Björn Peters

Founder

Peters Coll.

April 7, 2021

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Ep 299: Björn Peters - Peters Coll.
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Bret Kugelmass
So we are here today with Björn Peters, who's a European energy project finance expert and founders of Peters Coll. Björn, welcome to the show.

Björn Peters
Thank you so much for having me. Yeah.

Bret Kugelmass
So I'd love to just start off by learning about your background. I mean, I know that you've got a history in finance as it relates to clean energy projects, maybe you can take us back to the beginning and introduce us to how you first got started in that space.

Björn Peters
Well, actually, there was a youth science competition in 1984, when I took part, creating or inventing with a friend to sort of a new model of a wind power plant. So that actually brought me to the energy space. I later studied physics. And it took quite a while because until I came back to really doing something in energy markets professionally, first I, I did a PhD in brain sciences. And I was a consultant with McKinsey and Company for two years. And my first real job, I call it was with the organise organizer of the German exchange, financial market exchange. And they were building or they had built the first steps, let's say for of the European energy exchange. And our CEO, said that this is actually quite a success. So let's do it for all other commodity markets as well. And so analyzed about 30-40 different commodity markets with all their ramifications. So it's, it's really interesting to dig into a commodity markets, it is very much what kind of commodities. Well, it went from iron and steel products, via telecommunication markets, voice minutes are traded, of course, all the natural commodities and metals, we had one study of them of the copper market and the nickel and zinc and so on. And so the colored metals. And until one project was advertisement slots, in newspapers site, there was a sort of new commodities added. So it was really an exciting time.

Bret Kugelmass
And what's the goal of this type of analysis is to just to essentially predict where the price is going to be for these commodities.

Björn Peters
Well, that was what I learned much later that this is actually the type of analysis that we were doing was exactly leading to answering those questions. But we at that time, we didn't answer. I asked that question. It was all about market design. In general terms, it's who has got, who needs? And who's in between? Yes, and how do they interact? And is are there services that we can provide to make them trade more efficiently? Yes. And, and with this analysis, actually, it's exactly what commodity analysis are doing on a daily basis. But we got it, I believe in this cooperation between somebody coming from the natural science background and my boss was an economist, and he knew everything about all types of trading and of price setting and price formation mechanisms. So I think we got quite far in in analysis tools for all sorts of commodity markets.

Bret Kugelmass
And then so where did that lead did you get your first introduction to energy there as one of the commodities or did energy come later in life?

Björn Peters
It came a little later, so we did. This was not a terrible success, because most markets, actually, it was the time of the b2b bubble. Some of the older might remember, it was the end of the 90s, that you just needed to create a b2b marketplace, business to business marketplace. And you got you got lots of startup, venture capital, and so on. But none of it actually worked. So it came back onto the the established exchanges. And that was a move that we, we didn't see at the time, I believe. And so we close down this venture and I stayed in financial markets learn a little bit about the background. My first real commodity product was a gold fund that actually securitizes the rite of delivery of one gram of gold. That product is nowadays 12 billion euros. So it's not that big, but but as an employee, you have no benefits whatsoever. So I'm, I'm really parted there. But, but I am still quite proud actually, of that as a first success. That was nearly 15 years ago. And then afterwards, I joined a subsidiary, the asset management arm actually, of Deutsche Bank. And then it was in a closed end fund department. And I went there explicitly in order to, to contribute to the energy transition, but in the ways of financing it.

Bret Kugelmass
And so what is asset management exactly? I think our audience understands, you know, about your project financing, at least peripherally in the energy space. But is asset management more broad than that? What's under the asset management bucket?

Björn Peters
Well, asset management essentially is investing in a fiduciary role. Other people's money, so your clients money. And this, there's stock. So in the stock exchange, many of the customers do trading on the markets are actually funds to who manage these assets, these financial assets, and there is one branch that is closed end funds were the real, that invest into the real economy directly in terms of project.

Bret Kugelmass
Okay, so closed ends. And funds is a subset of asset management that directly deals with like real world stuff, like building a train rail, or building a bridge or a highway or a power plant.

Björn Peters
Or a power plant. Yeah. So we've had hydro power plants in our in our portfolio. Actually, I started out, of course, trying to find and solar and wind power plants. But that was a funny story. Because in wind, what people usually know if they know about wind energy, is that if you're wrong in the, in the wind prediction, every 10%, you're wrong. In average wind speed, you're 30% wrong in in the, in the capital gains. So in the in the harvest of power.

Bret Kugelmass
Why is that? Can you break that out a little bit more? Why does it grow from 10% to 30%?

Björn Peters
Because there's a third power dependency of wind capacity as a function of wind speed. So this, so double, or twice, the wind speed means eight times the wind power, you can transform to electricity. And that is something that you really need to know, because it's a it's a source of, of risk in the wind power business. And many of the project managers who came to me had two beautiful calculations with 80% debt on it and 20% equity. And it was quite expensive at the time, it's not that it was 1 or 2%. In interest, it was more 5, 6, 7%. And that meant if you're wrong by 10% of the wind speed you you earn 30% less money and you're broke, if if this is not managed well. Yeah. And I said, well, let's do it a bit, a little bit more risk adjusted. And then in particular, I was always joking with those guys that the they have a very asymmetric risk return ratio, because all the return was to them and all the risk was to my investors. And this was certainly nothing I could have accepted. So you walked away and found other people who were silly enough to invest into it.

Bret Kugelmass
This is you're saying the banks had the asymmetric return?

Björn Peters
No, the project developer, the project came to me as a as an asset manager, and or as a bank, I mean that it was similar. And sometimes it was insurance companies have bought those projects. That means a project developer goes to some place, make sure that as critic says that the land is there, that the checks for the for the for the average wind speed and the wind profile, and then walks up to a wind power producer, windmill producer, and says, Well, here, I want to buy 10 of your pure windmills, and what are the conditions? And and then this is a package that they approach with an investor. Yeah. And the investor as administrator.

Bret Kugelmass
Yeah. And so yeah, tell me about when you said asymmetric return, you got my ears picking up because I'd like to really understand what the risk return profile is, for the various parties involved, the developer that you were just mentioning that packages all together, the equity component, which is another financial institution, but that like literally opens the project. And then the debt provider, which offers debt, which offers alone but gets the project, if it fails, is that that's the distinction, essentially, on these early projects. Yeah. Who did you see as being the biggest beneficiary, you're saying, not the banks, you were at the banks, and it wasn't looking good for the banks.

Björn Peters
Yeah. Now, the biggest beneficiary clearly were the project developers because they sold the project at a fixed price, and could take out all the produce the profit they owned, or they earned in one moment.

Bret Kugelmass
And they sold it to who they sold it to the equity owner?

Björn Peters
Exactly

Bret Kugelmass
Got it

Björn Peters
And sometimes they were in collaboration with the banks, or we approached banks, for a bank financing of those 10, 50 to 80%, we like more 60%, but not 80%. And, and now, the risk moves, then if it's in your hand, and you've bought it, you have acquired it, then all the construction cost probably is all construction risk is probably gone because it's producing assets. So the depend only then on the the quantity you can produce the number of kilowatt hours or megawatt hours. And its price, the price is most often fixed by law in this domain, and not in the usual power plant business, but in wind and solar farms.

Bret Kugelmass
So when you say, when you say it's fixed by law, do you mean that someone has signed a private contract like a PPA? Or do you mean that the government in certain places has said no, this is all you're getting? This is what exactly what you're gonna get paid for power whether you like it or not?

Björn Peters
Yeah. Now, that's actually a European thing that started out in Germany, it was about the feed in tariff system. Yeah, I know that you're in the US, you have more tax credit system. So it works a little bit differently. Over here most countries have adopted a feed in tariff. So that is fixed by law or in similar. Yeah, government controlled processes, right.

Bret Kugelmass
And when the government is dictating the price, not the market, is what you're saying.

Björn Peters
Exactly. And it was meant to the price had to be high enough that the quantity of solar and wind power built had to increase every year. That was the the ramp up financing of this technology. And Germany paid about half of the learning curve, at least in solar energy. I'm not sure for for wind energy, it's probably a little less but for solar energy. And that was it. And so the my first projects in 2008, that I that made it to my desk, were about for six to eight euros per watt, or six to 8000 euros per kilowatt installed capacity. And nowadays it's it's 10% of it. Yeah, crazy. And really any good price decline.

Bret Kugelmass
Do you have any insight as to why the German government was the one to kind of pioneer this feed in tariff system for clean energy? And why solar? I mean, Germany's not very sunny, right?

Björn Peters
No, it isn't. There has been very old movements, intellectual movements are so in the technological part. There were a couple of people in the 1920s, who promoted wind power, solar wasn't developed at the time. And for example, Heidegger, Martin Heidegger, the philosopher, he was speculating about the flow, and you could extract from the flow, the energy, but only if it is volatize. So he didn't like hydro power, he liked only wind power at the time, because it made it meant that people had to be poor energy poor. And that is what something he promoted. Yes, there is actually a continuous movement, actually, from those more Nazi philosophers and economists, gradually been taken these thoughts, not intentionally, but by gradually taken over by the green movement in the 1960s, and 70s. And you can, you can observe this. And then there were people in the 1970s, who promoted this, or he who invented the the energy transitions or Energiwende in German, coined that term, and said, we need to move away from all the terminal power and and the only thing that's accepted is solar and wind power.

Bret Kugelmass
So it's almost like this this Energiewende that this program is almost like the latest iteration of like a purist mentality, the Germans, like, they needed an outlet for that purism sense. And they found it in these environmental movements.

Björn Peters
Yeah, because I think there's lots of this natural romanticism, that that is still there. And it's, to my humble opinion, it is really has always had a devastating impact on on German thinking. And, and even when you go back what I mean, the roots of historic roots have been in the late 19th century. And from these historic roots, you see, two three intellectual movements, so youth movement, that that when you had to go out into nature and learn to survive on a on very simple terms. One was another one was anthroposophy. And this in connection with with homeopathy. So it has said it was because everything is connected, and so only then you understand that even one molecule in a liter of water has still lots of impact on your health. So that is, it is hard to conceive why people believe it that. Well, and the third one, of course, was was the fascism. I mean, that's that in this direct causes, and for example, Hitler, or this Nazi Party, didn't have to invent the everything they still had to they simply had to pick up lots of thoughts from those other movements. And they were popular, and they were in particular popular about among academics. So if you look into the election results in late, early 1930s, so just before the third reich, the you had huge poll results for the for the NSDAP, Nazi Party, in towns like like Tübingen, Freiburg, Muenster, getting in where where nowadays, they're very strong on green, and they used to be so that it's the old university cities. Wow.

Bret Kugelmass
Wow. It's such an interesting history lesson. And so okay, so yeah, so you were tying it to how this how we're seeing this today and how there's this German movement towards the, towards the promotion of the renewable energy sources, they created this energy vendor program, which is a national program to help promote this. And then so obviously, this leads to a lot of odd economic opportunities for different industries over time. So maybe tell me a little bit more about some of the other things that you saw? Yes, you're on the back. kingside you got to see some of these projects up front. And then what came next in your career?

Björn Peters
Well indeed, when I when I saw that wind power was floored by construction so the the project developers yep the day they provided far too risky projects, I'll as per impairment looking very much into solar energy and I saw that there was an imbalance of feed in tariffs, they hadn't been reduced for a number of years. And I knew there had to be a shortcoming. And I didn't want to have projects in that very moment. So I wanted the bank not to invest into into solar energy. And just a few months later, so I was very lucky with that analysis. The it was fully confirmed. So Spain, Italy, and the Czech Republic lowered their their their tariffs for existing projects. So in without telling people in advance, so they were investing far too much. And many of those funds went broke. But not my customers, fortunately. And what I actually was then doing was investing into hydro power. I like this very much. I mean, it's it's a very stable source of energy. If you can build it in a way that it's very much environmentally friendly. And we were hiring the best parties for for knowing that. It was It is not a great for for lots of fish. So that that was very important to us. And we we built actually bought 30-35 hydropower plants across Europe. So starting from Norway, by Albania a little bit Austria a little bit Turkey.

Bret Kugelmass
I mean, that's quite a few projects. And how big are these? Are these anywhere from 10 megawatts to 100 megawatts or bigger?

Björn Peters
Much smaller, much smaller. It was between two and 25 megawatt.

Bret Kugelmass
Okay, great. Alright. So yeah, small hydro projects. But yeah. And then what constrains that? Is it just citing at the end of the day that after you've taken up all the available locations, there's just no more places that you can build new hydro projects?

Björn Peters
Exactly. So that, for example, the turkey in Turkey did a huge survey of all possible locations in the country of Turkey, where to build hydropower plants, it was about 700 projects, and 200 of them had already been built. So it was a very clear market. You could apply for one of those or two or three or five of those projects, but then it was certain that they would become more and more scarce. And of course, you were trying to find the most beneficial projects and start with them.

Bret Kugelmass
Yeah, economics becoming tougher and tougher. But it's not like there's a lot of innovation in the hydro space. Right? It's, it's not like with wind or solar, where we've seen the cost curves come down so drastically, that as they come down, you can open up what would have been unprofitable sites before. With hydro, that's probably not the case. Right? There's not going to be much change in efficiency, you know, from generation to generation of hydro plan is there.

Björn Peters
No, I mean, it's a very old technology, the very first power stations ever were hydropower stations. Yeah, it started in early in the second half of the 19th century. And of course, there has been lots of optimization going in from taken aside, but still, you sometimes find tricks to increase the average efficiency by 0.11%, which doesn't sound great, but over a 60 or 80 years lifespan to have 0.1% more power to sell. Yeah, that's actually something.

Bret Kugelmass
Yeah. Yeah. Though, I can also imagine that I mean, it's just like the cost of capital to it's like, you know, what, if the currency isn't as great or the labor prices are more expensive at the start of the project, if that increases your project costs by 20 or 30%, that also has like a long lived effect on the overall plan economics, right?

Björn Peters
Yeah. Yeah, but you paid so it's, it's a capital intensive business, all three of them. And so at the at the very end, it's you need to control the construction cost, and hope for for good power prices because in hydropower, you usually don't get free. In tariffs unless it's in countries where there is no hydropower projects. But in those kinds where we were, we realized we had to rely on the power markets. And so it is a bit on the power price and the leverage bit even.

Bret Kugelmass
And is there an opportunity of retrofitting hydro projects to become pumped storage is almost like a way to arbitrage the market by giving them that like energy storage capability as well. Is that is that a growing industry?

Björn Peters
No, no, not at all. I mean, some, it's already very rare that you have a storage system with a natural inflow, as a lake or so well, on the other side of the lake, you build a hydropower plant, and you might be able to change the lake level by one or two meters. And then we have a storage reservoir, we have some of those projects in our portfolio, I still say our portfolio, of course, I've left it, it feels like its own portfolio. And for some, in Norway, you have huge lakes of this type. And go enormous amounts of storage capacity, but in order to have pumped storage, you need to have some water to pump up hills. And these these these lakes are mostly situated quite close to the to the sea. So you would have to pump up the saline waters. And and that is, of course, not compatible with all that lifts that is living there. So you don't do it.

Bret Kugelmass
Got it. That makes a lot of sense. Okay. So after you left Deutsche Bank, where to next?

Björn Peters
Well, the the observation, I made it, Deutsche Bank and what gave me the impulse to move on was related to hydro power. It was in one year, I was getting four pumped hydro projects on my table. And it was really, it was stunning that what once had been a cash cow was then ending up at a desk of facility banker because usually, these energy, utilities, they know exactly what to do and where to earn the money. So there was something smelling. Yeah. And I dig into into this economies of storage, and didn't find any literature on it. So, I had to do the analysis myself, and I thought if they come to me, it has to be about something about the weather. So, the statistics of weather must be must have some properties that make hydro power pumped hydro power plants unprofitable. And so I acquired data from weather data from a university in a neighboring University, and we made a project to analyze analyze the statistics of weather. And we found out something that was deeply disturbing, because you realize, if you take just German as Germany as a copper plate, and more or less infinite amount of solar and wind energy, and, and that need to combine it with storage in order to always be able to deliver on the demand, as with the load curve, of course, constant demand, then you find out that you need about 2000 times the capacity of all pumped storage in order to do so. Oh my god, storage is the only type of storage that works. And with this message I anyhow, I was always sent to two big energy conferences, they like bankers speaking about this subject, for some reason. And and I was coping with this message. So this energy transition, it sounds nice, but it will fail on the on the storage requirements. Yep. And it was so surprising to me that I could surprise those people and impress these people. Because it's you, as a as a lay man, you would think that the the people in the, from the energy utilities that they know all about this, but nobody really had asked that question.

Bret Kugelmass
It's surprising. I mean, I find across the board and less, you know, for most people, they're happy with just kind of doing their job. So whatever their job is, hey, make this project work do this thing. It's rare that people will go that extra mile to try to disprove, like the theory upon which their like job actually stands. And so it doesn't actually surprise me that you were introducing a new concept to this cohort.

Björn Peters
Okay. But actually it I, it gave me the impulse to look elsewhere decided. So I had always been a fan of solar and wind energy and the energy transition in the years before. But then I understood that there has to be something else. And I started writing about energy policies. I had my I created my own blog, soon after I was out of the, out of Deutsche Bank. And, and this got quite popular, so it had several 1000s of readers every week. So I was really surprised. But apparently, this this view of someone coming from natural sciences, but deeply involved in the economics of the thing. Probably, there was a new angle on it so that people can learn. And my goal was, my grandfather was a was a priest, and I had him as it as an idol. So and I wanted to, to speak to, to the to the audience in a way that they really understand it, that they are taking where they currently are, and then move to new thoughts. And I had one simple idea every week, and try to bring this into the market and do let's say, take out one break each week from the wall of the energy transition. Until it it's it stumbles by itself. And actually, I was quite proud when I when I heard sometimes politician speak and taking up exactly my argument, right? Yeah, probably they never have ever written it. Read my column by my articles. But there are ideas out there told them in their simple words. And so it got it got transmitted, then to the right, guys. Yeah. So. So for the for those people coming from from the conservative, liberal side, I'm pretty sure that 90% of the parliamentary is of the members of parliament in Berlin know exactly that the energy transition transition has failed. And it's just the question how to communicate this in a face keeping manner. And it's very difficult for them because they all the political parties have been part of the energy transition. And it's not that easy to to get across it, or to move to the next step, then.

Bret Kugelmass
So what is the next step?

Björn Peters
Well, what I'm promoting is that we need some sort of ecological realism. First of all, we need to acknowledge the huge challenges on the ecological but as well on the social side. And then derive those policies that are really successful in in tackling those those challenges. And, after a long learning curve, I learned that certainly there won't be any energy transition without nuclear energy. Simply because you consume far less commodities, you consume far less space. And we need to concentrate ourselves on less space, in order to hand back as much space as possible to nature itself. And so because natural habitats are much more resilient to any type of stress, so they can usually handle lots of stress. So droughts, fires, storms, so everything that is related to climate change. If If, if there's natural habitats, they usually are resilient against this first,

Bret Kugelmass
And what was your first introduction to nuclear? How did it even come across your radar? And what made it so I understand what makes it very compelling to you that the small size, the small ecological footprint, small material consumption, but how did you like Where was it? Who was telling you this? How did you find out about this? What research did you do?

Björn Peters
Actually, it was, it was quite funny because I initially my column I was sometimes writing about nuclear, but in a more critical mode. So I said, well, of course with this unsolved nuclear waste problem, you can't really justify and then I got very, very, very friendly letters from quite senior people. So in their 90s sometimes But at least in their 80s, so the veterans of the old nuclear energy space, and they were explaining our Dr. Peters, that's very interesting what you say, but have you considered this and look into this? And maybe maybe you might change your mind? And, and I mean, I'm, I'm a natural scientist, I have to change my mind in favor of better arguments. Yes. And I was then gradually correcting myself publicly. Yeah. And and giving room to those thoughts. And that, that got somehow a spiral. So I learned much more about nuclear energy and how relevant or irrelevant, so the liquid waste problem may might be, or, as all these arguments, and of course, is this always the same five arguments against nuclear against nuclear energy? And if you look deeper into it, you see, it's all that it's, it's really, it's irrelevant.

Bret Kugelmass
I know that the waste one is so funny. It's like waste actually isn't that dangerous, and has never hurt anyone ever. And there's not profit per unit of energy deliver by orders of magnitude. So easily the greatest waste ever created from anything ever oh, and by the way, it gives off heat. So great, that could even be a power source a little battery, or who knows. But it's like, it's like the greatest gift anyone could have ever received from a back end of an energy system nuclear waste, and yet it is branded as like the like, the argument against it, or the go to argument against it. It's just it's so nuts. It is.

Björn Peters
Yeah. And so there was a god more and more a fan of morality, the more I learned about it, and I felt a little bit of shame, actually, because, I mean, I'm a physicist, I've never learned anything reasonable about nuclear energy, except that it exists. But so in our nuclear physics course, we had maybe five minutes on nuclear efficient. I mean, it was ridiculous. And I didn't know anything. And I even grew up just at five miles from as the crow flies from from a nuclear power station. And I didn't know anything about it. Yeah. So strange, but he did his lack of interest. Yeah. That is probably one of the major sources of, of this, this this public attitude against nuclear power.

Bret Kugelmass
Yeah. Yeah. No, it's, it's almost like a curse. It takes up so little room has such a small ecological footprint. And because of that, it goes unnoticed. And because it goes unnoticed, it's not appreciate. Okay, so you started to learn about it, then what? What happened next?

Björn Peters
Well, then I I got invited to Amsterdam by Michael Shellenberger I actually, I don't know how he, he learned from from in what I was doing. He proposed it, I have to ask him once. And and I was then in that room in Amsterdam, and Michael Shellenberger is, is a very good mentor for such a group is really, really skilled in this is, and we had really good discussions, and he made sure everybody's heard. And I believe I brought two things to the table. Most of the guys in the room were, firstly, mostly motivated by climate change, and said, I want to do something against climate change. My mission is broader. I think climate change certainly is one of the problems. But if you look at the 17 UN development goals, for sustainable development, climate change is just one of 17 Yeah, and there's so much more that we have to solve in order to make a good make good life happen on the planet, both socially and ecologically that you shouldn't over emphasize.

Bret Kugelmass
Yeah, I agree with you on that. I mean, I first came to you appreciate nuclear through a climate change lens as well. But the more that I learned about energy in general, and the same thing like UN sustainability goals, it's like, okay, well, why don't why is climate change that's a big problem. It's such a big problem because it's negative impacts on on people. And then you've got all these other goals which if you solve them you're also you know, solving the negative impacts on people problem, you know, everything from energy poverty, to air pollution, to just you know, access to water, all of these things. And it turns out nuclear can do all of those.

Björn Peters
That's pretty much it. Once I have yours, I get a I had to give a speech on the on sustainability and, and I realized that you have to group these UN Development Goals into three categories. One is the predecessor, so One that drives everything else. And energy is one of it. And then you have the the ecological and social goals. So access to water, health care, whatever housing, clean, clean air, clean water, clean soil, of course. And then you have subsequent goals that are solved automatically if you handle all the other challenges and climate changes just in that last category.

Bret Kugelmass
Yep. Yep. So yes, so what came next for you?

Björn Peters
Well, the second thing, that that was important, I believe, to the nuclear pride coalition was that our friends are often on the conservative side, and most of 35 or 37 people or something like that, in the room where it left these people, and so very much impressed by socialism and whatever. And I was one of very few people who, who don't believe in socialism. So I, for whatever reason, but but the the German middle way of social market order, is, I believe, still believe, really, the sweet spot of economies of how to organize an economy.

Bret Kugelmass
And what does that mean, exactly? That's where the government plays a role to help define and craft markets, but then markets do the rest.

Björn Peters
Yeah, that's probably a very good way of describing it. So you have to have a strong government in order to be a judge in the market, but not be the market. Got it. And it is mostly about cartels. So you want to avoid monopolies and an illicit cartels, that that then that rip off the the customer.

Bret Kugelmass
Right, because cartels are anti market in a certain sense. They're a market inefficiency. Yeah.

Björn Peters
And when, and I believe that the most important ingredient is the rule of law, so that everybody from the most poor to the most rich, one person in a society, they, when they come to court, they actually are treated the same way, no matter how much they are able to spend the lawyers and so on.

Bret Kugelmass
So okay, so you had a couple of differences, you know, you brought a couple different things to this group. And then so what does that turn into?

Björn Peters
Well, actually, I was quite happy that he was picked up by most of them. So we are now much more open in this pronuclear movement to link with essentially all types of political movements as long as they are they are positive for for nuclear energy, and the environment on the same plane.

Bret Kugelmass
Yeah. And does does nuclear have a future in Germany? I mean, I know you guys built out a whole bunch of plants, Siemens, you know, big company built plants. But then, you know, the around 2011, you know, laws were passed, plants are being shut down. I'm sure you guys still have maybe a half dozen. I don't know still operating but scheduled to be closed? Is that is a permanent? Is it forever? Is that it? Or it can that might maybe change?

Björn Peters
Well, I of course, I'm fighting for the remaining six power stations that they that they can keep running. But actually there's currently no, with one exception, no political party who is willing to really demand this openly.

Bret Kugelmass
Why are they afraid of that?

Björn Peters
Well, probably most countries, journalists are typically left wingers. And the politicians from the liberal and the conservative parties. Were conservative parties a little bit different, but the Liberal Party, most of the people within the party are pro nuclear, but they don't dare to speak up. The higher they come in their ranks, and in the Conservative Party, they have bet fiercely on the energy transition. And they need a face keeping way out. And what they are telling me is okay, okay, we would like to change all this, but we can't do it by ourselves. There has to be an external shock. And one of the one of the possible shocks would be blackout or long brown out such as like, like the one you faced in Texas, for example.

Bret Kugelmass
That's less likely to happen just because Germany is so interconnected to all of its nuclear neighbors. It's almost as if you know, if it can pull nuclear from all the surrounding countries, there's more inherent stability.

Björn Peters
I wouldn't too much agree on it. If you look at the balances, for example, in January 2017, we had such a famous long, cold doldrum 10 days without solar and wind energy, essentially only 5% of the installed capacity. And we were still exporting power to France rely because it was really cold, it was dark people switched on their light. People in particular in France were heating with with the power, because it usually you need a heating system only for a few days in the year. So you don't install something very expensive and the radiator is the most cheap, the cheapest heating system. So everybody is heating with power, power prices go up, power becomes scarce. And so now take this situation situation from 2017, only six years later, January 2023. The nuclear phase out will have happened. And we will have decommissioned a number of coal power plants that now in the same situation we have we won't have enough power in our system. But we can't expect France for example, to sell power to us, because they will need it for themselves.

Bret Kugelmass
I see. So the last system last time a shock might have happened. There was still enough backup or there's still enough power a bit to be deployed, wishing the next time, there's not going to be enough.

Björn Peters
Exactly. We've seen this already. So we have had many situations in the last year, where we imported five to 10 gigawatts, which is wonderful if everybody has this best capacity, but it was it was the current lockdown times. So all the No, no power station was really running at full capacity. But take an upswing in the economy and the cold winter day, and the cold winter week without solar and wind energy. And we shouldn't forget whether it's correlated across all Europe. So if it's dark, and gray here, it will be the same thing in Paris, maybe even in Madrid. So there's there's the likelihood that there's not enough power in the grid is increasing every year with all these Germans phased out.

Bret Kugelmass
But But what I still don't see, I don't see a good, good outcome then because so let's say the the nuclear gets shut down. And it takes that and a bad blackout for them to learn their lesson. Well, it's too late and nuclear shut down. And it's not so easy to start it back up in many places. It's not that it's physically difficult. It said it's almost like structurally and legally and operationally too difficult to start it back up, and especially if you've already started tearing down a plant. So what what to do what happens? Well,

Björn Peters
I think it would be lots of success, if we could just stop the decommissioning and know that not the decommissioning of the power plants but deconstruction of the power plants demolishing, it's a simple act of pure vandalism if you take it. So that that because these power plants, they are operating at full speed for 30 years now. And with the goal, for example, has reached as the first power plant on the globe, 400 terawatt hour production last year. And so it's a totally insane to demolish these things. But the point is, if we said the one first goal is, of course, to stop the decommissioning phase out, but if we don't manage to do so, we could secondly, ask for stopping the demolishing of the power plant so they could theoretically go back to service. And that's exactly what they're doing with coal power. Actually, coal power plant, there was one of the larger power coal power plants that went off the grid at first of January this year, and already on the eighth of January, it had to get back to power. It was so ridiculous. I mean, there is there is this hypocrisy in in climate policies that they they they don't care for no matter of amount of coal being being being burned up for for power. But if it's about nuclear energy, Oh, I'm so afraid. Okay. It must go wrong. It's so ridiculous. Yeah,

Bret Kugelmass
No, it doesn't. It's terrible. But maybe give me some insight and with the imminent shutdown, and then of the remaining six plants, but already, you know, who knows? How many were shut down? What are the workers have to say about this? And the companies? I just don't understand, like the nuclear industry and like the services and nuclear services industry, I mean, I, I'm making a number up, but there has to be at least 10,000 20,000 50,000 people whose jobs are directly affected by this, why are they not marching on the streets, I don't understand that if they're gonna lose their jobs. And the economic, you know, and like the town being an economic hub around a power plant, I just don't understand why these people don't come out and and show that they're our constituents, and have a nuclear pride and bring that to the political party. Why Why don't we have an army of, of nuclear workers participating?

Björn Peters
Well, let's start at the top. I mean, the board members of those, as a supervisory board members of the big power utilities are typically politicians. So they are working on on a on a on a political agenda, not on an economic agenda. The board members from the executive board, so you know, you know, in general, we have a board that is split into two, one is supervising, then there's the executive management. They're employed by those politicians, except in the in the supervisory board. And they try to do their best. And they I mean, it has been a national control a state controlled industry for a century. So it is nothing really new to them. If this was an interim phase between mid 90s. And maybe 10 years ago, that this looked like a little bit more like a private sector. But they're used to following a political agenda. And if it's building windmills, they do it. The interesting part of it is they do it, but not in Germany. So RWE, for example, has built lots of renewable energy in whatsoever countries, but not so much in Germany. And then the level below, okay, they have to make a career. So they don't speak up. And only at the very lowest level, you find people who still support us, and dare to speak up. But it is against their employers interest. So they want to finish the phase out quietly. And of course, if you if you've earned enough money, you're 60 years old, then this probably a good move. I mean, your your villa in the mountains won't be won't be in danger. If you just follow the political plan and everything I see that being bought off with retirement packages assigned. Yeah, yeah. And so that's, that's, it's really a shame. It's a shame. And it's, I feel so pity because of course, there are young people who who learn to run a nuclear reactor and nowadays, and they will all lose their job. And of course, they are frustrated. And they've essentially no no perspective of others than then demolishing something that works could work very nicely.

Bret Kugelmass
Yeah, yeah, I know. And another problem that I found in even in the US nuclear industry, are these decommissioning funds, or another way to buy off the employees, they say, Okay, well, you're gonna lose your jobs operating the power plant, but you know, or at least at the company level, some companies is, stands to make money from the decommissioning from the tearing down, there's a there's a, there's an incentive, there's a profit motive. And the government sometimes, you know, pays for it or the rate payer pays for it. It's just so crazy. structures are set up, such that the poor ratepayer instead of getting clean paying for clean energy, they're paying for demolition of clean energy, they don't even know. But that buys everyone off that keeps everyone quiet for until they're all gone. And then you can't do anything.

Björn Peters
Yeah, it's appalling, but it's the way it is.

Bret Kugelmass
So how do you see this changing? What what's your vision for the future where this can all be turned around?

Björn Peters
Well, do. You know of course, that I'm part of the founding team of dual fluid technology, that's the only nuclear reactor that has been developed in in Germany, of the generation four plus. And more and more people learn from us and we are in the middle of a financing round. So it's always time where you connect as much as possible to the to the audience and to the to the citizens and many people Know that we are handling nuclear waste, that there is no nuclear waste that it's it's raw material for the next generation of nuclear power stations, that these molten salt or molten metal reactors are inherently safe. So there is no super dangerous explosion possible by physics. So you use the the law of physics in order to make it work smoothly, you could build it in the middle of an industrial center, and it's a bit town without any problems, you have to switch fuel all 20 years, instead of all 18 months, and use all isotopes of uranium. So you stretch the fuel for millions of years, so to truly renewable energy. And, of course, when people learn about us, they start asking questions. And we've seen this. And the more devastating the energy policy actually is. And with the first blackout, I mean, it will it was most certainly have given the yield to a situation where the political decisions change very quickly. So politically, public policymaking is a very nonlinear process. So all, all everybody follows one idea. And it can be just one big event and you follow another ideas. That is what I'm counting on. And it will be certainly not long after January 23.

Bret Kugelmass
And so is that the idea that you're going to build up this technology, this company in preparation for a shift in political and public opinion? And then when that happens, you'll be ready to go and ready to deploy in Germany? Is the idea to deploy in Germany?

Björn Peters
Well, actually, we can't. We can't bet on Germany for the company that we founded. It is more about the global market. And we have founded ourselves now I founded the company now in Canada, because we don't trust Germany to provide a political, stable, stable political environment. We're really developing, going through all the development steps that are necessary.

Bret Kugelmass
Yep. Okay, well, any last words to leave our audience with as we wrap up today?

Björn Peters
Well, actually, I, there's one topic that's really important to me. And that is, how do you design energy policies, and many people in the OECD countries believe you can just impose carbon taxes or everything else that makes energy expensive. But I think that this is deeply, deeply wrong. Most carbon emissions stemmed from countries like India, China, Indonesia, Malaysia, many African countries are developing very well. And they couldn't afford a strategy that makes energy expensive. They have to have cheap sources, and of cheap, cheap sources of energy, but hopefully cheap sources of clean energy. And that's why I'm really deeply convinced that with solar and wind energy that has to be structurally, always more expensive, because of the storage you need, or the backup systems you need. You're paying twice the at least twice the energy bill. It is it is a flawed concept. They will always have their roll because it's cheap to produce. But to rely on it, it does work. So the only source where I believe we have a chance to developing a cheap source of clean energy, that's nuclear energy. And it's why I've changed to this sector and I hope it will work out.

Bret Kugelmass
Bjorn Peters, thank you so much for your time and your insight. Really appreciate coming on the show.

Björn Peters
Yeah, it was great fun, thank you.

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