← Catalyst with Shayle Kann
Catalyst with Shayle Kann
More 2026 trends: Solar costs, oil oversupply, and the startup slump
00:25:39
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A
Latitude Media covering the new frontiers of the energy transition.
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I'm Sho Khan and this is Catalyst.
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C
Oil is extremely oversupplied. The IEA estimate for the beginning of the year is about 5 million barrels per day of supply in excess of demand. That is a lot.
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Coming up part two with Nat Bullard.
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What if utilities could meet surging electricity demand with energy assets already in homes and businesses? Uplight is making this possible by turning customers and their smart energy devices into predictable grid capacity through an integrated demand stack. Uplight's AI driven platform activates smart thermostats, batteries, EVs and customers to generate, shift and save energy when the grid needs it most. Learn how Uplight is helping utilities unlock flexible load at scale, reduce costs and accelerate decarbonization@uplight.com Catalyst is brought to you.
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By Antenna Group, the communications and marketing partner for mission driven organizations developing and adopting climate, energy and infrastructure solutions. Their team of experts helps businesses like yours identify, refine and amplify your authentic climate story. With over three decades of experience as a growth partner to the most consequential brands in the industry, their team is ready to make an impact on day one. Get started today@antennagroup.com.
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B
I'm Shel Kahn. I lead the early stage venture strategy at Energy Impact Partners. Welcome. All right, it's part two. If you don't know what I'm talking about, go back and listen to last week's episode. This is part two of my conversation with Nat Bullard, running through all sorts of interesting data on the state of energy and decarbonization in the world. Here we go. All right, let's get off the data center thing for a minute. Or actually maybe it's impossible to get off the data center thing entirely. Let's move a step away so that it's a second order effect. I want to go to slide 54, which is a good narrative violation, I think, and a reminder that sentiment in different markets behaves differently and is not always what you'd expect. This is looking at public market performance of clean energy stocks which have done well.
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I mean, as we know, as long term listeners know, and many of them have the battle scars to prove clean energy equities can be volatile and they can have great years, they can go on a tilt for three or four years, they can then correct massively, but then they can start coming back up again. All of these things of course depend kind of on your interval. They depend on like what time period you're looking at it. But this specifically is fenced off to the calendar year 2025 and then calendar year 2025, the S& P global, the Clean Energy Transition index was up 40%. Rebased value of 100 at the start of the year, tips out at 140 at the end. So more than the S and P and the NASDAQ 100, which are both up about 20% over that same period of time. Nothing to sneeze at. Of course, like both of those indices being up 20% is pretty good, but it's just to show that A, there's activity still ongoing in these markets, regardless of what specifically you might hear in political rhetoric, and B, that again, there's a global nature to this. Like there are companies all over the world that build stuff and they're public and their performance gets tracked in the form of an index that went up more than the other things went up last year.
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Yeah. And also all this other stuff we've been talking about is generally positive for a lot. I mean, this is an index. So there are companies that do well, companies do poorly, but broadly speaking, the broad trends in the market are very supportive of clean energy at the moment.
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C
That's right. And for those who don't, just listen to the dulcet tones of me and Shale here talking, but go back and see the deck. It's essentially full of the same sort of stuff, regardless of rhetoric. Here's the actual play out in data and you can see it in all different kinds of ways. It's not as grim as people would have you believe. It's also not as rah rah as people would have, as some other people would have you believe either.
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B
Okay, so other side of the coin though, of course the public market performance has been good. Let's admit it has gotten a little rougher in startup land. So let's go to slide 62 where you have data on the share of US startup investment that went into energy startups over the years. And it's a very distinct curve that I think people would generally predict.
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C
Do you remember one of my sub themes last year? Because I watched up like three sub themes in the deck. One of them was it's a 2021 thing. And everybody complained to me that like it was, it was unfair or a snide. A snide use of like my look into the data. Well, the reason I said that is that there's a whole bunch of things that hit their peaks in 2021 or 2022 and I've yet to return to that. And first among them though, Newly seen in the data here for this year was investment in US energy startups. This is Carta data. Went just over $8 billion in 2022 and barely tipped past 2 billion in 2025 last year. And as a share of total startup investment, yeah, 2022 US energy startups were about 7% of all US startup investment, probably about 2 and a half percent last year. So again, these things, things go in waves. What I'm interested to see is where we start going from here. Right?
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This was what I was going to bring up. Let's make a bet on this one. I think this is going to be a fun.
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C
Let's make a bet.
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B
Yeah, you give me a number. You give me a number, I'll do an over under.
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Okay, my number. So was two last year. I'm going to call it above three this year. Billion dollars invested in US Energy startups.
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I go hard over.
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Okay, this is what I want to hear. Yeah, tell me, tell me, tell me, Mr. Investor.
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Everything is energy, man. Everybody woke up to it, right? Like data centers are measuring, but everything is turbine. Everything is turb. Turbine, turbine is energy. It's a transitive property. Everything is energy. No, just the elevation of energy and the importance of energy in all these conversations around sovereignty, around AI, around all this kind of stuff is more than ever. And I see this, the interest in energy startups that have anything to do to solve this kind of confusing and difficult set of problems, the interest is higher than ever and from a more diverse group of folks. So I think we're going to see this is going to be a return to a boom. This is my prediction right now where, yeah, we were at 2 billion last year, down from 8 billion in 2022. I don't know that we get back to 8, but like, will it triple this year? Maybe? I think so.
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C
One thing that's going to be really interesting is to see, and I said this in the most, like, in the most sincere way, what counts as an energy company in this context. Over time, this is going to be really fascinating to watch play out. Will see it firsthand. I'm certainly not an energy company, but there will be plenty of companies that will be coming forth having discovered their energy application or pivoting towards it. And this is not a bad thing, it's probably a good thing, but yeah, you're going to see a lot of reinvention, I would imagine.
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Is boom, supersonic an energy company? Right.
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Precisely my question, right? Is anybody capable of providing motive now, stationary power an energy company? Right?
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Yes, I think.
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Yes, I think too. But like, like. So we'll. We'll find a lot what part of software accounts as an energy company, all kinds of stuff will come. Will come back in. And that's a good thing. That's a very good thing.
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All right, let's get into. By the way, bet made. We'll come back to it in a year. Let's get into a bunch of other stuff. Let's talk about oil for a second. Slide. 167. I'm jumping way further in the deck. I guess I had not fully appreciated this. Oil is super oversupplied.
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Yeah, right. I mean, oil is extremely oversupplied. The IEA estimate for the beginning of the year is about 5 million barrels per day of supply in excess of demand. That is a lot. That's also about 5% over supply based on the current demand of around 100 million barrels per day in markets that balance on the margin, shall we say. Right. So that has a significant damper on prices. And it's one of the. It's one of the reasons that. It's one of the reasons that oil prices are where they are right now. It's one of the reasons that there's, shall we say, less than robust enthusiasm for reengaging with ultra heavy sour crude oil supplies that need $100 billion worth of infrastructure investment before they literally can start flowing again. It's the reason that we don't have a massive impact on fuel prices right now around the world from cost of oil. And yeah, this is the reality in which we live. We have more oil demand than ever and the market is comfortably oversupplied right now.
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It also drives home a point that I don't want to make directly about the Trump administration's strategy in Venezuela with regard to getting for some reason even more oil out of the ground.
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Right. Difficult to access oil that is theoretically low cost, but it requires a whole bunch of upfront investment to kind of get it back to par where it used to be a couple of decades ago. But yeah, the market is not screaming for new barrels, let's put it that way.
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All right, on from Oil let's talk Solar. This one's just a soapbox that I get on about solar periodically just because I To remind everybody of this point that that the world forgets over and over and over again, which is that solar module prices are not solar system prices. And in fact, as has happened in recent history, as you point out in the slide, they can go in opposite directions. So this is slide 83 and basically solar modules are getting cheaper and cheaper and cheaper. They're cheaper than ever and yet the cost to install solar is higher than not higher than ever certainly, but has gone up during that same period.
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And shale. As former solar analysts, I'm just aggrieved by the data here to see that modules cost so little relative to the numbers that you and I used to agonize over, you know, 15 years ago. Yet the price of a system is going up. Resident okay, residential system prices in the US went down by 3%.
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Gee, congrats. You're at $3.35 a watt, which is an a.m. yes you are.
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Congratulations at costing thrice what it costs in Australia or Germany, neither of which are particularly low cost markets for anything but commercial prices up 9% utility fixed and tracking prices up 9 to 10%. This is not great. And it's the things that are not the module in this case. If everything is turbine, nothing is module. So basically the things that are driving the costs up engineering, planning and permission, labor, cost of equipment thanks to tariffs like all of these things that are outside the remit completely of your friendly local module manufacturer. It's just unfortunate. It's not the way that you would want to provide a lot of low cost, quick moving new electricity supply in the US to have prices be going up. But as you can see from this, most of the forces that are driving it up are outside the control of a Developer, Right. You can, you can be the best developer in the world, but you do not control the landed price of your equipment if tariffs are put on it.
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Okay, on from solar to batteries and specifically batteries down under. Slide 107 residential storage in Australia. You mentioned solar in Australia is really cheap. It is increasingly valuable to add storage as well. Here is an insane number that I had not fully appreciated. The pace of adoption of residential batteries in Australia over the course of the past, what is it, five months or July through November 2025, Australia was installing 40,000 residential storage systems per month. That just to contextualize, if they maintain that pace for a year, which seems entirely possible that they will or even increase it, maybe 5% of households in Australia would add residential batteries in a single year.
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Well already like double digit percentages of households have solar. Right. And so these are actually these systems and this thanks to a new, a new government plan that opened up only in July are basically integrating with people who already have solar. And so they're like an add on to the solar that you already have to take advantage of the fact that they have insane duck curve action in pretty much every one of the major grid areas, at least certainly in the country's southeast. And yeah, they're priced to move. And people are like, well yeah, I would like to just lay off a bit more of my demand curve that I'm already satisfying a lot of with solar, so why not? Australia's not a particularly big market. It's fewer than 25 million people. And this movement so quick is pretty extraordinary.
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Australia, man. Something about distributed energy in Australia really figured it out. Okay, slide 97 is a check in. Just to check in on a thing we've talked about before, I'm going to title this one. We haven't fixed transformers yet. This is data on the price of transformers which is still high.
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C
Yes, I gave it the title Transformers same as meets the eye, which I hope people of my vintage will get as a really kind of lame joke. But yes, haven't moved right. If anything, they're still ticking slightly upward. And as much as there's energy and attention and noise being paid to we need to build stuff here. We're not. Tariffs do not help this. Uncertainty in future trajectories for demand do not help this either. And so yeah, we have yet to solve this problem. I am hopeful that there are companies that will come in and begin to solve this. But it's very much part and parcel with the, the gas turbine manufacturing motion, which is I don't want to build a bunch of inflexible manufacturing capability. If demand is fungible in the future, like if I don't have a great idea of what actual demand is going to be, then I'm less inclined to go build to supply it.
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Yeah, though I think there's less of an excuse. Gas turbine manufacturing is even more capital intensive. It's currently more of an oligopoly than transformers are. Like there are companies that are going to come solve this transformer problem, mark my words. But the point that the data makes in the slide is that nobody's done it yet.
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Nobody's done it yet. And for all the light, there's not a lot of heat. Right. And so let's hope that that turns around.
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Okay, onto something entirely different. China makes cars, it turns out. Slide 118. The actual stat here is just a crazy thing that now 40% of the world's vehicles are made by Chinese companies in China.
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For the first three quarters of last year, about 42% of all passenger vehicle manufacturing is in China last year. That's higher than the ratio for Japan ever was back in its heyday. Needless to say, it's a pretty extraordinary footprint in a multi trillion dollar global industry that is also a capstone or keystone industry for a lot of different countries. And Chinese automobility is sort of eating the entire industry to a really extraordinary degree. I have really front row seats on this, living in Southeast Asia, but watching in my hometown in Singapore, where BYD had 0.1% market share in December 2021 and is now by far the biggest auto seller in the country in four years. Watching EVs work their way through Southeast Asia, through South America, Chinese made EVs I should be very clear, is really a thing. And also remember that China exports millions of internal combustion engine vehicles as well. EVs are the ones that we think about in the US and because that's what you're likely to see. But there's plenty of low cost and fairly high quality internal combustion engine vehicles that are getting exported as well. So it's just, it's like I can talk about this stuff forever because I find this to be a very fascinating market with a lot of nth order effects that I think people are struggling to to deal with. And I'll leave you with only one in the interest of time, which is what's going to be the market as Today's new car ASPs go up and up and up. What's going to be the market for those used cars in developing markets versus a brand new Chinese made car. So very roughly speaking, what's the market for my $15,000 Corolla that might be acquired in Mexico or Brazil versus a $10,000 brand new Chinese made car? And we haven't played this out very well yet at all.
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This is a good question. Okay, so then the next two slides that I want to talk about, slides 121, 122 are an addendum to this, which is China doesn't just make passenger vehicles. They make and they deploy or they buy mid and heavy duty electric vehicles. No surprise to anybody here that that is happening. I think the pace at which it is happening is not well appreciated, especially because we're sitting here in the US and like the electrificated vehicle electrification thing is sort of. It's happening still, but it's a little out of vogue for various reasons and particularly in mid and heavy duty. It feels like that timeline has been pushed out. Not so in China.
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That's right, yeah. So China, China had 3,000 electric, medium and heavy duty truck sales in the year 2020. It had 81,500 in the first half of last year. That's a lot. Remember that these markets are electric. Media was like medium duty trucks is a pretty big market. Heavy duty is a smaller market relative to cars, but that's an awful lot. That's a really quick ramp rate of like 75,000 cars in the half year versus the previous low in 2020. There's a lot of room to go here. And to your point, this narrative is a little off the boil for many different reasons here in the US and possibly in parts of Europe, but not so in China. A lot of it is thanks to the infrastructure to support the deployment of those kinds of trucks. That's definitely different than in the US or maybe in Europe where you have all sorts of kind of cold start problems around infrastructure to be built to then go out and do the trucks. The infrastructure is less of an issue and so it's going very, very rapidly and we'll see. This is also part of your getting your getting your final energy from electricity case that we started the conversation with. It's going after those things that are kind of within our hard to abate areas from years past.
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B
Yeah, I mean fully a third of all new medium duty vehicles in China are electric now.
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Right. Like that's a lot. And if you think about this, only 10% of the heavy trucking is electric by sales now. But where's that going to land if these things are anything like cars. Electric car sales as a share in China is well north of 50% at this point. Are these going to go? Here's our question to ourselves. Is this going to go faster or is it going to top out lower or top out higher than those shares? There's a lot to play for and a lot to fight for.
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B
Okay, very last slide. We're going to land the plane on a thing we've already talked about a bunch. But you put in two quotes. I like these quotes. I think they're reflective of the moment. Read me the quotes.
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Sure. So the first of them is from December of 2024. I'll go in chronological order. It's from a Virginia focused energy economist intervening in a discussion about integrating very large data center modes. Not quite in the historic data center alley, but just outside of it. This energy economist says sitting here right now, I think our forecast of data center load for say 2032 is probably off by a factor of two. I just don't know which way two times too high or two times too low. The corollary to that is from the head of Instagram in February of last year who said we may need drastically more or drastically less capacity than we thought to build frontier models. I like them both because I think these are both people who know quite a bit about what they're talking about and are neither being snarky nor immodest or having false modesty for that matter. In terms of their view of the future. They just happen to see a great deal of potential uncertainty. Not quite order of magnitude, but definitely scalar here. 1x2x whatever. Uncertainty in terms of what might actually happen and for good reason.
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B
Yep. So we'll close it out with the slide title you used repeatedly, which applies to this equally well. Nobody knows anything.
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Nobody knows anything. But there's a lot we should be trying to learn every day. There's a lot we can do to get smart. There's a lot of good information out there and as ever, I have a lot of fun playing around with it and trying to do my best to capture a small slice of it that might be useful. So.
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B
Well, it makes for great pods. So thank you as always, Nat.
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Hey, it's my pleasure. You know, I can't. To be honest, I can't think of doing a launch for this any other way.
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B
Right.
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It is the only way I like to do this launch. So thanks again for having me.
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B
Nat Bullard is a longtime climate tech analyst and writer. He's also the co founder of Halcyon which is an AI assisted research and information platform. This whole conversation was based on a 200 slide deck that is chock full of other interesting information. You should go read the whole thing. It's nathanielbullard.com this show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Max Savage Levinson. Mixing and theme song by Sean Marquand. Stephen Lacy is our Executive Editor. I'm Shaya Khan and this is Catalyst.
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C
14.