0:01

Welcome to Zero I am Akshatrati.

0:03

This week wind Industry's history

0:06

and recovery.

0:17

The world desperately wants to build more

0:19

renewables, but a mix of factors

0:21

is causing the companies at the heart of

0:23

the energy transition to struggle.

0:26

Few have suffered as much as the big players

0:29

in the wind industry. Still

0:31

there are notable exceptions. On

0:34

last week's show, Jakab Barruel Poulsen

0:36

of Copenhagen Infrastructure Partners

0:39

told me about the one hundred and fifty

0:41

gigawards of clean energy projects that

0:43

his company has in the pipeline all

0:45

around the world. For context,

0:48

that number represents more than

0:50

the electricity generation capacity of

0:53

the UK, and most

0:55

of those projects are wind farms. On

0:58

this week's episode, we look at the story

1:00

of Vestus, another wind giant

1:02

that has survived a difficult period and

1:04

is finally back to making profits again.

1:07

Vesters was founded more than a century

1:10

ago. It went all in

1:12

on making wind turbines in the nineteen

1:14

eighties, but it operates in a volatile

1:17

energy market and that's made the job

1:19

of the company's CEO anything but

1:21

easy. When Hendrik Anderson

1:24

first joined vests as a board member.

1:26

A decade ago, the company had

1:28

just recorded its biggest loss. Shareholder

1:31

confidence seemed shaky, Anderson's

1:35

work to bring stability to the company eventually

1:38

led him to be made CEO in twenty

1:40

nineteen. Since then, WESTERS

1:43

has experienced even bigger ups and

1:45

downs. In twenty twenty two, the

1:47

company lost more than a billion dollars.

1:50

To make the company profitable again, Hendrick

1:53

was forced to make many changes, including

1:55

raising prices for wind turbines.

1:58

For the first time, I

2:00

spoke with Hendrik about new ways to harvest

2:02

wind more efficiently, the barriers

2:04

a company like Vestus must navigate, and

2:07

why he doesn't like the word subsidy.

2:22

Henrick, welcome to the show.

2:24

Thank you so much, Thanks for having me.

2:26

Now, it's been quite the journey for Westus since

2:28

eighteen ninety eight, from making

2:30

household appliances to agricultural

2:32

equipment and cranes to

2:35

now making wind turbines. What I

2:37

find remarkable is that Vestus,

2:39

even though it first made a turbine in nineteen

2:41

seventy nine, has been exclusively

2:44

making wind turbines since nineteen

2:47

eighty nine. That's very early

2:49

in what now we call the energy transition,

2:52

and it was a period when climate change

2:55

wasn't really even the biggest motivation to

2:57

try and go down the clean energy route. So tell

3:00

us why Westerns made that pivot so early.

3:03

No, and I think many many

3:06

parts of Europe from the time

3:08

was at an agricultural level.

3:10

With today in talks and language we

3:12

talk about either sort of minigrits

3:15

or enterity independence. But at that point

3:17

in time, the turbine in many ways was

3:19

the one that helped the farm have access

3:22

to its own power. So for that it's

3:24

been almost developing through societies

3:26

and especially also the development

3:29

from farming towards organization,

3:32

and of course in today's world it's

3:35

very much now back to the climate. So

3:37

I think it has developed a.

3:38

Lot, and that pivot, even

3:41

though it was that early, you think that's

3:43

been the right one because it's been as profitable

3:45

all through that period, even though really

3:48

we are now going through the energy transition today.

3:51

We went through a long period of time, especially

3:53

the nineties, the cerus and to

3:56

some extent around twenty

3:58

ten, the industry was building,

4:00

the industry was coming together. There was many

4:03

players in the industry, but they also

4:05

disappeared again because in

4:07

those couple of decades, if you didn't get

4:09

a government subsidy. The levelized

4:11

cost of entity was not competitive.

4:14

So that is, as I always say, the real

4:17

thing where the decade became

4:19

a real game changer was

4:21

actually from twenty ten to twenty

4:24

twenty. In those ten years you

4:26

reduced levelized cost of entity of the termine,

4:29

which somewhere between fifty to

4:31

sixty five percent in major

4:33

markets.

4:34

And so through the nineties and two thousands,

4:36

those two decades you required sort

4:39

of subsidies coming from Denmark the state

4:41

to ensure that VEST is stuck around.

4:44

Yes, and you can see that it was

4:46

from Denmark, partly in Germany,

4:49

partly in Spain, which are some

4:52

of the orittinenally founding

4:54

members of it. And

4:56

I think in those decades it was

4:58

also the decades where the countries

5:01

of Spain, Germany, Denmark actually

5:03

made technology transfers to other

5:06

parts of the world and not least to China,

5:08

which was interesting that when you transferred

5:10

to China it was

5:12

part of building, greening, transforming

5:16

China. And today I can probably

5:18

say that technology transfer works

5:20

quite a bit against some of the

5:22

originally thinking because now the competition

5:25

through the technology comes back to

5:27

its origin.

5:28

And your entry into the wind

5:30

industry is much more recent. You've been

5:32

on the board of Vestas since twenty thirteen,

5:35

you've been the CEO since twenty nineteen.

5:37

But what brought you to the wind

5:39

industry and what from your past helps

5:42

you in your job today.

5:44

When I was invited into Vestas

5:47

in twenty twelve, it was on

5:49

a little bit of an oblique background because

5:51

Vestas was throughout ten,

5:53

eleven and twelve through a very

5:55

challenged financial time. You

5:57

had in those years government away

6:00

the subsidies, and that meant that the Vestors

6:02

was continuing its capacity and

6:04

had multiple factories and couldn't

6:07

create the scale. So how

6:09

did I join the board? Probably because

6:11

I was known for doing restructuring,

6:14

being part of executive teams that

6:16

put not so good order into order,

6:19

and that was what I joined the board for. And

6:21

within thirteen we

6:24

changed an executive team. I think

6:27

Vestors a great company, but

6:29

probably needed a bit of a stop

6:31

and go and reset when you do a

6:34

turnaround. From that, since

6:36

then, executive management and board

6:39

investors have always been more like

6:41

one team. No filters, what

6:43

is good, what is bad? Get six

6:45

change between board and an executive

6:48

team, and I think that has been one of the

6:50

strength in also considering

6:52

what we have now gone through in recent times,

6:54

that we find a solution, we all commit

6:57

to it and then we give management the time

6:59

to execute. So that was my part,

7:01

and I always loved working in global

7:04

companies and you probably can't find

7:06

a more global company than Vestus.

7:08

Well. Also, you would expect an exciting

7:11

industry right the world is behind

7:13

on its clean energy goals and by a

7:15

big margin, and you would expect

7:17

renewable energy companies right now would be going through

7:20

a boom, but instead the

7:22

wind industry has had big problems

7:24

in recent years, especially around

7:26

profitability, which is required

7:28

if you want to scale this industry as

7:31

much as we need it. As

7:33

one of the largest wind turbine makers in the

7:35

world, if not the largest, you've

7:38

had a front row seat at

7:40

this saga. When did you

7:42

first think things had started

7:45

to sour and why?

7:48

I think from an industry point of view, I

7:50

think the industry is still developing

7:52

into a maturing industry. I think

7:55

in some of our key markets we are still relatively

7:57

immature, and you can take the offshore

8:00

as another part of a market that is

8:02

about too mature. We're building scale

8:05

and as long as there is not that maturity,

8:07

then you always will fight around

8:10

the next project. What started with the cod

8:12

and the Old Sous crisis and

8:14

the lockdown of the global community,

8:17

those bottlenecks in supply chain probably

8:20

show an industry very strongly that

8:22

there is no easy target and there is

8:24

no easy fix to your backlog,

8:26

and that we can see today it has

8:29

questioned also the survival of

8:31

some of the companies within the

8:33

wind industry, and that's what happens in the

8:35

last eight to ten years. Companies

8:38

have come into troubles and

8:40

disappeared.

8:41

So to be able to understand the troubles,

8:44

let's just talk through what's a little weird

8:47

about renewable energy

8:49

industry in general, but wind industry

8:51

specifically, is that most

8:53

wind farms even today are

8:56

built by developers who sign

8:58

long term contracts generate electricity

9:01

at a fixed price, and it

9:03

takes a few years before the wind

9:05

farm is actually built, and things can

9:07

change in that period. Of course, what you're

9:09

hinting at is you had inflation,

9:12

you had high interest rates, and

9:14

that caused you as a wind

9:17

turbine maker, but also developers

9:19

to just have a much

9:21

higher bill to build the wind turbines

9:24

and the wind farm, but then

9:26

they still had to sell the electricity at a fixed price.

9:30

Is there a way to fix this problem,

9:32

which is to renegotiate contracts

9:34

when things change, and have you tried

9:36

to do that? Yes?

9:38

I think one of the things we always

9:40

appreciate is it's a solution that generates

9:43

green electricity, which we all want more for

9:46

the next thirty years. But

9:48

as you're also pointing to and alluding

9:50

to it, it doesn't come overnight. So

9:53

typically in an auDA backlog industry

9:55

like hours, we get to a

9:57

customer developer, we

9:59

see the permitting and planning often

10:02

goes on many years before you actually

10:04

get to the final So when you have the permitting,

10:07

then you try to apply for the project

10:09

organization and you get

10:12

a binding offer from us, and then from

10:14

a binding offer to a full finance

10:16

project and here comes to thing. Sometimes

10:19

you have to appreciate that the product goes

10:21

into an auction where you then with

10:23

the government agree on an

10:25

electricity price for the coming ten

10:28

twenty years. You sometimes

10:30

in countries say, yep, I now have a great

10:33

access and permitting and that means

10:35

I can now sell my electricity

10:38

to a private company or anyone

10:40

who wants to secure the green electricity.

10:43

The ramp up until you have the

10:45

first killer water hour generated

10:48

from the turbine solution is

10:50

in many cases two or three years, and it's

10:52

in those two or three years, of course

10:54

vestors and the customer that our

10:57

developer is exposed

10:59

to the year volatility, and

11:01

the world saw volatility like

11:04

the world have never seen. Between

11:07

end of twenty nineteen and probably

11:09

to around mid year twenty three, that was

11:11

where the society was open again, and

11:13

we could see that the backlock of bottlenecks

11:16

in the supply chain took one

11:18

or two quarters to ease as well. So by end

11:20

of twenty three we seem to be back

11:23

to a society we can recognize

11:25

that sat before twenty twenty.

11:28

But those kinds of things might happen

11:30

in the future. You know, we're going into a period

11:33

where not just climate change, but there are

11:35

all sorts of other crises in the

11:37

world geopolitics that could

11:39

bring another period of this kind.

11:41

Is there a permanent solution to deal with it

11:44

or are we stuck with the old way of doing

11:46

business, which is have these long term contracts

11:49

and then just deal with losses

11:51

as you might have to make.

11:52

Sometimes I think the world has

11:54

become a lot wiser

11:57

and probably also trusting each other, at least from

11:59

our industry. I generally

12:01

meet most of our customers and partners

12:04

around the world, and I haven't

12:06

met anyone who says we will actually will

12:09

actually be missing vestors if you were

12:11

not there. And therefore, of course for

12:13

that reason, I think it's fair that we spent

12:15

a lot of time in generally understanding

12:18

where is it we have our risk, and where is it

12:20

we add the value and how do we

12:22

create that respectful partnership and contractual

12:25

obligations so we avoid

12:27

having a situation where in reality

12:29

in twenty two we lost one point

12:31

two or one point six billion euros

12:34

and by putting up thirty years

12:37

renewable solution, it's not great.

12:40

So I think that we have learned, and I think

12:42

the parallel work tracks

12:45

today as a developer is that you

12:47

work in parallel with the permitting, You work in

12:49

parallel with your partner

12:51

in the turbine solution, and

12:53

you work in parallel with your financing partners,

12:56

which means you are literally concluding

12:58

on the parallel tracks within one

13:01

or two.

13:02

Months after

13:07

the break. I ask Henrik whether there

13:09

is a solution to the wind industry's long

13:12

running woes. By

13:14

the way, if you find zero informative

13:16

and helpful, please do give us a rating

13:18

and review on Apple Podcasts or Spotify.

13:21

Thanks

13:29

right now. This is capitalism one

13:31

oh one right. Shareholders' perspective

13:34

is that any big loss for

13:36

any substantial period of time is

13:38

a bad thing. But it is

13:41

possible to convince shareholders

13:43

to bear through some losses because

13:46

in the future you'll get greater returns.

13:49

I'm just going to pick two examples here. Just

13:51

look at shareholders of Tesla for the first

13:53

decade of its existence, or look

13:56

at the shareholders of shale

13:58

oil and gas companies in the US. Wall

14:01

Street absorbed those losses

14:04

with gritted teeth. Nobody was happy,

14:07

But having done that, they

14:10

are now seeing the profits. So

14:12

why is it that you couldn't convince your shareholders

14:15

that, look, this is an industry

14:17

that has a big future. Bear

14:20

through the losses. It will be worth.

14:22

It to some extent. I

14:24

think shareholders will support you through difficult

14:26

times if you communicate that there

14:29

is a current status of where

14:31

you are, but there's no shareholders

14:33

that will support you. If you're not able to pick

14:35

a pretty clear track of where is

14:37

it you're going to be in two or three years from

14:40

now. And I think that is

14:42

probably one of the things I appreciate most

14:44

Throughout these difficult years. We

14:46

have been able to carry most

14:49

of our top twenty five shareholders

14:51

with us, and they of course welcome today

14:53

that we stock to the plan. And the plan,

14:55

by the way, worked, so I wouldn't

14:58

necessarily say that yearholders

15:00

won't support you, but I think

15:02

it's important when you ask for a shareholder

15:04

support, for instance, of an understanding

15:07

of losing one point six billion

15:09

that I've met no shareholders that didn't

15:11

ask me, so when is it going to stop? What

15:13

are you doing about it? And what prevents

15:15

you from ending there again in

15:18

the future. And I think that's the positive of

15:20

where we are today. The plan worked, and

15:22

of course it is nice to sit with scheerholders

15:24

today and saying we're safely back in profit.

15:27

But it's also now start stage two because

15:29

now we need to repay the one point

15:31

six billion we're born in twenty two from

15:34

shareholders, and that I'm adamant that

15:36

we will also do.

15:37

So.

15:37

I think you're right. You create transparency,

15:40

you avoid the fields that gives

15:42

seerholders confidence. There's nothing

15:44

not to like the industry maturity and

15:46

the lack of discipline is probably what we'll

15:49

question shareholders and also force

15:51

shareholders to do their individual

15:53

both stock and leadership pick.

15:55

But you also said, in this world, what

15:59

the world wants is clean energy and

16:01

winterbines to make it,

16:03

they won't miss vest as if vesters are

16:05

not making them. But of course you have

16:07

turned a corner and now you are profitable

16:10

again, but your competitors

16:13

take semens or g they're still

16:15

losing money. Does that

16:17

make you happy or do you see that to be

16:19

a problem given the industry as a

16:21

whole does require more than

16:23

one supplier for it to actually have the

16:27

reliability to deal with

16:29

what's going to be a big industry as it grows.

16:32

Yeah, I think whenever you look at industries,

16:35

they'll always be industries where you will have different

16:38

cycles. Often comes by

16:40

either change in management or different management

16:43

approaches, or different sizes

16:45

of the business. We are late comer in

16:47

to offshore. We offshore

16:50

business bag in in of twenty when

16:52

the world was almost close fully

16:54

down, and I think that's a testament of strengths

16:56

of what we are and how we operate vestas. So

16:59

I think companies will choose

17:01

differently to their discipline, and

17:03

we shouldn't forget to talk about

17:05

the customers. The customers still want more

17:08

of the solutions, and I think the governments

17:11

of course want more of the solution

17:14

because they want to come closer to their

17:16

COEO two neutral targets,

17:20

and they also for other

17:22

reasons today they also want to have a

17:24

energy independence and they want to build

17:27

a more national endy

17:29

supply, which of course speaks

17:31

highly for the turbine solutions.

17:34

So there are things that companies can do

17:37

to make sure that there are efficiencies. There's

17:39

the right management, there's the right vision, there's the right

17:41

execution. But then there are things that

17:43

are outside your control which also

17:46

make a material impact on the

17:48

industry. Just take the example

17:50

of what happened here in the UK where

17:54

an auction for your wind was run last

17:56

year and no bids came in

17:58

because the price was too low. Government

18:00

had to learn from it, go back to the board and

18:03

this year they've committed to a higher price

18:05

than last year. In November

18:08

twenty twenty two, in a Bloomberg interview, you

18:10

said some people made

18:12

the wrong assumption that energy and electricity

18:14

should become free. We

18:16

created that perception to some extent,

18:19

so we are to blame for it. That was

18:21

a mistake. Do you still

18:23

stand by that observation that the renewable

18:26

energy industry made a mistake of promising

18:29

ever following electricity

18:31

prices.

18:32

It's not something that is going away easily

18:34

overnight. And I think the language still

18:36

reflects it in many ways because when

18:38

we talk about the electricity

18:41

coming from either offshore

18:44

solutions, the government always

18:46

labeled it as subsidy. Interestingly

18:49

enough, that represents a market

18:51

price for you and I as consumers

18:54

that are substantially higher. Maybe

18:56

we should stop talking about a subsidy

18:58

because you and I we pay price

19:01

plus the VAT pros, the transmission

19:03

plus all the other things. But

19:05

the base price coming from the turbine

19:08

is not a subsidy. It's actually a penalty

19:11

to the developer that are building it

19:13

because the market price is substantially

19:15

higher. So we should stop talking

19:18

about it as a subsidy, because

19:20

if we treat it and talk about it

19:22

as a subsidy, we assume that

19:25

it starts from zero, and electricity

19:27

from a wind turbine is not cost

19:31

zero. You need to build and

19:33

you develop a technology, you construct it

19:35

and you maintain it for thirty years and it

19:37

is not zero cost, and

19:40

there are no desperate companies that would

19:42

take that chance to build something

19:44

and give the electricity for free

19:47

to the government.

19:48

Well, let's break that down. So the CFD,

19:50

the nice thing about it is that it's a

19:54

contracted price for the long term.

19:56

In the subsidy from the government

19:58

side is basically missing you. Regardless

20:01

of what the market price for electricity will

20:03

be. The government will ensure

20:06

that you get at least forty four pounds

20:08

per megawat are, which is what the

20:11

industry said it's not profitable. So

20:13

now they're coming back and they're saying, well,

20:15

we'll give you seventy one pounds per

20:17

magowatar. Please bring in the bids

20:19

and maybe this year. There's already noises

20:22

showing there will be bids because

20:24

the price may be right this time.

20:27

But the subsidy part is real because

20:29

they're committing to a fixed price plus

20:32

inflation in that long

20:35

term, right years to come. So

20:38

why do you think it should not be a subsidy.

20:40

No, I think we should just talk about it as

20:43

a price of electricity rather

20:45

than a subsidy, because if you call

20:47

it a subsidy. It gets a expression

20:50

that immediately in our ears to our brain

20:52

tells us that this is something that somebody else

20:54

paying for, and it's not a subsidy.

20:56

You don't want to call it subsidy, But

20:59

that is only being called because

21:01

it's committing to a fixed price for the long

21:03

term and the government is involved. Are

21:05

you saying we are at that place now

21:08

where pays the market

21:10

price because we understand we

21:12

wind industry can now produce electricity

21:15

at a cheaper price than other alternatives,

21:18

and we will provide that and we will actually

21:20

profit from being market players.

21:22

We don't want these contracts for differences, these

21:24

long term contracts. Just let us be pure

21:26

market players.

21:27

I can show you the levelized cost of energy comparison

21:30

of against cold fossil gas,

21:32

nuclear. We can show that levelized

21:34

cost of energy across country continents,

21:37

and we can show there is no cheaper alternative

21:40

than to build renewable So therefore,

21:42

let's talk about the price of building

21:44

new entity sources and exploring

21:47

new enity sources. Then just talk about

21:50

subsidies. So I think here we can

21:52

happily conclude and I will quote and

21:54

no name politicians in the UK who

21:56

said it's really interesting now

21:58

that ramping up the capacity within

22:01

renewable it is cheaper to save

22:03

the planet than it is to destroy it.

22:06

And that's a pretty pretty cool

22:08

way of playing with levelized cost

22:10

of energy in saying this is what we

22:12

want to achieve, and actually we can say money

22:14

in doing it. Hey, what's not to lie?

22:16

Well, I'll take a compliment that you quoted

22:18

my book to me. But going

22:20

back to it, are you saying no

22:23

long term contracts are needed

22:25

now and the

22:27

wind industry can just be a market player like

22:30

the gas power plant industry

22:32

is.

22:33

I don't know if we're saying it shouldn't

22:35

be long term contracts. I don't think anyone

22:38

either fear or require short or

22:40

long term contracts. I think

22:42

the merchant market works well because

22:44

we are also developing technologies that

22:47

makes the requirement or the storage

22:49

opportunities, for instance, of electricity.

22:51

So the storage opportunities of electricity

22:54

is substantially different today than it was ten

22:56

years ago. In twenty ten,

22:59

the turbine reality required

23:01

some of the support in ninety nine of

23:03

the global markets. Today it's less than one

23:05

percent of the global markets where you required.

23:09

Now looking at the history of wind turbines

23:11

few people would know. But even today

23:13

turbine manufacturing is kind of a bootique

23:16

industry, and that's not the case with solar

23:18

or batteries, for example, where if

23:21

you walk through the industry making

23:23

them, there's so much automation. There's

23:25

just robots everywhere. So in

23:27

your industry, what are the innovations

23:29

that you've seen in manufacturing and

23:31

in technology that will help

23:34

make wind turbines even cheaper.

23:36

First of all, part of it is the ramping

23:39

of turbines and the parts

23:41

of a turbine, whether it's the blades or it's

23:43

the nasil and other things, and there

23:45

are still so many things where it

23:47

has to be manual, and I don't

23:49

think any future soon changes

23:51

that because there are parts of this where

23:54

we are also now embarking in dimensions

23:57

where the small

23:59

weak point in a blade that is one hundred

24:01

and sixteen meter makes a blade

24:04

either crack or being under that

24:06

load. It's substantial

24:08

a challenge and sometimes compare

24:10

a little bit between industries. The Formula

24:12

one cars are designed to run maximum

24:15

two hours and then three hundred kilometers

24:17

an hour, but a turbine is designed

24:19

for thirty years and the tip speed of a

24:22

turbine is often in exist of

24:24

three hundred kilometers an hour, and they are

24:26

out there and have to be designed for that. So

24:28

the load and the pressure on some of these

24:31

assets enormous, which

24:33

I also think is probably also why you will

24:35

find still so many hand carried

24:38

things. But that doesn't mean that when

24:40

you do the first prototype and you see their turnover

24:42

time on either blades, on our

24:44

selves, we are able to bring that

24:46

quite far down over

24:49

a industrialization of the process,

24:51

So that's positive. So instead

24:53

of only focusing on the direct

24:55

employee here, Yes,

24:57

it will be nice to do some uptimization. Tried

25:01

many parts of bulls. We won't stop

25:03

innovating on it.

25:04

And what about technology innovation in

25:07

making turbines bigger, more

25:09

efficient and the

25:11

streaper.

25:12

Yeah, I think that's how we do the

25:15

levelized cost of entity down and we haven't

25:17

stopped doing that. In the last few

25:19

years. We put up a new prototype for offshore

25:22

that is now a fifteen megawater, and our previous

25:24

largest turbine was a ten megawat, so

25:27

that's a much bigger one. I know industry

25:29

players had maybe at twelve or a thirteen

25:32

megawatt turbine, so I think

25:34

the industry is constant changing,

25:36

So now we will start talking about what is

25:39

in grid and what is potentially off grid

25:41

as solutions as well.

25:43

Now, one of the reasons why you've been

25:45

able to turn a corner is your order book

25:48

has grown and has exploded

25:50

in the last year. Of course,

25:52

it's on the back of a lot of governments

25:55

that are still behind on their targets. I

25:57

mean, if you just look at Europe, by

26:00

twenty thirty, Europe wants

26:02

to build more than one hundred gig awards of offshore

26:04

wind. In the past, when governments

26:06

set those targets, they actually were underestimating

26:08

and the renewable energy industry

26:11

was able to over deliver. But

26:13

now do you think governments are setting targets that are

26:16

just too ambitious and the industry won't

26:18

be able to deliver.

26:21

Yeah, no, I think

26:23

that the say and they do gap unfortunately

26:26

seem to widen rather than to narrowing

26:28

in the past couple of years. And I don't think voters

26:30

anymore will not have climate

26:34

or for that match the progress in energy

26:36

as one of the key topics. So therefore politicians

26:39

are of course up for reelection, and most

26:42

politicians want to be re elected. And that's

26:44

also why you often see that target

26:46

setting gets a little bit of a kickoffwards

26:49

every time you're in election mode, because

26:52

if you take the targets in EU,

26:55

in the last couple of years, we have had target

26:57

setting that indicated we should put up more

26:59

than first GIGABO, and in reality

27:02

we have done just around half. We

27:04

won't get to carbon neutrality by

27:07

fooling each other with targets that are not being

27:09

fulfilled. That I know the word green

27:11

washing, and no one wants to hear it, but

27:13

please let us not do that. I know one of the

27:15

countries I probably in the past have always

27:17

given a little bit of a hard time, which is

27:20

Germany. The

27:22

German government has changed gear

27:25

dramatically within the last eighteen

27:27

months. New government came in. They

27:29

saw an energy dependence

27:32

suddenly becoming overly

27:34

towards a gas from the east. They

27:37

retired nuclear without necessarily

27:40

having exactly the resources available.

27:43

But within eighteen months they have re

27:45

established first of all access to terminals

27:47

from liquid gas. And

27:49

of course now they're building and permitting

27:52

a renewable entity at a rate I've

27:55

never seen before and I never thought was possible.

27:57

And we came from something where they were doing less

28:00

than a giga what a year, and when you now listen to the

28:02

run rate, they are in

28:04

excess of probably five giga wort this year.

28:06

And that's something I would have said eighteen months ago,

28:08

and now it's impossible they will not get

28:11

to that. So, as I said, to every EU

28:13

twenty six countries, with Germany as

28:15

the good example, make a study trip

28:17

to Germany and see how things

28:20

could actually work when you

28:22

consider that, yes it is in respect

28:24

for the country, Yes it is in respect

28:27

for also the society, but it

28:30

also sometimes have to have that we

28:32

do permitting at a faster

28:34

pace.

28:35

And this is something my colleague Will Matis and

28:37

I have written about, which is that

28:39

permitting has been a real issue,

28:41

especially in Europe, but just generally around

28:43

the world. I mean ten years

28:46

required for permitting is not unheard of,

28:48

which seems ridiculous. But now

28:50

you're saying some governments are learning. Could

28:52

you just talk through what are the things

28:54

that the German government got right and what

28:56

others should learn from what

28:59

the Germans did?

29:00

Yeah, and I think sometimes

29:02

change comes out of that. You are getting

29:04

into a difficult situation, so you

29:06

are forced to do something radically

29:09

because I think here, when you want

29:11

to have access to energy, and you want

29:13

to have and you're maybe even on the

29:15

brink of saying, whoa if we potentially

29:18

run the risk of not having electricity

29:21

available, which is called blackout,

29:23

and under those circumstances, you are actually threatening

29:26

your own society, and that's where

29:28

then the balance tips towards

29:30

Hey, now we need to find that solution.

29:33

And the good thing in Germany is they

29:35

have united the

29:37

delegated local regional state

29:40

with central government, so there is not the

29:43

central decentralized conflict

29:46

that we still see in many many

29:48

countries where you over

29:50

the last couple of decades you

29:52

decentralize the authority

29:55

to mandate or permit any

29:57

disaucing. And actually any disourcing

30:00

for any country is a national

30:02

matter, so you delegated to permitting

30:05

regionally or locally to municipalities,

30:08

but your innerity dependency is

30:10

actually a national matter. So something has

30:12

to give. I'm usually encouraged to see

30:14

how Germany Man is getting things done.

30:17

Now we are going into a year

30:19

with a ton of elections. Let's

30:22

just talk about two of them this

30:24

year, which is the US, and then one next

30:26

year, which is Australia. And I bring those up

30:28

because you've got a big order book from US

30:30

and Australia. What

30:33

happens if you get the

30:35

Republican Party coming into power in the

30:37

US and then next

30:40

year the Liberals in Australia,

30:43

both of them not particularly interested in climate

30:45

goals. Maybe they're interested in energy

30:48

as long as it's cheap. But do

30:50

you think you'll have again

30:52

those external factors weighing down on

30:54

an industry that's just back

30:57

to its state of growing

30:59

at the rate needs to.

31:02

There's always a risk for that. There's always

31:04

a risk for what comes in an election. And

31:06

I also think there are some factual positives

31:09

in the track we on for

31:11

the world, because I think the world is aligning

31:14

more and more about getting proper things

31:16

done. And if we go into the US,

31:19

it is fair saying that the US has contributed

31:22

positively today. It's called IRA

31:24

because it's a bigger package of many

31:27

things that got rolled in as

31:29

renewable energy, which.

31:32

Tax credits to build lots and lots

31:34

of solar and wind.

31:35

It is meaning that you and I,

31:37

if we were living in the US, we would

31:39

on average have a more stable electricity

31:41

price at a much lower level than we will be

31:43

experienced here in Europe. So you've actually

31:45

gained a huge thing. And if

31:48

you go to Australia, there

31:50

is an approximately further giga of

31:52

coal fired one way or

31:54

the other power plants

31:56

in Australia. They

31:59

have, for obvious reason now set out

32:01

attract to at least start planning

32:03

and retiring that. I think

32:05

it's maybe more a question around will

32:08

it be with a different pace. But for somebody

32:10

to say we will just replace ferty giga

32:12

of coal fired power plants within

32:14

six or seven years is also an enormous

32:17

steep curve. So maybe

32:19

in their election, I hope the topic

32:22

to be discussed and agreed on would rather

32:24

be that the Parliament in the election would

32:26

agree on whomever wins will

32:29

get the transition done at

32:31

a speed that is more the likely

32:33

of the.

32:33

Actual One thing you mentioned

32:36

was the conversation between the industry

32:38

and the UK government that allowed you

32:40

to come to a new place, a reset, so

32:43

to speak. If

32:45

you look at another part of the energy industry,

32:48

the oil and gas industry, they've been very

32:50

powerful in coming together

32:52

lobbying for outcomes that they want.

32:55

Do you think the renewable energy industry

32:58

as a whole as industry groups

33:00

is strong enough to make clear what

33:03

its demands are for building

33:05

out all this clean energy.

33:07

First of all, no is the right answer, because

33:09

I think too often we end up being

33:11

either non representative as

33:14

an industry group. But I also

33:16

think that comes a little bit back to come

33:18

on, we in the early stage timing

33:21

wise, of scratching the surface, you portrayed

33:23

it nicely. I mean we just come into out

33:25

of the first decade where we actually become a

33:28

competitive alternative. If

33:30

we look at the energy demands

33:32

and supply cycle of the world, when

33:35

energy is still one and a half percent

33:37

of the total energy supply, but

33:40

as the electrification increases,

33:42

it's obvious that we will have a more vocal

33:44

voice and probably become a more mature

33:47

industry. And part of that is also

33:50

that we will see a further consolidation

33:53

of fewer players in the industry,

33:55

and I think we are getting and we are fast approaching

33:58

that, and that will probably raise what

34:00

you're calling a little bit more. The

34:02

insight too, that you don't have to speak

34:04

to many people, but you speak to

34:06

a fewer that can then get

34:08

things done. Because it's not rocket science

34:11

to sit down and talk about what it

34:13

takes to get things built out.

34:15

Now that you've made vest as profitable, are

34:18

you going to quit now? Never?

34:21

For me, I have two daughters at twenty

34:23

one and twenty four. That will

34:26

be too easy, as they say, but it's

34:29

a big milestone to get

34:31

back. There's no fun in working in a company

34:33

that is not making any money. The real

34:35

journey starts now. This has been two

34:37

mots of emergency cure

34:40

and trying to get it back now also

34:43

starts part of it. How do we build

34:45

the foundation to get vestors

34:47

to the performance that is reasonable

34:49

for a company of our

34:51

nature so far, if I

34:53

have the choice, I will continue for some years

34:55

yet to come.

34:57

Thank you, Hendrick, You're welcome,

34:59

Thanks for having Thank

35:05

you for listening to Zero. If you liked this episode,

35:07

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35:19

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35:21

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35:24

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35:27

Thanks to Kira Pindrim and will mathis

35:30

I am Akshatrati back soon