Speaker 1: Hi, I'm Dana Perkins, and you're listening to Switch on
Speaker 1: the b n F podcast. So today I speak with
Speaker 1: Andres Glusky, CEO of a S Corporation, and he shares
Speaker 1: his thoughts on innovation from an electrical power company's perspective.
Speaker 1: Can batteries be peakers? Is green hydrogen overhyped? And what
Speaker 1: has a S already done to bring their emissions down?
Speaker 1: And what are they innovating one for the future, in
Speaker 1: particular in regard to their net zero target. If you'd
Speaker 1: like to read some related b n F research, you
Speaker 1: can go to the Bloomberg terminal at BENF Go or
Speaker 1: to b NF dot com or a mobile app. Some
Speaker 1: examples of things that might be of interest to you
Speaker 1: include the corporate net zero state of play key trends
Speaker 1: or the corporate pp A deal tracker from or our
Speaker 1: first half energy storage market outlook, and lastly the Texas
Speaker 1: Power failure the supply story. As a reminder, B and
Speaker 1: the F does not provide investment or strategy advice, and
Speaker 1: we have a complete disclaimer at the end of the show.
Speaker 1: But now let's hear from Andres. Andres, thank you so
Speaker 1: much for joining us on Switched. On today. Can you
Speaker 1: tell me just a little bit about yourself and how
Speaker 1: you got involved in the power sector. Well, Dana, first,
Speaker 1: thanks for you very much for the invitation. It's a
Speaker 1: real honor to be on this podcast. I got into
Speaker 1: the electricity sector via telecoms. So I was in telecoms
Speaker 1: in the nineties. I found it a fascinating time because
Speaker 1: first you had digital networks, you had cellular networks, and
Speaker 1: then you had internet service providers. So I was lucky
Speaker 1: enough to be in the telecommunication sector in the nineties,
Speaker 1: which really underwent tremendous transformation. So from telecoms, I got
Speaker 1: into an electricity company. It was a multinational and that
Speaker 1: multinational was based in Venezuela, where I'm from, and it
Speaker 1: was bought by A S. And that's how I started
Speaker 1: working for A S in the year two thousand. So
Speaker 1: I find a lot of parallels between the sectors, between
Speaker 1: a telecom and the electricity sector. And I think what
Speaker 1: we're experiencing today in the electricity sector is most similar
Speaker 1: to what I lived in the nineties in the telecom sector.
Speaker 1: So it's a fascinating time to be in the electric sector.
Speaker 1: It's undergoing a transformation. The likes of which it hasn't
Speaker 1: had for a hundred years. Yes, so you're in this
Speaker 1: super fast moving, rapidly changing space. And I bet when
Speaker 1: you first got involved in the electricity sector it was
Speaker 1: pretty box standard and then things seem to have well,
Speaker 1: have changed quite a bit. So just reflecting back on
Speaker 1: even just the time since you became CEO, So you've
Speaker 1: been CEO for quite sometimes since, and what have you
Speaker 1: seen change really in how people not only look at
Speaker 1: this industry and what happens in this industry, but just
Speaker 1: even in the terminology because we're thinking that you know,
Speaker 1: a lot of companies right now talk about net zero
Speaker 1: targets and E s G has become a phrase that
Speaker 1: was you know, niche maybe when you first started, and
Speaker 1: is now ubiquitous across a lot of investors in the
Speaker 1: investment community. How is the terminology and really just kind
Speaker 1: of the speed of change changed, Well, it's changed dramatically.
Speaker 1: When I became CEO at the end of twenty eleven
Speaker 1: and we saw that this was going to change, we
Speaker 1: thought the sector was right for a change, but the
Speaker 1: technologies weren't really ready. So for example, we started really
Speaker 1: inventing I would say grid scale energy storage using lithium
Speaker 1: ion batteries for example. Back then, you know this this
Speaker 1: goes back even I started to CEO a little bit
Speaker 1: before I was CEO, working with people here like Chris Shelton,
Speaker 1: we saw that, you know, energy storage was very much
Speaker 1: needed if we were going to have a renewable revolution,
Speaker 1: because as we all know, renewables are mostly intermittent and
Speaker 1: that means that they're not available, so you really needed capacity.
Speaker 1: So how are you going to achieve zero carbon capacity?
Speaker 1: We had this view of where the sector could go.
Speaker 1: We also thought about digitalization, so we worked very hard
Speaker 1: to become very efficient, leading edge innovator, i would say
Speaker 1: from the very start, but the cost of the of
Speaker 1: renewables and many of the technologies weren't there. That that's
Speaker 1: really been I would say in the last four or
Speaker 1: five years, were renewable energy not capacity. Renewable energy really
Speaker 1: became cheapest in many locations. So the good thing is
Speaker 1: we had a great foundation to be able to incorporate
Speaker 1: all of the latest technologies when they became really cost effective.
Speaker 1: So we were, i'd like to say a little bit
Speaker 1: ahead of the curve now in terms of how the
Speaker 1: sector talked about it. It was interesting when I first started,
Speaker 1: you know, making large investments in renewables, investing in leading technologies,
Speaker 1: a lot of them through joint ventures. I did get
Speaker 1: some pushback you know from uh, you know, some investors,
Speaker 1: and I remember the term. One said you you really
Speaker 1: drank the kool aid, and I was saying, no, uh,
Speaker 1: you know, we think we're going to be able to
Speaker 1: make money in this and we think the transition will happen.
Speaker 1: So what we've done really is, I would say, be
Speaker 1: a leader in the transition. We have let's say, we've
Speaker 1: retired or sold more coal as a percentage of our
Speaker 1: fleet than anybody in the States. Uh. And in terms
Speaker 1: of absolute I think we're second, if not first. But
Speaker 1: we've also are one of the largest renewable developers among
Speaker 1: all the US companies. What we have done is shut
Speaker 1: one down in a responsible fashion and build the new.
Speaker 1: So now we find that we no longer get that pushback.
Speaker 1: I mean, I don't have anybody questioning it. And you know,
Speaker 1: our leadership, you'll say in in g matters is becoming
Speaker 1: more more commonplace. But you know, for example, we were
Speaker 1: the first large US company in our sector to come
Speaker 1: out with a report for the Task Force on Climate Disclosure.
Speaker 1: In we came out with the second report last year.
Speaker 1: We're part of the Dow Jones Sustainability Index. In terms
Speaker 1: of innovation, it's very interesting. The Edison Electric Institute, which
Speaker 1: is sort of the umbrella organization of the large electric
Speaker 1: companies in the US, gives two prices for innovation every year,
Speaker 1: one internationally and one domestically. We have won seven prizes
Speaker 1: in the last twelve years, so if you think about that,
Speaker 1: we've we've won a very high percentage. Nobody else comes
Speaker 1: close for the domestic or the international because you guys
Speaker 1: operate in both in North and South America. That's correct,
Speaker 1: we've won both. We've won domestic for the US and
Speaker 1: we've won international. We've been running up twice as well.
Speaker 1: So I think that, you know, this shows that this
Speaker 1: spirit of entrepreneurship, the spirit of innovation that the a
Speaker 1: S has somewhat unique, has given very good results. And
Speaker 1: you know, we have really moved radically into renewables. I'd
Speaker 1: say we're probably half half the way there. But at
Speaker 1: the same time, you know, are we be we were
Speaker 1: more profitable, you know, we're more profitable than we've ever been.
Speaker 1: So we haven't really given up on the economic and
Speaker 1: financial side to be able to make this transition. Well,
Speaker 1: so perhaps instead of drinking the cool lady saw the
Speaker 1: future and speaking of the future, So a s a
Speaker 1: net zero target, of when did you set that target?
Speaker 1: We have multiple targets and so one of the things
Speaker 1: that you know, a lot of people were setting sort
Speaker 1: of twenty fifty targets and we thought, well, that's a
Speaker 1: long times out and you know, the key executives aren't
Speaker 1: going to be here. One that happened, So we set
Speaker 1: a lot of shorter term goals. So we have set goals.
Speaker 1: We said goals, we said goals. So are I'd say
Speaker 1: our most dramatic is by we want to be net
Speaker 1: zero from electricity and then completely net zero by but
Speaker 1: we want to be below ten of our generation coming
Speaker 1: from coal, and we wanted to be below by. So
Speaker 1: we have you know, made you know, dramatic commitments, but
Speaker 1: you know, so far we've been overachieving them. So I
Speaker 1: think that we're on a good track to achieve these
Speaker 1: uh and we're making the necessary investments today, So we
Speaker 1: really aren't just making the investments. In many cases, we're
Speaker 1: kind of inventing inventing the market on the digital space,
Speaker 1: on the energy storage space, on the combination space. Uh.
Speaker 1: And that that's what's allowed us to move that quickly.
Speaker 1: About when do you think that a s IS portfolio
Speaker 1: will reach kind of peak emissions? Are you already drawing
Speaker 1: down on emissions now? Or is that thing that really
Speaker 1: will take some time in some investment into before you
Speaker 1: can reach that peak and then really start to come down. No. No,
Speaker 1: we've passed peak emissions. We're certainly on a decreasing So
Speaker 1: I've actually never you know, directly thought of that question,
Speaker 1: but it must have been like two or three years
Speaker 1: ago when we really started building giga watts of renewables
Speaker 1: and when we started shutting down giggle watts of of
Speaker 1: cold So you know, in the big picture, we've sold
Speaker 1: or retired about twelve gigawatts of coal and you know,
Speaker 1: some of it is still in the closing down phase
Speaker 1: because you can't do this overnight, but it will happen
Speaker 1: over the next couple of years. Uh. And we've built
Speaker 1: probably twelve gigga watts of renewables in that time period.
Speaker 1: But in addition, I would say we're doing a lot
Speaker 1: for climate change that doesn't really count in those numbers
Speaker 1: because today we're selling energy storage through our joint venture
Speaker 1: with Siemens called Fluence. We're now in twenty nine countries,
Speaker 1: and energy storage is really allowing people to put more
Speaker 1: renewables on the grid. You know, we also have a
Speaker 1: joint venture where we make prefabs holder a product called Maverick,
Speaker 1: and the joint ventures with a company called five b
Speaker 1: Uh and we're starting to roll that out, and so
Speaker 1: that allows you to double the energy density of solar farms,
Speaker 1: build them in a third of the time, and perhaps
Speaker 1: most importantly, it's hurricane resistant. We have projects which have survived,
Speaker 1: you know, very well to category four hurricanes and now
Speaker 1: we're testing it in category five tunnel tests. So we're
Speaker 1: doing a lot to help the transition to a sustainable
Speaker 1: energy future beyond just our own platform. And as we
Speaker 1: record today, there's actually a tropical storm headed for Florida,
Speaker 1: so definitely something that you know, many people are keeping
Speaker 1: an eye on. Let's expand on that. You know, climate
Speaker 1: change is often talked about in terms of global averages,
Speaker 1: but really re experience them in these extremes and as
Speaker 1: you referenced, hurricanes, and we have these high temperatures actually
Speaker 1: that happened recently in British Columbia, and then these incredibly
Speaker 1: low temperatures that happened just this last winter in Texas,
Speaker 1: and these have big implications for power companies. You're looking
Speaker 1: at this resilience within as you referenced within your solar investments.
Speaker 1: How do you think power companies can prepare for these
Speaker 1: extremes and how important is it for power companies to
Speaker 1: prepare for extremes when you just don't know how often
Speaker 1: these things will happen. Well, as they say, it's not
Speaker 1: just global warming, it's global weirding. So you will have
Speaker 1: more extremes in temperatures, you'll have changes in rainfall patterns
Speaker 1: as well. So we've looked at this very deeply, i'd say,
Speaker 1: when we came out with a second task of for
Speaker 1: you know, report on climate disclosure, the one we looked
Speaker 1: at two scenarios and one scenario was basically that the
Speaker 1: world doesn't do enough to reduce emissions and the temperature
Speaker 1: rises on average four and a half degree celsius. And
Speaker 1: the other scenario is that you know the world is
Speaker 1: successful and keeps the temperature increased below to degrees celsius.
Speaker 1: And what we found is that our business is resilient
Speaker 1: both in terms of its physical assets and in terms
Speaker 1: of financially in terms of where our exposure will be
Speaker 1: when these things occur. So we started that, we did
Speaker 1: it again, and you know, we're more robust in Uh,
Speaker 1: the scenarios have changed somewhat, but I feel confident of it. So,
Speaker 1: you know, one of the things that I think is
Speaker 1: very important is that we really be serious and look
Speaker 1: at the details. Because when Hurricane Maria hit, for example,
Speaker 1: our solar farms in the US Virgin Islands were completely destroyed.
Speaker 1: If you look at what happened to wind farms in
Speaker 1: Puerto Rico as well. You have to really have renewables
Speaker 1: that can resist these extremes. So I go back to,
Speaker 1: you know, the Maverick product of five B that's hurricane
Speaker 1: resistant solar. That's key. You know, it doesn't make sense
Speaker 1: to make people build something that will be destroyed. So
Speaker 1: one of the approaches that we've taken I think that's
Speaker 1: unique is that we think of ourselves as open source.
Speaker 1: So when we come up with new developments, whether it
Speaker 1: be energy storage, AI efficiency programs, whether it be you know,
Speaker 1: hurricane resistant solar, farms. We sell it to third parties
Speaker 1: because this is a global problem. So if we can
Speaker 1: get people to put these on their platforms, will advance
Speaker 1: renewables much faster than we try to just keep it
Speaker 1: as a competitive advantage for ourselves. That definitely does push
Speaker 1: things forward, because well, it pushes innovation. So you were
Speaker 1: talking about how a S really looked at batteries before
Speaker 1: they were probably as popular as they are today. And
Speaker 1: also a lot of these renewable technologies which now have
Speaker 1: very strong economics, but didn't always. So this puts some
Speaker 1: emphasis on technology an advancement. And of course there's advancing
Speaker 1: existing technologies and making them more efficient better. But then
Speaker 1: there's this concept of what don't we know? What haven't
Speaker 1: we invented yet? And that came up earlier this year.
Speaker 1: So Biden convene in this climate summit with world leaders,
Speaker 1: and one of the things that Secretary carry said at
Speaker 1: that summit was that many of the technologies that we
Speaker 1: need for a net zero future haven't been invented yet.
Speaker 1: Do you think that's true and if so, where do
Speaker 1: you see the technology development going. Well, I think it's
Speaker 1: true in the sense that we have to get to
Speaker 1: net zero in all sectors, not just electricity. So I
Speaker 1: think in the case of electricity that you will have
Speaker 1: specific problems, mostly of capacity in places where you know
Speaker 1: you don't have good win, you don't have good solar,
Speaker 1: you have great seasonal variability. So the truth is thinking
Speaker 1: of the US as a whole, you know, we probably
Speaker 1: know how to get to probably about carbon free. The
Speaker 1: last will be more difficult, and so the real question
Speaker 1: is how do you approach that, and against it's a
Speaker 1: question of doing it economically because you know you could
Speaker 1: do it, but the cost of electricity would would not
Speaker 1: be affordable, so that really there is that issue. There
Speaker 1: are technologies on the horizon energy storage using lithiumine batteries
Speaker 1: US keep getting cheaper, but it's not the ideal solution
Speaker 1: for for example, interseasonal variations, because it's it's terrific for
Speaker 1: even you know, I would say weekly variations, but it's
Speaker 1: not the right technology for interseasons. So you know, will
Speaker 1: it be green hydrogen, will it be modular nuclear, so
Speaker 1: on something? Some of these you know, we do need
Speaker 1: to really have the And again, the technology i'd say exists,
Speaker 1: the real question is can you scale it up? Is
Speaker 1: it cost efficient? Decisions have to be made. You know,
Speaker 1: are we going to except, for example, modular nuclear, because
Speaker 1: that would solve a lot of the problems of capacity.
Speaker 1: You know, those are the decisions that have to be made. Now.
Speaker 1: Do I think that we will get there? I do,
Speaker 1: But I do think that there's a whole lot we
Speaker 1: can do with today's existing technologies. It's a question of
Speaker 1: having the right regulations in place to incentivize using the
Speaker 1: best possible technology, because some of this is regulatory driven,
Speaker 1: so sometimes regulations are keeping back the optimal technologies. Now
Speaker 1: for a very short break, stay with us. So I
Speaker 1: love that you brought up green hydrogen because hydrogen is
Speaker 1: definitely a very buzzy topic at the moment. A lot
Speaker 1: of people want to know more about the potential of
Speaker 1: hydrogen maybe when the costs are really going to be
Speaker 1: at parody, and I think there are a lot of
Speaker 1: companies that really are thinking about this as a is
Speaker 1: a very viable solution for the future. So I'm maybe
Speaker 1: not necessarily about hydrogen um, but about any technology. If
Speaker 1: you had to pick, what is one energy transition technology
Speaker 1: that you feel is a bit overhyped at the moment. Well, actually,
Speaker 1: I do think it probably be green hydrogen. You know,
Speaker 1: we have today probably the first industrial scale project in
Speaker 1: Chile to produce green ammonia. It's a joint venture and
Speaker 1: you know, we're in the feasibility study and as you say,
Speaker 1: you know, it's really it can be produced. The question is,
Speaker 1: you know, the price point. But if successful, you know,
Speaker 1: this would be require almost a giggle watt of renewable
Speaker 1: energy to crack the water and produce the hydrogen, and
Speaker 1: then of course you have to transport it, and you know,
Speaker 1: can you use a fuel like green ammonia for the transportation.
Speaker 1: So we're actually I think leaving the pack in this.
Speaker 1: I'm not aware of any other truly industrial scale in
Speaker 1: this case. It's green ammonia, hydrogen based fuel that's at
Speaker 1: this stage of advancement that we're in. So you have
Speaker 1: a lot of projects that are you know, twenty megawatts
Speaker 1: or you know, pilot projects. So it gets hype like, well,
Speaker 1: this is the solution. Well, no, we have to be
Speaker 1: able to do, you know, make a million tons three
Speaker 1: hundred thousand tons a year from one facility to to
Speaker 1: really drive down the cost. So I think it's a
Speaker 1: little bit overhyped. Now. The other issue is Uh, you know,
Speaker 1: there's the electric sectors. I said, the real problem is capacity,
Speaker 1: uh and inter seasonal fluctuations. But then you have transportation.
Speaker 1: In the case of transportation, I do think that you know,
Speaker 1: for everyday commuting electric vehicles are you know, probably the solution.
Speaker 1: Now when you're talking about long hauls of trucking and
Speaker 1: the like, you know, that's where something like hydrogen comes in.
Speaker 1: Do we have the engines that don't need a starter fuel?
Speaker 1: Do we have you know, how are you going to
Speaker 1: transport it? You know, how are you going to make
Speaker 1: sure that the whole cycle makes sense? Because you know,
Speaker 1: you have to think of the whole cycle. You know,
Speaker 1: what is the energy loss when you produce the fuel,
Speaker 1: when you store it, when you transport it, and then
Speaker 1: you burn it again. You know, you have to look
Speaker 1: at the complete picture. So there's still a lot of
Speaker 1: things that have to happen. So I think some of
Speaker 1: the companies are over hyping it. If if we get
Speaker 1: this big project off, you know, by the end of
Speaker 1: this year, I think that's going to be really a
Speaker 1: milestone in the sector. So it's going to be very
Speaker 1: specifically you know, for like say ocean transportation, but a
Speaker 1: lot of it would go into actually fertilizer, I believe.
Speaker 1: So I have to ask, do you have an electric vehicle? Yes?
Speaker 1: I do, well, Yes, I do have a Tesla Model three.
Speaker 1: In addition, you know here at a Yes, we've been
Speaker 1: planting trees to offset our carbon emissions. It actually started
Speaker 1: by Roger Sant, who's who's one of our two founders.
Speaker 1: But you know today we've planted ten million trees. So
Speaker 1: even today we calculate our carbon footprint for by for travel,
Speaker 1: you know, because bart really jet travel is probably the
Speaker 1: most carbon intensive thing that any of us does. Uh,
Speaker 1: and we offset it by planting trees in Brazil. So yeah,
Speaker 1: we're very conscious about our own carbon footprint and trying
Speaker 1: to reduce it in all our installations. How much of
Speaker 1: an opportunity or potentially logistical challenge do you think electric
Speaker 1: vehicles are going to pose for the grid and for
Speaker 1: the electricity sector, because as you referenced, for long haul,
Speaker 1: even an electric vehicle, you've got to figure out where
Speaker 1: you're going to charge and where you're gonna take your breaks,
Speaker 1: and it may not always happen at home. Yes, that's
Speaker 1: a good question. Look, I think that first year you're
Speaker 1: gonna have the you know, for example, electrification of bus fleets.
Speaker 1: You know, that's going to require energy storage because it's
Speaker 1: basically either you have to upgrade the whole grid or
Speaker 1: or you're going to store up energy in certain you know,
Speaker 1: bus team posts. When you think of cars, you know,
Speaker 1: individually at the homes, they're kind of like mobile batteries,
Speaker 1: and so how do they fit into a smart grid.
Speaker 1: So one of the things that we're the leaders in
Speaker 1: quite frankly through a joint venture called Uplight, we are
Speaker 1: the leading energy efficiency services cloud based services provider, you know,
Speaker 1: just a sort of a data point where we're the biggest,
Speaker 1: I believe seller of nests in the country. We provide
Speaker 1: energy efficiency algorithms, etcetera to a d us electric and
Speaker 1: gas utilities. So I think this part of using AI
Speaker 1: and smart networks is part of the solution because the
Speaker 1: most let's say, carbon friendly solution is to use electricity
Speaker 1: more efficiently, and so we're approaching that as well. So
Speaker 1: the way we look at it, what is unique about
Speaker 1: AS is that we bring together all the technologies and
Speaker 1: we joint venture with people. We've been very effective at
Speaker 1: taking small startups and growing up to you know, unicorns valuations,
Speaker 1: you know, over a billion dollars, and the fact that
Speaker 1: we are pretty much open source, you know, we are
Speaker 1: sharing our technological advances with with everybody. So again, when
Speaker 1: we started using lithium ion batteries for energy storage, nobody
Speaker 1: else was and we had the first great scale units
Speaker 1: not only in the States, but you know in countries
Speaker 1: like you know, Germany, the UK, India, Philippines, and a
Speaker 1: lot of the work was, for example, with regulators to
Speaker 1: get that pass. So, you know, we could have taken
Speaker 1: an approach and saying, look, we're leading in this, let's
Speaker 1: use it to you know, win more power purchase agreements.
Speaker 1: But instead, you know, I think we took the right
Speaker 1: role of saying, okay, we will sell it at the
Speaker 1: same price to others because it will allow us to
Speaker 1: massiffice and drop the cost. What's one of the areas
Speaker 1: in particular in regard to storage, where you see there
Speaker 1: are being some real potential and one of the things
Speaker 1: that you're kind of maybe not experimenting, but trying out.
Speaker 1: I think one of the areas that excites me most
Speaker 1: is the application of energy storage to transmission, because transmission
Speaker 1: lines are built, you know, the whole line for the
Speaker 1: maximum use at any period of time. You know, it
Speaker 1: could be a couple of days of a month, and
Speaker 1: it could be a couple of hours during those days.
Speaker 1: So really they're overbuilt, you know the words, they're a
Speaker 1: little bit like you know, uh, you know, they have
Speaker 1: the you have the opportunity like for an uber or
Speaker 1: B and B Airbnb. So how can you make better
Speaker 1: use of that transmission? So if you put energy storage
Speaker 1: on it, you can basically run those same transmission line
Speaker 1: at of capacity all the time because you are storing
Speaker 1: it up in these banks and injecting it where you
Speaker 1: need it when you need it. Now, this is very
Speaker 1: important because we all talk about the renewables and how
Speaker 1: we're gonna build you know, thousands of giga lots of renewables,
Speaker 1: but those are not located where the energy demand is.
Speaker 1: So you're going to have to create transmission to get
Speaker 1: it across and that's going to take years for the permits,
Speaker 1: and you know, tens of billions of dollars to build
Speaker 1: that transmission. So the smart application of energy storage could
Speaker 1: drastically reduce the amount of money you have to invest
Speaker 1: in transmission. So right now we have through sements. We've
Speaker 1: talked to the German government and they're they've put out
Speaker 1: a request for proposals to use energy storage so that
Speaker 1: they can use the existing transmission lines two more efficiently
Speaker 1: bring energy from the North Sea down to the southeast
Speaker 1: of Germany where you have a lot of the industrial load. So, um,
Speaker 1: this is a great case where we can prove it. Uh.
Speaker 1: And then I think that the main restriction. I think
Speaker 1: the technical issues are will be solvable or you know,
Speaker 1: are solvable. It's just a question of getting the regulations
Speaker 1: to incentivize people to make better use of existing infrastructure
Speaker 1: and not necessarily building new infrastructure. And do you think
Speaker 1: that this could save a lot of money in the
Speaker 1: long run, because I know there's been a lot of
Speaker 1: talk about how transmission lines are really underinvested in Well, absolutely,
Speaker 1: I think time and money. Because so I'm not saying
Speaker 1: that this would solve all the transmission problem, because obviously
Speaker 1: you're gonna have renewables in areas where there's no transmission line,
Speaker 1: so you need to get a line out there. But
Speaker 1: what I'm saying is it it could definitely reduce the
Speaker 1: amount of investment needed, and it could reduce the time
Speaker 1: because you don't. You would require much less permiting. Since
Speaker 1: you know, energy storage doesn't have any emissions, it can
Speaker 1: be located anywhere. It could really optimize the transmission lines.
Speaker 1: And then you you add to that artificial intelligence to
Speaker 1: optimize the charging and the discharging. Um you're gonna have
Speaker 1: a much better system. So I have absolutely no doubt
Speaker 1: that this can save a lot of time and money.
Speaker 1: And do you see these as potentially being kind of
Speaker 1: companies unto themselves? And do you see them sitting under
Speaker 1: a lot of electricity providers as a part of their portfolio.
Speaker 1: A lot of the issues surrounding energy storage is who
Speaker 1: gets to own it? Is a degenerator, is a distributor?
Speaker 1: Until today, you know, for example, you didn't get the
Speaker 1: tax breaks the investment tax credit or a production tax
Speaker 1: credit that applies to solar or wind for standalone energy storage.
Speaker 1: So a lot of projects include energy storage with solar
Speaker 1: or wind that may or not be optimal. So it's
Speaker 1: you know, I think it's best just to say, look,
Speaker 1: all technologies have more or less the same subsidy and
Speaker 1: allow people to use the one that is best. You know,
Speaker 1: I think the meat key point will be, you know,
Speaker 1: regulators should allow as many people as possible to have them.
Speaker 1: They should allow utilities to rate base them. And I
Speaker 1: think that you know, you shouldn't artificially say no only
Speaker 1: generators can have it, our only distribution companies can have it.
Speaker 1: I think make it widely available to all. So a S,
Speaker 1: I would definitely say, see yourself as innovators and are
Speaker 1: looking at opportunities to change, grow, improve the electricity sector
Speaker 1: makes you fit in quite well in Silicon Valley, which
Speaker 1: then brings me to Google. So there was a recent
Speaker 1: announcement that a S would be providing electricity to Google,
Speaker 1: providing green electricity to Google. Can you tell me a
Speaker 1: little bit more about that relationship? That was a very interesting,
Speaker 1: let's say process, and it really was a partnership because
Speaker 1: this wasn't like a just the response to you know,
Speaker 1: our FP or a bid. It was really we went
Speaker 1: to Google and we said, look, we have these capabilities.
Speaker 1: You want renewable energy. But what is happening is you know,
Speaker 1: you have to cut through really what I would say
Speaker 1: reality and a little bit of hype. A lot of
Speaker 1: people say they're green, but the truth is they overpurchase
Speaker 1: renewables certain hours and certain hours are taking non renewable
Speaker 1: energy from the grid. So what we proposed to Google
Speaker 1: was for their data centers here in Virginia was to
Speaker 1: have seven carbon free energy and that we would provide
Speaker 1: that for ten years. So that is very complex optimization
Speaker 1: problem because like what is the optimal mix of solar, wind,
Speaker 1: hydro and energy storage. Because you can do it, but
Speaker 1: the question is how can you do it cost effectively?
Speaker 1: So it takes a tremendous amount of you know, mathematical
Speaker 1: modeling takes a tremendous amount of knowing all the different
Speaker 1: energy sources. So we co developed this, I would say
Speaker 1: to a large degree, and really what came out optimal
Speaker 1: was Okay, we can net this on an hourly basis,
Speaker 1: So that's unique. Nobody nets this on an hourly basis.
Speaker 1: Usually they netted on a yearly basis. Now it's not
Speaker 1: a carbon free, it's carbon free because quite frankly, that
Speaker 1: was the price point that they wanted. Now this we are,
Speaker 1: you know, in talks with other technology companies to provide
Speaker 1: similar products. We were not only the first, but I
Speaker 1: still think we're the only ones who can really provide it,
Speaker 1: who really have the modeling capabilities today to do this,
Speaker 1: so it wasn't just you know, giving them clean energy,
Speaker 1: was giving them something new. And that's what we're really,
Speaker 1: I think most interested in doing. You know, out in Kauai,
Speaker 1: for example, we did the first really sort of DC
Speaker 1: paired solar energy storage that would give them baseload capabilities,
Speaker 1: So basically saying, look, you want to have solar power
Speaker 1: around the clock, how can you do that efficiently? And
Speaker 1: allowed them to retire a lot of their diesel plans.
Speaker 1: So that's what's what we're about. But we work with
Speaker 1: the clients. We don't we don't just come and say,
Speaker 1: look what you need is X. You know, we come
Speaker 1: and say, look, this is an interesting idea of what
Speaker 1: do you want. So if we have other contracts that
Speaker 1: are similar of you know, sort of twenty four seven
Speaker 1: carbon free energy with other firms, you know, it might
Speaker 1: be slightly different than what we did with Google, but
Speaker 1: it's it's a very good partnership and you know, we
Speaker 1: um you know, we're very happy we're working on several
Speaker 1: things with them and that they chose us as as
Speaker 1: a counterpart too to work these things. I certainly hope
Speaker 1: you got to visit the Kawaii project. I haven't and
Speaker 1: I've never been to Hawaii, but we have on the
Speaker 1: island of Kauai. We worked with the Kauai Island Utility
Speaker 1: Cooperative and you know, we did that solar energy storage
Speaker 1: sort of baseload project. The military very interested in it
Speaker 1: because the weakest link in the supply chain for them
Speaker 1: was was the Navy having to have ship diesel to
Speaker 1: say missile plants out in the Pacific. So if you
Speaker 1: could do solar plus storage, that makes that missile base
Speaker 1: more robust. So we're working on something with them. We're
Speaker 1: also doing another one now also in Kauai with the
Speaker 1: k I U S which is combining pump hydrome, wind,
Speaker 1: solar and energy storage. And you know, we have been
Speaker 1: very active in Hawaii, not only with k I you see,
Speaker 1: but also with HICO helping them to become carbon free
Speaker 1: and we've done that building solar wind energy storage. So
Speaker 1: these these partnerships are exactly what what we think is
Speaker 1: our sweet spot. You know, it's it's not selling a
Speaker 1: commoditized product, but it's really creating the most value for
Speaker 1: our clients through combinations of technology, inventing technology, and you know,
Speaker 1: I think this is a very good place to be today.
Speaker 1: But I love that you brought up pump hydro because
Speaker 1: that's one of those technologies that's been around for a
Speaker 1: while as a storage technology and is pretty effective. While
Speaker 1: you referenced this at the beginning of today's conversation, you
Speaker 1: talk about how batteries are really useful for helping with
Speaker 1: intermittency on the daily or maybe even a weekly basis.
Speaker 1: But then there's the seasonality issue. And if you're going
Speaker 1: to be supplying seven, three and sixty five days energy,
Speaker 1: what are the technologies where you see the most potential
Speaker 1: for us to really work on this seasonality issue. For example,
Speaker 1: pump hydros is great where you already have a reservoir
Speaker 1: and you know you can you know, optimize it now. Now,
Speaker 1: the truth is, for you know, shorter term fluctuations, it's
Speaker 1: much more efficient to store electrons than be pumping molecules
Speaker 1: up and down. But again, it you know, a reservoir
Speaker 1: does provide interseasonal storage. You could also do that again
Speaker 1: with a h'd gin fuel. That's where I think hydrogen
Speaker 1: could be now. Again, it would be a hydrogen fuel
Speaker 1: that you don't have to keep cry you know, so
Speaker 1: cryogenically because you waste a lot of energy on that.
Speaker 1: So I think that you know that part, you know
Speaker 1: that there are various ways that society can go. It
Speaker 1: has to take to take a decision. And then then
Speaker 1: decision really is, you know, are we going to invest
Speaker 1: in in hydrogen based fuels? Are you going to have
Speaker 1: to subsidize it because it's it's not that cost effective
Speaker 1: if you have to store it genically for long periods
Speaker 1: of time, or do we go to something like modularor
Speaker 1: nuclear because nuclear does is you know, is baseload and
Speaker 1: nuclear you know, would solve that problem to a large extent,
Speaker 1: but you know, there's a lot of pushback uh nimby.
Speaker 1: Nobody wants nuclear plants in their neighborhood. So, you know,
Speaker 1: those are the questions. I think that the Secretary Kerry
Speaker 1: was really saying, you know, we have to what are
Speaker 1: the technologies that they're going to close that gap? Do
Speaker 1: you think a yes is closed on doing modular nuclear? No?
Speaker 1: Quite for any of that. We've we've always shied away
Speaker 1: from from nuclear because we think that uh it um
Speaker 1: there's a lot of resistance. It's going to be very
Speaker 1: hard to um to get the permity, certainly for the
Speaker 1: first ones. Uh on the other hand, you know, it's
Speaker 1: it's the large traditional nuclear plants have had tremendous cost overruns.
Speaker 1: It's been very expensive to do um and some of
Speaker 1: the older nuclear plants are not economic. So, you know,
Speaker 1: having said that, you know, nuclear is an important element
Speaker 1: to keep carbon free uh baseload energy. So again that's
Speaker 1: that's an area that we've decided not to not to enter.
Speaker 1: I mentioned that just because I think that it might
Speaker 1: be part of the solution to get to net zero.
Speaker 1: Is there anything else that you think that I'd missed
Speaker 1: that you want to discuss. I think just you know,
Speaker 1: what an exciting time it is to be in the
Speaker 1: sector and the electricity sector, and how in terms of
Speaker 1: attracting talent, there's never been a better time because the
Speaker 1: young generation is very mission driven and they want to
Speaker 1: make a positive difference, and I think that, you know,
Speaker 1: many of them feel that the renewable sector, the energy
Speaker 1: sector in total, is a place that they can make
Speaker 1: that difference and get meeting. So it's an interesting time
Speaker 1: to to be in the sector. And I think it's
Speaker 1: you know, we're just starting this this traumatic change and
Speaker 1: it's going to involve not only building carbon free energy,
Speaker 1: but also changing how we use it. You know, don't
Speaker 1: underestimate the use of AI and digital and smart grids
Speaker 1: to optimize our energy use well, and you talk about
Speaker 1: attracting talent, so you know, when we were talking about
Speaker 1: the targets, when I think of targets, I think about
Speaker 1: the fact that my kids are going to be roughly
Speaker 1: the age I am now when that happens. Um so
Speaker 1: on the way there, we need to attract as many
Speaker 1: people into solving these solutions as possible, and is a
Speaker 1: really exciting time. What are the skills that you look
Speaker 1: for in order to be in the electricity sector? This
Speaker 1: is obviously a space that has attracted engineers all along,
Speaker 1: but what are the other things that you think are
Speaker 1: really required in order to make you competitive today's day
Speaker 1: and age. What we're really looking for, I would say,
Speaker 1: is people who have great intellectual curiosity because you're going
Speaker 1: to have to be constantly learning things. And also people
Speaker 1: who are able to I would say, have the open
Speaker 1: minded listen to the clients to find innovative solutions. So
Speaker 1: it's not just a matter of you know, being the
Speaker 1: best engineer, because if you sort of stick to tried
Speaker 1: and true solutions, that's not what's required, is really required,
Speaker 1: is how can I come up with something new. It
Speaker 1: doesn't have to be totally, but it really could be
Speaker 1: how you integrate things, And that's what we're doing. You know,
Speaker 1: we really feel that we have this suite of capabilities
Speaker 1: and the very best developers were having really they're able
Speaker 1: to bring these to bear to solve the client's problem.
Speaker 1: So decarbonization, it's you'd reference that we are going to
Speaker 1: need to well that the energy transition can't do at all,
Speaker 1: and that there are a lot of areas, including some
Speaker 1: of the really hard to abate sectors, that are going
Speaker 1: to need to turn if we want to avoid not
Speaker 1: just one point five or two, but higher temperature warming
Speaker 1: on this planet. So I once heard Christiana Figures. She
Speaker 1: said that the energy transition is already happening and it
Speaker 1: has so much momentum that we really do need to
Speaker 1: focus on a lot of these other areas like agriculture
Speaker 1: that just don't have the wealth of solutions right now.
Speaker 1: So outside of the electricity space, which you know so well,
Speaker 1: what are the areas that you're watching most closely when
Speaker 1: it comes to decarbonization, We think the next one really
Speaker 1: would be transportation and they're going to be very intertwined.
Speaker 1: As I said, electric vehicles are in a sense mobile batteries,
Speaker 1: and they have to become part of the smart grid
Speaker 1: in terms of how we manage it. So I would
Speaker 1: say transportation. Now there are some areas, like say aircraft,
Speaker 1: long haul aircraft, which will be more difficult. I mean
Speaker 1: there you might have to go to some sort of
Speaker 1: synthetic fuel or something that the whole processes is in
Speaker 1: the zero. I think in terms of agriculture, there are
Speaker 1: many things that can be done to make sure that
Speaker 1: it's as sustainable as as possible. Now, you know, the
Speaker 1: reality is that the world can feed itself today. You know,
Speaker 1: we didn't fall into the sort of club of Rome
Speaker 1: Malthusian trap. But it has a lot to do with
Speaker 1: nitrogen and the fact that nitrogen based fertilizers. So there's
Speaker 1: a whole point now I think of thinking how can
Speaker 1: you make agriculture more sustainable, And it's not only a
Speaker 1: question of methane and CEO two emissions, but it's also
Speaker 1: an issue of you know, making sure that the soil
Speaker 1: has all the nutrients and capability to for you know,
Speaker 1: long term farming. So agriculture I think will probably be
Speaker 1: the most difficult area. But I really like that she
Speaker 1: brings that up because a lot of people, I think
Speaker 1: rather simplistically of the problem and just say, well, if
Speaker 1: we band burning coal, problems solved, and the truth is no,
Speaker 1: it's unfortunately, it's going to take an all around effort
Speaker 1: and who knows. I mean, maybe we come up with
Speaker 1: an efficient way of capturing carbon from the atmosphere that
Speaker 1: might be needed, but you know right now there's no
Speaker 1: cost efficient technology to do that. Well, on that note,
Speaker 1: here's to innovation and you know, hoping to see continued
Speaker 1: innovation from a S and then just across the electricity industry.
Speaker 1: So thank you very much for your time and for
Speaker 1: sharing your insights today regarding where you see things now
Speaker 1: and how you see things changing in the future. Thanks Andreis,
Speaker 1: Thank you very much. Data. It was a real pleasure.
Speaker 1: This week's show was produced by Ava Gonzalezi Slaw and
Speaker 1: edited by Rex Warner of grace Stok Media. Bloomberg an
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