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Transitioning to a wind-powered world

Welcome to the latest series of the DNV GL Talks Energy podcast, hosted by Mathias Steck, Executive Vice President, DNV GL – Energy. Each week, we will be joined by the world’s leading energy experts to discuss their insights and opinions on how governments, business leaders and wider society can help accelerate the energy transition.

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Transitioning to a wind-powered world

Global wind power capacity is estimated to grow by 60% in the next five years, with emerging markets such as Asia expected to play a major role in this transition. Clive Turton, President and Chief Executive Officer, Asia Pacific, at Vestas, discusses the rise in wind power and what more needs to be done to ensure a faster decarbonization of the global energy market.

With DNV GL’s Energy Transition Outlook 2019 finding that five times more wind power is needed to close the emissions gap by 2030, Clive explains why education on clean energy is still needed to ensure that policymakers around the world are making the required investment to help slow climate change.

Read the transcription of this episode here

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NARRATOR Welcome to the DNV GL Talks Energy podcast series. Electrification, rise of renewables and new technologies supported by more data and IT systems are transforming the power system. Join us each week as we discuss these changes with guests from around the industry.

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MATHIAS STECK Welcome to a new episode of DNV GL Talks Energy. My guest today is Clive Turton, President and CEO of Vestas Asia Pacific. Welcome, Clive.

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CLIVE TURTON Thank you, great to be here.

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MATHIAS STECK Clive, we want to talk about the importance of wind energy in the energy transition but before we come to this, it would be great if you could introduce Vestas as well as your own background a little bit.

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CLIVE TURTON Sure. Well, I hope everyone listening knows who Vestas is. Just in case, Vestas is a Danish company, it is the world’s leading renewable energy company. I think it is the world’s biggest renewable energy company. Our focus is wind. We manufacture, service, build, transport, and we deliver to our customers’ renewable energy projects. We own projects, we develop them, we deliver them. We work across the world and my responsibility is the Asia Pacific region. So, Asia Pacific for us is everywhere except China. So, China we have a separate business unit that runs that, and I run India, Australia, Japan, Korea, all through Southeast Asia and South Asia.

I’ve been in Vestas for around three years. I have had a career in energy. I don’t like to talk too loudly about this at Vestas because I used to work in a coal-fired industry. I have also worked in the gas industry, so I come from the dark side. My career has been mostly in Asia, for the last 20 years I’ve worked in Asia. I started as a lawyer. I worked for 10 years in banking, I ran the utilities and energy sector for one of the world’s leading banks here. And then yes, for the last three years I’ve been at Vestas.

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MATHIAS STECK Very good. So, you converted from the dark side as you just said and the brand message of Vestas is wind, it means the world to us. Could you explore on that scene a bit?

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CLIVE TURTON Sure. I mean it’s a great little play on words if you like. I mean, Vestas originally, it was a wind company. Sole product, wind. Now we look at ourselves more as a renewable energy company. We deliver projects to customers that include hybrid technology. We’ll develop wind and solar together, for example. But at its heart, wind is the world for us. That’s what we started at. But obviously, it’s a very clever play on words because it also states the company’s real message is for the benefit of the planet, for the benefit of the environment, for the real sustainable delivery of energy. The world needs this, right? The world needs folks who are pushing towards a renewable energy future. Not just in electricity but across the whole spectrum. So, it’s a nice little slogan so it captures everything. It captures where we come from, what our DNA is but also our mission and our message. Today we’re probably talking more about renewable energy and renewable energy projects rather than just wind. Wind now factors into a much, much larger universe.

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MATHIAS STECK Put that into perspective a little bit, you just mentioned, that the largest or one of the largest renewable energy firms. How much in stored capacity does Vestas have around the world?

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CLIVE TURTON So, we hit 100 gigawatts earlier this year. I think it was in June, July. So, we installed our 100th gigawatt, crossed over the 100 gigawatts earlier this year. Of which I think around about 85-90% is serviced by us. Interesting thing about the wind industry compared say to the conventional power industries, is we practically service all of the turbines that we install.

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MATHIAS STECK Impressive numbers.

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CLIVE TURTON Yes, it’s great.

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MATHIAS STECK So, listening to your messaging, Clive, you talk about disruption when you talk about the future of renewables. And how are you in Vestas as a company looking to disrupt the market and why?

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CLIVE TURTON Really interesting point. I think it’s one of the things we talk about a lot with customers, with policymakers, with other big energy companies, is the way in which the energy market has already changed, has already been disrupted. I sat on a panel the other day and one of the guys sitting next to me said something about, he didn’t call it renewable energy, he called it alternative energy. Folks like Clive from the alternative energy industry. And I rudely interrupted him and said no, no, it’s not alternative. It was alternative maybe 10 years ago but wind and solar, it’s mainstream now. It’s already. We’ve already disrupted the energy industry.

If we were having this conversation five, ten years ago, you’d be talking about this niche technology which is interesting and nice but it’s not going to change the world. Today it’s already changed the world. It’s already the mainstream cheapest form of energy in a lot of markets around the world and a lot of new energy installations are renewable. Vast majority in Europe for example is renewable. So, we talk about energy transition, we’re already there. Today, we’ve already hit a point where we have changed the electricity industry. But it’s just at the beginning for us.

We see the whole industry continuing to grow and change and renewables continue to play a big part. In the past renewables relied on subsidies, relied on government policies to support higher cost. Today we’ve long since hit the point at which the economics are sufficient to incentivize utilities and governments to want to build more. So, obviously, our mission is to carry on that transition to the point where we really see the decarbonization of the energy industry. I mean that’s really where the world is heading, and we want to be part of that journey.

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MATHIAS STECK Yes, we have already proven, especially in the European markets I will say that grids can take large amounts of renewables. But looking into the outlook, how much renewable we will take on going forward, are there any other disruptions required to make this transformation happen?

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CLIVE TURTON What’s happened in Europe I think needs to happen in Asia is one of the disruptions that I see in my day to day work. And the conversation that you would have with a policymaker in Southeast Asia about something like grid stability or energy pricing is very different to the conversation you would probably have with a European policymaker. So, there’s still a lot of work we need to do in terms of education. We’re still having conversations today about no, no, renewables are actually are a lot cheaper than coal, it’s a lot cheaper than gas. No, no, there are ways to manage grids in very sophisticated ways, so you have a large proportion of your power from intermediate sources. We still have a lot of those conversations today with policymakers and players in the industry. We need to continue our journey of educating the public, educating the policymakers about how we can change the industry here in Asia.

The next layer of disruption is we need to go beyond electricity. If the world is really going to be decarbonized, if we’re really taking seriously the threats of global warming and the need to change the way we act as a whole industry, we need to be looking at transport, we need to be looking at heat, we need to be changing the way those industries are producing carbon.

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MATHIAS STECK When you look into the required uptake of wind from an investor’s perspective, what do you think needs to happen to support the energy transition? I’d just like you to take a snapshot of where we are today and where we want to go. And if you think are we on track and it would be great if we could maybe get a bit of a regional flavour into this as well, how the different parts of the world are performing against those targets.

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CLIVE TURTON Globally we’re in the 5-10% range of wind and solar as part of the energy mix, which I think most people find surprising. I gave a presentation, sorry, I’m going to go off topic here a little bit, I gave a presentation recently at my son’s school, my eight-year-old. They’re studying renewable energy and how companies work. So, I gave a presentation to all the kids about renewable energy and how important it is and how it all works. And one of the teachers asked at the end, how much of the world is renewable energy now? Is it 10, 20, 30, 50%? When I said five, they were shocked. People don’t realize we’re still very much at the beginning of this transition. 5-10% is a tiny portion of the world’s supply mix so we think that in order to hit the Paris accord targets, we need to be up in the 50-80% range. So, there’s a long, long way to go.

And I think if you looked globally, Asia I think there’s relatively low penetration of renewable energy. I think we are at an earlier part of the journey here. If you look in Europe for example, you’ve had a lot more time for the industry to develop. So yes, we’re seeing a lot more work to do.

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MATHIAS STECK In the recent DNV GL Energy Transition Outlook we made the statement that world needs five times more wind energy to close the emission gap by 2030.

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CLIVE TURTON Right.

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MATHIAS STECK Where do you think this growth may come from? Is it more from emerging markets here for example in Southeast Asia or from existing markets?

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CLIVE TURTON You’ve seen the base markets of the wind industry, Europe for example, and also the US, have enormous growth. And they’ve had a long transition. I think what you’re going to see in the future is across the board energy growth in Asia will account for something like 60% of the world’s energy growth in the next 10 or 20 years. So, of that energy growth, we also have a need to increase the penetration of wind. So, I think you’re going to see a lot of that new wind here because the region needs the energy. The cheapest form of energy in a lot of countries where energy growth is so strong is renewables. So, I think I don’t know how much faster or how much more Europe or the US can, for example, grow in terms of their energy uptick but certainly in developing markets and certainly in Asia. And when I say Asia, I don’t mean Southeast Asia. I mean India, China, the Asia Pacific region, Southern Asian countries, so across that big chunk. And that’s 60% of the world’s energy growth. It’s also probably 60% of the world’s population. This is where it’s going to come from for sure.

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MATHIAS STECK Clive, I wanted to change topic a little bit, talking about the change in public perception when it comes to renewable energy. I remember when I came into this industry 17 years back, we were a bit like the tree huggers begging for subsidies and feed-in tariffs and there was a lot of criticism around this, they’ll say it’s all too expensive. Today it turns out it’s one of the most important pillars of the energy transition. So, that must clearly have helped the company like Vestas as well. So, if you could expand after this but nevertheless, having that change, what are still areas where you need help from the public, from policy, from governments?

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CLIVE TURTON Interesting anecdote and I think if you had that same conversation with the energy ministers in this region, you would find folks who still think you’re a tree hugger. You would find folks who still don’t realize that the cheapest cost of new energy is wind and solar. And you would find plenty of folks who are very worried about what’s going to happen if they connect wind or solar to their grid source or the disaster that’s going to engulf their country.

So, I think one of the things we need to be doing is to continue their education. My sense and this is obviously not my area of expertise, my sense is that general public like the idea, they’ve accepted that this is part of the story now and whatever your view, the idea of having clean energy is a fantastic idea. Policymakers still need to learn in some parts of the world what it is that’s happened in Europe. How is it that Denmark manages to generate so much of its power with renewable energy without the grid exploding? How is it that we can actually get cheaper power in all parts of the world? I still feel that conversation needs to take place. I think sometimes we might neglect that the conversation is already done. Like I said, I think in certain Southeast Asian countries yes, you are still a tree hugger.

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MATHIAS STECK Okay, happy to be. When I browsed through your website, I found an interesting article about the polluter pays principle. So, that would be interesting if you could elaborate a bit on this, what that is about.

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CLIVE TURTON It’s a general concept that I think everyone in the industry is familiar with is that in certain industries you make money by producing a product that has pollution as a by-product. And that pollution finds its way into the public sphere one way or another. So, you can think of examples of polluting rivers or the oceans or the skies or whatever. There’s no cost in certain countries, in certain regulatory environments, there’s no cost to producing that pollution.

The idea of polluter pays is okay, if you’re producing a product and you are having an impact on the general public or the general environment which impacts the rest of us, then there’s a cost to that. And the person who should be paying that cost is the person who’s benefitting from the pollution. That’s the general concept. I mean the focus of our public affairs outreach and our dialogue with policymakers and stakeholders is much more about what’s the right direction we should be going. I don’t want to see more coal-fired power plants get built because someone is prepared to pay for the pollution. I don’t want to see them get built at all. I want to see us building cheaper and cheaper and more and more reliable renewable energy sources. And that’s really the direction we’re going. But yes, it’s an interesting policy concept and I know it comes up from time to time.

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MATHIAS STECK We hear also a lot about the import and export of renewables, especially from countries who maybe don’t have enough space for renewables or they don’t have the right climate conditions. Hydrogen might be one medium to do that. What do you think about this going forward in the energy transition?

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CLIVE TURTON I think this is really interesting and I think this is something we’ll be seeing in the future. If you think about the way LNG for example developed, I mean gas was originally something that was flared off when one extracted oil from the ground and then folks realized it could be used as a fuel but unfortunately it wasn’t close to where the demand was. Gas gets liquefied, put in a ship and sent to where it needs to be. If you look at the renewable energy industry, or the renewable energy resources of the world, there are large parts of the world where there are massive amounts of renewable resources. Take the Gobi Desert or Western Australia or parts of the Middle East where you have fantastic wind, fantastic sun but no real demand.

If the technology can reach the stage where it’s commercializable, we could be producing renewable energy and through electrolysis you can convert water effectively to hydrogen. Hydrogen is very expensive to transport, you can convert hydrogen to ammonia. Ammonia is relatively easy to transport, relatively. And we could be delivering shipments of liquid renewable fuel all around the world and it would hopefully start to look like the LNG industry in 10, 20 years. And that is another huge sea change that could happen in the industry. That would mean we would be able to affect transport, heat, shipping itself with renewable technologies.

That’s a very interesting area and it’s not science fiction. A lot of countries around the world they already have policies in place, already looking at how it’s going to be done. Creating hydrogen is something, it’s a known technology. It’s not something that is pie in the sky. It’s just a question of how quickly the costs come down. If you were to look at a graph of solar or wind costs 10 years ago, it would have said it would take forever for it to get to the point where it’s commercializable. The graphs of hydrogen cost look the same today so it’s just a matter of time.

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MATHIAS STECK So Clive, I have one last question for you. What is Vestas doing to harness this new collective focus on climate emergency to progress the energy transition?

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CLIVE TURTON Well, we’re going to keep on doing what we’re doing, all right? At its heart our goal is to build more, grow more, build this industry, bring it to the public’s attention and help create a better environment for everyone here. And we’re going to continue to drive our business in conjunction with policymakers and the public to deliver that message and build out the industry.

And we’re also quite interested in what we can do even further. I mean the next step in this transition is going to be bringing electricity or being green energy to transport. Or green fuels themselves. We will be looking interested at the hydrogen economy for example. How we can be part of that as well.

The other thing we’re doing which I think is very exciting is we’re partnering with Mercedes for Formula E, the electric version, the renewable version of the Formula One competition.

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MATHIAS STECK Very good. Thank you very much, Clive for these great insights and thanks for listening in. That was Clive Turton, the President and CEO of Vestas Asia Pacific.

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NARRATOR Thank you for listening to this DNV GL Talks Energy podcast. To hear more podcasts in the series, please visit dnvgl.com/talksenergy.

Wind energy is at the heart of the energy transition, a necessary shift to a sustainable future for our society and its people. Before COVID-19, the global community had started to make strong progress on implementing the Paris Accord to prevent damaging and irreversible climate change. The pandemic has created a temporary reduction in carbon emissions, allowing us to see some immediate health benefits. As we recover from the pandemic, it is important for us to create a more resilient and sustainable clean energy system, not only reducing the risk of climate change but also accelerating economic recovery by boosting investment and job creation.

Clive Turton,

President and Chief Executive Officer Asia Pacific
Vestas, May 2020

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