You're listening to Redefining Energy. Your co hosts from Berlin Gerard Reed and from London Laurent Segal.
Today on Rief n Energy.
We're going to DeVos, where chard you moderated a panel last months.
How do you arrive in a panel in DeVos? What does it take?
The usual laurl look, but look a good fortune being in the right place the right time.
I've been involved with the World Economic Forum, they have a Future Energy Council for many many years. And I also know the Hattachi people very well. So the Hattachi Energy people is the from a abb grid business. And then we just had a chat about let's actually do something there on the future of energy and really what we call the energy supercycle and whether it's a reality or not. I said, well, it's greater there, let's do it.
Can you describe a bit of the Congress Center when you arrive, just.
To describe Davos, just to give you an idea. So what you've got is this town, which is about one and a half kilometers up the mountains, and I have never seen such a big.
Army presence in my life.
I think there's probably more Swiss Army people there than there are people living in this town, right, there's about five thousand they deploy.
Now why do they do that?
Because what you've got is the top political leaders and business leaders from a large part of certainly the Western world, but actually I would say a greater world.
There.
For example, I met the Argentinian president Laurum. It was very funny, right Melay, Oh, I shook his hand, But you know the stuff like that that was there. You get all these people there, and you can imagine this is just a Swiss alpine ski resort, and so it's just full of these people and their security everywhere. I mean, you can't go anywhere without to get through meta detectors and and to get from one place to the other.
You know, as I said, just it was very interesting to be there.
You know, did you meet Bill Gates or not?
No? I didn't meet Bill Gates.
No, no, no. Did you meet anybody famous?
Yeah? I did quite a few.
Actually, okay, I drop the names. Drop the names.
I'll give you an example. For example, I met Stefan Bansell.
MH probably means nothing to you there. I think he is one of the most famous Frenchmen of our generation. He's the sea all more Dana. Obviously that's not It was all because of the COVID nineteen B. Actually that's very interesting so to just you know, being able to go over to people and just say hi, how are you no, and just chat to them, right, it was It's a really really interesting enviroment. I'm definitely going to
spend more time there next year. I only went in for a day, and I am definitely going to spend three or four days there next year.
Okay, because Urina complained that you only spend twenty four hours there.
I did.
Yeah, yeah, it just it was just the way things panned out. But next year, definitely, I won't to spend more time there.
The room. How many people are they in the room?
So what we did was with Hachi is we put on a small event and it was probably better.
I don't know, there was eighty people in the room something like that. You just don't know who's in the room though. It's just very interesting, you know.
It was good insure uce the ban Alan. So who was there with you?
So we had tashi IgA Shahara and he's the executive chairman of Hititachi, and then we've got Hitachi Energy, which is our grid business, and the CEO of that was Andrea Sharon Beck. And then finally we had Elizabeth Vardaheim and she's the CEO of Statnet and Statnet is the Norwegian guid operator.
Okay, great, so let's listen to excerpts of the panel.
We're going to talk about the energy super cycle and why we think it's unstoppable. And to do that just in terms of our guests. Here to my right here we have Elizabeth.
Who's the CEO of that.
Net Thatt is the Norwegian grid operator. And then besides we have Tashi here who's the executive chairman of Haitachi. And then on the end there we have Andreas who is the chairman or the CEO of Hitachi Energy. So let me just sort of give you a little bit of context here before we open up to everybody.
So use the phrase supercycle.
Now, when I hear the word super cycle, I think commodities, and actually I think probably a good place to start about that is to talk about fossil fuels. Because we're not going to talk about the fossil fuels being in a super cycle, but I have to explain that. So if we look at fossil fuels across the world. We've probably seen peak demand for oil, all right, We've also seen peak demand for coal. Now we've got one fossil fuel where we're going to see demand increasing going forward,
and that's natural gas. The reason is it's clean and it's very low cost, and also it fits very well in if you're going to build a future system built around clean renewables, clean nuclear and.
Stuff like that. So this is what we see. Now.
Let me just go to the supply side. So today, if I look at the oil industry, we have an access to supply. And by the way, I'm not including the fact that let's say Venezuela has the biggest oil reserves in the world and we're not exploiting them. The point about it is lots of oil out there and wheat demand. I don't go to coal. Nobody wants coal anymore, and it's not about climate change. It's just it's dirty
and they are cheaper alternatives like natural gas. So we've got declining demand for that and we've got lots of supply on it.
Now what does that mean.
What that means is there's no supercycle in the fossil fuel area because it's high risk. Why would I put money on my finance person, Why would I put money or capital to work in an area where.
I don't know what's going to happen with demand.
So why are we talking about a supercycle in energy, because we're actually talking about a supercycle in electricity.
Very different to talk a little bit what that is.
If we look going forward, what we're going to do is we're going to electrify nearly all of our energy system. Why well, one is it's clean, it's efficient, it's low cost. And guess what not one of our digital devices can survive without electricity.
Not one.
And I have a very simple example, right, I come from Ireland. My home in Ireland had no heat the last two days. Let me explain why they have a little control box on the wall, and believe it not, it's battery powered and it went out of batteries. So the point I'm making, even though we're burning natural gas in the house, that controls all use electricity. You use an internal combustion engine car today that controls use electricity.
We cannot do without electricity. I can do without cold tomorrow, I can do without all. I cannot do without electricity. Now to add to that I go and talk about the whole area of digitalization. Well, if I look in the Western world, what we've seen is electricity demand fall for the last ten years.
Not a great place to put your money.
Right, Well, guess what Now we're seeing electricity demand go up. Why because of artificial intelligence? Yeah, all right, Really, artificial intelliges are a very big game change for this whole electrification space. Now you might say, we've got all this growing demand for electricity, where's it going to come from?
Well, let me just talk about.
The technologies that are revolutionizing the supply side.
The first one is solar.
Now you might go, oh my god, solo, how can that revolutionize the world. So let me just put this into perspective. Last year we installed across the world six hundred gigawa's are solar. Now I'm going to compare that to nuclear nuclear there was three and a half gigawats put online. If I look at gas, ten gigawats put online. We have never seen an energy technology come to market as quickly as solar.
Why.
It's easy to install, and it's cheap, and it's getting cheaper, and the pform moments is getting better. Okay, So that's number one. The second thing is energy storage. People always talk about energy storage as a black box out there. We don't need it. Let's be really clear. Every energy system needs storage. So the current storage mechanism in the electricity system is called a pile of coal that's sitting at a coal bunker, or it's gas sitting in a
gas tank. That's what we use in terms of storage. Now going forward, I'm just going to say to you that we're gonna use go to More's chemical storage. We're gonna go use lots and lots of batteries going forward, and I'll talk about lythium ion litia. Online batteries is not just revolutionizing the automobile space, but it will off revolutionize what's going on in our homes and our buildings. We will have these batteries in our homes, and I
don't mean just for our digital devices. We'll do it just because it's cheap, okay, and it matches very well into solar And to just to give you an idea to scale, we now have one thousand gigawatts of batteries that came online last year, most of them in elect cars. All right, if I went back a few years ago you were probably at one hundred gigabytes, So the scale of increase is incredible. Now the third thing, and this is the game changer, is how do you connect all
this together? You connect this together with digitalization. Now, digitalization is sensors, it's semiconductors, it's connectivity of your mobile devices, and more importantly, it's artificial intelligence. And I'm going to end on the artificial intelligibly because this is a game changer, and it's not just a game changer in the sense that you can connect everything together and make it a
much more efficient system. For those of you who realize what's going on in artificial intelligence today, the latest AI models are up to the PhD standard of anyone doing the STEM qualification today, that's any science, technology, or mathematics. Now what does that mean, Well, I guess I'm going to have lots and lots of people helping me innovate
faster than ever before. And because I'm going to be able to innovate faster than ever, what this means is that technologies like nuclear fusion, small modular reactors, you name it, are going to come to market much quicker than we have before because we will have real innovations in the area of material science, and I even go to go far to say we'll find new elements and we might even come.
Up with new physics laws.
That's the extent of really what is happening in the world. Now, what does that mean for me? In conclusion? Well, actually, that doesn't sound like a small thing. That sounds like a revolution. And if I go back in time, the first energy revolution or the first industrial revolution was a combination of coal and steam engine. So you needed the steam engines drive coal demand. Then the second one was
the automobile. It drove oil demand. Now digitalization and AI what they do is they push electricity demand, and in particular it's going to be clean electricity, and again clean electricity because of the innovation is going on. And my own view is that the revolution that we're going through now is going to be bigger than the industry revolution either.
The last two.
That's how big it is, Okay, And that's why I'm sitting here to talk about this. So at this point in time, I'm going to stop, and I'm gonna hand over and I'm gonna go hand over the Tashi and hear his views from a systemic level about what's going on in the energy space and a particular electricity.
Okay, thank you.
First of all, let me talk about that he toutually the social renovation business first, and he dutchly promoting the social innovation business, which is the providing integito of the infrastructure such as a railway system or partay system. By liberating digital technology all over the wall.
That means he actually.
Has the capability of the developing the AI. Also the nuclear power brands and something like that. You mentioned how to combine with the creating energy and how to make the people happy. This is one of the very important social innovation targets and the status is a committity to tolving the social challenges, including the carbon neutrality very important. We have to solve this kind of THEOTO emission we have to reduce all over the world. Is a very
ardent program. And also recently you mentioned that zerative AI has become an increasingly wide spread and the other result the energy consumption that in data center increasingly the adoption of the ZERATIVEI is expected to accelerate even further.
So we have to solve this issue.
Everybody uses GENERATIVEI and also we have to reduce a COEO too. We have to provide a sustainable power supply, shorting the carbon new drug. We have to solve these kind of houristic program from the surprise side and demand side. Also, the power transition solution is very important and the HIT Act provide the rom the solution surprise side.
Thank you, Thank you very much, Elizabeth. You come from Norway, and if I look at Norway, Norway is really at the forefront of electrifying as energy system. And I mean you've been doing it for a longline in a sense of heat, but now in terms of transport, construction, etcetera, etcetera. You're all at the forefront. So tell me a little bit about your experiences and what are the challenges now as a grid operator.
It's a funny thing that you say that we are in the front, because it's just natural to us. We've had hydropower for many many years now. All the houses use electricity for heating, and then they have been doing for many many years. In twenty ten, we launched a strategy in start Net. We called it the future is Electric and everybody laughed at us, not thinking about that they were using electricity already.
But we have been totally dependent.
On oil and gas. Of course huge incomes to the whole Norway, but they didn't believe ring an electric future. Just before Christmas, we launch a new strategy calling it Electrification for a New Era. And in this strategy because we have seen the demand from twenty eighteen and we are in no position to meet this demand at the moment, even in Norway, and they are all very angry with
us because we are irresponsible to meet this demand. As we say we who are irresponsible for the grid, that there will not be any transition without transmission, and I think people sometimes forget that. So what we're doing at the moment is to really use technology to get the most out of the grid and the power system we are operating today. And why we're doing that, we're planning and constructing a whole new transmission grid. Also in Norway. We are really well off before because we have been
constructing and reconstructing a transmission green from twenty ten. But now it's getting really.
Old that transmission grid.
In Norway and the demand is huge. Another issue and I think we share that with all of the world and the Europe, is that we must be working on the energy security and accelerate that. And the third prioritized area in this strategy is to enhance the resilience of the power system we have today, both in operation and development. And we mustn't forget that Europe is the world's most
interconnected houses. If something goes wrong in one region, if we don't have a really resilient and robust power system, it will that impact on the whole well Europe and the neighboring Ragians Andrews.
Maybe just to follow on from that, can we talk about energy security? How do you help her and grid operators in that whole energy security resilienary because the whole point is without electricity, we can't do anything simple as that.
I think it's an interesting question and point, and I think you're completely righted as it is, until a couple of years before, energy security and safety was and either completely ignored or just seen as a technical term. What happens if an overheadline is falling down. The whole thing has become a complete new dimension. And one aspect why we see so much renewable as well growing at the moment is that the point of energy security and safety
has read from a different angle. If I don't sitting on coal, oil or gas and depa and then from imports. And I don't want to beat the dependent from imports. We have seen what can happen oil and gases. That's why definitely going down, even in countries which have been traditionally big role importers like China and India. India has a clear strategy to get rid of all imports of
oil and gas in the near future. That's one hundred eighty billion price ticket and rely on renewable because the sun is always local and the wind is always local. But of course it's not only that angle, which we could discuss as well. As Elizabeth stated her net is we are stretched to say it mildly, may be overloaded,
it's aging, it's creating issues as well as well. How to make that more reliant and more resilient in a technical way as well, and actually, yes, building new things when we're doing it together, that's one thing, but it takes longer than expected.
It needs assets which are rare.
We have to use it and OT to do that as well, looking at the assets, how they are loaded, how they are used. THEII can play a good role understanding better the consumption pattern, forecasting wealth are really looking into the future and really going through all levels and details on that. On the other hand, the installed base what we have as an industry is huge, and it's not used and operated always in the most intelligent way.
We are still in a way that after a couple of years we exchanged a lot of the transformer because we say so, we're not looking into it. Was the transformer really use that much in that time? Do we really have to do that and have an outage can be used maybe a predictive maintenance to forecast which part should be exchanged when and maybe even in addition, even they have not failed because avoid every kind of single technical outage or issue makes the grid more reliable and
more resilient. Of course, connecting coming to the way and what you said about Europe is the biggest connected grid in the world. You can much more resilient if connecting it differently, not on AC but on DC you have no interactions from one country to another. I think it's a complete new level and ironically I wouldn't even say what you said, Jerard. Yes, the age of electricity as it called by the IA is fueled by AI meant electrification.
Of course on the other end, I will contribute a big part to solve that will will deal with the challenges of today and tomorrow. That makes it good, more resilient, more safer, and more cheaper. It works in both ends, which I think is good news.
Can I go back to what we actually started with, which was energy supersychled I said it was an energy super it's electricity supercycle. What's your own opinions and what does it mean for your business and how you see it going forward?
We will say that we are in the middle of our transition. I believe that we are just in the beginning of the transition and revolution or a superciching. And we always say that twenty thirty is today, in twenty
fifties tomorrow, so we are always in a hurry. I think we need to approach it as a society and both between together with our suppliers as well, and in a very holistic way, and we need to rethink how we collaborate in a very different way, because we need to lean in and share the risks and share the cost because we have no time to sit around and wait for someone else to dig in and do the job for us.
Tashi, how do you look at it. Elizabeth mentioned the houristic thinking.
I think this is very important keyword because the take for instance, the recentry. It is very difficult to concider about, for example, carbon neutrality and the Sakia economy, nature polity, these are seem to be the different issue. But we should consider about houristic. I mean, in order to achieve the carbon neutrality, soaker economy is very important. How to minimum you know, Mattia, your input and we use the products again and the material again. It is a very
important we can reduce energy. Also we have to consider about the nature positive. So we should consider about a total houristic solution is important. Energy security, we should use everything that's a renewable energy, new career, tamer park plant and this is the core combustions technology we should use ver then and considered about the holistic.
That is a key word.
Andrews ifa a look at your business. It seems like it's a huge opportunity in Frontier.
So do you get out of the bed every day excited? And what does it mean for you guys going forward?
And of course we'll be excited about the age of electricity and the super cycle. We not only believe in it, we feed it and we know it's coming, and were in the middle of that. On the other end, you have to consider where we are coming from as an industry, in touch energy and all the others. For twenty years, actually we were fighting for survival and the decision of the day was which factory we are closing tomorrow, in which we are not closing tomorrow. So and now we
are in that complete different situation. So the organization is feeling a little bit like a couch potato sitting in front of the TV, having one package of ships after the other, and one morning somebody is coming there. Look, you start running. You're starting running a marathon there without training. You can train while you run. So the organization is stressed. Yes, we're investing heavily six billion euros, but we have to
hire fifteen thousand people in three years. We have to train them, we have to add them, we have to learn how to produce efficiently because we were never running on three shifts in the last fifteen twenty years.
That creates other problems.
So is it a good problem to have, definitely, because the other side of the medal was not good neither. But of course it is a huge undertaking for us. There are huge challenges, quality issues, delivery issues. We are dealing with people and our customers have to be with us and we cannot set it for everybody. But yeah, that's the huge ENDEVA, and it's really be good to be in that industry at this time, especially if we're
doing it really for the gat good. You know, the electricity revolution on transition will only happen if we can supply equipment and if you're using our existing equipment better and efficiently.
Very good.
Well on that note, well, j'ah, I listened to your panel, and there's a world that really pops out all the time.
Is holistic holistic?
Yeah, yeah, yeah, yeah yeah holistic, Yeah, take a holistic view of it. Well, actually, it is important to take a holistic view because it's complex, this energy transition. If you don't look at it from the top, then you'll just make very serious mistakes and it costs a lot more money than what we wanted to be.
So there was also a very interesting metaphor from Andreas where he said that the industry had to go from couch potato to running a marathon. A lot of those industries have lost the mussile memory of growth. That's probably why you see all those delays and surprising problem, it's just because now they need to go into growth mode.
Well, Andrew said something very interesting, which was they needs to hire. Ask what's greatest challenge was he needs to hire fifteen thousand people over the next few years.
To forget.
If you've been in the quick business for the last twenty twenty five years, you've been basically focused on optimizing costs, closing factories, restructuring, and now suddenly you're in growth mode. And as you said, you know they've just lost the ability to do this.
Finally, AI AI AI. Everybody must have been talking about AI and a few days after your session comes Deep Seek and one trillion dollar value is removed from all those AI stocks. So when something is the zeitgeist in devils, isn't the time to sell?
You know what?
The talk though, was in.
And around at davas, around the I'm talking about around the tech community was in and around energy efficiency and that there was going to be improvements there and let's peak there out wrong.
We remember we had the head of Google's energy team on our podcast and he made the.
Same point, which was that we will see energy efficiency games and we are.
So the talk there in Davos was not.
Really about oh, there's going to be a bull wind energy. It was more what impact is AI going to have in the greater world. That was more the talk that was there. And actually I would say most of what I got out was positive shader the words it's going to be really good in terms of the whole medical field, in terms of longevity, it's going to speed up innovation.
I got positive things in terms of AI out of it.
You're being reinvited, which is not really my case sometimes when I go with confronts, well, I just have to.
Be nice to everybody for the next year. So I don't know if I'm going to manage to do that or not.
Okay, so we're going to conclude this podcast on a high note. Douvles is great. We love Deuvos, We love Doubas all right by frid Okay, cheers, talk to you next week.
Bye bye friend, bye bye friend.
Speech you next week.
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