Equinor Acquires Stake in Ørsted, CBAM Tax Effects

This episode explores the recent acquisition of a stake in Ørsted by Equinor, discussing its implications for the renewable energy sector. We delve into the EU’s carbon border adjustment mechanism and its potential impact on wind turbine prices. Additionally, we examine Form Energy’s latest funding round and the challenges of scaling up new energy storage technologies.

Sign up now for Uptime Tech News, our weekly email update on all things wind technology. This episode is sponsored by Weather Guard Lightning Tech. Learn more about Weather Guard’s StrikeTape Wind Turbine LPS retrofit. Follow the show on Facebook, YouTube, Twitter, Linkedin and visit Weather Guard on the web. And subscribe to Rosemary Barnes’ YouTube channel here. Have a question we can answer on the show? Email us!

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Intelstor – https://www.intelstor.com

Allen Hall: So, down in the south, which is hurricane prone, one of the ways you know to evacuate is to check out the Waffle House. Now, if you’ve never been to a Waffle House in the South, it is delicious for breakfast, or pretty much any time. It’s open 24 hours a day, Joel. You can always go in and get some coffee and some eggs and some waffles.

Joel Saxum: The best time for a Waffle House is 2 a. m., because it is

Allen Hall: But the weather forecasters at the Waffle House appear to have an inside knowledge of where these storms are going because everybody’s paying attention to if the Waffle House is closed, that means get out of town, or if it’s open, then maybe it’s not going to be so bad.

So instead of listening to the National Weather Service or your local weather agency, weather person were relying on the Waffle House to determine the fate of hurricanes now.

Joel Saxum: Allen, it’s a little why I made a reaction when you did this is I actually have a LinkedIn post that I put together about the hashtag WH index the Waffle House index that is, was coined by a FEMA director back in 2004.

And what it was is he was down in Florida surveying and I can’t remember what hurricane that was, but surveying a hurricane damage and the only place he could find that was open was Waffle House. So he, then he separated into three things. It’s green for Waffle House is all a go, yellow for Waffle House has a limited menu, and red for Waffle House is shut down.

And if all the Waffle Houses look red around you, you better evacuate.

Allen Hall: It’s a good rule of thumb. And I know people in Western North Carolina. Eastern Tennessee and now sort of central Florida are really going to have a bad go of it. And yeah, serious stuff, everybody pay attention, keep your head down, get out of the bad weather.

Welcome to the Uptime Wind Energy Podcast. I’m your host, Allen Hall, and I’ll be joined by my Uptime co hosts after these news headlines. In a major development for European offshore wind, Total Energies has agreed to acquire a 50 percent stake in two large scale offshore wind projects from RWE in Germany.

The combined capacity of these projects is a staggering 4 gigawatts. Located northwest of the German island of Borkum, investment decisions are expected by 2027 and 2028, with full commissioning planned for 2031 and 32. The partnership not only strengthens TotalEnergy’s presence in the German electricity market, but also significantly contributes to the country’s efforts to decarbonize its energy sector.

Across the Atlantic, Canada has passed groundbreaking legislation opening up its east coast to offshore wind investments. For Bill C 49 creates a framework for developing offshore wind energy in Nova Scotia and Newfoundland and Labrador. The bill amends the Accords Act, allowing federal and provincial governments to jointly manage offshore wind resources.

As a result, regulatory bodies have been renamed to reflect their expanded role. The Canadian government sees this as a significant economic opportunity, potentially creating thousands of jobs and attracting investors. billions in investment. In a bold move to support innovative technology, the Norwegian government has proposed a substantial subsidy of up to 35 billion Norwegian crowns, or approximately 3.

29 billion U. S. dollars, for the country’s first commercial floating wind power tender. This support aims to accelerate the development of floating offshore wind technology, which is still Considered immature and expensive, the subsidy is based on a reference project of around 500 megawatts in size, but the actual capacity realized will depend on various factors, including cost developments, and project maturity.

Moving to the UK, Leeds based engineering services company Renew Holdings has made a strategic acquisition, purchasing Dutch firm Full Circle Group Holding, BV, for 50 million pounds. The Full Circle specializes in repair, maintenance, and monitoring services for onshore wind turbines in the UK and Europe.

The acquisition allows Renew to enter the growing onshore wind services market. Which has been bolstered by the new UK government’s lifting of restrictions. on onshore wind projects in England. In industry news, German wind turbine manufacturer Nordex reported a decrease in third quarter orders compared to the same period last year.

However, for the first nine months of the year, the company secured orders of 5, 000 megawatts of wind turbines, slightly higher than the previous year. The average sale price per megawatt of capacity remains stable at 900, 000 euros. with a slight increase to 920, 000 in the third quarter. Lastly, significant progress has been made on the 1.

2 gigawatt Baltic Power offshore wind farm in Poland. The first of four directional drills for the onshore connection has been completed in the Lubja Tova area. This 1. 4 kilometer tunnel will house power transmission cables Connecting the offshore wind farm to its onshore substation. The project, developed by PKN Orlin and Canada’s Northland Power, is on schedule.

Construction of the onshore substation is over 40 percent complete, with full completion expected in the fourth quarter of 2025. Baltic Power will be one of the first European offshore wind projects to use Vestas new 15 megawatt wind turbines. And is scheduled to begin operations in late 2026. That’s this week’s top news stories.

After the break, I’ll be joined by my co host, renewable energy expert and founder of Partilope Consulting, Rosie Barnes, CEO and founder of IntelStor Phil Totaro, and the Chief Commercial Officer of WeatherGuard Lightning Tech, Joel Saxum.

Joel Saxum: As busy wind energy professionals, staying informed is crucial.

And let’s face it, difficult. That’s why the Uptime Podcast recommends PES Wind magazine. PES Wind offers a diverse range of in depth articles and expert insights that dive into the most pressing issues facing our energy future. Whether you’re an industry veteran or new to wind, PES Wind has the high quality content you need.

Don’t miss out. Visit peswind. com today.

Allen Hall: Well, the biggest news in Denmark is that Equinor, Norway’s energy provider, has purchased a 9. 8 percent stake in Ørsted, valued at approximately 2. 5 billion U. S. dollars. And this is causing a lot of shockwaves around the world because I, I think No one thought that Orstead would ever sell any part of it to Equinor.

However Joel, I do think this makes sense from a couple of levels, right, financially at the moment.

Joel Saxum: Yeah, there’s from a lot of levels, right? It’s, it’s a win win for both of their goals. So, Equinor being, Equinor is Statoil. That’s the Norwegian National oil company as was dong which is or set as the danish national oil company So you see this transition right dong has transitioned over to be this renewable energy giant Econor continued along its oil and gas path, but Econor has goals by 2050 to have so many so much renewables in their Investment portfolio.

This is getting them back Further along the lines to making those goals reality. Also it puts money and some powerful backing into Orsted. So win for Econor on the getting towards the renewable goal side, win for Orsted for getting some more capital behind them. And to be honest with you, if you have Econor that’s invest in part of your company and you’re working in the offshore world, well, Econor is a fantastic offshore player, whether it’s oil and gas or not.

They know how to do things and they’ve invested heavily in offshore as well already, right? They’re a part of Highwind and some other cool innovative projects. So to me, I think that they’re not in the press release. They did say that they’re not shooting for a board seat. If I was Orsted, I would almost ask them to be on the board.

I mean, you’re here, why not come and be a part of the game?

Allen Hall: I think that would create an international situation, and rightly so. But it does, Phil, beg the question, what’s the move by Equinor? Is it just there to back Orsted in a sense that they’re neighbors? They’re all heading in the same direction, because it does seem like, Equinor is getting back into more oil and gas at the moment, while Oersted remains firmly committed to renewables.

Is that just a play that both of them can win? That Equinor gets a little bit more of a renewable portfolio without them having to develop it? Yes,

Philip Totaro: at its most simplistic level. And largely because, this was touted as a possibility for a while, I’ll say, but nobody ever really believed it was going to happen until it did.

But the reality is the reason that it happened was Orsted needs the stability of large minority shareholders like Econor because of not just the, the cash that they bring to the table to help, offset some of the, issues that, that Orsted’s had, particularly with their, their offshore developments in the U.

S. But it, it provides that, risk diversification for Equinor in terms of having access to the, to a renewables portfolio without having to directly pour money into it. They’re trusting Orsted’s team to, go and continue the, the offshore and onshore development process.

But at the end of the day, I mean, this isn’t like it’s a huge capital infusion, it’s basically, Equinor positioning themselves, if something were to happen and, a larger minority stake or even a majority stake became available, they might be in prime position to step in. Should that occur in the future, nobody hopes it does because, that would mean kind of a financial disaster for Orsted, but it’s just, at this point, it, it’s just like any other, minority investor in any size corporation saying, all right, well, we’re going to take a position.

We’re going to hold it. It’s worth, putting a little bit of capital behind it. And and just waiting out what the future brings and then seeing how we, either increase or decrease the position from there.

Joel Saxum: I think it’s interesting because you let you in this in the coming at the same time that we’ve seen a bunch of oil majors back out of direct development, right?

BP just announced they’re going to sell their whole onshore fleet in the United States. We’ve seen Shell pull out of offshore wind. BP also pull out of offshore wind and focus back with what’s good returns for their stakeholders and shareholders. Whereas Econor, like they’ve kind of dabbled in it and they’re along the same lines where they haven’t, they, they get to dip a toe.

They get to be a part of the energy transition, but they don’t have to be the upfront developer. I think it’s a smart move by them.

Allen Hall: Rosemary, how does this play in Denmark? You lived there for a while.

Rosemary Barnes: I think I’ve mentioned that before on the podcast. I, I feel like in Denmark, they are pretty competitive with Norway about.

companies. And in particular, I think that people are still very aware that, back when Denmark and Norway split into two separate countries and they drew the line that would divide, which were Denmark’s waters and which were Norway’s waters. They didn’t realize at the time that they drew that line so that Norway got all of the oil basically.

So I think that, There might be, and I haven’t spoken to any of my Danish friends about this, but I feel like there might be some sort of feelings about Norway coming and, you know, taking part of their, yeah, their big shiny national energy company. And I do think that it’s like, it’s a story to be really proud about as well.

The Ersted story or Dong story, I don’t know of any other, you oil and gas company in the world that has actually managed to trans transition to a clean energy company. I don’t think that there, there is one where they have legitimately got out of oil and gas and now are leading in renewables.

So, I expect that Danes are proud of that and I definitely think that they should be yeah. So it’s also a bit funny with Norway, they have a really, really great green, environmentally conscious reputation and, and, appearance leading the world in electric cars, a hundred percent clean electricity grid.

All of those things, but, just slightly beneath the surface is the fact that that’s done based on money that they’ve gotten from fossil fuels both within their country and expanding out. And, I got a little bit thingy about it when. There was a time a little while ago when Norway was making a big deal about we’re not going to exploit the Lofoten archipelago for their fossil fuel resources because it’s too special.

But at the same time, they were in that incredibly beautiful part of the Australian coast trying to develop that. So I, I felt like, like as a national kind of thing there where I felt immense hypocrisy from that stance. And there is a really weird tension in, in Norway between all the great things that they’re doing for the world, which I definitely can’t deny that they are.

And the people have a, do have an immense love of, of nature and spend a lot of time outdoors and that’s important to their national identity, but at the same time, the funding for all that does come from continuing with fossil fuel projects. So they also have quite a few renewables projects more so than, many other oil and gas companies that like to pretend that they also moving into renewables.

I think that. Equinor is actually, seriously intending to have offshore wind and floating offshore wind, wind be a big part of their future strategy. So I don’t want to get too cynical. But it’s just, yeah, it’s a really complex story and it definitely doesn’t just fit into, norway is good, or Ecuador is good in terms of, climate, there’s, there’s a tension and yeah, it will be interesting to see. I can’t imagine that they would be investing in Urstel expecting to take it back to oil and gas, so I’m assuming that this does count as more indication that in the future, where they want their direction to go is more towards the renewables area.

So yeah, tentatively think this is probably a good thing.

Allen Hall: Phil, it does seem like Equinor is going to acquire about 10 percent total in Orsted. Why 10%? What is the magic number there? Why are they stopping at 10, or is there some threshold?

Philip Totaro: No, I, it just, I think that’s probably what shares they could buy either on the open market, or what shares they might have been able to buy from Orsted themselves if Orsted had been doing some share buybacks and had some shares available to be able to offer privately to, uh, to Econor.

I, I think the rationale is that they don’t really want to go much beyond the, I think it’s 9. 8 percent if you want to be extremely precise with it. And the reason for that is, again, they, they want to have a, a minority shareholder, and I believe it’s, they’re now the number two minority shareholder in, The in Orsted at this point, so, for them, it’s fine.

Again, they just have a little, it’s, it’s kind of a dip their toe in the water jobby at this point where they’re just going to see, how that goes and take it, take it from there. As I said before, they, they may end up increasing that in the future. They may pull out and start plowing their own money back into, their own renewables developments.

They, again, unless something drastic happens, I don’t think they’re going to be able to take a majority shareholding for reasons that Rosemary just went into, but at the end of the day, I mean, it’s, we’ll, we’ll see where they go from here, but for right now, it’s just something that provides some, some stability.

We’re not a

Allen Hall: stock program, so we’re not, we’re not falling stock that close or financial program. The shares of Orsted are way down, like 70 percent from where they were in late 2020, if I believe. So does this make sense from just a financial standpoint that Orsted is only going to go up over the next couple of years in your ROI?

From a 10 percent acquisition is just a cash play in a sense.

Joel Saxum: If you look at just what, what just happened. So they’re down with Allen, you’re right. It’s 70%. It’s like 61 or something like that from, from early 2021. But just, okay. So they put two in the, so their stock, their value right now is worth about 2.

5. So, upon this, the stock went up, or Orsted stock went up 5. 8 percent in that day. So that 5. 8 percent is worth 145 million in a day. To eor, so

Allen Hall: come on, Phil. You’re our insights. You’re supposed to let us know this before it happens, but you’re two and a half billion dollars in it.

Philip Totaro: Yeah, but that’s what I’m saying is as a percentage of their overall market cap, it’s not really, that’s why I’m struggling to be as excited about it as others.

I guess it’s like it’s. Again, they’re, they’re dipping their toe in the water.

Allen Hall: Does it give them insights into what Orsted is going to do before the rest of us hear about it? Because they’re in the boardroom, in a sense? Well, of course.

Yeah.

Allen Hall: Well, isn’t that a huge advantage for

Philip Totaro: them? From a couple of perspectives, one, again, because they are such a large minority shareholder and they’ve publicly stated in, in the Danish press that.

Equinor did, that is, that they’re interested in helping to, again, without taking a board seat, which, again, we can debate a little, if you want, why or why not do that. But, at the end of the day, Equinor has said that they want to be able to, help and influence and guide Orsted’s decision making and strategy as much as they can.

Or as much as Ørsted wants them to. So, from that perspective, they’re, they’re there. I think it was a bit deliberate the way they said that and what they said in the Danish press because again, going back to what Rosemary’s mentioned, it’s, it’s a little bit touchy between, between the two countries.

Yeah. And, and at the end of the day it’s, it’s one of those things where, alright, so they’re providing, like I said, they’re providing some stability. It’s, at this point still a minority shareholding and, they’re, they’re

Allen Hall: going to kind of just wait and see. All right. After the break, I wanna talk about something that’s, it’s influencing the price of turbines, particularly in 2026.

This. Carbon Border Adjustment Mechanism, and what it means for wind in Europe.

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Visit bladeplatforms. com and get started today. Well, a study was commissioned by WindEurope and prepared by the UK consultancy Penta and EY, and it was looking at the impact of the EU’s carbon border adjustment mechanism on The European wind sector, right? So, the carbon border adjustment mechanism based on this analysis, could raise the price of an offshore wind turbine by almost a million euros.

Now, there’s some factors into that. It seems like about 25 percent of the turbine is imported and would be affected by this border adjustment mechanism. But first, let’s just take a step back. Rosemary, what is a carbon border adjustment mechanism for those of us in the United States that don’t have one of these things?

Rosemary Barnes: We’ve got to call it C BAM, C BAM makes it sound very exciting. Right? So that’s the, that’s the first correction that I’ll make.

Allen Hall: Sounds like you’re getting taxed. That’s what it sounds like.

Rosemary Barnes: So basically countries that are taking action on climate change, like Europe has a price on carbon for, within the EU, they’re concerned that what that means is that energy intensive products.

Won’t be, you won’t, it won’t be competitive to make them within the region anymore and countries without a penalty on carbon emissions are going to be at a competitive advantage and that without any mechanisms in place, you would just say, say something like cement or steel. Instead of continuing to make that locally in Europe, where those companies have to pay for all of the emissions that that generates, you would just see countries outside of the region who don’t have to pay a carbon tax.

They would be able to sell them in cheaper. And so those industries would suffer. So, the way that they are getting around that is by having the carbon border adjustment mechanism. To basically level a playing field between inside and outside of the region.

Allen Hall: How does that practically happen though?

If I’m going to buy steel from someplace else outside Europe, what tax do I apply to that? And how do I know they’re not building or making steel in a green way?

Philip Totaro: I mean, Allen, the thing with this is it’s, it’s, it’s, it’s, it’s, it’s, it’s, it’s, Half of it is, Europe’s doing what they have to do because they’ve already enacted this carbon pricing.

But they’re also, never at a loss for shooting themselves in the foot, are they? When it comes to trying to level the playing field. They always do it in absolutely the worst possible way. And this is yet another example of where they’re trying to be fair to anybody that’s You know, going to be leveraging a global supply chain they’re trying to be fair to their own domestic manufacturers within the EU, but at the end of the day, this is why we have global supply chains in the first place is because if you can get the thing cheaper someplace else and import it, you want to be able to take advantage of that price arbitrage, because then the cost of the energy transition, the cost of capital, the cost of everything isn’t, So, putting a tax on things necessarily, compensates somebody who feels like they’re losing whether it’s a government or domestic manufacturers, etc.

But, again, this is problematic because you’re ignoring the fact that a lot of these things that are going to be subject to the CBAM are going to be things that we already import which is why they’ve, they’ve done this study. And they’re saying that upwards of, 910, 000 euro per turbine is what the price increase is going to be for not for nothing on a, that’s almost like eight or nine or 10 percent of the cost of a wind turbine.

Certainly an onshore turbine in, in Europe right now and an offshore turbine, maybe it’s only 5%, but guess what? Who pays for that extra 5%? as, as electricity rate payers, because if the price goes up, they have to go get more capital. If they have to go get more capital, that increases lending rates and increases all these other things.

And that means necessarily they have to have a higher power purchase offtake contract. If the PPA is higher, then the rates that we pay as electricity consumers have to be higher to pay for that extra, that extra 5 percent that’s baked into the PPA. So the point is, you keep finding ways to raise prices and it’s just gonna, ruin it for, for electricity consumers.

It’s not gonna solve the fundamental free trade issue that we have.

Joel Saxum: But at the end of the, at the end of the day, Phil, exactly what you’re saying, to me, like, at some point in time, you hit a ceiling. We’re You know, you’re not going to be able to sign a PPA high enough to cover this stuff, and you’re just going to stop the energy transition.

It’s just not going to happen. It’s just going to be like, it’s too expensive because of all these rules, laws that we’ve enacted. And so we’re not going to do it anymore.

Philip Totaro: I mean, Joel, this is the same argument that oil and gas companies are making right now, saying we’re going to pull out of making investments in renewable energy projects because we’re not seeing a return on capital.

If you make them even more expensive, then they’re going to keep plowing money into oil and gas, and it’s going to End up reversing progress that’s been made. I mean, it’s, it, you’re, you’re saying it’s going to stop the energy transition. I’m saying it’s going to reverse it.

Joel Saxum: I, I just don’t, I don’t like reading about this I don’t understand how anybody sits in a, in a room and writes this legislation or this this CBAM, CBAM, writes this and looks at each other with a straight face and says, it’s a good idea.

I don’t, I don’t understand it.

Philip Totaro: But here’s the thing. They, going back to what Rosemary is saying, I see why they enacted it. Because if you’re going to adopt carbon pricing within the EU, if somebody’s going to manufacture something outside the EU and, and bring it in, it’s theoretically unfair to the people that have to pay the carbon price tax in, within the EU in the first place.

So I, I get it from that perspective. However, what we didn’t address was Rosemary’s earlier question, which was, Isn’t there a way, if somebody can, can demonstrate that this was made in a carbon offset fashion, whether it’s the steel, the concrete, whatever is being imported, whatever would be subject to this eBAM, if they could demonstrate that that was done in a, in a quote unquote green way or, or, carbon offset compliant way, Why can’t they necessarily apply for an exclusion on those goods or, or get, certain companies goods?

Excluded from the CBAM if, regardless of where, what country it’s coming from, just say, all right, well, we’re going to make green steel or we’re going to make, yeah, and, and just do it that way. That seems like it’d be funny. A better mechanism. Am I wrong? I don’t know.

Joel Saxum: I think that that makes sense, Phil.

But I guess what I’m looking at here is in, okay. So just take it from a us standpoint. I know that my friends in Europe are under the same pressures with we’ve had in the last few years is inflationary pressures and some other things that have just like the, the local household is struggling a little bit with finances because of what the global economy has been doing, but now you’re putting.

More pressures onto that local household by having to basically because what the local household wind turbine Operators or developers end up being that local household they end up being the one that’s the end user that’s paying for this the same way that if you were buying a car and all of a sudden the price of the car goes up because Imported steel or whatnot with this c bam thing What ends up happening is is I know that there’s a cost associated with energy transition, but some You The general public might not be able to afford it if you just keep jacking up the prices on everything

Allen Hall: Isn’t it a real circular argument though if let’s just Well, we can use the UK because they’re not part of the EU, but let’s just use them as an example.

So if the UK decided they were going to put a tariff on parts that are going into a wind turbine. All right. So they do this thing and it raises the PPA prices, but ultimately the UK government is accepting those, those offtakes, right? So they’re like taxing themselves and yet they have this pool of money of which they’ve just taxed sitting in the treasury, which I don’t call it a treasury, but then they Then they would just subsidize the cost of electricity generated.

It’s just like a pass through in a weird sense, right?

Philip Totaro: That’s maybe a specific situation to the UK because they have the contract for difference mechanism. In countries where you don’t use a contract for difference, then it’s, it’s maybe applied in a different way, but I, to your point though, yeah, it, it doesn’t, I mean, how many times have we talked about this on the show, right?

Like, but, It’s just governments don’t, they, they put policies in place that make it look like they’re, fighting for energy transition or fighting for the environment or doing whatever it is that they think they’re doing. And it’s probably mostly to get votes. But at the end of the day, they don’t create the market environment in which investors feel comfortable putting money in.

In a way that’s going to unlock, the capital necessary to get the energy transition to happen. So it’s like you can, you can try to score all the political points you want by enacting whatever policy you want. And, and, you can go have COP 29 in Azerbaijan and, and everybody’s going to come out of it saying, All right, well, we’re really going to do something this time and nobody’s going to do anything if you don’t create the environment.

That makes it possible and necessary for, for investment to flourish and for investors to see return on that capital. In the same way that they see returns in oil and gas or any other investment they could theoretically make.

Allen Hall: Well, when we come back from the break, I want to talk about investment into a battery company in the United States, and I want to get, to get Rosemary’s opinion on how it’s going.

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Allen Hall: Alright Rosie, Form Energy has secured 400 plus million dollars in a series, not A, B, C, D, E. Or E, it’s now at F, financing. The funding round was led by T. Rowe Price, of course. And G. E. Vernova has joined in as a new investor.

And if everybody remembers from our discussion a while ago about Form Energy, they’re making the iron air long term storage battery. And they’re building a factory, I think it’s down in West Virginia, if I remember right. Rosemary, they’ve raised a little over a billion dollars total to build this factory to make, basically take Studebakers and grind them up and make batteries out of them.

What, what is it taking a billion dollars to do?

Rosemary Barnes: I think it’s maybe this is a sign of things that are changing in, yeah, in VC world or just general funding of new technologies. That needs to happen for all of these clean tech companies, because it’s just a fundamentally different business model from what VCs are used to investing in where they, like, usually you would prefer something that, I mean, one would grow quite fast and two would have low CapEx requirements to get that growth.

So, if you think about like investing in a company, that’s like. Got an app like Facebook where it doesn’t cost much to develop the app. It definitely doesn’t cost very much different to have 1000 users versus 10, 000 users, and then you get, this network effect and everything just like grows very fast and there’s this huge upside.

Whereas hard tech, like, like actual physical hardware products, like most of what we need for the energy transition. It’s not like that, it does cost more to make a factory that can put out, 1000 units per year versus 10, 000 units per year. And yeah, they do get cheaper with time, but it’s not nearly this kind of like same explosive growth that we have been used to seeing within, in investments.

And then the other thing is just the timeframes, like you can, you can develop a smart piece of software in a year or two. And like gradually improve it, but for really big physical things, it’s going to take you probably minimum 10 years from the smart science that was discovered through to having something commercial scale.

And then probably another 10 years before it’s scaled up far enough that it’s actually making a difference in the market in terms of like actual volumes. So there’s been, there’s a really well known problem for not just clean tech, but I’ll, I’ll limit to clean tech because that’s the space that I play in.

There’s a really big problem. First of a kind projects are a certain type of funding challenge because it’s not proven yet. It’s quite experimental. And that’s well known that it’s quite hard to get your funding for the first, the first project, the first, the pilot factory or, whatever.

But what’s proving to be an even bigger challenge than that, because there are quite a few companies that are investing in, in first of a kind because you, there’s quite a lot of upside to be taken from that risk. The bigger challenge is the second, third, fourth, fifth, sixth of a kind, that sort of where that sort of area where it’s not like totally brand new anymore and you’re, you’re not getting in early enough that you’re, going to expect to ten times your investment within a few years.

But it is not yet proven enough that a bank is going to finance it. And so that’s this like new, new funding challenge that needs to be, we need to find out how that’s going to be done for any, like any cool energy technology that you can think of that has to actually be physically manufactured.

They’re all experiencing this same kind of issue. And so unless you’ve got a literal billionaire funding you with deep pockets, then you’re going to need somehow to come up with at least probably hundreds of millions of dollars. And yeah, sometimes a lot of hundreds of millions of dollars to, to be able to build and prove sufficiently that subsequent projects can just be financed in a normal way by a bank or something.

Thank you. So I think that this without, I will admit, I haven’t actually looked at the yeah, the, the terms of this, this fundraising, but I’m guessing that that’s, that’s the kind of hole that it’s trying to fill and what makes it feel a bit unusual, but I I’m expecting we’re going to see more of this because it’s really needed, like we don’t lack for good technology ideas and that have been proven once or twice.

Thanks. But what we do lack is those same technologies to then move all the way through to implementation. Cause yeah, a good idea is not going to solve the, the climate challenge. It’s going to be, implementation that is going to solve it. And that means you’ve got to scale up. Scaling up is where it’s about.

Allen Hall: I just have a question of, about how complicated this battery is and why they need a battery 1. 2 billion. I think they’ve raised total. They’re probably going to go get some more money to roll the factory out. It’s not supposed to be really in true production until 2028. Are batteries that complicated?

Cause I’ve seen Tesla. Build battery factories in a really short time for lithium.

Rosemary Barnes: Yes, but Tesla is really building on very well known manufacturing processes that have already been they’re not optimized, like the optimization is continuing, but, they really know how to, move things around as little as possible waste as little material as possible.

And the thing is, I mean, with nearly, I work a lot with manufacturing and in nearly everything that I do, it’s not, is it hard to make this thing? And probably, like if we think about anything that, the US is trying to make batteries locally, Australia is trying to manufacture solar panels locally, maybe some wind turbines as well.

It’s not that we can’t make those things. Of course we can make those things. What’s hard is making them cheaply. And so if you let’s consider like a wind turbine tower as an example, cause it’s something that I’ve been studying recently. Like you take a plate of steel, you roll it into a cylinder, you weld it, you weld a bunch together.

Like any country can, can do that. Right. But what is challenging is getting them cheap enough that you can at least come with somewhere within the same ballpark as what they’re coming out of China. For, and so that means serial production. That means that you have dedicated equipment and that everything is, arranged so that you’re not, you’re handling things as little as possible.

You have machines that are doing double, triple, quadruple duty so that, everything happens exactly right. And it just, they just roll off one after the other, like probably. One every day in terms of like a wind turbine factory. That’s how they’re kind of like minimal economic model is that one comes off the end of the production line, every single 24 hours, like clockwork.

And the more that you can do, the more savings you get. If you can’t manufacture like that. It’s going to be just much, much, much more expensive, right? You could have one person, one welder go around and, do all these things by hand, but that’s very expensive compared to making the big investment in automated equipment, like, positioning equipment and robot welders and all that sort of stuff.

Is where you save the money, not at first, at first you have to spend, 50, 100 million dollars setting up your, your factory just to do stuff that, any guy or girl with a welding certification could, could go and do that by hand. But. That’s what you have to do to be economic in the long run and with long duration energy storage, I mean, it’s just crucially about the costs.

I mean, if you can’t lithium ion batteries getting just cheaper and cheaper and cheaper. And if your long duration energy storage technology can’t be much, much, much cheaper than lithium ion batteries, then there’s no, no place for it. So I think that they’re trying to demonstrate that they can get to that low cost price and they’ve, they’ve done their demonstrations.

They’re beyond the point where they can say, trust us, this is going to be one 10th the price. Once we do it at scale, at some point you need to do it at scale to show that that’s what it is. And once you’ve done that. Then a bank will back a project that uses that technology.

Allen Hall: Were they anticipating that lithium would be their competitor?

Cause I thought when they first announced, this is a couple of years ago, the iron air battery didn’t have much competition for longer duration storage. That’s why they were, they were kind of standalone for a while in that competitive landscape.

Rosemary Barnes: Yeah, yeah, sure. It does. I mean, there are a hundred hours.

Pumped hydro would be the other thing that they would be competing with or some kinds of thermal storage as well. But I think that this is something that I’ve been saying about long duration energy storage right from the start. Like everybody had the goalposts wrong. They’re looking at where, like four years ago, lithium ion batteries were like one hour, two hours.

And so people were developing technologies like, we’re gonna be cheaper than lithium ion batteries at four hours or eight hours. But failing to look at the cost reduction curve for lithium ion batteries. And like it’s very easy to predict that by the time. Your technology at four hours or eight hours, by the time that’s mature, lithium iron will have blown that duration out of the water as well.

And you’ve got no space to play in. So form with iron air, a hundred hour battery duration. That’s a lot further. Do we need a hundred hours? But I mean in any case they have to be very, very cheap. Otherwise there’s no point.

Joel Saxum: The difference though, here with the, with form energy is they’re actually saying that now in the form in, in, in the form in where they’re, how it’s set up now.

It actually compliments lithium batteries. So what they’re saying is, is when you put a long duration storage unit in, you do part of hours and part with lithium ion batteries, because the lithium ion batteries, I think can charge faster and discharge faster than, than their technology. So it’s like, You have, Allen, it’s like you and I were talking about turbochargers the other day, a small turbo that spools up and down quickly, and then a large one that spool, it may have more power in it, but it takes longer to spool up and get going.

So it’s kind of the same thing where it’s, they complement each other as a battery storage unit. So they’re not, I mean, they’re, in some respects, yes, they’re competitors, but at another scale, what we need on the grid, we need both of those technologies.

Rosemary Barnes: As long as form does get Much, much, much, much cheaper.

If it is not much, much, much, much cheaper, then it will never play that role. That that’s the thing. Like all of the long duration storage technologies, like there’s nothing to say that you can’t just put in a hundred, a hundred lithium ion batteries instead of one, form one with the equivalent.

Yeah, equivalent capacity. It’s just that, we expect the form will be vastly cheaper because it’s just, like it’s, it’s made from very cheap materials. That’s the assumption that we need to now prove. And I will say most new long duration energy storage technologies have not been able to reduce costs in the way that they assumed and promised that they would be able to based on, like, back of the envelope and lab scale, you assessments that just the costs haven’t come out the way that they needed to.

And lithium ion batteries just have, they have, I mean, we should have been able to say you can, like it’s very predictable with learning rates. Once technology gets started, you can see how much costs are reducing with every doubling of production and lithium ion batteries have just been doing that the way that you would expect, but it’s just so hard to actually believe in those massive cost reductions.

Okay. But yeah, lithium ion batteries are getting so cheap that we really need to get to the point now with alternative long duration energy storage technologies. They need to stop telling us their calculations for how they’re going to be cheap and start showing us that they’re cheap.

Allen Hall: I’m not sure I would pick a market where I’m competing with Elon.

Philip Totaro: But one, one last thing to add on this too, is the reason that Form Energy is able to raise as much capital as they have. And it’s, it is admittedly highly unusual to get to a series F capital raise. But the reality of it is that there are so many energy arbitrage, energy traders, energy arbitrage companies out there that want both the, short duration, whether it’s lithium ion or supercapacitor based or some other short duration technology that usually provides more of a grid smoothing capability.

The reason that everybody’s getting excited about iron air batteries by, form and, and by others is that in addition to being made from cheap materials, it’s enabling a use case that energy traders want, which is long duration storage means they can, open up more opportunities for energy arbitrage where, they can sell power at a price optimal time back to the grid.

And bank power from wind or solar or whatever so that they have it, in this long duration storage. It’s, it’s basically an extra tool or an extra knob to turn when you’re talking about, grid balancing and, and energy trading. So, that’s why so many people are excited about it.

That’s why so many people are willing to put money behind it, is because it is gonna potentially unlock again, with those cost reductions, it’s going to potentially unlock new use cases and business cases for the industry.

Rosemary Barnes: And they have orders. There’s, there’s a dozen project probably announced for these batteries.

So, I mean, they might not all happen, but I think that the majority will. So. That’s obviously, an important place as well.

Joel Saxum: It looks like they’ve got orders from the California Energy Commission XL Energy, multiple projects for XL Energy going on, Georgia Power. You see all some other states up and down, Dominion Energy and up and down the East Coast.

So yeah, they definitely have got some stuff moving.

Allen Hall: If you haven’t picked up the latest PES wind, I holding it in my hands. If you’re watching me on YouTube, it’s heavy, Joel. This, this edition. Is thick and I was scanning through it and noticing a pretty good article from the Odense port in Denmark and how massive that facility is.

It’s incredible and how they’ve really transitioned from basically being a steel port. To being a renewable energy wind port.

Joel Saxum: Yeah. If you are a part of anything in offshore wind you’ve been touched by the port of Odense or you’ve been connected to it at some point in time. Even some onshore wind projects.

So it is Denmark’s largest port eight and a half million square meters. And for those of us who doesn’t don’t speak in square meters, it’s about 1800 acres, which is massive. Like that’s just a huge facility. And And they have a lot more available there, too. Two million more meters available, and they’re going to be growing by another million square meters.

So another 250 acres that they’re going to be growing by. And what they’re doing at this at the port is they’re continuing to innovate in, basically make a port a part of a, the whole supply chain, which is really cool. So they have, they want to be an all component offshore port. So they want to have all the components as many as they can actually manufacture their onsite or nearby.

They want to do right there. Then they want to do the sub assemblies right there on site. So you have less handling materials, less risk involved, less logistics costs. And by doing all this, they think that they can actually reduce the cost of a turbine by two to 3%, which. I mean, armchair to the armchair engineer, it makes sense, right?

Do it all in one spot. Don’t have to handle it, pick it, move it, anything like that. Things cost less. So they have a massive amount of acreage. They got big plans for being an offshore wind port, but the other side of this. Thing in the port of Odense is they’re an innovation hub. So, there’s, I mean, there’s test facilities down there.

They do a lot of robotics. Maersk was down there for a long time doing large scale robotics for ships. So, they’ve continued that legacy. So, a lot of, a lot of big things going down on there. And being that it’s robotics and a innovation type hub of a facility. The engineers and researchers can be right on site, developing things with new products right as they get loaded up Keyside and off to fix the energy transition or to lead the energy transition.

So, the Port of Odette is pretty cool article in the PES Win magazine this week.

Allen Hall: Yeah. So if you haven’t downloaded your copy, go to PESwin. com. It’s free. And you can check out all the cool articles.

Joel Saxum: This week’s Wind Farm of the Week is the Cardinal Point Wind Farm from Capital Power. It’s up in Illinois in operation since 2020.

There is 60 GE machines, 89 meter towers, 62. 2 meter blades, for a total height of 496 feet. Again, speaking in from the U. S. side. And the interesting thing about 496 feet is it’s right under 500, which is when you start to get into the federal aviation administration’s airspace. So that’s why a lot of these are that high.

But construction costs of this thing, if you’re wondering what 60 wind turbine site looks like, it’s about 240 million. Interesting in this project as well, Cardinal Capital Power with Cardinal Point Wind. They did an interesting financial mechanism here. Twelve year fixed price contract with an investment grade U.

S. financial institution. So that means, basically, instead of getting the revenues, living on the revenues of the wind farm, they have a fixed price contract with a bank that pays them as much as the contract is, but then the losses and gains from that is a risk that the bank took on. So, kind of an interesting financial mechanism there.

The other thing that Capital Power does, and I really like this, this is why I came across this wind farm for the Wind Farm of the Week, is they put out community newsletters from the site supervisor of every one of their wind farms. So, quarterly, the site supervisor and of course the marketing communications team, they get together and they write a newsletter.

To the local community and they send it out around that area and it kind of supports things of all the different charities that they’ve been working with and whatnot. So pretty cool thing that Capital Power does for transparency within their wind farms. So the Cardinal Point Wind Farm of Capital Power, you are the Wind Farmer of the Week.

Allen Hall: That’s going to do it for this week’s Uptime Wind Energy podcast. Thanks for listening and please give us a five star rating on your podcast platform and subscribe in the show notes below to Uptime Tech News, our weekly newsletter. And check out Rosemary’s YouTube channel, Engineering with Rosie. And we’ll see you here next week on the Uptime Wind Energy podcast.