Podcast Transcript: Jan Rosenow, discuss current policies in renewable energy.

Announcer (00:00:03):

Welcome to another episode of the Solar Podcast. Today Dave is talking with Jan Rosenow, director of European Programs at the Regulatory Assistance Project. Join us as they discuss current policies in renewable energy, the current energy crisis in Europe, and how Jan's work at the Regulatory Assistance Project is helping the world transition to a clean energy future. Let's get right into it on the Solar Podcast.

Dave Anderson (00:00:31):

Well, we'd like to welcome everyone to the Solar podcast. We're thrilled today to have Jan Rosenow with us. He's the principal and director of European programs at the Regulatory Assistant Project. He's a PhD. He's a worldwide and well-known speaker. He is absolutely an energy expert and we're thrilled to have him on with us today. He brings particular expertise, not only just around the United States and solar in the United States, but just energy generally. And also we're thrilled to talk with him a little bit and I think you'll see us get into some of the things that are going on in Europe, which obviously are affecting us here in the United States. Jan, thanks so much for coming on and I'd love if you could give our listeners a little bit more of an in-depth understanding about who you are and what your background is.

Jan Rosenow (00:01:12):

Yeah, happy to, and great to be on the show, Dave. I mean, for your listeners, it would probably be quite important to understand that I'm based in Europe and I work for RAP, the Regulatory Assistance Project, and we are headquartered in the US but I run the Europe team of RAP, working quite closely with my American colleagues of course, and I follow what's going on in the US in quite a bit of detail. But my day job is to really help decision makers in Europe to craft, implement and evaluate better policies to drive the transition to clean energy. That's the mission that we have as wrap, and my role is to oversee the work that each of our teams is doing on things like renewables, energy markets, electricity, regulation, how do we electrify buildings and transport, these kinds of questions I'm grappling with every day.

Dave Anderson (00:02:02):

And who are RAPs typical customers? Who would be someone that you'd interact with there?

Jan Rosenow (00:02:07):

So our main audience is the public sector, so it's regulators, but it's also government departments. In Europe, it's European Commission. But we also do advise industry and we do advise advocates. If they want to advise, we give them the same advice, but our main target audience are those people who make the policies that affect how fast we can go with clean energy.

Dave Anderson (00:02:31):

Would you mind going into a little bit and explaining some of what your educational background is and some of the things that you sort of studied over the years, and I think it's particularly relevant for our conversation today?

Jan Rosenow (00:02:41):

Yeah, sure. I mean, my background, my undergrad was in geosciences, very much looking at the environment from a scientific perspective. I did physics, chemistry, biology, climate science, all of the different pieces to understand how the earth as an ecosystem functions. But I very quickly learned that if you actually want to understand how not only what the impact is of human activity on earth, but how to change that, how to mitigate some of that impact, you actually have to get into economics and policy. So I then did a master's degree in London at the LSE in environmental economics and policy, followed by a PhD at Oxford in energy, efficiency policy was my spec specialty about energy policy more broadly. And now that's where I ended up, in the energy space. Because, that's where a lot of the impact, if not the largest impact of human activity lies, is how we produce and consume energy that has the largest impact on the planet.

Dave Anderson (00:03:40):

And as it relates to maybe RAP generally, which is obviously the Regulatory Assistance Project, but then maybe you more specifically, what are the things that you're particularly passionate about as it relates to this subject right now?

Jan Rosenow (00:03:54):

Well, I think what really gets me excited is this opportunity of seeing the cost of renewables plummeting over the last decade and already before that, but that huge decline in cost. I remember very well 20 years ago when I was discussing renewable en energy with a bunch of German engineers, they were telling me, oh, it's always going to be too expensive. We can only ever have maybe maximum 5% of renewable electricity in the grid. When you now fast forward 20 years and you see the cost in many places of renewables actually cheaper, way cheaper than new fossil plants, that's unheard of.

(00:04:34):

And also when you look at some of the electricity systems in the world that have achieved not only 20%, 30% of renewables, but 50% or even 60% of renewable electricity, that is remarkable and that really excites me. So there's this huge opportunity to do more of that in many more places, but also to replace some of the fuels we currently use, especially in the buildings transport and industry sector, that are still fossil fuels largely with that green renewable electricity. So I think that's the opportunity that we have that really excites me. Because I think it makes the whole system more efficient, makes it cleaner, and if we get it right, it also makes it cheaper.

Dave Anderson (00:05:16):

Yeah, I think we're talking about renewables pretty generically and obviously we're titled the Solar Podcast, so we're strong solar advocates here at the Solar Podcast, but we also want to understand renewables more broadly and all of the ancillary technologies that help to drive renewables. And so maybe you could talk about, so we're not using the term renewables, so generically, what are some of the sorts of policies or what are some of the sorts of technologies that you work on both individually but also as part of your responsibilities at RAP?

Jan Rosenow (00:05:46):

Yeah, I mean, so solar is clearly one of the key technologies in that context. I actually just got solar installed in July this year.

Dave Anderson (00:05:53):

Congratulations.

Jan Rosenow (00:05:54):

And it's rooftop solar. It's a modest installation. I have to tell you it's a small house in Oxford in the UK, and they don't tend to be very large compared to the US. But no, it's great. I mean Solar now pays back even in a cloudy country, a rainy country like the UK, without any subsidy, we tend to rely on subsidies on feed and tariffs and government grants. But now you can install solar even in the UK and it actually pays back just because of the economics haven't gotten so positive. But I think solar is going to be a tremendous opportunity, not just in Europe, but anywhere really. We are seeing these huge numbers also in China, just saw the latest numbers on 2022, the amount of capacity increase and solar is just phenomenal what China has done in building out solar. Most people always think China is building just coal plants. But when you look at the data that doesn't tell you that story. It actually shows that China is deploying record levels of renewables.

(00:06:54):

And then offshore and onshore wind are also seen widely in all of the forward-looking scenarios. As you're providing vast amounts of electricity, the cost of that have come down dramatically. And we are seeing a huge uptake in the deployment of wind all over Europe, all over the world. And I think that's really good to see. On the demand side, I work a lot on heat pumps. I think heat pumps are one of the technologies that have huge potential but have been overlooked so far. That is changing now. And when you couple a heat pump with solar in many places, you can see some real financial benefits of doing that. And I think there's huge potential of thinking about these packages of technologies rather than thinking about them in isolation.

Dave Anderson (00:07:42):

The recently introduced bill in the United States, the Inflation Reduction Act contemplates or it actually gives a lot of value and benefit to homeowners that want to make a transition over to heat pumps. And so obviously many solar companies are trying to figure out how to incorporate that into a more holistic offering. And I think that homeowners and businesses and ultimately the climate and individuals will benefit from that sort of transition. That being said, so I talked about a very big piece of regulation that's happened here in the United States. So what are some instances or some examples where regulation has really helped to speed or facilitate the transition to clean or renewables across... And I would say that globally, but any examples you can give here in the United States or otherwise I think would be great. And just as a little bit of a precursor, I think my next question is going to be what are some examples of where regulations got it wrong as well?

Jan Rosenow (00:08:37):

Yeah, absolutely. I think a good example is market access. There's still places in the world where if you are a small producer of renewable electricity, you can't actually sell it on the wholesale market. You're prevented by regulation from doing that. And places that have accelerated have found ways of opening up wholesale markets to producers of renewable electricity and found pricing models. Contracts for difference are quite a big pricing model in Europe where you get a paid certain minimum amount, but also they might be a maximum amount of how much you get paid, they're called two-sided contracts for difference. But they provide certainty to investors and de-risk those investments in renewables. So that's been a tremendous success I think, in reforming electricity markets to enable them to absorb renewable electricity that previously could not be sold at the wholesale level.

(00:09:33):

That's been, I think I would say, a success. And yeah, there's still work to be done. It's not perfect yet, but that's been a very important lever. Your second question, where does regulation get it wrong? Well, there's so many areas still, and it depends where you're looking in which country, but clearly we still have to do a lot when we look at how we price the use of electricity. When in many places if you plug in your electric vehicle, you pay the same amount per unit of electricity regardless of whether you charge during daytime hours when there's lots of solar on the system or at night when there isn't any solar. Or in a windy country, you pay the same whether it's windy or not. And that is clearly not going to set the right incentives.

(00:10:21):

And we are already seeing where you don't have any price signals, time of use tariffs, that people make decisions that are actually not very good for the grid, not very good for emissions, and not very good for cost because it costs everybody else more if they consume during hours that are expensive, the peak hours and not during hours that are cheap, the off peak hours. So those kinds of price instruments I think are still not sufficiently deployed and they block. Well, I think what is needed is much more flexibility on the demand side. I think that's a key piece that we are seeing now that is needed, but there's not enough incentives yet to make that happen. I think in the US in California for example, that is changing and there's now much more innovative tariffs, but there's so many countries in the world where you just pay flat rate regardless of when you consume and where you consume.

Dave Anderson (00:11:11):

It's interesting you bring up California, that was actually going to be my follow-up question. So here in the United States at a federal level, I'd say we have a lot of tailwinds that are pushing renewables forward generally. Certainly solar is a beneficiary of that with a 30% tax credit. There are some local incentives that help to subsidize the cost, but generally speaking, it's at the federal level. But I would tell you that many solar integrators or people that are installing solar at the ground level, at each individual state are encountering a lot of regulatory headwinds. And one of those examples would be there's been a real whiplash effect that's been going on in California where you had this very favorable net energy metering program where you essentially got one for one credit for all of the energy that you consumed and used, kind of what you're talking about.

(00:11:54):

And this new policy, this NEM 3.0 is going to change California from being probably the largest solar market competing with Texas to it's going to significantly impact the amount of solar deployment. And so again, the regulatory benefits that happen at the federal level haven't changed at all, but at the local level, the state level, it's a big deal. I should also mention, however, California, for whatever reason, we could get into some of those details, but remains the most expensive solar in the world. So if you want to install solar in California, it's the most expensive place to get it. Propped up, at least in part by some of those big regulatory subsidies that exist. So I'd love to get some of your comments on that. I don't know how deep you've dug into the specifics of California, but what are maybe some other practical examples, if not California, where you see these great regulatory benefits on one side, but then they're just ultimately competing against or being canceled out at a local level or at a different spot?

Jan Rosenow (00:12:51):

Yeah, I mean there is actually a bad example. Maybe not using California, but Spain. In Spain, there was essentially a penalty that you had to pay if you installed solar because the assumption was that if you connect solar, you're using some of that electricity yourself, but you're still using the grid, but you pay less towards the cost of the grid. So there was basically like a tax, sunshine tax, I think it was called or the sun tax in Spain. That's now been abolished because it's been recognized that once that was implemented, it was really holding back deployment of solar in Spain. And hey, Spain is one of the sunniest places in Europe, if not the Sunniest place, has huge potential for solar. And because of that tax design, it became very unattractive. And that has changed now be because regulators have recognized that this is a significant obstacle.

(00:13:49):

But no, there's so many issues around regulation. The time it takes to get connected to the grid in some cases is very, very long. Permitting is a huge topic in Europe, not so much for solar but also for solar. But if it's more for wind projects and it can take five years, 10 years until projects from the planning stage to actually being decommissioned get off the ground, and those time scales are just too long. There's some steps that need to be undertaken for sure, but quite often it's just a lot of bureaucracy that is not always needed.

(00:14:27):

And right now we are looking at that in Europe to shorten those permitting times to be able to actually meet those really aggressive targets. Because if you have those really high targets on the one hand for 2030 to increase capacity from renewables, but at the same time you're having those really long permitting processes which may drag on way beyond the target date, it's very hard to meet those goals. And that's not being recognized by policy makers. Will it actually happen? Will these changes be made on in time? I don't know. I would hope so, but it's certainly become an issue of discussion is now on the agenda.

Dave Anderson (00:15:04):

Those regulatory roadblocks or bureaucratic roadblocks become real inhibitors for the private sector wanting to make investments or frankly being capable of making investments into the renewable space just for fear of regulatory risk. So I'd love, if you wouldn't mind helping to make the case for... Because I think a lot of our listeners are going to be laissez-faire type of people that don't really believe in regulation, want to have completely free markets and free economies. And I think that for the most part, most industries that have seen a lot of solar proliferation, it's been at least in part because there is a free market system, but obviously there's been a huge benefit from regulation as well. I'd love, if you wouldn't mind, just for our listeners, if you could make an argument for policies and for regulations to help drive these renewables and why they really are a necessity in terms of driving forward the proliferation of renewables?

Jan Rosenow (00:15:59):

Yeah, sure. I mean, let me maybe start from slightly different perspective here. The status quo that we have in a lot of countries involves already a lot of regulation, but it's regulation that's been designed around an energy system that's no longer fit for purpose. It's very highly centralized energy system. It's often large thermal generators and that regulation doesn't necessarily lend itself to facilitate a much more decentralized transition where you have different market actors coming in and offering up solutions. So actually often existing regulation isn't a free market at all. It's just designed around a different energy system and changing and modifying that regulation may actually mean more market in many areas, opening up markets for new actors, new entrants to come in and offer solutions. And let me give you one example from New York, actually. This is Con Edison, the utility that is responsible for running parts of New York.

(00:17:08):

They were facing a big problem with grid constraints a while back. And traditionally they would just reinforce the grid, build a new substation and things like that, but they decided to take a different approach and go out to tender and run an auction. So if you can come up with a solution to solve the problem, you could bid and put forward your solution. And they did that. And what they found is that the majority of projects were actually things like decentralized renewables, rooftop solar, they would be energy efficiency, flexibility, demand response, these kinds of things. And they saved an awful lot of money by doing that, by opening it up to tender.

(00:17:51):

So that, I think is a good example of where if you make that approach mandatory that you go out and you invite people to come forward with solutions, and you invite the market to find a way forward, you can actually get to a place where it lowers costs for everybody, for all consumers, and you're accelerating the transition to low carbon energy. And I think that's an example of where you're actually using the market rather than constraining it, but you're using it in a very purposeful way, mindful of existing constraints that are already built into regulation. So I think this idea of a free market that has no regulation doesn't exist. There's always regulation, especially in such a tightly regulated space like electricity.

Dave Anderson (00:18:38):

Yeah, I think that's actually a critical point that listeners need to understand, is introducing new regulation, particularly in the energy sector, is oftentimes relieving some of the regulatory constraints that exist within the energy space already. And each, particularly here in the United States, and I'm less familiar with how grid management works in Europe and the European countries, but in the United States, obviously you have, for the most part, regulated monopolies. There are a few states that have deregulated power, but for the most part you have these regulated monopolies. And it's a little bit of a situation where no one's in the room where these deals happen. I know that they're public, but it's a real black box for most consumers in terms of why energy costs are what they are. And I would say that you get huge variances as well.

(00:19:34):

So for example, you take California, which is more of a strained grid than some states like Utah where I'm filming from right now, where energy costs are about a third in Utah, what they are in California, and oftentimes purchasing electricity from the same plants. And it's just because in California just to maintain and manage that grid, the way that it's regulated, the cost of just transmission there is more than the cost of retail power plus the transmission costs in Utah. And so could, we could dive really deep into the complexities about how the regulated monopolies work, but the point that you're trying to make, and I think you make really well, is there's already extensive regulation. What we're trying to do in some examples with policy is to free up some of the regulation to allow new entrants to come in and provide a better way to do energy.

(00:20:26):

And one of the points that you made so well too is fit for purpose. I love that. And we've talked a lot about that in the solar podcast. If we were to start over today, and if there was no grid system, would we do it the same way? And the answer is an obvious no. But I would be curious. As we go into new countries that don't have established grids, as we expand and there's so much expansion that's happening here in the United States and in other parts of the world, what is the right way to deploy renewables now in your opinion?

Jan Rosenow (00:20:56):

So we've actually done a thought experiment that we started, I think it was in 2021/ we actually thought, look, why don't we step back for a moment rather than thinking about what we currently have, and what could we tweak to make things a little better or a little less worse? Let's think about the end goal. So if we want to achieve 100% zero carbon electricity system by the mid 2030s, that's the aim in Europe, and also in the US at I think at federal level, we've seen similar goals being voiced there to decarbonize most of the electricity system by the mid 2030s, late 2030s. So that's not a lot of time, that's only 13 years to 2035, but how do we actually do that? What does the system need to look like in 2035 to accommodate that? How do we need to design markets? How do we need to regulate the networks? What price incentives signals do we need to send to consumers?

(00:21:56):

All those questions we looked at and we designed what we call the blueprint, a power system blueprint, from a regulatory markets perspective, and you can find it on our website. If you Google RAP online and blueprint, you'll find it straight away. And you can click on each of the elements to understand what needs to happen in this area and what needs to happen in that area with examples with further reading and evidence. But it's really trying to put all these things together because often you get lost in just one of those aspects of regulation, but if you don't get all these other pieces, then you may never achieve your goal. So we looked at it holistically with a team of experts across the whole piece, and I think it's a really useful thing to do. Sometimes we get so stuck in what we currently have and we think that's a status quo and it's difficult to change. And yes it is, but it helps sometimes to think about where do you actually want to be and then aim for that rather than think about what can we tweak today?

Dave Anderson (00:22:55):

And so during that thought expert experiment, I would imagine that has driven a lot of the work and a lot of the educational piece of what RAP does for the public in terms of the world that ultimately you guys are hoping to drive and create. So it's it in some ways it's the why behind what you guys are doing.

Jan Rosenow (00:23:17):

Yes, and it's a theory of what are the right policies ultimately that we need and regulations that we need, the market designs that we need to achieve that transition. What's the end goal? What are we aiming for and why are we doing that? I think that's an important question. It's not just about, oh, let's get a little bit more of this technology deployed next year, but actually what's the system change that we need to see to accommodate all of that? It's not just about getting more solar deployed, we also need to think about storage. We also need to think about flexibility, electrification, energy efficiency, how do we bring all of that together and in a holistic way so that these technologies interact well together? They don't cannibalize on each other, but they actually support each other. And sometimes that's not the case. Sometimes we have policies that are actually contradictory where you support one thing with one policy that's actually not beneficial to another technology that you also want to see being deployed.

(00:24:19):

And that is really not something that we or we ought to be doing, but it happens too often because what we see that in governments and regulators, often you have these silos. So you have one part of the government agency dealing with a specific policy area. They may be designing a ground program for deploying solar or installing batteries or energy efficiency measures. And then you have another part of government that deals with something else. But they should be talking to each other a lot more and making sure they have a holistic proposition. But that doesn't always happen. So I think that that system thinking is really important and we try to take that into all of our work so we don't just talk about, oh, we need to get this technology off the ground, but actually how does this fit into the wider system?

Dave Anderson (00:25:07):

Yeah, I'm afraid I'm going to show my own ignorance now as we sort of transition and start talking about what's going on in Europe. But I would say that and you should assume that most of the listeners for the solar podcast are here in the United States and are going to be in a similarly disadvantaged position in terms of an asymmetry of information. You're going to know a lot more about what's going on there certainly than we are, but I'd love to get your take on what's happening, generally speaking as it relates to energy in Europe, some of the things that are happening, some of the critical things that need to happen, and we can start from there.

Jan Rosenow (00:25:38):

Yeah, sure. Europe has, and I'm sure many of your listeners will know this, has for quite a long time had an agenda around renewables, clean energy, energy efficiency. We had carbon goals for a long time, goals for renewables for reducing energy demand through energy efficiency. And that is culminated in what is called the green deal. That's not the Green New Deal. The green deal is the European Commission's policy package of all of the things that they're doing to achieve those goals. So that was in the works for a long time. But what has really changed is the invasion of Ukraine by Russia in February last year. That has fundamentally changed the discussion around energy. And the focus is now much more on energy security.

(00:26:29):

Of course, we are just coming out of this winter, there were real concerns as we were going into the winter that there would be physical shortages of fossil gas that we would literally run out of gas in Europe, and there would need to be rationing, so the state would have to tell people, you can only use this much, and you guys can use gas, but you can't. And that hasn't happened. We have not seen that for a variety of reasons. One reason is we were lucky that the winter wasn't really cold, it was fairly mild. That helped of course, because people use less gas when it's warmer, because a lot of that is for heating. But what also happened is that what many European countries have done, and the European Commission has done is in response to the crisis, rather than saying, oh no, let's stop with the transition to clean energy, let's stop with the green deal, they decided to accelerate.

(00:27:23):

Because they recognize that if we double the deployment rate of solar, of wind, heat pumps of energy efficiency, we also accelerate the time it takes to transition away from the imports of fossil fuels from Russia. That was very much the narrative, and we are seeing that now playing out in all of the policies that are getting adopted, but we are also seeing it on the demand side. So when you look at the demand for renewables, for energy efficiency, for electric vehicles, batteries, heat pumps, all of that, there's a lot of consumer demand and it's growing at a rapid pace, and the industry can't actually keep pace with that. They can't make the stuff quickly enough to actually sell it to the customers.

(00:28:12):

To give you a specific example from the UK, when you now go to a solar company and you want rooftop solar, you often have to wait at least half a year, maybe a year to get it installed. In the past, it would happen very, very quickly. You could get solar in a few weeks time. And they often have seen five, six times more demand ramping up in just one year. So that's what happened on the demand side. That is a much more awareness because energy prices... And I haven't mentioned this yet, but energy prices have gone up in some cases like 10 times more for gas within just a few months time. And that those price spikes have really made energy one of the key topics in the discussion in the major newspapers on television, and people are well aware that if they do not transition away from these fossil fuels, there's a risk that it may happen again. So that's what the impact has been is really an acceleration of the transition towards clean energy.

Dave Anderson (00:29:15):

So two questions. The first one, take them in order. The first question is what are the major constraints that are making it so difficult, particularly we're using the UK example, to get solar installed. What's the six month 12 lag?

Jan Rosenow (00:29:30):

Well, it's a combination of installers, so a lack of people who can actually physically install the kit. And the other constraint is modules, just getting a hold of modules, solar modules, because yeah, there was a real constraint, especially because they're made in China mainly. And I think that's been related to the Covid lockdowns in China and just factory capacity, not operating at full scale and increased demand. So there was just long wait time to get orders in, and those two factors in combination, lack of qualified installers and a lack of solar modules really led to this shortage and the long wait times. It's not a regulatory barrier, it's really to do with I think supply site constraints and this massive spike in the demand.

Dave Anderson (00:30:21):

The second question is around Germany. So Germany had previously been lauded and I think applauded in the media generally speaking as being really forward thinking and been applauded for its deployment of renewables. But there were a lot of individuals both on social media who tend to try to give news out and soundbites. But then just generally I would say in the media, giving small soundbites talking about how Germany found itself because this Ukraine crisis in a really disadvantaged situation, because of its deployment of renewables. I'd love if you could talk about that in a little bit more than just a quick soundbite to help us understand what really happened in Germany and what needs to happen going forward to make sure that Germany continue to be a really forward renewable, forward thinking renewable country and never put itself in a position where it might be disadvantaged as a result of making that transition.

Jan Rosenow (00:31:20):

Yeah, no, it's a great question. What I would say is that it's important for your listeners to understand that most of gas that's being used, and gas is the main fuel that cause the crisis. Oil as well, and coal to an extent, but gas was the main one. Is actually not used for electricity production. Most of the gas that is used, is used for heating buildings. That's the biggest sector by a significant margin in Europe. And there's also a lot of industrial gas use. So the electricity sector is not unimportant, but it's not like that's where most of the gas is going. It's a share of the overall gas usage. And then I think the logic of people who claim that, oh, Germany or Europe generally is in this difficult position because of renewables, what I would say is that, well, if we hadn't built out renewables as we have over the last 20, 30 years, there would actually be an increase in gas use.

(00:32:17):

There would be more gas that's been being used in the electricity sector, not less. So renewables that we had actually helped us to consume less gas for electricity production. And when you look at the numbers, we are seeing that very clearly. And the dependency on Russian gas imports was very much driven by the attractive gas prices that were on offer. And it had nothing to do with renewables. It was companies making contracts with Gazprom and others to get cheap Russian gas because it was on offer. And people who have warned against being overly reliant on just one individual country, you have not been heard in the past, and there were warnings by environmental groups many times saying that we can't rely on Russian gas imports. We actually need to make sure we become more efficient in our energy use, but we also have more domestically generated energy from renewables so that we don't rely on these imports.

(00:33:22):

But those voices were unfortunately not heard, and that's really changed now. But I think the narrative, the logic doesn't stack up for me to say, oh, because you deployed renewables dependent on Russian gas, first of all, electricity is a small share. Most of the gas use is not for electricity production. And secondly, the fact that gas imports went up from Russia had nothing to do with renewables, it had all to do with declining gas reserves in Europe and just Russian gas being really cheap on the market. That was the major factor that was driving that dependency. Having said that, what many of your listeners might not know is that right now Germany does not import any Russian gas anymore through pipelines. In late August 2022, that's when the last imports for pipelines stopped. So since then, it's 0% through pipelines. There may still be some LNG where there's Russian gas mixed in. I don't know. That's difficult to find out.

(00:34:27):

But the vast majority of Russian gas is totally phased out now and replaced with a lot of LNG from the US for sure in other places like Qatar, but also replaced by accelerating clean energy in Europe. So I do not think that ultimately this is exposing the failure of the German or the European experiment with renewables. And in fact, this narrative has never taken off the ground in the European debate. There were commentators in the beginning making exactly that point, saying, oh, now no, we need to dig for more oil, coal and gas in Europe. Let's move away from renewables. But that hasn't happened because every single analyst who's looked at it seriously, the IEA the International Energy Agency, the European Commission, national Government Departments, they've all found that the root cause is to do with Russia constraining supplies to Europe. And the main response to that is to accelerate the transition to zero carbon electricity to energy efficiency, electrification, things like that.

Dave Anderson (00:35:31):

And I think it's pretty easy for any of the listeners to understand that if you can reduce or completely eliminate, as Germany has with the case of Russia, your dependence on foreign oil or foreign gas, then I think that you actually put yourself in a much more stable situation. So the point with Germany is it hadn't fully made the transition, it had mostly made the transition, and because it hadn't fully made that transition, it probably found itself in that situation where it had to make some fast and quick decisions in order to make sure that the German citizens were able to continue to heat their homes, for example, and businesses were able to heat their homes.

(00:36:09):

But thank you for that clarification. It never really intuitively made much sense to me that by increasing the amount of solar production or increasing the amount of renewables, I should say, in a country should disadvantage you in terms of if there were a crisis, your ability to have access to energy. But I think your explanation is perfect. So we know that that conflict is not completely resolved. In the case of Germany, they've removed or eliminated their dependence, at least it sounds like they don't get any resources from Russia anymore. But generally speaking in Europe, how have these things resolved themselves, and how would you explain the state of affairs as it relates to energy in Europe generally?

Jan Rosenow (00:37:00):

So I think what we're seeing in the short term is, and I haven't mentioned this before, of course, in some places, coal plants that were supposed to be phased out or phased down have come back on in the short term, but that's relatively small. Those are small amounts sometimes been overstated in some of the media coverage around this. But it's not surprising that in a crisis situation like this, if you are the regulator, you might decide that we're going to let that coal plant run for another year just to make sure we don't have a shortage here. So that's some fuel switching happen in that way. But also diversification of supplies. I think that we now have three floating LNG terminals in Germany alone to be able to import liquified natural gas from different places. So the supply infrastructure has changed, but I think that's an important piece in the short term.

(00:37:58):

But in the medium and long term, what we are seeing, and we talked about this before, is this real focus on how can we get up to speed? How can we really accelerate? Because in order to replace vast amounts of fossil gas and other fossil fuels, just doing a little bit more of what we are already doing is not going to be enough. And I think that that discussion is now in full swing. So how do we not just double or triple the deployment rate but actually quadruple or go even further? And that discussion will be interesting to watch, whether do we actually get the right incentives? Do we get the right regulation, the right policies to make that happen? Would the market be able to deliver on that? I think that's a very exciting journey that we are on. I'm an optimist in this.

(00:38:49):

I think looking at some of the big transitions in history, they sometimes happened very, very slowly, but they often happen very, very quickly. And we get surprised how quickly they happen when we look back. But at the time people think, oh, this will never happen. This will be very, very slow. Just a few examples. Electric vehicles is a good example. I remember very well 10 years ago, a lot of people were saying electric vehicles will never take off. Tesla's a joke, they're never going to get to market. And now we fast forward 10 years and we are seeing in a lot of major markets, electric vehicles being one third, maybe even 50% or more of new sales. And that has happened in a relatively short amount of time.

(00:39:33):

We are seeing that in other sectors too. You think of smartphones. I remember very well where the first iPhone when it came out, that was sensational and it didn't take long for smartphones to become commonplace. So I think technology can move very rapidly. And this is what we're going to see I think with renewables and with other clean energy technologies, especially in Europe because there's now so much pressure to do that. And I think the economic case, as we said before, it's now so much stronger.

Dave Anderson (00:40:07):

What are some of the things that the global we are not doing in terms of trying to drive energy or drive renewables that you'd like to see happen organically? And I'd also love to hear what are some of the policies that don't exist that you think are going to be critical in terms of our deployment of renewables globally, but obviously at any local example as well.

Jan Rosenow (00:40:27):

I think the missing piece is still how are we going to deal with a system that is not just 60% or 70% zero carbon, but a hundred percent. What do you do when the wind isn't blowing, the sun isn't shining and you have an extensive period where it's cold. It's called a [foreign language 00:40:45] in Germany. And it's a term that I think made it even into the English speaking world now, but it's mentioned quite frequently, at least in the English speaking media in Europe. And yeah, it's a real challenge that needs to be taken seriously. I would say that those periods are not that as long as people often think they are, and the more interconnected you are, the less of a problem it is. But we have to find solutions to balance the system to produce sufficient amounts of power when you don't have enough renewables and you still have that demand.

(00:41:28):

And I think that's the missing piece that we will have to start address. And no one has all the answers yet, I think for that. To what extent can we actually store energy for long periods of time? So, I think that's a critical ingredient in the transition that currently I don't see enough activity around. There's lots of research, there are lots of pilot projects, but I think we have to incentivize these kinds of technologies a lot more to really get to a place where we can have a stable, reliable, and economically affordable energy system that provides clean power 24/7.

Dave Anderson (00:42:08):

I think again, one of the great things about the United States is with the 50 different states that we have in each state having some control in terms of how it manages and runs within any given state has its own, you get essentially these little experiments that are happening at the state level. I mean you still have a very strong overarching federal government system, but you take the case of Hawaii, which is an island and has its own very specific needs, and they've actually driven the adoption of batteries. They're far in advance of any other market here in the United States, or excuse me, in the contiguous United States. California with its recent policies is certainly batteries are going to be a critical component. One of the things that has really disadvantaged, I think the United States generally is the cost of deployment. So cost of acquisition and then the cost of actually installing.

(00:43:01):

And a lot of that is just dealing with the permitting, it's dealing with the local bureaucracies. But we're installing, in the case of California, it's three or four times more expensive to deploy solar than it is in Australia. And the timelines to get solar installed in Australia relative to California significantly longer, and California's actually fairly fast as states go in the United States. And so how much of the policy that you're thinking about is purely just around trying to eliminate barriers to individuals and businesses from a cost perspective, and are there any major policies that we should be thinking about right now to really help drive the cost of solar down that that's not just a pure subsidy just paying for it at the government level?

(00:43:46):

Because ultimately at the end of the day you're just spreading the cost across the entire constituent... Well, not just constituency, but across the entire base when you do that to the benefit of maybe only few. So how do you think about that and are there any specific policies that you think should be enacted to help overall keep the costs down? I'd love to get your take on that.

Jan Rosenow (00:44:08):

What I would say is that I think it's not sustainable to build policy around the area that you subsidize these technologies in perpetuity. That you effectively have government pay people to adopt all these technologies because it's not economic otherwise to do so. I think that's not a good proposition. I think for very immature markets, kickstart a market, that's fine. And for some customers like low income customers for example, there may need to be support that's ongoing. But I think for the majority of the market, you want to get into a place where you don't need any subsidy anymore, because it's the most logical, the most economic thing to do to deploy these technologies. But that's not often not the case because we don't get the incentives right. And then you're left in a situation where because the incentives are designed badly, and the cost signals are not right, you then have to come in with a subsidy to incentivize the uptake of those technologies, which has a cost associated with it for taxpayers.

(00:45:19):

But it's not a great way to actually get a sustainable market and get that certainty for investors because that subsidy could be taken away. Every time you have a new incoming regulator, you have an election. Whereas if you get the long term economic signals right, I think then there's a clear path forward and this is going to be a good investment in the long term. So let me give you a specific example, and this may or may not apply in the same way in the US but I'm going to use it anyway. So what we've done in Europe is that we put a carbon price on electricity, we put a lot of the cost of the subsidy schemes on electricity bills. So customers are paying extra for electricity for all the different energy programs, energy efficiency, renewables. And as a carbon tax on top, we have not done the same for the use of fossil fuels.

(00:46:17):

So if you buy fossil gas or you burn propane or coal, you're not going to pay any of those costs. So what it's done is it has actually made the usage of electricity more expensive, but left those other fuels relatively cheap. And the incentive is of course to continue consuming those fuels and not electrify. And then you provide subsidies for people to procure an electric vehicle or to buy a heat pump, and those subsidies need to be sufficiently high to offset that disadvantage that you then get if you switch from one fuel to electricity. So that's something that decision that makers can make and they can decide that they rebalance the way how we allocate those policy costs across different energy carriers to create the right incentives.

(00:47:12):

And I believe once you have a long term saving, if you invest in a specific technology and you're actually saving money in the long term, you don't need the subsidies. There be financial models, someone will come forward as we've seen it with if you buy a car you don't pay up upfront, most people lease it or get a loan. You will see the same thing for clean energy technologies, just as we see for other products that people buy every day. But as long as these long term cost savings are not there, there's no demand driver, there's no clear incentives for people to do it. And relying on subsidies I think is in the long term, not a good way. And it's not fiscally sustainable either because at some point those subsidies will run out and that's not helpful to give that certainty to the market, in my view.

Dave Anderson (00:47:58):

Carbon tax credits at a few different states or jurisdictional levels. I know the European Union has much broader implemented these essentially tariffs for non-renewable energy sources and these carbon taxes, but it's a difficult thing to get right. So what is the true cost to society that if you're generating energy with non-renewable or with carbon emitting technologies compared to if you're doing and using more renewable sources and trying to get that right so that people are paying, and for lack of a better term, their fair share for their contribution, negative contribution I should say, to the environment and to the economy as well. But these things are difficult to get right, but I think that there is a lot of modeling that can happen, that it's not necessarily demonstrating the net carbon costs to the environment as much as what's the right amount of tax to drive the right incentives for people to make good and responsible choices.

(00:49:04):

And I think that is something that you can model. It's a lot easier. You don't have to try to get into a science debate in terms of what the impact of carbon is in the environment. You can just simply say, look, this is better and we can subsidize it simply. We can help to further the deployment and we're not having to use government subsidies to essentially pay for a renewables infrastructure, which is good. We could spend one or two podcasts just talking about that sort of modeling and that sort of deployment. But I do think that those approaches are the right approaches. And something I'd like to see happen a little bit more here in the United States as well. Less of a government tax credit and more of a free market sort of a situation where people can make a decision where they want to get their energy, but they just pay the necessary fee for the decisions that they make.

(00:49:57):

And so that's a total free market situation, a free market decision that any homeowner, any business could make where they're essentially just paying for the net cost that they're making to the environment or that their non-renewable choices can go towards helping to also proliferate renewables in other parts of well in the energy deployment. So again, I think we could talk a lot about that specifically. I'd love, if you could, just talking about, again, I want to get into some real practical examples. We've talked a lot about policy, we've talked about Europe. I think we could dive much deeper into any of those subjects, but I'd love to get your take generally as an expert in energy just on systems integrations generally. So what are some of the things from a systems integrations perspective that you think are really beneficial to individuals but also to the environment and some things that you guys would like to see happen at RAP and individually, things that you're particularly interested in?

Jan Rosenow (00:50:58):

Yeah, that's a great question. And I think we touched on some of this already in our conversation. It's going to be so critical as we essentially converge, the different sectors are converging, right? In the past we had the electricity sector that was quite separate from the transport sector. There wasn't an awful lot of interaction. That's now changing with electrification. The building sector, the power sector, the transport sector and the industry sector will essentially converge and be much more integrated. And what that means is that we can't just think about electrification of buildings in isolation. It becomes part of the electricity system, and therefore if we do it badly, it can create big problems for the electricity system. A good example would be people coming back from work at six o'clock plugging in the electric vehicle all at the same time during the peak period, adding more to the peak, making it harder for the system operator to meet that demand, making it more expensive and also maybe running fossil generators that are polluting and expensive at the same time.

(00:52:20):

And that can be entirely avoided by having the right price signals again. And there is real well data on this in the absence of those signals, that's exactly what happens. People will just come back and plug in at six o'clock, walk away and the car is starting to charge. But with the right incentives and they exist now in many places also in some of the states in the US, you get actually a massive discount if you charge overnight or maybe it's during the day when there's more solar, depending on the location, it will vary. I do that all the time with my own electric vehicle. We have a time of use tariff and it's highly variable. Sometimes it's quite expensive and sometimes it's really, really cheap and sometimes even negative, when there's too much electricity that there's no offtaker for it and you get actually paid to charge.

(00:53:09):

That doesn't happen very frequently, but it does happen. And I always use those tariffs and I would say I reduced my charging cost by at least 90% by doing that. And that's not a subsidy, yeah, it's not someone paying consumers for that. It's just offering them the benefit or at least the share of the benefit that they are offering the system if they behave in a certain way. So I think that's going to be key to get those incentives right, to get the flexibility on the demand side to integrate all that new load into the power system in a much more meaningful way that actually helps to accommodate an increasing share of solar and wind and other renewables. A good example I think of solar is Australia, where when I talk to people in Australia that tell me in some areas there's now so much solar on the system, they actually don't know what to do with all the electricity because it's produced during hours when there isn't enough demand for it and they can't store it yet.

(00:54:11):

So it's really important to, I think, also create incentives for that flexibility so you use and store the electricity when it's available and when it's cheap to be generated, and you avoid usage if you can avoid it easily during periods when it's more expensive, more polluting. So that's an important piece, I think, that we need to get right. And we are starting to see a lot of movement, I think, in that direction because it offers really all those benefits to the energy system and to consumers. If you can save a bunch of money by using an app to charge, that automatically schedules the charging to minimize your costs, it's not very difficult to do. And you actually getting a significant saving as a customer

Dave Anderson (00:55:01):

Here in the United States one of the all two common questions is we're starting to transition over to electric vehicles is people will ask the question, well, what's the capacity of the vehicle? That's one of the first questions. But the truth of the matter is that only matters once in a while. I mean, for the most part, people are using their cars for 10 to 30 miles a day, and so they have a bunch of excess energy that they're just driving around with in their car for those instances where they're going to need two or 300 miles. But if they're charging their vehicles every day, most people don't need the full capacity of the batteries. And so in talking about systems integrations, in California particularly, one of the things that's happening now is we're moving to a situation where we don't have one for one net energy metering with the NEM 2.0 program moving to this NEM 3.0.

(00:55:48):

So we're having to add demand control and we're having to add storage to be able to store power. There will be times where the cost for electricity that you export or the export tariff to export your electricity to the grid, and this isn't going to be very common, but it'll be like three or four bucks a kilowatt hour to US to deploy those kilowatt hours. But then there are going to be other times where you maybe will get a penny for a kilowatt hour, which obviously it costs a lot more to generate a kilowatt hour than 1 cent. And so, you're net negative if you're looking at it from a pure financial perspective. And so doing things like integrating your EV, and these are things that haven't happened yet, but could happen very quickly. But being able to use some of the excess capacity in your car to be able to help with demand control at your house and having that be an integrated part of the grid is something that a lot of people are getting really excited about and something we'd love to see happen.

(00:56:43):

People are installing 20 or 30 kilowatt hours of batteries, or even as few as 10 kilowatt hours of batteries where there are cars now that have well over a hundred kilowatt hours of capacity that are just sitting in their garage. And so having that being a integrated part of the system, I think is something that gets really exciting. So now, if you are a consumer and you have a 200 mile trip planned for the next day, well, you can take your batteries offline so that they're not part of the grid so that you're not deploying the electricity. So you can have that capacity for that next day when you need to drive the couple hundred miles. But for the most part, most consumers would be able to make their electric vehicle battery capacity part of that system and create a fairly efficient system for being able to deploy and meet peak demand just by virtue of changing cars, not only to being consumers of energy, but also a producer or rather a store of energy to be able to be deployed at those high demand times.

Jan Rosenow (00:57:43):

Vehicle to grid, as is commonly known, is I think it's taking off now finally, it's been talked about for quite a while, but there are now several technology providers that actually do that. Not all car companies will allow that. I know Tesla for example, I think are not allowing bidirectional charging yet where you can feed in.

Dave Anderson (00:58:03):

It's less about not allow, actually, it's not a super simple problem to solve. So this is something that we've done a fair bit of research on and I think it's just something that they haven't solved yet, but it's an inevitability that they will. Obviously, Ford with its deployment, they have a bi-directional system, but it's a fully integrated battery and charger and inverter to be able to make that happen. And Tesla has tried to be more ubiquitous in terms of being able to work with multiple chargers and in its desire to be ubiquitous in terms of how to charge. It actually created the unfortunate, unintended consequence of not necessarily being able to be grid integrated is as simply, but there's certainly something they're going to solve.

Jan Rosenow (00:58:46):

I'm sure it's going to come. And the question is how often you will actually have to use that. There could also be a scenario where you use it as backup when you have outages and things like that. I know that there was a very successful ad advertisement campaign in the US by a specific car maker that was majoring on the fact that this is an electric vehicle that you can actually use as backup when there are outages. I think that's an important feature too. So it remains to be seen to what extent and how frequent we will use electric vehicles to actually feed in to the grid. But it's certainly becoming a topic I think of considerable interest and we are seeing a lot of pilot projects and testing, what is it going to do to battery life. I think that's always a question people ask, is it actually worth doing?

(00:59:33):

Because it's not just the cost of charging the car and then you giving that back to the grid. It's also the lifetime of the battery. And will that degrade? I think that's an open question. I heard some people say it's not going to be a major factor because it's not a major draw on the battery. It's not like you're pushing down the accelerator on the highway. It's more like a gentle trickle of electricity. So it's not going to change the battery lifetime dramatically. But other people have more concerns. So I think it remains to be seen what it does to batteries. But if indeed it has very little impact on the battery lifetime, for sure. It can be something that could offer tremendous benefits.

Dave Anderson (01:00:11):

Jan, there's so many things that we could certainly talk about. One of the things I would love to have gotten into with you, and I'd perhaps we're going to have to schedule another time to do some follow-ups, but I'd love to have gotten into hydrogen and a lot of other renewables. And these are things that I know that you're passionate about and have been really helpful with, not only with your role at RAP, but also just in the numerous speaking engagements you've done in terms of creating awareness. It's been an absolute pleasure and delight for me to be able to visit with you today. Getting a better understanding of certainly Europe, but just generally speaking, the way that policy and regulation play such a critical role in the proliferation of renewable energy. Right now, areas we've got it right and areas that we've got at wrong.

(01:00:51):

So thank you so much for coming on the show with us today, Jan. And again, we'd love to have you come back to talk about some of the things we certainly didn't have a chance to. I have many, many notes of things I wanted to talk to you about hydrogen, not the least of which, and how it plays a role in the overall system as well. But again, thank you so much for coming on and spend some time with us and helping to illuminate our listeners on the importance of policy and regulation, and also just general effects that are happening in Europe and otherwise. Again, thank you so much for coming on.

Jan Rosenow (01:01:23):

Thanks for having me, Dave. Pleasure.