Advanced Energy Solutions: scaling up the tech that can help us get to net zero

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Ann Mettler, Vice President, Europe, Breakthrough Energy: Unless the clean products become competitive, price competitive, it's very difficult to create markets. In wind and solar, it took almost four decades for that to happen. We know that we don't have this time

Robin Pomeroy, host, Radio Davos: Welcome to Radio Davos, the podcast from the World Economic Forum that looks at the biggest challenges and how we might solve them. This week: energy - many of the innovations we need to get us to net zero are out there - how can we get them scaled up fast enough?

Ann Mettler: There's a whole slew of promising clean technologies out there that we now need to de-risk and help stand up. Only a clean technology that is actually used can help us decarbonise.

Robin Pomeroy: We hear from members of the World Economic Forum’s Advanced Energy Solutions community - which brings together innovators, investors and regulators to try to chart a way forward all around the world.

VK Samudrala, CEO, Amara Raja Energy & Mobility: If you ask the question, will India lead the energy transition momentum around the world? Yes it will. But the solutions that we are going to develop would be more applicable for economies like India. We need to look at these global technologies, but bring them to the country in a manner that addresses the specific needs of the Indian society.

Robin Pomeroy: From a big producer of batteries in India, to a Belgian startup putting solar panels on people’s homes for free.

Maarten Michielssens, CEO, EnergyVision: What we build is a virtual, or decentralised, or digital grid, so to speak, and we match production and consumption.

Robin Pomeroy: Subscribe to Radio Davos wherever you get your podcasts, or visit wef.ch/podcasts where you will also find our sister programmes, Meet the Leader and Agenda Dialogues.

I’m Robin Pomeroy at the World Economic Forum, and with a look at advanced energy solutions...

Maarten Michielssens, CEO, EnergyVision: Tangible actions, that are today and tomorrow. A lot to be done. But we need tangible, tangible action.

Robin Pomeroy: This is Radio Davos

Welcome to Radio Davos where this week we're talking about advanced energy solutions. And I'm joined in the studio by Jeremy Jurgens who's a managing director of the World Economic Forum. Jeremy how are you?

Jeremy Jurgens: Good. Great to be here with you today, Robin.

Robin Pomeroy: Lovely to speak to you, Jeremy.

Now, energy and new technology are two very important areas for the World Economic Forum. And they come together in this thing called the Advanced Energy Solutions community. Can you tell us what that is?

Jeremy Jurgens: Yes. That's right. If you step back, you can see that actually, energy has under-powered industry since the second industrial revolution, if not earlier, and continues to be absolutely critical to every industry today. And now, today, we also have everything around AI and technology more broadly, which is also going to be central to every industry, in every sector. The Advanced Energy community actually brings these two domains together and say, what are the new energy solutions that will actually help us drive a sustainable, affordable and secure energy future?

Robin Pomeroy: And you bring this community together actually in person.

Jeremy Jurgens: That's right.

Robin Pomeroy: Because I conducted three interviews, which you're going to hear in this episode, very different. What's quite impressive about this group is it's every imaginable kind of angle on energy. I mean, could you give us some idea of the diversity of the people who would attend a meeting like that?

Jeremy Jurgens: Yes. So, you know, we have a range of individuals here because, you know, you may have startups that are driving new energy solutions in a specific domain, could be in solar, in fusion, in connecting grids. Then you have, policymakers who are actually important to actually understand how these new technologies are evolving. And what do we need to do to make sure that the regulatory environment adapts as well? You have financiers that are actually helping fund the rollout, where we're clearly underfunded, where we are today and will need to put in much, much more capital to help try these solutions forward.

Of course, there's the expertise and knowledge that comes from the large, established energy companies. And then as well, you have a broad set of consumers, that are actually using these energy and these new solutions. And they're really important to bring together the right demand signals.

So we try to bring all of these groups together where they might not necessarily normally meet around this specific topic, and actually understand how we can actually accelerate, investment in advanced energy solutions.

Robin Pomeroy: We're going to hear a couple of interviews from people in one or two of those niches. But the first interview we're going to listen to is Ann Mettler of Breakthrough Energy. Could you tell me something about Ann Mettler?

Jeremy Jurgens: Yes, I mean Ann's great. She's at Breakthrough Energy Ventures, where they're actually helping catalyse new technological solutions with capital and by looking at public private-partnerships there. And so a lot of the times we actually need to seed these new solutions, and they're looking at a broad based sector of new technologies to help drive that.

Robin Pomeroy: Let's hear Ann Mettler.

Ann Mettler: Breakthrough Energy was founded in 2015 by Bill Gates in an effort to help stand up a new generation of clean technologies. And we're very much guided by science and innovation. And we work across the innovation cycle. So from discovery to development to deployment.

Robin Pomeroy: So you're going out looking for new innovations.

Ann Mettler: Absolutely. We believe that there is the current set of mature clean technologies and we absolutely need these. But we also believe that we need new clean technologies that now need to be scaled. And we need to lower the cost. This is what Bill Gates likes to call the green premium.

Robin Pomeroy: What does he mean by the green premium?

Ann Mettler: The green premium is essentially the difference in price between a clean product and one that has to compete with a product that is probably cheaper because it is CO2 intensive, a polluting product.

And we are working to bring down the cost differential because unless the clean products become competitive, price competitive, it's very difficult to create markets.

So if you look for instance in wind and solar, where we have, broadly speaking, reached price competitiveness, it took almost four decades for that to happen. We know that we don't have this time. So this is why this is so urgent, the reduction of the green premium.

Robin Pomeroy: And how do you achieve that? Is it a matter of scaling up? Because I think for wind and solar, people were surprised when what seemed like suddenly this was cheaper in many cases than fossil fuel energy. What needs to happen to allow things to scale up and to become cheaper?

Ann Mettler: Completely. I mean, it's a process. It starts at the early stages with R&D, and then we essentially need to figure out how to quickly scale, as I said before, and bring down the cost.

But it's a little bit of a chicken and egg problem because unless it scales, the cost doesn't come down. And so generating demand for a product that is not price competitive is challenging, but it can be done and it has been done.

So if you look, for instance, in solar, in the early days of solar, Germany had a feed-in tariff which guaranteed a certain price and that actually helped stand up this technology. So this can be done across a whole slew of new clean technologies. And these are the kinds of models that need to be studied.

Robin Pomeroy: German example that you give shows the importance, I suppose, of public sector and private sector. What was happening there was those government policies were encouraging private sector companies to produce solar energy and consumers to use solar energy. Where do you see that kind of public private partnership when it comes to the energy transition?

Ann Mettler: Well, it's critical because neither the public sector nor the private sector can achieve this on their own. So they need to work in tandem in a way that I think they haven't done today.

So and the onus is really very much on the public sector, if I can say so, because we work with the private sector and startups in particular, so we know that there's a whole slew of promising clean technologies out there that we now need to de-risk and help stand up. And what I can tell you is in energy, you don't move an inch without public policy. Everything is regulated. So the onus, as I said, is on the public sector to try to figure out how can we enable the private sector, how can we unleash these innovations and these technologies.

And I know a lot of thinking is going on in that respect, and I welcome that. But I do urge a clear focus on speed. A lot of this takes too long and really understanding that unless the technology scales, you're not going to bring down that cost. That means you're not going to achieve your goals, because only a clean technology that is actually used can help us decarbonise.

Robin Pomeroy: So that's interesting what you're saying. You can have the best idea in the world. You could be an entrepreneur with a fantastic product, but no one's going to invest in that if the policy landscape isn't right for it.

Ann Mettler: Exactly. And this is the perennial chicken and egg problem, right? Because for the most part, our economy still operates sort of in a regulatory and policy environment that was built for the industrial age. But we're trying to have a new industrial revolution built on clean technologies. So a lot of changes need to be brought under way. And very quickly.

Robin Pomeroy: You're vice president Europe, correct? For Breakthrough Energy. So maybe you can talk to the policy situation here because we've seen in America massive policy changes with the weirdly named Inflation Reduction Act, which is actually not about inflation but seems to be all about the energy transition. How do you compare America to Europe, and do you think things need to go faster in Europe there?

Ann Mettler: First of all, to say, I mean, the original leadership for climate came out of Europe, right? And also with the European Green Deal, we have a legally binding framework now that essentially is supposed to bring us to net zero.

However, what I will say is, and this is becoming clear in the European context, we cannot regulate ourselves to net zero. And I think this is why the Inflation Reduction Act was actually a welcome wakeup call in Europe, because we understood that both mature and emerging clean technologies are at the heart of the energy transition.

So in that sense, I actually believe that the Inflation Reduction Act is cleverly worded because, a, it drives public acceptance because no one wants inflation. But secondly, I would also argue it's correctly worded because if you look at the inflation that we suffered in 2022, a lot of that was driven by the high price of energy, fossil energy. And we need to be very clear that if we want to get a grip on this, yes, we need to invest now in these emerging clean technologies. But the payoff over time will be lower inflation, because a lot of these technologies actually can help bring down the cost. Because for wind and solar, as I said, they are price competitive already.

Robin Pomeroy: Yeah, we saw that really in Europe didn't we? With the invasion of Ukraine, very much coincide, it wasn't the only reason for that massive jump in inflation, but it was a big one, wasn't it?

Ann Mettler: Huge. I mean, there was a study out this morning that says that in Germany, at least 50% of the inflation in 2022 was driven by the price of energy. And this poses a significant policy challenge, because that means that central banks, which have a mandate to keep inflation low, have limited means because they're not in charge of the price of energy. So it really poses a conundrum that I think we haven't seen today.

Robin Pomeroy: So can you tell us anything about the trends that you are seeing, or that we should be looking out for? Wind, solar energy, we've seen that come up over the past decades. Are there particular technologies or just trends in the energy transition that people should be looking at?

Ann Mettler: Of course, and in general, I would always encourage a portfolio approach. So there isn't one clean technology that is sort of the silver bullet. However, we know that especially in Europe, since we're really doubling down on solar and wind, we will need that to go hand in hand with storage because wind and solar are intermittent energy sources. So what do we do if there's no sun and there's no wind? So by definition, we need long duration energy storage. So that would be one area that I would favour.

Europe has also made a really big bet on hydrogen, in particular on green hydrogen. A lot of reputation I would say, is at stake here for Europe to really show and demonstrate it can be the leader that it has said it wants to be.

I think there's a huge scope also around sustainable fuels. In aviation and shipping we know we need new types of fuels.

Also a big one for Europe is how to decarbonise the industry sector, where we know it's particularly difficult. If you look at steel, you look at cement, you look at chemicals. Those are sectors that are extremely difficult to decarbonise but where, for instance, industrial heat, clean industrial heat, can be a real solution.

So we really need to zero in on the technology solutions and then need to invest in these and help scale them. But it's absolutely doable. The technologies we need are out there. It's now really a matter of bringing about the catalytic, systemic change that is needed.

Robin Pomeroy: I've just got back from an AI summit, a World Economic Forum event about artificial intelligence, and it's really is obviously flavour of the month. Must be something obviously that Bill Gates is very interested in. But are you seeing that already in the energy sector? Because I the proponents of it, say it could solve some of the big issues like climate change, but it's not yet clear to me how it might do that. Is AI and that kind of technology...?

Ann Mettler: I'm a firm believer in that there is a strong intersection between digital technologies and clean technologies.

And I'll tell you why. If we are looking to reduce the carbon footprint, how do you do that unless you actually have metrics? So if we were to digitise the power grid, we would have much better metrics over when is the power used, who is using it. And if everyone had access to this data, including at household level, and you could aggregate that data right in a big data pool. You could gain very important insights.

So I absolutely see the application of AI in the fight against climate change. And I actually ought to think that we double down on this because where does the intelligence, artificial intelligence, where does the intelligence come from? It comes from data. Are we collecting that data? Are we synthesising that data? Are we trying to understand the data? I would argue no.

And what I can tell you, having worked in public policy for a long time, unless you can measure it, you can't manage it. So oftentimes we are actually operating in the dark. And here we really need to bring those two communities, the AI community and the clean tech community, much closer together.

Robin Pomeroy: You're here in the World Economic Forum in Geneva attending this Advanced Energy Solutions meeting, which is lots of companies who are innovating in energy. What's been your impression of the event?

Ann Mettler: Firstly, it's like a dream come true because, if you look at people who operate at the clean technology frontier, we don't always have a chance to meet one another, especially when it's across geographies.

Because we had fabulous colleagues from India, from Saudi Arabia, from Turkey. So extremely interesting and very necessary because these are the people that in many ways chart the future.

And I think what we collectively learned is that even though we sort of have a broad understanding of these clean technologies, emerging clean technologies, it would be a fallacy to assume that everyone else does, and the policymaker in particular.

One of the points I made based on my experience in public policy is unless the policymaker knows where the technology frontier lies, he or she cannot regulate for the clean technology frontier, or set the standards or invest in that because they don't even know it exists.

So there is a big onus on that group, I think, to almost have a pedagogical approach to what they are doing because they're charting new ground, and it's really of critical importance that we bring others along.

So I applaud the World Economic Forum for, a, bringing us together and, b, a little bit of a challenge for all of us. How do we mainstream that and really bring it into society, where we can bring about the systemic change and the speed and scale that we know is needed?

Robin Pomeroy: Ann Mettler of Breakthrough Energy. Jeremy, I think important to her is public private partnerships, which is very much what the World Economic Forum is all about. How do you see that relationship? Between the private sector, the public sector coming together on energy innovation.

Jeremy Jurgens: Yes. It's really critical that we bring these two sectors together. Neither party can do it on their own. The public sector doesn't have necessarily the expertise, the knowledge, the capabilities. And on the private sector side, they actually need clear signals and a, you know, clear roadmap of where we're going in these domains.

Robin Pomeroy: Let's hear then the second of our three interviews then. This is VK Samudrala of Amara Raja Energy Mobility. Tell me something about him.

Jeremy Jurgens: Yeah. He's leading India's largest automotive battery and supporting capabilities in India. And we've seen everywhere the electrification of the transportation sector will be critical in achieving, both 2030 and 2050 or 2060 objectives around carbon neutrality.

Robin Pomeroy: Let's hear from VK Samudra.

VK Samudrala: We are about 30 plus years company in India and we started our business in India, just about the time when economic liberalisation happened in 1991.

Our idea was to bring the latest battery technology to the Indian market and bridge the gap between what was available at that time in India versus what's the latest technology elsewhere in the world.

The timing seemed to have been perfect because the liberalisation policies opened up the market. We could see the wireless telephony business growing up rapidly, and our battery product was a perfect fit for that, because the telecom needed a battery solution that doesn't need manual attendance and maintenance on a frequent basis.

For the last 35 years, we've actually grown our business in the battery area, offered a lot of solutions both for industrial customers as well as for automotive customers.

What we did was probably the first time in India in terms of offering the latest technology.

But in the last five years we've seen that there's a lot of competing advanced chemistries that are coming into the energy storage applications. So we said, let's diversify our product portfolio and also relook at our business models and relook at the next ten years in terms of not as a product company, but more as a solutions company.

We are a listed company in the stock exchange in India, valued with about $1.3 billion in market cap, with more than $1 billion of revenue. So we're the number two largest battery manufactured in India at this stage.

Robin Pomeroy: Batteries seem to be increasingly important part of people's lives. You mentioned mobile phones. People didn't have that a generation ago. Laptop computers, all these gadgets need power. And then also the industrial level, electrification is all part of the energy transition. What do you see as the new products or the new uses for batteries? Where do you think things are going in the next 3 to 5 years?

VK Samudrala: I would traditionally describe the battery applications on three fronts. One, like you said, you have mobile devices, if not mobile phone, that needed power. For example power tools have been there, garden equipment has been there. They needed batteries. You also needed batteries for DC power, for certain communication related equipment, because that equipment works with the DC power. So batteries were required there. And then battery as emergency power backup. These are the three classical applications that batteries have always been used.

And lead acid battery is about 55 year old technology has been the backbone of the world calls for this battery in those applications.

But in the last ten years, we have seen that there are strong new application segments that are evolving. Mobility, e-mobility has been one of it. And then the renewable energy space where we are getting into clean energy generation, we needed batteries to take care of intermittency of the power generation, either in solar or wind, or providing stability to the grid and providing peak load shaving applications.

So these applications are significantly new, and the demand is significantly an order of magnitude higher in terms of capacity requirements.

If you take an automotive vehicle, there's been a lead acid batteries sitting there providing the starting, lighting and ignition services, but that's a smaller battery. Now you take EV, you have a battery that's much bigger in size and almost 40 -50% of value in terms of cost. So we are pretty excited. And it also required technologies on the battery area that are a lot more agile and flexible.

I'll just give you three possible functional requirements that are very different from what batteries have been doing all along.

You want batteries to be lightest because on mobility applications you want the battery to be not being too much but give you enough power. We would like to see that if you put a battery on a vehicle, the battery has its life as long as the vehicle is existing. And you want the battery to be charged faster. So, fast charging, long lasting and lightweight, you know, functionality which lead acid cannot offer in a significant manner. So you see new chemistries coming up. Lithium family is one of the most popular right now, but I'm able to see that a lot more new technologies and communities that are evolving in the space.

Robin Pomeroy: You're based in India. How do you see the wider energy transition happening in India? Do you think India is well placed to kind of to be some kind of a leader in the energy transition?

VK Samudrala: The Indian society needs energy solutions, which could be pretty unique. First, I would like to acknowledge that India has one grid for the whole country. So we have a unified grid that's delivering the electricity as a part of the energy needs.

Largely, coal fired power plants are the ones that produce electricity requirements for the country. And we all have oil based energy sources for mobility and industrial applications.

Now, ten years ago, the government had a clear vision to enhance the clean energy component in the overall energy basket. And if I look at the progress that we have made as a country, I think we've done pretty well for ourselves.

Today, approximately 27% of generation capacity of electrical installations are based on either solar or hybrid. As we see by 2030, that is a clear policy by the government to get to about 500GW of renewable energy. The energy capacity will grow towards 870GW. So you're having more than 55% of the overall energy basket from a generation capacity perspective coming from renewable sources.

But we also know that renewable sources have intermittency, low PLF factor. The plant load factor: thermal power plant probably has about 65%. So if you have 100 units generating capacity, it actually generates 65 units. But a similar 100 units generation capacity for solar can only generate about 20 units.

So we need to increase the PLF factor for solar and wind. And we got to also look at how do we enhance the storage capacity because of intermittency.

So if you ask the question, will India need the energy transition momentum around the world? Yes it will. But the solutions that we are going to develop would be more applicable for economies like India where there are a lot of development needs, the economy's in a development mode, a nd then the scale is evolving in certain applications.

So we need to look at these global technologies, but bring them to the country in a manner that addresses the specific needs of the Indian society.

As an example, if you look at the mobility as a challenge, India consumes a lot of oil for its transportation equipment, and we don't have enough oil resources, so we import a lot. So transitioning to electric mobility would solve some of the problem by developing domestic capability and creating the electric vehicle component ecosystem.

Now what India needs is not, you know, a large, long range mile vehicle, because the Indian commute requirements are very different. So we see a big revolution happening in the light electric mobility solutions. The two wheelers and three wheelers provide for 70% of the mobility needs of the country. And when you have such kind of very different end user application, it's important for us to develop solutions that are aimed and customised for those requirements.

So as an industry participant, I see that the responsibility for companies is to innovate in that area, derive the strength of global technology development, but apply it to the Indian context by innovating on the solutions that you offer to market.

Robin Pomeroy: You say it's a very different marketplace, but probably some of those innovations, two, three wheeled vehicles, there would be a market for those around the world as well. Do you see that?

VK Samudrala: Absolutely. I am very clearly seeing a trend that with electric powertrains, the local mobility requirements will be more and more met by the light electric vehicles like two wheelers and three wheelers for the people or the logistics needs.

And except for the climatic challenge that we have, that these vehicles may not be very convenient to use around the year, but the majority part of the year, you can still use these electric platforms or for light electric mobility for local commuters. Let's say, you know, 15-20 mile range.

That basically means that you don't need a big battery that you would need probably in a large passenger vehicle, and hence you can actually put more electric vehicles on the road with smaller battery capacities.

Because we know that there are supply chain challenges of being able to meet the battery demand. You know, one smart way of solving the problem is make smaller packs and hence build more electric vehicle.

Robin Pomeroy: You're here at the Advanced Energy Solutions meeting at the World Economic Forum. What has been your impression of it? Lots of people from different parts of the world, in different parts of the industry or different industries, even.

VK Samudrala: I think thre are three things that came out very clearly.

Energy transition is a must. It's not a choice. But are we able to navigate through this energy transition in a manner that we are making the future of energy more affordable and cost competitive? Is there a premium to be paid for this energy transition? And if there is a premium to be paid, who is going to pay the premium? If you expect the consumer to pay the premium, how are you going to motivate and educate the consumer that in the transition to clean mobility or clean energy, you have to pay more for it?

At this point of time, it costs more. But the conversation then moved on to: can we innovate a lot more to ensure that the cost of clean energy is not burdensome on the society? Because if you need partnership with the consumers and they're buying into this whole initiatives, either from the government or from the industry, you have to make them understand that there is value for them.

Robin Pomeroy: VK Samudrala of Amara Raja Energy & Mobility.

Let's go to our third and final interview from the Advanced Energy Solutions event. We're going now from India to Flanders, I believe, Maarten Michielssens of EnergyVision. What do you know about EnergyVision?

Jeremy Jurgens: EnergyVision is a solar panel manufacturer in Belgium providing home based solar solutions. An important element in the energy equation.

Maarten Michielssens: We're a Belgian company, also active in China and north of Morocco, and we want to include maximum number of people, families, SMEs into the energy transition. So we basically we install, for instance, solar panels for free and then sell the energy to them. So no need to invest for our customers.

Robin Pomeroy: Was this a demand you felt was out there, that people were hesitating about putting in solar panels?

Maarten Michielssens: When we started our company in 2014, you just had a few years of huge subsidies that then stopped, and all of a sudden the market collapsed. Confidence was lost. And basically we said, well, the technology is mature, so we don't need the subsidies. But still, in order to get over these barriers, technical, financial barriers, let's give the advantage of the technology without the burden of the cost. So you have the added value, but that comes with added costs. So we want to get rid of the costs to give the value to the people.

Robin Pomeroy: So how would it work then if I'm living in a place where you run the service, let's say in Belgium, what would I do, what what would you offer me?

Maarten Michielssens: If you would be a family or a household, we would, for instance, put solar panels on your roof. You wouldn't pay anything to us for the installation. We don't get paid by subsidies. At the end of the day, we get paid by the energy you consume. So we sell the energy at a much lower rate than the normal energy price, 50-80% discount. But in general, you would only use 30 or 40% of the energy we produce. 60% goes into the grid and is lost, and that energy redirected towards your electric charges, and then sell it for people that charge their car.

And so we have local green, cheap energy for people who charge their car. And that's how we make a profit.

So by the energy you consume, you pay to us, we recover our investments. The energy we sell to the car drivers, that's how we make profit, basically, with electricity.

Robin Pomeroy: I'm often confused because you have grids, people feed in, and you're never quite sure where that electricity has been generated. So is yours, you say it's a local charging stations. Are you actually kind of wired up into these houses, or is actually you're putting it into a grid and pulling it back off the grid?

Maarten Michielssens: We use the grids. We use the grid indeed. While of course if we sell energy to your house, we don't use the grid, it's local. But then everything else we inject into the grid and get it out and we match it.

Because in general, electricity or energy sector, that's production-consumption. And both are two pillars, but both are misery basically. In production, if we try to sell solar panels to you, you would go to a competitor, you would ask a lower price, you would negotiate with us to have a lower price. We would have to reduce our quality. So it's really misery. And at the end of the day, an installer builds and gets 3 or 4% profit and has ten years of risks and liabilities, misery.

In consumption, it's something similar. If you're an electricity supplier, you would buy electricity from the market and sell it at a 2% margin to your customer, and then Russia enters Ukraine and prices triple. But even then, those energy suppliers don't make any profits. A lot of value gets lost in between this production and consumption.

And that's what we try to match.

So in production we have a very simple model. You don't pay for solar panels, you pay for the electricity. In consumption, we direct the excess energy here towards our customers or chargers. And that's allows us to have very predictable revenue streams. We know the investment costs of our installation, we know the outputs. We know the lifetime. So we know the cost of electricity - cheap - and we sell it here at fixed price as well.

And the result is that those people, drivers or people who can't have solar panels on the roof, they have predictable energy costs and even during the crisis we did not increase or energy price. We kept it stable and we made a profit.

And those energy suppliers that tripled their price, they still acted at a loss, basically.

What we built is a virtual or decentralised or digital grid, so to speak, and we match production consumption while using the normal grid. That's basically what we do.

Robin Pomeroy: And this model, is it unique to you? Is it happening around the world?

Maarten Michielssens: I hope in five years from here, it's happens everywhere. Today it's quite unique, but it's really something. I mean, we ask companies to copy us.

You know, we have a great business case in Flanders, in Belgium, with social houses.

Typically, social houses, so we have families who cannot afford a house, they get a house from government and they pay a lower price. Typically those people have subsidised energy bills as well. So they pay a social tariff, so to speak. So it costs enormously to governments because social tariff means you have your energy price, social tariff versus the market price, the difference is paid by governments. During the energy crisis we're talking about billions of euros of subsidies.

And those people cannot buy solar panels. First of all, very often they don't have the means, but certainly they don't own the house, so they cannot put solar panels on it. So then we step in.

What we did is, it's a project called ASTER. It's a very long name, but that's the abbreviation. ASTER is basically saying, so, we install solar on social housing. The family doesn't pay anything. For the energy you consume, we will charge you a price lower than social tariff. So the family really has an incentive to use that energy because it's cheaper than the social tariff. There are zero subsidy. And at the end of the day, the government saves a lot because they don't have to intervene anymore on the social tariff.

And we recover our investment, ASTER recovers their investments. Social families or social housing areas are very happy because they pay lower prices and government is happy because they don't have to pay the energy building more.

It's a model that really works and we started it 12 months ago. Today, more than 8000 families already joins. We have an agreement for 50,000 families. But I mean, if you can do 50,000, you can do 500,000 to 5 million. So please copy that model. It's very simple.

Robin Pomeroy: What's the big barrier that you've experienced to it? I imagine, in other discussions that I've had here in this meeting, is getting the alignment with policymakers, the policy scenario has to be right. If you've got a great idea, which sounds like your idea sounds great to me, I'll have a free solar panel and cheap electricity. But if the regulatory regime isn't right, it won't work. Is that something you've struggled with?

Maarten Michielssens: Definitely. In all senses. I mean, policy and innovation don't go quite well hand-in-glove, so to speak.

For instance, we give free solar panels. Okay, but government says either a family buys a solar installation, and we get VAT, or they pay for their energy bill and we get VAT. If you give free solar panels and cheaper energy, we lose on VAT. So we have to charge you.

So basically we get charged on the free solar panels we provide.

Then we have these smart metres but they don't really read out. I mean in Belgium we have a huge rollout of digital smart energy metres, but in reality it doesn't work that well.

So we say ours, so we will sell the energy and everything else we will put towards a charge, but it's really a pain in the arse to make it work, let alone to replicate it.

And for instance, in the Walloon region in Belgium, the regulation is simply not ready to to implement. So we have thousands of families on a waiting list. We have to wait for a new government and new regulation. So that's definitely something troublesome.

Robin Pomeroy: Beyond Belgium, beyond Flanders, then, you mentioned Morocco. Did you mention China? What are you doing in those places?

Maarten Michielssens: Oh, we are very active in both countries. In China, we basically sell Chinese solar panels to Chinese customers, and they buy from us because we finance them and we come with European interest rates.

That's how we started. We started as a very small company for people €6,200 equity, and we had a financial model but no money. So we developed a system where Chinese customers buy Chinese solar panels from us, but they are backed by Belgian funds and state guarantees and cheaper interest rates, and profits we reinvested in in Belgium, in our home markets. That's basically how we started.

To put it simple, the Chinese government said you cannot exceed a certain number of kilowatt hours because of pollution. So you have to reduce your energy spending otherwise we triple your energy price. And then Chinese companies just calculated and said, okay, even if you triple the energy price, we still make a profit. So we just continue. And then they said, second stage, they said, well, if you still pollute that much, you go to jail yourself. That was something different. So they had to find solutions. Very often they didn't have the funds or the resources. So then we came up with a model and we set European interest rates, which makes it much cheaper than your local bank loans, which were 12 or 13%, and we were at 1 or 2%. So this way we did hundreds of megawatts in China and then reinvested the profits in our home country.

Same for Morocco. Morocco has huge lands, has a king that really wants to go in one generation from energy import to energy exports. They have sun, they have wind, they have everything. And it was a new market basically. Today we have tens of thousands of customers that work along that model in both countries and in Morocco as well, really increasing a lot.

Robin Pomeroy: I imagine you say you're selling Chinese solar panels to Chinese consumers. Imagine you're selling Chinese solar panels to Belgian consumers as well. Do you see changes in global trade, in the supply chain? There's political reasons, maybe economic reasons, that things are changing. Where do you see things going in terms of the supply of that technology, the hardware?

Maarten Michielssens: We have in our board of directors a former European commissioner of trade who imposed sanctions on Chinese solar panels. But the reality is that European solar panel manufacturers don't exist anymore.

Most of the solar panels come from China and we are very strict on our supplier selection, very strict. But the reality is it comes from China. And you know, you have the rubbish quality coming from China, but you also have the very best quality coming from China. So it's a reality of things.

Yes. We are highly dependent on Chinese manufacturers. It's true. On the other hand, we are not a company that tries to sell installations and then have to find customers every year. I mean, we have recurrent income, so if there would be disruption in the supply chain at least our income streams continue. We just wouldn't add new projects for a while. It's a risk we are very aware of. Until now, it's very fine for us. We have huge stockpiles everywhere.

But yes, the innovation comes from China, the risk is Chinese. But on the other hand, China showed us the way. Without China, solar would never have rolled out as it did. I mean, it's went ten times faster, five times cheaper. That's also China.

Robin Pomeroy: So we're at this meeting is recording today, the Advanced Energy Solutions meeting here at the World Economic Forum in Geneva. What impression do you have of the meeting, of this meeting of people from different parts of the energy industry, different parts of the world coming together?

Maarten Michielssens: Everybody understands that the challenge is huge, but there's no way back that the way forward is very, very, very challenging, that it doesn't help much when the interest rates are increasing at high, especially in renewable, because that's always about project financing. And so the interest rates when times four in the last 12 months, that has - it's not a deal breaker - but it's real impacts. Everybody understands the banks are also present. Everybody understands.

On the other hand, what we often lack is public acceptance or at least to include people. I mean, to be frank, I mean, it doesn't make much sense to talk about goals in 2040 or 2050 or to discuss about this also at the other end of the world, when for normal people, I mean, basically they struggle to get to the end of the month or they don't look beyond the street or beyond the neighbourhoods. And I also mentioned it yesterday, we do, as an industry, a very good job at telling our story very badly. We talk about these goals 20 years from here. I mean, let us try to talk about specific, tangible actions that don't go beyond people's life here on earth, basically. I mean, there are today and tomorrow and next year, a lot to be done. But we need tangible, tangible action.

Robin Pomeroy: Maarten Michielssens of EnergyVision.

Now, he makes the point that, the regulatory environment is very important. All of us would love to generate our own solar power. Sometimes cost is an issue, but very often the regulatory environment is an issue for individuals and for companies making investments. That must be very important to the kind of conversations you have when the World Economic Forum is dealing with this.

Jeremy Jurgens: Yes. That's right. We need to continuously adapt the regulatory solutions to the current environment. If you look, for example, at how quickly, solar costs have fallen, over just the last decade, it's a completely different environment. And it means that we can use solar and other energy solutions in different settings, in different contexts where they haven't been previously used. And so we need to continuously update our understanding of what is possible and how to most effectively approach these issues for policymakers to help shape a healthy regulatory environment.

Robin Pomeroy: Is there anything, in all the conversations you have with this diverse, worldwide group of people that really excites you about energy innovation? Is there 1 or 2 things where you see real breakthroughs happening that maybe most people weren't expecting? I'll also ask, and/or, AI, everyone is still talking about artificial intelligence. It's a huge challenge because of the energy required to deliver AI. But do see that as one of these big breakthroughs as well?

Jeremy Jurgens: Let's start with the first question. I'm extremely excited about electrification. You know, five years ago, people didn't think we'd be as far along as we are today. And as we scale up, solutions, particularly in the solar domain as well as in storage, we actually see new opportunities being unlocked.

So it's actually feasible today to have not only electric cars but electrified heavy transport for shipping, mid range and long range trucking. And these costs can be anticipated to fall, much more rapidly as we bring manufacturing solutions to batteries and storage that were reserved previously for making, phones and digital products for those who are well understood.

Now, if I look at the area around AI, this is going to be one of the biggest drivers of both energy demand but as well as energy solutions. You know, data centres to run the latest AI chips, they're only about 20% full because these new chips consume so much energy that they don't even fill out the entire data centre. So you literally have 80% of the space being unused because the chips for AI consume so much energy.

And if we look at the, you know, kind of anticipated demand in this space that will continue to drive demand for energy.

What will be important here as we roll out these AI data centres that we also bring online quickly additional power here and that that power is green and sustainable.

We anticipate that this is actually going to drive demand for resurgence and in power. And we also see recent advancements and developments in fusion, which has always appeared to be decades away. But for once, you know, it may actually be much closer than that. But you'll have to come back and check with me in another decade and see how that pans out.

Robin Pomeroy: Jeremy Jergens, managing director of the World Economic Forum, thanks so much for joining us on Radio Davos.

Jeremy Jurgens: Thank you Robin.

Robin Pomeroy: After recording that, Jeremy was heading to the Forum’s Special Meeting on Global Cooperation, Growth and Energy for Development held in Riyadh on 28-29 April 2024. Around 1,000 leaders from business, government and academia are attending, to address the challenges posed by an increasingly fragmented geopolitical and economic environment. Find more information at wef.ch/specialmeeting24 and across social media using the hashtag #specialmeeting24.

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This episode of Radio Davos was presented by me, Robin Pomeroy. With editing by Jere Johansson and studio production by Taz Kelleher.

We will be back next week with a special episode for the Special Meeting on Global Cooperation, Growth and Energy for Development, but for now thanks to you for listening and goodbye.