“You Can’t Have 100% Renewables” Featuring George Bilicic, Lazard

Today we had the exciting opportunity to host George Bilicic, Vice Chairman and Global Head of Power, Energy and Infrastructure at Lazard. George has had a long and distinguished career including his time as a Partner at Cravath, as President of Sempra, and 20 years at Lazard in the investment banking business. We were thrilled to visit with him in our office in Houston.

Our discussion centered around Lazard’s recently released 2023 Levelized Cost of Energy, Storage and Hydrogen Analyses. As you will see, we picked a handful of what we thought were the key pages from the full report and asked George to walk us through them. We kicked off the broader discussion with George by getting more background on this now very well-known annual report, hit some of the key themes and predictions, and also discussed the process involved in gathering the data. One of the items we discussed was the analysis not just of the levelized cost of energy comparison but also the same analysis with the cost of “firming” added (to adjust for intermittency). George shares some of the feedback they’ve received about the report from around the globe and how the firm uses the work as a discussion piece with everyone from governments to investors to companies to university students. We also discuss his perspective on global attitudes around the IRA, Lazard’s recent Climate and Energy Transition Conference, supply chain risks looking forward, the difficulties in calculating total value, and the potential for consolidation in the alternatives/renewables/power/utility space. Toward the end of the discussion, we touch on Lazard’s recent formation of a Geopolitical Advisory Group and the rationale for the effort. We ended with asking George what an LCOE report might look like in ten years. As you will hear, he had a fun and interesting answer. Overall, we had a great visit with George and can’t thank him enough for joining us today.

Mike Bradley started the show by relaying that commodity and equity markets are very volatile, and to the downside, given poor recent economic data and uneasiness heading into Wednesday’s FOMC meeting. He highlighted several observations including an equity market (S&P 500) that’s been directionless and stuck in a very tight trading range. He shared that unlike the S&P 500, which is trading at the upper end of its recent trading range, WTI price is testing the lower end of its 5-month trading range, mostly due to growing recessionary risk concerns. He also emphasized that this will be an extremely heavy earnings week dominated by E&Ps, Midstream and Refiners. He concluded by highlighting two main themes to expect from E&P calls, lower 2H’23 oil service cost inflation and return on capital programs leaning more heavily into share buybacks. Brett Rampal also joined today and offered his nuclear perspective in the discussion as well.

Thanks to you all. We hope you enjoy!