Feb 8, 2024 · 52m · catalyst
2024 trends: batteries, transferable tax credits, and the cost of capital
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Host Shail Khan and energy analyst Nat Bullard analyze key global decarbonization trends from Bullard's annual presentation, evaluating underappreciated efficiency milestones, climate finance and interest rate headwinds, and the rapid expansion of battery storage supply chains.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Shayle holds 34.4% of the talking time here. How this is scored →
Shayle as informed peer 5.6 Guest teaching 2.8 Guest disagreement 0.7 Shayle pushing back 1.2
speaking balance: gold is Shayle, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 36:36 Bullard rejects automatic clean/fossil equity substitution
Bullard strongly pushes back against naive divestment assumptions, explaining that institutional capital moving out of fossil fuels does not neatly funnel straight into clean tech equities.
Hardest push from Shayle ▶ 35:36 Kann critiques long clean / short traditional trade logicKann challenges the underlying premise of pairing long clean with short traditional energy, arguing the two sectors are not zero-sum in the short term.
Biggest teaching moment ▶ 4:18 Bullard reveals historical 1973 per-capita emissions peakBullard teaches Kann a surprising historical data point regarding the 1973 peak in global per capita emissions driven by 1970s efficiency adaptations.
Shayle holds their own ▶ 50:00 Kann details looming battery recycling feedstock deficitKann demonstrates expert VC market insight by citing exact 2M ton feedstock vs 10M ton capacity projections to illustrate massive underutilization risks for battery recyclers.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Shayle as informed peer | Guest teaching | Guest disagreement | Shayle pushing back | Why |
|---|---|---|---|---|---|---|
| Mid-Roll Sponsorship: Bloom Energy, Engie, and Energy Hub | 2 | 0 | 0 | 0 | Introductory segment and sponsor ad read. Kann introduces the annual tradition of reviewing Bullard's decarbonization deck in an easygoing, collegial tone. | |
| Examining Historical Peaks in Global Per Capita Greenhouse Gas Emissions | 4 | 6 | 1 | 1 | Kann admits he did not know global per capita emissions peaked in 1973. Bullard contextualizes the historical shift stemming from the 1970s oil shocks and efficiency gains. | |
| Global Solar Installations and Unprecedented 2023 Growth | 6 | 3 | 1 | 1 | Both host and guest reminisce about tracking solar since 2007-2008. Kann cites exact 2022 vs 2023 deployment numbers (252 GW to 440 GW) showing deep subject matter mastery. | |
| Plummeting Module Prices and Shifting Solar Cost Drivers | 7 | 2 | 1 | 3 | Kann notes that module costs are now a smaller portion of overall solar Capex, driving home the point that soft costs and financing matter far more today. Bullard readily agrees and elaborates. | |
| The Global LED Transition and Declining Lighting Demand | 5 | 4 | 0 | 0 | Bullard and Kann discuss the massive global penetration of residential LED lighting. Kann notes the rapid timeline and global South reach, while Bullard highlights historical electricity demand shares. | |
| Deforestation Trends in the Amazon and Land Use Emissions | 5 | 3 | 0 | 0 | Bullard details declining Brazilian Amazon deforestation figures and global land use trends. Kann adds context on the broader land use change carbon cycle category. | |
| Explosive Global Growth in Grid Energy Storage Deployment | 7 | 4 | 1 | 1 | Kann expertly introduces the new IRA tax credit transferability market mechanisms. Bullard delivers precise data points on pricing discounts across ticket sizes. | |
| Mid-Roll Sponsorship: Bloom Energy, Engie, and Energy Hub | 6 | 2 | 0 | 0 | Kann explains how renewable CapEx/OpEx sensitivity shifts dramatically when interest rates climb from 4% to 12%, framing Bullard's slide 50 analysis on capital cost impacts. | |
| Evaluating Long Clean and Short Traditional Energy Equity Strategies | 7 | 2 | 2 | 4 | Kann critiques the fundamental thesis of the long clean / short dirty equities strategy, arguing that clean growth does not immediately mean fossil equities collapse in the short term. Bullard concedes and echoes the nuance. | |
| Asian Dominance in Global Battery Cell Manufacturing | 6 | 2 | 1 | 2 | Kann contrasts the Asian battery manufacturing landscape with solar history, pointing out the continued presence of South Korean and Japanese manufacturers alongside Chinese giants. | |
| Rapid Rise of Lithium Iron Phosphate (LFP) Battery Chemistry | 5 | 4 | 1 | 1 | Bullard details the rapid ascent of LFP chemistry in EV markets, noting how it forced him to re-evaluate his solar intuition about 'winner-takes-all' chemistries. | |
| California Net Metering Reforms and Battery Attachment Surge | 6 | 2 | 1 | 1 | Kann and Bullard dissect the aftermath of California NEM 3.0, showing how curtailing export compensation forced residential solar customers to attach storage. | |
| Lithium Price Cycles and Downstream Battery Pricing Effects | 5 | 3 | 0 | 0 | Bullard walks through the ten-fold surge and subsequent crash of raw lithium prices and its delayed transmission to pack costs, with Kann summarizing classic commodity cyclicality. | |
| Battery Recycling Overcapacity vs Feedstock Scarcity | 8 | 2 | 1 | 3 | Kann brings practitioner VC experience to highlight a stark 5x imbalance in 2030 projected recycling capacity vs available feedstock, cautioning prospective recyclers without secured supply. |
Statements from this episode (25)
Bullard: Global per capita greenhouse gas emissions peaked in the 1970s
“And the result is that on a per capita basis we had all greenhouse gas emissions peak in the 19 seventies. In particular methane and nitrous oxide emissions were peaking in the 19 seventies. CO₂ emissions didn't peak, but Into well into this century per capita…”
Bullard: Developed world energy intensity of GDP peaked in the 1970s
“And the reason I say, like, I saw this in the 19 seventies as well in other data is that that's also when the energy intensity of GDP in the developed world peaked.”
Kann: Global solar installations jumped from 252 GW to 440 GW
“Like, we went from 252 gigawatts in 2022 to four 40 in 2023.”
Bullard: China's 2023 solar additions topped all global historical totals except 2022
“If you were to take just China's installations last year, which is north of 200 gigawatts, in and of itself, it would have been the biggest year in any other year besides twenty-twenty-two.”
Bullard: Solar oversupply cycles act as forcing functions for further market growth
“Remember that these things go in cycles, that these markets tend to over, oversupply themselves, which has a way of becoming a forcing function for the market to grow further.”
Bullard: Solar module prices fell from $1.09 to 12 cents per watt
“But at the same time, the module price has gone from a dollar and nine cents to 12 cents.”
Kann: Solar module costs are less relevant than ever to total project costs
“You know, the thing, one thing that I always point out though, is that it is now true that actually looking at the cost of the solar module is less relevant than it has ever been Historically, in terms of the cost of the solar produced, because, specifically b…”
Kann: US solar PPA prices rose despite falling module prices
“There is a rational way to reconcile the fact that on one hand, solar module prices have continued to decline, while on the other hand, at least in the United States, the cost of solar PPAs has increased during that same period, right?”
Bullard: LEDs surged from 1% of global residential sales in 2010 to over 50% in 2022
“More than 50% of all global residential lighting sales in twenty-twenty-two were light-emitting diodes, which is pretty extraordinary, because in twenty-ten, it was one percent.”
Bullard: Lighting's share of electricity demand dropped from over 25% to barely 10%
“Lighting is, and this is still totally fascinating to me, is not only a lower percentage of total electricity consumption than cooling, but even than low temperature heating in this century, and it's come down from like a share of more than a quarter of all el…”
Bullard: Amazon deforestation fell 60% from 2021 to 2023
“We had about 5000 square kilometers of deforestation in the Amazon last year, which is like 60% less than it was in the year 2021 and much less, like maybe a fifth of what it was or even less in the 19 nineties and in the early 2000.”
Bullard: Global energy storage tripled to 100 GWh in 2023
“My former colleagues at BNEF gapped their projection up by, like, almost, you know, like, 30 or 40%, I think, if I look at the numbers a really substantial leg up on On what had been anticipated to about a hundred gigawatt hours of total storage in, in 20, 23,…”
Bullard: Sub-$1M transferable tax credits trade at 84–86 cents per dollar
“So, for projects that are, or a transfer of under a million dollars, you're getting, like, an 84 to 86 cent price, as opposed to what you say suggests is a hundred percent, a hundred cents on the dollar, which gives the investor a quite high IRR, like a 16 to …”
Bullard: $50M transferable tax credit deals trade at 94–96 cents per dollar
“When you get all the way up to, say, a fifty million dollar transfer, where you're going to be competing with traditional tax equity, but not only with traditional tax equity, but with other risk-free investments, like, say, treasury bills, you're in the, like…”
Kann: Financing becomes 60% of renewable costs at 12% interest
“With a four percent cost of capital, 75% of the overall project cost is born out of the project itself, CapEx and OpEx. 25% is financing, but if you're up in the 12% cost of capital range, now 60% of your total All in project cost is your financing”
Bullard: Developing markets face 11% to 13% energy cost of capital
“The adders onto the risk-free rate could be, Adjustments for currency risk. Adjustments for sovereign risk. And you'll be at the point where your cost of capital is 11% or 13%. Like, it does happen in markets like South Africa or like India.”
Bullard: Clean-over-dirty energy stock strategy whipsawed to -77% in 2021
“2018, 2019, 20 20, you had 17, 13, and a 160% outperform excess return from this long clean
Short, dirty strategy.
Which kind of unwound.
So, it would have really stung in twenty-twenty-one when that strategy went to a -77% excess return.
That's some sophistic…”
Bullard: Battery cell makers outside Asia hold only 6% global share
“In fact, all of the others are six percent in total.”
Bullard: Annual global battery production reached 1 TWh for first time
“I believe it was also the first year of producing a terawatt hour worth of batteries.”
Kann: LFP battery market share surged from 5% to 42% since 2019
“LFP went from five percent of EV batteries in 2019, not that long ago, to 42%. In twenty-twenty-three.”
Bullard: Battery chemistries will segment by use case rather than one dominating
“In batteries, I think we will see a world where you've got some separation based on use cases. You know, there will be the NMC batteries that get used for hypercars and for aviation. And maybe the LFP battery becomes much more common for your sort of bulge bra…”
Bullard: California residential solar battery attachment spiked to nearly 25%
“It was like a couple of percent of systems had a battery attached in the middle of twenty-twenty-three, and now like almost 25% do.”
Bullard: Markets are created by removing legacy subsidies, not just adding new ones
“You know, we think about markets being willed into being by a new subsidy coming into place, or a new support mechanism, but they're also willed into being by other mechanisms going away.”
Bullard: Lithium prices spiked 10x over two years before collapsing
“So yeah, the prices went up by like a factor of about 10 over the course of two and a half years in January, 20 20 to like the middle of 2022, late 20 22. And then collapsed.”
Kann: Projected 2030 battery recycling capacity exceeds scrap supply by 5x
“According to the numbers that circular energy storage compiled will be in 2030, will be at about two million tons per year of combined end of life batteries and production scrap versus ten million tons or so of capacity for material recovery and processing. So…”