Jan Weismüller, CFA

#energytransition is driving demand for a modernized #powergrid. Yet current #infrastructure is struggling to keep up with the rapid growth of #renewable #energysources, resulting in significant delays and rising costs. Addressing these challenges requires both optimizing existing #grids and building new connections. Streamlined permitting, #innovativetechnologies, and a coordinated approach are essential to meet the changing landscape of energy generation and consumption.

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A great report out recently from Clean Energy Associates (CES) that sets out the general move towards 5MWh BESS systems because of suppliers moving to +300Ah cells, in part based on the standardisation of 20-foot BESS based containers.   The economics of current generation BESS systems are still very much focused on deployment of container-based systems, which due to their requirement for land does restrict the ability to sensibly provide large scale energy storage, which also keeps the per KWh price higher than otherwise could be provided. As an example, the current generation of container-based systems traditionally require circa 7.5-10m2 per MWh and if you were to assume 5 MWhs per MW, then the EUs current estimation for 900GWs would require a container-based system of between 50-100KM2, or the size of the German city of Heidelberg by 2050. If BESS systems are truly going to deliver large scale energy storage, then they need to reduce the land required to below 5% of the current requirement of container-based systems, this will then allow true scale to be deployed at grid level. We believe the next generation of BESS systems are better deployed using dedicated large scale buildings, similar to hyper scale data centres, that have the ability to provide GWh capacity, which in itself will drive down the cost per KWh to customers. https://lnkd.in/dAyKrfsg

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It is not easy to do project financing, let along project financing on a "first of its kind" type of project. As such, it was fun and insightful discussing this topic with like-minded colleagues during the BloombergNEF summit in Munich last week. As always, there is no single magic bullet you can use to achieve a succesful financing, but there are strategies to help you. Please find the link below, and many thanks to Claire Curry Tim Hawk Aruna Ramsamy and Christina Friberg. #climatefinance #projectfinance #sustainability #munichsummit #ing

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This week we have announced 𝗼𝘂𝗿 𝗹𝗮𝘁𝗲𝘀𝘁 𝘀𝗲𝘁 𝗼𝗳 𝗶𝗻𝘁𝗲𝗿𝗺𝗲𝗱𝗶𝗮𝘁𝗲 𝗻𝗲𝘁𝘇𝗲𝗿𝗼 𝘁𝗮𝗿𝗴𝗲𝘁𝘀 𝗶𝗻 𝘁𝗵𝗲 𝗿𝗲𝗮𝗹 𝗲𝘀𝘁𝗮𝘁𝗲 𝘀𝗲𝗰𝘁𝗼𝗿 𝗶𝗻 𝗦𝗽𝗮𝗶𝗻 𝗮𝗻𝗱 𝘁𝗵𝗲 𝗴𝗹𝗼𝗯𝗮𝗹 𝗮𝗹𝘂𝗺𝗶𝗻𝘂𝗺 𝗶𝗻𝗱𝘂𝘀𝘁𝗿𝘆. They join the list of targets for eight emission-intensive sectors previously set by the bank (oil & gas; power generation; automobile; steel; cement; coal; aviation and shipping). The #netzero journey in banking means financing the technological shift in all high emissions’ intensive sectors. The best way to manage our impact on climate through financed emissions is to set intermediate science-based targets in key industrial metrics and embed them into our frameworks, tools, deal processes. This is what as founding members of the #netzerobankingalliance we are at BBVA committed to. ➡️ For commercial real estate, BBVA’s target is to reduce the intensity of its financing portfolio by 44 percent between 2023 and 2030 ➡️ For the mortgage segment (residential real estate), the reduction target for this period is 30 percent ➡️ For aluminum, the bank set the target of aligning its financing portfolio to the decarbonization trajectory established by the International Aluminum Institute (IAI) for a global emission reduction of 28 percent by 2030 In order to achieve these targets, a coordinated effort is essential, with the participation of multiple stakeholders. Climate policies and adequate public incentives will be particularly relevant for the decarbonization of the residential real estate sector. In this sense, Spain has an Integrated National Energy and Climate Plan (PNIEC) as a road map that defines the national emission reduction targets, penetration of renewable energy and energy efficiency. BBVA’s hypotheses are based on this scenario and its fulfillment will be essential in order to accomplish the established decarbonization objectives. https://lnkd.in/dBCZH4Y4

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𝐏𝐨𝐭𝐞𝐧𝐭𝐢𝐚𝐥 𝐁𝐁𝐕𝐀-𝐒𝐚𝐛𝐚𝐝𝐞𝐥𝐥 𝐦𝐞𝐫𝐠𝐞𝐫 𝐰𝐨𝐮𝐥𝐝 𝐜𝐫𝐞𝐚𝐭𝐞 𝐨𝐧𝐞 𝐨𝐟 𝐰𝐞𝐬𝐭𝐞𝐫𝐧 𝐄𝐮𝐫𝐨𝐩𝐞’𝐬 𝟏𝟎 𝐥𝐚𝐫𝐠𝐞𝐬𝐭 𝐛𝐚𝐧𝐤𝐬 The combined entity could free up an additional €5bn a year in lending capacity for the real economy, says BBVA A merger between BBVA and Banco Sabadell would create one off western Europe's 10 largest banks and Spain's second largest bank by domestic market share, widening the gap between country's largest banks and second tier banks. #bancosabadell #bbva #bankmerge #banking #europe #finance #spain https://lnkd.in/d67MTid7

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Almost halfway into 2024, some charts, analysis and considerations about the main trends of European #powermarkets : 1) #emissions from the power sector keep declining in double digits year-on-year. After a record low fossil generation in 2023, we have witnessed the continuation of the same trend in the first months of 2024, with around 20% less carbon emissions than last year in the January-May period. April&May 2024 are so far the months with the lowest carbon emission from the power sector in Europe #ever recorded, even below the record month of April 2020, in the worse period of the COVID19 pandemic. We see however risks for increased emissions in Q4 '24, especially if constraints in the European #powergrid will remain. 2) From the #demand side, the recovery in the power sector remains weak: we calculate so far 1.5% higher demand than last year, and we expect this trend to continue throughout 2024. Demand destruction is still hitting Europe quite hard, though with significant differences across countries, and a stronger recovery in the Nordics and in the UK. Embedded #solar generation is growing in every country, and it is often difficult to capture and to quantify explicitly; we just launched our third embedded solar model (Spain), and we will probably add a forecast model for France soon. 3) #volatility is here to stay: in a matter of a few weeks we have witnessed both record-low prices (first negative hours in Spain, record high number of negative hours in France,...), and record-high prices (last Monday intraday prices reached the ceiling at 9999 EUR/MWh on record high discrepancies between day-ahead forecast and actual renewable output). Also, record low #captureprices and record high #curtailment of renewables and nuclear technologies, as we have pointed out in other posts. 4) The deployment of #renewables continues at sustained pace, and we expect this year for the first time renewables (wind, solar, hydro & biofuels) to cover more than 50% of European demand. The largest increase come from wind and solar, which are expected to add ~80 TWh year-on-year from 2023 to 2024, and about 100 TWh per year in the remaining part of the decade. 5) The recent increase in #gas prices coupled with the renewables rich spring months have hit hard gas-fired generation in Europe, whose contribution to the power mix has been reduced to ~20 TWh/month (!) in both April and May, corresponding to barely ~10% of the power demand in these months. So far gas generation is down 17% year-on-year, and coal+lignite generation is down 22% year-on-year, mostly during the winter months. Last year in this period we saw quite a lot of lignite-to-gas switch, while this is definitely not the case this year, with lignite plants in the money for most hours in Germany, leaving gas plants in charge of covering just peak hours. As usual, data and analysis on LSEG Data & Analytics , coverage of the figures/charts ~90% of EU27+CHE+NOR+GBR.

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🎭 Impact Investing: Beyond Virtue Signalling Impact investing, aiming for both financial returns and positive social or environmental change, faces a growing challenge: virtue signaling often overshadows genuine solutions funding. This post explores this disconnect and calls for a shift to outcome-oriented investing. 🚫 Virtue Signalling: A Barrier to Impact Virtue signaling, the practice of public statements or actions for a positive image without substantive impact, hinders impact investing. Companies may make grandiose claims but lack results, while investors prioritize PR over genuine impact. 🌀 The Harms of Virtue Signaling Virtue signaling diverts attention from pressing issues, hampers impactful solutions, and erodes public trust. It creates a false sense of progress, hindering impact investing's ability to achieve its goals. ✅ Outcome-Oriented Investing: A Path to Real Impact To address these challenges, we need outcome-oriented investing. This means investing in ventures with measurable impact on social or environmental problems, outperforming alternatives. It's about prioritizing impact over appearances. 🌏 Beyond Buzzwords: A Call to Action When evaluating impact investments, focus on tangible results: * Measurable Impact: Quantify CO2 reduction, lives improved, and timeframes. Compare to alternatives. * SDG Alignment: Ensure the investment aligns with global priorities. * Efficiency: Assess the venture's ability to convert capital into impact. Compare to current pathways and consider maturity and jurisdiction. By asking these questions and conducting due diligence, we can identify truly impactful investments. Let's move beyond virtue signaling and embrace a future where impact investing drives positive change. Can we enhance financial engineering for real-world outcomes? Share your thoughts.

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Against the backdrop of the ongoing debate and conflicting data surrounding various aspects of #energytransition, the overarching trend towards new and sustainable energy system continues to gain momentum. It's important to remember that different sectors and regions are undergoing their own #energytransitions, each with its own timelines, ambitions, policy support, and economic factors at play. And it has been clear that we will need a broad and diverse set of solutions – and perhaps even all of them – not only to address the #energytransition but also to meet the growing global #energydemand. Just few topics where differing perspectives shape the discussion: 🌬️☀️ #Renewables and #Intermittency : While renewable energy adoption continues to rise, concerns regarding #solar and #wind intermittency persist, with one side of the argument is that it hampers #gridstability, while others highlight advancements in #storage and #gridmanagement solutions addressing these challenges. 🌽 🍴 #Biofuels: The debate over the sustainability and environmental impact of #biofuels has increased, with conflicting studies assessing their carbon footprint and land use implications. ☢️ #Nuclearpower: Despite recent resurgence in conversations about #nuclearpower, it remains a divisive topic, with proponents highlighting its #lowcarbon base load power, while opponents raise concerns about safety, waste disposal, and the potential for proliferation. 💧 #Hydrogen: Conflicting viewpoints surround the potential of #hydrogen as a #cleanenergy solution at scale, with debates over its production methods, cost-effectiveness, and infrastructure requirements. 🏭 #CarbonCapture: #CCUS scalability, cost-effectiveness, and long-term environmental impacts continue to be debated.

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After the boom: BESS revenue learnings ================== Key points from my very qualified panel. - diversification of geography remains the key priority for BESS platforms (and BESS deployment obstacles are falling: e.g. Italy, Netherlands, Spain) - BESS platforms are sceptical about big batteries: they impede diversification - diversification of optimiser matters within a geography: performance dispersion is high - BESS tolling is growing, but it will be a shallow market with availability quickly saturated - optimal asset duration is not uniform but a function of geography: 30 min for Irish DS-3, 8 hour for Italian MECSE - BESS revenues’ gas price link is neither a surprise nor a risk - plenty of signals that BESS assets’ natural owners are renewable generators - BESS is merchant. Deal with it. Accept and manage, like any other portfolio. Thanks to the exceptionally qualified Alan Smallwood, Amanda Niklaus, Paul Soskin, Alexa Strobel, Lukas Pfeiffer, representing Gore Street Capital, BKW AG, Masdar Arlington Energy, Field, DRH (Digital Resources Holdings) and of course Jo Wilkinson 🌞 Renewable Energy Event Expert.

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ING - July’s ECB cheat sheet: The less I know the better The ECB is weighing sticky inflation and wages with a softening growth outlook, French political turmoil, and more dovish Fed expectations. Cutting again this week is out of the question, and giving new rate guidance is probably an undesirable path too. Once again, less is more in ECB communication, and the impact on rates and FX should be limited

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European Utilities Fundamental Update: * Energy transition remains a driving force in the Utilities sector, leading to elevated capex investments, especially with integrated utilities targeting material growth in renewables capacity. * Regulated electricity transmission and distribution networks also require an increase in capex investments for renovation, reinforcement, and extension that will allow the grids to adapt and handle these renewable connections. * Capex growth will cause leverage metrics to tick upward over the next few years. However, several factors including rate relief and added capacity will help mitigate greater upward expansion. * Supply chain delays, high interest rate environment and the persistently high inflation has impacted investment spend and renewable projects across the sector. Offshore wind projects have been the most severely impacted based on the longer construction lead time. * There is limited scope for large-scale and transformative M&A within the sector. Any activity will likely be relatively small-scale or bolt-on type acquisitions.

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FIXED INCOME FOCUS - JUNE 2024❗️ By Edouard Desbonnets 📖🖊️ Summary 1️⃣ Monetary policy decoupling has begun: the ECB has started the cycle of rates cuts before the Fed, as it cut rates in June while the Fed is delaying. We expect two more rate cuts for the ECB (September and December) and only one for the US (September). In 2025, we expect three rate cuts in the eurozone and four in the US. 2️⃣ We expect the US 10-year yield to fall to 4.25% over the next 12 months, while the German equivalent should reach 2.25%. We are Positive on US government bonds and Neutral on German government bonds. We favour intermediate maturities (up to 10 years) in Germany, and we prefer to wait before adding duration in the US (3-5 years for now). 3️⃣ French political risk: we are cautious on French government bonds for the time being, given the risk of wider spreads before the elections, which turn into opportunities after the elections. 4️⃣ Spotlight on India: Recent elections and upcoming index inclusion. Indian Government Bonds (IGBs) will be included in major indices such as the JP Morgan GBI-EM Global Diversified and Bloomberg indices from 2024, boosting capital inflows. We believe this inclusion, along with a favourable economic outlook, high yields and low currency volatility, will increase the attractiveness of IGBs for investors over the medium term. 5️⃣ Opportunities in Fixed Income: we are Positive on US Treasuries, US inflation-linked bonds, US Agency Mortgage-Backed Securities, UK gilts, as well as European and US investment grade corporate bonds. We are also Positive on Emerging Market bonds in hard and local currency. Enjoy this exciting read📖❗️ #bnpparibas #wealthmanagement #privatebanking #markets #economy #strategy #articles BNP Paribas Wealth Management - Private Banking

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Big day today (or not with ECB 100% priced in to cut today). They will cut...but will it be a Hawkish or dovish cut? ING scenario analysis below

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German consumers utilising dynamic #electricity pricing reaped the benefits of high #renewables penetration with retail tariffs of only €6.2c/kWh over the course of April. In a renewables dominant #grid the ability to afford these rates will stimulate increased demand for #heatpumps, #heatstores and #ev adoption in step with a wider #electrification of the energy system.

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The #IEA published a new and interesting report on the relevance of recycling of #criticalmaterials. "Recycling is indispensable to the security and sustainability of critical minerals supply for clean energy transitions. [...] Moreover, scaling up recycling mitigates the environmental and social impacts related to mining and refining while preventing waste from enduse technologies ending up in landfills." As we've highlighted in the past pointing at the 'European Critical Raw Materials Act, #recycling critical materials plays a vital role from #climate, #environmental, #economic, and #geopolitical perspectives. It serves as a powerful #catalyst for advancing the #circulareconomy. Swisscanto yohann terry Cezara Lozneanu Gerhard Wagner, PhD, CFA Dr. Daniel V. Fauser Rocchino S. Contangelo Christian Haller, CFA Dominik Ladner

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Today, I’d like to highlight a recent article in The Economic Times (https://lnkd.in/dxHgS8Jc) that discusses the crucial development of the International North-South Transport Corridor (INSTC). This project, initiated over two decades ago, is a part of the Eurasian Transport Network, Eurasian Development Bank’s megaproject. This initiative introduces a new approach to regional connectivity and outlines essential projects and strategies to enhance transport links across Eurasia. Currently, there are still no direct rail or road connections between #India and Central Asian states, with costly air transport being the only direct option. Most goods are shipped via the Suez Canal and Black Sea ports, tripling the distance and requiring multiple transfers. This leads to high transport and logistics costs, which reduce the competitiveness of goods and limit the potential for increased trade between these regions. The #INSTC will reduce the delivery distance from the Indian port of Mumbai (Nhava Sheva) to #Uzbekistan’s capital Tashkent to 4,700 km, compared to the current 7,000 to 10,000 km routes. This development is expected to revitalise trade between #CentralAsia and India and boost India’s investment in the region. At the #EDB, we believe that building physical infrastructure alone isn't enough. We also need to focus on "soft infrastructure" - the rules, procedures and coordination between governments and the private sector that ensure the system runs smoothly. Our think tank suggests focusing on key soft infrastructure improvements, such as consistent container services, competitive tariffs, simplified trade agreements, standardised road transport, easier visa processes, better customs cooperation, and the digitalisation of customs and transport tools. #EurasianDevelopmentBank #InternationalTrade #Infrastructure #roads #EurasianTransportNetwork #logistics

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INVESTMENT STRATEGY FOCUS JULY 2024❗️ By Edmund Shing 📖🖊️ Summary: 1️⃣ Election uncertainty surges: early July French and UK legislative elections trigger increased policy uncertainty. November’s US Presidential election is also increasingly in focus. Typically, political events trigger short-term volatility but have little long-term effect on financial markets. 2️⃣ Hedging against heightened uncertainty: to hedge against this increasingly volatile backdrop, investors can look to safe havens such as physical gold and short-dated bonds, secular growth themes such as electricity/energy infrastructure & clean water, and structured solutions with downside protection. 3️⃣ Global disinflation to intensify, driven by lower goods prices, stable energy costs and slower rental growth. We believe that US, European and Asian inflation rates will fall towards or below 2% in H2 2024. Supports sovereign and corporate bonds, with short-dated yields likely to fall. 4️⃣ Global rate-cutting cycle to gather pace. Easing inflation should permit central banks to lower benchmark rates. The Bank of England and the Fed should join the ECB, SNB, PBOC and Bank of Canada in reducing interest rates over H2. Should lend support to selected short rate-sensitive property markets like the UK and Spain. 5️⃣ Look to add on weakness to i) selected cheap emerging markets bonds and stocks such as South Korea, Turkey and Latin America; ii) precious and energy transition metals (gold, silver, copper, aluminium) and associated miners; iii) European bank sector bonds and stocks. Enjoy this exciting read📖❗️ #bnpparibas #wealthmanagement #privatebanking #markets #economy #strategy #articles BNP Paribas Wealth Management - Private Banking

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As a leading actor for the economy’s #Decarbonation, Crédit Agricole CIB is pleased to host a digital conference on the #EnergyTransition financing and investment opportunities on June 28th 2pm CET, bringing together 12 high-profile panelists around 4 round-tables (corporates, public institutions, asset owners and asset managers) to share their latest views on how to navigate this new industrial revolution. Looking forward to being your host on this digital conference. https://lnkd.in/e7wSkVPY

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