Key insights from the 2024 Financing Energy Transition Conference

We recently attended the 2024 Financing Energy Transition summit hosted by Tamarindo in London. The event had numerous informative discussions and panels though out and was attended by leading UK Funds/Owners/Developers. Here are our key takeaways from the conference:

1. Keep an eye on India

There are significant opportunities in India, who not only have an ambitious plan to deliver 500GW by 2030, but in contrast with other countries, are backing it up with: 

a) Enormous investment in transmission infrastructure. 

b) Hybrid PPAs offered by the TSO and DSO (one example included wind, solar and battery).

2. Let China In

Echoing the sentiments at previous conferences, there was a call for western governments to allow Chinese turbine suppliers to play a greater role in the western energy transition. Every other region has a shortage of components, whereas China has an oversupply. We need this oversupply, because even though we delivered a record 160GW of new capacity worldwide in 2023, this needs to triple to reach our 2030 targets

This is also highly relevant for Battery Energy Storage System (BESS) development. While Australia is a major source of Lithium for battery projects, 90% of this is refined in China, which then provides 60% of the world’s supply. Any trade sanctions with China would significantly impact the roll-out of battery technology (which is expected to grow from a $3bn industry currently to being a $50bn industry by 2032).  

3. Things to think about before entering a Battery Energy Storage market

Some thoughts from the panellists on how to decide whether or not to enter a BESS market: 

1. Is there significant wind/solar development which will drive an inherent need for long term supply balancing (High volatility matters much more than high prices.) 

2. Can batteries trade? (Not currently possible in many markets, including Ireland) 

3. Is there some initial subsidy (e.g. capacity, ancillary services) to support the initial investment decision (acknowledging that this won’t be long term)? 

In this context, it is surprising that South Africa aren’t pushing storage more actively given the current supply balancing requirement. 

4. How to get a Green Hydrogen Project Financed

Panel discussing financing for green hydrogen projects

1. Start with the client, not the resource. Industrials have the highest appetite, but perhaps not the best prices

2. You’ll need to include storage 

3. Biogenic CO2 is difficult to get. Locate projects near it. 

4. Projects are easier to get over the line where there the grid is already 90% decarbonised, or where there is a high renewable resource. For example, most of the projects in the recent European Hydrogen Bank auction went to Spain, Portugal and the Nordics.

5. Go for well-developed technology (typically technology research level (TRL) of 8 and above). Banks typically insist on PEM and Alkaline technology, but will accept a scale-up risk. 

6. Demand OEM warranties. Many of the new technology developers will have issues. Be demanding, as the banks will be.
   

Congratulations to Tamarindo on hosting another excellent conference – we’re looking forward to next years’ one already!