You are listening to Redefining Energy.
Your co hosts from Berlin Gerard Rein and from London Lauren Saga. Today on Reallyfer and Energy, we're going to talk about where to invest in energy transition.
I don't want to talk about this topic because you didn't do it podcast.
Well now I'm doing it a podcast.
So there you become this investment girl, so you might as well tell us about your topology and why it's going to change the world.
Well, I was invited a few weeks ago by Luca Peetti, with the CEO of Texas Park and now his own podcast, and I was very pleased and privileged to have a good discussion with him around my investment thesis.
So go and let us know, tell us all about it.
It's all in the conversation. So let's listen to me and Luca.
Okay, very good, bring them out.
Laura, welcome to the show.
Welcome to your show. You've been already twice on our show, and you're going to come soon. Always very popular episodes, so I'm glad to be able to return a favor.
Thank you, Laura. In the anticipation of this show, today, we were discussing about clean engine investments, your role in that there's a lot of doom and gloom, especially here in Europe. But what is personally exciting you in terms of investments in Europe.
The investment that interests me are in a bit of a gray zone between trading and infrastructure. Trading because I've been a trader for more than ten years trading carbon electricity, and that's a universe I'm very accustomed to. And of course it's all digital, so that's number one. An infrastructure, which is a very very big universe. The part which interests me are more like a small infrastructure linked to energy,
which you can replicate and scale easily. And of course I can go in the detail of both, but that's generally my playground. If you arrive with a super technical innovation, I'm lost because I'm not an engineer and I don't like to be the guy around the table who doesn't get a clue and surrounded by very enthusist people have no idea what they're talking about.
Yeah, let's get specific. Most people think about energy transition, clean engine investment, think of wind parks, toler investment. That's infrastructure, as you mentioned, But maybe let's talk a bit about the digital side. Where do you see opportunities or where would you put your money?
Well? Have I put my money? So about six years ago I had created a little platform where I was brokering Toller Park wind Farms. The platform was very active at a bit of monetizing it, and then I bump into some young kids wheneverbody's a young kid, considering I'm now more than sixty years old, up extraordinary RFP module for PPA, and I decided to invest and let them grow, and that became Zygo with GP Serda, and after a few years we managed to exit and sell it to
Shlender Electric. And then one year later GP came back to me and said, ook, I've got a new idea for a new company. So his team was so good and it was such a great on topnet that I also invested in a new platform called Renewable, where we're going to track and trade print certificate but hourly re certificates.
You mentioned to me a classification hierarchy how you look at investments. Maybe it would be interesting just to learn how you do that and how you would place those investments.
Yeah, that's probably my copy right. So I've got my five categories from the lowers to the highers. The lowers would be I would call aspirational. So you're selling a product which is a bit of a service, which is a nice to have like in zero or those type of things you have to do that I'm not interested. Then you get the upper level, which I called the shoehorn.
So the shoehorn is a concept where you have those guys selling technologies with a big Excel sheet and they say, oh, okay, Sola is going to do this, Wind is going to do that, Butter is going to do this. Oh there's a gap to go to zero, And of course they try to plug, they try to shoe on their technologies. And of course, because those technology that don't exist or totally uneconomical, they require a crazy amount of subsidies. So I'm going to list either gen SMRs, CCS, and I'm
not interested. If people want to burn money, good for them making a green cement or green steel. It's very very very difficult. So that I'm not interested. Then I go up a notch. So number three is what I call the compliance product. Complaints product is okay, it's the law. You need to have it. Now, if you're this year and smart, you can make the complaints much cheaper. And somehow that's what Texa Park is doing, plus delivering other services.
And it's not just a regulatory compliance. You can be market compliants marking your books and stuff like that. Now, only interest I see in those products is when you create such a database, such a client base, and it's quite sticky, and people are just gonna come again and again and again because they have to. And some of those products are really excellent, provided there's not too much competition. If I look at carbon accounting, there are the twenty
five software doing carbon accountings. That's probably nineteen too much.
At level three aspirational shoehorn compliance. So let's go one type higher.
Oh that's the best one, right, not the second. Best one's second. The best one is profitable. It's very simple. There is this magic sentence in business, which is you will see your money back in three years. And I can tell you you can sell whatever thing you want if the magic sentence, if you can convince that whoever is buying that product's going to see the money back in three years. And a certain way is Zigo was a bit this idea that don't pay three hundred thousand
euro fees for a PPA. You know, you can get a PPA below of fifty thousand, and it's all thanks to digitization and so on. But look, anything that pays itself in three years will sell. Don't arrive by saying okay, this product is the shoehorn product or operational product to say you'll see you back in three years. If you can't sell a product where people are going to see their money back in three years, what are you doing? You know, what are you doing?
Final level?
Ah, the best well Salvation, Salvation, Salvation. You buy this product, you're safe. If you don't buy this product, your factories goes down, your grid goes down, you're out of a job, you lose your bonus. That's not the chief operating officer is the CFO or the CEO. I need that.
In the renewable space for that or the energy space.
TEXA pack has reached such a level that there are now guys who come to see you know, oh it's nice to have, or you know I should have that, or maybe it's good say oh my god, I need to have it because you know, my competitor have it and I'm auditor skiing. So in fact, if I don't buy it out of a job.
So what is the difference to compliance where you must basically have a certain product the competition level.
Yeah, it's started by early movers. Then after you know, you've got the main peloton if I use to the post analogy, but then you've got your blackguards and those guys have a choice.
Can you use this framework to classify let's say, as an example, investing in a standalone solar park in Spain.
It has to be profitable. The question is how long it's going to take to become profitable? If you look at and I mean I love the industry of solar developers or wind developers, but you have identified at Texa Park the problem of containnabalization, capture prices and so on. And I don't know there what thirty gigawad of solar in Spain or something like this, and in Germany now
it's one hundred giga awad, which is absolutely crazy. And the question is the value of an additional I would say Vanila solar at some point whatever asset you put on a grid as to create value for the system, especially in Europe, because you ask your problem were in Europe is that we're still with high prices. We are still doing energy efficiency or closing unfortunately some plants, which
mean the demand has not picked up. Was in the US, Now you have a system that's going again, especially with data centers and AI. So the old US approached with a transition is extremely different than in your because in the US they have all that conucopy of gas which is like support cheap was in your hope, we see need to import it. So the question is not the same.
No, I agree on the adding value. And your friend and co hosts from Redefining Energy Gerarity, he had the term energy intelligence and this is what you need to deliver today, not just a solar plant, but low system costs and somehow a green profile which covers more than just a solar profile. Maybe on the negative side, what would upset you in the clean energy investment space?
What's upset me right now is the amount of money of taxpayers money that's given to hydrogen which has a track record of absolutely not working. And just lead the report on by lobbyists and they don't do the basic calculation that at the end of the day one dollar per kilo hydrogenical a nine dollars and met you of gas. Okay, So it means now they are targeting a five dollars or five year old. That's forty five dollars and BT,
which means nothing to anybody. But if you multiply by six, you can have the equivalent in the bile of oil. And now we're talking about two hunrot and fifty dollars oil per barrel. It's just too expensive. It's just too expensive to use hydrogen as an energy source period. Plus you can't storey, you can't move it. I mean as
well as batteries, really super superbolish in batteries. With the price going down, you can have more and more use of those batteries everywhere and pretty much where it goes. It's eating into gas. Gas was supposed to balance everything, and the gas plants are going to run less and less, but they will shot more and more those few hours that they will run.
You also coined the statement of the energy transition is down deal by deal. Would you still stick to that or are we at the point of the transition hours back to Europe where we need regulatory policy changes or can we just let market players do their stuff?
I mean, I greatori, I mean we've got a telephone book every months of new regulation. I think you hope should regulate a bit less. Now if I'm being a bit cynicl and I look at the zones where you have growth in energy and growth of pin energy. You have two zones. One is China, and I guess nobody wants to do it the Chinese way. But you have Texas and Texas which is not run by leftist in
any shape or form. But the development is even faster than California, which is supposed to be politically more aligned with goals. And why it's because they're de regulated. And then for instance, they have a system of connecting to the grid which is basically okay, you connect at your own risk and then we'll manage it afterwards, whereas the old system of regulation and permitting in Europe is a bit antiquated. So in fact we are losing time just filling papers.
I agree, And coming a bit to the end to the show, is there anything you want to plug which keeps you motivated going on in the clean energy investment space?
Yeah? With Jerrard we have done. Three years ago we invested in a rooftop slam stall in Germany. We've been pretty lucky in term of timing because we came in we had fourteen employees and we managed to exit at three hundred employees, and I think the value was multiplied by five or six. So we're quite fortunate, especially now that the market is going down. It was an extraordinary entrepreneurial adventure with a great team in Manaim always an anecdote.
I have talking to Daniel and I said, I mean your system is so, you know, wonderfully organized. So you have planned to export and I say, oh, yeah, yeah, we are considering export market and I say, which one? Verya Otherwise, the big horizons are the cable across the Atlantic. Now that's a long term dream, but we gather more and more support. Now it's going to take fifteen years.
But I think it's really neat that you need to have some strategic assets, which are balancing assets, because when you have a Dunkel floater or when you have negative prices, it doesn't make any sense to try to manage those by hydrogen or you know, nuke or whatever. I love hydro, but the number of potential sites are very limited, so it makes a lot of sense. We have created, you know, a website called need to l dot org if you
can want to overlook. So right now it's a bit of a concept, but we get out of support and technically look, the longest interconnector right now, so SA is between England and Denmark with the Viking Link eight hundred kilometers with a loss of two percent. So going to America is we need two times five. But when you talk to Itachi, when you talk to Prismian or g they say tough, but do ever in the ground scheme of things is going to be six times cheaper than
a new Clubland. Yeah, we're working on that. We see where it goes.
Yeah, and it fits very well with another saying that no transition without transmission or absolutely how it fits very well. Norah, thanks a lot for coming on the first show of this year. I wish you a great day.
Thank you very much.
I must have bitch, Laura. I like your phraseology you horr salvation. I like us. I mean like what you smoke a drugs or something when you came up with our southist.
At least if some investors are this framework in mind, they would not have put that much money into hydrogen or sm mor or nuclear fusion or CCS or those type of things. You need to concentrate your investment where there are currently problems that we know and solve the problems. When your problem is okay, we need more capacity. You need to invest in transmission, you need to invest into batteries, because these solutions exists today and they can fix problem today.
And I can understand people get very excited about tomorrow's problem theoretical, but you have problem today and the problem we need to fix them now. Not a lot of inspiration, but a lot of perspiration. That's the way I see it.
I know you're right. I've always been captivated by the aspiration the dreamers. We need the dream. But I don't know if you make any money by investing in the aspirational.
Yeah, and again, certain investment can change from category to the other. Look, if you want to develop the stabiliation fuel, is it a shoehorn? Is it as pirational? Because you want to have green flights. It's starting to become compliance in your hope that you need to blend a certain percentage. And at what point it's going to become profitable, I don't know. But salvation, Yeah, if the penalties are very high,
definitely that's a purchase you have to do. Yeah, the typology is interesting, but sometimes the lines between different categories are a bit blur. Now there are some stuff like you're going to be in a zero, you're going to have green products that I think the ship has said.
I like it around actually believe or not. I think it's actually I'm gonna actually look at my own portfolio and my own in lessons with the ion and we'll see what We'll see what comes of it, and we'll.
Have a chat about it next year.
Right if I have a good year.
Or a bad year, Okay, but don't count on me because, as you say, very bad at predictions. Okay, job, talk to you next week. You look forward to.
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