Hi, everyone. I have a confession. I think I got into all this energy and climate stuff to impress a girl. Actually, no, I'm I'm sure I did. I was in grad school for molecular biology at the time, but looking for a change. She was working in utilities in environment and told me about all this stuff I never heard of, like offshore wind farms, or bioplastics, or taking c O two from the air and pumping it into rocks. That one now known as carbon capture and storage sounded particularly out there
to me. The more I looked into this stuff, the more interested I got. So fast forward a few months, I found myself interviewing for a job with New Energy Finance or any F, a London based research and analytics startup whose u S operation was two guys working out of a tiny rented office in Alexander, Virginia. The person interviewing me was Ethan Zindler, who happens to be today's guest.
So I got the job, and Ethan and I have worked together for about thirteen years at what is now Bloomberg in e F or bn F, where he is the head of America's Over this time, we've seen the industry go through a lot of changes. Just one example, in two thousand seven, when I started it, there was nineteen giga watts of wind and solar online in the US.
There were two fifty nine giga watts. Today. We'll get into the many changes that have happened in the US over the past decade, and a report he and his team did in collaboration with the Business Council for Sustainable Energy or the bc SE titled Sustainable Energy in America Factbook Good News. The report this week is available to everyone, not just Be Enough clients. You can get it at
bcs dot org. And before we get into it, a reminder that benef does not provide investment or strategy advice, and you can hear a full disclaimer at the end of the show. If you like the show, please go ahead and rate and review us on Apple podcast or wherever you listening. Oh and the girl, I think she was impressed. I'm still not sure, but we're about to celebrate our tenth wedding anniversary. I'm Mark Taylor, and you're
listening to switch on to Be Enough Podcast. Ethan, thanks for coming in, great to be here to start us off. Can you just tell us a little bit about the project itself. Sure, So the fact book is something we've now done for eight years in partnership with this Council
for Sustainable Energy UH. The bc s E is a Washington based organization that is basically a coalition of energy efficiency companies, renewable energy companies, at gas companies, and other similar organizations that are focused on lower carbon power generation overall. And the report, I should note, is free to everybody and encourage people to download it at www dot b CSC dot org or on our website at BNF dot com.
It's not behind any kind of a payroll. So I read this report, and I must admit when I went into it, I thought it was gonna be pretty boring. It's a fact book of what's happened in the US over the last ten years. I thought it was just gonna say renewables have grown, Yippi great. But I was quickly turned around. I started to make a note of all the many areas that are changed, and I can put in a list of sixteen areas that have changed. Can you talk a bit about what has changed and
what has happened in the last ten years? Well, first, Mark, I mean I don't know when last time you came the United States. But like facts are kind of cool now here, okay, um, and actually being yeah, so being real factory is actually pretty sexy, so you know, I would say, you know, okay, we you know. So the ambition of this report is to provide a great deal of data and information about what is going on in
the US market. And one of the main reasons is because we feel like that there is a lot of misinformation or even disinformation out there, and that's the goal. But yes, there's lots of really I think, extremely interesting things. Because um, the report is usually it's an annual report. It still is, but we very conveniently just came to the end of a decade, so we tried to cast
a little longer view back. And if you look at how much has occurred in the United States in the last ten years in the areas of what we call in this report sustainable energy, but also renewable energy, energy efficiency, advanced transportation, all these things, it's pretty remarkable. Really, it's incredible how much is changing. You and I know because you know, we were working together ten years ago in
Washington and there's a lot going on. But but you know, the transformation that's taken place in the U s energy sector has been really, really quite dramatic. I remember when I started at any F when we were back in when we were startup, I met our CEO, our founder at a at a meeting from a corp, the American Council and Renewable Energy, I believe it's called, and it was called their Phase two meeting UM, and I think it was phase two of going from like experimental into
like commercialization of renewable energy. I think what phase we in now, I don't know, like we're definitely I mean,
you know exactly. It was trying to go from like you know, we're at the at the edges and the kind of pilot scale, a demonstration scale, to entering the market, and then that certainly happened during the decade, and then we really entered another phase where we're seeing, you know a lot of these things take place really driven for economic reasons and the cost competitiveness, which is legitimate, and so you know, if you take something like solar, there was us than a giga out of solar online in
the United States a decade ago, where at seventy five giga watts. Now, UM, you know, the amount of wind capacity has tripled over that period of time. Um. And then on the flip side, if you look at how much there's been decarbonization in terms of coal coming offline. You know, we used to get about half our power from coal. Is probably about twenty four of our power
came from coal. I think the thing that, for me at least is interesting, And of course what makes it fun for us to work in this industry is that, you know, the traditional thought about energy as well. Okay, do changes do occur, but they take a long time, and you gotta be patient, you gotta think in decades, etcetera. I mean, this decade has proven that that is just not true. Things can just turn on a dime, very
very quickly. Yeah. I just as I've mentioned in the beginning, I started to take notes of things that have changed. And my first assumption was that, yeah, the world looks roughly the same, or the US at least look roughly the same. But no, it's very different. I can't remember the last time I've used, you know, a filament light bulb for example, or I take Uber everywhere, Um, yeah no, and or you know, electric vehicles ten years ago. Basically
you couldn't buy one. There's about forty four choices for American consumers to buy electric vehicles that's pure electrics. You can buy plug in hybrid electric car if you if you really you want to your nerd out, you can get like a fuel cell hydrogen car. There's those are unusual, but it's possible many cars. I'll let you put some biofuels in the tank too, if that's what you want to do. So the number of choices for consumers when
it comes to transportation is obviously dramatically expanded UM. But one of the points we also try and make in the report is that, you know, we call it the quote unquote empowered consumer, where you look at all different types of areas where consumers now have choices that they didn't have before. Transportation is just one of them. Homeowners have different choices UM. Businesses have more choices even in
terms of what type of power to buy. Absolutely you can you know and and how you want to buy it, So you know, do you want to put a PV system on your roof? Where do you want to sign on to be part of a community solar deal where you buy some of the solar that's produced locally or do you want to just buy it through your utility by paying some kind of a green you know, premium
on that. And of course companies have the same opportunities as well, and they can sign direct contracts um with large producers and we saw another another you know record for corporate p p A s that were signed last year as well. So consumers have been very much empowered in all of this. And I guess, you know, within the Washington context, one of the things that I really do try to emphasize in this report is guess what,
it turns out that actually this is also cheaper. And that's something that I think there's still very often this sort of false economy perpetuated that like dirty energy is cheap energy, plain energy gotta pay a little bit more. But that's just not true if you look at if you look at how costs have come down in the US. And to be clear, before anybody you know out there
and podcast world, you know, complains and says that I'm oversimplifying. Yes, that's not just because of renewables, that's because the gas too, definitely a gas is really cheap. It was the peak fourteen dollars prove v to you, and now they can barely get over to yeah. So yeah, and that, you know, and low and holding by the way, like it doesn't look like it's going up anytime soon, especially since we didn't really have much of a January in terms of weather,
so the prices have been pretty flat. So going back again, I remember every year, almost I guess every year we in the office would get nervous that the PTC or the production text credit was going to expire, and it always seemed to, you know, keep on going. You had a line in the in the report that said there was a great confluence of technology, innovation, policy, and economies of scale. Which of those three do you think at the greatest impact. Well, definitely combination of all of them.
But it's a really good question. I mean, at one point to make is that you know, the United States, we don't do like long term policy planning like pretty well at all. So ten years ago it wasn't like, you know, in Washington they sat down they said, we have a natural energy strategy. We're going to cut our emissions by this and much. We're you know, going to take about half the call fleet offline. We're gonna do
all these None of that happened. Um, yeah, there was some federal legislation, and I could argue that the stimulus Bill it was passed at the end of the prior decade, made a huge impact, but it frankly wasn't its main goal wasn't like to think long term about US energy
security and people rights, to get people working. So those things contributed, and I would say that the stimulus bill plus the state level mandates for renewables kind of and and by the way, state level mandates for energy efficiency it should we pointed out to those really kind of
got some momentum going. And then economies of scale kick kicked up, frankly because in part because the Chinese were like, Wow, the US, that's a big market, let's export there, and so boom, suddenly you have a massive scale up of battery manufacturing and photobo take manufacturing in China to serve the US market. Prices not just the US market, but others prices came down. So that's your economies of scale
kind of story. And then by you know, two thirds of the way through the decade and towards the end, you have legitimate price competition. And so yeah, it's a combination of all things, but I think you could probably say the policy really did help spark stuff and then you've got economies of scale and along the way it's
been technology innovation. But I do think it's worth, you know, noting that like you and I remember back in the heyday where people are raising venture capital for all kinds of stuff, and that those days are long over and there were innovations, but economies of scale are really what drove a lot of the progress that we've seen at our summit over the past couple of days. I heard venture capital for quote unquote clean tech is back up.
Is that right? There's definitely some renewed interest and I think, you know, but vcs have so many scars from money loss the first time around. The Usually the first criteria is like, Okay, can we invest in this uh in a way that won't you know, in two years require this company and us to try and raise like a half a billion dollars for them to go demonstrate the
technology out in the desert someone. So if it's something that's simpler than there, and you know, and it's more plug play or or or software oriented, and I think they're more there. I'm smiling because it just reminds you of the areas that I used to cover as an analyst, you know, geothermal and carbon capture and stores, which were big projects that in a lot of cases cost tens to hundreds of millions of dollars to test. Can you talk about some of the things that didn't pan out
over the decade. It's a really good question. And um, as you know ten years ago, we as a firm at Bloombergunna F we're interested in all the potential new technologies, and we frankly from a sort of resources perspective, we're spending as much time probably thinking about bio fuels as we were about geothermal and ccs and all these other things.
There was certainly no guarantee it was. It wasn't clear then that you would have a couple of technologies on the renewable side be the biggest ones that would emerge. It also wasn't clear at all about how important the fracking revolution was going to be in the fact that we boost our natural gas production by in ten years. So there were a lot of things that weren't clear.
And I would say, though, yeah, I mean like geo thermal has not gone in the way I think people might have liked and steady um Eile Fuels had a moment where basically they built enough capacity to serve ten percent of the gasoline market and so they could replace what was an additive called mtb UM and the policy driven policy driven, and then since then not so much interesting stuff. I'm sure you know a few things around the edges, but not nearly as much. So, yeah, that
hasn't panned out. And then of course, um CCS is one of those things where you know, I think CCS is sort of having a moment again and seems to be and it's because it's it's actually, frankly largely because the federal government has put in place a pretty generous tax credit, which I think a lot of the folks in the industry are hoping we'll drive some real scale it. But yes, CCS maybe one of the classic technologies that required billions of dollars of investment and people just weren't
willing to kind of take the plunge on it. In twenty nineteen, we saw basically a form of all of these things. All these dynamic changes happen in some shape or another. Can you just catch some the major changes just last year. Sure, So you know, and I'm gonna look down at my cheat sheet a little bit here because I can't remember every single fact that but there, yeah,
certainly were have been. And I would think the one point I would make about twenty nineteen was that, you know, we've now done this fact report for eight years, and again, like I said, we we do it in Washington, we release it in Washington. We want people to understand what the facts are. And there is a larger narrative about decarbonization and transformation and empowerment of consumers. But every year there's like different things that like kind of are slightly
off trend. You know, something doesn't exactly happen within that grander scheme of sort of larger trends. It was seeming to kind of have to explain it. Last year was interesting though, because basically almost everything happened on trend. So basically we saw, you know, on the whole side, we saw thirteen percent less coal generation from the year prior, so a pretty steep decline. UM. We saw US power
sector emissions again decline. UM, we saw total US greenhouse gas emissions decline just a little bit year on year as well. We saw increasing competitiveness for energy storage projects paired a solar. We saw wind go past hydro in terms of total generation as a contributor. We saw increasing
energy productivity. And this is something we try and highlight every year in the report, which is very very simple metric, which is just like how much does the U. S. Economy grow and how much does our primary energy consumption grow? And the answer is pretty often the economy grows and primary energy consumption stays the same or goes down. And in fact, basically the GDP grew at a much greater rate over the course of a decade than it did
than energy consumption did. And last year energy consumption actually ticked down a little bit. So there's five of ten last five of the ten last year started to finish, but just ten last years energy consumption has gone down year on year, But in each of the last ten years the U. S. Economy has grown. Can can you explain that a bit? Does that mean we're just getting more efficient? Yeah? How this sort of the good news
and I'm making I'm make an air quote. Um, but the good news is that you know, Americans in the American economy is unbelievably profligate in terms of how much energy we consume per person, we use a ton, I mean, more than anybody in the world. So yeah, by a long shot. So what that means is that, you know, not only they're low hanging fruit. There's like, you know, I don't you know, a massive harvest of watermelons. All every ground scooped up for the for the energy efficiency sector.
And so in many ways, we're still just getting started on all of this. So you know, for instance, in the last decade, we've put you know, there's about a billion LED bulbs that have been installed, and that's sort of light bulbs are easy because people can kind of get their heads around and understand that compared to none a year ago, and that's cutting energy consumption massively. But we're still only replaced about half the light bulbs in
the US. There's all kinds of opportunities going forward, only pace half only about half. And I can't remember the last time I've seen a filament bulb in a store. I mean, still there's you know, people have the bulbs last a long time, they have them on the shelves for years, and you know they're old bulbs, you know, And I still have a few old ones in my house kicking around someplace. So you know that that change is going to take time. But it's not just that
it's furnaces, it's washers and dryers, it's cable television boxes. Yeah, some people still watch cable TV, and um, you know, all all those kinds of things that are being swapped out. And and to be clear, you know, you get you can pas themselves on the back is this is some sort of great, you know, decarbonization effort, But in many cases it's business owners and and and homeowners just trying
to cut their monthly costs. And along those lines, you know, we found that over the decade, the percentage that homeowners are spending on energy is like the lowest it's been in like forty year years, and they seem to be the biggest winners in the past decade, Is that right? Yeah?
I mean consumer you know, consumer retail retail electricity prices have definitely not fallen as much as wholesale power prices, but they will continue to fall, especially as US utilities are supposed to pass through the value of a tax cut that the Trump administration gave it last year. Um, and that will continue. And but generally speaking, yet consumers
pay less. We know we have some of the least costly. Um. You know, energy in the entire world on multiple levels is cheap natural gas now plentiful oil production in the US, and gasoline prices that aren't high, and then electricity prices that have been driven down by cheap gas prices. So let's flip it a bit. Costs of all technologies have decreased over the past decade, right, and companies used to do okay by getting relatively high terraces for their electricity
or hydrocarbons. Who is winning now in this current market. So that's a really good question and definitely something that we probably hear more from clients these days, which is like, how do I make a buck? Yeah? Exactly, Um, And that's not a you know, that's not a crazy it's not a crazy question because you know, with this sort of real lentless pushed down on power prices, particularly in the electricity sector, it's hard for folks to make money.
In many cases. We are definitely seeing new models in terms of how energy get sold. But I do think it's not a it's not a sort of I can't sort of blow that question off. I think that one of the things that in the medium to long term in the US that's going to have to be thought about is how can you restructure power markets in a
way so that people do get compensated. Because it's it's all well and good that we're in this period of sort of steep power price decline, but eventually, if you want to continue to see people, you know, participating in terms of building new projects and stuff, then you're going to need to make sure that they can earn a
rate of return so they can keep investing. All that said, a small asterisk guy put on that is that I think in the US, traditionally, when especially when you think about renewable development and even you know, power and even a fossil fuel development, we have this great tradition of independent power producers, the sort of um, you know, the cliche wind farm cowboys. You know, these independent firms that were going out, yeah exactly, and you know, signing deals
and whatever. Those guys are usually backed by private equity money, and those investors expect pretty high rates of return on the projects. Those guys in particular are facing you know, some real headwinds at the moment, but that doesn't mean that you can't have a big utility who wants to earn a much lower rate of return come in and develop.
And that's what we're definitely starting to see, not just with like domestic utilities like the southerns and the Dukes and the others, but also international players like a Knell and some of the others who are coming over and they make a lot of money cash flow off of other operations. They don't need to earn ten to fift rate of return on a winter solar project. They'll take you know, in the five to ten percent, maybe even a little lower. So the market's going to change as
a result of that. But yeah, it's it's hard out there for some of the windfarm cowboys of yesteryear. So is that what you see for the next ten years? We'll see more and more international players coming in. Where are the opportunities in the next time. We're definitely seeing more international players come into renewable development. There's still plenty of opportunities for domestic players for energy efficiency retrofits, you know, and that stuff that's local work, you know, that has
to be done, the installation of PV modules on people's roofs. Again, like there's no reason's an you need to be owned by UH, an international conglomerate or even like a tesla. But you know, there's are there are those opportunities I think out there. Um, you know, we we do think that these report itself to be clear and UH is all backward facing. But what it doesn't have is any forward looking views because we we wanted to keep it just fact based. So this is my opinion, which is,
you know, we are optimistic. We think we're going to see actually one of the very strongest years for renewable build this year, and we think we're gonna have a good couple of years going forward. Do you foresee any black swans or or big changes in the next decade. I guess that's a definition of black swan. You can't see it, but hey, black swans, black squirrels maybe I don't know. You know, it's it's hard to maybe more blackly black squirrels. I mean in the sense that you don't.
I think that a lot of the trend, there's a lot of momentum here um that's gone on. Um that's going to be pretty hard to turn back. And if if you need any sort of proof of that, maybe look at the last couple of years. I mean, from a policy perspective, the Trump administration has tried to do kind of whatever they can to support the coal industry, and yet the amount of coal generation dropped really sharply last year. The number of coal plants that say they're
retiring is definitely not easing up. There's like another twenty five giga watts of coal that's said that they're gonna retire over the next five years. So I take that as sort of proof that there is a kind of momentum here that really isn't going to get knocked off course, at least by policy. I guess there are other questions about other things that that could come up um as
we go forward, and of course, you know, you never know. Certainly, the coronavirus as we speak is a scary thing, and who knows what kind of effect that can have on markets and things like that. And there's trade. But but generally I think it's gonna be hard to kind of stop the momentum what we've seen. I think I have one more question for you. You run the America's for being, if not just the US, are you seeing what's happening in the US happened in other markets as well, or
is it unique to the US the questions. So I'll maybe not try to go country by country because we'll take too long. But I mean, I think Canada is an interesting case where we're definitely seeing a lot of things go on. However, the Canadian power sector in particular is already pretty decarbonized because they get so much hydro electric power to begin with, where coal is still prevalent,
which is out in the province of of Alberta. Um they are actually also we're seeing a lot of transition underway, although some political challenges out there. The rest. You look further south, Mexico has traditionally been one of the hottest markets that we've seen, but the current government is definitely raising some problems for the industry down there. And then across the rest of Latin America, Brazil is a fascinating one.
I would just say to keep an eye on because suddenly, like almost overnight, there's a couple of gigga outs of distributed solar that's just like boom popped up, and and that's a market that we just know it's just to come out of nowhere to some large degree. So that's one that we'll have to see. Um. But they're they're you know, the the story of lad i Am is obviously very different from the US of Mexico because these are middle income developing countries potentially with much faster growth.
You know, we don't really have actual top line growth and electricity demand in the US. It basically flat has been for a decade, and Canada is not that different either, Ethan. Thanks for coming in sure, thank you. Bloombergun e F is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor it should it be construed as investment advice, investment recommendations, or a recommendation as
to an investment or other strategy. Bloomberguinn ea F should not be considered as information sufficient upon which to base an investment decision. Neither Bloomberg Finance LP nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this recording, and any liability as a result of this recording is expressly discla