Power purchase agreements with Luca Pedretti (Co-Founder & COO @ Pexapark)

Now when I say it's not a natural market, the natural power market has time horizon of one or two years. So someone has to step in and take this tenor risk. And that's why it becomes quite expensive to provide such a contract, for example, from a trading perspective, And it's also not the natural batting horizon from the corporate. So a lot of technical terms, but that's a key thing.

And the problem is right now, How can you expand this market? Because we're talking ten, fifteen gigawatts of assets realized on the PPAs, but we gotta potentially realize triple quadruple of those moments per annum, and there's just not the market there for this if you have to stick to tiny people's. I think that's probably the biggest and fascinating opportunity in the PPA space. Hello, everybody.

Welcome back to transmission for our first episode of two thousand and twenty four. In today's episode, Quentin is joined by Luca Padretti, chief operations officer, and co founder of Pexa Park. Over the conversation, they discuss power purchase agreements or PPAs.

How do they work and what does the future of power purchasing look like? If you are enjoying the podcast, please consider hitting subscribe and giving some rating. It really helps us reach a wider audience and ensures that you never miss an episode. And with that, let's jump in.

Hello, Luca.

Hi, Quentin. This is a very special podcast because it's the week before Christmas, and no one's doing any proper work. And so we're just gonna have a chat about, Pexa Park PPA's. And then, really, we're gonna spend a lot of the conversation talking about your contrarian views because you have a lot of them, and I I I know a couple of them, and I'm quite excited for you to share them with our listeners.

And funnily enough, you've logged into this recording as mister PPA. So, firstly, is that your title, or does anyone call you that? And what is a PPA? Well, I wish it would be my title.

It's not yet. I'm trying hard to be an influencer in the industry. But so what is this PPA?

It's not the professional photograph or association that what it was when you googled it a few years ago, it's a power purchase agreement. And I'm sure we're going to talk. A bit about it. Yeah.

How did I get into that? Energy trader and originated by heart, by profession, also by accident I did this first PPA fifteen years ago, and, yeah, I haven't stopped since then. And, that's how I got to co found Pexo park six years ago. Before we talk about Pexipark, this contract, this power purchase agreement thing, who are the counterparties?

How how do you use it and why is it special? I think there's no point talking about Pexa Park until we've covered all of the basics of that. A power purchase agreement in the end is a bilateral agreement. So you have a seller, you have a buyer, and you wanna govern the exchange of electrons either physically or financially.

And take three things. You have to get done or regulating this agreement is, how you structure volume, how you price it, and you gotta find some wording on credit.

And in our space, when we talk PPA, it's typically a ten year or long term agreement. It's linked to the financing of new capacity, a wind park, a solar park. So it's a buyer or a seller, and it's often related to new energy project. Right?

What what does that mean? As it is related to a new project, it typically links to finance. So what does a PPA do? It secures revenue for a long period of And by securing revenue, you can get financing.

You can leverage up the project.

And that's, where PPAs came in. It used to be all feed in tariffs. So you had a government or a government backed entity providing this, revenue guaranteeing the price and PPS came in ten, fifteen years ago to do essentially the same just with private software. And it is still to today.

The main lever of the PPA is to be seen from a financing perspective. So what sort of assets are we talking about here? Well, we started the first PPs were done for, onshore wind project in Sweden, and then it was like a wave spreading from market to market. And when you look at it today, it's sixty, sixty five percent of the assets realized on the PPAs or solar parks.

Or, offshore or wind. So basically, you could contract any kind of renewable power capacity under a PPA, but the main things are, of course, solar as it has become cheap, plenty, and it's easy to realize. Alright. And now we get to talk about Pexa Park.

Pexa Park is a business. We we've been working at Moto. We've been working in Pexa Park for a couple of years now. It's been a great privilege to see you guys build a great business.

And it's got a hell of a coverage, right, geographically and different types of assets and complexity.

So I wanna dig into to that in more detail. But firstly, what is Pexipark, the company that you founded? And what what's the mission and what you're trying to do? Yeah.

So the company is now six years old. I think the big background to Pexa Park is renewables facing merchant risk price risks. That's the story of Pexa Park. And the purpose of the company is very simple.

We want to make power markets more efficient, and we do this, by creating providing software that allows to manage renewable investments, and we make the PPA market transparent. So we provide reference prices for this energy transition. Because in the end, if you don't know what the fair price is to transact, it makes transactions harder. And finally, we help clients just to get PPA stuff.

And so who who are the customers? What what what what kind of customer profiles do you help solve problems for. And what what are their big problems? What is the big problem we're facing in the market?

PPAs were the main tool to get financing.

And the long term PPA market is not a natural beast. So just going out there and getting a ten year PPA is nothing we should do quickly. I mean, when we look at the total market, we're talking one hundred and fifty to two hundred transactions. It's huge volumes which are involved. You have to finance a project is where someone is spending hundreds of millions of euros potentially.

So there are a lot of stakeholders involved lenders, off takers, a lot of credit risk. So this is not going super quick Now when I say it's not a natural market, the natural power market has time horizon of one or two years. So someone has to step in and take this tenor risk. And that's why it becomes quite expensive to provide such a contract, for example, from a trading perspective, And it's also not the natural buying horizon from a corporate.

So a lot of technical terms, but that's a key thing. And the problem is right now, How can you expand this market? Because we're talking ten, fifteen gigawatts of assets realized on the PPS, but we gotta potentially realize triple quadruple of those volumes per annum, and there's just not the market there for this if you have to stick to ten new PPs. I think that's probably the biggest and fascinating opportunity in the PPA space.

And just to go back to basics here, could you give an example of a trans action, both sides of the which both both counterparties, and then the the company that was building the asset and the company that was buying the power or signing the PPA. Could you give an example? And we just let's stay away from hydrogen for a second. Let's just keep it purely electrical.

Yeah. Let's assume, you're a developer in Germany. You have secured to land. You have a building permit.

And the only thing what you need is secure revenue, so you can basically make more of the equity you have, we can get financing.

So you sit there, you look at the market, you look at what prices there are, what are, what you could sell your power and you start to strategize. So what type of landing could I get? How could I sell my power? When you have to find that, you try and go out in the market and, try to source a PPA. For example, you would conduct, RFQ.

By doing so, you get offers and then you have to compare those offers. An RFQ is a request for quotation.

So you go out in a structured manner and you get quotes, you get offers.

And typically when you get offers, you see that You have to compare apples and oranges and bananas and sometimes even something else. So the first challenge is then how can I compare those different offers? That they they are the same. If you're happy with those offers, everyone agreed, especially also the lender, you try to close this PPA. That's a process which typically takes to up to twelve months.

As we just mentioned, it is a a high stake negotiation as typically hundreds of millions of euros are invested. In the underlying asset. So if I've got this right, what happens is company X, I don't know, wind farm limited or wind farm ink comes along and says, wanna build a wind farm. I wanna spend five hundred million euros on a wind farm. And that's not the same company that's gonna use all the power. So they say I'm gonna build a wind farm, and I need to find someone out there who's gonna buy that power over a long period ten, fifteen years.

And those that you you get a lot of quotations there's lots of different types of buyers. We're gonna talk about that in a second, and then you contract with them over ten or fifteen years. And that whole process takes two to twelve months. So it's a big deal, and Pexa Park, you're right in the middle of that, aren't you?

Correct. So we could support the entire process. We start at the very beginning where we would just give price transparency. So what could I get selling my power in the market, then, we can help define the strategy.

So we'd have appropriate tools that you can size the PPA, you can look at the right structure for you, what type of revenue security you need for your project. And then we would also have people that help you to to get the transaction done, really negotiate, structure the PPA until it's closed. And can you just give an overview of the type of folks involved in the transaction. So who who are the big players in because a lot of people listening to this have maybe never even heard of PPP or even that it exists.

But it's it's massive and there's, you know, billions of euros, maybe tens of billions of euros transacted in it. Who are the big players? Who are the big buyers? Of course, on the news, you hear a lot about the tech companies with data centers who are buying lots of power.

But what does the market look like at the moment? Well, the market is very fragmented. So you have a lot of developers that are developing assets. These are we call them the sell side.

Then on the buy side, you used to have a lot of utilities and traders, but nowadays, it's like eighty percent are corporate off takers. So as you mentioned, for example, IT data centers that's approximately thirty percent already just to power up, Google Cloud and Amazon Cloud. And then you have the classical energy intensive industries, like in the metals and mining sectors, which are buying power in bulk over long term. Who else is involved lenders and legals.

So these are the the four parties typically involved in a in a bigger PPA transaction. And how long is a typical PPA? Is it is it ten years? Is it fifteen years or is it longer?

And also, what's the longest PPA that you guys have you've you've managed you've you've supported. Well, we're coming from, age where it used to be ten to fifteen years. And why ten to fifteen years. This was tied initially to the asset life cycle.

How long will my asset last?

And also trying to secure for that period, the revenue. Because if you secure your revenue, you can get financing.

And the bank looks at how secure is this revenue and the more secure it is, the easier for you to get, bank financing.

And now we're gonna take it up a gear with the more, exciting bits. So we're gonna talk about top trends in PPAs right now. You guys have got so much data at Pexa Park, really interested to know. I've asked I've asked you for three, and, and I haven't read the answers yet. So this could be interesting. And then we're gonna go onto your contrarian views. But firstly, what what's hot right now in PPAs?

There are many things hot, but probably the hottest topic right now is colocation. So in the past, we used to have just standalone onshore wind or solar projects.

But that was in an age when the penetration of renewables in the grid was very low. And now as penetration of renewables increasing, and we have the so called, I love this cannibalization risk, and balancing risk increasing.

It makes sense, even more sense to add storage to the asset. Now if you add storage to the asset, you have a bit more complexity because there is a value associated with this storage.

And, we call this Hebrew PPA.

So we're seeing more and more of those PPA's that regulate not just the offtake of power, but also the storage allocated to, to this unit of capacity. The other big trend is shorter term PPAs when we talked, before PPAs were associated with long term contracts ten, fifteen years. Because of the financing.

Now the thing is that short term PPAs get such a big premium. Compared to, longer dated contracts. Just to make you an example, on average currently in Europe, you would get up to twenty euros more. If you just sell five years instead of ten years.

Just just to just to interrogate that a second. The the thing about this market is it reminds me of the bond market in that it's it's almost like an annuity where you get a coupon or you get a regular payment, and you're setting the terms for that. And there's different durations that you can look at different yield curves if you like. So so you said twenty twenty euros.

So just to get this right, a five year PPA generally has higher prices, twenty euros per megawatt hour higher than a ten year or longer PPA says, so if you're a wind farm and you're selling selling power long term, a shorter contract, you get paid more for than a longer contract because the market thinks over the long term, prices will come down, your base load prices will come down, and that will affect renewables in that way. Is it have I got that right? Yeah. Pointing out the right things.

So what is very important is this is what you fetch today. So if you're in the market today, and you're selling five or ten years, you might get twenty euro more. That doesn't say anything what the price will be in five or ten years. That's just what you're able to here now.

This can change within weeks. So, that's a market situation as it is today, but that can change. So The worst thing you can do being active in the PPA market is get a quote today and then do nothing for the next three to six months and having the feeling that you can back can go back to the market and just close at the at the price you had before. Prices are changing daily.

And now coming back to So you get twenty euros more for your five year PPA. Now you go back to your lender and say, Hey, I get twenty years more at twenty euros more if I sell just five years, and the lender will say, okay, that's interesting.

But if you only secure for five, years, even at the higher price, let me recalculate at what cost I can finance you. And here is the optimization question.

It will probably carry a higher cost of debt. And the interesting question is at what point does it make sense? And there's a huge premium paid for actually securing long term debt. Or that there's a willingness to do so as people want to have long term secured revenue. And I think this points the way to an interesting development in the market as, ultimately, I believe if you're able to go down the short term PPA route, much more capacity can be. Realized on the PPAs.

Huge. We heard it here first. Just just to make sure I got this right. So we've we're we are about to build a wind farm.

And as part of getting the financing to build the wind farm in the first place, we need to find an offtake, we need to find a buyer. So we go go to the PPA market, and what the lender wants, what the bank wants, who's gonna lend us the money, they want us to have a deal where someone's gonna pay a lot of money for the power for a long time. And if you have a lot of money for the power for a long time, your interest rate from the bank to get asset finance is gonna be a bit lower. But you can get higher prices in short term.

So what you're saying is it's like there's two curves that we're gonna cross at some point. I don't know. I can't really do it here with my hands. And what matters is the intersection between those curves of the asset financing, your, your, your cost of capital, and the duration and certainty that you can have in long term revenues.

Against a market, the market that is pricing in, this is a key part. The market thinks over the long term, base load power is gonna come cheaper. Correct. That's to the point.

It's an optimization problem in a rather illiquid market so those data points, change maybe. Only every week, not daily, but that's the fascinating, work we have every day on the PPA market. A very important point here is that there would be also huge interest from the corporate side to to shorter PPAs because, the natural cycle within a industrial company is typically not too secure for ten years. Yes.

You might be a data center. Or yes, you're in the aluminum or metal space, but the typical industrial, he just wants to buy for one or two years. So having the ability to do short return PPAs can unlock so much more demand. So we're talking a thousand terawatt hours of industrial demand in Europe, a year, a thousand.

When you look at the corporate PPA market, we just got covered a fraction of it. And the only way to expand this is by having short term PPAs. Next to other things, but that's a key thing which we would have to tackle. Absolutely.

Yeah. I mean, if you're if you're a normal business, and you've got cash that and, you know, your cash flow can even rely on for a year or two. How on earth can you sign a, you know, a bankable PPA with a green power producer when they want ten years or longer. So this, so this this future where you have short term PPA, say one year or two year, which actually looks a bit more like, the current power market with suppliers, business suppliers, but with direct to source where you're buying it from the owner of the asset.

In that world, this PPA thing, this contract between both both sides, How how copy and pastable is it? You know, how how standardized is a PPA document? Just to give us an idea. You know, how many pages or how many words is one of these things?

Is it like, I don't know, the Bible or is it, you know, a couple of pages of a four? What where is it in between that? You sign a Bible, and then you have amendments, ten amendments.

And, that's very simple. The short term PPA market is highly standardized. You have a master agreement, which you have to go through once. And after that, you can sign on two pages. The long term PPA market is very much bespoke because we're talking two hundred transactions a year.

Huge underlying investment sums. So there is more interest, more lawyers, and hence you get very bespoke agreements, which can run into eighteen ninety hundred pages. Okay. Wow.

So it's still plenty of work for the lawyers. Yes. You always need them. That's another thing I wanna talk about here before we move on, which is it sounds very exciting, but I don't know what it is.

It's active revenue management. What what's that? Just imagine you're, you started, doing development of renewables ten, fifteen years ago, you had your first asset and you have one PPA, which takes all the volume. Nothing to do after you closed.

But now you're adding asset by asset in different countries, and the structures of the PPA start to change. Maybe in some asset, the only sell eighty percent or fifty percent. One PPAs five years, the other is seven years. Oh, and then there's a whole lot of other things to do.

You have the so called guarantees of origin. We have an extra value. You also have balancing, needs. Maybe you have a storage collocated with one of your asset.

So over time, your portfolio becomes much more complex. And up to today, most investors are not actively managing all of their PPAs, and there's so much money in there. So what we're seeing is that bigger players are building themselves a small team taking care of their PPAs, their route to market, their hedging, their geos, all technical names. But in the end, It just pays off to have a person or two taken care of energy sales actively managing them.

What one of the things that struck me about your answer there was you said some some PPAs might not be for a hundred percent of the power. So that's an important thing here. You might have if you could answer how this works, say you're building a hundred megawatt wind farm, And Google comes along and says, right. We're building a load of data centers.

We want eighty giga or eighty megawatts of, your hundred megawatts. We want eighty percent of it. Do you have to does that PPA contract have to find someone else to take the other twenty megawatts, or would you just sign it and only eighty percent of the total wind farms?

Power capacity has been transacted. I'm aware that we're talking about megawatts, not megawatt hours, and there's a cap capture rate issue with wind farms and blah blah blah. But in simple terms, What happens when you've only when you've got a buyer for only eighty percent of your power? Right now, what happens is you have an intermediary.

So there's always a third party involved. Typically, it's a trader or utility, and to providing all the complimentary necessary services you need so that you can fulfill your contractual obligations from the seller to Google. And this comes at the cost. And if you have a big portfolio, it starts to make sense to in source some of those intermediary activities into, into your house, in source into your house, and have a little desk with two people that take care of that.

That's active revenue management. Alright. Now it's your time to plug before the contrarian view. So anything that you wanna get out there to our listeners or any comments on the current state of play?

Yeah. I'm doing this now for fifteen years, and for fifteen years, it has spent growth. Just more assets, more green assets, more wind, more solar, and then it was supercharged by cheap capital. And I think there's now an inflection point.

So we have reached a phase with a lot of renewables now in the system, which is causing changes to the market, and the area of cheap money is over. So this is changing the way business is done. It reshifting the focus, and it's shifting from a purely growth to operational excellence. So investors are starting to look much more at, managing their existing portfolios extracting most value.

And I think that's a new cycle for the industry, and it's very typical for high capital intensive industries. So that's nothing new. But for the renewable energy market, as we know it, and for most players, it's well, it takes a bit of readjusting, but that's a major inflection point. I don't really know what you're plugging there, but I mean, I've I enjoyed it.

But interested to discuss this. So you say at the end of cheap capital is is here.

But it looks like, you know, the feds the Fed's gonna bring some, rate cuts in, let's say, three or four next year. Bank of Japan still stay negative. You know, Europe hasn't really caught up. It looks like twenty twenty four, we could be back into a world where cost of capital comes down to, of course, not you know, not twenty twenty one levels, because capital comes down to a level where your hurdle rates don't prohibit assets getting built. So I'm a little bit hopeful, actually. That said, there's a mind shift. That's like a there's a sentiment shift that has happened which we've certainly noticed that asset owners are saying, okay, how do I become more informed?

And how do I run this better? How do I run this leaner? I don't need a hundred person organization to run, you know, I'm not gonna put numbers on it, but I might have too many people to do the stuff I need to do right now. And that's that's really interesting for the market to go through that.

Correct. If you need more data, you need more systems, you need more skills. The market is more demanding. So capital costs more, even if next year it will come down.

PPAs are costly. The risks, to managing and selling renewables are higher, balancing cost, price volatility.

So to succeed in this new environment, it is exactly as you say, you need to be in better control of your assets, of your revenues, and that's the big shift. That's the inflection point. In the renewable industry. Okay.

Now on the contrarian views, where do we get started here, Luca? What's your do you wanna go for a big hitter to start with? Yeah. Let's let's be a bit provocative.

I think corporate PPS are a bit overrated. So Everyone talks about corporate PPAs. You could make a living at our organizing conferences, and they are cool, but I think overrated in life. It needs intermediaries.

So intermediaries somehow trade these utilities have a bad image.

But the market wouldn't work without them. There is profAT risk. There is balancing risk. There are the geos to sell. There is the aggregation effects.

Someone needs to take care of that, and they have a role to play. And sometimes there's a bit of, conflicting a point with who shall get the power. We don't need to have an intermediary, but I think that's a wrong view. I think they work together and, you need them. So I hope to see more traders, more utilities.

They are a net. Also take for the PPA market. I wasn't expecting that because, surely, the future that you want at Pexa Park is no intermediaries some type of kind of peer to peer liquidity provided by the edge of the market, you know, the buyers and sellers themselves.

Surely, I'm just gonna gonna throw the other side here. So surely, all of those midstream traders, intermediaries, they're just adding cost onto the system aren't they? By the way, I I don't actually believe this, but I just wanna hear you answer it. Yeah.

The question is can we lower the service cost they provide? So typically an intermediary takes risks or reduces transaction costs, so they they provide a service. The question is whether technology can help to reduce this transaction costs and this intermediary cost. But without intermediation, it doesn't work.

And you see this all over the market. For example, corporate PPAs. So we talk about those huge corporate PPAs down by large offshore wind park and the data center, but this is just ten percent or five percent of the overall market The big demand is with smaller off takers, small industrials, small, small and medium business enterprises.

And to reach them, you need intermediation.

And intimidation can be something very modern. It can be digital, but you need to have intermediaries investing in platforms. In standardization to allow reducing this transaction cost. So intermediation per se is something good.

The question is who is the intermediary? Alright. So corporate PPA is, a little bit overrated, and you think an intermediary is a cool. I actually agree with you.

Absolutely. What what what what else What other contrarian views do you have? I know you've got a few. Baseload PPAs are cool.

Baseload PPAs are cool. That is incredibly contrarian.

What is a base load PPA? Well, yeah, that's exactly what I was gonna ask you. What is a base load PPA? A base load PPA is a contract where you deliver for every single hour the same amount of power, electricity.

Now you being a renewable producer, every hour you might produce more or less than you contract contracted the capacity.

So you need to sell on the market or buy back on the market, and prices on the market at that time could be higher or lower. So, yes, when you sell a baseball PPA, you encourage you engage in in different risks. Now typically such a base load PPA comes at the big premium compared to other PPA's because the seller is taking on some risks. And what happened is that some of those space load PPAs were mispriced, were, contracted on too high levels and cause severe stress for some sellers.

So they got a bad press, but what I want to point out is there's tremendous values in baseball PPA. That's the product most industrials want. And, ultimately, we talk always now about this twenty four seven renewable power, carbon free, you need exactly the same skills, the same data, the pricing skill. The management systems to be able to price and run a base load PPA as it is for twenty four seven.

If you're saying we can't do base load PPA's, we would actually be saying we come to twenty four seven. So by saying base load PPAs are cool, I'm saying twenty four seven energy is cool. What we need to focus on is what does it take that you can do this successfully as a renewable power producer? We have this myopic thinking in the renewable industry is that I need to sell ten years.

The price has to be high and all the risks have to be with the off taker. No. We have to go beyond that. We have to think of what does the customer wanna buy, and they don't wanna buy the profile from a solar park.

They wanna have base load or twenty four seven. And that's why I say base load PPAs are cool. Yeah. Someone's gonna buy it from the market or provide it other ways.

Right? Is that gonna be the buyer or the seller? I guess if you're an industrial, a steelmaker or, well, no, you make whatever. Part of the reason why you're buying your PPA is because you kind of you don't want to be involved in the power side.

You just want to buy it. So then for you to be lumped with all the complexity of you know, being exposed to all of that risk. It may be a bar barrier to a lot of these industrials actually getting involved. I'm just talking about corporate PPAs now.

So, yeah, they base load PPA's are cool, but I do have a question. So can you then go out and so say that this bit is It's basically a flat line PPA. Right? It's like a it's like a, like, a continuous block.

And then there is gonna be some nuance around that block where there'll be a drop in generation or over generation or whatever. Can you then go to another third party and push that risk onto someone else? Like, some sort of swap instrument, then whether you call it a basis swap or whatever. Can can you find someone else who will then take that?

Yeah. That's the intermediaries. That's the traders and utilities that provide exactly this service. Cool. Alright.

We've done another one. Another contrarian view. And that wasn't that contrarian, actually. So could you amp it up a little bit for the last one?

What what's your third contrarian view? I think Shail got saved us. Shale gas saved us. Yes.

Shale gas saved us. I think there's a lot of bad mouthing in the energy industry.

So we in the renewables talk part about the fossil, about nuclear and vice versa. And when gas deliveries were weaponized before the Ukrainian war, I think what many of us have forgotten is that all this LNG now which is, arriving in Europe and allowing us to to continue.

This is due to gas fracking.

In the US, which has been highly contentious and which we don't wanna do in, in Europe, and I just acknowledge that. And it goes even further.

I just listened to a few podcasts about advanced geothermal, energy.

And this wouldn't be possible without, technological breakthrough from gas fracking. So the the good might lead to the bad the bad might lead to the good, and I think we're doing just too much agonizing against each other instead of thinking how the overall system could be improved. That's why I'm saying shale gas saved us. Shale gas.

So fracking, essentially fracking sa saved us. I actually completely agree with you. I think everyone everyone at Moto knows that I get a real beer in my bonnet sometimes at company away days or after a couple of beers. Where there's just this I find the the energy transition, the stain for oil and gas, sometimes annoying and sometimes really, really beyond that.

The idea that that that the whole life runs in oil and gas and that by we as a community of people who are trying to do renewables are somehow, you know, better or morally better. These people who have to go on helicopters for three weeks at a time. It's the middle of the North Sea. And get gas out of the, you know, gas out so we can be warm for winter and have our Christmas dinner or whatever.

And then for for this idea that we could have been in these comfortable offices doing renewable stuff, you know. We're we're the we're the good guys and they're the bad guys. It really gets on my nerves. And yet, now I live in the US live in Texas and the impact of shale, the impact of fr fracking on not only the prices of energy over there, but also the feeling of energy security they have means they can actually make big bold bets elsewhere geopolitically in lots of different ways.

And I think you can only do that with that type of, you know, it doesn't matter what the world does, we've got our own energy. There's obviously there's lots of downsides to it, and, you know, it's just been caught last week. There's loads and loads of things that we need to fix. We really need to fix flaring and methane emissions and all that other stuff.

But a hundred percent agree with you. The mindset that fracking is a hundred percent bad, is just so short sighted.

Probably agree.

In the end, we want to create a more efficient system, but we need so much more electricity. I believe in electrification, being the most efficient solution for most things, but, boy, we need to build, and, Foster is gonna stay for quite some while. And we shouldn't just be antagonizing, but just focusing on, building stuff and making it more efficient. I mean, coming back to our previous conversation now about Costa Capital, it would be interesting to know to see what happened.

I mean, if if rates were to stay as high as they are for for another couple of years, that is big trouble for a lot of these, shale, developers, and, gas producers? Well, it's equal for everyone. Capital, of course, is increasing for everyone. It's, s for shale, for renewables.

In the end, it will just lead to aggregation. We'll have, much quicker consolidation in the industry. Awesome.

Luca. Always a pleasure to speak to you. Wanna say a massive thank you for taking the time to speak to us on Christmas week of all weeks, and I look forward to receiving some Pexa Park socks. In the post or at next meeting.

Thanks, Quinti. It was an honor to be here. Thanks. Thank you.