← Catalyst with Shayle Kann
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- [00:03]
Latitude Media Announcer
Latitude Media, covering the new frontiers of the energy transition.
- [00:07]
Shayel Khan
I'm Shayel Khan. I lead the early stage venture strategy at Energy Impact Partners. Welcome to Catalyst. So let me just state it plainly. I am an electricity bull. Obviously we talk all the time about the many reasons why there's tons of growth in electricity demand on this podcast. But I've been spending more time kind of separately just stepping back and thinking about the big picture and, and I'm coming increasingly to the conclusion that I think many of these things are actually going to compound and there are a number of feedback loops that people maybe don't appreciate. I'm not sure the market is actually bullish enough about electricity as a cornerstone of economic growth in the coming years, not to mention energy growth globally over the coming years. As a reminder, electricity is only 20% of final energy demand as it stands today. So I wanted to do something to look at the current state of global affairs in electricity more broadly. A kind of big picture look in particular at the sources of electricity generation, what is growing, what is not growing, where and why, and just some of the dynamics that are perhaps a little bit more surprising than what you might think on the outside. Ember put out a great paper on this just a couple months ago called the Global Electricity Review, which is an annual report that they do on the state of electricity in the world. So I brought on Nick Fulghum to talk through some of the more interesting findings. For me, this is kind of a table setter. I'm going to come back in a few weeks, I think, once I have a more fully fleshed out thought on what I think is really happening in the big picture for electricity. But consider this the scaffolding for the story that's coming. Nick's coming up after the break.
- [01:47]
Alfred Johnson
Trillions of dollars are flowing into clean and critical infrastructure. But those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux and host of a brand new podcast, Critical Capital. Each episode I talk with people deploying capital, shaping policy and building the clean economy. Tune in as we unpack how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts.
- [02:19]
Latitude Media Announcer
Catalyst is supported by Fishtank pr, an award winning PR firm focused on climate and energy tech, renewables and sustainability. Fish Tank is known for generating prominent and effective media coverage for the brands they work with. If you want a PR partner that's thoughtful, shoots straight and gets results you'll like Fishtank PR. To learn more about Fishtank's approach, visit fishtankpr.com that's F I-S-C-H-Fishtankpr.com when utilities need
- [02:46]
Energy Hub Announcer
flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities corporate, coordinating over 2.5 million devices to manage 3.4 gigawatts of flexibility. Built for the moments when utilities can't afford uncertainty, Energy Hub builds and operates virtual power plants that utilities actually stake their grid, planning on coordinating EVs, batteries, thermostats and more through a single platform built for utility scale, predictive, verifiable, and designed to perform when it counts. Learn more@energyhub.com.
- [03:22]
Shayel Khan
Nick welcome.
- [03:23]
Nick Fulghum
Thanks for having me.
- [03:24]
Shayel Khan
All right, let's dive right into a bunch of interesting data on global electricity generation. I want to start with Solar. In 2025, Solar had a big year. I think people know that by now. But actually most of the data that I've seen historically is focused on capacity additions. And then when you talk about capacity additions with solar or wind, then there's a whole wave of commenters who are like, well, capacity isn't generation and you know, you need to discount it. So you're looking exclusively at generation, which I think is good. Talk to me about how much solar Generation increased in 2025.
- [03:59]
Nick Fulghum
Yeah, as, as you said, generation is basically the the real deal. Capacity is a great leading indicator, especially if you want to know where we're traveling in over the next six months to 12 months. It can really tell us a lot. But generation is the best measure of how the power system is actually changing on the ground to where people are actually getting their power from. And that's where solar has really had a standout year in 2025, increased by 636 terawatt hours. So that's twice the size of the UK's annual electricity demand. Huge amount of additional electricity globally that's coming from solar. And the really interesting trend that we found this year or last year was that the increase was a 30% increase over the previous year. Now, that might not even sound that special. A lot of people still see solar as a relatively small source that just has really high growth rates. But we're actually in a mature solar market now. This technology has been on the market for a very long time, and usually even if you get really high absolute growth, you do expect growth rates to come down. But 30% is actually the highest growth rate that we've seen in eight years. And that really tells you that solar, even though it's grown to this level, where it's a major participant in the market in so many of the world's largest power systems, can still have a record growth year, not just in absolute terms, but also in relative terms as well.
- [05:24]
Shayel Khan
Yeah, I think it's worth putting a finer point on that. So 30% year over year, net generation growth for solar. I remember I first started working in and around solar in 2009. Ish. Right. And the expectation at that point, and basically at every point since, was that solar was going to have some kind of an S curve. Right. And you'd see this rapid growth in the market, rapid growth in generation that would then sort of level off at some point when it started to reach maturity. And here we are 17 years hence, and you actually have a chart in the report that shows the curve of generation year over year for solar since 2000 or something like that. There are no signs of it leveling off, as you said, actually the growth increased in 2025. And so it looks very, very much like an exponential curve, which I think people don't totally appreciate. We're still on the exponential part of the solar adoption curve. And it's been pretty consistent actually for a while that that growth rate has been increasing year over year.
- [06:29]
Nick Fulghum
Yeah. The interesting thing, for someone who is looking at this every single year, I have a gut feeling every year that this is the last year where we'll see this exponential growth continue. And very much had that feeling after 2024. Huge solar increase, obviously, record absolute growth. And very much had the expectation, surely the growth rate is going to step down a significant chunk, still maybe absolute records. And then 2025, again, we saw, you know, the same growth rate maintained and even increased. And we've now had over the last 10 years, the average was 27%. So with 30% now, we're pretty well within the range of still calling this pretty consistent exponential growth of around 25 to 30% every single year. Now, that gut feeling that I was talking about, that definitely extends to the present moment as well. My gut feeling now is that maybe 26 is the year where that relative growth rate will step down a little bit and we'll see slower relative growth, even though we might still again get a record absolute increase. But it is notably different from other sources in the past where we've seen that slowdown happen much earlier. So one of the charts that we in the past looked at was how fast did sources move from 100 terawatt hours of electricity globally. So basically saying this is when they were major participants in the market and not a fringe source, like for example, tidal currently would be considered like a fringe source that doesn't really generate much on the global level. So how long does it take for sources to go from 100 terawatt hours to a size like 2,000 terawatt hours? And if you look historically, no source has ever made that jump as quickly as solar has. Right behind it is wind with just a few more years. So for solar you're talking about 10 to 12 years to make that, make that jump to now over 2,500 terawatt hours. We're actually up to 2,700 already. So that took about 10 years. For wind, a very similar amount of time, a bit more than that. And then the next one after that is nuclear in the 70s and 80s where it had a similar growth trajectory. But what we saw with nuclear then is it levelled off really quickly. And actually in terms of absolute generation after the 90s, 2000, there wasn't actually that much nuclear added after that point, at least on a net level globally. So we're really in a completely new uncharted territory for solar. If you, if you look at that chart, solar is really outgrowing and out competing other sources historically. And now the question is where that S curve will turn. Because S curves are great, S curves are amazing. But an earlier or later turn can really change the expectation for where and when we will get to the higher levels of market penetration and then reach not just the 8, 9% where we are currently globally, but closer to 30, 40 and then 50%.
- [09:40]
Shayel Khan
Okay, so we're going to come back to the two other things that then people are obviously going to mention in response to solar's growth. One of course being China. We got to talk about solar in the context of China. But the other being batteries and the need to firm solar power. We'll come back to those. Before we do that, I want to finish out the what happened in 2025 bit. So you mentioned solar added 636 terawatt hours of net generation increase. The total global net generation increase was like 849 terawatt hours. So you know, whatever that is, three quarters of it was solar. But talk to me about the other major sources of electricity generation and what happened with those.
- [10:19]
Nick Fulghum
Yeah, if, if not for the standout year for solar, we would also be talking about a pretty robust year for wind growth as well. It was the second fastest growing source and just over 200 terawatt hours, so made up a huge amount of the increase in demand. As you said, solar was basically exactly 3/4 of the increase in electricity demand. Now, mind you, if you go back five years, solar wasn't contributing at the same level. The growth rates were 3, 4 times, or the absolute growth was 3, 4 times lower at that stage. So that's why we're saying solar is really a structural driver of change now in the power system. Now, in that gap, wind made up almost the entire gap to meeting that electricity demand globally. And then we had a small increase from other clean sources as well. So hydro generation, basically relatively unchanged. We had a small increase in nuclear generation as well, and that closed that gap to electricity demand as a whole. And that meant that for only the fifth time in this century, and for the first time since 2020, we actually saw a small fall in fossil generation, particularly airfall from coal generation, which was both in India, in China, we had those falls. So for meeting demand and the trend in fossil generation, it's basically always a game of how big is the increase in electricity demand and how high is the increase in clean electricity as a whole. And this year or in 2025, we did get to the point where the increase in clean sources was just a little bit higher than the increase in demand.
- [11:56]
Shayel Khan
Yeah. So just to put a finer point on that, because I think there's a big narrative violation and then there's like some little narrative violations embedded within it. The big narrative violation is overall fossil energy generation went down in 2025, globally. Now, that part maybe isn't as surprising. You go on a level underneath that fossil energy generation decreased in both India and China in 2025. That seems more surprising to me. Obviously, the narrative is both in India and China, they're building out lots of new fossil generation capacity, both coal and natural gas. I think, depending on the situation, what's going on there. I mean, if you show some historical data too, and it's not like that's been a consistent trend, this is actually the first year in recent years that fossil energy generation went down in both China and India. So is that something anomalous about 2025, or does it portend a bigger trend?
- [12:52]
Nick Fulghum
Yeah, so it's. The two countries are actually a really interesting split into China on the one side, which is basically representative and obviously also dominating the global trend as a whole. And that trend is a growth in clean power, particularly from solar and wind power, that is meeting rapidly rising demand. So that's the Story, both globally, but also in China. And then on the other side you have India, where the underlying current of that rapid rise in renewables is also present. It's just not quite as far advanced yet as in China. But we basically got a taste in 2025 of what the next few years could look like because electricity demand growth was significantly lower than in previous years. And the reason for that was mainly just the weather. You couldn't, you could say it as a, there's a climate aspect to it, but in 2025 it was largely because we had a really mild monsoon season. So that means temperatures were much lower. India's electricity demand is heavily pegged to how high temperatures are, how much electricity is needed for cooling. And so what happened is demand growth is relatively low. Couple that with a record increase in renewables and you get a similar, on the face of it, a similar trend to China where fossil generation falls. But we do expect that it will still take a few more years for, for that trend to really be structural. So it'll be closer to 2030 where we'll be seeing normal years of demand growth and falls in fossil generation at the same time in India. But in China we've already made it to that point much earlier than a lot of people anticipated.
- [14:29]
Shayel Khan
And yeah, I mean, you have some other data in there that fossil generation in China has been flat now for a couple of years. That's not just a one year anomaly. It basically flattened off and has stayed that way. And I guess stepping back again. So what we have, let's focus on China. So we have happening in China is continued economic growth, but not, you know, they're not in the steep trajectory of the economic growth curve that they used to be in. They are still building lots of new stuff and it is both solar, wind, you know, the new sources of energy and fossil generation, but they're also retiring some fossil generation, I presume. And basically what's happening on net is that most of the increase, all of the increase, the net increase in demand is being met by renewables at the moment, which is sort of interesting. I don't know if you have this data, but I wonder whether what's happening is because they are in China still building out lots of new capacity, fossil capacity. They're building new coal plants, for example. Are the new fossil generation plants operating just at lower capacity factor and serving more of a shoulder or peaking use case than a baseload use case? And is that what's happening in the generation data?
- [15:41]
Nick Fulghum
Yeah, that's exactly what's taking place. So we have this slightly contrary trends of on the capacity side where coal capacity is still growing in China. So that's where you get those headlines that I think can be quite misleading at times, where it's like China is still betting on coal. The reason that China at the moment, and in 2025 as well, has been building so many coal plants is actually the reason is a few Years prior, in 2020 and 2021, there were shortfalls in electricity generation, particularly in 2021, and those shortfalls led to maybe from a policy perspective, a bit of a panic. Turnaround times in China are quick. Other countries don't really usually build coal plants in a sort of three, four year time span. China can do those things, but there's a general pipeline still of new coal power plants. So this is why I think looking at generation is so important, because it can tell us so much more about what's actually happening on the ground. And we see exactly what you pointed out. So the capacity factor for coal has been falling consistently over the last few years as more of the generation is met by solar and wind power. And then at the same time we have not just policy commitments, but actual policy that means China is actively reducing the lowest level that coal plants can run at. Now, this is not just a policy choice, it's also a technical requirement. So it means they want coal plants to be able to throttle down in the middle of the day further than they had to in the past to enable more of that solar generation to come in. Now someone could say, okay, are we just running two different power systems at the same time here? Is that really inefficient? But that coal costs, every single unit of coal generation costs money for solar. It's just the capacity that we're paying for. So solar capacity is being installed at an incredibly rapid rate in China. And the generation additions that we've seen are actually not flowing fully reflective of all the capacity that's come online, there's still reasonably high levels of curtailment with more capacity coming online, that's not a problem that's going away even though China is building loads and loads of batteries on the side as well. But it means that the coal fleet increasingly has a change in role from the baseload provider that always needs to deliver power throughout the entire day to meeting demand in shoulder hours, meeting meeting demand when it's particularly hot or particularly cold. And China is very much moving into, into a time where they will, for most of the year there will be significant overcapacity of coal, coal generators as well. So yeah, a big change in the role that China is using coal, and that will be a feature for years
- [18:34]
Shayel Khan
to come, is curtailment increasing each year as well. So like all these things are happening, there's building so much more solar that during midday hours you're turning coal into a rampable resource. So coal ramps down to minimal levels lower than it has before. And yet despite that, you are still doing a whole bunch of curtailment.
- [18:55]
Nick Fulghum
Yeah, that's right. And the official numbers aren't telling the full story here likely as well. So we're currently in 2026, for example, not seeing the level of solar growth that we would expect from the capacity numbers. We still see really robust growth, but it's just not quite as high as the capacity deployment would suggest. And although it sometimes seems China in the power system operates outside of the confines that every other country in the world needs to kind of operate in, they are subject to the same struggles. So historically, the way that power is dispatched in China also works, has, has rules that were benefiting coal power generators for many, many years. And that means now that solar and wind are such a large participant in the market, the rules for the market also need to change. And that takes time. It's not flick of a switch, as it might be for some technical requirements or for the retrofit that they've done on their coal plants to reduce that middle of the day barrier of how low they can throttle down. But yeah, these are multi year projects on changing the electricity market, having more projects go onto the open market. That's also the case for wind and solar if you need to and in the future should really compete in the open market as well. And those changes just take time. In the meantime, that means that curtailment likely is significantly higher than what is being reported, or at least that's what we expect from when we look at how much capacity has been installed and how much generation is actually growing. That also means, and this is the positive side, that once that capacity is properly integrated into the market, there's actually sort of a backlog of generation that can be unlocked without adding that capacity all over again. So there's a lot more generation still to come from the capacity that's already on the ground.
- [20:51]
Shayel Khan
Could we talk about nuclear for a minute? And particularly nuclear in China. So as you said, nuclear globally has been basically flat for decades. People know that. People also know that China is in construction or various phases of development on a whole fleet of new nuclear reactors. I guess two questions One, do we have a sense of how big that's going to be in terms of overall generation increase, whether in China or globally, once that fleet comes online? And then two, is that nuclear fleet going to be forced to be flexible in the same way that the coal fleet is nuclear? Again, historically not really a rampable resource? What is the market participation of that nuclear fleet going to look like in a market where they are increasingly inundated with zero marginal cost renewables?
- [21:39]
Nick Fulghum
Yeah, I think this is where the story of nuclear and baseload providers in a country like China and India is quite different from how we talk about it in a European or maybe a North American, Latin American context. The stock of coal generation is still so incredibly high that there's a large chunk of sort of baseload generation that can be replaced without worrying too much about the curtailment that will come from having a nuclear plant run continuously throughout. There's, there's enough demand to make that, to make that fit without worrying about curtailment too much. If you would translate the same problem into a European context, you do see already some nuclear power plants provide a little bit of flexibility in the middle of the day. If you look at a power profile of an output in France, for example, output in the middle of the day is lower to make room for the increase in solar generation during that time. That has some benefits. But obviously nuclear power is, is really partial to being run consistently throughout the day and throughout the year as well. So there's, there's a little bit of a different story in China versus versus the rest of the world. But yeah, it's. China is by far the country that is leading nuclear generation build out currently, and it's not close to anyone else. So almost the entire increase in 2025 as well was in China directly. And we do expect that to continue into the future. The pipeline of new plants is just so much larger than any other country. But even there, we do expect that wind and solar will play a significantly larger role both in China and in other countries. It's just not nuclear, even in China isn't growing at nearly the same rates as we are seeing for wind and for solar power. So, so even with policy adjustments and, and the very apparent reduction in fossil generation, or at least avoidance of fossil generation that nuclear is bringing already, it won't match the growth rates of solar and wind in the future.
- [23:48]
Alfred Johnson
We're living through a profound economic shift and energy sits at the center of all of it. Trillions of dollars are flowing into power plants, transmission lines, battery factories, data centers. But the future of energy isn't shaped by technology alone. It's shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, the capital platform for the Clean Economy. Join me for my brand new show Critical Capital. As I talk with people deploying capital, shaping policy and building projects together we unpack how risk is priced, how incentives are structured, and how progress is actually made. Listen to Critical Capital on Spotify, Apple or wherever you get your podcasts.
- [24:31]
Latitude Media Announcer
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- [25:15]
Energy Hub Announcer
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- [25:59]
Shayel Khan
let's talk about India for a minute. We spend more time on China. India is kind of, as we said earlier in the economic development growth curve. And so there, I think has been an assumption that a lot of people have made that you can project India five or 10 years into the future by looking at what happened in China five or 10 years in the past, you guys make a case in the report that that's actually likely, not what's going to happen in India.
- [26:25]
Nick Fulghum
So walk me through that kind of where we look at electricity demand, there's various metrics per capita absolute electricity demand. The two countries have basically the same Population. So it kind of brings a lot of metrics nicely in line and if you put them next to each other, basically India's demand is where China's was about 15 years ago and what happened from that point onwards. So China 15 years ago had a huge boom in coal generation, which obviously came alongside a huge boom in economic growth. That all was very electricity intensive. So high energy and electricity demand over that period. China is a big manufacturing country, so the, that economic growth came with a huge chunk of coal generation growth. And the worry was India is on a very similar trajectory. Really high GDP growth every single year. It's now on purchase power parity, over $10,000 of GDP per capita. So we're really moving from an emerging economy into really a global economic powerhouse. The worry was, are we going to see the exact same trend replicated? Are we going to see a huge increase in coal generation over the next 15 years that would take in on par with China and would bring back into focus some of the, some of the more negative outlooks of where coal generation and fossil generation as a whole was going globally? What we're actually seeing on the ground is there's two really big differences. The first one is that the energy intensity or electricity intensity of India is just significantly lower. So India's GDP per unit of electricity demand is significantly more efficient. So India doesn't need as much electricity demand to achieve the same level of GDP growth as China does.
- [28:19]
Shayel Khan
Like less than half.
- [28:20]
Nick Fulghum
Less than half. Yeah, there's a huge difference here. So it's a much more service sector focused economy. And even though manufacturing is building up, we have a lot of buffer to be even close to where China is. And then the other side is that wind and solar weren't really available technologies to the same level when China went through this growth spurt in like 15 years ago. The wind and solar generation per capita that India has Now is already five times higher than China's was 15 years ago. And obviously that's only going to continue to grow. So this is where India has just basically the benefit of time. It comes 15 years later. There's been 15 years of technological development in the solar and wind sector and it just has access to a completely different set of generating technologies at a completely different price point. And if you put those two together, so faster growth in renewables or a lot of quite a few steps ahead on the same timeline and that lower energy intensity or the lower demand per gdp, and that means we think that India is going to top out or peak its coal generation both in absolute terms and per capita at a level that's three to maybe even four times lower than where China's peak was. So it's not even about oh maybe India is going to drift from China's path. It is really a completely different trajectory. And this is at the same time as India is expected to grow. We do expect those that GDP growth to continue in the next decade. So this is something that people expected maybe to happen in the 2000s, maybe in the late 2000s. And it is that change in a trajectory for solar power and wind power build out in India that's now brought this forward to a much, much earlier stage where we could even see as soon as 2030, that structural point where all of the new demand is already met by clean power sources. And that means that not just fossil generation, but also coal generation would not need to grow beyond that. Now it might not be exactly 2030, might be closer to 2035, but it was a much earlier timelines than what people had usually been expecting.
- [30:39]
Shayel Khan
Let's talk about batteries. We alluded to this earlier. One might presume, given the general maturity of lithium ion batteries and the, the cost curve and so on, one might presume that you would see a direct correlation between the amount of solar and wind to some extent that a country is installing and the amount of best, the amount of grid connected batteries. There does seem to be some pretty meaningful differences though in the degree to which countries are sort of matching their new solar generation with new battery capacity. So talk me through some of the kind of leaders on that Pareto front and then countries that are further behind.
- [31:21]
Nick Fulghum
Yeah, so something that we looked at this year is as batteries have really entered the market at a large scale now we wanted to know how countries are reusing these. So the expectation was always that batteries, once the price comes down to a level where they're competitive, especially combined with solar and wind, that they would then have a rapid takeoff. I don't think anyone quite expected the takeoff to be as rapid as it actually was. So just to put a number on that, the installations in 2025 were around 250 gigawatt hours of energy capacity from batteries and that's a 46% increase over the deployment in the previous year. So a huge step up. We do expect another step up next year as well. There's quite a few years more of growth to come on that side as well for the annual additions. So the question is where are those batteries actually going on a global level? We've compared it to the increase in solar generation. And if you take those 636 terawatt hours of additional solar that we had in 2025 and you break them down into the daily additions, then you get roughly a bit less than 2 terawatt hours every single day of additional solar generation. Now, curtailment isn't a problem in every country. There's quite a few countries with really low solar penetration currently they can add solar without having significant grid integration challenges. But for a country like Germany, Spain, some provinces in China that have high solar capacity and high solar penetration, California, quite a few systems, Australia is also one, already have this problem where adding a lot more solar in the middle of the day, it makes it much harder to reduce the generation from other sources. And that would be curtailment. You don't want to curtail a huge amount of your solar. A little bit is totally fine and economical, but you don't want to do it with a lot. So on a global level, we have a bit less than 2 terawatt hours per day of additional solar generation, but we also have 250 GWh of additional battery capacity. And you put those two together and it means that 14% of all the solar generation, the additional solar generation we had globally, can be shifted to different parts of the day. So whether it's the morning or the evening peak, that's on a one day cycle. So that's assuming batteries charge once per day and they discharge everything, which is pretty close to the actual operation in the real world. Now that's on a global level. And 14% is a big step up over the previous few years as well. So on the global level we're making progress. But then we have some countries like Chile and Australia, where that rate is much, much higher. So over 50%. Now you'd say, oh, maybe what you'd want is you want to shift 100%, right? You don't want to add anything to the midday peak. But we don't actually need 100% equivalent battery capacity and solar generation to make that work. We actually need only about 50%. So 50% is enough to take all of the peak away. You still get all of the gains in the morning and afternoon hours where there's a lot more room still in the grid for solar to grow. And then, yeah, you take all of that peak, you charge your batteries with it, that's about 50% of your daily solar output. And then you move it to the morning and the evening hours. And effectively that means that in Australia, solar generation isn't growing in the middle of the day, it's just growing in the shoulder hours and into the evening. The same is true in California as well, where most of the solar growth is happening in shoulder hours, where it's most needed. And that means that cheap batteries have really now changed the game where the natural thresholds that were previously there just don't really apply anymore. You don't have to worry about your midday peak as much because batteries make solar effectively a dispatchable source, particularly in systems that have excellent solar potential like California or Australia.
- [35:38]
Shayel Khan
Yeah, I really like this metric and what it makes me think, okay, so let's say that 50% is sort of ultimately the benchmark. It's where countries should be once they hit reasonably high solar penetration, such that that solar is doing a mix of meeting the demand in the middle of the day, but also shaving the peak in the evening. As you said, Chile and Australia already well above 50%. The US down at 20%. China down at 18%. The EU down at 9%. And to the extent that solar continues to grow quickly in those markets, as I expect it will, the implication to me is that batteries should be growing at roughly two to three times the rate that solar should. To play catch up here. And so we have this, we started off with this very bullish solar meeting the vast majority of new net electricity demand. The implication is that batteries should be leapfrogging that from a growth rate perspective for at least the foreseeable future until we hit this kind of stasis of plus or minus 50% on this solar to battery ratio, which is interesting.
- [36:45]
Nick Fulghum
Yeah. And I think there is a potential here that we'll get maybe not on a global level where there are just so many markets that are different stages that it might just sort of shake out, but at a market level, we might get a little bit of yo yoing as well, where it's not just a technological question, especially something like batteries. The revenue streams are quite important. So the way that countries are integrating batteries into the, into the system will not be linear. It might be step changes where you see a country not have any battery capacity, even though the technology is already there, it's really cheap to build. All of that might be there, but there might just not be the right revenue models. There might not be any guarantees. There might be no way for batteries to find an off taker. So there will be switches that enable the penetration of batteries into certain markets and then they will rapidly take off. We see the same with solar. These are modular technologies. They're really applicable in a lot of contexts. And that also means that they're not like a nuclear plant or gas power plant where it's a 15, 20 year project. Everyone can see it coming from a mile away that this will happen. It's just we will see some countries have rapid bursts of battery capacity deployment which then might lead also later on to then more solar deployment that previously wasn't really priced in because it's now enabled. The reason I say on a global level it might be harder to see that trend is because countries are completely different stages here. Australia for example, has one of the most developed markets for battery storage. A lot of different revenue streams. You can either do ancillary services so helping with the grid to operate, but also have those big arbitrage opportunities of moving power from the middle of the day to the evening. A lot of different revenue streams, different models that enable a lot of battery deployment. In the end, a lot of this is private investment. So it needs the right frameworks to be able to go ahead. And other countries aren't necessarily at that stage. So it's both a policy and a technology question.
- [38:54]
Shayel Khan
It's even intra country in some places. Right. Like in the us you know your point about this kind of mini boom bust cycle that we might see? I think ercot like Tex, the Texas market in the US is super interesting, right. Because it's like the most pure merchant wholesale power market that we have. And there was a big boom in batteries. The boom is still happening, but there was a big boom in batteries. And then partially as a result of that and partially a result of weather and other things, we've had a couple years of pretty low spreads. Right. The market has not been as volatile as it was historically. And that means that if you're using that battery for arbitrage, you're actually earning less on those batteries. And there's a lot of merchant batteries in ERCOT that are not performing to expectations, which is going to make it harder to finance the next wave of batteries in ercot. But meanwhile we do still have the boom in solar and wind that are getting built. And so it's going to level itself out and we'll see the boom in batteries again. But it is not a clear linear trajectory. There's definitely ups and downs on this market by market level.
- [39:59]
Nick Fulghum
Yeah. And it's actually when you look at the numbers, it's super surprising how much. Even a relatively moderate stretch of different weather, for example, a really hot period where power prices surge even a month of sort of unusual patterns can make a battery's entire year from a revenue perspective as well. So this is where it gets quite difficult. The nice thing about the combination of solar and battery storage together is, is that they kind of make each other's business model work. So on a more structural level rather than the year on year fluctuations that battery operators, both in the US but also in Europe really experience a lot. So that trajectory of solar edging up and then batteries following up I think is going to be a feature of a lot of power systems in the next few years.
- [40:49]
Shayel Khan
All right, final question for you. We've talked a lot about solar obviously and batteries and some about wind and nuclear and coal. We haven't really talked about natural gas. And what's happening in the US right now is a clear rise in new natural gas planned natural gas generating capacity. No question that that is coming and that is going to create a commensurate rise in natural gas generation overall over the coming years. Right. We have this AI wave data center boom. Both the combination of behind the meter stuff that data centers are bringing their own generation, but also utilities who are in capacity in order to meet this new load growth era. Some of that is coming from renewables, a lot of it is, but a ton of it is coming from natural gas as well. On a global basis, natural gas generation doesn't seem to have moved that much in the past few years. But if I look at it from the US perspective, it seems clear to me that the curve is going to bend back upward again for natural gas. I'm curious what you think the global picture of that is going to look like.
- [41:51]
Nick Fulghum
Yeah, it's a really interesting question. There was essentially gas has not really been rising at really high growth rates for a while now. So in 2025 as well, it was a really moderate increase between 30 and 40 terawatt hours. Again, solar was 636. So we're talking about, you know, 18 times more than the increase in gas. There's a, there's a big difference in the, in the growth year and it's not really meeting huge amounts of electricity demand in some of the countries that are growing the fastest. The US is in a sense the big exception here. So whether you look to China or India, they're not growing gas generation. It's always been historically coal and now renewables. The big determining factor for the growth in gas is the domestic gas supply here. So the US and to some degree as well Canada have either the luxury or maybe a little bit the curse of having really cheap domestic gas. Supply. And that means that for the US it was a very obvious option to move away from coal generation to switch to gas. I mean, gas in some respects in the US is almost a byproduct of other, of other, for example, oil fracking. So it's just incredibly cheap compared to the world market, which is where Europe or Japan or Korea need to get their gas from. So that's why the US trajectory is so markedly different historically and now even more so because the recent crisis in the Strait of Hormuz again has really shook every gas importer globally to the core. Japan and Korea, in a slight panic, have already committed to a much faster build out of renewables to get away from gas as quickly as possible. Almost all of their gas is imported lng. The same is true for Europe. Europe's had this sort of double hit where in 2022 it was Russia, so that was their cheap source of gas that went away after the invasion of Ukraine. And now some of the alternatives, for example, Qatar was one of the big, was like one of the big alternatives for LNG supply for Europe. That's obviously now that confidence is shaken and it's going to be hard to restore that. So on the global level, gas importers aren't really looking to grow gas generation in a meaningful way. At least right now you'd be hard pressed to find anyone who'll commit. But in the U.S. yeah, very different story. It's a completely different picture.
- [44:29]
Shayel Khan
All right, Nick, this was super interesting. Appreciate you pulling together all the data. I'm going to be very curious how it looks in 2027.
- [44:37]
Nick Fulghum
Absolutely, we'll, we'll keep track of it.
- [44:41]
Shayel Khan
Nick Fulghum is a senior energy and climate data analyst at Ember. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. This episode is produced by Max Savage Levinson Mixing in theme song by Sean Marquand. Ann Bailey edits the video version of the show. Stephen Lacy is our Executive editor. I'm Shao Khan and this is Catalyst. Sam.