1 00:00:15,519 --> 00:00:19,039 Speaker 1: Hello, and welcome to the Texas Tribune trip Cast for Tuesday, 2 00:00:19,120 --> 00:00:22,480 September thirtieth, twenty twenty five. I'm Matthew Watkins, editor in 3 00:00:22,559 --> 00:00:26,000 chief of the Texas Tribune, and joined as usual by 4 00:00:26,239 --> 00:00:28,399 Eleanor Klibanoff Lawn politics reporter. 5 00:00:28,440 --> 00:00:32,320 Speaker 2: Hello Eleanor, Hello Matthew. I have no banter for you today. 6 00:00:32,560 --> 00:00:35,920 Speaker 3: Well, I think September thirtieth could be government shutdown day. 7 00:00:37,000 --> 00:00:39,679 That's right, you know, we'll wait and see end of 8 00:00:39,920 --> 00:00:40,759 Also the end. 9 00:00:40,640 --> 00:00:44,560 Speaker 1: Of Q three, Yes, yeah, there you go. 10 00:00:44,640 --> 00:00:45,840 Speaker 3: Do you have any goals for Q four? 11 00:00:47,479 --> 00:00:49,439 Speaker 1: Just no legislative sessions. 12 00:00:49,479 --> 00:00:52,679 Speaker 3: No legislative sessions. Yeah, that's my goal too. So let's 13 00:00:52,719 --> 00:00:55,520 hope it's our good lawmaker's goal, our governor's goal. 14 00:00:55,640 --> 00:00:59,600 Speaker 1: Yes, exactly, exactly. All right, Well, today we are going 15 00:00:59,679 --> 00:01:04,000 to talk talk about renewable energy and the grid in Texas, 16 00:01:04,000 --> 00:01:08,959 and we are joined by Eric Goff, a Austin based 17 00:01:09,000 --> 00:01:11,840 the founder of GoF Policy and Austin based advocacy and 18 00:01:11,920 --> 00:01:16,280 advisory firm focused on energy and infrastructure policy. Welcome, Eric, 19 00:01:16,439 --> 00:01:18,359 thank you so much for having me. Thank you for 20 00:01:18,400 --> 00:01:21,560 being here. Okay, so I want to set this up 21 00:01:21,640 --> 00:01:23,480 just a little bit. We of course, all know, all 22 00:01:23,480 --> 00:01:27,760 our listeners know that Texas is the fossil fuels powerhouse 23 00:01:28,159 --> 00:01:30,439 in the US, and our state leaders for have a 24 00:01:30,439 --> 00:01:34,439 long time been pretty publicly skeptical, if not aggressively opposed 25 00:01:34,439 --> 00:01:38,040 to the idea of a transition toward cleaner sources of energy. 26 00:01:38,319 --> 00:01:40,200 But a funny thing has happened in the past half 27 00:01:40,319 --> 00:01:44,599 decade or so, which is amid all that opposition, Texas 28 00:01:44,599 --> 00:01:48,159 has sort of become a renewable energy powerhouse as well, 29 00:01:48,239 --> 00:01:53,599 at least for the United States. A statistic since twenty 30 00:01:53,680 --> 00:01:56,879 twenty one, ninety two percent of the power supply capacity 31 00:01:56,920 --> 00:01:59,959 that's been added to the grid has come from wind, solar, 32 00:02:00,159 --> 00:02:03,680 or batteries, And in twenty twenty four, Texas produced about 33 00:02:03,760 --> 00:02:08,120 fifty percent more renewable energy than California, a state that 34 00:02:08,199 --> 00:02:12,719 you know, obviously its leaders are much more excited about 35 00:02:12,800 --> 00:02:15,800 renewables than Texas. That growth has helped shore up our 36 00:02:15,840 --> 00:02:18,879 power grid. You know, energy demand continues to climb in 37 00:02:18,960 --> 00:02:22,840 Texas six percent per year since Winterstorm earned Uri. But 38 00:02:22,960 --> 00:02:29,800 it is also you know, you know, the state. It 39 00:02:29,800 --> 00:02:33,560 has basically essentially helped the state avoid having this summer 40 00:02:33,879 --> 00:02:37,919 a single power conservation notice, which you know, is somewhat 41 00:02:38,000 --> 00:02:40,840 rare these days. Of course, a somewhat mild summer helped 42 00:02:40,840 --> 00:02:45,879 with that too, but it's been an interesting summer. The 43 00:02:45,960 --> 00:02:49,199 legislative session kicked off with a lot of lawmakers filing 44 00:02:49,280 --> 00:02:52,800 bills targeting the renewable industry. The people in the industry 45 00:02:52,840 --> 00:02:55,599 breathed a sigh of relief when those bills bills did 46 00:02:55,599 --> 00:02:57,560 not pass, and then a couple of weeks later, the 47 00:02:57,599 --> 00:03:01,319 big beautiful bill in Congress passed and wiped out a 48 00:03:01,360 --> 00:03:03,560 lot of clean energy tax credits and things like that. 49 00:03:03,919 --> 00:03:06,879 And so we're going to discuss today the growth of 50 00:03:06,879 --> 00:03:09,879 that industry and also what's going to happen to it beyond. 51 00:03:10,080 --> 00:03:12,639 And Eric going to start with you, and I want 52 00:03:12,639 --> 00:03:15,800 to look backward before we start forward. Can you just 53 00:03:15,840 --> 00:03:17,759 talk a little bit, tell us a little bit about 54 00:03:18,360 --> 00:03:22,400 how this renewable industry has grown so much in Texas 55 00:03:22,560 --> 00:03:25,159 despite the fact that there's been, you know, some vocal 56 00:03:25,199 --> 00:03:27,400 opposition from from the political power in the. 57 00:03:27,319 --> 00:03:31,039 Speaker 4: State happy to do that. And it's a long history. 58 00:03:31,120 --> 00:03:37,360 It starts with Governor George W. Bush and he pushed 59 00:03:37,560 --> 00:03:41,360 for inclusion of some sort of wind credit or requirement, 60 00:03:41,759 --> 00:03:46,199 and the original restructuring bill you know that opened this up, 61 00:03:46,240 --> 00:03:52,479 you know, twenty five thirty years ago, and that initially 62 00:03:52,599 --> 00:03:57,159 led to some investment and when but pretty soon federal 63 00:03:57,199 --> 00:03:59,759 tax credits came in and made the much bigger difference 64 00:03:59,800 --> 00:04:03,039 than the state program, and that led to an enormous 65 00:04:03,120 --> 00:04:09,639 boom uh in which led to costs of the construction 66 00:04:10,319 --> 00:04:16,920 and the components coming down pretty dramatically, solar battery when 67 00:04:17,079 --> 00:04:23,680 price costs all came down, and and now the most 68 00:04:23,759 --> 00:04:28,040 economically rational investment to make in many cases is solar 69 00:04:28,040 --> 00:04:28,839 plus storage. 70 00:04:29,439 --> 00:04:34,120 Speaker 1: Is that is that largely you know, early Biden infrastructure 71 00:04:34,240 --> 00:04:36,279 bills that really kicked started it, or or. 72 00:04:36,600 --> 00:04:40,439 Speaker 4: It went back even further than that. There's been a 73 00:04:40,480 --> 00:04:45,439 long history, uh until recently of having federal tax credits 74 00:04:45,480 --> 00:04:48,600 for production or investment in. 75 00:04:50,439 --> 00:04:52,639 Speaker 2: And clean energy. 76 00:04:53,120 --> 00:04:55,360 Speaker 1: Do you agree with sort of my assessment that I 77 00:04:55,399 --> 00:04:57,639 made up front, that that a lot of that growth 78 00:04:57,680 --> 00:05:00,839 has really helped put Argrid in a better position than 79 00:05:00,839 --> 00:05:02,120 it was four or five years ago. 80 00:05:02,680 --> 00:05:07,639 Speaker 2: For sure, solar keeps costs down. 81 00:05:07,839 --> 00:05:10,240 Speaker 4: As you know, the fuel cost of the sun is 82 00:05:10,279 --> 00:05:16,199 pretty low, and the cost of the equipment is also 83 00:05:16,360 --> 00:05:22,079 coming down dramatically. It's fairly predictable, so you can plan 84 00:05:22,160 --> 00:05:22,560 around it. 85 00:05:22,800 --> 00:05:25,399 Speaker 2: The sun. We know what time the sun will set, 86 00:05:25,480 --> 00:05:26,439 you know, seven. 87 00:05:26,240 --> 00:05:31,560 Speaker 4: Years from now, and there is you know, variability, but 88 00:05:31,720 --> 00:05:33,360 that can be accounted for pretty easily. 89 00:05:34,480 --> 00:05:35,240 Speaker 2: What it does do. 90 00:05:35,399 --> 00:05:41,759 Speaker 4: Is it pushes some of the issues around balancing the 91 00:05:41,759 --> 00:05:46,120 grid until after the sunsets when that resource is not available, 92 00:05:46,639 --> 00:05:51,439 and so as demand for electricity goes up after sunset, 93 00:05:51,920 --> 00:05:55,480 that's still something that Arcot has to manage, and so 94 00:05:55,560 --> 00:05:58,399 farther doing that with natural gas and batteries. 95 00:05:59,079 --> 00:06:01,920 Speaker 1: Right, So let's let's talk about this because, like we said, 96 00:06:01,920 --> 00:06:04,480 there's been you know, even as this growth has happened, 97 00:06:04,519 --> 00:06:07,480 there's been a considerable amount of skepticism in our state 98 00:06:07,519 --> 00:06:10,480 government around whether this is a good thing, you know, 99 00:06:10,560 --> 00:06:13,720 whether it's sort of pricing out more fossil fuel backed 100 00:06:14,800 --> 00:06:18,680 power that you know, some would argue is more reliable. 101 00:06:19,079 --> 00:06:22,079 It feels to me like the two sort of criticisms 102 00:06:22,120 --> 00:06:24,319 of this, and I'd be interested in hearing your perspective 103 00:06:24,319 --> 00:06:26,639 on both, the first one being sort of what you 104 00:06:26,639 --> 00:06:30,680 talked about. It's actually less reliable. Right, you have a 105 00:06:30,920 --> 00:06:35,879 winter storm, the wind stops blowing, you know, not as 106 00:06:35,959 --> 00:06:38,279 much sun during the day and all of a sudden, 107 00:06:38,279 --> 00:06:40,279 we're in trouble. You can't turn the sun on at 108 00:06:40,360 --> 00:06:44,439 three am if you're having this crisis. It seems as 109 00:06:44,519 --> 00:06:47,399 though maybe batteries have helped with that a little bit. 110 00:06:47,399 --> 00:06:49,480 But talk about that concern and is that still a 111 00:06:49,519 --> 00:06:50,720 concern in twenty twenty five. 112 00:06:51,879 --> 00:06:54,560 Speaker 4: For sure, it's still something that has to be actively managed. 113 00:06:54,720 --> 00:06:58,360 But we have a choice of do we manage it 114 00:06:58,399 --> 00:07:04,319 through like or you know control, command and control of 115 00:07:04,399 --> 00:07:05,720 exactly what's happening, or. 116 00:07:05,639 --> 00:07:07,360 Speaker 2: Do we manage it through market forces. 117 00:07:07,680 --> 00:07:12,959 Speaker 4: And that's a key question that drives outcomes. Since when 118 00:07:13,000 --> 00:07:15,560 a storm ury, we've been managing it with you know, 119 00:07:15,680 --> 00:07:23,519 urcot command and control. But in principle, if solar is 120 00:07:23,560 --> 00:07:26,199 not available when you need it, then it doesn't get 121 00:07:26,240 --> 00:07:28,800 paid to the very high prices that happen when you 122 00:07:29,399 --> 00:07:32,079 have a shortage of power, and so on average it 123 00:07:32,120 --> 00:07:36,000 gets paid less than a dispatchable power plant that is 124 00:07:36,079 --> 00:07:40,160 available during those high priced hours. So this, in my opinion, 125 00:07:40,199 --> 00:07:44,360 there's not a need to fix anything. If solar wants 126 00:07:44,399 --> 00:07:48,439 to earn money during those high priced hours, then they 127 00:07:48,560 --> 00:07:51,920 add storage. There's a natural market incentive to do. 128 00:07:51,839 --> 00:07:56,959 Speaker 1: That, and this idea basically is building big batteries, connecting 129 00:07:57,040 --> 00:08:00,439 them to the grid, charging those batteries during this sunny, 130 00:08:01,000 --> 00:08:04,399 you know, hot or whatever windy times, and then waiting 131 00:08:04,519 --> 00:08:09,560 until you're in a situation where there's not as much 132 00:08:09,720 --> 00:08:12,600 supply in the system, where the prices will go up, 133 00:08:12,639 --> 00:08:14,920 and then you can make more money by right searching it. 134 00:08:15,240 --> 00:08:17,560 Speaker 4: And that can be you know, tens of dollars per 135 00:08:17,600 --> 00:08:19,720 making what hour on a you know, a normal day 136 00:08:19,959 --> 00:08:22,240 or on a tight day, can be hundreds or thousands 137 00:08:22,279 --> 00:08:24,560 of dollars per make what hour, which can make you know, 138 00:08:24,600 --> 00:08:25,680 an investors whole year. 139 00:08:26,439 --> 00:08:29,160 Speaker 1: It just very briefly, let's take a step back and 140 00:08:29,240 --> 00:08:32,960 explain sort of the ERCOT system here. It's you know, 141 00:08:33,039 --> 00:08:37,600 the the deregulated system, the system where you know, basically, 142 00:08:37,799 --> 00:08:43,039 right power suppliers are paid to feed the grid and 143 00:08:43,240 --> 00:08:46,679 they are paid based on how much demand and supply 144 00:08:46,759 --> 00:08:50,679 there is at the time. So when say you're in 145 00:08:50,720 --> 00:08:53,320 a winter storm and you know half the natural gas 146 00:08:53,360 --> 00:08:57,679 plants are out of line, you're making tons of money, 147 00:08:58,080 --> 00:09:01,960 right if you're able to supply that grid. Whereas if 148 00:09:02,000 --> 00:09:04,720 it's a three o'clock on a windy day, in a 149 00:09:04,759 --> 00:09:09,360 sunny day and there's all this you know, renewable energy 150 00:09:09,360 --> 00:09:11,480 being fed in the amount that you're getting paid for 151 00:09:11,519 --> 00:09:14,879 suplying that grid is significantly right. 152 00:09:14,919 --> 00:09:17,720 Speaker 4: And I would argue that adds up to benefits to 153 00:09:17,799 --> 00:09:22,960 consumers because there's this intense competition that drives costs down. 154 00:09:24,480 --> 00:09:27,039 And the other side of that coin, when you said, 155 00:09:27,039 --> 00:09:29,519 if you're available during the high priced hours and winners 156 00:09:29,559 --> 00:09:32,200 from ury or some similar hour, you make a bunch 157 00:09:32,200 --> 00:09:34,240 of money. If you had sold your power in advance, 158 00:09:34,240 --> 00:09:37,320 which many power plants do, you were losing a bunch 159 00:09:37,320 --> 00:09:40,600 of money because you sold and now you have to 160 00:09:40,639 --> 00:09:42,440 fill in a gap that you don't have and you 161 00:09:42,440 --> 00:09:44,840 have to buy it back for thousands of dollars. So 162 00:09:45,759 --> 00:09:49,360 that risk of having to buy back that power also 163 00:09:49,480 --> 00:09:51,720 creates a strong incentive to try to make sure your 164 00:09:51,720 --> 00:09:52,960 power plants are reliable. 165 00:09:53,639 --> 00:09:56,039 Speaker 1: It's basically the idea here is the invisible hand of 166 00:09:56,080 --> 00:09:56,960 the market is. 167 00:09:57,240 --> 00:10:00,440 Speaker 4: Yeah, and we see it happening. I know there's you 168 00:10:00,480 --> 00:10:03,000 know a lot of people that here you know markets 169 00:10:03,000 --> 00:10:06,399 and kind of get skeptical, but like, we have real 170 00:10:06,440 --> 00:10:09,320 world evidence of it working in the power markets. 171 00:10:09,399 --> 00:10:14,720 Speaker 1: Okay, So the other argument here has been essentially this 172 00:10:14,799 --> 00:10:17,320 isn't a free market system because there has been so 173 00:10:17,440 --> 00:10:21,919 much government government support for solar and wind and everything 174 00:10:21,960 --> 00:10:25,159 like that, and that basically the government, the federal government 175 00:10:25,200 --> 00:10:28,159 in particular, should sort of get its foot off the scale, 176 00:10:28,600 --> 00:10:32,759 which would make it more cost effective for natural gas plants, 177 00:10:32,919 --> 00:10:35,679 which they argue are more reliable because you can turn 178 00:10:35,720 --> 00:10:39,799 them on in the middle of the night to create 179 00:10:39,840 --> 00:10:41,759 a better system for Texas. What do you think about 180 00:10:41,759 --> 00:10:42,720 that sort of argument. 181 00:10:43,399 --> 00:10:48,080 Speaker 4: So there's something to it. When you subptionalize something, you 182 00:10:48,120 --> 00:10:51,480 get more of that thing, But it doesn't change the 183 00:10:51,519 --> 00:10:58,240 fact that, you know, when things actually get tight and 184 00:10:58,519 --> 00:11:00,480 prices get high, it doesn't matter matter if you are 185 00:11:00,480 --> 00:11:04,559 subsidized to exist. It matters if at that moment you're available. 186 00:11:05,120 --> 00:11:07,000 If you're available at that moment, you can get paid 187 00:11:07,000 --> 00:11:10,759 those high prices, and if you're broken down, you don't 188 00:11:10,759 --> 00:11:11,879 get paid those high prices. 189 00:11:13,440 --> 00:11:14,240 Speaker 2: So there. 190 00:11:16,039 --> 00:11:18,799 Speaker 4: How you earn money in in that what's called the 191 00:11:18,879 --> 00:11:22,399 real time market, which when those prices can get high, 192 00:11:22,960 --> 00:11:25,840 directly contributes to whether or not you're willing to invest 193 00:11:26,039 --> 00:11:31,840 in UH solar or storage or natural gas. And frankly, 194 00:11:33,360 --> 00:11:36,919 it's been difficult lately for those prices to materialize for 195 00:11:36,960 --> 00:11:42,480 a natural gas in part because there are more expensive 196 00:11:42,519 --> 00:11:45,639 resource than solar and storage. We are seeing some new 197 00:11:45,720 --> 00:11:48,919 natural gas now with all the enormous load growth we've had, 198 00:11:49,320 --> 00:11:52,039 and so it's you know, policymakers that are looking for that, 199 00:11:53,440 --> 00:11:55,840 you know, should you know, be happy to see it happening. 200 00:11:55,840 --> 00:11:58,759 Speaker 3: Finally, I mean when you talk about these like the 201 00:11:58,960 --> 00:12:00,919 foot on the gas idea of the federal subsidies. I 202 00:12:00,960 --> 00:12:03,320 spent some time this summer on an unrelated story out 203 00:12:03,320 --> 00:12:05,120 in parts of West Texas that are being just like 204 00:12:05,399 --> 00:12:08,399 entirely sort of remade in some ways with these giant 205 00:12:08,440 --> 00:12:11,840 wind farms and the batteries and and all of that. 206 00:12:12,120 --> 00:12:15,879 And it is like there is obviously like a political 207 00:12:16,000 --> 00:12:19,399 underpinning to this that people feel like there is a 208 00:12:19,639 --> 00:12:22,519 part like generally, I feel like they feel like, oh, 209 00:12:22,559 --> 00:12:25,159 the Democrats are more likely to subsidize, you know, these 210 00:12:25,200 --> 00:12:29,200 sort of things. They want more subsidies for these renewable energy, 211 00:12:29,440 --> 00:12:32,440 and in Texas that is often seen as a bad thing. 212 00:12:32,679 --> 00:12:33,919 But I do feel like a lot for a lot 213 00:12:33,919 --> 00:12:37,679 of you know, people in the industry, they're sort of like, well, 214 00:12:37,720 --> 00:12:39,919 what's gonna what's going to get me paid a little bit? 215 00:12:40,000 --> 00:12:43,399 Speaker 4: You know, Like yeah, and it's not just in the 216 00:12:43,440 --> 00:12:46,279 industry about what's going to get me paid. But you 217 00:12:46,320 --> 00:12:50,639 know these investments are you know, creating an enormous tax 218 00:12:50,639 --> 00:12:53,279 space and rural counties that didn't have it previously. 219 00:12:53,639 --> 00:12:55,799 Speaker 3: Right, it's like if it you know, it's ultimately good 220 00:12:55,799 --> 00:12:58,720 for the consumer, you know, like benefits the consumer, benefits 221 00:12:58,919 --> 00:13:01,440 some of these landowners, and if it's people working in 222 00:13:01,440 --> 00:13:04,639 these industries, how much of that resistance is Do you 223 00:13:04,639 --> 00:13:07,840 think it's like it's sticky and or just sort of 224 00:13:07,879 --> 00:13:09,799 goes away if the money starts making sense, so. 225 00:13:10,120 --> 00:13:11,919 Speaker 4: You know that, you know, maybe it's a good way 226 00:13:11,919 --> 00:13:15,440 to transition to what happened last session where there were 227 00:13:16,600 --> 00:13:22,360 bills that were filed that would change the way some 228 00:13:22,799 --> 00:13:26,600 prior law that was going to increase costs for clean 229 00:13:26,720 --> 00:13:31,480 energy would have worked. It was called firming, and firming 230 00:13:31,559 --> 00:13:38,639 basically came out of HB fifteen hundred two sessions ago, 231 00:13:39,080 --> 00:13:44,519 and it's. 232 00:13:42,799 --> 00:13:44,879 Speaker 2: Really vaguely written. 233 00:13:44,879 --> 00:13:47,720 Speaker 4: It's not totally clear what it means, but it essentially 234 00:13:47,759 --> 00:13:53,720 means that they expect generators to perform above average during 235 00:13:54,120 --> 00:13:58,120 times of low reserves. But the way it was written, 236 00:13:58,120 --> 00:14:02,080 it was only for new generation for existing generation, and 237 00:14:02,159 --> 00:14:06,639 so it would be a new requirement for new investors, 238 00:14:06,840 --> 00:14:10,080 and generally that's a good way to do thing. Investors 239 00:14:10,080 --> 00:14:12,240 don't trust you if you impose new costs on their 240 00:14:12,320 --> 00:14:15,360 existing assets. They start to question whether or not you're 241 00:14:15,399 --> 00:14:19,799 a reliable place to invest. Anyway, there was a proposal 242 00:14:19,879 --> 00:14:23,440 the past session to make it retroactive, and that got 243 00:14:23,480 --> 00:14:27,559 through you know, the relevant House committee. And the fact 244 00:14:27,559 --> 00:14:31,840 that it you know, advanced, you know, surprise a lot 245 00:14:31,879 --> 00:14:35,039 of people because there had just been a compromise two 246 00:14:35,120 --> 00:14:40,799 years before. So it led to pretty much the whole 247 00:14:40,879 --> 00:14:44,840 Texas economy coming out and saying, please don't pass this bill. 248 00:14:45,200 --> 00:14:48,720 It would raise costs, it would not help reliability, we. 249 00:14:48,679 --> 00:14:49,320 Speaker 2: Don't need it. 250 00:14:49,840 --> 00:14:56,120 Speaker 4: And it was an enormous effort where you know, almost 251 00:14:56,159 --> 00:15:00,480 every industry came out, you know, to express concerns about 252 00:15:00,639 --> 00:15:05,559 the proposal. It ended up not advancing after you know 253 00:15:06,039 --> 00:15:10,240 a lot of back and forth, but it forced people 254 00:15:10,240 --> 00:15:13,720 to kind of go on the record because it almost passed, 255 00:15:13,840 --> 00:15:20,279 so you know, that was interesting, and it also didn't pass, 256 00:15:20,759 --> 00:15:22,559 and that's an important story. 257 00:15:22,759 --> 00:15:27,000 Speaker 1: So yeah, and it's it's an interesting situation, right because 258 00:15:27,840 --> 00:15:31,240 I think one of the things maybe we felt like 259 00:15:31,320 --> 00:15:34,559 we learned about that whole process is that it might 260 00:15:34,679 --> 00:15:39,039 make good politics to sort of bash the idea of 261 00:15:39,080 --> 00:15:42,960 the Green New Deal or targeting fossil fuels in Texas 262 00:15:43,120 --> 00:15:51,279 or you know, the hardcore environmental right, I mean sorry left. 263 00:15:52,039 --> 00:15:56,159 But then when you get down to evaluating what is 264 00:15:56,200 --> 00:15:58,960 the actual impact of these renewables where you know, once 265 00:15:59,399 --> 00:16:02,279 you build them, once you build the solar panels, once 266 00:16:02,320 --> 00:16:06,360 you are put in the wind farms, they're quite cheap 267 00:16:06,559 --> 00:16:10,759 to you know, at generating electricity. And also there is 268 00:16:10,840 --> 00:16:15,519 a major there are major concerns as data centers come online, 269 00:16:15,759 --> 00:16:18,879 as bitcoin mining comes into the state, and also just 270 00:16:18,960 --> 00:16:22,440 the state grows in general, that there's going to be massive, 271 00:16:22,480 --> 00:16:24,960 massive needs for power over the coming years, and that 272 00:16:25,440 --> 00:16:28,919 wind and solar might be the solution to this. And so, 273 00:16:30,159 --> 00:16:32,279 you know, I think you had a lot of folks thinking, 274 00:16:33,679 --> 00:16:36,559 you know, I might get a short term benefit for 275 00:16:36,639 --> 00:16:39,919 saying we stuck it to those like liberal environmentalists, but 276 00:16:40,279 --> 00:16:43,399 I also might face the long term frustration of my 277 00:16:44,120 --> 00:16:48,279 constituents who are paying more for electricity, or worrying about 278 00:16:48,320 --> 00:16:51,879 another twenty twenty one winter storm from happening. 279 00:16:52,559 --> 00:16:54,000 Speaker 3: Or like had a chance to sell their land to 280 00:16:54,120 --> 00:16:56,480 wind farm, or it's like seeing a you know the text, 281 00:16:56,519 --> 00:16:59,559 you know, benefits from a big battery plant or something. 282 00:16:59,639 --> 00:16:59,879 Speaker 2: Yeah. 283 00:17:00,240 --> 00:17:03,720 Speaker 4: Yeah, when it came down to it, there's an opportunity 284 00:17:03,759 --> 00:17:07,039 to pass you know, this bill that would have been damaging, 285 00:17:07,160 --> 00:17:10,759 and the legislature, in a bipartisan fashion, chose not to. 286 00:17:11,640 --> 00:17:19,799 But then yeah, so then then Congress happened, and so 287 00:17:20,599 --> 00:17:23,920 there have been you know, one of the things that 288 00:17:23,960 --> 00:17:28,400 President Trump said he would do is, you know, reverse 289 00:17:28,599 --> 00:17:34,119 all of the Biden policies around you know, the Inflation 290 00:17:34,200 --> 00:17:37,680 Reduction Act and has said, you know, the Green New 291 00:17:37,720 --> 00:17:41,440 Deal is you know, not good for anybody, and you 292 00:17:41,440 --> 00:17:44,640 know other things along those lines. And you know, one 293 00:17:44,640 --> 00:17:48,200 of the things I've learned recently is you know, when 294 00:17:48,759 --> 00:17:50,519 the president says you're going to do something, you should 295 00:17:50,559 --> 00:17:52,039 believe him. 296 00:17:52,599 --> 00:17:59,279 Speaker 2: And so the bill passed. 297 00:17:59,519 --> 00:18:02,720 Speaker 4: You know, Democrats were hopeful that the way that Biden 298 00:18:02,759 --> 00:18:04,839 structured it, by having a lot of the benefits to 299 00:18:04,920 --> 00:18:09,400 crew in red congressional districts, would you know, inoculate it 300 00:18:09,440 --> 00:18:18,359 against being overturned. That didn't happen, And there's now the 301 00:18:18,400 --> 00:18:23,359 remaining tax credits. There's a scramble towards construction because in 302 00:18:23,440 --> 00:18:26,079 order to get them, you have to have to demonstrate 303 00:18:26,079 --> 00:18:29,519 the under construction in almost every case. The exception is 304 00:18:30,039 --> 00:18:32,119 I think if you're under one point five megawatts, you 305 00:18:32,119 --> 00:18:36,640 don't have to do that. That's small, and so the 306 00:18:36,680 --> 00:18:39,079 other thing people doing is maybe doing more small projects 307 00:18:39,200 --> 00:18:44,640 because that's easier. But in my opinion, what's happening is 308 00:18:45,000 --> 00:18:49,400 there's actually a rush to qualify for the remaining credits. 309 00:18:49,799 --> 00:18:52,960 Speaker 2: When did those expire? Gosh, that's a good question. 310 00:18:53,000 --> 00:18:58,000 Speaker 3: Okay, soon soon, soon Again the fast approaching deadline. 311 00:18:58,039 --> 00:19:07,079 Speaker 4: Yeah, the very fast approaching deadline, and the once they expire, 312 00:19:09,160 --> 00:19:12,759 then we're going to be in a new world. Historically, 313 00:19:14,039 --> 00:19:16,880 they've been set for expiration and then extended and extended 314 00:19:16,920 --> 00:19:22,599 and extended, and I'm really curious to see what happens. 315 00:19:23,200 --> 00:19:27,039 I still think we'll still see investment in solar and storage, 316 00:19:28,240 --> 00:19:34,079 especially in places with load growth, because it's just a 317 00:19:34,160 --> 00:19:38,480 fact that you can't consume a megawatt unless someone makes 318 00:19:38,480 --> 00:19:42,880 a mega wat, and so that means that in order 319 00:19:42,880 --> 00:19:45,480 to keep up the demand, we have to build new 320 00:19:45,559 --> 00:19:51,559 facilities and solar and storage. Because the impacts that we've 321 00:19:51,559 --> 00:19:54,640 had of those costs coming down for many years are 322 00:19:54,720 --> 00:19:59,039 still in the money. It's going to raise the cost 323 00:19:59,200 --> 00:20:03,160 of buying those because they won't be subsidized, But especially 324 00:20:03,200 --> 00:20:07,640 in areas with load growth, I think we'll still see purchases, 325 00:20:07,640 --> 00:20:10,920 maybe not to the same level, but at least enough 326 00:20:10,960 --> 00:20:12,119 to keep up a load growth. 327 00:20:14,720 --> 00:20:18,559 Speaker 1: This is maybe too complicated of a question to answer 328 00:20:18,680 --> 00:20:23,160 in a quick but I'm curious whether you have any 329 00:20:23,240 --> 00:20:28,279 insight on you know, once these credits expire, does it 330 00:20:28,400 --> 00:20:33,279 flip the equation of whether it's more efficient economically efficient 331 00:20:33,519 --> 00:20:39,119 to build a solar farm or a wind farm compared 332 00:20:39,160 --> 00:20:40,400 to a natural gas plant. 333 00:20:40,680 --> 00:20:43,319 Speaker 4: So it's not a black and white question like that. 334 00:20:43,359 --> 00:20:47,000 We're seeing right now investment in both solar and storage 335 00:20:47,039 --> 00:20:51,400 and natural gas as it relates to all of load growth. 336 00:20:51,720 --> 00:20:53,079 Speaker 2: And that's because. 337 00:20:54,519 --> 00:20:57,039 Speaker 4: In the wholesale market, the people that are responsible for 338 00:20:57,079 --> 00:21:01,559 covering that load growth need to cover the possiabilities. So 339 00:21:01,559 --> 00:21:04,119 solar and storage can take you a long way and 340 00:21:04,160 --> 00:21:09,160 it's cheap, but you need to be able to physically 341 00:21:09,240 --> 00:21:12,519 have enough energy to get you through whatever conditions you 342 00:21:12,599 --> 00:21:16,720 know might arise. And so we're seeing investment in everything. 343 00:21:16,559 --> 00:21:19,640 Speaker 2: Right now that makes sense. 344 00:21:20,119 --> 00:21:26,720 Speaker 1: So one of the questions then, I have is what 345 00:21:26,799 --> 00:21:30,039 does this mean for the reliability of our ur cut 346 00:21:30,240 --> 00:21:31,559 grid moving forward. 347 00:21:31,400 --> 00:21:33,559 Speaker 2: Right, So. 348 00:21:35,400 --> 00:21:41,400 Speaker 4: Air Cut is kind of actively managing the problem of 349 00:21:42,680 --> 00:21:46,519 how do we deal with data center growth that get 350 00:21:46,720 --> 00:21:48,000 technical pretty quickly. 351 00:21:48,039 --> 00:21:49,240 Speaker 2: So I'm going to set that aside. 352 00:21:49,240 --> 00:21:51,279 Speaker 4: But they're doing a bunch of studies that will be done, 353 00:21:52,119 --> 00:21:54,559 you know, later this year, and then they'll react to 354 00:21:54,599 --> 00:21:55,559 whatever those studies say. 355 00:21:57,119 --> 00:22:03,759 Speaker 2: But beyond that, there's. 356 00:22:03,559 --> 00:22:12,519 Speaker 4: A question of whether or not Urkott lets the market participants, 357 00:22:12,640 --> 00:22:16,000 you know, follow incentives and see what comes out of 358 00:22:16,039 --> 00:22:19,200 that and just trust, you know that markets will lead 359 00:22:19,240 --> 00:22:23,079 to the right mix, or for them to be heavy 360 00:22:23,079 --> 00:22:25,680 handed and lean in. And ever since wenters from URI, 361 00:22:26,240 --> 00:22:28,960 they have kind of had their hands on the reins. 362 00:22:29,599 --> 00:22:34,240 And recently at an Urkott board meeting, the chairman of 363 00:22:34,279 --> 00:22:40,200 the Public Utility Commission, Thomas Gleeson, said that it's time 364 00:22:40,279 --> 00:22:43,960 to reconsider whether or not we kind of control the 365 00:22:44,000 --> 00:22:46,519 market as tightly as we have, and that's called they've 366 00:22:46,519 --> 00:22:50,319 been calling it conservative operations, and he said, maybe it's 367 00:22:50,359 --> 00:22:54,920 time to reevaluate that. I'm excited by that because I 368 00:22:54,920 --> 00:22:58,319 think it will lead to more investment and you know, 369 00:22:58,359 --> 00:22:59,920 all kinds of capacity. 370 00:23:00,559 --> 00:23:04,359 Speaker 1: Because one of the things that conservative operations has one 371 00:23:04,400 --> 00:23:07,279 of the causes of that, or one of the effects 372 00:23:07,279 --> 00:23:10,799 of it is it makes prices go up for the 373 00:23:11,200 --> 00:23:11,960 average consumer. 374 00:23:12,119 --> 00:23:13,799 Speaker 2: Well they not necessarily. 375 00:23:14,240 --> 00:23:18,680 Speaker 4: They buy more reserves and so costs go up, but 376 00:23:18,839 --> 00:23:20,720 prices don't necessarily go up. 377 00:23:20,799 --> 00:23:23,000 Speaker 2: It's just a quantity issue, right. 378 00:23:26,079 --> 00:23:30,480 Speaker 4: But what investors want to see is higher prices occasionally, 379 00:23:30,559 --> 00:23:32,680 so that way they can earn those higher prices by 380 00:23:32,680 --> 00:23:39,279 being available during those conditions. So by buying fewer reserves, 381 00:23:40,759 --> 00:23:44,559 you're buying the total quantity and the bill goes down. 382 00:23:44,720 --> 00:23:47,400 Plus this is the opportunity for these higher prices to 383 00:23:47,400 --> 00:23:51,359 materialize that investors can earn. So it could, if they 384 00:23:51,559 --> 00:23:55,240 do it right, result in lower costs and more investment. 385 00:23:56,079 --> 00:24:00,759 Speaker 3: Are we moving off of conservative operations because like we 386 00:24:00,799 --> 00:24:03,359 have strengthened the systems and we've learned our lessons and 387 00:24:03,400 --> 00:24:06,480 things are better, or just because when the winter storm 388 00:24:06,519 --> 00:24:08,720 is so far in the rear view mirror that you know. 389 00:24:08,920 --> 00:24:10,640 Speaker 2: Yeah, it's a little bit of both. 390 00:24:10,960 --> 00:24:16,039 Speaker 4: But the state has made significant progress on responding to 391 00:24:16,079 --> 00:24:18,839 Winterstorm Muri. There was some real low hanging fruit on 392 00:24:18,880 --> 00:24:24,400 what to fix weatherization of generators in the natural gas system. 393 00:24:25,119 --> 00:24:31,000 There is a procedure to shut down consumers to match 394 00:24:31,039 --> 00:24:34,319 apply and demand, there's not enough generation. That's called rotating outages, 395 00:24:35,000 --> 00:24:39,839 and unfortunately, some of the outages that they rotated were 396 00:24:39,880 --> 00:24:47,039 onto natural gas systems, and so it led to unintentionally 397 00:24:47,079 --> 00:24:52,000 cutting off natural gas going into the power plants. We're 398 00:24:52,039 --> 00:24:54,079 never going to do that again because we're like, oh, 399 00:24:54,119 --> 00:24:56,720 that was a mistake, let's fix it. And so that 400 00:24:56,839 --> 00:24:59,759 was that's a real easy thing to fix. Plus there's 401 00:24:59,759 --> 00:25:05,319 been a number of new market design changes. I think 402 00:25:05,359 --> 00:25:06,319 we're in a better place. 403 00:25:07,359 --> 00:25:08,599 Speaker 2: Interesting. Interesting. 404 00:25:08,920 --> 00:25:11,880 Speaker 1: One other thing that did happen during the legislative session 405 00:25:12,160 --> 00:25:14,720 was the state putting I believe five billion more dollars 406 00:25:14,759 --> 00:25:17,799 into the Texas Energy Fund RIGHT, which is a fund 407 00:25:17,799 --> 00:25:22,279 that is specifically designed to give low interest loans to 408 00:25:23,400 --> 00:25:28,119 natural gas plants, right, not renewable plants and things like that. 409 00:25:28,160 --> 00:25:30,640 I think the total now is ten billion dollars of 410 00:25:30,680 --> 00:25:33,119 the legislature has put in there in recent years. And 411 00:25:33,160 --> 00:25:35,279 one of the criticisms of that was that just not 412 00:25:35,480 --> 00:25:39,160 many companies are accessing that. At the time, there had 413 00:25:39,160 --> 00:25:43,000 only been two I believe now there's been a third. 414 00:25:43,400 --> 00:25:46,640 Right that happened this week or sorry, last week. There 415 00:25:46,680 --> 00:25:48,680 was also an announcement separately from that and it was 416 00:25:48,680 --> 00:25:50,920 the biggest loan ever, right, it was five hundred and 417 00:25:50,960 --> 00:25:54,559 sixty two million dollars approved by for Energy to be 418 00:25:54,759 --> 00:25:57,519 a plant. You also had Vistra Energy announcing I think 419 00:25:57,640 --> 00:26:00,559 maybe yesterday that it was going to be build to 420 00:26:01,279 --> 00:26:04,559 new advanced natural gas power units totally and I think 421 00:26:04,599 --> 00:26:08,640 eight hundred and sixty megawatts, which is a major, major investment. 422 00:26:09,440 --> 00:26:14,319 How much of that is the market responding and swinging 423 00:26:14,400 --> 00:26:16,960 back to natural gas and how much of it is 424 00:26:17,079 --> 00:26:20,319 just development that would have happened anyways. 425 00:26:20,519 --> 00:26:24,319 Speaker 4: So one of the things that you know, in my opinion, 426 00:26:24,400 --> 00:26:28,319 is interesting about the Texas Energy Fund is I've been 427 00:26:28,319 --> 00:26:31,319 talking about incentives and it's you know, it's a lot 428 00:26:31,359 --> 00:26:34,960 to take in, and the politicians realized that and needed 429 00:26:35,000 --> 00:26:37,559 to be able to explain to you know, every day 430 00:26:37,599 --> 00:26:40,119 voters that were doing something. And I think that's why 431 00:26:40,200 --> 00:26:42,519 they created the find to say, here's this money, it's 432 00:26:42,559 --> 00:26:46,640 going to new investment that's easy to understand, and it 433 00:26:46,720 --> 00:26:50,000 makes sense because you know, they want to be able 434 00:26:50,000 --> 00:26:54,240 to clearly explain the voters that they accomplish something. The 435 00:26:54,279 --> 00:26:58,279 investment in natural gas and whether it's happening in the 436 00:26:58,319 --> 00:27:01,279 Texas Energy Fund is interesting. There have been a number 437 00:27:01,319 --> 00:27:04,880 of canceled projects and the Texas don't do fund you know, 438 00:27:04,960 --> 00:27:10,480 where the applicant said that you know, they didn't have 439 00:27:10,519 --> 00:27:13,319 a turbine available or it, you know, didn't you know, 440 00:27:13,440 --> 00:27:17,400 make sense for one reason or another. But we what 441 00:27:17,960 --> 00:27:20,640 the power plant investment in natural as we are seeing 442 00:27:21,799 --> 00:27:25,160 not all of it, especially with this Vistra stuff, but 443 00:27:25,400 --> 00:27:28,640 a lot of it is going co located at new 444 00:27:28,720 --> 00:27:33,480 data centers. And you know that's because what those data 445 00:27:33,559 --> 00:27:39,319 centers need is the physical ability to consume electricity. And 446 00:27:39,400 --> 00:27:43,640 it doesn't matter about market design or incentives or whatever. 447 00:27:43,960 --> 00:27:49,200 They just need enough megawatts in one location to you know, 448 00:27:49,400 --> 00:27:54,240 do their business model. And so for that reason, it's 449 00:27:54,279 --> 00:27:59,319 worth it to you know, install solar storage, natural gas 450 00:28:00,200 --> 00:28:03,240 uh installed, you know, pay for you know, giant new 451 00:28:03,319 --> 00:28:08,079 transmission lines because they have an infrastructure problem, not a 452 00:28:08,160 --> 00:28:14,200 market's problem, and if they can consume a lot of electricity, 453 00:28:14,240 --> 00:28:16,599 they're happy and they're willing to pay for the cost 454 00:28:16,640 --> 00:28:16,880 of that. 455 00:28:17,880 --> 00:28:19,839 Speaker 3: I mean, there was a like we've talked about sort 456 00:28:19,839 --> 00:28:22,480 of the criticism on the right of you know, putting 457 00:28:22,480 --> 00:28:26,759 your thumb on the scale or subsidizing renewable energy. This 458 00:28:26,799 --> 00:28:29,759 obviously is like pouring money, a ton of money directly 459 00:28:29,759 --> 00:28:34,799 into natural gas. I mean, do you see sort of 460 00:28:35,079 --> 00:28:36,880 a conflict there in those two or is it just 461 00:28:36,880 --> 00:28:37,640 sort of this as hell? 462 00:28:39,839 --> 00:28:47,519 Speaker 5: Yeah, in many other markets, uh, you know, a market 463 00:28:47,599 --> 00:28:50,160 for apples or t shirts. 464 00:28:50,240 --> 00:28:53,039 Speaker 4: You know, it's not there's not a need for politicians 465 00:28:53,079 --> 00:28:54,519 to weigh in and say, I think we should do 466 00:28:54,559 --> 00:28:58,039 the T shirt market differently. But electricity is just so 467 00:28:58,160 --> 00:29:03,680 fundamental to our daily existence that and this Historically it 468 00:29:03,759 --> 00:29:06,440 was regulated very differently where it was, you know, very 469 00:29:06,519 --> 00:29:09,279 much like all the decisions were made by the government, 470 00:29:10,680 --> 00:29:14,400 and so it it makes sense why people you know, 471 00:29:14,440 --> 00:29:17,079 went away and make sure that people get the lights on, 472 00:29:17,160 --> 00:29:20,920 especially after the experience that we had. I would love 473 00:29:20,960 --> 00:29:23,480 for the politics electricity to get boring again. 474 00:29:25,079 --> 00:29:26,279 Speaker 3: Yeah, make electricity boring. 475 00:29:26,519 --> 00:29:28,240 Speaker 2: Yeah, Yeah, it's funny. 476 00:29:28,319 --> 00:29:30,319 Speaker 1: Just I think about like how many people didn't know 477 00:29:30,319 --> 00:29:33,079 what urkot was in twenty eighteen or whatever. Now. 478 00:29:33,119 --> 00:29:34,519 Speaker 2: Yeah, you know, it's like we didn't. 479 00:29:34,279 --> 00:29:36,680 Speaker 1: Even have to explain it on this podcast because we've 480 00:29:36,759 --> 00:29:40,039 all been talking about it for so long, right, Yeah, 481 00:29:40,119 --> 00:29:41,920 one thing I wanted to ask, I mean, the other 482 00:29:41,960 --> 00:29:43,920 thing driving this we've hinted out a little bit. Is 483 00:29:43,960 --> 00:29:47,039 just this idea that all this massive amount of demand 484 00:29:47,480 --> 00:29:49,559 coming on to the grid in the coming years in 485 00:29:49,640 --> 00:29:53,519 order to power the you know, economy of the future, 486 00:29:53,640 --> 00:29:56,480 the expected economy of the future. It's very complicated though, 487 00:29:56,559 --> 00:30:00,000 right because we have this massive queue of data center 488 00:30:00,400 --> 00:30:02,559 and bitcoin miners who want to join the grid, but 489 00:30:02,920 --> 00:30:06,160 they're also you know, applying to join grids in other 490 00:30:06,200 --> 00:30:09,119 states or other places around the states, and it's very 491 00:30:09,160 --> 00:30:12,759 unclear how that's being built. Is that making it difficult 492 00:30:13,000 --> 00:30:18,559 for regulators to know what to what they need to 493 00:30:18,559 --> 00:30:20,640 be doing, and what they need to be accomplishing in 494 00:30:20,720 --> 00:30:22,359 order to shore up the power. 495 00:30:22,079 --> 00:30:24,119 Speaker 2: In the state. Yes and no. 496 00:30:25,279 --> 00:30:28,759 Speaker 4: The yes is to know exactly what to do. But 497 00:30:28,960 --> 00:30:32,079 the no is like they know, we need more investment 498 00:30:32,079 --> 00:30:34,400 and transmission and we're going to need more generation. 499 00:30:34,799 --> 00:30:38,559 Speaker 2: Right. The way it gets complicated is. 500 00:30:40,960 --> 00:30:43,519 Speaker 4: There are only a certain number of companies that are 501 00:30:44,839 --> 00:30:49,640 going to pay for these hyperscalar data centers, you know, 502 00:30:49,759 --> 00:30:56,640 companies like Google and Meta and open Ai. And it's 503 00:30:56,680 --> 00:31:00,920 not you know, going to be you know, a bank 504 00:31:01,000 --> 00:31:03,279 that's running you know, their system, they don't need something 505 00:31:03,319 --> 00:31:05,640 of that scale. They can use traditional data centers for 506 00:31:05,680 --> 00:31:09,440 their business model, and a lot of people would love 507 00:31:09,519 --> 00:31:13,599 to sell an enormous data center site to these giant companies, 508 00:31:13,640 --> 00:31:18,119 and so there's a significant amount of speculation. One of 509 00:31:18,119 --> 00:31:22,519 the things that SB six did last session is require 510 00:31:22,960 --> 00:31:27,440 that data center developers demonstrate that they control the site 511 00:31:27,799 --> 00:31:31,519 and also require them to post what will probably be 512 00:31:31,519 --> 00:31:35,440 a substantial amount of money before the utility or acut 513 00:31:35,640 --> 00:31:41,279 does any planning for them, and that prepayment will hopefully 514 00:31:41,319 --> 00:31:45,160 filter out you know, some number of speculators, so it'll 515 00:31:45,160 --> 00:31:46,319 be an easier problem to solve. 516 00:31:47,359 --> 00:31:51,559 Speaker 1: I want to ask long term, I mean the numbers 517 00:31:51,599 --> 00:31:54,119 I read at the start of this. You know, two 518 00:31:54,440 --> 00:31:56,680 of the power supply capacity that's been added to the 519 00:31:56,720 --> 00:31:59,559 grid has come from wind, solar, or battery since twenty 520 00:31:59,559 --> 00:32:06,119 twenty one. And the trend line seems clear here of 521 00:32:06,559 --> 00:32:11,720 what direction we're heading. Do you think that the actions 522 00:32:12,119 --> 00:32:18,119 of Congress this summer will in the long term substantially 523 00:32:18,200 --> 00:32:20,920 change the direction of that trend line? Like, is there 524 00:32:20,960 --> 00:32:24,000 any is there putting? Can the toothpaste be put back 525 00:32:24,039 --> 00:32:26,640 in the tube here? Or are we ultimately heading toward 526 00:32:26,680 --> 00:32:29,880 a solar, wind and renewable future for a grid? 527 00:32:31,720 --> 00:32:37,680 Speaker 4: In my opinion, the solar and storage is going to 528 00:32:37,680 --> 00:32:39,640 be a key part of our future. No matter what 529 00:32:40,440 --> 00:32:48,640 we will see changes, there's constant you know, invention that's 530 00:32:48,640 --> 00:32:51,640 happening and the battery space and the solar panel space 531 00:32:51,720 --> 00:32:55,200 to make them more efficient or longer duration for the batteries. 532 00:32:55,720 --> 00:32:58,519 There's different kinds of batteries that are coming out all 533 00:32:58,559 --> 00:33:04,200 the time. A lot of people are excited by clean 534 00:33:04,359 --> 00:33:09,720 firm power, so that's you know, not necessarily natural gas, 535 00:33:09,720 --> 00:33:12,880 but maybe natural gas with combon capture and storage, or 536 00:33:14,640 --> 00:33:19,240 nuclear power, geothermal power, or you know, longer duration storage. 537 00:33:19,880 --> 00:33:23,200 There's a lot of investors that are trying to make 538 00:33:23,200 --> 00:33:28,279 all those things happen. Historically, the government you know, had 539 00:33:28,400 --> 00:33:33,240 industrial policy around let's do what we can to reduce 540 00:33:33,279 --> 00:33:35,880 those costs. And we might still be doing that for nuclear, 541 00:33:38,839 --> 00:33:41,240 but but for nuclear that's not really happening. 542 00:33:41,440 --> 00:33:42,599 Speaker 2: And so if. 543 00:33:44,400 --> 00:33:47,160 Speaker 4: People want those to happen, then there's going to have 544 00:33:47,240 --> 00:33:51,400 to be some sort of you know, risk sharing or 545 00:33:51,480 --> 00:33:53,799 you know, other mechanism in order to make sure that 546 00:33:54,079 --> 00:33:58,599 those first movers don't have huge cost overruns. And I 547 00:33:58,599 --> 00:34:00,759 think there's gonna be active evident that space because people 548 00:34:00,759 --> 00:34:03,920 want to see there's other technologies, see other technologies succeed 549 00:34:03,960 --> 00:34:04,359 as well. 550 00:34:06,839 --> 00:34:09,360 Speaker 1: So okay, let me this is a question that I've 551 00:34:09,400 --> 00:34:11,760 been wanting to ask someone smart enough to have an 552 00:34:11,760 --> 00:34:13,639 opinion on it for a while. So I'm going to 553 00:34:13,760 --> 00:34:18,920 veer into the realm of fantasy and uh, pure speculator, 554 00:34:18,920 --> 00:34:24,119 here we go. Yeah, here we go. So you know again, 555 00:34:24,159 --> 00:34:26,199 I'll repeat it again. One of the big drivers of 556 00:34:26,239 --> 00:34:31,320 this is AI, right, data centers, crypto to a certain 557 00:34:31,320 --> 00:34:34,719 extent as well. Right, there is this massive rush by 558 00:34:34,800 --> 00:34:38,519 companies to build as many data centers as possible in 559 00:34:38,639 --> 00:34:42,079 order to power our AI future. Right, whatever you want 560 00:34:42,079 --> 00:34:46,000 to call it, right, But something we know about technology 561 00:34:46,119 --> 00:34:49,320 is that it gets more efficient over time. It You 562 00:34:49,360 --> 00:34:52,519 know that the computer that took up a whole you know, 563 00:34:52,599 --> 00:34:55,360 floor of a building, you know, seventy five years ago 564 00:34:55,400 --> 00:34:58,000 fits in our watch today. 565 00:34:58,519 --> 00:34:58,679 Speaker 2: Right. 566 00:35:01,280 --> 00:35:05,719 Speaker 1: Is there a world where we're rushing to fill all 567 00:35:05,840 --> 00:35:12,599 these this power demand? This technology will get more efficient 568 00:35:12,840 --> 00:35:17,280 in the future, and then the super cheap to maintain 569 00:35:18,039 --> 00:35:22,920 wind and solar and batteries will sort of be what's 570 00:35:23,039 --> 00:35:27,119 left standing as demand drops elsewhere and we're suddenly looking 571 00:35:27,199 --> 00:35:29,440 whether it's fifty years down the road or twenty five 572 00:35:29,519 --> 00:35:33,079 years down the road, or whatever on a much much cleaner, 573 00:35:33,719 --> 00:35:38,880 less fossil fuel dependent power supply, just because the demand 574 00:35:38,880 --> 00:35:43,639 has changed so much. And these things we built in 575 00:35:43,679 --> 00:35:46,440 this decade were are the ones that are going to 576 00:35:46,480 --> 00:35:48,119 be the easiest to run into the future. 577 00:35:49,079 --> 00:35:53,280 Speaker 4: So I think AI is going to change every job 578 00:35:53,800 --> 00:35:59,960 and every industry. And because of that, there's substantial demand 579 00:36:00,079 --> 00:36:05,280 and for the capabilities to make that happen. So we 580 00:36:05,480 --> 00:36:08,519 are not anywhere close to the amount of data center 581 00:36:08,559 --> 00:36:10,840 development we need to make that happen. It won't happen 582 00:36:10,840 --> 00:36:15,360 all at once, but you know, that's that takes a 583 00:36:15,360 --> 00:36:19,480 substance amount of electricity. It's possible that you know, the 584 00:36:19,519 --> 00:36:23,400 next generation of that will result in like more efficient chips, 585 00:36:23,920 --> 00:36:26,079 but what that could mean potentially it's just more chips 586 00:36:26,079 --> 00:36:32,280 at one site too, right, And you know it's also changing, 587 00:36:32,519 --> 00:36:36,679 you know, the way we think about national security. You know, 588 00:36:36,760 --> 00:36:40,400 we've seen you know, the horrible videos in you know, 589 00:36:40,599 --> 00:36:46,360 Ukraine where you know, drone strikes against people. You know, unfortunately, 590 00:36:46,719 --> 00:36:50,320 you know, that's easier to do when you have when 591 00:36:50,320 --> 00:36:53,760 you automate it, and and from even just from a 592 00:36:53,800 --> 00:36:55,920 defense perspective, if the other guys have it, you wouldn't 593 00:36:55,920 --> 00:37:02,280 have it too. That's also AI. So as we make 594 00:37:02,320 --> 00:37:06,000 all these new investments, you know, even if AI drops 595 00:37:06,039 --> 00:37:09,679 off or or if it doesn't, I don't think it matters. 596 00:37:10,679 --> 00:37:15,320 Speaker 2: In my mind. There's a continual loop of. 597 00:37:17,400 --> 00:37:21,599 Speaker 4: New load from new industry coming because they see cheap electricity, 598 00:37:21,960 --> 00:37:24,920 which was made possible by solar and storage, because that's 599 00:37:24,920 --> 00:37:25,679 how it gets cheap. 600 00:37:26,239 --> 00:37:27,519 Speaker 2: That new. 601 00:37:29,360 --> 00:37:33,239 Speaker 4: Demand increases prices, which increases the incentive for new solar 602 00:37:33,239 --> 00:37:33,800 and storage. 603 00:37:33,840 --> 00:37:35,159 Speaker 2: And that's the virtuous cycle. 604 00:37:35,880 --> 00:37:38,199 Speaker 4: And I don't know what the next thing after AI 605 00:37:38,280 --> 00:37:45,199 is going to be, but the access to enormous amounts 606 00:37:45,239 --> 00:37:49,320 of cheap electricity will enable all kinds of potential. 607 00:37:50,280 --> 00:37:55,159 Speaker 1: Yeah, that makes sense, all right, My techno utopian theories 608 00:37:56,280 --> 00:37:57,800 might be a little optimistic there. 609 00:37:57,960 --> 00:37:59,519 Speaker 3: It is just funny, like these are the things that 610 00:38:00,400 --> 00:38:02,280 for all the politics we talk about and all the 611 00:38:02,440 --> 00:38:04,639 like culture war stuff like, this is the stuff that 612 00:38:04,679 --> 00:38:07,320 our elected officials really I think should be an often 613 00:38:07,400 --> 00:38:10,280 are grappling with of like what is the future of our. 614 00:38:10,199 --> 00:38:10,920 Speaker 2: World going to be? 615 00:38:11,159 --> 00:38:14,159 Speaker 1: But also just like the power of partisan politics and 616 00:38:14,199 --> 00:38:17,559 like fighting like might not have as much power over 617 00:38:18,719 --> 00:38:21,960 you know, technological changes in the future we're going as 618 00:38:22,000 --> 00:38:24,599 to as we think right, Sometimes the market is going 619 00:38:24,639 --> 00:38:26,320 to push you in a direction whether you like it 620 00:38:26,440 --> 00:38:30,039 or not. And sometimes a place like Texas, which you 621 00:38:30,079 --> 00:38:33,960 know claims to be suspicious of this, will find itself 622 00:38:34,360 --> 00:38:36,280 the market leader in the country. 623 00:38:36,360 --> 00:38:39,199 Speaker 4: Well, and you know that happened just because Texas got 624 00:38:39,239 --> 00:38:42,280 out of the way and let investors do what they wanted. 625 00:38:42,000 --> 00:38:46,960 Speaker 1: To do right, right, And you know, the it's been 626 00:38:46,960 --> 00:38:49,880 so funny to watch, you know, folks like the Abundance 627 00:38:49,960 --> 00:38:53,119 people talk about how you know, these these sort of 628 00:38:53,159 --> 00:38:57,280 liberal thinkers saying, California, you're doing it wrong. Look at Texas. Right, 629 00:38:57,360 --> 00:38:59,320 It's so much easier to get the permitting. It's so 630 00:38:59,360 --> 00:39:01,480 easier to much easier to get these projects off the 631 00:39:01,480 --> 00:39:05,119 ground because they stay out of people's way and let 632 00:39:05,119 --> 00:39:08,760 these things build up. You know, it's an interesting world 633 00:39:08,840 --> 00:39:09,559 we live in right now. 634 00:39:09,639 --> 00:39:11,280 Speaker 3: Yeah, it does remind me of the conversation we had 635 00:39:11,280 --> 00:39:13,199 on this podcast about housing and things like that right 636 00:39:13,239 --> 00:39:17,039 where it's like you know, things credit where credits do 637 00:39:17,239 --> 00:39:18,599 some stuff is working here? 638 00:39:18,719 --> 00:39:22,880 Speaker 1: Yeah, all right, Eric, thank you for walking us through this. 639 00:39:22,960 --> 00:39:25,719 It's been a very interesting discussion. Thank you, Eleanor, and 640 00:39:25,719 --> 00:39:28,440 thank you to our producers Rob and Chris, that's it 641 00:39:28,559 --> 00:39:29,719 for it today. 642 00:39:30,519 --> 00:39:31,480 Speaker 2: Talk to y'all next week.