Cleaning Up vs Still TBD - Ep129: Matt Ferrell

Michael Liebreich  So Matt, welcome to Cleaning Up.

Matt Ferrell  Thanks for having me, and welcome to Still to be Determined.

ML  So, this is great, it's a bit of an experiment for me to do a joint episode, but I'm looking forward to it. Let me ask you to introduce yourself first, and then we can reciprocate, right?

MF  Sure. I'm Matt Ferrell and I have a YouTube channel called Undecided with Matt Farrell, and a podcast called Still To Be Determined, where I talk about sustainable technologies, kind of from the perspective of a consumer. Because it's like, I'm trying to implement a lot of stuff in my own life to try to be more net-zero, have a better home, as well as different technologies that are being rolled out around the industry, and how it's kind of impacting all of our lives. So how about how about you?

ML  So, I'm Michael Liebreich. I also have a YouTube channel, and a podcast called Cleaning Up, which I've been running, actually, I started it during the lockdown, during the pandemic. But really, I am, I guess, an analyst, a commentator, and investor and advisor - everything around the net-zero transition. I started New Energy Finance back in 2004, which is, you know, my goodness, nearly 20 years ago, analyzing all of the trends, the economics, the deals, sold that to Bloomberg, and I continue now in this role as a writer and a commentator. And, and, and, and, and. But what's interesting is, I do do those things; in my life, I have made changes - not as many as some people would like - but I'm really more of an energy economist, and a transport economist, kind of getting into the nitty gritty. I would say, you know, if you're the b2c, if you're the consumer guy, I'm more of the kind of b2b guy.

MF  Yeah, gotcha. So we're kind of both ends of the spectrum here, we've get both covered.

ML  Well, I think so, I hope so. And also, what was interesting as we chatted before we came on air, I've been doing this for nearly 20 years, you've been doing this for five. We should kind of maybe talk about where we are today, the changes that we've seen over those periods, and then maybe try and go five years out and 20 years out and spin our wheels and think about how things could go in the future.

MF  Yeah, absolutely. That sounds good to me. For you, I mean, you've been doing this for 20 years, so it's like, what have you seen? What's the thing that jumps out at you the most that's changed over the past 20 years?

ML  Oh, I think when I started, my friends from business school thought that I had completely thrown away my career by doing this thing called alternative energy, and it really was marginal. I mean, we're talking about a time when renewable power was less than 1% of the electricity supply in the world. And the biggest, biggest change for me is that the stuff that I was talking about 20 years ago... I don't want to say it all came to pass, but you know, it is such a mainstream agenda now, it's what everybody's talking about, and now it seems obvious that we would be doing clean energy and clean transportation and net-zero and climate - it was not obvious at all. How about yourself? What's your arc over the five years since you started?

MF  My arc over the past five years... EVs are a good example. EVs still felt pretty new and unusual just five years ago, and now it seems to be, it's kind of almost catching on as this normal thing. More people that are not in the space of interest in sustainability are concerned about this stuff. Like I'm building a new net-zero home, and one of the things I've been surprised by is how many other people are saying, oh, yeah, I'm trying to do something very similar in my house. And I didn't see stuff like that just five years ago when I was starting this. So, it seems to be like there's a more kind of a public consciousness becoming aware of what's out there.

ML  So, I wrote something a few years ago - I think it was 2018 - about how long a cycle takes in business. I don't mean a recession or whatever; I mean, you're a business person, you get to kind of make a bet, you invest, you build a business, hopefully you get it right, maybe you don't. That takes sort of five or six years. And so, maybe your five or six years is one cycle. And I've seen kind of four cycles: I've seen the first clean tech bubble cycle; I've seen some difficult years when that went pop. Then I've seen the... I would say maybe, we're talking about the period when clean energy was starting to get competitive, and then where we are now, maybe those are my four, I'm not sure if that's that specific. But I have seen these cycles, I have seen more of them through the 20 years than perhaps you've seen, but it's a very familiar story.

MF  That's interesting. The more people I've been talking to that are in the industry, either its energy storage systems that are meant for the grid, or utility-based stuff, I've been hearing a lot of stuff from them of saying... Just over the past three to four years, there seems to be kind of a sea change in attitude within the industry as well. Is that something that you're kind of seeing as well in this most recent cycle that we're in?

ML  Oh, definitely. I mean, look, there's also some kind of weird pathologies going on at the moment around hydrogen; there's some hysteria, there's people who've gotten kind of overheated. And there's always that by the way, going on. I've also seen those things happening - hydrogen has one of those every 20 years. But we also saw the biofuels bubble back in 2007, where everybody went crazy about next generation ethanol, and then that didn't work. So, we've seen cycles before. In a way, I think what's different now, is that we're looking full spectrum at transition. We went from, maybe there would be a kind of enormous amount of focus on just renewable energy. Well, first, just technology in the clean tech bubble. Then it was just renewables, and then it was EVs. But now, it's heating, it's industry... So it is actually a net-zero line of sight, rather than just saying, oh, it's this little additional thing; if it goes, well, it'll kind of solve one or two pieces of this.

MF  That's a good point. It's one of the things that you brought up is hydrogen. I've talked about hydrogen on the channel, my YouTube channel a little bit, and it always brings out a really divisive - from the comments - of people saying, it makes no sense, it's not going to make any sense at all. And then other people are like, I'm pro hydrogen. I'm curious, why is it so divisive? Why is that topic so divisive?

ML  I think it's a kind of faith-based technology, a bit like crypto or Bitcoin or whatever. Nobody can tell exactly what it's going to do, and therefore you can hang whatever hopes, whatever preconceptions, also your tribal markers, you know. So, if you're an oil and gas person who really fundamentally doesn't like clean energy or renewables and whatever, and feels threatened by climate change, you can like the fact that hydrogen comes from natural gas, so you can kind of hang some stuff on it, you can hang baggage. If you're a technologist, you can go crazy. It's funny, because I got called recently a hydrogen denier by somebody. And you know, I find that really offensive, because I think this word denier is just used as a weapon, and I hate it in all contexts, pretty much. But I also found it incredibly funny. That's not how I see it. I think that we've got certain things that you have to do with clean hydrogen. We make fertilizer with grey hydrogen, and hydrogen produces over 2% of global emissions. So, do I love clean hydrogen? Yeah, as long as we use it to do something about that problem. But, I've just done too much analysis on the economics, the thermodynamics, the safety, the human behaviour, the history of failure of hydrogen to live up to its promise, to just postulate it as a solution for everything. But that enrages some people extraordinarily. I mean, I don't know, why do you think it's so polarized? Maybe you can answer the question. I'm also mystified how deep the passions are.

MF  Yeah. For me, it's shocking that it's so polarizing. I have a nuanced take on hydrogen. It's not a silver bullet for everything. It's going to be a solution for a very specific use cases. Like for me, it makes sense for energy storage in some fashion, but it doesn't seem to be the silver bullet for heating homes, and for, you know, the future of all cars, and EVs and all that kind of stuff. It doesn't make sense for necessarily every sector. And I think people tend to find their tribes, they tend to find the thing that they back, the thing that they like. And so either you're pro hydrogen, which means you're for hydrogen for everything, or you hate hydrogen, because only the oil companies care about hydrogen, so you're anti-oil, and anti-oil companies, so you hate it. So, I don't think there's this kind of grey area mentality for a lot of people out there. And the thing is it's kind of human nature, but what I do, as a content creator, I struggle, because a lot of times there's this nuance. You try to put out that nuanced take on something, or describe something in a very specific way, and then you end up getting hate from both sides, because you don't make anybody happy.

ML  But it's funny, because I think that the two tribes are hydrogen for everything-ists, and those are the kinds of hydrogen economy, hydrogen world, hydrogen Swiss Army Knife-ists. And then I think the other tribe is the nuance-ists, right? Because it's very hard to argue we don't need any hydrogen, and it's very hard to argue that we're going to have battery plug-in transatlantic aircraft, you know? So, the nuance-ists, are like, yeah, that makes sense, that makes sense. But the all-or-nothing-ists try and portray us as antis, and I think that's where things go a bit kind of off-track. So that polarization... I don't think there's anybody out there who says, no clean hydrogen, ever, for anything. I don't think that that group actually exists.

MF  If you looked at the comments on my hydrogen videos, there are people that say hydrogen, just no way, doesn't make any sense. And I find that very interesting that some people have a very black or white view of topics like this.

ML  But are they really referring to hydrogen across the board, or are they just referring to hydrogen cars, or hydrogen heating? Because, I mean, are they anti-fertilizer? Do they want 3, 4, 5 billion people to because, "I'm anti-hydrogen, we shouldn't be using it at all..."?

MF  Yeah, it's a good question, I don't know. YouTube comments, they just drop a sentence, and it's hard to read into, are you actually against this? Or just this specific use of it?

ML  So, I've said that I think that this cycle pretty much probably takes us through towards 2030. I cannot see how we're really going to de-program the hydrogen-for-everything-ists, the Swiss Army Knife-ists, I don't think that we're going to be able to de-program them. What's really going to do that is project failure. So, there are now 40 reports that say that hydrogen in heating just makes little or no sense. I mean, it might be a kind of tiny niche thing, or whatever, but fundamentally, it's really stupid. There's 40 reports. You could have 400 reports: the people who want it - either because they're romantics and think it's wonderful, or because they hate the idea of a heat pump because they flunked physics or whatever it is, or because they own a gas pipeline, and that's a big piece of the people who are really in favour of hydrogen heating, actually, funnily enough, own gas distribution assets - they're not going to be proven wrong by some report, or by ten reports, or 100 reports. They've actually got to try and dig up a street and try it and fail, and then we'll move on.

MF  Yeah, that's a good point. It's related to hydrogen a little bit, but I feel like there's a similar conversation around nuclear that's similar to this, where you're either a pro-nuclear... Because I can't tell you, I'll do a video on solar panels, or a wind turbine, or something you can do for your house that has to do with solar, and there's always comments that say, just go nuclear in everything.

ML  Oh, boy, this is gonna be a popular episode of both of our channels, because, we're talking hydrogen, we're talking nuclear, we're talking crypto. We get all the buzzwords, we're gonna get hammered from all sides. No, I think that that's right. And the issue with nuclear is, it's already a polarized debate going back, you know, many decades. Germany tried to exit nuclear, and people can barely remember why they were so anti-nuclear now, given Putin's invasion of Ukraine. But there is something about the pro-nukes, is that instead of saying, you know, hey, it's a big world, there's lots of energy demand, let's have some nuclear as well, which is kind of where I am. And certainly, we should keep what we've got, and I'm happy to spend a bit of money trying to build some new ones - who knows, maybe it'll work, maybe not, economically. But the pro-nukes, far too many of them, one, think that nuclear is the whole answer, which is just manifestly stupid night for all sorts of reasons to do with. Very simply, first of all, the economics, but secondly, what happens when there's a fleet failure situation, like a car recall? You know, when the Teslas are recalled all at once? That happens from time to time. But, you know, if your nuclear plants fail at once, then you get the situation we had in France over this summer, where there's a real shortage of electricity, and it's extremely risky. Number one, they postulate it's nuclear all the way and only nuclear. But also, they manifest it by attacking other solutions. So, very simply, there's Pepsi and there's Coke. If you want to sell Pepsi, you don't buy the Super Bowl halftime ads and say that Coke is rubbish; you should not drink Coke because it tastes like crap and it's full of sugar, it's really unhealthy. You're not going to sell any Pepsi by saying those things, because everybody knows that fundamentally, the two are the same, right? So, you can't sell something... I'm straying into your area, you know, this is consumer psychology. But you won't sell a single nuclear plant by saying that wind and solar are rubbish. And yet they do it all the time.

MF  Yes, I've actually interviewed some people that were doing that, they were bagging on solar and wind energy, and claiming that nuclear was cleaner than solar and wind. And I was like, you don't have to tear down solar and wind to make a case for nuclear at all, it can make a case for itself. There's some compelling arguments there, but you don't have to tear things down.

ML  Right? You know, wind and solar are headed for $20 per megawatt hour, maybe even $10 bucks per megawatt hour, they're getting really, really cheap, but they're intermittent. And therefore, you know, they're really cheap, but you have to spend some of what you save, or some of the cheapness gets spent on making up for the fact that they're difficult. Okay, that's fine, but that's their proposition. Then nuclear is much more expensive - much more energy dense, it doesn't take up the same land area - but on the other hand, you've got a supply chain, and you've got proliferation, and you've got waste, and you've got the cost, and so it has its own issues. Can't we... can't we all just get along nicely?

MF  It sounds like your viewpoint then is diversification, is kind of a key point?

ML  Oh, diversification, definitely. Because actually, I'm a resilience hawk. And, as I say, there's a fleet failure risk. If every single wind turbine was the same make and model using the same software, that would be a risk; it doesn't matter how well it performs, same with a battery, same with a car, same with a nuclear power station. And same with, you know... if we were totally dependent on I don't know, the same HVDC technology, the same interconnectors: we need to risk diversify. And, you know, the Ukraine invasion shows, beyond a shadow of a doubt, the need to diversify. And some of these things can't really be predicted. France has threatened to cut off the power to the Channel Islands because of a fishing dispute after Brexit. Well, right now, we're very friendly with Europe. But you know, we kind of have to have a Plan B as well. Not a fully-formed Plan B. But what we don't do is become fully 100% dependent, or even 50%, dependent, on something that we can't control. You've got the same examples in the US.

MF  Taking it back to a broader picture of the consumer and business to business kind of point of view, what kind of things do you think that policies are having today that are helping to push all of this forward? Because the IRA here in the US seems to have had triggered a bunch of stuff to happen; it seems to have triggered Canada to make some changes as well. So, it seems to be having kind of a profound effect, at least here in the US.

ML  Oh, that's absolutely right. I mean, you guys have thrown the very largest rock into the pool, and the ripples are kind of interesting. And I just did a podcast with somebody developing a project to methanate hydrogen. So, green hydrogen, and then capturing CO2, combining them as methane, and then shipping them over to Europe as the equivalent of LNG. And the ratio between the subsidies from the IRA that that business model would collect relative to the value of the gas. I mean, natural gas is $2 per million Btu in the US, and let's call it five - at the moment, it's ten, but normally, it's five - in Europe, and the subsidies are like $60. And that's because of the IRA, the Inflation Reduction Act. So, that is definitely a large rock in what was previously a fairly placid pool. You know, in Europe, we've done things differently. I mean, the EU has got a carbon price, a lot of regulation, a lot of you might call it central planning. The UK has split off from that, but frankly, is still kind of doing the same things. Japan, I did a lot of work recently. They are, man, they are hydrogen mad in Japan at the moment in terms of... They've committed to 2050, but when you look at the plans, it's like, hydrogen for this, hydrogen for that, hydrogen for transport.... And of course they don't, they can't interconnect electrically with their neighbours. Well, their biggest neighbour, China, they're not - correctly - they don't want to become dependent on. So, I think policy is still pretty heavy-handed. It is driving the sector forwards. Not exclusively - economics is doing a lot, and security concerns are doing a lot. And the IRA... that IRA story is not finished, just because it's so distorted, something has to happen there.

MF  Yeah, I mean, that's on a b2b kind of view. Even on a consumer point of view, in the US it's lengthened the time that you can get that 30% tax rebate for getting solar on your home, geothermal systems, EV credits.

ML  Heat pumps. The IRA provides a big slug of money, $4 billion plus for heat pumps.

MF  Yes, it's massive. I'm a big fan of heat pumps, I think we should be heat pumping all the things. It just makes so much sense. I do have one question about Japan, because that's been nagging at me - why are they so in on hydrogen? Is it because it's like their only way to do energy independence? Is that the way they're viewing it? Like, what is it with hydrogen in Japan?

ML  So I called hydrogen earlier a faith-based technology, I think in Japan, there's an element of it being a saviour technology. You know, 1973, the first oil crisis, caught Japan completely exposed, right? Because they don't have the domestic supplies themselves. And then along came these brilliant engineers, and brilliant everything, and they were like, you know, hydrogen can actually save us, we can actually do nuclear electricity, make hydrogen, and we can then run transportation, and we can do all the things, we can run our economy. So, then the oil price dropped again, and that was the first hydrogen... I don't want to call it bubble, but you know, boom-bust cycle. There was another one around 2000. Again, Japan heavily involved. But that was almost like the tech, that was driven by all of the tech and the internet, and so on, more than energy security issues. I think what's happening in Japan, though, is some of those original hydrogen - I don't know if I'm allowed to say young Turks, the expression for kind of the brilliant, the most brilliant young thinkers and drivers - they're kind of now still running the ministries, and they're still very, very influential. And, they haven't kind of caught up with the fact that batteries just had this huge spurt of development, and so did renewables. And so actually, there is an alternative for Japan, which is a lot of offshore wind, as much solar as you've got space for, some geothermal and so on, nuclear, switch back on the ones you've got, maybe do some others, and import hydrogen just for the one you mentioned, which is long duration storage, hydrogen or ammonia for long duration storage. There is this solution, but they're almost... it's very hard for somebody to tell these - I don't know if I can say this, like older Young Turks - that it's time to kind of move on. And you'll get things like, they'll say to me, Michael, if you're right that fuel cell cars are not going to be a thing, you don't know how many jobs there are in Japan associated with the internal combustion engine. There was an announcement yesterday about these, Yamaha and so on, Honda, getting together to do small combustion engines, hydrogen combustion engines for motorcycles and other things. And partly, it's like, well, if you don't do that, what do you do with all those jobs? But you know, physics doesn't care about jobs. If the battery solutions just going to be better physics and microeconomics and so on, if that's the better solution, those jobs are going to go. They can go to Chinese motorbikes, Chinese cars, European cars, or they can go to Japanese-made ones, but you can't just hang on to them, because it would be like a better universe if the laws of physics were slightly different.

MF  It's funny, because it's like EVs seem to have taken on, have captured the zeitgeist, and it's clear that for passenger cars, that's where it's going. And for me, it's so sad to watch Japan... we're passing them by, and they're still holding on to that hope for hydrogen for cars, which to me just looks so foolish. In five years, it doesn't look like it's gonna be good for them.

ML  I agree. And, you know, I've been on calls with groups of Japanese businesspeople. And I say look, I'm a huge friend of Japan, but I look at it, and you want to have a car industry around fuel cells, which people are not buying, right? That's a fact, look at the data, they've been around long enough to know if they're going to work or not. You've got steel you want to make based on imported hydrogen? Well, yeah, but you know, you're going to import the hydrogen from Brazil and Australia and the iron ore from Brazil and Australia, then you're going to do something... That costs a huge amount of money and then you're going to compete and try and make the steel and compete with those source countries, it's not going to happen. And then you've got ammonia co-firing, or synthetic methane... you're going to be energy uncompetitive on a grand scale, it's really scary. Slightly similar for South Korea, to be honest, and Germany.

MF  It's funny you bring up Australia because that's one of the countries I keep looking at. Every time, no matter what the topic is, it always seems like Australia is doing something really interesting with solar, or energy storage techniques and batteries, different kinds of batteries, and hydrogen systems. They seem to be kind of on the forefront. Do you see that as well?

ML  Australia is an interesting one because, yes, they are doing interesting things, and they've certainly got the resources to do that. But they're coming from a pretty troubled starting position. This is a country that has got natural gas, really cheap, natural gas. It's got uranium, it's got coal, it's got sun, it's got wind. It's got fantastic universities, full of smart people, in fact, Professor Green, one of the real pioneers, real, real pioneers of solar technology. And they've got lots of money in savings, because they have these pension funds, the superfunds, so they've got cheap money. They've got absolutely everything, and yet, they have some the most expensive electricity in the developed world. So it's like, how do you do that? That takes real political talent to get it wrong that badly. So I think they're coming good, and it's a really interesting test case, what they can do, there's no question, worth watching. But I worry about their... And their politics is also this polarization that we talked about in hydrogen world, they've got that between the kind of coal-ites and the clean energy-ites. I'm not sure where it is today, but a couple of years ago, it was really bad.

MF  It's funny, because whenever in my videos, I talk about my experience with solar in my home, I get so many comments from people in Australia just shocked at how much I paid for my system. Because they're always like, oh, to get a 10-kilowatt system here is like incredibly cheap. And I've always been like, why is it so cheap to get solar there and so expensive over here?

ML  Yeah. So, talk about your home, I'm really fascinated. Because I've seen you, you've sort of popped up here and there and I know bits of it, I know bits of the story. But tell us the foundation story, and tell us what you've got actually powering and in your home?

MF  Yeah, well, my current home, I have solar panels and a Tesla Powerwall. But I'm building a new net-zero home, where I'm kind of practicing what I preach, I guess? I've been talking about all these different technologies and how we can make our homes better, so I'm building a home out around that. So, I'm trying to build a super energy efficient, super insulated, super airtight, Passivhaus-level quality home that's going to be powered by solar and have home energy storage, so that I can try to get to that net-zero energy over the course of a year on my house. It's been quite a journey, I've been working on this now for a couple of years, and I'm hoping to be able to move into the new house in the next few months. But it's been a learning journey along the way, because I've never built a house and never gone through this. So, it's been an interesting experience.

ML  And where are you in the US? Let me get an idea for what's your weather system?

MF  I'm in Massachusetts.

ML  Okay. So, it can get really hot, but it can also get really cold. And it can get really kind of blow as well, right?

MF  Very, yeah. In the winter it gets... I'm gonna talk in Fahrenheit, so I apologize to anybody that's maybe in the Celsius camp. But It's like zero degrees Fahrenheit, ten degrees Fahrenheit, and then in the summertime, it can get up into the 90s. So, it can get pretty, pretty warm and steamy here and humid.

ML  So I was at Harvard Business School, so I know these conditions well, and I can translate it into Centigrade. That's not very many centigrade, and then very many centigrade during the summer. I mean, we're talking about, zero would be like minus 20s, and then up into the 40s during the summer, so it can really get two extremes. That's really interesting. But now, you said that you're going net-zero during the course of the year, so you're not really going zero?

MF  Not going truly zero because I'm not going to go off-grid, where I can totally supply all of my power on my own, every month of the year, because in the middle of like December and January, here in Massachusetts, I would have to have such an outsized solar panel system to be able to do that, it just doesn't make sense, financially to do that.

ML  So, you'll be fine. So, you're connected to the grid, and you'll be fine as long as somebody on Massachusetts PJM electricity market, as long as somebody that has got some gas generators and has got some nice, safe, resilient natural gas, you should be fine, right? And then you'll dump some solar back in, maybe some wind, when it's convenient to you? It's not really... it's kind of a bogus, zero, right?

MF  It's not a bogus zero... It's one of those, I'm trying to obviously offset some of my costs over the course of the year, and it's also then, at same time here in New England, it's like we can lose power in the middle of winter, so having an energy storage system for the middle of winter in case powerlines get knocked off and I'm not producing my own solar I can at least have energy that can kind of carry me through those short blackouts that might last half a day or a day or something like that.

ML  So, I'm being cheeky calling what you're doing bogus zero, because the way I see it is this: what we should be doing, on the consumer level, we should be doing what we can, whatever we can, right? But there are certain things we cannot do, right? And then what we need to do is act systemically on our politicians or you know, maybe in the work that I do with investors or with innovators, and try and create the solution. So, you can only do what you can do, affordably and conveniently and technically. But the bit that needs to be filled in then is pushing your representatives to say, well, I don't want gas to be used during the winter when the wind drops in Massachusetts, let's find some other... I don't want natural gas, let’s find some other solution. So, it's kind of like a two-level thing that we need to be doing, I think.

MF  Yeah, I agree. I heard this term for the first time just recently: a prosumer. As somebody with solar panels on my home, I'm a prosumer; I'm not just consuming, I'm also contributing to the grid. So, in the summertime, I'm producing a lot of extra energy that goes in, in the wintertime, I might use a little bit more. I'm doing my part for the community, being part of the grid, helping to supply extra energy for the utility. But also, here in Massachusetts, I'm participating in a virtual power plant system, which I find those systems super exciting, because it's like the utility can actually tap into my battery, along with hundreds or thousands of other home batteries, to help do peak shaving during the summertime - when people come home from work and air conditioning is running, and they're cooking their dinner -it can help save the utility energy. So it's kind of this kind of nice, give-and-take being kind of a prosumer on the grid that I really like.

ML  I think it's a really nice thing to... Not just nice, it's beyond nice, it's really interesting. The economics of it is great, right? Because it's all about using those assets better. When you're producing solar, and you don't need it, give it to somebody else who's going to pay for it. And so the asset utilization, it should make enormous economic sense. The issue, though, is that we are, we in the developed world, use far more energy than we could produce from the rooves... I mean, I don't know how big your place is, but I doubt that it could produce enough.... So, the "pro", the produce piece, is much smaller than the consumer, or the "sumer" piece, and you are a net energy importer, I'm afraid, Matt, probably, almost certainly. And that leaves the timing issue that we talked about, that you may produce it at a wrong time for when it's needed, but also that there's a net import. I mean, I guess, if I was trying to be difficult and nasty, I would say you're kidding yourself, right? Because you produce it at the wrong time of the year, and you don't produce enough. And that's why I think it's really important that we also bear in mind, we have to act at the systemic level.

MF  I agree completely. That's part the reason why, when you talk about solar, energy storage is a must, for any kind of solar installation or wind kind of thing. But it's like on diversification, I'm kind of in that same camp; we need more nuclear, we need more wind, and I'm talking grid-scale, I'm not talking about for homes. So, a combination of me as a prosumer, with changes we're making at a more systemic level broadly, I think that's the way that we move our energy systems forward. It's not one or the other, it's got to be both.

ML  You didn't give us the origin story that I asked for, right? Was it like one amazing gadget that you found? And you thought, hey, you know, this is so fantastic, and then you got drawn in? Or was it... what came first, the idea of getting to net zero? Or was it a gadget, or was it a... where does it all come from?

MF  Okay, this is the slippery slope that I went on. It kind of started with, I was fascinated by EVs, wanted to get an EV. And so it's like, when you have an EV, suddenly, it's kind of like, oh, well, I don't have to pay for the electricity necessarily that I'm putting into my car, how can I offset that cost, because the car uses so much electricity, your electric bill goes up, how can I offset that? Oh, I want to get solar. Okay, then you get solar, it's like, oh, well, I'm putting all this energy back into the grid that I might not be getting my full credits for, how can I take advantage of that? Oh, I want to get a battery now, because I want to store as much of the energy as I can, so I can use it. So, it just starts this slippery slope of finding the best way to make use of the energy that you have, and what you need, as well in your house, you're like, oh, my gosh, I'm wasting all this electricity, and then you want to track how much energy is being used in your house. Like I have a smart electric panel, because I became obsessed with knowing where's the electricity going in my house? I want to know how I'm using it.

ML  I wanted to ask that, you know, is there somewhere like this kind of nuclear power station control room full of screens where, you know, everybody else in the household goes to bed and Matt sort of pulls up his chair and he's got his donuts and beer or whatever, and you sit there and you start looking at all these screens?

MF  I do have a dashboard that I created, I have a smart home, so I have a dashboard that I created. I can look at my water usage, my energy usage, what circuits are using what, I can see everything in my home, where it's going, what it's going to. And it's helped me track down things, like I had a rogue dehumidifier that I had set up to run in the garage to keep it from getting a little too moist, and I realized it was running way more than I expected and it was wasting an incredible amount of energy. So, finding little things like that, that you can just adjust really quickly to kind of cut back.

ML  The stories you hear from people who have actually gone to the effort of trying to monitor... I mean, I met somebody who was really quite experienced in this stuff, and they started monitoring, started monitoring, and was actually mystified, absolutely mystified, couldn't understand the meter readings of this and that, and the other, and realized that his utility had been sending for years his neighbour's bills to him and his bills to his neighbour. And only discovered it when he couldn't get rid of those rogue sources of demand, which were not, they weren't in his house, they were somewhere else.

MF  Wow, that is crazy.

ML  So, let's do that bit where we kind of say, okay, we've talked about 20 years ago, and these cycles, we've had the clean tech cycle, the renewable cycle, the EV cycle, you've pulled them all together in your home. And we are where we are with the IRA and so on. But what about, you know, what happens next? You've got another five years' work probably snagging your new home. But where will the world be in five years, then maybe we can look at 20 years? What do we think?

MF  Oh, wow, that's a tough question. In the next five years, I think there's going to be a big surge of how much people want to provide for themselves. I think there's a desire for energy independence. So, I think there's gonna be a lot more interesting products for the consumer on the market for batteries, and energy storage systems that you can add not just to a house, but to an apartment. I think there's gonna be a growing number of those kinds of things that people can get. That, to me seems like where it's going to be going, energy storage seems like it's gonna be a big, big key player, because you can cost-shift. Like time of use rates for your utility: you have a little battery that you put in your apartment, and you can help kind of change when you're using the electricity and where you're pulling it from the grid to save yourself energy in your bill, which helps to shift when the energy is being used from the grid, which helps the grid and its stability. There's like this benefit that comes from energy storage. So, I think in the next five years, that's one of the things I'm kind of keeping an eye on.

ML  And do you think people will be doing this stuff for themselves? Or are we going to see lots and lots of new service providers; people saying, look, I get it, and I want it, but you know, I'm busy. But oh, look, somebody's knocking on the door, putting a flyer through and you know... Will we have new service providers that are user friendly, that take other people on the journey? Or is it just a whole bunch of Matts kind of in their control rooms?

MF  Right now, I think it's a whole bunch of Matts. But I do see a point at which... There could be utilities might provide some of this stuff on their own, because it helps the utility out. So, they could basically like lease you this energy storage unit they put in your house. And for me as a consumer, it costs me nothing, they maintain it, if something goes wrong with it, they'll fix it or replace it. So, I think there's gonna be a point at which some of these utilities or third party services that layer into it are going to become bigger and bigger, for sure.

ML  I think heat as a service, but it's really going to be kind of comfort as a service. You know, in an ideal world, because my house is too complicated. By the way, I also have a crazy house, the one I'm in right now, which has been written up in The Economist and The Financial Times. It's not net-zero, but I did twelve innovative technologies. And the punch line is that I'm actually just about to rip half of them out because it was way too complicated. And we have solar and we've got a heat pump... We've got solar and a heat pump, we've got to a fuel cell - yeah, I'm the guy with micro-CHP, oh, yeah. And passive ventilation, which is great. But anyway, some of its coming out, we're just going to go to a single heat pump. Shall I give you my five year forward look?

ML  What's your five-year look?

ML  Well, so I don't know if it's quite a five-year, you know, maybe it's a five to ten, that window. But I have - and I've written about this, I still write for Bloomberg - the electrification of heat. So, we've seen renewables really start to take off and do one of these curves, right? Sorry, for those on the listening on the podcast, I'm sort of pointing at the ceiling. We've seen EVs doing a similar thing, really break out of the kind of 1%, 2% going though 5%, 20%, and beyond. I think electric heating is the next one that's going to pop. And I don't mean just in the home; I do mean heat pumps, we see that already, growth rates are of 30%, 40% in Europe, and substantial growth worldwide, but also in industrial heat. Because the more you look at how do you solve industrial processes, the more you realize that it's just so much more elegant to do it with electricity. Not just in terms of it can be clean and net-zero but also, the processes become more controllable, you find all the energy efficiency opportunities. Give a man a fish, and he'll heat up the whole kitchen and half the house frying it, right? You give a man a microwave and a fish, and it just heats up the fish. The difference is gas heating versus microwave heating. So, we're going to see that I think right across the economy. And so, the thing that I predicted is half a trillion-dollar market for electrical... heating and cooling could take, you know, five, seven years. If it's just heating you're talking about it'll probably take more like 15. But it's all about heat is the next frontier.

MF  Do you think thermal energy storage is part of that as well?

ML  Oh, yeah, definitely. I think thermal energy storage absolutely is interesting, because it's a lot easier to store warm water than to store electricity; a lot easier, a lot cheaper, a lot safer. And, you know, hot water is something we have everywhere, right? We have warm water in pretty much every home, every shopping mall, it's all over the place. And it's completely an underutilized resource. And we're going to digitize - that's another, you know, easy forecast - we're going to digitize everything. The stuff that happened to media and telecoms, when I was working in media and telecoms 20 years ago, that's happening now in assets, and every single asset is gonna have its own kind of - I was gonna say its own website, but - its own IP connection. And that opens up opportunities for heat storage. Not just because we can do thermal batteries using phase-change materials, but just using the heating of water, or the heating of our homes, as a flexible storage resource. 100%.

MF  It's awesome. Thermal energy storage has captured my imagination over the past six months or a year. It seems like that's a sector that's going to kind of blow open, from everything I'm seeing.

ML  So, not only do I have a micro-CHP fuel cell in this house, I also have thermal storage. I've got some phase change materials in the walls of the top few floors.

MF  You have the energy, the insulation?

ML  Yeah, so I'm channeling my inner Matt here talking about my attempts to do a very, very low carbon house. So, what I've got... In this house, the top two floors get very hot. Even in London, it does get into - not into the 90s, but into the 80s in Fahrenheit - it can get to 30 degrees. And the top floors, the sun beats on them. So, I thought phase-change materials: you've got this wallboard, with these phase-change materials, these micro-beads. They melt when they get hot, so they absorb lots and lots of the latent energy of melting, that they absorb. And then during the night, you throw the windows open - it cools down and you throw the windows open - and those little micro-beads re-solidify, and you tune it to stay at 21 degrees. So, the whole thing should stay at 21, right? Shall I tell you what the problem is? Throwing the windows open, in Notting Hill Gate in London, is not a thing. Because you've got opportunistic burglars, people can walk along the roofline. And so every window has got two locks on it on each side, four locks. Opening the windows, throwing them open, takes 45 minutes, so you don't do it. And so, you never cycle you just end up... So, there you go, that's thermal storage 1.0 fail for me.

MF  I've been wondering how that kind of insulation works in practice, it sounds really promising. But in practice, it may not work for every situation.

ML  I think if I had better ventilation. Because what I did, I did a vast amount of insulation, because I saw the problem of, this is an 1865 house, it's leaky, I'm going to close every air gap, and I'm going to insulate the front and back. I'm hoping that the neighbors are adiabatic, i.e. the same temperature as me. But I insulated huge amounts, closed all the air gaps, and of course the problem - and with climate change it's going to get worse - is the time when the house is horrible is not in the winter. In the winter, it's fine, but it's the summer. Not enough ventilation, and so the temperature soars and it gets stuffy and it's horrible. And so, if I had good ventilation that I could purge through, then maybe the phase-change will sort of come in, and that's one of the things we're doing in the works that are just starting, we're just about to start works to fix some of this stuff.

MF  Right. That's funny. It's good to hear your experience with that, because I've been fascinated by how it actually plays out.

ML  Yeah, I think it's promising. I mean, there are some companies now making thermal storage in a box. I wrote about them in a recent piece for Bloomberg. tepeo in the UK, there's one called Sunamp up in Scotland, and they do these things... Because when you have a heat pump, you want it basically to run very close to 24/7. You want to drop the temperature right down that it produces because then it's very efficient. But then if somebody wants to run a bath, and it's like, whoa, where's that gonna come from? You have to put a huge heat pump in to run a bath in real time, but then it's not efficient, because then it's cycling on and off - it's too big, then it's off, and then it's too big, and then it's off. So, what you can do is actually use one of these thermal storage systems to sort of charge itself up, trickle charge, and then when you run the bath, boom, there you go, you've got your hot water, it can immediately produce hot water at 45 degrees, whatever you need.

MF  In a very small, compact box, I'm assuming?

ML  It's pretty small. I mean, look, you're in America, so you would sort of laugh if you saw even the size of the bathtub, probably you'd think that that's inadequate. But yeah, they're pretty small. And of course, they scale. Everything's modular, everything can scale. So yeah, these things that could handle the hot water requirements of a house... Or, the other thing that you can do is load-shift between when the electricity is cheap at night, and when it's not, maybe in the morning or the evening or midday when it's all solar, you can charge these things up. And yeah, they're about the size of a small refrigerator - an inadequate American refrigerator, or a normal European, small refrigerator.

MF  In America, we like things big. Yeah.

ML  Well, you'll get big thermal storage, then.

MF  Exactly. Well, this has been a really great conversation. Is there something else that you want to touch on?

ML  No, it has been really interesting. I think it's just sort of bouncing around these ideas of, you know, what can the consumer do, and what has to happen at the systemic or the energy system... I think it's really, that's such an interesting space to be operating in. I don't know, I'm sure we could talk about financing models, consumer finance model. There's so many other things we could talk about - anything else you think about, that you work on, that you've not shared?

MF  Oh, that's actually a good thing about the financing. Because I've been going through that myself, of financing my new solar and energy storage system at my new house. And it's doesn't seem very consumer friendly, from that point of view. Because one, it's expensive. Two, most of the incentives are things that are like tax rebates that come later, and only benefit you if you earn a certain amount of money every year. So, there's these incentives that don't seem to be as equitable as they should be. Is it the same thing that you're seeing where you live, and in other areas?

ML  So, right now, we're just traumatized because we've had this incredible energy price spike, because of Putin's invasion of Ukraine. And also, by the way it was happening, it was starting to happen at the back end of COVID, as this kind of wall of pent-up demand hit these broken supply chains. So, right now, it's kind of like, subsidies all the way down in energy in Europe. And so, that's kind of stifled some of the innovation that I would like to see, that I would hope to see, on the consumer side of energy solutions. But you know, I'm on the UK Energy Efficiency Task Force, I'm not on the domestic side of it. But there's definitely a whole workstream around innovative finance - green mortgages, green savings products - and I think that's really important. It's really fascinating: I could invest, as an individual, I could invest, I could even get a tax-advantaged investment, in a bundle of energy efficiency assets, right? I advise a bank - SDCL - that produces such bundles. But I couldn't invest in a tax-advantaged way in my own energy efficiency in my house. That's just wrong. Right?

MF  Yeah, that seems backwards. The other thing is like, you have the incentives, when building a new house, there's all these incentives for, the more energy efficient you make it there's these different rebates you can take advantage of. However, getting a loan to build a house is a completely different thing, because most banks don't understand, oh, you're building an energy efficient home, it might be worth more than a standard-built, code-built home. And so finding a bank that understood that was actually a huge challenge.

ML  Did you manage to find one?

MF  Yeah, we found one, we got one, but I was surprised at how many banks don't seem to quite get it.

ML  But there's so many distortions here. So, somebody will build a really, really nice kitchen. And they'll say it doesn't matter that it costs $50,000, $100,000, because it's adding to the value of my house, right? And then you say, well, why don't you spend $50,000, $100,000 on really making the most extraordinary, energy efficient house, have no utility bills forever. And they'll be like, oh, no, that's a cost.

MF  Exactly. That's exactly what I was saying. Because it's not showy, it doesn't add value to the house, when it's like no, it does add value to the house. You're not gonna have a utility bill.

ML  I'm just keeping one eye on the clock, and we said we tried to be off, we could do this for hours, I'm sure. Let's do the 20 years forwards thing, just very briefly, though. Optimistic or pessimistic?

MF  I'm optimistic. I'm blown away by all the different advances I keep seeing happen. And yes, not all of them are going to succeed. But there's so much that's happening, there's so many brilliant people and people around the world like yourself, and people that are advising on policy changes that can really kind of push things forward. I am optimistic about where things are heading. I feel like I'm in the minority, though. What about you?

ML  Well, so I would say I'm mainly optimistic, but nuanced in the sense that climate change is happening, we are seeing bad effects. So, I am enormously optimistic that we can... we've bent the curve to the point where emissions are essentially flat, and have been for about a decade globally; not many people know that, they kind of want to believe that they're still soaring upwards - emission. Concentrations are still soaring upwards, right? But the emissions are flat. And I think we can bend the curve, and we can probably land this thing at about two degrees of climate change. I think 1.5 is out the window. We're seeing damage, we're gonna see more damage. But broadly speaking, I think we can end up with a planet that is recognizable, with an economy that is delivering human progress and continues to do that. So, I am very optimistic. But at two degrees, there are going to be vulnerable people who have suffered and are suffering, and we need to also dip into the justice pockets and help those people, because we can't... Just being an optimist and saying, there we go, we're done, it'll all be fine, I can't do that.

MF  That's a really good point, you're making. For those of us that are not going to be as pinched as other areas of the world, we need to help those other areas of the world out.

ML  And those in our own part of the world who do not have the ability to protect themselves from the price spikes, and from the potential climate impacts and so on. So, it's a big challenge, but I am optimistic, yeah.

MF  Okay, so we're both kind of, sort of in the same camp, you got a little more of a nuanced take, which I like, that's great.

ML  Matt, it's a huge pleasure talking to you. This is great. I'll really look forward to putting this out on Cleaning Up. I don't know if we have to coordinate when it goes out. But I look forward to helping to promote both versions of this conversation.

ML  I really appreciate you coming on Still to be Determined as well, this was fantastic. It was great talking to you, too. You have such a wide array of knowledge; it was great to kind of pick your brain.

ML  Very good. Maybe we should do this again, at some point we'll revisit and see what how much we got right, how much we got wrong, what we missed.

MF  Sounds good.

ML  All right. Thanks very much. Have a good day.