The new economics of renewable energy: Why transmission trumps technology

**Eklavya Gupte** (0:01)
Welcome to Energy Evolution, a podcast where we examine the forces shaping how we power, fuel and electrify our energy future.
I'm your host, Eklavya Gupte, and in this episode, we're looking at the evolving economics of renewable energy projects. What makes an investor say yes to a battery storage project in Europe while turning down the same opportunity in a place like the US.?
Now, the landscape for financing clean energy has changed significantly in recent years. Interest rates have surged, supply chains have buckled under geopolitical pressure, and the technologies once hailed as showbets now face hard questions about actual returns. Yet amid all this upheaval, something has emerged. A different breed of company or a different breed of investor has quietly prospered. Their secret and almost obsessive focus on the basics– transmission access and power market fundamentals. Now, to talk about the investment landscape in clean energy, we are joined by Declan Flanagan, founder and CEO of Bluestar Energy Capital, which is a renewable energy investment company with a global portfolio. He founded Lincoln Clean Energy, which was sold to Ousted in 2018 And before that, he built Etricity North America, which was sold to Eon in 2007 In other words, Declan has been building, scaling and selling renewable energy companies for two decades through multiple market cycles, policy shifts and technology disruptions. His philosophy runs counter to the industry's typical playbook. Stay mid-size, stay focused, and don't confuse a good story with good economics. Bluestar's current portfolio spans wind, solar and battery storage across the US, Germany and Australia, with plans to bring 1.4 GW of projects to notice to proceed this year alone. In our conversation, Declan explains why nighttime wind power now commands premiums over mid-day solar in some markets in the US, why Germany's battery storage market could be this decade's most overlooked opportunity, and why he believes higher interest rates have actually improved the renewable sector by killing off projects that never made economic sense in the first place.
Anyways, let's go straight to my interview with Declan. Declan, welcome to the Energy Evolution podcast. Great to have you here with us today.

**Declan Flanagan** (2:54)
Delighted to be here.

**Eklavya Gupte** (2:56)
Superb, thanks. So you founded Bluestar Energy Capital, I think sometime in 2022 How has the investment landscape shifted?

**Declan Flanagan** (3:05)
I would say that a lot has changed in the four years, in all markets we're active in. It's been an eventful four years in global energy. But my conviction around mid-market, and as it applies to Bluestar, that means we're a business that this year will bring 1.4 gigawatts of projects to NTP across all our markets. And that's a pretty big year for us, but that gigawatt per annum being mid-market, we're not a multi-gigawatt platform. There are plenty of those. We're not a small regional specialist either. So that mid-market part was a key part of the conviction.
Other things, convictions have been tested, as I'm sure we'll get into.

**Eklavya Gupte** (3:45)
Sure, thanks. One of the things we hear a lot from investors is that they are sort of prioritizing transmission access and interconnection over almost the sort of generation technology itself.
So, can you walk us through why getting connected to the grid has almost become more valuable than the actual turbines or panels?

**Declan Flanagan** (4:06)
Yes. Look, I hear this a lot. I kind of smile when I hear it as if this is a new revelation, right? Access to transmission has always been absolutely crucial. The timeline, the cost, the terms, how robust that connection is in terms of exposure to, say, basis risk, negative pricing, et cetera, et cetera. So this business has always been about transmission.
And so as we started at Bluestar in all of the markets that were active between US wind battery storage, German battery storage, Australian wind, it's always been about transmission first, and then the technology being second. That's only increased now at lead times. I would say what's changed in this cycle is that lead times measured in 160 weeks, 200 weeks for key high voltage equipment, that lead time is probably even more a criteria and more important than say cost of connection, for example. But the centrality of this business all been about grid, both for development success, but most importantly, the success, commercial success of a project over its 30, 40-year asset life. You've just got to be transmission focused in this business. For us, it's always been central to site selection, investment, evaluation.

**Eklavya Gupte** (5:35)
How are investors like yourself approach these trade tensions and geopolitical tensions that seem to dominate headlines?

**Declan Flanagan** (5:43)
Well, if this is one where I feel often gets too much ways or put a different way, retrospectively, people highlight the resilience of investment decisions around geopolitical events that really were doubtful that they were central to the original investment case. It's just so difficult to predict these twists and turns from a development point of view, technology, market point of view, let's say, our German battery storage business.