The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:19:13 · Alan Chang, Harry Stebbings
[00:19:13] S0: Two reasons. The first reason is overregulation. It's very hard to build anything in The UK, like physical otherwise. Let me give you an example, right? So we're trying to build a power plant in The UK, and one of the things the council have complete discretion over is planning, especially around environmental impact. So we had to do wintering bird surveys, right, over several winters. So how that works is you hire a guy with a clipboard, and they count number of birds in the winter. And until that survey is done, you can't build. So that's one example where it's so hard to build something physical in Britain. Right now, I can tell you, if you speak to any of the infra capital providers, they want to deploy a lot of capital to building infrastructure. So the problem is not capital. The problem is it's very, very hard to build. So that's the first reason. The second reason, I would say, is the quality of companies operating in this space is not very sophisticated. Like a lot of these energy, existing energy companies, they are not technology driven at all. They're very old school, still pen and paper, spreadsheet based companies that are incredibly inefficient. Now, there's not much I can do about regulation, but I think we can, for sure, build the best version of, you know, best energy company using the latest technology. [00:20:24] S2: Who is in charge of the regulation? Is this Ed Miliband and the energy [00:20:28] S0: Yeah. It's it's Ofgem. It's Desnez.
00:20:28 · Alan Chang, Harry Stebbings
[00:20:28] S0: Yeah. It's it's Ofgem. It's Desnez. [00:20:31] S2: And when we compare that to The US, do they not have the same regulatory compliance issues that, say, California does, which is why they failed so woefully on their expansion of the railway systems that they wanted to build out? [00:20:42] S0: Yeah. I I think, to be clear, I think US also share a lot of the similar problems Yeah. To The UK, to a lesser extent. And it also depends on what what state are you talking about. For example, in state of Texas, right, where, you know, a lot of people say it's a home of energy, it's much easier to build compared to The UK. [00:20:58] S2: When you think about energy, the energy crisis today, what does no one know that everyone should know? I'm very naive on energy. It's it's not my business. [00:21:08] S0: Yeah. [00:21:08] S2: It's not where we invest traditionally.
00:21:09 · Alan Chang
[00:21:09] S0: So first of all, there's no such thing as 100% renewable. Just think about when the sun is shining, solar is generating. And obviously, sun is not shining all the time. For wind, it's the same. Right? When wind is blowing, you get wind energy, right, wind power. However, they are extremely correlated to each each other. What that means is even if you overbuild solar and wind, it's never possible to cover a 100% of the time to be a 100% renewable because they're highly correlated. So in certain hours, you get abundant of solar and wind energy, but in certain hours, you basically get near zero energy, even if you overbuild. Now you can argue, okay, you can put storage in. But right now, most batteries are sub two hours. So they're actually... Batteries are so way too expensive for us to use to store, you know, days or even weeks without, you know, solar and wind energy. So any energy company that's claiming their renewable is a is is a complete lie. They are simply buying renewable certificates to claim their harms in renewable, and it's completely false. Let me give you, like, a proof point of why why why this is completely false. When Russia invaded Ukraine, the gas prices shot up, but the energy companies that are offering 100% renewable energy tariffs also went up. How is that possible if it's 100% renewable? Right? I think that's the first thing. Second thing most people don't understand is power is not fungible across time and space. You have a lot of power, for example, wind power in North Of Scotland, that are being told to turn off because the power is not getting to where it needs to be. People are not using energy when a wind is blowing, and it's also not going to where it needs to be, which is, you know, the big demand centers like like London because the grid is not set up to do that. So, yeah, these are two biggest misconceptions in energy, I would say.
00:22:49 · Harry Stebbings, Alan Chang
[00:22:49] S2: If you were in charge of The UK's energy policy program, what would you do differently that we're not doing today? [00:22:57] S0: I would deregulate building anything physical. I'll make it so easy for anyone to build. Number two is I'll delete all subsidies of any kind. Why? Because the goal for energy should be as low cost as possible. A subsidy basically means it's actually not profitable to build this project, but because the subsidy is now profitable. Think about who takes that burden of that higher energy cost. It's ultimately the ratepayers, right? It's it's you and I. It's everyone. So it actually doesn't make sense. So I'll delete all subsidies and let the free market do its thing. If it's profitable to build it, people will build it. If it's not, don't. [00:23:34] S2: When we look at energy regulations, infrastructure, policy, which country do you think stands out as an exemplary that we should follow?
00:23:34 · Harry Stebbings, Alan Chang
[00:23:34] S2: When we look at energy regulations, infrastructure, policy, which country do you think stands out as an exemplary that we should follow? [00:23:42] S0: China. Why is that? Just look at the energy price. If you look at the... What the Brits and Europeans pay in terms of, you know, cost per kilowatt hour, it's roughly 25 to $30 cents. In The US, it's 10 to $15 cents. In China, it's $8 cents. If you look at energy per capita, US hasn't grown in the last twenty five years. It's been flat, and China has gone up by seven times. And if you look at the build out in China, right, they have truly vertically integrated energy companies run by the state, from generation to the grid and distribution. And, you know, whilst, you know, in the West, like, there are people debating, oh, is renewables better? Is, you know, oil and gas better? You know, then there's like... It's it's becoming, like, a very political thing. In China, they build everything. In China, they deploy more solar than the all Western economies combined. In China, they deployed more gas, more coal, more grid. They've laid more cables of grid than all Western economies combined. So they're just building everything. Like, clearly, they understand the importance of energy costs, and they're just building everything. I think that's a, yeah, model economy we we should we should we should follow for energy policy.
00:23:42 · Alan Chang, Harry Stebbings
[00:23:42] S0: China. Why is that? Just look at the energy price. If you look at the... What the Brits and Europeans pay in terms of, you know, cost per kilowatt hour, it's roughly 25 to $30 cents. In The US, it's 10 to $15 cents. In China, it's $8 cents. If you look at energy per capita, US hasn't grown in the last twenty five years. It's been flat, and China has gone up by seven times. And if you look at the build out in China, right, they have truly vertically integrated energy companies run by the state, from generation to the grid and distribution. And, you know, whilst, you know, in the West, like, there are people debating, oh, is renewables better? Is, you know, oil and gas better? You know, then there's like... It's it's becoming, like, a very political thing. In China, they build everything. In China, they deploy more solar than the all Western economies combined. In China, they deployed more gas, more coal, more grid. They've laid more cables of grid than all Western economies combined. So they're just building everything. Like, clearly, they understand the importance of energy costs, and they're just building everything. I think that's a, yeah, model economy we we should we should we should follow for energy policy. [00:24:46] S2: Do you stand by the belief that, yeah, we're all in the same WhatsApp groups and they say... And everyone says, ah, but the level of talent coming out of Imperial and Cambridge and Oxford, absolutely, we can parallel The US. Do you stand by that on talent levels in The UK?