0:11

Hello, and welcome to another episode

0:14

of the fully charged podcast. There's

0:17

quite a lot of activity

0:20

that goes on behind the scenes in

0:22

every in every industrial and

0:24

governmental apartment

0:27

as you I'm sure you can imagine. You know,

0:29

that's not public facing. So we often

0:31

know about the sort of public facing stuff

0:34

are big companies and car makers and

0:36

electricity companies and where

0:39

people you buy your electricity from. But we

0:41

don't know what goes on behind the

0:43

scenes with the organization of things

0:45

like a grid in a

0:47

country or AAA

0:49

kind of background of energy generating

0:52

and how it's done and who pays for it and

0:54

where the money goes and how

0:56

it all fits together in a mock kit

0:58

place. And one of the most complicated market

1:01

places I've ever thought

1:03

about tried to understand this to people

1:06

talking about is the energy market. Because

1:08

you can I can sort of understand you

1:10

make car, so you buy iron

1:13

ore from some from mining company

1:15

and you buy plastics and rubber

1:17

from an oil company and

1:19

you buy electronics from maybe a Chinese

1:22

company and you put that all together and you

1:24

make a thing and then you sell it. And

1:26

that's kind of, you know, it's complicated, but

1:28

it's sort of understandable. And

1:31

you've got to sell it for more than you make it for or you

1:33

go bankrupt and all those things, you

1:35

know, that I can understand energy

1:38

markets, mind boggling.

1:40

And I had a really good education

1:44

in this and really an education

1:46

in realizing how little

1:49

I understood earlier this year

1:51

in in Oxford in the

1:53

UK. When I attended a

1:55

conference Aurora

1:58

Energy Finance Day, Aurora one their

2:00

energy analytics. I think is their

2:02

official term. I'm just gonna make sure. No. It's not

2:04

even that. It's Aurora Energy Research.

2:07

So they spend and there's

2:09

like not one or two. There's three hundred of them

2:11

around the world in this organization that

2:13

study energy market, study

2:16

new technologies that are being introduced into

2:18

the energy sector. Study

2:21

the impact that solar has on the coal

2:23

industry or the impact that wind has

2:25

on gas turbines on, the impact

2:27

that renewables and

2:29

storage has on the nuclear industry. And the impact of the

2:31

nuclear industry has on the gas industry, all those

2:33

relationships incredibly complicated.

2:36

How do we how we pay for electricity?

2:38

How much? How the electricity

2:41

price is set by the most expensive

2:43

generating form, not by the cheapest,

2:46

but by the most expensive. Who

2:48

makes the Who's making the money? Where

2:50

the investment's going? They're giving advice

2:52

to governments, to companies, to big banks,

2:54

to hedge funds about where

2:56

they invest their money. And is it sensible

2:59

to invest in renewables, for example?

3:01

And that was one of the things learned that day.

3:03

Yes. It definitely is. That's where

3:05

the big money is going now. Other

3:07

than nuclear, it's it's going into

3:09

renewables, it's not going into coal

3:11

and gas. And so

3:13

I really wanted to try and dig deeper

3:15

into that. The reason I was at that

3:17

conference is because I was on one of the panel. About

3:20

electric ground transport. And

3:22

it was it was embarrassing

3:24

because the people there were proper, clever.

3:27

Well informed people. I was at the

3:29

very bottom of the the food chain,

3:31

if you like, of that particular gathering. I mean,

3:33

there's thousands of people there, and my goodness. They

3:36

were they were I wouldn't be possible to

3:38

meet someone who knew less about

3:40

everything to do with the energy transition and

3:43

electric transport and everything else.

3:45

Materials needed for batteries. Materials

3:47

that are put into wind turbine manufacturing. Everything.

3:50

Recycling wind turbine blades, all

3:52

those things. So

3:54

I then got in touch with the

3:56

company behind the Aurora Energy

3:58

Research. I've

4:01

talked to a few of them, and there were some alarmingly

4:03

clever, very young people, which we mentioned in

4:05

this podcast. I mean, I'm talking very looked

4:07

like. They just left school and

4:10

they were so well informed and such confident

4:12

public speakers fascinating. So one day,

4:14

I hope to get some of them on the show as well.

4:16

But I I just spoke in in this

4:18

episode too, doctor John Feddersen is

4:20

the the CEO and founder of

4:22

Aurora Energy Risk

4:24

Search. Am I saying research?

4:28

Yes. Because I say research,

4:31

but then I've suddenly realized I'm saying

4:33

research, which I believe is like more American

4:35

phrasingology. And that is slightly worrying because

4:37

I don't do it consciously. Emera

4:40

Arora, energy research. Yeah. You'd say

4:42

research in American. And

4:44

you say we say research. How

4:48

interesting is that observation? I'll

4:50

tell you, here's the here's the interest of

4:52

water. Tong, it's just fallen off.

4:55

It's dropped. We

4:57

talk about long duration batteries. Price

4:59

cap cannibalization. The

5:02

business case for base load providers, do

5:05

we need base load? They

5:10

are yes. How to how to avoid

5:12

getting Russian gas into Europe,

5:14

how to not use Russian gas to

5:16

produce the heat and energy that we need

5:18

all these things. They're fascinating.

5:21

Nuclear power. So I if you're interested

5:23

in this topic, at all, you're gonna be fascinated

5:25

and what is brilliant? John's got a

5:27

real skill because clearly he

5:29

is alarmingly well informed about these

5:31

things and there is a whole language

5:34

of an internal language that's

5:36

used in the energy industry to

5:38

explain market trends and

5:40

price caps and all that. Really be complicated.

5:42

We don't do that. We don't go

5:44

there with that. We're it this is a I don't

5:46

think it's anyone who come who who's

5:49

competent at basic

5:51

understanding of English, who won't understand

5:53

what we're talking about. And I mean, I needed

5:55

it like that because I don't understand a huge

5:57

amount of it. It is a very complex topic.

6:00

So that is the introduction to this.

6:02

I'm gonna mention because

6:06

just before we start, I'm gonna mention

6:09

my energy because we we've we've been sponsored

6:11

by managing for a long time on this

6:13

podcast. And I know that is coming to an

6:15

end, and it's fantastic. We're not upset.

6:17

We're very happy that

6:19

they supported us for so long, and we're very

6:21

happy that this podcast now can

6:23

support itself, and we don't need to have

6:25

that direct injection to

6:27

keep it going. But I do

6:29

wanna kind of say a massive thank

6:31

you to them. What they're doing is

6:33

amazing. They've been winning awards

6:36

recently, which is a really well deserved.

6:39

And all I'll say about them is just go to the

6:41

my energy website because it's it's really

6:43

interesting to see what is on offer, what

6:45

they're doing, how popular their

6:47

stuff is, I'm amazed when I see it

6:49

like a video of someone who's got a Tesla in

6:51

Australia or New Zealand or a America,

6:53

and they've got a zappy charger. They've

6:55

really you know, they're and why have

6:57

they got a zappy charger? Because they're why

6:59

did that person choose it? Because they're really

7:01

good. And they really

7:03

work. This is a ball mounted charge that you

7:05

have in your house. And if you've

7:07

got solar panels, Do

7:10

you want a Zap each an electric car? You want

7:12

a Zap each? Because that's what makes the two things work

7:14

together so well. Have a look at all their

7:16

other projects. All their other products including

7:18

the the the

7:20

new battery, which I've now managed to forget

7:23

what it's called, the Libbey, isn't it? I think it is.

7:25

The Libbey. And the Eddy, which

7:27

is a controlling system that's in

7:29

your house that does I've got an

7:31

Eddy here. It does really clever. Don't know what it

7:33

does. It's in a cupboard. It never makes any fuss.

7:36

So so if you go to my energy dot

7:38

com, MYENERGI

7:41

dot com, it's all there. Don't

7:43

wanna go on about it too much but just a big thank

7:45

you to MyEnergy for supporting the fully

7:47

charged show over the last oh, the

7:49

fully charged podcast over the last

7:51

year or so. And

7:53

then as you wanna quickly mention that we

7:55

will you may notice when you

7:58

hear or watch these podcasts that doctor

8:01

doctor is Australian.

8:03

He's from Melbourne originally, although he's lived

8:05

in the UK for a long time. And

8:08

we are going to Australia and we are going

8:10

going to be at the

8:13

Sydney exhibition center on the eleventh and

8:15

twelfth of March next year.

8:17

In what is now, I can

8:19

come So you're gonna be an amazing

8:22

show. We got incredible people

8:24

speaking there. We've got such a huge

8:26

amount of stuff on display. I'm really impressed.

8:28

There's a kind of really exciting

8:31

explosion of interest in renewables,

8:33

in energy storage, in electric

8:35

vehicles, in electric ground transportation, generally

8:38

in massive mining

8:40

vehicles that are electric I mean,

8:42

amazing stuff going on in Australia.

8:45

Huge amounts of solar, not

8:47

surprising. So we're very, very

8:49

excited about being there. If you're in

8:51

Australia and you're anywhere near

8:53

Sydney in March, do come along. It's gonna

8:55

be amazing. But

8:57

that's it. So let's get on with this week's

9:00

podcast, which is let's just

9:02

welcome. Doctor John Feddersen

9:04

Aurora Energy research to

9:06

the fully charged podcast. So

9:15

John, thank you for I know you're incredibly

9:17

busy, high pressure individuals. So it's very

9:19

kind of you to to find time

9:21

to talk to us. Mean, I just wanna give a

9:23

little bit of brack background because I was

9:25

so sorta I don't know what it was,

9:27

flattered, honored, and hugely

9:29

feeling hugely inadequate when I spoke at your

9:32

conference in Oxford, which was

9:34

amazing. I mean, I had such an I

9:36

was dizzy. With data when I

9:38

left that place because I've got you

9:40

know, everyone I spoke to

9:42

horrifyingly intelligent and well informed.

9:44

Everyone whose talks I watched

9:46

fascinating. One talk

9:48

I really wanted to get into, I couldn't get in

9:50

the room. That was the I talk about batteries. I

9:52

I just couldn't get in. It was in

9:54

between two of my talk. So and

9:56

it was just jam packed. It was just a wall of

9:58

backs standing room only. So

10:00

that was and I think

10:03

shows interest in the

10:03

topic. Yeah. I heard

10:06

about that one. And unfortunately, my job

10:08

is to if it's ever packed

10:10

because it's my event, don't don't enter the

10:12

room. Yeah. So I've been out on all the most

10:14

packed ones. But, I mean, Robert, the

10:16

honor the honor was all ours. I mean,

10:18

it's such a good day. I think for any energy

10:20

nerd, it's such a fantasy lad for the

10:22

day that that that that event is is what

10:24

we've tried to create. So -- Yeah. -- it was not a

10:26

lot a lot of you were there. Oh, it was a great

10:28

a great joy to be there. So but can you

10:30

give us a I'll let you

10:32

explain what Aurora is because I kind

10:34

of know but I know I get it

10:35

wrong. Yeah. So if you can because it's such a

10:37

fascinating anyway, you

10:39

you explain what it is because I I yeah.

10:42

Yeah. So we're we're we're a subscription

10:44

research business in the power sector. And the

10:46

premise I mean, you go back to the start. III

10:49

was studying in the UK when

10:51

I started, I was just finishing my PhD when I

10:53

started the business. Mhmm. And

10:55

the premise was basically power

10:58

markets are getting a lot more

10:59

complicated. Yeah. were moving from

11:01

a world in which most

11:03

of the power generated was from large

11:05

power stations. They were run by fossil

11:07

fuels primarily or nuclear.

11:09

The grid had been built a long time ago

11:12

and there was enough grid capacity. And

11:14

what was changing was the

11:16

sources of of generation, you know,

11:18

renewables are more complicated

11:20

in a sense to think about from an

11:22

analytical perspective because they

11:24

produce power when the weather is

11:26

conducive, and they don't, when they're not, and

11:29

they're also built in places where the grid didn't

11:31

exist. Yeah. And similarly, other

11:33

technologies like EVs and batteries that

11:35

were starting to integrate with the grid

11:37

came along. So the premise was things

11:39

are getting more complicated and

11:41

I thought along with

11:43

with early investors in the business.

11:46

If we can take the modeling very

11:48

seriously, then we can help people make

11:50

better decisions. Yeah. It worked.

11:52

So we've grown. We're now about three fifty

11:54

people globally. With the

11:56

presence in Europe, the U. S. We've never raised

11:58

capital. We've always been

12:00

profitable. We've just continued to grow and serve our

12:02

client base. And so what we

12:04

really help people with is

12:07

long term decisions. Right. Whether that's

12:09

a private sector investor saying

12:11

does it make sense for me to build a

12:13

battery in this particular location given

12:15

the revenues? Or will

12:18

a wind farm be profitable there? They

12:20

might ask, what would happen

12:22

if government increases or

12:24

the European Parliament increases the

12:26

carbon price? What does that do to the

12:28

business model for the thing I'm thinking about

12:31

investing in right now. And

12:33

policymakers also, you know, government will

12:35

often will often ask for our view

12:37

on What would a particular policy

12:39

or regulation do to

12:41

the market prices of

12:43

electricity, those sorts of things.

12:45

Right. The one thing we don't do, Robin, you know, we do a

12:47

lot of analysis around forward looking

12:49

for forward looking analysis

12:51

in power markets. But we're

12:53

not advocates of anything. Right? So

12:56

the the premise behind the business is

12:58

it's a subscription model. And

13:00

so no one is more than a

13:02

percent or two of our revenue base.

13:04

And so no one has

13:06

editorial influence, and that was a very

13:08

deliberate decision early on because we think

13:10

that's the best way to think about the future. So we're not

13:12

here to say how fast we should go

13:14

towards net zero. We're not here to say what the

13:16

carbon price is. We're not here to say how much

13:18

attention it should pay for their power bill. We're

13:20

here to do the quantitative analysis

13:23

that hopefully helps inform Demradically

13:26

elected people around those sorts of decisions.

13:28

Yes. No. That's a very good

13:30

description. III understand that, and I'm hoping

13:32

that I'll listen as well. I'm sure they will. I

13:34

mean, can you give us an idea though of your because

13:36

you mentioned your client base. So that I'm

13:38

I'm assuming power

13:40

companies you know, in I guess even like

13:42

investment people who are going who aren't necessarily

13:44

part of thinking we want to invest

13:46

x million in a wind farm or

13:48

a solar farm or there. Is that is that sort of

13:50

area that your that your

13:52

clients Yeah. So we've got we've got, I

13:54

think, over six hundred clients now

13:56

globally and it's people

13:58

it's people who are invested in

14:00

producing electricity. So your

14:02

traditional utilities, like your British

14:04

Gas Centrica and your SSE and

14:06

your RWE in Germany, your

14:08

Iberdrola in in in in in Spain.

14:10

Yeah. It is a lot

14:12

of people who are in the developer

14:14

or the renewable

14:16

investor ecosystem. So,

14:18

you know, there's a there's a group of people who are

14:20

developers that ranges every you everything

14:22

from the guy in Cornwall

14:24

who knows how to shake hands with the

14:26

farmer to to secure a lease on the land

14:28

to build the solar farm. All

14:30

the way. And and at some point, you know, they

14:33

they're starting to build a solar farm. They wanted to

14:35

bring in investors and and

14:37

larger developers. All the way

14:39

through to big infrastructure funds like BlackRock,

14:42

who deploy capital globally.

14:45

Suppliers like Octopus, for example, in --

14:47

Right. -- in this country. And

14:49

and the big oil and gas companies. And as

14:51

you'll know, the shells, the BPs

14:53

of this world are getting increasingly

14:56

serious us about the energy transition and

14:58

they subscribe to Aurora services globally

15:01

to help them make better decisions

15:03

in the in the in the

15:05

electricity space. The networks is

15:07

another one, I should say. But, you know, there

15:09

are relatively few networks because they're

15:11

monopolies. So it's not a whole It's the whole

15:13

garment and government I didn't mention, but

15:15

-- Right. -- governments around the world

15:18

subscribe to our services because

15:20

they they find it a useful way to

15:22

to to get insight into the long run decisions

15:24

they're making. Right. And when and your it

15:26

sounds like you're mainly

15:28

focused on elect on electric on generating distribution

15:31

sales of electricity. What about

15:33

because, I mean, it is it's still a

15:35

it's a hot topic. I saw in one of

15:37

your list of topics was, you

15:39

know, Europe and Russian gas or how

15:41

can Europe function without Russian gas and all that

15:43

stuff? So presume you are studying the

15:45

gas market as well and what's going on

15:47

in there? Is that part of your

15:49

agreement, would you say? Absolutely,

15:52

Robert. And you can't understand

15:54

the electricity market. As we

15:56

as we've learned very seriously

15:58

this year, you can't understand the

16:00

electricity market without

16:02

understanding broader fossil fuels.

16:04

Yeah. And you can't understand

16:06

equally without understanding some

16:08

of the end use sectors. Right. And

16:10

I think there's a very interesting question around

16:13

the role of electric vehicles

16:15

in the grid and a number of

16:17

open questions that Flummox

16:20

forecasters like us in terms of

16:22

what role vehicles will have. Yeah.

16:24

So so so we we need

16:26

to think much more broadly than just the electricity

16:29

sector. And probably the most important

16:31

historically, and and this year and and probably

16:33

going forward is, yeah,

16:35

fossil fuels. You know, what is the cost of

16:37

fossil fuels because they

16:39

in a lot of markets drive the price

16:41

of electricity I know that surprises

16:43

some people. Yeah. And that in a forty or

16:45

fifty percent renewable system, the

16:47

price of electricity would be determined

16:49

by the price of gas and price of

16:51

time. Ninety percent of the

16:53

time. Yeah. But but but that's the

16:55

that's the fundamental economics

16:57

of wholesale markets. Yeah. And

16:59

that is I mean, I've had that I've

17:01

we've discussed this a

17:03

painful length on the podcast in the past,

17:05

but why that is the case? You know,

17:07

that when the gas price goes up and, you know, I know

17:10

people who are in the renewable space, and I sort of

17:12

ask them, has the price of generating

17:14

electricity from your wind turbine gone

17:16

up? No. Why am I paying so

17:18

much more than you know, but I mean, I do

17:20

understand it. It's a because that is what

17:22

the two of the talks that I

17:24

heard at the conference. Because

17:27

I think of that conferences like I was an attendee.

17:29

I only spoke a a couple of

17:31

things and, you know, but that had been that

17:33

was so exciting to hear because it was

17:35

the primary thing is, oh my god, this

17:37

is a complicated topic. There is

17:39

no simple way of explaining

17:41

the energy market and how it works.

17:44

You know, and the and the

17:46

the kind of legacy of it as well, the

17:48

the decades of negotiating and

17:51

price you know, price agreement. It

17:53

just goes back a long way.

17:55

It's we've built our entire

17:57

world around

17:59

fossil fuels. And the

18:01

process of not using fossil

18:03

fuels, you know, of

18:05

transitioning away from fossil is really

18:07

complicated painful, huge,

18:10

expensive. You know, it is a

18:12

it's a monster topic. And

18:15

it is it's interesting. On

18:18

that transition, I have one of

18:20

the benefits I have is that I see

18:22

a lot of different market a lot of

18:24

different stages of the energy transition. And

18:26

now you see the challenges from a ten percent

18:28

to a twenty percent to a thirty percent to

18:30

a sixty percent renewables system.

18:32

And the themes are quite similar, but there's

18:34

some sort of big challenges at every every

18:36

stage. So I know there's gonna be a decade

18:38

or two of more big

18:41

challenges coming up in a lot of parts of

18:43

the the world. So it is complicated.

18:45

But on the I mean, I

18:47

think Robert, on the on the on

18:49

the question of why are why

18:51

are why despite the fact that

18:53

the cost of the wind and the sun hasn't

18:56

gone up. In a world in which,

18:58

you know, we're forty whatever

19:00

whatever we are, forty percent renewables in

19:02

Great Britain. Yeah. You know, why why

19:04

are we still driven by gas price?

19:06

I think A big chunk of it comes down

19:08

to a lot of consumers don't

19:10

know what they're buying when they're

19:12

buying a green tariff. And

19:14

so you may well have covered this on

19:16

the show. But, you know, to some extent,

19:18

there's a sort of there's the the idyllic

19:20

vision is I've bought

19:23

green power that matches

19:25

my consumption profile sort

19:27

of firmed green power -- Yeah. --

19:29

which is reserved for me so

19:31

it's there whenever I want to use it. And that's

19:33

what a hundred percent green tariff is.

19:36

And it turns out, you know, what

19:38

what people in most countries when

19:40

they when they take a green tariff by is,

19:42

you know, green certificate, which

19:44

gives a claim on the

19:46

output of an existing renewable

19:49

asset. Doesn't necessarily

19:51

make sure it's matched hour to hour with their

19:53

profile. It's obviously a lot cheaper to

19:55

get that than it is

19:57

to get firm green power, which is a lot

19:59

more expensive. I think that's part of the

20:02

that's part of the confusion in in

20:04

in general here. Yeah. And

20:06

and, of course, green power generators. If

20:08

if if if they know they're competing with

20:10

gas generators and the price of gas has

20:12

gone up, they wanna charge more for their -- Yeah.

20:14

-- more for their power. I mean, I suppose

20:16

it's the same, you know, Tesla's profit

20:19

margins are 6x, the profit

20:21

margins per vehicle I hear of

20:23

other manufacturers. Yeah.

20:25

You know, I I don't expect Tesla to reduce their prices

20:27

just because they could produce cars more

20:29

efficient nice cars more efficiently than

20:31

Tesla. It's the it's the same deal in the

20:33

power market to extent. Yeah.

20:36

Yeah. But then there's some terms that I

20:38

that well, I mean, one of the

20:40

key arguments that I've we've I've

20:42

been sort of deluged with them. We've just

20:44

done an episode about nuclear power.

20:47

And and again -- Yeah. -- I I mean,

20:49

I I don't wanna state here

20:51

from the audience as well as you. You know, because some I think

20:53

people assume have assumed I'm

20:55

sort of anti nuclear. And I always

20:57

wanna understand, like, no. There's only one one

20:59

type of fuel I'm if you wanna say

21:01

I'm anti, But in a realistic way, because I know

21:03

we totally rely on it, it's fossil fuels. I'm

21:05

happy to be classified as anti

21:07

fossil fuels. I'm not anti nuclear,

21:09

but it is such a that is a

21:11

fascinating debate because it's entirely down to the economics

21:13

as far as I can as I'm

21:15

seeing it. That's the economics

21:17

and the speed of deployment, you know, that we've

21:19

-- Mhmm. -- we are now suffering.

21:22

And as, you know, this is happening

21:24

around the world. We're suffering from not

21:26

making decisions ten years ago or

21:28

twenty years ago, like, we should

21:30

build more nuclear, you know, or we

21:32

shouldn't build more, you know, make the decision, but

21:34

it's sort of feels like we've

21:36

crumbled towards oh, some it's

21:38

happening. The Chinese and the French are building a nuclear

21:40

power plant, and it's costing unimaginable

21:42

amount of money down I mean,

21:44

so far from where I live, you know, it's down the

21:46

road. So I don't know. I

21:48

mean, because that was one of the

21:51

So I did wanna ask you about this because it was one of the

21:54

talks I could get into quite easily was

21:56

about nuclear and it was fascinating and there weren't that

21:58

many people in it at the

22:00

Aurora Conference. But what

22:02

I got from it was people who

22:04

are in the nuclear industry,

22:06

clearly pro nuclear, want to promote

22:08

the nuclear the nuclear option,

22:11

but we're basically quite depressed.

22:13

They were sort of it wasn't that

22:15

thrilling. It was like, well, we're trying, and it's gonna take

22:18

twenty years, and it's gonna cost forty

22:20

billion pounds. And, you know, they were

22:22

quite young. And I was going I thought I

22:24

was I was waiting some positivity from them.

22:26

And I it was a little bit rowdy,

22:28

but, I mean, I bet you've got a different

22:30

take. But what do we do about

22:32

it, dear? Yeah.

22:34

So at a at a very high level, I think nuclear's

22:36

got the yeah. As you say, it's got the

22:38

issue of these very long planning

22:41

horizons. Yeah. And if you were, you know, if

22:43

if if global history is anything to go

22:45

by, there's some sort of nuclear

22:47

scare maybe every twenty to

22:49

thirty years. Alright, is what we've seen in

22:51

human history. And Fukushima

22:53

was the was was the latest

22:55

one. Obviously, Chernobyl was the biggest

22:57

one. Mhmm. And And

23:00

it's very hard to stay the course on a

23:02

long term project in the

23:04

context of something like that happening. So there

23:06

is a there is a fundamental problem

23:09

that the politics of nuclear, given the timescales

23:11

-- Yeah. -- just can't get away a bunch of

23:13

nuclear reactors in a five year period.

23:17

And in a democracy, it's very hard to

23:19

maintain public support over the

23:21

ten to fifteen to twenty year

23:23

planning horizons

23:24

there. Yeah. I don't think

23:24

so so I think that's one of the biggest challenges.

23:27

Right? And and and, you know, we're

23:29

seeing ways in which government tries to

23:31

address that as a stake for

23:33

example, in the UK, the the the size

23:35

well sea plant, which is the one --

23:37

Yeah. -- that will come after hint

23:39

hinting point. Yeah. Governments taking

23:42

a big stake in that, and they're and so they're they're

23:44

committing and driving whereas Hinkley was very much a

23:46

sort of George I was born off the government

23:48

balance sheet type type structure.

23:50

So so that's a fundamental problem. The

23:53

economics of nuclear are actually you know,

23:55

they're not they're not too bad. Yes, it's getting more

23:57

expensive, but --

23:59

Right. think I think

24:01

and again, to your point of the power

24:03

sector is complicated. Decarbonizing

24:07

the last ten, twenty, thirty

24:09

percent of the power sector gets very

24:11

hot. So so there's been an

24:13

argument historically that

24:15

The levelized cost of electricity from solar

24:17

and wind and even onshore wind is

24:20

materially below the levelized cost of electricity

24:22

from nuclear. That's true. So,

24:24

you know, in the UK, if we're

24:26

talking UK numbers forty to sixty

24:28

pounds, maybe it's fifty to seventy

24:30

dollars US, for

24:33

each megawatt hour that comes out of

24:35

a solar farm or a wind farm or an offshore

24:37

wind farm. Nuclear, it's

24:39

materially above this. Fifty hundred percent more, you can

24:41

make arguments about scale economies and and

24:43

things like that. But we yet to see, you know, maybe we're seeing

24:45

that in China to an extent. So up so

24:48

it's very easy to say onshore

24:50

wind is cheaper than

24:50

nuclear. Right? And that was the

24:53

argument.

24:53

The problem is, once

24:55

we get to a certain level of

24:58

renewables penetration, It's not the cost of the

25:00

wind turbines that's the issue. It's

25:02

the ability to integrate them into the

25:04

system. And you see that in a couple of

25:06

ways.

25:06

Right? So one is We

25:08

need to build network to get to

25:11

the wind, and it's typically

25:13

in new places. And

25:15

another one is just public acceptance at

25:17

some at some point. It's not just a British problem,

25:19

it's a German problem, it's a Australian problem. Anywhere anywhere

25:21

you've got a democracy or or

25:23

a particular, densely populated democracy,

25:26

it seems like maybe

25:29

but it seems like tolerance of

25:31

large infrastructure onshore.

25:35

Whether it's wind turbines or high voltage

25:38

transmission becomes a problem. And

25:40

so and as I say that, I

25:42

reckon about fifty percent renewables penetration

25:44

in the system. It it varies. To get above

25:47

fifty. There's a there's a school of thought

25:49

which says, okay, we just need to

25:51

persuade people that we can

25:53

build big infrastructure on shore. It's not bad

25:55

for them. Or or need permitting regime.

25:57

I'm always a little bit skeptical of

25:59

any public policy solution that starts

26:02

with if only people would

26:04

just -- Yeah. -- because, you

26:06

know, people are who they are. Yeah.

26:08

There's another version of this where you say,

26:10

okay. Well, let's assume that

26:12

we can't get past that and that there are

26:15

political barriers to high

26:17

voltage transmission online

26:19

to onshore wind. For example, Robert,

26:22

the last four high voltage transmission

26:24

lines from Scotland down to England

26:26

have all been in the water. No one's Yeah. They

26:27

haven't been built overland because -- Yeah. --

26:30

and much more expensive to build them in the water, but you can actually

26:32

do it. Right? And you don't have to go through

26:33

a planning regime. So there's

26:36

there's another version where you say, look, we know we

26:38

need to past fifty percent renewables

26:40

penetration over an annual

26:42

average. And we know we can't build

26:44

– we know it's hard to build onshore wind and

26:46

high voltage transmission online.

26:48

All of a sudden, the economics of nuclear at

26:50

that point, the economics of offshore wind. To

26:52

some extent, the reason we build offshore wind is

26:55

because of public acceptance. It's not because of cost. It's it's

26:57

it's more expensive than onshore in

26:59

general. You say maybe this has a role to

27:01

play. And so you know,

27:03

you need a you need a you need a

27:05

politician who's prepared to make that argument

27:07

and say, look, this thing is more expensive per

27:09

unit of electricity, but it means

27:11

you're not going to have a whole bunch

27:13

of visible onshore infrastructure

27:15

because of the energy density. Yeah.

27:17

And that's when nuclear can start to come into

27:19

it. Come into its own is in my

27:21

sense. So yeah. Like, maybe

27:23

there are naturally so so I think there's a role

27:25

to there's a there's a role to play.

27:28

A particularly in a net zero system

27:30

and particularly consistent with

27:32

public acceptance. But, yeah,

27:35

I I can see why the dynamic are a

27:37

bit dour, you know. When you try to build a

27:39

nuclear power station, there's like one

27:41

there's one guy trying to do it and there's

27:43

a lot of people who are at to you. Yeah. And so

27:45

you you you never get the,

27:47

you know, the political kind

27:49

of cohort, the contingency like you get

27:51

with renewables where you've got a massive

27:54

with people doing a lots of things. It's always one versus

27:56

it's EDF versus the whole rest of the

27:58

industry. Yeah. And in a lot of markets,

28:00

including the UK, I think

28:03

people say any support for nuclear

28:05

is support that won't go towards other

28:07

low carbon technologies. And so it becomes

28:09

a little bit adversary. Yeah. So

28:12

So -- Yeah. -- I partly where where the

28:14

debate is in general. But, you know, I'm pleased

28:16

to see a number of countries. The

28:19

Netherlands, for example, the

28:21

UK taking nuclear seriously because

28:23

it is, you know, he's one of the it

28:25

is one of the proven

28:27

baseload zero carbon technologies

28:29

out there. And to some extent,

28:32

we all hope that hydrogen

28:34

and CCUS and these technologies

28:36

will evolve to the point where

28:38

they can provide better economics on

28:41

zero carbon dispatchable

28:42

technology. But for the time being, nuclear is really,

28:45

really one of the the few that we

28:47

have. Because I what I'm what I'm intrigued in is

28:49

is how you sail

28:53

through quite storm occasionally

28:55

stormy political waters

28:58

remaining kind of neutral on the

29:00

technology, which is in a way I try and do

29:02

as well except for I

29:04

I you know, I relish being very negative about fossil

29:06

fuels. But, you know, everything else,

29:08

every other aspect, you know,

29:10

I I want to be positive about

29:13

and like promote. But the one that's become

29:15

really peculiarly charged

29:17

is hydrogen. And I

29:19

can't work out now

29:21

you know, I'm sort of because

29:24

again, I've I mean, one of the

29:26

second non

29:28

combustion car I ever drove was a hydrogen fuel

29:30

cell car, it was a Honda Clarity. When

29:32

I started doing the the second episode

29:34

to fully judge is about is about hydrogen.

29:37

So I was definitely not opposed to it, and it was a fantastic

29:39

car. And they had a hydrogen

29:41

fueling infrastructure in Germany

29:43

where I drove it, which

29:46

was effectively

29:48

a waste product from chlorine production.

29:50

So it was a huge chlorine factory

29:52

and one of the waste products was hydrogen,

29:54

which they put in a tank and you filled your car. And

29:56

I went, this is this is the future of this. But

29:59

that was in twenty ten

30:01

and it still isn't here. But I don't

30:03

necessarily wanna talk about hydrogen in

30:06

vehicle. Because I think that is a

30:08

debate that you and I don't need to discuss.

30:10

But hydrogen in hydrogen

30:13

for heating I'm having real

30:15

emotional problems with in like for like as

30:17

in burning hydrogen in a

30:19

boiler. It's not making a lot

30:21

of sense and some quite intelligent people

30:23

I've met in spoken to, including some

30:25

people who are at your conference, are very

30:27

negative about that. And, you know,

30:29

I don't know what your take is on that.

30:31

And how you well, in a

30:33

sense, It's not so much whether that can work

30:35

or not. It's how do you discuss that

30:38

without being slightly political because it's so

30:40

politically charged, it

30:41

seems. Yeah. And and look, there's on the heating

30:43

side, I'm not an expert in hydrogen

30:45

heating. Certainly, as as you

30:47

infer if you form your opinions based

30:49

on what people if certainly if I would

30:51

form my opinions based on people what I pick

30:53

people who I respect are saying, then I would

30:55

be very anti hydrogen

30:59

heating in inside for various

31:01

reasons. And look, part of

31:03

it is the politics of going into people's homes.

31:05

It just it's very difficult, right? And I

31:07

think part of the success

31:09

of decarbonization in transport

31:11

compared to the failure

31:13

of decarbonization in the home

31:15

whether that's insulation or boilers

31:18

or or or cooking or whatever

31:20

it is, it's to do with the

31:22

politics of you know, get don't don't come

31:24

into my head. Don't come in my head around the way

31:26

that I do. Yeah. I I think part of

31:28

the hydrogen debate and

31:30

I I see both sides of it to an extent

31:32

which is hydrogen

31:34

is very expensive. Zero carbon hydrogen

31:36

is very expensive. Okay? So you've got to market

31:38

at the moment. I'll I'll give you some rough figures,

31:41

but gray hydrogen, which is the the stuff we make

31:44

from methane reformation. It's

31:46

heavily carbon intensive. It's

31:48

what you would use for industrial applications now.

31:51

Yeah. Maybe you can get it delivered to you for a

31:53

dollar fifty a kilogram at the moment.

31:55

Right. My team and Aurora

31:57

tell me green hydrogen in a

31:59

sunny place like Spain is

32:01

maybe in the six to seven dollar

32:03

range per kilogram. So -- Right.

32:06

Four to five times more expensive

32:08

and that's that's where it's

32:10

produced. So you'd won't be producing yeah.

32:13

Hydrogen's obviously not known for it

32:15

to dent you just have to look at periodic table.

32:18

And and so it's very hard to store, it's

32:20

very hard to transport. And

32:22

so unsurprisingly,

32:24

there are people out there who say, this

32:26

is not the lowest hanging fruit of decarbonization.

32:29

That's true. This is incredibly

32:32

expensive. So that's I think

32:34

that's one side of it. I think the other side

32:36

of it is people

32:39

who say we need to get to net

32:41

zero. And okay.

32:43

You know, I've just said before, the first

32:45

fifty percent renewables will do that. It doesn't matter

32:47

which country you go. It doesn't matter what government

32:49

support there is, you know, you can go to go to, you

32:51

know, you know, Africa where, you know,

32:53

Tanzania or something where willingness to

32:56

pay for decarbonization. It's relatively

32:58

low. People will still be installing

33:00

solar panels, potentially storage. That that's

33:02

just gonna win for the first fifty percent

33:05

of it. The grid.

33:07

And then I talked about the next

33:09

bit, which is, you know, you need more

33:11

networks and you need to integrate renewables.

33:13

The last bit, the last ten percent

33:15

is really hard. Right? Because electricity

33:17

is expensive to store. Even in batteries,

33:19

it's incredibly expensive to store for a

33:21

long period of time. And so

33:23

those last, you know, is eight thousand seven

33:26

hundred and sixty hours in a

33:28

year. That last eight

33:30

hundred and seventy six hours or ten percent is

33:33

when the sun isn't shining, the wind

33:35

isn't blowing, it's probably been

33:37

two days since the wind blew.

33:39

Right? Yeah. Because you have these Australians call them

33:41

wind droughts, Germans call them and

33:43

Dunkle flautre. It's the same

33:46

chest. You need to

33:48

decarbonize that if you're going to get to a

33:50

net zero system and batteries aren't the answer.

33:52

And so a a critic, you know, someone from the

33:54

other side of the argument would say, okay, great.

33:56

Yes. Hydrogen is five times more expensive, but it's

33:58

the best thing we've got to store electricity

34:01

or energy over these long

34:03

periods of time. And and we're in

34:05

a climate emergency, and we just need to do what

34:07

it takes. And so to some extent, I

34:10

don't I don't I don't think the the latter

34:12

would say that the cost are lower at the

34:14

moment for Green Hydrogen. No one would argue

34:16

that. And look, but but but what

34:18

they're saying is the urgency is higher, and

34:20

so we need to do more. And I think

34:22

that's where sometimes you see cross purposes in

34:24

terms of the focus on hydrogen. I'm

34:26

actually pretty bullish on

34:28

hydrogen in general. You know,

34:30

the the the US

34:32

government, and maybe we have time to talk about what

34:34

they're doing. But, you know,

34:36

it's, you know, they've passed the biggest climate

34:38

legislation -- Yeah. -- probably ever

34:40

in the last six months,

34:42

the Inflation Reduction Act.

34:44

What they've done is they've provided a three

34:46

dollar per kilogram

34:48

tax credit to green hydrogen. So to get it from the six bucks to

34:50

the three bucks. So it's starting

34:52

to compete. And the

34:54

nice thing about it is it's a, you know, hydrogen

34:58

electrolyzer are a technology that looks a lot like

35:00

some of the technologies that have seen massive

35:02

cost declines, lithium ion

35:04

battery solar panels.

35:06

It's modular, you you

35:08

do more of them, you probably learn how to do them

35:10

better, and and you and you come up you come

35:12

up with more efficient ways of doing it. So

35:14

I'm I'm it as much as

35:16

you can be bullish about a a

35:18

technology that is miles away from

35:20

competitive on cost. It

35:22

looks like the one it looks like one

35:24

of the ones that certainly has the most potential. I

35:26

think we're gonna find out over the next five

35:28

to ten years because there's no shortage of

35:30

government support on both sides of

35:32

the Atlantic. Yeah. But, yeah, in terms of home

35:34

heating, you know, transport,

35:36

you will know better than me, Robert, than it looks

35:40

like it. Lost the lost the debate there. Lost my sense.

35:42

And then home heating,

35:44

you know, I I think got

35:46

a number of grounds in addition

35:48

to costs you know, the

35:50

the network infrastructure required

35:52

some of the the danger involved. I

35:54

would I would defer to experts, but

35:56

certainly the people I respect most when it

35:59

comes to energy commentary seem

36:02

to be pretty pretty

36:02

attitude. I know we're getting our homes in

36:04

hydrogen. But I mean, it is, you know,

36:06

when I visited a large battery

36:09

plant plaques, you know,

36:11

large battery installations felt like grid

36:13

level battery because I've I've got batteries in my house, and

36:15

they'll run my house from I mean, if

36:17

I was careful, maybe two days. Not

36:19

even that. Actually, a day and a half, you know,

36:21

we'd have to be careful. But, you know, they

36:23

could do it. That and it's great. And that and that isn't what I use them for. And you you and

36:25

I'm balance and they're I'm balancing

36:28

my my usage all the time with

36:30

those. But when

36:32

you see a really big battery, there's one new one outside Oxford, not far from

36:34

you. You know, there's a big big one out in

36:36

near Cowley. But I I'm

36:39

really bad at math which

36:41

is why I could never be a researcher for your amazing

36:43

company. But even with my bad maths, it doesn't take me

36:45

long to work out this in the

36:47

grand scheme of energy

36:50

consumption even in one city like OXXO. This is

36:52

not very big. This is a very small bag.

36:54

This is a this is a a

36:58

triple a trying to run a car, you know, is tiny. And but and

37:00

and it's that scale, you know, it that's

37:02

what I've not really understood yet. It's

37:04

whether you could get up to sort of

37:06

in in a sense gigawatt hour level energy storage -- Yeah.

37:09

-- with hydrogen. Because, I mean, that then

37:11

you because we've just been through it's

37:13

we've just had for classic

37:15

example in the UK the last few days. I mean,

37:17

I've got I have so many apps that

37:20

show me, you know, renewable

37:22

generation and

37:24

energy consumption. And it was really, really low. The lowest I've

37:26

ever seen wind was about two or three

37:28

days ago. For about

37:30

three days, and and you

37:32

just go, that's that's that

37:34

wouldn't work. If we didn't have gas at the

37:36

moment, we'd all be very dark and

37:37

cold, you know, that's it's as

37:39

simple as that. Yeah. So, I mean,

37:41

Tilly, to give you some maths on that, Robert. So we

37:44

my team here did an analysis

37:47

and they said, let's take

37:50

the the most difficult let's

37:52

take a world in which we've

37:54

got, you know, on average, a hundred percent renewal. So we

37:56

we, you know, we've got we've got,

37:58

over the course of the year, our renewables,

38:00

if they weren't being cut out, would produce

38:02

more electricity than you need in

38:04

in Great Britain, like a lot more.

38:06

And then let's look at the most difficult week of that --

38:08

Yeah. -- of an average year with that with

38:11

that amount of generation. And

38:14

so it's you know, it is the Feb

38:16

it's the February week where the wind doesn't blow and it's pretty

38:17

cold, the dongle flower.

38:20

Yeah. And

38:21

what we did was we said, okay. Right.

38:23

Let's assume battery costs continue to go down for

38:25

the next decade. They've come up a bit

38:28

lately, but continue to

38:30

progress. What would it cost us to build

38:32

enough batteries to keep the lights on for

38:34

those seven days? Right. You know,

38:36

with the wind not blowing and and not a lot of

38:38

sun coming out. And what would

38:40

it cost us with gas engines? And it was seven hundred and fifty billion

38:42

pounds worth of gas engines, so

38:44

three quarters of batteries. Three

38:48

quarters or trillion pounds worth of batteries. Right. It was about

38:51

forty billion pounds worth of gas

38:53

engines. So for that week, batteries

38:55

have an enormous role to play. But for that

38:58

week, gas engines right now were about one

39:00

twentieth of the cost. And so --

39:02

Yeah. -- if you believe lithium

39:04

ion cost come down by ninety five percent or more than ninety

39:06

five percent -- Yes. -- then which one

39:08

which one, you know, a lot of this is labor and and,

39:10

you know, and so so far you can drive the

39:12

sale cost

39:14

down. Then yes, they could totally replace that technology. But if

39:16

you don't believe that and I and I don't, then

39:18

we're gonna need and we want a net zero system,

39:20

we're gonna need another technology to

39:23

get through that period. Yeah. Now nuclear can play

39:25

a role there if it's running running

39:27

by baseload and that's partly why I I think it,

39:29

you know, it it has a role to play. Certainly,

39:31

it's a good insurance policy

39:34

where the public's willing to accept

39:36

nuclear as a source of generation. But it's

39:38

why there's great enthusiasm for hydrogen

39:40

because in a net zero system, that's what you need to

39:42

look at. I think the other

39:44

one that is interesting is, you know, carbon sequestration. Now what format

39:46

takes -- Yeah. -- you know, direct

39:50

air capture that

39:52

sort of modular, you know, potential?

39:54

I think when it comes to

39:56

project specific CCS, you know, we're gonna

39:58

need to see some big projects actually

40:01

happen. Yeah. There's been a lot of talk over the last ten or

40:03

fifteen years, but not a lot delivered. It

40:05

may be the case that we just

40:07

say, look, those

40:10

hours that week that's difficult. We're just gonna run the system on gas

40:12

or diesel or something like that. Yeah. And we're gonna

40:14

sequester the power, the the carbon

40:16

throughout the rest of the year.

40:18

And it'll be a a net zero system in general. And the atmosphere doesn't

40:20

doesn't doesn't care very much. So

40:22

-- Yeah. -- that gives you a sense

40:24

the size of the challenge with with

40:28

with batteries in general in the system? Yeah. No.

40:30

I

40:30

mean, I think it's fairly obvious. It's

40:32

not you know, as a as

40:34

a role in grid balancing So

40:37

over the hour long here and there, period, I think they

40:40

have an enormous role. And we've it's been

40:42

proven in Australia who extraordinary

40:44

impact they've had there. But yet, to run

40:46

a country for four or

40:48

five days. It's it's yes. It's

40:50

gonna I mean, we

40:51

yeah. Just crazy. Yeah. The the other one that's

40:53

interesting though, Robert, is of the

40:55

vehicle fleet. Right? Because that is

40:57

massive. So

40:58

-- Yes. -- you know -- Yeah. -- again, I

41:00

I know your listeners probably have had enough of

41:02

math, but there's thirty million cars in Great Britain. Let's just say each

41:04

of them has a fifty kilowatt hour

41:06

battery battery pricing and

41:09

they're getting bigger. Right? That's

41:11

something like one point five terawatt

41:14

hours of capacity. And --

41:16

Right. -- and the g and GB GB is about

41:18

three hundred three thirty terawatt

41:20

hours a year. So it's so it's two it's two

41:22

days worth of storage.

41:24

Right. I don't the thing I don't know and you will

41:26

know better than me is vehicle owner's

41:28

willingness to profit the

41:30

grid with their batteries. But

41:32

what I do know is at some

41:35

point in the future when the vehicle fleet is largely electric. There will

41:37

be an enormous amount of storage

41:39

in those vehicles. If

41:41

it could be unlocked, then

41:44

it means the burden on other

41:46

long duration storage is a lot.

41:48

Lower. Yeah. And so I could see a big role there. It's just I think we're yet

41:50

my sense is, I'd be interested in your thoughts.

41:53

But my sense is, vehicle owners

41:55

don't necessarily wanna prop

41:57

up the grid with their vehicle batteries.

42:00

Okay. Yeah. Maybe a week, but

42:02

yeah. I mean, I think the the,

42:05

you know, what's fascinating is and I've been

42:07

hearing that very recently, is the number

42:10

of big car manufacturers

42:12

who are building in bidirectional

42:14

charging into

42:16

their into the infrastructure of the car. Right now, it's not

42:18

it's not software enabled. It doesn't work now,

42:20

but they've done it and Ford, in particular,

42:22

with their their incredible pickup.

42:26

It's only it's not it's not incredible because I climbed into one. It took me

42:28

about a minute to get up. It's so cute. How big is

42:30

the bat do you know how big the battery is? It's a

42:32

I thought it goes up to a hundred and

42:36

fifty kilo I think I think there's various ones. So I think there is a hundred

42:38

and fifty and and there's a we're actually looking

42:40

at the the General Motors

42:42

Electric Hammer

42:44

I think is the battery and that is even bigger. But it has to be because it's

42:46

-- Yeah. -- the range is about fifty miles.

42:48

Yeah. Yeah. It's weighs three and a half tons.

42:50

I mean, you can't drive up Mount

42:52

Everest, but, you know, yeah, anyway. But that's but the the

42:54

the what was fascinating was

42:57

the their response

43:00

to their TV commercial. So I've talked about I don't wanna go on about it on this

43:02

podcast, so I've mentioned it before.

43:04

But that was one of the key

43:06

selling for

43:08

that car. They've had two hundred thousand orders for the

43:10

Ford f one fifty lightning. And at

43:13

they they reckon like fifty or sixty

43:15

percent of those sales are specifically

43:18

because people can run their house.

43:20

Okay. Some of American independents

43:22

off grid -- Yeah. -- type -- Yeah.

43:24

-- marketing. So I mean, I think there

43:26

is a there is a sign that

43:28

that's possible. And it's the

43:30

the fact that they're all talking about it

43:32

in Hyundai, in particular,

43:34

in Kia, are already building in bidirectional just as a standard

43:36

thing. So you can literally plug a

43:38

domestic plug into your car and it'll run

43:40

-- Yeah. -- the

43:42

boiler catalog. Run about

43:44

electric barbecue or something. And that I think we'll

43:46

we will see

43:46

that. But I still think you know, and this I

43:48

don't know if you saw we've done an episode about

43:50

Utrecht the City View trucks that are running a

43:53

a car sharing by directional

43:56

charging. Okay. You know, they're starting to do that.

43:58

So all the cars that are

44:00

parked on the street, the the posts that they

44:02

plug into on their dedicated

44:04

parking spots are all

44:04

bidirectional. Okay. And they can just take it from

44:06

you. If they can take well, yeah, because it's not

44:09

your car. So they take a they take a

44:11

so they can use that battery, you

44:14

know, the aggregated Yes.

44:16

And they're aiming for sort of big, you

44:18

know, in the thousands of cars. And then it

44:20

becomes a noticeable impact on,

44:22

like, peak demand. You can actually start

44:25

to shift that. I mean, it seems the

44:27

the the one area where I think it could play a big role

44:29

is in a crisis. I mean, I don't yeah. It's to

44:31

some extent, I don't I you know, at

44:34

least in my experience with an EV

44:36

is, you know, I I want it available

44:38

to drive when I want it available to

44:40

drive and and and, you know, a few quid here

44:42

and there. On selling my power isn't isn't worth it for the

44:44

inconvenience. But so I

44:46

was in they run the power grid

44:48

out of the the

44:50

California grid. I was in California a few weeks ago at

44:52

Fulton, California where the network

44:54

operator is. They had a very

44:56

difficult September they forty

44:58

gigawatt peak is the peak demand

45:00

in that market. And they wrote to everyone,

45:02

you know, text messages or something on

45:05

the day say, hey, you know, pre call your house because

45:07

the evening peaks are the peak. Yeah.

45:09

Nasty. They think so the CEO

45:11

of that organization from recollection said they knocked

45:13

three gigawatts off a forty gigawatt

45:16

peak by just sending out

45:18

SMSes. And so I could see a well,

45:20

you know, if you've got enough

45:22

EVs on the grid that actually you could knock the

45:24

whole the whole thing off in an hour

45:26

or two, we are

45:28

seeing this kind of, you know, it's not it's not digital. It's a sort of analog

45:30

behavior or response -- No. -- people turning down

45:32

their air conditioning. You could see that sort

45:34

of thing at peak. So maybe

45:36

it's not you've heard a bet.

45:38

Maybe I'd say it's not gonna be a it's

45:40

not gonna be a part of the way we live our lives,

45:42

but in a crisis which in Europe is

45:44

in February and in the US -- Yeah. --

45:46

in August. You know, can you can you deploy this

45:48

enormous, you know, battery storage

45:50

from vehicles to the grid?

45:51

Yeah. You know, III could see

45:52

a setting up ways to do that to keep the

45:55

light Certainly. Yeah. I mean, well, they said take I

45:57

mean, Octopus are doing it now in this country already.

46:00

And I've done three nights now where

46:02

I I don't use

46:04

any power between she's usually about five

46:06

thirty to six thirty or some five to six

46:08

away. Yeah. Yeah. No. My wife sends me the results,

46:10

and she's in the nineteen you know, the eight ninety

46:12

second percentile. She gets very excited. I'm not sure

46:14

she's doing it for the money though. I bet she's sort of No.

46:16

No. I don't think you do it for the it's only it's like fifty

46:18

I well, I might get, like, forty eight pence

46:20

Yeah. Exactly. Trish Tifel, it's not a lot of money. But it's it's

46:23

a fascinating, you know, because it's at the moment, I

46:25

think it's in the hundreds of

46:27

thousands of people. That are involved in

46:30

households -- Yeah. -- that that

46:32

really reduce their consumption just

46:34

for an hour at night when there is that peak,

46:36

that would

46:38

that's it's I think that's the thing that's emerging

46:40

to me to my understanding is the

46:42

the combination of things. So

46:45

all those things like when

46:47

I've done talks about electric cars, I always start that they're not the answer

46:49

to everything. They're not the solution. They won't make

46:51

the world better. They're

46:54

still cars They're made in factories

46:56

that materials we dig out the

46:58

ground. It's just that when you cycle behind one,

47:00

you're not breathing in toxic gases, you know

47:02

-- Yes. -- that you could make that

47:04

argument. But you know, there's so but there's so many solutions

47:06

that are emerging. And I think that's in a way

47:08

why I remember talking to someone at your

47:10

conference that If I'd gone an

47:12

energy conference, say fifteen or twenty

47:14

years ago, well, I wouldn't have gone because

47:16

it would have been so boring. Mhmm. So it

47:18

would have been people who run big power

47:20

plants, talking to people who run the grid, talking to people who run local grids,

47:23

and then, you know, get

47:26

a consumer awareness or

47:28

there would have been the most tedious thing.

47:30

Whereas, it was, like,

47:33

buzzing with excitement. You know, the the the changes that

47:35

are happening are very, very and the play

47:38

side

47:38

I mean, the the place that gives me the most

47:41

confidence in the energy transition where I see that is

47:44

graduate recruiting. Yeah. It was as you say,

47:46

in the nineteen nineties,

47:48

the sharpest graduates did not

47:50

go and work for you. Did you wanna go in the NHS?

47:52

No. No. You go and work for

47:54

Reficel. You know, you go and work for BP. You, you know,

47:56

go on an oil rig in Nigeria

47:58

and, you know, you build your way up through

48:00

this international cup you know, they're the biggest

48:02

companies in the world. The smart you

48:04

know, we go through graduate recruiting. I

48:06

meet I meet them all at Aurora

48:08

and -- Yeah. They're phenomenally clever and they wanna play a role in the

48:10

energy transition and the power sector is the

48:12

place to be. And and, you know, as I

48:14

said before, this is not

48:16

a fleeting you know, we've got a couple of

48:18

decades worth of very difficult

48:20

analytical questions to to

48:22

address. So I I, you know, I don't

48:24

think it's dynamic's going anywhere. Yeah. But it's it's

48:26

certainly reassuring. It's a lot of slightly

48:28

humbling when a bunch of really clever people turn up

48:30

and you

48:32

have to Yes. Make sure society benefits from their knowledge

48:34

as well. Yeah. Well, I mean, that was certainly

48:36

my experience that I felt

48:38

old and stupid at your

48:40

conference because quite a lot of the

48:42

people I spoke to, I thought, I'm like, my god. You, you

48:44

know, you're barely out of primary school, and you

48:46

are talking, you know, language that is

48:48

so sophisticated. I mean, well

48:50

informed and intelligent. I mean, just go, oh

48:52

my god. Yep. That's basically my

48:53

daily experience in my own general.

48:56

Yeah. Best you. But there's a couple

48:58

of other things I just wanna yeah. So

49:00

the arguments around base

49:02

load, because you mentioned that. And III

49:05

cannot come up with, you know, I cannot understand them, but there are

49:07

people who argue quite strongly and

49:09

with, you know, intelligence.

49:13

That the notion of base load

49:15

is is flawed that, you know, why, you

49:17

know, that we can be a hundred percent

49:19

renewable powered and we can't deliver we don't

49:21

need baseload. And it because it's such

49:24

a simple strong argument, and I've

49:26

become more suspicious of simple strong argument. Or,

49:28

well, obviously, we need baseload for when the

49:30

sun doesn't shine and the wind doesn't

49:32

blow and you go, I've heard that too many times now. That's too easy.

49:34

Because there is other mitigating

49:38

seconds we've just been discussing. But do you still

49:40

feel there is it's not

49:42

even whether whether it's

49:44

whether you think that we have to have base

49:46

or not? But the general

49:48

opinion amongst politicians power

49:50

industry, the network

49:51

operators, everybody, is that we need

49:54

baseload. Is that still the

49:56

kind of sublime thing. No. I mean,

49:58

there's nothing virtuous about so

50:00

so a couple of observations on the point. There's

50:02

nothing virtuous about basically. And demand

50:05

is not baseload. Now we we need supply

50:07

and demand to match at all periods

50:10

of time and storage

50:13

is expensive. And then the system you build around

50:15

that is is is really up to you.

50:17

You know, one of the most important properties

50:19

of the system is inertia,

50:22

and that is the, you know, responsive

50:24

frequency to a mismatch in supply and

50:26

demand, essentially. And when you

50:28

close traditional, you know, conventional

50:30

thermal plants, whether that's

50:32

nuclear, you know, big big spinning things

50:34

basically nuclear gas coal,

50:36

then you get a bigger frequency response

50:38

to that mismatch. But there are ways you can address

50:40

that at, you know, cost cost more money, but there are

50:42

ways to do that. So, no, there's nothing

50:44

yeah. When people start talking about needing

50:46

baseload, that

50:48

that's it doesn't mean anything in a sense. There's nothing virtuous

50:50

about baseload. As I say, demand isn't baseload,

50:52

so why not supply need to be baseload

50:55

in general? But it's often

50:57

a shorthand for, you

51:00

know, we need high we need higher

51:02

inertia on the system

51:05

or maybe it's renewables. We curtail

51:08

them sometimes because we can't get them to to

51:10

market because we don't have the grid. So, no,

51:12

there is enough,

51:14

you know, my my view is there is absolutely nothing virtuous about

51:16

baseload. It's not it shouldn't be a policy

51:18

target in general. Right?

51:20

New Clears positive

51:22

properties, and I think people would refer to it as a base

51:24

load technology, are and

51:26

it has a number of positive properties.

51:30

But but you wouldn't classify any of them as the fact that

51:32

it's baseload. And to some extent,

51:34

actually, the fact that

51:36

it's inflexible

51:37

is a is a is a negative.

51:40

But what I would say, Robert, is I I do

51:42

think the

51:43

I I do think that

51:45

when the wind doesn't flow and the sun doesn't

51:47

shine, you know, framing gets

51:50

pilloried quite a bit in general, it is

51:52

a fundamental

51:54

problem. It just said So so so, unfortunately,

51:56

people consume electricity when the wind's

51:58

not blowing. And when we have that week or

52:00

two where the wind's not blowing, That's

52:02

really that's a That is kind of the crux of the challenge of

52:05

net zero. So it slightly concerns me.

52:07

And I I know it's rhetorically

52:10

easy from a renewables perspective to

52:12

say, look, I've heard the wind doesn't blow

52:14

and sun doesn't shine critique before.

52:17

That's nothing new. Part of the reason it

52:19

keeps coming back is that it's just fundamental. Like -- Yeah. -- and this is why

52:21

we're talking about technologies like

52:24

hydrogen that are

52:26

five x the cost of the substitute because we

52:28

take net zero seriously, but we don't

52:30

really know how to keep the lights on when we're

52:32

not producing from those

52:34

very cheap variable

52:36

renewable sources. Yeah. Yeah.

52:38

No. I absolutely agree with

52:40

you. I mean, this is it is I

52:42

mean, I think I think one of the things that I've

52:44

seen annoy people is

52:48

it's, you know, sort of a lump of man's

52:50

explaining annoyances someone

52:52

goes, have you fancy you know,

52:54

eco warriors with your fancy wind turbines.

52:56

You ever thought what

52:58

happens? Yes. But, you

52:58

know, I went to a conference where

53:01

that was the at an essential topic of

53:03

thousands of people discussing it. Yes. We have we have

53:05

thought about that. And and as I say

53:07

frankly, it's it's kind of

53:10

a relevant it's pretty irrelevant until you get up to a fairly high

53:12

renewables penetration as well, Robert.

53:14

So to some extent, it is a it is a

53:16

fundamental challenge with net

53:17

zero. It's probably the biggest challenge.

53:19

One of the

53:19

biggest challenges, it's it's it's how do we get yeah.

53:22

You know, the two biggest challenges, how do we get power

53:24

from where it's generated to where it's considered

53:26

where we use it. And do we get from when it's generated to

53:28

when it's consumed? And that's -- Yeah. -- that

53:30

that latter one is the the wind and the the wind

53:33

and the sun not produces at at the same time.

53:35

So they're the fundamental problems. But

53:38

you don't I don't know many power

53:40

systems that have had that problem

53:43

for the first fifty fifty percent renewals in a

53:45

sense. And and to some extent that's history.

53:48

We've got we've benefited from a lot of

53:50

investment in

53:52

plant Yeah. In history,

53:54

that's available there. It's hanging around.

53:56

There are policies that enable it to hang around. But

53:58

we can get through those periods.

54:00

But they they will get more problematic. And that's why we need to, you we need the best minds

54:03

thinking about, is it hydrogen? What can

54:05

EVs do in a crisis? Man,

54:08

you know, what does CCUS do? Does that enable us to generate

54:11

with a diesel plant at at a mid

54:13

during those hours? If we can save it

54:15

up in those other hours. Where

54:18

does nuclear fit in in sort of easing the

54:20

burden in those out? So they're all -- Yeah. -- they're

54:22

all really big challenging

54:24

questions. I I don't have the answer to to any

54:26

of them. Up some

54:27

hypotheses. But certainly, it's a big policy question.

54:29

But I think it was also when – I think

54:31

that was at another conference years ago when I

54:33

suddenly – when someone said

54:36

the first hundred gigawatt hours. That's easy.

54:38

It's it's the last gigawatt hour

54:40

is the real problem. You know you know, we could

54:43

or whatever it was, the first hundred

54:46

gigawatt or whatever, you know, measurement you like to cause. It's that, you

54:48

know, we can produce a huge, you know,

54:50

we already now, we there will

54:52

be days when we're producing a vast

54:54

amount of

54:55

renewable electricity. We can't really use. I mean, that's I

54:58

think that is the the big challenge, isn't

55:00

it? Yeah. And is exactly.

55:02

So so there was this debate about

55:04

levelized cost electricity where it's like, hey, renewables are the cheapest. That's true

55:06

-- Yeah. -- for the, you know, for the for

55:08

the first bunch. And that second

55:10

point, Robert, which you've touched on, which I think

55:12

is really

55:14

important is you increasingly see it. There are days when

55:16

a huge amount of renewables are getting

55:18

turned down -- Yeah. -- because we

55:20

can't get their power

55:22

to market. The thing

55:24

I would say though

55:26

is in the future

55:28

curtailed renewables will be a feature

55:30

of the system, not a bug.

55:32

So we'll always renewables are cheap.

55:34

Network is expensive and hard

55:36

to build from a public acceptance perspective.

55:40

Yeah. And if that's the going to

55:42

overproduce in certain hours and

55:45

you're and and response

55:48

is not to build enough network to

55:50

cater to the highest output of your wind

55:52

farms in Scotland or in West Texas.

55:55

Or wherever it is, you're gonna need to build a

55:57

network that caters to it pretty well knowing

56:00

that certain times you're gonna spill the

56:02

load. So So so that's

56:04

that's another of those short hands. I think it's sort

56:06

of you you occasionally see people

56:08

saying, you know, we curtailed x amount of

56:10

renewables in Germany

56:12

or in West Texas or wherever are these

56:14

big big renewable zones. Yeah. Therefore,

56:16

there's a problem with the system. Actually,

56:19

the optimal system in the future will have curtailed

56:22

renewables because building the

56:24

network is expensive. We'd rather throw the

56:26

power away and renewals

56:28

are sufficiently cheap, then then upgrade the whole

56:30

network to get it to get it to demand

56:32

centers. Right.

56:33

Right. That's I mean,

56:35

it does. It's so I've got one last thing I want

56:37

to ask you about. Actually, it's

56:39

two, but I'll try

56:42

and keep the shot. Well,

56:44

the one One is just terms that we used on your on

56:46

your website, which is which I'd

56:48

never heard before. And I've got a feeling I may have

56:50

heard people talking about them at

56:52

the conference. Which is price cannibalization and merchant

56:54

risk. You know, I think I know what merchant

56:56

risk is, but I don't I don't know what price

56:58

cannibalization

56:59

is. Yeah. In

57:02

I I'm presuming, in relation to renewables and

57:04

what happens. Yeah. Yeah. I mean So so

57:06

this is in a sense the invest

57:08

aside. It's it's what investors call that problem of

57:10

wind curtailment to an extent. So

57:13

so it so

57:16

Historically, we had a power system where

57:18

we built enough network. And so

57:20

any power I generated from my

57:22

coal or gas plant I could

57:25

sell to demand centers really without very much friction. And

57:27

so the the the value of the

57:29

power from any power station in the UK

57:31

or Germany or wherever

57:34

it was was basically equivalent. Right? We're

57:36

now in a system

57:38

where, fundamentally, power near

57:42

demand centers South Germany, London, or whatever it is,

57:44

is more valuable

57:46

than price that's generated

57:49

very far away. You know, when the

57:51

when when the wind blows in there's so much wind in that part of the

57:54

world that or in West Texas

57:56

is another really good example where there was

57:58

a

57:59

huge build out. The value of

58:01

the power actually goes very low, like close to zero. And that's

58:04

because it can't all

58:06

get out.

58:08

And so one thing that investors in wind and solar get worried

58:10

about is the weather is correlated, particularly

58:12

on a small island like Great Britain, but also

58:14

frankly -- Yeah. -- on the East Coast of Australia.

58:18

so if I've got a solar

58:20

farm and then a lot of other people build

58:22

solar farms around me,

58:24

then when the

58:26

sun shines the the value of my power goes down a lot. So price

58:28

cannibalization isn't right. And there's

58:30

enormous debate

58:32

around how you reflect that.

58:35

Right? And the US has gone for

58:37

a very granular pricing approach where

58:39

each different wind farm has a different

58:41

price. It's called a nodal

58:44

pricing market. Whereas in Europe, what they tend to do is pay all

58:46

the wind farms in the UK

58:48

the same

58:50

price. Right? they they

58:52

actually kind of do side payments behind

58:54

the scenes that they socialize to consumers

58:56

to kind of, you know, make make

59:00

reflect actually the economics of generation

59:02

in the different regions. So price cannibalization

59:04

more wind, more solar means the average

59:06

price of a wind farm or a solar

59:08

farm goes

59:08

down, goes down -- Yeah. -- new investment. Merchant

59:11

risk,

59:11

that's power price risk. And and the reason

59:14

that's an important

59:16

topic is Leverage and

59:18

debt is a big part of investment

59:20

in renewables. Yeah. And

59:22

historically, the business model before

59:25

renewables were really cost competitive was, before you built

59:27

your wind farm or your solar farm, you would

59:29

get a contract with

59:32

government that the guarantee

59:34

you payments for fifteen years. Right?

59:36

Fifteen years for a contract for difference in the

59:38

UK, twenty years for a feed

59:40

in tariff. After that, you

59:42

would then have to sell your power in the market, so it

59:44

wasn't guaranteed. Right? Right.

59:46

That's the merchant

59:48

risk involved. So and in general, it's much harder to

59:50

borrow money against merchant risk

59:52

because some years of value of the power is

59:54

very

59:54

low, and some years of

59:56

high. And so lenders say, well, this is a much more volatile revenue

59:58

stream than if you've got the

1:00:00

British government back, you know, backing

1:00:03

this payment. So So

1:00:05

they're they're of investor conceptualizations

1:00:08

of of issues that we see as

1:00:10

consumers in power markets. You know, prices of

1:00:12

-- prices of volatile. We all need

1:00:14

look at our power bill now. And that's that's

1:00:17

a a problem to be navigated. Yeah.

1:00:19

Yeah. John, I've got to let you go.

1:00:21

It's I want you please come

1:00:24

back on the podcast again because it is

1:00:26

absolutely fascinating because I think it's a

1:00:29

for the general electricity can tumor.

1:00:31

It's a fascinating glimpse into a world that

1:00:33

really is, you know, you you don't talk

1:00:35

to individuals. You know, you're

1:00:38

talking to big companies and, you

1:00:40

know, and and governments around

1:00:42

the world. We don't get to

1:00:44

hear that generally as a as a

1:00:46

electricity consumer. You don't know quite what's going

1:00:48

on. You get your electricity bill and you

1:00:50

moan about you know, that's about that's about the the total. And

1:00:52

and I think what's interesting what we're seeing

1:00:54

shift is and the people that we meet

1:00:56

through making

1:00:58

the show who've got solar panels and batteries and electric cars,

1:01:00

they're suddenly kind of more

1:01:02

connected to it, which, you know, twenty

1:01:04

years ago, I wouldn't

1:01:06

have known anything. And

1:01:08

the thing is I made TV shows where I

1:01:10

go around power stations and film

1:01:12

a big like, DraxB. I went around

1:01:14

DraxB. They were there for two and oil refineries.

1:01:16

It didn't click. I was

1:01:19

interested in it. I was fascinated by the

1:01:21

scale of it. It's just huge. I

1:01:23

mean, drag speed. The generator hall in Draxby is

1:01:25

mind boggling. You know, it makes Heathrow look like a garden

1:01:28

shed. It's just huge.

1:01:30

Yeah. But

1:01:32

it it burns it then burnt millions of tons of coal every

1:01:34

week, you know, and that was from Poland

1:01:36

at the time and I filmed there. But

1:01:38

anyway, Interesting. Well, that would

1:01:40

be a topic for a future one. Is with

1:01:42

the conversion to biomass and the role

1:01:44

the dracks can have, I'd say it's

1:01:47

a fascinating topic. Oh, yeah. In general as well.

1:01:49

But And there's also that the company in

1:01:51

the states that we're very keen to go and

1:01:53

see who are doing very deep

1:01:55

deep geothermal. If you heard about them, I can't remember the name of the

1:01:57

company. Yeah. I mean, I don't know if it's

1:01:59

gonna work. Yeah. But, you know, fascinating

1:02:01

stuff. But really, really good to talk to you. Thank you

1:02:03

so much for taking the time to

1:02:05

come. Well,

1:02:06

thanks for having me on, Robert. It was

1:02:08

it was great fun. I

1:02:12

really hope you

1:02:15

enjoyed that. It was a fascinating talking to

1:02:17

John. I wanna get him back on the show and

1:02:19

I wanna have him on

1:02:21

panel a fully charged life. I really hope he

1:02:23

can do that. Just really

1:02:25

interesting insights. And clearly, what

1:02:27

is exciting about it is it's

1:02:29

all changing. So however a

1:02:31

detailed conversation got today. If we do this again in six

1:02:33

months, it will be completely different. Other things would

1:02:36

have happened. Good

1:02:38

and bad. You know, it's a it's a very, very

1:02:40

volatile area

1:02:42

and exciting and with enormous

1:02:46

potential opportunities. That we've got to

1:02:48

grab. Anyway, that's all.

1:02:50

Please do subscribe to the fully charged podcast.

1:02:52

Tell your friends about the fully charged podcast.

1:02:54

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1:02:57

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1:02:59

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1:03:01

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1:03:04

reviews that says we're nice. So my

1:03:06

really exciting episodes coming soon. I

1:03:08

know we're recording on this week. Can't wait.

1:03:10

It's gonna be amazing. And Well,

1:03:14

that's it. If you have been, thank

1:03:17

you for listening.