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Strictly Business Interview with Michael Power · Strictly Business

• 0:00
  You're listening to Strictly Business Podcast with Lindsay Williams.
• 0:05
  When my next guest was full-time at 91 in Cape Town, he consults to them now
• 0:11
  incidentally,
• 0:13
  we spoke fairly often and he always added a certain gravitas and dare I say elan to
• 0:18
  my
• 0:18
  podcast.
• 0:19
  And he's back now in the guise as a contributor to The Daily Maverick, the
• 0:25
  excellent Daily Maverick,
• 0:27
  and it's Michael Power.
• 0:29
  Michael Power, I've missed you.
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  Welcome back.
• 0:33
  Thank you, Lindsay.
• 0:35
  Long time no speak.
• 0:37
  Too long time no speak.
• 0:39
  Yes, and we'll rectify that right now and in the future, I hope.
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  Now, an article on wind power and other renewables caught my eye.
• 0:43
  That was your last contribution to Daily Maverick.
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  And it sort of coincided with an ad campaign on Dutch television for a company
• 0:51
  called Vattenvaar.
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  It's a wind power company and it's engaged the services of Samuel L.
• 0:55
  Jackson.
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  And at the beginning he said, Well, he said a rude word.
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  And then he said wind farms, loud, ugly and harmful to nature.
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  And then rather whimsically, he said, now, who said that?
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  And of course, he's talking about Donald Trump.
• 1:09
  And that is a big theme in your article.
• 1:13
  Indeed, it is.
• 1:15
  Although I use a slightly more eloquent way of introducing it.
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  I talk about Don Quixote on his nag, Rossinanti,
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  tilting his lance at windmills and calling them monsters.
• 1:27
  But.
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  But truly, we haven't really progressed much from that.
• 1:31
  No, we haven't.
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  What I really need to know, you're going to give us the detail because there's a
• 1:38
  lot of detail in your article,
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  a lot of statistics and comparisons, etc., particularly between the United States and
• 1:45
  China.
• 1:47
  But what Trump has done, is it disastrous for the renewables movement?
• 1:49
  And perhaps you could tell us what he's done as well.
• 1:53
  Well, I think that, I mean, at the most basic level, he has given in.
• 1:57
  to the oil lobby.
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  And I think that, I mean, he is in hock to the oil lobby, probably because they
• 2:06
  supplied a lot of money for his reelection.
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  I also think that it just fits neatly with his own almost antiquarian thinking on
• 2:13
  where the
• 2:13
  US is.
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  And he has this sort of rather naive belief that we can go back to, I'm not
• 2:19
  sure if it's the 1950s or the
• 2:21
  1850s, but one of them.
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  And somehow that this sort of almost
• 2:25
  glorious world that was existing then and portrayed on television and the like can
• 2:31
  somehow be restored.
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  It's just, you know, it's tilting at windmills.
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  He is in Khao Kukulant and the Chinese are laughing all the way to the wind bank.
• 2:42
  And I'm afraid the United States is heading for a really bad reckoning.
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  It's quite sad to watch, particularly since I have a fleeting admiration for the
• 2:54
  old US that was.
• 2:56
  but I'm afraid I don't have that admiration any longer.
• 2:57
  Yes, he has a fleeting admiration for the Rockefeller era, of course, you know,
• 3:04
  digging holes.
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  I'm a great fan of the, actually, of the first Roosevelt, who was a Republican who
• 3:10
  took on the Rockefellers of the world.
• 3:12
  That's my, I know he's not without his bad side,
• 3:14
  but early Roosevelt was a remarkable individual.
• 3:19
  The United States produces 21 million.
• 3:22
  barrels of oil a year.
• 3:23
  That's opposed to the Saudis who produce 11 million.
• 3:28
  Why is it so important that the mix, the American mix,
• 3:33
  goes more in favour of renewables and away from fossil fuels, Michael?
• 3:39
  Well, first of all, renewables are incredibly cheap.
• 3:41
  Indeed, the feedstock is free.
• 3:44
  You don't pay for wind, you don't pay for water, and you definitely don't pay for
• 3:51
  sunshine.
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  And all of those arrive on your doorstep and you just have to make the most of
• 3:55
  them.
• 3:56
  You don't have to dig them out of the ground like you do with oil or gas.
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  And that can be extremely expensive.
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  In fact,
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  I think that break-even rate for most of the shale projects in the United
• 4:08
  States is about $60 a barrel.
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  So first of all, it's much, much cheaper.
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  Once you've got it up and running and you've borne the costs of establishment,
• 4:19
  the running costs are incredibly low.
• 4:21
  It's then also because the Chinese have come up with this incredible thing called
• 4:26
  ultra-high voltage transmission,
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  which sounds incredibly boring,
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  but basically it allows them to transport electricity to 3,000 kilometers without
• 4:35
  basically losing any along the way.
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  Previously, you were broadly restricted to about 150 kilometers from the point of
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  generation
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  before it became economic to send it further.
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  The Chinese have completely overcome that problem.
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  And the result is they've got these two massive deserts in the northwest of China
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  called the Gobi, which we all know of, and then the Taklamakan,
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  which is almost as big as the Gobi, which are both sun traps and wind traps.
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  And they've just set up an enormous array of turbines and solar panels there.
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  And they are just bringing in enormous amounts of electricity as a result to the
• 5:16
  East Coast.
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  Well, this is very interesting, Michael.
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  Sorry to interrupt.
• 5:18
  This then means that the floating wind farms that have been mooted for quite a
• 5:25
  while now can be a
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  reality.
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  You can stick these things out into the wildest waters of the Atlantic and the
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  Pacific and transport
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  electricity back.
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  I mean, that's what it sounds like.
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  In fact, the largest wind turbine in the world is offshore China.
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  And you and I will appreciate the reference.
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  It has a diameter that is three and a half rug.
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  rugby fields wide.
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  Good lord.
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  That's enormous.
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  Enormous.
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  Now, take it one stage further and be quite boring and engineering about it.
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  The amount of materials technology that was required in order to be able to
• 6:02
  withstand the torque that is
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  generated from that monster turning round, you know, they basically had to reinvent
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  metal, which they've done,
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  in order to be able to get this thing to stand up there and indeed withstand.
• 6:14
  hurricanes and tornadoes and the rest of it, which it's done so.
• 6:18
  Okay, so the future is renewables, and Donald Trump is obviously not the future.
• 6:22
  Rather, Donald Trump's policy is not the future.
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  And I look at my electricity bill every month.
• 6:29
  It's not particularly low, but I look at it anyway, and it's broken down.
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  It tells me where I get my power from.
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  Number one is wind, number two is solar, and number three is biomass.
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  So there's no coal or nuclear or anything involved there.
• 6:44
  And I wonder when the United States will ever get to that sort of position,
• 6:48
  Michael.
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  Well, look, it was traveling in that direction in a hildy-pigldy sort of way.
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  And indeed, you know, Joe Biden would have probably pushed it further or any Democrat
• 6:58
  would have pushed it further.
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  The oil lobby in the United States is still unbelievably powerful,
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  regardless of whether it's Democrats or Republicans that are running the place.
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  There is this delusion that somehow just because we've become, you know, the
• 7:12
  world's largest oil and gas producer.
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  that somehow, you know, we've nailed the energy problem.
• 7:15
  They've actually, obviously, because of all sorts of eco considerations, they've
• 7:21
  compounded it.
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  But it comes back to the basic point that the cost of that energy is so much higher
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  than it would be for wind or solar or indeed hydro,
• 7:32
  which the Chinese are doing some extraordinary things as well.
• 7:36
  The sort of example that you've given of the desert, it.
• 7:41
  the deserts in China, where only, and I'm not being facetious here, well, actually I
• 7:46
  am,
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  where only a few lizards will be squashed with these windmills being plonked into
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  the sand or the rock or whatever
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  it is, can't be applied to a lot of other countries, for example, a sunny country
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  like South Africa,
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  because of the pristine environment across most of the country.
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  Well, actually, it is being applied to South Africa.
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  In fact, Two years ago, and I haven't seen last year's figure,
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  South Africa was the fifth largest importer of wind turbines in the world.
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  So there are vast areas of South Africa, and many of them actually will work
• 8:20
  through winter as well as summer, like, as you know,
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  the northwest of South Africa.
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  But that can actually both host particularly solar.
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  But the West Coast itself is one of the best wind traps in the world.
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  It's basically because it's a west facing.
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  Across the sea, it's one of those sort of areas like Chile.
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  And the amount of facilities that are now going into the West Coast is quite
• 8:44
  extraordinary.
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  So, yes, I think South Africa, I mean, I've heard and I've not seen how this has
• 8:49
  been calculated.
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  But one estimate is that because of the mess up of Eskom a few years ago and the
• 8:56
  need for us to look at renewables,
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  the renewables that have been installed since that happened have now taken us up
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  to what was called level six in terms of load
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  shedding.
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  So we are now covered up to level six with renewables,
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  which creates a buffer in South Africa that is quite extraordinary, which is why,
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  touch wood,
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  we don't have load shedding now.
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  I went off at a tangent because we were supposed to be concentrating on the US
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  versus China.
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  And when we think of the US versus China, we think of AI and we think of military
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  and we think of all sorts of different
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  geopolitical nastinesses.
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  But back to renewables.
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  Is it important that the United States catches up even after Trump?
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  And if so, why is it important?
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  Look, I think that if we want to go back to Ecos 101, sorry, Physics 101,
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  you will know that energy transferred is work.
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  So it is the most basic equation in basically life.
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  You know, this world does not function without sunlight coming in, performing
• 10:01
  photosynthesis on plants,
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  allowing that to become food for all the species that live here.
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  That then gives us the energy to do what we do.
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  So we need energy.
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  And we need it in vast quantities.
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  And you mentioned AI.
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  One of the ironies of ironies at the moment is that the AI industry in the
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  United States is potentially going to be tripped up because it simply doesn't have
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  enough electricity for what is going to be needed over the next five to 10 years.
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  It's probably the Achilles heel of the AI industry in the States.
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  So energy is needed, but it's also being needed.
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  And I think we're moving out of what I would call a petrostate to an electrostate
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  world.
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  And the United States is getting left behind.
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  There are factories now operating in China that are pretty much totally without human
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  involvement.
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  Not, you know, I'd say 99%, but there is one, and you can look it up on YouTube.
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  It's wonderful.
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  It's called the Dark Factory.
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  It's a Xiaomi cell phone manufacturer just outside of Beijing.
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  And it operates without humans.
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  And it produces 10 million handsets a year.
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  Gosh.
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  The new...
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  BYD factory in Zhengzhou, which will be 10 times the size of the largest factory that
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  Tesla has,
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  16 production lines, 1 million car units per annum, 2 EVs per minute,
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  is entirely run off electricity.
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  So we're moving into this world where electricity is essentially going to power
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  not just industry,
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  but services and life itself.
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  And it's quite clear looking at the long-term projections that that the age of
• 11:40
  carbon is moving behind us.
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  Of course, and the car example is a very good one and a very pertinent one because
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  BYD is building a factory that is 10 times bigger than anything that Tesla's got now.
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  It means that everyone in China, or the majority of Chinese car owners,
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  will be Chinese electric car owners and they need electricity, of course.
• 12:01
  Well, in 2022, there are 11 million electric cars in China.
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  By the end of this year, there'll be 44 million.
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  That's up, you know, four times in four years.
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  That plant that BYD has built is twice the area of downtown San Francisco.
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  It's absolutely massive.
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  These things pass the mainstream media by, don't they, Michael?
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  Well, they don't pass you by.
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  Now, tell me, the Trump policy, the Trump administration's policy of, you know,
• 12:30
  removing...
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  certain tax breaks and all that sort of thing is obviously a setback to the
• 12:37
  renewables industry in the United States of America but
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  it'll get back when the next president comes in they'll get back won't they
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  they'll claw their way back
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  from the setback yeah
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  they might but um you know the fact of the matter is is that that as I said at the
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  outset you know there's 1.4
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  billion Chinese people laughing at what the United States is doing at the moment
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  they're They're basically taking time out from the great race of the
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  21st century.
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  And that is an energy race.
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  It is not an AI race.
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  And just to make the point, doubly make the point, you can't have AI without
• 13:08
  energy.
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  So get the energy sorted out and then you can have AI.
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  And they're basically taking time out for four years.
• 13:15
  Yes, they might be able to get back.
• 13:16
  But as things stand at the moment,
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  China is responsible for two thirds of all solar and wind installations currently
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  happening.
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  Of the nuclear power stations that are under consideration, there are 65 in the
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  world, 30 of them will be built in China.
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  The hydro capacity, they're just putting in this new dam, which is three times the
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  size of the Three Gorges Dam.
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  And broadly speaking, we'll be able to match the entire HEP,
• 13:44
  hydroelectric power output of the United States, on an annual basis.
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  You know, these numbers, and that's why I, as you saw in the article, completely
• 13:52
  bludgeoned
• 13:54
  the reader to death almost with the data.
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  But you just have to in order to, as you said, the mainstream media doesn't pick up
• 14:02
  on this and it just seems to be letting it
• 14:04
  pass by.
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  Meanwhile, the Chinese are almost delighted the fact that they're not being
• 14:08
  spotlighted for
• 14:10
  what it is that they're doing because they're creeping up and taking over.
• 14:12
  In fact, my latest presentation, it says how China has risen to the top of the
• 14:18
  world of tech without the US or Wall
• 14:20
  Street realizing it.
• 14:22
  We've described with all the the idea of how much electricity they need.
• 14:25
  Chinese policymakers will sit down and say, we project that we need this amount
• 14:31
  of electricity in 5, 10,
• 14:33
  20 and 50 years time.
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  And they present it to somebody and they say, OK, do it.
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  There's the desert.
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  Go and stick the wind from.
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  You can't do that in the United States because of the layers and layers of
• 14:43
  bureaucracy.
• 14:45
  No.
• 14:47
  And at least and there's also this other problem is that to some extent.
• 14:48
  Because they're only dribbling the new electricity supply onto the market very
• 14:54
  slowly,
• 14:54
  there is a political dimension.
• 14:56
  I mean, I don't know whether you know, but electricity prices in the United States
• 15:02
  are rising at quite a material clip above the rate of inflation.
• 15:04
  Yes.
• 15:06
  And it's becoming a political hot potato now because basically the data centers
• 15:10
  that are required to run these
• 15:12
  large language models are just so power hungry.
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  And they are essentially crowding out you and me.
• 15:16
  And so.
• 15:16
  So electricity prices are just going up.
• 15:19
  They haven't gone up for five years in a row in China.
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  Reason being is, and it goes back to your point,
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  the people who planned all of this have brought on supply to match what they
• 15:31
  consider to be the rising demand.
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  And broadly speaking, they've done it at the right rate.
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  So, yes, you're right.
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  In the United States, they can't do this.
• 15:38
  And then, of course, you've got a government that basically is trying to put
• 15:44
  all sorts of blockages in the way of.
• 15:46
  particularly renewable energy and then just say, no, don't worry, we'll supply it
• 15:51
  all by gas and coal and oil,
• 15:53
  all very eco-friendly.
• 15:55
  And it's not happening nearly at the rate that is actually required.
• 15:56
  You started to write your piece with a point in mind, and you've made many of the
• 16:03
  points, but can you sum it up for us,
• 16:05
  please, Michael, what you've said and why what you've said is so important?
• 16:09
  Well, in the great race of the 21st century, which is ultimately an energy
• 16:13
  race,
• 16:15
  and how the world is transitioning from being petrostates to electrostates.
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  The US is throwing in the towel and China is running away with the winning cup.
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  And it's largely not being appreciated by Western financial media.
• 16:29
  Very good.
• 16:30
  What can we expect next on the pages of Daily Maverick, please?
• 16:34
  I'm doing a piece on AI, partly because it just has completely and utterly
• 16:39
  overwhelmed my inbox.
• 16:41
  And it's taking up almost 50% of my reading time at the moment.
• 16:43
  And there's a very interesting and, again, untold story that's beginning to emerge on
• 16:48
  AI.
• 16:48
  First of all, if you read most Western financial media,
• 16:52
  all they talk about is AI as represented in large language models.
• 16:57
  And that seems to dominate most of their thinking.
• 16:59
  And that, of course, translates into, you know, NVIDIA being the most valuable
• 17:06
  company in the world and the tech element of the
• 17:08
  Magnificent Seven doing extraordinarily well and the stock market reaching new
• 17:10
  time highs.
• 17:12
  But actually, there's essentially...
• 17:14
  two in the large language model story.
• 17:16
  There are two side-by-side philosophies.
• 17:19
  One which is dominated by the Americans, which is the closed model, or the closed
• 17:25
  weight model, as it's sometimes called.
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  And the other, which is the open weight model, which of course is dominated by
• 17:29
  China.
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  And Chinese approach is catching up.
• 17:34
  with the American approach very fast and probably will soon start to overtake it.
• 17:38
  The interesting thing about the Chinese approach, and there's a good analogy here,
• 17:43
  it's a bit like Linux.
• 17:45
  You know, we've almost forgotten about Linux, but it's there in the world of
• 17:50
  computer software.
• 17:52
  In fact, I found out yesterday that the top 500 supercomputers in the world are
• 17:57
  all run on Linux.
• 17:59
  They have nothing to do with Windows.
• 18:01
  I haven't heard the word Linux for years.
• 18:03
  Exactly.
• 18:05
  And it's a fascinating subject once you get into it and look at it.
• 18:07
  I mean, my God, it underpins the world of big computers exclusively.
• 18:10
  Microsoft does not get a look in.
• 18:13
  And what is potentially going to happen is a parallel sort of development where open
• 18:20
  source
• 18:22
  large language models, which, by the way,
• 18:22
  don't require as spectacularly sophisticated microchips to be able to
• 18:29
  operate, nor do they require.
• 18:31
  heavy-duty data centers that consume huge amounts of electricity.
• 18:34
  They're a much cheaper way to run large language models.
• 18:38
  And the Chinese are winning hands down.
• 18:40
  They're winning in the open source or open weight race.
• 18:45
  The Americans are still winning for now in the closed source race.
• 18:51
  And so it's a fascinating side-by-side tussle that is emerging.
• 18:55
  Again, not picked up by Western financial media,
• 19:00
  because there are very few companies that are listed that reflect the open source.
• 19:05
  philosophy.
• 19:07
  Most of the companies that are listed are either in the closed source area or, like
• 19:13
  NVIDIA,
• 19:13
  supplying that area.
• 19:15
  And it's just going to be, oh my God, it's just going to come out of left field.
• 19:19
  And suddenly, like Linux, people are going to realize that actually there's a vastly
• 19:25
  cheaper way and more
• 19:27
  efficient way and less energy intensive way of being able to run large language
• 19:31
  models.
• 19:33
  And it doesn't involve necessarily going down the the closed route of the
• 19:36
  Americans.
• 19:36
  You'll probably cover this in your article, but does that mean then that if
• 19:41
  someone says,
• 19:41
  I don't want to buy NVIDIA because I can't bring myself to buy something that's gone
• 19:47
  from $1 to
• 19:49
  $160, whatever it is now,
• 19:50
  so there must be Chinese AI-linked companies listed on various exchanges in
• 19:57
  the Far East?
• 19:59
  There are, and there are a couple of plays, and if you want to look at one on a
• 20:03
  chart, look at Cambricon, which is
• 20:05
  an interesting sort of NVIDIA light option that's potentially emerging in China. And
• 20:11
  nobody's really heard of it,
• 20:13
  but it's a fascinating chart.
• 20:15
  It's one which almost eclipses NVIDIA in terms of its stratospheric rise.
• 20:18
  And I worry about stratospheric rises.
• 20:20
  But the point being is that, no, there are some stories and there are ways of playing
• 20:27
  the China game, as it were.
• 20:29
  But I think it's really this sort of philosophical head-to-head that's taking
• 20:32
  place at the moment.
• 20:34
  It is absolutely fascinating and is not being, broadly speaking, talked about,
• 20:36
  partly because you get buried in jargon and acronyms and the rest of it.
• 20:40
  And it's actually quite difficult to understand.
• 20:42
  So what I'm trying to do is to essentially shake all of that off and write it down in
• 20:49
  a way which
• 20:51
  you and I can understand.
• 20:53
  Michael, I don't know how to sign off.
• 20:55
  I don't know what your business card, your digital business card would be.
• 20:56
  I've got a picture of you here on WhatsApp.
• 20:59
  So you were a fisherman.
• 21:01
  You're a contributor to the Daily Mavrit.
• 21:03
  You're a fisherman.
• 21:04
  But what else are you?
• 21:05
  At the moment, I'm really starting to think deeply about what's actually
• 21:12
  happening in the global economy.
• 21:14
  And I do.
• 21:16
  I'm going back to history.
• 21:18
  I'm reading a lot into sort of strange areas.
• 21:18
  The latest thing is something called the Heartland Theory,
• 21:22
  which I think is being re-invoked by the Chinese and was done so in Shanghai last
• 21:28
  week.
• 21:28
  Or sorry, not Shanghai, Tianjin.
• 21:30
  and Beijing to some extent when they had their big parades.
• 21:34
  But basically, it's bringing together all the Asians into one big group, one big,
• 21:39
  Xi Jinping even uses the phrase, family.
• 21:42
  And the idea of seeing the Russians,
• 21:45
  the Indians and the Chinese glad-handing each other in Tianjin should have made
• 21:51
  people woken up.
• 21:53
  This is a really big shift.
• 21:54
  And that's sort of what I'm concentrating on at the moment.
• 21:58
  So you're a thinker as well.
• 21:59
  Michael, thank you very much for your time.
• 22:00
  Michael Power will be back very soon with an AI expose.
• 22:06
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• 22:13
  various contributors and do not reflect the policy,
• 22:15
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• 22:17
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• 22:22
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• 22:29
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• 22:31
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• 22:35
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• 22:37
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• 22:37
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