Speaker 1: With a round Segal end from London and Gerard read
Speaker 1: from Berlin. This is redefining.
Speaker 2: Energy Today at Rated Finding Energy, we're going to talk
Speaker 2: about hyperscanners and the utility landscape.
Speaker 3: Yeah, because what it's crazy is we see the growth
Speaker 3: of demand is geometric, and the utilities the supply it's arithmetic,
Speaker 3: so there's really stress on the system. But first of all,
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Speaker 1: business more flexible. Back to the show, Lauren, But let's
Speaker 1: be correct you that you're talking about us, You're not
Speaker 1: talking about Europe.
Speaker 3: Yeah, in the US, absolutely, because.
Speaker 2: In Europe are not saying that's called demand growth. That
Speaker 2: was saying in the States or anything like that. Yat,
Speaker 2: you know it might happen, but right now or not.
Speaker 3: In order to do so, we had invited, but unfortunately
Speaker 3: you could not come because of your knee operation. How
Speaker 3: it's getting better, Sliman. Our guest was.
Speaker 1: Chris Seipel, who is the vice chairman of Whatmark Power
Speaker 1: and Renewables Group.
Speaker 3: And really he has delivered a master's class describing the
Speaker 3: relationship between ut ties and I postcan.
Speaker 2: Well, let's bring them on the show.
Speaker 3: Chris, Welcome to the show.
Speaker 4: Great to be here.
Speaker 3: Well, Chris, we both have been working three years in
Speaker 3: LG and I've just a first question for you. Have
Speaker 3: you ever seen anything that what we're saying right now?
Speaker 4: Not in my thirty years of working in power business.
Speaker 4: I got into this business because in nineteen ninety two
Speaker 4: I was in graduate school and I had two professors
Speaker 4: from Washington, DC who would come up who were actually
Speaker 4: negotiating the Energy Policy Act of nineteen ninety two that
Speaker 4: deregulated the electric power business. And I got into this
Speaker 4: business because I thought that was such an exciting time
Speaker 4: because moving from monopolies to deregulation was going to change
Speaker 4: the business so much, and it was a very exciting
Speaker 4: decade as we went through that. But what's coming now
Speaker 4: is having a much more fundamental impact on transformation of
Speaker 4: the electric sector, which makes it just a super exciting
Speaker 4: time to be in this business.
Speaker 3: Yes, because for the past twenty years there's been a
Speaker 3: lot of technological changes, but by and large, the demand
Speaker 3: has been flat. So as we're going to try to
Speaker 3: analyze what's going on, they are really two different aspects,
Speaker 3: the demand and the supply. So first, probably let's jump
Speaker 3: into the demand. And you are very kind to send
Speaker 3: me this document called AI to War twenty seven, So
Speaker 3: probably first explain to our listeners what is that crazy document?
Speaker 4: It's a website. I spend some time in San Francisco
Speaker 4: lifes Fall meeting with people deep in a research and
Speaker 4: they all pointed me to this document and it lays
Speaker 4: out month by month path to how AI could evolve
Speaker 4: between twenty twenty five and twenty twenty seven. And a
Speaker 4: core thesis that they have is that while you and
Speaker 4: I are probably interacting with chat GBT and experiencing hallucinations
Speaker 4: and things that it gets wrong and seeing some of
Speaker 4: the limitations of it, all of the research that's happening
Speaker 4: behind the scenes right now is oriented around actually dealing
Speaker 4: with one of the biggest constraints, which is the availability
Speaker 4: of AI researchers to improve models, and the focus is
Speaker 4: on building the capabilities within the models themselves to become
Speaker 4: the AI researchers. And it lays out this thesis around
Speaker 4: how the pace of innovation in the AI model itself
Speaker 4: is just going to start to go faster and faster
Speaker 4: as the models are essentially able to work twenty four hours,
Speaker 4: and instead of having a limited pool of researchers, you're
Speaker 4: just limited by how much compute you can have in
Speaker 4: having researchers work on the model. And so it lays
Speaker 4: out this picture of just massive improvements in models achieving
Speaker 4: artificial general intelligence, which is models that are as smart
Speaker 4: or smarter than humans, and ultimately all of that resulting
Speaker 4: in massive increases in electricity demand as more compute is
Speaker 4: needed to transform industries and economies.
Speaker 3: I know nothing about AI except what I read, but
Speaker 3: I don't suffer from the dun Incog effect where liberally
Speaker 3: reads five articles and think is becoming a world expert.
Speaker 3: More compute I can buy, but with marked meat is
Speaker 3: the infamous Mark Mets. Twenty five years ago, we predicted
Speaker 3: that the Internet would don the planet and consume half
Speaker 3: of the world power by two oh ten, and of
Speaker 3: course nothing happened. So it's also realized a lot on
Speaker 3: how fast the chips and the softwares can get the efficiency.
Speaker 3: What do you hear?
Speaker 4: I love that reference to the Mark Mills study. It's
Speaker 4: a great case study. And for those who aren't familiar
Speaker 4: with it, there were US power companies that were telling
Speaker 4: Wall Street analysts that they were building so many new
Speaker 4: power plants because of this explosive demand in digital economy
Speaker 4: and the need for power to supply all of it.
Speaker 4: And if you look back on that study, one of
Speaker 4: the things that got most wrong was the extent to
Speaker 4: which the industry that was managing all of that information
Speaker 4: became so much more efficient than what it was in
Speaker 4: two thousand. I do think today is fundamentally different than
Speaker 4: when Mark Mills produced that study back in nineteen ninety nine,
Speaker 4: in the sense that here's just an interesting statistic for you.
Speaker 4: The hyperscalers, the large tech companies, all of them except
Speaker 4: for Amazon, actually publish their historic electricity consumption. And when
Speaker 4: you look at that data, even before AI was becoming
Speaker 4: the growth engine, like the large language models and data
Speaker 4: center compute, just the migration to the cloud and the
Speaker 4: need for cloud compute was resulting in essentially a growth
Speaker 4: rate where their need for data centers was doubling about
Speaker 4: every four years, and the data center industry has already
Speaker 4: gotten to a scale we're just like that doubling every
Speaker 4: four years requires a large amount of data center capacity.
Speaker 4: But so what's different is that there's this underlying trend
Speaker 4: that's been around for four or five years. There's a
Speaker 4: race to win in artificial intelligence with a lot of
Speaker 4: companies now trying to compete in this space and add
Speaker 4: a lot of data center capacity. And so over the
Speaker 4: next five years there's going to be a very large
Speaker 4: growth in data center capacity. But just like Mark Mills
Speaker 4: back in two thousand, as we move beyond that, like
Speaker 4: into the twenty thirties, there's a lot that could happen
Speaker 4: on the efficiency improvement side and the efficiencies of the
Speaker 4: models themselves and how much compute they require.
Speaker 3: There are as many numbers floating around as consultants, but
Speaker 3: one that I've seen kind of coming more and more
Speaker 3: is number of one hundred and eighty gigawa of US
Speaker 3: Electrictic commitments for data center for our listeners, that's one
Speaker 3: or eighteen nuclear plants by and large, knowing this about
Speaker 3: one hundred in the US. That is absolutely massive. And
Speaker 3: if I can give another number, the hyperscalers who've invested
Speaker 3: three hundred billion US dollars in capex into twenty five,
Speaker 3: I've all announced that for Tour twenty six that's going
Speaker 3: to be seven hundred billion dollars. Now it's not just
Speaker 3: going to be powered, mostly going to be chips. Now,
Speaker 3: if you look at the capex of a data center,
Speaker 3: about twenty percent is power and eighty percent is chips
Speaker 3: or you know, you'll tell me from right or wrong.
Speaker 3: So how do you interpret that thirst for energy?
Speaker 4: So let's take that one hundred and eighty gigawatts number.
Speaker 4: It would result in about a thirty percent increase in
Speaker 4: demand in the United States for electricity. It is equal
Speaker 4: to like two French power systems.
Speaker 3: That they would have to be rebuilt.
Speaker 4: To put it into perspective, the number that we are
Speaker 4: watching most closely is what have US utilities actually committed to?
Speaker 4: And what I mean by that is a data center
Speaker 4: has made an application to interconnect with an electric utility.
Speaker 4: The electric utility has studied what it's required for it
Speaker 4: to do to be able to accommodate that demand growth.
Speaker 4: It has figured out how much it's going to cost
Speaker 4: to add us to the system, and an agreement has
Speaker 4: been signed, and typically the data center company is making
Speaker 4: down payments to the electric utility for long lead time equipment.
Speaker 4: So that's where the one hundred and eighty gigawatt number
Speaker 4: comes from. That's what US utility have committed to at
Speaker 4: this point. And what's important to keep in contexts and
Speaker 4: the evolution of this is that for fifteen years, US
Speaker 4: utilities have had no growth, so they didn't have teams
Speaker 4: of people to respond to all of these requests. They
Speaker 4: didn't have a culture of dealing with growth. The regulators
Speaker 4: that regulate the utilities haven't regulated in an environment, most
Speaker 4: of them where the industry is actually growing. Industry is
Speaker 4: very unprepared for it, and a lot of change is
Speaker 4: happening as they respond to this one hundred and eighty
Speaker 4: gigawatts of commitments.
Speaker 3: Well, one or eighty, that's for real, that's extraordinary. But
Speaker 3: as you said, the industry has lost the muscile memory
Speaker 3: of growth and they've been mostly managing their dividends and
Speaker 3: you know, making sure the trees didn't fall on the line,
Speaker 3: but that was kind of boring, and now it turns
Speaker 3: out to be there in the one of the most
Speaker 3: exciting sector are going on. And Chris, the most extraordinary
Speaker 3: thing is you just tooking that center. So we're not
Speaker 3: even talking about the electrification of transport or electrification of heat,
Speaker 3: which in other countries are as big, if not then
Speaker 3: data center. So I don't know what numbers are going
Speaker 3: to look like because they're going to be antification of
Speaker 3: transport at some point.
Speaker 4: Correct part of the way I'm thinking about this is
Speaker 4: that what's happening in the US right now is really
Speaker 4: the first time that we have had a deregulated electricity
Speaker 4: market experiencing substantial growth, and this is kind of a
Speaker 4: precursor with provide lessons to be learned as other parts
Speaker 4: of the globe, like Europe in particular, where electrification of
Speaker 4: transports and heating likely become a bigger part of the
Speaker 4: story what those markets are going to go through in
Speaker 4: a few years as that becomes a bigger part of
Speaker 4: the story. But I would say in the US, though,
Speaker 4: the large loads are not confined to just data center demand.
Speaker 4: Data center demand is most of it, but we also
Speaker 4: have chip manufacturing facilities that are under construction. We have
Speaker 4: electric battery manufacturing facilities. Those are all large loads that
Speaker 4: are of a scale in size that the electric industry
Speaker 4: hasn't had to deal with in the past.
Speaker 3: And the interesting thing is that those clients can pay
Speaker 3: because what you used to have with big industrial loads
Speaker 3: is that those who are like large volume, low margin,
Speaker 3: like you know, steel or refining, where every sense petkida
Speaker 3: whateur would count was here. The margin on computer is
Speaker 3: so ginomous, and those people are willing to pay a
Speaker 3: lot in order to get their power fast, which was
Speaker 3: not probably the case before.
Speaker 4: Yeah, that is a super important point. The reason that
Speaker 4: I think that is so important is that you have
Speaker 4: a buyer that puts enormous value on something, namely electricity,
Speaker 4: that they're not able to get enough of right now.
Speaker 4: When you have those type of conditions, that is the
Speaker 4: type of condition the results in innovation that is difficult
Speaker 4: to predict. We don't know exactly where it's going to
Speaker 4: come from. But when you have somebody that values something
Speaker 4: so much they can't get that's when we see innovation.
Speaker 4: That's part of what makes this time period so exciting
Speaker 4: in the electric power business. As we talk, we're starting
Speaker 4: to see some of that innovation take place.
Speaker 3: Now. You have clearly defined the sector in the US
Speaker 3: as really been in two buckets, the regulated part and
Speaker 3: the unregulated part, which probably reminds you how you started
Speaker 3: your career. Let's dive first into the regulated part, which
Speaker 3: are regional, fully vertically integrated dutties, and then we talk
Speaker 3: about the unregulated market. So what's your take on the
Speaker 3: regulated utilities.
Speaker 4: The first thing I would say is there's differentiation happening.
Speaker 4: There are regulated utilities that are finding ways to transfer
Speaker 4: themselves to become a home for data centers, and those
Speaker 4: utilities are actually becoming growth stocks, not something you would
Speaker 4: normally associate with an electric utility. But let us focus
Speaker 4: on the ones that are innovating in what they're doing
Speaker 4: and the types of innovations that they're bringing to kind
Speaker 4: of become a home for data centers. Three years ago,
Speaker 4: they were getting inundated with data center requests. They have
Speaker 4: chip manufacturing facility under construction. They actually have all of
Speaker 4: the different types of loads I was talking about. They
Speaker 4: had no process whatsoever to deal with it. It's literally
Speaker 4: like a group of executives sitting around the table saying
Speaker 4: I'm going to prioritize that project, not that project. We're
Speaker 4: going to call this politician to tell them we're not
Speaker 4: doing the project that's in their district. And it wasn't transparent.
Speaker 4: Not a great way to communicate about it. You know,
Speaker 4: another thing about this electric utility, I don't think they
Speaker 4: had a single load over five megawatts in two thousand
Speaker 4: and twenty, and probably by the time that they get
Speaker 4: to two thousand and thirty two thousand and thirty, one
Speaker 4: thirty percent of all of their demand is going to
Speaker 4: be coming from just a few large load customers. So
Speaker 4: to deal with this where they have to make a
Speaker 4: large investment to support one facility, they've changed how their
Speaker 4: tariffs work. Historically, tariffs have been you average up all
Speaker 4: the costs of electric utility and you allocate that across
Speaker 4: all of the customers, with some differentiation in customer classes.
Speaker 4: What they're trying to do is develop tariffs that are
Speaker 4: very specific to this customer, where they allocate all the
Speaker 4: costs of serving that customer directly to that individual customer.
Speaker 4: And unlike electric utilities of the past, they have all
Speaker 4: types of credit requirements, they have minimum payment charges that
Speaker 4: this data center company has to make to be able
Speaker 4: to mitigate the risk of those costs eventually falling on
Speaker 4: existing customers if something went wrong. But what I found
Speaker 4: even more kind of transformational about this particular electric utility
Speaker 4: is that they're now able to analyze their system and
Speaker 4: have a conversation with a data center company, And this
Speaker 4: is a real life example where they can say, if
Speaker 4: you give us three hundred hours of interruptible power during
Speaker 4: the wintertime between the hours of eleven o'clock at night
Speaker 4: and seven in the morning, we can get you online
Speaker 4: four years earlier because we can meet your demand from
Speaker 4: our existing resources. So that's like an analytical capability that
Speaker 4: they didn't have before. Is kind of an example of
Speaker 4: them finding a way to get somebody online even faster.
Speaker 4: And now they've even gone beyond all of that to
Speaker 4: develop like a subscription model where they have acquired a
Speaker 4: site that they can put two thousand megawatts of gas
Speaker 4: fire generation on, so very large gas fired power plant,
Speaker 4: and data centers are basically bidding to subscribe to that
Speaker 4: capacity and to pay for the cost of building all
Speaker 4: of that capacity. So that's just kind of like one
Speaker 4: example of how a regulated electric utility has transformed itself
Speaker 4: in responding to this demand growth.
Speaker 3: And we've seen recently in the price a lot of
Speaker 3: announcement of hundreds of billions of investment from those regulator utts.
Speaker 3: So I'm going to name a few juke ANTLG Southern
Speaker 3: Center point to a lesser extent, those guys are really
Speaker 3: boosting their investment like we've never seen before.
Speaker 4: Yeah, And talking with one of the data center companies,
Speaker 4: they were telling me what their ideal energy supplier looks like.
Speaker 4: One of the things that they said was interesting was
Speaker 4: we want an energy supplier who can actually go into
Speaker 4: the local community and help us with the permitting of
Speaker 4: our data center and help change the zoning requirements that
Speaker 4: we need at a local level. They want a partner
Speaker 4: who who cannot just necessarily deliver energy to them, but
Speaker 4: knows the local community really well and can deliver these
Speaker 4: other benefits. And when you think about who's best poise
Speaker 4: to do that in the energy world, it's the regulated
Speaker 4: monopoly utilities that have really strong political connections, typically within
Speaker 4: their service territories. And you're seeing that, you know, most
Speaker 4: of the companies that you just mentioned are those vertically
Speaker 4: integrated regulated electric utilities.
Speaker 3: So now switching to the unregulated utilities, and here I'm
Speaker 3: gonna name a few Constellation, Vistra, and RG Those guys
Speaker 3: have mostly been busy buying existing assets, somehow bitting that
Speaker 3: the price on a regulated market would go up, whether
Speaker 3: it's on PGM, COT or is where those der regulator
Speaker 3: market looks very, very different from the regulator utilities.
Speaker 4: Yeah, let's step back a second and dissect the deregulated markets.
Speaker 4: In the deregulated markets, you have regulated utilities, but they
Speaker 4: only own the wires. They don't own generation supply. So
Speaker 4: that's how they're different from the regulated utilities group we're
Speaker 4: just talking about which are regulated. Their generation is regulated,
Speaker 4: their transmission is regulated in their service territories. The data
Speaker 4: center doesn't have a choice of who they buy from.
Speaker 4: They have to buy from the regulated utilities. In the
Speaker 4: deregulated market, the wires only utilities. They represent about half
Speaker 4: of the commitments to adding data center capacity to the grid,
Speaker 4: but when they study the request to connect somebody to
Speaker 4: the grid, they only look at what investment has to
Speaker 4: be made in the grid to accommodate this data center.
Speaker 4: They have no responsibility or obligation and for the most
Speaker 4: part aren't even allowed to participate in the generation market
Speaker 4: and figure out how to meet the generation supply to
Speaker 4: be able to supply power to that data center. So
Speaker 4: so it's creating a real kind of planning predicament for
Speaker 4: the industry. You have utilities in Texas, single state, that
Speaker 4: have committed to fifty gigawatts of new load coming onto
Speaker 4: the grid, and there's no coordinated plan for how supply
Speaker 4: will be brought on to match it. And there's two
Speaker 4: fundamental problems. The first is you can build a data
Speaker 4: center a lot faster than you can build a new
Speaker 4: power plant. That creates a mismatch and being able to
Speaker 4: maintain demand and supply. And the second problem you have
Speaker 4: is a political problem, which is the regulated utility I
Speaker 4: describe is able to allocate all of the cost of
Speaker 4: building its power plant directly to the data centers and
Speaker 4: the deregulated markets. The way it's supposed to work is
Speaker 4: Adam Smith's invisible hand and price setting mechanisms that result
Speaker 4: in new supply getting built. And what that means is
Speaker 4: if you look at the power markets right now in
Speaker 4: the US, our prices are at about half the level
Speaker 4: of what's required to provide a price incentive to build
Speaker 4: a new power plant, to get somebody like Vista or
Speaker 4: Constellation of the companies that you mentioned to build a
Speaker 4: new power plant. And if prices rise to provide that signal,
Speaker 4: then prices have to rise for our customers. And that
Speaker 4: has become a big political problem, as affordability of energy
Speaker 4: is one of the biggest political issues right now in
Speaker 4: the United States.
Speaker 3: So basically what you're saying is that something also we've
Speaker 3: seen all around the world is when the market are tight,
Speaker 3: government or at least a central command control is more efficient.
Speaker 3: Was when the market are laxed and over supply, This
Speaker 3: is where the market creates a good price discovery. And
Speaker 3: now as we are moving from one relatively laxed market
Speaker 3: to a more stressed one, it looks like naturally the
Speaker 3: regulated central command a more efficient into responding to this
Speaker 3: rise of demand. Yeah.
Speaker 4: I sometimes have a hard time emotionally saying this, Laurel,
Speaker 4: because I got into this business because I saw the
Speaker 4: promise of drying in all the innovation that it could create.
Speaker 4: But the reality of what I'm seeing right now is
Speaker 4: that the vertically integrated regulated utilities, some of them, not
Speaker 4: all of them, are doing a better job at responding
Speaker 4: to the demand growth. And I think there's one critical
Speaker 4: reason for this. It goes back to the story that
Speaker 4: I described earlier of an electric utility being able to
Speaker 4: communicate to somebody that if you give me interruptable power,
Speaker 4: I can get you online four years in advance. It's
Speaker 4: because the vertically integrated regulated utilities are looking at their
Speaker 4: system on an integrated basis what investment needs to be
Speaker 4: made in transmission and distribution and generation to most efficiently
Speaker 4: support this customer. In the deregulated markets, there's not co
Speaker 4: ordination in the planning right now between how generation gets
Speaker 4: added to the grid and how load gets added to
Speaker 4: the grid, and that disconnect makes it a lot harder
Speaker 4: to efficiently accomplish this. In the deregulator markets plusters the
Speaker 4: political overlay.
Speaker 3: Plus on the top of that, the price of equipment
Speaker 3: has gone Ballistick. You used to have your assistant BC
Speaker 3: at one that apple What now it's at three that apple.
Speaker 3: Wa So go get any type of LCE below one
Speaker 3: hundred that up and make what our those prices can't
Speaker 3: be done? Yeah? Sure, when we all know so, we'll
Speaker 3: always find this way. But you need a lot of
Speaker 3: land and some batteries. But so somebody don't mean the
Speaker 3: other day, I just puts it out on the roof
Speaker 3: of the data center, as my friend, you're gonna put
Speaker 3: the five hundred megawat data centers. Okay, you're gonna copy
Speaker 3: the roof. You're gonna get ten mega? What well the
Speaker 3: four ninety coming? And of course that opens a lot
Speaker 3: of fantasies around SMRs and fusion and whatever, because everybody
Speaker 3: who supposedly as a solution is going to propose whatever
Speaker 3: in their book. Chris, how do you see that playing
Speaker 3: out in the de regulated market.
Speaker 4: There's a couple potential paths that it could take, and
Speaker 4: this has important implications for investors in the sector and
Speaker 4: how things will work out for the companies that you mentioned,
Speaker 4: like the Vistras and the Constellation Energies. One plausible scenario
Speaker 4: is we actually see some reregulation of the market to
Speaker 4: some extent and allow some of the regulated utilities to
Speaker 4: get back into the regulated generation business, and some of
Speaker 4: them are pushing for that. I think a second more
Speaker 4: likely possibility is what we will see emerge is a
Speaker 4: market that has one price for new capacity and one
Speaker 4: price for existing capacity, and we will see structures put
Speaker 4: in place in those markets where the new load that
Speaker 4: is coming into the market essentially has to sign long
Speaker 4: term purchase power agreements. That has to come from a
Speaker 4: new power plant that has been built. It can't come
Speaker 4: from an existing power plant, and that has very important
Speaker 4: implications for the value of existing assets, and there will
Speaker 4: be an attempt by politicians to kind of have this
Speaker 4: one price for the new capacity, make sure there's overall
Speaker 4: oversupply in the market as it relates to all of
Speaker 4: the existing capacity, and we get differentiation in those prices. Ideally,
Speaker 4: we would see an attempt to try to make the
Speaker 4: market work and develop structures that result in better connection
Speaker 4: between generation planning and transmission planning, but I think it's
Speaker 4: likely that politics will interfere with a plan that does that,
Speaker 4: where you would see substantial price increases for all customers.
Speaker 4: One other thing to note, just on the regulated sides too,
Speaker 4: is just on the transformation in the innovation side. Because
Speaker 4: of the pressure on regulated rates, we're starting to see
Speaker 4: things like utilities pushed by the regulators to embrace more
Speaker 4: things like grid enhancing technology that get more capacity out
Speaker 4: of the existing grid. It's causing a lot more pressure
Speaker 4: on developing mechanisms and structures that create more opportunity for
Speaker 4: distributed energy resources and things like that, and you can
Speaker 4: see the early signs of that starting to take hold,
Speaker 4: which I think is going to create opportunities for other
Speaker 4: players to come into the space.
Speaker 3: Yeah, because they're old models of utility used to be
Speaker 3: what can we build, what can we build, what can
Speaker 3: we put in the rates? And probably at some point
Speaker 3: they're also going to be reregulated in the sense that
Speaker 3: they will need to account for a much more efficient
Speaker 3: system to be run and just not piling a passet.
Speaker 4: There's so much to be built that they have a
Speaker 4: wrong growth story even as they become more efficient, and
Speaker 4: when they didn't have that growth to do it, there
Speaker 4: was things that would make them more efficient might take
Speaker 4: away any growth opportunity they had. So it's really a
Speaker 4: new kind of paradigm for the regulated utilities.
Speaker 3: Well, Chris, from what we discuss, it looks like there
Speaker 3: is a chinomus investment opportunity at every level. Where is
Speaker 3: it going to be.
Speaker 4: The scale of the opportunity that exists for investment in
Speaker 4: new sources of supply? We need all supply sources, So
Speaker 4: this is an opportunity for investment and gas power plants.
Speaker 4: This is an opportunity for investment in batteries, in solar
Speaker 4: and wind like all resources are necessary to all hands
Speaker 4: on deck right now, and the scale of that opportunity
Speaker 4: is larger than it's ever been during my thirty years
Speaker 4: of working in this business. But that's where the most
Speaker 4: concentrated opportunity is right now.
Speaker 3: To my friends and listeners from the investment funds, open
Speaker 3: your checkbooks, game on exactly. Chris, thank you so much
Speaker 3: for coming on the show.
Speaker 4: Thank you so over.
Speaker 2: What's your thinking?
Speaker 3: I can literally not comprehend the demand for power from
Speaker 3: the perscalars. I recently had a conversation with one of
Speaker 3: the top guys at Google and he told me our
Speaker 3: budget for two twenty six for data centers, and of
Speaker 3: course that includes chips and everything, but our budget is
Speaker 3: one hundred and eighty four billion dollar. So I said,
Speaker 3: oh wow. They no, No, you don't understand. One hundred
Speaker 3: and eighty four billion dollar for Google alone. That's more
Speaker 3: than the Russian military budget.
Speaker 2: Yeah, I mean side, the numbers are off the charts absolutely.
Speaker 3: So I say, yeah, but all this AI you know
Speaker 3: is the I I say, no, No, it's not about
Speaker 3: the AI. It's just normal cloud it it's way more
Speaker 3: so automous vehicle. It's YouTube, but we just can't have
Speaker 3: enough compute so er Yes, but it's just the normal
Speaker 3: cloud development that is so power hungry. And the interesting
Speaker 3: thing is that if AI does not materialize the way
Speaker 3: everybody's thinking, they will repurpose their data centers. So this
Speaker 3: is a real demand and it's happening.
Speaker 2: Yeah, I'm not worried about the electricity side of things either,
Speaker 2: because worst case, let's assume you're in an AI bubble
Speaker 2: and a bus, that power will have other uses. At
Speaker 2: the end of the day, we are electrifying society and
Speaker 2: that power go to over the places.
Speaker 3: Yeah, so we'll see it in China, we'll sit in
Speaker 3: the US, and we're all eager to see in Europe
Speaker 3: because right now it has been a bit of a
Speaker 3: misery in terms of demand of all those years. So hopefully,
Speaker 3: even if it's only partial, that demand from my postcalor
Speaker 3: is going to come here.
Speaker 2: Yeah, well, it all yes coming here. I mean, at
Speaker 2: the end of the day, you're talking about Europe here,
Speaker 2: It is coming here. But the demand in Europe is
Speaker 2: more on the cloud side than it is the AI side.
Speaker 2: But doesn't that change come forward, No doubt about that.
Speaker 3: Absolutely. And look I can tell you because I'm checking
Speaker 3: electricity map all the time the stress point. I can
Speaker 3: tell you there's a stress point right now. It's Norway.
Speaker 3: Norway used to export a lot of power and now
Speaker 3: they need to import, which is crazy. And maybe it's
Speaker 3: because the hydro season is not very good. And that's
Speaker 3: also the power of interconnectors. And of course we took
Speaker 3: about batteries morning an evening, but interconnectors are also extremely
Speaker 3: important to give resiliency to the system.
Speaker 2: Without a doubt we need to and by the way,
Speaker 2: I think the come back to the Norway situation. What's
Speaker 2: interesting about this is maybe the Norwegians will actually realize
Speaker 2: that interconnectors are not just win laws, they're also a
Speaker 2: win win And what I mean by that is huge
Speaker 2: amounts of sort of I say, anger from Norwegian customers
Speaker 2: about the power price is going up because of the
Speaker 2: fact that Norwegian our has been exported to Britain, in
Speaker 2: Germany and now actually to the way around exactly.
Speaker 3: So we want to think. Chris, really a great conversation
Speaker 3: and job I hope you on this is getting better
Speaker 3: and I took to you next week, look Quarters.
Speaker 1: Thank you for listening to Redefining Energy.
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