Top Trends to Watch in 2025: Clean Energy Technology

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Hill Vaden:

All right, welcome back to EnergyCents, an S&P Global Commodity Insights podcast covering all topics on the intersection of energy and finance. This is your host, Hill Vaden, here with your other host, Sam Humphreys. Sam, how are you doing?

Sam Humphreys:

I'm good, thank you. Happy New Year, I think we should say, and welcome back.

Hill Vaden:

Happy New Year. Yeah, I guess we're saying this still in the old year. Provided we haven't jinxed anything, we can make it two weeks. We'll be in the new year, and we've got an exciting topic to start the new year of Energy Sense today, which is lists. We're talking about the top 10 list of clean deck for 2025. People love lists.

Sam Humphreys:

They do.

Hill Vaden:

I got baited into a list of most handsome celebrities.

Sam Humphreys:

I love those things. You can spend quite literally hours going through top tens of, like you say, celebrities, good-looking celebrities, or what's the best cat, literally anything, and I love them. They're filling up my feed now.

Hill Vaden:

The best cat.

Sam Humphreys:

Honestly, yeah. This maybe exposes too much of the algorithm on my social media accounts, but there's loads of cats that come up, and it's like best cat moment of the year sort of thing, top 10. Yeah, that's weird.

Hill Vaden:

Well, and some of it is that people always leave things off. It's all just for debates over coffee or drinks that Apple did its list of the best albums ever, and I think Miseducation of Lauryn Hill was number one, which great album, but I'm not sure I would've put it number one.

Sam Humphreys:

It was a bold move and got the desired effect, because everyone started talking about it.

Hill Vaden:

Yeah. Well, it's a big one for the celebrity one. Bradley Cooper did not make the list, which-

Sam Humphreys:

What?

Hill Vaden:

Yeah.

Sam Humphreys:

Who was number one?

Hill Vaden:

Some guy who is very symmetrical. His nose is perfectly symmetrical with his eyes, so it was a robot that kind of made those

Sam Humphreys:

It was an AI image.

Hill Vaden:

Right. But he's rumored to be the next Bond, and he has a perfectly symmetrical face. The guy, the Barbie guy, Ken, he didn't make the list either. I guess he doesn't have symmetry.

Sam Humphreys:

He's not symmetrical. If that's what they were going on, that's pretty narrow.

Hill Vaden:

Yeah. Nature loves symmetry.

Sam Humphreys:

Yeah, I guess.

Hill Vaden:

So we don't have a top 10 celebrity list or top 10 cat list, but we do have a clean tech list, and Sam Wilkinson and Edurne Zoco joined us for a good conversation. We go into 30% of the list, so there's a lot more that is going to be in the public domain for people to download and to read in their own time. Can you flag a couple of things to listen to?

Sam Humphreys:

Yeah. Without giving too much away, because we are talking about top 10 trends, I think the investment into clean tech, what we're expecting for 2025, is significant, and it's potentially overtaking upstream oil and gas investment, which is huge. The numbers we're talking about, again, I will let Edurne explain that, but it's massive investment, and whether or not that's enough or what we're expecting to meet those sort of renewable and climate goals, that is something that we do talk about and you should listen to.

China comes up a lot. One of the other trends was the oversupply that we've seen for particularly solar panels and solar PV, I think they're called, panels and what that's done to the markets and what that's going to look like in the year ahead. And then the topic that Sam was particularly interested in, which is battery storage, which is something that I don't think we've talked about an awful lot, but it is extremely important and what that is going to look like over the next year in particular and then the next five years or so. And what about you? What are some key things you wanted people to listen to?

Hill Vaden:

I guess just enough to get them excited to Google S&P Global Commodity Insights, Top 10 Clean Tech, and then download the document themselves to read all 10 of them, that this will be fertile ground for conversation in 2025, and I'm excited to watch it come into play.

All right, Sam, this is one of my favorite podcasts of the year, partly because it's an easy and a popular topic. We are going to be talking about the top 10 list for clean tech. And so Edurne and Sam, Sam was last year's guest for this topic, Sam being a repeat offender, I suppose, and Edurne, new on this topic, but this is a big thing for S&P Global Commodity Insights to do these top 10 lists on what we want to see in energy or what we expect to see in energy over the coming year. This version was the most popular podcast I think of 2024.

Sam Humphreys:

Yeah, that's right.

Hill Vaden:

So no pressure, Sam and Edurne.

Edurne Zoco:

You said that. My God.

Hill Vaden:

We're not going to list all 10, but for all of you listeners, this is going to be available in the public domain starting the week of January 13th with the full list. So Edurne, we're going to pick a few highlights, and the first highlight from the top 10, "Clean energy investments overtake upstream spending for the first time in 2025." That's perhaps a bold prediction. Can you tell us a little bit more?

Edurne Zoco:

Well, actually, this is our first trend for 2025, and there is a very good reason for that, because I'm sure it's going to be newsworthy. The reality is that clean tech investment should have surpassed upstream oil and gas investment in 2024, and the only reason why it didn't happen is because the reduction in cost in renewables, mostly in batteries and solar, was stronger than even anticipated, and also because we saw some delays in higher cost clean tech technologies like offshore wind or hydrogen and carbon capture. So actually, this should have happened in 2024, but definitely, even with increasing capital efficiency, is going to happen in 2025.

Sam Humphreys:

So Sam, hey, Sam, another Sam. Can you sort of tell us a little bit more about this? How is this investment going to be split? Is it biased towards certain areas of clean tech? Are we talking big investment in wind and solar more than anywhere else, or is it kind of more evenly split?

Sam Wilkinson:

The 2025 investment numbers, just to be clear what we mean when we say investment, we're talking about the cost of building these, whatever you want to call them, solar systems, wind farms, energy storage systems, that's what we're talking about when we say this. So the vast majority of it is still solar, and that's because more solar is getting built in terms of megawatts than anything else. And then it's closely followed by wind and energy storage, which is probably the fastest growing piece of the puzzle.

And then there's a bunch of other things as well. Obviously, emerging technologies, if we can still call them that, carbon capture, hydrogen production, geothermal, CSP that make up another kind of small chunk, but the bulk of it is definitely solar. And in terms of regions as well, which is important, China accounts for still a huge proportion of the build out in terms of megawatts of most of these technologies. Roughly speaking, 50% for solar, 50% for energy storage, probably something similar for wind. But actually because prices are so much lower in the Chinese market, then the overall investment share isn't quite as high when you look at it in terms of millions of dollars.

Edurne Zoco:

So here, you are looking for actual numbers. Our current estimation is that around half, so 50% of the clean tech investments in 2025 will be coming from solar, but solar is going to be accounting for around two-thirds of the total gigawatt install, so I said, because it's the lowest cost technology, so it will be half of the investments and two-thirds of the gigawatt install.

Hill Vaden:

And it sounds like there's perhaps, I'm going to say perhaps, some risk around that because of the improving cost of solar manufacturing. Is that the thing that concerns us more than the installation that we're going to see cost declines?

Edurne Zoco:

We have a lot of things to concern. It's not all rosy on the solar space. Of course, I think solar has reached a situation where a further reduction in CapEx is not going to warrant you to have more solar deployed. There are other things that need to be taken into consideration, like expectation for PPA prices, grid enhancements and saturation, and, of course, that we need more storage. So that's why the storage are also other trends. But yes, I think CapEx and cost reduction, further cost reductions of solar, will not necessarily help to have more solar deployed, especially mature markets where there is already a lot of renewables. It might be a different case in emerging economies or emerging markets.

Sam Wilkinson:

And if you look at another technology in this calculation, which is storage, Edurne just said that, as the cost of solar falls, it doesn't necessarily in the next year or two mean more solar is going be installed. But there's something kind of different happening in the storage sector where we've seen other very impressive reductions in cost when we look at batteries. If something happens in the battery sector, whereby as the cost falls, the possibility to install longer duration systems opens up, which means more revenue opportunities. And actually, that then kind of moves people towards installing larger systems, longer durations, more batteries, and actually, the overall investment gets stronger as a result. And I know that's a bit unintuitive to think about, but unlike solar, with batteries you do have that relationship that lower costs means more is going to get built and greater investment in the sector. And that's very much the case, right now.

Sam Humphreys:

We want to come back to that point, because I think that's one of the trends that you pick out a little later on. But so just going back to investment, we've talked about China, and you're saying accounting for more than two-thirds of the power within these clean tech investments. So where else are we looking at? Who are the other big regions that are investing in this, and how efficient is that investment in comparison to China, which is doing quite well?

Edurne Zoco:

Of course, China is number one for both manufacturing and installation of clean tech technologies. Then the other key regions are Europe and the United States, and then India is growing both on the manufacturing and the deployment state. In terms of capital efficiency, again, China, as Sam was saying before, is the region with the highest capital efficiency, the lowest dollar or RMB per kilowatt install or kilowatt-hour install. And then we will have Europe in between with higher cost but kind of aligned with China, cost in China. And then the US is by far the region with the highest cost for clean tech technologies, and there is a number of reasons for that.

Hill Vaden:

And how about solar and wind and batteries are perhaps more at scale or commercial than some of these other ideas? I know The Note expects increased spending on some of the technologies that are perhaps still emerging, if that's the right word I think Sam used a little bit ago. CCUS, hydrogen, some of these other clean tech technologies, do we see more spending going into that in 2025 than 2024? Sam?

Sam Wilkinson:

Okay, I wasn't sure if you were aiming that question at me, and I was looking, hoping [inaudible 00:12:07]

Hill Vaden:

I was looking at you on Teams.

Sam Wilkinson:

My comment would be yes, they are definitely going to be more in 2025 than they were in 2024, which is the direct answer to your question. There's still not going to be a significant proportion of the overall investment number that we're talking about here, though. I don't know if you've got the numbers to hand, I'm guessing you have, but I'm certain, and let's put my guess to the test, that we're talking about 5% to 10% of that is not solar, wind or energy storage.

Edurne Zoco:

Yeah, so I think, as Sam was saying, investments in hydrogen and CCUS will grow in 2025. These technologies are growing as they mature, but the reality is that there were very big expectations in the market that might not have been the most realistic. Also, in the case of hydrogen and CCUS as well as offshore wind, there were the expectations that cost would be lower than they had been. Everybody is expecting that cost might not be decreasing at least until 2030, and of course, this has kind of hampered and created a lot of challenges for some of these projects of the pipeline to move on. But having said that, we are seeing significant progress in some of the projects around CCUS and hydrogen that have a clear business case, mostly around ammonia, and then it is for this reason that we are seeing some kind of cleaning of the pipeline and some of these projects moving ahead, not only for 2025 but, of course, for the rest of this decade.

Sam Humphreys:

So I'm going to ask quite an ambiguous question. Is this enough spending in this space to meet the climate goals that we have in place for most of the world by the 2030s, 2035? Is this where we're expecting to be, or were we expected to be spending more on this at this point in time, if that makes sense? I don't know if I've worded that well.

Sam Wilkinson:

One thing I can tell you, which is possibly not the answer to your question but is at least relevant and interesting, and nothing to do with our top trends at all, is that there was recently an announcement, quite quiet, but it was announced, that there was a global energy storage target at COP 29. So they announced this 1.5 terawatt global energy storage pledge, I think is the correct word. Interesting thing is unlike renewables, which was announced the year before, there was this tripling renewables, the energy storage forecast that we're currently producing, it suggests that that target will not be met.

So we went through the exercise of actually splitting up this 1.5 terawatts into the, well, allocating it to regions. We did that based on electricity demand. And what you find is that a lot of the established energy storage markets, some of the key markets in Europe, China, Australia, they are all on track to exceed their share of the target if you do the calculation that way. But there is a huge gap in what people would call the rest of the world. So this is emerging markets, interestingly the US, Latin America, where if that target was to be met a lot more investment is required to get us to that.

But I'm only talking about energy storage here, because the piece of analysis that's sitting on my desk right now and we've been talking to clients about a lot, I think in general, a lot of the renewable build out is definitely on track against the kind of climate 2030 targets. I don't think we're in a position right here today to say what that means in terms of temperature change. I don't know. Edurne, maybe you've got something else to add on that.

Edurne Zoco:

I think on the electrification part, things are progressing further. There is still a gap, and we are not even able to reach the 2030 target, but I think on the electrification and the electron part, we are doing closer to what is needed. The issue is more around the reality that emissions are growing every year, and that's not only because of the power sector. There are other sectors that are contributing to this, and there is where a lot more effort needs to be done in order to reduce emissions from high traffic sectors and transport and agriculture. So yes, I think in general, there is still a lot of room to cover or to catch up. Every year, we do a bottom-up outlook for carbon capture and storage, and again, the result for this year is that we are really, really far away from both carbon capture needs by 2050 and from carbon removal technologies needs. So there's still a lot of work to be done.

Hill Vaden:

So Sam is determined to talk about energy storage. So we're going to jump to what I think were numbers six and five in your top 10. So Sam, we'll start with number six, but, "Long duration storage set to surge in 2025 as governments and grid operators prioritize energy resilience." You've already introduced energy storage and some of the battery technology that is moving fast. Can you talk a little bit about number six here on our list, and why this is so important?

Sam Wilkinson:

Yeah, sure. No problem and apologies for hammering on the energy storage story relentlessly throughout this podcast, but it's a topic that I think is important. So long-duration storage is a kind of piece of the energy storage story in that for many years, there's been a recognition that a low-carbon world, predominantly powered by solar and wind, has to have some sort of long-duration storage to make up for the times where for a long period of time, there's no wind and no solar. It's been kind of widely documented in the UK and I think broader Europe over the last few weeks that we have had classic terrible British weather, zero wind, zero sun. It's gray, dull, terrible.

Sam Humphreys:

This is so true.

Sam Wilkinson:

And as a result, the power prices, one of the guys in my team actually has recently moved on to one of these dynamic power price tariffs where you literally get a different price for every hour of the day, and his power prices are sky-high because there's no solar and no wind, and so he's kind of making his family freeze as a result.

Edurne Zoco:

Did that improve climate change? Nothing.

Sam Wilkinson:

Sorry, I've gone on a bit of a tangent there, but the point is we do need long-duration storage, right? And my poor colleague's family can definitely attest to that. And as a result of this idea that we know we need it, there's a lot of people lobbying for it, they want policy change. There's analyst companies producing charts that suggest that we're going to have unbelievable amounts of long-duration energy storage, these kind of hockey stick or banana-shaped graphs that analysts love to produce. But the fact is that long-duration storage just doesn't make money today. I'm going to make more money if I build a two-hour battery than I am a 10-hour battery in terms of return on the cost, because the various revenue streams are in place to incentivize batteries, whether they were meant to incentivize them or they just do as a kind of byproduct. Just don't incentivize me to build a longer-duration.

And so there's a lot of governments, grid operators all around the world now stepping in to specifically procure these systems beyond there being an organic business case for them. They're just mandating that we need them, and they're tendering for them. So in the context of our paper and the general idea of what we talk about, long-duration storage is greater than eight hours. Some people will tell you it should be multiple days, and they're probably right, but in terms of a definition, that's what we talk about.

And in the past, up until the end of 2024, we're talking about just over a gigawatt hour of systems of that duration have been built all over the world today. But in 2025, as a result of some of these direct procurements, we're talking about getting into the gigawatt hours for the first time. So I think we're in around about two or two to three gigawatt hours compared to the less than one built ever prior to that. And then the numbers do start to creep up every year from then on in our predictions.

Sam Humphreys:

So you kind of touched on it just then, that we're talking eight hours-plus. How many multi-day power storage facilities are there? And we talk about distribute ... Zero. Okay, cool. That answers that one.

Sam Wilkinson:

What we do have today is pumped hydro, which can go into the kind of tens of hours, but I wouldn't necessarily describe as multi-day. Everything we talk about mostly in energy storage state, lithium-ion or some sort of battery, and there are some specific technologies that are tackling that multi-day piece, impressed air, ion air batteries, but these systems are not yet built. They're in development or early stage or pilot for now.

Hill Vaden:

So the long-duration batteries, can you clarify? Or the longer duration you mentioned, I've got a ton of questions on this, so we might stay here for a while. Are they just putting a bunch of two-hour batteries where one turns on, drains, the next one turns on, drains, the next one turns on, drains, and two batteries times fives gives you 10 hours or two hours times five gives you 10 hours? Or do we actually have the technology that allows for six 10 hours of continuous energy storage from a single battery?

Sam Wilkinson:

It's a good question, and it could get rather technical, but in reality, what you want to achieve with a battery ... But when we talk about duration, let's be clear on that to start with, that is determined by the ratio of how many batteries you've got, so the size of the inverter or the grid connection, if you like. So if I've got a one megawatt inverter and two megawatt hours of batteries, that's a two-hour system, because it can charge or discharge for two hours at that one megawatt power. If I change that to a one-megawatt four megawatt-hours, it's a four-hour battery and so on. But most batteries being planned today are in that hundred megawatt 400 megawatt-hour range if you're talking about four hours. And depending on what country you are in determines what the sweet spot is in terms of business. In most of Europe, two hours makes sense. In most of the US, four hours makes sense.

But when you are discharging your batteries, right, in reality, there's probably thousands if not tens or hundreds of thousands of battery cells within your system. You actually want to what's called balance them. So you want to actually be charging and discharging them all at the same time effectively, because to preserve the lifetime of the battery, you really want to stay in a kind of as narrow window as possible. So if you completely discharge and charge a cell, that's going to damage the battery. So actually the whole system is kind charging, charging in unison is what I'm trying to say, and there's a lot of sophisticated software out there that make sure that everything is kind of within a safe way and also in a way that prolongs the lifetime of the battery. So no, it's not like you've got a two-hour battery, and you discharge that, and then you move on to the next two-hour battery and then you move on to the next two hour, not really how it works. You would be looking to operate it as one big system.

Sam Humphreys:

You did touch, then, previously that governments are specifying that companies, people need to have this battery storage. Can you, either you Sam or Edurne, explain how they're going about, that and is it a consistent approach globally, just setting a target, "We need this much storage, and you just have to do it," or does it vary globally?

Sam Wilkinson:

Just to be clear, I'm talking specifically when I'd say about this mandated or tendered or directly procured, I'm talking about the long-duration piece. People are building the shorter duration, the two hours and four hours, all over the world because it makes a fair bit of money right now. It's the longer duration that they're having to intervene and make sure it gets built, despite there not necessarily being a business case. And typically, it is like a tender type process. So Italy has a specific tender for long duration storage, eight hours. Interestingly, all lithium ion projects that have won it. Same in Australia. There is a specific long-duration energy storage tender.

In the UK, it's got a slightly different name, and they've done it more like a competition, but controversially, they've actually precluded lithium ion from it or disadvantaged lithium ion, which has raised a few questions from people that believe that at that duration, lithium ion is still the favorable technology. In California, it's been done by the CPUC, the California Public Utilities Commission. They're the ones that have mandated that these systems are built and gone through a kind of tender-based procurement for them.

Edurne Zoco:

What we are seeing actually more and more markets, as Sam was saying, and China's also a very good example of this is that in order to be able to compete in a public tender for renewables, you need to have to warranty a certain amount of storage. That's a pre-requirement for the tender. Otherwise, you will be disqualified. And this has been an issue for utility a few years ago when the cost of solar components were more expensive and the cost of batteries was more expensive, it was very difficult to go to tender with competitive CapEx. But now, the situation has changed, so this will hopefully help for further integration and grid balancing and flexibility in the systems.

Hill Vaden:

Edurne, continuing on that, are we seeing 90%+ of new solar and new wind projects inclusive of storage in the same project, or are people still doing solar only, wind only, or is it totally shifted to address that intermittency?

Edurne Zoco:

I will let Sam to elaborate more on this, but co-location and hybrid, that means solar and wind. Solar or wind or solar plus wind with batteries is one of the big trends in renewables. We are seeing that in many markets. We are also seeing things like repowering of wind farms using solar panels because it's faster and it's cheaper and we are seeing more and more plants that are actually integrating storage from the beginning or doing retrofit of existing plans. So yes, that's definitely one of the big trends, because it will help with managing the flexibility and reduce the cost of transmission and distribution. Basically, at some point you need to make the investment, so you need to decide that you make the investment earlier or you need to make the investment at the grid and transmission level. So yes.

Sam Wilkinson:

Again, to directly answer your question, which is something I rarely do, no, it's not at 90%. It's not even close to 90%. There's an awful lot of renewables being built without storage attached, but it is a growing trend to attach storage at the project. In reality, the batteries can do what they need to do without being paired with the solar, but just in terms of efficiency of the grid connection and the land, often the developer will have the land available and the grid connection available, because they've got a solar farm there so they'll put a battery there as well.

The other thing just to mention to build on that a little bit is that it's far more common to pair batteries with solar than it is with wind, and that's because relatively speaking, solar is a lot more predictable than wind, right? You pretty much know you're going to get solar in the daytime and not at night, and you've got an obvious gap that you can fill with stored electricity. You store it in the day, and you discharge it at night. Whereas wind, you can get several days of nonstop wind and then several days of no wind at all, and that makes it very difficult to size a battery appropriately and to make a really clear investment for adding the battery.

Sam Humphreys:

And just on that, we've talked about the developing technology for batteries. Is there work on having these much larger capacity batteries for exactly that when you've talked about a period of days and days of windy weather and trying to capture that longer. We've talked about multi-day, I know, but is that in the near future, in the next five years, to make it more accessible for those wind farms to store their power.

Sam Wilkinson:

Projects planned for within the next five years roughly that would do that. I talked about ion air batteries. There's huge scale plans for batteries for that. In the US, there's one company in particular that makes that technology. Compressed air, there's one in Texas, a couple in Europe, big. These are underground compressed air projects where you basically take the excess electricity, you use it to drive turbines to compress the gas into these huge underground salt caverns, and then it sits there pressurized until you need the power back, and then you just run the system in reverse to discharge it. But again, give or take, there's not an obvious and strong business case for these systems just yet, but there is a bunch of them planned to come online this decade.

Hill Vaden:

All right, Edurne, we're going to come back to the list. Number two on the list was, "Chinese oversupply continues to shake international clean tech markets." We've been talking about China already in this podcast. Can you add some context to that as the number two item in our top 10 list?

Edurne Zoco:

It's difficult to talk about clean tech without talking about China. That way we discussed before, even if it was not directly related to the trend. The reality that this has happened almost across clean technologies that we have seen that manufacturing capacity has definitely outgrown demand. And in the case of solar PV and batteries, that has been the most clear case where capacity outnumbered installation by a ratio of two to one or even more so, more than double of the capacity for modules for our batteries done from the volumes demanded by the market. And of course, this has created a major collapse of prices, not so much of cost, but definitely of prices and difficult to finance a situation for some companies.

So where we are right now is that we are seeing for the first time, and I think this is probably one of the big trends within the trend, is that for the first time we are seeing in China some signs of trying to make efforts to control production and rationalization of the utilization rates and the capacity because the domestic market cannot continue growing at the same pace in terms of demand that it was until now.

So solar installation cannot grow so much as they have been growing until now. Batteries cannot grow, rather battery solution cannot grow as much because the Chinese economy is not growing and it's not thriving as much as in the past. But also, we are seeing that international markets are becoming increasingly difficult for Chinese products. So I think for the first time and in 2025, it has been happening in the second half of 2024, but next year for sure we're going to be seeing an increasing strengthening of the efforts from Chinese government and industry associations to control production and help with this oversupply.

Sam Humphreys:

And is that literally just limiting production, excuse my ignorance, or is there implications on competition going forward, or is it just production?

Edurne Zoco:

The situation I'm going to talk up for solar, and Sam can talk more about batteries, is that the supply chain is already strongly concentrated. There is a number, you look into the top four polysilicon producers produce like 80% of global polysilicon for wafer. It might be the top three to four have or so, 80%. So there are a number of companies that definitely already have a lot of power within the supply chain, and I believe that in the case of batteries there is also some concentration, but the situation is a bit different because the automotive sector, not the battery energy storage sector, is the price taker and is the one that's actually determining how prices are fluctuating. Right, Sam?

Sam Wilkinson:

Yeah, to some extent I agree, but there is some extra color happening at the moment. So the interesting thing, maybe not interesting, the different thing about energy storage compared to solar is that the solar supply chain has been built almost exclusively to serve the manufacturing of solar panels. Whereas the battery supply chain has been built out to serve mostly the EV sector but also the energy storage sector as well. And they have two extremely different end markets, different value chains as well.

But what's happened in 2024 is that the sentiment towards EVs has noticed that there's been challenges there, and the opposite has happened with energy storage. And so the share of energy storage as a proportion of the global lithium ion battery market has increased quite significantly. And around about 25% of LFP batteries, which is a specific type of lithium ion, is now going to energy storage.

As a result, the battery manufacturers are paying a lot more attention to this sector than they used to, and that is definitely increasing the competition and making the case for this kind of control over the supply chain that you mentioned to try and limit this oversupply. That said, the growth trajectory of lithium ion batteries still is something very impressive. People talk about the slowdown of EVs. EV market isn't slowing down, it's just not growing as fast as some people predicted it would. There's nobody anywhere that believes that less EVs are going to be sold next year than last year, and that remains the case. So the market or demand side is still expanding enough to support eventually, like the supply chain, but it is true that the supply chain is a little bit kind of ahead of demand right now.

Hill Vaden:

You touched on something that kind of bugs me, Sam, is that I see all these headlines every now and again that will say, "Rate of growth of solar slows." Well, of course, that if you move from no scale to high scale, then your growth rate slows. It's simple physics.

Sam Wilkinson:

Math.

Sam Humphreys:

Maths.

Hill Vaden:

Math. And physics, I suppose.

Sam Wilkinson:

Yeah. Which for reasons that I won't even share reminds me of what I meant to say in the previous thing, which is the EV sector is the bit where the real trade issues and the trade barriers are coming in, and that's the bit that's going to really impact on the competitiveness of the supplier base. There's 80%, roughly 90% of batteries made in China, and there's obviously very, very strong opposition to that in certain parts of the world where they're determined to build out local manufacturing facilities. In Europe, I'm not breaking any news here, but the poster child of European battery manufacturing, Northvolt, just announced bankruptcy having digested something in the range of €15 billion and failed to really scale up their manufacturing to anything remotely significant. That's just shows you the challenge that the local or non-Chinese battery manufacturers have in being competitive. And if that is something that we want, then some fairly significant steps are going to have to be taken to make them competitive.

Edurne Zoco:

What Sam was saying is absolutely true as well for the case of solar, because we have seen this decline of prices, of course, is having very negative consequences for the financials of Chinese manufacturers. But at the same time is making even more difficult or more costly to create or showing manufacturing in the United States or in Europe or any other regions is going to be increasingly more difficult to compete. So that, I think, is why there is no surprise that we are seeing, especially in the United States, the announcements of additional tariffs and the speculations of additional tariffs to protect the domestic manufacturers, both for solar as well as batteries.

Sam Humphreys:

All right. We've got through three of those top ten trends. So just to wrap up, because there are a few more trends that we didn't touch on, I'm going to ask each of you pick one other trend that you think that we should be paying attention to for 2025. Sam, why don't we start with you?

Sam Wilkinson:

Okay. Well, I'm going to, surprise, surprise, pick the other energy storage one, which basically says in a nutshell that to operate a low-cost electricity market, we need more energy storage. What is happening in various places around the world is it's becoming increasingly common that we have negative electricity prices. What that means is that you have so much electricity being generated compared to demand that you are literally paying people to take it away, which is a concept that seems mind-blowing to most people. And if you were to say that to someone outside of the industry, they're going to fail to understand what you're talking about, but it's true.

In terms of energy storage, that's an amazing opportunity, because you are essentially getting paid to charge. You're going to soak up this electricity and get paid to do it. Then later on in the day when the electricity price is high because the sun's gone in, maybe there's no wind, it's like high time in terms of demand for electricity, you're going to discharge and make a very big profit, especially considering you got paid to charge and paid to discharge. That's clearly a broken system. That cannot carry on. So we need to add storage into the system to capitalize on that and to correct that.

Now, of course, the problem with this is that the more you add storage, the more that you are solving the problem and the less the business case is. So in 2025, what I expect to see is a lot of people building batteries capitalized there, but also a lot of concern building about how many batteries can be added before the business case of all of the existing batteries is completely destroyed.

Sam Humphreys:

All right. Edurne, what about you?

Edurne Zoco:

Okay, so I'd like to finish talking a bit about AI, of course. AI, yes, sorry, we almost made it, but we have to mention AI as a [inaudible 00:40:10].

Hill Vaden:

And data centers, right?

Edurne Zoco:

And data centers, of course, of course. No, but of course, data centers is a big part of the picture because AI is driving these surge in demand for power, and actually, we are going to be releasing as part of the clean tech trends that we are expecting data centers to drive more than 300 terawatt hours per year of corporate clean energy procurement agreements. So that's pretty massive. Of course, this is being led by the United States, where we are seeing a lot of the CPA activity happening, but also, of course, data centers are becoming an essential part of power demand in many economies. As in the case of Ireland, I was reading the other day a report from some of our colleagues that in Ireland, the percentage of electricity that is being used for data centers went from 5% in 2015 to 21% in 2023 and is rising. So more than one-fifth or one-fourth of power in Ireland is actually being used for data centers, which is pretty impressive.

But apart from AI revolutionizing demand for power, which it was something that it looked that it was going to be quite as stagnant or even going down in the next years, the reality is that AI is going to profoundly transform the power sector from many different angles. And not only from the demand in the case of data centers, but we are about to publish a report about the early uses of AI in the power sector. And we are seeing two emerging use cases that are standing up, which is about the application of AI for renewable generation forecasting. This could have very great implications, even into the trading, short-term trading power markets as well as into grid planning. We are seeing early applications in Chile and in California. So I think this is something where we, as clean tech analysts, we need to continue keeping an eye on and providing information to our customers.

Hill Vaden:

And for all those who have been asleep for the past 18 months, AI stands for artificial intelligence, technology that eventually will perhaps take over this podcast because now all of our voices are in the public domain, and somebody can use digital twins to make sure that the four of us are eternal.

Sam Wilkinson:

And I'll probably say something far more succinct and relevant and useful than I did.

Hill Vaden:

Perhaps. All right. Well, thank you, guys. So yes, we did not get through all of them. This was fantastic. There's a lot more. It will all be available in the public domain, and we look forward to seeing how well these predictions come to play in 2025.