is not necessarily a red state, blue state

568
00:28:08,240 --> 00:28:10,240
Speaker 2: thing because what we talk about a lot on this

569
00:28:10,280 --> 00:28:13,160
Speaker 2: show is URKAT, which is for those well I think

570
00:28:13,200 --> 00:28:15,240
Speaker 2: everyone knows at this point that ur cut is a

571
00:28:15,240 --> 00:28:17,920
Speaker 2: part of the Texas grid, but you know, it's one

572
00:28:17,920 --> 00:28:19,800
Speaker 2: of those places where you end depth seeing a lot

573
00:28:19,840 --> 00:28:23,240
Speaker 2: of technologies installed, with economics really being that driving force

574
00:28:23,440 --> 00:28:25,400
Speaker 2: and a place or you see a lot of innovation

575
00:28:25,560 --> 00:28:27,920
Speaker 2: in the energy transition. So not a red state blue

576
00:28:27,920 --> 00:28:31,440
Speaker 2: state thing, but to your point, region by region and

577
00:28:31,760 --> 00:28:34,280
Speaker 2: local laws are going to impact local sites.

578
00:28:34,640 --> 00:28:37,480
Speaker 3: Yeah, but permitting in the US is an incredibly local thing.

579
00:28:37,680 --> 00:28:41,800
Speaker 3: So in some cases states have statewide permitting policies for

580
00:28:41,840 --> 00:28:44,360
Speaker 3: onshore wind, but in many parts of the country it's

581
00:28:44,400 --> 00:28:47,200
Speaker 3: a county by county issue. So you go a few

582
00:28:47,240 --> 00:28:49,280
Speaker 3: fields over and you have to go to a different

583
00:28:49,320 --> 00:28:51,520
Speaker 3: board to get your permit and go through a different process.

584
00:28:51,680 --> 00:28:55,400
Speaker 3: And so it's incredibly localized how many barriers there are

585
00:28:55,440 --> 00:28:57,640
Speaker 3: to developers and how difficult it is to get that

586
00:28:57,680 --> 00:29:00,280
Speaker 3: permit for both a greenfield project but also so in

587
00:29:00,320 --> 00:29:03,120
Speaker 3: the future for a repower and so the cost.

588
00:29:02,840 --> 00:29:05,960
Speaker 1: Of generation for a repowered site is it typically lower

589
00:29:06,360 --> 00:29:08,680
Speaker 1: than the original site that it's replacing.

590
00:29:08,920 --> 00:29:12,560
Speaker 3: We tend to think about costs roughly similar to a

591
00:29:12,600 --> 00:29:17,320
Speaker 3: greenfield project, So you have often slightly higher capital costs

592
00:29:17,360 --> 00:29:20,800
Speaker 3: given that you also have to think about the decommissioning

593
00:29:20,840 --> 00:29:23,120
Speaker 3: of the old turbines. But yeah, you get a boost

594
00:29:23,120 --> 00:29:25,920
Speaker 3: in generation for the new project as well. Sometimes and

595
00:29:26,560 --> 00:29:29,560
Speaker 3: usually when you're installing a new wind project today, you

596
00:29:29,600 --> 00:29:32,520
Speaker 3: have to lock away money in a decommissioning bond, so

597
00:29:32,560 --> 00:29:35,000
Speaker 3: you're basically locking away that money in order to cover

598
00:29:35,040 --> 00:29:37,960
Speaker 3: those decommissioning costs in the future. That wasn't the case

599
00:29:38,000 --> 00:29:41,600
Speaker 3: on every early wind site, and so sometimes that there

600
00:29:41,680 --> 00:29:45,360
Speaker 3: is an additional cost. Usually there's a there are stipulations

601
00:29:45,360 --> 00:29:48,680
Speaker 3: in your permit, either with the governing bodies or with

602
00:29:48,840 --> 00:29:51,760
Speaker 3: the landowner for the site that means you have to

603
00:29:51,800 --> 00:29:53,880
Speaker 3: remove a certain amount of the kit at the end

604
00:29:53,920 --> 00:29:57,880
Speaker 3: of the project life. Again, in some limited cases, there

605
00:29:57,960 --> 00:30:01,280
Speaker 3: weren't those stipulations for the earliest projec and so in

606
00:30:01,320 --> 00:30:04,440
Speaker 3: some places around the world you see abandoned wind projects

607
00:30:04,480 --> 00:30:06,960
Speaker 3: where no one's willing to pay those decomissioning costs. They're

608
00:30:06,960 --> 00:30:09,160
Speaker 3: not on the hook to do that legally. That's a

609
00:30:09,200 --> 00:30:11,800
Speaker 3: really bad look for the industry. And that's completely changed

610
00:30:11,840 --> 00:30:14,600
Speaker 3: over the years, and now every permit or every landowner

611
00:30:14,720 --> 00:30:17,200
Speaker 3: will will stipulate that there has to be some kind

612
00:30:17,200 --> 00:30:20,360
Speaker 3: of decommissioning activity and money put away to do that

613
00:30:20,440 --> 00:30:21,479
Speaker 3: at the beginning of a project.

614
00:30:21,720 --> 00:30:23,840
Speaker 2: You know, ironically enough, I can see one of those

615
00:30:23,880 --> 00:30:25,720
Speaker 2: from my window. It's not a wind farm, but they

616
00:30:25,760 --> 00:30:28,560
Speaker 2: are wind turbines that are built into an office building

617
00:30:28,560 --> 00:30:30,480
Speaker 2: in London, and I can see it from my desk,

618
00:30:30,600 --> 00:30:31,760
Speaker 2: and they don't move anymore.

619
00:30:31,880 --> 00:30:35,160
Speaker 1: Yeah, it's a repressing site. But twenty years ago, when

620
00:30:35,200 --> 00:30:38,400
Speaker 1: these projects were first built, their levelized cost would have

621
00:30:38,440 --> 00:30:40,600
Speaker 1: been something like one hundred dollars to make it what

622
00:30:40,680 --> 00:30:43,080
Speaker 1: our are today. A new wind project is, of course,

623
00:30:43,120 --> 00:30:44,400
Speaker 1: sort of fifty dollars a maga what.

624
00:30:44,360 --> 00:30:47,400
Speaker 3: Hour, Yes, that's something like that. So the energy generated

625
00:30:47,400 --> 00:30:49,960
Speaker 3: by that new project is vastly cheaper than it would

626
00:30:50,000 --> 00:30:53,560
Speaker 3: have been twenty five years ago. Comparing a greenfield asset

627
00:30:53,800 --> 00:30:56,160
Speaker 3: to a repowered asset, there's not too much of a

628
00:30:56,160 --> 00:30:58,800
Speaker 3: difference in terms of the cost of energy. But wind

629
00:30:58,960 --> 00:31:02,720
Speaker 3: has wind takes technology has drastically improved over the last

630
00:31:02,760 --> 00:31:05,800
Speaker 3: twenty twenty five years, and that's brought the costs down

631
00:31:05,880 --> 00:31:07,680
Speaker 3: in a big way. So one of the reasons that

632
00:31:07,720 --> 00:31:10,840
Speaker 3: the industry is using these really large turbines is because

633
00:31:11,080 --> 00:31:14,120
Speaker 3: using a larger turbine with a higher generating capacity is

634
00:31:14,240 --> 00:31:17,520
Speaker 3: usually cheaper on a permegwat basis for the turbine itself,

635
00:31:17,680 --> 00:31:21,680
Speaker 3: but you also need fewer foundations, fewer cables, fewer days

636
00:31:21,760 --> 00:31:24,200
Speaker 3: hiring a crane for a project of the same capacity.

637
00:31:24,240 --> 00:31:26,760
Speaker 3: If you're just using fewer machines, and so we've seen

638
00:31:27,160 --> 00:31:30,520
Speaker 3: a massive scale up of wind tibine technology and that's

639
00:31:30,640 --> 00:31:33,200
Speaker 3: led to a massive decrease in wind technology costs over

640
00:31:33,560 --> 00:31:33,960
Speaker 3: the years.

641
00:31:34,080 --> 00:31:36,760
Speaker 1: And so contractually, what does this sort of mean for

642
00:31:36,800 --> 00:31:39,920
Speaker 1: the off taker of that power? So somebody twenty years

643
00:31:39,920 --> 00:31:42,000
Speaker 1: ago it signed a contract for twenty years of powered

644
00:31:42,000 --> 00:31:44,680
Speaker 1: one hundred dollars a mag what hour is that off taker?

645
00:31:45,280 --> 00:31:47,440
Speaker 1: Usually the same person then that is going to be

646
00:31:47,480 --> 00:31:51,280
Speaker 1: purchasing their power from the repowered site and they is

647
00:31:51,280 --> 00:31:53,400
Speaker 1: this a big win for them because now their generation

648
00:31:53,520 --> 00:31:55,200
Speaker 1: cost is down to fifty.

649
00:31:55,040 --> 00:31:57,480
Speaker 3: Often the off taker is different, partly because some of

650
00:31:57,480 --> 00:32:02,280
Speaker 3: these earliest assets required a lot of government funding. Wind

651
00:32:02,320 --> 00:32:05,400
Speaker 3: farms weren't competitive on a cost basis with other technologies,

652
00:32:05,560 --> 00:32:08,160
Speaker 3: and so we had subsidy regimes like feed and taris

653
00:32:08,160 --> 00:32:11,400
Speaker 3: to wind assets, and to a certain extent, the government

654
00:32:11,440 --> 00:32:13,600
Speaker 3: of these countries was the off taker or at least

655
00:32:13,600 --> 00:32:17,200
Speaker 3: providing that kind of revenue stability for assets. These days,

656
00:32:17,240 --> 00:32:19,800
Speaker 3: in some cases it's government subsidies. Often it will be

657
00:32:19,840 --> 00:32:23,760
Speaker 3: a corporate off taker or utility off taker buying that power. Yes,

658
00:32:23,800 --> 00:32:27,080
Speaker 3: probably for its environmental credentials, but also because it's the

659
00:32:27,120 --> 00:32:30,480
Speaker 3: same price or cheaper than buying power from the grid

660
00:32:30,640 --> 00:32:32,000
Speaker 3: or from a fossil generator.

661
00:32:32,200 --> 00:32:36,240
Speaker 1: So it's policy supportive and required then to incentivize repowering

662
00:32:36,360 --> 00:32:39,120
Speaker 1: or do the economics alone just make it worthwhile.

663
00:32:39,320 --> 00:32:42,760
Speaker 3: It really depends on the market. The thing where policy

664
00:32:43,040 --> 00:32:46,800
Speaker 3: really makes a difference is revenue certainty. So it's really

665
00:32:46,800 --> 00:32:49,040
Speaker 3: important when you're going to a bank trying to finance

666
00:32:49,040 --> 00:32:51,520
Speaker 3: a wind as set that you can present a business

667
00:32:51,520 --> 00:32:53,440
Speaker 3: case that's compelling enough for a bank to give you

668
00:32:53,720 --> 00:32:55,959
Speaker 3: a twenty year loan for example. So if you can

669
00:32:56,040 --> 00:32:58,960
Speaker 3: say I've got a power purchase agreement of fifteen years

670
00:32:59,000 --> 00:33:01,840
Speaker 3: or twenty years, lenders are much more comfortable giving you

671
00:33:01,880 --> 00:33:04,080
Speaker 3: a large sum of money than if you say, oh, well,

672
00:33:04,160 --> 00:33:06,480
Speaker 3: I predict that the power prices in fifteen years are

673
00:33:06,520 --> 00:33:09,960
Speaker 3: going to be however much so, sometimes you can get

674
00:33:10,040 --> 00:33:14,840
Speaker 3: revenue stability from a company or a utility, but often

675
00:33:14,880 --> 00:33:17,960
Speaker 3: if countries want to build wind and solar assets at

676
00:33:18,000 --> 00:33:21,360
Speaker 3: great scale, then governments can also provide that revenue stability,

677
00:33:21,480 --> 00:33:24,720
Speaker 3: and so yeah, often for markets really aiming for scale,

678
00:33:24,760 --> 00:33:29,040
Speaker 3: we still see some role for government revenue stabilizing mechanisms.

679
00:33:29,280 --> 00:33:31,640
Speaker 2: So this wave is largely onshore. Are there any special

680
00:33:31,640 --> 00:33:35,640
Speaker 2: considerations for the offshore wind sectors, those start to retire

681
00:33:35,720 --> 00:33:38,080
Speaker 2: in the next few years coming up ahead, because that

682
00:33:38,240 --> 00:33:40,840
Speaker 2: was that second amount of installed capacity that came a

683
00:33:40,880 --> 00:33:42,920
Speaker 2: little bit later and maybe isn't all coming up on

684
00:33:42,960 --> 00:33:45,520
Speaker 2: its twenty years just yet, but it will come before

685
00:33:45,560 --> 00:33:45,959
Speaker 2: we know it.

686
00:33:46,360 --> 00:33:48,840
Speaker 3: So we're just starting to see the first offshore wind

687
00:33:48,880 --> 00:33:51,600
Speaker 3: farms start to retire. So there's a couple of demo

688
00:33:51,680 --> 00:33:55,520
Speaker 3: projects in markets like Denmark, in earliest offshore wind markets

689
00:33:55,560 --> 00:33:58,120
Speaker 3: like the UK, where we're starting to see these early

690
00:33:58,200 --> 00:34:01,320
Speaker 3: test cases on what a deco missioning of an offshore

691
00:34:01,360 --> 00:34:04,880
Speaker 3: wind farm really looks like. We've seen very little repairing

692
00:34:05,120 --> 00:34:09,600
Speaker 3: so far for offshore wind, but some developers, particularly more recently,

693
00:34:09,680 --> 00:34:12,840
Speaker 3: have paid an incredibly high amount of money for development

694
00:34:12,920 --> 00:34:16,160
Speaker 3: rights for some of these offshore sites, and often these

695
00:34:16,280 --> 00:34:19,399
Speaker 3: leases for the developers are around sixty years, so that's

696
00:34:19,480 --> 00:34:22,440
Speaker 3: not one project lifetime, that's two project lifetimes. So the

697
00:34:22,480 --> 00:34:24,759
Speaker 3: assumption bates in there is that we could see some

698
00:34:24,880 --> 00:34:27,600
Speaker 3: kind of repairing for offshore wind assets. It's likely to

699
00:34:27,600 --> 00:34:30,200
Speaker 3: be similar. So if you want to use the latest

700
00:34:30,200 --> 00:34:32,600
Speaker 3: and greatest technology, you're probably not going to be able

701
00:34:32,640 --> 00:34:36,160
Speaker 3: to use those same offshore foundations or cabling, and so

702
00:34:36,320 --> 00:34:39,000
Speaker 3: it's likely to be a complete project replacement as well,

703
00:34:39,040 --> 00:34:40,719
Speaker 3: with all the costs that come with that. But it

704
00:34:40,800 --> 00:34:43,160
Speaker 3: is an issue that is going to grow for the

705
00:34:43,160 --> 00:34:45,600
Speaker 3: offshore wind industry pretty fast as we see more and

706
00:34:45,640 --> 00:34:47,560
Speaker 3: more assets reach that end of life point.

707
00:34:47,880 --> 00:34:51,319
Speaker 1: So how would you sum up this dynamic of now

708
00:34:51,880 --> 00:34:54,040
Speaker 1: a large amount of wind farms reaching end of life?

709
00:34:54,080 --> 00:34:58,080
Speaker 1: Is this an opportunity for renewal and for cost reductions

710
00:34:58,160 --> 00:35:01,120
Speaker 1: and for more renewable power during the system or is

711
00:35:01,160 --> 00:35:03,600
Speaker 1: it a challenge that the industry is really just trying

712
00:35:03,600 --> 00:35:04,640
Speaker 1: to figure out how to get through.

713
00:35:04,840 --> 00:35:08,439
Speaker 3: I would say there's great opportunity. The opportunity to use

714
00:35:08,520 --> 00:35:11,320
Speaker 3: brand new technology on some of the windiest sites around

715
00:35:11,320 --> 00:35:14,960
Speaker 3: the world is a great one for developers and governments alike.

716
00:35:15,120 --> 00:35:17,719
Speaker 3: It also represents a big risk if you look at

717
00:35:17,760 --> 00:35:21,080
Speaker 3: some markets where the business case isn't there for wind assets,

718
00:35:21,200 --> 00:35:24,440
Speaker 3: then you are actually seeing that the cumulative operating capacity

719
00:35:24,440 --> 00:35:26,680
Speaker 3: of wind farms start to decrease as we see more

720
00:35:26,680 --> 00:35:30,040
Speaker 3: and more assets come offline. And so if markets are

721
00:35:30,200 --> 00:35:33,720
Speaker 3: hoping that wind forms a big part of their overall

722
00:35:33,760 --> 00:35:38,000
Speaker 3: decarbonization story, then supporting repowers both from a regulatory and

723
00:35:38,040 --> 00:35:40,800
Speaker 3: sometimes a financial perspective is going to be really important.

724
00:35:41,080 --> 00:35:41,279
Speaker 3: You know.

725
00:35:41,320 --> 00:35:43,840
Speaker 2: The big takeaway for me from the conversation today was

726
00:35:43,880 --> 00:35:47,600
Speaker 2: that this is also a very very hyper local conversation.

727
00:35:47,800 --> 00:35:51,319
Speaker 2: It's country by country, site by site, and turbine by

728
00:35:51,360 --> 00:35:54,920
Speaker 2: turbine being assessed. So it's hard to make huge generalizations

729
00:35:54,960 --> 00:35:57,919
Speaker 2: about this wave that's coming, but we certainly are going

730
00:35:57,960 --> 00:36:00,560
Speaker 2: to see it and there is a lot to consider

731
00:36:00,800 --> 00:36:03,960
Speaker 2: for this industry, both now and going forward as we

732
00:36:04,000 --> 00:36:07,160
Speaker 2: install more replace more. Thank you very much for joining

733
00:36:07,160 --> 00:36:10,280
Speaker 2: today and explaining where we are now, where we're headed,

734
00:36:10,360 --> 00:36:13,080
Speaker 2: and as the industry matures. Nice having you here, Allie

735
00:36:13,080 --> 00:36:15,640
Speaker 2: and Cobed really nice spending some time on the mic

736
00:36:15,680 --> 00:36:16,080
Speaker 2: with you. O.

737
00:36:16,239 --> 00:36:18,000
Speaker 1: Pleasure to be here and thank you. Thank you for

738
00:36:18,040 --> 00:36:18,520
Speaker 1: talking to us.

739
00:36:18,560 --> 00:36:27,640
Speaker 3: Really thanks for having me guys.

740
00:36:28,760 --> 00:36:31,879
Speaker 2: Today's episode of Switched On was produced by Cam Gray

741
00:36:32,080 --> 00:36:35,799
Speaker 2: with production assistance from Kamala Shelling. Bloomberg NEIF is a

742
00:36:35,840 --> 00:36:38,960
Speaker 2: service provided by Bloomberg Finance LP and its affiliates. This

743
00:36:39,080 --> 00:36:41,759
Speaker 2: recording does not constitute, nor should it be construed, as

744
00:36:41,800 --> 00:36:45,719
Speaker 2: investment advice, investment recommendations, or a recommendation as to an

745
00:36:45,719 --> 00:36:48,920
Speaker 2: investment or other strategy. Bloomberg ANIF should not be considered

746
00:36:48,960 --> 00:36:52,280
Speaker 2: as information sufficient upon which to base an investment decision.

747
00:36:52,360 --> 00:36:55,359
Speaker 2: Neither Bloomberg Finance LP nor any of its affiliates makes

748
00:36:55,360 --> 00:36:59,080
Speaker 2: any representation or warranty as to the accuracy or completeness

749
00:36:59,120 --> 00:37:02,120
Speaker 2: of the information cantained in this recording, and any liability

750
00:37:02,160 --> 00:37:04,800
Speaker 2: as a result of this recording is expressly disclaimed