Oversupply, hydrogen storage and the future energy system

Adam Sroka (00:41)
Hello and welcome back to the HyperCube podcast. I am joined today by Lawson Steele, who is CEO of Haldane Energy. Lawson, great to see you. Would you like to introduce Haldane, introduce yourself, what you’re up to, what you’re doing in and across the energy sector?

Lawson Steele (00:58)
Hi, Adam. Thanks so much for having me and great to see you too. So my name is Lawson Steele. And as you said, I’m CEO of a business called Haldane Energy Limited. And that is the latest of three renewable energy infrastructure development strategies that I’ve been involved with as a kind of founder and ⁓ I guess kind of shareholder director, ⁓ executive over the last decade or so. ⁓ And Haldane is part of a

Family of companies, as I mentioned, form part of a group called Wimbledon Energy that’s based in Edinburgh. And I established that group of companies with two fellow founders a decade ago. I guess really the group is kind of, if you boil it down, we’re committed to delivering the necessary renewable energy infrastructure that is required for the transition.

in the UK. have, we talk from time to time about the kind of geographical growth and looking outside of the UK, but the honest truth is we’ve kind of got our hands full in terms of the things that we’re doing right now. But like, I’ve always been fascinated by the work that you do and our interactions when we’ve had them. So I was delighted when you wanted to, you know, you want to understand a bit more about myself, but hopefully.

the conversation can be two way and you can share your thoughts. Now, I’m presuming that we’ll go on to talk about more precisely what Halden does and what those other companies are doing and what I’ve been doing within them during the course of the conversation.

Adam Sroka (02:31)
Yeah, definitely. think you were the, Dane was first introduction to the word DecaGigawatt, which is just great chat. So we’ll get into that a bit later, but I guess what I’d love to know is like your story personally, how did you get into energy and you’ve kind of had a bit of a journey through like finance and real estate. Yeah. Just how, how do, what got you to this point?

Lawson Steele (02:53)
Absolutely. So I’m an accountant by trade. So I trained with a business called Deloitte for a number of years and kind of more latterly, I was involved in corporate finance activity. effectively advisory is linked to buying and selling companies. found that organization and that work really, really stimulating intellectually. I always felt that being in practice as a consultant wasn’t going to be for me in the fullness of time. I really wanted to have

a more kind of a great sense of proprietary and kind of ownership in terms of what it was I was spending my time doing. So I guess that was always a bit of a platform to ⁓ I guess without sounding too grandiose kind of entrepreneurialism, like I was always attracted to that to kind of building something to the good that you can do with business and the positive influence that you can have and the experiences that you can benefit from. So my experience within

The renewable space is very much driven by the partnership I formed with the founders that I mentioned in my opening remarks. So I worked for Deloitte for number of years. I found myself introduced to Stuart George and Oliver Millican, who are the founding partners within Wimbledon Energy. We’re all based in Edinburgh. I think we’re all of a similar age and 10 years ago had a similar outlook in terms of our appetite, our belief in the good that you can do with business and probably our sense of kind of risk.

and commercial risk taking. And so I started working with those guys about 10 years ago. initially we were working in real estate. And guess ostensibly you’d look at that experience and say, you know, was relatively straight up and down one dimensional. We were buying and selling industrial warehouses up and down the UK. It was highly profitable. But I think ostensibly you would look at it and say, you know, it wasn’t particularly innovative or interesting.

But I think actually there was a very, very strong high-convention investment thesis that was linked to that, which has kind of been a bit of a calling card for everything we’ve done within the renewables. And so what I mean by that really is we were really investing against this structural shift away from high street retail and towards online e-commerce, really. And that was driving a kind of structural wave of need in that space. It was kind of underserved in terms of

the real assets that were available to the market. so although it’s not particularly related to the renewable space, think that process. There’s a parallel in terms of structural needs. there’s absolutely a parallel in terms of first principle economics of structural need versus supply kind of looking slightly longer terms and not being too short term, as to your view, and understanding that dynamic really, really positively and then responding to it.

Adam Sroka (05:27)
parallel, right?

Lawson Steele (05:46)
The reason I labour this point is that it’s so valuable when you’re with long term, long dated renewable infrastructure, energy infrastructure assets, because by definition it takes a long time to bring these things forward. It’s very, very hard to deliver in Western Europe and further afield. And so you’ve got to kind of stay the course. And I think the way you do that best is that you pick sectors and areas of the market that are structurally positive. So you say there is an unequivocal need.

for whatever it is we’re delivering here. And that really allows, in my experience Adam, that allows you to kind of ride the volatility of running a business, financing businesses longer term, macroeconomic conditions that are outside of your control, government policy positions that kind of move around and flap around in the wind a little bit. And all of the kind of difficulties and unknowns that come with the business, if you have a central thesis, which is structurally sound, in my experience, it creates a huge amount of latitude for you to kind of ride those things out.

And that was something I think Stuart Oliver and I really learned in the real estate space and were able to translate. So long story short, we kind of felt like we had the t-shirt in that space. Also, arguably a lot of the fun had gone out of the market. We were seeking to deliver and create growth and profit from a lot of it was done. You can just keep repeating that model. And so we did start to actively say amongst ourselves, what next? And we weren’t kind of quick to jump into it, but sustainability and particularly renewable energy was something that appealed to us. was…

It was transferable and translatable because there is a heavy real estate element to it. So that was familiar. I think we found it stimulating to kind of appraise the market and assess that point I mentioned around need versus supply. We were starting the business say 2017, 2018. And if you can cast your mind back to that window of time, the sector in terms of onshore wind, which is what we first stepped into.

was heavily influenced by government policy, as it is today, but in a negative sense. The then kind of conservative government had effectively said, we’re closing down on shore wind. We don’t kind of want it anymore. It had been heavily politicized and that had manifested in a removal of a subsidy that had been driving the market to that point called the Renewable Obligations Certificate. And of course, as outsiders, I think we were able to really look through that hiatus in the market and that kind of, I guess,

I guess in some ways turmoil and say, but how does this play out over the fullness of time? What does this look like in five years time? And the conclusion of course was like, this is kind of irrefutable and inevitable because if you extrapolated the cost of the power that you were able to procure with onshore wind, it was really, really compelling. If you looked at public consensus opinion about climate change and emissions reductions, generally it was very, very favored. And so

Although the lived experience right then and there was, goodness me, this doesn’t look like a market you want to go into, actually we were able to kind of look through that and that proved to be positive. So we established a business called Bute Energy, as I say, around 2017-18. And really we were looking to get exposure to that space based on what I’ve just told you. So we were seeing a market that was suffering a hiatus, suffering some illiquidity and stalling fundamentally. And we were able to understand that in all likelihood, if you could crack this, there’s going to be a need.

And so we set about to do that. And I think we brought a fresh perspective that allowed us to look through that problem set and kind of not waste too much time. So I remember having a lot of conversations about people, this idea that we had to say, we’re going to create a renewable platform linked to onshore wind. And people saying, why are you doing this? It doesn’t work. You the economics don’t work. The government doesn’t want it. It’s really, really challenging to deliver. And I was kind of seeing, in terms of our research, completely the opposite.

but you just needed to extend your gaze and lift you up, scan the horizon a little bit more and look slightly longer term. And I was seeing exactly the opposite. And interestingly, the economics that I see now in terms of our onshore wind portfolio that we’re bringing forward in Wales are very, very, very akin to what we were looking at on a fact packet basis when we established the business. The long and the short of it was we established a business called Bute Energy Limited, which is an onshore wind portfolio platform in Wales that is set to be the largest onshore wind developer in the UK.

It is bringing forward roughly a number of wind farms on a greenfield basis over the next five years or so that are kind of, capacity terms, worth about two and a half gigawatts of export potential. So really, really significant. The opportunity in Wales in terms of that investment thesis was really quite simple. The region benefits from a lot of resource in terms of wind. It was underdeveloped.

at that point in time and arguably still is versus the devolved region of Scotland, for example. So it felt like it hadn’t delivered as much as it possibly could. And what that meant was there was a huge amount of development potential in terms of green fields that could be developed that weren’t under control. And we saw very, very positive green shoots from the devolved administration that have jurisdiction over planning efforts and energy system design. ⁓

in the country at the Senate in Cardiff that were effective in saying we’re open for business. So there was language that was emerging in policy terms that was saying things like, you there is a presumption in favor of consent at some of these activities. So really positive, but not ratified. So all of that opportunity was what underpinned the thesis. The big structural issue in Wales was a lack of grid. so grid, think, is, you know, is a narrative that’s kind of very well understood by industry personnel, but also I think

laypeople when they think of the energy space in the UK, they understand that grid and electrification generally is a limiting, grid is a limiting factor on that agenda. So whilst we might be able to build the renewables, grid is like, in a latent sense, is a bit of a handbrake. That was particularly acute in Wales at that time. And there was just a complete paucity of infrastructure. So it wasn’t that it existed, it took a while to get connected. It just doesn’t even exist. What was there was heavily saturated. And so

Because we had such belief and conviction in the unit economics and quality of the profit opportunities and development opportunities for onshore wind, we engaged with our problem set to say, well, OK, how would we solve that? As opposed to kind of putting that responsibility on someone else. And that led to the second business, the Genesis, the second business, which is a platform called Green Gen Cymru. And Green Gen Cymru is a greenfield developer of electricity networks.

and its primary network focus is in Mid Wales. And so that is set to become the largest independent overhead line grid network in the UK if we can deliver it in the way that we’re envisaging, which I’m really, really proud of. And that is subject to license regimes with Ofgem. So I spent a couple of years getting a license from Ofgem to enable that platform, which we successfully did a couple of years back.

And that’s very much in development activity right now in conjunction with the system business of Energy. So there is an inherent link between Butte Energy Limited in terms of its ambition to create and export renewable energy and Green Gen Cymru in its ambition to unlock that in rural Wales, mid Wales in particular. So those two things occupied a lot of my time between 2015 and kind of, well, even now I still have

⁓ broad presence on some of companies and oversight from the holding company. I’m really, proud of them. But, you know, in terms of my day-to-day experience, I focus mainly on how they’re in energy, which Richard will come on to talk about. And I’ve been able to do that because we’ve been able to procure a really, really fantastic executive team and team of industry experts that are kind of busy delivering those assets and taking them through planning in the traditional kind of sense.

Adam Sroka (13:47)
Amazing. God, so many questions. guess the first one for me is like, and kind of answered by the fact that you’re yeah, story number three or four by now, but you’re still that hot on entrepreneurship after having started a business in one month for a decade.

Lawson Steele (14:03)
Well, we should swap notes because I’m sure you’ve got some scars on your back. Undoubtedly, the story that I’ve just kind of quickly portrayed, I’m sure, well, hopefully is interesting to people, but at least, you know, I’m sure certain people will listen to that and there’s a kind of romantic element to it in that, well, that’s quite an interesting way to spend your time. It takes something out of you. You you leave a piece of yourself along the road as you’re kind of building it, it’s really, difficult. But I think that’s when it comes back to the first principles of kind of need.

your belief and conviction in what it is you’re doing. Like no one really, very few people give you that much of a hand. That’s the truth. You’re constantly selling to people, including the team that you asked to work for you. And quite rightly, know, it requires, doing difficult things requires belief, conviction, but also I think followership amongst stakeholders. And most stakeholders can be members of your team, your immediate family, investors. So I’ve never lost that.

And I still maintain it with Butte and Gringe. you know, Butte and Gringe are very much in kind of delivery mode now, where they’re in that grind day to day of delivering infrastructure in this country and the lived experience of planning efforts and of community engagement and of ⁓ political interest. And it’s really, difficult, but I still think what we’re doing is the right thing. I still believe in ⁓ the first principles of the economics of that business case.

And I guess I’ve always had that sense of the good that you can do with business. Like I’m proud of some of the things we’ve done. We’ve created a lot of high skills employment in regional parts of Wales, Cardiff in Edinburgh, know, long-term well-paid jobs. And that’s something I’m like super, super proud of. ⁓ I’ve never, I’ve never kind of lost faith or energy in that regard, but like you’re quite right to ask the question. Like it is.

challenging and you leave bits and bits of yourself along the road. And I think what I’ve probably learned and I’m sure you can attest to is, you know, being quite alive to strategies to deal with that. So things, you know, I’ve got a young family, so things like stated objectives around family life and around work-life balance, for example. That was something I introduced maybe last year for the first time. And I looked back at the end of the year and I thought that had a very positive influence both on me personally and on my professional

kind of contribution. But if you’d have asked me that four years ago, it would have been right down the bottom of the list in terms of things I was concerned with. so, you know, I think you amend your strategies in terms of dealing with venture creation. But I think if this all fell over tomorrow, I think you’d probably find me doing something similar in a year’s time in terms of giving something a go, because it’s just what makes me tick.

Adam Sroka (16:49)
Yeah, I’m concerned I couldn’t ever go back now. Like I’ve been sufferable to anyone that tried to manage me. I’m sure.

Lawson Steele (16:55)
Also,

think there’s something in the habit of being exposed to venture creation and the volatility and some of the hardship that you experience because I think it creates a resilience, but also it just creates like a muscle memory where perviction, we’re to the ups and downs of that. And what I’ve experienced is like, I’ve almost learned to compress that volatility. So I never get too up when it’s really, really good. And I never get too down when it’s like, it feels like you’re in the gutter.

think there’s some value in that approach. The more I look, I often find I’m giving that advice to younger members of the team when we’re either having a hard time or they feel like they’re flying. Just to say, just keep, stay in middle of the road. Because as long as that’s the point I made earlier, as long as you believe in what we’re doing and it makes sense, that will win out. And so just keep the faith, but also don’t let yourself get too carried away when times are good.

Adam Sroka (17:50)
Every silver lining has a cloud is like one of my favorite saints and from saying of the house, but I take the opposite of just always be really down in the dumps about everything. then you can only possibly surprise, but I totally get it

I think energy is a bit like that in that everyone’s quite reticent to do anything. It’s a bit like.

Lawson Steele (18:10)
It’s a funny sector. It’s a funny sector because I think, well, maybe not energy, electrification is still kind of relatively nascent. If you look at it, know, like renewables in particular, like it’s it’s a few decades old. And I recognize your sentence. Like I do sometimes think the industry suffers with a bit of groupthink, whereby it’s I sometimes think it’s not curious enough. It could be more curious.

And I also sometimes think it kind of butts into, that’s not how things are done or that looks quite difficult. And that we should challenge that and always kind of push and say, well, why? I do, you know, kind of controversial figure at the minute. think Elon Musk, but you know, some of the things I see in terms of the problems we’re trying to overcome with Haldane, I kind of do think what would someone like Elon Musk do? And he wouldn’t take no for an answer. And I think there’s, you know, that’s quite a healthy way to approach things. Just say, unless you tell me it’s impossible.

can we just kind of tease this thread and can we kind of engage with this problem and look to test it? Because we’ve done that periodically. We’re doing it at the minute with Haldane Energy. All of the opportunity is driven by the fact that you’re doing something different. And if you’re doing something different, no one’s done it before. they’re frontier and new ground. So you can’t expect a boilerplate approach. You can’t expect a manual. Like getting people to engage with that mindset and that way of problem solving.

can be really difficult if the kind of lived experience to that point and all the muscle memory is, or what did the last person do? Or what does Emmanuel say?

Adam Sroka (19:41)
And I do want to get onto Haldane’s story, but just final example on that. So we had a customer that we were talking to lots of them, a big engagement from across the business. And there was this really hairy problem. And it just got to the point and was like, no, no, no. And then we proposed a solution and a very senior technical person said, no, we’ve had the experts see and we’ve been told this is too complicated and it can’t be, it can’t be unpicked. And I was just like, did a human build it?

Did you inherit it from the gods or was it discovered at the Bobbio Line? I feel like this is an IT system. Humans built it. It might be hard work, but it could definitely be done. I get that, the group thing, what’s been done before? What hasn’t been done before? Let’s talk about how day and energy.

Lawson Steele (20:27)
Yeah, So, okay, so I’ll give you a quick whistle. I mean, how, look, Haldane Energy, formed it about three years ago. The honest truth is it’s moved around a little bit as a kind of investment thesis, but it was conceived off of the back of questions around the energy system and what it looks like in really in the middle of the next decade. So what we were, you know, if you think of our experience, right, we had this, we had this idea around renewable energy and a large scale portfolio of onshore wind. And…

we said, okay, the way to deliver that is to tackle the grid. And then we were lucky enough to secure a really, really significant amount of development capital funding to support those platforms and something which we’re really proud of and really grateful for. And I think I and some other members of the board started to party because I freed myself up a little bit because we were putting people who are more capable of delivering that business plan than me candidly into it.

And we started to kind of have some really stimulating debates at the board around and amongst the shareholders around, well, what does this look like in the fullness of time? Like success in Butte really looks like we’re delivering a two to three gigawatt onshore wind portfolio. we might be largely the largest actor doing that in Wales, but we won’t be the only people doing it in the country. know, that probably looks like there’s a meaningful contribution elsewhere. And this is well before like the current government’s renewable energy targets, which we hopefully we can come on to talk about for a…

for a second. But you start to say, okay, how does this play out? Because there’s lots of good in that system in terms of the, I mentioned earlier, the levelized cost of energy that you can produce under that approach, particularly in places like Wales, really, really great. But it’s inherently difficult. That resource is a bit of a handful. Electrically, it’s intermittent, demands huge amounts of grid, and it begs some questions around system resilience.

So really we started to kind of concern ourselves with that. And if you if you look at that problem set and things start to emerge and there are kind of two North stars that we’re responding to within Howden Energy. So if you look at the energy system over 10 years time, this increasing penetration of renewable energy is going to lead to a kind of structural oversupply. Nothing particularly new, but bear in mind I’ve been looking at this stuff for three years, right? So there’s more of a kind of public perception around that problem now.

But I still don’t think it’s quite grasped and understood in terms of the nature of that problem in 10 years time. So really what we’re forecasting in terms of our Intel analysis and some of our of research house partners is that if the government gets anywhere near its renewable energy targets, which effectively have taken that problem set that I just mentioned, just accelerated it and magnified it. And I think it’s to their credit, if I’m honest, like they are the Secretary of State.

That agenda is heavily politicised at the minute, but I do think in the fullness of time when we’re talking to our grandkids, that position will be looked upon favourably. I think history will look at those decisions that they’re making in terms of backing renewables, harnessing our natural resources, driving down the cost of that delivered energy, procured energy rather, that will be looked upon favourably. But the cost of the delivered energy, so fair enough you can produce it cheaply when it’s available.

how do you handle it given that it’s intermittent and it’s spatially quite spread out? Provided we can solve those problems, I think those decisions will be looked upon favorably. The government targets and commitments have just accelerated this problem. You’re going to see in the middle of next decade a kind of tenfold increase in those periods of time whereby energy, power on the power system, electricity is just fundamentally oversupplied. And at the minute, what you’re seeing is that’s borne out in a really acute sense, in a spatial sense. So you’re seeing offshore wind farms in

Northern parts of Scotland are you’re not capable of harnessing all of the power that you might like because it can’t be moved. But what you will see increasingly if these government targets are met is that issue of curtailment whereby the power might be available but can’t be moved to where it’s won’t be the only issue and there’ll be a temporal issue whereby you will just be producing enormous amounts of power that

that can’t find a home in a temporal sense. And that’s where people start to talk about this idea of economic curtailment. And so we will be kind of switching power off because we just can’t find a home for it. It’s not a question that the grid is not available. It’s that we can’t find any utility for it at that moment in time. And so we were really saying, OK, this is like a big structural problem and a natural resources opportunity. What are the commercial opportunities to respond to that? And then I think the other thing that I would mention is that what props up that system

These government targets talk about, say, 90-95 % renewable power contribution and then a very residual amount of reliance on gas. What props up that system, which is really, really important and really valuable, are our gas power stations. And of course, they are kind of, on a headline basis, deemed untenable in the fullness of time because they’re unabated in terms of their emissions producers.

It’s unabated and it’s deleterious in terms of that climate agenda. But I think it’s begun to be introduced in terms of the conversation, but we are very, very dependent on those power systems. So it’s sort of asymmetric, right? Whilst the government and society is saying, let’s back renewables, the nature of how reliant we are on that 5 to 10%, if that’s what it gets to from gas, is sort of asymmetric in the sense that without that, the system falls over. If you then dive into that reliance on the gas,

those assets are really rapidly reaching the end of their useful economic life. So a lot of them were delivered in the latter part of the last century. There was a development boom and we haven’t delivered large scale new power plants at scale for decades and that’s going to begin to bite. So you’ve got these two really big structural influences on the market with the transition that is effectively we’re to have lots and lots of renewable power and inherently that means at times it’s going to be dramatically oversupplied.

And when it’s not available, we’re dependent on a fleet of assets that need to be reinvested against and replaced. And when you start to look at both of those problems, hydrogen as a fuel source and as an energy store start to look quite interesting. So I think inherently people look at hydrogen and, goodness me, it’s quite difficult to handle. It’s relatively inefficient when you’re taking an electron and converting it into a gas and converting it back into an electron to put back on the system.

But you have to consider those constraints within the envelope of the problem set. And the problem set is going to be multi tens of terawatt hours of oversupply power that can’t find a home. It’s like big wastage and big, big opportunity, far bigger than what we’re experiencing at the minute. Far bigger really openly than some of the traditional technologies can cope with. think notionally people might think, let’s just build more batteries. But that doesn’t work in terms of the nature and

volume and size of those energy opportunities. And then we have to replace these gas fleets. So thinking about hydrogen, you start saying, like, can solve both of these problems with the infrastructure. And so that is basically the energy business plan in a kind of nutshell. We’re looking to deliver very, very large scale what we call hydrogen L. There’s assets, so long duration energy storage assets. And it’s a real mouthful.

Really, if you step right out of it, think of them as kind of very, very large scale, very, very versatile, very cost effective within that paradigm, cost effective means of storing power. And so they’re kind of like large batteries. So what we’re envisaging is pieces of infrastructure. It’s an infrastructure development play in the same way that Butte Energy and Green Gen Cumbria were and are. We’re looking at the traditional activity of kind of finding sites, designing things, bringing them through planning, taking an FID, constructing and energizing.

The infrastructure will comprise kind of three constituent elements. Transmission connected electrolysers, so that’s the hydrogen production engine. We will use newly procured and developed salt caverns that are available to parts of the country because of the geology that we’re blessed with. these are these are caverns that you can create roughly a kilometer to a kilometer and a half under the ground in where the geology is available. And they’re very well suited.

proven as a technology type to store gases such as hydrogen under pressure. And then the third constituent part is CCGT, so new power stations that are capable of being run on hydrogen. The means by which we deliver those different constituent parts is something we’re actively working on and wrestling with because there are a number of things that need to happen to bring that forward. But in a nutshell, that is how they’re energy looking to be.

And it is large in terms of the gigawatt scale appetite and ambition for the portfolio. We’re talking about tens of of export capacity in terms of the power stations and the electrolyzers. But that is informed by our analysis of system. So we’ve spent a huge amount of time appraising how that system is going to look, how it’s going to behave, what is going to be characterized by, and therefore then responding to, well, commercially this on merit is the best way to respond to that.

And this is what needs to happen to enable it. And so over the last three years, I’ve kind of spent a lot of time in the analysis of that. More latterly, we’ve started doing conversations like this where we’re breaking cover and starting to speak to people about our plans. And we are actively engaging with landowners up in our country to secure kind of development rights to underpin the delivery of those assets. Hopefully that makes sense.

if you look at, so we have some commercial arrangements with OEMs such as Seamers Energy, which we’re really proud to have. If you look at their R &D campaign and their commercial offering in terms of the units they’re looking to produce, they have been working for a number of years on hydrogen readiness. And because they’re drawing conclusions to us, because they know that any jurisdiction or area that has kind of carbon budgets or statutory targets like the likes of the UK, but that’s true of the continent as well.

And it was true of North America until recently, saying, look, ultimately we want to out gas. But anyone that is familiar with power system or electrification, or indeed your world and AI, recognizes that the demand for electricity is not going to go away. It’s likely to grow. I think there’s inevitability there in terms of that being the right thing, both in terms of what society needs, but also economically, in terms of the cost of what it is we do.

as a body of people. And so I think actually to give them credit, they’ve done a huge amount of work in terms of readiness and actually probably that without speaking on their behalf, my observation of those platforms in terms of hydrogen readiness is actually what they’re looking for our platform such as ours to meaningfully invest and develop the assets to kind of unlock that. There’s only so much you can do in terms of in lab or a research facility because

Hydrogen is difficult to procure. It’s difficult to handle. You kind of need to say you need to do it and commit to it and adopt it systematically. And so I think actually they’re really, really well placed to help us on this journey. And that’s the other thing. Sorry, just to add one more point on the business plan is what I’ve just described to you in terms of these activities of hydrogen production and storage, particularly that’s an interseasonal storage place. So those those caverns, you know, what I want your viewers and listeners to have in their minds eye is

a kind of seasonal profile whereby in the shoulder months of the kind of calendar year you might be able to procure lots and lots of wind, but that may well disappear at other points in the year. And in those periods where that energy is available and plentiful and probably quite cheap, it makes a lot of sense to able to harness it and store it, but you need to store it at large scale and you need to store it in such a way where you can actually hold it for months on end potentially. And these stores suit that. And then that last activity of the kind of traditional

gas turbine technology being able to combust the hydrogen to produce power. All of those things are well understood and tested. Soil caverns are used for hydrogen storage in the UK and on the continent, but typically they’re used for methane storage, natural gas storage, but it’s really well understood. Electrolysis at scale is well understood and has a very mature technology readiness level in terms of the commercial lens on that. And these power stations, as I mentioned, the likes of Siemens Energy have poured significant time and money and effort into…

proven concept around hydrogen readiness. And so the beauty of the concept is, although it’s kind of very new and kind of quite progressive, it doesn’t represent oodles of technology risk. You know, it’s not like you’re stepping in and saying, well, let’s do this first of the kind activity. Really, I think the smart thing that that business plan is doing is stitching together, recognize things systematically and within a system that needs them and that will benefit from the utility of using them in that way, rather than saying, well,

can we produce hydrogen at scale or can we store it or can we combust it for power? All of those things are of relatively well understood. So that’s also been a bit of a calling card of our business activity. We have intended, which is probably very different to the likes of stuff that you do, we have intended to do, to commit to business plans that represent lots of technology risk. And that’s not to say there’s anything wrong with them. It’s just not something we’re super, super comfortable with or familiar with. We tend to like to say, where’s the big opportunity and how can those established technologies be

against that opportunity as opposed to there’s something that doesn’t exist yet, can we redesign it and commit the R &D spend.

Adam Sroka (34:17)
The bit that then my head goes to is like, must’ve been some hard sell to investors though, that you’re leaning on, okay, we’ve got track record of delivering projects. It’s, hydrogen’s had a bit of a rough time. how did those kinds of conversations?

Lawson Steele (34:30)
Yeah, so I think, okay, so for the avoidance of doubt, the investors that are behind this are the incumbent shareholders within Women Energy. So it doesn’t include the investors that we’ve brought in to deliver the Butte Energy and Green Gen Comrie plan. It’s the same three shareholders that established Butte Energy and Green Gen Comrie. And the honest truth is, like, I remember large parts of time when we were developing those business plans whereby people would ask similar questions around, like, how are you getting comfortable?

with this because it cuts both ways, right? You can’t do new, innovative, exciting things or see big opportunities and capitalize on them if everyone else is doing it. By definition, if they are, the opportunity is not there or it’s heavily diluted. And, you know, at heart, are kind of particularly the main shareholder. We are really kind of value investors and you can only do that. You can only drive those sorts of returns if you’re early and you’re opportunistic.

And so it kind of comes with the territory that ⁓ we are doing things whereby we’re not in a room of people doing them. You can’t have that. Although sometimes I wish that was the case, because it would be reassuring. You can’t do it. And so I think what I come back to in terms of our incumbent investors, my board, and my reporting into our majority shareholder are those first principle fundamentals that support what it is we’re doing.

really helpfully the current administration’s commitment to the CFD rounds and the renewable auction lots that have just gone through. And I saw in the press this morning that they’re advertising the next round to give the Secretary of State credit. The clean energy targets, what I see amongst that team of mission controllers, whatever the phraseologies they use, is that they’re focusing on like the right things. And it feels to me like they’re hitting their straps. So that…

that exposure to renewable energy doesn’t seem to be going away. If anything, it seems to be accelerating and becoming more more magnified. And I can point to the power stations that I mentioned in terms of their age and their need for reinvestment. You can get consensus opinion amongst professional people who are better qualified than me to appraise that and say, yeah, that will need replaced in the next five to 10 years, as will this one, as will this one, as will this one. And so, you know, you’re then really, it’s about saying, well, look, there is a structural need and the art of the venture response is kind of…

keeping yourself alive long enough to capitalize on it. Because the problem is you’re early, but the opportunity is you’re early. And so I find a lot of what I do is trying to spread this message and build some consensus opinion and influence stakeholders that matter, particularly policymakers within government, but similarly investors. But on the investors, you can be quite rational and say, look, I don’t need you to believe lots and lots of things. Basically, I need you to believe these headlines, and you can see it for yourself. That doesn’t mean it’s without risk, but

Often I feel that our issue is that we’re almost too early. So it’s about responding in a practical and pragmatic sense to that dynamic whereby you say, kind of know this is inevitable. really, like Adam, I truly believe what we’re doing, there is an inevitability to it. So my problem is not whether or not it will happen, it’s whether or not we’ll be involved in the party. So I’m trying to, everything I do day to day is with that in mind.

it’s not about like, we doing the right thing? It’s more about are we boxing clever to kind of respond to that thing that we’re doing? Because what we’re doing is definitely the right thing in my opinion.

Adam Sroka (38:00)
Yeah. And I mean, I say that I have a lot of like CEO, CEO psychopathisms that I say, and like one is around a lot of big companies that don’t get back to us. And I would say, look, like these, these people, like they are hyper-custodial. They just don’t know yet. We just need to give them time to catch up to us. And it’s a similar kind of thing. And I guess like you’re talking about being from, and does, is it an element of that actually like the, kind of investment world catching up with it?

with what you’re doing and making elders more investable.

Lawson Steele (38:32)
Yeah, I think there’s a bit of that. Like, I’m really encouraged, right? Because of the substantive approach that we take to the analysis, I see it and like, yeah, we’re not making it up. So I can objectively see that. And what I’ve noticed over the last three years is all of the things that I’ve kind of touched on during the course of this conversation, and I could bore you with for longer if we had the benefit of the time, there is a kind of gradual awakening to each of them. And that’s not like, I’m not sort of saying like,

how clever we are, it’s just the fact of like we spend all our time doing this and most people don’t do that. They’re concerned themselves with an array of different things, particularly investors. And actually their challenge is kind of like, if I’m allocating capital, where do I allocate it? And so that’s the playground that we’re playing in. We’re sort of saying, look, you should come and invest in this. But what I have seen is an awakening. So I’ve seen a recognition of that economic tailman point I mentioned. So there is going to be a real structural issue with just out and out oversupplied power.

and finding a home for that must be really beneficial. And then you say, okay, what technologies are available for me to do that? And what’s the most cost effective? And so I’m seeing all of these things trend very, very positively. And I’m seeing government policy trend really positively. And the frustration I have is I want it to be quicker. Of course I do. But I think it’s futile to expect it to move. It’s going to move at its own pace, right? So can go, I can speak to people like you and I can bang the drum and I can tell everyone that, know, spread this gospel. But the reality is what I’m seeing is

objective and people will draw those conclusions. It’s just a question of how long it takes. So I think that really kind of I’m quite familiar with not getting too impatient and not riding that too much in terms of the investment markets or any other stakeholder group. But I’m really encouraged by the kind of trajectory. If I extrapolate those data points that I’ve witnessed over last few years. So people saying like, well, if we have a hydrogen economy, we need to it in cell caverns. Like that was not recognized when I started this journey. And now

you might not know it, lay people on the street might not know it, but anyone in the space that has any sort of interest in hydrogen as a fuel source for power recognizes that and they recognize you know you do it in certain parts of the country. I think it will get there, it’s just kind of letting it gestate and kind of recognizing that the opportunities were early but the issue is that we’re early and you know as I mentioned before and just kind of letting that play out and like giving it its time to breathe.

Adam Sroka (40:58)
And you wrote about in your recent Energy Gap article, you wrote about some of the stuff, but also about system planning. Do you want to just cover some of that as well?

Lawson Steele (41:06)
Yeah, I mean, like really, really briefly, I think this is where some of the stuff that you are involved with and that agenda around AI and digital optimization can really, really help. What I see in the space, and I think it’s driven by the politics, is a short-termism in terms of the system thinking and the planning. And the honest truth is the energy system comprises large like

complicated pieces of infrastructure that you really don’t want to get wrong and you really need to demonstrate conviction to deliver in the right way. To get best cost, to get best program, to get best, most efficient all-in system dynamics, you need to be quite thoughtful and I think really openly five-year parliamentary terms don’t lend themselves to that type of thinking. It’s quite kind of knee-jerk. Our assets, for example, have a seven to nine-year gestation.

creative, like idea through to land assembly, design, secure planning, construct the things, energize them. It just takes a long time, right? Now, maybe we can promote the planning system. People are doing that politically and saying, can we do this quicker? Brilliant. Let’s have that conversation. But like, there’s only so much you can compress. You can’t really compress the construction timeframes that much. So given that, you know, it would be, I’d really welcome a kind of more, a more fulsome conversation around system planning.

Adam Sroka (42:05)
So great.

Lawson Steele (42:34)
And we’re starting to see that emerge. Like I think the current administration have given a huge amount of oversight and agency to the National Energy System operator at what was previously National Grid. And I think that’s a positive thing. Because when I engage with the architects and the thinkers within that body, they totally get what we’re that’s not to say they’re proponents of ours or our projects per se.

But what I’ve told you about the systems that America need, they’re a very, very willing, accommodative audience because they’re dealing the same things that I do. But I think there’s a frustration in there in terms of their ability to kind of make decisions and press the right buttons and pull the right levers because they’re sort of always looking up to what are the politics of the day. You know, that’s a whole other conversation. But 2029, what is the consensus opinion in terms of the composition of the government at the next general election? That’s really, difficult to predict, right? All you can see is that this current administration is under a fair degree of pressure.

And I’ve just mentioned how positive I am about the Secretary of State for Energy’s agenda and campaign. But there’s a question mark about how that plays out. So I just think that the subject matter calls for long-term system thinking and rationality when it comes to cost and first principle economics. And I sometimes think that we trip ourselves over because of our political system, because it compresses that thinking and it doesn’t allow that to breathe in the right way.

And I think sometimes it leads to decisions and investment requirements that are too short-termist and not high value enough, basically. The genesis of the Halbin Energy Plan is like we sat around for six months and asked ourselves questions around like, does this look like in 10 years time? Not everyone affords themselves that, but I think that’d probably be a good thing for those in government to be doing. And maybe that’s happening, and I’m sure it is. But in terms of the influence of the politics, I sometimes feel like it anchors it into chunks of four or five years.

which is suboptimal.

Adam Sroka (44:28)
how many promises we had in the last decade?

Lawson Steele (44:30)
⁓ Exactly. Exactly. And like, you know, there’s good in that. And that’s that’s a reflection of our society. And I’m not saying I’m not saying I overthrow that, but I just did when it comes to energy policy and large infrastructure delivery for the country, because these fundamentally is all paid for by our bills, right? You know, I contribute on our bills like that’s how much we’re covered in fullness of time by hook or by crook. That’s that’s that’s that’s how model works. And like

So it’s in our interests and it’s in our children and grandchildren’s interest to be really thoughtful about that. And sometimes I think that the conversation is sort of slightly lacking, but it’s a transition. I’m increasingly encouraged by the feedback that I get when I table this agenda and this plan with ⁓ through media such as this, but other conversations, roundtable conversations. And I think we’ll get there. I think it’s just…

feels at times a bit short-termist and a bit messier than it could be, but so are we.

Adam Sroka (45:29)
Well,

I can’t let you do it without asking about AI. mean, see from someone that’s now on their third business developing infrastructure assets, where do you think like we should be pointing the latest and greatest tools and technologies to make a real impact?

Lawson Steele (45:46)
My goodness. So like, I’m not qualified to talk about this. You are way better than you’re better qualified than me. And I think, you know, you should, you should respond, but I’ll just give my like lived experience over the last three to six months. And it’s been, it’s sort of slightly blown my hair back in terms of what I’ve seen going on in terms of the power of some of these tools and what they’re capable of. So the observations I’ve had are, goodness me, like I became an analyst at a corporate finance house and provided kind of

support through intellectual capital to businesses and some of the stuff I was doing you can do like in the click of a finger now with some of these some of these applications. So it’s so bringing that regard when I look at my kids and the experience I had because I don’t necessarily think that will be available to people in five years time maybe even less. So that’s been that’s been really interesting. Think of our energy system and its inherent inefficiency and some of the points I touched on but like you overlay policy decisions

decisions, the nature of the transition and how much of a handful these things are to manage and move around. I’ll give you an example. The conversation for listeners that are familiar with this agenda around kind of nodal pricing. So the government was saying, should we recalibrate our electricity system such that those units of power that are bought and sold are cleared in such a way that they encourage geographical specificity? Because of what I’ve mentioned, you know,

some of the renewables are produced in far-flung places and should we be encouraging users of that electricity to domicile in those places because it would be more efficient. Really, at its core, intellectually, that appeals to me, I think, a lot of people. The problem is it’s messy and it’s really difficult and there’s a lot of vested interests and people can price the cost of capital response and all the rest of it. And in the end, I think it was decided against, mainly because it was just too big a price to pay, that risk of the unknown. That sort of stuff, I think…

AI and digital optimization can just like cut through so much of that to kind of point us to the right conclusion. So I think that’s really important. But I think really if I, if you said what my most focused on in the business is productivity gains. So it’s capital allocation in particular, if I’m honest, human capital. And that’s quite confronting. But if I look at some of the things we do in terms of how labor intensive things like planning applications are and how inefficient those places are, the extent of overlap, the extent of consultancy input.

I just cannot escape the sense that that can be heavily optimized and the pounds that we put in in development capital can work a lot, lot harder with the benefit of some of these technological interfaces. So I think that’s the thing that I’m probably most focused on for our businesses over the next year or two is saying, how do we introduce some of these ideas and platforms and opportunities and interfaces to make us much more, much, much more efficient and channel our human capital towards

higher value uses that aren’t necessarily suited to AI input at this stage at least.

Adam Sroka (48:48)
Yeah, I wholeheartedly agree. And I think there’s so much like, I always grew up a human craft and it’s like the work you have to do to do the work. It’s like moving numbers around spreadsheets or, and how can we get the machines to crank the handle on stuff that scales so the humans can think about that like asymmetric nonlinear, like extra value stuff in the kind of long tail of things. So yeah. And that was like no surprise. That’s why that’s where the Hapkiki platform is going and the kind of

the stuff we’re building for the next while. it’s an interesting space to say that.

Lawson Steele (49:21)
That’s good.

I’m excited to see how that stuff plays out and to kind of see that journey and hopefully contribute to it. But yeah, think enormous opportunity in short.

Adam Sroka (49:31)
So final, what’s next for Haldane, Windward Group? going to come up with another fusion assets next?

Lawson Steele (49:36)
Now then, this is sort of the third

album and we flirt periodically with a fourth. I’ve got to say the market conditions at the minute are really, really testing in terms of like cost of money, the point I just mentioned around every pound of development capital having to really, really sing for its supper and kind of earn its crust. And my overarching sense is we’ve got our hands full in terms of delivery. So I feel like I’m in an execution mode in terms of my thought process across the group.

If I talk about Haldane more specifically, we will really be looking, and we’ve got a lead advisor appointed, we will be looking to introduce institutional capital in the next two to three years. And I’m very, very focused on that as a gate to step through and taking that really, really seriously and making sure that we do that to the best of our ability to give the businesses its chance to deliver over the longer term, because our ambition will outgrow our balance sheet. It’s something we’re familiar with. We’re good at raising institutional investment, but we’ll need to do that again.

So that’s really my and the team’s focus. But I’m very, confident and I’m excited about that process and our chances of kind of navigating that. I’m full of optimism despite the fact that market conditions are quite tricky and there’s a lot going on geopolitically that don’t help massively. But nonetheless, I come back, I revert to my opening remarks, which is really we pick strategies that we wholeheartedly believe in, how high conviction in and feel are inevitable. And so…

now’s the time to kind of keep your faith and keep moving forward.

Adam Sroka (51:03)
It’s

been incredible speaking to you, Lawson. Thanks once again for joining us. Before we let anyone leave, I always like to ask if there’s anything you’d like to promote or if anyone in the audience wants to find out more about you or about Wynwood or Haldane, where should we point?

Lawson Steele (51:16)
Good old LinkedIn. I’d have a search from my name, which is Lawson Steele. I’d welcome any interest that people have. We have a really good website that we refreshed a couple of months ago, and you can find that online at howl.n.energy. And then the team are, we’re kind of maturing our social media output. So most of that channels through LinkedIn, but you’ll see increasing amounts of media that we’re producing in terms of our thoughts on the sector, our plans for the business.

and that tends to be really well received. So I’d encourage people to kind of get online and follow us.

Adam Sroka (51:50)
I

wish you all the best and I look forward to hearing about how it all plays out.

Lawson Steele (51:54)
Likewise, Adam. Thanks very much for your time and good to speak.

Adam Sroka (52:00)
Thank you once again for listening to the Hypercube Energy podcast. As always, if you have any feedback or comments or you want to get involved, please get in touch. And if you want to find out more about what’s happening in data and AI across the energy sector, please join the Beyond Energy community and I look forward to speaking to you soon.