In Australia, just 20 coal-fired power stations remain operational today. That number is set to fall dramatically over the coming decade; by 2030, 55% of Australia’s coal-fired power stations will be over 30 years old, and many of them will be either retired or scheduled for retirement. This creates a massive opportunity for investors, who can benefit from the stability, income, and capital growth that comes with investing in renewable energy.

Sam Reynolds, Managing Director of Octopus Investments, is well familiar with this opportunity, having managed the largest investment team in Europe dedicated to renewable energy. He returned to Australia in 2018, seeing the massive opportunity here. With such a large portion of our power generation requiring replacement, someone needed to fund the investments.

"You're removing 85% of the supply in the market. To replace that 85%, you're looking at about $170 billion to $200 billion of new energy investments required in Australia."

In this episode of The Rules of Investing podcast, Sam busts the myths that renewables are expensive and unreliable, and he explains why coal-fired power stations must be replaced regardless of climate change concerns.

Timestamps

  • 2:06 - Sam explains the origin of the company, why they chose that name and what Octopus does
  • 6:42 - What got Sam into renewables and why he's so passionate about it
  • 12:05 - The opportunity and benefits for Australia in transitioning to renewable energy
  • 14:38 - Sam uses a Wallabies versus All Blacks analogy to explain where we are along the energy market curve
  • 17:14 - How COVID-19 has impacted the conversation around renewables in Australia
  • 20:26 - Patrick asks Sam about how returns are derived from renewable assets
  • 25:12 - Are renewables unreliable?
  • 28:12 - What firming means in the context of renewables
  • 30:04 - Sam explains the risk of renewable assets versus traditional energy infrastructure
  • 32:20 - Pat asks Sam his three favourite questions

Reading recommendation - Fall of Man in Wilmslow: A Novel of Alan Turing

Building Australia's clean energy future

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Ken Gotfried

Busting the myths?? Yet another wishy washy explanation of how renewables can deliver reliable energy when the sun doesn't shine and the wind doesn't blow. Is he seriously suggesting car batteries will be used as back-up for your house heating and air conditioning?? At least he admitted gas will be a required back-up. I have yet to find a credible explanation from anyone as to how we can rely on renewables, other than the frequently expressed hope that battery technology will provide much higher capacity at lower cost - again, a hope!

Paul Vazey

Thanks Patrick, great interview. One slight correction though. Renewable Gen in the National Electricity Market (NEM), when including Large Generation Certificate (LGCs) creation, actually have a negative marginal cost when they are generating.

Ryan E

Ken, AEMO in their Renewable Integration Study reported that we could have up to 75% baseload power from renewables, based on current technologies. What is limiting us are policy settings https://www.aemo.com.au/energy-systems/major-publications... This is a credible examination and vindication of that target. Further penetration levels are possible, especially given improving technical capabilities. It is imperative that we remove old, unreliable, polluting fossil fuel sources and replace them with cheap renewable energy.