Feb. 2, 2022

Ep74: Francesco Starace 'Europe's Clean Power Leader'

Francesco Starace is Chief Executive Officer and General Manager of Enel.

Before becoming the CEO in 2014, Francesco spent 14 years at Enel, holding a number of executive positions - between 2008 and 2014 he led Enel’s renewable power generation business, Enel Green. Prior to this role which included overseeing the businesses’ IPO. Before 2008 Francesco was, inter alia, Head of Business Power and Managing Director of the Market Division.
Before joining Enel, Francesco worked at General Electric, ABB and Alstom. His work has taken him to Egypt, Saudi Arabia, Switzerland and the United States

Francesco served as a member of the Advisory Board of the United Nations’ Sustainable Energy for All (SEforALL) between 2014 and 2017 and has been Chair of SEforALL’s Administrative Board since October 2020. Francesco also served on the Board of Directors of the United Nations’ Global Compact from 2015 until 2021. Between 2016 and 2018, he was co-chair of the World Economic Forum's Energy Utilities and Energy Technologies Community. Francesco served as President of Eurelectric between 2017 and 2019. Since January 2020 he has been co-chair of the WEF “Net Zero Carbon Cities – Systemic Efficiency Initiative” and since January 2021 he has been co-chair of the European Clean Hydrogen Alliance’s round table on "Renewable and Low-carbon Hydrogen Production.”

Even though Francesco has a degree in nuclear engineering from Polytechnic University of Milan, he is a fan of A.S. Roma. His other passions include cycling and poetry.


Transcript

 

Click here for Edited Highlights

 

Michael Liebreich: Before we start, if you're enjoying these conversations, please make sure that you like or subscribe to Cleaning Up, it really helps other people to find us. Cleaning Up is brought to you by the Liebreich Foundation and the Gilardini Foundation. Hello, I'm Michael Liebreich, and this is Cleaning Up. My guest today is Francesco Starace. He's the CEO of Enel, that's the Italian utility, actually Europe's largest utility by market capitalization. Francesco is also Chairman of the Administrative Board of Sustainable Energy for All and we used to sit together on the high level group for Sustainable Energy for All and he's a previous president of Eurelectric. Please welcome Francesco Starace to Cleaning Up. So Francesco, welcome to Cleaning Up. 

 

Francesco Starace: It’s a pleasure, Michael.

 

ML: It's really wonderful to see you, our paths used to cross at various conferences: Sustainable Energy for All and so on. And then I would say probably once a quarter or more often, and then the last few years - nothing because of COVID. So it's been - I've missed you.

 

FS: I missed you and a lot of other people, because this is something that's really, I think, at the beginning was kind of wow, wow, let's take it easy. It will end. Now it's getting really to be a little bit heavy on me. I regret those meetings. These travels. They were a little bit, you know, difficult sometimes, but I miss them somehow. So I'm looking forward to the end of this.

 

ML: Yes, for sure. I mean, it was, you know, initially, I really, you know, had this kind of burst of creativity and productivity when I wasn't travelling. I had so much time, but two years later, I'm like, okay, enough. I don't need to go back to so many flights. But I do need to see people. Yeah. Where are you actually calling in from? So you are? It looks like you're in an apartment, I’m gonna guess, in Rome.

 

FS: At home in Rome. Yes. That's my home in Rome. Yes.

 

ML: And you probably spent a little bit too much time over the last two years. 

 

FS: Actually, I split my time between this home and another home I have down south, close to the sea. So I can’t complain. Both locations are very good.

 

ML: Let's start with obviously, you know, you've got the best vantage point. I think the Americans would call it the bird dog seat to see what has actually happened to energy demand in Italy, over this pandemic period. And, you know, how has it been? What have you? What have you learned from it?

 

FS: Well, if I can tell you about the demand evolution in Italy, in Spain, because we also large in Spain, and most of other countries like Latin America, Romania, where many different places and this pattern, more or less repeated itself across all these geographies, from the onset there, so that we're talking about 2020. The first phase, we got this big drop in demand driven by the economy going into lockdown. So all sectors, industry, commerce, you know, they all went down with one exception the domestic market went up. Right, that was the first time in history because typically they all go down or this time the domestic market went up because people spent a lot of time at home using energy there. So, the net result was very strange. Overall, demand went down 20-25% volume-wise, but the demand became so different, the pattern, the curve of demand became so different than what the algorithms of the TSOs were used to have, that the necessary balancing services to the network required to keep the lights on was growing like hell. So generation had a compression of all the thermal generation that took the brunt of this, this reduction. But the same thermal generation started making money by balancing the system. So I would say five years and sometimes ten years forward in the future, looking at how the energy mix changes, much more renewables percent wise, a lot of volatility because of the nervousness and the, let's say relative new way of consuming energy that system was used to have, in completely new ways of managing the system. Funny thing is the lights went on and were kept alight. I mean, they, they, there was no problems to manage the system, this huge volatility was managed pretty well. And then, of course, things changed back into normal where we are today. And we're basically back to where we were pre-pandemic at this point. But it was an incredible experience. So very important.

 

ML: And that is fascinating, because there's so many things going on there, because presumably, the curve, all of the kind of morning peak, evening peak, people working from home, not commuting. So presumably there's transport demands that also change. And, and I mean, it's interesting, there's always I always look for the kind of the gotcha quotes in these conversations. So it's CEO of Enel says, the funny thing is that the lights stayed on. That was a lot of hard work, I would have thought, I would have thought that it was a huge amount of very stressful work.

 

FS: I think it was a spectacular demonstration, around different geographies, that the systems can cope with this volatility, they can resist the shocks. And they are more than ready for a world where thermal demand is compressed. And the system becomes more I can say nervous or more volatile in terms of demand, much more than you read, when you read experts and consultants speak about that. It's a proof. I mean, we went to that future and then came back. And now we cannot ignore that these things work.

 

ML: Right? And to what extent do you think that those patterns were a kind of postcard from the future, because we were always, you know, we've been talking about more people will work from home, there'll be more renewables, there'll be more ancillary services, more of the revenue will come from keeping it you know, from from the front, the thermal capacity will come from the services was that, you know, have we now done a sort of dry run for five years’ time, or was it just so different. And so kind of such an extraordinary pattern that we collect, learn very much other than the fact that we're flexible.

 

FS: No, we learned a lot, actually, it's a very challenging dry run, because clearly this happened overnight, it didn't take five years to happen, it just happened. So the systems coped with it instantaneously.

 

ML: Right. 

 

FS: So just to tell you, the systems were getting this, imagine that TSOs use algorithms to predict the curve of the demand of tomorrow and the day after tomorrow. And this algorithm uses data that has been fed into them in 10 years of experience. All of a sudden, they were blinded by the way in which the system works. But this system, that means the combination of renewables generation and thermal generation, all kinds of systems coped with it very well.

 

ML: And for our, for our audience, we just, Francesco we just have to keep them along with us because TSO, some of them will know. So that's the transmission grid, above all that they are probably everybody's responsible for keeping the lights on. But in some ways, they're more responsible than anybody. I mean, if they get it wrong, definitely there's a problem. But they manged  keep it all up and running. 

 

TS: Well, they are the ones that actually call the shots, they say start, stop, move this. And so if they get it wrong, lights go off. And so they want to run these algorithms, but they always have a safety net during the day. So they can call people, if there is something that doesn't really fit, they can call a power plant and tell them to go down, go up, shut down, raise your power production, and the system complied with that beautifully. 

 

ML: And so they're making the market, they're paying people to shut down paying people to come on. And they manage that. Well. Now, the context behind this, of course, is that Italy is shifting towards a low carbon future that you, Enel have a plan to reduce and then eliminate your fossil fuel generating capacity. Could you give us a thumbnail of that plan, which started well before COVID. And I'd be interested to know where we stood at the point of COVID. And now.

 

FS: I think it's something that started earlier than that. I mean, this is something that basically the renewable energy voyage you can say started in earnest, the last decade 2010 2020. So at the beginning of 2010, it was still a game for kids. Maybe you remember that, right? And decarbonization was something that didn't really matter that much. It was on the agenda of a few people. But across these 10 years, renewables became the backbone of the generation of the future, everywhere in the world, not only in Italy. Decarbonization becomes an important issue for combating climate change, but also in our industry, it is a must from an economical standpoint, a thermal generation plant is displaced by a renewable energy generation plant every time, most of the time provided there is enough resources. So that trend started. We were one of those that spotted it at the early times. We invested heavily in renewable generation. That's the present and the future. So I'm saying this is the present future of renewable energy as it covers the present and the future for the next 15-10-20 years. The investment that we're putting down is about 75 billions between now and 2030, trebling the capacity, we have about 54,000 megawatts, we're going to have 145,000 By the end of 2030. So that gives you the trend.

 

ML: But what was the number in 2010? You called them children's toys?

 

FS:

In 2010, we had about 30,000 megawatts, which was the hydro capacity of the first age of electrification of the world.

 

ML: Because there would have been only a few gigawatts of wind and solar in Italy in 2010.

 

FS: Yeah, Italy was booming for solar across 2011-2014. We put down 25,000 megawatts in those four years, five years. Right? And then, so.

 

ML: What, what percentage of your power, not the capacity, but the power, the generated power? What percentage is now renewable?

 

FS: We have more than 55% renewables, and we crossed the 50% benchmark. Last year midway, the year before midway in 2019.

 

ML: How much is hydro? And how much is the modern renewables? How much is the more variable stuff? 

 

FS: So out of that half is hydro and half is the rest, right.

 

ML: So something like 25-27% renewables wind and solar with probably a bit of biomass.

 

FS: And geothermal. We have a lot of geothermal.

 

ML: Okay. Okay. And you know, what's fascinating? You are referring back to that period, actually, even before 2010, when I started New Energy Finance 2004. And people said, “Oh, if you have more than 2%, 3%, it's a disaster, the system will collapse” those TSOs, those transmissions systems operators will not be able to cope, so it's, it's a recipe for disaster. And then of course, we got there. And then they said, oh, 5%, the limit? And then you got there. And then you know, it's kept going, hasn't it? Yeah.

 

FS: And you see, for example, last week, Australia went on 100% renewables for a whole week, Australia, okay. Which is very weak, I mean, it's a very fragile network system with very little storage capacity. But there's a lot of flexibility now based on batteries, there is a lot of flexibility that the grid has the terms of being able to monitor the demand and respond to that. A whole week, at 100%.

 

ML: What was your instantaneous peak? Because the 55% you talk about that's an average over a period over that's an annual average. Right? But what's your instantaneous peak that you've ever achieved?

 

FS: In? Depends on the country we have in Spain. We've been at 100%, several moments in the year. It happens typically during the summer most of the time in Italy too. So, we have had moments with more than 100% with 100%. So zero thermal.

 

ML: And what is maintaining inertia because again for our audience, they may not all be very technical, but hydropower plants are delivering the frequency signal.

 

FS: Thermal power plants are rotating machines and pump storage which is again now. I think you will see more and more batteries playing that game, batteries and gravitational storage are going to be the one tool that will make penetration of renewables above 60-70%. Constantly during the year possible. And that's something that is happening right now.

 

ML: Right? Because that was going to be my next question: “You've got to 55? When does it start getting really difficult?” And what you're saying is, okay, 60-65…

 

FS: Well, it depends, it depends very much where you are, if you go to Ireland, they are already there. But it's a special system. So it depends very much on what geography gives you. If you have a lot of pumped storage, you can go without it with no problems above 60% - 70%. If you don't have that, you need batteries. And you probably need gravitational storage systems.

 

ML: You say gravitational storage, I did not see that one coming, I'll be honest, because there's one player out there that everybody's very excited about. They build the cranes, and they have the thing. And so and I look at it and go, I don't understand because I look at the levelized costs.

 

FS: We are working with them. And if it's going to be big, absolutely big.

 

ML: I'm absolutely astonished. Because what is the sort of price point that the cost point is going to be for gravitational storage versus a battery?

 

FS: It's funny, because gravitational storage is not rocket science. If you look at it, it's, you lift a weight, and you let it go down. So it's like pumped storage, but it's dry. So you don't need water, you can put it everywhere you want. It is full of technology, because it needs to withstand wear and tear. And it is full of technology, because it needs to be responding immediately to demand from the network. So it's a combination of digital and material science. It's very interesting. From a physical standpoint, it's easy. Gravity is something we all know about. But a combination of these two branches of technology is a very unique feature. And by the way, it lends itself to be scaled up and down and you can put it in large scale, middle scale, not alone, smaller scale. So you don't have a limitation in the size. It's something we are doing. We are building one not prototype, a real plant in the US. 

 

ML: Can we name the company, are we allowed to give them a proper plug? Because it's somebody I know very well, I think.

 

FS: Why not? I mean, I don't see anything

 

ML: If it is public already?

 

FS: I am not sure. You know, I don't I'm not prepared for that question. I think it's possible. Yeah, it's a listed company, so we have to be careful.

 

ML: Yeah. So let's not do that with anybody else. If you're listening to this, there is one major provider out in California. And, and you can easily find it, we might even put it in the show notes. But that’s absolutely fascinating. Now, did you look at compressed or liquid air? And also hydrogen for that sort of long duration storage?

 

FS: Liquid air? Air? Yes. But from the technological standpoint is tricky. All right. Much. Not that simple. Hydrogen is for me, not so much a storage medium. Hydrogen is a very precious molecule. And to use it to generate electricity is crazy. Okay, it's the fact that you have maybe a situation where you have an abundance of energy, and you don't know what to do with it and then say, okay, I build molecules of hydrogen. That doesn't mean that you have to waste them to produce electricity afterwards. They're so precious, they better be used for chemical applications. And those applications today, we need for which we need hydrogen that is high combustion, you know, high temperature combustion, stuff like that. But to use hydrogen, you know, to generate a kilogramme of hydrogen out of water you need 50 kilowatt hour. 50 kilowatt hour in a car drives you to enter 200 kilometres 230 kilometres. You put it back into a fuel cell car and you drive 90 kilometres, wasting a lot of energy in the process. That hydrogen is precious, use it to produce fertilisers, ammonia, reduce steel, but for God's sake, don't think that you can get back the energy you put in there and not lose stuff in the middle, you lose a lot.

 

ML: I'm surprised…I completely agree.

 

FS: What do you know when I hear that they want to use hydrogen for heating homes? It's like blasphemy. It's impossible. I mean, it's an incredible waste.

 

ML: I'm on the record as having said that, that is stupid from Stupidville. But nevertheless, they're going to try there's whatever,

 

FS: You can always try to do that and see if you fly.

 

ML: Yeah, the UK hydrogen strategy is very, very, very finely judged on this, because what they actually said was that there's going to be hydrogen in the homes, enough hydrogen for 3 million homes, but not until 2035. And in 2030, only 67,000 homes, which of course, in the context of 24-25 million homes is nothing. It's a science experiment. Okay. Yeah, this is beautifully judged. So we do the science experiment. And then afterwards, we can say, well, it didn't really work. And we'll stop doing that. That's what I think is going to happen. I tell you what I'm interested in, though, in storage. Storage is a little bit different, though, because it does give you that time shifting of potentially large amounts. And you know, what I worry about for the UK for Northern Europe is the two three weeks with very low wind output, and no battery is going to get through that. And I would just be very surprised if gravitational storage could get you through two, three weeks without having cranes and blocks, you know, everywhere. 

 

FS: Look, I mean, if you take, for example, a normal power plant, coal fired power plant - Drax, okay, you look at the boilers, this stuff, that's a gravitational storage size, for the same 600 megawatt capacity. So nothing's so fancy. I mean, it's something that we have already in terms of visual impact in our, in our minds. So if you used to see these monsters out there, now, they don't burn coal anymore, they just store energy. Okay, I'm not saying this at the same stuff, I mean, you have to take off the boiler and put down again, sources, but the impact on the land on the landscape is the same, it's a big block full of ways to go up and down. And you can keep them up if you don't need them, and then just store energy for whenever you need to let it flow down.

 

ML: There's, there's a piece of data which I wish I had, I don't have it to hand, you just showed the glass of water, and how much you know that you could drive 200 miles that glass of water, but I don't know, I will look into it afterwards in order to the energy of that much hydrogen, or that much of pretty much any chemical storage, if you work out how high you have to lift it to give it the same gravitational energy as the chemical energy in that much, you know, bio fuel gasoline on it's hundreds of metres, I believe. So it just feels like it's the wrong scale.

 

FS: It depends how many systems you put, I mean, you can put it very high, or you can put it in the middle. And then there's just putting more on top. The issue is that that energy is electricity right away, it flows through your cables the other... The other stuff is chemical energy that needs to be burnt in order to generate electricity, or transported with pipes, which are not that simple. At high pressure. It's dangerous. There's a lot of logistic nightmares around that. Plus, it's not for everyone to handle. So it's not that friendly.

 

ML: At the moment. We're still in this honeymoon period where people think every bus station, every home can have hydrogen, every building site can have hydrogen, forestry operations are gonna have hydrogen, every garage, every car, every workshop, why not? And people are still in that honeymoon period.

 

FS: But you have a gasoline pump at home?

 

ML: I of course don't.

 

FS: Why don't you? Why don't you put one? Yeah. You don't like the smell? Dangerous? Is it because you don't like to sleep on a pipe full of gasoline? Or what? Would you do with hydrogen?

 

ML: Well, interestingly enough, I mean, some people there's a hydrogen home or the off grid home that is being proposed as well. And you know, and I laugh because there's hydrogen. I'm a big fan of clean hydrogen. I don't mean, we'll get on to talk about CCS and probably talk about blue hydrogen along the way. I'm a big fan of clean hydrogen, because at the moment, we're using a lot of dirty hydrogen. We're using a lot for fertiliser and hydro cracking and all sorts of things. Yeah. So then when I look at these plans for hydrogen throughout the economy, I sort of seem to be fighting a battle. I'm sort of known as the hydrogen sceptic because I don't believe any of that stuff is going to happen.

 

FS: You know, I'm in the business of producing electricity. So I love blue hydrogen. It's a huge demand multiplier. So imagine that we have competitive green hydrogen so that we have found a way of producing hydrogen That is at par with the grey hydrogen we're using today. So 70 million tonnes of hydrogen, which is the world consumption of hydrogen today, have about 860 million metric tonnes of CO2 associated with that production. So it's like the combined emissions of the UK and Indonesia put together every year. Right. So the first thing one should do is to take the green hydrogen and displace the grey hydrogen, get rid of this 860 million tonnes of CO2. Now 70 million tonnes multiplied by 50 kilowatt hour is the demand for 3500 terawatt hours of electricity, which is the yearly consumption of Europe, including the UK. So that's what we're talking about. This is a staggering amount of energy. I love it. But it cannot be done like that.

 

ML: So I've used almost exactly the same statistic, what I've said is, there are people who are, you know, zealots for green hydrogen. In the context of the conversation about green and blue, what they say is it must be green. And I use the same statistic, I say, but just to replace the grey hydrogen, the dirty hydrogen today would require every single solar panel, and every single wind turbine that we've built over the last 30 years just for that, you know, those chemical uses of hydrogen, and clearly, and that's on top of at the same time as rebuilding every single solar panel, every single wind farm, we're also supposed to be greening our electricity system, as you said, going from 55%, to 60% 70% 80% 90% 100%. And also, electrifying and green, electrifying heat, and transportation. So how can we possibly I mean, the scale of this… 

 

FS: The fact that we can for once in our lifetime, probably in the history of mankind, we can, let's say, measure the amount of work that we have in front of us. We shouldn't be afraid of that. Because I think if people that, you know, started drilling oil in Oklahoma a long time ago, had in mind that they had to flood the world with 80 million barrels of oil. And they would say, look, we cannot do this. It's impossible. I mean, this is too much. It's never going to happen. It did happen. Okay, it took a while. But it actually did happen. So mankind can do these things. It's a question of not being afraid of the fact that they work a lot in front of us. But make sure that we not waste too much time debating stupid things. Like heating homes with hydrogen. Which is crazy. But if we just say, Look, we have a lot of panels to build, we have a lot of technology to discover, we have a lot of storage to make sure that, you know, gets there. But it's an incredible challenge. And it's fantastic. Because technology helps it's going there. Right?

 

ML: So just segueing from hydrogen, and it also helps to finish off the conversation because it is about blue hydrogen, is natural gas, generally natural gas rather than coal with CCS. Is that part of the future solution? Because it is such a challenge even to replace the 70 million tonnes of grey hydrogen you talked about. That's such a challenge. Shouldn't we be open to blue hydrogen with CCS? As long as it's done right.

 

FS: But the question is can CCS be done? Right? Yeah. Honestly, I don't know. I think I belong to an industry that has tried hard and failed. We spent cumulatively something around $18 billion. Not ENEL, everybody in the industry we belong to trying to make CCS work. And obviously, we had a big interest. Imagine that we did find a way to make CCS work, then all of our coal plants would be perfectly fine. All our gas plants will be perfectly fine. We would have a lot less problems to manage. But we failed. We failed. It doesn't work for us. Okay for us.

 

ML: What but that's retrofitting CCS to an existing coal fired power station that maybe only works 50% of the time.

 

FS: No, no, we failed more than that. We failed to build from scratch plants with CCS embedded in it from the design phase. The fact is that the complications and the cost of CCS made these plants even more vulnerable to renewables. So renewables killed it from the beginning because a coal plant to the CCS cannot be cheaper than a coal plant without it when a coal plant without CCS is already undercut by renewables, game over. So for generation of electricity, CCS is gone. For us, it's out. Now, can CCS work on decarbonizing hydrogen? Maybe provided you don't stop at 60%, you have to go at 100% or 99.9%. And then this CO2 must be safely stored in places that don't leak 1% every year so that in a century, all the CO2 is back in the atmosphere. We know this happens now and then. So and then let's make sure that while the blue hydrogen tries to be decarbonized by CCS, the green hydrogen does and due to the blue hydrogen, what renewables did already to generation that means basically kill it on the on the beginning, because it's already more competitive, because the CCS will be more expensive. It will add the cost component to the hydrogen, it's not going to become free.

 

ML: And I certainly envisage, I certainly see green hydrogen becoming cheaper than blue hydrogen. So hydrogen from renewables with electrolysis becoming cheaper than gas with CCS, I see that cross-over will happen. I don't know. Let's say 10 years, let's say eight years, some time, it will take some time because the experience curve requires experience. Yeah, I guess my worry, though, in all of this is the sheer scale of renewables that need to be built and the land use, the steel that goes into the foundations, rare earths that go into magnets. It is quite daunting, the volumes are crushingly big, are they not?

 

FS: Yeah, they are large, but then they're not impossible. But the time with you, there will be a moment where CCS will have like a 10 years or 15 years, maybe lifespan, but eventually this is a losing technology. This is a technology that belongs to the 70s. Mostly it's chemical technology belongs to it… if you look at the CCS plant is an incredibly complex array of piping and vessels. It cannot compete with solid state technologies going forward. It will be a… it is a  temporary revolutionary transition transient story, not the end game, and not surely the cure.

 

ML: And I think the question is, I suppose, you know, given the emphasis on rapid action 2030-2040, the question is, if that transient is five years, it's not worth worrying about. If it's 20 years it and if it can really help keep us within the planetary boundaries, so I’m open minded to it. And a lot of people are trying to push on me and say, no, you shouldn't be and you should be a zealot like, like, you know -

 

FS: I am totally open minded, I only make sure that, for us, it's a it's, it's game over, I think it's going to be a trap in which a lot of stranded costs will finally find their way through the balance sheets of companies, because people get the timing wrong at the end. So it's dangerous from that standpoint, because you never know how long it will last before being undercut like it happened with other technologies in the past, we've seen this. So for me, it's fine. I  believe it's going to be much smaller and less important than people think today, then that there is a lot of hype, because it's a way of maintaining the status quo in many ways. But other than that, you know, and maybe there's only one marginal benefit out of all this, that maybe through the research and development of CCS, maybe somebody will find a better way to do the direct capture technology story, maybe? Yeah, not sure. But if there is a chance, maybe that one?

 

ML: Well, certainly there's a company I've come across called Carbon Clean Solutions, I think it is. And that's a modular small scale that seems to be able to capture more cheaply. But you know, we'll see, I've seen a lot of breakthroughs that haven't <inaudible> will work. I thought you were going to say that maybe with the research about the subsurface geology, geology, maybe it'll help the geothermal. I'm an advisor to a geothermal company. I believe you've come across a company called Eavor closed loop geothermal scalable geothermal. It doesn't involve fracking, but it does involve an enormous amount of drilling. So it's kind of a play on drilling costs coming down. I find that interesting. But I wanted to actually ask you about the other saviour technology that's very commonly sort of pushed in our direction, which is nuclear. Nuclear, there's the existing nuclear and of course, Italy has famously, you know, exited from that. But then there's also these moves to go to small modular nuclear and people even talking about fusion, how do you think about nuclear in all of this transition?

 

FS: I should warn you that I am a nuclear engineer myself

 

ML: As am I, I studied it in undergrad

 

FS: I also worked in it. By the way, we have 3300 nuclear capacity in Spain, then we have a plant that we are commissioning in Slovakia, which probably will be the first to come online in Europe, beating Flamanville and Olkiluoto. But the issue is, this technology has designed itself out of the world. So there is no way that this present nuclear technology can be a solution. I think those that own nuclear power plants that are online should keep them running, safely invest in them and prolong their lifetime until it is safe to do that. Not shut them down early. It's a mistake, I guess. But again, it's another 10 years, maybe 15. That's it. And then to build one of these things today is crazy. It's totally anti-economic, and it is not the solution. Okay. Fourth generation nuclear power plants are not anything new. When I graduated in 1980. All these technologies were there already. And they didn't work for many different reasons that we could talk about for a long time. I think if there is a chance for small modular reactor reactors to come online is using thorium instead of uranium and plutonium. Thorium is a totally perfect, fissile material that has the only flaw of not being useful for military applications. And that's why we don't have a thorium technology being developed in the world. Okay. But thorium could probably be the next generation of small modular reactors, fast breeders so that they are intrinsically safe. But we have to wait until the 2040s before we have something close to commercial operations. Other stuff, we have modular reactors today, we have small reactors in all the aircraft carriers and submarines, the Russians have them in the icebreakers in the north of the Arctic. There's nothing new about that. But this is just exactly the same technology we have today on a smaller scale with exactly the same problems, proliferation of waste, waste and stuff like that. So I think nuclear, frankly speaking until we have a thorium cycle, is not interesting. It's just the prolongation of a cycle that started with a big crisis in the 70s, when oil shocks started the nuclear, the nuclear generation that we have still today running that started because of the oil shocks of the 70s and 80s.

 

ML: Do you think that those modular reactors can become economical through series manufacturing? You know, if we really said, we're going to build 100, 200, 800, 400, 800, to really scale it, and build them in shipyards to make them identical? Do you think that they could get the same sort of experience curve as wind turbines or solar panels or batteries?

 

FS: Do you know how many submarines there are already? They're already on the scale. I mean, this is not something that scales, it's the scale changes much. I think that the question is just the intrinsic dangers that uranium and plutonium fissile value chain has is way past, the cost is much more complicated than it looks. It's not just manufacturing, controlling and managing the whole cycle. So that's really the problem. But if we had a Thorium driven reactor, then that question of yours would become valid, but that's something that you have to worry about between 2040 and 2050. Not now.

 

ML: So there was a funny situation. In 2015 I believe it was somebody that you know, and I I know very well, Ernie Moniz who was actually on this show last year. And he was Secretary of Energy. And I interviewed him at the Clean Energy Ministerial in San Francisco. And the Indians had just decided to put a lot of money into thorium. And of course, the US has played around with thorium. There have been doing all sorts of programmes at various times and Moniz, unlike me, is a proper nuclear physicist by background. And I asked him as my final question, I said, well, the Indians have just put a lot of money behind thorium. And you've, you know, you've watched this, you've been involved in lots of thorium programmes, what would be your message to them? And he sat there, and he grinned very broadly, as only Ernie can do. And he said “good luck”. So yeah…

 

FS: You know, this is the point, I mean, the industry is, is a plutonium and uranium driven business, because, but you can’t make a bomb with them. That's the point.

 

ML: Let me go back to something else you said, which is, if you've got nuclear power stations, and they are operating, they are safe, you should prolong their lives, and you should keep them and it's a mistake to shut them. So Germany has just shut three, and is going to shut another its last three. And these extraordinarily productive power stations Isar 2 is , I think, the second best nuclear power station in the world in terms of uptime, and so on. So that is a mistake in your book.

 

FS: I think from that point of view it is a mistake, from a political standpoint, maybe not. So this is a place in which I mean, another weak point of nuclear power is that it is not just a technology, it's more than that. It's a social decision. So it requires a consensus from a lot of different stakeholders, which is not always obvious. Take the case of Italy, we have five nuclear power plants, we were one of the first to put down a nuclear power plant in Europe, right after the war. We had a referendum that was called to decide whether or not to continue the programme. And then Chernobyl, like one month earlier, the referendum was already scheduled. So you can imagine the result of the referendum. Then we started another referendum, another try a long time after that. And there was another referendum called and like two or three weeks before Fukushima happened. So I think, you know, if we call another referendum, the world should tell us, you know, look, we're gonna give you power for free, but for God's sake, don't do this again. And you know, that's the point of nuclear, you cannot just take your decision and put down a power plant somewhere and just ask the local people, if they like the landscape, it's much more than that. That's the problem of the nuclear technology.

 

ML: It is, but isn't this what leadership is about, you know, I'm always raising the question of, you know, Germany has made this decision, famous Energiewende, and, but what it has focused on is shutting nuclear, before shutting coal. They won't say that explicitly. Nobody wants to admit it in Germany. But that's explicitly if you look at the numbers, that's what they've done. And that coal has killed people. It has killed people in Germany through air pollution, it's killed people in Belgium and in Germany's neighbours. And now, it's also responsible for two things, which I'm very concerned about. One is the energy price spike, not responsible, that's too strong a word, but it's contributing to the spike in energy prices, because Germany is now sucking in so much gas to fill the gap. And the geopolitical instability of Europe. We've now got, you know, we've got President Putin building up troops on the border of Ukraine threatening a major European war and invasion. And Germany kind of can't say anything, because it's worried that it will lose its gas supplies during winter. And this is because of Germany's nuclear programme, is it not?

 

FS: Not really, because he didn't, it wouldn't change that much, even if they had their power plants up and running. I mean, the nuclear was marginal  in Germany already. The question is, if you look at Europe from let's say, You come from Mars, and you look at Europe, you say, guys, man, these guys, they're very strange people, but all in all, they have a good energy mix. They have nuclear, they have renewables, they have thermal, they have coal, they have everything they have, they are changing a little bit out of thermal into renewables. Not bad, the reason why we did it is totally casual. It's totally random that after the war, each individual state had its own individual energy policy. Some of them didn't change it like the French. Some others changed it like the Germans. Some of them changed it like the Italians. But we all ended up with completely different points of view. The net result is that Europe is quite balanced when you look at the European energy mix. And it's working in the right direction - decarbonizing. So the question is, is it not better to stop, you know, saying, This is the French decision, this is the German decision, it's a European decision, because, and we have a proof right now, is France better off? Since they have all the nuclear power plants? Are they paying less for energy? No, they are not. Why is that? Can you tell me, why not? Do you know why? Because the marginal price is driven by gas, even if you have a little bit of it. So, the real thing is that what needs to be done here is to first of all, get rid of as much gas as we can quickly and second establish across the Eurozone habits that we had and we forgot, after a while, to buy and sell energy on a longer term than one or two years, because that's where the volatility ends. So, I don't think this story of the nuclear getting out of Germany is really that important. These plants were old and they wouldn't have changed much in the mix of Germany.

 

ML: Okay, but let me challenge that, because I agree with the diversity, you’ve’ called this accidental diversity. 

 

FS: Yeah it was not planned. 

 

ML: But it is reducing. So France wants to go to 50%, nuclear, and then reduce and make up the difference with renewables. Germany wants to go entirely renewable. UK, lots of renewables, and not just in the UK, but Holland, Denmark or Northern Europe. So are we reducing the resilience of the system? Moving in southern Europe to lots of lots of solar in Northern Europe to lots of lots of wind. And both of those are variable resources that have their own issues in terms of, you know, that there are periods when there's no sun, and there's periods where there's no wind.

 

FS: Let's take the UK. And let's say that, is there more sun in Scotland, or in the southern part of the UK?

 

ML: More in southern part of UK.

 

FS: About wind, more in Scotland, I guess.

 

ML: But very correlated.

 

FS: So there is a correlation everywhere. And I tell you in the fact of the Northern windy part and the southern sunny part, it's interesting, and it's right most of the time. Okay. The question is that the Sun goes up and down quite predictably. Thank God. And wind is a little less predictable? 

 

ML: I have solar on the roof right above me. There's solar, it produces it’s east west. It produces in summer 13 times as much in summer as it produces. And when in winter, it produces essentially nothing. In the UK, it is essentially if the UK were to go 100% renewables it would be pretty much, during the winter, a 100% wind correlated around the British Isles now, never go to zero. But really, really, you could have a very concrete example, for two or three weeks to very low levels.

 

FS: No, I think that across Europe, provided you manage the interconnection of Europe in the right way, provided you digitise the distribution networks, which most of Europe has digitised. But large parts of Europe have not. That includes Germany and the UK, for reasons that are beyond my comprehension, but if you do digitise the distribution network, and the transmission network gets more and more interconnected, it's a lot less complicated. than it appears this is the same discussion that we just had on the 5% in Germany that was going to create the Armageddon, the same at European level, you've just put more connectivity and let the technology take care of it because it can be done. I tell you, it's totally useless. The concern is not well documented. You will have batteries and you will have storage, pervasive everywhere. batteries that will not cover the five hours but cover 24 hours and long term seasonal storage. That can happen in I tell you it's like 10 years ago, when people were discussing about can the solar panel cost less than $1? No, impossible. Here we are. This will happen again and again. And again, like the discussion five years ago, can cars become electric? No, it's impossible. Here they are, this is gonna happen. And then you will see in Europe, you will still have nuclear plants running, because they were built in the meantime, the UK is building one, for example. And they need to run otherwise, you have to write them off so that you keep on running, but they will be the most expensive stuff going up. It's okay. It's normal in the industry, this happens all the time, we shouldn't be concerned about that.

 

ML: I should also disclose I'm an investor in a project called XLinks, which is Moroccan solar and wind with batteries to provide dispatchable, southern, you know, North African solar and wind into the UK directly. So that again, just in terms of diversity, you know, is it the whole answer? No, but I agree with you, it is, you know, the more diversity at scale, the better

 

FS: And by the way, you know, there was a big scheme time ago, which was called DESERTEC, more or less providing this idea. The question is, you know, if you take the population growth of that part of the world, in this part of the world, and you try to understand where demand growth is going to happen more?

 

ML: Yeah, well, I'm not a big fan, I was not a big fan of DESERTEC, for example. It didn't take into account the needs of North Africa,

 

FS: But I hope your scheme gets built. And by then you will understand which way the energy flows will go. You might be surprised.

 

ML: Yeah. So you and I met, I want to finish by talking about Sustainable Energy for All because that was where we first met. I was on the high level advisory group. In fact, I was involved in Sustainable Energy for All when it was an UN-coordinating initiative. So yeah, something like 2008 or 2009. And then it became Sustainable Energy for All. It became essentially SDG7, and you're now working with the third we've actually had all three heads of SE4All, all three CEOs. I've had Kandeh Yumkella, I think it was something like episode 14 or 15. Rachel Kyte was episode two. Damilola was actually just a few weeks just before COP, so just in November last year, but you're taking a very active role now helping Damilola and helping SE4All, what are you doing?

 

FS: I am the chairman of the board, of the administrative board of Sustainable Energy for All in that capacity. Of course, I have to say chair, the board and and I'm trying to, let's say sustain the efforts of Sustainable Energy for All, every time I can, with all the networks of people that I know, that includes you and everybody else, you know that because this, I think, is a very powerful organisation that has an incredible mission. Imagine that you have today, something short of 800 million people that still lack access to energy, to electricity, to electricity, electricity. Regardless of whether it's renewable or not renewable, they just don't have it. And then the idea is, let's give them electricity that is already decarbonized and not just go through the cycle that we all had to go through. 800 millions, mostly concentrated, say 90% in Africa, and then there is 10% scattered around Asia and some other mostly in Africa. And the endeavour is colossal because you have more than 50 governments that are active in Africa today. It's a very fragmented state panorama here, each with different endowments from nature from mother nature, each with different problems to solve, each with different demographics, to take care of the. Urban and rural population. So the there it's a fascinating thing, what we're focusing now is to put to work the big capacity of, you know, the lending capacity that we have been able to finally secure the funding and help the governments of these countries to put down policies that will make it easy for private capital to invest in the country so that finally is this this can, this can be triggered. It's an incredible moment for Africa this moment, and then it's not the Africa that people think about, you know, Africa is going to be going urban and going into cities. And cities, why people move into cities, because they think their life will be better, the future of the kids will be better and their opportunities will improve. So there's a big chance because as people move into cities there, you have to act and change. And give them electricity in, in the city, where they where they move in. And then you have the rural Africa, but that is in itself, becoming smaller when compared to metropolitan Africa, that's a big thing that people sometimes fail to understand. And that's where the major decisions are going to be taken. Because what happens in cities in the world happens in the world. And what happens in cities in Africa, is that what happens in Africa, it's much more, it's much more metropolitan driven than people think.

 

ML: It's so interesting. And it's been a couple of years since I was on the high level group. So I'd love to know, are we kind of accelerates to victory, sustainable energy, energy access, electricity for all in 2030. Because, you know, when you track it, and one of the things that that we put into place, during my years involved in Sustainable Energy for All was tracking, when you track it, it's not on track. If you expect linear development, if you expect exponential development, which is, in some cases, what I was sort of betting on, then actually, we'll get to electricity access for all by 2030, a lot of it done in the last five years,

 

FS: If there is a chance, it is that we capture electrification in cities, because people will move there, and demography explodes in cities, because this is a movable target. There are 800 million without electricity today. But they can be like a billion in the next five years. Because of demographics, right? You have to really get where they are moving and they are moving into cities.

 

ML: Right? Very good. So that's, that's an emphasis that is new, within Sustainable Energy for All. It only really remains for me to say if there's anything I can do to help on that. And I'm still, you know, very happy and willing to do so. 

 

FS: I will follow up with you on this because we need all help we can get.

 

ML: I would love it to still be a topic and a, you know, an issue that I feel very strongly about, and I want to help, but we are sadly Francesco out of time. So for now, I'm going to have to say thank you so so much for joining us here on Cleaning Up and spending a little bit of time explaining about how you see the transition to net zero, the challenges in Italy, how we actually keep the lights on, and then just at the end, how are we going to actually bring modern electricity, certain energy services to those 800 million who still don't have it. Absolutely fascinating. Thank you very, very much.

 

FS: Thank you, Michael. It's been a real pleasure. Always a pleasure to exchange with you and I look forward to doing that in person as soon as possible.

 

ML: Excellent, thank you. Thank you. So that was Francesco Starace, CEO of Enel, the Italian utility. My guest next week is David Turk, Deputy Secretary of Energy in the United States and a former deputy executive director of the International Energy Agency. Please join me this time next week for a conversation with David Turk. Cleaning up is brought to you by the Liebreich Foundation and the Gilardini Foundation.