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Energy Gang
What can we expect from energy in 2025? The people, places and technologies to watch this year
01:03:56
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- [00:01]
A
The energy industry is changing faster than ever. So to make sure we're helping you stay on top of every development, we'll be adding some extra shows to the schedule over the coming weeks. First up, we'll be at New York Climate Week speaking with leaders in clean energy, finance and policy and partnering with our good friends at NYU for a very special panel discussion with some big names from companies including Nvidia and Amazon. That episode will be out on Friday, September 27th, so mark your diaries now and we'll also have lots of extra shows throughout the week of September 22, so make sure you're following the show wherever you get your podcasts. Hello and welcome to the Energy Gang, a discussion show from Wood Mackenzie about the fast changing world of energy. I'm Id Crooks. Happy new year to everyone. And for the first show of 2025, we're going to be looking ahead to what we can expect from the world of energy this year. To do that, it's a great pleasure to welcome, as always, my good friend Amy Myers Jaffe. Amy is the director of the Energy, Climate, justice and Sustainability Lab at New York University. Hi Amy, how are you?
- [01:08]
B
I am great, Ed. Unlike some people, I have taken a vacation time, so I'm totally relaxed and ready to do the show.
- [01:16]
A
Fantastic guest. Always. Great, great. If you're able to do that, isn't it also a pleasure to welcome back Melissa Lott, who's the partner General manager for Energy technologies at Microsoft. Hi Melissa, how are you?
- [01:26]
C
Hey, I'm doing great, Ed. Amy, I didn't get to take a long break this year, lots going on, but I did take a few days and have been absolutely loving the hill country of Texas where I'm sitting today. So this is my last day sitting here in my home state.
- [01:43]
A
And as usual, Melissa, of course we have to have with you the standard disclaimer. Anything you might say in the show is your own opinions does not necessarily represent the corporate views of Microsoft. That's right, isn't it?
- [01:55]
C
It's all from my brain. It's just all a nerd out fest here, y'.
- [01:57]
A
All.
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C
And I'm really excited to kick off the New year with the two of you. Really, really looking forward to this.
- [02:02]
A
Absolutely. Me too. So as I was saying, we're going to be looking ahead to what to expect from energy in 2025. The way we're going to do it is going to break it down to look at the places, the people and the technologies to watch in 2025, along with a few world cards as well. And I thought maybe I would start, if that's right. I thought I would start with my place, which is a bit obvious, probably very obvious. But that doesn't stop it being important. My place is Washington D.C. obviously we have a new Congress just arriving, just I think being sworn in as we're recording this right now, we're going to have a new administration taking office in a couple of weeks on Monday, January 20, promising some very big changes for energy in the U.S. a shift very markedly away from climate policy, worrying about emissions, towards a focus on increasing production of fossil fuels and driving down prices as far as possible. What do you guys think?
- [03:11]
C
You got to go first. That was my place too. Now what to do? No, it's a good thing. I have a long list of places that I'm tracking. But in terms of it, I completely agree. It'll be interesting to see what happens in D.C. and I'm thinking about it on two fronts. Just what is going to happen specifically around the Inflation Reduction act implementation. Things that are not tied up with a bow in terms of final rules and we can come back to that, or just other decisions. What's going to happen after January 20th? What's going to happen as you see a lot of folks transition out of politically appointed and other positions within D.C. and new folks coming in. And the second piece of that that I'm following is definitely around, okay, how high in the list of priorities will next steps in terms of streamlining permitting, thinking about how do we get stuff built at a high level, how high on the priority list will that be? Because there's a real question of in this year, if certain decisions aren't made? How many times have the three of us talked about this in different forums? If different decisions aren't made, the actual potential of the Inflation Reduction act is affected. Even if you don't change the incentives that are in it, you still affect how much is able to deploy, when, where, how, you know, how big, all that stuff. So I'm really looking at it from a two pronged view, which is, okay, the actual Inflation Reduction act and then the other things that were kind of left on the table that we know are key to really rapid deployment of new energy infrastructure at large.
- [04:42]
A
Yeah, I think that's absolutely right. And in that context, I'd want to flag up a couple of things that happened and didn't happen right at the end of last year. The thing that didn't happen was the passage of some kind of new legislation on permitting reform to streamline and expedite the processes for building new infrastructure projects. There were some hopes as 2024 entered its dying days, that perhaps you could get together a coalition to support permitting reform, which had very broad support from across the energy industry, was supported by the oil and gas industry, it was supported by many parts of the power and renewables industries as well. Just couldn't be done. In particular, you couldn't get enough Republicans to sign on to support it because they feel that they're going to have that trifecta, control of the House and the Senate, even if only narrowly, and control of the administration as well. And therefore they'll be able to pass some new kind of permitting reform which is more favourable to the things the Republican Party cares about in general. I guess it's going to be more favourable to the fossil fuel industries. So that's going to be something to watch. And then the other thing that has happened, which is absolutely hot off the press. Again, breaking news just as we're recording this is we've had the details of the implementation of the 45v tax credit for low carbon hydrogen rules on eligibility, how you can claim that credit, which in the preliminary version was really pretty restrictive. A lot of people in the hydrogen industry, not everyone, but a lot of people, thought it was much too restrictive and would prevent the industry getting off the ground. And Melissa, you've been looking at these regulations that they've just published and so what are they saying now in the final form of these?
- [06:27]
C
Yeah, so a bunch of different things. And Amy, I was so glad we had this on the books for this morning because the announcements out of the Institute of Policy Integrity at your home university came out. They were top of my inbox today. And this idea, I'm really, really curious for your perspectives on this idea of this. I'll use the phrase from. Actually, let me pull up the IPI's actual press release because it was really on the nose, which was the final rule abandons a major proposed exemption to the incrementality requirement. And that in their statement would have led to a lot of inaccurate accounting. But what I'll say is this rule seems to have taken on a lot of the input to the proposed draft rule. It seems to have addressed some of the issues, but I mean, this is hot off the press. And so I will say, Ed, we're just running in sync today on the same race, which is. I'm watching this for 2025. I mean, this is a big way to start the year. And one of the first things I'm diving into is just understanding it. I mean, that's my nerdy weekend obsession is like understanding what has come out with this. But Amy, I really am curious for your perspectives on what you were seeing.
- [07:32]
B
You know, having worked out in California, I can tell you that when the government gets involved in trying to pin down what the life cycle analysis is of different methods, different technologies, different sources of supply, you know, you got geologic hydrogen, now we got other different kinds of ways of doing hydrogen. You know, I think that it can become overly complex in California. If you wanted to do something in renewable fuels and you were doing a pathway that they hadn't run the standard greet, which is called the name of the model greet model against, you would have to provide this whole scientific paperwork on how you saw the lifecycle analysis. And then a bunch of people for the state who did life cycle analysis would have to analyze it as a pretty complex and time consuming process. Thinking about the federal government undertaking that process and with a large number of applications, that could be a pretty slow gait. Maybe there's no way around that. But the more complicated you make the rule, the more different hurdles people have to go through. And I don't know exactly how they thought they were going to square that knot.
- [08:53]
C
So, and I will say just I do think it is significant that this one made it out the gate. Now I think I know what the follow up questions are going to be on the statement I'm about to make, but let me just make it real quick, which is, you know, the fact that this rule made it out the gate isn't particularly shocking to me that it got out between before the 20th of January, you know, before inauguration, all of that, I wasn't surprised. I did not expect this one to be one that is in the question mark category of is this going to actually get finalize put out as a final rule before then. So that wasn't surprising, but it still is a significant deal. I know I've been talking to endless people, including some of my closest former colleagues in D.C. over the past several weeks and there's a lot on their plates that they're trying to get done before, you know, transitions happen. And so it's just this was one of the big priorities and I think it's a really important priority. But let me pause there for a minute. I think I see your faces. There are questions here, there are comments. So let's go. Let's go.
- [09:56]
B
Okay, so first thing first, on Ed's general point, whenever you have a transition in the federal government and you're going to shift in and out all these political appointees. Nothing on the ira, whether it gets canceled or not, is happening fast. So you had a giant team of human beings under the Biden administration that were under pressure to push, push, push money out the door and get contracts signed so that when the contracts were signed, it would be very hard for the Trump administration folks coming in to undo it. Right. So that whole uncertainty about can we undo it, can't we undo it? Is a slow process. And so, if anything, I don't think 2025 is going to be a stellar year for clean tech investing, specifically because we have the government transition. But on Melissa's point about the hydrogen rules, I'm not a lawyer. I don't know. I mean, the Biden team absolutely think that they did this and it's going to stick. But all of us would have to call someone from the Trump team after we stopped taping this show to ask them if it's actually going to stick and do they actually have a way to change it and do they want to change?
- [11:16]
C
And that last point is a really important one. Right. So it's one of those perfect. Being the enemy of getting anything done. LCAs are very complicated. You know, to your point, Amy, how complicated do you make a methodology? Where's the compromise between streamlining it and getting as close to the, you know, the decimal points that you want or need? And then is this going to be priority? Is this going to be or not? And the question of, like, do they want it to change? Is this actually a good compromise? I mean, I think that's all still jury out and it's. Oh, I was about to do a spoiler to when we get to tech, I'm going to stop.
- [11:53]
B
I would take it a step further. Okay. I've been trying to work my contacts about whether hydrogen will be a priority or not and how. Right. So the entire, in my opinion, the entire tech industry is shifting to what I call the national security moniker. Right. So you can't say climate change anymore. We're not doing decarbonization. We're talking about hydrogen as a matter of national security. And the arguments being made have to do with military applications about why hydrogen is important in the sort of what I call the clean tech world of dual use. Right. And hydrogen is a very important fuel for space, for drones, et cetera. So I don't see the Trump administration canceling hydrogen. And the industry is still, I think, pretty committed to hydrogen. But you're seeing a lot. I mean, the news on Hydrogen. You know, Ed made me admit on the last show that I was not 100% correct, saying that 2024 would be the year of hydrogen. Right. So I'm having to, like, admit it, right. But Bloomberg New Energy Finance just came out with this really negative report saying that hydrogen costs will never come down. And I'm not a believer in that. I don't like what they're saying in terms of cost because I just don't think it's accurate. I don't think, why pick that fuel as being the fuel that can't come down? People have these really advanced designs that they're working on. I'm not in agreement with their assessment, but it's created this tonality of, like, the futility of doing hydrogen and how projects are going to get canceled left and right.
- [13:44]
C
And I. Amy, I'll just say I don't disagree with you. So something I'm following in 2025, and this isn't going to be my technology, Ed, so it's not a complete spoiler, but is what is happening in hydrogen, how many projects are continuing on, which ones accelerate and which ones don't? And I expect some projects will fall out of the queue because projects fall out of queues because of a lot of different reasons that have nothing to do with, you know, these different topics that we have discussed thus far.
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B
And because vc, because VC is doing A and not B and C and not D doesn't mean that those things are going to just die, because everything's not about the VC space 100%.
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C
And so when you look at this, it's like, it will be interesting to see how high a priority hydrogen is in dc, but also in an international context, also in certain particular states that are making some big investments. There's a lot to be following around this. And I will say I did struggle with not putting hydrogen higher up on my list of texts that I was following. And there's reasons I didn't. But within this, I agree with you that the interest in hydrogen is. It's not just about climate impacts, it's not just about security, it's not just about any one thing. And when I start to see that confluence of. There's a lot of different pressures that make this one interesting. That's when I get fascinated in tech, when a technology has like one application and that may or may not be universally kind of the benefit might be not universally applicable across wide swaths of groups, then I'm like, maybe, but that means that one or two things could derail it. When I look at hydrogen and when I look at the just global picture, there's so many things that would have to shift for this not to remain very interesting. There's just too many things.
- [15:22]
B
Well, and the, and the industry, the industry does hydrogen. I mean, they use hydrogen in their industry. I mean, the United States and China are the biggest producers of, of, of hydrogen globally. And if it has different applications, that would enhance the competition in energy and other uses of hydrogen. I mean, the industry is not going to stop. Not in China, not here.
- [15:47]
C
So can we, off the record, later guys, make bets on how much project. I'm kidding. Not actual bets, but like I owe you, you know, a book or something at the end of the year, how much we think is it going to progress? So my favorite kind of bets, but sorry, Ed, you, we're talking about places. I'm so sorry. We've already gone down the rabbit hole. Welcome to 2025. But I agree with you, DC decisions are going to be really big. Hydrogen is going to be one of them. We've already gone down this massive rabbit hole. I love it. It's super fun. Ed, you've obviously struck a nerve. And I think it is fair to say when we were talking in our prep for this and offline, the US Is a place where we are focusing a lot of our eyes. In the near term, we're focusing them on other countries too. But there's some big things that may or may not shift and we're kind of wondering is this going to be status quo or will these be top of the pile kind of discussions? I think a few of them are going to rise to the top. But agree with you, D.C. from those two things I outlined earlier. Oh man. We'll have a good reflection show at the end of the year.
- [16:46]
B
Okay. My place is California.
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C
Ooh, good pick.
- [16:51]
B
Because if Ed's place is DC then the next most important place, if DC is the important place, is California, because Gavin Newsom, who frankly. Well, let's also do my person, because my person was also going to be Gavin Newsom, right. He just put out a request for a $25 million add on of resources for the state's legal team so that they could prepare to sue the Trump administration to defend its climate and clean energy policies. They sued the federal government 120 times during the first Trump administration. That cost them about $42 million. So the 25 million is not, might not be the total budget, but it's a very interesting dynamic. And as Melissa, as you alluded California has a big hydrogen strategy. You have this plan to create the world's largest green hydrogen project in Lancaster, California. I don't see California wanting to abandon that. You have a lot of corporations that are invested in doing that project, but it's not just hydrogen. The state has the plan to ban ICE engine sales of new cars in 2035. I mean, they're on the road to 100% renewables, and they have a big and successful sustainable port and sustainable trucking program. And so they do not want to abandon any of that. And so therefore, I feel like California, if Washington's gonna be the center of the universe, California is gonna be the thing knocking on that door, trying to prevent it from doing anything against the state's interests.
- [18:51]
A
Question. Fact check. Do you happen to know how many of those 120 or so lawsuits against the first Trump administration were successful?
- [18:59]
B
So the interesting thing about the lawsuits, Ed, is what happened last time, especially with tailpipe emissions exceptions, is that they kept suing and suing and then we had a new election, and then that bailed them out because the election went democratic on the federal level. So some of it is just to prevent the federal government from exercising its authority. You don't necessarily have to win. You just have to delay, delay, delay and hope for a better political environment.
- [19:30]
A
That's a great point. Hadn't thought about that. As you say, the wheels of justice grind slowly.
- [19:34]
B
They do grind slowly, but they can.
- [19:35]
A
Still get to the destination where you want them to go. Yeah.
- [19:38]
C
At the risk of opening up a very big box at this moment, I'm having flashbacks to my freshman year political science classes and talking about the dynamics between D.C. and California. And you know, okay, D.C. does this, California does this. Where are states rights and all of this, and what decisions can they make? And with this particular administration, I think we're watching DC in part also because it kicks things off for the run to 2030, which is, oop, five years away. We're going to be in 2030 and there's a lot of goals, and then there's another set of goals five years after that and other goals. 5. You know, it just, it's interesting to see these dynamics related to this. I have a question for y' all that I'd written on the side margins of my, of my brainstorming.
- [20:18]
A
Melissa, did you have any other places you were thinking about?
- [20:21]
C
So I had a long list of states I don't know about y', all that I debated on. So, Amy, completely agree. California, interesting to watch. But there's a whole list of other ones where I'm watching individual investments from the inflation reduction acts about recycling facilities, just different components, different things coming up. Electric vehicle manufacturing facilities. I'm looking at also the whole world of nuclear and what is going on there and what do we expect to have happen in terms of movement within the next year. So I had a lot of different debates. I also went down a fascinating rabbit hole for another day. I think we talked a good number of shows ago, Ed, about Tennessee and my drive through it and TVA and how I wonder about the structure of TVA and how that affects like that region of the country and all the development we're seeing within the state of Tennessee. But my list was full of a lot of different states. And then on the international side of things, I mean, all the usual suspects. But I was, I did briefly consider a couple of different European countries for a number of different reasons, including continuation of concerns about energy security like that. That just was one of those things where I wondered, okay, I know I'll follow these regardless, but should that be on the list? But mine was states in a few different countries, But I think D.C. and California, they really did rise to the top for me. And the focus on the US in general, like the number of states on my list really showed me that my mind is thinking about where's the US Going to go in this next year. I just what decisions are going to be made, what's going to get built, what's not.
- [21:50]
A
So, yeah, absolutely. I think that's exactly right. So let's move on and talk about people. Melissa, who's your person to watch for this year?
- [21:58]
C
Oh, I'm so glad I get to go first because it won't take it off the list. I'm watching DC Again. I'm watching the Trump administration. I am just going to say I'm watching the person who eventually becomes the Secretary of Energy and the person who becomes the secretary of the Interior. I will say that for the following, which is just, again, what decisions are going to be made, what manpower is going to get put behind what types of things when it comes to accelerating deployment of energy infrastructure, period, across all different types of technologies. And I will hashtag footnote myself saying, or whoever ends up in the Trump administration being in charge of being that kind of czar pusher. So I've got a long list of players that I think might contribute to it. And it's not just Wright and Burgum. It's not just Musk. It's, I mean, there's this. And this goes back to the we're going to see how this plays out. And again, is it going to go to the highest level priority? Who's going to be driving it? Who's going to be driving it in terms of the public face of it, and who's going to be actually doing the lifting behind it? And so I'm looking at where's the heartbeat of energy transitions going to be within the new administration? Because how strong that is beating, how strong that is moving will affect so many things that I'm looking at outside of that. So I'm going with Interior and energy for now. But I've got that footnote because I got to put it in, because I don't. I don't know, Amy. Like, I just don't know. Ed, I'd love your thoughts on this one, too.
- [23:24]
A
Well, I was going to ask you a question, actually, Melissa, which is what are your initial impressions of those two individuals? Then Chris Wright going to be the nominee for energy secretary, Doug Burgum, governor of North Dakota being nominated for interior secretary, and also to head the new Energy Council of the White House. What might we expect from them, do you think?
- [23:48]
C
So to me, it's a pivot. Is it bad or good? Well, when I'm thinking about purely accelerating the deployment of infrastructure, what I then say is, okay, who are you complementing in the rest of that group within Interior and Energy? So if you have business at the helm of energy and then you have more government, but someone who's very well versed in energy coming into Interior, that's Bergam, then, okay, who are they going to bring in with them? And then how effective are they going to be in the government within these, you know, halls, within Forestall, within, you know, within the nuanced ways in which bureaucracy works in D.C. how effective are they going to be? And so that's the question there. I think they are interesting choices. They are not. And when I say that, I mean both of them obviously get energy. And so that's signaling to me that, like, energy's on the table, y'. All. Like, this is a big deal. I don't know how that's going to manifest.
- [24:45]
B
But, Melissa, does it signal that energy's on the table or does it signal that natural gas is on the table?
- [24:51]
C
I think it signals that natural gas is a really top topic that we're all grappling with, and we've been grappling with it for years. And so how that's going to be grappled with, I Don't know if you're asking me specifically, like the development of natural gas, the United States and will this accelerate it or not? I mean, no matter what, you've got two people who get how those industries work, I think. I mean. Right. Definitely does. Ibergum appears to. And so how much is that going to be applied to a whole host of technologies? And within that, I will go back to the Inflation Reduction act, which is a ton of these investments have been made in states all over the country in lots of different technologies and parts of the supply chains. And how are these folks who are going to be in a D.C. federal. I'm dealing with all these different states and interests. How are they going to navigate that? And I don't think it's going to be just one technology that is affected by these two positions. I think it's going to be a ton of different ones, including my favorite from last year, geothermal and enhanced geothermal.
- [25:45]
B
I mean, I mean, I mean, yeah, because the secretary, the possible secretary of energy is an investor in geothermal. So there we go. And it's. And it's a technology he ran a company using.
- [25:56]
C
Yeah. So I was hesitating. And why I didn't put their names in it in the very beginning, Ed, is because obviously everyone's confirmed. They have to be in position. Who knows what stuff can happen in the new year. But wherever those two positions go, or if they do have this kind of energy czar, you know, whoever ends up that position, again, it's where's the heartbeat of all the energy stuff? That's the person I'm watching. Because D.C. is going to have the potential to really affect some trajectories in the short term. Not changing the fact that we're in a transition, not at all, but affecting what technologies, where are deploying and then those tensions between states, how much bandwidth is spent on that. It's just a lot of stuff. A lot of stuff. Big, important positions.
- [26:37]
A
So, Amy, what do you think, given Melissa's caveat, that we don't know for certain that Chris Wright and Doug Burgum will end up in those two key energy roles in the Trump administration if they do get those jobs, what would you expect from them?
- [26:52]
B
You know, and I think the sort of tricky area is the industry has actually, the top of the industry has actually spent a lot of effort. I know the listeners are always a little skeptical. Capturing methane and reducing methane leakage. And that's directionally where the industry, in my opinion, needs to go. Because the United States is not the only country in the world where they sell natural gas. The question really becomes, what do we do with all of that? If the inclination is to just say, hey, industry, you don't have to do any of that, we're going to lift all environmental practice. You know, who is it that's really going to do that? Because I don't think that the major companies, and I don't mean that just by the, you know, international oil companies, I mean the biggest players are going to follow that tune. I think that they're not going to suddenly turn around and decide they're going to just pollute the hell out of everything or they're going to stop trying to figure out a way to exit the gas from the Permian. Listeners probably don't go into the weeds of this. A lot of the LNG facilities is not actually capturing the gas in the Permian. And you've got a lot of we had Toby Rice on the show a while back, and he's got all this gas that's stranded somewhere in Pennsylvania that needs a place to go. And those are not easy things to solve. So Trump can stand up and say he wants Europe to buy more, and surely they'll want to, given the fact that there's increasing supply problems from Russia. You've got Russian LNG that's unsellable today, that's being put in storage because of all the sanctions. But how you turn that into a viable policy when you're going to say that you're going to unwind every single environmental rule, it doesn't necessarily promote natural gas. The things you need to do for natural gas are not necessarily unwinding the environmental rules.
- [28:56]
C
Super quick question on that, Amy. How much of that equation that you're just outlining is dependent on how quickly you could build new pipelines to move any gas that you're developing? Like, how big a deal is that these days?
- [29:07]
B
I think the pipeline question is. I mean, in places like Texas, maybe more so in Pennsylvania, I'm not so, so familiar. I mean, there is the permitting reform question, which I think is just important to everyone. But some of it is, you know, the investment outlook. I mean, the industry has a tendency to overbuild and overproduce. And we're having this debate. We're going to lift the day one. President Trump is going to lift the pause on lng. And then you have to ask yourself the question, Europe has a cap on its use of natural gas. That kicks in in 2030. If you end the pause today and somebody spends five years developing an LNG plant that's not currently under development. Are you even going to have a market for that when it gets built? And then like we said, what's going to happen in petrochemicals post 2030 when we just get to the point where you can't go to the beach anywhere in the world or eat seafood, like at some point more is not necessarily better.
- [30:13]
A
That is a super important debate which we should come back to in a future show.
- [30:16]
B
100%.
- [30:18]
A
My person to watch in 2025 is a bit of a pivot away from the United states. I'm picking Dr. Sultan Ahmed Al Jubeir, who is the chief executive of adnoc, the national oil company of the United Arab Emirates, chosen him in part because he's kind of emblematic of really interesting developments across a number of these big national oil companies. From emerging economies, very much stepping out onto the world stage, making a lot of very interesting moves, interesting investments, often investing growing amounts in low carbon energy as well as their traditional core businesses of oil and gas. So there's quite a lot of that activity going on in the world. I think there's going to be significantly more of it in 2025. Also, I think Sultan Al Juber is interesting personally himself because ADNOC is right in the forefront of those NOCs that are kind of forward thinking, changing themselves in interesting and significant ways. The very significant move that they announced back in November is, is that ADNOC are going to be launching a new lower carbon energy company which is going to be called xrg and they're going to be talking more about its strategy during the course of 2025. This is a company that's going to have three divisions in gas, in chemicals and in low carbon energy. They're saying it's going to have an enterprise value of $80 billion. So it's kind of instantaneously creating a very, very significant player on the global stage. And I think watching how that plays out and how that both is emblematic of a broader shift and also is a very specific move in terms of what ADNOC is doing to diversify away from being just based on oil and gas towards a whole range of other technologies to fit itself for the energy transition. I think that's a very, very important story and I think that's going to be a big one to watch in 2025. Let's move on. Let's talk about technologies. Who wants to go first on that? What is your technology to watch in 25?
- [32:28]
C
You got stuck last Ed, so why don't you go first?
- [32:30]
A
Yeah. Okay. So this is an interesting and potentially controversial one, which is solar power. And I want to raise the question of whether the growth in solar power is going to slow this year. And we are going to see essentially not the industry contracting in any way, but that escalation year after year after year after year. We had more solar power installed every year than in the previous year. Whether that trend is going to come to an end and we're going to see annual installations kind of flatline, broadly speaking, now for a significant period of time. If you look at where we've come from in solar, only 10 years ago, in 2014, the world installed about 45 gigawatts of solar generation. In 2024, it installed about 500 gigawatts. So roughly speaking, a tenfold increase in 10 years. So it's been absolutely breathtaking how fast that industry has developed, but there are now some pretty significant headwinds starting to kick in. Talked a bit about the US and about how we may see various changes, both regulatory and potentially legislative, that will slow the growth of the solar industry in the U.S. there's also been a very important shift in policy in China. China, of course, by far the world's largest solar market. And in November, the Chinese Industry and Information Technology Ministry published new standards for the industry. In particular, they're trying to tackle this issue of massive overcapacity in production of solar modules. And there's all sorts of rules about new efficiency standards, new standards for manufacturing, new standards for financing the development of new plants for making solar modules and so on. And we've had that huge increase in Chinese manufacturing capacity which has driven prices down. Prices for solar modules globally have absolutely plummeted. And those very, very low costs have helped encourage the use of solar power right around the world. Maybe now that overcapacity is going to be addressed. Maybe some of the issues that we've seen in terms of the rapid build out of solar power in China in particular, where you're starting to see negative electricity prices emerge in some places, and sometimes in China, because so much solar power has been built now, they get excess supply at times in the middle of the day when solar power generation is at its peak. And so you put all those things together.
- [35:06]
B
So, Ed, I always have to be contentious. I think everything you've pointed out is important and really worth chewing on. Let me throw a couple other ideas to add on to it before we make like a final evaluation. So, number one, there have been a giant effort ahead of the Trump administration coming in to buy and stockpile materials from China across many industries. And so what you're probably seeing is that, you know, a lot of Chinese inefficient, inexpensive solar panels are probably on a ship somewhere, sailing somewhere, so people could stockpile them ahead of these changes taking place. So maybe the impact of that rule won't be immediate in 2025. That's point number one. Point number two, though, you raise a sort of an interesting question. One of the things that's held back solar, in my opinion, is the sort of quality control on the panels to some extent. So to the extent that China's going to really address that and try to produce more uniformity in a better quality product, that might actually help solar in the long term. And then the third thing is you're absolutely right about this problem of net negative electricity prices in midday. If you think that's going to stop or slow down solar, you're really making an assessment about whether you think storage is going to be having continued gains in terms of its cost effectiveness. And some of that's just that the cost of storage is going to come down the technology itself. But also you might finally get to the point where a PGM in the United States or China would engage in some kind of. The Chinese don't have a reformed electricity pricing sector. I mean, at some point they're going to have to tackle that and the same thing in other places, Africa, Africa and so forth. A lot of it has to do with pricing reform. So it's not an easy answer. I don't think the panels and the tariffs are the only variable. I think there are these other variables that come to play. And the one thing I've been telling people, which I'd be interested in your opinion on, Ed, is that I think countries are more inclined towards energy transition, whether that's solar and battery, whether that's other kinds of storage, whether that's hydrogen, because the oil and gas markets have been so volatile with this whole. Now again with Russia and the question and the war in the Middle east and instability in the Middle east, that countries want to control their energy future. And that means using something that's inside their borders. And the easiest thing that's inside their borders is to do some form of renewables, waste the energy, you know, whatever, and use, have some kind of a hydrogen or storage business because they can control that. And I know there's the whole thing about, you know, well, do you have to buy the battery from China and so forth, but that's why I think hydrogen is still going to have its moment. Because if you're in India or you're some other country that has good renewable resource, you can make your own hydrogen and solve the problem yourself.
- [38:40]
A
Yeah, that is a great point. And I do absolutely agree with you that energy security motive for investing in renewable energy is going to remain very strong. And also the cost motive, given the low cost of solar power relative to many other options in terms of generation, that's going to remain very compelling. So we'll see. And as I say, I'm absolutely not predicting kind of disaster for the global industry, but maybe a slowdown in growth. I do think that is possible. Melissa, what's your technology to watch?
- [39:10]
C
Can I have four?
- [39:14]
B
I know.
- [39:21]
C
So this is so hard. Like it's been, I've been, I've been debating right up into this moment. I'm still debating. Okay, here we go. I'm also watching renewables. I'm not about to say enhanced geothermal. I'm not going to say solar anymore, Ed, because you just talked about it. I'm actually looking at the compliments to solar, which is a lot of different things. But okay, wind and long duration energy storage. Give me two guys, give me two.
- [39:47]
B
I'm surprised you're saying wind because the wind industry looks like it's imploding, so please elaborate.
- [39:53]
C
No, so I'm watching it because I don't know what's about to happen. I mean that's, that's kind of part of the point. It's like I don't know which way this is going to happen. I'm looking at two things. I'm looking at what existing wind is doing because we've gotten to a place where we have like oh, so many different things going on. I'm sure many listeners will reach out to me about this comment, but it's like the over concentration of wind. Some regions we're looking at transmission constraints, we're looking da, da, da. But then at the same time, I mean for the last several years I've been following companies like well, there's one that I find really interesting radio, which is like, let's get offshore wind onshore. And when I look at the different patterns that you have when that you can actually. Have you guys heard of this? I should pause for a second. Have you guys followed radio at all?
- [40:32]
A
No, I don't know this. What is that?
- [40:33]
C
Okay, so as a Texan, what is one of the things that I have seen many times as a Texan from the hill country Is this idea of you need to get a turbine blade to a certain place, you have a custom truck to get that wind turbine blade out there because of its dimensions and all that. We know this story. There's also this section. I remember driving down Highway 84 one weekend and watching them shut down traffic because they had to get a bunch of these blades around a bend and there was an overpass situation. Yes. In the middle of very small rural Texas there was this. And so they had to shut down some of the road. The point being they've like reached a max where they're like, we can't go bigger than this because we start having issues with the road turns. The turn on the road is what it is. Where do we go from here? So you have offshore wind technologies that could be really useful onshore. But it's like, well, how do we get them onshore? Well, so this company I'm following probably for five or six years at this point. Head by Mark Lindstrom. It's just an example that I'm bringing up, which is they're saying, well, if you can't drive it, how about you fly it? And so they have this big plane that they've designed to actually move offshore wind turbine size turbines, the blades and stuff to where it needs to be onshore to actually capture some of this additional energy. And so I don't know if this year is going to be it for wind, but this is another dynamic. So I'm not just looking at the overall what you highlighted, Amy, and like, okay, how, what's the next step with kind of more traditional wind? I don't want to say smaller because. Good night. Has anyone walked up to a wind turbine lately? They're huge. But what's going to happen and are we going to have some breakthroughs when it comes to getting these really huge technologies on the system? Are we going to be able to actually connect even some of these new lines within states, like within single states in the US but within smaller regions outside of the US to get these things online or not. And I'm just, I'm just curious. And you've got relatively clear line of sight when it comes to things like production and investment tax credits? I think so. I mean, what's, what's going to happen? Like, I, I just, I have this feeling like we're at an inflection point of some type. And I am curious enough that I'm watching it. The second one, which I'll say in 10 seconds because I. Thanks for the, thanks for the extra Guys, you know, this one's killing me today. I have such a long list is just long duration energy storage. And when I say long duration, I mean way more than a hundred hours though. A hundred hours is great. I'm talking about those weeks and months and those kind of gaps. I'm watching a number of different technologies within that space. But the overall cost economics of it, I think what happens in the next couple of years here will have really significant knock on impacts to an alternative to different types of long duration energy storage, which are these kind of drop in fuels and carbon capture, et cetera, et cetera. And so I wonder where these things are going to develop. And I'm watching two specific classes of technologies which is the long term thermal storage, storage of heat, and then also the creation of alternative drop in fuel. So when you talk about creating fuels that can just sit there for long periods of time and I just, I want to see what's happening this year in that because it just does affect the overall dynamics, particularly electricity sector so much. Okay, that's it. I'll leave it. It's killing me though, y'. All, it's killing me.
- [43:41]
A
And one footnote to your footnote, which is just your mention of 100 hours, reminds me something else that's going to be really significant to watch this year is the first project using the Form Energy Iron air battery long duration storage, which is configured for 100 hours of storage. So that's still obviously a huge advance on typical lithium ion battery storage project, which might give you four hours of storage. So, sorry.
- [44:09]
C
And it's number six on my list. Other types of batteries. I want to go into it.
- [44:12]
A
Yeah, absolutely. But again, just I want to flag it up because it's important for this year. As I say this first project using these batteries, which are a huge advance in terms of duration on lithium ion batteries, they don't, as you say, Melissa, cover every need you might want to address. There are places where you can have low wind and solar output for two weeks at a time and 100 hours isn't going to help with that, but still can be potentially, I think, a very important technology. That first project is meant to be coming online in Minnesota by the end of this year. Definitely you want to watch if it works technically, if it works commercially, if it works in terms of enabling the increased use of renewable energy the way that people hope that could be a very, very significant breakthrough. I don't think we'll be able to really tell definitively this year whether that technology really works or not. But definitely, if it can be made to work this year, that's going to be an important step forward. Amy, what's your technology to watch?
- [45:20]
B
Okay, so now I've never talked about my youngest son. You know, we heard about the writer son. I have another son who's a finance son. And we had to take. We were here in California using a Tesla. We had to go to the mall to charge it. And as we were sitting over fast food, he started explaining to me about quantum computing. So that is my. I was going to do AI as, you know, digital, digital, digital. But I decided to upgrade myself to quantum computing. He explained it to me that I could actually read the articles and sort of absorb some of it, but it might take its physics, so it might take Melissa to chime in, but basically we're making some progress. They're now saying we're five years away, blah, blah, blah. But the difference between regular computing and quantum computing, let me just say this is the son that does coding. He was using large language models to do his program, et cetera, et cetera. So he was explaining to me about qubits. In traditional computing, you have a binary choices. And the analogy everybody uses, which I think is an easy way to explain it, is that imagine you're putting a mouse in a maze and the computer is putting them down one turn, then another turn, and you have to, to do each turn in succession. With quantum computing, you can just pretend you have thousands of mice all going every single possible pathway at once. And then you come up with the solution much faster. Right? And that takes these qubits that need to be put in a deep freeze to almost absolute zero temperature to eliminate all electrical resistance and shield them from external vibrations. And they have to vibrate in unison and it has to be consistent. And so if there's any kind of disturbance where they stop vibrating in unison, you get a error. So that's the puzzle is the how to keep it, the system, totally, totally stable. Why is it interesting from energy perspective? Not only because it's going to be just this game changing technology, as people say, if it's puzzle gets cracked. So people were saying that it couldn't be applied to fusion, right. Because there was this gap in the physics of waves with Maxwell equations and quantum mechanics. Like that's two different sort of systems of.
- [47:52]
A
Yeah, I'm afraid you'll definitely be on me when you start talking about the Maxwell equation. Melissa, are you comfortable with the Maxwell equation?
- [47:58]
B
But here's the point, because the listeners don't need to actually understand what the Maxwell equation is. All. All they need to know is that there's a group of professors at MIT and researchers at MIT who've created a way to make a translator to bridge this gap in physics so that you could possibly use quantum to model the conditions you need to get a better vessel shape or better magnet spacing or better understanding of plasma dynamics using quantum.
- [48:33]
A
Well, okay, so quantum.
- [48:35]
B
So if you had a breakthrough in quantum, it might mean you'd have a better and faster breakthrough in fusion.
- [48:41]
C
And this is something broadly. I'll make a real brief comment on when it comes to quantum, when it comes to AI. Like, all these tools that are helping us, as you say, move through discovery processes more efficiently and effectively and giving us more tools in our toolbox, I think will be very transformative in this decade of what we're able to do in the next decade. So in the remaining five years, it's like discovering new materials, accelerating these different processes. It's just about getting there faster because we're not having to do such a manual process. It's like, I think of it as in, you know, you're building the first car and then you're building the first, you know, manufacturing line to put cars out, and then you're automating pieces of this. It's like, these are huge steps forward. So I agree with you, Amy. Like, these are tools that will accelerate discoveries quite a bit. I will just, like, I don't think it's going to mean we install something different in the next 24 to 48 months, but it does set us up with a whole host of things to do after that. And I do believe these tools will simultaneously help us to make the whole system that we do have today much more efficient. Like the things that we'll be able to discover in terms of operating efficiencies, which can be implemented so much quicker. Like, I'm really watching that. So something as on a run of the mill as predictive maintenance on energy systems that we have today, on whether it's wind turbines and rotating those cranes around to do maintenance on them or other things, I mean, that's already being assisted by all of these types of tools that are made possible through AI, through quantum computing, etc. And I just, I do think sky's the limit on what that can do. It'll be really interesting. So it's a good pick, Amy. I will admit it was not in my top 10, but. But it's a really good one.
- [50:20]
B
Okay, so, Melissa, I have a question for you. As A technologist. I tried to do some reading to try to figure out if this absolute zero temperature thing meant that quantum was going to use more electricity or more heat or more power or less than large language models. I saw conflicting things. Some people say, no, it's going to be so much faster that you're only going to need that energy for short. And so it's going to be much more energy efficient than what we're doing now. But on the other hand, I understand that concept but like you're going to have endless things you want to compute and you're having to compute them at absolute zero temperature. So thoughts on that? Am I for the research?
- [51:07]
C
No, I mean, so I think it's a really good question and it also goes back to something more fundamental which is just like, all right, when you make something really, really efficient and therefore you do so much more of it is a success or failure. You know, overall, I remember this came up actually Ed, did we, I don't know, a while ago that we briefly commented on like building efficiency improvements in the UK and how there was this idea that oh, but energy use went up after they did these efficiency improvements and what the finding was that actually people could have their homes be warm and for the first time and so they were heating it to a healthy temperature. So is that success or failure? So within I think Amy, it's to me it's more complex. So it's like it's a question are we going to use more energy overall for these processes or are we going to have discoveries that it's like, I don't know, discoveries of anti scratch coating lenses from NASA and solar panels and all that. It's like it was really expensive to do that but the knock on effects are so huge that actually you're winning overall by whatever your metric is. The short answer is I don't know, but I think it takes a lot of picking apart and we will see.
- [52:10]
B
I'm not going to challenge that because I have no idea. I'm just beginning to go down this rabbit hole. It's going to be a process.
- [52:17]
A
That's a great point you make, Melissa, which is that if we become more efficient in our use of energy and therefore maybe use more energy, but are doing more stuff thereby and AI actually is another classic example of this, right? If it is possible to do a whole load of new and exciting and valuable and useful things with AI, that's a positive, that's not a negative for the world and that's something we should embrace and obviously make sure it happens the right way and make sure we limit the environmental impacts to the extent that we can. But it's not an argument for saying therefore technology should not be allowed to progress, we shouldn't go any further, we shouldn't be able to do these new things. That seems completely self defeating.
- [53:06]
B
And also if Quantum gets us to be able to be Star Trek y and we can be beamed from one place to another, which some people are.
- [53:13]
A
Saying, I'm not, think of the jet fuel we'd save. Yeah, right.
- [53:17]
B
We wouldn't need jet fuel and it wouldn't be emitting excellent.
- [53:20]
A
Well, that is definitely something to look forward to. So we should just about wrap it up there. I was just also wondering about wildcards. Suppose these are our free electrons or unpredictable things, risks potentially unexpected developments in 2025.
- [53:42]
B
Well, I'm going to. I have two. See, Melissa, after I made all that fuss, you know, the first one which we kind of talked about is, you know, what if there was actually a giant collapse in oil prices? You know, that would really change a lot of the dynamic that we're used to in the markets in the last couple of years. So that would be, I just think, something to watch that could happen in 2025. Not saying it will because, you know, we could have worse war in the Middle east and other places or other kinds of things that could upset that market. But we could have downward. It's the first year, I would say, in recent years where I'd tell you that downward volatility might be on the table. But the thing I'm still watching since it's kind of free electron, is that I've been driving around in a Tesla all week and you know, I gotta say, you know, I'm. I'm in California, I'm wanting to go to the supermarket and I can push the park button on this Tesla at the farmer's market where there's some tiny spot that no one else could get into. So it's free. And it's amazing to see the car park. Totally amazing to see the car park. As you know, I'm totally into AVs. I feel like AV ing could really get us to the next level of transportation innovation for fuel and lower emissions and so forth. I've been thinking avs and I only have one negative story about it though, because Tesla's saying they're going to move forward. They're trying to do robo taxis. You've got others in China working on that puzzle. The problem that I see is that now multiple people from My family have taken this Tesla and if I don't use the cruise control on the highway because I don't trust the AV thing, but even though I'm thinking it's going to be the world's biggest breakthrough, blah, blah, blah. And several of us have been in the car, having it on the automatic pilot thing, but having our hands on the steering wheel and we had to fight the car because the car decided to change lanes when it shouldn't. So not 100% there, that's all I have to say. But still a technology I'm watching.
- [56:06]
A
Yeah, very interesting. As you say, if it can be got right, huge potential benefits from that. But certainly there are some issues that remain. And it's not something that everyone is going to be using during 2025.
- [56:20]
B
Oh, for sure not. But I will say in defense of the car, when it was parking me at the grocery store, if somebody was walking up with their groceries, the car stopped parking.
- [56:33]
A
Even just that is actually incredibly impressive that the technology can do that.
- [56:36]
B
Incredibly. And they weren't even near the car. But the second there was any human being anywh the parking lot, the car would stop parking briefly until that person was out of the way.
- [56:46]
A
So, Melissa, I'm going to ask you to go last if I can, because my wild card is a really downbeat one and I don't want to end on that. I think we should end on a more positive note. And it goes to Amy, the point you were making earlier about is it possible we'll see another collapse in oil prices this year, one of the things that might trigger that is another pandemic. I should preface all my remarks by saying that just as I'm not a nuclear physicist, I'm not an epidemiologist or any kind of medical expert, I've just been reading the stories, as everyone has, and when you look at what's happening with bird flu, the way it's been spreading among a number of different species, the way that there is transmission, for instance, within dairy herds, which is, as you'll know, Amy, become a massive problem in California just very recently. The possibility of that virus jumping the species barrier to make human to human transmission possible is really quite alarming. We don't know what's going to happen. We don't know if it's going to be an issue this year. But definitely as a risk to put on everyone's radar. And something that is clearly a growing risk, that is something I think we all need to be aware of.
- [58:11]
B
So let me just put the listener's mind at ease in the following way. My husband has had AVN flu and I took care of him and I didn't get it. Then my husband got Covid and he gave it to me. So just want to make that distinction so that people feel a little bit more relaxed about now. Maybe this new version could be at some point more contagious, but just telling that story to make people feel a little bit calmer.
- [58:40]
A
Yeah, as you say, that's definitely a kind of a reassuring fact about the virus as it exists at the moment. There are no recorded cases of human to human transmission. Anyway. Melissa, cheer us up. What's your more positive wild card for 2025?
- [58:57]
C
Oh no, Ed, we assumed mine would be positive. This is not good. This is not good. I was trying not to laugh because I really am the optimist. I'm going to focus on solutions. Like it's hard not to be optimistic with the number of solutions we have to challenges. Something I'm watching is a wild card, but I'm actually going to blend in something. I know we're not doing free electrons, but there's something else I'm watching and I'm just really curious about. So what I'm watching is extreme weather events. Did y' all follow this Puerto Rico blackout? Which to be clear, I mean to my knowledge was not, not actually kicked off by an extreme weather event. But it made me think about like blackouts and it made me think about infrastructure damage and it made me think about, okay, what's going to be happening in the next year and how will that affect conversations around the climate, meetings around cop, but before that, you know, because it's one of those things where at the end of the day, energy security, reliability, resiliency is a topic we all can identify with and I just am wondering what that is going to be. And so my wild cards, they're the geopolitical ones which Amy, I was like I will leave to Amy on those and what might happen there. But there's also this idea of natural disasters and just stuff that can happen, whether it's big wildfires, whether it's big hurricanes, whatever, more rain than we normally get in a single month, you know, hitting an area or less over time and what that does to power plant cooling. So that's on my mind. And it's, it's the first ones in those lists. The extreme one off things versus like trends. Okay, we were in the middle of a five year drought. What's the six year going to be that I'm actually Thinking about those more extreme ones within that part of, part of why I was thinking about that was the Puerto Rico event. That just happens. This blackout that took out, I think according to Luma's announcements, it was like 90% of their customers at different points were without power New Year's Eve into New Year's Day. They did get some folks back up on New Year's Eve. But the other thing I was thinking about is just living in a region that has more swings in weather than perhaps I've been used to in a while and looking at just the infrastructure there around a really robust electric vehicle fleet. And I am thinking also about how all of these changes and all these different car manufacturers having access to that electric vehicle charging network, namely Tesla's and the Supercharger one. Amy, how is that going to play out this year? I just wonder. But the wild card is the first one. I mean, okay, what happens if XYZ happens in what region and how quickly will we respond in what ways? And I hope there are none. I hope it's super boring and my wild card does not get drawn from the deck. I really do. But I'm sorry, Ed, I didn't have like a super positive one on my deck today.
- [61:38]
A
Yeah. To think about the more positive side of it, we want to be solutions focused on. There are lots of things that can be done to improve resilience in the face of those risks. I'd just like. As a quick sidebar, I'd like to give a shout out to my Wood MacKenzie colleagues who give their time and money to an organization called let's Share the Sun, which one of the things they do, in fact is they work on a non profit basis providing distributed solar and storage in Puerto Rico, so. Exactly. Helping with the kind of blackouts and shocks that people have been suffering over the past week or so.
- [62:16]
C
And as we think about it and addressing them and creating these more resilient systems again, I hope that none of these. I hope my wild card stays in the deck. I hope it stays in the deck for a long time. But as things happen, I also am a bit, I am optimistic that some of the things we have done in the past, I'm thinking about like deployment of batteries to people's homes who have emergency medical devices. So in a blackout they are, you know, having what they need. Like I'm, I'm optimistic that if those things happen, when they happen, we will see some market improvements from some investments that have made in some parts of the world to actually make those communities more resilient to those things. And I'm hopeful that we will then take that additional information and use it as quickly as possible to make communities more resilient after that. But, yeah, it is the wild card, like stuff can happen.
- [63:04]
B
Well, let me just, just mention, Melissa, that the Pakistan floods really helped get cooperation on a loss and damage fund off the ground, but it's not financed well enough. So hopefully if we do see a catastrophe like you're describing, it will mobilize countries to think about how to help fund risk, recovery and resilience.
- [63:30]
A
Yeah, I think that's absolutely right. And certainly our awareness of these risks and our ability to address them is improving all the time. So I think that is a somewhat positive note to end on. Anyway, I say we do have to leave it there. Thanks very much indeed, Melissa. Great talking to you.
- [63:48]
C
Always great talking with you, Ed. And you, Amy. What a wonderful way to kick off the new year. Happy 2025, y'.
- [63:55]
B
All.
- [63:55]
A
Absolutely. Very much starting the year the right way. Many thanks to you, Amy. Great to see you.
- [64:00]
B
Thank you, Ed. Thanks, Melissa. Great to see you.
- [64:03]
A
Absolutely. I'm sure we'll see you both again very soon on the Energy Gang. Thanks to our producer, Toby Biggins Gilchrist. And above all, of course, many thanks to all of you for listening. We hope you'll keep listening through 2025 to see how all of our predictions play out or don't play out. We really value your feedback, so please do keep it coming. And we will be back in two weeks with all the latest news and views on the energy transition. Until then, goodbye.