Redefining Energy

“It’s hard to play a good game when you have been served weak cards”. This is the perennial challenge of Japan when it comes to the Energy Transition. And the game is getting harder when your two main choices, nuclear and hydrogen, are proving extremely costly in a world of cheap renewables.

How robust is a business model based on a protected internal market with high margins and limited competition allowing Japan Inc. to expand abroad at super competitive prices, but stifling innovation and diversification? Japan is “Prisoner of its geography” (to quote Tim Marshall); thankfully its answer has been a world class level of engineering allowing to partially overcome its shortcomings.

And Gerard, during his recent trip to Japan, has witnessed some extraordinary achievements in the energy transition in the downstream sector, with extreme energy efficiency, retail innovations, and digital developments.

We have the pleasure to welcome Shuichiro Kawamura, who heads one of the rare investments’ funds focusing on the Energy Transition. Established in 2006, Energy & Environment Investment (EEI) is Japan's first VC firm solely dedicated to the energy and environment sectors. They support startups with innovative technologies and services in this space, aiming to drive sustainable growth and positive global impact. As of Q1_24, the AUM of EEI is around US$500MM, with more than 130 portfolio companies. There is no easy formula in Japan. Only the smarts will survive.

We thank our friends and partners AQUILA CAPITAL for supporting our show.

This week, Gerard and Laurent talk about Conferences / Exhibition that they recently attended and what they have learned there. Gerard was in Germany’s E-World while Laurent was in London’s Energy Storage Summit.

And they act as mirror opposites: "back in business" in Germany while the storage in London realises that the Champagne year of 2022 cannot easily be repeated. The storage industry nevertheless rejoices at the fall in price of batteries while the classic Utilities are being challenged by new innovations such as “balcony solar”

The two limiting factors for a faster deployment of EVs are the price of vehicles and “range anxiety”. While the former is being addressed by an ever-growing number of cheaper models available on the market, the latter is also experiencing a revolution.
You would believe that such an opportunity would be grasped by Utilities. Surprise! They didn’t move. Oil companies have started investing, but at their slow pace. In the Automotive sector, only Tesla has seized on the challenge, and how brilliantly! So, the passivity of incumbents has created an overture for talented and dynamic entrepreneurs. We have decided to invite one of them.
Our guest is Toddington Harper, CEO of Gridserve, a leading UK charging network. Gerard, Laurent and Toddington discuss all recent developments in EV charging from technology to software to interoperability. We are going to talk about Electric Super Hubs, Electric Retail Hubs and the industry-leading Electric Forecourts®.
In the coming years, the whole EV charging landscape will totally change and petrol stations will be looked at like we look at CDs and Cassette Tapes. At the heart of the revolution, focus on a consumer-centric approach and a new way of thinking holistically called “sun-to-wheel”. Charging is not a commodity, it’s a service, and only the best service providers will emerge as winners.

We thank AQUILA CAPITAL for supporting the show.

This week, Gerard and Laurent talk about three great reports that have recently been published and deliver some world-class data about past achievements, current status and the direction of travel. As a sign of things to come, European Carbon has lost 36% since the beginning of the year.

1. We are here saluting Ember and their power/emission statistics – European Electricity review https://ember-climate.org/ https://ember-climate.org/insights/research/european-electricity-review-2024/
2. Then the new bible, from Nat Bullard, available here. Everything Climate and the Energy Transition in 200 slides. https://www.nathanielbullard.com/presentations
3. And for the battery buffs, the encyclopaedia in everything batteries, which comes from the Volta Foundation https://www.volta.foundation/annual-battery-report

To discuss everything that’s going on in the PPA market (and a lot of things are happening), Gerard and Laurent bring back the excellent Luca Pedretti, CEO and co-founder Pexapark. Pexapark is the leading swiss-based intelligence platform on PPA in Europe.
With Luca, we have an extensive conversation about the recent evolutions in the PPA market. Trends, duration, size, shapes, types of contracts, risk-sharing arrangements... We try to lay out how the market prices the following risks: capture risks, cannibalization risks, curtailment risks, settlement risks, credit risks…
Then the discussion moves to the Tech titans and their unquenchable thirst for green power are reshaping the market for green electrons. How new innovations like hourly Green Certificates (GoOs, REGOS) are appearing and adding some transparency in the price discovery process?
We finally debate about those soviet-era industrial policies in term of fuel choices (nuclear, hydrogen) that seem to ignore the permanent technological innovations (batteries), the need for flex, and the power of the market signals.
A lot of those themes are also detailed in Pexapark annual PPA report available below

We thank our friends and partners of Aquila Capital for supporting the show.

Link to Pexapark 𝐄𝐮𝐫𝐨𝐩𝐞𝐚𝐧 𝐏𝐏𝐀 𝐌𝐚𝐫𝐤𝐞𝐭 𝐎𝐮𝐭𝐥𝐨𝐨𝐤 2024 Report
https://pexapark.com/european-ppa-market/

In this report you’ll find:

💡 A 360° 𝐫𝐞𝐯𝐢𝐞𝐰 𝐨𝐟 𝐏𝐏𝐀 𝐝𝐞𝐚𝐥-𝐦𝐚𝐤𝐢𝐧𝐠 in 2023: Top PPA countries, buyers & sellers, and more thought-provoking data-driven insights
💡 𝐍𝐞𝐱𝐭 𝐟𝐫𝐨𝐧𝐭𝐢𝐞𝐫𝐬 on the rising: Hybrid PPAs, 24/7 green procurement, PPAs for Green H2 Production, Multi-buyer PPAs
💡 𝐌𝐚𝐜𝐫𝐨 𝐭𝐡𝐞𝐦𝐞𝐬 setting the rhythm: PPA pricing, market fundamentals and risks, regulatory environment, CfDs vs PPAs
💡 Distilment of our 𝐓𝐨𝐩 𝐏𝐫𝐞𝐝𝐢𝐜𝐭𝐢𝐨𝐧𝐬 𝐟𝐨𝐫 2024

This week, Gerard is out, so Laurent does the Minutes with Michael Barnard, host of our sister show Redefining Energy – Tech.
On the menu this week, an overview of the decarbonisation of shipping.
What will be electrified? What role for Hydrogen, Green Ammonia, Methanol and Biodiesel? And the answers are hybrid and multi-fuels.

Links to Michael’s articles on the subject in Forbes
https://www.forbes.com/sites/michaelbarnard/2023/12/05/how-will-climate-action-change-the-face-of-global-shipping/
https://www.forbes.com/sites/michaelbarnard/2023/12/29/hydrogen-half-truths-keep-shipping-fuel-hopes-afloat/
https://www.forbes.com/sites/michaelbarnard/2023/12/11/different-segments-of-the-shipping-market-have-different-climate-fixes/
https://www.forbes.com/sites/michaelbarnard/2023/12/17/how-much-shipping-can-just-use-batteries-for-energy/
https://www.forbes.com/sites/michaelbarnard/2023/12/20/shipping-still-has-efficiency-levers-to-pull-for-climate-action/
https://www.forbes.com/sites/michaelbarnard/2023/12/27/what-energy-will-ships-that-cant-electrify-use-including-wind/
https://www.forbes.com/sites/michaelbarnard/2024/01/05/2023-was-year-of-methanol-for-shipping-but-that-likely-wont-last/

At COP28 was endorsed the concept of “tripling renewables” – all good, but a lot of people forgot to mention the rest of the sentence which is “and doubling of Energy Efficiency”. In the latest IEA report, there is a 400bnUSD Energy Efficiency pie, almost at the level of Oil Upstream, and more than into Grids. Nobody talks about it. Buildings, Industrial, Transport. Electrification, Heat Pumps.

So, Laurent and Gerard thought that is was time. There are very few specialist of Energy Efficiency like Jonathan Maxwell.

Not only has he authored an extraordinary book called the EDGE, but he also manages Sustainable Development Capital SDCL, a multibillion Energy Efficiency fund. Efficient and decentralised generation of energy (or ‘EDGE’) solutions represent the largest, fastest, cheapest, and cleanest source of greenhouse gas emission reductions and energy security.

Datacenters, Lighting, Building, Heating, that’s the unknown world we are going to dive into. And it is a fast growing sector. Persistent tails winds such as energy security, decarbonisation and costs are powerful drivers for a continuous expansion of that sector.

We thank Aquila Capital for supporting our show

Why has the fund raised by infrastructure fund drastically collapsed in 2023. Is it linked to lackluster returns in a high interest rate environment?
At the same time, we have seen numerous acquisitions of mid size infrastructure specialists by larger global asset managers, case in point the very spectacular purchase of Global Infrastructure Partners by Blackrock (or is it a reverse take over?).
Where is the infrastructure investing going? That’s what on the menu of this week’s Minutes

Join Laurent and Gerard in Berlin – 20/21 March 2024 – Global Infrastructure Summit https://www.peievents.com/en/event/infrastructure-investor-global-summit/

After two years of irrational exuberance, we are back to earth when it comes to Cleantech investment.

On the menu this week, Gerard and Laurent are reviewing the Cleantech 100 report (15th edition). The overall ecosystem is down 40% yoy, but it has also cleaned the foam and is now revealing the future.

We discuss the 5 sub-sectors (agriculture, transportation, materials, resources, and energy) Our conclusion is that the sector has digested its excesses and is on a path to a new start.

Link to the report https://www.cleantech.com/the-global-cleantech-100/

Long term renewables assets portfolios provide stable returns. In most of the world, they are held by pension funds, insurance companies or big infrastructure funds. We have the exception of the UK with listed Infrastructure funds, also known as Yieldcos. For more than a decade, Yieldcos have been the backbone of the Energy Transition investing.
To explain what are listed Infrastructure funds, we bring in Colette Ord, Director, Investment Companies Research Property & Infrastructure at DBNumis. Deutsche Numis is a leading UK-focused investment bank leader in the UK market, the adviser of choice for listed companies, including one-fifth of the FTSE 350 index, with an average market capitalisation of £1bn, and has acted on the most UK IPOs over the past decade.
Colette Ord has analysed the listed infrastructure and renewables investment company segment of the London market since the launch of the first fund in 2006, so we dig into what was the thesis behind their launch 10 years ago.
We investigate how they delivered in terms of performance. We then dig deep into the key metrics of NAV (Net Asset Value). What is NAV, how it is calculated, how is it consistent. Then we analyse the interaction between free-risk interest rates and valuation of Yieldcos.
We conclude on their future, especially how they are progressively morphing into IPP (independent Power Producers)

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Link to Bruce Huber’s paper on Yieldcos. https://www.linkedin.com/pulse/yieldco-fallout-bargain-zombie-category-bruce-huber-jnbie/