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