An Optimistic View of Australia

22 July 2022
It is nice to have some sensible optimism.

Spanish tycoon tells our fortune
David Crowe SMH 15/7/22
A global green energy mogul sees Australia as a sure bet. Other money will follow his.
The bulls were running through the streets of Pamplona when a young Jose Manuel
Entrecanales encountered some of the first Australians in his life – and promptly got into a
fight. The Spanish businessman, now one of the biggest investors in Australian clean
energy, is hazy on what the fight was about. He was in his late teens at the time and had
joined thousands of others at the San Fermin festival in northern Spain. Was alcohol
involved? No doubt. But he remembers settling the argument at a pub.
It turns out that the way Australians settle their arguments is one of things Entrecanales likes
most about the country. In short, he respects a place with a solid court system. It is one of
the reasons he is planning a pipeline of projects here worth $26 billion over the next few
years.
Australians are prone to putting their country down. Or complaining about the politicians who
have messed it up. So the view from Europe might help explain why Australia still has
immense opportunities ahead. Entrecanales was born into money but knows how to make a
lot more of it. And he is placing big bets on Australia becoming a powerhouse in renewable
energy.
‘‘From an objective point of view I find that you have, by far, the best variables for growth
and for stability,’’ he says when asked if he is happy with Acciona investments here since

2002. ‘‘I mean, you are a legally binding country. Which is, in fact, a show of legal maturity
      because people need the resources of law and legal arbitration because it is very efficient. In
      other countries you cannot do that because, in the first place, it is not fair and, secondly, it is
      not efficient. So that is, to me, one of the
      biggest assets you have, that you are naturally a very solid democracy. Then you have the
      biggest amount of natural resources in the world.’’ He is not just talking about oil and gas
      and coal: his investment plan is all about wind and solar.
      ‘‘And then you have something that, I’ve noticed, you Australians don’t see so much as an
      asset and you’re very worried about, which is the infinite capacity to attract talent. I mean,
      you have a line standing outside your borders of probably three billion people just waiting
      outside to be allowed in. And you can select who comes in. ‘‘That asset, together with all the
      other elements – space, resources, the rule of law, democracy, political stability – all of that
      is just unheard of. Think about where you can find that. Maybe Canada,
      despite the fact they have lousy weather most of the year.’’
      Why should Australians care what one of Europe’s elite thinks about investing here? Parts of
      Australia, including most of the Nationals, are convinced Europe is wasting its time on
      renewable energy. Their scepticism about the Acciona boss would only rise if they learned
      he has been advocating a price on carbon for years. To make things worse, he plays polo
      and his family is worth about $5 billion, which puts him at No.4 on the El Mundo rich list for
      Spain.
      Yet Entrecanales has made that fortune by being smart enough to anticipate the change in
      global energy over the past three decades. He inherited a construction company and turned
      it into a renewable energy giant. He put money into the wind farms in Spain in the 1990s.

Around the time others were inventing the worldwide web, he was commercialising clean
power.
That makes his opinion count. And if he thinks Australia is a good place to build more clean
power, you can be sure others will reach the same conclusion. Some will do it for the good of
the planet. Others will do it to boost their bank accounts. Either way, the change is coming.
The Acciona chairman believes there is a solid rate of return on Australian renewables when
measured in the basic unit of global finance, the basis point. He evaluates everything by
whether it can deliver 300 or 400 basis points, which is to say 0.3 per cent or 0.4 per cent in
returns above the cost of finding the capital to build the project. He says 300 points would be
‘‘a reasonable objective’’. In Australia it might be between that and 400 points. That might
not sound like a lot, but it suggests Australia may have a slight edge in attracting investment.
What is next? Probably hydrogen. The commercial barriers are significant. But Europe is
putting immense amounts of time and money into making green hydrogen work as a way to
store and
transport energy created by electrolysis that is powered by electricity from renewable
sources.
In the Netherlands, the Port of Rotterdam has struck deals with companies including Shell to
import and generate hydrogen to send by pipeline into Europe.
In Spain, the company that builds the trams for Sydney’s inner west light rail, CAF, has built
a hydrogen train using fuel cells from Toyota. It will be tested on the country’s rail lines at the
end of this month. Navantia, the company that built three air warfare destroyers for the Royal
Australian Navy (and wants to build three more), is developing a submarine powered by
hydrogen.
Entrecanales says Australia would be a natural exporter of green hydrogen. But he thinks
the trade in hydrogen will only happen at large scale when the price is cut in half from the
current $12 or so per kilogram.
‘‘We’re living a moment of truth in trying to develop this technology,’’ he says. ‘‘I think we’re
close, meaning I’ll see it in my shift – meaning, my professional life.’’
So Entrecanales is betting on Australia. He is running with the bulls. Some of the crowd will
be mauled, of course. Some will get into a few fights.