Q&A with David Hostert, Head of Wind at Bloomberg New Energy Finance
— Planet OS Visionary Series
In the second issue of Planet OS Visionary Series
we discuss the transforming energy industry with David Hostert, the Head Of Wind Energy Research at Bloomberg New Energy Finance. With more than a decade of experience in the industry, David was glad to answer our questions about the present and the future of smarter energy.
Planet OS Visionary Series is a round of exclusive interviews with 10 most inspiring professionals in the transforming energy industry.
Q. The decentralization of both power generation and energy consumption will require sophisticated, data-driven approach to the management and economics of storage, grids, transmission, and distribution. What are the key success factors for achieving this?
A. As more renewables are on the grid and energy systems converge, it will be important to enable the different parts to be able to talk to each other and providing flexible interfaces. For data analytics, this means building a dynamic system that also allows operators to run their own programmes.
“Fundamentally, I think there will be a race for the right platform and possibly a separate race for the right applications. A decentralised energy system can be more resilient, but data security will be absolutely key.”
Q. Which key areas is Bloomberg New Energy Finance (BNEF) focusing on in the next 12–24 months?
A. We’re excited about advances in the operations and maintenance space (which includes data) but have also been looking at hybridization of renewables. Consolidation for manufacturers and the supply chain are an important topic, but we will look more into the right strategies for developers to succeed.
Q. Financially speaking, what challenges are utilities who co-own and operate wind farms facing today and going forward?
A. Utilities have a large footprint with relatively high fix cost and a large workforce. This means they will look for ways to reduce O&M cost and synergies to deploy staff intelligently. Some utilities have moved to a build-sell-operate model to recycle capital and create steady income streams. This is an efficient way to free up cash. However, margins in this business are also under pressure and also dependant on how the wider financial market will look like going forward.
Q. At Planet OS, we know that Big Data can help in making renewable energy more affordable. In which areas should utilities collaborate more and share data to solve mutual problems?
A. Unplanned down-time is the costliest operational expenditure, so any information and data that can help identify the root causes will be good.
“The more data, the better really. I also think that we have not talked enough about spare part rotation and sharing. There are a few companies active in this space but it just seems like such no-brainer that I’m surprised it hasn’t taken off more.”
Q. As wind turbines are getting bigger and bigger, the medium and small turbines are becoming more commoditized. How are OEMs forced to change in the competition for price and commodity?
A. It’s true that the medium-sized ‘workhorse’ turbines are becoming increasingly commoditised, but with standards converging and price competition high, there will be more focus on providing system solutions rather than just a piece of kit. All the major manufacturers are interested in solar and storage, too, and we’ve seen some integrated solutions coming already. Also, more efforts to tailor the turbine and software better to the actual site and really maximise production.
Q. There is a hypothesis that the cost of electrons is a race to the bottom, and ultimately energy will become almost free, creating space for a new economy around value-added services in energy. What is your view in this?
A. I don’t think that is the case. It’s great to see the cost of renewables coming down and competitive allocation mechanisms bringing value to consumers. However, if I look at the wholesale power markets today, the way we price electrons is increasingly inadequate. There are less and less ‘valuable’ hours to actually make money in and right now everyone is gunning for them: gas peaker plants, batteries, virtual wind farms,… These ancillary services markets are too shallow to sustain the whole market. Right now, renewables are often protected from these market forces, but the industry cannot expect this to last.
Q. What is your vision for the future of smarter energy?
A. ‘Baseload’ and ‘Peakload’ are increasingly antiquated terms and the sooner the rest of the energy sector realises this, the better.
Thank you for reading. I kindly invite you to see how we empower large wind farms with data. The next #VisionarySeries interview will come out in the end of April. Stay tuned by starting to follow our publication or add yourself to our subscriber list to find the next interview from your mailbox.