Latest / Saving the World From Bad Ideas / Bad Idea #50 "clean energy is too expensive for Africa" with Daan Walter

Transcript

Bad Idea #50 "clean energy is too expensive for Africa" with Daan Walter · Saving the World From Bad Ideas

• 0:00
  First and foremost, Europe and Northern United States, North
• 0:03
  America are just in a unique spot in the globe.
• 0:06
  So we will always have less solar potential than the rest of
• 0:09
  the world. If you live in a country like
• 0:11
  Mexico or India or for that matter Kenya or Vietnam or
• 0:16
  Cambodia, you have much less seasonal variation in your solar
• 0:19
  generation. You have much more potential,
• 0:21
  much more solar coming to you in a day.
• 0:23
  So your panels out, your panels can produce much more like a
• 0:26
  country like India. I think it was like more than
• 0:28
  90% of the Indian you get power just with solar and batteries
• 0:32
  without much overproduction at all.
• 0:34
  And this could be achievable for a price that is comparable
• 0:38
  basically the same as the current electricity prices.
• 0:41
  So you can basically take over the whole energy grid, 9090%
• 0:45
  plus of the Indian electricity grid with batteries and solar.
• 0:48
  What are you already seeing due to the the the Iran war and the
• 0:52
  Strate of hormones crisis? Is this is this going to
• 0:54
  supercharge the Electrotech revolution or is it just a blip?
• 0:57
  Very much a turbocharge. I think the best way to conceive
• 1:00
  of this energy crisis, which by the way, we're not making a big
• 1:03
  enough deal of at all around the world, this is really, really
• 1:06
  bad. What's happening?
• 1:08
  It's the biggest energy crisis. It's bigger than the 70s energy
• 1:11
  crisis. Welcome to saving the world from
• 1:15
  bad ideas. I'm Mark Linus and I've had a
• 1:17
  few bad ideas in my time. I used to go out in the night
• 1:21
  time to destroy GMO crops and I also posed nuclear power.
• 1:24
  But then when I looked at the science I found I got it wrong.
• 1:27
  Oops. I've learned the hard way that
• 1:28
  none of us are right all the time.
• 1:30
  So now I'm here to challenge the assumptions that we all too
• 1:33
  often take for granted because the future depends on us getting
• 1:36
  it right. Hello.
• 1:37
  My guest today is Dan Walter of Ember, where he's a principal
• 1:42
  and he's got a pretty amazing CV, which I'm just going to read
• 1:46
  out a couple of bits of. You were a principal at Rocky
• 1:49
  Mountain in Sudan and LED global energy strategy research there
• 1:53
  and batteries efficiency and mineral demand.
• 1:55
  For that, you were at McKinsey and you hold a graduate degree
• 1:57
  in nuclear energy and a graduate degree in theoretical physics,
• 2:00
  both from the University of Cambridge.
• 2:02
  That's, that's a pretty impressive CV for anyone.
• 2:05
  So welcome to the show. Thanks.
• 2:07
  Thanks for having me Mark, glad to be here.
• 2:09
  I only found out five minutes ago that you had a degree in
• 2:11
  nuclear energy when I, when I was reading up for this.
• 2:14
  And I'm, I'm quite keen to talk about that a bit bit more
• 2:17
  further down the line. But we have to start by thinking
• 2:20
  about what our bad idea is going to be.
• 2:23
  And perhaps, given the focus I'd like us to take in in this
• 2:27
  episode, the bad idea is that clean energy is too expensive
• 2:32
  for developing countries, perhaps because that's certainly
• 2:34
  been the case for a long period of time.
• 2:37
  And you now have the data to show that it's not the case any
• 2:41
  longer, right? Exactly, Mark, I think it's a
• 2:43
  very bad idea as an understandably bad idea because
• 2:47
  it was a true and A and a good idea to some extent 5 to 10
• 2:51
  years ago. And it's one of those things
• 2:53
  that because the pace of the energy transition around the
• 2:56
  world, the pace at which these new electric technologies are
• 3:00
  coming down and cost is very easy to make this mistake.
• 3:03
  And so this is one of those things where that you hear a
• 3:06
  lot, right, renewables are too expensive, electric cars too
• 3:08
  expensive. And the answer is not you're
• 3:10
  wrong. The answer is you were right
• 3:12
  five years ago. And that I think is the, I think
• 3:15
  that the Codswell, this, this big bad idea right now is the
• 3:18
  the cause of it is that people don't update their priors often
• 3:21
  enough to understand how fast this transition is going.
• 3:24
  And that has given way to this sort of myth.
• 3:26
  That's or Rob myth is not the right word.
• 3:28
  This idea that electrotech is still too expensive to adopt,
• 3:32
  and quite the opposite is true, which is exactly why we're
• 3:35
  currently seeing even the poorest countries in the world
• 3:37
  and the poorest families within countries in the world actually
• 3:40
  adopting electrotech, because it's the cheapest option now,
• 3:43
  not the most expensive. Tell us what you mean by
• 3:45
  electrotech. Is that a term that you've
• 3:47
  coined yourselves, Amber? Yes, yeah.
• 3:48
  So we, this was a a term about two years ago.
• 3:52
  We sat around the table and we kind of wondered like, what is
• 3:55
  like the simplest way to explain what is happening right now in
• 3:58
  the world? We, we try to do this with a
• 4:00
  strategic resource as much as we can kind of apply Occam's razor
• 4:03
  to really say like, how can we explain what's happening in the
• 4:05
  most simple terms? And a lot of people have been
• 4:07
  talking about clean tech and as had we like this generation of
• 4:10
  clean tech that's coming in. But if you look at that sort of
• 4:13
  group of technologies that we collectively call clean tech,
• 4:15
  you look at which technology is actually being, which are
• 4:18
  actually successful and rapidly scaling and rapidly coming down
• 4:21
  in cost. It is wind and solar, there's
• 4:24
  batteries, it is like new grid enhancing technologies.
• 4:26
  It's electric vehicles, it is heat pumps, it is industrial
• 4:30
  electrification and automation technologies.
• 4:33
  And so we start kind of, you know, saying all these
• 4:35
  technologies, you start realizing that there's a
• 4:36
  magnetic center around which all all of those sort of gravitate.
• 4:39
  And that is of course, electricity.
• 4:42
  These are all electric technologies.
• 4:43
  And that's why we came up with this term of electrotech, this
• 4:45
  new generation of ways to supply electricity, connect that to
• 4:50
  demand with batteries and, and grids and software and demand
• 4:54
  side technology like electric vehicles and heat pumps.
• 4:56
  And that's what we call there for the, that's what we're
• 4:58
  talking about an electrotech revolution happening across the
• 5:00
  world rather than a clean tech surge.
• 5:03
  Because if you really look at within the bucket of clean tech,
• 5:05
  the most successful buckets are all electric.
• 5:07
  And that's why we keep talking about this for this electrotech
• 5:09
  as the as the real sort of sharp term to identify what's
• 5:13
  happening. I.
• 5:13
  Was particularly interested to have this conversation now
• 5:16
  because as you know, I'm science advisor with the Climate
• 5:19
  Vulnerable Forum and that's an alliance of 74 developing
• 5:22
  countries, the most climate vulnerable countries in the
• 5:24
  world, representing the world's poorest people, about 1.8
• 5:28
  billion people represented by the Climate Vulnerable Forum.
• 5:30
  And you've done some collaborative work with the CVF
• 5:34
  looking at the pace of electrotech, the electrotech
• 5:37
  transition, the revolution, whatever you want to call it in
• 5:39
  these countries. Give us a quick rundown of your
• 5:42
  of your top findings. So top finding, I think top
• 5:45
  finding of the top findings is it's already happening and it's
• 5:48
  happening actually much faster than most people think.
• 5:51
  In the same way that people have not update their priors on how
• 5:55
  cheap Electrotech is becoming, they, they, they have also not
• 5:58
  yet update their priors of where exactly the revolution is taking
• 6:02
  place. There's still this attitude that
• 6:04
  the electrotech revolution is something driven by rich
• 6:06
  economies and that's poorer countries and CVF nations.
• 6:10
  A lot of them fall under the lower GDP per capita segments
• 6:13
  the world that they would kind of be slow to adopt.
• 6:16
  They would wait until the West would kind of be complete with
• 6:19
  its transition and kind of hobble along to follow up.
• 6:21
  And that's not at all what's happening.
• 6:22
  We're actually seeing across these economies in the CVS with
• 6:25
  which of course span Latin America, Africa, Southeast Asia,
• 6:29
  South Asia, they're actually leapfrogging many of the West.
• 6:33
  We're seeing that a fair amount, like over 50% as I've overtake
• 6:37
  United States in terms of solar uptake, like percentage of
• 6:40
  electricity that they're getting from solar as we're getting
• 6:43
  across the also around 50% are actually more electrified as
• 6:47
  economies than the US economy is.
• 6:49
  So they get a larger share of their electricity from of their
• 6:52
  energy or final energy from electricity.
• 6:55
  And this is kind of numbers that typically if you read the
• 6:57
  newspaper, you wouldn't believe that that's the case because the
• 7:00
  priors that we have from the West, sort of Western street
• 7:02
  light that we have when we look at the energy transition is
• 7:05
  surely we as the West are ahead. And can you only imagine how
• 7:08
  hard this is if you are a country like Vietnam or like
• 7:12
  Kenya trying to kind, you know, climb this development ladder
• 7:16
  now? But the opposite is kind of
• 7:17
  true. Opposite is true, which is these
• 7:19
  countries are actually very rapidly racing ahead to adopt
• 7:22
  these new technologies, which is, of course, related to the
• 7:24
  fact that these technologies are now getting so cheap.
• 7:27
  And I think that's the main sort of data finding that we we put
• 7:30
  out there in the report is update your priors.
• 7:33
  It's happening actually really fast in these developing
• 7:35
  economies, much faster than you think.
• 7:38
  And, and it's not happening because all of a sudden
• 7:40
  everyone's terribly concerned about climate change.
• 7:42
  In fact, the opposite trend has been the case for the last year
• 7:45
  or two at least. So this is basically happening
• 7:48
  all because of economics, right? Exactly.
• 7:50
  So in our in our larger Electrotech revolution report,
• 7:53
  we identify three key drivers of the Electrotech revolution
• 7:57
  across the world, but also of course in these countries.
• 8:00
  And none, none of those three are explicitly climate.
• 8:02
  We say it's, it's simple physics.
• 8:05
  These systems are more efficient.
• 8:06
  It's simpler to set up and less material intensive and less
• 8:10
  energy intensive to set up an electrotech system.
• 8:13
  It is economics for sure. These technologies get cheaper
• 8:15
  and cheaper over time. And now they've crossed this
• 8:18
  across tipping point where they become cheaper than the income
• 8:20
  and fossil technology. So therefore, of course, if you
• 8:23
  have a low budget, you're going to pick electrotech over fossil
• 8:26
  tech because you have a smaller budget.
• 8:28
  And the third one is geopolitics.
• 8:30
  And that, of course, has been on full display again over the past
• 8:32
  couple of weeks. The energy security risk in the
• 8:35
  world is real. And people are willing, even if
• 8:37
  they would pay a premium, they would like to pay a premium for
• 8:40
  secure energy over anything else.
• 8:42
  And it turns out that's, you know, every country in the world
• 8:44
  has a small Saudi Arabia worth of energy falling from the skies
• 8:48
  on them every year. All they need to do is put a
• 8:50
  panel up towards the sky and capture it.
• 8:53
  And that energy is fully secure to them.
• 8:55
  Or as was it Bill McKibben said, like the sunlight travels
• 8:58
  93,000,000 miles towards the earth, but none of it is through
• 9:01
  the Straits of Hormuz. And so no matter what closure
• 9:04
  there is around the world or what kind of trade bottlenecks
• 9:07
  there are, you can keep operating your solar panel if
• 9:10
  you want. You have it on your roof.
• 9:10
  And that's of course, a tremendous amount of
• 9:12
  independence and geopolitical security that you get from that.
• 9:15
  And it's, I think those three drivers and of course, for
• 9:18
  emerging economies primarily those last two drivers of
• 9:21
  economics make it actually cheap and affordable for your people
• 9:24
  to move towards this new energy system.
• 9:26
  And 2nd, the security that you get from that and the untangling
• 9:30
  from the increasingly chaotic fossil markets that can secure a
• 9:34
  development pathway that's much more stable than the fossil one
• 9:37
  ever was. Yeah, I mean, one of the
• 9:39
  arguments for at least still having fossil fuels was that
• 9:44
  550, you'll tell me the exact number million people still
• 9:47
  don't have any access to electricity at all, and
• 9:50
  therefore insisting that they have the more expensive clean
• 9:54
  options would keep them off the grid and keep them in the dark.
• 9:56
  Obviously, that's no longer the case.
• 9:57
  From what? From what you're telling us, but
• 10:00
  how rapidly can we expect energy or electricity access to improve
• 10:05
  the people in in developing countries, particularly in the
• 10:07
  CVF who are currently excluded from from modern energy
• 10:10
  services? So there are three drivers why
• 10:13
  we would expect the the already rapid change over the past
• 10:16
  couple of years to accelerate right now and they kind of sit
• 10:19
  across the three dimensions of supply a demand and the
• 10:23
  connections in between. So on the supply side, we have
• 10:26
  this very unique moment where the upfront cost of buying an
• 10:31
  electric vehicle or the upfront cost of buying a solar panel per
• 10:34
  MW hour of electricity that you can get out of it is matching
• 10:38
  the incumbent fossil power. So an electric vehicle, an
• 10:41
  electric moped is becoming equally expensive, if not
• 10:44
  cheaper to buy upfront than a diesel car.
• 10:47
  And of course, afterwards it's cheaper to run a solar panel.
• 10:50
  It actually delivers per per dollar invested is cheaper than
• 10:54
  a coal plant. And so this is a huge moment for
• 10:57
  emerging economies because if you're very capital constrained
• 10:59
  like many of the emerging economies are and you're
• 11:01
  borrowing costs are very, very high in these economies, right.
• 11:04
  We're talking about 1415, sometimes even 20% borrowing
• 11:08
  cost. You don't really care about full
• 11:10
  lifetime costs of technology. You care about what is the money
• 11:13
  that I need to spend today? Because that's what's going to
• 11:16
  determine the cheapest option of the money out of the, the, the
• 11:18
  cost of the technology today is going to determine what I buy.
• 11:21
  And that of course has driven even as wind and soul on
• 11:24
  electric vehicles on a total lifetime basis became cheaper
• 11:28
  than fossil fuels already a couple of years ago.
• 11:30
  That didn't do much good for emerging economies because you
• 11:34
  don't care about a lifetime cost.
• 11:35
  I don't care if this car pays back in 5-6 years from now.
• 11:38
  I only have many thousand or $15,000 to spend right now.
• 11:41
  That's all I can do on a car. So I'm going to buy whatever is
• 11:44
  cheapest that can get me driving out of the shop right now.
• 11:47
  That's a huge inversion because that has just flipped and it has
• 11:50
  flipped over the past, I would almost say like 18 months, two
• 11:53
  years that that has conclusively flipped.
• 11:55
  And we should expect that to be, that's flipping to happen in
• 11:57
  more and more technologies and more segments of cars and more
• 12:00
  segments of a generation over the next year.
• 12:03
  So that's all the supplies that suddenly having a small budget
• 12:06
  forces you note down the fossil path like it used to, but it
• 12:08
  pushes you down the electrotech path.
• 12:10
  And then the second thing is for the particularly for people that
• 12:13
  were unconnected to the grades or had poor connections to the
• 12:16
  grades so far there is a, the, the reason that many people did
• 12:20
  not get connected to grid electricity is because they
• 12:23
  simply lived far from the grid, hard to navigate terrain, very
• 12:27
  expensive to connect. Particularly if you have for
• 12:29
  instance, a village of 20 megawatts, like an average
• 12:32
  village that is far away from the existing grid.
• 12:35
  You could easily double if not triple your electricity price to
• 12:38
  get that delivered from a centralized power plant that
• 12:41
  needs to go kilometers through forest or Savannah or rough
• 12:44
  territories and cliffs, etcetera to get to your village.
• 12:47
  And that's what's basically one of the key reasons by many
• 12:49
  people in the world, like the the the 700 million people in
• 12:53
  the world currently are unconnected to electricity's one
• 12:55
  of the main contributors. Now this solar revolution
• 12:59
  changes that very fundamentally because the sun comes by every
• 13:02
  village in the sky every 24 hours.
• 13:04
  And again, you need to hold up a panel and maybe put a battery
• 13:07
  behind it so you can keep some of that electricity for the
• 13:09
  evening time. But then you have a very
• 13:11
  reliable source of electricity that you can run on more off
• 13:14
  grids rather than connected to the grid.
• 13:16
  And I mean, we're talking about this off grid solution in the
• 13:19
  development space, of course, for decades, right?
• 13:22
  And this has always been a promise.
• 13:23
  The thing is now again, it's become cheaper now.
• 13:26
  Like even if we look at 2019 costs of battery and solar,
• 13:30
  maybe connecting a village that would be like 5-6 hundred
• 13:33
  kilometers away from the grids, that could still make sense.
• 13:35
  But it would still also be very expensive for the people that
• 13:38
  village to also get the solar plus batteries.
• 13:40
  But because costs have come down so much since then over the past
• 13:43
  seven years and since 2019 today, because costs have come
• 13:47
  down so much, it's actually very competitive right now to just do
• 13:51
  this off grade model batteries have become very cheap.
• 13:53
  So you can put a lot of batteries behind your panels and
• 13:55
  save the power for the evening time.
• 13:57
  And so no, now that's, that's sort of this break even cost at
• 14:01
  which you would opt to do decentral rather than getting a
• 14:04
  grid connection have moved from like 4 or 500 kilometers to now
• 14:08
  maybe 4050 kilometers. So that basically means that
• 14:11
  most people that live or they're from the grid can easily now get
• 14:16
  connected. And that connection is great
• 14:18
  because, and that's the last component of this on the demand
• 14:20
  side of this electric technologies like the end use
• 14:23
  technologies from electric mopeds, but also just like
• 14:25
  dishwashers and and phones and laptops and TV's, all of these
• 14:30
  electric technology hands your life with electricity have also
• 14:34
  become cheaper in these economies.
• 14:36
  And so you basically get across the sort of across the value
• 14:39
  chain of electricity on the supply chart aside, you have
• 14:42
  this CapEx parity moment. Things have become cheaper on
• 14:45
  the connection side as you no longer are dependent on long
• 14:48
  laying down long power lines to get connected.
• 14:51
  And on the demand side, you get all these technologies that can
• 14:53
  enhance your life, all these electric technologies becoming
• 14:55
  cheaper as well. And that's concoction of those 3
• 14:59
  is causing this sort of explosive mixture in these
• 15:02
  developing economies. So how close are we to batteries
• 15:06
  being able to deliver solar power 24 hours a day?
• 15:10
  I mean, I've got, I've got I think 6 core hours of batteries
• 15:13
  here and I'm in the UK, but I'm not seeing the solar solar that
• 15:18
  I have from my panels last into past like 8:00 PM in the
• 15:21
  evening. So the other of having 24 hours
• 15:23
  worth you'd need, well, you need a bit more solar and I also need
• 15:26
  quite a lot more batteries and that would cost quite a lot.
• 15:28
  So are we close to price parity for literally solar as base
• 15:33
  loads to give 24 hour power now in in certain places?
• 15:36
  Yes, we're getting, we're getting very close.
• 15:38
  I mean, so we, we, we published a bit of work as this Ember over
• 15:41
  the past, over the past year on how close we're actually
• 15:43
  getting. You can get basically 80 to 90%
• 15:47
  uptime solar plus battery for around 100, a $120.00 per MW
• 15:52
  hour. Just for reference, a similar
• 15:54
  kind of like coal plant or gas plant would cost something
• 15:58
  around that as well. So we're roughly A parity there.
• 16:01
  We're seeing project like Francis in the UAE, this famous
• 16:04
  project by Masdar where you got 99.5% uptime I believe, which
• 16:08
  was just a purely solar plus battery project.
• 16:11
  And I was able to deliver for basically 20 percent, 15% lower
• 16:16
  cost than a gas plant have been in that country.
• 16:18
  And that's the UAE with UAE gas prices.
• 16:21
  So that really means it's really cheap.
• 16:22
  I think it was something came in at below $70 per MW hour.
• 16:26
  So we're seeing the possibility of cheap base load solar
• 16:30
  becoming more and more real and that's of course a huge thing
• 16:34
  for developing economies. It has to be said here too as
• 16:37
  well, of course, is that the UK, Well to two things actually.
• 16:40
  First and foremost, again, we need to be careful with our
• 16:43
  western streetlights towards this because Europe and Northern
• 16:47
  United States, northern North America are just in a unique
• 16:50
  spots in the globe. So we will always have less
• 16:53
  solar potential than the rest of the world.
• 16:55
  If you live in a country like Mexico or India or for that
• 16:59
  matter Kenya or Vietnam or Cambodia, you actually have
• 17:03
  quite a lot of like you have much less seasonal variation in
• 17:06
  your solar generation. You have much more potent, much
• 17:09
  more solar coming to you in a day.
• 17:11
  So your panels output, your panels can produce much more.
• 17:14
  So our analysis shows that for instance, for instance, like a
• 17:16
  country like India, we recently published a report that you
• 17:18
  could power, I think it was like more than 90% of the Indian
• 17:22
  grid, good power just with solar and batteries without much
• 17:25
  overproduction at all. And this could be achievable for
• 17:28
  a price that is comparable basically the same as the
• 17:32
  current electricity prices. So you can basically take over
• 17:35
  the whole energy grid, 9090% plus of the Indian electricity
• 17:39
  grid with batteries and solar. And the only thing that remains
• 17:42
  the last 10% where you keep backup plants just in case
• 17:45
  there's a, a dark spell or something like that.
• 17:48
  So we're getting very close and of course costs will continue
• 17:51
  falling. So at the moment we're kind of
• 17:53
  like in that's that that Gray zone of cost parity.
• 17:56
  I think if we talk in another five years from now, we're in
• 17:59
  that very clear zone of obviously it's cheaper.
• 18:01
  Yeah. So you have a graduate degree in
• 18:04
  nuclear energy. I know you're not some kind of
• 18:05
  crazed anti nuclear psychopath like like I've had to deal with
• 18:08
  in the past. But where does that leave the
• 18:11
  nuclear power programs in sub-Saharan Africa?
• 18:15
  Because Kenya's got plans to build a nuclear plan, I think
• 18:19
  Uganda does, Ghana does, Nigeria does.
• 18:21
  Does this still make sense at any level given, given that
• 18:24
  what's happened in the last, well, the last two years
• 18:27
  essentially? Well to me not really, but it
• 18:31
  depends a bit on what scale. Like a couple of nuclear plants
• 18:34
  for dedicated sites that wander around the clock power and are
• 18:38
  ready to pay a premium for it. Like we're also friends are
• 18:41
  seeing in the United States with data centers, etcetera.
• 18:44
  Sure. Like that could make sense if if
• 18:46
  for instance, data centers or other factories would like to
• 18:48
  pay a bit of a premium and get a nuclear plant set up for them.
• 18:52
  I'm sure that supplying them on can find each other.
• 18:54
  But if we talk about the scalable solution to power up
• 18:57
  your country, no, it does not like that is not feasible.
• 19:01
  And what's the main reason there?
• 19:02
  The main reason there, I would say is has very little, very
• 19:06
  less to do other than with economics here.
• 19:08
  Solar and wind are the big dogs in town now, basically, right?
• 19:11
  So those are the technologies to beat.
• 19:13
  We published yesterday again, a report that basically all
• 19:16
  additional electricity demand in the world that was added was now
• 19:18
  met with wind and solar. That basically means that we're
• 19:21
  now on a path to basically see wind and solar push into the
• 19:24
  grid next year and actually start reducing fossil amount.
• 19:27
  But it means that they're the big dog in town.
• 19:28
  They're 95% of the global capacity additions or something
• 19:31
  like that. That means that if you come up
• 19:33
  with a new technology to push into your energy mix, it needs
• 19:37
  to play nice with the big dog in town.
• 19:40
  It needs to play nice with solar and wind.
• 19:42
  And what does it mean to play nice with solar and wind?
• 19:45
  Well, that means that people are going to buy solar and solar has
• 19:48
  a 0 marginal cost. That means that you know, if you
• 19:51
  can generate electricity with your solar panels, you'll take
• 19:53
  it because it costs you nothing. There's no fuel to be burned,
• 19:55
  nothing not not even parts. So maintenance costs as hardly
• 19:58
  goes up either. So that means that during times
• 20:01
  that the sun is shining, you probably don't need that much
• 20:04
  electricity. In other times you do.
• 20:06
  If you want to play nice with solar and winds.
• 20:08
  Therefore you need to be flexible as a technology and
• 20:12
  primarily you need to have a cost structure that can abide by
• 20:16
  low uptime with by which I mean it should be OK to only run your
• 20:22
  site for 20 to 30% of the year to make ends meet.
• 20:26
  Because if you cannot. It's going to be very expensive.
• 20:29
  And So what does that concretely mean?
• 20:31
  If you are a technology that's very capital intensive like
• 20:34
  nuclear is, that's going to be a very tough sell.
• 20:37
  Because currently if you see prices quoted for nuclear, also
• 20:39
  for SMRS, they assume 80 to 90% uptime.
• 20:43
  And that leads us to something like $120.00 per MW hour in the
• 20:47
  most ambitious cases. But what happens is that most of
• 20:50
  that cost is capital cost that you need to levelize over 30 or
• 20:53
  40 years to get your cost back. What happens if you can't run at
• 20:56
  80%, but wind and solar come into these economies and they
• 20:59
  force you to run at 20%. That means that basically your
• 21:03
  costs go up times 4 and all of a sudden your nuclear plant
• 21:06
  actually doesn't cost 120, but it suddenly costs well over $500
• 21:11
  per MW hour, which makes it so expensive that even hydrogen
• 21:14
  would compete, which is a crazy thing to consider.
• 21:17
  But like, that's how expensive it gets.
• 21:19
  And so this is the main challenge for nuclear.
• 21:22
  This by the way, also holds to some extent for geothermal, the
• 21:25
  cost structure. If you have a very high upfront
• 21:28
  cost and you need to play nice with wind and solar because any
• 21:31
  hour that they can generate, you'll be pushed out of the
• 21:33
  market. You're going to have a very
• 21:35
  tough time made to make the business case.
• 21:38
  And that's the main issue for nuclear also in emerging
• 21:40
  economies. But across the world, wind and
• 21:42
  solar are going to dominate our future grids.
• 21:44
  And they don't seem to have a strategy yet how to deal with
• 21:48
  that and how to sort of play nice with solar.
• 21:51
  Wind rather than I think what I, what we see much more in the
• 21:54
  right of the world right now is that the sector strides to sort
• 21:56
  of compete with wind and solar and say we should come instead
• 21:59
  of wind and solar. And that's of course just
• 22:01
  generally not and economically. Good.
• 22:03
  What about the the last mile issue in that unless maybe do
• 22:07
  you envisage the wind and solar could provide 100% 24-7 power at
• 22:12
  some stage for for entire national grids or so?
• 22:16
  And if not, where does that extra bit come from?
• 22:18
  Is it? Surely it's going to have to be
• 22:20
  fossil fuels if nuclear can't just fill in the gap for a small
• 22:22
  period of time? So for the foreseeable future, I
• 22:25
  think we just need to be honest here and say we have, we don't
• 22:28
  know yet how we're going to solve the last 20%.
• 22:31
  We know that we can get to 80. But I mean, if you look at the
• 22:34
  master project, if you're blessed with good son, you can
• 22:36
  maybe even get to 9599%. But that last percent you see
• 22:40
  that all analysis to push solar and battery or solar wind and
• 22:44
  battery from zero to 90% is very cost effective.
• 22:47
  From 90 to 95 gets more expensive.
• 22:50
  From 95 to 100, this is really, really expensive.
• 22:52
  So it gets progressively more expensive.
• 22:54
  And so I think for the short term or for the immediate term
• 22:57
  over the next 5 to 10 years, I think we should just expect that
• 23:00
  the last mile backup, the sort of the the last five to 10% that
• 23:04
  you generate when the sun is a little bit disappointing or the
• 23:07
  winds a bit disappointing for a week, they're just going to be
• 23:09
  diesel Gen. kits and gas plants as backup.
• 23:12
  And why do they work so well? Because they're very low CapEx
• 23:15
  technologies, very high OpEx technologies, Diesel, I mean,
• 23:17
  especially today, diesels are very expensive, but you don't
• 23:21
  run it for many hours in the year.
• 23:22
  So it's just in the worst case scenario.
• 23:24
  And then you just have a Gen. kit as backup in your local
• 23:27
  village or in your city or around your centralized solar
• 23:30
  farms to just provide backup power in case it doesn't work
• 23:34
  out. And it doesn't mean that we're
• 23:35
  locked in here through to 2100 using these technologies.
• 23:39
  It just means that we need to invest heavily into R&D to find
• 23:43
  alternatives for the last mile technologies.
• 23:46
  But just saying we're therefore going to do nuclear and use that
• 23:49
  as backup is really crazy. Because that means that we have,
• 23:52
  you know, we're going to pay 4 to $500 per MW hour to put
• 23:55
  nuclear plants out there where whereas even other crazy
• 23:59
  technologies like even hydrogen would then also be competitive.
• 24:02
  And I think that's one of the things that we need to, I think
• 24:04
  need to realize at the moment we shouldn't let perfect be the
• 24:08
  enemy of good. And so at in the short term, it
• 24:11
  means we're going to build more backup capacity.
• 24:14
  So it might be more gas capacity, more diesel Gen. kits
• 24:16
  capacity, but we're going to run these things so little that in
• 24:19
  terms of, you know, fuel throughput and energy security
• 24:22
  risk, it's much, much lower than even today.
• 24:25
  So capacity might go up of these technologies even as generation
• 24:28
  goes down. Yeah, I'm very into not letting
• 24:31
  the perfect be the enemy of the good.
• 24:33
  And if you were to come to me and say, well, as you pretty
• 24:36
  much just have done that we can decarbonize electricity to
• 24:39
  8590%, I'm, I'm pretty happy. That's a lot better than things
• 24:43
  have been in the past. And yeah, I'm happy to keep the
• 24:47
  the last five or 10% into the future where new technologies
• 24:50
  will be developed. I'm sure.
• 24:51
  I'm sure that'll happen because there's other sectors which are
• 24:54
  much harder to decarbonize, right?
• 24:55
  Chemicals, steel, aviation, shipping.
• 24:59
  Is the Electrotech revolution going to come and solve those
• 25:02
  problems too? I think again, this is one of
• 25:05
  those topics like so within power you have to sort of the
• 25:08
  last mile, the last five to 10%. How do you do backup similarly
• 25:12
  across the economy on the electrification topic, there's
• 25:14
  this last mile like it's very clear to see that road
• 25:16
  transports going to go electric, that low temperature heat is
• 25:19
  going to go electric, that a lot of industrial processes and
• 25:22
  automation and stuff like that can go electric and on sites
• 25:24
  logistics. But you do keep these energy
• 25:27
  intensive processes in steel and cement and other technologies.
• 25:31
  And there I think honestly, anyone that says with any
• 25:33
  certainty that they know the pathway towards low fossil and
• 25:37
  low carbon, No, I wouldn't say is lying.
• 25:41
  That has been extreme. But I think it doesn't really
• 25:43
  know how disruptive revolutions work, right?
• 25:47
  It's, I think very hard for us to say at the moment how that's
• 25:50
  going to be solved in the same way that by building the first
• 25:52
  couple of computers, we had no idea that we would end up with
• 25:55
  AI today, right? These these revolutions on roll
• 25:58
  in unexpected ways and they do things that we don't expect.
• 26:02
  So if we take cement, for instance, long being thought
• 26:04
  that we need to opt for CCS to decarbonize cement and fossil
• 26:09
  use would remain rampant because it's cheap.
• 26:12
  But you have companies like Francis Sublime and A and a few
• 26:14
  others that are now just having, you know, electric processes,
• 26:17
  full electric processes to make cement with electric kilns,
• 26:21
  electric solutions. There's still a bit a bit of
• 26:24
  emission. So there's still something to
• 26:25
  deal with, but it's a much lower emission process could be cost
• 26:28
  competitive within 10 years. I mean, if you believe Sublime,
• 26:30
  of course this is so it's, it's again, it's a pitch.
• 26:33
  I don't want to put my money on saying whether Sublime or these
• 26:37
  companies are right or wrong. What I'm saying is that there's
• 26:39
  a lot of innovation potential that we're still pursuing.
• 26:42
  And I think at the moment, not having an opinion on what we're
• 26:46
  going to do in these sectors is also fine because we can get to
• 26:49
  75 to 85% of the economy electrified before we have to
• 26:54
  worry about that last 10 to 15%. Yeah, I mean, we'd be having a
• 26:57
  very different conversation if the lithium ion battery had
• 26:59
  never been invented. And of course, there's new
• 27:01
  battery technologies coming as well with sodium and potentially
• 27:04
  cheaper and more more available, right?
• 27:06
  And all this technologies like these long duration, like you
• 27:09
  see now the, the Google deal with our data center in, in the
• 27:12
  US where they'll do this form energy batteries, right?
• 27:14
  These, these are in batteries. So these are like long duration
• 27:17
  storage. They can store energy for weeks
• 27:19
  of electricity for weeks, which is very useful for balancing out
• 27:23
  wind and solar for your, for your data center, which you want
• 27:25
  to have running basically 24/7 as much as you can.
• 27:29
  So you, you see these technologies coming in and again
• 27:31
  so even on the last mile and electricity generation of where
• 27:34
  we now say diesel Gen. kits and gas, I think the better answer
• 27:38
  there is just we don't know if you want to build it today, you
• 27:41
  just do it with diesel Gen. kits and gas.
• 27:43
  But it's very likely or even possible that in five or ten
• 27:46
  years you just put an additional kind of storage technology on
• 27:49
  top, not lithium ion, but one of those long duration ones.
• 27:52
  And that's what solves the last five to 10%.
• 27:55
  I mean, I've been in the climate business a long time and I was a
• 27:58
  lot more depressed in the past when solar wasn't an option.
• 28:01
  And I remember the projections from the IEA and all of various
• 28:04
  energy experts which had solar leveling out to fairly low,
• 28:08
  fairly low extent. And they've always been wrong
• 28:11
  over and over again. They've had this, this, this,
• 28:13
  this famous graph isn't it of solar leveling off and leveling
• 28:15
  off? I mean, it just goes up and up
• 28:16
  and up. And then the real world is
• 28:18
  almost, is almost vertical. I'm just, it's extraordinarily
• 28:22
  how, how things have changed. It's certainly changed my world
• 28:24
  view of this whole, of the whole energy, whole energy issue.
• 28:27
  And it's happened really quickly, right?
• 28:29
  It's, it's, as you say, 5 years, but it's almost within the last
• 28:31
  18 months. It seems like every time I look
• 28:33
  forward to Energy Pub and the publications because every time
• 28:36
  you've actually got something really, really new and quite
• 28:38
  exciting to say. Tell us some of the, the, the
• 28:41
  big trends that I mean, I know you've just done your
• 28:43
  electricity review for 2025. Tell us some of the big trends
• 28:46
  that you're seeing globally. So across the world, so we just
• 28:50
  released electricity review day before yesterday.
• 28:52
  I can give you a couple of highlights from that.
• 28:54
  I think the global view remains the March of wind and solar
• 28:57
  continues, the exponential curve keeps going up, the annual
• 29:00
  additions keep rising. The big moment of 2025 because
• 29:04
  it's reports about then last year where we always look back
• 29:07
  then on the previous year in our reports is that there was, it
• 29:10
  was a robust year for electricity demand growth.
• 29:12
  We had serious electricity demand growth across economies.
• 29:16
  Despite that fossil fuel and generation actually fell by a
• 29:20
  little bit because wind and solar and a bit of hydronuclear
• 29:23
  on top, but mainly wind and solar supplied all that growth.
• 29:27
  And that's a really momentous moment because we had moments in
• 29:30
  history before where fossil generation fell a little bit,
• 29:32
  but those were crisis years like 2020 or 2013 or 14 with the
• 29:37
  European crisis. And so we had almost when it's
• 29:39
  fell before, but this is now a different type of fossil
• 29:43
  decline, which is it's actually being driven out by wind and
• 29:46
  solar. It's actually structural in that
• 29:49
  sense. It's a structural decline, yeah.
• 29:51
  Exactly. So if we keep pace with building
• 29:53
  wind and solar like this, you will actually see fossil fuels
• 29:56
  going to decline. If we see wind and solar
• 29:59
  continue their accelerated pace, you see fossil generation going
• 30:02
  down at an accelerated pace, which is obviously what we
• 30:06
  expect to happen, especially now with 2026, the Strait of Hormuz
• 30:09
  closing, which is everything into a tailspin.
• 30:12
  So I think we should expect an acceleration well.
• 30:14
  That was my next question actually.
• 30:15
  What, what are you already seeing due to the, the, the Iran
• 30:18
  war and the Straight of Hormuz crisis?
• 30:20
  Obviously oil prices gone through the roof, gas prices as
• 30:24
  well. And, and there's an actual
• 30:26
  shortage globally now of LNG and lots of countries have built
• 30:29
  their energy sectors on having endless supplies of LNG tankers
• 30:33
  coming in. Is this is this going to
• 30:35
  supercharge the Electrotech revolution or is it just a blip?
• 30:38
  Very much a turbocharge. I think the best way to conceive
• 30:41
  of this energy crisis, which by the way, we're not making a big
• 30:44
  enough deal off at all around the world.
• 30:46
  This is really, really bad. What's happening.
• 30:49
  It's the biggest energy crisis. It's bigger than the 70s energy
• 30:52
  crises. And it seems like government
• 30:54
  still treating this as, you know, something that the fat
• 30:57
  that will pass. And once the straight is open,
• 30:59
  everything is reset, as if we don't have destroyed assets, as
• 31:02
  if it doesn't take time to ramp up production again.
• 31:05
  It's a really bad crisis. The best way to conceive of
• 31:08
  what's happening here is that this is as big, if not bigger
• 31:11
  than the 70s oil crisis. Isn't it's another twin shock,
• 31:14
  right? It's we had Ukraine and now we
• 31:16
  have Hormuz and the the war on Iran.
• 31:19
  Those are the two big shocks that are upending this narrative
• 31:23
  of endless fossil supply and in this case also a lot of endless
• 31:26
  LNG supply into the world. And so the impact as we see it
• 31:30
  right now, I think is best divided into two parts, which
• 31:32
  is, which is the the sort of the, the, the narrative part and
• 31:37
  the physical part. So on the narrative side, all
• 31:40
  the pitch books of LNG companies and oil companies around the
• 31:44
  world had focused on renewables unreliable, we're reliable,
• 31:49
  we're abundant. It's only getting cheaper on our
• 31:51
  end. So sign up for the contract as
• 31:54
  we can give you abundant energy and development.
• 31:57
  Those pitch books are all broken right now.
• 31:58
  So they need to be rewritten in a fundamental way because you
• 32:02
  can no longer make that argument then that that's the narrative
• 32:05
  side. And the second one is the
• 32:06
  physical side. We just see it happening
• 32:07
  literally on the ground. And we just got new statistics
• 32:10
  in on March exports from China of solar panels and batteries
• 32:15
  and other electrotech and all of them are just rapidly going up.
• 32:19
  I think it was this morning we just published on solar panels
• 32:21
  exports from China just really just going up by 10s, hundreds
• 32:26
  of gigawatts sort of on an annual basis, annualized basis,
• 32:29
  just really shooting up over the past couple of months as
• 32:32
  everyone in the world now things down.
• 32:34
  I'm quite exposed to this kind of volatility.
• 32:37
  It's the second time it happened in four years.
• 32:40
  So we need to do something about this.
• 32:42
  And so we see also plan government plans across Asia of
• 32:45
  shifting towards more renewables.
• 32:47
  We're seeing individual companies and individual
• 32:50
  citizens just going out and buying plug in solar because if
• 32:53
  the government doesn't do it for me, I'll do it for myself.
• 32:56
  I want to keep safe and a solar panel allows me to do that.
• 32:59
  So we've seen that shift happening and that's the one
• 33:01
  thing to watch for us over this summer as it seems unfortunately
• 33:04
  and disastrously, that this crisis continues to extend and
• 33:07
  perhaps into the summer as well. What we'll keep tracking very
• 33:10
  closely is these export statistics and these things that
• 33:13
  are happening on the ground to show how much of an acceleration
• 33:16
  we see. We definitely, from first
• 33:18
  principles and from what we're seeing on the ground not
• 33:20
  happening, believe that there's only an acceleration towards his
• 33:23
  electric future and all the deceleration.
• 33:25
  Yeah, but one of history's little ironies, wouldn't it that
• 33:27
  if Donald Trump, who's professed a complete distaste for, well,
• 33:31
  wind and solo and in fact all all renewables as a kind of woke
• 33:35
  climate thing, ended up being the one who who who turbocharged
• 33:39
  the Electro tech revolution and. And even more so given that he's
• 33:43
  supposedly trying to protect the EU s s role against China, that
• 33:48
  he he just delivered the entire global energy system to China on
• 33:51
  a plane. And the first, the first of the
• 33:53
  twenty 20s oil shocks was similar.
• 33:55
  It was Putin using as gas leverage and trusting that
• 33:59
  Europe would bend his way over over it there gas exposure.
• 34:02
  And instead Europe actually stood up and pushed towards a
• 34:05
  more electric, electrified and renewable heavy future.
• 34:08
  So here we have two people actually that are trying to
• 34:12
  leverage their side, their fossil side of the arguments
• 34:15
  very strongly and it's coming back to bite them after.
• 34:18
  So yes, I, I think this is definitely, this is a strong
• 34:20
  accelerant and I think we shouldn't underestimate also,
• 34:23
  there's also true in the 70s, right?
• 34:25
  How important is to have it almost happened twice in a row,
• 34:27
  like as we put in our in our report on the on the Hormuz
• 34:30
  crisis, like sort of the first shock gives you pause.
• 34:33
  The second one gives you wisdom, right?
• 34:34
  The first one you can still pass off as, oh, it was a one off
• 34:38
  thing, this won't happen again. But if you see it now happening
• 34:41
  again in a different circumstance but with very
• 34:44
  similar parameters, you'd have to wonder as a developing
• 34:47
  economy or you want to make a 1520 thirty years development
• 34:51
  plan, can I actually rely on my energy inflows to secure this
• 34:56
  development plan towards some more prosperous country?
• 34:59
  And with fossil fuels, it's decreed that pitch is
• 35:02
  decreasingly convincing that you can rely on them.
• 35:05
  And so therefore, yeah, it it indirectly, these crises are
• 35:09
  making the case for China and Chinese export.
• 35:12
  Yeah. And it's not quite analogous
• 35:15
  though, is it? Because even if you buy a solar
• 35:17
  pan from China, it then runs itself from the sun for 30
• 35:19
  years. Whereas with fossils, you've got
• 35:21
  to keep buying it over and over and over again as you burn it,
• 35:23
  right. So it's a.
• 35:24
  It's a bit different in terms of what the dependence were
• 35:26
  dependency relationship might be.
• 35:28
  Yeah. So it's another, maybe another
• 35:30
  sort of bad idea, a conceptual idea that people have in the in
• 35:34
  the world is that solar panels and barrels of oil are
• 35:37
  comparable. No, solar panels are the gas
• 35:40
  turbines sort of right, that they're the thing that makes
• 35:43
  electricity. The thing is that the fuel that
• 35:45
  goes into a solar panel, you don't need to import like with a
• 35:47
  gas turbine or a diesel Gen. kit, but it comes from the sky
• 35:51
  for free. So the exposure sort of the
• 35:54
  import dependency of solar panels that you'd create if you
• 35:58
  go towards a solar electricity system, it's very similar to, I
• 36:01
  don't know, the exposure of the United States or the exposure of
• 36:05
  Europe to gas plants manufacturers or the exposure to
• 36:10
  German car manufacturers, Right. To what extent do we see that as
• 36:13
  an extremely risky exposure? Not really.
• 36:17
  Like it's a completely different order of exposure because as you
• 36:20
  put it, quite rightly, if Germany cuts me off from selling
• 36:23
  cars to me, all my existing cars still continue to run and they
• 36:26
  run perfectly well. It's just that the new cars to
• 36:29
  come come in, if Japan decides not to sell gas turbines to me,
• 36:34
  I can still have my existing gas turbines run and continue to
• 36:37
  run. And that should be the
• 36:38
  comparison when we think about importing electrotech and, and
• 36:40
  solar and, and electric vehicles and heat pumps is, it's the
• 36:44
  technology and it's fuel less technology.
• 36:47
  So it's, it's, I think it's like renting.
• 36:50
  It's like owning rather than renting a, a, a gas plant you
• 36:53
  buy, you need to pay it upfront cost, but you're effectively
• 36:56
  renting it because you need to keep paying for gas to go in to
• 36:59
  keep power coming out. Whereas a solar panel you buy
• 37:02
  and then the power afterwards come outcomes out for free.
• 37:05
  So it's, it's much more like an ownership.
• 37:07
  And so this is I think what's happening in the world right now
• 37:09
  is this massive realization of fossil power.
• 37:12
  Is fossil like technologies? Are borrowed technologies
• 37:15
  actually borrowed based on the fuel you need to pay to go in
• 37:18
  there, whilst electric technologies like ownership
• 37:21
  borrowing is fine. I mean, we all know like renting
• 37:23
  an apartment is fine as long as you have a good landlord.
• 37:26
  But if your landlord turns a bit off, you'd much prefer to buy,
• 37:30
  especially if buying turns out to be cheaper than renting.
• 37:33
  But this is very much a China story though, isn't it?
• 37:35
  I mean China dominates the the solar sector, EVs increasingly
• 37:41
  batteries as well. Is there any part of the
• 37:44
  Electrotech revolution which isn't largely Chinese?
• 37:47
  Increasingly so. So I say I would amend it to say
• 37:50
  I agree it's a China story. But I think it's mostly because
• 37:54
  China is showing a way to build up a sort of high tech industry
• 37:59
  that goes beyond electrotech, that goes also into other
• 38:02
  sectors like phone manufacturing and and other high tech
• 38:04
  technologies. But they're showing a way for
• 38:07
  economies like China was 30 or 40 years ago that seemed to be
• 38:10
  very poor to rapidly rise into global leadership.
• 38:14
  And so this China model, I would say this using of electric
• 38:18
  technologies to, to rapidly develop your economy is not
• 38:21
  something that's limited to China.
• 38:23
  We're seeing friends as countries like Vietnam and
• 38:26
  India, Cambodia to some extent with solar panels as well.
• 38:28
  But we're seeing across particularly Asia economies kind
• 38:31
  of following this China path and actually saying we can also do a
• 38:36
  version of this our own our own country's version of course, but
• 38:39
  we can also do this and signs of that.
• 38:41
  Actually one of the most interesting bits of data that's
• 38:44
  coming out over the past couple of couple of months is the rapid
• 38:47
  rise of India in the in the electrotech space.
• 38:50
  Of course over the past couple of years, a lot of Apple
• 38:52
  diversified their phone manufacturing to India.
• 38:56
  That's gave India a lot of high tech manufacturing skills, a lot
• 38:58
  of training, etcetera, very much similar as happened in China.
• 39:02
  The next step is that they then say, OK, let's use that high
• 39:04
  tech manufacturing skill that we have and put it into
• 39:06
  manufacturing solar and batteries and other
• 39:09
  technologies. And that's exactly where you're
• 39:10
  seeing happening in India right now.
• 39:12
  So India's producing a massive amount of solar panels at the
• 39:15
  moment, to the extent where India at the moment is on the
• 39:18
  net solar panel independence. They install as many solar
• 39:22
  panels as they make themselves. So they're no longer dependent
• 39:24
  on China, and they're now turning, of course, into an
• 39:26
  export economy. So I agree it's a chat story, as
• 39:30
  in like China kind of discovered UN quote, UN quote, sort of this
• 39:33
  route. But more and more economies can
• 39:35
  actually take this and follow this, because there's nothing
• 39:37
  special about China why other countries couldn't copy it.
• 39:41
  And of course, China's still burning humongous amounts of
• 39:43
  coal. And some skeptics point out that
• 39:47
  a lot of the solar panels are manufactured using coal and that
• 39:50
  the well, it's such China's the the world's largest coal
• 39:55
  consumer and obviously the largest emitter as well.
• 39:57
  So following the the China path isn't isn't necessarily the
• 40:01
  right the right way to go, is it?
• 40:02
  Well, exactly. So this is what we call a call
• 40:05
  out in our reports, what we call the fast track that economies
• 40:07
  can take like it's kind of like you, you use the technologies on
• 40:11
  hand to build the technology of the future, right.
• 40:13
  The the first Ford Model T factories in the United States
• 40:16
  were built with horse and cart buggies driving around to
• 40:19
  deliver equipment. You can't therefore say, oh,
• 40:22
  therefore Ford's not going to happen.
• 40:23
  It's you. You use the old technology to
• 40:25
  build the new. Now what has happened though, of
• 40:27
  course, that China has sort of gone down its coal path, this
• 40:30
  deep coal path, and is now re emerging from that and going
• 40:33
  towards renewables because they used coal to build their
• 40:36
  industrialized economy. That doesn't necessarily mean
• 40:39
  that if I'm currently India or Vietnam or any of any of the
• 40:42
  other developing economies in the world that I need to follow
• 40:45
  a similar path. It means that I can use what is
• 40:47
  cheapest and most available to me today rather than what was
• 40:51
  cheapest and most available to China in the 20 in the 2000s.
• 40:55
  And what's the most cheapest and most available technology in the
• 40:57
  world today? Energy technology that's
• 41:00
  electrotech. And so that's exactly what we're
• 41:02
  seeing is that these economies are basically turning in a
• 41:04
  shortcut compared to China. They don't need to go down this
• 41:08
  path of becoming first very heavily fossil dependent and
• 41:11
  therefore also import dependent to build their economy up
• 41:14
  because they already can go straight towards the electrotech
• 41:17
  solution. And so this is what we're seeing
• 41:19
  happening across all those CVS economies.
• 41:21
  But we also wrote the report about India.
• 41:23
  They're kind of taking this fast track where much earlier in
• 41:26
  their development path, they're already turning towards
• 41:28
  electrification of their, their economy and of wind and solar
• 41:32
  and, and domestic energy sources to power their electricity.
• 41:36
  And so again, sort of China is a is, is enabling that because a
• 41:39
  lot of the imports of electric technologies comes from China.
• 41:42
  So China went down this deep fossil path and it's not kind of
• 41:45
  climbing its way out again, whilst other economies can take
• 41:48
  a shortcut and avoid this sort of deep pits of, of fossil
• 41:51
  dependency before they actually start growing their economy,
• 41:54
  which is another reason I think to get very excited about the
• 41:56
  Electritech revolution for developing economies.
• 41:58
  They don't need to follow the China path.
• 42:00
  They can go straight into an electric future and leapfrogged
• 42:03
  the West doing so. Yeah, And of course, it's not
• 42:06
  just a climate story. The the worst air pollution that
• 42:09
  I've ever experienced is in developing countries.
• 42:11
  Bangladesh was pretty bad whenever when it was there.
• 42:13
  Recently. Most African countries have
• 42:15
  pretty terrible air pollution as well, certainly in urban areas.
• 42:18
  And that's to do with obviously with fossil fuels being burned
• 42:21
  on a huge scale, often quite inefficiently.
• 42:23
  So if the Electrotech revolution can decarbonize and obviously
• 42:28
  stop the pollution coming from transport and from other sectors
• 42:32
  at an earlier stage, that's that's going to save millions,
• 42:35
  10s of millions of lives, isn't? It, it's a huge, huge
• 42:39
  humanitarian effort to do this, but it's also just a, an
• 42:43
  economic effort, like the amount of economic damage due to, you
• 42:47
  know, people being off for the sick for a day because they have
• 42:50
  a bad cough and all of these things that they all way down on
• 42:52
  your economy as well. It's pretty hard to as a family
• 42:56
  to climb out of poverty if on top of, you know, the lack of
• 43:00
  access to capital and the lack of, you know, ownership of your
• 43:03
  own time, you also get weeks where you're ill and sick and
• 43:06
  you need to take care or family members that are ill.
• 43:09
  It's all a drag on the economy. So there are these sort of more
• 43:11
  hidden compounding effects behind developing electrotech
• 43:15
  that can actually really boost your economy.
• 43:17
  So it's it's not just sort of top line import dependence.
• 43:19
  Indeed, these are kind of like the the macro numbers that we
• 43:22
  like to talk about when we look at this sort of zoomed out as
• 43:25
  macro strategies like myself, we like to talk about these
• 43:27
  numbers. But there's a much, I think a
• 43:29
  much more powerful or rather much more probably even
• 43:31
  eventually a much more impactful story at the human level, which
• 43:34
  is you have 24 hours in a day. How many hours do you need to
• 43:38
  spend on cooking, taking care of a sick family member, taking
• 43:42
  care of all the other things, walking towards a place rather
• 43:45
  than be able to take an electric mopeds to go there.
• 43:48
  All of these hours add up to the extent where an electric future
• 43:52
  can open up so much more time for people in emerging
• 43:56
  economies, time not being sick, time not being walking to a
• 43:59
  place, time not having to do extraneous like washing duties
• 44:02
  and other things and open up the time to actually start
• 44:04
  innovating. And, and when you see that
• 44:06
  opening up, I mean, China again is an example here.
• 44:08
  Once you see that opening up, turns out that you can unleash a
• 44:11
  real powerhouse of innovation and a powerhouse of economic
• 44:14
  growth in your country and. The other thing that I find
• 44:17
  quite attractive about this is that it's a it's actually a
• 44:20
  bottom up revolution, right? It's a great grassroots,
• 44:22
  grassroots revolution, and that it's driven by people buying
• 44:26
  solar panels and batteries and so on and just installing them
• 44:29
  at the local level where it's not like some huge centralized
• 44:33
  utility, you know, just spending 15 years doing PowerPoint
• 44:37
  presentations, eventually making some decision about an
• 44:39
  expensive, expensive energy option.
• 44:41
  It's literally being done by ordinary people in their
• 44:43
  billions now at a grassroots level.
• 44:46
  And this is the ultimate threats, I think to utilities or
• 44:50
  threats is maybe a big word, but it's the ultimate risk.
• 44:54
  Yeah, exactly. Disruption, the better words
• 44:56
  like utilities get granted by the government a exclusive
• 45:01
  monopoly over typically transporting electricity around
• 45:04
  the country. And that used to be the only way
• 45:07
  to get electricity. So they had a pure monopoly.
• 45:09
  So basically whatever they said goes that monopoly, well, their
• 45:13
  monopoly of transporting electricity might still exist,
• 45:16
  but if I can put solar, plug in solar on my own roof and have a
• 45:19
  battery behind the meter, I might not need that service as
• 45:22
  much anymore or at some point not at all anymore.
• 45:25
  This, of course, what we're seeing across happening across
• 45:27
  Pakistan. If utilities mess up and they're
• 45:30
  too slow to react to the solar revolution and they don't sort
• 45:35
  of invite in solar and wind and batteries on their own grids and
• 45:39
  provide people with the cheap power that they want if they
• 45:42
  renege in the old system, we would think, oh, therefore the
• 45:46
  transition is in trouble. But what we're actually now
• 45:48
  seeing is that then solar manufacturers and bachelor
• 45:50
  manufacturers sort of via Alibaba directly target
• 45:53
  consumers and say, hey, if you're centralized government or
• 45:56
  you're centralized utility doesn't want to do it for you,
• 45:58
  we can deliver directly to your house.
• 46:00
  How would you like that? And that's that's of course,
• 46:03
  what's currently in Pakistan triggering the solar revolution,
• 46:06
  but also the huge debt crisis that their utilities are in at
• 46:09
  the moment because they built expecting people to need their
• 46:13
  electricity. But people are actually saying,
• 46:15
  no thanks for that price, I'd rather buy a solar panel on a
• 46:17
  battery so you can keep your electricity.
• 46:19
  And so they can't actually pay back their investments that they
• 46:22
  that they put in. And this is a massive risk
• 46:25
  across the emerging economies. It's no longer that you are in
• 46:29
  charge of the energy consumption of your households.
• 46:31
  It's no longer that you can dictate, I'm going to put a coal
• 46:35
  plant here and you guys all are all going to use it because
• 46:37
  people are just going to go out and they're going to buy their
• 46:39
  own solar panels and their own batteries.
• 46:41
  And unless you want to ban those technologies in your country and
• 46:45
  start policing people on this, which is I think very unlikely
• 46:49
  something you want to do because although the cost of that would
• 46:51
  be very high, you need to deal with the fact that the solar
• 46:54
  revolution is happening with or without you at.
• 46:56
  So you need to find a way to integrate it.
• 46:58
  Otherwise you'll you'll end up in a similar kind of debt crisis
• 47:01
  as as Pakistan. You tell us what happened in
• 47:03
  Pakistan. It's, it's quite a good case
• 47:04
  study, isn't it, of how, how rapidly this has happened and
• 47:08
  also how difficult it is to track from, from the top down at
• 47:10
  least. Yeah.
• 47:11
  So Pakistan offered a so about two years ago, we started seeing
• 47:15
  massive exports from China, solar panel exports from China
• 47:19
  into Pakistan. We started doing aerial scans,
• 47:22
  talking to local think tanks and others and we started seeing
• 47:24
  like this story emerge of a very rapid shift towards solar.
• 47:29
  What was behind this was a utility cost rising in Pakistan,
• 47:33
  energy big, electricity becoming more and more expensive across
• 47:36
  the country. The government had wants to do
• 47:39
  something about this and this is credit for credit it's due.
• 47:41
  They did a very brilliant thing by subsidizing a sort of net
• 47:44
  metering rule, which was very beneficial for people in
• 47:47
  Pakistan. So a lot of people started to
• 47:48
  buy solar to supply the grids as well as what does.
• 47:51
  Net metering mean does that mean you can export to the grid?
• 47:54
  Exactly. That means that all the, all,
• 47:56
  the, all the power to you export to the grid kind of cancels
• 47:59
  negative consumption of your, of your bill because you're kind of
• 48:02
  supplying electricity back into, into the system.
• 48:05
  That triggered a boom and a boom just wouldn't stop even when the
• 48:08
  government started to say, can we calm down now?
• 48:11
  Because we kind of have an overproduction of solar at the
• 48:13
  moment at peak hours. But people started kept buying
• 48:16
  more and more solar because they're started to realize, hang
• 48:18
  on. My grade currently sometimes has
• 48:20
  as little as like 50 or 40% uptime.
• 48:23
  So I'm kind of lucky as a business.
• 48:24
  If I'm like a manufacturer of, I don't know the clothes or there
• 48:27
  was this interview with a football manufacturer.
• 48:30
  Half the time my factory staff is there, but we can't work
• 48:33
  because the electricity system is not working.
• 48:35
  But if I have a solar panel, I know when the sun is up, I can
• 48:37
  work. That's easy.
• 48:39
  And then maybe if it's a cloudy day, I can maybe buy a battery
• 48:41
  or I just say then I can at least predict that I don't even
• 48:44
  need to let let people come into work.
• 48:45
  So it becomes a much more predictable system is actually
• 48:47
  much easier to work with solar cycles and solar reliability
• 48:51
  than with human unreliability of the grid.
• 48:54
  And that is really triggering this sort of snowball effect.
• 48:56
  It's one of many reasons, but that's really triggering the
• 48:59
  snowball effect where the amount of gigawatts installed, the
• 49:03
  amount of capacity, power generating capacity in installed
• 49:06
  in Pakistan I believe by now is nearly doubled versus two or
• 49:09
  three years ago purely because of the amount of solar panels
• 49:13
  that are being imported into that country.
• 49:14
  But it's not. But it's not owned by the
• 49:16
  graves. I mean, this is owned by
• 49:17
  households in that case largely. It's largely owned by households
• 49:20
  largely, but also increasingly just by small industrial players
• 49:23
  like a textile industry, Smaller players, they can use solar
• 49:27
  power, they can buy a panel, they can install it for very
• 49:29
  cheap. They typically.
• 49:31
  Ask about that, because when I had my panels installed, I had
• 49:34
  to take thousands for an and the whole thing is it's not like you
• 49:37
  can actually do it directly as an ordinary person.
• 49:39
  Is that is that different now? It's, it's starting to become
• 49:42
  different. And this is one of the stories
• 49:43
  that we're currently very closely tracking actually.
• 49:46
  So this morning, oh, we had another session on this to to
• 49:48
  fight to do some truth finding on this on the cost of
• 49:51
  installing solar in emerging economies has a very different
• 49:55
  cost structure than in the West because we in the West have a
• 49:58
  lot of probably very good, but we have safety standards, but we
• 50:01
  also have certain union standards and other things.
• 50:03
  The reason that your solar panels on your roof are so
• 50:05
  expensive is not because the panels themselves are expensive.
• 50:08
  It's because the kits around it and the installer, all of these
• 50:11
  things are expensive and they'll be getting more expensive
• 50:13
  because so many people want them, which drives up the
• 50:16
  demands and therefore drives up cost of these things.
• 50:18
  And that's why you have to pay, you know, 10s of thousands of
• 50:21
  dollars or ten, $15,000 to get solar on your roof.
• 50:25
  So in the West, it's the case that rooftop solar can cost
• 50:30
  easily, let's do a little bit of like $1500 per kilowatt, whilst
• 50:35
  utility solar can cost less than $1000 per kilowatt.
• 50:39
  So basically it's cheaper to go these to go centralized, which
• 50:42
  is also the main push in the West, right?
• 50:43
  Like, right, it's like, it's nice to have residential solar,
• 50:45
  but it will be cheaper to do it centralized what we're actually
• 50:49
  seeing in emerging economies. And again, take this data with a
• 50:51
  grain of salt because we're still figuring this out, but
• 50:53
  we're getting this sort of suspicion, let's put it that
• 50:55
  way, that when we look at the cost structure of installing
• 50:58
  residential solar versus utility solar, it's the other way around
• 51:02
  in emerging economies, because people buy a solar panel of
• 51:06
  Alibaba, that's that might be a plug in solar panels that is
• 51:10
  little inverter glued to the back.
• 51:11
  So you already kind of get it out coming out in an AC power.
• 51:15
  They watch a YouTube video on how to kind of install it on
• 51:18
  where to install it. They might buy a couple of extra
• 51:20
  screws and other pieces of equipment, but they screw it in
• 51:23
  themselves and then it runs. And that can be as low as like
• 51:27
  400 or $500 per kilowatt. So 1/3 of what you would
• 51:31
  typically pay in, in the UK, whilst utility scale solar in
• 51:35
  these countries would still cost probably six, $700.00 per
• 51:38
  kilowatt. So actually going residential
• 51:40
  here might actually be cheaper than doing it centralized
• 51:42
  because it becomes so sort of easy for people to, to do it
• 51:45
  themselves. And we're seeing this of course
• 51:47
  in the West happening as well. Plug in solar, right?
• 51:49
  There's this new idea of like just buying a solar panel with a
• 51:52
  plug and you can plug it in and it's or your household without
• 51:55
  an install installer coming by. But that that, that revolution,
• 51:59
  I think is very strongly pronounced in emerging
• 52:01
  economies. And, and again, take my cost
• 52:03
  estimates here as with a grain of salt because we're still
• 52:05
  figuring it out. But we're definitely seeing a a
• 52:08
  trend of large overestimation by Western forecasting agencies of
• 52:13
  how expensive it actually is to implement solar panels in
• 52:16
  emerging economies. So has the extent to which
• 52:21
  countries have got now large amounts of renewables helped
• 52:25
  insulate them from the Strait of Hormuz crisis and obviously the
• 52:28
  increased price of, of, of oil and gas that's results from
• 52:31
  that? It's a huge boost.
• 52:33
  It's a huge boost. And it's a boost that goes
• 52:34
  directly to the home. I mean, we're seeing this across
• 52:36
  the world like electric vehicle sales are going up, panel sales
• 52:39
  are going up. And again, it's a, it's good to
• 52:42
  realize for governments when we were in the 70s, right, the twin
• 52:45
  shock of the 70s, energy systems were highly centralized.
• 52:49
  And so individual citizens were powerless.
• 52:51
  They had to vote for good politicians and hope that they
• 52:54
  would make the right choices. And those choices were on big
• 52:57
  centralized infrastructure projects for energy.
• 53:00
  And it would take a decade or more to actually pan out.
• 53:03
  Today, that's completely different.
• 53:06
  We can go out right now and get solar panels for ourselves.
• 53:09
  We can try to do something on our own budget.
• 53:12
  And that means that there's a different game also for
• 53:14
  governments in policy making in the coming years as they deal
• 53:17
  with the fallout of this crisis. You should make centralized
• 53:21
  planning, but you should make centralized planning knowing
• 53:23
  that you're that you're not the only actor in this space and
• 53:27
  you're acting Your citizens in your country will also make
• 53:29
  their choices and they're now able and empowered to make those
• 53:32
  choices of their own technologies.
• 53:34
  And so it's no longer directive. I decide we're doing this and
• 53:38
  therefore my people are going to do that.
• 53:39
  It's I decide this, I hope it connects with the individual
• 53:42
  plans of my citizens, because if it doesn't, I'm making a very
• 53:46
  bad investment decision here. And that's AI think a really big
• 53:49
  difference in how we need to respond to this energy crisis to
• 53:51
  previous ones, because we now need to take into account
• 53:55
  individual energy choices rather than just a directive that we
• 53:59
  the directive role that governments could play before.
• 54:02
  So what should governments do? I know you don't do policy
• 54:04
  advice directly, but just speculate here.
• 54:06
  What should governments do to help accelerate the electorate
• 54:08
  revolution in their countries? So I mean, first and foremost,
• 54:12
  it comes down to the realization that energy security is key and
• 54:16
  the first thing you need to first thing you need to secure
• 54:19
  for your people is energy security.
• 54:21
  And that means maybe the focus also also climate focus and a
• 54:25
  security focus points in the same direction, but they have a
• 54:27
  slightly different sort of angle to what you would focus on.
• 54:30
  So first and foremost, most import exposure around the world
• 54:34
  in any country effectively in the world is on oil.
• 54:38
  And that is mainly oil that goes into transport.
• 54:40
  So the biggest, biggest lever you can currently push to reduce
• 54:44
  your import dependency is electric vehicles.
• 54:47
  Push out electric transport from mopeds to trucks, everything you
• 54:51
  can, every barrel saved is a serious unlinking from the
• 54:55
  global oil volatility. And so whilst it's important to
• 54:59
  continue to push solar and wind, important to upgrade your grids,
• 55:02
  important to a lot, I would say first and foremost, there needs
• 55:05
  to be an integrated electric vehicle strategy and almost like
• 55:09
  an integrated global task force on how do we phase in electric
• 55:12
  transport as fast as we can and as wide as we can.
• 55:16
  I think that's the first major, major thing to focus on.
• 55:20
  And then second actually is treat this like every crisis
• 55:24
  also comes with an opportunity. Treat this as a way to get the
• 55:29
  get sort of the transformational bills and things done in your
• 55:32
  government that have been stalled like many countries have
• 55:35
  been trying to push for big electrification campaigns,
• 55:38
  industrial automation, other like electric Electro industrial
• 55:42
  programs. We've seen those pop up across
• 55:45
  economies like ambitious plans, but they're going to get stalled
• 55:48
  in a status quo. We now with a crisis.
• 55:52
  As a politician, you get the permission to make more drastic,
• 55:55
  take more drastic measures and you can make those measures in
• 55:58
  terms of, you know, give some extra subsidy to fossil fuels so
• 56:02
  the pain doesn't hurt your people that much.
• 56:04
  And then you're kind of you're just basically spending money or
• 56:07
  like money leaks out to oil producers so you don't see it
• 56:09
  back. Or you can say, no, I'm going to
• 56:11
  leverage this crisis and to actually force through my larger
• 56:14
  electrification programs, my larger Electro industrial
• 56:17
  electrification programs. And this would be the time, I
• 56:20
  would say, in the world to do that.
• 56:22
  And they're still important duties on solar panels, other
• 56:25
  things the governments can do to literally to to zero out the the
• 56:29
  tariffs on on some of these electrotech imports.
• 56:31
  Yes, yeah. And but there of course it gets
• 56:33
  a bit like I suppose in the short term 1 can do that to just
• 56:36
  boost it. But there's also a good argument
• 56:37
  to be made to say like, actually to what extent can we instead
• 56:40
  of, for instance, importing the panels from China, we import the
• 56:44
  cells or even the wafers, like the precursors to solar panels.
• 56:47
  And then on top of people, they're buying lots of solar
• 56:50
  panels in my country, We also attract a bit of the
• 56:52
  manufacturing towards my country.
• 56:54
  China seems increasingly happy to just outsource like the the
• 56:57
  latest stages of the solar, solar assembly or even
• 57:00
  manufacturing process to other countries.
• 57:02
  And so it's, it's also a way not just to say, let's open up the
• 57:05
  market to China and let my people buy Chinese technology.
• 57:08
  But you could be a little bit clever about them and say,
• 57:10
  actually, let's open you up. But maybe we open it up to
• 57:13
  precursors of solar panels. Then my people can turn those
• 57:16
  into solar panels and sell it domestically because that way I
• 57:19
  also get a manufacturing boost on top of this.
• 57:21
  And then it's not just managing the crisis, but it's actually
• 57:24
  growing through this crisis. The same for critical minerals,
• 57:28
  right? I mean, in Africa in particular,
• 57:29
  look if you look at the DRC, it's basically just exported raw
• 57:32
  materials, gets very little from the value chain.
• 57:35
  The whole thing is, is makes very little money and people are
• 57:38
  in the absolute edge of well at the worst stage of the poverty
• 57:41
  line really when they're when they're the ones actually doing
• 57:44
  the mining. The more that countries could
• 57:46
  do, particularly CVF countries to to actually capture some
• 57:49
  benefit from from the increased demand there's going to be for
• 57:51
  critical minerals. Yes, I mean Congo is a good
• 57:54
  example and it's been for a long time.
• 57:56
  I think the DRC has been a topic of how do you move up the supply
• 58:00
  chain, right? How do you get out of this
• 58:02
  commodity trap? And it turns out also in the DRC
• 58:05
  to be very hard. But it is of course the only way
• 58:07
  to start levelling up your economy around critical minerals
• 58:10
  is to to to not just outsource the don't do not just do the
• 58:14
  mining, but get into the refining, get further upstream.
• 58:18
  This is hard and it's hard for two reasons.
• 58:21
  I mean, there's the obvious reason that other countries come
• 58:24
  in with capital and if they come in with capital, they will want
• 58:27
  to decide where your mining output goes to.
• 58:30
  And so it becomes hard to negotiate as a country there.
• 58:33
  I think that's that's 11 component of this.
• 58:36
  The second one, and I think that's a bit more
• 58:38
  underappreciated, is that it's wrong to think that critical
• 58:41
  minerals are like sort of the new oil in a sense of like this
• 58:45
  transition won't happen without them.
• 58:47
  That's that is true. But what we're seeing over the
• 58:51
  past 15 years happening in the innovation space of Electrotech
• 58:55
  is that every time a certain mineral gets constrained or more
• 58:58
  expensive or harder to get or for instance, the case of the
• 59:01
  DRC, just the humanitarian worries of final consumers.
• 59:05
  They don't want to buy batteries which have minerals in there
• 59:08
  that were not sourced properly. They trigger innovation away
• 59:12
  from these minerals. So if we think about battery
• 59:14
  production across the world, 10 years ago, you would indeed say
• 59:18
  without cobalt it won't happen. So without the DRC, it won't
• 59:21
  happen. Today, the vast majority of
• 59:24
  batteries are LFP sees lithium phosphate, iron, iron phosphate
• 59:27
  batteries. There's no cobalt in those
• 59:30
  technologies. And so innovators found a way
• 59:32
  around the bottlenecks. And so that again becomes hard
• 59:35
  because as an emerging economy and I have critical minerals in
• 59:38
  my country, how much hardball can you play if there might be
• 59:42
  ways to innovate around you? So I think it's also a deep
• 59:45
  understanding as governments of the innovation space that's
• 59:47
  happening and understanding where you do when you don't have
• 59:50
  leverage is really key because in in the end, this is not a
• 59:53
  commodity revolution. It's not like we're moving away
• 59:56
  from oil and going to critical minerals.
• 59:58
  And that's just as the new defining geopolitical power.
• 1:00:01
  I think the better way to look at it is we're going from a an
• 1:00:04
  extractive economy to a knowledge economy where the
• 1:00:07
  future technologies are mainly determined by how much like the
• 1:00:10
  knowledge of how we can put them together.
• 1:00:12
  And then? Another example of silver prices
• 1:00:15
  go up like they where they went last last year.
• 1:00:18
  People just find ways to use other materials instead.
• 1:00:20
  And they, you know, they shift towards copper or other
• 1:00:22
  conductive materials and solar panels.
• 1:00:24
  And so it's, it's a different game to play.
• 1:00:26
  It's it's, it's not an oil playbook, but it's much more a,
• 1:00:29
  a deeper sort of knowledge playbook, understanding the
• 1:00:31
  innovation space and where you have leverage.
• 1:00:33
  And and back to the global level.
• 1:00:35
  Is, is it becoming the speed of the transition?
• 1:00:37
  Is it becoming exponential almost in the sense that it
• 1:00:40
  keeps accelerating all the time? Or is it or is it a linear?
• 1:00:43
  I'm just trying to get a sense of how rapidly we can expect
• 1:00:46
  this transition to play out and then ultimately what the effect
• 1:00:49
  will be on on the climate through ultimately reducing
• 1:00:52
  carbon emissions down to 0. So over the past years has
• 1:00:55
  definitely turned exponential, right?
• 1:00:57
  It's turned super exponential in some cases.
• 1:00:59
  Even so faster than an exponential would grow some guys
• 1:01:02
  a bit slower. It depends a bit on the original
• 1:01:04
  take, but it's definitely, it's definitely not linear at the
• 1:01:07
  moment. There's definitely exponential.
• 1:01:09
  I used to be much more also my previous roles much more into
• 1:01:11
  forecasting the future. I think even with outlooks that
• 1:01:15
  people call bullish a few years back when when I produced them,
• 1:01:18
  I've now actually turned kind of bearish compared to reality.
• 1:01:21
  The outlooks maybe I've turned a bit too bullish on, for
• 1:01:24
  instance, how much Friends of Cobalt would still be a play a
• 1:01:26
  role in battery manufacturing and we actually shifted to a new
• 1:01:29
  technology. So I think we're in that phase
• 1:01:31
  of the transition. This stuff like in, in, in
• 1:01:34
  business language, like the start of the hockey stick, where
• 1:01:36
  it goes up, where it's actually very hard to say what steepness
• 1:01:39
  this hockey stick is going to, to take at the moment.
• 1:01:42
  And so the best thing that we can do right now is, is, is, is
• 1:01:45
  plan for the next two or three years and, and accelerate where
• 1:01:49
  we can accelerate to see how fast this can go.
• 1:01:52
  I mean, we see bottlenecks coming up, like grid connections
• 1:01:54
  being an issue. We see bottlenecks coming up
• 1:01:56
  with like certain materials and minerals getting constrained.
• 1:01:59
  We of course, there's some policy backlash in some
• 1:02:01
  countries in the world. So it's, it's hard to say right
• 1:02:04
  now just how steep it can go. The only thing that we can say
• 1:02:07
  is that we've consistently typically underestimated the
• 1:02:10
  pace of change. And so whatever I can say right
• 1:02:13
  now, I sort of like the commonly accepted view of how fast it's
• 1:02:17
  going to go. I'm probably going to
• 1:02:19
  underestimate how fast is this going to go.
• 1:02:21
  And so we need to treat this. I think the best way to think
• 1:02:25
  about it for me, Mark, is I, I think about the Electrotech
• 1:02:28
  revolution at the moment in the same way that we should think
• 1:02:30
  about AI. Who knows where we'll be in
• 1:02:33
  2032. It could have taken up all of
• 1:02:36
  our white collar jobs. We could have two.
• 1:02:38
  We could have a Mark and Don AI talking in 2032 about their AI
• 1:02:41
  reports, or it could just be one of the many tools to be having
• 1:02:44
  our toolkit. I've resisted even doing a
• 1:02:46
  podcast episode on AI because something I'd recorded three
• 1:02:50
  months ago would be complete completely out of date by now, I
• 1:02:53
  mean. Yeah.
• 1:02:54
  And and we're kind of getting also to your point of like all
• 1:02:56
  of this is kind of feels like it's happened over the past 18
• 1:02:58
  months. We're kind of hitting that
• 1:03:00
  similar kind of singularity points for Electro tech where
• 1:03:04
  it's sort of so rapidly scaling that it becomes very hard to
• 1:03:07
  even say that what we're saying in this podcast right now in six
• 1:03:11
  months or a year would still be the latest update.
• 1:03:14
  And so I think we need to treat this much more like the AI
• 1:03:17
  disruption and AI revolution that we should treat it as a
• 1:03:20
  managed transition by governments and target setting.
• 1:03:23
  And in that sense, it may very well be that by 2040, we're in a
• 1:03:27
  very, very high electrified economy that is very low carbon
• 1:03:31
  already in the same way that by 2040 we might be in the economy
• 1:03:34
  that largely runs on AI white collar work.
• 1:03:37
  Yeah, because in the climate space, we've always been
• 1:03:39
  obsessed with what's going to happen by 2100 or what the
• 1:03:42
  temperature is going to be. Is it going to be 2.7 or 3.4 or
• 1:03:45
  whatever, whatever. Obviously we've got no clue and,
• 1:03:48
  and that kind of uncertainty we've sort of got to get used
• 1:03:51
  to. And you always seem to be
• 1:03:52
  smiling when I meet you and that's because you're working on
• 1:03:55
  all these positive stuff. But are you still worried about
• 1:03:58
  the, the ultimate climate outcomes or you just like,
• 1:04:00
  actually we've probably got, we're probably going to fix
• 1:04:02
  this. So when it comes to climates,
• 1:04:05
  there's actually this sort of funny irony, I think, like if
• 1:04:09
  you look at climate models over the past 20 years and their
• 1:04:13
  forecasting of like 2100 temperatures, you actually see a
• 1:04:17
  consistent underestimation of how bad and how fast things
• 1:04:20
  would go. Like 10 years ago.
• 1:04:21
  We're still talking about like, oh, by 2050, we'll experience
• 1:04:24
  these damages. And we're seeing actually those
• 1:04:26
  damages happening very much right now already.
• 1:04:29
  So there's been a historical bias to underestimate the pace
• 1:04:32
  of change also in climate science.
• 1:04:34
  I, I'm not trying to diss climate scientists right away.
• 1:04:37
  It's also because they've been really forced to be reasonable
• 1:04:40
  with the rest of the world, right?
• 1:04:41
  So they've been really forced to say, don't be alarmist.
• 1:04:44
  You know, give us the, the lower end of the scenario, not the
• 1:04:46
  high end of the scenario. But we've had this
• 1:04:50
  underestimation of the, of the pace of change among climate
• 1:04:53
  scientists. And of course, we've had the
• 1:04:55
  same underestimation of the pace of change by energy analysts
• 1:04:58
  that have constantly underestimated how fast Electro
• 1:05:01
  tech can roll out. Ironically, we're now sort of in
• 1:05:04
  this situation where we have two underestimations fighting each
• 1:05:08
  other. It's kind of like, what did we
• 1:05:10
  underestimate more as analysts group?
• 1:05:13
  Did we underestimate the pace of climate change more?
• 1:05:16
  Or did we underestimate the pace of electrotech more?
• 1:05:18
  And there it gets into almost like sort of comparing 2 zeros
• 1:05:21
  or comparing 2 infinities to each other, right?
• 1:05:24
  It becomes very hard to say conclusively which one we
• 1:05:27
  overestimator underestimated more.
• 1:05:30
  But the one thing we can at least appreciate, at least I
• 1:05:32
  appreciate, is an irony of the battles now almost, between who
• 1:05:36
  was more wrong, the energy analysts or the climate analysts
• 1:05:39
  about the future of the planet. Who's wronger?
• 1:05:43
  I like that. That's a good, that's a good
• 1:05:45
  endpoint. Hopefully you won't be wrong in
• 1:05:47
  terms of the, the, the repetitive of these, of these
• 1:05:49
  trends. I mean, you're analyzing things
• 1:05:51
  in, I guess in real time. So when you're looking, when
• 1:05:54
  you're looking backwards, it's it's, it's harder to wrong when
• 1:05:57
  you're making projections about the future, which of course.
• 1:05:59
  It's very difficult. Anything we should look forward
• 1:06:02
  to upcoming from any any sort of I'm not asking you to bake break
• 1:06:05
  big news stories that I'm sure you'll want to run for your
• 1:06:08
  media team. But what?
• 1:06:09
  What's next in terms of the the big bombshells are going to
• 1:06:11
  throw at us? Obviously, we need to write
• 1:06:13
  something about Asia and we're currently working on a report on
• 1:06:16
  electric Asia, how to respond to Hormuz.
• 1:06:19
  But actually in broader terms, how electrification is the, the
• 1:06:22
  Asia moment? And then I think same as we
• 1:06:24
  launched last year, our Electrotech Revolution report in
• 1:06:26
  September, we are currently planning for sort of an update
• 1:06:29
  of that where we are talking about the geopolitics and the
• 1:06:32
  energy security implications sort of in, in a larger
• 1:06:34
  resetting of the narrative. Uh, and that will be September
• 1:06:38
  and in between dozens of reports as I think will get us deluge of
• 1:06:42
  data coming out of what's happening with the trade of
• 1:06:44
  Hormuz at Ember. We're trying to get the data
• 1:06:46
  from trade dashboard, etcetera, directly in front of people
• 1:06:50
  across social media and across conventional media.
• 1:06:52
  So I'm sure, I'm sure we're going to get out there over the
• 1:06:55
  coming months with lots of data points.
• 1:06:58
  Well, thanks so much for for taking the time, Dan.
• 1:07:01
  I think pretty much everyone who's been listening to this or
• 1:07:03
  watching it will will come out with a bit more of a smile when
• 1:07:05
  they went in. And so I think you can you can
• 1:07:08
  take that away that you've helped bring some sunshine, some
• 1:07:10
  more sunshine to the world, which is perfectly perfect for
• 1:07:12
  solar power, of course. And so anyway, just yeah, thanks
• 1:07:17
  so much for saving the world from the bad idea that clean
• 1:07:19
  energy is too expensive. It clearly isn't anymore.
• 1:07:21
  And you at Ember have done more to demonstrate than anyone.
• 1:07:24
  So again, thanks. Thanks for joining us on the
• 1:07:26
  show. Thank you, Mark.
• 1:07:31
  Thanks so much for listening to Saving the World from Bad Ideas,
• 1:07:33
  a We Planet podcast we plan. It's a movement of citizens and
• 1:07:37
  scientists dedicated to defending the science and
• 1:07:39
  solutions we need to save the world.
• 1:07:41
  Please do subscribe and share a nice review.
• 1:07:43
  It helps us spread the message. We'd also love to hear your
• 1:07:45
  feedback and suggestions at our e-mail podcast at weplanet.org.
• 1:07:50
  Please also join our podcast mailing list and we'll let you
• 1:07:52
  know when a new episode drops. Just go to Saving the World from
• 1:07:55
  badideas.org or weplanet.org podcast right now.
• 1:07:59
  See you next time.