Renewables Are Here To Stay. Get Over It. | Ep211: Antonio Cammisecra

Antonio Cammisecra  

I'm saying something strong, I take responsibility. So far, there is no proof, in the last 15 years or 20 years, any of the blackouts, it's directly attributable as the main route cause, to renewables. Not in Australia, not in Chile, not in Texas, not in Italy, in 2003, and today, not in Spain. Now, when we discuss these kinds of things,Michael, let me underline this. In most of the debates, I see a missing argument: why we're doing renewables, why we're electrifying, why we are leading this pain of transforming electricity. And we forget from when we started. We have a problem we are trying to solve. This is climate change. So we're not doing this just to have fun.

Michael Liebreich 

Hello, I'm Michael Liebreich, and this is Cleaning Up, and long-time viewers on YouTube will notice that I'm back in the big chair, which means that the building works are over, and I'm back in my studio, and I can tell you that feels good. The world's electricity system is transforming. We're integrating more and more variable renewables. Fossil plants are running fewer hours. Demand is growing everywhere, including in the developed world, as we electrify transport and heating, and AI data centers elbow their way onto the grid. And some people find this very threatening. Not today's guest. Antonio Cammisecra is the CEO of ContourGlobal, Italy based, and one of the leading IPPs (independent power producers). Officially, he's called Antonio Cammisecra. His friends call him Antonello. Please welcome Antonello Cammisecra to Cleaning Up. 

ML  

Antonello, welcome to Cleaning Up.

AC  

Thank you, Michael, pleasure to be here.

ML  

Where is ‘here’? Just tell me where you are right now.

AC  

Well, actually, I am in our new office in Milano, which is now the corporate, let's say, base of ContourGlobal.  And we just moved into these two floors, a nice ancient office building that we've recently refurbished a little bit to be also a symbol of the new course of ControlGlobal. You are actually invited now to our inauguration that we'll do in October.

ML  

Thank you very much. And normally we start by asking a little bit of a bio, and about the company and so on. And I'll get back to that. But the reason I started with where you are is you're in Milan, right? But you are not a supporter of Inter Milan. And there's a big football match which is coming up, presumably would have happened by the time this goes live, by the time we release it.

AC

I'm not at all a supporter of Inter Milan. I'm proudly a southern Italian. I'm from Napoli, and Napoli has been an underdog for all its history. So next Friday — so in two days, three days from now that we're recording — we will have the final match, and if we win that match, we will be winning the Italian league, the Serie A.So hopefully, when this will be on air, we are the national championship. Let's see. I hope.

ML  

I feel we should record two segments to open this — well, we should have recorded — by the time people see this, it will be in the past. We should record one which is you with a big smile, maybe a hangover, where you've won, and one where you're very upset and sad. Because you've only won, I think, three times in the past, and this would have been the fourth. But of course, Inter Milan wins it every second or third year, right?

AC  

But that's the philosophical angle I would like to tell you very briefly. For us, Napolitan being there and fighting for being the champions, it's already a victory. So whatever, we will be happy. If we were to win, we would celebrate for three days like crazy. If it's not, it was good to leave all the champions, like the potential winner. And so I think this is the Napolitan mentality and philosophy, and I think it's the right one. 

ML  

That's very, I don't want to say politically correct, but it sounds pretty defeatist. Coming second, what's good about that? But anyway, let's get back to the usual question, and we've already started, we know your name, you've mentioned the company, ContourGlobal, but explain a little bit more to our listeners and viewers, what is ContourGlobal? And what do you do? Do the short version, then we'll dive in.

AC  

ContourGlobal is a truly global independent power producer, currently owned 100% by the American fund KKR. We have operations across the oceans, in Europe and in America, in the United States and Latin America, and also presence in Africa, and a little presence in Asia, in Armenia. We produce electricity. We produce electricity from multiple sources, mainly gas and renewables, with a presence in coal that we are very quickly phasing out. We are now characterizing ContourGlobal as a developer. So we are building up a huge pipeline mostly of renewable assets, mostly solar plus batteries, but also some wind and some, I would say exotic new things like electrolyzers and data center connections. So we are what is considered, the quite new version of an IPP, with an ambition of becoming a global operator in most mature markets around the world.

ML  

Now we have a rule here on Cleaning Up. Nobody gets to use acronyms. We have a metaphorical acronym klaxon, which goes off when you do. IPP, an independent power producer, that's a company that owns energy generating assets. You've got the generation, the network, and then the retailer. Broadly speaking, as an IPP, you're up at the sort of front end generating electricity. 

AC  

Yes, and the word independent referred to the fact that we're not a utility, so we're not based on big concessions or like a former monopolist company. So it's truly based on private investments. So the assets are built, operated and owned through the cycle of investments, of building the project, owning them, and then selling electricity in the power markets, in the liberalized power markets. 

ML  

Then there was another acronym that you use, which was KKR — Kohlberg, Kravis —  What's the R stand for? You should know.

AC  

Kohlberg, Kravis, Roberts. These are the names of the founders, right?

ML  

And I need to point out that KKR is one of the members of our Leadership Circle, and in fact, that's how we were reintroduced. We met a number of years ago, you were working with a former Cleaning Up alumnus, Francesco Starace, who was the CEO of Enel at the time, and that's where you were working. So just briefly, what were you doing there? And what was your jump to ContourGlobal? 

AC  

I start from the second which is, I'm the CEO ContourGlobal. I'm the boss under the sponsorship of KKR, which is my shareholder. And when I was working with Francesco in Enel, I went all the way through the career. I started as a young engineer 23 years ago, and then I became the CEO of the generation division, before Enel Green Power. Then the head of the entire generation, including thermal. And then the last three years in Enel, I was the head of the electricity distribution division. I think it's, I believe, quite a unique experience, because not so many people in this industry have been on the two sides of the moon, and I think I've also been on the bright side and the dark side? I don't know, but on the other side.

ML  

So we won't call it Enel University, but you graduated, and you're with ContourGlobal, and you've been very keen to call it a company in transformation. And you also referred to having some coal, and what you're now investing in. You kind of jumped to, 'oh, we're now doing all this other stuff.' But what's the history? There's lots of other things we'll come back to in your thumbnail description. What was this portfolio? Why have you got coal? Where is it coming from? Before we talk about the transformation.

AC  

This year, we celebrate 20 years in ContourGlobal. So ContourGlobal started, really, as an independent power producer 20 years ago, and the ambition was really to build up an asset base based mostly in thermal generation. So it's the consequence of the view of the founder Joe Brandt. 20 years ago, there was no blame in using coal. It was just  one of the technologies that was used to generate power. Then I would say, luckily, we understood that this was harmful to the planet, harmful to the environment. So this technology, it's no longer part of, I would say, any energy mix of a mindful country. So we started generating from coal, like many other companies around the world. And then we now decided, first of all, we set an ambition of being net zero by 2040. And in the very short term, we decided to exit from coal. So we did two things: We sold one asset in Colombia, because there was no other way to decarbonize that asset, and the country was not keen to close that plant, so we had to sell it? And in the other asset, which is in Bulgaria, we are midway repurposing it. So two units are under transformation. As we speak, we are building new facilities. We are transforming two units into batteries and co-located PV plus batteries. So we will have two large 200 megawatt, 500 megawatt hour batteries connected to the original connection point of the two units. So it's a little bit also a circular economy kind of project, because we're using the surface, the land, the powerhouse, the transformer and the substation, and then we are now thinking what to do with the other two units. So the ambition is to completely repurpose that asset to continue to be helping and serving the electricity system of Bulgaria, but in a more modern and sustainable way.

ML  

 I talked about the tradition of the acronym klaxon, and we have another tradition here, which is I get to ask the difficult questions. So you sold the coal asset, right? So I understand Bulgaria, you're doing the virtuous thing of batteries and solar and so on, but it's a very interesting question about how virtuous is it to sell coal to somebody else who's just going to use it. I mean, it's a nice way to get you off the hook. Talk us through that, because there's a naive view which is, you shouldn't sell it, you own it, you should shut it down. But I think you hinted at why that would not have actually even been allowed, right?

AC  

There are two levels of decarbonization. The one that really matters is the planet decarbonization. We should stop using that source of power to produce electricity. I'm totally in agreement. But then you cannot force a country to take your own direction. So in Colombia, it was very difficult, if not impossible, literally impossible, to repurpose that asset. This is typically more difficult when the country is also a coal mining country. And of course, I understand the concept. There are social aspects associated with it — labor, tradition, interest and whatever. So our strategy is the following: if we can repurpose an asset, this is what we want to do, so it's delivering the highest sustainability possible. But if we cannot do that, then we don't want to be in it. I mean, so we tried a lot, as we're trying also, as we speak, to convert the third and the fourth unit in Bulgaria. But there is a limit, a moment in which you cannot force, because you're not completely alone in this decision. There are many things involved around a decision like that. And so if this is not possible, then we don't want to hold that asset anymore.

ML  

Yeah, and I've spoken to the team at KKR about their strategy, which is sort of brown to green, also lots and lots of clean energy, and then the innovative stuff. And maybe that's a kind of, you know, this conversation, in some ways, will follow a pathway like that, because that's the coal to green in the case of Bulgaria, and not in the case of Colombia. I don't know if our audience knows Colombia is a huge coal exporter, so that's kind of a tough challenge to persuade them to rapidly exit. But now where does gas fit into that? Because I think you've got gas, you've got CCGT, and you've got peakers. Are you building one and removing the other? Are you doing both? What's the story there?

AC  

No, we are operating combined cycles. Some of them are co-generative combined cycles. So we will produce heat and electricity, steam and electricity, to serve a very nearby industrial district. This is the case, for example, in the United States or Mexico. We are running our gas gas fleet with the constant aim of improving the heat rate, so as to deliver the highest sustainability possible, knowing that that technology has a carbon footprint. So we are studying the marginal abatement cost curve to understand what to do in the future. For example, using renewable gas or using CCS, when and if, because I have strong doubts about it, it comes into the money. Also considering what will be the supporting policies, or the non-supporting policies like ETS in Europe, that will make those technologies in the money. The other activity we're doing, for example, in the case of peakers, is that we are installing — well, we're not installing yet — we are developing the projects to install batteries, 1-2-3 hour duration, mostly one-two hour duration, especially in the peakers that we have in California. Because those peakers are used very few hours in a day and very, very few days in a year. So we believe that we better serve the market by installing batteries. So those projects are going quite quickly ahead, and we most likely will substitute those peakers with batteries for the combined cycle. We believe that in the overarching history of the transition, gas is the transition fuel. We cannot get rid of it reasonably before the next 25 years. So our goal is to operate them safely and reliably, trying to improve, bringing our plants the best technology available to reduce, in general, the footprint. Not only the carbon footprint, but the emissions and everything else associated to it, including water, in order to be a responsible operator. That's our strategy around gas.

ML  

Okay, so let's do the following, because there are some teaching points, because there's acronyms that, in fact, you and I have used a few: CCGT, ETS and so on. So let's just recap those for those in the audience that aren't familiar. CCGT: combined cycle gas turbine?

AC

Basically it's the association of two technologies, a gas turbine, which is very simply said, it's the model of an airplane. It's a compressor with the same shaft connected to a generator. So basically burning gas and together with a big, higher mass flowing through it, we generate power. And then the exhaust from this gas — imagine a car with the exhaust and at the end of the car, the heat contained in the exhaust of the gas turbine goes through a heat recovery steam generator. Another acronym, HSG, so a heat recovery steam generator, where there is a lot of tubing with water inside that gets heated by the heat contained in the exhaust. So the water becomes steam, high pressure steam that goes and turns a steam turbine, which is, again, like a wheel of an airplane where the steam moves this turbine that is connected to another generator. So we use the gas to produce electricity in the gas turbine. Then we use the residual energy contained in the hot exhaust to extract that energy content to generate electricity in the steam turbine. Typically, just the gas turbine, would hold an efficiency of around 37%. But when you also harvest the energy that is in the exhaust with the steam turbine, you can reach today, the most modern combined cycle can hit 60% efficiency. That means that 60% of the entire energy content that is in the gas that you're burning is transformed into electricity. It's important 60% — there is a limit, thermodynamic limit to the quantity of energy that you can really transform into usable, disposable energy. In the case of solar, this is close to 100% I mean, it's more than 905

ML

So CCGT, the short version is that it's a big plant. There's two cycles, quite a lot of complexity. It's expensive, very efficient, up to 60%, but an expensive piece of CapEx. And it doesn't like to go on and off, it's not a peaker. So the other thing that you'd mention is peakers, right? 

AC  

If you take only the gas turbine alone, it's like a motor of an engine. So you immediately understand you can start up and shut down much easily, much more easily than the combined cycle. 

ML  

So then it's less efficient, then you only get that kind of 37% or whatever, right?

AC  

It may be for the most modern ones that we can hit 40%. I think it's in the range of 38%.

ML  

One of the recent episodes was with Anders Lindberg, the head of energy at Wärtsilä, also a Cleaning Up leadership circle member. And they make gas engines. And I didn't know this, that gas reciprocating engines are actually more efficient than open cycle gas turbines. 

AC  

Yes, we have it in ContourGlobal. We have internal combustion engines run with gas in Togo, Senegal and Rwanda. The big motors on the ships are basically the same. They are very efficient in terms of electricity, a little bit less efficient in terms of emissions, I think. So comparing the models with the gas turbine, you get plus and minus, but they become very efficient over time. Now, if they are hitting the 40%, the low speed engines exactly the same that you use in a ship, in a big vessel, in a big ship, also those models can be converted into a combined cycle.Because the exhaust of the motor can be used to heat a small heat recovery generator. And then you have a small turbine, which we have in Senegal. 

ML  

Okay, the reason I thought it was worth diving in is because certainly something that I'm spending a lot of time thinking about, and I wrote a piece about the cost of decarbonization, which, broadly speaking for the grid — this is for the electrical system — it's actually, I want to say, pretty affordable. It bounces around, but let's call it below $100 per ton of carbon of CO2, then it goes to like $125 all the way up to about 90% or 95% decarbonization. Then it goes nearly vertical, then it really goes up to $1,000 per ton. We'll put a link in the show notes to the piece that I wrote, which has got some charts and so on. And so I have been having an aha moment, quite a long a-ha moment that says, 'Well, why don't we just focus on the first 90% and we just use flexible gas for the moment, because that's the cheapest way.' When it goes vertical, the cheapest thing to do is to not do it, and just say, 'Do you know what, we get 90% of the way there by all the clean technologies. But then the gas, whether it's a reciprocating engine or an open cycle gas turbine (OCGT), we'll just do that for the last few percent.' And by the way, what's really cool about that is that it can provide all of your grid services. Because the big a-ha moment for a lot of people on resilience was the Spain-Portugal blackout. But also, of course, the Chile blackout and the UK one and various others. As you go to a lot of renewables, you also have to provide a bunch of services to keep the grid stable. So my a-ha was, 'well, let's just do the 90% and use flexible gas for the last five or 10.' Anders talked about 2, 3, 4, percent, even. The problem is you can't have any CCGTs in that, because they don't like to switch off, you could only do it with flexible gas.

AC  

Well, it's partly true. The modern configuration of a CCGT is made in a way that you can use this as a base load capacity when you need it. So using a gas turbine and steam turbine all together, but with the clutch, you can disconnect the steam part, and use just the gas turbine as a peaker in the moment when you need it. So first of all, that is additional flexibility in the combined cycle technology, that can better serve some unforeseeable future. So you don't really know how many hours you're going to use it, and in which operating mode. So this comes from one side. But I think if we really achieve the decarbonization of 90% of the electricity generation, considering that much more energy use will be converted into electricity. So overall, we are converting into electricity — sustainable electricity — a big share. Today, it's only 20%. I mean electricity is only 20% of the energy mix, it's only 20%. So if you can bring it to 40-45%, maybe 50%, having 90% of it through sustainable sources, really zero-emission sources, I think would be a good news — fantastic news — more than a good news for me. 

ML  

It would be a huge win, a huge win. 

AC  

Exactly. So for now, I think our souls and brains, hearts and legs and lungs should be really oriented to go to the 90% that you're saying, because we are far away from that 90%. And then I think technology, business models, money, capitals, will be serving the problem of the last 10%. So there is still a long way to go to get to 90%. About the concerns about the blackout, there has been an issue of blackouts since the 70s. Never was the cause clearly attributed to renewables. So I think wise planning of the grid, including a predominantly central role of renewables will have to cope with the situation that are unprecedented. So for days and days up to 100% of power supply truly only from renewables. But so far, I'm saying something strong, I take responsibility. So far, there is no proof, in the last 15 years or 20 years, any of the blackouts, it's directly attributable as the main route cause, to renewables. Not in Australia, not in Chile, not in Texas, not in Italy, in 2003, and today, not in Spain. Because, as far as we know already, from official sources, not from the LinkedIn heroes, but from the official sources, the cause is not clear, and it looks like, from what's officially been already communicated, that it's not the problem of too much renewables. So let's wait and see.

ML  

I mean the piece that I wrote, which there's another... So I wrote two pieces, one on the last 10%, but I also wrote one on

AC  

And I always read what you wrote. So I know, I'm your reader.

ML  

Oh, that's wonderful to know. You've done your homework, but what we'll do again, we'll put a link in the show notes for those who've not seen it. I wrote my... jumping ahead of ourselves, we don't know the causes, the reports will take months, but if you jump ahead, then I've written what I think. And absolutely I agree with you that there's been a history of power cuts or disruptions to the grid. And then, as you say, the LinkedIn heroes, the talking heads, they jump in and say, 'ah, it's renewables.' Now, what there hasn't been, in any of these cases, is a fundamental lack of electricity because of renewables, right? So there hasn't been a mismatch where demand is so high and supply suddenly is too low, and then you get a mismatch and the grid can't cope. However, to be fair, what you have got is renewables, particularly wind and solar, that don't provide these stability services. And you know that I love that just before the Spanish power cut...

AC  

Inertia, nobody knew what inertia was. 

ML  

Nobody knew. There were loads of these people, they were suddenly big experts. They had become experts on coronaviruses or suddenly they were big experts on weapons systems of the Russians, or whatever it was. And then suddenly, look, my goodness, they all know about inertia as well. But they don't really know about inertia. They don't know about things like short circuit current. They don't know about reactive power. They don't know about blackstart and all sorts of things. This is really complicated stuff, but I think we have to also be very honest, that switching to lots and lots of renewables has exposed that we have not gone at the same pace as adding resources that can provide all of those services that are essential to the grid. Is that fair?

AC  

Is it fair? I mean, first of all, let me say one thing. I have been the proud manager of 13 distribution companies. So I think I have the experience also on that side. And I want to tell you something, the penetration of renewables, it's a phenomenon of the last 20 years, Okay, before we had rotating machines like geothermal and hydro, which were very similar to thermal assets, rotating masses that could provide inertia, the frequency and voltage regulation, stuff like that. With the new technologies — wind and, most importantly, solar — solar in particular, there is nothing that moves. It's just a piece of glass that is taking in the sun. You know, it's the life I would like to have, staying on the beach, taking in the sun all day long and producing something at the same time. So the penetration has been massive in the last 20 years, but the technology has evolved a lot. So the inverters, for example, 20 years ago, are completely different from what we have today. So the capabilities of modern renewables, including the fundamental contribution of batteries, completely changed this discussion. So if we were to stick to what renewables were 20 years ago, I say the renewable of the zoo. So you know, protected environment, we can just generate some power, some electricity, actually, not even power, not capacity, mostly electricity, that's what we are. Now, renewables are out of the zoo, because they are becoming the backbone of any generation system of a modern country. So the duty of those technologies has to change, regulatory I mean. So it's in the role of the TSOs (transmission system operators), in the role of the regulator to raise the bar, to write codes, grid codes and specifications that will oblige renewable players to help to make the grid operator's life possible, safer and even more economical. For example, one big phenomena that is happening in Europe in particular is that typically, power plant were connected to the transmission system, the average size today in Europe of a power plant, it's about 630 megawatts. If the energy transition will happen, so if the penetration of renewal will continue this year, 94% of the capacity addition was renewables. So if this continues, as I think, the share of power capacity that they will be directly connected to distribution grids will completely change. Today, 75% of the capacity is connected to the high voltage system, to the transmission lines and in the system is built, conceptualized to cascade down power from high voltage down to low voltage with the distributed generation, but also, very importantly, with the fragmentation of the utility scale generation, which is moving from 630 megawatts to an average of 32 average power plant of the future will be 30 megawatt, so 20 times smaller on average, than in the past. Those plants will be naturally connected to distribution grids. This is a problem, an issue to be discussed today, not when we will have problems. And nobody's talking about this. So the role of the grid, it's completely transformed, cascading down power, bringing to your house. Now it's harvesting electricity, distributing somewhere else. I mean blaming renewables and just blaming it, it's a waste of time. We have to be aware that the electricity system will be quickly transformed the key word for me, it's quickly. This is happening in a unprecedented way, with a speed that is surprisingly fast. Think about the penetration of batteries. Three years ago, batteries were something. The capacity addition in batteries of 2025 it's like 25 times what we had four years ago. So it's amazing what is happening and duration is getting longer and longer and longer. So it's not the one hour or two hour to cope with the peaks. We, for example, as ContourGlobal, are proudly the owner, the developer and the owner of the largest long-duration project in South America. We have a project where we harvest with solar power during the day, and we have 6.5 hours storage, and we sell electricity only during night. 

ML  

In Chile?

AC  

Yes, in Antofagasta, our project is the biggest, it's the longest, I don't think there is anything longer than 6.5 hours. So we have a night PPA, I call it sun at night — Sol de Noce — because we generate power entirely from solar, and we sell entirely at night, with some little arbitrage between day and night. So this is transforming the system, plus the battery can provide inertia. Now, I'm not a technician, I'm a manager, but I started 20 floors below, when I was young, so I have gone all the way through the career. The synthetic inertia that can be provided by the new inverters, it's faster than the mechanical inertia that can be provided by a spinning wheel. So what we can do with renewables, it's come, it's not magic, but it's enough to cope with the complexity that renewables are bringing. Now, when we discuss these things, Michael, let me underline this. In many, in most of the debates, I see a missing argument about why we're doing renewables, why we're electrifying, why we are leading this pain of transforming the electricity system. And we forget from when we started, we have a problem we are trying to solve. This is climate change. We're not doing this just to have fun. We're doing this because, as we speak, this is the only solution we have found so far to try to save the planet, to try to save this problem. So that's the solution we have. We don't have alternatives, so we have to study all the technologies to make this possible reliably and sustainably and also economically.

ML  

Cleaning Up is brought to you by members of our new Leadership Circle: Actis, Alcazar Energy, Davidson Kempner, EcoPragma Capital, EDP Portugal, Eurelectic, the Gilardini Foundation, KKR, National Grid, Octopus Energy, Quadrature Climate Foundation, SDCL and Wärtsilä. For more information on the Leadership Circle, please visit cleaningup.live, that’s cleaningup.live.       

ML  

You're not going to find me disagreeing in principle, but you will find me disagreeing for the purpose of this conversation. Because what we've said through the last few minutes is that, on the one hand, you've got to do something for the last 10% to complement the renewables. And then what you're saying is we have to change the grid codes and insist on a bunch of assets being added to maintain stability. So now the critics will say that all of these people who say that renewables are so cheap, they actually have misled us, because, in fact, once you have to pay the integration costs... And by the way, it's not just backup, it's also the fact that all these renewables come from different places. The standard power station is probably near the sea, in a port where the coal used to arrive and the cables used to be etc. It's all there, and now you're off in a desert, you're offshore, you're in the mountains, you're somewhere else. So you're having to build enormous amounts of new infrastructure. You're having to build batteries, and you're having to build all these things that provide services. Because we were getting them free, they were all just bound up. So you're not the cheapest way of doing things. We've been misled. And if you do want to deal with climate change, the answer is definitely nuclear.

AC  

Yeah, I'm not against nuclear. I'm a nuclear supporter. I do believe that the future mix will have to contain nuclear. I think it's a big mistake, for example, that Germany decided to shut down nuclear and is keeping coal, for example. I think this is nonsense for me. I'm happy that Spain is reconsidering the closure plans. And honestly, as an Italian, I'm sorry that we have left the people to decide, because I think the people were not prepared to take that kind of decision twice in our history. So that's my personal opinion. There was not enough education, I mean the public. Because we decided that after Chernobyl and after Fukushima, one of the reasons why in Italy we have one of the highest electricity bills is definitely because we abandoned our nuclear program. So definitely, I think in the future, nuclear will have a role. But the problem is and the reason why I say the future is because if you want to have an honest discussion, an intellectually honest discussion, you have to say that if we start today developing a nuclear program in Europe, imagine we're talking of common defense. I mean, we should talk about common nuclear programs, for example, to have the same standards, same technologies, and save costs. Nobody's talking about this. I would be supportive of having a discussion in Europe about nuclear power, but you would not get any electrons generated from nuclear before 15 years, if we want to be extraordinarily optimistic. So if we want to go for Net Zero beyond 2040, there we need nuclear,I'm totally with you. Today, talking of nuclear energy is a way of wasting time and burning gas. That's my opinion. And so about the cost of electricity, I tend to disagree. First of all, renewables are distributed by nature, I mean distributed generation, you put it on your rooftop or in your parking lot, okay, distributed. So immediately attach it to your own consumption. And that's one part. The second part is that renewable sources are much more distributed than anything else, for sure, much more than ports and coal and high voltage infrastructure. Solar is possible basically everywhere. Wind, it's much more distributed than hydro, for example, there is wind pretty much almost everywhere. Not like the sun, of course, but for sure, more than hydro. So the penetration of renewables is small in size, it doesn’t need deserts. We can do it in a crowded country like Italy, in a crowded country like the UK, using just zero comma X percent of the territory. So any discussion about the use of land, it's silly when you then make the real calculations for something not of secondary importance. We're talking of doing clean power, which is, after water and food, the most important commodity for human life, right, in modern terms. So we're not using land for soccer fields, even if I'm a Napoli supporter, I would love that. But you know, it's not for soccer fields. We're talking of clean power. And about the cost? Well, first of all, we should discuss the hidden subsidies of the oil and gas industry, but that would bring us probably too far away from the topic. But then the savings we would have from not using gas as a marginal source of power in Europe can cope with a possibly increased CapEx that would need to reinforce the grids. But hit me, and I can tell you, trust me, I run distribution companies. I can tell you, it's a legend that the grid reinforcements are due to renewables. The grid reforms are due to the increase of energy consumption. It. The electrification that is driving the need for stronger, more reliable grids, and also because grids are old. The average  technical life of a grid, it's between 30 and 40 years. If you see the number of lines in Europe that have exceeded their technical life, you would understand immediately why we have blackouts. 

ML  

I hear you, but I push back, because there is still this variability. There is still in the north of Europe, you have the dunkelflaute, and we have to be prepared, not just for the smallest dunkelflaute that you and I can remember in the last five years. If we're going to run a continent, its energy system, its emergency services, everything, then it has to really be able to ride through the worst case happening at a time when maybe there's a cyber attack or something. We have to really be deeply resilient. I call it deep resilience, and that's a lot of redundancy. You know, in the south of Europe, you have more solar, you've got some wind, some solar. But it doesn't match exactly. But even on Europe as a whole, I talked to Nicholas Tsafos, who's now Deputy Minister of Energy in Greece. I spoke to him, he was on the show just before he was promoted. And he paints a very nice picture of Europe, where you've got these fantastic winds in Greece, you've got the solar. But when there isn't wind, then you have wind in the North Sea. It's like, okay, fine, but you have to invest a lot. You have to because then the North Sea, at that point, you have to over invest or have surplus capacity, because now the North Sea is not just providing electricity to Northern Europe. It's now also helping out Southern Europe when it has no wind. And you've got the transmission so it just, much as I want to, I don't know, sing Kumbaya and say it's all going to be fine because of the learning curve, which is my natural sort of starting point, I also see redundancy and infrastructure that does have to be built. And the context is that in the US, electricity is one quarter to one third of the price that we're seeing in Europe. And for better or for worse, we want to deal with climate change, but we also need jobs and industry and competitiveness, right? 

AC  

Yeah, I'm totally with you on, let's say, analyzing the consequences in the short and longer term, consequences of the energy transition. But honestly, I don't really share the fact that the redundancy that is needed to really go towards a very high penetration, 90% plus, ideally, 100% would be avoidable if we keep investing in thermal sources. Because you mentioned a cyber attack, but a cyber attack with a completely pure thermal system would have the same consequence. So that's another argument, let’s part with it. Because sometimes we tend to, when we have a new solution, we want it perfect.

ML  

The issue with the cyber attack is actually a different one, which is it actually shines the light on, in a sense, the risks of electrification, not of renewables. 

AC  

For sure, completely we do, but with a mitigant that was impossible 20 years, 30 years ago. Now, if I get a cyber attack and the grid goes off and I am in my property in Tuscany, I am completely autonomous because I have my backup system, and for four or five days at least, I can be autonomous.

ML  

If your backup system has grid forming capability.

AC  

yes, which I have, because I learned it. Because I had a big disappointment. During a summer day, I was having a party, I had the battery. The grid was off, and my property had a blackout. And I said, but I have the battery. And I learned that I need a box like this. Few bucks. I mean, it's like €300. But again, for example, this should be the new normal. So every generation, let's say home system, should have blackout capability. But besides the jokes of them, I mean, the world will not be happier if I am blackout or not. I'm not the problem. The problem is building a reliable system, a new system. Of course, we want to improve with the new technologies and not just be at the same level of the former one. So I buy the challenge of, ‘okay, if we have to go renewables 90% plus, we want to solve some of the issues.’ So grid reinforcement, international interconnectors among European countries. It's a strategic discussion. I think it's absolutely important not only to cope with the mismatch of supply and demand that you can have across north south Europe, etc, but also for reliability and also for security and energy independence. This is one of the most strategic discussions we should have here. After the unified defence, we should discuss a unified market and a unified electricity system. The second point I would like to make is about becoming more resilient. Becoming more resilient with renewables. It's also really, I mean, there is an argument that was very popular years ago: energy efficiency. So if we believe that we can cope with any possible growth and growth in electricity, it's only positive. I think we're creating a disaster. So now I see a lot of hype for the emergence of new loads from electrification, in particular, AI. But then if you see the quality of that demand and the use we're doing of AI, I mean, we're creating an impact on the planet for something that is absolutely not strategic. So there is a good use of AI and a stupid use of AI. And the use case at this moment is, ‘can you paint a cat with a face that is similar to Michael Liebriech.’ This is what the massive use is. So energy efficiency should be really refocused a lot in the energy discussion around the world now I think. And I don't want to be very long, but I think in the big discussion, we said internet connectors among the countries in Europe, technology energies, energy efficiency, I think we need a piece of technology. We need long duration storage. Now, I think what we are learning from the market about electrochemical storage, it's very positive. The negative thing is that it's all produced in one country. Okay, that's an issue, but the technology is performing fantastically well. Now I think we have to invest for longer-duration storage, including using a different way, the idle reservoirs.

ML  

I was a bit distracted there, because I was imagining the cat with my face. I'm going to be on ChatGPT straight after we finish recording, because that sounds really cool. I mean to me, see, because I come from a sort of center-right political tradition where I don't want to be the one telling people ‘don't do the cat face guy, right? Don't do this, don't do that.’ You know, if AI works and it's good, I actually am a guy that says: You know what? I think innovation. Look at what happened with DeepSeek. Everybody was just convinced it would be incredibly energy demanding, and all in America. But suddenly it was much more efficient and it was in China.

AC  

Exactly. That's the energy efficiency I'm dreaming of. So we believe they had a big impact, but then we found DeepSeek can do the same for less. That’s fantastic.

ML  

Just on AI, I think the interesting thing people are now, you know, everybody's a big expert on AI energy demand. And I wrote something. I don't know if you saw the episode, I actually made an AI voice to read it on my behalf. And now I'm embarrassed, because that probably used several megawatt hours of electricity. But it's not that the demand is so huge, in my view. It's just that it's incredibly demanding. They want incredible reliability and all in one place, and gigawatts of it. So that's very, very difficult. But we've also got to remember what we are, at least I am, advocating for. Because the right solution, electrification of transportation, electrification of heat, and electrification of a lot of industry… If that happens, then it's not like AI, it's a lot more electricity and it's everywhere. It's absolutely everywhere, correct?

AC  

Yeah, basically, AI is considered only the fourth potential contributor to energy growth. Industrial electrification, residentialities and mobility are number one to three. So, I mean, there is a lot more hype on the AI, but I think the one, two and three are really the ones that are probably transforming the supply and the demand side. 

ML  

Antonello, can we just come back to… There was, it wasn't an acronym, but I'm going to pick you up on something that you said, I want clarification. What do you call long duration energy storage? What is long? Because you're doing six and a half hours. Is that long? I've just come from the long duration energy storage council, they say eight hours. What is long?

AC  

Okay? There are two ‘longs’. Let's say one long, it is very important, is the daily long? So what we're doing in Chile, six hours, I would say rare, eight hours maximum, so between six and eight hours, we could significantly transform the contribution of solar in the energy mix of modern countries. So what is happening in Chile, I think, is signaling a big transformation that will happen in Europe, for example, and in the US. Because the second project where we're promoting, it's actually in Arizona with a connection to California. I cannot say more, because it's under NDA. But we have a big off-taker with which we are negotiating a longer duration solar plus storage. So I think it's six to eight hours. If the battery cost, the solar cost, will go down to a level that combined, and we can still be competitive to supply it…

ML  

Is that all going to be just lithium ion? You just take a bunch more lithium ion?

AC  

Yes, daily I think lithium ion, or whatever the new electric chemicals on it will be. But let's say batteries, okay. Today, lithium ion, with all the evolution that you know, the battery technology can deliver over time. When we go longer than a day, I don't see a problem of weekly or monthly. For me, this is not a big problem. The other problem we have is the seasonal storage so you move from eight hours maximum to probably three-four months. So storing energy to cope with the imbalances between the summer supply and the winter use that it's like, you know…

ML  

I just want to make sure we catch on as you go, because this is fantastic stuff. But you said, daily. And then you sort of very quickly said, ‘Oh, I think weeks and months is fine.’ And you went seasonal, right? Is it fine? Because that's the dunkelflaute.

AC  

No, because I'm explaining… Yeah, but I think that all when you look at single asset, you have a problem of a week or a month, but you see the combined contribution of a portfolio, or a generation mix in a big region of a given country, you see that the fluctuation among days it's not that important, because you don't have a cloud simultaneously across the entire south, let's say, and then you have other resources, like hydro basins that can cope with very short duration imbalances, like a week or a day.

ML  

And it's very clear we don't currently use the hydro — It's not just a question of pumped hydro. It's also a question of keeping it to be used at the right time. 

AC  

So I think that for seasonal storage, there are a number of technologies that could look promising, like flow batteries, compressed air stored in certain ways. So there are technologies that are showing certain positive evolutions that can bring the cost of the LCOS, the levelized cost of storage, to a level that is compatible with the dream of having declining cost of electricity over time. But still, this is still in the lab.

ML  

This is great, because I actually get to, not quite disagree with you, but I can put a flag in the ground and say that you will never get those to the levelized cost of storage will never be affordable for that sort of technology on a seasonal basis, because it's basically one cycle per year. So where your lithium ion is doing 365 cycles a year, going day, night, day, night, maybe it might even be doing 720 cycles in the morning and evening. This is doing one cycle. All the cost, one cycle, right? Never going to work well. 

AC  

Or maybe two: winter and summer. Because you know that we have two peaks, basically two big peaks.

ML

In some places, 

AC

In some places. So, yeah, you're right. But if the technology is simple enough that you store something, produce it in an easy way, like water or like chemicals in a big tank, and then you recombine, like the flow batteries. I think this may have a hope. 

ML  

Storing water is pumped storage. Hydro already does that. That is actually the segue onto something I do need to ask about. You use the word electrolyzer. You didn't use the word hydrogen. You knew that that would set me off on a whole rant, but you are doing something with electrolyzers. Is that around a storage solution, a fuel solution? How can I put it? How's it going, Antonello?

AC  

Wwell, let's tell you, I want to be clear. So I said electrolyzers because we are developing in Europe a small pipeline of projects that combine batteries with electrolyzers. So we want to make the best of a given connection by using the battery as a bi-directional flow and using the electrolyzer as much as we can, but also with a certain level of flexibility, minimum level of flexibility. Let's say we are at the beginning of this story. We're looking to tomorrow. Actually, I would say the day after tomorrow. We're also looking at biogas, for example. But this is just because we don't want to miss anything. So that's why we're also starting to look, with some interest, to the possibility of connecting data centers to our connection facilities, because we have an excess of what we need for generating power. So maybe that resource becomes more valuable for data center developers, rather than for us. About the electrolyzer, not at all. I don't believe in hydrogen as a storage vector, because when you do that, when you burn it to produce electricity, again, it's much more expensive and complex than just storing it in a battery and using the battery, which is the simplest way possible. I do believe in hydrogen a lot as a vector for sustainability and decarbonization of certain industrial sectors, like the green, clean chemicals, fertilizers and stuff like that. And then high heat uses. But I think the first use of hydrogen, in my opinion, will be to try to have a cleaner, greener chemistry, you know, so in those high value uses, and that's the niche that we are considering. I don't believe in mobility based on hydrogen. Frankly speaking, even the long distance ones I'm seeing now — trucks are becoming cheaper and cheaper, longer range than those sold just few years ago. And I don't believe in hydrogen for power generation. So hydrogen to power, for me, it's a scandal.

ML  

That's very in line with the famous hydrogen ladder. And I mean, I suppose where I am now is even for chemicals, I can't see green hydrogen being affordable. So 100 million tons a year. If you have a small cost problem, it becomes a huge cost problem. But maybe let's not go there. I mean, what we can do is come back in a few years and tell me how that all is going. I do want to touch on one more thing before we wrap up, which is, you're active in Africa, personally, you've done some work in Ethiopia. But are you also looking at that as ContourGlobal? 

AC  

As ContourGlobal, we have a presence in three countries — Senegal, Togo and Rwanda. \

ML

Of course. You mentioned. 

AC  

Yes, I mentioned. So Senegal, Togo, Rwanda. We use pretty much the same technology, the combustion engine motors in two of the three countries. We have, actually, in one of the three countries, we have combined cycles, so we have the motors and we have a steam turbine. So it's quite a high efficiency plant. Now we are closing the cycle — so installing a steam turbine also in Senegal. And in a second phase, after that, we will do it also in Rwanda. In Rwanda, we have our flagship project. It's the crown jewel of ContourGlobal. Because this was developed by us in the past, we extract gas from the water of a lake, one of the African lakes.

ML  

Lake Kivu. 

AC  

Lake Kivu. So we extract the gas from 300 meters below the surface. We bring up to minus 20 meters. We separate for differential pressure, and so the gas then is brought on a floating barge where we have a distillation system. So we create pure natural gas that is distributed with a 12 kilometers floating pipeline, and we burn it.

ML  

And that's methane that was dissolved in this Kivu. So, this is ancient biomass that has rotted, stayed in the water, I guess?

AC  

Not even ancient, because we did a lot of studies there, and the bottom is full of biological materials in the compositions. So there is a natural flow of gas from the surface, going into the atmosphere. And you know that is 30 times more potent than CO2 as a greenhouse gas.

ML  

One question, so that methane, which is escaping from the water, it's better to burn it than to let it escape?

AC  

Right exchanging gas for CO2, and it's better as CO2 than gas.

ML  

Exactly, so you reduce by 29 times the 20 year impact. Okay, one question I have on that, because I looked at this project, I did a bunch of work in 2013 on Rwanda's energy mix. Actually published a white paper, because at the time, they wanted to do peat, they wanted to do a lot of peat energy. And I was like, ‘No, do solar. Please leave the peat where it is.’ It's so valuable for biodiversity. And I looked at this. One worry at that point was that there's also a lot of CO2 in that lake. And you could get a situation where the lake overturns, the CO2 is emitted, this has happened in other lakes, and you get a kind of a burp of CO2 that kills, because it kind of comes out suddenly, and you can have die off of people and livestock and everything, right?

AC

It's not actually the CO2, it's the gas itself. So the management of that extraction, it's absolutely under the severe monitoring of the environmental bodies in the country, but also the best experts in the world. Because there was a case in Cameroon that is quite famous, but that's a completely different story. So we are absolutely aware. So we are extracting from a certain particular depth, and we are injecting the water that has less gas content so that it's absolutely in equilibrium. We know that by using the gas, we are reducing the problem because we are de-gasifying the water. But of course, you have to do it in a very scientific way, and we have. Now I can say we are the most knowledgeable group of people about managing this issue, and that's why. But it's something that has been studied and it's absolutely well monitored and under control. I want to invite you to visit that facility, because it's amazing. So if you want to go with us to Rwanda, or to see how we are closing the cycle and making more energy out of the same gas use in Senegal, you are more than welcome, we will go together. We can go and see it.

ML  

I might well take you up on that. I've just been for my first ever trip to West Africa, to Sierra Leone to visit my project, Project Bo at the neonatal unit, another episode that we did.

AC

We can go to East Africa this time.  You come to Rwanda and we can show you that. 

ML  

I'm definitely up for a road trip. What I want to do to finish, I want to give you the chance — I wish I had an egg timer, because I want to give you only one minute — to summarize, in a way, two things, actually. One, what will the energy system look like in I'm going to say seven years. So it's not just what's going to happen right now, but what will it look like in seven years? And what will ContourGlobal look like in seven years in order to respond to that development? One minute for both of those. Go. 

AC  

I think in seven years, we will see the definitive penetration of the new technology that we are seeing emerging very fast, which is storage. So we will see a lot of new projects, hybridized with storage. It will be mostly solar, maybe some wind. So we will overcome what is becoming the natural limitation for solar penetration, which is the daily congestion, the zero price hours, etc. And so with the coupling with storage, we will see solar predominantly dominating and transforming the electricity system around the world. This is starting already in Chile, in the US, we will see this a lot in southern Europe and then also in Central and North Europe. So I think the impact of cheap storage will transform the penetration of solar and consequently the entire electricity system. Maybe not in seven years, maybe it'll take 10 or 15 years, but this will be transformative, definitive, and without coming back. So that's definitely the transformation of the electricity system. Because I believe in that, the ContourGlobal I'm building, together with my colleagues under the sponsorship of KKR, it's a ContourGlobalthat is fostering this phenomenon. We are investing in it, we're developing projects. We are pioneering, we are the proud owner of one of the largest projects like that in Chile. And we will be promoting, at all possible levels, doing projects, investing money, but also advocating for regulation and for, let's say, the market conditions and business model and PPA power purchase agreements, so that this can become the natural way to do power. We have a new purpose in our company, it's the right path forward. I think the right path forward will be more renewables with much more modern technologies, being aware that we have another role to be the backbone of the system, being aware that we do represent the new normal, the new standard. So coping with all the complexity, this is natural, but also I hope bringing a completely different equilibrium between supply and demand. Because the sun is everywhere, and so we can build a sustainable electricity ecosystem in much more countries. So ContourGlobal is very focused on building on it, and being calm, a very reputable, recognized, independent power producer with gas and a lot of renewables.

ML  

Antonello, it's fantastic sharing a bit of time with you, and I very much look forward to watching your journey, and maybe we'll do that trip. But also, in due course, we'll have you back on the show, and you'll be able to tell us which bits went well, which bits were difficult, and where you are. That'll be before seven years is up. Thanks so much, thanks for joining us. 

AC  

Thank you very much, Michael. I also enjoyed it a lot. Congratulations for your podcast. Thank you.

ML  

So that was Antonello Cammisecra, CEO of ContourGlobal. And as always, we've put links in the show notes to resources that we mentioned during our conversation. So that was episode 74 with Antonello's former boss, former CEO of Enel, Francesco Starace. Episode 201 with Nikos Tsafos, now deputy energy minister in Greece. Episode 208 with Anders Lindberg, the head of energy at Wärtsilä and audioblog 14, the piece that I wrote, but that my avatar, Mike Headroom read, on Cleaning Up, of course, all about AI. We've also put in links to the two pieces that I wrote on Substack, one on the causes of the Spanish blackout, and the other on the cost of decarbonising the last 10%. And with that, as always, I'd like to thank Oscar Boyd, our producer, Alex McInerney, who stood in to help out with the recording of the episode. Our video editor, Jamie Oliver, and the whole team behind Cleaning Up. And, of course, all the members of the Leadership Circle. Please join us at this time next week for another episode of Cleaning Up. 

ML  

Cleaning Up is brought to you by members of our new Leadership Circle: Actis, Alcazar Energy, Davidson Kempner, EcoPragma Capital, EDP Portugal, Eurelectic, the Gilardini Foundation, KKR, National Grid, Octopus Energy, Quadrature Climate Foundation, SDCL and Wärtsilä. For more information on the Leadership Circle, please visit cleaningup.live, that’s cleaningup.live.