245. BESS: Who is making money? - Sep26

With Laurent Segalen from London and Gerard Reed from Berlin, this is redefining energy. Today on redefining energy, we're going to talk about batteries and especially how much money do they make. Exactly. I mean, sorry, the batteries are obviously key technology for the energy transition and the loss of them being deployed, but they're complicated. Yeah. Well, from my partner. Right now, it feels like the energy world is one wild ride, changing a dizzying speed. Trists, turns, steep climbs, sudden drops, but volatility doesn't have to slow you down, where the industry's largest proprietary data set, expert analysis, interconnected insight and synoptic AI, Wood McKenzie helps you quickly react to any sudden change, so you can be sure Wood McKenzie intelligence connected back to the show. So we have a great guest, friend of the show, we've been following model for years now, so it's at Porter and they know literally everything that's happening in the battery universe. Exactly. Exactly. It's great to actually have Ed come on the show and talk about this. Well, let's dive directly into the interview. Ed, welcome to the show. Thank you very much for having me, big fan, so looking forward to this. Ed, first question, I know model, because I love to go in your summer party. So great, like a thousand people and so much talent, but what is model beyond your summer party? As we speak, Q326. Model helps our clients put assets into the right place. Really we're talking about batteries, solar, wind here. In terms of what we do, we help people with forecasting, so like looking at future revenues, we help people to benchmark, so looking historically, we then write research around what's happening in the market as well, and then we kind of go a little bit beyond that. So if anyone wants to bring debt and step project, for example, with commercial due diligence, that type of thing, then we'll support them through that process, probably the four big things that we do, sort of products. If you go above one step on top of that, I'd say huge chunk of the business right now is working out how do you feed all of those bits of information into an AI product that makes life so much easier for our client. We have over a thousand research pieces. We have hundreds of benchmarks, hundreds of forecasts. It takes a huge amount of effort to keep on top of all of that. The way that sort of we interface with clients these days is much more AI-led than trying to get people to go and rooting around in parts of our terminal to find each of these pieces. So hopefully that's a flavor of what we do. I haven't talked about locations, I'll do that very quickly, US, we're in seven RTOs in Europe. We're in GB, Germany, France, Spain, Italy, Poland, and I'm sure I've missed one, the Netherlands. And then in Australia as well. Can I kick off just a minute, just to ask you very quickly, how do you decide on the market, your focus on? We get loads of questions about different markets all of the time and there's lots of information which you could transfer from country A to country B that would still be useful. Three years Modo, we want to give a certain level of care to the products, make sure we've got a fully-fedged forecast, it runs out to 2060, we've got benchmarks or indices that people can use. And for us to put the time into those products, there needs to be enough batteries that get built or solar enough wind to get built in those regions. So if it's a region of one or two gigawatts, then it's quite difficult for us to bump that up the list because we've got competing priorities everywhere. So generally, if you see Modo in a country, that's because there's a good volume of assets coming through and so we think there's a reason to build our product there. And I guess the quality of information and the fact that you can extract it directly from the system, whether it's charges charge or prices, that's quite important as well. Have you seen some progress in the past three, four years? Yeah, for example, in Great Britain, you can see quite closely what assets are doing and so it's possible to build something that we would call an index and that is essentially looking at the real dispatch of, for example, batteries to be able to say how much money they're making. You can do the same thing in Texas, you can do the same thing in Australia's NEM. But for example, you can't do that in Germany. And so for regions like Germany or Italy, what we're having to do is build virtual assets. And so that's essentially given the set of market information that we can see, how do we think an asset would be dispatched? So it's not sort of giving real asset performance, but it's giving the indication of what an asset could make. And then you can vary that by the duration, the grid parameters that get put on it, the cycling rates, dot, dot, dot, dot. What are the stages of development of a battery market? The first part is pre-saturation. And so what you're doing is just starting to add batteries to the first time to a power system and big gas units or coal units. They don't like jumping up and down quickly in terms of their power output. It's like jumping into a car and trying to put it in fifth gear and pressing go quite quickly, you're going to break that car. So gas or coal, they generally tend to price quite high for those types of services. So when you're responding in under 10 seconds, for example, but batteries, they love to do that. They love to be quick responding assets. And so when grids are buying quick response from these large thermal assets, there's a massive opportunity for batteries to come into this markets, batteries do come into this market. And when they provide those services, because the price still gets set by the thermal assets, which is sort of right at the top, your batteries are making very, very good returns. To give you an example of some of the markets that are there right now. So Poland, if you've got a four-hour asset in Poland, it's making over 300,000 K per megawatt per year. That kind of gives you a payback of like two years. If you go to the US, you could look at PGM, currently running it over $300,000 per megawatt per year for a four-hour system, again, like the payback on that is, is really straightforward. And if you go to Germany right now, one that's kind of heading towards saturation, that's about 200,000 euros per megawatt per year. And again, it's kind of low single-digit payback, which is very nice. The trouble is that story doesn't run forever, right? You keep on adding batteries, adding batteries, adding batteries. And then at a point, you only need to say a gigawatt of a particular service. At some point, you have enough batteries that all of the batteries can provide the service. And so they're no longer pricing off the top of what that gas unit is charging. They start to compete with each other. And that revenue then falls down to the next best opportunity. So they then get set by the opportunity cost of an adjacent market. And that, nine times out of ten, is the wholesale market. And so that takes us to phase two, which is saturated markets. And here you're in our wholesale trading, things that we will know very well, which is all based around supply and demand. And there are some classic kind of examples. And here, so you've got regions like Britain, Urquats, or in Texas, Kyso, California, they're now in Australia. So you've got all of these regions that are post-saturation. And the revenues in there, we should be no surprise, are not the sort of 300,000 per megawatt per year. GB, for example, at the moment, it's around 70,000 per megawatt per year. That's pounds. That's okay. That's just not a bad return. If you go to Texas, you've got some pretty crazy numbers, like 25 to 30,000. A thousand dollars per megawatt per year. That is not enough to finance a new battery. California is doing a bit better. Australia is perhaps quite similar to Texas in that there's been a big oversaturation and the revenues are quite low. When you get into that phase two, there are some quite variable returns. And there's a phase three, but I'll stop that. Can I just ask specifically about the tax market, right? So explain a little bit what's going on there. I think this would be helpful, certainly to myself, and I hold the listeners as well. A few years ago, Texas was a really hot market. There were some very high prices for ancillary services in Texas, and it became the place to go. And in part, because it was very quick to get assets to market. So it potentially had the best speed to market anywhere in the world. So people responded, as you'd expect them to do in an economy. They looked at that opportunity, saw that they could get connected quickly, and they all came in and built batteries. They built a lot of batteries, that's great, but it does suppress the tightness in the market. And so once you've saturated thecillary service market, you then go into the wholesale market. And if you look at Texas, in particular, they have summer stress because of the air conditioning load. Well, they have added a lot of batteries. They have added a lot of solar and a very short period of time. And that has given them a lot of capability to deal with system stress, which is brought down the revenues for those asset owners. If you can use consumers in Texas, then I'll seeing a market that's far less volatile. And I think you've seen sort of all the way to this summer, Texas keeps on hitting records in terms of peak demand, whilst it's got assets that are off the system. So it's losing thermal assets because they're not being able to run in the high temperatures. But because they've got so much solar and so much battery capability, they're able to kind of get through these sort of record demand periods. And I'm very interested by the number that model publishes. And if I look at the revenue, you give me a revenue in $1,000 per megawatt. But of course, the CapEx is in $1,000 per megawatt hour. If I do a bit of a back-end-involved calculation, let's assume your full system CapEx installed is $250,000 per megawatt hour. So let's assume it's two hour and I know there are places where it's four. Let's take two for the sake of the calculation. So that's $500,000 per megawatt. And you tell me you're going to get reviews of $300,000? Hello? Yeah? Great. love to do that. But if you tell me the revenues per year are in the 20,000, that's not going to pay itself. So I would imagine that if you have a cost of capital between 8 and 12 percent, you will need 70 to 80,000 a year. Do you have the same type of assessment? Yeah, that's exactly right. And I think if you then go into Texas to Jard's question, you kind of go, "Oh, why are people still building in Texas?" If you're seeing 20 to 30,000 from your assets today, "Why would you go into that market?" And all of this is looking at what the future might hold. So it depends how much of the data center story you believe in Texas. If you believe that anything kind of like ERCOT's revised data center build will happen, you have some very aggressive demand increases and that brings back tightness in markets. And because ERCOT is a very much energy-only market, you can see some very high prices coming into it. So people will go towards that market. They will build into it on the expectations that they'll see these high returns coming in the future. But if you had a highly deared battery from two to three years ago, right now you're suffering in Texas. And so there's kind of two sides to that coin. Ed, can I ask you then just to continue on the Texas thing there, is that obviously you're seeing this huge big data center build there. And if you look more and more of these data centers, they require storage, not just to the gate, but within everything at the rack level, even now, at the chip level. How does that impact what's going on there in the wider wholesale market or does it? I suppose it depends on how you're using those batteries. If you're just using those batteries for one event per year period where you're trying to step in and cover some sort of grid connection faults or you're trying to deal with sort of transients on your data center. So you're trying to not allow these kind of spiky things that the grid doesn't want to see. You're trying to stop those going through into the system. Then the wider sort of grid scale battery side doesn't see them so much because you're taking this quite sort of versatile asset. You're sort of hiding it behind a data center. And so the bulk of the demand is still coming through. And you're holding that battery back in reserve for these particular problems you might have. So when you're putting batteries into that situation, it doesn't matter so much for the grid scale. I think a little bit more interesting if you're trying to do things like solar and battery to meet lows at a data center side because then what you're doing is you're taking load off the system when a solar or battery can deal with it. And then you're relying on the system in the sort of the most peaky periods. And this is also true, by the way, for outside data centers for the commercial world or for the domestic world, what we might get if we get a lot of behind the meter solutions is your behind the meter solutions designed them to get rid of 70 or 80% of your volume. You still get this really sharp, say 30% that comes to market when winters get tight or summer's get tight, depending on sort of which hemisphere you're in. And so how do I see the behind the meter side? In some cases, doesn't have a huge impact on how the grid functions. If you're much more energy trading behind the meter than yes, it can have an impact. The thing that I would take home is that if you have a lot of behind the meter solutions, you can get some very spiky things coming to market and it's a very high peak prices. Well, I like to talk about the Ashburn event, 22nd of July this year. In Virginia, you had transmission issues and three gigawatt of data centers vanished from pitch hame in one second, which is a crazy event. And now, of course, that's going to push more batteries. Did you monitor that? Yeah, maybe let's just take a step back. So what the battery is really, really good at. It's dealing with sudden changes in the grid. Like, why do you have like faster reacting things? It's because if your largest coal generator, your largest nuclear generator, your largest interconnection drops and potentially two of them drop at the same time, you need to be able to react to that reasonably quickly. And so that's kind of like the history of how we've designed these things. So we've got two or three gigs of reserve that are sitting there waiting for something to drop off. From that sense, we usually kind of see it on the on the generation side, but you can also have it on the other side, right? An aluminium smelter would be kind of a classic example. Maybe in the future, we're going to have to plan a lot more for data centers dropping off the system. And this is a perfect problem for batteries to solve, rather than kind of commenting on that specific incident. Imagine the future. Imagine not having sort of hundreds of megawatts of batteries online. Imagine a world where Texas or California already are where you're getting sort of 15 gigawatts of batteries, two hours in Texas, four hours in California. In regions like GB, we've already hit seven gigawatts, like roughly two hour systems. Imagine going for another five years and you've got 20, 30 gigawatts of these systems here, we dropped three gigs for an hour, no problem at all. We are getting to this point where provided we've got these battery fleets there, they will get us through these kind of short-term issues. I think a lot of these problems will get solved by these large battery fleets. Ed, can I just look up the summer that we've had in the Northern Hemisphere in particular? What we've seen is just extreme weather events everywhere. Everything, terminal plans out, nuclear plans out. How do you view that going forward? In the sense that you think things get worse, they get better. How do you model that? How do you think about the base of the air? Yeah, well maybe let's start this story in solar. So if you've been watching the solar market for some time, you'll have seen the sort of the capture rates of the portion that solar gets paid of the base load price. Go about 10 years, it used to be about 100%. Over the last 10 years, it's kind of trickled down and it was kind of heading down towards low 90s. And in the last couple of years, the breaks have really come off and you've seen some markets have some solar capture rates that have not been in the 90% but they've been like far lower. And so to give an example, like in February of this year, I think the capture rate in Spain was like 10%, which is a crazy number. And so the narrative was you are seeing as you turn off the last gas unit or the last thermal units, your price can fall very, very quickly. Perhaps similar to the entry service story I was telling earlier because you've no longer got this like really high short and marginal cost that's in the market. And so the price can fall off. And that was very much the story, right? There was the story was that solar generators were in trouble and there was this big fall happening in the rate of a term for solar. And then we come into this year and I think we've seen some quite exceptional condition. We've had four months of over 35 degree heat peak in GB which is crazy considering like it's supposedly not a hot country. And what that does is it stresses out systems. It stresses out systems in two ways. So you've got things like freight can't come through in the way you do imagine for say coal. You've got generators who are requiring river temperatures to not get above a certain level of having to turn off because they have environmental limits placed upon them. And then you've also got people like me who have air conditioning. We run that air conditioning during the day. That's no problem because the solar deals a bit. But as soon as you run that in the night when you want to sleep and pay air conditioning at night, it's quite nice. Then you also have this brand new load that kind of crops up. And what that has done is put a huge amount of stress onto those summer periods. And that's very welcome relief for solar players. I think for batteries, particularly in Europe, and let's just talk about Europe for a second year, it's starting to work them out twice. So they've always been stressed in winter. They've always had these kinds of system stress that they've been helping to solve. Summer was always a bit of a rest period. Now it doesn't look like a rest period at all. Now summer looks like a very good opportunity for batteries to be able to help system security as well. So we've seen some very good returns for batteries across the course of this summer. Like it won't happen in every single summer because not every single summer is going to be like the one we just had. But you can see the direction there. And so if I was looking at a fleet of assets, yeah, I'd certainly be thinking about summer as being a pretty good wrecking opportunity. You are monitoring all those markets. So let's start in Australia and then move westward. You know, Australia, as you previously said, the returns are pretty low. What's so special? Because in my head, it's about the volatility. There's a lot of countries where you probably will never see a battery because that task on the grid is taken over by Hydro. So I don't think you see a lot of batteries in Scandinavia or Canada or Brazil. But yeah, what about Australia first? And then we'll move westwards. Yeah, part of the reason that Australia's revenues are now so low is because Australia both doubled the size of its grid scale connected battery fleet in a year. But also did something similar in terms of the behind-the-meter storage as well. So a huge growth in grid scale and behind-the-meter storage all in one go. And that very much has taken the wind out of any scarcity in the market. That is a very healthy thing to see. You're looking at supply and demand economics. If people chuck a load of additional supply onto the market, you're going to create a prices. What that's going to do is it's going to slow down the addition of future batteries into the Australian grid because investors won't get over hurdle rates. But that's okay. If I was going to try and say always just kind of forever build more and more batteries in every single country, I think that would be complete lunacy. What you should see is you should see this slowing down of certain markets as you get over build from here at the time. If demand then picks up or more solar comes onto the system, then get excited about that. Maybe one slight tangent if you'll forgive me. But I'm quite excited about grids like the them going beyond just supply and demand balancing. So if you go, I talked about phases before. So free anti-driservice saturation being phase one, post anti-driservice saturation being phase two, phase three that I really like is that when you find out more and more about power systems and grids, it's not just about energy flows from A to B. You've also got things like voltage. You've got things like a fault current in the show all these things that give you system strength. And as you take more thermal systems off that system strength gets harder. The thing that I'm really excited about and Nem's a good example of this is where you're starting to then procure these services like voltage. The voltage is a great example for Australia. And you can get paid to do that. And so when I think about like a phase three system, I think about how would batteries start to serve these kind of grids of the future. The one thing if people shout at me that I should be clear on is that the way that Australia does that at the moment is they charge like a fee for system strength at the moment. So you only make money in Australia by avoiding the fee by providing a system strength. But you see where I'm coming from and this, which is that outside of just pure provision of energy. There are these other things that batteries can do and mostly to be good forming inverters where you can get additional system strength. And I'm just asked about that. I would have taught like it's a must to go this area right because the system is getting more and more complex. And we've seen incidents across Europe of how difficult it has been for grid operators to keep the grid up. Let alone talk about voltage stability and stuff like that. So I'm interested to hear what you said there in Australia. Are you seeing that in other places now at this point in time? Yeah, we've had in GB we've had system stability pathfinders. So rather than getting people to find we give people a pathfinder and pay them some money. I think we paid them somewhere between 10 and 20,000 per megawatt per year under these pathfinders. So that's the other way right so you can do carrot or stick Australia's doing stick to be doing carrots. Germany have gotten inertia procurement round again different stability pathfinders in GB but it's it's more inertia based. And in Germany, you can get something like 10,000 per megawatt per year. And again, it's still early days. But it just shows you if you've got these problems, if you've got an inertia problem, you've got a fault current problem, a voltage problem. If you as a system operator can define an auction process for it and put it out to market, you'd be quite surprised by what comes in. There are probably some regions that are wishing they had this a few years ago without naming names. Now, if we move westwards and we arrive in Europe. So when I saw your report on GB, I thought that there was certain location. And of course we've got a national price, which is another debate, but we got certain location where it seems that the batteries are making a lot of money and others much less. So can you explain a bit that location part of the revenue? Yes. In all grids, you've got to think about location. A lot of you've said on this podcast many times, time and space. I agree with it. If you are a power trader, that's something you've got to know inside out. And the same thing is true about where like knowing where to put your battery. I've given some high level numbers across all of this recording. Just know that inside each of those numbers, there's always a big range of returns. So not every battery is the same, different durations, different cycling rates, different locations. I mean, you get this really big range underneath in a way that you probably didn't with say solar and obviously different locations you would have done, but perhaps there's more consistent. So going back to GB and talking about location, for people not familiar with GB, we have a national wholesale market at the day ahead stage and the in today stage. And then things only get locational when you get into the balancing mechanism. And so what happens is that everyone dispatches on a national signal a day ahead in today. And then the control room from the national energy system operator then has to run around fixing things essentially in the last hour before delivery. And we've known about this for some time when you try and get gas assets to react in very quick period of time to let's say a locational problem. They might say, well, hold on, I don't want to react to that. I'm not ready. I wasn't planning to be on and now you're asking me to be on all of a sudden because winds drops slightly quicker. So what you're seeing is that in the balancing mechanism, you're seeing batteries undercut gas and essentially provide those locational services at far lower cost to the system operator. And those services are where you're getting extra revenue for those batteries. It's complicated on the face of it. A national price feels very simple. But when you then have to unwind a load of it when you get into the delivery, that's not simple. That's actually really complicated. And you're also forcing all of it through this kind of like lens of the last hour. And so you're designing a future system. You really want to think about how do you give locational incentives like way ahead of time so that people can put assets in the right place. They can make sure they're not wrapped up in some other service. It's not the right thing. The more that you can allow people to react to a locational signal, the better your future system will be. But would you say that a battery which which has been extremely profitable because of location, you find a cell result year after year after year or sometimes it spans and if there is a new transplant line. Yeah, absolutely. If you've got location problems in your system, be aware for transmission lines, they will resolve congestion. They are quite slow and like 10 to 15 years to get built. So you should be able to see them coming. There's another part to this right, which is that in all investment and energy, if you can line up consumer good as in lower bills with assets making money, then I think you're in a really good place. And your business case should be quite robust. If you're finding that you're making money, but it's bad for consumer bills as in you found some loophole somewhere, then I don't think that that is sensible governance. I would expect those places you'll find that those loopholes get close sooner than you expect. And when you get these kind of edge cases of like national market meets location market, there's just a lot of room for interpretation of rules to go on in between. And so I can't say I'm a fan of having those areas of uncertainty in market design. I much prefer markets where it's kind of much more upfront all the way through and a consistent pricing. Ed, could you talk a little bit about duration and how that's changing? I know we've moved from one to four hour batteries. And I'm here and people talk now about up to 12 hour batteries. Just talk a little bit about the development there and how you see that going forward. As in a lot of groups we're still around two in terms of the average of what's being deployed in regions like California were more like four. There is now this appetite for three to four hours. So when you're looking at investment cases of storage often you'll see sort of three to four systems come through. You've then seen things like the L Tessa in Australia, which is a scheme to essentially replace the way coal runs that was procuring assets that I think were around 11 hours. And we've recently run a long duration energy storage competition called L there's in GB. And that procured some assets that I think got up to 15 and a half hours. I think that might have been the longest asset and that was a company called field that submitted that proposal. So the first thing to say is that people think about long duration storage as something that's not lithium. I remember in 2016 looking at our system operator's view of long duration storage in inverted commas and that was like it was two hours with this kind of long graduation. And now it seems very comfortable that we can do for we could do eights and now you're seeing sort of competitions coming back with 16. Two things to say one thing is that every single time you add an extra sort of megawatt hour onto your site that megawatt hour is getting used less and less. And so if you want to make long duration storage work, you can't cycle it very hard because there aren't enough hours in the day. And so you need to get something that's really, really, really cheap to be able to make it work. So we see the sort of natural duration for storage as being around the four to six hour duration because that fits into a day. So you imagine a morning peak and an evening peak and a solar peak in the middle of the day. Morning peak of demand, evening peak of demand, solar peak in the middle of the day. And there may be some say wind overnight to get two cycles out of an asset. It needs to be around four to six hours. If you've got 60 hours, you can't use most of the battery for that. So it has to be really, really cheap if you want to, if you want to go ahead and build it. There's also the natural sort of follow up question, which is like what are the technologies to want to build. And we see lots of examples out there. Just remember, as Nicole Mangane's cobalt went to lithium ion phosphates, the lithium world is not static either. And we're also now starting to see things like sodium ion coming through. So what I would say is that we see a lot of like new technologies coming forward and trying to compete, but it's not as easy as you might think to get something that's commercially viable. What I would say is to look at those types of new generation that coming through if they can deliver a 10 megawatt 100 megawatt hour system or 100 megawatt one gigawatt hour system start to put your fate into them. But whilst there's still sort of the lab and R&D phase, I would say just just wait and see before you commit to too much. I think you're overly pessimistic because there's a revolution coming silicon anodes and which means that that your LFP are going to be five times more energy dance. There's one of my prediction for next year silicon anodes very excited, you know, replace the broad fight because that part of the battery technology isn't changing in a decade. So I'm an investor. Where do I put my money by continent? We get artists a lot. The first thing to say is you need to find your edge. So if you're someone who owns existing solar assets in Spain, which aren't doing very well from a revenue perspective. Okay, look for co-location on those assets. If you've got a fleet of one hour systems in GB or Australia or Texas, okay, you probably built those in 2018, 2019. It's time to augment those and bring in four hour systems. You might even be able to put it on the same site if you're working with a whole host of commercial enterprises, maybe behind the meter is a sensible way to go, right? So play to your edge. There's not sort of a single answer to this, which is there's one perfect solution of where to put your money. That's really where I would push people towards. There were probably some quiet exciting opportunities as well as regions. It's worth talking about regions. So if you've got a good connection position inside Poland or Netherlands, Belgium, PGM, there are going to be a couple of bumper years if you can get your timing right. So if you can get your timing right and get grid connected, it's much more about execution than it is about picking the right play. That's a high level. Outside of that, yeah, you're looking for some interesting conditions in whether things like summer coming through. There's definitely a kind of key train at the same. Well, Ed, we could keep you for another hour because you and Motto, you know, really so much. So you really need to go to person when it comes to battery investment and much more. Thank you so much for coming on the show. A pleasure. Thank you both. It's been great having you. Thanks a lot. Well, Ciao. Motto, so Ed and Ponteen, they really have built an extraordinary company in the past five, six years. Can you imagine they just raised first six months, they raised 50 million dollars, two-thirds equity, one-third debt, they have almost a hundred employees. So half in GB, 35 in New York, 15 Australia, it has become really a powerhouse for data around batteries. Yeah, even the wider power markets, there are such as batteries because batteries as we both believe and see is key technology going forward in the grid. And it's incredibly complex to deploy and I would say to make money out of it because the revenue streams are changing all the time, you know. Yeah, it's a moving target. Not only do we need the per like model to really check what's going on, but you are permanently with the technology that's getting better and better and cheaper and cheaper, but at the same time, the market is changing as well. So it's much more sophisticated than just putting solar panels or windform. It's a very, very complex universe and you really need to track what's going on. Yeah, yeah, that's not going to add to that. Lauren, you've got also massive changes on the demand side for electricity, which you haven't had before, starting with obviously data centers in AI, but transport electrification, you're seeing air conditioning units needed, where they were not needed before. So that whole demand side changes as well as you're having people putting a whole pile of assets in behind the meter, you know, solar batteries, whatever, heat pumps. That's a really complex system and very difficult to make sure that the system stays stable, you know. And because the revenues are stochastic, I don't really know what that means, but it sounds very intelligent. Now, if you have a crisis with Russia or with the straight of almost and the price of gas goes up, your batteries are going to make a lot of money. If you have events from a climatic point of view, like low hydro or low wind or high wind or too much solar, that's going to have also an impact on the price of batteries. But the interesting thing is, to the contrary of generation, when you have a problem against your scenario, you're going to make less money. But in the business model of batteries, the more problems you have on the grid, the more you can solve them and the more money you're going to make. So it's a very interesting asset and it's very difficult to fathom if you come from the wind and solar universe because it's all reverse. And in fact, the tools that we've seen are the best manager of batteries. They come from the gas universe, not the wind and solar. There was one thing I wanted to just take out of the conversation, which was this, we didn't spend a lot of time on it, but you called this phase three of the market where, where suddenly batteries are becoming almost like the center of stability for the grid. They're not just there for power trading perspective or for auxiliary services. You suddenly need them for voltage. You might actually need them for the national security point of view from backup power. You can go on and on and on in terms of the use cases of batteries. As the price of batteries goes down, there's increasing revenue, opportunities and areas that you probably people weren't thinking about. That's what I find really interesting about it. Yeah, but again, difficult to model. I'm talking. And by the way, it's back to your last point about that. I did want to comment on it. The people who are really making the money and this are the guys that come from the gas trading area. They understand this. They understand how they can match the two assets together and they can see what's going on in a different way than maybe some of the battery players because some of the battery players are coming off from the solar space. And they're probably lack that system-wide understanding that you definitely need to have, I think, in this ever-changing and more complex world. Yeah. Why is words? But Jarl, we thank Ed from Moto for coming on the show and I'll talk to you next week. Yeah, exactly. Tag said and thanks Ron. Speak next week. Thank you for listening to redefining energy. Don't forget to rate the show and subscribe on Apple Podcasts, Spotify, or the platform of your choice.