This is a transcript of the Nov 13 edition of the Energy Insiders podcast, featuring an interview with Tilt Renewables CEO Deion Campbell.
SUMMARY KEYWORDS
wind farm, asset, deion, gigawatts, projects, market, transmission, bit, battery, giles, hydrogen, australia, new south wales, point, price, renewables, people, year, terms, talking
SPEAKERS
Deion Campbell, Giles Parkinson, David Leitch
Giles Parkinson 00:00
Hello and welcome to this latest episode of the Energy Insiders podcast. My name is Giles Parkinson. I’m the editor of Renew Economy. And joining me at the end, well, not quite the end, but nearly the end of a very remarkable week in energy news is David Leitch from ITK Services. David, how are you?
David Leitch 00:20
I’m well, thanks, GIles. Trust you’re well, and I trust our special guest today is well as are our listeners, and looking forward to having an interesting conversation.
Giles Parkinson 00:31
Absolutely. Absolutely. Well, I would like to welcome Deion Campbell. He’s the CEO of the listed company Tilt Renewables. Deion, thanks for joining Energy Insiders podcast.
Deion Campbell 00:42
It’s my pleasure. Good to see you, to be talking to you Giles. Let’s see how we go.
Giles Parkinson 00:46
Let’s see how we go indeed. Look, we’ll start off with talking about Tilt Renewables interim results, which came out earlier this week. But there’s a lot of other things to talk about. The New South Wales energy plan unveiled by Matt Keen, some more news from AEMO and its transition plans in Victoria, which I’m sure is of interest to you, Deion, and even Andrew Forrest and Fortescue metals, and huge plans for a Global Green hydrogen system. Anyway, let’s start off with Tilt Renewables.
Deion, you reported results which were probably down a little from what you were hoping at the start of the year. Your main problem I think, has been the Dundonnell wind farm and the delays in the commissioning process there. But this week, I suppose you’ve got some good news because you’ve been invited or allowed to expand up to another hold point. And I think you’re probably around about two thirds production capacity now. Could you just tell us what the situation is there?
Deion Campbell 01:50
Yeah, sure, you’re right. The results aren’t where we thought we’d be. We will always see this as a year in transition for us is as we move from having Snowtown 2 in our asset base to two projects in construction, which, you know, always have the opportunity to go slightly different than you anticipated. So Dundonnell really has been that for us, with the increasing understanding AEMO has, of how the whole NEM responds to increasing penetration of renewables. Now, they’ve got an integrated model, we’ve found that they’ve kind of held us up at Dundonald while they’ve tried to understand certain fault scenarios, and so forth.
And, you know, it’s been an interesting journey. You probably would say you wish you weren’t here. But we’ve we’ve learned a lot. I think AEMO’s, it’s a lot. We’ve probably developed some new relationships we didn’t think we needed. We’ve managed to, to tidy up things and get to the 226 megawatts hold point late on Monday, and for us, that’s 85% of a typical year or P50 energy yield, right. So we’re 85% of the way there, I think we’ve got a good path to get to what is 97% of a expected yield by Christmas time. What are we roughly three months later than expected. So it’s untidy, but it’s not really the end of the world in context of a 30 year asset. So yeah, extra effort. Probably better for all of us that we’ve done it .Won’t be looking forward to, in
Giles Parkinson 03:37
What exactly has been the problem there? Because it’s been hard to sort of ascertain from the outside looking in. I mean, as far as we can see, and and from your announcements, you’ve done everything that you thought you were expected to do for the registration and you started generating. Now we have seen some other projects being held up because they had sort of quote unquote, performance issues or quote, unquote, technology issues. Yours doesn’t seem to be in either of those cases, it doesn’t seem to be a problem with your wind farm, it seems to be an issue that was discovered in the grid as a whole.
Deion Campbell 04:11
Yeah, that’s probably the way to describe it. We did get fully registered as a generator in the NEM, which is required to start running and, and we achieved that somewhere around March and about a month later AEMO said, hey, look, we’ve this new modeling capability we’ve got has meant that we probably need to have a chat about your registration. And of course, we have already committed $650 million and made a long long way towards progressing the completion of that construction at that time.
So it was a bit of a surprise for us. I think it was a bit of a surprise for AEMO that that the performance that they registered us with at our asset was no longer really going to pass the bar that they were setting. And I think what’s happened is it’s they’re in transition, the energy rules in Australia have gone from about number 85, when we were registered, or at least when we got offered to connect, and they’re now at about 151, right, so the rules in Australia are evolving very, very fast. And we were sort of offered our registration process, kind of in the middle. And I think we were just in a little bit of a hole in terms of AEMO’s thinking. So look, you know, they’ve tried really hard to not make this is bad as it could be for us, given that we were registered. And even the project progress we made this week, they were they were pretty flexible with some of the stuff we had to deliver. They worked really hard, including over the weekend to make sure we got there this week. So look, we’re, we’re disappointed we’re here. You know, we’ve lost a bit of revenue we thought we’d get. But we’re really happy that we’ve been able to get an outcome that they’re happy with that we can deliver. And we haven’t had to go for the extra capex of that project.
David Leitch 06:16
Deion, that capex point is interesting. And, you know, I was looking through for my own purposes at a bunch of operators and I increasingly think in a fragmented market that operational expertise is going to become more and more highly valued. And the obviously the winning, the winning companies, as the market consolidates are going to be those with operational expertise. I guess the point I wanted to start with, though was to come back to the bigger question about listed wind and all solar developers.
You guys had a takeover offer last year from your majority owner, which was knocked back, but now there’s 15%, minority shareholding, something like that. And I think Mercury’s there with 20%. The are sort of two questions I have but one is what’s you know, is it viable to be half pregnant, if I can call it that way? That secondly, we also saw the takeover of Wind Lab and of Infigen, and I’m just wondering what you see as the future for listed wind development and solar development companies in Australia? I mean, in the United States Nextera has done an incredibly sensational job, Orsted in Denmark. But, but but, I mean, how do you think about your Tilt’s longer term future and strategy in that context?
Deion Campbell 07:44
Yeah, that’s a good point that, first of all, we’ve got two large shareholders in Infatil and Mercury, who are completely supportive of what we’re doing and how we’re doing it. And I think that’s pretty special in the listed space. Other companies, such as those you mentioned, maybe didn’t have the cornerstone kind of believers, you know, so they were, they were there, they possibly weren’t performing as well as the, you know, they might be expected to, and so they were probably ripe for takeover. But we’re a bit different. We’ve also got a scale in a future investment pipeline that is way superior to, to those companies.
And so, and we have this discussion a lot with our major shareholder, “can you support us as we head through this next wave of investment?”, and they’re, they’re both saying, both the big ones, and actually the more sort of smaller ones are there for the journey, right. And so, look, consolidation probably is a reality going forward. There’s a lot of people that may have thought there was a bit of a runway ahead of them in Australia, maybe there’s not anymore. So one day, the owners will look to get out. But for us, we’re here. I think we have the benefit of operating in both countries, New Zealand and Aussie. So there’s a bit of, if you like, resilience to things that politicians might do. And we’ve been doing it for 20 odd years. So we kind of do have that operational experience. We think we know what we’re what’s required to make a good, profitable asset base. And we’re not impatient, you know, we can sit here and stay as we are for a few years without anyone pressuring us.
David Leitch 09:30
No, I see that. But I don’t know that the market will sit still, for a few years, when, in fact, it seems to me it’s in very rapid transition. And this brings me to the other general point that there’s a bit of a dichotomy between people who think that the outlook isn’t all that good in the sense that there’s not much a way around in the way of PPA opportunities. And there are all these transmission bottlenecks. And yet on the other hand, we’ve seen three and a half gigawatts by ITK’s count get to go ahead status this year. And I’m just, and I think a lot more projects are going to be announced for various reasons. And I’m just wondering how you see yours, you have, as you say, got a great development portfolio, it’s really a terrific set of options. And, and and, I mean, what do you think about the pace of development from your perspective and the opportunities out there?
Deion Campbell 10:28
Yeah, it is going pretty fast. And that’s part of the challenge for AEMO, of course, is it’s going faster than perhaps no one really thought it would. For us, as I said, we’re patient right? So unless some activity happens at shareholder level that really sort of, we’re probably not that closely involved with, our mandate is to keep a really high quality portfolio of options together, and put them to the market when the market requires them. And so we’ve made progress. Since we’ve been de merged with Salt Creek, with Dundonnell, with our Waipipi wind farm in New Zealand, we’ve got some discussions happening around Rye Park.
It is harder to secure a PPA. There are projects that have announced off tag prices that, you know, really don’t reflect the real market, and possibly we’ve seen some of those projects not actually proceed. So it’s definitely challenging. It’s definitely not getting easier. You add the grid uncertainty and some of the other negative pricing congestion, general constraints, yeah, you add that to it and it’s actually not a game for everyone. This development, construction stuff. Operations tends to be a bit easier, but then a few people really, really badly burned in the last two years as well.
David Leitch 12:00
I agree with that very much. Could you just talk about a little bit about Rye Park, maybe in the context of New South Wales and then I’ll hand back to Giles.
Deion Campbell 12:10
Yeah. We’ve signaled for a long time now that as we as we build out our projects that we like in Victoria, we want to head to New South Wales and I guess, Minister Keens announcement today, or this week, rather, really sort of helps encourage us in that thinking. Rye Park, it’s 400 megawatts, we were close to getting planning approval to increase the tip pipe on those turbines to get the latest and greatest machines installed. We think the project for a New South Wales wind farm offers competitive energy pricing and has a good connection – should not suffer what we’ve suffered at Dundonnell. Mind you, Dundonnell, we would have said the same about. So for us, probably the focus then is on making sure that we’ve got the right contractors and the right technology and looking to make sure that our shareholders are happy that we take an investment decision sometime next year.
Giles Parkinson 13:18
The broader New South Wales government strategy, I mean, as an investor, as a constructor, developer, are you pretty impressed with that? I mean, just to sort of remind listeners, really, with it was sort of like a further step forward. For what they previously announced on renewable energy zones, the fact that they, they’ve kind of updated this by recognizing that to add certainty, and to lower the cost of capital, they seem to be prepared to provide a base price to sort of underwrite the projects or contract for difference or what, what have you we’re not really too sure exactly what they’ve got in mind. But how much easy will that make it for companies like yours? Is the cost of capital what’s key here, or is it the offtake agreements? Or is it in fact, the actually having the renewable energy zones where presumably you will you will not run into the sort of problems that you faced at Dundonnell?
Deion Campbell 14:13
Yeah, it’s still a bit still a bit murky. To be fair, I think. I think it’s hard to see exactly how the proposed underwriting or off takes would work. A reverse auction is sort of fine. But we’ve seen in other auctions where people win and never go and build whatever they thought they would build, because because they just pitched too low. So we’re a bit cautious around a gold rush approach. The high level theme of 12 gigawatts in New South Wales before 2030 is exciting and is not simple. You take a renewable energy except where the transmission is sort of provided with some voltage support or or other network services as part of the connection that the investment timing then becomes a challenge.
And it’s sort of chicken and egg. And somehow they’ve got a breakthrough that, someone’s got to take the risk on it transmission connection in both of our key sites in New South Wales being Rye Park and Liverpool have pretty solid connection opportunities that don’t necessarily need to be part of a REZ. And I guess we see that as, as optionality for us. If the REZ approach takes a bit more time than they think we probably don’t need to be involved. And if it goes faster, and looks better than than we think, then we can be involved. So we’re pretty, pretty well hedged in terms of that process. There’s also not not a, there is a merit order to the projects that might be announced in the state, and you take a view on the relative merits. And we think our projects, those two I mentioned, are up there in terms of the quality of projects, but that’s not the only thing that drives people to invest. Sometimes it’s, it’s, well, we’ve only got one project, so we can only choose one. So that’s the one we’re investing in and we see a bit of that in the solar space. We literally can’t see why people are building solar in Australia if they have another option such as a wind farm, and I think thats what we’re seeing.
Giles Parkinson 16:25
Could you, could you explain for listeners a bit more about why, why you can’t see why people would build solar farms? I mean, I presume there’s just too much solar in the grid, and it’s pushing prices down during the middle of the day. But can you just maybe just elaborate on on your reasons for that?
Deion Campbell 16:40
Yeah, so I really like for like economic basis, our solar options don’t get near our wind options in terms of economic outcome. And there was a period maybe two years ago, when of course, there was a lot of build, some companies never made it through that process. And that’s probably the market outcomes of people thinking solar is actually cheaper or easier than it is right. Now we’re seeing the rooftop solar, which has been an outstanding kind of success for Australia, starting to really impact on the on the value of electricity from the solar farm. No one actually wants more energy in the middle of the day when it’s hot.
David Leitch 17:21
So I agree, I think that’s number one sort of policy problem, in the sense that you can make a case that solar is cheaper to develop than wind. So it has a lower required price, but its value is equally lower, because there’s only so much you can take that at some other time so you’ve got to find something else to do with it. That’s I and ITK’s price forecasts reflect that, to be honest. Just about transmission, there’s a heck of an argument about how to price transmission going forward. And Deion, do you have some thoughts about you know, the generator sort of pays and gets a long term arrangement, access arrangement, the sort of thing that’s been talked about, I suppose, in New South Wales, not just in the New South Wales strategy, but Transgrid itself has come up with its own sort of little version for some stuff.
Deion Campbell 18:17
Yeah. In a way, some of the other markets around the world that offer offer firm transmission rights in some, in some manner, do do remove some of the things like condition constraints that might impact the business case. So I think the sort of open access arrangements in Australia make it more and more difficult and you see a lot of that playing out in reality in South Australia, and I, there are people adding capacity in Australia, in South Australia right now into a transmission system that just can’t handle it. So I fear there are more more blood to be on the floor before some, perhaps more offshore investors really try and get their head around what’s going on in Australia.
David Leitch 19:05
It reminds me of one of my old fund managers who always used to tell me back in about 1989, but I never forgot that there are more bankers than banks. Sorry, more banks than bankers. I got it the right way round. I think there are more solar farms than solar farmer smart owners But anyway.
Deion Campbell 19:20
Yes, and we’ve seen the outcome of it and but you know, the the views are the banks, they are, they are wising up to where the risks are and these things and you know, what you got away with a couple of years ago in terms of debt funding you wouldn’t get now. So over time, there has to has to sort of normalize to quality assets and quality developers providing energy.
Giles Parkinson 19:55
Given that, um, you’ve got a couple of storage assets and battery storage I think in Victoria, but the more advanced one that you’ve been thinking about for a couple of years, and it’s next to the SnowTown wind farm and particularly a big battery, My understanding from your last presentation was that you expect to make a conclusion sometimes over the next four months before the end of the March quarter. So what’s the weighing up on your mind at the moment about battery storage? Is it the falling cost of battery storage? Is the value stack that you can get out of it? Is that the sort of the shifting the energy is? Is the FCAS market already flooded? What are the things that you’re considering when you’re weighing up those options?
Deion Campbell 20:39
Yeah, I think you’ve probably summed it up quite well. But for us, it’s the battery project at Snowtown, there a couple of things there. Connection wise, we’re breaking the mold and kind of going back, if you like behind the meter into the Snowtown wind farm connection asset, not in the pure sense, but in the sense that we havent had to build new and we haven’t opened up the GPS at Snowtown. So there’s, there’s quite a nice for Australia Inc. process there that we’re learning around adding batteries to kind of legacy assets.
So I think that’s useful. But for us, we we definitely think batteries are part of the future at the moment, the sort of, you know, optimum two hour type, type, discharge time really isn’t going to help firm, you know, even the Snowtown asset, isn’t going to be firmed in the sense that we can go and sell it to mum and dad, as a retail offering, right. But you look forward to the five minute settlement. And the way FCAS charges are made, a battery can make the difference between hitting up or down your dispatch target right, so FCAS charges go down closer. So for us the battery is really about understanding the other various markets that a battery get into into play. Arbitrage as one. Arbitrage sort of isn’t that exciting because you need to also then recharge at some point. So if you if you discharge, and then you miss it by by three periods just sitting there, a the bit of a lame duck. So Arbitrage is one, FCAS, the various FCAS markets are the other.
We’d like to understand what the control systems need to do? How the batteries behave? What they look like in the evolving sort of market in Australia? And it’s not so much about future investment opportunities for us. It’s about how the market will behave with these fast acting, kind of price chasing assets that will sit there. And so if you look, we’ve we’ve mentioned we’ve got some thermal firming options that we we are developing, maybe they take a slightly different shape and in a market that’s full of batteries. But until you know what a battery can do, you really can’t do anything, but yes. So it’s a bit of an r&d project to make it worth it, but it’s more about what the team can learn, what our control systems do, how the market evolves.
Giles Parkinson 23:06
It’s interesting what you’re saying there because you’re talking just about this sort of energy market in transition and you allude to that about you know, the issues with the connection process and all the renewables flooding into the market, people kind of learning as they’re doing, AEMO conducting more modeling, finding there’s some weak points here and there and stuff like that, I mean, does this excite you or depress you or are you sort of confident that the whole process will be correctly managed because we kind of doing it state by state and AEMO has a plan, but the federal government doesn’t seem to have an overriding policy, you’re talking about sort of, you know, sort of discovering what the battery storage can do as you’re going along. And there just seems to be so many different variables going on.
Deion Campbell 23:43
It’s pretty difficult job to be the market operator, isnt it?. I think for us the leadership transition that they’re in now will be key to how they sort of position themselves going forward. I think the federal government has pretty much made itself irrelevant in the transition to renewables. They are, in my view, I believe they’re they’re actually supporting it in sort of a secretive manner, you know, they’re supporting Snowy too, that’s an important renewables penetration supporting asset.
And we’ve seen that with Snowy in the market for PPA’s. in 2018. They’re talking about the second link with Tasmania Marinus link. All that stuff’s about supporting or enabling further renewables penetration. So I think while they’re not overtly trying to drive the change, they are looking at where they might be able to help with the entities that they own. So yeah, I think, does government policy matter anymore? The states have taken the lead in in perhaps the ability issue.
David Leitch 24:50
I think it’s federally it’s about carbon policy. Electricity has historically been a state matter. For states like New South Wales where energy security becomes an issue because historically they’ve been a net importer. You know, you and something has to be done over time, you can understand why states have moved into the vacuum. And, you know, Matt Keane’s gone a step further, in a sense, in that he’s gonna make the future come true. And move, I think, New South Wales out have been a net importer to being, you know, a leader and pass it probably the biggest stage in terms of ownership of renewable assets as we go forward.
But it does bring me back to the point that in terms of developing new capacity, I mean, do you foresee that you’ll be selling to the government, at your potential developments or into the private sector? I mean, one of the other things that you can observe Deion is that, you know, like the big gentailers who have the big retail market, don’t say they haven’t, for years bought any new, renewable PPAs, you can understand that. But in the end, what happens if they don’t? I mean,
Deion Campbell 26:11
I think I think in the end, they’ll probably have to. And I say that not, what’s driven their interest to date has been the renewable energy target. And we all know that’s full. So I take a look at what’s happening in New Zealand and the sort of the main and only real decent thermal asset over here is also nearing the end of its operational life.
And so its owner Genesis is already partnered with us to take the off take out of Waikiki wind farm for twenty years, and they they’re doing it solely because they need gigawatt hours to serve their retail load. So there’ll be a point where those big guys you’re talking about have thermal assets that will exit the market need to find gigawatt hours. And so the easiest, quickest and cheapest way to provide gigawatt hours in the market right now is renewables, that won’t change.The hard part is how to store it. So it’s available at a time when you want it, and thats a mix of diversity in terms of asset type and location. And it’s a mix of some actual storage, which I said many years ago has typically been a pile of coal in Australia, that’s gonna move to a pile of lithium and water.
Giles Parkinson 27:33
David, you’ve actually written a very good analysis this week and published earlier this week, youve even got another one coming up talking about the implications from coal, from the things like renewables and what have you, maybe you can just share with the listeners and maybe have a discussion with Deion about that. Yeah. Just just briefly remind us what exactly your conclusions were, I mean, broadly summarizing, it’s that coals gonna leave the market before people had thought.
David Leitch 27:56
Yes. So you know, the main point is that people are still under estimating the amount of new stuff that’s been built, because there was all this gloomy talk about how hard it was. Earlier in the year, people underestimated how much was still in the pipeline, if you want to put it like that. And actually, as we’ve said, at the outset of this podcast, there’s still been three and a half gigawatts thats got the go ahead this year, despite all those difficulties, and that’s quite a lot. That’s equivalent to a coal generator and a bit more, you know, that’s equivalent to Vails Point that has got the go ahead this year. And so over the next two or three years, as this stuff gradually comes online, what we’re going to see is softer prices and reduction in market share of thermal generation, and an increase in ramping. That’s the amount that thermal generation has to close, that leads to the duck curve where where the coal generation has to reduce its output in the middle of the day and lift it up in towards the evening peak. And that in ITKs, opinion is going to become very pronounced down there in Victoria.
And we don’t think at the moment that, and I’m not asking for Dion’s opinion on this because no one wants to comment on other people’s companies and stuff, but ITK believes that Yallourn won’t be viable by about 2025. And so that’s that’s just one example. We’ve yet to see how Vails Point, that is Sunset Power International ,performed during the last fiscal year. They hadn’t released their accounts the last time I looked, which was yesterday. So it’s slower than last year. And overall we see that by now with the New South Wales announcement if they can stay on the timetable, which of course they won’t, that something like six gigawatts of thermal generation could arguably close by 2030, which will make for very volatile prices, and what we say to finish this little burst of talking for someone like Deion is that he’s Tilt has got one of the best portfolios of undeveloped assets that are out there that we at ITK know about. And every new asset that you can see, even though the development is difficult, every new announcement that goes ahead, essentially, is creating a market for itself in some sense, because it’s making it more likely that the thermal generators will close. And that will make the prices go up briefly or in some volatile fashion. So I don’t know, that that’s that’s the way we’re thinking about it.
Giles Parkinson 30:45
Deion, you want to comment on that?
Deion Campbell 30:48
Yeah, I guess the question for us is, is it better to have an overbilled slightly ahead of a coal power station exit, so causing depressed prices for a bit, or is it better to wait until they go until they go and have a high price problem like we saw when Hazelwood left? And actually, it’d be nice if the energy wasn’t newsworthy in Australia, at some point.
David Leitch 31:13
Good luck with that. Back to the battery, you mentioned, and it’s early days for you with with batteries Deion, but I mean, you say that a two hour battery isn’t much use at Arbitrage, but when I look at the way that Nextera represents it in the United States, they mostly using this concept of a four hour battery adder, and saying that effectively that for that four hours, the overall price of electricity is relatively attractive compared to doing it with gas. And they seem to have sold that quite well, because they’ve sold a lot of contracts for, you know, gigawatts of batteries now. And it does seem to me that the in the daily balancing market, the peak opportunity is relatively brief, you know, a couple of hours, maybe it goes up a little bit so that it does seem to me that at some point batteries are going to be able to play in that market. Once enough coal generation has exited,
Deion Campbell 32:11
I absolutely, absolutely agree with you. And whether it’s two hours or four hours, you just have to understand what they can do and how they can play. That’s why we want to do it. Even now you’re going well, already, as you describe coal, coal and gas, are a little bit slower to to start up, or ramp up and so batteries fill that void already. There’s a chance here that the evening peak lasts for a couple of hours most days. That’s just what you do, how you heat yourself on those long hot no wind days when there is less generation in general available. Right. And that’s, that’s I guess we’re where the markets got to get itself sorted. And, and where we go carefully in terms of how we look at off takes, you know, firming, sometimes I think we believe it would be better to be able to firm yourself, sometimes market products are available. It’s all quite, quite evolving and complex. We still believe if you know what a battery can do, we can watch them evolve over time and adding hours to a battery is easier than then if you starting with nothing in terms of a battery, right. That’s why we want them.
David Leitch 33:21
Yep, I agree with that. And I guess my final final question I just want to ask is in regards to this AEMO and all the transmission and, I mean is, do you have a sense that AEMO is actually, and all the other work that’s going on besides AEMO, all the other reform processes ..is, I mean, do you have, I mean, how long do you think it’ll be before we’re on top of the transmissions issues in the NEM? If I look forward three years, do you think do you think it’ll be pretty clear sailing by then? Or is it going to take longer?
Deion Campbell 33:52
No chance. I think I think between all the bodies that are around that try and influence the energy market in Australia, there’s a lot of good work going on. I’d probably suggest, respectfully, there’s not a lot of coordination to that work. And that’s what has to be sorted out before Australia will have a plan that’s actually going to be useful. Building transmission isn’t isn’t all that’s required you know. There is a lot of coordination, both in policy sense, but also coordination in terms of what technology is out there to control this stuff. And we’re gonna we’re gonna find someone like, like Google or which Audry would enjoy, but Google or someone is going to come in and eat AEMO’s lunch because they’ll have a control system that can talk to all these devices and do what you probably would expect AEMO should be prepared to do already now.
David Leitch 34:50
I agree with that. I completely agree with tha,t over to your Giles.
Giles Parkinson 34:54
That was an interesting conversation. I do have to ask before we go Deion, two questions left. One just about the Dundonnell wind farm. Apart from your connection problems, you had an unfortunate event last month when one of the turbine blades fell off. It’s not a particularly good look, it’s um, it hasn’t, and it’s actually happened at some of those Vestas turbines at Lal Lal wind farm, I think last year in a lightning strike and a couple of times over in the US. Now they’ve got about 400,000 turbines around the globe, so it’s all they’re all falling off everywhere. But what’s your understanding? I mean, loose bolts? Is that a satisfactory explanation of, what do you know about it? And how confident are you that it’s not gonna happen again?
Deion Campbell 35:38
Yeah, so we know a lot about it. Of course, we’re an active asset manager. What we’re more interested in is: Was it a type fault or a serial fault in a turbine that we should be worried about? In this case, we think it was a human error issue that we we understand, we don’t know why the human was subject to an error, but they are narrowing in and we do understand them, the mechanism that caused that blade to fall and how to provide appropriate assurance that others won’t. So we’re in that zone, you know, investors are doing a good job, they, they understand completely what’s going on there, share it with us, and that’s why we’re operating that asset. So the things that happened at other wind farms, as you describe it, probably lightning related This wasn’t and there’s a bit more contained to local manufacturing,
Giles Parkinson 36:30
Okay. And now just to finish up just a broader question, and Andrew Forrest from Fortescue, this week has announced this grand plan for green hydrogen, he’s talking of wind and solar developments in a, not just a multiple gigawatt scale, but a hundreds of gigawatt scale, 235 gigawatts. Now, Andrew Forrest is a man sort of prone to making grand vision statements, but if we are going to decarbonize the grid, globally, this is where we’re kind of heading. So when you look at Andrew Forrest announcement, and he his efforts to sort of strike deals with governments and sort of put his company at the forefront of that, do you sort of think, yes, you’re right, or no, you’re kidding yourself, you’re dreaming or Well done, you’ve kind of seen where the future is going to go. Good luck with an effort to to get in the front foot of it.
Deion Campbell 37:18
I tend to go towards the latter of that. I think, you’ve seen where it’s going. hydrogen has got a role to play definitely. I guess it’s not quite clear where that role is and how fast the use case for all this green hydrogen will grow. So So for us, you know, we know we can make hydrogen, it’s very expensive to make it from renewable electricity for any electricity at the moment, that will change. That’s the use case, who’s gonna be first to convert their airplanes to hydrogen or their boats. That’s got a long run ahead of it and I don’t particularly consider the manufacturer of hydrogen has been the block of the I think it’s the use case in so Fortescue are probably right in that if hydrogen does set itself alight in terms of the use, then there will be huge opportunity for those who have got renewable energy assets either built or ready to be built. One of the things I’ve learned about the electrolyzer technology, that’s that sort of favoured out there at the moment is that it can be operated quite variably. So it can match, say, the output from a solar or wind farm. So seems to be there’s a match made in heaven there as long as someone wants the hydrogen.
Giles Parkinson 38:41
David, any final thoughts before we wrap up?
David Leitch 38:44
No, I’d just like to say thanks to Deion, Giles, and I’m sure you’ll thank our sponsors and to recognize, again, that, you know, from my reading Tilt has been a good operator and has a good portfolio, and I think that those, I don’t think it’s going to be a case of being able to sit on your hands and because I think the market will overtake people who do that, but it’s nice to start with, almost like a rugby team, as much as I hate to say it with a decent set of assets and a coordinated plan before you go on the field.
Giles Parkinson 39:23
Thank you very much for joining us on this podcast.
Deion Campbell 39:26
My pleasure, David and Giles, good discussion. Thank you. And of course, as usual the All Blacks will win like a good Kiwi company such as Tilt.
Giles Parkinson 39:34
Nah, Deion, that’s a very provocative way of ending. I should point out that Deion at the moment is in New Zealand. I think he’s been sitting next to a cafe on the beach and I’ve been sitting in a car park in Canberra at the Dixon shops. David’s been at home on his iPhone, such is the way that podcasts have been done. I’d like to thank Evergen and Pylon our sponsors. Thank you very much for your ongoing support. Thank you all to our listeners for your support and your enthusiastic feedback to us and we’ll be back again next week. Bye for now.
