Green Giants – Episode 37

Craig Wood (01:26)

Yeah, sure. So Vast is an Australian company that was founded a little over 15 years ago. At the time, solar thermal and photovoltaics PV were neck and neck in terms of people trying to figure out which one would provide the lion’s share of solar energy. It turns out PV won that race, and solar thermal has been in the doldrums, really for probably the last 10 or so years. The reality though, and kudos goes to the founders of Vast which I was not one, but the reality was our founders actually saw that dispatchability was going to be a really important part of the mix and went and, really from first principles, settled on solar thermal as being one of the important technologies that would be able to provide dispatchable power that would complement PV and wind and other intermittent sources.

The interesting thing that’s also emerging now is that, because as part of our process we capture and store the sun’s energy as heat, we can use that heat extremely efficiently and it’s actually one of the cheapest sources of renewable energy, renewable heat I should say, that we have.

And so processes where heat is a requirement, whether it be industrial processes or increasingly the creation of green fuels where you need both heat and power, those are applications where solar thermals are starting to look like a winning power source as well.

Wes Ashworth (02:40)

Yeah, and just a little bit diving into that educational lesson. I know a lot of listeners probably aren’t familiar with CSP, or concentrated solar power. Can you explain just a little bit more about what it is, how it differs from traditional photovoltaics? I’d love the kind of Reader’s Digest of sort of how it works and what people should know about it.

Craig Wood (02:58)

Yeah, sure. So let me talk about photovoltaics first, because I think everyone understands those, right? They’re essentially a silicon cell that’s created to allow solar energy to be turned directly into electrical energy. They’re very cheap, they’re very efficient, they work if it’s, whether it’s one panel on the roof of your house or whether it’s thousands of panels in a field as part of a utility scale power generation system.

Solar thermal is different. If I take you back to your childhood where you had the magnifying glass and you used that to focus the sun’s energy and burn holes in leaves and things, essentially that’s what we’re doing but on an industrial scale – using mirrors to concentrate and capture the sun’s energy in the form of heat, and we store that heat, it turns out thermal storage is actually extremely efficient. So we’re able to store that heat typically at about 550 degrees Celsius. When we need to, we can take the energy out of the storage medium, often salt, and use that to either create steam to spin a turbine or we can use the heat directly for industrial processes, or we can combine it to do the green fuels.

The key thing really other than the ability to provide that cheap heat is dispatchability. I’m sure most of your listeners are power nerds so they understand the term but for those who aren’t, dispatchability is pretty simple. Means you have an ability to turn the electricity generator on or off as required. In markets where you’ve got a high degree of intermittent renewable energy penetration, like PV in wind, where sometimes the sun doesn’t shine or you have clouds that come over, sometimes there’s a gust of wind and sometimes there isn’t. It’s important in those sorts of dynamic systems to have other complementary generation that’s able to be turned on and off. And that’s really what solar thermal provides in a very cost effective way in hot, sunny places.

Wes Ashworth (04:43)

And thinking about that too, so it being not as well known, or I guess in terms of just readily available where people just know about it like they do when you look at PV or those sort of things, what do you think from your perspective, maybe the biggest misconception about it is? How do you address that when speaking to stakeholders or investors from your side?

Craig Wood (05:04)

It’s interesting and it’s actually the answer is, it’s changing quite rapidly. So a couple of years back, no one really cared about dispatchability. It was all just about cost. And so it was a pretty short conversation when I turned up with my solar thermal technology, because the reality is, it is more expensive than photovoltaics. What’s happening now, though, is that as people are building out the PV and the wind, what they’re finding is there’s this persistent thing called nighttime. And having a dispatchable technology that’s able to reliably create energy to fill that nighttime issue in grids and in off-grid situations, that becomes really important. The conversation is changing over time, and, you know, the reality is there’s also been some sort of missteps in the industry.

Again, your listeners, particularly those in the US, might be familiar with some of the solar thermal projects that have been done that really haven’t performed very well. Our technology is really the next evolution of solar thermal technology, where we’ve learned a lot of those lessons and fixed a lot of the mistakes that have been made in the past, such that we’re able to now provide cost-effective solar thermal technology with the level of reliability that’s appropriate for the sorts of investments that are being made.

Wes Ashworth (06:20)

So thinking about that sort of comeback, you know, and solar thermal really experiencing a renaissance as you shared earlier and with the technology evolution – how has your technology evolved to overcome some of those challenges, as you just mentioned, of the earlier solar thermal projects like Crescent Dunes or others?

Craig Wood (06:39)

Yeah, I mean, the US actually has pretty much like the fossil record of solar thermal plants. We call it CSPV1, which was a technology called parabolic troughs. It was actually one of the first countries to deploy that at scale, was the US. Parabolic troughs, it’s a terrific technology, right? It’s very predictable, very boring, very bankable.

The only challenge with it is it’s too expensive, and that’s because it’s a thermal technology, but the temperature in the system is limited because the energy is captured in a thermal oil which can only be heated to about 400 Celsius. By the time you put that through a storage medium, molten salt, and then use that to create steam, you end up with power cycles that are operating at kind of 350 Celsius, which is actually not very efficient once you get a steam turbine at that temperature.

So what people tried to do was to move to what are called central tower plants, which you mentioned Crescent Dunes, that’s a good example. Central tower plants, essentially you have a meter tall, call it 750 foot tall giant tower, typically in the middle of the desert. And then you have mirrors arrayed around the base of that tower. The furthest is typically about a mile from the base of the tower. So they’re extremely large installations. Certainly if you’re in an airplane, you know, flying in and out of Las Vegas, you can see it out the window.

Those plants, while they look good in movies, the reality is they haven’t actually operated very well. And the fundamental reason for that is that there’s a lot of solar energy. The flux that actually is gathered at the top of that tower is up to thousand times concentration of the sun. When you get clouds that come across, that can go very close to zero very quickly, and then when the clouds go away, obviously it comes back again. So you get these enormous flux changes. And ultimately, the job of a solar thermal technology is to capture that energy, but to do so in a way that is usable. And those systems really have proven unable to control that great flux change. That creates downstream issues with the gear breaking basically, it’s thermal cycling fatigue.

What we’ve done is, we’ve sort of gone back to the future in some respects in that our technology uses three fluids. So we use liquid sodium as a heat transfer fluid in the solar array, which is similar to what the parabolic troughs did, except that they used that thermal oil that I mentioned. The difference is sodium actually, you can heat it up to, it boils at 883 degrees Celsius. So we actually heat the sodium to 585 degrees coming out of our receivers. We then pass that heat from the sodium into molten salt, same as the other technologies, and then when we need to, we can use that to create steam. By using sodium, essentially what we’re able to do is move back to a modular solar array, but we, instead of having the parabolic trough configuration, we actually have a sort of mini-tower, a modular tower system.

So we have a cookie cutter where we’ve got little solar arrays with little towers, and we link those solar receivers in each of those towers together using the sodium heat transfer fluid loop. And that means that we get really the controllability of the parabolic trough plants, but with the high levels of optical concentration and the efficiency of high temperature operation that the central tower plants were going with. So it’s a sort of best-of-both-worlds scenario in V3 of the technology, which is what we’ve been developing down here in Australia for the last 15 years.

Wes Ashworth (10:08)

Yeah, it’s super cool and impressive. And just thinking about Vast, the technology that offers more cost effective, longer duration, dispatchable power, as you mentioned. Why is this solution so crucial for the energy transition? Like talk us through some of the uses, why it’s important, where the value is and how this comes into play.

Craig Wood (10:27)

Sure, I mean, there’s sort of three buckets of use for what we do, and it comes back to that dispatchability and the heat and then combining those for green fuels. So the first, and historically the one that people have chased hardest, is actually utility scale electricity generation, so dispatchable night-time power. That is still going to be a very significant market. If you look at how you provide energy overnight, there’s a lot of talk around batteries. Lithium-ion batteries are terrific. I should note that we’re fans, we’re actually developing a battery project down here in Australia as a way to make some money as well.

But the reality is lithium-ion, the economics only really make sense for sort of two, probably up to four hours of storage. By contrast, solar thermal really doesn’t start making sense until about eight hours, but by the time you get to 12 to 20 hours of storage duration, in sunny places, there’s nothing that gets close to the price point that solar thermal can hit. So that will be a significant market for the tech.

The second and sort of adjacent-use case that’s very similar is actually as the anchor for off-grid power systems. You know, if you think about a large mine, maybe in an isolated place that’s sunny, you know, in Australia you’d think about Pilbara, where the iron ore comes from. If you’re in Chile, you’d think about the big copper mines down there. You know, a lot of those miners have already developed PV and wind and some batteries, so they’re getting their renewable fractions up north of 50%. The challenge is 50% is approximately halfway to 100%. And if you want to do the second half of the decarbonisation journey in a sunny place, that’s where solar thermal comes in. So those hybrid systems where we’re bringing other intermittent and other storage technologies in and using that in the most cost effective way, the phrase down here you would use is horses for courses, right? Making sure that the right technology is doing the right job. That’s the second place where there’s significant opportunity.

The other one that’s potentially even bigger than just pure dispatchable power generation is actually green fuels, and we’ll talk some more about this no doubt, but the interesting thing about green fuels, when you look at the energy that’s required to make those fuels, whether it be methanol for shipping or whether it be ESAF for aviation, in most of those processes there is a net energy requirement, and oftentimes there’s an endothermic process involved. What that means is you need often electricity and it helps to have high capacity factors because then you get a good degree of utilisation out of the downstream equipment. But also, in most cases, you need some level of heat. What we find when we look at the economics of using solar thermal as the primary energy source is that it is significantly cheaper, like in the order of 40% cheaper to use solar thermal than what it is to try and create e-fuels using just electricity alone. So by that, if we’re in, let’s say, Australia or Arizona and we’re doing a project, if you were trying to do that with PV and wind and batteries you would be approximately 40% more expensive than if we were trying to do the same project powered by a solar thermal system. And you may also have some PV and batteries in there as well, just depending on what the right mix of technologies was. That’s important because when you look at what needs to be done the green fuels thing, the opportunity is just massive.

You know, everyone’s talking about biofuels, and that’s great and we should do all of that stuff. But the reality is there’s only so much leftover maize, there’s only so much used cooking oil in the world. And if you did all of that stuff, it gets you to about 10% of what we need to do in order to decarbonise shipping and aviation. So there is going to be a huge requirement for e-fuels. And it’s our understanding based on the economics of our technology that actually, if you’re able to do that, do the creation of those fuels in hot, sunny places, that using solar thermal as the primary energy source, it makes a lot of sense. So that’s probably the largest market that we see.

And then the final one, just for completeness, but it’s, I think, going to be much smaller, is industrial process heat. So if you’re a big manufacturing operation and you happen to be somewhere where it’s nice and sunny, then using solar thermal to provide that heat instead of burning gas is the way you typically do it. That’s another option that makes a lot of sense as well. And we just recently actually, I was down in a little town called Wodonga here in Australia. You’d be familiar with Mars Corporation, make obviously Mars Bars. They also do, it turns out, a very significant line in pet food. And so we were down at their pet food facility in Wodonga cutting a ribbon on a solar thermal installation where they’re going to actually use some direct steam parabolic trough technology to displace just over 50% of the gas that they would otherwise be using to make the pet food that they’re producing at that facility. So yeah, there’s lots of examples for where solar thermal is going to make sense, but really I think that the two big ones are dispatchable power as well as the green fuels.

Wes Ashworth (15:22)

Yeah, no, it’s super cool. To me, it’s one of the most interesting topics in the space, you know, to learn more about and think about. So thinking about some of the projects that you’re doing – so, you’re working on a utility scale power plant and a green methanol project in Port Augusta, South Australia. What makes those projects significant? How do they demonstrate the potential of Vast technology and its energy integration with green fuels, which you touched on a bit there?

Craig Wood (15:57)

Yeah, so I’ll take them each in turn. So for us, they’re very significant. They’re our commercial reference plants. Without those, we don’t have the business. We spend all of our time thinking about those projects and how to make sure we get those right, but also do them in a cost effective fashion and in the right time frames. We have to prove up all of those elements. In terms of the solar thermal plant, the interesting thing about what we’re doing in Port Augusta is the modularity, because in Port Augusta, we’re building eight solar modules, so four on the west, then a central power block, four on the east. What happens if you want to build, you know, that’s a 30 megawatt plant, I should have said. What happens if you want to build a 200 megawatt plant is instead of having eight of those modules, you might have 50 or 75 depending on the solar resource. The modules are exactly the same. The only thing that changes, there’s a piping exercise to actually move different volumes of sodium around between the modules and bring, ultimately, all of that energy back to the central power block.

All of the stuff inside the central power block obviously needs to get bigger, but it’s pretty easy to order a different size turbine. It’s pretty easy to specify more tanks or slightly bigger tanks. So actually making the power block bigger is really not that difficult. So ultimately what we’re doing in Port Augusta with the solar thermal plant is providing that commercial proof, that actually at a utility scale, we can build these things, we can operate them effectively, and we can provide dispatchable power. In the case of Port Augusta, it’s got eight hours of storage. But as I mentioned previously, for utility scale projects, we would expect to be building plants that have more like 12 to 20 hours of storage.

In terms of the importance of it, just to touch on it, Australia is actually the only country in the world with lots of sunshine that does not yet have utility scale solar thermal. And there’s a bunch of interesting historical reasons as to why that is. So we enjoy the support of the Australian government and they’re very focused on making sure that we actually introduce solar thermal into the technology mix for the transition that’s going on down here.

The other part that’s really critical is that we’ve got Electricity de France, EDF, as a partner working on that project with us. And they’re working with us in Australia to make sure that they understand the technology and how it’s going to work. And we’ll be co-developing other projects with them. So in the context of Australia and that EDF relationship, it’s really important.

If I turn now maybe to the methanol plant because that’s the other one that’s really interesting. So, we were approached probably little over two years ago now, two and a half years ago, by some partners who do solar thermal work in Germany, because the Australian and the German government had realised that actually there was an opportunity to use technology to take Australian renewable energy and turn it into liquid fuels for use in Germany. So there was a program that was set up called Highgate, the hydrogen German-Australian transition initiative, and they called for applications, were north of 100 applications. Four of them were selected, of which we were one. And as far as we’re aware, we’re the only project so far to have actually secured funding under that program. We’ve worked hard on that program, but it’s been really interesting as that’s evolved. Essentially what we’re doing is taking some of the heat that’s coming out of the solar thermal plant and then some of the electricity, either from the solar thermal plant or from the grid, depending on what the right economics are at the time.

So as a side note, the price volatility in the electricity market in South Australia is very high. And so there’s some interesting dynamics as to whether you’re able to capture very cheap energy when it’s available to create methanol, because obviously that creates cheaper methanol. And that’s one of the interesting parts about doing the project where we’re doing it.

But if I come back to the main event, what we’re doing is taking heat and power, and we’re using that as the primary energy source for a methanol project that’s going to create about 7,500 tonnes per annum of green methanol. To put that in context, that’s enough to run one, maybe two small vessels annually. It’s really, I could use a better phrase, but a drop in the ocean. You probably wouldn’t want to drop in the ocean. But it’s really a very small volume of methanol. When you take a look at what’s going to be required, given the number of large vessels that have now been ordered by the likes of Maersk and CMA, CGM, and the big Chinese shipping lines, there’s a really strong move on amongst those ship owners to move towards a dual fuel solution from diesel and green methanol and as I mentioned, even if you did as much as you could coming from biogenic sources, the reality is that e-fuels are going to be a very important part of that. So we’re really excited about that methanol project because we think it’s a very interesting proof point for the economics that our solar thermal technology can deliver.

Wes Ashworth (20:42)

Yeah, and I think that’s so significant as well. One, it’s super interesting, but just the fact that you’re proving it out, you’re doing the work and that innovation and those early stages to then take it to where you are ramping it up and as you mentioned, that demand is there, right? It’s just a drop in the bucket of where you’re starting, but the growth potential is amazing.

Thinking about, again, growth in a different way, but you’re looking also at US expansion and planning a major project in West Texas. What excites you about expanding into the US and what role do you see Vast playing in the American renewable energy landscape overall?

Craig Wood (21:21)

Yeah, look, what excites us about the US – so firstly, we’re listed on NASDAQ. So even though that sounded like it, I’m now part American. No, but look, the reality is, we’ve for the longest time been looking at the US as really our second market to expand into. It’s very large, goes without saying. It also has exceptional solar resource. Those southern states, California, Nevada, Arizona, New Mexico, West Texas, they’ve got outstanding solar resource. Great people, great technology, really well connected. So in terms of places to go and do solar thermal, we think the US is a really interesting market.

Why West Texas? To start with, again, whilst I’m partly American, I’m also partly Texan because the way in which we’ve came to be listed on NASDAQ was actually in partnership with a business that was backed by Neighbours, which is a big Houston-based drilling business. So we spend quite a bit of time in Houston. In fact, my CFO and part of my finance team sits in Houston. So we like Texas as a place to do business. And that area over the west there, good solar resource, good connectivity, and some access to water, which is going to be important given that we are looking at doing a fuels project there in the first instance.

The other thing that’s interesting, I think, and this is really an emerging theme in the US, is the data center opportunity. We view data centers as kind of like mines in the sense that if you think about a data center, particularly these large ones that people are now looking at building, to augment the grid to house one of those large data centers is quite expensive and takes a lot of time. If it’s possible to do behind-the-meter solutions where you’re hybridizing PV wind batteries with solar thermal, we think there’s some interesting opportunities. And so while we’re looking at fuels in West Texas first, it’s also fair to say that the data center opportunity is something that we’re taking a close look at.

There is another interesting angle because I’m sure you’re already aware of this, the new chips that are powering AI revolution are oftentimes water-cooled, and so the cooling requirements in the data centers is actually now significantly higher than even what it was five years ago. And if you’ve got heat, which our process does as part of the ordinary course, then there are some interesting options available for how you provide cooling for those data centres as well. So, too early to be definitive on exactly what that opportunity looks like, but it definitely is interesting.

Wes Ashworth (23:25)

Yeah, and you hit on this earlier, but I want to make sure I just encapsulate it nicely. So thinking about an application like a large data center and with huge power demands, what would be the advantage of a solar thermal option like Vast versus a traditional PV with battery storage attached to those data centers? Comparing directly with those two solutions, what are the advantages of the solar thermal option?

Craig Wood (24:06)

Firstly, it depends where you are. So if you’re in Pennsylvania, solar thermal is not going to make sense, right? But if you’re in Arizona, then what you would find is the solar thermal option is going to be most likely cheaper. And it also gives you most likely a more elegant way of delivering very high capacity factor renewable energy. So just to expand on that a little bit, if you’ve got a regular PV array, it might give you a capacity factor of, I don’t know, 33%, say. If you couple that with a four hour battery, that might lift up to 40, 42%, something like that. If you couple that with wind, that might get you to 55, 60%. If you overbuild the PV in wind by a factor of two or three, that might get you to 65 or 70%. But a bit like that maths from earlier, 70% is still 30% away from 100%. And there are diminishing returns as you continue to overbuild those intermittent technologies. And the storage becomes more expensive as well.

By contrast, I can build you a solar thermal system that can reliably give you 12 to 20 hours storage overnight, right? So a typical plant in somewhere like Arizona might have 14 hours of storage, say, and that can give you pretty close to 50% capacity factor. It’s called night time. You couple that with photovoltaics to give you another 33% during daytime, obviously very cheap, and then stick some batteries on there as well to help manage the PV and do the handover to the solar thermal, you can build systems quite easily where you’ve got minimal amounts of overbuild that are delivering capacity factors of sort of 85, 90%. You can go higher, but it starts to get expensive for the same reason as it gets expensive if you’re having to overbuild PV and wind. That lasts 5 to 10%. That’s the really tricky part. But that’s really what it comes down to, is ultimately people care about the trade-off between cost, the green fraction of the cost capacity factor, and then it gets really interesting for us if there’s also a heating or a cooling requirement because that tends to differentiate us even further.

Wes Ashworth (26:22)

Yeah, it’s super interesting. And I wonder too, as it continues to evolve, thinking about the advantages there, cost being a huge one. Do people then start choosing locations based on, we want solar thermal, so we’re going to put this data center here versus here. You know, almost dictating it that way, a little bit of influencing it that way would be interesting to see. And I don’t know if you’ve seen any of that yet, but.

Craig Wood (26:46)

So we haven’t in solar thermal, but we have absolutely in other technologies. So if you go and look, you know, five years ago, the hyperscalers were running around trying to set up data centers next to hydroelectric plants. Why? Because that’s where the green energy was. Now, it turns out a hydro plant is pretty expensive to build and it’s pretty challenging and all of those opportunities have been hoovered up. So what you’re now finding is the data center guys are starting to think about building them next to old nuclear plants. Why? Because that’s where the energy is. So, yeah, we fully expect that once we’ve got what we need to get done down in Port Augusta are out of the way and people have confidence to sign those long-term off takes, we fully expect that we’ll be looking at doing data centers as well as fuels projects where the energy is cheapest. If you go back and look at the history of how humans have done stuff, it’s oftentimes the energy that actually ends up being the driver for things being located where they are, and we don’t see the renewable transition as being any different, it’s just going to take a little time for those economics to play through the system.

Wes Ashworth (27:48)

Yeah, no, super cool. And you mentioned this earlier as well, too, but your Mars and some of the other industrial processes. So can you expand on that a little bit further, in terms of how Vast’s technology helps to carbonize those industrial processes, which are, they’re heavy power users, you manufacturing, heavy manufacturing, especially those types of things. So how does that role directly come into play? And then can you give us a little bit more insight and how that works, where it makes the most sense to use your solution as well?

Craig Wood (28:17)

Yeah sure, it actually ends up being pretty straightforward. Quick refresh on our system, we’re using mirrors to capture and concentrate the sun’s energy, we store it as heat. We take that heat through the sodium into heat exchanger and then we store that energy in molten salt. That energy that’s stored at 550 Celsius, I can bleed that energy off and give you heat, typically in the form of steam, at whatever temperature you like. And obviously, if it’s a lower temperature solution, then if I’ve got 12 hours of storage at 550 degrees Celsius in my tank, but you only need heat at 250 Celsius, then I can give you a much longer duration of heat at that lower temperature because that’s how the energy in the system is able to be transformed. What that typically means is, you know, if you’re an industrial user and you’re currently burning gas to create steam to use in a process, what we’re able to do is just displace that gas as opposed to using gas and creating carbon dioxide emissions to put the steam into that industrial process, we’re able to give you green steam. That’s what it boils down to. No pun intended.

Now, the reality of industrial processes and the reason why it came a distant third on my list of interesting markets to talk about, most industrial processes are located where people are. So by far and away the largest share of industrial processes is actually kind of urban based or urban or sort of, you know, sort of decent sized towns where you’ve got people, where you’ve got manufacturing, where you’ve got markets. A lot of those installations are really not that suitable for solar thermal because we do need a reasonable amount of land, and we need that land to be contiguous with the manufacturing plants because heat, if that’s what we’re providing, doesn’t travel well.

By contrast, with electricity where it travels fine down what’s called a transmission line, heat, if you’re going to move that, you actually need a pipe, and so it actually is quite difficult to move heat, and really that limits the market applicability for solar thermal solutions. It does work, in fact it works really well, but it requires large loads in sunny places where there’s plenty of spare land around, and when you actually run the analysis on how big that market is, it points to it being an interesting market and certainly those projects where it makes sense, makes a lot of sense. But there’s a lot of industrial load that is going to need to be serviced by technologies that are not solar thermal, if and when we’re going to decarbonise that part of the economy.

Wes Ashworth (30:50)

Yeah, absolutely. And shifting gears a little bit, getting into more of the financial and economic side of the equation. How are you approaching the investment challenges of developing your technology? What strategies are you employing to make it economically viable?

Craig Wood (31:05)

Look, there’s sort of a couple of different lenses that I can use to answer that question. The first one in terms of how we’re funding it, the reality is these commercial reference plants are subscale, and so what we’re needing to do is work very closely with governments and also our other partners who all understand that it’s subscale and that we’re doing it because we need to prove those commercial reference projects work properly. But we’ve been partnered with the Australian Renewable Energy Agency, ARENA, which is similar to ARPA-E in the US. We’ve been partnered with ARENA for more than 10 years and we will continue to need the support of ARENA and the Australian government in the form of financial support in terms of grant and other funding for the first project in order to get that built and over the line. Same story on the methanol. I mentioned Highgate, but the practical reality of that is the Australian government is, through ARENA, again providing 25% of the funding for that project. An organisation called PTJ, which is similar to sort of German ARENA, is providing 25%. And then ourselves at 25%, and a German fuels giant called Marbenaft are our partner for the other 25%.

So these sorts of technologies, it doesn’t take much money for the first 10 or 12 years to actually continue to develop and refine them, but you get to the point where you do need to build utility scale projects. And in both of those cases, we’ve taken the decision to go subscale to manage the overall CAPEX number down, but it does require government support for the first ones. What happens after that is a different story because in solar thermal, there are really significant drivers that push you towards scale. So they sort of fall into three buckets. A turbine, so a 300 meg turbine costs you about four times as much as a 30 megawatt turbine. If you think about the O&M, the operations and maintenance required to operate a 30-megawatt power station, it’s essentially the same size crew to operate a 300-megawatt power station. Another couple of people, but really not very different. And then the other big driver is actually turbine efficiencies, because our turbine in Port Augusta is going to be about 42% efficient. By the time you get up to a big turbine, you’re sort of looking more like 45%, 46% efficient, so nearly 10% better.

And that’s important because it’s the turbine that is the single biggest loss in terms of efficiency in the system. What that means is basically that combination of scale effects, operations and maintenance and turbine efficiency means that simply building a bigger, solved thermal plant makes the energy that is produced significantly cheaper. And so that’s really the trick for VAST. We need to get the commercial reference plant built. That then gives us the licence or the ticket to go and build 150, 250 megawatt size plants where the economics are compelling, really from day one. Now, obviously we continue to improve the technology to make it cheaper, to make it more efficient, etc., etc. And all of that is necessary to continue the trajectory of cost reductions that you’ve seen in other renewable technologies and keep us competitive. But really for us it’s just about getting the first plant built so that we have the right to go and build larger ones that are much cheaper.

Wes Ashworth (34:24)

Yeah, absolutely. And looking forward to that future outlook, what do you envision for the future of Vast and solar thermal technology and any upcoming announcements or developments you’re particularly excited about?

Craig Wood (34:37)

Yeah, look, I mean, the futures that we see really haven’t changed much in the sort of 10 years or so that I’ve been involved with the business. For Vast, we will be a manufacturer and a supplier of solar arrays. We partner with others to provide the other bits of equipment, whether it be John Cockrell on the steam generation system, Skoda on the power cycle. Ultimately, our IP and the smarts that we’ve developed are embodied in those products in the solar array. And so that’s what we’re about. In order to do that we are developing projects in Australia, the US, and we’re also really interested in the Middle East and Saudi, the UAE as well, and so we’ll continue to develop those projects essentially as a market entry strategy almost over the course of the next five to ten years, end users for that energy are going to be as we’ve talked about.

It’ll be a combination of on grid, off grid. It’ll be mines or data centers, green fuels, and then where it makes sense, industrial process heat as well. So that’s really what we’re about is making sure that we’re able to expand our ability to manufacture the equipment that we sell and ensuring that there are projects, whether they be projects that we’ve stood up or we’ve done in partnership with EDF or Mabanaft or other partners. That’s what it’s about.

Wes Ashworth (35:50)

Yeah, absolutely. Look at a little bit further than that. So like 10, 20, even 30 years ahead. What impact do you hope Vast will have made in the energy sector overall?

Craig Wood (35:53)

Yeah, so, probably the best way to answer that is to talk to you about the Vast vision. So if you go to our website you’ll see “continuous carbon free energy for the world.” That’s really what we’re about. You know, we can’t provide a solution for your power needs if you’re in British Columbia or Norway, right? That’s what hydro is for. But if you’re in a sunny place, you absolutely should be getting your night time energy from solar thermal. And it’s our view that we have the best solar thermal technology on the planet. For us, it’s about getting out and getting as many of our systems deployed as we can to really drive decarbonisation as quickly as possible. That’s important for our kids and for their kids, but it’s also a really good way to make some money. And we see the opportunity is just massive and it’s really about getting, for us, it’s about getting Port Augusta finished and finished well so that we are able to then go and do what we need to do in Australia, the US, Saudi and other markets around the world.

Wes Ashworth (36:39)

Yeah, I love it. What’s the criteria? So when you say a sunny place and, you know, of course you think the Arizonas of the world, you know, the Middle East, obviously Australia, those make sense. What’s, can you give us a basic criteria in terms of what you look at to what makes an area work?

Craig Wood (37:12)

Yeah, so look, in simple terms, the sunnier the better. So the best place in the world is the Atacama Desert. Elevated, very few clouds, incredible sunshine. The pithy answer to your question, if you get Google Maps up, if it’s red, orange, or yellow, then it’s good for solar thermal. If it’s green, blue, or white, typically it’s bad for solar thermal.

So, the science answer is we use a, the type of solar radiation we use is different from what PV uses. PV uses what they call GHI, which essentially diffuses solar radiation. Whereas because we’re bouncing the sun’s rays off a mirror and hitting a target, we actually need the photon that arrives from the sun to have come directly. So we have, we use what’s called DNI, direct normal incident radiation, and that really requires bright sunshine. So DNI of, you know, in Australia anything north of about 2000 is a good number. If you’re in China, anything north of about 1600 is a good number. So yeah, the sunnier the better, but then you start to get into discussions about what the other energy sources are and what the pricing needs to be to make it competitive. It wins in sunny places at night time, that’s ultimately the simple pitch.

Wes Ashworth (38:09)

Yeah, makes sense. Makes sense. Absolutely. A few more questions. So one, just to say and just to kind of open it up, anything that you would like to share about Vast, about the technology, about what you’re doing now with the company that we haven’t been able to talk about yet, something you’d like to get out there and make sure everybody knows?

Craig Wood (38:22)

Probably the thing we haven’t touched on is just the timelines for what we’re doing. You know, we’re working really hard on the two projects in Port Augusta and really what that’s driving towards is taking FID on those projects – sorry, I should say, be more precise, FID on the solar thermal project in the next quarter, and then the methanol plant is some distance behind. We’re still working through pre-feed on the methanol plant, so that’ll be later this year. But that work is, it’s really important, and we’re doing that in partnership obviously with the Australian Government, ARENA and EDF on the solar thermal plant and we’re doing it in partnership with ARENA and PTJ and Mabanaft our partner on the methanol plant. So I guess the reason I bring that up is simply to say, yes we’ve been in business for 15 years, we haven’t touched on it but we previously built, operated, ran, and decommissioned a 1.1 megawatt grid connected power station. We ran that for nearly three years. We’re now very much on the cusp of delivering these two commercial reference plants. And then that is the license to go and make a lot of money down the track in a couple of years’ time once we’ve got those projects out of the way. It’s an exciting time in the business to be that close to the next big step up in terms of the development and the proof of the technology.

Wes Ashworth (40:05)

Yeah, it’s super exciting for sure. And I’ll give you a couple more. So if you could leave our listeners with one key takeaway about the future of renewable energy and the role that Vast technology will play in it, what would that be?

Craig Wood (40:19)

It’s easy to become somewhat pessimistic about the trajectory for decarbonisation, but I think it’s important to always go back and look at what happens when technologies get to the right price point and the market all of a sudden starts to clear. If you look at what’s happened with wind, and then we did it with PV, and we’ve recently done it with batteries, we actually think solar thermal is going to be one of those technologies. Our system is modular, it’s scalable, it’s relatively straightforward to permit it to drop into existing grids, and so we’re actually pretty excited about the fact that the trajectory, the hockey stick that everyone always has in their forecasts, we actually think that in solar thermal, it’s a good chance of being real. That’s important.

And as I mentioned, the vast vision previously, but everyone inside our business is here for a reason, and that is to drive decarbonisation. And we think that we’re very close to actually hitting the point of acceleration on that curve. If we’re able to do that and play our part in the decarbonisation of the world’s energy systems, we think that will be important, but also very lucrative and that’s the exciting thing for us.

Wes Ashworth (41:26)

Yeah, it’s very exciting. And I think people often just kind of like forget about that, you know, that it’s the time that it takes to get it to where, yeah, that hockey stick model, we get so impatient sometimes, and just write something off if it doesn’t happen quick, but it takes time. There’s no way to rush it. But I agree.

Craig Wood (41:34)

Yep, correct, if we get this right, we’ll be about an 18 year overnight success, I suspect.

Wes Ashworth (41:50)

Absolutely. Love that. Love that analogy. Anything else kind of looking ahead? What are you most optimistic about just for the renewal energy industry as a whole? What are you thinking? What do you predict? What are your sentiments as you go into this year and think about the future?

Craig Wood (41:52)

Look, there’s just a lot to do, And there’s a lot of detail and it’s important to get all of that right. But when you do, the market opportunity is just so significant. It makes it all worthwhile. What happened last year, I think it was just earlier this week, they announced the hottest year on record again. You know, what you’re seeing in LA with the climate and the impacts that that’s starting to have, all of this stuff is starting to get very serious very quickly, and it is important that we continue to make these investments and that we do the necessary development to progress things in an appropriate fashion, take the risk out of the system, but we’ve got to keep doing it quickly and that’s the exciting thing, right? The opportunities are huge, there’s lots of work to do, it’s really interesting work and we’re excited to be playing our part.

Wes Ashworth (42:51)

Yeah, so well said. And with that, we’ll wrap up. But thank you for tuning into this episode of Green Giants. And thank you, Craig, for coming on the show, was really insightful and interesting. But we hope your insights have illuminated the incredible potential of concentrated solar power and how companies like Vast Energy are paving the way for a cleaner energy landscape. If you enjoyed this episode, as always, share it with your network. Don’t forget to subscribe, leave us a review, and check the notes for some important links to check out more in Vast and learn more as well.

See you next time.