Speaker 1
There are a lot of buzzwords when you open the news or listen to television about hydrogen and sustainable fuels and biomethane. But what is really needed to make that attractive? That's what we're here to discuss today. So starting maybe with Felix.
Speaker 2
How is your company contributing to the energy transition and helping to achieve net zero? Well, obviously all these billion of tons and kilograms of hydrogen that I heard today will produce within the next 10 or 20 years, or hopefully also in five years, we transformed again back in energies. What are we doing? We are doing the fuel cells for that, as you rightly mentioned, based on direct methanol. So methanol using as a fuel and then also on hydrogen, and really then bringing the fuel cells into the markets, finding people who are willing to pay the price for it, finding the right markets.
So again, we cannot rely on subsidies, we cannot rely on government's helping us subsidizing the sales person, our products. There's a lot of people asking for hydrogen fuel cells and a lot of incoming calls for those fuel cells and a lot more than we've seen in a lot of recent years. And as my analysts always ask me, why are we not making millions and millions and millions in revenue with hydrogen fuel cells? The reason simply being is it's an expensive technology.
Also, hydrogen as of today is super expensive. Maybe it'll be cheaper one day, but that will probably take another 10 or 20 years. And again, do we see demand? We see a lot of interest in hydrogen fuel cells. We do sell a lot of hydrogen fuel cells, but into applications where people need this specific energy source. And let's be honest, also in the recent years, when we bought our products, people did not buy it because it was a fuel cell people bought it because it has certain USPs and that's off-grid power in certain regions and that's when they're willing to pay the price for it. So long answer to your question, interest is there, price sensitivity is still very high.
Speaker 1
How do you see the long-term perspective of the sector? What has attracted you to it? Which of the criteria you just mentioned has the company ticked? Also question to Felix.
Speaker 3
I started the first investment in 2016. So back then it was, I liked what Marco said, you have to be crazy enough to believe in the whole thing. So back then it was not the most sexy investment in the field, but I believed in the long-term positive perspective of biogas and biomethane. So that's when we stepped in and started to buy up companies in that sector.
So it was this long-term vision and the opportunity that was at hand which showed up on our radar screen when we did the first investment.
Speaker 4
I mean, I think from our perspective there's clearly a regulatory support of the sector right now that makes it fundamentally interesting with I think a lot more longer term potential upside. I think the question is if you listen to the previous panels with regards to how much hydrogen we're going to see in the
It is possibly a transitional technology, but I think ultimately it will possibly transition into something else than it is today. Today it's a transition technology in the long term. We see it possibly more as an often almost like an energy from waste facility, because let's face it, we'll still eat meat in Germany. There'll still be chickens and cows.
kind of waste that needs to be treated and that needs to be treated in a way that captures the CO2 that otherwise is emitted uncontrollably. And so if we really want to become net zero as Germans or as Europeans, we see the technology basically of the digesters as becoming a kind of energy from waste type usage for animal waste in the very long term.
Speaker 3
It's not a transition technology. I think it's there to stay, but it's changing it looks and feels. When we entered the market 2016, it was all about baseload and I think that's pretty much gone or it will be gone. We don't need biomethane or biogas for the baseload in the electricity market, but it will be there for the peak load, I'm quite sure, and it's there for the decarbonization of the heavy traffic. I don't see that hydrogen will do that.
Especially when I look at our farming activities, heavy lifters, heavy tractors or at the construction companies, there will be a market space that stays where biomethane is the better option than hydrogen or the cheaper option. And when we look at the large real estate, it's there to be decarbonized with a biomethane solution.
The combined power and heat solutions that we are evolving. I mean we run a couple of district heating installations and they used to be in the past just connected to the biogas plants directly. Now in the future we will change that, add the solar systems, actually we're currently doing it, it's under construction, and we add the biomethane treatment plant and the next step will be to add a battery storage for the day and night shift of the electricity.
And when you combine all of that, the city where we do that will be completely on a green energy supply. And we will shift during the winter and the summertime, the way we operate the system, be it electricity from the biogas during winter, when you need the heat, or from the photovoltaic with the battery storage during the summertime.
And these kind of combinations, that's there to stay. And the linking part is the biogas, no matter where it comes from. I think there will be a revival of crop-based biogas because we don't need all that land. We don't need all the crops that grow. We cannot sell it internationally. We're not cost competitive, but we use only 20% of the agricultural land to feed our human beings here. We don't need more. And so we make
I think it will come back that we realize how valuable it is to have this closed loop from crop-based Navarro's to biomethane to electricity and heat and also the molecules.
Speaker 1
Anything you want to add?
Speaker 4
No, I mean obviously from an investor perspective you would expect me to be slightly more pessimistic than the CEO of an industry player because we always tune down the business cases right? I mean that's kind of the logical...
logical view that you would have, but I'm obviously glad to hear the view because it just kind of reaffirms what I've told my IC a few weeks ago.
Speaker 1
Very good. Then going to the hydrogen side, Stephanie and Daniel first. There are a lot of plans to build hydrogen projects, but actually the number of projects that are operating so far is quite limited and it's more test projects we've seen reaching COD. What do you think in your view is required to really get to a larger scale and to make these ventures a success?
Speaker 2
I think there's not only a lot of plans, there's a lot of projects out there and hydrogen electrolysis, megawatts, I think by 2030, we already did before, but also IES believes we need something like, what is it, 730 gigawatts whatsoever to get to net zero.
And we need a lot of electrolyzers for it. It's going to come from the US. It's going to come all over the world. Let's wait and see. You know, by 2003 is a long way to go. And the reason why we really see is, right, and we are sitting right there. We need to sell our products and we cannot sell our products and the customers do not have hydrogen. People will not buy it if they don't have the fuel. People will not buy it if the fuel or the hydrogen is not as a competitive cost.
So electrolysis or hydrogen is a key thing for us. And it's only, let's be honest right now, most of the hydrogen out there is gray. Green is like, you know, super, I don't even know, it's not even two or 3%, it's super low. So, you know, for the time being, the fuel cell is not a green energy, done, right?
Hopefully, it will become a green energy soon, and that's why we're in the market. The reason why the projects are not really kicking off, and it's very simple, and you may ask the investors, is you don't get financing. Why do you not get financing? It's not only because interest rates are high. Interest rates are high for all investments. So in return, it doesn't matter what you invest. The capital costs are the capital costs. The reason is regulation is super high. Try to build electrolysis somewhere. The reason is prices.
You don't know what the off-take prices are. There's super high insecurity. And of course we could see all those great studies from all those super smart consultants, where the pricing will go. Eventually, hydrogen is gonna happen. It's gonna be there. It's not gonna be away. And it's not gonna go away. It's probably gonna take a little bit longer. And it really needs to come down in cost. If it doesn't come down in cost, as quickly as you may read it here and there, then obviously you need to find market where...
people are willing to pay the cost for that energy and the question is only how much does energy cost at a certain site? And obviously if you're off grid in a house or if you close into the grid, well then energy is a lot cheaper than if you're somewhere out, well that's how you in the Himalaya, all right? So, that's sort of the way we see hydrogen. No, we still strongly, strongly believe in it.
But we see it's gonna come a little bit different from what you may, you know, you read in newspapers. It doesn't matter what technology you have, you know, you need to go and apply or sell the technology where people are willing to pay the price and do value that technology and valuing the price. And it has, whether it's fuel cell or any other technology. And of course, if I wanna compete with, you know,
the grid or the grid price over solar, right? Then of course with hydrogen, it will take a long time to be competitive in terms of pricing, not only from the technology, but also simply from the hydrogen cost. But like I said, then you need to find markets. And when we done this 20 years ago with direct methanol, the reason why we started with methanol with hydrogen 20 years ago, what we need to find markets, what people saying, okay.
The price of the energy I need for the what produced at this site is not only the energy, it's getting it there, it's operating it there, it's reliability, and it's a lot of other factors. I think this is also the key for hydrogen. We can wait till we import it from North America, till we get it from Africa. I remember Desert Tech many years ago, we used to be a huge investor in CSP mirrors. And we say, yeah, this is only gonna happen, and we're gonna have big cables coming from Africa to Europe, and then we have a lot of energy, frankly speaking, I haven't seen this cable yet.
Then we say, yeah, we'll get all this energy from the sea, in Bavaria, I know, also discussion, getting it from the Northwest has been going on and Bavaria is not being supportive of that one. So yes, this will all happen, but I think it's gonna take longer. But if we do not want this technology to really die, and if we do not want that investors are pulling money out,
We need to find ways to keep it attractive and really get it into the market step by step. Not a revolution, but hopefully an evolution.
Speaker 1
What role is politics and the regulation playing in getting that off the ground? Is it more a supporter or helper or is it locking?
Speaker 2
How do I answer this diplomatically? Don't. I put this way. I've just been recently in Europe with our chancellor, and then there's a vice chancellor. And he visited our site, which I think is a really nice thing of him to do. And obviously, it's helpful. But, when it comes to the big but, and it doesn't matter where you are in the world. Regulation is super, super high.
And I think politics is not very helpful. They're very helpful in saying, yes, we're going to have hydrogen. We're going to have the hydrogen infrastructure, electrolysis. Trust me, try to build an electrolysis somewhere until you get the permit. It takes forever. And it's probably different in Germany. And I live in Switzerland. It's different in Switzerland, in France, wherever you are. There's no at least that is my impression. And that's the people we have that is no even in Europe, like one set of rules how and where to do it.
And so, is politics helpful? They probably could be more helpful in making regulations easier. But I think this is something everybody kind of, you know, sees and knows, but only in this space, but specifically also in this space. I don't know.
Speaker 3
Yeah, we see that daily. I mean, we have so many processes running where we apply for new. permits to change, to build new, whatsoever. And you see that the authorities, they lack the knowledge and the capacity to really understand the complexity of their own rules. And then you get lost in a nirvana. So we heard that a lot, but maybe we can look at a couple of examples. And I'm not giving up yet on politics. I mean, they are the wild card, I have to admit, in all the investments that we have done.
And on Friday I will go again to one of those expert hearings in the Bundestag to try to convince them that we need to streamline our regulation, that it's consistent. As an example, for the biogas production, the crop cap is quite important. And it was introduced in Germany, coming from the environmental part, to make sure that there is no monoculture.
plant so that you have mice after mice after mice on the fields. Because this was regulated in the energy regulations because they were local, they were under the German authorities and they couldn't change the agricultural norms which were driven by Brussels. So we have this crop cap now the Brussels caught up and changed the farming regulations that introduced also regulations to protect us from any monocultures.
Now the two caps are not aligned, they bite each other. And we are not willing in German politics to scrap the one set of rules completely because now we have a European wide set of rules for farming. So we have still the rules of energy trying to regulate farming in place in Germany. And we have on top the European rule.
That is not doable. Stuff like that is annoying in the day-to-day operations. We operate biology. That is not the same day by day. It's changing by air pressure, temperature, wind, whatsoever. But we have strict regulations and the monitoring gets tighter and tighter. What to feed the plant day by day. Which is crazy. We need flexibility. Then we could progress way faster with scaling up.
They didn't do what in a formal panel was said, go back a step and get a big systematic view on it. But we rather see that there are sentences from each lobby group stitched together and that's a new package. When I talk to my team that does all the regulatory work, they say, hey, no, there's no speeding up because they took away the two roadblocks there, but the other five are still there, so nothing changes.
We haven't seen any speed up of any of our photovoltaic systems and it's ridiculous that it takes three to four years for a large scale plant. And the typical plant we build has more than 100 megawatt peak capacity and you discuss how many spots for birds to fly in need to stay open in that field and it takes half a year. So that's the level where we operate is super important, but they need to wake up. Sorry for being so lengthy.