Ep70 Why Energy Tech Will Change Everything, ft Kingsmill Bond, Ember

We talk to Kingsmill Bond, energy strategist at Ember, sharing insights from his latest report, "The Electrotech Revolution". Discover how new energy technologies are transforming economies and geopolitics, with a special focus on Asia's rapid clean energy advancements. Tune in to explore the future of power systems, investment shifts, and what it means for a sustainable world.

REF: The Electrotech Revolution; Electricity Data Explorer; Ember.

ABOUT Kingsmill: Kingsmill Bond, CFA is an energy strategist for Ember. He has worked as a financial market analyst and strategist for over 30 years, including for Deutsche Bank and Citibank in London, Hong Kong and Moscow. He believes that the electrotech revolution is the most important driver of financial markets and geopolitics in the modern era. He joined Ember from RMI in 2025 to write analysis on the impact of the energy transition on financial markets, with a focus on the exponential growth of electrotech and the disruption to the fossil fuel sector.

FEEDBACK: Email Host | HOST, PRODUCTION, ARTWORK: Joseph Jacobelli | MUSIC: Ep0-29 The Open Goldberg Variations, Kimiko Ishizaka Ep30-50 Orchestra Gli Armonici – Tomaso Albinoni, Op.07, Concerto 04 per archi in Sol - III. Allegro. | Ep51 – Brandenburg Concerto No. 4 in G, Movement I (Allegro), BWV 1049 Kevin MacLeod. Licensed under Creative Commons: By Attribution 4.0 License

Transcript

***PLEASE NOTE: The text is an automatically generated transcript and may contain errors. For accuracy, only rely on the original recording.***

Ep70 Why Energy Tech Will Change Everything, ft Kingsmill Bond, Ember

Joseph Jacobelli: Good morning, good afternoon, and good evening, wherever you may be listening from. Welcome to episode 70 of the Asia Climate Finance Podcast. Today I'm joined by one of the leading voices in energy analysis, Kingsmill Bond. Kingsmill is the energy strategist at Ember Research.

Kingsmill brings a rare combination to the energy conversation. The analytical precision of a 30 year financial markets veteran and the intellectual courage to challenge the fundamental assumptions driving energy policy worldwide. You'll find details of Kingsmill background in the show notes. Ember Research is a London based global independent think tank. It has become one of the global authorities on electricity transition data by doing something quite different, making comprehensive power system data completely free and also quite transparent. And it is something, by the way, that I use quite a lot for my own analysis.

Ember's open access electricity data explorer covers over 200 countries where real time generation data is transforming how we track the clean transformation worldwide.

Today we are talking to Ember's Kingsmill about his latest annual slide deck. The title is the Electro Tech Revolution, the Shape of Things to Come. It unpacks how electrotech is rewriting the economics and geopolitics of energy globally. The 112 page slide deck is available on Ember Research website at ember-energy.org. Also, there is a link in the show notes. As always, please do contact me with ideas on topics or guests. Our email is also in the show notes.

Enjoy the show.

Hello Kingsmill and welcome to the Asia Climate Finance Podcast. It's so great to have you. Thank you for making it.

Kingsmill Bond: Thanks for having me, Joseph.

Joseph Jacobelli: We're going to start as per usual with a little bit of a personal introduction. So we've got your bio in the show notes, but could you tell us something about yourself?

Kingsmill Bond: I have to admit, I do like reading energy history, so that's one thing I spend a lot of time doing. Apart from that, I spend a lot of time cycling, so my life is between cycling and reading energy history books. And having the pleasure of talking to you.

Joseph Jacobelli: Well, that's kind of close to what I like to do. I love cycling and I love reading about climate finance and about energy. I guess we should exchange notes sometimes. So talking about the report with a little bit of a backdrop first.

So why don't we just start with the big picture. Now, you framed the electrotech revolution as a whole new way of looking at the energy transition, specifically not just about climate targets, but about technologies, economics, geopolitics. Why did you choose that lens and how do you think it helps us to see what other narratives miss?

Kingsmill Bond: The argument that we make in the electrotech revolution is that the drivers that have changed the energy system are much deeper and older actually than climate. We frame it as physics, economics, and geopolitics, or in more prosaic terms, efficiency, cost, and energy security.

The reason why we wanted to look at the technology shift in these terms is really twofold. First of all, because we would argue it's a much more accurate reflection of the forces which are driving change, actually driving change. Secondly, this analysis enables you to understand much more effectively what's actually happening on the ground.

So why is it, for example, that Pakistan has suddenly installed so much solar in three years, that 30% of its electricity comes from solar? Why has ASEAN leapfrogged the United States in 2023, years before it was expected? Why is Asia as a whole deploying electrotech far more rapidly than was anticipated?

So there's stuff going on out there which we think is much better explained by looking at it through the electrotech lens.

Joseph Jacobelli: As opposed to the usual narrative where climate change and then policy and then we take it from there. But then, I guess we can talk a little bit more about some of those countries, especially China, in a minute.

Getting into the topic more deeply. Kingsmill, you make the point that fossil fuels get more expensive to dig up over time while electrotech gets cheaper the more we build it. In places where fossil fuels are still heavily protected or heavily subsidised, what is it going to take to tip the scales?

Kingsmill Bond: I could give you a long and worthy answer about how we need to help these people move to the new world. But the answer is it doesn't matter. They're just the laggards in the energy transition. If you frame the question what can we do with countries which have decided to double down on the horse system in the year 1920, the answer is they're just tough. They're going to be laggards, they're going to have more expensive energy, more expensive systems. They'll struggle to compete with their neighbours. They'll be outcompeted and they will lose. So it's just tough, really.

Joseph Jacobelli: On paper, electrotech is about three times more efficient than fossil systems, but in the real world, what's stopping us from fully cashing in on that advantage?

Kingsmill Bond: The answer is that actually in the real world, we are cashing in on this advantage. It's very widely appreciated that 90% of investment, for example, in the electricity sector is already going into electrotech type solutions, primarily solar and wind. In the EV sector, 60% of sales in China, the world's largest car market, are already electric. The key point to be made here is that we are already deploying these technologies at scale.

Another data point is interesting. If I take the IEA data, two thirds of investment now in the energy systems is already going into electrotech. So a lot of change is already happening. The reason why we don't necessarily notice this is because it's the difference between stocks and flows.

Without getting too technical, a stock is the car fleet. A flow is the sales of new cars. So it takes a while, 15, 20 years, to turn over the entire fleet. But the flow can happen very rapidly. If you go look out in the car park in Lisbon right now, you'll see that it's mainly ICE cars. But if you actually look at the statistics for the sales, you'll see the sales of electric vehicles are growing very rapidly. But clearly, as an analyst, you want to look at the flows because ultimately the stocks derive from the flows.

Joseph Jacobelli: Talking about what I always call the global leader in clean energy, China comes across in your work as both the biggest fossil demand driver and the fastest moving electro state. How should other countries read that? Should they view it as a challenge? Should they view it as an opportunity, or a bit of both?

Kingsmill Bond: This is one of these areas where it doesn't help to look through the climate lens. You want to look through the technology lens. You want to look at growth, you want to look at change. When you look at what's going on in China in these terms, you see two very important things. First of all, they're reducing the price of these core electrotech technologies such that I can buy a solar panel for $50, which is incredible really, because it's going to produce $500 of value or more over the course of its lifetime. They're reducing the cost for other people, so that's great. The other thing that they're doing is they're setting a challenge to other countries which want to compete, because they're creating a new ecosystem of superior energy solutions and they're actually forcing countries, at least other countries that want to engage with the future, to respond to that challenge. So there are two things that China is doing: to set the bar higher for other people to aspire to and also make it easier for them to get there.

Joseph Jacobelli: There's a lot of interpretations and obviously I've got my own of why China is still building coal fired power plants. Maybe could we have your take on that?

Kingsmill Bond: This whole point about China building coal fired power plants, it's kind of irrelevant to the story because the question really is what's going on with the high growth, new technology. The Chinese are still building some of these old technology coal fired power plants. The capacity utilisations in China keep on falling. Last time I looked, it was below 50%. The question really is how much of that coal are they using? The answer to that one is that Chinese coal demand, as is now widely appreciated in the power sector, peaked about six months ago, or even nine months ago, down about 3%. What's happening is that these coal plants are turning from base load to backup. But again, I find it so funny that people fixate on this question, which to me as an energy analyst is completely irrelevant, with all due respect, because it's a kind of reflection of the old system rather than understanding the new system that's being built. The key number to be fixating on is the amount of solar and wind and batteries and electrification that China is doing because that is clearly the future, and that's the very fast growing new technology where all the flows are coming.

Joseph Jacobelli: I'm a hundred percent in your camp, and I wrote in my book Asia's Energy Revolution that I published almost five years ago, I talk about that a lot, but I think the challenge that analysts like ourselves face is the narrative. It's a very easy narrative: oh, China may be doing really well in clean tech, but they don't really mean it because they're still building coal fired power plants. So it makes very nice headlines and like you say correctly, it completely misses the point of what else is happening.

Kingsmill Bond: Again, there's this article we were discussing earlier by Noah Smith, for example, which talks about the electro stack and makes the point that you need to have these electrotech technologies in order to compete in the modern world. He's talking in military terms, we are talking in economic terms, and again, I think the debate has been very distracted by the focus on carbon and climate and has been missing the point. That's a technology shift, and people who deploy better technologies are in a superior position to outcompete you in your economy and of course militarily as well. So again, I think other countries do need to wake up and embrace these technologies.

Joseph Jacobelli: Towards the end, I'm going to ask you how we're going to convince people. Now going back to the report, you show in the report that some emerging economies are racing ahead in solar and electrification. What makes the difference between a leap that sticks and one that just swaps one kind of dependency for another?

Kingsmill Bond: A leap that sticks is one which is deploying universally available energy sources at scale, where there's enough capacity for those sources to provide you with all of your energy. If I look across Asia or the world right now, every country has plenty of solar and wind, quite sufficient to supply all its energy demand. Having made that grand statement, because on average, countries have a hundred times as much solar and wind potential as they do current energy demand. But there are certain countries where that multiple is less than 10. That includes, for example, Germany, Belgium, Japan, and Korea. For those countries, it is a bit more problematic. For most countries, however, the long term solution, which can stick, is to deploy renewables and to electrify.

If the second part of the question is, are you exchanging one type of dependency, dependency on fossil imports, for another type of dependency, dependency on electrotech imports, the answer to this one is the difference between renting and buying. If I import fossil fuels, that's like a rental contract; I have to import that thing every day. I buy my millions of tons of fossil fuels, I burn them, then the next morning I have to wake up and buy them all over again. If my supplier decides that he doesn't like me, then the lights go out. So it's a real degree of risk and dependency in this world with more stress.

The difference is if you buy a solar panel and you put up the solar panel, it lasts for 30 years and the seller can't do anything about it. If the seller cuts you off, you've got 30 years to find another solution. Of course, as we all recognise, life isn't quite as simple as that, and particularly at the moment for the next five or 10 years when countries are building up their electrotech systems there is a very high degree of dependency upon China. Again, this is another reason why countries need to find alternative sources or buy large amounts from China in order to reduce the risk of being cut off in the future. Nevertheless, it's still a far lower risk than the risk of buying fossil fuels every day.

Joseph Jacobelli: If most countries have way more renewable potential than they need, how does that change the global energy map and what happens to today's big fossil exporters in that world?

Kingsmill Bond: What this is doing at heart is creating an extraordinary opportunity for Asia to leapfrog to a superior energy system. The best comparison is with what happened 200 years ago when Europe, led by the UK, leapfrogged to a fossil energy system and used the power derived from that to create their colonial empires. This time round Asia is in a better position to leapfrog to a superior energy system, and the United States is held back by its politics and by its very large, vocal and powerful fossil fuel system.

It's Asia's chance now to shine and grab the opportunity. So what's this going to do to the global energy map? It's going to transform it, and not just the energy map, but the global political map as well. What we're going to see is a leaching away of power from the petrostates and a shift to the global south in the Sunbelt, to countries which enjoy superior levels of sunshine and therefore lower long term energy costs, and industry will as ever migrate to low energy costs. The best of all possible worlds is to have a stable political environment and therefore a low cost of capital, plenty of land, and to be in the Sunbelt. Countries which are able to combine all of those factors will grow and prosper in this new environment.

Joseph Jacobelli: Kingsmill, in the report you say we can get 70 to 80% wind and solar with tech we already have. If we solve variability in smart ways, which of these solutions do you think is the most overlooked right now?

Kingsmill Bond: We make this point about the fact that you can get solar and wind or variable energy sources to provide 70 to 80% of your electricity based upon analysis done by the Energy Transitions Commission which came out fairly recently. They talk, for example, about there being six standard solutions that you can put into place for the deployment of electrotech. But to answer your question specifically, the one solution that is most powerful and where costs are falling most rapidly and demand is growing most quickly is batteries right now. As battery costs fall, it makes possible the deployment of ever rising levels of solar and wind at reasonable prices.

To give you a couple of numbers on this, we did a detailed piece of analysis. We looked at about 20 different cities across the world, looked at their weather patterns over 10 years, and worked out what percentage of hours in the year you could get from solar alone, with solar and batteries. We found that if you take a $60 per megawatt hour cutoff for the price of your energy, in Hyderabad, for the sake of argument, you can get 35% of your electricity now from solar plus batteries as a kind of firm. That's the ceiling of the possible for $60, but as solar and battery costs fall, by 2030 we calculate that it'll be 65%.

What's important here is not so much the numbers, but the fact that the ceiling of the possible for the deployment of solar plus batteries is already far above our heads, and the ceiling of the possible is rising quicker than we are deploying these technologies. That means we can just keep on building solar and batteries. I'm not saying for a second this is easy. You can have situations like what happened in Spain, where they overbuilt solar, didn't put enough batteries in, and didn't change the regulatory structure quickly enough.

It's not easy, but it's absolutely possible to put in solar and batteries and get very high levels of penetration. The point is, when you combine it with wind and hydro, and you combine it with other technologies such as demand side management and bigger grids and more effective use of current fossil solutions, you could get to very high levels. Seventy to eighty percent is the number the Energy Transitions Commission talks about. In fact, I suspect it's higher, but it doesn't really matter because the world as a whole is only at less than 20 right now, and many countries in Asia are lower than that.

Again, it's an extremely interesting, exciting opportunity. Sorry, there's one other point Asia has which it's worth emphasising that other countries don't have: Asia's got rapidly rising electricity demand, and it doesn't have such a large fixed fossil fuel system. It's growing more rapidly and electrifying faster. The other great fact, which is not well appreciated, is that electricity as a share of final energy demand in Asia leapfrogged the West about five years ago, and it just continues to rise absolutely, clearly and cleanly on straight lines. It's a real opportunity.

Joseph Jacobelli: That's got to do with the fact that 85% of electricity demand in the Asia Pacific region is actually in emerging countries. Only 15% is from developed Asia. So that makes a huge difference.

Talking about demand management, we introduced the concept of the whole digitalisation game. Within that, obviously AI is going to play an important role. You suggested AI could actually speed up the transition. Where do you see the most exciting, practical uses for AI in this space? Also, what guardrails do we need to make sure it helps rather than hinders?

Kingsmill Bond: On AI, there is this completely bizarre narrative at the moment that AI is going to increase energy demand and increase fossil demand. This is very clearly pushed by US fossil interests, and it's absolutely baseless.

AI might add 5% of the growth in electricity demand over the next decade, according to the IEA, but equally possibly it will do what it's done for the last 15 years, and actually we will innovate our use of computational power more rapidly than we are using it. Kumis Law says precisely that.

The much more interesting angle is the point that it's only AI which can enable us to handle the complexity of billions of devices connected to local systems, billions of demand, and millions of supply assets connected to a system. For example, air conditioning units or heat pumps in each individual home, all the way down to washing machines, being connected to individual solar panels. That degree of complexity is not something that current systems can handle. But AI can. So I think that in this space, for me, is the most exciting area in which AI could play a role.

Joseph Jacobelli: Some fossil linked industries like oil refining, liquefied natural gas, look especially exposed to disruption. How do we manage the social and economic fallout when those sectors shrink fast?

Kingsmill Bond: This is an interesting question. I always like to put the question back to people: how do we manage the economic fallout of the rise of Uber or the rise of online shopping and the impact that it had on the shopping industry and the taxi industry? The answer is, we didn't. People just reinvented themselves. It's exactly the same thing here. There's no particular reason why we need to give special treatment to the 0.4% of the world who work in the fossil fuel industry.

Putting my hard headed finance hat on, but actually there is another angle. The best way to avoid the problems that are coming down the pipeline for these industries is don't build them in the first place. Don't build the LNG import infrastructure or, if you're Australia, the export infrastructure. Don't build giant new oil refineries which are going to get stranded in 10 years’ time. European oil refineries are selling for a dollar right now because nobody wants them anymore. That's what's going to happen right across the world as oil demand starts to shrink. LNG specifically—it's one of the greatest misallocations of capital in history, the current build out of the LNG infrastructure, because LNG is competing at the margin with solar and the price of LNG is never going to compete with solar, even now with solar or solar plus batteries. The expected growth is delusional. It's not going to happen.

Joseph Jacobelli: One of the issues also about LNG or oil that people don't talk about enough is price fluctuation. If you're a data centre, you don't want to be paying 20 cents per kilowatt hour today and 30 cents tomorrow and 15 cents the following day. You want a stable price, and you've got this commodity volatility pricing that really can hurt the economics of your business. So I don't understand why people don't talk about the fluctuation in prices enough.

Kingsmill Bond: It's fluctuation in prices. The other argument that people make is, renewables need to be paired with fossil fuels, or gas. The answer is, yes, fine, whatever, 5%, maybe 10%, but even quite a big number, five or ten percent is not going to be very large amounts of gas. You can have these volatile, imported energy sources in relatively small amounts, but everyone is going to base their system on homegrown, domestic, cheap, local energy from the sun and wind, and with a bit of top up from expensive foreign stuff. But that's not going to be the foundation of the system.

Joseph Jacobelli: Absolutely, I totally agree. Now talking about the fun part of the energy transition policy. You talk about experimenting with policy to match the realities of new tech. Can you give me an example of a policy idea that could unlock a lot of stalled progress? It can be a real policy idea, it can be a hypothetical one.

Kingsmill Bond: We actually, and unusually in this report, this is one of the very few slides where we lean into the complexity and provide a list, a five by five matrix of all the policy decisions that people can deploy. One of the reasons we do that is because it is different everywhere. The different policy suite solutions because no two places are completely alike. 

To answer your question, there are two or three very specific and obvious solutions which will apply everywhere. The first is you need to change planning regimes so that you can put electrotech solutions into place rapidly. The classic example is the famous 340 kilometre piece of electricity grid that they tried to put in place in Germany, which apparently required 13,000 separate permissions. It's incredibly slow and difficult and expensive and people don't like building it. So you need to change the planning regime to allow for the deployment of what is ultimately economically and militarily vital equipment for every country right now. Another very simple solution is you need location and time-based pricing, because that is going to make your system much more efficient, enable pricing to reflect reality, and that will then in turn enable a much more efficient way of using the resources.

Those are a couple of observations. But it is different everywhere and most places, in very broad terms, are tooled up for a fossil fuel system and they need to retool for a renewables based system. The upside, should there be policy makers listening, is that you get to have cheaper energy and if you're a politician, you get reelected for that cheap energy. So it's not just a question of this is boring and painful and difficult, we can't be bothered, which is what people have been saying forever, but you're going to get very material benefits if you actually address some of these problems.

Joseph Jacobelli: You are pretty direct about certain options like carbon capture and storage or biofuels not stacking up on the physics or the economics. How do you keep the focus on what works, when there's political pressure to keep everything on the table?

Kingsmill Bond: We have the luxury of working for a think tank, not running a country. Nevertheless, I think there are political pressures which will seek to maintain some of these industries, but it's worthwhile understanding reality. So we have this kind of framing of looking at the physics, the economics, and the geopolitics of different solutions. If you take, for example, carbon capture or biomass: if you look at the physics about the efficiency, carbon capture detracts from efficiency. Biomass is the least efficient solution; depending on what you're using it for, it's about 10 to 15% efficient from primary to useful. It's a terrible way of using land. If you're thinking about the economics, carbon capture just adds to the cost, and biomass again is by far the most expensive way to extract energy from the sun. From first principles, you're capturing 1% of the energy in phytomass and then having to convert it into fuel. It's very expensive. If you think about geopolitics and energy and import dependency, of course, there are some countries which are relatively—well, nobody benefits from having carbon capture from a geopolitical perspective, because it just increases your energy demand. For biomass, there are a few countries, Brazil most notably, or Indonesia, which are rich in biomass. Most countries are not, and most countries are importing their biomass. Take the UK for example. We're importing 95% of our wood pellets, the pellets that are used by Drax for turning into electricity.

Joseph Jacobelli: I totally agree with everything you said. On the outlook side of things, Kingsmill, if the electrotech revolution plays out the way you think it could, what does the world's energy system look like by mid-century? I know it's a long way away, I know you prefer looking at five or ten years, but let's think maybe 20 years from now. What does it look like, not just in terms of power sources, but in how it shapes economies, geopolitics, and everyday life?

Kingsmill Bond: There's a very big question for a podcast, but the point is that energy is a foundation technology and all other systems are built on top of energy. One can construct many castles in the sky for the superior, brighter future that can be built when we are able to harness the sun, and particularly when people who have access to limited amounts of energy are able to get considerably larger amounts of useful energy.

To restrict ourselves to a few general points. The first is it will be a world of far greater abundance because there will be access to much more energy. Energy is ultimately the resource that we require in order to fulfil our human needs and desires. It will also be a fairer world because this solar energy is evenly distributed, particularly across the emerging markets. It will be a world where we no longer have to pay ransom or rent to the petrostates for the privilege of selling us their very expensive technologies. It will also be a world where we have a chance of avoiding catastrophic climate change, and we can keep global warming to less than two degrees.

There are many benefits, but I don't want to be too pollyannaish, because there are of course many risks. The risks that we don't do this stuff, the risks that it gets misappropriated and misused by leading actors, the technologies don't disseminate around the world. There are clearly risks here, but it's a fantastic opportunity for humanity.

The best comparison, as I started with, is what happened 200 years ago when we rescued ourselves from 10,000 years of the Malthusian Trap and were able to dramatically increase energy usage and human wellbeing. We could do the same again.

Joseph Jacobelli: That's fantastic, Kingsmill, I really appreciate your time today. I really enjoyed the conversation. I do hope that we can have another follow up, relatively soon. And again, thank you so much for your time. Thank you for participating in the Asia Climate Finance Podcast.

Kingsmill Bond: Brilliant. Thanks Joseph. I'm looking forward to the book. Looking forward to reading your book, the previous one and the new one that's coming out. Thank you.

Joseph Jacobelli: Thank you. Thank you for your support, Kingsmill. Thank you.