I was honored for the second year in a row to have a meal with Michael Liebreich, founder and chairman of the advisory board of what is now Bloomberg New Energy Finance (originally named New Energy Finance), and to be able to interview him “during” that meal.
In this year’s interview, we kicked things off by talking about electric vehicles. That has clearly become my #1 focus professionally, and Michael has also transitioned much (or even most) of his professional attention to this cleantech market. Sir Liebreich (I just knighted him!) proposed in this interview that the next big step for electric vehicles (EVs) is segmentation. It’s an interesting and I think completely valid observation. This followed an initial discussion of the benefits of electric cars and their remaining limitations. (Note: even if you aren’t much of a video person, you have to at least watch the first 6 minutes or so, in which Michael and I discuss the issues above and, best of all, Michael brings up “the little Tesla” -- I have to use that phrase again!)
Sir Liebreich notes that, right now, the electric car is already “the perfect second car” for people with a garage. I think this is a critical point that doesn’t get highlighted nearly enough. In fact, I think it may be the most understated point about this market. With instant torque, a smooth & quiet ride, and convenient home charging, electric cars are typically much better than gasmobiles from a consumer perspective. The limitations are limited range, scattered public charging stations, and higher upfront costs (due to the batteries). However, the first two points don’t really matter for a typical city/commuter car, and the latter one can often be recovered by the lower operational costs of electric cars.
I added that a used EV can also be super cheap, while Michael postulated that a home’s second car probably doesn’t turn over very frequently, which provides more time for the upfront cost to be recouped and savings to be made from lower operational costs.
Luckily, Bloomberg New Energy Finance (BNEF) just released historical figures and projections on battery price reductions, and Michael noted that 2015 saw battery price reductions of 35%. BNEF is projecting a 10–15% price reduction in 2016, and then 2017 should again bring a big reduction thanks to Gigafactory battery cell production coming online.
Sir Liebreich also aptly pulled in the projection from Saudi Aramco that battery prices will only drop 40% by 2040. His lunchtime response: “Hello! They came down 35% last year alone!”
He was cautious not to make any clear projections for 2020, since that is the task of his great team of analysts, but he said he wouldn’t be surprised if battery prices halved again by 2020.
UK Electric Vehicles & Renewable Energy
Since Michael is such an active citizen in his home country of England, I was especially curious to get his perspective on the electric car industry there (which has been exploding) and the country’s recently volatile renewable energy industry. You have to watch the video to get his thoughts on all of that, but suffice it to say, he had plenty of good comments.
Solar Power Market
We slid into a discussion about solar power prices and growth, in which we talked about the differences between the US utility-scale average of 5c/kWh, the record-low bids in Dubai (“special cases”), and a more typical global average for wholesale solar power prices. Jumping into the ramifications of these competitive prices, Michael highlighted Morocco’s recent announcement that it is targeting 42% renewable energy by 2020 and 52% by 2030.
The big takeaway from COP21, with all of this incorporated, is that the transition to renewables for electricity is now seen as “inevitable.”
I love that Michael highlighted a handful of externalities that renewables extinguish and benefits they offer that are very often ignored: resilience, geopolitical independence, and economic stability. Aside from the externalities we typically discuss -- pollution and climate change -- these are hugely important societal matters. Jump to 23:10 into the video to hear him discuss these subtle but powerful advantages of renewable energy.
Global Clean Energy Trends
The last part of this video interview includes Sir Liebreich’s general thoughts on clean energy trends for the coming year. His one-liner on that, which he used for a recent article, was: “Sunny with a Hint of Götterdämmerung.” I think you can get the broad picture from that alone, but you can hear more in the interview or read more in his article.
I also got Michael to talk a bit about yieldcos and why that segment of the market was so hot and then crashed so hard. I think he does a good job summarizing why Wall Street treated this new part of the clean energy industry with such schizophrenia.
Overall, talking with Michael is always a stimulating and enlightening treat for me. I hope you enjoyed the interview as much as I did.