Energy Transition: In Conversation, with
Nick Boyle, Group CEO, Lightsource bp
During the past decade, we’ve witnessed the transformation of the solar industry, from a niche technology to one of the key players within our global energy mix. With 20% of Europe’s electricity demand predicted to be powered by solar 2030, and 30GW of market growth expected over the next two years alone, the importance of this once novel technology for the energy transition is now hard to question.
We’re looking forward to hearing more from Lightsource bp, a company that specialises in the financing, development and management of solar energy projects. We sat down with Nick Boyle, Group CEO, to get his thoughts on the role of solar within the energy transition and the future energy system more generally.
Nick, either within or outside of solar, what technologies and/or innovations do you see as most significant enablers for ET?
I think the big one is storage. Not any technology in particular, but anything that allows the successful ‘shaping’ of electricity delivery from renewables. At Lightsource bp we’re preparing for this at all of our new sites by building them with storage capacity in mind. Ultimately people expect to flip the switch and the light to come on, rather than wait until the wind blows or the sun shines and this is the big challenge with wind and solar energy. However, if we figure out a way to get electricity to the customer and make sure the customer has it when they need it, this will lead to energy transition unencumbered.
Can you tell us a little more about your strategic partnership with bp; what are you most proud of so far, and what, if anything, has been most challenging?
To answer that question I have to backtrack a little bit. We decided long ago that oil and gas had the right sort of attributes we needed in a strategic partner. They were used to large engineering projects, particularly in remote places. Power and energy markets were completely familiar to them and they had enormous existing trading capabilities. In terms of their financial strength, they had the resources to deliver, and the government connections to make it happen. We were also not blind to the fact that they really wanted, indeed needed, to make this energy transition a reality as they had pressure coming from all sides to do so.
And out of a wide range of suitors, bp just got it. They got that the world needed to change, and that they needed to play a leading part in that change. They got that the transition would only be possible if the established businesses embraced the new. And they got that change and reinvention were coming, and this offered at least as many opportunities as it did challenges.
The strategic partnership is working amazingly well for us, far better than we could have ever envisioned. Our philosophy is to combine the best of both partners: Lightsource’s skills in identifying and developing solar opportunities, alongside securing funds and offtake contracts, with bp’s scale, financial strength and global reach. Since the beginning of our partnership in 2017 our pipeline has grown eightfold, our territory count has trebled and our staff headcount has doubled. We want to build the first global brand for solar and in just two years we have now a very solid foundation on which to do just that. Furthermore, the partnership has totally changed how people view our company as they now know that we’re going to stand the test of time.
On a regulatory level, what do you think the most important development could be to help drive clean energy solutions?
I think this comes down to creating a truly level playing field on subsidies. Renewables have been criticised as ‘subsidy junkies’ in the past and there was a lot of political heat several years ago to remove the support to our sector. Well, we’ve come through that and turned solar in particular into an economic prospect that succeeds because it is an economically attractive prospect. The solar industry is able to generate electricity for 60%-70% of the world’s population, at a cheaper price than our competitors.
What’s often less discussed is the enormous range of subsidies that remain for traditional energy sources. These are barriers to our growth and may not in fact be best for our economy or consumers. The energy market, like all markets, is by definition efficient and needs to be allowed to find its own position, without having any governmental policy or regulation getting in the way.
How do you see the relationship between digitalization and energy transition, and how are you adapting your practices in an increasingly digitalized world?
The concept of ‘data managing electrons’ is everything. Whether it is optimising battery storage in the system or better management of the grid, software plays a critical role in maximising efficiency of investment. The whole concept of Internet of Things and everything that needs, supplies or stores electricity is what is going to make sure that the majority of our energy output doesn’t go up a chimney, which is what has happened in the past. It will also reduce the need for lots of power generation capacity sitting mostly idle ready to meet the peak load that only happens at specific times rather than the average we see throughout the year. ‘Data managing electrons’ means we need fewer power stations and that is a massive economic benefit.
We’re investing into this space at Lightsource bp through our technology division, Lightsource Labs. The team there are focused on research and innovation, including a software Home Energy Management System that turns a home into a smarter user and producer of energy. The system integrates solar generation, battery storage, Internet of Things enabled devices and even electric car charging in order to ensure that households get maximum benefit from any electricity they generate at home, and giving the consumer control over their energy and greater independence from their retail energy supplier. This system means that the customer typically retains more than 90% of the electrons being produced from the sun on their roof, whereas without the smart system this would be closer to 30% as the energy would be generated at times when they are not around to use it. That is a huge benefit to both the customer and the wider system because it means we’re using that energy to its maximum potential.
There has been a lot of buzz around PPAs – how is this model working for you currently, are there any new agreements you call tell us about?
The reason why PPAs are highly valuable to the recipients is because they give them absolute control over one of the biggest bills they face. We are adding huge value to a company in two ways: first we reduce their unit energy costs compared to the market price; and second we can then fix that price for 10, 15 or 20+ years. That is something unimaginable with energy produced from fossil fuels – try finding someone who will ‘fix’ the price of oil that hasn’t even been discovered yet! We can do this with our PPAs because we spend all of the money upfront so we know exactly what we are amortising and hence the price we need to deliver a return. We know the sun is always going to come up tomorrow so we don’t have a worry about our fuel costs either.
PPAs are also highly valuable to the seller because they enable us to securitise the promise to pay from counterparties, which makes banking so much easier. Ultimately, the reason why we are able to be so cheap is because of the predictable, long-dated nature of what we produce and this also gives us easier access to backing from long-term investors such as pensions, life insurance etc. and lower interest rates.
As a company clearly helping to shape the future of global energy, what do you think the future of global energy actually looks like?
The future is all about the need to generate power efficiently and cheaply, making sure that we store it in a way that is appropriate and allows us control over it in order to get the maximum out of our spending. But we also need to be efficient in the actual system that uses the power, namely houses, businesses, transportation, private vehicles etc. We need to move away from gas-based heating for households and oil-based transport systems, to electric ones. We need to challenge the status quo and promote more efficient ways of doing more for less energy input.
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