WEBVTT 1 00:00:04.679 --> 00:00:08.240 With Laurent's segele End from London and Gerard Reed from Berlin. 2 00:00:08.759 --> 00:00:10.599 This is redefining. 3 00:00:10.160 --> 00:00:15.199 Energy today on reallyferring energy job. We're going to Texas, 4 00:00:16.039 --> 00:00:16.879 we sure are. 5 00:00:17.760 --> 00:00:21.679 It is definitely how would I describe it, Well, it's 6 00:00:21.719 --> 00:00:24.559 definitely the capital of energy in the Western world. That's 7 00:00:24.600 --> 00:00:26.760 why I describe it as And I don't get all 8 00:00:26.879 --> 00:00:28.000 forms of energy. 9 00:00:27.760 --> 00:00:29.199 Right, but first of the world. 10 00:00:29.239 --> 00:00:32.560 From my partner, A b Loco Energy is Europe's premier 11 00:00:32.640 --> 00:00:36.600 leaser of ten foot container mobile batteries built in Europe 12 00:00:36.600 --> 00:00:41.479 with COTL best LFP cells. 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Make your life easier, 17 00:00:58.079 --> 00:00:59.119 make your business. 18 00:00:58.759 --> 00:01:02.439 More flexible, you show you name it, it's there, and 19 00:01:02.479 --> 00:01:05.200 then add to that all whole part of AI companies 20 00:01:05.400 --> 00:01:09.680 and yeah, they're at the forefront of everything to do 21 00:01:09.840 --> 00:01:12.159 with innovation and energy, right, so we need to talk 22 00:01:12.200 --> 00:01:12.560 about it. 23 00:01:12.959 --> 00:01:16.760 Yeah, and what's absolutely crazy is the coass of honorables 24 00:01:17.200 --> 00:01:19.599 because if you look five years ago and I'm talking 25 00:01:19.640 --> 00:01:22.719 in gigawatt wind solar batteries. Okay, so five years ago 26 00:01:22.760 --> 00:01:26.599 we're twenty five five and one. Two years ago thirty five, 27 00:01:26.719 --> 00:01:30.480 twenty and five, and now we've got forty gig of Win, 28 00:01:30.680 --> 00:01:35.359 forty gig of SOLA, and twenty GIGAF batteries. Absolutely mind blows, 29 00:01:35.439 --> 00:01:36.159 its mind blowing. 30 00:01:36.159 --> 00:01:40.280 You're absolutely right, absolutely, So it's we have to look 31 00:01:40.319 --> 00:01:41.560 at Texas, right. 32 00:01:42.000 --> 00:01:45.079 So we're bringing in a Texas girl on the show. 33 00:01:45.599 --> 00:01:49.040 Yeah, we sure are. We're bringing in a Rushi Shama Frank. 34 00:01:49.519 --> 00:01:53.359 She really is a strategy builder and I would say 35 00:01:53.480 --> 00:01:57.519 mentor to AI and energy companies. She's highly knowledgeable and 36 00:01:57.560 --> 00:02:00.079 has been in the space for quite a while, and 37 00:02:00.120 --> 00:02:00.959 so it's great to have her on. 38 00:02:01.079 --> 00:02:01.239 Right. 39 00:02:01.359 --> 00:02:03.079 I think she was formally with if I remember Crackly, she 40 00:02:03.120 --> 00:02:04.599 was more formily with Tesla as well. 41 00:02:05.040 --> 00:02:05.439 Brittiant. 42 00:02:05.959 --> 00:02:08.000 Look, she's a lot of fun and of course, something 43 00:02:08.039 --> 00:02:10.759 I'm doing my lawn. So sometimes I'm trying to be 44 00:02:10.879 --> 00:02:13.719 the smartass and I pull out a lot of statistic 45 00:02:13.879 --> 00:02:17.240 just before the interview, and of course I I cut 46 00:02:17.240 --> 00:02:19.879 the wrong stuts. So at some point I said the 47 00:02:20.000 --> 00:02:22.960 load factor of the ccigts in Texas is thirty two percent. 48 00:02:23.639 --> 00:02:27.280 That is not true. It's plain wrong. It's blame it 49 00:02:27.479 --> 00:02:31.400 on TJIPT because the road factor is forty five percent. 50 00:02:31.800 --> 00:02:35.199 Yeah okay, yeah, yeah yeah, So I draw a lot 51 00:02:35.199 --> 00:02:38.639 of conclusion based on the wrong STATISTICKS. 52 00:02:39.759 --> 00:02:42.240 The should putting your hand up and admitting your mistake. 53 00:02:42.280 --> 00:02:46.520 That's good. Yeah, okay, let's bring Aarushi on the show. 54 00:02:46.639 --> 00:02:49.719 Exactly A Rushie. Welcome to the show. 55 00:02:50.080 --> 00:02:52.840 Thank you, thrilled to be here, Rushie. 56 00:02:52.879 --> 00:02:55.400 Maybe I could just kick off with just if I 57 00:02:55.439 --> 00:02:57.960 look from the outside and I look at US energy policy. 58 00:02:58.000 --> 00:03:01.120 For me, it's all about it's trial drill, right, But 59 00:03:01.120 --> 00:03:03.400 if I look at Texas, it seems to be much 60 00:03:03.400 --> 00:03:04.919 more intelligent and that's cheap. 61 00:03:04.960 --> 00:03:07.840 Bybe cheap, every energy just has to be cheap. Is 62 00:03:07.879 --> 00:03:11.639 that a fair way of sort of looking at Texas? 63 00:03:11.840 --> 00:03:15.759 Yes, I think it is s dierrard with the caveat 64 00:03:16.159 --> 00:03:19.800 that when you say energy is cheap, you need to 65 00:03:19.919 --> 00:03:24.919 factor in the infrastructure cost, what it takes to deliver 66 00:03:25.039 --> 00:03:29.680 the energy, and the energy itself on the cheap power side. 67 00:03:30.199 --> 00:03:32.840 You know, I I'm really fascinating is that I can 68 00:03:32.919 --> 00:03:36.000 have a great conversation with somebody who wants to come 69 00:03:36.039 --> 00:03:40.080 to Texas because of cheap industrial power, and they know 70 00:03:40.439 --> 00:03:44.719 that in a given winter season, the cost of power itself, 71 00:03:44.840 --> 00:03:48.719 the commodity cost of energy, kill A what hours is 72 00:03:48.800 --> 00:03:53.080 like six cents in Texas, it's about eight cents Nationally, 73 00:03:53.759 --> 00:03:57.759 it's like fifteen fourteen in California, seven to eight in 74 00:03:57.879 --> 00:04:00.879 New York. So there's this idea that, oh, it's just 75 00:04:01.039 --> 00:04:05.240 this standalone price that's like a cost edge. But the 76 00:04:05.280 --> 00:04:07.479 big things that I really want to get into with 77 00:04:07.520 --> 00:04:11.319 you guys is what is the delivery cost stuff? And 78 00:04:11.400 --> 00:04:15.719 like the funky cool stuff about the Texas market that 79 00:04:16.000 --> 00:04:18.959 enables that cost Because I KILLO what cost hour is 80 00:04:19.319 --> 00:04:22.959 not in a vacuum. It is definitely cheaper power than 81 00:04:23.000 --> 00:04:25.480 everywhere in the US. And that's attractive for all sorts 82 00:04:25.519 --> 00:04:26.399 of reasons. 83 00:04:26.759 --> 00:04:29.720 Oh she I like to take a step back. Sure, 84 00:04:29.759 --> 00:04:32.839 and it's cheap power now, but you know it was 85 00:04:32.920 --> 00:04:35.720 not always the case. And if I look back twenty 86 00:04:35.800 --> 00:04:38.399 years ago, which I mean, you're young, so maybe for 87 00:04:38.480 --> 00:04:41.399 you it's his story, but for us as memory, twenty 88 00:04:41.480 --> 00:04:45.120 years ago, the average price of power in Texas was 89 00:04:45.160 --> 00:04:48.959 sixty two dollars make it what hour. If we inflate it, 90 00:04:49.160 --> 00:04:51.279 that would be one hundred dollar and make it what 91 00:04:51.360 --> 00:04:56.560 our today. Okay, yeah, and of course today it's twenty seven, 92 00:04:57.120 --> 00:05:02.199 so the price is four times less than inflation criteria. 93 00:05:02.240 --> 00:05:04.639 And number one and by the way, if you look 94 00:05:04.639 --> 00:05:08.240 at pgm, PGM was cheaper than Texas twenty years ago 95 00:05:08.279 --> 00:05:11.360 and now it's more expensive. But if you look at 96 00:05:11.399 --> 00:05:16.040 the growth, the growth of power, it's phenomenal. Because overall 97 00:05:16.079 --> 00:05:19.759 in the US demand has been flat. But if you 98 00:05:19.839 --> 00:05:23.199 concentrate on Texas twenty years ago, it was three hundred 99 00:05:23.680 --> 00:05:26.879 hour and now it's four hundred and seventy and you 100 00:05:26.920 --> 00:05:29.560 know it's expected to continue to grow. So this is 101 00:05:29.600 --> 00:05:32.680 the only place in America where there's been a growth 102 00:05:33.240 --> 00:05:36.680 of demand and we're talking more than fifty percent in 103 00:05:36.720 --> 00:05:39.800 twenty years. We'll go in the detail of why and 104 00:05:39.839 --> 00:05:43.560 where new sources or you know, conservative that's all when 105 00:05:43.560 --> 00:05:47.800 i'm find But for me, that's the characteristic of Texas. 106 00:05:47.839 --> 00:05:52.040 It has been an area of incredible growth load and 107 00:05:52.079 --> 00:05:55.279 an area where the prices are much much cheaper than 108 00:05:55.279 --> 00:05:55.879 they used to be. 109 00:05:56.879 --> 00:06:00.399 Prices are cheaper and also all around, on top of that, 110 00:06:01.040 --> 00:06:05.319 the avoidance of infrastructure cost on your power bill, meaning 111 00:06:05.319 --> 00:06:08.879 what you pay for demand for the commercial and industrial 112 00:06:08.920 --> 00:06:13.199 class is much cheaper. There's no other market in the 113 00:06:13.279 --> 00:06:17.920 country where an industrial customer can curtail or run on 114 00:06:18.040 --> 00:06:22.519 site chen or use demand response assets where they can 115 00:06:22.560 --> 00:06:25.759 cut their annual transmission bill by twenty five to forty percent. 116 00:06:26.639 --> 00:06:30.920 And your overall power bill annualized over a year is 117 00:06:30.959 --> 00:06:35.279 set by your peak demand, and the way that the 118 00:06:35.319 --> 00:06:38.720 transmission system is built is set by the states or 119 00:06:38.759 --> 00:06:42.959 the grid's peak demand. So today in Texas, the peak 120 00:06:43.000 --> 00:06:49.480 demand that eighty plus gig number for today expected to double, right, 121 00:06:50.399 --> 00:06:54.040 just crazy, But that gets set by residential load, not 122 00:06:54.120 --> 00:06:59.279 by industrial load. Meanwhile, the residential customers in Texas pay 123 00:06:59.560 --> 00:07:04.079 coincident peak prices when they pay their power bill. However, 124 00:07:04.560 --> 00:07:08.040 the commercial and industrial folks get to benefit from a 125 00:07:08.160 --> 00:07:13.720 four coincident peak regime and therefore a transmission cost. If 126 00:07:13.759 --> 00:07:17.720 you can curtail the right for summer hours, essentially you 127 00:07:17.759 --> 00:07:21.600 can dodge most of the transmission charges, which is millions 128 00:07:21.600 --> 00:07:25.480 of dollars a year. There's other cool stuff too about 129 00:07:25.519 --> 00:07:28.720 Texas that makes it such a unique and fascinating market 130 00:07:29.439 --> 00:07:34.160 to enable what you're calling this growth in power consumption, 131 00:07:34.519 --> 00:07:38.600 and on the other side of it, the obvious economies 132 00:07:38.639 --> 00:07:41.920 of scale, All of that kind of like stems down 133 00:07:41.959 --> 00:07:44.519 into these key constructs. 134 00:07:44.600 --> 00:07:49.959 That grows fifty percent, which today make Texas consume more 135 00:07:50.079 --> 00:07:54.839 power than fronts despite having only half of the population. 136 00:07:55.720 --> 00:07:58.519 If you look at what has been the source of 137 00:07:58.560 --> 00:08:04.079 this additional general ration, it has been with solar and 138 00:08:04.199 --> 00:08:08.199 now of course batteries, and that is more than ninety 139 00:08:08.319 --> 00:08:13.040 percent of the additional load came from vulnerable And yes 140 00:08:13.600 --> 00:08:18.199 there's more gas production, but it's almost compensated by the 141 00:08:18.240 --> 00:08:22.639 diminishing of coal and nuclearized by a large flat. So 142 00:08:23.120 --> 00:08:25.319 really what that means is that Texas has become a 143 00:08:25.399 --> 00:08:28.240 vulnerable power state, And of course I understand that the 144 00:08:28.240 --> 00:08:32.240 Pacifical lobby is not very happy about that, especially considering 145 00:08:32.240 --> 00:08:34.120 the fact that if you look at the load factors 146 00:08:34.120 --> 00:08:37.399 of CCGTIS twenty years ago was forty five percent and 147 00:08:37.480 --> 00:08:40.399 last year it was only thirty two percent. So yeah, 148 00:08:40.440 --> 00:08:42.320 so they're not making any money. So of course they 149 00:08:42.360 --> 00:08:46.039 wanted to prevent them continue their growth, and of course 150 00:08:46.759 --> 00:08:49.720 it failed at the legislature, which is an excellent news. 151 00:08:49.759 --> 00:08:52.919 So is the future going to continue a bit like this? 152 00:08:53.159 --> 00:08:55.120 Like with a crazy amount of vulnerable or do you 153 00:08:55.200 --> 00:08:57.840 think gas can come back? What's your take on that? 154 00:08:58.639 --> 00:09:02.360 My soul will extend saying similar things about data centers 155 00:09:02.360 --> 00:09:05.320 and loads as well, is that we need to stop 156 00:09:05.360 --> 00:09:12.480 pretending and enforcing the narrative as technologists. We need to 157 00:09:12.480 --> 00:09:18.480 stop enforcing the narrative that in resource planning, meaning power planning, 158 00:09:18.600 --> 00:09:25.240 supply planning, markets should be modeled and forecasted and evaluated 159 00:09:25.600 --> 00:09:31.480 as equilibrams. We have to have tools for this process 160 00:09:31.799 --> 00:09:36.600 at solve for hourly demand and supply balancing, and we 161 00:09:36.799 --> 00:09:41.480 can't use tools that don't assume the volatility that is 162 00:09:41.480 --> 00:09:45.759 inherent in the system and don't value flexibility. You know, Lauren, 163 00:09:45.799 --> 00:09:50.039 I'm saying that because it is equally hard right now 164 00:09:50.960 --> 00:09:55.519 that investment is difficult. Equivalently, I think now in new 165 00:09:55.600 --> 00:09:58.720 gas as it is in new batteries, because the models 166 00:09:58.759 --> 00:10:01.120 are set up to solve for William straight and that's 167 00:10:01.159 --> 00:10:03.480 not what the market is in today. There's so many 168 00:10:03.519 --> 00:10:08.480 factors and interconnection, timing, supply of the turbines, timing for 169 00:10:08.559 --> 00:10:13.679 green field development, attainment versus non attainment, for environmental permitting. 170 00:10:14.159 --> 00:10:18.799 There's just like all of this over indexing, and it's 171 00:10:18.879 --> 00:10:20.399 just kind of bonkers. 172 00:10:20.480 --> 00:10:21.360 Wind and solar. 173 00:10:22.120 --> 00:10:26.879 The megawat hour base case for l COE for wind 174 00:10:26.960 --> 00:10:30.320 and solar is still like sixty bucks to megawatt hour 175 00:10:30.639 --> 00:10:34.840 for solar and like forty five for wind, and combined 176 00:10:34.879 --> 00:10:37.759 cycle is one hundred and thirty three bucks a megawatt hour. 177 00:10:37.840 --> 00:10:39.879 At the moment, that's nuts. I was like, all right, 178 00:10:39.919 --> 00:10:41.759 what's going on there? I mean, you know, the obvious 179 00:10:41.799 --> 00:10:46.679 answer I think there that one of the non market 180 00:10:46.879 --> 00:10:51.279 solves more for regulatory solve for more gas in Texas 181 00:10:51.399 --> 00:10:57.080 is the behind the meter co location benefit of CCGT 182 00:10:57.440 --> 00:11:00.799 with data center load a large load as they call it, 183 00:11:00.879 --> 00:11:04.000 seventy five megawatts or bigger. So going back to wind 184 00:11:04.000 --> 00:11:07.159 and solar, you know, the motivation for wind and solar 185 00:11:07.600 --> 00:11:12.840 anywhere is typically project finance and PPA with some part 186 00:11:12.840 --> 00:11:15.360 of the risk of what the plant can earn over 187 00:11:15.440 --> 00:11:21.120 its lifetime in a market construct. In Texas, we have 188 00:11:21.159 --> 00:11:25.600 an engine in this energy market that every five minutes, 189 00:11:26.440 --> 00:11:32.840 using secured economic dispatch as a tool, solves for transmission constraints. 190 00:11:33.519 --> 00:11:37.320 And then we also have this connect and managed ie. 191 00:11:38.320 --> 00:11:42.159 Every new developer of every new project isn't paying a 192 00:11:42.960 --> 00:11:48.519 carefully tooled cost causation contribution to building the transmission grid. 193 00:11:49.279 --> 00:11:52.000 And between those two things, what you get is a 194 00:11:52.000 --> 00:11:55.240 way for wind and solar to come onto the system 195 00:11:55.639 --> 00:11:59.759 and optimize the risk of curtailment, meaning how much they 196 00:11:59.799 --> 00:12:04.440 can make in the markets against ppa risk, which of 197 00:12:04.480 --> 00:12:07.799 course you can secure by actually having contracts in place 198 00:12:07.879 --> 00:12:11.039 to sell off the value of your portfolio. And that 199 00:12:11.159 --> 00:12:13.799 portfolio is more of the greenness of the portfolio than 200 00:12:13.840 --> 00:12:16.120 it is the windplant itself or the solar plant itself. 201 00:12:16.480 --> 00:12:19.879 Between those two things, I don't think cheap capital is 202 00:12:19.919 --> 00:12:22.559 lining up for anything other than renewables. 203 00:12:22.960 --> 00:12:27.360 Ruschi just again outside inview as this is as Europeans looking, 204 00:12:27.399 --> 00:12:29.399 and we look at Texas and it sort of reminds 205 00:12:29.480 --> 00:12:31.600 us of home. And what I mean by that is 206 00:12:31.639 --> 00:12:34.799 you've got a liberalized mark, You've separated the retailer from 207 00:12:34.840 --> 00:12:39.759 the grid from the generator, and you've also got this 208 00:12:40.000 --> 00:12:42.559 power market there that again is very similar to Europe. 209 00:12:42.600 --> 00:12:42.840 Right. 210 00:12:43.879 --> 00:12:45.639 Can you talk a little bit about that, just so 211 00:12:45.679 --> 00:12:49.279 that listeners understand what the text is what makes the 212 00:12:49.320 --> 00:12:51.679 Texas market very special in the US. 213 00:12:52.480 --> 00:12:57.480 Yes, Texas in most of the state is under one 214 00:12:57.519 --> 00:13:00.960 grid operator, and that's very different than the rest of 215 00:13:00.960 --> 00:13:03.879 the country. So there's one entity that's over all of 216 00:13:03.960 --> 00:13:07.720 the poles and wires and power plants, and so there's 217 00:13:07.799 --> 00:13:12.320 the singularity inside which you as a consumer of power, 218 00:13:12.960 --> 00:13:16.120 you have the choice to choose where your power comes from, 219 00:13:16.519 --> 00:13:19.440 as in who you're buying it from, and that also 220 00:13:19.559 --> 00:13:23.440 means you have a lot more creativity in deciding as 221 00:13:23.480 --> 00:13:26.480 a consumer what kind of power you want. Do you 222 00:13:26.480 --> 00:13:28.799 want green power, do you not care? Do you just 223 00:13:28.840 --> 00:13:31.320 want the cheapest power? Do you have solar in a 224 00:13:31.360 --> 00:13:32.879 battery on your roof? When you want to be in 225 00:13:32.919 --> 00:13:36.240 a very special plan. Test the electric is an example 226 00:13:36.279 --> 00:13:39.399 of that kind of plan. And that's so different from 227 00:13:39.440 --> 00:13:41.799 the rest of the country because in the rest of 228 00:13:41.799 --> 00:13:47.159 the country, we really have one or two default choices 229 00:13:47.320 --> 00:13:51.200 for where to go get your power. And that's reflected 230 00:13:51.440 --> 00:13:53.600 on the other side too, for the folks who are 231 00:13:53.600 --> 00:13:57.440 building the power plants. To your point, the liberalized nature 232 00:13:57.480 --> 00:14:00.720 of Texas means that you can just choose to go 233 00:14:01.039 --> 00:14:03.799 in or coup. You can go inside that space and 234 00:14:03.840 --> 00:14:06.720 basically just choose to cite the plant wherever you want 235 00:14:06.840 --> 00:14:10.039 to put it. Yeah, there's always going to be admin 236 00:14:10.120 --> 00:14:11.639 and other things you have to do, and you've got 237 00:14:11.639 --> 00:14:13.919 to work with the local landowners and all those things. 238 00:14:13.960 --> 00:14:18.360 But it really is the pick your bet and then 239 00:14:18.399 --> 00:14:22.679 go and fulfill it, which is absolutely not how the 240 00:14:22.720 --> 00:14:25.440 rest of the country works, where you have very large 241 00:14:25.519 --> 00:14:29.919 utilities or maybe even very small utilities that essentially have 242 00:14:30.519 --> 00:14:34.039 Fiat authority around what you can do to cite your 243 00:14:34.080 --> 00:14:36.879 plant and bring it to the market, and Fiat authority 244 00:14:36.879 --> 00:14:39.000 on the other side too, which is as a consumer, 245 00:14:39.120 --> 00:14:40.360 who I can get my power from? 246 00:14:40.759 --> 00:14:43.320 Can I also sort of add to that Again, this 247 00:14:43.360 --> 00:14:46.000 is a perception is that in Texas you just seem 248 00:14:46.039 --> 00:14:49.440 to get things done much quicker than everywhere else, Right, 249 00:14:49.519 --> 00:14:50.440 is that the case? 250 00:14:51.000 --> 00:14:54.480 It is the getting things done quicker piece for both 251 00:14:54.519 --> 00:14:58.759 consumers and power plants is super interesting. For consumers if I, 252 00:14:58.960 --> 00:15:00.840 you know, you and I are on on like some 253 00:15:01.559 --> 00:15:05.799 power company plan that says, oh, you know, our bill 254 00:15:05.879 --> 00:15:08.240 is twelve kilowatts or whatever, and we're going to pay 255 00:15:08.279 --> 00:15:09.799 whatever we're going to pay for it, and we're not 256 00:15:09.840 --> 00:15:12.759 happy with our power usage versus how we're getting built 257 00:15:12.840 --> 00:15:16.360 under that plan everywhere else in the country retard. It 258 00:15:16.399 --> 00:15:19.159 can take either I can to move off of it, 259 00:15:20.039 --> 00:15:22.799 or it can take months of hassle for me to 260 00:15:22.799 --> 00:15:25.000 actually get reassigned if I am in a place that 261 00:15:25.080 --> 00:15:28.080 has some choice to find a new provider, and it's 262 00:15:28.120 --> 00:15:30.919 so much work and there's so much transition cost where 263 00:15:30.960 --> 00:15:33.799 the customer it's just not worth it. You know. In Texas, 264 00:15:33.840 --> 00:15:36.679 they're back end systems between the folks that run the 265 00:15:36.679 --> 00:15:39.399 big grid and the people in their homes who have 266 00:15:39.440 --> 00:15:42.480 their little electric meter on their house. Is so easy, 267 00:15:42.559 --> 00:15:45.960 the system is so well integrated. But I can switch tomorrow, 268 00:15:46.320 --> 00:15:48.159 I can switch within the hour, in a day. This 269 00:15:48.279 --> 00:15:51.159 is switchability where consumers can just decide, Nope, I'm not 270 00:15:51.200 --> 00:15:54.279 into this anymore. I will cancel my contract. And yes 271 00:15:54.320 --> 00:15:57.799 there may be penalties around early cancelation. Whatever I want 272 00:15:57.840 --> 00:16:01.200 to do my own thing. That is is completely unique. 273 00:16:01.320 --> 00:16:06.159 There's this really cool R Street publication on grading choice 274 00:16:06.799 --> 00:16:10.720 that came out our Street Institute in Washington, and they 275 00:16:10.759 --> 00:16:13.159 gave Texas an A minus on the report card and 276 00:16:13.159 --> 00:16:15.039 that's the best in the state. And after that, there's 277 00:16:15.039 --> 00:16:17.440 nothing else that has an A in the country. Ah. 278 00:16:17.600 --> 00:16:22.799 She When you're at Tesla, you've been instrumental in developing 279 00:16:22.799 --> 00:16:27.919 the old VPP and battery universe. Okay, Tesla probably is 280 00:16:27.960 --> 00:16:32.480 the most known name, but the growth of the battery 281 00:16:32.639 --> 00:16:34.840 in Texas in the past three or four years has 282 00:16:34.879 --> 00:16:39.039 been nothing but exceptionally so. Probably it's also in the 283 00:16:39.080 --> 00:16:41.799 aftermath of Yuri and the fact that nothing that was 284 00:16:41.840 --> 00:16:46.919 supposed to work worked. How do you see the incredible 285 00:16:46.960 --> 00:16:50.240 growth in the batteries and vvps we've seen in Texas 286 00:16:50.320 --> 00:16:52.080 compared to everywhere. 287 00:16:51.559 --> 00:16:55.799 Else with batteries. It's interesting. I think a battery is 288 00:16:55.840 --> 00:16:59.000 like a water cooler. The water cooler can be as 289 00:16:59.039 --> 00:17:02.159 big as you need for a party, but how fast 290 00:17:02.240 --> 00:17:05.319 you drain your water cooler depends on how many guests 291 00:17:05.400 --> 00:17:08.519 arrive at the party. When we think about batteries, there's 292 00:17:08.559 --> 00:17:13.279 this presumption in the rest of the US that, Okay, 293 00:17:14.119 --> 00:17:16.599 if this battery shows up, this water cooler shows up 294 00:17:16.599 --> 00:17:19.160 at my party, I'm going to end up draining it 295 00:17:19.240 --> 00:17:22.720 very very quickly. And in Texas, with a way that 296 00:17:22.759 --> 00:17:26.000 the economics of the market work, we actually drain that 297 00:17:26.079 --> 00:17:29.359 water cooler as if one guest is arriving every thirteen hours, 298 00:17:30.039 --> 00:17:34.559 meaning that the incremental value of sending power into the 299 00:17:34.640 --> 00:17:39.039 market to help solve four constraints in this very tight 300 00:17:39.599 --> 00:17:44.559 transparent energy market means that batteries, you can forecast the 301 00:17:44.640 --> 00:17:47.839 value of batteries to be a lot more of what 302 00:17:47.880 --> 00:17:51.720 batteries are good at, which is solving problems quickly. There's 303 00:17:51.759 --> 00:17:54.799 another side to that, Laurent, that is the opposite of 304 00:17:54.839 --> 00:17:57.839 solving problems quickly, and that is like the resiliency piece 305 00:17:57.839 --> 00:18:00.440 which you mentioned with winter storm ury, and that is 306 00:18:00.799 --> 00:18:04.640 on the residential side. People want batteries as economic security, 307 00:18:04.799 --> 00:18:09.559 as personal security, outage protection, and so for them, the 308 00:18:09.599 --> 00:18:13.319 way that I've seen the market for residential batteries evolve 309 00:18:13.960 --> 00:18:16.680 is not the version you see on the big grid. 310 00:18:16.920 --> 00:18:20.039 It's not the put systems that we know we can 311 00:18:20.079 --> 00:18:22.319 stretch out and earn a lot of money by fixing 312 00:18:22.359 --> 00:18:27.319 the markets problems in these quick intervals of time. It's 313 00:18:27.359 --> 00:18:29.759 the opposite problem. It's we want the battery in our 314 00:18:29.799 --> 00:18:34.000 house for resiliency. So that's why batteries on residential homes 315 00:18:34.000 --> 00:18:36.720 in Texas are getting bigger, and also people are getting 316 00:18:36.759 --> 00:18:40.599 smarter in how they use that battery in their choice 317 00:18:40.640 --> 00:18:43.079 world where you can choose which type of power provider 318 00:18:43.119 --> 00:18:46.000 you have to be able to optimize your battery, and 319 00:18:46.079 --> 00:18:48.240 when there is a power outage risk, your ability to 320 00:18:48.279 --> 00:18:52.160 conserve and habit insurance policy in your home is super important. 321 00:18:52.960 --> 00:18:57.480 You know Tesla's vision for VPP in Texas that I 322 00:18:57.599 --> 00:19:01.920 worked on implementation for from the work Tesla did first 323 00:19:02.000 --> 00:19:07.359 on VPP in Australia Australia BPP, then went California VPP next, 324 00:19:07.440 --> 00:19:08.480 and then Texas last. 325 00:19:09.279 --> 00:19:11.680 If I look really what text has done incredibly well. 326 00:19:12.119 --> 00:19:15.400 It's been able to obviously attract new industry to the 327 00:19:15.440 --> 00:19:19.480 state and also provide the energy that that those businesses need. 328 00:19:19.839 --> 00:19:22.440 And this is especially the case I see in the 329 00:19:22.480 --> 00:19:24.759 whole area of data centers. So I'd love to hear 330 00:19:24.799 --> 00:19:27.680 you're told in around data centers and AI and you 331 00:19:27.680 --> 00:19:29.160 know how you see that going forward. 332 00:19:30.160 --> 00:19:32.559 We're talking a lot today about what makes Texas different 333 00:19:32.559 --> 00:19:36.039 than the rest of the country. Another major feature of 334 00:19:36.160 --> 00:19:39.640 Texas is a place to put your data center. Is 335 00:19:39.680 --> 00:19:42.279 that it is far easier for you to put your 336 00:19:42.359 --> 00:19:45.880 generator or your insurance policy for your data center next 337 00:19:45.880 --> 00:19:49.200 door on the same plot of land with the same 338 00:19:49.359 --> 00:19:53.160 common connection to the big grid and another markets. In 339 00:19:53.160 --> 00:19:56.200 the US that's a lot harder because of how we 340 00:19:56.279 --> 00:20:00.359 actually pay for access to the grid between the consumer 341 00:20:00.480 --> 00:20:04.200 side and the power plant side. This word, by the way, 342 00:20:04.279 --> 00:20:08.400 is co location, which is pretty intuitive. Co location in 343 00:20:08.440 --> 00:20:14.039 Europe has been the result of countries like Ireland making 344 00:20:14.240 --> 00:20:18.200 a mandate I your grid, making a push to ensure 345 00:20:18.279 --> 00:20:20.799 that co location occurs. We're at a point at which 346 00:20:21.160 --> 00:20:25.359 new data centers can't show up without this co location existing. 347 00:20:25.960 --> 00:20:29.039 Across the rest of the US. We're in these strange, 348 00:20:29.119 --> 00:20:33.880 lightly litigious policy circles where everyone's trying to decide, like, oh, well, 349 00:20:33.920 --> 00:20:36.559 if the power plant and the data center are connect 350 00:20:36.640 --> 00:20:39.319 to each other, who's paying for what? How do we 351 00:20:39.359 --> 00:20:41.680 pay for it? And there's this incrementality that I talked 352 00:20:41.680 --> 00:20:46.039 about the beginning. In Texas, everyone is paying like when 353 00:20:46.079 --> 00:20:48.960 you get a stamp at the post office, you pay 354 00:20:49.000 --> 00:20:51.359 thirty two cents, just like the next guy behind you 355 00:20:51.359 --> 00:20:54.359 pay thirty two cents for that one stamp. That's how 356 00:20:54.480 --> 00:20:59.759 transmission or grid cost allocation works in Texas. And that 357 00:21:00.079 --> 00:21:04.079 complexity that we're simplifying here is like the thing that 358 00:21:04.200 --> 00:21:08.079 makes Texas so good for AI loads, And it's because 359 00:21:08.680 --> 00:21:12.440 there's the simplicity translates to the world of putting big 360 00:21:12.480 --> 00:21:16.279 power plants next two loads, and it'd being an easier 361 00:21:16.359 --> 00:21:19.519 time to get onto the grid without getting stuck in 362 00:21:19.599 --> 00:21:21.440 what you're hearing about in the news, which is that 363 00:21:21.480 --> 00:21:25.319 it takes like five years, seven years, ten years to 364 00:21:25.400 --> 00:21:27.720 get these big systems online and the rest of the country. 365 00:21:28.480 --> 00:21:31.920 Oh she As we come towards the end of this conversation, 366 00:21:32.039 --> 00:21:34.480 and of course team we took for hours. But a 367 00:21:34.599 --> 00:21:37.680 very simple question for you, which is pretty much what 368 00:21:37.759 --> 00:21:40.680 a lot of eye in Fasticto investors are asking us, 369 00:21:40.759 --> 00:21:44.839 is look, we see peakload going from saying ninety gigawat, 370 00:21:44.880 --> 00:21:48.319 which is already phenomenal, to one hundred and forty gigawatts 371 00:21:48.319 --> 00:21:52.640 in the convenios. Are you confident that the economics and 372 00:21:52.720 --> 00:21:55.839 the model will allow that blood growth in Texas? 373 00:21:56.359 --> 00:22:00.160 No, of course not, Laurent. If we have that kind 374 00:22:00.160 --> 00:22:03.400 of load growth where we assume that all of that 375 00:22:03.599 --> 00:22:06.599 load will be a firm meaning a twenty four to 376 00:22:06.599 --> 00:22:10.440 seven contributor to peak demand, we don't have any months 377 00:22:10.559 --> 00:22:14.000 left in the year for our power plants to take means, 378 00:22:14.599 --> 00:22:16.960 and if we can't maintain our power plants because in 379 00:22:17.000 --> 00:22:21.480 the year you're planning for consumption at peak for so 380 00:22:21.599 --> 00:22:24.359 many more days, for so much longer. At such a 381 00:22:24.440 --> 00:22:26.920 higher level, if you think about it like a mechanic 382 00:22:26.960 --> 00:22:29.720 with a toolbox, that person's job is to look at 383 00:22:29.720 --> 00:22:31.759 what's inside the toolbox and make sure that there are 384 00:22:31.839 --> 00:22:34.359 enough tools in there to fix all the problems that 385 00:22:34.400 --> 00:22:37.319 are coming. So the number of tools you have to 386 00:22:37.359 --> 00:22:40.279 go and make sure your power plant fleetworks are constrained, 387 00:22:40.279 --> 00:22:43.039 but the number of tools need to have to maintain 388 00:22:43.079 --> 00:22:46.079 the system to do its job as being reliable and 389 00:22:46.119 --> 00:22:49.119 there being enough power plant generation available to serve all 390 00:22:49.160 --> 00:22:52.400 of this peak load. You talked about URI, and in URI, 391 00:22:52.480 --> 00:22:55.039 one of the things that came out of that is weatherization, 392 00:22:55.240 --> 00:22:59.000 meaning making power plants more weather resilient, which means you 393 00:22:59.039 --> 00:23:02.039 have to go out and maintain them. So this kind 394 00:23:02.200 --> 00:23:06.880 of adulterated load growth forecast or peak demand is like 395 00:23:07.039 --> 00:23:12.079 the direct opposite of what policymakers told Texas power Plans 396 00:23:12.079 --> 00:23:16.039 to do, which is be even more conservative with their 397 00:23:16.160 --> 00:23:19.880 maintenance of the power fleet. And mind you, the power 398 00:23:19.880 --> 00:23:23.200 fleet that needs the most support to have enough headroom 399 00:23:23.200 --> 00:23:25.119 on the system to go and do all their maintenance 400 00:23:25.480 --> 00:23:29.119 is gas Plans. So I think that there's no way 401 00:23:29.240 --> 00:23:32.519