A (3:10)

Yeah, they have definitely evolved. I think we have. The industry has become very mature and professional and sophisticated. In general, we speak of s generated agreements. This is the most simple form. You have an energy only contract where you sell whatever you produce at the fixed price over a given duration. Now that's the most simple and basic structure you can have. But this has become a bit more structured over time. What are structural elements which came up or changed? For example, in Europe we have the occurrence of negative prices when there is ample supply of renewables. You end up in situations where prices go below zero. So suddenly clauses popped up in those PPAs which want to exempt pricing when there are negative price hours. Then you can start to modulate the contract as you deem. You can add churn profiles. This can be beneficial. It can also expose the seller to new risk because if there is no production and there is some emergency in the system, you might face painful situations. And this has happened over the market. So overall these are all variables between sellers and buyers that they can negotiate. And there are trends when certain variables are more in or less out. Sometimes there's more demand for firm structures. Sometimes negative prices upend the risk allocation. So this is our job basically reporting on how risk allocation, how pricing is changing. But generally just to feel right now in most markets, in the biggest markets in the US and in Europe, is that those times of simple agreements, energy only as generated, are over. And we're talking more structured contracts which have elements of firm capacity or elements of interoperability to account for where the grid is now, where the risks are right now.

B (5:18)

Yeah, yeah. Tracking kind of the sophistication of the players and the complexity of the market. I want to talk a little bit about trading these contracts and actually what we can learn from them before we move on to kind of the bigger picture. But just help me understand the FPAs and just very simply, you know, I decided to build a utility scale battery, best battery energy storage systems. You know what kind of contract is? Very simple sort of contract. I would put around that you mentioned sort of flaws and all this good stuff.

A (5:48)

So I could come to you and say, hey, for the next seven years I'm going to lease essentially your installation and I pay you $8 per megawatt and you give me the entire capacity. I can do Whatever I want. And you have a fixed income and you can use this to finance your asset. So that's the most simple thing. Hand over basically the keys and I'm allowed to run the asset against the various markets.

B (6:18)

These contracts themselves are, I guess there's, they're taken on initially by increasing the ipps and utilities and so forth. But they, they also, whilst they're not traded on an exchange and they are very illiquid, they are, they are traded otc. Can you give us some sense of the vibrancy of that sort of traded market? And obviously that's where Pexapart comes in.

A (6:38)

Yeah, it is a slow motion trading. So just let's look at the size of the market. So we had in the, in the US markets we had 20, 20, 25, 16 gigawatts of PPs recorded. In Europe it was 13. On the best side it was 12 and 10 for the respective markets. So overall, let's say in Europe 25 gigawatts and this is over maybe 250, 300 transactions. So there is not really a trading of those contracts. But these are bilateral negotiations between sellers and buyers. So it is very liquid. It is most often non standardized contracts. We do have master agreements. The ecosystem is very professional, they know about the risk, they know how to do it. But it doesn't lend itself to daily weekly trading in this particular segment.

B (7:36)

And just out of interest, you know, are there still some contracts out there obviously presumably right at the end of their contractual life that are kind of just these amazing, you know, selling renewable power, really high prices on, you know, fixed amounts at fixed prices and all of that is sort of starting to tail off. And you know, I guess my question is, yeah, they've all held up. I've assumed some people have some very lucrative contracts today given how sort of power prices have shaped and changed. And what can we see in the big picture about the, the pricing of a contract today versus 10 years ago?

A (8:10)

Oh man, where to start? So there were so many faces. I mean there are different sub segments of the markets. So we had, for example in Europe before Russia attacked Ukraine, we had a gas crisis. Gas prices went up. The market is still price wise, driven by gas. So power prices went up and PPA prices exploded and we had a lot of industrials being short and they ended up in very high priced contracts and they actually spread those costs over longer dated contracts and they are now deeply out of the money causing stress again. Then there is another play where you have for example in ERCOT before the Winter storm Euro. You had a lot of firm contract which caused tremendous pain when prices went up to US$10,000 and you couldn't deliver, which caused really renegotiations, cost, big stress in the system. We had another play in the Nordics which was the original market in Europe where those PPAs came up, a real market access to them. Most of those contracts were signed on firm basis, firm hourly prices, firm hourly deliveries. And also those contracts came under severe stress in the last years actually leading also to bankruptcy. So there is no one answer. But it is a very active dynamic but also complex markets with a lot of stories and it is always changing depending on where the power market is. So all the contracts which are closed reflect the current environment which they're in. So you won't find as we just mentioned, those simple energy only contracts as they used to exist as there is more complexity in the market which you have to take account for.

B (9:58)

Yeah, and we'll probably loop back to that. Okay, right. This isn't the redefining Energy show so we can't go into all these detail because I don't understand it. But you know if you're that that's for our good friends over there. But I think what is fascinating to me and this audience is moving a little bit beyond the headlines and understanding how effectively these, this power purchase agreements with PPAs have worked alongside sort of associated government support and policy around the world. But you know, over the last 10 years you've just had this tremendous penetration of renewables in particular markets. Can you give us some sense of the scale of that a little bit as to, as to the why that's happened in your mind and then what the consequences have been for the power markets and the infrastructure in those markets.

A (10:45)

Yeah, I think we call this typically pricing. So indeed as you say more and more markets, renewables are starting to dominate. So you have this huge influx of renewable production and it causes structural changes to power markets. So in the markets where we have single price zones as in Germany or Spain, compared to the system, what you have here in ercot you see negative prices, you see escalating, balancing costs. Balancing costs. Are you nominate a firm amount to the grid and then you deviate with your forecast, what you actually deliver. And this delta needs to be, someone needs to provide it and the cost for that can went actually up. Then we have a concept called capture or cannibalization. My most beloved word in the renewal word that means what is the volume weighted average of price capture of your production and the more you have of the same production at the same area, this goes down and this accelerated. So lots of stress to the system, not to mention curtailment. So this is what has changed due to the success of renewables. And we can talk about why it was so successful, but this is the situation now. Lots of renewables causing a lot of stress. This is changing now how we have to operate in the market. But in the first place, why the word is successful? I mean, what is really nice about PPAs is this is a free market. Most PPAs closed in Europe are purely free market transactions. So it's a private seller, a private buyer, and they agree on free terms over 10 or 15 years on a fixed price. And if the price is high enough, the seller can realize this asset. So this is beautiful and it goes into cycles. We see this very clearly at some points. PPI prices are below thresholds for new investments and they don't get realized. And I think that's actually the beauty of the market and how it should be done. Those PPAs have to factor in the realities of the market. So if you close a PPA today, you have to deal with negative prices, you have to deal with balancing costs and the whole chain has to adapt. And this is for me the purpose also of having such a market because it shows the innovation, it shows what needs to be done, how it needs to be adapted, what structures work, what doesn't work. And I think that's why it's a good playbook actually for how energy markets change step by step, deal by deal.

B (13:24)

And where you've got that penetration, that dominance to varying degrees, it would seem to me more associated with where you've got deregulated power markets than it would be necessarily sort of policy support. Right. So you could use ERCOT and contrast that against caiso. They've got different policy regimes, but they both got a higher, it's more function. The ultimate driver of their renewables penetration is one of they've got free markets and you can do these PPAs.

A (13:54)

Correct.

B (13:55)

In turn, I'm bemoaning the fact that most of the US market is regulated.

A (13:58)

That's a very good point. I mean there's a huge PPA market in the US, but when you look under the surface, you have PPAs in single buyer markets, which is more a large utility is tendering for a capacity or there used to be this renewable power purchase quotas and you just went out by policy and then you, you contracted. But real PPA markets, they probably exist in ERCOT, but in not many other ISOs in the US. So in this way the European markets are ahead. There's more free market in that sense in Europe as you can trade and negotiate those type of contracts.

B (14:37)

The technology comes along, so does the market. The pricing structure, these PPAs that allows this domination of renewables, that has consequences in terms of cannibalism. You know, you've got lots of solar farms in one area and you know their sort of economic rent, if you like, goes down because the sun's shining on all of them. Negative prices. That's sort of a well known, I think most people are familiar with why that happens. You then got this, the balancing costs go up. Can you just I guess talk about what you mean by curtailment and the bouncing costs going way up and perhaps weave that into the price volatility. And that's a story of increased volatility in power markets in general, especially in the short term. And that is ultimately now a function of weather because your combined cycle plant doesn't go down if the sun shining or not kind of thing. It introduces a lot more volatility.

A (15:30)

Yeah. So let's start with the balancing cost. So this applies to markets where you have non nodal price zones. So in ercot you would have thousands of nodal points and basically every production unit has its own hourly or 50 minute settlement price. Whereas in a single price zone there's just one price for every production unit. And what happens is that you need to signal to the grid on a firm basis what you're going to deliver. And as you all know, forecasts can differ on solar, especially on wind. And if you then have a delta between what you nominated and what actually was realized, these delta someone has to procure on the intraday, someone has to actually produce it or curtail that comes a cost. Now as you mentioned, more and more of renewables going in in an otherwise rather inflexible market, it means alter stations have to curtail the price for this balancing actually shot up. It used to be $0.10, $0.15 and now we have markets where you pay, well, 7, 8, €10 per megawatt hours to balance. And this on a total price of maybe 40, 50. So significant. Now if you go even more extreme at a certain point, there's so much volume in the market that the grid just cannot handle it. So it's not even about we're going to balance it, but hey, we just need to curtail and you can't produce and well, you can't produce, that means you will not get any revenue at all and the markets are so saturated in certain price zones in Europe but also emerging in the US in the first case is that well there is just no production anymore. So it's not about really a price risk anymore but it is a real volume risk. And yes, having so much renewables adds to price volatility because in the end it is a completely weather driven system. If something happens, unexpected weather with the forecast of weather, demand can shoot up, demand can collapse. The same on the I'm referring to production. And this what you then observe is you observe on structurally higher daily average spreads between the low priced hour and the high priced hour and that's the effect but I like to say that's the temporary effect of this phase of the energy transition where we're in and

B (18:05)

looking at our shared notes, you bolded, underlined and all the rest of it, so I'll bring it out is I guess you're arguing that some of these are the side effects of this sort of energy. The transition, bit of the energy transition as we're journey towards a much lower cost renewable energy world. Right. Where actually sort of I guess the capex is high but the OPEX is low. And you know, we're probably still going to have the challenges around balancing.

A (18:32)

Well these are all you tell me. Yes, yes. So these are stresses but equalities are opportunities. So what you see is real saturation of markets for those type of PPAs. So volumes have been going down but on the flip side you have a huge boom in batteries. So when the spreads are going up between low and high priced hours, man, this calls for flexible capacity. So batteries are not the only winners. A few years ago people were very worried about their gas assets in their portfolio, not in the renewable space and they're very happy. Now if you have gas peakers in certain price areas, the same is for storage. And on the corporate buyer side is, well, there's not much value in buying a solar ppa. The hedge value actually goes down. If in most hours where there is lots of sun, I won't even get any volume. If there's no sun, prices are higher, then I'm not protected. So hey, I want the firm profile, can you give me a firmer profile? I'm willing to pay what is the premium I need to pay for that. And that's the beauty about it. If you allow it in private market setting, people will adjust. And this is what we're seeing deal by deal. I'm doing this with Pexopark. We're providing those price assessments with this price intelligence, it never stops. It's adjusting deal by deal reflecting those new risks. And that's why it's such a good indicator of how the energy industry or the power markets are changing. And it is driven by private capital, private markets. So typically those solutions that come out of this are very strong.

B (20:21)

The energy and resources sector is experiencing unprecedented change. To help navigate this change and capture its opportunities, HC Group launched Enco Insights, a global advisory network dedicated to the sector providing senior advisors and subject matter experts to investment and infrastructure funds, law firms and corporates. Enco Insights leverages HC Group's 20 years of connections in energy and commodities to give clients the expertise they need when the stakes are high. And insight matters. Learn more@encoinsights.com Europe leading the way on free market enterprise in Europe. That's actually shocking to our American listeners. But it is what it is guys. Okay, so you see this demand to actually have some produce the power, deliver the power, you know in a, in a, you know, avoiding that sort of duck curve and negative prices and so forth. And so does that mean. I'm just trying to understand that is creating that boom in Bess because you're co locate your and I'm talking very simplistically here. I've built a big solar farm. I also want to make sure I've got on site best so I can dispatch the power correct. In a much more shaped curve. Is that correct?

A (21:38)

Every stress which we mentioned, the increase in balancing cost, the higher price utility, the technical curtailment going up, the cannibalization, all of those stresses are value drivers for flexible capacity but and also actually interruptible demand. So the value has been shifting into this area and this is why we're seeing the boom is storage but also on the flexible generation side why we're

B (22:08)

seeing this goal and our sister search firm Hyperion Search are very and have been incredibly active in all of those technical and commercial and financial skill sets around Bess that HC Group doesn't know. And they do some great work on some of these trends but just out of interest so and I imagine this is exactly how it happened. So the first sort of introduction of Bess was probably on site and next door and owned by the same person who owned the wind farm to now I imagine there's virtual best and there's you know all this how has that market who owns the energy storage and just how sophisticated are we getting? Are we at the virtual battery stage and all the rest of it?

A (22:48)

Yeah, we are. It went extremely fast on The PPA space, it was like seven, eight years and I think on the storage space it's in half the time. I think the leading market, the pioneer market in Europe was Great Britain. It started out with basically grid markets or ancillaries, where you have a single buyer which organizes a market because the grid has to procure certain services. And these markets are relatively small, but they provided a fertile ground for batteries to compete against the other market providers. Gas, power station, hydro, whoever is eligible to provide into those grid service markets. So they were able to mature over a few years in those markets, but they're relatively small and now they're entering into the much bigger market, which is daily swaps. It's basically trading the energy arbitrage game. And thankfully to increasing volumes. And to our Chinese friends, costs have come continuously down the same as in solar. These machines are getting cheaper and cheaper. So those two factors, being able to grow in established markets, the ancillaries, coupled with lower costs on the technology side, ample capital which was willing to invest in this, these were the combinations of the recent battery boom on both sides of the Atlanta.

B (24:16)

Yeah, we had Casey Keller on last year talking about Bess in ERCOT and you know, some of the complexities there. And then years ago we had Aaron Lally on talking about virtual battery options back in like 2021. Right. So I mean it definitely has moved quickly. Two questions before we sort of move on to what other trends you're divining in the future here. But with regards to Bess, you know, has this commensurately built, Is it driving too much capacity? Kind of. Where is the focus of best installation happening and are there any key trends you can point to there?

A (24:53)

I think what really speaks for the maturity of the market, for example, when you look at ercot, Bess, I think there was such a massive build out because the opportunity was so huge from a revenue side and the arbitrage side is that it's become exact exactly common. So it as you see, for example, or we used to the markets in gas turbines, you, you have these long cycles where you are over investing and underinvesting. So what we clearly see now in ERCOT is that the boom times are maybe a bit over. Revenue dramatically have come down over the last two years, but now basically there will be less investment. Demand further is growing and maybe then we're under investing again for one, two years and then it takes one or two weather events, some real spiky prices, some new situations and investment ramps up again. So this will be Very classical, long lived capital cycles where we will see investments in those assets.

B (25:59)

And then the second question would be increasingly, certainly in Europe you've got these large battery energy storage systems driving around on our roads and getting plugged into our homes at night. Has anyone started to integrate those into that? The balancing act, so to speak?

A (26:16)

Oh yeah. I mean just speaking of ercot, we have basepower, that's the son of Michael Dell, he has the same entrepreneurial genes. So what he's doing just started in ERCOT going very fast. They're installing oversized home batteries very quickly, very standardized. So typically if you have a home batteries maybe 10 kilowatt hours and what they're doing is they're putting in 20 or 40 kilowatt hours and they're aggregating them as virtual power plants so they can deliver utility size batteries they claim, and I believe them at the same size, faster, at the same cost. So on all sides things are moving very quickly. Also on the demand side. So again here an example of private market beauty where you allow those price signals, where you allow private actors to move and build. You will see those solutions.

B (27:15)

Yeah, fascinating. I mean that was always kind of the, you know, if you go back seven years or something. I know. Or five years. And you could hear me say this on the podcast as well.

A (27:25)

Right.

B (27:25)

It was part of the Tesla Premium was this idea that they were going to capture the domestic power space at the same time.

A (27:32)

Right.

B (27:32)

And the cars were just the trojan horse to get inside your, your home.

A (27:36)

We're getting there Paul. This is what is actually happening. The heal to grid will come. It is happening. So we see power installations like what are just the business case on the retail side from, from base power, but also adding the vehicles. This will all happen and the same thing on the demand side. Just again ERCOT the best example, we have more and more interruptible load. So yes, right now data centers, they, they're so expensive, so capex intensive that they want to run it 24, 7 if possible but they can ramp, they, there is flexibility there. And you have also all the bitcoin miners, this is interruptible load and they will react to price signals. And you saw this very well in the recent winter. Well it was a winter storm just beginning of the year in, in Texas actually where there was lots of stress anticipation. But in the end what happened is there was a huge shadow load which didn't show up because prices went up in the day ahead, week ahead and demand reacted. And this is, this will be more a bigger structural feature. So we will finally see also demand side and actually when you look at the entire data center space, I mean what is actually a dream com or dream combination, what is really happening is that you have all those bring your own gas station in a non firm setting with the grid, they adding gigawatts of batteries as well. So the system is getting much more flexible. We're adding much more flexible demand, we're adding much more flexible generation, mainly storage from all sides, retail utility size. So the system will not be recognizable within five to 10 years. And yeah, we're moving away from an energy only system and it will be much more. What is the daily spreads, flexibilities, what is the capacity? Absolutely fascinating. And it's happening in real time and I think ERCOT is a wonderful example for this.

B (29:45)

Just out of interest what has happened, you know, if we were also to go back five years, firms were doing these PPAs because they wanted the green electricity, right? To put it very simply, whether that was backed by sort of subsidies or whatever, it might have been incentives or just social incentives. What's happened to that green premium today? Do we look at the renewable sector and say it's done for green purposes or is it done actually because this is a really, there's, you know, fundamental economic drivers and it makes a lot more sense.

A (30:18)

Yeah, I mean the corporate demands, the voluntary green corporate demand has been a big driver on the PPA side. So you had all those tech companies, they constitute roughly 30 to 40% of the PPA demand and it was really a voluntary commitment to do. But it was easy because it was economically sound for the last years. And also from a hedge perspective it did make sense. So they are using gigantom amounts of power and those PPAs also help to hedge this price risk away. So they have been driving this transformation, they have provided this demand. What is really changing is, let's call it the hourly debate. Most of renewable contracts, the way they were done, all those PPAs are annual commitments and annual certificates. So basically you have your load, your profile and you say I consume 100 gigawatt hours a year. And the solar plant says well I roughly produce hundred gigawatt hours a year. And then you do a PPA as generated these simple contracts which you said and you could claim I'm green, my power procurement has been green. And there's now a debate to actually create more transparency in this that you actually say hey, actually on an hourly basis only 60% or 60 whatever percent of my hourly demand is actually green. And why is this important? I think first it makes sense just purely from a transparency point of view, but it would also help to add quicker add value, the right green value to firm capacity. So if someone wants to say hey I'm, I want a firmer profile, I want to have the evening hours fixed or whatever it is, and you say, look, I can build this battery but I need this type of premium and then you can track it. So this is a very big debate right now in, in the global industrial procurement scene. Shall we move to mandatory hourly green standards or do we leave everything as it is? And there's right now a decision pending on those standards and debates are very heated, but that's a bit the stage. But clearly the green premium is gone. So you will not find an industrial paying voluntarily a significant premium above gray market power prices. And I think it's actually a sign of the maturity of the market.

B (33:07)

I don't know if you wanted to answer this, but where do you stand on that heated debate?

A (33:11)

Where do I stand? I think it just makes, I think we need a modern infrastructure so we need to assign hourly values. So right now you see it's happening with the batteries, but I think it would be very beneficial if we simply have standards just like of your hour consumption. What has been green, if you can say where the sources are from, you don't even need to pursue a sustainability agenda. It just actually makes sense for a system operator for everyone in the market for retail owners, for transparency purposes. It just makes sense to know let's

B (33:52)

change tax slightly and just go to the US where I know you've expanded and invested. It's a well trodden path in some sense. But obviously there has been a Volt fast on, on policy as it comes to renewables and green power and so forth. You know, can you just give us a, your quick take on kind of the impact of that? It seems to have been largely, really definitely come down hard on wind. That's had a big impact on those large European energy companies that have invested significantly. Where is the US at and our data centers. The saving grace?

A (34:31)

Yeah, I mean on the classical PPM market it has been nerve wracking. It was a roller coaster. It was all about policy, policy, policy. This year I think in the end it reduced the amount of bankable projects and it created a lot of stress to get the deals done for those eligible projects that still have tax credits. So we had a very intensive year or the industry had a very intensive year just to get those deals done. They have been down. And the second Effect is it has reduced visibility so it is not fully clear how the market will look like in two years. And it has also increased. I would say I don't have evidence yet, but I would expect that actually the, the risk premium has gone up on certain types of projects. We had those offshore wind projects which were already running billions of investments. I mean this is a political risk and the same thing generally on wind, but it is also on the simple rules like how will I be connected, will there be new requirements on firming up? So I think overall the sense is that policy risk, political risk has increased and this typically means that capital will be more expensive. I think it is overshadowed by a demand center which create more demand. So we see this, but this is really concentrated in single spots and it is not really. It's only partly a renewable story. So most of the build out on the data centers will be with gas. They will add storage, but it is not actually a renewable plan. Hello, I'm David Hunt, founder and managing director at Hyperion Search. Founded over a decade ago, Hyperion Search has helped organizations from major utilities to startups recruit their leadership teams and key individual contributors to accelerate both their growth and the energy transition. Our three main verticals are renewable power, energy storage and the mobility. The energy transition and the talent that delivers. It has been our passion since day one. To find out more, visit hyperionsurge.com or listen to my Leaders in Clean Tech podcast available on all platforms.

B (36:58)

Yeah, it's much more sort of. Instead of it being, well of the trifector of security of supply, you know, sustainability and cost, the dials have shifted towards that security and cost and a gas story rather than incentives at the moment. On the green side. And as you say, okay, fine, yeah, we've had this period of closing out those projects that needed to be closed by the end of this year, I think it was, or whatever, whatever the details were and we had lawyers on last year talking about this. But it certainly, and all this has is just increased the risk premium, as you say.

A (37:33)

I would say there's one bipartisan agreement is that storage makes sense and storage is actually not a renewable asset class. It is a infrastructure class for itself and people are building it everywhere. It works very well together with gas, it works very well together with data

B (37:56)

centers and should provide a fertile platform for resurgence or renaissance in renewables when market conditions return.

A (38:07)

Yeah, and you have new technologies coming up, but that's all beyond 2030 I think on the new generation of the nuclear, which hopefully will happen. You see it on the geothermal, so this is all a lot of excitement. But also never underestimate solar. So solar, the sun machines as the economists culted, this is just continuing. It is cheap, it pairs very well with storage. So actually colocation will be more about adding solar to storage. But this is if you want it or not. I think in the end it's economics that place. I think the hardest part is probably for new wind as it takes a lot of maintenance to maintain it is capex intensive. It does have good qualities in terms of where the wind comes, but just by nature it is very, very unreliable energy also from a forecasting point just even day ahead compared to solar. So I think this is where I'm actually bullish on wind profiles just in terms of value if you trade around it. But on new build I think that's probably the hardest, hardest technology in, in the overall stack.

B (39:27)

Yeah, I mean from a cost standpoint it looks more like, you know, deep ocean offshore drilling than it does, you know, most of the other renewables. Right. I mean it's very, very expensive and takes a lot of talent. Okay, so thanks for that. Let's I guess take that and talk about further Trends from, for 2026 and beyond. You know, what are you, I guess staying, let's, let's return to Europe. You know, you, you sit at the heart of all of this data and intelligence and you know a lot of that obviously is incredibly valuable. That's why Pexon park exists, but also helps you divine and you know what, what the future and trends might be kind of. What are you, what are you seeing? What are you seeing going on?

A (40:15)

Yeah, so we see consolidation on the player side. So who are the main actors? We have developers, we have the corporates that do the offtakes and we have the so called independent power producers. Now we use the independent power producers or IPP as a category in itself in the renewable space. IPPs were also the guys 20 years ago doing merchant gas in a similar way. These were the players during renewables. So what is happening there is that, well, renewables have become mature, it has become more complex and you need size. So value is moving downstream. You need to optimize your portfolio, you need to have multi country, multi tech portfolio. You need to have desks that trade and optimize it on a daily basis. And I think what we're seeing there is probably a large consolidation. Now it's all owned by private equity. It used to be independent portfolio managers. Now it's basically all owned by private equity and big Consolidation there, big trend. What else do we see? Data centers we already talked about that's. Well, you wanted to focus on Europe. So this is more a US thing like this bring your own capacity. The storage boom also allocated with data centers, this new load, these new centers of demand, flexibilities. So that's what it. That's a very, very big trend. And maybe also another one in the us it's just on the IPP side will also be very interesting. Valuations are sky high and we're actually not seeing on the fundamental side, just when you look at PPA prices, they went up 16% which is a lot, but over 2025, but not huge. Also when you look at forward prices, they also went up. So it could be that there is some mismatch there and that would be interesting to see if something has to give either power prices go up or valuations go down. So these are some of the things which we are trying to track and observe over 2026. And for sure what we see is a continued boom on storage. It just went on and you see one deal after the other. So the fundamentals are very strong right

B (42:49)

now it's kind of the no regret deal. Right. And then actually sort of increasing sophistication in the financing and the commercials of them. You know, we're also seeing. Let's zoom out a little bit further and final sort of question would be this. This has always been described as an energy transition and there's this discussion about Europe's obviously done significant investment over the last 20 years into going to renewable power. And again the thesis ultimately being when you couple renewables with storage, you get this sort of very low electron price for the capex you put in. And at some point Europe should see a much reset at a lower power price for its citizens and they should start benefiting economically competitively from having done this major switch from essentially being hydrocarbon buyers to now domestic electron producers. And all that investment has paid off and they've got lower power prices. Is that still a future available to Europe and in, you know, and commensurately is the US going to regret having not made the, the transition quicker? Like what was. What's that state of play? And perhaps, you know, what are the kind of the arguments, you know, you've got a populist rise in populism in European politics and so forth. Is that an argument that's out there? Has it still got supporters kind of. What's that, that meta state like?

A (44:20)

Yeah, a very good question. Not sure if I Have a direct answer. I mean, it's the question on system cost. For example, we have renewable dominated markets, but the marginal price is still set by gas. Will this always be or can we change that? But in the end we. I just see that we can go about it incrementally so we can look at what can we economically built over the next two, three years. What is the willingness of the system to pay for certain qualities like the firmness, the availability. So it's a constant battle. But I think we're too much pitting technologies against each other. So what I'm more advocating for is rationality of markets. So do we allow private actors to make their decisions themselves? How they invest, Are they allowed to connect? Are they allowed to aggregate their retail portfolio, their batteries and participate in a regulated market? All those questions that actually trying to depolitize this and just allow actors to take decisions that. That would be actually my take on the entire question and not pitting technologies against each other.

B (45:46)

And that would be very much the belief of this podcast as well in free market economics. And I guess that extends as well to having responsive demand as well, right? Going all the way down to the household level to be able to make rational economic decisions about when or when not to use power. This is your old sort of running the dishwasher overnight.

A (46:05)

Yeah, absolutely. In the end, it's always like, will you do that? Does this make sense? But do you allow players to aggregate and play around and to actually make this visible and motivate this? But as I say, I just got back from Texas, I moved back to Zurich just recently and I'm back in my house and I just got a card from my utility, so I still have to fill out manually how much I actually consume. So they can check. So.

B (46:37)

Oh, wow.

A (46:38)

Exactly. So this can still take. You need to have the infrastructure in place that those markets can play.

B (46:47)

Yeah, yeah. I think a guy still goes around the back of my house and sort of checks every. Every quarter or something. It might be for the gas or water, I don't know. But usually they just leave the bins out. So I have to. I can't drive into my garage. But first world problems. When should people call you? When should people call Pexapart?

A (47:07)

Well, if you have exposure into renewables and these days this is everyone. Because if you have exposure into the power market and you want to know how, let's say illiquid products are priced. So if I want to know if I have to sell or buy today a solar profile, a wind profile. What is the value of flexibility and what our market. What is the market consensus on pricing for those? We are probably the guys you should call.

B (47:43)

Fantastic. And that's both now in Europe as well as the us.

A (47:46)

Yes, in the us, we just started a year ago. We bought a small company. We started in ercot, which is a very cool market. We just expanded to pgm and that's so far for the us, but it's going really well. I think we have the same price assessment needs here as everywhere else.

B (48:05)

Fantastic. Well, I'll put links to Paxton park in the show notes and I've. I've really enjoyed it, actually. It's been great to sort of get a. Get an update and catch up with a. With a market lens. And I'm sure there's some MBA case studies going to be written about solar penetration and the.

A (48:21)

Oh, they can bribe me. I like that.

B (48:26)

Awesome. Well, Luca, we'll look forward to having you on again in the future and see what's developed.

A (48:32)

Thank you, Paul.

B (48:38)

Thank you for listening. To find out more about HC Group, our global offices and our expertise in search within the commodities sector, please visit www.hcgroup.