Navigating Merchant Risk in Australia with Dennis Freedman (Managing Director @ Aquila Clean Energy)

Hi, everyone, and welcome back to the Transmission Podcast. I'm Wendell. And in this episode, I'm joined by Dennis Friedman, managing director of Australia and New Zealand at Acryla Clean Energy. Dennis has been in the energy industry for coming up to two decades. And in this episode, we dive into his experience of the real world challenges that come with building, operating, and financing clean energy projects in Australia, especially battery energy storage. Dennis brought some great insights to this chat, and I hope you enjoy the conversation.

As always, please hit and subscribe. It really helps us to grow the show. Let's dive in.

Hi, Dennis. Welcome to the Transmission Podcast.

Yeah. Thanks, Wendell. Appreciate you inviting me to come on.

Yeah. Great to have you on. So, yeah, just, you know, can you just give me a bit about background about yourself and ultimately a bit about your role now at energy?

Sure. Been in the energy industry coming close to twenty years, not quite there, but I I feel like I feel like an old man in there now. Been that long, but I'm currently for my sins, the managing director for Australia and New Zealand for Aquila Clean Energy. We are a developer, constructor, and operator of renewable assets.

We play in seventeen countries around the globe.

We have, in Aussie dollars, about twenty billion dollars of renewable assets that we manage and operate or are developing across the globe at the moment. And so the business has been is based in Hamburg. In Germany, it's been operating for over twenty years. In the Australian and New Zealand context, we're fairly recent, entrance of being here coming on two years, and we've probably been in the market two and a half to three years in ANZ.

And we operate in this part of the world. We operate through APAC in OECD type countries with little asterisk, but we're in Japan, South Korea, Taiwan, Australia, New Zealand, and then we have a hub out of Singapore that provides a lot of shared services for us. So to if I try and describe a cooler clean energy in this part of the world, I feel like I'm at the end of the startup phase of the business that sits within an established entity that's within a bit of a monster in the positive sense. So I I get the best of those all those bits.

What does that look like in terms of, like, numbers? I guess, I'd count, but also, I guess, the size of your development pipeline.

Our development pipeline currently has and I talk about Australia and New Zealand sort of combined because we our resources are spread across those two countries. I'm based in Melbourne, and it's quicker for me to get to Auckland than it is to Perth. So through that lens, it makes sense. We have nineteen development projects at the moment, including two in construction in New Zealand, a couple of solar farms.

Then that spans both solar assets, wind assets, and best storage across both both the countries, all going at different speeds and all have their different challenges. So it's quite a healthy pipeline. We have seventeen people based locally in the region. And, again, that's supported by around sixty odd colleagues out of Singapore that provide a lot of the back end services.

If we didn't have our Singapore hub, we'd probably have to have thirty five or forty people on the ground for an equivalent size development type operational business, I think, sitting somewhere else. So that gives a bit of a view of the scale.

And, yeah, and you mentioned so you're developing these projects, but also you wanna take them to operation. Right?

Yeah. Absolutely. So we take them into operation and then manage them through their end of life. It's a great position to be in because it means your lens is long term.

One of the natural tension points when in bringing large scale generation to market is a developer who wants to sell to a long term owner, and a developer typically has a much shorter term view and therefore makes decisions based on that. And the long term owner is looking at an asset and thinking about how they keep us alive for thirty to forty years depending on the asset. And so they have very different lenses, and that can bring a lot of tension. So having both those things as part of our life cycle in house removes some of those tension points and ensures that we're when we're developing our assets, they have a forty year view in terms of how they impact everything from the the easy stuff, which is commercials, but right through to what's your impact on community, landowners, people that can touch and see your asset on the ground, and that bit's, in my view at the moment, probably the most important bit in the whole life cycle.

Yeah. Because you need to make sure the project's sustainable, right, both from a business perspective, but also, yeah, socially.

Hundred percent. Hundred percent. Yep.

Awesome. So if we think about some of the projects in your pipeline, maybe if we think about battery energy storage projects because that's at Modo, what we spend most of our time thinking about. And so the lifeline of that lifetime of that project, so from development to operations to end of life, what does that look like? Can you talk me fairly rapid speed through that process?

Yeah. So the first part is every battery has typically has a different business case than the battery next door. So that in itself is probably the most complex bit. A solar farm or wind farm, for example, is a lot easier to understand the revenues. You can model how much sun is gonna shine or how much wind is gonna blow within the an inch of its life and take that to the bank. And at the end of the asset life, you've also taken a view on what the power prices are gonna be, and you build up a business case and you're there or thereabouts.

With a battery, it's not generating power. It's taking someone else's power and storing it and then spitting it out into the grid usually based on economic factors that say now is a good time to sell or to export the power because the price is higher than what you paid for it. So it's got a very different business model, and you could stick two batteries next to each other connecting to the same connection point and have two different owners who operate them very differently, and they also play in different markets potentially.

So you need to believe in the battery story.

I think to be an investor in storage because it's very hard to model what it's going to do and then get banks comfortable, you need to have a very good understanding of energy markets.

In fact, that's probably the key to to batteries, I believe. If you don't understand how energy is traded in the Australian market or in our case, the New Zealand market as well, then you shouldn't be doing batteries because you're gonna end up in a water pain, and your investors won't understand it. The banks won't understand your story, and you won't get the thing out of the ground. All you would have done is annoyed a few landowners and whatnot is you tell them for five years you gotta build something and never get and never do.

And then once you've got that understood and get countered with your risk position, then you need to go and make sure that you you've got off take and understand how that's going to work. And so there's a lot of moving parts with the battery that make it a in some lenses, much more difficult than, say, solar or wind. From the construction side and the planning side, it's probably the simplest. Yeah.

And so it's the quickest turnaround. It's the easiest one to get a development approval. It's the smallest footprint. And then when you look at a piece of paper, it's probably got the biggest margins if you know what you're doing, but the knowing what you're doing bit on the market side is the hardest part.

Yeah. Yeah. So if you kind of summarize, it's complicated at the start trying to figure out the business case for it and what that looks like. And then to actually get it operational, it's the simplest it's what we're seeing happen in the market. Right? These batch projects are quite quick to to get constructed, get operating, but then you have the next complicated bit, which is actually operating it day to day.

Yeah. So if I the example I use, if I'm doing a wind farm, for example, I can model the wind, like, can take a view on what the power prices will be when the wind's blowing based on a whole lot of factors. There's a lot of really clever companies that sell those type of models, and you come up with a business case. You know what a cost of the turbine is, so forth.

With a battery, it almost doesn't matter what the power price is at any given point in time. What matters is when do you wanna charge it, when do you wanna discharge it, and what's the spread on that. And it's very difficult to model spreads or volatility, which is ultimately what you need to be doing to model a battery. And that's one lens.

Another lens might be you just do it. You just lease the whole capacity to somebody else who wants to take that risk on your behalf, and you just get a rent essentially, and that might be your business model. Your other business model might be to play some of the ancillary markets to provide grid support. You might look at a model that gets government grants or network subsidies or something.

So there's so many different ways to put it together. Whereas a wind farm or solar farm is so much simpler in regards to the revenue modeling.

On that point for battery, like, how do you look at it? How's Okilo look at it? Do you want that merchant exposure, or are you looking to just contract it away?

So every company looks at it differently. As I said earlier, Accuola has quite a strong appetite for, I would say, what most people would see as risk.

Very comfortable closing, taking to financial close batteries with fully merchant exposure. We've got a very strong markets team with some really amazing expertise in there. We have a management team and investors who are also really comfortable with how batteries make money and also counsel with the fact that although you need models for investment committees and get markets, you don't necessarily need models to believe in what the battery is going to do.

So quite pragmatic in terms of results of batteries, where they're gonna hit. Having said that, it's always nice to have some of your battery contracted at some point, but we're not waiting for contracting or fixed revenue to slow down our ability to get things out of the ground. And that's a really nice position to be in. Not every asset developer is in that same position, and that's fair enough.

As I said, everybody has views on how they see risk. We're quite comfortable getting to close merchant, and then we can always go back once we've got some contracting and work with our debt partners to either put more debt in or whatever the case may be to make the economics look better. But the model at close when you're fully merchant is not the model at the end of twenty or twenty five in your life after you've done contracting three or four cycles, five cycles, maybe debt markets have moved. The way we view the energy markets today is a hundred percent not what it's gonna be in twenty five years' time with the battery life.

You've gotta have a fairly pragmatic view and understand how markets work, I think, to get into the battery space. It's not a it's not a traditional infrastructure asset like a toll road or a building or something like that where you build it once. You've got a capital cost. You've got a set operational cost, and you set and forget.

Batteries take a lot of active management.

Yeah. Definitely. And I guess so your approach, you can move probably quicker than some of these other projects that are waiting, like debt funding, contracting, but then you have flexibility as well to, in the future, change the structure.

Yeah. Correct. And I mean, not the only ones acting like that. There's more and more getting into that space as they understand the economics better, but there's still a lot that will need contracting to get away.

And as I said, I don't I don't see that as a negative. That's just a different risk position. Everybody has different risk positions in the market. There's room for everybody.

And I guess from the perspective of when you say go to a bank, how are those conversations progressing in terms of looking at merchant projects compared to something that's just hundred percent contracted?

I think if you ask me that question two years ago, a fully merchant battery with most debt providers wouldn't have got off the ground or maybe twenty percent gearing, which is quite low.

If you compare that to, say, a wind farm or a solar farm that that might have seventy or eighty percent contracted in Australia, you might get sixty five percent gearing. In New Zealand, you'll get a bit more. The debt market is slightly different.

Now when I look at battery storage in Australia, for example, I know of at least one bank who recently closed a project with fifty percent gearing on a fully merchant battery. And when I speak to them, they're talking about, let's not for everybody that package, but if it's the right project and the right counterparty who know what they're doing, and they set up properly and they've done their due diligence on them, then that's available. So like all debt products in renewables over the journey, they mature, banks get more comfortable with risk, and that's through the lens of them just doing more and seeing more in the marketing, understanding the market more. The future is quite bright, I think, for storage in in in the two markets that that I participate in, both Australia and New Zealand.

What are the differences between those two? I guess if we think of focus on, say, the them in Australia and then New Zealand market. What are the differences and what are the similarities?

So in Australia, we're really good at producing electricity. We're really poor at storing it, and that's causing all kinds of disruption. In New Zealand, they're great at storing it. They don't can't produce it. I'd assume most of your listeners are in Australia, so maybe I'll talk about New Zealand because that'll be the interesting bit. And New Zealand is give or take sixty percent hydro.

It's around twenty percent geothermal and coal, bit of gas. The bulk gas still sets the price there. And then the other twenty percent of our whole mix of other things with less than one percent being solar as we currently see it. And they also have a stringy grid like Australia, so they have the same network issues that Australia has because it just runs north south and doesn't go east west very wide.

And they've got an undersea subsea cable or a couple of them between the North Island and the South Island for those of us old enough. I don't think you are, Wendell, but that cable went down in the nineties and knocked out Auckland for months on an end with and now running diesel generators just to keep the lights on, and so they've got those types of issues. The other things that are interesting there is a gas still sets the prices as the marginal price set a bit. They're almost out of gas, and they don't have a gas import terminal, so there's no way to actually ship gas into New Zealand.

That's a problem. They've only got one coal power plant at Huntley, and that imports its coal from Indonesia. It's the only place they can get coal that's of this quality and the standard that the generator is built for, and that's end of life. So very similar site issues to Australia.

Only about ten percent of their hydro can be stored. Most of it's run a river. It's still a large percentage, but when it doesn't rain or the snow doesn't melt because it hasn't been so cold, they've got the same problems as what, say, Tassie hit maybe a decade ago where they had to run diesel generators there too because they ran out of water in the dams. And then probably the most interesting piece is it's what they call nodal pricing.

So there's about two hundred and sixty five nodes, whereas the NEM has five.

So NEM you got one price point in each state. Victoria, you get a price. New South Wales, you get a price. Queensland, you get a price. In New Zealand, I can drive five kilometers down the road, connect to a different substation, get a different price for my power.

So that nodal pricing is quite interesting because it really impacts how you might where you might connect your projects to where you plan to build them. For example, we're building a project at a place called Pukanui, a solar farm, which is it's the most northernmost substation in the country. It's literally a twenty minute drive to the tip.

And up there is say that.

Yeah. And up there is like far north Queensland. There's just nothing there's nothing up there, but there's also it's a five hour drive from Auckland, which is the biggest load center in New Zealand, and most of the generation in New Zealand is south of Auckland.

So our price that we get at that node is the highest price in the whole of the New Zealand market because it's so far away from any other generation, and it can all be absorbed locally.

So it's an amazing spot to build a solar farm. Whereas in Victoria, where where I'm from in Melbourne, I could build a solar farm in Melbourne. I could build one in Mildura.

I get the same price minus minus the grid losses, but, essentially, I get the same pool price. So there's that's there's there's some of the differences.

Probably the only other interesting thing is because it's a they have some storage with the hydro.

The solar becomes quite interesting because when the sun's shining, they don't have to run the dams, and they need that energy security, for example, overnight and whatnot. Where Australia has quite a lot of solar rooftop subsidies, New Zealand has no subsidies for any renewables, essentially. So we're not the duck curve doesn't quite exist there yet.

It may come, but I guess that's the thing.

Yeah. You mentioned at the moment, it's at one percent solar. Like, you're building soda. Are you anticipating I I don't know how much soda do you reckon they can get?

Yeah. So we've got we're working towards some numbers in our modeling of what we think it will be. That's all a lot of it's dependent on what the future state of New Zealand market looks like. Like, the Australian market, there's load growth as just population increases.

There's load growth as people move from to electric vehicles. There's load growth as people move to electric spatial heating at home. There's big load growth when it comes to data centers.

I don't know. I have a view that maybe ten to fifteen percent of the total consumption might be from solar, but, ultimately, any modeling is gonna be wrong, and the grid's not static.

So every time a generator comes off and send a life for a new one comes on, the mix changes. And so you if you think of it through that lens, there's like a bubble of sort of a range of what at any given day solar might be or might not be, but it's not a fixed number as I said because the grid changes on a daily basis. But there's definitely room definitely plenty of room for grid scale solar in New Zealand. Whereas in Australia, it's very different scenario. The duck curve for a whole lot of reasons has pretty much killed up solar only investment at a grid scale.

That's a rare one that gets away because just the negative pricing during the day in almost all states. So it makes a business case really hard. That has a lot of people now looking at the hybrid model with the batteries and the solar behind the meter or AC coupled even. We've looked at a few of those, and we we had one in our portfolio, but ultimately, still, we think the solar is decretive to a business model on a hybrid.

That may change in time, but twenty percent of of the NIMS load is support is supplied by rooftop solar at the moment. We've been that's uncontrolled. It's a massive number. It's a massive number.

Right? So you're competing against that. And, ultimately, when the sun shines for you, it's shining for everybody. Again, how the NIMS built, it's a northwest type market, not an east west.

That's a north south, not an east west type market, so it's difficult to make solar only work. And I think at some stage, the hybrids will get there, and there'll be some first movers that take a punt on those. We're not quite there, but we're probably not too far away.

Cool. I guess if we if we that's a good pivot, I think, back to Australia. And, I mean, if we zoom out a bit and there's election obviously in less than a month.

How do you see the energy transition is going in Australia? What's going well? Obviously, rooftop solar is going well, but creates challenges. And, yeah, like, I guess, where do you see it going from here?

Yeah. The it's a difficult one. Look. I think the transition's going pretty well. There's always room for improvement.

If you take a step back, peak demand both in winter and summer on the NIMS, give or take thirty five gigawatts. Right? Like, it's a lot of energy we need to produce.

Typically, that's come from coal and gas depending on the state.

The coal's nearly gone, and commercial factors have shut coal down. It's not tree hugging greenies that have shut coal down. It's the asset owners have gone. I can't make money out of this anymore because it competes against new technology, which doesn't have an input cost.

There's no fuel cost to solar or wind. But in fact, solar's ultimately that with humankind has never produced energy cheaper than what solar is today, ever because there'd never been a cheaper source. And that's why you see it on people's roofs. It's it's obtainable for most homeowners to a degree.

Right? So that's been a success. I think the take up of EVs has been a success. I think Elon Musk has probably put a build a rod for his own back in recent times to slow down the sales of his cars, but I think the general acceptance of EVs and electrifying transport and the rollout of charges and so forth is, again, there's room for improvements going the right way.

Large scale rollout onshore with solar batteries and wind, I think, has been generally positive.

We've got some challenges around planning and speed of planning.

The next one that comes offshore winds, there's definitely been some successes in terms of getting state and federal government aligned with creating laws and bringing some certainty around how those things can be done, but we have to see one in the ground. I think we're looking at new ways to solve the transmission problem.

I think some of that is good. Some of it, I don't agree with that we're now seeing the central west Iran, a res, for example, get start building its financial close from what I read the other day.

We've seen, I think, the establishment of arena and the CFC and the fact that they've been able to maintain their positions under both Liberal and Labor governments has been an absolute success. I don't think without Arena, we would have ever seen a battery market in Australia.

Yeah. There's a lot of funding for ADI.

A lot of funding projects.

The CFC stepped in to get the banks comfortable in the early days with renewables and is making money. Like, it's proving so it's giving debt probably at the lower end of the scale, and it's making cash as I was investing in investing well. So that's been a positive for both the renewables industry, but also the Australian taxpayer.

So there's a lot of things to point out. I think the challenges we've got around social license and disinformation, that's gonna be the hardest one to solve. We can always solve through legislation planning and rules for the market and bits and pieces. That's just get some smart heads in a room and kick it around and come out with an answer. But it's pretty hard to fix feelings and sense of belonging and sense of community and fear and disinformation out in the communities.

So that's a longer journey, and without that, we won't be successful. We're gonna get stuck.

And I get frustrated at times with that because some of the things I hear coming back when we're out in the communities is come from places of bad faith, from bad faith actors just trying to shut down industry. And I that that really annoys me when I hear things like, your wind farm being built in my community, but it's only powering the cities. I'm like, no. That's not how physics works or their works work. There's wind farm's gonna give me cancer. The solar farm increases fire risk.

We're wasting great agricultural lands, whatever. There's just so many mistruths and misnomers that have started, in my view, from places of bad faith rather than general rather than, I'll say, general curiosity. And so we got a long way to come back in in some communities around that. But the flip is flip side of that is also a lot of developers in the renewable space who's doing it who are doing it really well, peers of ours.

I'd like to think ourselves who are patient, taking the time, engaging correctly to ensure that you might not always have a community rolling out the ticket tape parade when you come into town, but at least we at a minimum, we should be aiming for general acceptance and making sure that we're leaving the place better than when we got there. Ultimately, when you build something, yeah, the construction is quite disruptive is the reality, but then you're in the community for thirty or forty years as a minimum as a community member, as a big industrial asset, creating jobs, sustaining local landowners, paying rates, so forth, and nobody wants a bad neighbor.

So I think the industry has worked that out and has done a few rounds of that from a generation perspective. Transmission's probably got a harder job because that's a long linear infrastructure. If you build a two hundred kilometer transmission line, you're going through a lot of land owners and a lot of communities, and they don't all think the same way.

So that's a much more difficult task, but I see that as the biggest issue. You could have somebody else on this podcast, Wendell, and they'll tell you the grid's the biggest issue, and you'll have somebody else, and they'll say regulatory certainty is the biggest issue. We all have different lenses, and I think that's the beauty of it. There's a lot of challenges. We're all tackling it and have different views on the risks in different ways. But I think, in my view is the social license piece if we lose that and don't get that rise, generally, then that could really put the brakes on.

I guess especially like you said with the you've got the twin contest. Right? You need to build the renewal projects, which as you said, is maybe a case of time, but then you also need to build the transmission infrastructure to link to those.

Yeah. The real the reality is we build an energy system that's been going for, say, a hundred years, probably a bit more, was all designed around coal and gas, and rightly so. That's what that was the technology of the day. When the transmission was built around getting that back to the major load centers, that was how the network operated and was planned.

And for the right reasons, both the environmental damage and also just commercially, coal can no longer survive. It just cannot compete, and so it's coming off. And when we're still at sixty percent of our of the name at least is on the coal. Right?

So this that all has to be built out with a mix of solar wind, other technologies.

And on a like for like basis, every megawatt of coal you take off, you probably gotta build two to two and a half megawatts of renewables plus the storage.

And so that's disruption.

And all those projects that need to be built aren't in the same locations. You don't just knock down Hazelwood and put a wind farm on it. It's there's no wind there, for example. So, therefore, you need to connect it somehow.

So we need to build the grid and the energy assets that will take us for the next hundred years. And that comes at both at a cost in terms of change of how communities are look at the landscape and how land is used, that's a cost or opportunity. It depends on the lens, and it also comes as a cost economically. We there's a lot of money needs to go into the ground to rebuild the energy system, and that needs a return.

Otherwise, it can't be done, and governments can't fund it. It's too big.

Themselves, even Queensland, which is probably the most parochial state in terms of state owned assets, have come to the conclusion that all the gen on generation, it needs to be fifty fifty privately funded because they just can't do it themselves.

Yeah. If you'd be you kinda gave that ratio, like, so for every megawatt of coal, you need two and a half renewables plus storage. That's a lot. Do you see that there's the appetite from these kinda, yeah, private institutional investors to actually finance this?

Yeah. There's no issue with capital appetite. There's no issue with debt appetite. The question is at what price.

And I think that that that's that still works. The model still works. You and it has to work because just the basic supply and demand curves of supplies going down. We're not building this stuff fast enough to keep up with the demand increases.

So the economics are good if you look through a real a very sort of clinical lens like that. The price that you can get for an electron is strong enough to support investing in this stuff. And the reality is we need to. Otherwise, the lights are gonna go out, so we need to go faster.

We're so we're changing the grid in terms of how that produces energy. We're electrifying transport.

The next big sector to to electrify will be agriculture at some stage. They're big chunks of demand that we need to supply for, and so we don't have all the technologies in place now to do that. I don't believe either.

I think nuclear, for example, has a place. It's not gonna by the time we've built ninety percent of the grid out with renewables, the first nuclear plant might come along and supplies one percent of the power. But I think in the next fifty years, it's part of the solution or something.

But, yeah, renewables is going so fast, and it but still not going fast enough to keep up. It's a fun fun place to be.

Yeah. That's that kind of long term story that, I guess, everything so focused on, like, twenty fifty net zero transition, which really is still on renewables because of the speed. But then beyond that, if you what happens then? Yeah.

Yeah. Look at the tech the next wave of technology will be offshore winds. Assuming we can make the numbers work at the moment, the numbers are difficult. Nuclear, in my view, is part of the mix, but how do you make the numbers work?

It's if I look at the Liberal parties, the guys espousing that they'll try and bring it in, they're also saying it's gonna be a hundred percent subsidized. Taxpayer funded hundred percent. It's the only technology ever in the history of the Sir. In Australia, it's been a hundred percent subsidized except for right back in the day when we had state owned coal getting built.

It's and why is it a hundred percent? Why are they saying it's hundred percent subsidized? It's too expensive. It doesn't make sense today.

But it might make sense in thirty years, but we need to start planning for it now. And so I think that's one of the other challenges probably coming back to your earlier question is, are we properly planning long term? I think a lot of people talking today's numbers. So if I look at today's numbers, I can tell you peak demand's thirty five gigawatts on the worst day in winter or the worst day in summer, give or take, on the.

If I wanna replace that with fully full renewables, I need to build nameplate about nineteen gigawatts of a mix of solar and wind and other stuff, and then probably a third of that in storage.

So so that's today. If you ask me that question in five years time, when EVs have gone up, maybe we've got some hydrogen out of the ground. Maybe Google's built a massive data center that has a one gigawatt constant load. I don't know. There's so many things that are driving electrification. Those numbers are now they've been superseded.

So the pace that we need to keep building to ensure that people maintain their quality of living standards that they enjoy. We keep forgetting how easy it is to just flick a switch light comes on. For that to come on is a lot of infrastructure right back from finding the lands, working out what technology source you want, getting the planning permits, building it, someone operating and making your money, then building all the poles and wires and all the control systems and all the market rules and all the regulation just so that electron arrives in your house so you can flick a switch. Like, it's there's a lot to it. There's a lot to it, and I think we're missing some of that longer term thinking.

It's become a little bit politicized. So a wee bit stronger. It's become ridiculously politicized both state and federal level. And as an investor, that's really annoying because something as simple as and crucial as as the energy market shouldn't be politicized.

It should be bilateral. It should be no different to water supply or NBN or these are road planning, rail planning. These are infrastructure assets that ensure that we have a quality of life that in Australia and New Zealand we're accustomed to and for it to be politicized as it currently is at least in the Australian market, it's less so in the Kiwi market. But, I think the colloquialism is it's doing my head in.

Yeah.

I think I was gonna ask that.

We've kind of, like, the scale and speed at which we need to move. Do you see the result of the election either way, like, in making an impact on that?

My contrarian view to most others in my industry is probably not.

Their three year election cycles at a federal level, the federal government doesn't control energy policy as much as state governments do. What are the federal government's levers? At the moment, there are probably a couple of things. One is the renewable energy certificates.

They run out in twenty thirty. That's legislated. Both sides of politics have come to that. So the the LGCs, the green certificates, terms of creating new ones are gone. So that's built in. And now we're established at the time to help get these projects out of the ground, so another success. The second one is the capacity investment scheme, which is legislated.

It's likely we're gonna have minority government maybe after March three. Is that the election? March three, March four? I'm sorry. May three. Yeah. Yep.

Let's assume we have a minority government.

It's gonna be impossible to change anything with legislation we've seen in Australia before. So you might see some tweaks around the edges, but you're not gonna the the Liberal party is saying they won't shut it down. They might just add gas to it, which I think even if they did, it won't work. It'll need to be a separate election. I say a separate option. I was talking at a conference the other day, a clean energy council conference the other day.

And I said, where's the list of gas projects lining up to bid into a CIS?

Tender. They they don't exist. There's carry which Snowy was told to build that maybe could bid into it, which was built under the old scheme.

But I don't see anyone else developing gas fired peakers anyway. There's nothing to bid into it.

Yeah. I know. We're seeing stories in other markets of the cost of these gas projects here going up and up. That's not the supply.

Yeah. And I heard the CEO of tilt talk the other day, and he's he was saying he's closer to this than I am, but he was saying the cost of turbines is four times what it might have been few years ago, and then the availability of them is just not there. Coming back to federal government policy, if the Liberals get in, I don't think they can do much for the CIS. They know they need it, and its legislators can be hard to get rid of.

And LGCs are at twenty thirty are gone. So what kind of impact? They don't. They've got a little bit around EPBC planning laws.

That's already difficult enough. They can't make it any harder. The states and everything else. The states are the transmission planning.

The states are in planning, most of the planning laws.

The AMO, AMC, AI, like, the holy trinity, they're sixty percent owned by a combination of federal and state government and forty percent by industry. So federal government can't come over the top and just change the other market works.

They tried that through the old energy security board, and that failed. There's just too many vested interests and too many players to we're not gonna change in that. So the energy market, the way it works is established. The states are derogating away from the national electricity rules on a whim when they want to. Victoria's been doing it since ever in a day. Queensland recently basically wrote the AR out of any planning decisions when it comes to new transmission.

I think the only two states that haven't moved away from the numerals is South Australia and Tasmania.

So, you know, the two smallest states, but it's ultimately, it's a state driven energy system that has some wires that connect it into the next state. It's not a federally run energy system. So through that lens and the three year election cycle, the nuclear things noise, but nuclear is not gonna stop any investment. Nuclear is twenty five years away, best case. All the land where mister Dutton wants to build his nuclear or has announced where he's gonna build his nuclear, which is coal sides. He owns none of them. So he just assumes that the landowners are gonna wanna put nuclear on the sites.

Every state and the Commonwealth currently ban nuclear, so you have to overturn legislation. The only last year, I sat at another clan as your council conference, and the only state liberal energy minister in the country at the time was minister Nick Diagon down in Tassie, and he was asked, what do you think about nuclear? He said, not in Tasmania. So there's not even alignment at the state level on the liberal side to make it work. So I I just see it as bit of noise on the side. I think players like ourselves just keep getting on with it.

Yeah. Yeah. I think that's gotta be the way. Right?

Yeah. And ultimately, if you what's the counter to that? Everything stops because we're waiting for nuclear.

We'll quickly have some blackouts and nothing changes a government's policy or even loses government visibility to rule than a blackout.

First, like, yeah, we have in Sydney or Melbourne. You watch what happens.

Yeah. I think that was a good way to finish it. I could keep talking, but but I think we're gonna figure out things out. I've got two two final questions which we all have for, I guess. So firstly, is there anything you would like to plug?

Oh, obviously, cool and clean energy is an amazing place to be. So if anyone's interested in reaching out, we're always looking for great talent. We're always looking for opportunities. We think we're an awesome partner to play with, whether it be working with or developing or constructing. Well, that's always keen to engage in the market. I think the second thing probably for people listening that are in industry engaged, either join up or engage with the Clean Energy Council. It's the industry's leading body by far in terms of having a voice into community regulators and governments in terms of how we drive policy and regulation, and it's one of one of the few unions I'm getting really right behind.

Excellent. We can drop a link to yeah. We can drop a link to the key engine council in the show notes. So, yeah, if you're interested, cover that there. Awesome. And finally, you mentioned the control review earlier, so I don't know if this would be the same control review. What is your control review, Dennis?

Yeah. It's a good one. I saw that. You I saw that, like, country last night.

I've got a few. The first one's about the federal election. I don't think as many agree with me, but I'm on that bandwagon. The other one, I think there's probably two more.

One is I I see a still strong role for gas for a long time. I think we demonized gas way too early, and we forgot we forgot they're in an energy transition, and the word transition's important. It means it takes time to get from one place to the other. It's not a binary drop dead day we have to stop.

And if we want to keep power prices as low as possible and keep resilience in the system, we still need gas for some time.

Again, the Victorian government didn't agree with that position for a period of time and some other governments as well, but we're starting to see it swing back. I think the reality of running an energy system is that it can't be done on ideology necessarily. It also has some physics involved and economics involved.

That's number one. Number two is probably in the transmission space, We're seeing a lot of states considering we're actually doing tenders for new transmission and outsourcing who builds it and who operates it. I think that's a really bad idea breaking up natural monopolies. So to be like saying your street in the NBN is on a different regime with a different owner of that that one little bit of line and actually to connect to it has a different technical regime and a different commercial regime, and I think that just brings more uncertainty for investors.

And it's making things difficult and slowing things down, so I'm not a massive fan of that. And, again, I know industry probably is not behind me on that, especially those chasing winning the transmission lines to build them and operate them, but I don't see how that's helping speed up anything. I think it's actually diluting what is quite a small pool of x industry skills that we need into much many more entities and pushing the price up and taking far too long to build. So there you go. There's my concierge. Oh, I've got a whole box of them. We can keep going.

Save it for next time. Awesome. Dennis, thanks a lot for coming on the podcast. It's been great having you.

Thanks, Wendell. Appreciate it.