Season 2, Episode 2: Jenny Chase, BloombergNEF
In this episode of The Solar Journey, Torsten is joined by trailblazing solar analyst Jenny Chase, who was the first member of the BloombergNEF Solar Analyst Team. Jenny, who has spent over 17 years shaping solar market intelligence, shares her journey from studying physics at Cambridge to leading one of the world’s top sources for solar data and analysis.
Jenny walks us through the early days of solar, back when the price of polysilicon was astronomical and when installing half a terawatt of PV in one year (as we are on track to do in 2024) would've been unthinkable. She reflects on how solar has evolved to become an essential driver of the global energy transition and discusses the many challenges of analyzing an ever-changing and rapidly evolving market.
An extremely engaging conversation, sprinkled with her signature wit and no-nonsense approach, Jenny speaks to the joys of building a team, the perils of management, and the importance of doing what you love (which may or may not include tending to a flock of multi-generational geese).
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Show Notes:
"Solar Power Finance Without the Jargon" (Second Edition) by Jenny Chase
Jenny's unique path from physics student to solar industry leader.
How the early solar market was a data challenge and how BloombergNEF changed that.
The dramatic drop in polysilicon prices and how it shaped solar’s future.
Reflections on the explosion of global solar installations since 2005.
Why the next big questions in clean energy aren't about solar—they’re about batteries and using power when it’s free.
Transcript
[00:00:00.250] - Torsten
Welcome, Jenny.
[00:00:01.300] - Jenny
Good morning, Torsten.
[00:00:03.240] - Torsten
Jenny holds a master's degree in natural science, so she actually knows what she's talking about when she talks about solar energy. And she did that at the University of Cambridge. I think it's adequate to call her a prominent figure in the solar energy sector, known for her extensive work with the Bloomberg NEF. She founded the Bloomberg NEF Solar Analyst Team in 2005 and led it for 17 years. It's now one of the leading sources for market intelligence for the solar energy sector. She stepped down in 2022 as manager to write and analyze more. One of Chase's notable contribution to the field is her book, "Solar Power Finance Without the Jargon", published in 2019.
[00:00:49.240] - Jenny
I think you brought this second edition. This is the new edition. This is the 2023 edition. I think we're calling it, it came out at the end of December, we're calling it 2024.
[00:01:00.640] - Torsten
Fresh off the press. Besides writing and analyzing, she has a personal interest in breeding award-winning West of England geese. That's something ChatGPT told me.
[00:01:12.940] - Jenny
That is true. I have a flock of West of England geese. They are very nice.
[00:01:16.450] - Torsten
They are very nice. How did the geese find you?
[00:01:19.300] - Jenny
Well, my parents started breeding geese when I was about five years old, and I still have the descendants of those geese. All right. I've moved them to Switzerland now.
[00:01:28.020] - Torsten
So which generation is in your family?
[00:01:30.900] - Jenny
Oh, many. Many, many. Well, many generations of geese – only the second generation of humans that have been breeding geese.
[00:01:39.970] - Torsten
Excellent. Now, you just mentioned you live in Switzerland, but grew up in England. What pulled you to the mountains, to the very high mountains, I should say?
[00:01:48.960] - Jenny
Well, my husband wouldn't move, you see. Basically, I was at this startup called New Energy Finance, where I founded the solar team. And the company was bought in 2009 by Bloomberg. And one of the terms of the acquisition was that Jenny would move to Switzerland and shack up with this boyfriend she had there, who I'd met at university, and he'd got a job in Switzerland. And it was one of those two body problem things. So I moved to Switzerland. I shacked up with a boyfriend, and it went okay. So we got married and had a kid and got some geese. And I guess now I'm not leaving.
[00:02:25.890] - Torsten
All right. Too nice a place.
[00:02:27.520] - Jenny
Also, you have to settle somewhere. I mean, Switzerland is not a bad place to settle, but certainly, sometimes you have to solve that problem of how do you live with the person you want to live with.
[00:02:37.190] - Torsten
So how did you start your solar journey? You were in natural sciences, and then at what point did you say it's got to be solar or clean tech?
[00:02:44.030] - Jenny
When I was in, I think, my third year of my physics degree, there was a solar cell technology project on offer. I wanted to be green. I had these vague ideas that I was going to save the world with writing on maths or something. I had originally wanted to be a journalist, but I went and studied physics because I I could write already, so I needed something to write about. So I applied for this project with SolarCels, and I didn't get it. Someone much better than me at physics got that project. So over the summer, I went and did an internship with a chap called Michael Liebreich, who was paying the interns £10 a day to basically copy data off press releases into a database. And I did this for a few weeks and he said, "come back and work for me when you graduate." And I didn't really have anything else to do. And it was clean energy related, so I did. I think he was a bit surprised that I turned up again, but he did indeed employ me. At first, I was adding data to the database. The BNF database still very much exists.
[00:03:44.100] - Jenny
It still has some projects and some companies that I originally added to it. The idea was to make a relational database of all the companies in the clean energy industry, which Michael and his partner then thought would be maybe about 300 or so. It's a few more than that now. The idea was to sell this information to private equity investors and such. We have built basically an information service about the whole industry.
[00:04:10.370] - Torsten
This is how the Solar Analyst team started.
[00:04:13.610] - Jenny
In 2005, Michael realized that we needed a bit of specialization and allocated "someone to do biofuel or someone to do wind. I guess we should probably have some solar stuff. But, Jenny, you're there." So I did solar. At the time, I thought that solar might one day be 1% of global electricity generation, which was cool. Sometimes being a small part of the solution, it's way better than not being part of the solution at all.
[00:04:41.570] - Torsten
Which year was that?
[00:04:43.360] - Jenny
It was the end of 2005 when I was officially assigned solar. I had no idea what I was doing.
[00:04:50.510] - Torsten
Tell us more about the times back then. You were a startup, right? With Michael free financing the whole thing?
[00:04:56.550] - Jenny
We were a startup. We were running on Michael's cash and a bit of angel investment from Michael. We were really just collecting public information into one place. But the thing is, if you keep collecting public information and you keep writing it down and you have an interested brain, you start to see patterns. And that was just when the industry was getting big. There were a few really big solar IPOs. So for the first time, there were substantial companies that public market investors could invest in. A big question was, what is the price of polysilicon? Because we were just moving from the point where the solar industry had been so tiny that it was doing perfectly well on the off cuts of silicon from the semiconductor industry. But it was just starting to get bigger than that and starting to suck up all the silicon that the market offered. And no one even knew what the price of silicon was, never mind what it could be in theory. There were companies paying $450 a kilogram for polysilicon. Just for the record, the price today is, I think, $4.77 a kilogram as of yesterday.
[00:05:57.200] - Torsten
Back then, I was at QCells and QCells was just trying desperately to get any silicon they could get to keep the production lines running. So it was all about silicon back then.
[00:06:07.090] - Jenny
It was all about silicon, yes.
[00:06:09.740] - Torsten
And so how many people were there in the beginning? Just four or five analysts and Michael?
[00:06:14.360] - Jenny
I think I was a permanent employee number three. Then there was Michael and a couple of other people who were founders. So in the beginning, there were about 10 people, I suppose, counting a roving squad of interns.
[00:06:26.870] - Torsten
So when you look back to 2005, it was pretty much also the kick-off phase for the, let's say, modern solar industry. Maybe there's a second milestone when the Chinese got big. I think that's another milestone. When you look back 2005, now 2024, how has the industry changed? Not only by the fact, but also by the dynamics and the drivers in the industry. How would you describe it?
[00:06:49.670] - Jenny
Well, now it's a proper industry. I mean, it really was a bit of a cottage industry in 2005. I really was dreaming when I thought solar might be 1% of the world's electricity supply. And today, it's about somewhere between 5% and 7% global electricity, depending on how you estimate it. And it's pretty clearly going to be a lot more. I mean, we're going to add more than half a terawatt of solar capacity globally this year, easily, which given total world power capacity at the end of 2022 was at 8.5 terawatts, we are really getting somewhere into pushing into the age of fossil fuels. It really does look like solar is going to be part of the end of fossil fuels. Not before some time, and there are still a lot of challenges, but we are going to get there.
[00:07:33.230] - Torsten
Before we come back to solar, let's just say a little bit longer with being an analyst. So you're a natural science student. You must have enjoyed analyzing stuff, obviously you found that, and that's also why you do more analytic work now. What's the most difficult part in providing great analyst report?
[00:07:53.760] - Jenny
Usually, it's data, actually. People love to talk about big data, but the truth is that most data sets are terrible. A lot of data sets rely on a human mind to go through it and almost line by line be like, is this reasonable? What is this telling us? Is this a lower bound for something? I mean, we don't even know how much solar there is in the world, really. This takes about a quarter of the time of my team. How much solar is there right now in different countries? It's actually getting to be more and more of a problem because it used to be that the official sources tracked subsidy regimes, and so you could normally tell how much solar there was from the official sources. Increasingly, solar has no subsidy. It's just being built. When solar has no subsidy, there's not actually any reason for anyone to track it, particularly.
[00:08:35.740] - Torsten
Are you using artificial intelligence?
[00:08:48.100] - Jenny
No – I just do not trust artificial intelligence for what we're doing. I mean, artificial intelligence can summarize things. It can pull out surface-level information. It also has some interesting medical uses, my husband is working on it, diagnosing very specific complaints from very specific information.
The thing about financial analysis as opposed to academia is that if you wait for something to go through peer review, It would be far too late to do anything about it. Most financial analysis has to be quick and dirty and back of the envelope, but directionally correct. For that, what you need is common sense, a certain amount of focus on detail, an ability to develop a methodology for what you're doing and know what it will tell you and what it will definitely not tell you. Often you're just looking for an order of magnitude effect. It needs to be done fast. If you do it with the pedanticism of academia, you will just not be useful, sadly. So financial analysis is nothing like academia. And to be honest, that's probably just as well, because I would never have made it as an academic.
[00:09:54.930] - Torsten
Are you using AI at all for some groundwork?
[00:10:09.210] - Jenny
I would not touch AI with a large pole. I'm a physicist who got into finance, so I sauntered vaguely downwards into the world of finance. I think that what people don't realize about finance is that it's almost entirely about understanding risk and putting approximately the right numbers around risk. Everything boils down to that. What you're usually doing is trying understand the world, what risks the world presents and what risks change presents to the numbers that you're putting in your spreadsheet. Sometimes that literally just means that you may as well throw the spreadsheet away as well. But you should have the spreadsheet anyway because you should know if this, then that. But there's also, and you should consider this before making an investment, there's a probability that this will happen.
At the moment, for example, one thing that we know is that the solar is growing. The implication of this is that power is going to be more or less free in many places whenever the sun comes out in the relatively near future, like seven or eight years. So if your model says that the price of power that you get on the spot market is going to be about the same as it is today, your model is wrong.
It might be a beautiful model. It might be very complicated. It might have lots of lovely, delicate assumptions. But if it doesn't assume that you're going to have a massive uptick and solar build, which is going to change the way power is paid for, your model is wrong, and you have misunderstood risk.
[00:11:30.150] - Torsten
What's the most difficult part, you said, in providing a great analysis report, because that's the core offering of Bloomberg NEF. It's understanding the risk. I would assume that you need to include the whole complexity of the industry, or almost the world, to understand what eventually is a risk for the future.
[00:11:51.680] - Jenny
It depends what you're trying to do. When it comes down to it, you cannot model the world in as much detail as the world. That's why it's the world. Nothing is ever going to be that complex. There are some things I don't honestly think you could ever forecast.
I mean, randomly, Vietnam added 12 gigawatts of solar in the years 2019 and 2020 because it set a feed-in tariff and It was relatively generous. But when we were forecasting Vietnam build, we talked to international developers and international banks, and they said, no, Vietnam is too risky. We would not invest in solar in Vietnam. Therefore, there will only be a few gigawatts of solar built. And the Vietnamese government only actually wanted a few gigawatts of solar, so our forecast was very low. And then what it turned out was that the Vietnamese state banks were perfectly happy to invest in Vietnamese solar. Vietnam added about 12 gigawatts of solar in two years, which is astonishing for a nascent market. Then it ground to a screeching halt because the government was paying way too much for subsidy and there's curtailment and things. But sometimes there are things that you just cannot predict with data that's out there.
Of course, what we should have done is ask the Vietnamese state banks whether they were financing solar.
[00:13:03.200] - Torsten
Bloomberg is now almost the ultimate brand, I would say, in the analyst reports. Why do they choose you over so many others? And why do you have such a strong position in the analyst market?
[00:13:15.400] - Jenny
I think that we're quite good at writing reports that are understandable and boil something down to the essence. We also keep our report short because, let's face it, nobody reads 30-page reports. And we try and answer questions quickly but well. I mean, that's one of the other things. I said that academia is often out of date, and that's particularly true, unfortunately, in a field moving as fast as solar and batteries. If you have an academic report on the cost of solar or batteries, it's probably been in peer review for two years, and therefore it's out of date, sadly.
[00:13:48.790] - Torsten
So it's up to date, concise, and easy to understand.
[00:13:51.690] - Jenny
Exactly. So sometimes when we come back from a trade show, I'll come up from a trade show, this trade show, and I'll write up a report with my colleagues who were at SNEC last week about what manufacturers are saying about prices, about silver use, about their technology plans. It will probably be more useful to the people making decisions than something that is a bit more rigorous.
[00:14:13.240] - Torsten
We'll touch to the silver, et cetera, in a bit. You build up the Solana Analyst team, and at some point you said, well, it's too much management work. That's what you wrote on your LinkedIn profile. I want to step down and analyze and write more. What was the feeling? What was your state of mind like just before you stepped down and afterwards?
[00:14:33.640] - Jenny
It was definitely the right solution. I thank the gods, and I thank Lara Hayem, who took over my job every day that I am no longer a manager. I founded the team, and I will always very I mostly care about it and identify with it. I love the work that we do, and I love the people in it, actually. Management is not the same as loving something. As it got bigger, the administrative load and the emotional load of caring for the team while managing them. It did get me down. I don't want to use the burnout word, but it was heading a little bit in that direction. And what I love to do is write.
[00:15:10.990] - Torsten
And the geese. So there's already other animals you have to take care of.
[00:15:14.830] - Jenny
Well, exactly. And I also have a six-year-old child.
[00:15:16.850] - Torsten
So you talked about the team. How did you pick the great talent? How can you tell?
[00:15:23.390] - Jenny
We offered them an internship, and then we hired the good ones.
[00:15:27.160] - Torsten
So you've got five internships, and then how do you know? Why do you choose one and not the other?
[00:15:32.960] - Jenny
Well, it's evolved a lot over the years, of course. At the very beginning, I was in fact turned down for an internship because I didn't have my own laptop. The only reason I actually got a laptop was because the person who was supposed to be taking an internship dropped out and said this sucks and hit the bricks. And they had a laptop that I could use. So they called me at short notice into London. And all I was doing over the summer holidays was cleaning windows with this really nice guy who had a small business doing it. So I said thank you and goodbye for the summer to him and went and did this internship.
Hiring interns is a good opportunity to get a variety of different people with a variety of different enthusiasm. A lot of the time, what you want is someone bright and motivated rather than someone who has an enormous amount of relevant experience. I mean, let's face it, I spent four years studying physics, and all I really use it for is that I really know the difference between a megawatt and a megawatt hour.
[00:16:29.170] - Torsten
That comes in handy sometimes.
[00:16:30.340] - Jenny
It really comes in handy, and it comes in handy to know things at a bone deep level, so you don't have to think about them. But do I think doing a PhD would have been a good thing? No. Sometimes we do hire people with experience, and it's amazing and wonderful. But I'm not convinced that's necessarily what makes someone a great hire.
[00:16:51.250] - Torsten
So how can you tell that someone is bright?
[00:16:53.710] - Jenny
I give them a lot of work and see if they do it well. And some of this is so open-ended. You ask someone to look into a topic, you ask them to, for example, put together a spreadsheet of the manufacturers in Europe, and you give them as much guidance as you can. But you see questions like, are they being creative and how do they get that information? Are they, for example, using Google Maps to see if a factory actually exists? Are they calling the phone numbers and finding out if anyone picks up? Are they interrogating the data a little bit?
Because there are a lot of manufacturers on the trade floor now who will say they have 5 gigawatts of capacity or whatever. And some of that is maybe not exactly true, or at least it's true, but the 5 gigawatts is actually a partnership with somebody else, or it hasn't actually been built yet, or it's highly hypothetical. And this is an industry that has a lot of cowboys and charlatans. And so you have to be alert for that and you have to keep a weather eye. I guess what I look for in interns is people who are not just getting a number and writing it down.
[00:17:58.070] - Jenny
They're someone who tries to understand what that number is, who raises a red flag if they find some reason why that number is a bit dodgy. It could be as simple as they want to talk to me about it. Maybe I don't think it's a red flag, but somebody who wants to talk to me about whether this data is correct is always going to interest me more. Frankly, being able to understand, to explain your ideas so they're not too complex is hugely important, I think, in any job.
You look at the methodology, how they do it. If they are persistent. They cross-check. They are critical about the findings, they remember things, they have a decent gut feel about where could something be dodgy in the data or in this case, the company, etc.
[00:18:44.530] - Torsten
Solar modules are crazy cheap these days. You talked about the 1% of the global energy supply in 2005, where you thought this would be amazing. That was aspirational.
[00:18:55.760] - Jenny
It was so expensive in 2005. Like a solar module cost $4.20.
[00:19:01.560] - Torsten
Now we are down to 10 cents. Will it go back to, let's say, 15 to 20 cents, which some people consider as a healthy price?
[00:19:11.300] - Jenny
Here's the thing about solar manufacturing. It is a horrible business to be in. Probably the easiest bit is polysilicon manufacturing because there is quite a barrier to entry in polysilicon manufacturing. So you're a bit protected by the sheer size of the factory. It doesn't protect you right now because there is enough polysilicon in the market this year to make about 1.1 terawatts of solar modules. And we get global installation to be about 585 gigawatts. So there is massive oversupply of polysilicon, too, right now. But the rest of it, the wafers, the cells, and especially the modules, are highly commoditised. And technology evolves very quickly.
So you want to be a solar manufacturer. You make your decisions, you find your site, you buy the latest manufacturing equipment, you hire a bunch of people, you are making the state of the art solar modules. And three years later, the state of the art has changed and your factory is no longer making the products that the market demands.
And you probably haven't paid back the debt on your factory.
[00:20:24.700] - Torsten
It's pretty amazing, right? Because in the early days, let's say 2005 to 2008, there was little breakthrough innovation. You had these aluminum back surface field, wholly silicon or multi-corps.
[00:20:37.270] - Jenny
Multi-corps and silicon aluminum back surface.
[00:20:39.010] - Torsten
And nothing changed. People were working on R&D. PERC was super crazy stuff. I used to do them in the 1990s at Andrew Blackers Institute, and I was sure that this will never make it into production. Now we are almost in the post-PERC phase area.
[00:20:55.480] - Jenny
We are. We're in our TopCon era now.
[00:20:57.850] - Torsten
It's moving so fast now suddenly. It's pretty amazing, I think, right?
[00:21:01.590] - Jenny
It is, and it is vicious. The thing is that the last generation of technology is still perfectly good. I mean, my house still has multi-crystalline silicon, aluminum back surface fields, models from Suntec installed in 2019, and they're fine. Of course, they could never have got this cheap. I think even in 2005, the companies were working on smaller innovations. So for example, they were making the wafer much thinner.
[00:21:23.180] - Torsten
You could argue if that's innovation or just a –
[00:21:27.920] - Jenny
I wouldn't bother because arguing the difference between incremental innovation and breakthroughs. I think it is very philosophical at this point. And philosophy is a waste of time.
[00:21:37.720] - Torsten
So what's the situation like for the Chinese manufacturers? Are they making money?
[00:21:42.430] - Jenny
No.
[00:21:43.830] - Torsten
What's going to be the situation landscape like in a year from now in China?
[00:21:47.530] - Jenny
We call this a solarcoaster. Every so often, the industry gets over excited, massively invests in new capacity and expectation of demand that they know cannot be equal to supply. Then demand isn't equal to supply. There's massive oversupply and a load of companies go bust. We're just moving into one of those phases now. There's about 1.1 terawatts of polysilicon production capacity globally and at least a terawatt of wafer cell and module capacity, compared with demand that is about 585 gigawatts this year. Everyone calls it a Chinese problem, but really that's just because the solar manufacturing industry is in China.
The thing is that these companies are viciously competing to stay alive. They don't want to be selling at the current prices. The current prices are somewhat below their costs. But if they stop selling, then their customers will go to their competitors, and those customers will never come back, even if prices rebound a bit. What they do have is quite large war chest of money because the last two years were actually quite good. They're going to use that money to stay alive, to keep that vicious technological grind to get more and more cost out of making solar modules.
My suspicion is that eventually, after some bankruptcies, after some factories are shut down, after a lot of these incremental technology improvements, we will have the module price flattening out at more or less where it is now at10 cents.
[00:23:20.310] - Torsten
What's the fully loaded cost? In one year from now, you think it's fully loaded cost is 9 cents?
[00:23:26.470] - Jenny
I think our prediction for the price budgets in a free trade market like Europe at the end of the year is about 10 cents a watt.
[00:23:36.190] - Torsten
Fully loaded with overhead, everything?
[00:23:38.470] - Jenny
Free on board. We don't really use the fully loaded term.
[00:23:42.970] - Torsten
Let's say all costs, whatever the company has.
[00:23:47.040] - Jenny
You mean the manufacturing costs rather than price?
[00:23:49.490] - Torsten
No, all the marketing sales, R&D, et cetera.
[00:23:52.780] - Jenny
I don't know what those are. I mean, they're not going to cover those, are they? I think that a lot of marketing budgets are going to be slashed. Covering your marketing costs right now is just not a plausible thing for companies to be doing.
Quite often, it's said that the Chinese manufacturers receive massive subsidies from the central government or the provincial government. That's not true. There are no longer massive subsidies for the Chinese central government, and there haven't been for a long time, for a decade or so.
Are there subsidies by the local governments or by the provinces? Not explicitly. However, in every country, you have local authorities competing to attract jobs.
For example, by finding sites, by giving those sites to manufacturers for relatively low cost, by perhaps offering tax breaks, those certainly exist in China. Definitely, the state governments are taking measures to promote local investment.
[00:24:47.190] - Torsten
Could you put a price tag on –
[00:24:52.690] - Jenny
No. How do you put a price tag on local collaboration? You can't, really.
[00:24:58.620] - Torsten
Gut feel, let's say we when you talk about nine cents production cost in a year from now, how much would that be? Is that included already?
[00:25:06.500] - Jenny
Well, that is included. Oh, yeah. I mean, this has been included in building all these factories. I do not think that most of these companies will not be building new factories in China in the next year. Because why would you? There's way too many of them. That's the problem. My personal feeling is that China is not so much directly subsidizing its industry as it has provided an environment where it's possible to expand very rapidly. And that's what the US in particular is not doing.
[00:25:31.040] - Torsten
The US, with the IRA, and India, with their own program, try really hard to establish their own domestic industries. And the Europe is going zigzag, I would say, its maybe doing, maybe doing it not. How do you think the industry landscape will look in 10 years from now in these, let's say, emerging markets, Europe, India, and US?
[00:25:51.970] - Jenny
The thing about 10 years, is it's a really long time. When I was a kid, Japan was where you did low-cost manufacturing.
[00:25:59.240] - Torsten
What's the the maximum period you would dare to give a forecast for? One month, three years?
[00:26:06.770] - Jenny
I think in three years, the US will still have some manufacturers, India will still have some manufacturers, Europe will not have manufacturers, and China will have the good manufacturers.
[00:26:16.950] - Torsten
So it's going to be tiny amounts outside China.
[00:26:20.180] - Jenny
Outside the current industry center of gravity, yes, which is probably okay. I mean, Chinese investment and commitment to the solar industry is why it's not a cottage industry. That is why I have hope for the future.
[00:26:33.240] - Torsten
Let's hit one more aspect of technology. We talked about innovation. Perovskite is the hype topic these days.
[00:26:42.080] - Jenny
Is it really? I thought we'd all given up on perovskite.
I mean, bear in mind, everyone down on that trade floor is doing their best to convince you that their company is not like all the other companies if they make solar modules, which is a shame because their company is like all the other companies. Yes, there are some perovskites there [in the future]. They're not a commercial product.
[00:27:06.990] - Torsten
So you think perovskites will never make it into a commercial product?
[00:27:10.520] - Jenny
Never in a long time. Outside of me.
[00:27:11.860] - Torsten
But let's say, will eit ver make it to 10 gigawatts?
[00:27:15.020] - Jenny
No.
[00:27:15.790] - Torsten
Never, ever?
[00:27:16.790] - Jenny
Not in five years.
[00:27:18.550] - Torsten
Not in five years, or10? Because the ITR PV roadmap basically gives us one gigawatt of perovskite containing modules in 2027, '28.
[00:27:29.660] - Jenny
A gigawatt isn't really commercial production, is it?
[00:27:33.110] - Torsten
A new block of cell and volume manufacturing, let's say the minimum size is 5 gigawatts. Okay, but a few years later, it would reach then 2029. It would reach, according to that forecast, let's say the commercial volume of 10 gigawatts. You doubt it?
[00:27:50.380] - Jenny
It may or may not happen. I mean, in a sense, it only matters to the companies doing it. What I dislike about the perovskite hype is that it tends to become associated with the idea that you should only build solar when you have the next generation of technology. That is not true. You should build the solar you have. In fact, a crystalline silicon on glass is an incredibly good technology. Perovskite, in theory, it may be. There are good engineering reasons why it may work quite well. Because perovskite is quite low temperature processing, it may actually work quite well to use perovskite as a second layer on top of crystalline silicon. But so far, these products, they have dubious lifetimes, and they're just not ready for scale manufacturing. So we did not have to wait for perovskite to come along.
[00:28:38.930] - Torsten
There's plenty of cowboys and charlatans in this industry.
[00:28:42.370] - Jenny
Yeah, I mean, to be fair, I don't think the Perovskite guys are cowboys or charlatans. I think they're just misguided.
[00:28:48.080] - Torsten
So who are the cowboys and charlatans? And why do you think there are so many in the solar industry?
[00:28:52.500] - Jenny
Well, I can't give you names because I'd get sued. They know who they are. This is a rapidly growing industry. Not everyone here is quite honest. There is a very strong incentive to claim any differentiating factor, like the Bloomberg NEF tier one list for solar modules, which is more or less a methodology I developed to show what companies have products that are passing technical due diligence for banks, according to our database. Now it's being used as a marketing term and it's splashed on booths all over. To some extent, because there are so many players in this industry, what buyers and investors and everyone really is looking for is some legitimacy, and people grasp onto any evidence of legitimacy they can get. But the only way to really establish legitimacy is to do what you can do and keep your promises. And some of these companies out there have not done that yet.
[00:29:49.160] - Torsten
So what would be the best methodology to prove the real tier one label?
[00:29:57.080] - Jenny
You're talking to the person who developed the methodology for the real tier one label. I think that what we've got is the best we can have.
[00:30:03.710] - Torsten
I got the feeling that you are questioning it now.
[00:30:07.290] - Jenny
I'm certainly questioning the way it's been used. I invented the tier one methodology, and I think it was 2009 because we had a database of manufacturing plants. And I was pointing it to my investor clients and going, this is a big number. There's going to be oversupply. And they're like, yes, but most of them are just random Chinese companies. And this is true, most of them were just random Chinese companies. So I had to assign some of these to tier one. So like SunTech and Trina, I think. I said, okay, based on vibes, the fact that I hear about them a lot, I think these are tier one. And that made my clients happy. But of course, it made the companies that were not tier one very unhappy. So they were like, can we talk to you? And after a number of very boring conversations, I realized I had to come up with an actual methodology. I decided to use a database of individual projects, some of which are linked to the equipment supplier. So the methodology is based on how many projects have been supplied in the last two years by a module maker.
[00:31:09.630] - Jenny
And now it also requires those projects to be non-recourse financed by banks. The assumption being that the bank or the developer will have paid a proper technical due diligence firm like Peevel, which is now KewER, or RETC, or TUV, to do proper due diligence on the bill of materials and on these factories and ascertain that this solar module will probably perform the way it is supposed to. People like the tier one list because it's short, it's simple, they never read the bloody methodology. You can Google the methodology. Google Bloomberg tier one methodology and you will find the methodology. It's three pages long. I wish people would read it.
[00:31:48.400] - Torsten
So it has the right methodology, but then it makes sense to use it as a marketing tool if you make it into the tier one list, right? What do you not like about putting it on the booth?
[00:32:04.910] - Jenny
First of all, it's not actually on the tier one list. You know that all those logos down there that say Bloomberg tier one, those are entirely invented by the manufacturers. We don't have a Bloomberg tier one label.
[00:32:12.790] - Torsten
You're saying that some of the manufacturers use the Bloomberg tier one whatever label?
[00:32:19.190] - Jenny
Well, there is no Bloomberg tier one label, Bloomberg NEF tier one label. Also, a lot of them have put Bloomberg New Energy Finance tier one, and Bloomberg New Energy Finance does not exist. It has not existed since 2018. You have Bloomberg NEF now. I mean, to be fair, most of the manufacturers who have actually put it on their booth are currently tier one, but it's a quarterly list. Sometimes, manufacturers do basically fake up documents saying they're on the tier one list and send them to potential customers.
[00:32:44.400] - Torsten
With the auditing, you mentioned something super interesting, which is the auditing of the manufacturing sticking to the bill of materials. How good are these audits? Because these plants run 24/7. If you go in there, say, I'm doing an audit, this is like your mom saying, I'm coming to check on if your room is clean, and then you would make sure that your room is clean.
How sustainable, let's put it this way, are these audits?
[00:33:10.330] - Jenny
I don't run these audits. I do think that you need a certain amount of basic competence to pass the audits. And so at least if you've managed to clean your room once, you know what a clean room looks like. I think that's probably a good indicator that at least the people behind the factory know what they're doing to some extent. And also, many of these technical due diligence providers will test random batches. I do think that paying for technical due diligence from a proper technical due diligence supplier is how you should pick your modules.
[00:33:38.360] - Torsten
My final question is always, what does it take to bring solar to the next level?
[00:33:42.620] - Jenny
Flexibility. We've got as much solar as we want to. We're going to have free power basically in sunny hours by 2030 in most places.
[00:33:50.730] - Torsten
Is it going to saturate at 3 terawatts? That's the, let's say projection, by Pierre Verlinden, for production capacity.
[00:33:59.200] - Jenny
We won't ever build more than a terawatt of solar a year.
[00:34:02.450] - Torsten
One terawatt, that's the maximum?
[00:34:04.410] - Jenny
We're not convinced we will because we don't need more than one terawatt a year.
[00:34:08.110] - Torsten
All right. So we're already there where we want to be.
[00:34:10.460] - Jenny
Pretty much. The big questions in solar are no longer about solar. They're about batteries, and they're about how we can change our civilization to use power when it's free.
[00:34:22.800] - Torstej
And how do we do that?
[00:34:24.050] - Jenny
I don't know. No, I mean, obviously, electrification of heat and transport and industry has a lot to do with that. Probably moving around where things go, maybe a bit of hydrogen. I mean, our long term energy system model wants to build hydrogen capacity in a lot of places. Partly, we are going to have this problem that sometimes we get weeks with not much sun or wind, and particularly with not much sun in the winter in Europe. And at the same time, we're sometimes going to get way too much sun. And this is not like a little shift. This is a whole civilisational change.
It's super exciting, but it's also really bloody hard to muddle.
[00:35:06.640] - Torsten
Maybe we'll talk about that next time. Jenny, it's been a great pleasure. Thanks so much for sharing your solar journey and your insights with us.
[00:35:15.620] - Jenny
Thank you, Torsten.
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