Why do green groups seem to have no plan for data centers or for accelerating the build-out of a low-carbon grid? Why aren’t governors using hyperscaler money to grow and strengthen state grids? Why are Democratic members of Congress faffing about on permitting and transmission reform?

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These questions and many others like it haunt Jane Flegal, one of the most interesting, prolific, and peripatetic figures in the clean energy world today. Jane has [deep breath] worked at the Bipartisan Policy Center, been a program officer at the Spitzer Charitable Trust and the Hewlett Foundation, led work on industrial emissions in Biden’s White House climate policy office, led market development for Frontier’s carbon-removal initiative, and worked as the founding executive director of Blue Horizons, a charitable foundation focused on climate. She is now a senior fellow at both the Searchlight Institute and The States Forum, a fellow at both the Energy for Growth hub and University of Chicago's Institute for Climate and Sustainable Growth, and the principal at Flegal Energy Advisors.

That is, if you were following along at home, an inside perspective on philanthropy, private-sector climate finance, government, and non-profit policy development. On the bright side, she has gotten a uniquely wide-angle view of clean energy work; on the darker side, she’s also been forced to become intimately familiar with the various ways that lots of people in all of those worlds are — and these are my words, not Jane’s — dumb and wrong about stuff. It’s a lot to carry.

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Nonetheless, Jane spends her time thinking about how the US can rapidly build out a low-carbon grid, which is more or less the founding vision of this podcast. I always find her writing insightful and stimulating — she is the rare commentator who seems to care less about team sports or personal aggrandizement than about figuring out what’s true and what works — so I’m excited to talk to her about all kinds of hot-button stuff, from data centers to permitting reform to utility incentives. Let’s get into it.

Chapters

• 00:00 – Introduction

• 03:11 – Flegal's thesis: building a clean grid fast enough to power growth

• 06:29 – Why she rejects degrowth

• 09:27 – The Roosevelt essay: climate as more than a market failure

• 13:30 – Why clean energy underuses its political muscle

• 15:24 – Industrial policy and the green spiral theory of change

• 20:40 – Was IRA the right approach?

• 22:12 – Lily Bermel's paper and the fight over what survived

• 23:21 – What she would have done differently under IRA

• 30:11 – Philanthropy, Silicon Valley, and what government is for

• 33:29 – The epistemic crisis inside environmental NGOs

• 39:09 – The abundance movement and what each faction misses

• 44:16 – What establishment Democrats get wrong on climate

• 46:06 – Why issue polling misleads

• 50:34 – Republicans and the Cold War analogy

• 52:47 – Data centers and the American Grid Infrastructure Fund

• 59:13 – Affordability politics and who pays for the grid

• 1:08:14 – Emissions, behind-the-meter gas, and flexible load

• 1:13:57 – The clean firm debate: storage plus transmission?

• 1:20:14 – Capacity markets, ERCOT, and the case for planning

• 1:24:32 – Utility incentives, public power, and affordability fixes

• 1:35:55 – Permitting reform and the land footprint asymmetry

• 1:41:05 – NEPA reform and the political window

• 1:48:21 – Where fresh policy thinking comes from

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Apple Podcasts - Spotify - YouTube)

• Jane Flegal (Profile - X)

  • Searchlight Institute (Website)

  • The States Forum (Website)

Company & Industry News

• New Texas data center projects frozen until state audits them

• New report says Trump hasn’t squashed Biden’s clean energy buildout

Books & Articles Discussed

• Glass Half Full: Building a Decarbonized U.S. Power Sector

• Seizing the Data Center Buildout for Grid Modernization

• Industrial Policy Synergies: Industrial Policy + Climate Policy

Related Volts Episodes

• Who is paying for all that data center power?

• Making data centers flexible so they can serve the grid rather than stress it out

• Sen. Brian Schatz wants permitting reform, but not like this

• Advocating for decarbonization in 2026

• Giving clean electricity a political voice of its own

Transcript

David Roberts: Okay. With no further ado, Jane Flegal, welcome to Volts. It’s long overdue.

Jane Flegal: Hello, David. Thanks so much for having me. Super excited to be here.

David Roberts: I practically lost my voice reading your resume.

Jane Flegal: It’s really, like, doesn’t speak particularly well to my ability to hold a job for any sustained period of time, but-

David Roberts: Yes, you’ve seen it all. So I thought, you know, it’s funny, my whole career when I had bosses, journalists, they would always say, “Start with something specific, start with a hook, start with a person, grab interest, don’t get abstract.” But I don’t have any editors or bosses anymore, so I wanna start at the top, at the sort of 30,000-foot level, and just tell me, maybe describe for us your thesis. What are you trying to do? What do you think the US ought to be doing at the highest level?

Jane Flegal: Well, defeating fascism would be up there on my list of objectives, I have to say.

David Roberts: [laughs] Yeah, you don’t have to do the whole list. Maybe let’s narrow that down to energy. We can bracket fascism. That should be the subtitle of this post. Bracketing fascism, comma.

Jane Flegal: Yeah, yeah, okay. Look, I mean, I have devoted my entire life to the issue of climate change, which you’ll note that I am not hushing about. And that remains something that is, like, centrally motivating for me in the way I think about what we ought to do as a country on energy. I also think that you are not gonna decarbonize the global economy, which is ultimately what matters for climate change, without enabling a bunch of other good things that people care about, including economic growth.

And so I think what’s become quite clear is that objective number one, if you, like me, care about climate, is to rapidly build out a clean electricity system in the United States capable of powering not just today’s demand, but the demand growth that if we are lucky, we will see to meet our climate objectives.

That is, like, sort of thing one. I think another thing that, like, is perhaps a slightly unique undercurrent in my own work is that my academic training is in science and technology studies, which is a sort of bizarre field that spends a lot of time thinking about the ways that social systems and society and politics and technology and science are sort of co-produced, and the ways that science and technology are kind of infected unavoidably with politics and values, and vice versa. And what that kind of has meant for me in the climate problem is that I really do think that climate change is an incredibly complex challenge that has multiple dimensions, where uncertainty is often quite high, and the stakes of decision-making are quite high.

And so I try to push for both epistemic humility in the face of that. You know, I think we need to, rather than trying to pick one path that is optimal and blast it through, given all the things that have to happen for us to achieve our goals, I sort of adopt more of a risk management frame around, like, how do we adopt plural perspectives? How do we move forward to address climate in a way that mitigates the risk of failure, which in my view is like trying to pursue one optimized path that some engineer cooked up in a lab or whatever, or a model. Anyway, probably longer than you wanted, but for me, those are the two like orienting principles probably for my worldview.

David Roberts: Those are great. Those are great. And two things I would say about both those. One is I do appreciate the latter perspective, ’cause especially early in the climate fight, the climate thing, it was dominated by a lot of people who were just, “Let’s twiddle the knobs on the model until the model says just the right thing, and then we’re gonna heave it over the fence with some prayers about political will,” right? You know, we invoke political will. Let’s get political will, everybody, and make this model into reality. And boy, has that not worked.

So yeah, the sensitivity to politics and to just epistemic humility for its own sake, because this is a very big thing, and we don’t really know. We genuinely don’t know how to do it, and we’re figuring it out on the fly.

The second thing I would say about it, and I don’t know if you really wanna get into this, but it’s a pretty explicit rejection of what’s called degrowth, basically. Rejection of the idea that the way to approach climate change is to shrink down humanity’s footprint, humanity’s ambition, humanity’s, you know, reach, I guess.

And I guess I’d just quickly ask about that. I mean, there’s two reasons you might reject degrowth. One is you might just say, “Well, it’s not realistic. We’re not gonna do it. Whatever you might think about it, we’re not gonna do it.” And the other way is, like, you genuinely share those human ambitions and maybe really do want to, like, grow and become ever more prosperous and desalinate the oceans and go to Mars or whatever.

Like where do you come down on that?

Jane Flegal: Yeah. I subscribe to the normative case against degrowth. I mean, the obvious answer to this, which is, can feel like a little bit of a cop-out, is like, the vast majority of economic growth and emissions growth that we are likely to see in the coming decades is from developing economies, right? And, like, that is just a fact. That in and of itself, and candidly just I care very deeply about climate change and the risks of climate change, most of the way you solve that problem is to get emissions to zero as quickly as possible.

But we also are, as we are already seeing, going to have to adapt to the impacts of a warming world, and that’s gonna require development. And so, like, in general, I just think global equity is a rationale for rejecting degrowth logic, which almost always falls hardest on the people who need more growth.

I also just think, like, I’m also not, like, some pro-growth, like, GDP go to the moon, and that’s the only thing that matters. You know? Like, surely we can hold a couple of things true at once, and I think we’re living in a moment where income inequality and anxiety about wealth distribution in this country in particular, I’m sort of empathetic to the anxiety about, like, okay, just more more more while we are not dealing with like, in my view, the very real imperative to redistribute more effectively.

David Roberts: Right. Okay. And so moving down a level from that then, you have this essay for the Roosevelt Institute back in 2023, just when you were coming out of the White House.

Jane Flegal: Mm-hmm.

David Roberts: Which I think is sort of like a little bit of a mission statement about what kind of policy problem this is and what kind of policy approach to take, and I think this is probably tied to your background in science and technology. But one of the things you say in that essay is this is not just a market failure that you are going to correct by turning a few knobs on your market approach, on your economic approach. It’s gonna take industrial policy. Just say a little bit about what motivates that, what you mean by that.

Jane Flegal: Yeah. Unlike the way you framed the degrowth question, David, there are, like, two things going on here. One is that what you will find in most of the kind of academic or theoretical literature around the rationale for just, like, pricing the externality of climate change assumes that you can actually do that effectively in the real world, which of course confronts all sorts of real challenges that I know you’ve talked to Danny Cullenward and David Victor, who’ve done a great job sort of describing all of the ways in which that fails when it hits reality.

So there is just kind of like a practical argument about this. But I also just think, like, one of the original sins in my view about the way that we came to understand climate change as a problem was that.

You know, we had all this great success with the Montreal Protocol and HFCs where... Which was a certain kind of problem, you know, a relatively well-bounded one in a couple of discrete geographies with a handful of producers where we had cheap substitutes, or at least rapidly becoming cheap substitutes. And so, like, the mechanism for managing that was, like, kind of a conventional pollution control program, right? Including at the international scale, and it worked, and it’s awesome. And it’s like, I actually worked on HFCs in the White House for Biden. There was a bipartisan ratification of a treaty on HFCs during that period which everyone seems to forget.

So that worked. That is not, though, the same shape of problem as climate change. Carbon, unlike these other pollutants, is embedded deeply kind of everywhere in the economy.

And so the expectation that price signals alone are gonna move it is, I think, just, like, basically incorrect.

David Roberts: And you talk about trying to generate a green spiral. What does that mean?

Jane Flegal: You know, I think this is really misunderstood. Useful question. I was really compelled when I was in grad school by the work of Nina Kelsey. And she’s a political scientist, and her sort of framing of green spiral is a positive feedback loop where investment, often government investment, though not only, makes clean technologies cheap enough to deploy at scale. That deployment then creates industries and jobs, and those industries become a powerful political constituency with real power to demand more climate action.

So you need a couple of things, right? You need, like, falling costs, which, you know, we have 90% cost declines for solar and batteries, and incredible... Same for batteries, 70% for wind. Like, crazy. So that was true. I think the other two pieces kind of were closer to failures in my view.

I still think it worked in the IRA, which we can talk more about, but, like, one part of the hypothesis is that you deliver tangible near-term benefits in communities. That one we should really unpack because I think my view is that too many in the climate advocacy community thought it was mostly that and not the industry power that was gonna move things, and I think that was wrong. And for me, I’ve always been a little bit more focused on, like, even if your hypothesis, which is not mine, but some people’s hypothesis is that, like, the single barrier to climate progress is the evil of the fossil fuel industry, and they have done very bad things, so I’m not minimizing it. I wish it were that easy, frankly.

But if you believed that, you are not gonna roll them with, like, a coalition of the marginalized. It’s the same way that the New Deal worked. You gotta have some part of capital on your side.

David Roberts: Tell me if you think this is right. Like, we have had these incredible cost declines and incredible growth in these industries, but I at least have been frustrated, as you probably know if you ever listen to the pod, that it doesn’t seem like the industry is using even the muscle it has. I mean, it’s still obviously not anywhere near as big as the fossil fuel industry, but it doesn’t seem like that side of the equation has worked, and I don’t totally understand why the industry is not acting on its own behalf more concertedly.

Jane Flegal: It’s totally fair, and I totally agree. To the extent there was a failure mode on IRA defense, it was, like, largely this. And interesting, I think there are a couple of possible explanations. One, to your point, like, it is just a more nascent industry, and they’re, like, trying to grow up very fast, and so, like, that is somewhat understandable. I think there’s also just these issues of, like, how do you exercise political power effectively and are trade associations the best way to do that, which you’ve also opined on.

And I think, like, another piece of this, and this is not to, like, blame the green groups, but I think for a long time, while these industries were quite nascent and it was very expensive, they relied on environmental nonprofits to be their advocacy muscle.

Do you know what I mean?

David Roberts: Yeah.

Jane Flegal: So we kinda had these, like, training... We had this, like, support structure. But over time, that resulted in, I think, the industries not building enough cross-partisan audience, which is like, whether you want that to be true or not, like, we obviously live in a country where Republicans are gonna control parts of government, and any mature industry is, like, engaging on both sides of the aisle. And I think that, you know, Republicans won the election, and many of these industries did not have strong relationships with those offices.

David Roberts: Yeah, so what you’re describing basically is, I mean, sort of the contrast to the market correction, tweak the externality approach. The more active approach is generally known as industrial policy. And I will just say I’m older than you. I’ve somehow come to a place in my life where I’m older than everybody. Like, for the first 15 years probably I followed US politics, industrial policy was just verboten. It wasn’t just sort of, like, neglected. It was the bad guy. Democrats strove to distance themselves from it. We’re not about command and control anymore.

Now we’re all neoliberals. We’re all about the market. We all respect markets. That’s what the whole Waxman-Markey sort of carbon pricing push was about. And just, it seemed like things flipped on that question on a dime.

And I still, I’m not even sure to this day I totally understand it. Like, all of a sudden from one day to the next, everyone across the political spectrum was like, “Yeah, we do industrial policy now. Like, this is the thing.” It’s wild.

Jane Flegal: Yeah. I have a couple of hypotheses here. One is like, it’s interesting, I’ve talked to some people who are like, “Well, the US was doing industrial policy during the peak of neoliberalism. It was just for financial markets.”

David Roberts: In reality, it was always doing it, right? I mean, it never really went away.

Jane Flegal: Yeah, exactly. But the willing embrace of it on, like, explicit terms, I think is like, yeah, a relatively new phenomenon. And I think for me, like I’ve thought about this a lot, I think there were a couple of things that came together at once. You know, I worked at the Hewlett Foundation at the same time as Jennifer Harris, who was leading this kind of beyond neoliberalism program, and I was like this nerdy climate person, but I immediately was like, “Aha, this is the answer to our problems.” Because for those folks, for the kind of economic policy, you know, economic thinking, geopolitical scholars and activists, there were a set of rationales for embracing industrial policy that had more to do with, like, competition with China-

David Roberts: Yeah yeah.

Jane Flegal: among other things.

David Roberts: That’s obviously, I think, if you’re listing causal factors, China not just using industrial policy, but very effectively and successfully using it, I think shook things up.

Jane Flegal: And then, like, so much of this is just, like, luck. Then, this is horrible. I do not feel lucky that COVID happened, let me just say. But then COVID happened, and so, like, as the window for federal action on climate specifically was opening, you had both stark competition with China, philanthropy’s role, frankly, in, like, seeding a bunch of ideas on that front in a bipartisan way, including a lot of the work that Jen did, frankly.

And then the Sunrise Movement kind of shaking things up on climate and leading with a more investment-led strategy. And then, like, the piece that often doesn’t get attention, and I’ll just give these guys a shout-out ’cause I think they don’t often get credit, is, like, there had been a set of organizations in clean energy and climate world who had been kind of not as focused on turning up the salience of climate politically, for better or worse, but much more focused on just moving the needle on things like innovation investment, including in the industrial sector.

You know, it’s like Clean Air Task Force, and the energy team at Third Way, and, like, the Great Plains Institute, and ITIF, and, like, these smaller NGOs. And, like, that’s not gonna solve the climate problem, but there were groups who had been working on just defending and reforming DOE’s energy programs while most of the climate community was much more focused on EPA as the locus of climate action. Those guys also deserve some credit, I think, for at least having some stuff to bring to bear on, like, what would big demonstration projects look like, blah.

David Roberts: Well, I say this with some chagrin, but it does kind of look like, in retrospect, the green spiral theory of the case, which is let’s do things, change facts on the ground, and then that will change politics, and we’ll turn this ratchet, does seem, in practice, to have produced more fruits than the let’s create a civil rights-style movement-

Jane Flegal: Yeah.

David Roberts: browbeat politicians into caring a lot about climate. Maybe you could say it was a pincer movement, and there was both, and it’s hard to disentangle them in retrospect. But I do think you’re right that the industrial policy side of things was a little neglected.

Jane Flegal: It’s also definitely true that, I mean, I was in the Biden White House, the Democrats in control really care about climate change. They like-

David Roberts: Yeah...

Jane Flegal: they really cared about climate change, and I think there’s two things. One, like I think there was a belief, which I think proved to be false, unfortunately, that like there were a bunch of climate voters, you know, who were gonna change the electoral outcomes. I think that that post most recent election has probably been deflated, but the belief that they were there definitely impacted the fact that we prioritized climate as much as we did in that White House, I think.

And then also, like this is kind of crude, but there’s a lot of political money in the climate space that flows to Democrats. Democrats feel accountable to those constituencies, and like it’s not particularly Democratic, but like it is what it is. And in truth, like I don’t know.

We did spend the vast majority of our funding opportunities on climate for a reason. So yeah, maybe we did need both. I don’t know.

David Roberts: Yeah. We’ll return to some of that a little bit later. But on the industrial policy tip, so let’s just talk about IRA. This is one of the big hot topics. Was IRA the right approach? The Inflation Reduction Act, sorry for everybody who does not get that by now. IRA, was that the right approach? You know, it was explicitly an industrial policy approach, I think, and originally I think was a much broader, more comprehensive industrial policy approach. Of course, it got whittled down and whittled down.

But still you, I think, have defended the basic approach. Everybody wants to discuss, like what was wrong with IRA? Should we deem it a failure because it didn’t stick as much as we thought it would, right? The theory of the case, it’s like you shovel these benefits to red districts, you’ll blunt opposition to the whole thing.

That maybe didn’t turn out to play out the way we might have liked. So what’s your sort of retrospective case on IRA?

Jane Flegal: The IRA was a historic law with much more durability than it should have had, having been passed by Democrats only in a reconciliation. It was, as a durable climate intervention, I think it did very well, and it was the right thing to do at the time. There was... I would love someone to articulate an alternative to the IRA that would have met the mark on climate ambition, and much of which would still exist today. Like, it certainly wouldn’t have been a regulatory agenda.

David Roberts: An alternative that, you know, Manchin would have signed off on is the relevant...

Jane Flegal: Well, yeah. Well, that for sure, but it wouldn’t have been a regulatory agenda. Carbon pricing, let’s just not even discuss really at the moment. Like, the, these things were not options then. Like, you just have to be kind of realistic. And I do think my view, and Jesse and I went on Ezra Klein a long time ago now, just to sort of say, like, “Look, here’s what the IRA did and what it did not do,” and that’s not to be poli- whatever. I can’t even get into, like, the modeling wars about whether the glass is, like, half full or half empty or a quarter full, like, whatever.

David Roberts: But that was my next question. I want you to get into those wars. There’s a fight, or not a fight, but there’s a question about... Lily Bermel had this paper where she’s like, “Glass half full, more of it survived than we thought.” And I don’t know if you saw, but the sort of NRDC people recently came out with a piece, and Heatmap is like, “No no, the glass is way less than half full. It destroyed a lot more than you thought.” I’m sort of curious, like, where you see industrial policy now post O-B-B-B-A, stupid Big Beautiful Bill Act. Like post Trump’s ravaging, what’s your assessment of how healthy the green industrial policy is today?

Jane Flegal: Look, I mean, the vast majority of that law remains intact, and I think all of the modeling... Like, okay, part of the problems with these models is that, A, they’re fake, and B, they’re like they are all asking different questions, right? And like, I know Lily well. I think she was very clear about the question she was asking, and I believe she is, was correct on the answer to the question. I think part of the reason it was so triggering for everyone, because one of her kind of normative takeaways was we probably shouldn’t throw down to reinstate the solar and wind tax credits. And like that’s why everyone got obsessed with the fullness of the glass. Leaving that aside, I think that that is true.

Other things have happened in the world. Demand growth has gone through the roof as a consequence of the data center build out, among some other things. Interest rates are extremely high. We are in multiple wars. Things are different, and so like if you try to account for everything, there are certainly all sorts of headwinds that, you know, there were not in four years ago.

But I don’t think any of that detracts from the fact that the IRA was a quite durable and important intervention that put the US, even today, on a much better trajectory than it would have otherwise been on. I believe that is true. I also think one thing that models are terrible at capturing, so as a consequence we just like are never allowed to talk about, is that there were a lot of investments in both the infrastructure law and the IRA in more innovative clean energy and industrial technologies that are going to be absolutely crucial for global decarbonization, you know, including tax credits for geothermal and other forms of, I won’t say clean firm, ’cause then we have to fight about what clean firm is.

You know what I mean.

David Roberts: We’re gonna fight about that later. That’s coming up. But just before we leave IRA behind… Looking back, are there things you would’ve done differently under IRA? Realistic things. I mean, obviously, like there’s a million things you could think of. Do you think there were things on the table that were possible that we should have done? If you were tweaking IRA in retrospect, is there things you would’ve... dials you would’ve turned?

Jane Flegal: Yeah. Well, okay, one thing is just like there’s the law and there’s the implementation of the law, and like much has been made about how slow we were to implement the law. So like across the board, I would try to do better on that, and I’m sure we’ll talk about this later too, but I think there are implications for our current permitting regime that are related to that. I think that in the design of the IRA, many of us were overly focused on satisfying every member of the Democratic coalition rather than thinking about like the actual theory behind the green spiral.

So there was, you know, a lot of pressure to do... And this is like gets a little bit into like the everything bagelism, although I like the everything bagel, and I like think that if we’re spending public money, we should try to make sure it’s going to good things, and that’s legitimate.

But, you know, I do think there was a lot of funnel a lot of money into disadvantaged communities, and make sure the EJ groups are never mad at us, and make sure labor’s never mad at us, and make sure the enviros are... And like, it was just a lot of co-optimization and like kind of unwillingness to just say no and like make some tough trade-offs. That was kind of a problem.

And then the other thing I’ll say is like I was in charge of industry, and I think in part because the IRA is sort of remarkably, the IRA, you know, we kind of created this nationally determined contribution for the Paris Agreement. We came up with our domestic NDC, and then like there are a bunch of nerds with spreadsheets on the Hill and in the White House trying to like quote, “Find the tons.” And this is a bigger anxiety I have around like that is A, like a not a very global way to think about a global problem, particularly in light of the fact that we no longer live in a world where every country has like a binding emissions target.

So I think calling the question of how does everything we’re doing in this bill relate to global decarbonization, and maybe your theory is the US just needs to meet its NDC because it needs to be a leader, blah blah blah. I’m not sure that holds anymore, frankly, but I think we should have had a clearer theory of the case of how what we were doing here related to accelerating global decarb. And also these find the tons exercises bias you toward near term large tons. In that framework, like incremental subsidization of commercial solar is really good ’cause it delivers a bunch of tons.

But investing in clean steel or clean chemicals or a clean cement is like the immediate impact of those more innovation-oriented investments don’t show up in the models.

But like industry is supposed to overtake electricity as a source of emissions. And like we gotta-

David Roberts: Right. And it’s very difficult to model the effects of US innovation on developing world. The causal chains are so long, it’s very difficult to quantify that stuff. And so, I mean, there were political reasons they were counting tons, you know what I mean? They were trying to satisfy... They were trying to impress upon a lot of dimwitted legislators, “You can’t kill this. You can’t kill this,” you know, “You’re gonna kill a bunch of tons if you kill this.” Like, I understand why they were doing it, but-

Jane Flegal: I get it, but, like, in this moment, isn’t it kind of crazy? Well, I am sort of saying parts of it... It’s not that it was bad, but there were things that got left off the table, at least until the very last minute, in our search for near-term tons. And I think that bias is not always useful.

David Roberts: And I wonder also, like, how politically potent, if you’re in DC and you’re trying to persuade a bunch of legislators to go along with you, how politically potent is it saying, “Look, if we invest a bunch in this innovation, it’s gonna have enormously positive consequences in the developing world”? You know, is that compelling to people?

Jane Flegal: Well, yeah, now we don’t have USAID. How compelling is it to be like, “We made up a spreadsheet, and this is how many tons we have to reduce, and then for climate in the name of climate.” You know, it’s weird. I think all of it is a little... I just think, like, on the substance, there are a bunch of things that we need to do outside of the power sector that are really important for global decarbonization that kind of got left on the cutting room floor because it wasn’t legible in the same way other things were. There was a big obsession in the industrial sector with, like, demand side tools, buy clean. You know, these ideas that we were gonna basically subsidize the purchase of cleaner goods to buy down the green premium, so to speak.

And I kept arguing, like, “We don’t have cleaner goods to buy.” Like, I feel like we should’ve spent probably more time on the supply side, because otherwise these demand side incentives don’t end up pulling truly novel clean technologies into the market. They just basically turn into a version of buy American.

David Roberts: Hmm. Interesting. Okay.

Jane Flegal: So, like, that’s the other thing. It was, like, so much buy Amer- Yeah anyway. The buy clean, I think, I wish we’d have done more on the supply side on industry.

David Roberts: Okay. Well, Jane, I have like 10 clusters of questions, and we’ve made it through one of them.

Jane Flegal: Okay. Okay. Okay.

David Roberts: Not your fault. It’s totally-

Jane Flegal: I’ll be faster.

David Roberts: I could talk about any of these for an hour. Let’s talk a little bit about philanthropy in a couple of different ways. One of the sort of interventions you’ve made, I forget if you wrote a paper on it or if this was just stuff on Twitter. But I think there’s an enthusiasm for private philanthropy in Silicon Valley these days, and almost a sense among that crowd that, like, government is dumb and slow and incompetent and run by nannies who won’t let you take risks, et cetera, et cetera, et cetera.

And so private philanthropy is gonna step in and do things government can’t. You have sort of pushed back against that a little bit. I wanna come at this philanthropy question from two different directions. That’s the first. Like, why is it that you still think that government has a central role.

And do you agree with that assessment of sort of the Silicon Valley mindset?

Jane Flegal: Yeah, I mean, I think it’s fair. And it’s gotten even worse actually now, because now we’re in this weird moment. And even if you would think that government should have a more robust role, Trump is now in office, and so he can’t be trusted. And, like, I actually think you see this a lot with the AI conversations where it’s like we can’t have state ownership of these companies because, like, then Trump is in charge, and it’s like, well, wait, didn’t you guys, like, help elect... You know, it’s just kind of like what’s happening.

So I do think that some of this is true, the sort of like more kind of libertarian skepticism of government impulse. And I think it’s really unhealthy. I think we need government.

We need a functioning government that can do lots of good things. It’s actually, like, the most beautiful thing about being human in my view, that society has, like, come together to acknowledge that we have, like, shared interests that can only be achieved in partnership with one another. So, like, I’m quite enamored with the notion of a government that does good things.

David Roberts: And specifically if you wanna do industrial policy, you need a big, active, competent, well-staffed government.

Jane Flegal: Totally. There’s, like, a really instrumental argument for this which is like, you know, I remember even getting in some debates with folks about philanthropy funding things like methane satellites directly, where it’s sort of like that’s a really expensive-

David Roberts: Yes.

Jane Flegal: Surely you could do an advocacy campaign to get the government to build some methane sats. You know what I mean? I always found myself kind of calling... I’m not making a judgment on methane sat. I’m just saying, like, there was an example of, like... And that didn’t even come from Silicon Valley, but the sort of like-

David Roberts: Yeah.

Jane Flegal: are we being thoughtful about what are the functions that we want an effective government to have? Where is philanthropy crowding in the public sector rather than crowding it out? And to me, that’s a really important question that’s always informed the way I’ve thought about grant making. But I think it’s a real challenge right now with this influx of kind of AI and Silicon Valley money.

David Roberts: Well, the other way I wanted to approach this, you know, you worked inside philanthropy for a while making grants, and so you had a lot of intimate behind-the-scenes interactions with green groups, with big green groups, small green groups, the environmental community, let’s say. And my impression is that you came away from that rather disillusioned.

Jane Flegal: Careful, David.

David Roberts: I know, I know. I don’t know how much you wanna get into this, but I think a lot of this, I think it’s helpful, I think, to air a lot of this out. So I’m curious, you know, you’ve said on Twitter and I think maybe elsewhere that you think there’s something like an epistemic crisis going on in that world, inability to distinguish expertise from advocacy. However much you feel like getting into it, I would love to hear your critique of the environmental NGO complex.

Jane Flegal: God. Okay. First of all, let me say, I have long funded, when I have been in philanthropy in the environmental groups, and I adore many of them, and there are great people working at those organizations. Let me just say that. Also, you know, they are all different. They are not all the same. Let me also say that.

David Roberts: Gotta use the monolith line.

Jane Flegal: One way to frame this, I think, David, is like, okay, I’ve been thinking a lot about our current political moment and, like, what’s next on the federal agenda for climate, and we can get into that later. But I remember being at the Hewlett Foundation before the 2020 election and having a similar feeling of, like, what the hell is the plan?

What are we gonna do? We’re obviously not gonna do cap and trade again. Like, are we really gonna do the Clean Power Plan 7.5? Like, what are we doing? And thank God, honestly, for the Sunrise Movement, because I think we needed some insurgent energy to sort of, like, reframe things, and I think that is kind of a symptom of one of the problems I see, which is just that in any domain, if you have a bunch of really big organizations who share kind of the same large funders and have kind of, like, a shared way of viewing the world and kind of coordinate and have really big staff and have all sorts of interests they have to manage institutionally, it can just be hard, A, to, like, generate novel ideas and, like, generate alignment across a large organization about what should, you know, so and so’s organization’s posture actually be on federal permitting for reform, for instance.

Like, it’s just really hard. And many of these organizations, like, grew up in a different time, where, as everyone has pointed out multiple times, the chief objective was to, like, stop bad things, the sort of pollution paradigm that I pointed to as problematic in international climate governance also I think applies here, where it’s just maybe, as Steve Rayner would say, kind of a wrong trousers situation. And, like, you know, a lot of litigators and blah blah blah. That’s just, like, kind of core to their institutional DNA.

And then I think… Maybe the last thing I’ll say is just we’re in a kind of a new era. Like a lot of the work those organizations did to advance clean energy standards in states, for instance, I think was incredibly valuable.

And now we’re in a phase where like, turns out you gotta actually meet those targets somehow. The world evolves, things change. It’s really hard and like you can’t... Simply enacting legislative targets of like expressive climate ambition is not enough. We gotta like actually build this stuff, and that is just kind of like a different moment.

And then there’s the broader political anxiety I have about someone who is climate obsessed. I’m also concerned about the rise of fascism, not just here, but everywhere around the world. And like, as much as I would like my party to prioritize climate change, I also think it’s very important that they get elected and need… that ought to be the first priority.

And so like anything that I think, and I don’t think climate always is in tension with electability, but there are some cases where like running on climate is not a...

We’re talking about climate hushing. I have to stop, but like-

David Roberts: You told me not to bring it up. I didn’t bring it up. Here you are bringing it up.

Jane Flegal: I know. I guess I think like so much of the posture has been pressure for more ambition at every moment. And on the epistemic issue, this is where this has really shown up for me is just for a while things were really wacky and you couldn’t even say like, climate change is a risk management challenge without being told you were a climate denier. And so like this notion that there like are in fact real trade-offs on the path to net zero, we need people in the world who are able to like inform policymakers and decision makers about those trade-offs so that those people can use their judgment to make the right choices. That capacity, academia I’ve also worked in and is kind of broken, obviously.

Maybe I should blame you for this, David, ’cause you were always like, “This is a political problem. You gotta like elect Democrats. That’s the way to do it.” And so like everyone kind of did that, but I do think we kind of lost this functionality of actually just doing really balanced, careful analysis to like help people make decisions in a credible way.

David Roberts: Part of me returns to the thought that like you want a group defending old school environmental stuff, air and water. You want a group pushing for clean energy industrial policy. You want a group doing sort of disinterested careful empirical policy analysis, it’s just a little crazy that we’re looking to these groups to do all these things.

Jane Flegal: Yeah. You want industries who can get Republicans to say yes. Like, they’re not all the same thing, and this is why I get so frustrated when people say that I’m, like, punching the enviros or whatever. The only argument I have ever tried to make is that is a necessary but insufficient part of the overall funding strategy that a philanthropy should take. We don’t have enough state capacity. We d- all these things that you’ve described, like, we are gonna have to build some new institutions now that we’re, like, in this era of climate policymaking, and I just feel there is a real reluctance to do that because it’s viewed as, like, a threat to the status quo.

David Roberts: Well, speaking of punching left, I think there has been some concern in some circles that you’re over there on Twitter, you’re over there hanging out with the abundance people, and the centrist bros, and over time, that just pulls you into this world where the left irritates you, and you become consumed with your irritation by the left.

And I certainly, like, I don’t think that’s actually true of you, but it is definitely true of some of the people with whom you are in proximity, who have let that vibe, that dynamic just consume them to the point that, like, fascism is raging around our ears, and we’re still scolding the left about language questions and stuff like this. You know, I won’t get into that whole thing, but I’ll give you a chance.

There are other factions involved here, and, you know, as we have discussed in-

Jane Flegal: Yes, I hate them all, David...

David Roberts: in private, as we have discussed in private many times, everybody is dumb and wrong. So I’ll give you a chance to say this new abundance movement. I like a lot of it. I’m irritated by some of it. I’m irritated by some of the people involved more than I’m irritated by the ideas. I’ll give you a chance to just say on some of the other factions what do you think they miss? What do you think that crew, that crowd misses? What do you think their weaknesses are?

Jane Flegal: Maybe because I’m, a nice way to talk about myself would be that I really value epistemic humility. Like, the truth is probably that I’m, like, deeply insecure and believe that I don’t know anything, and so I’m like, I really have a hard time subscribing to, like, any one ideological worldview. And, like, I really think pluralism is good. Like, I genuinely think that. And when it comes to the sort of... I don’t self-identify as, like, an abundance person. I identify as someone who has, like, a bunch of problems they’re interested in helping to solve, and, like, I try not to become, like, reverse polarized by the stuff I’m overexposed to.

But I have spent, like, more than a decade in climate nonprofit world. So, like, there is something kind of refreshing about someone having the courage, in my view, to, like, alm- have my back a little bit and be like, “No, she’s not crazy.” Like this isn’t to say that, like, all of these other tools aren’t important, but we have to pay attention to this stuff over here, too, or, like, we’re not gonna achieve the goals that we all claim to share.

Like, we all just have to be more open-minded. A good example of this is, like, I know you had Todd Tucker on recently, who I have a ton of respect for, and you know, I’ve written for Roosevelt. I think they’re great. But you know, they put out this thing all about, like, more state capacity and what to do next and blah blah blah, and there’s a lot in there that I really agree with and like. And just to, like, as one example of the way I would like these worlds to be brought together, yeah, I’m also really good friends with Grayson Flood. We, like, joke that we’re kind of frenemies, and he’s been writing about, like, a public grid and a public financing authority and whatever. I think those are great ideas the left should be pushing forward.

And if you bring together the kind of abundance people and pro-growth left that cares about public power and these kinds of things, there’s a bunch of shared stuff. Part of the abundance agenda, as you have pointed out, is, like, increasing and enhancing state capacity and how do we do things more effectively and what are all the, how do you rebuild all of these capacities and build them better? That’s a huge part of the agenda that I think the abundance movement sometimes leaves out, although there are people like Jen Pahlka who do a lot of work on this.

On the other side, I think it’s kind of nuts, frankly, to put out a bunch of proposals about the public sector doing very large, big investments into things directly and also claiming we don’t need to reform NEPA.

Like- Do you know what I mean? It actually is the case that if you wanna have very large public infrastructure projects, you need to grapple in a serious way with the permitting constraints. But anyway, the point is just, like, why can’t we be more normal about this?

David Roberts: That’s well said. This is also my frustration. Like, people, put your eyes on the target. It’s, so much of the fighting seems personalist, personality-based, and, like, tribal and, like- team sports.

Jane Flegal: And people are just like mean. Like, I’m like very sensitive. When people are mean to me on the internet, I get really upset, and I want... And my, you know, your inclination is to like curl up and go back to a tribe that you know will defend you. But half the time I’m like, “Well, I don’t want you to defend me. I think you’re wrong about a lot of stuff too.” Like, it just seems that everyone hates me.

So I do understand the impulse around this stuff. And I do think it probably is fair that, again, you know, where we stand depends upon where we sit, and I spent a lot of my life in climate philanthropy and nonprofit land. I developed a long list of annoyance.

David Roberts: I think we share this quality in that we get irritated by and want to argue with whoever we happen to be around.

Jane Flegal: But the one thing that I would push back on a little, Dave, is like, ’cause I get annoyed with all the infighting too, and like keep the eye on the prize, but I do think we’re having some pretty important intraparty fights about we do have to actually defeat fascism. So like we need to kind of air out and like experiment. Like, what are the best ways to do it? Is it running Democratic Socialist can- Like, I don’t know, but I’d rather have that fight than like not have a primary or whatever.

David Roberts: Yeah. While we’re taking on various factions, what about just establishment Democrats? They’re not really the same as green groups. They’re influenced by green groups. But like what do you think the sort of modal Democratic Congress person is missing?

Jane Flegal: On climate?

David Roberts: Yeah, on specifically on this stuff, on industrial policy and climate, clean energy. What are the Dems getting wrong?

Jane Flegal: You know, right now they’re not in control at the federal level, so like hard to blame them for very much. I would like them to do, especially after the midterms ideally, do like much more kind of oversight on the corruption. I mean, Trump is just like doing state socialism now. And there’s a lot of really bad stuff that’s happening, and I think there are a bunch of things Democrats could be doing there. I think the actual tension is not that they don’t, the modal Dem doesn’t understand industrial policy. It’s more like where are we gonna land on this sort of fight between populism and industrial policy. Do you know what I mean? Industrial policy does require a certain amount of technocratic skill and expertise and state capacity.

David Roberts: Technocracy is out of fashion, but if you’re gonna do industrial policy, you need competent, informed technocrats at some level to make sure you do it right.

Jane Flegal: And they’re gonna have to sometimes say no to things that pollsters tell them are popular because they’re bad policy. And so, you know, I’ve been in a bunch of conversations lately about rate freezes, like in the electric power sector, and I think like, okay, sure. I also have this... I mean, I hate polling also, and issue polling, and I’m like, everyone is like, “Oh, but freezing rates poll so well.” And it’s a little bit like, okay, yeah, if you asked me if I wanted to not pay my bill, I would say yes. This is not revealing of any, like, interesting truth about the electorate. It’s just like-

David Roberts: I hate issue polling so much. I hate it so much. It’s one thing to use it as a piece of propaganda to try to get what you want. That I kind of understand. But when you start, like, smoking your own supply, when you start believing your own issue polling, I think it’s bad. I mean, this is- I’ve been following issue polling for 20 years now, and you can get people to say almost anything. You just... They want more good stuff and less bad stuff, and so you just tweak the question. Do you want more of this thing that sounds good? You’re gonna get them to say yes. The public just doesn’t know much. This is another thing you’re not really supposed to say out loud, but, like, they hardly know anything.

So, like, they don’t have deep, fixed opinions on flavors of industrial policy. They’re just gonna, like, say, “Yeah, that sounds good,” if you phrase a question to make it sound good. Same with, like, climate and all this stuff. Like, should we do something about this big, bad problem? Well, like, yeah, they’ll say yes to that.

And then do you want me to take $5 out of your wallet to solve this big, bad problem? Of course they’re gonna say no to that. But none of that tells you anything about how they’re gonna behave in the wild in actual politics. Anyway, okay. So finally, let’s talk about Republicans briefly. I mean, fascism’s bad. I think we agree on that. Another big fight is like, are there promising green shoots somewhere in that machine that are worth expending a lot of resources.

Obviously, like, if there are Republicans who are sympathetic to this stuff, you want to cultivate them. I think that’s coming to the issue polling. If I just ask people that, well, like, yeah, that sounds good. But the question is, like, how to prioritize and should you tamp down or moderate your own message to your own people in the name of not irritating these possible Republican allies? You know what I mean? There are trade-offs. So I wonder, like, what’s your take on whether or how much to sympathy there is somewhere in that machine for what we wanna do?

Jane Flegal: Sympathy, wrong word for me in my feelings about this. On the other hand, like, look, I try to start with what are we trying to achieve? On climate, like, this is gonna be a multi-decadal problem we have to manage. It’s also just the case that the Democrats winning elections into perpetuity feels unlikely given all the structural disadvantages among other things. So, like, I care about this problem. I don’t think you can solve it by, like, never having Republicans do the right thing on it. That seems really hard to me, so-

David Roberts: But on the other hand, look at the Republicans, right? This is like-

Jane Flegal: Right. Like it’s, yeah...

David Roberts: this is the rock and the hard place here.

Jane Flegal: And like, look, I’ve been in philanthropy. Like, I think two things can be true. One, I think efforts to cultivate Republican champions on this is- set of issues have been woefully underfunded, but also, like, some of it’s been crap. Multiple things can be true. I think part of the frustration I have is that it’s never been clear to me... I actually think the way in here is to be much clearer about what the actual policy agenda needs to be as a first step. Like, having this vague goal of, like, getting Republicans to care about climate change is just... It really depends what you think they need to do. If what they have to do, for instance, is, like, defend tax credits for nuclear power, I think there’s a way to get them to do that.

If what they need to do is vote for embedding CO2 emissions in trade policy, I think there’s a way to get them to go there. You know, I think there are ways to move them on certain issues.

David Roberts: But if you’re trying to get them to endorse grandiose targets, I think that’s probably fruitless.

Jane Flegal: Well, that’s the thing. Like, what are you asking them to do? And I think, like, we’re often unclear about that, and I think step one for me is, like, what is an actual agenda that is, like, authentically Republican? You know. And I think there is space there, in part because of competition with China, but also because of broader geopolitical stuff.

And I don’t wanna be Pollyanna-ish here, but I think if you’re clear-eyed about what you’re trying to get them to yes on, I see more space for progress. On the other hand, I will say I was incredibly surprised. Of the many things that I’ve been wrong about in my life, the degree to which there has been such cultural backlash to solar and wind power specifically.

’Cause one hypothesis I had back in the day was like, I don’t know, man, maybe, like, this climate could be like other public policy problems where there’s, like, a Dem answer and a Republican answer, and, like, we kind of agree there’s a problem, but, like, we have different solution sets. But, like, the way the technology polarization has played out has freaked me out a bunch. So I don’t really know totally what to do with that.

David Roberts: Well, just, like, the epistemic environment over on that side is such a smoldering wreckage. One sort of analogy I’ve been playing around with, and see if this rings true at all to you, is I often think about the Cold War, and I often think about the fact that Republicans, at least in the post-war era, kind of went along with democracy reforms and clean air and a social safety net kind of things, in part because we were trying to compete with communism in Russia, and we were trying to say, “Look, we do better by our citizens than they do.” This was a big undercurrent in the Cold War. Capitalism produces better results for ordinary citizens than communism does, and so that sort of led, I think softened at least Republican opposition to sort of public provision and stuff like that.

And I have been wondering if a Cold War with China could have a similar dynamic on the clean energy thing particularly. Like, could we try to get that dynamic going where we’re like, ”No, we, capitalism and free enterprise is better for clean energy and good technology and advanced this and that than communism is. It kind of seems to be going the other way, but-

Jane Flegal: I know. Yeah. I mean, I also think that the thing has cha- that one of the things that has changed is, like, demand growth. It’s kind of a diff- the problem is structured slightly differently when we’re all fighting over a small pie and, like, a pie in decline. But, like, when there’s a growing pie, I think it feels a little less zero-sum. I don’t know. I think that there’s some room for maneuvering there.

David Roberts: Okay. Let’s pivot. Let’s take a big pivot.

Jane Flegal: But I really, just one last thing, I really think the industry needs to, like, give Republicans money to advocate for their stuff. That’s also just true.

David Roberts: What do you think also about the solar PAC that is just going out and shooting intransigent Republicans in the head, taking them out in primaries? Like, I think that’s extremely promising.

Jane Flegal: Great. I think it’s awesome. Also, the more uncomfortable piece of that is, like, we can’t only do the accountability stuff. We also have to cultivate champions. So I think that piece of it is still a little under attended to.

David Roberts: Okay. Let’s pivot and talk about data centers. Everybody wants to talk about data centers. There’s a lot of aspects of this, but let’s start with your proposal, which you wrote up in a paper for something called an American Grid Infrastructure Fund. And the idea I think here is just let’s get these hyperscalers who have all this money, who desperately want to build these things, to pay into a fund in exchange for the social license to build them, and the fund, well, you describe it. I’ll let you describe it. What is the idea there?

Jane Flegal: Yeah. I have been kind of thinking about this in two pieces. When it comes to data center anxiety about electricity and energy, right? There’s, like, a couple of things going on. One is just basic good governance. How do we make sure that data centers are not screwing other ratepayers on cost, right? And, like, we’re seeing a lot of innovation at the state level around, like, large load tariffs and other kinds of rulemakings around trying to ensure that that is not happening, right? And we can talk more about that. My view is that is, like, a necessary but insufficient condition because these tariffs were not designed to handle all of the issues associated with the scale of the data center build-out. Leaving aside, like, managing the downside risk, like, there’s a ton of upside opportunity here, I think, in terms of having new revenue to invest in a grid, and that is sort of what I’m trying to capture here.

On the, like, what doesn’t get captured in the tariff thing, I think a really good example of this is, like… It’s relatively straightforward to be like, “Okay, this one gigawatt data center has these direct associated costs, this substation, this distribution line,” blah blah blah. But the further you go upstream to, like, regional and interregional transmission cost allocation, it’s just kind of a nightmare.

David Roberts: Yeah. One of the premise of this whole discussion is that we can actually measure and quantify those things. I always bump up against that. I was like, “Well, that’s a lot of fuzziness and uncertainty there about what exactly is causing what.”

Jane Flegal: I think we cannot, and in fact, I actually think it would be potentially bad precedent to do that. I mean, one good example of this is that these ways of managing these cost allocation fights for regional and interregional transmission are brutal, as everyone I think knows. And so, like, you know, when Maryland was doing a bunch of clean energy laws, Virginia was really pissed at them because they claimed they were paying for transmission upgrades caused by Maryland’s clean energy laws. Now, Maryland’s really pissed at Virginia for their data center policy for causing them to... You know, like, this is just not a way through building out shared infrastructure that benefits the entire economy and climate.

David Roberts: Yeah. I’ve been worried about these, about the hyperscalers playing the states off one another, too. I- this is happening to some extent already, I think.

Jane Flegal: And they’re already... Like, even the ones who say, like, “We’ll pay our fair share,” like, if you look at the rate cases, they’ll often be like, “We don’t wanna pay for that transmission upgrade.” So anyway, this fund idea, the premise is just that there’s, like, a bunch of potential upside here that’s not gonna be captured through these, like, quite opaque regulatory proceedings, and there’s an opportunity, and I think an imperative, to, like, capture some amount of the generational wealth these companies are going to acquire and use it for something good.

David Roberts: So it’s a federal program that you have in mind?

Jane Flegal: Yeah. The... Well, the initial idea I proposed is a federal program. Sam Ricketts actually put out today a kind of version of this at the state level, and I have been talking to some state offices about a version of, like, a state level fund. New York, you know, when Hochul announced the pause, sort of said that they were looking at launching a fund. I think other states, as they grapple with some of these questions about cost allocation, are also like, “Huh, maybe a fund could be helpful.” So I think... You know, and Virginia has passed a charge on electricity consumption by data centers that’s just going into, like, the general fund, which I think there are problems with that approach.

But in any case, yeah, I just think there’s a lot of potential here.

But it’s funny, the politics have gotten, have shifted. Like, I think when I initially wrote that, which was in like March or something, I was sort of like, “Even if the companies did this voluntarily,” like now it’s like, “No, you must contribute to a fund or like you’re banned forever.”

David Roberts: Yeah. Well, let’s talk about the politics a little bit. You have sort of criticized, I think, green groups and others for-

Jane Flegal: Stop telling me I criticize the green groups, David. You’re gonna get me in trouble.

David Roberts: For approaching this with a kind of scarcity mindset. Talk about what you mean by that.

Jane Flegal: Here’s where it gets a little complicated, and like this is probably why I get like abundance coded. I think in my view, we are in a very unique historical moment where we have significant demand growth, the kind of demand growth that we could only imagine in our decarbonization models, but could never grapple with seriously. We have the richest actors in the economy with apparently a willingness to pay quite a bit of money to power compute.

And so like I think there’s a lot of opportunity here. The question is, what are the most catalytic things that we can and should be doing in this moment? And the truth is, there are kind of two imperatives that are sometimes kind of intentioned, but both really important. One is affordability politics, right?

And that’s where all of the stuff on like get more out of the existing grid, peak shaving, VPPs and DERs, all of that stuff is really important. I have in fact written about policy ideas that states should use to like do better on that front. So I am not at all dismissing those things.

But it is also the case that, as you know better than everyone, we are not going to rooftop solar our way to a decarbonized economy. It is an important part of it, but it is not actually the bulk of it even in under the most optimistic scenarios. Like, we need interregional transmission. We need a lot more utility scale clean power. These things are just true. Batteries are great, but they’re not gonna solve this problem on their own.

And so my big issue is, are we kind of penny pinching? Are we overly focused on penny pinching at the expense of generational big thinking on like rebuilding our grid for climate?

David Roberts: Well, I’m glad you’re raising this about the affordability politics, ’cause I feel like everyone in the Democratic world and associated groups is just herding in this direction, but we need growth of the grid in the long term. We need a lot of investment. And that’s gonna cost money. So, like, there’s a lot of things you could do to save money in the short term that would forestall or delay or cut off that investment that you need in the long term. I think that’s basically the dilemma you’re raising. And of course, this is where, you know, the voice of Jigar comes in saying, like, the stuff you’re talking about, the grid utilization and stuff like that, is how you navigate that dilemma. That is how you get short-term affordability while still allowing for long-term investment.

And I kind of feel like nobody really disagrees or, at least like, informed people don’t really disagree. This is another one of these sort of fake fights between do you want grid utilization or do you want investment in new generation and transmission? Obviously you want both, right? Both is the obvious answer, is it not?

Jane Flegal: Yeah, I think that’s totally right. The one other thing that I, the layer that I would add here is, like, that kind of assumes that you have two options, which is reduce or increase the amount that we’re spending on things. A third option is, like, change who’s paying for stuff.

David Roberts: Yeah.

Jane Flegal: And, like, that’s where some of Grayson’s ideas about the fund is one version of this, but I think in general, like, you know, if you look at the LBNL report on actual drivers of electricity affordability, in many states the sort of grid hardening costs and wildfire mitigation and that kind of stuff is not a not an insignificant part of the bill.

David Roberts: We’re gonna get to this later. Let’s bracket that for the moment. A final question about data centers, though, is, you know, the politics have shifted dramatically, I think, even since you wrote this proposal, even since, like, months ago, in not necessarily a great way. So, even the governor of Texas now is putting a moratorium on new data centers. Do you... What do you make of the politics? I kind of think or fear or wonder whether the anti data center thing has become something that is beyond individual, specific, answerable objections and has become kind of a synecdoche for just, like, people’s dissatisfaction with the state of the world and the state of income equality and, like, it’s just something that everybody can sort of read their own dissatisfaction into and thus, like, is no longer something that can be brought under control by these sort of concrete technocratic answers to the specific objections.

Do you know what I mean?

Jane Flegal: Yeah. Yeah. There is a part of it that, like, feels a little, like, mass his- hysteria driven. And the funniest thing about this, by the way, is that I have wondered, like, to what extent this is how real this phenomenon... Like, it obviously is real, but, like, to what extent is it fed and perpetuated by our broken information environment that is created by the same companies trying to build the data center? You know, like, there’s something funny happening there.

But I think, like, I hear you, and this is why I’ve been pushing back on, like, “Oh, we’ll do a large load tariff, and, like, that will resolve the politics of electricity afford-” It’s like, no, it won’t. No one understands that, and, like, it’s not responsive to the political moment.

I think one thing that we could do much more effectively is… I think we’ve done a ba- like, whatever. There was the ratepayer protection pledge, and then, like, all these individual states doing weird stuff. But, like, Democrats or Republicans for their part, or the data center companies themselves have not put out a clear, like, four clicks of more granularity beyond the ratepayer pledge that’s like, “Here is what good grid citizenship is, and, like, this is what we are doing. We’re all aligned on, like, this is the thing.” And I think in the absence of, like, a clear set of asks that we are making of these companies and securing, it’s kind of like, yeah, this feels like a mess.

David Roberts: Yeah, what’s maddening to me is these companies have so much money. I listened to a presentation by a guy, I can’t call his name to mind, so great story, Dave. But anyway, he was talking about data centers can have the capacity to, and some have, can come in and say, “Not only will we make the investments such that we don’t raise your rates,” that’s the electricity piece, “but we can install bioswales, we can spend the money to improve the air and water in your town, and we can spend the money to improve your tax base, and we can build you better schools, and we can install rooftop solar and batteries in your basement so that you have more resilience.” Like, they have the money to do all that stuff.

Like, they could spend the money to do all those things, and it would still be a fraction of what they’re spending by being delayed, by having the data centers being delayed, by not getting the compute. It’s just like they could be... There is a world in which a data center coming to your town is a boon. It improves water, it improves air. There are mechanisms by which it could do that. It’s hard for me not to see just, like, tech bros being douchebags, some kind of at the root of their refusal to do this. It seems like there’s a win-win-win there on the table waiting to be grabbed, and they just won’t grab it.

Jane Flegal: I agree with much of what you said. I also think they’re also not like morons, right? And I think one of the things that I had sort of undercounted is just the degree of competition within and across the industry. And so like, you know, maybe initially they were like, “Well, sure I could do the bioswales, Dave, but Company X is gonna just like go as quickly as possible with their like rolled up gas engine, jet engines. And like in the meantime I’m like painting my facility green. Like what are we doing here?” So like I do think some of that, and I think what they have learned is like they don’t have a choice. They’re all gonna have to like take a beat and slow down or they will be forced to.

I mean, the other thing I will say is I’ve now found myself occupying a very weird corner of the world in this discourse, which I’m, where I’m like pro data center under the right set of conditions and like maybe now anti-AI. Like I’m like the hugging face thing freaks me out so much and I’m just, wait, so like there’s no plan and like what are we doing and like should the state own these co- Like I’m having a much bigger... Now, I also happen to think that blocking the data center build out is probably not the best way to deal with the issues I find most concerning, so like-

David Roberts: But it’s the only tool the public has in its hands. I mean there’s so much of this is like you poll people and they say, “Oh, it’s water,” or like, “It’s the noise.” But I think there’s just so much of like generalized angst about like the world is hurtling off into some dystopian sci-fi future and we have no control over it. They’re not asking us. It’s just a handful of rich guys doing it and like this is the one thing, the one place where we can kind of throw ourselves on the gears of the machine, and there’s just a lot of that generalized angst around this. Well, let’s talk about also behind the meter gas plants, which is, you know, I think the initial hyperscaler response to the slowness and the inability of these institutions, utilities, and regulators and etc.

To move quickly was just like, “Okay, we’ll build our own stuff.” Curious how you feel about that. I mean, one strain of thought, and again Jigar is a big proponent of this, is just that it’s a lot harder than it looks, and these machines are gonna be breaking down and maintaining them is gonna be incredibly difficult and they’re just not gonna do as much of it as they say they’re gonna do. That’s one of the big arguments going on right now, like how much is realistically possible.

And then there’s also the question of like what should the attitude of public policy makers and regulators be toward this stuff? Should we ban it? Should we force them to commit to a schedule to hooking up to the grid.

What’s your thought on that whole thicket?

Jane Flegal: We gotta get ’em on the grid, man. That to me, like, is the climate challenge, frankly. Like, that to me is the biggest risk for decarbonization and emissions. I think, like-

David Roberts: Why? Spell that, just briefly spell that out why.

Jane Flegal: Well, first of all, like, on the size of the behind the meter gas build out, I do not know the answer to this, but, you know, semi analysis is saying that behind the meter could account for more than half of new US data center capacity by 2028. Not because it’s, like, the preferred solution of anyone, but because headroom on the grid is gonna run out soon in the most congested places, and, like, they can’t get interconnected fast enough, and, like, that’s what’s happening. Now, I don’t know, maybe Jigar’s right, I have no idea, but the prospect of this freaks me out quite significantly. And Cleanview also put out-

David Roberts: I mean, the gas build out happening right now is huge. Like, I don’t-

Jane Flegal: No, it’s for real happening...

David Roberts: it’s a macro phenomenon at this point. I think people are perfectly within their rights to be freaked out about it, to view data centers as kind of coterminous with a giant build out of fossil fuel generation. That’s a legitimate thing to be freaked out about, I think.

Jane Flegal: Totally, I totally agree. I mean, the two, on emissions, I think there’s like two reasons I’m freaked out. One is a kind of like dilution of the resource mix. So if you have a grid connected data center, you’re drawing on a shared pool of generation. That importantly includes whatever like zero marginal cost renewable energy, nuclear or hydro happens to be running, plus efficient combined cycle gas, right?

So like the effective emissions rate of that facility is the blended rate, right? Whereas an off-grid facility’s emissions rate is 100% gas ’cause gas is the only thing powering it in most cases. So like that’s bad, and I have high confidence in our ability to continue to put a bunch of low cost, zero marginal cost resources on the grid, and the more that we can keep things on the grid, the more we can outcompete them.

So like that I think is really important. The second thing that I think is really bad is that like a lot of these off grid projects are optimized for speed, not thermal efficiency So you end up with these crazy inefficient, like arguably worse than coal gas plants, like these simple cycle or like aeroderivative turbine stuff running at like 100% capacity factor.

David Roberts: And a lot of diesel and kerosene back up. It’s a nightmare.

Jane Flegal: It’s so bad, and like some of the modeling I’ve seen, like you know me, I love modeling to a- only when it confirms my priors, that like the net effect of those two things means that grid connected data center load, you know, without making assumptions about new stuff, new generation, produces like a much lower cumulative emissions by 2040 than behind the meter gas.

So like that is really, I think, quite important. I also think this notion that like, “Oh, they’ll connect eventually,” because it’s like they all wanna be connected, is like, I don’t know man, if you built a 400 megawatt gas plant to power your data center facility, and then like in seven years you get interconnection, why wouldn’t you just like double the size of your data center?

David Roberts: Well, some states, some countries, like I think Spain is it, probably should’ve made a note of this before I launched into it, but I think it’s Spain who’s basically saying, “If you wanna build a data center, it’s gotta be 80% clean energy fueled.” Which would basically statutorily ban giant behind the meter gas plants. You know, I don’t know that there is the political will to do that in the US, ’cause that would basically just like jam to a halt an enormous amount of data center building. But like what should governors do behind the meter gas plants specifically. Is there a public policy tool here that you would recommend?

Jane Flegal: Okay, there’s two ways to answer this question. One is like, what do we do today given this is where we are? The other, which I would like to talk about at some point, is why are we in this position, and what would’ve had to have been different for this demand growth to not be met this way? Which I think is actually a really useful exercise.

But on the, like, near term, what do we do? I mean, there are a couple of things. One, I think Tyler Norris has been aggressively advocating for a willingness to, you know, like non-firm interconnection, basically. Like, if you have a data center accept some willingness to, like, accept that they’re gonna partially reduce their load at given times, can they get connected far faster?

David Roberts: Yeah, and I’ve done a couple of pods about flexible data centers that are capable of doing that, capable of accepting that sort of variable hookup, capable of reducing their demand on, you know, at a moment’s notice kind of thing.

Jane Flegal: Yeah, totally. So I think like non-firm capacity, and like FERC has been pushing this and, you know, some RTOs are sort of trying to figure this out. I think that that is probably useful and important way to get these things connected to the grid faster. If they’re willing to accept like non-firm interconnection, that seems good.

The other thing is like Travis Kavulla has been proposing this idea about like having kind of an open season where you have an RTO or a utility sort of say like, “At this specific node, here’s the spare capacity, come get it,” which is a way of pre-screening planned interconnection locations and cutting the timelines to get connected.

So like that seems like a basically good idea to me, but what do I know?

I think SPP might be doing something like that. And then I think like- At some level, to the extent that a lot of this is symptomatic of how hard it is to interconnect, right, and how slow, you know, there are people who are focused on interconnection queue reform and connect and manage and that kind of thing, and, like, that’s useful, I think, on the margins and, like, worth exploring. And a lot of this is downstream of the fact that we just don’t have enough capacity and transmission. And, like, for me, that means that we ought to take the permitting reform conversations a lot more seriously. And that’s not a fix overnight, but I do think it really matters.

David Roberts: Okay, we’re gonna get back to permitting reform in a minute, but let’s talk then about what kind of grid would we need to have where a data center could just come hook up and be fueled by clean energy? Like, why are they reverting to behind the meter gas plants? What is missing from the grid? And I’m guessing your answer is some clean firm and some transmission. Is that right?

Jane Flegal: I think that’s probably right. But here’s what I’ll say, like, I think the piece that is missing is, like, not a particularly sexy one, but again, this is where I’m not an abundance person, just exclusively, is, like, we have lost our ability to do meaningful planning in this country on these issues. So, like, you know, in regulated states you have IRPs and whatever, but that’s not great always. And in deregulated states we’re basically like the market will decide where you should build whatever. And, like, what this has meant in practice, among other things, I think, is that it has been very hard to plan a grid for growth.

And so I think if you look at the states where data center development has happened and put downward pressure on rates, it has mostly been in states that had like a lot of spare capacity.

In other words, there was stuff that was built in advance of demand. And this is where I think I have some issues with the paradigm the affordability politics is pushing us toward, which is like invest less, build less. I think the risks of under-building are way bigger than the risks of overbuilding, as long as you’re careful about who’s bearing those risks, right? As long as it’s not all on ratepayers, which I think there are tools to manage that, including taxpayer funding and, you know, all sorts of things that states are already experimenting with.

But like what you wanna do is have a thoughtful electricity system that is built in advance of demand, I think, like anticipating demand. And that’s like an unthinkable proposition in much of the world.

And notably, Texas did this with their transmission when they did CREZ, right? Like they built out a bunch of transmission lines in the state that enabled both a lot of low-cost clean energy to connect to the grid very quickly and a bunch of demand to grow, including oil and gas stuff. Anyway, I think that is a piece of this, in addition to just like having more transmission and having more clean firm would’ve gotten us in a slightly different position. So I don’t know. I would like a real analyst to like do that exercise.

David Roberts: I have questions about all pieces of that, but let’s talk about clean firm. This is a vexed debate for me, but it seems like the conventional wisdom at this point is that we need an immense amount of clean firm, and that’s why we need to be investing in nuclear and geothermal, and people are still even talking about gas plants with CCS attached and all this.

And I guess I just wonder, you know, I talked about this a little bit with Lily. If you have a bunch of new transmission, right? If you get serious about transmission and maybe even like, say, link up America’s three big grids and like, et cetera, and then you have batteries which are getting cheaper, and then you have longer duration storage, which is also getting cheaper and also starting to come online.

You got your flow batteries, you got your iron air batteries, you got smaller and more nimble pumped hydro people are proposing and starting to build. Why do you need so much clean firm? Why won’t more transmission plus more storage satisfy a lot of what people think you need clean firm to do? This idea that like storage is like not firm enough or not firm in the right way or not manly firm, I guess I just don’t get it. Like, what’s wrong with storage plus transmission as a answer to the problems that clean firm is supposed to solve?

Jane Flegal: This is where, maybe this is a cop-out, but I’ll go back to like the very beginning of this conversation where I asserted that I take kind of a risk management frame to this. In the real world, doing any of this is basically impossibly difficult. So being able to like plan, permit, pay for, and build the transmission system you would need to do what you’re describing would be very difficult.

David Roberts: Yeah.

Jane Flegal: Innovation in battery technology I’m very bullish on, but that’s a real challenge. Like, there’s a bunch of stuff that siting and permitting all of these renewables, very hard. Very hard actually. So like that path, it has its own set of potential failure modes and frictions, as does the clean firm path, you know? Maybe advanced geothermal doesn’t work everywhere we think it will be. You know, like whatever, like maybe the costs don’t come down, that maybe advanced nuclear never amounts to anything. Like, there are real questions about all of this.

David Roberts: I mean, the whole history of the nuclear industry seems to point at a very large risk just relying too much on that for clean firm.

Jane Flegal: Yeah, but I mean on the other side, in the history of the world, the handful of economies we have that have actually decarbonized tend to rely pretty significantly on nuclear power, you know? So like that’s not to say we should go full nuke here, but like when I hear skepticism about this, I do feel like compelled to kind of point out like, I don’t know, look around the globe at the places that have actually decarbonized, and it’s usually on clean firm.

David Roberts: Yeah, but come on. I mean, all that was before solar fell 90%. All of that was before cheap batteries. All of that was before we were even really trying in earnest to decarbonize.

Jane Flegal: Yeah, but maybe that’s the point, Dave. Like, they did it. Like, it still is a fact in the world. And again, I’m not advocating for, like, a nuclear maximalist path here, but, like, I do think it’s relevant. So for me, it is just like, I don’t know what path is going to be most plausible, and I think we need to try a bunch of different things.

And I do think that it just, like, actually is true that, like, while clean firm, the term, is, like, kind of a modeling convention, and you can, like, discount capacity credit and try to, like, you know, use ELCC and capacity accreditation to, like, figure out how to make all these things equal. Different resources just do different things in different ways, and, like, that’s good.

It’s actually good that they have different failure modes and, like, a good system is diversified. And then imagine a world where we don’t solve all the transmission stuff. This is why I want someone to actually study this. Like, say we didn’t solve all the transmission stuff, and you still have this demand growth, and we were still able to meet it with clean power. It would probably have to be what we call clean firm behind the meter because, like, the physical footprint of powering these data centers with, like, solar and batteries alone is just, like, very difficult to imagine. And, like, the amount of redundancy you have to have, which is why it’s not really happening.

David Roberts: Well, you know, I think one of the critiques people have of the sort of electricity market is that having that firm capacity. If you have privately owned utilities and you have these markets, you have these energy markets, it’s kind of hard to price it such that the system produces enough of it. You know, the sort of the two options here are like you have PJM, which has a capacity market, which tries to sort of do this, and it has many flaws that we don’t have time to get into.

But then on the other hand, you have ERCOT, which is just pure energy market, which is whereas the sort of scarcity is supposed to drive investment in spare capacity also doesn’t seem to be doing a great job.

You have sort of floated this federal strategic reliability reserve. I realize this is like a quarter-baked idea, but what do you mean by that and what is the need for it?

Jane Flegal: Again, like this is where like maybe I’m the socialist, you know, who’s to say? But I guess most of my like real electricity market nerd friends think that Texas is a better model than PJM. But these, again, like none of these are perfect. It’s almost analogous to the issue with climate pricing, which is like in order to have a price signal in any of these versions of the world that actually does what we want it to do, people are gonna probably be kind of pissed off.

David Roberts: Yeah. To me, this is the flaw of ERCOT. Like it would work if you really allowed electricity to get as expensive as it needed to be to do the scarcity pricing. But like the minute it gets that expensive, politicians intervene. Like no one has the guts to let that work.

Jane Flegal: Totally, and it’s the same at PJM right now. You know? Like this is like people wanna cap the price, and like I understand this. So the strategic reliability reserve is basically just like a very not even quarter-baked idea around could you imagine a world where the federal government like procures on behalf of RTOs and states enough kind of dispatchable capacity that, and pays for it to be available, that we’re not asking every state and market to figure out a way to like have kind of backstop capacity. And I have no idea. This could be like a totally insane idea, but I’m just kind of like surely someone should think about it.

David Roberts: Let’s just surface this ’cause you sort of gestured in this direction several times, which is we need more planning. We need more central planning. We need arguably more central control of things. And I guess there’s a faction of people out there who will just say, “Well look, you’re just working your way around privately owned utilities and trying to compensate for the many, many failure modes and things that they don’t do well. Why don’t you just embrace public ownership? You know, why don’t you just turn around and really like full-throatedly embrace “we need public...” Like, it seems like there are a lot of reasons and justifications for private ownership of this stuff that I understand fully in history, but a national decarbonization imperative and imperative for massive demand growth, which is a macroeconomic phenomenon, not a state phenomenon, just all points toward lots more public ownership of the grid, of utilities, and public planning.

Are you willing to just throw your hat in that? I don’t know what the metaphor I’m groping for is, but like are you willing to embrace that idea?

Jane Flegal: Yeah, I mean I think it is precisely the kind of thinking that folks should be offering right now. Like, look, at the moment, nobody is structurally in most of this country in charge of planning anything on the grid. You have FERC Order 1920 that’s trying to get RTOs to plan transmission at least like 20 years in advance, and that’s great, but it’s like barely taking effect and blah blah blah, and there’s nothing really on the generation side.

So like this is the result though of choices we made decades ago. So we either need to like figure out, in my view, how to rebuild planning capacity inside the system we have, and there are like some ways to do that. But I agree with you, it’s like is the more ambitious correct thing to do, just change who owns and directs the assets?

David Roberts: You wrote a piece about grid enhancing technologies, for instance, and these are all ways that we could make the existing grid work better and cheaper. But, you know, I’m not telling you anything, like- If you implement a bunch of technologies that moot the need to spend more, utilities who have a very basic incentive to spend more are not going to embrace them. It’s hard for me. I’ve come back to this virtually every pod I do, but like, it’s hard for me to envision a long-term sufficient solution to these problems that doesn’t address the basic utility incentive, malincentive problem squarely. Do you agree with that?

Jane Flegal: Yeah. Okay. Well, let’s talk about the utility incentive problems. But like, I do think on this point, you either need some kind of better planning processes layered onto the stuff we have. Massachusetts actually has this kind of interesting, like, grid modernization advisory council process that I only recently learned about that is their attempt to kinda like bring these things back together. I have no idea if it’s working or not, but like, whatever, at least they’re trying. You either need that, some like dedicated funding mechanisms, like the GRID Fund or whatever, or public power. We may need a combination of all of those things, depending on where you are.

But like, that I think is the issue. On the utility incentive problem, okay, this one really frustrates me, I’ve gotta say, because I think the way that this gets talked about is not clear about the goal we’re trying to achieve, and often, like, bundles together a bunch of different problems.

The goal that I am trying to achieve is like building out a grid capable of enabling decarbonization and economic growth, right? So like, I, again, like I’ve been very clear, I have a kind of pro over-building bias here, so long as we can mitigate who’s on the hook for any risk of over-building.

So for me, at a paradigm level, I am just not as worried about over-building as everyone else seems to be right now. So like, let me just put that on the table. And if it were the case that I thought, this is where the like, on the one hand, I totally agree, we should be doing all of, like, the efficiency and demand response and DERs and GETs as possible, and I’ve written about that, and we should build a bunch of stuff.

The difference between those two things is that you could, if affordability were not an issue, build a bunch of stuff and solve climate change. You can’t efficiency your way to solving climate change. And so, like, for me, that’s sort of where I come at from this stuff.

David Roberts: But, like, if affordability weren’t a problem is a pretty big caveat. I mean, this is whole Jigar’s point. Like, if you just do this inefficiently, if you do this without doing it in a at least somewhat optimized way, you’re just gonna drive rates through the roof and get political blowback, and you can’t do it that way.

Jane Flegal: I totally understand this, and I think that that’s totally fair, but that is a different kind of argument than, like, we can get there with just this set of things. And I agree, like, I am in favor of doing all of these things. Now, I do think it raises the question of, like, okay, what are the problems here? There’s the problem of utility political influence. There’s the problem of the incentive to overbuild. There’s the problem of the incentive to build the wrong stuff.

And then there’s the issue of just the cost of capital, right? That is how I think about utility incentives and these sorts of issues. And my frustration is that the popular fix here seems to be like suppressing return on equity or performance-based rate making, and I don’t know that that solves these problems.

So for one, I think there’s a category of stuff that’s like good governance reforms, which is just like, of course we should ban ratepayer-funded utility lobbying and trade association dues from the rate base, right? Like, of course. And we should try to address like all of the weird political economy dysfunction around the ways that utilities influence regulators who set their returns. Like that’s real, it’s worth doing. We should like say that it’s bad and like fight that fight with the utilities.

David Roberts: And it does kind of seem like public power just moots all those issues in a much more direct and efficient way.

Jane Flegal: Yeah, totally. But to me that’s like populist and correct, and we should just like do those things. Then there’s like the incentive to overbuild thing, where it’s everyone’s like utilities earn a return on the rate base, so they’re biased toward cap intensive solutions. And that like theoretically is real, but I just am not yet convinced based on the evidence that it’s doing as much damage as people claim. And in this moment, I think the bigger risk, again, is under-building.

So like I’m really amenable to like, you know, I know you had. Pete on to talk about like more transparency into how local transmission and distribution spending is being done. Like I think all of that stuff is good and important to do. But like treating utility overbuild as the central problem to solve right now is just, I don’t think that’s the fight that matters as much right now, and like people are gonna disagree with that.

And if I believe that having that fight would lead to outcomes that would solve climate change or meaningfully help us solve climate change, I would be more open to that, but I have skepticism there, which you may or may not share.

David Roberts: Well, it’s all just like if people could just be normal again and not play team sports with this, like obviously if you want to overbuild, if you want to build big and fast, just on a political economy level you need to use capital the most efficiently as you can while you’re doing that so you don’t create political backlash. Like, there’s a obvious synthesis of these perspectives.

Jane Flegal: And it is really frustrating, in part because of the opacity around how they’re actually spending the money in parts of this, to your earlier pod. It’s hard to e- for me to even, like, get the evidence of, like, how much gold plating is actually happening. It’s just, like, really hard to know, I think. But that is a thing that I think matters. And I do think I buy the version that, like, given a choice, they’re gonna gravitate toward... utilities are gonna gravitate toward the stuff that’s easiest to get into the rate base, which means local transmission and distribution. And, like, that stuff is often also not that risky.

David Roberts: Yeah, to the extent they build transmission at all, it’s within their territories, so they you know-

Jane Flegal: Totally... So there I’m like, yeah, more transparency and governance over those decisions, but, like, this slam down ROE just feels to me like a pretty blunt instrument that discourages CapEx more generally, not just the CapEx you don’t want. And so, like, I just think there’s downside risk, and it’s, like, not even solving the right problem.

Two more things. The one other thing is, like, in theory, I’m really supportive of the move to performance-based rate making or, like, TOTEX or whatever, where you’re decoupling utility profit from CapEx and trying to reward outcomes. But genuinely, I have now talked to people in Massachusetts and Hawaii and the UK where they’ve tried this, and it is, like, not been clearly vindicated by the results.

And I don’t know exactly why that is.

I think what I’ve heard is that it’s just really hard to define the outcomes that matter, but, like, it has a real mixed empirical track record. So, like, I’m not opposed to it, but I’m just like, I don’t think it’s a panacea, which I don’t think anyone argues it is, but, like, I am a little confused about why it’s not working where we’re trying it, so I would love to know more about that.

And then the last idea that I hear less of that I do think is important is that to me, if we’re worried about affordability, the issue is the cost of capital, which is about capital structure, not return on equity. And so if it’s like utility investment costs ratepayers too much, I think another way to do this is to try to push utilities to finance more of their CapEx with debt rather than equity.

What’s interesting here is, like, the Trump administration is doing a bunch of like, you know, they basically gave a giant grant to Southern Company to, like, pay for their stuff. And, like, I do think this question of whether it’s securitization or LPO funding or whatever it is, like, trying to get utilities to use more debt is another way to bring down costs.

Anyway, this makes me sound like a utility stooge, but I’m genuinely just trying to, like, understand what we’re trying to solve and what’s going on here. And I do get a little eye-rolly at, like... And I love Jigar, but this kind of like, “Utilities are evil profit seekers, but all third-party VPP developers are, like, aligned with the public interest,” is just, like, bullshit, you know?

Like, these are all corporations with incentive problems and, like, I’m not saying utilities don’t have their own unique challenges, but they all need to be governed appropriately.

David Roberts: Yeah. Everything we’ve talked about for the last 10 minutes, I just keep coming back. It all sounds like kludges and Band-Aids over the fact that we have granted infrastructure to private companies. Like-

Jane Flegal: Yeah, like just do the national highway. Yeah, I agree.

David Roberts: Before we leave this topic, the one other thing about affordability that you have promoted that we should at least discuss briefly here is getting BS off bills, I believe is the slogan, which is we have larded up electricity rates with a lot of goals and programs of general public benefit. And I think the basic idea here is if something is of general public benefit, it should come out of the general tax base. And is there a more concrete... Like, are there people trying to do this? Are they s- actual bills involved? Like, how far along is this idea?

Jane Flegal: There’s like some really smart people... Where this is at really playing out is in California, which I haven’t followed closely enough, but the wildfire stuff is a really big thing, and I think it’s gonna be big across the country. So Melissa Roberts at the American Flood Coalition has been doing some thinking about like how to grapple with multi-hazard mitigation and grid hardening in a less regressive way.

David Roberts: Yeah, I mean, we should just say just in case any listeners don’t know this already, but just like one of the things motivating this is that paying for things out of the rate base, making electricity ratepayers pay for things, is the single most regressive way to pay for anything. Whereas the tax base, because you have a progressive income tax involved, puts much more of the burden on people who can afford it. That’s part of what’s driving all this.

Jane Flegal: Yeah, totally. Like the standard energy burden literature says that I think low-income households spend 8 to 17% of their income on energy, where it’s like 2 to 3% for higher income households. Like this is my view. I mean, look, the reason people hate it, advocates of many of the programs that are covered in these sorts of programs, is that like it’s a more opaque way to fund stuff. Not just more opaque, but like you’re not subject to the whims of like fights over the general fund.

So I understand, and like many of these programs are very good and very worth doing, so I’m not making a judgment about that. It’s just that I don’t think they should be financed on bills, and in some cases they’re not a huge part of bills, but in some states they really are, and especially this grid hardening stuff.

David Roberts: And I guess maybe this goes without saying too, but I’ll just say it like if your goal is to electrify everything, and if all your decarbonization hopes come down in the end to having cheap, abundant, available, clean electricity the last thing you wanna do is make electricity more expensive. Like, you should be trying to make electricity as cheap as possible to encourage its spread. And so paying for wildfire mitigation costs on electricity bills is squarely in contrast to that. Like, squarely against that goal.

Jane Flegal: Yeah, this is why you’re pointing out some hypocrisy I have in my desire for my, gilded grid that is like yeah, like I do think we have to pay attention to affordability, for sure, and this is a big part of that.

David Roberts: All right. So only two clusters left. We’ve blown through our time limit a long time ago. Let’s talk about... Maybe I should’ve done this earlier, since I know it’s a big thing for you. Let’s talk about permitting reform. I think your thesis, and I think the thesis of a lot of people, and this was of course Lily Bermel’s whole conclusion from her paper, was that the real binding constraints on the build-out of a clean grid today is not cost, it is these regulatory barriers. What are people getting wrong about permitting reform, and what ought they to be doing? Like, what is frustrating you about that whole discussion right now?

Jane Flegal: Yeah, I mean, A, everyone’s really vague about it in a way that it was probably enraging for everyone. So, like, let me just say, I think the deal that people are likely contemplating at the federal... So there’s a federal conversation and then there’s state and local stuff, and we gotta do both. And the federal stuff is there are some reforms to NEPA and the Clean Water Act, and now the National Historic Preservation Act that are being contemplated alongside very important reforms to interregional transmission siting, and then permitting certainty.

So it’s like permitting certainty, NEPA, Clean Water Act, NHPA, and then transmission. Those are, like, the three big moving pieces, I think, at the, of the federal deal. So, like, one, everyone should just be more specific about what they’re talking about.

I think the thing that I will say is, like, a couple of reasons why I think permitting reform really matters for clean energy. One is the land footprint asymmetry. So solar and wind require roughly 20 and 200 times, respectively, the permitted land area of gas per unit of energy delivered, and that includes drilling. And transmission rights of way run two to three times wider than a comparable gas pipeline.

So, like, more linear, more dispersed siting means categorically more permitting exposure. That is, like, just true. So from that one would take the permitting reform that makes it easier and faster to build stuff is likely to asymmetrically advantage clean. I also think there’s, like, a lot of fights about, like, whether NEPA actually matters for clean energy.

All of the data I have seen suggest that, like, one of the dynamics that people often miss is federal land avoidance, despite the fact that there are often better resources on federal lands. So federal lands are 21% of the lower 48, but they host only 3% of US onshore wind, solar, and geothermal capacity, even though the desert Southwest disproportionately federal land has, like, the best solar and geothermal resources in the country.

So, like, there’s something going on there. Third, we’ve surveyed a bunch of developers about, like, what the deal is, and over 85% of transmission developers and over 65% of solar developers rate federal permitting more onerous than state or local, and 82% of developers surveyed this year said they’d intentionally sited a project to avoid triggering federal permitting.

So, like, that’s, they, this is what the developers are saying.

David Roberts: Yeah, th- I was gonna ask you to sort of try to rank federal permitting versus interconnection versus our state and local permitting as kind of like in their degree of severity, their degree of difficulty. So you think federal permitting is the top of that list?

Jane Flegal: I think federal permitting is like really the top, followed by state and local, followed by interconnection, just because like I really think some of the interconnection stuff is downstream of like a lack of capacity. Which isn’t to say that like you don’t need process fixes to the interconnection process, but like fundamentally that is largely a consequence of the fact that we don’t have enough transmission capacity where it needs to be.

The other thing is like on transmission, exposure to these permitting challenges is gonna get much bigger, so only... You know, it is true that only 3.5% of new transmission lines required a full environmental impact statement in the last decade. It was 26% of new line miles in 2024, and of the 26,000 plus miles of transmission now planned, an estimated half of it are likely to trigger NEPA, and that has to do with like a lot of the transmission had been built in the East, we are likely to build a lot more transmission in the West.

It’s gonna implicate federal lands.

David Roberts: Well, and a lot more regional and interstate. I mean, that’s kind of the whole point, right, is the bigger, longer line.

Jane Flegal: Exactly. That is the point. So you can’t just look at historic NEPA implications for transmission and project forward. And then the last thing, the state level stuff is really a problem, which again, like may push people toward wanting to build on federal land and they can’t. So like 17% of the continental US county land mass now heavily restricts wind and/or solar, which is double the share only a few years ago.

So like that’s bad, really bad. So that’s why like it all has to happen. I think the permitting certainty thing is like, candidly, I think my view is like lawless presidents are gonna lawless president, and so like that just is what it is. But if that’s table stakes, and there are things we can do in law to try to constrain them.

David Roberts: Let me articulate some of the pushback, some of the questions people have about this. First, I’d say there’s NEPA reform and NEPA reform. A lot of different kinds of things can sneak in under that banner, and I think one of the things, one of the, I think, fair criticisms is the concrete proposals you tend to hear for NEPA reform is just put arbitrary limits on the amount of time it can take.

And I think a lot of people will just say if you don’t, as opposed to let’s better fund and better staff the agencies that are assigned to do these things, right? Let’s do it more competently and quickly by having more staff and more funding of the people doing it. That asymmetry, I think, makes people suspicious.

They’re like, “It just sounds like you’re trying to cut short the process rather than make the process work better or more rationally.” How do you feel about that one?

Jane Flegal: You gotta do both. And, you know, I was in the White House when this bill passed that gave EPA a bunch more staff capacity and money, and Republicans championed it actually, to do permitting for CO2 injection. And one of the things I found was that, like, I think that stuff is totally necessary, but if you don’t have the kind of... If you don’t have the political and/or policy change to enable it to move more quickly, it just won’t, even if you have more state capacity.

So, like, it’s a necessary but insufficient. And I guess on NEPA, I think the thing that is probably most likely to happen, and is important in my view, is that you gotta have some litigation reforms, especially to kind of judicial remedies.

Because right now, basically, the default resolution for litigation under that law m- it means that courts can just, like, hold up a project indefinitely. And, like, we should just have time-limited review. Like, I think we should just have time-limited review, and I think that’s, like, not a threat to outcomes. A more fundamental argument about NEPA that I’m not sure I totally am convinced of, but I... Jim Connaughton often makes, is like NEPA was one of the first environmental law. And we now have a lot of other environmental laws, and any project has to comply with the Clean Water Act and the Clean Air Act and ESA and whatever. It used to be the case that NEPA was necessarily the workhorse of all of our environmental planning and compliance, and now it’s kind of like, I don’t know, man.

Like, well, the role that it plays is kind of interesting to contemplate in a world where we have a lot of other environmental regulations, I would say.

David Roberts: I take it to be your position that Democratic politicians should get engaged in this and try to pass it now, try to pass it in this session. One of the other things people push back about, which you waved away a second ago, but I think deserves at least a little discussion, is you have Trump now forcing his agencies to very selectively intervene and shut down clean energy projects specifically. They’re doing all this nonsense with offshore wind. They’re doing nonsense with onshore wind about supposed dangers with national security drones, some BS they dreamed up. They’re denying solar permits on public land, where, as you say, that’s most of the solar resource. It’s the idea that you’re gonna create a fair playing field and that clean energy will win on a fair playing field, which is kind of the whole pitch for permitting reform, doesn’t really seem to apply if you do not in fact end up with a fair playing field.

If in fact you end up with a playing field where you’ve made it easier for oil and gas, but then it’s still hard for clean energy because you have this rogue administration shutting everything down. Like, you could imagine people making the argument, this is not a political environment in which it’s fair to ask people. So like, at the very least, we should wait until we don’t have a crazy fascist trying to shut down clean energy.

Jane Flegal: Or we can only pass this in this exact political moment is the counterargument. And like, I totally hear this and I understand the frustration, and A, I think that’s why the ongoing federal conversation as far as I am aware can includes quite significant permitting certainty provisions that are reforms that can close off like many accessible avenues to willy-nilly do what this administration is doing and empower developers and courts to respond more quickly and reduce investment uncertainty. Like those are all good things worth doing, which you can only do in a permitting bill and the status quo is the status quo.

So like I just am a little... The other thing is that barring things I’m not in the mind to discuss right now, like he’s not gonna be president forever.

And in fact, if you imagine a world where there’s a Democratic administration in 2029, a lesson I have learned is that, you know, these reforms are going to take years to work through the system. We’re gonna have to build state capacity. They’re gonna have to trickle down to the courts and to judicial decision-making and all of these things.

And I really think Democrats are gonna wanna be in a position to hit the ground running on their governing agenda. And I also, for more like arcane reasons, I’m highly suspicious that after the election it will be easier to pass this bill. Right now you have a very rare moment of both Republicans and Democrats being highly motivated to get this done. The one other political wrinkle that I think is actually important is that.

You know, the transmission provision, which we haven’t talked about, which is actually, you know, one of the things that’s most exciting, is historically has been blocked by states and utilities, right? And like right now, both parties, utilities have much less power with both parties right now than they have historically had.

David Roberts: Yeah, they kind of are on the back foot a little bit because of the data center stuff, affordability stuff.

Jane Flegal: Yeah. And so, like, this is one of very few moments where you might be able to roll them on federal transmission planning and permitting, and like that feels really important to me.

David Roberts: And I will say, like if there’s a Democratic administration, Republicans are gonna try to block everything. They’re not gonna help them do anything. They’re gonna block everything, period, full stop. That’s just what they do. That’s just their mode, and they will absolutely shoot themselves in the foot to prevent Democrats from accomplishing anything, whereas there are some sane Democrats. The final question about the politics of this is, and this is something that’s mystified me, the reason, as you say, hyperscalers are resorting to behind-the-meter gas and all these workarounds is that they can’t get enough clean energy, and they can’t get enough clean capacity on the grid. And if you agree, as I think a lot of people do now, that permitting is one of the primary, if not the primary barrier to building more clean grid, why on earth aren’t hyperscalers beating on doors in Washington, D.C. supporting this?

Why aren’t they using their political heft more sensibly? Why are they not in the front of the line pushing for permitting reform?

Jane Flegal: Look, I think many of them are. It’s just been a very quiet negotiation, is the honest answer. Like, I don’t think that Republicans certainly would be at the table in this way, frankly, if that constituency weren’t meaningfully pushing for this. Yeah, I’m not so sure they’re not.

David Roberts: Interesting. We’ve talked two hours. I have one final question, or at least final topic, which is you and I have talked before and are frustrated by every group and faction kind of being dumb and wrong about various different things and refusing to kind of look past their institutional imperatives to see the bigger picture. It just seems like there’s no, like everybody’s groping at the elephant and like there just doesn’t seem to be like a coalition sensible people, you know what I mean? Who are, like, pursuing the big picture in a way I think you and I agree would be sensible, which is, like, a lot of these disputes we’ve discussed, as we’ve discussed, the answer is both/and. The answer is to do all of it.

There’s just a lot of silly fights and silly parochialism. Everybody’s got their blind spots. It just doesn’t seem like if you’re a person who wants rapid build-out of a clean grid, there just is no clear answer to, like, what group or what faction you should join and throw your efforts behind. It just doesn’t seem like there’s anybody that’s quite aligned on doing the sensible things in a sensible way. You know what I mean? I talk to people, a lot of people in my audience who, like, wanna get involved, and, like, I don’t always know where to tell them to go. There’s not a clear group or faction that I think I really, like, can endorse with a clear conscience who seems to be... And we’ve discussed, like you, I think, are out kind of trying to assemble something like this coalition.

But I guess my question is, like, why isn’t there such a coalition? And is there something about coalitional politics as such that prevents people from taking this broader, longer term view? You know what I mean? In some sense, is it only possible for sort of independent individual to be good on this stuff? It’s almost impossible to create a group that’s good on this stuff. Like, how do you think about that? Like, how do you think about coalitional politics and assembling a coalition behind what we’re trying to do here?

Jane Flegal: Man, this is such a good question, and it’s something that I’ve really been grappling with lately because I’ve been working a lot on, like, what does a federal agenda over the next few years need to look like if you care about climate in this new moment? And my response to answering that question has basically been to, like, identify the 30 smartest people I know… On, like, the topics I think matter and been like, “Tell me what you think we should do.” And that is because I think I share your frustration or skepticism about the ability of, like... I think, A, I’m sort of... The sort of, like, obsession with consensus-based coalitional politics within the Democratic Party, I think does us no favors because it elides the trade-offs and it, like, just makes it really hard to, like, say true things, honestly, sometimes.

And it can, like, be constraining on creativity. ’Cause, like, if the answer is public power, like, what 70-year-old organization is gonna, like go on the record and say... You know, like, people are risk-averse, and they depend on, you know, a certain set of funders, and they have their own institutional constraints. It’s just really hard.

So I think, like, on the question of, like, maybe there’s two pieces. It’s like, where does the fresh creative policy thinking going to come from? And I wish I had an answer like, “Oh, there’s this five amazing groups, and they’re gonna just gonna figure it all out,” but I don’t think that’s the truth.

And I think some of it should come from academics too. You know? Like, some of it should come from workers.

So I think I don’t have an answer to that. But then there’s the question of, like, how do you actually implement the policies that you think and the actions that you think are high priority?

David Roberts: And I wanted to emphasize this too, like, in terms of that consensus, that sort of obsession with broad coalitional consensus, that is sort of the everything bagel critique and everything. Specifically in 2029, assuming things go well and there’s a Democratic president and maybe even Democrats have Congress, there is so much to do. There’s so much that has been broken. There’s, like, accountability for the scumbags who have done all these horrible things. There’s, like, dismantling ICE. There’s, like, building back up institutions that have been broken and destroyed. There’s the federal scientific apparatus that’s been pulled apart. All the agencies are now underfunded and, you know, they don’t have enough people. There’s just, like, the list of things that need to be done is almost infinite.

And so that means one outcome of that is prioritization is going to be everything because as we know, like, you gotta get a few key things done, and generally that’s all you can get done with a new administration.

Like, for whatever reason, however much you might lament that, it’s generally a few big things. And so, like we’ve got to specifically on this clean grid question, need to prioritize a few key things. And like how does that work? Who does that work? Who decides those priorities? And who pulls everybody along?

Jane Flegal: Well, this is political leadership. This is actually like one of my biggest critiques of Democratic politics right now, is like the standout electeds, I think, have this quality of not listening to polling on everything, not being like true DSA member or true moderates. Like, there is this quality of just like judgment and taste and leadership, and like willingness to say true things that I do think people value. And people are going to have to do that because we can’t say yes to everything. And just on the fiscal question in 2029, like Brendan Duke at CBPP has just been tracking, you know, how much undoing SNAP and Medicaid alone is gonna be, and it’s crazy. Like, we are in a real bind.

So anyway, I mean, I think the phase of policy development we are in right now is, in some ways, my favorite phase I think, which is like we are and should be in a battle place of ideas, and we should like that right now.

We should just be like, “Everyone say your best idea. Maybe it’s public power, or maybe it’s limit ROE, maybe it’s VPPs, maybe it’s state-owned nuclear.” I don’t really even care. I just want people to say with their whole chests what they think the correct answers on the merits are to a bunch of different problems so that we can have like an informed, smart discussion about what the right answers are on the merits. And then the question of like selling it-

David Roberts: That is the fun part.

Jane Flegal: That’s the fun part, and like that’s where we are. So like my anxiety right now is that I’m not seeing enough of that. And including from some of the like big groups. I’m kind of like, “Get out there.” Like, “What do you got?” Let’s just not be afraid of fighting and like eventually we will come together as Democrats around a shared agenda. But right now, this is the time to like, have robust debate. That’s democracy.

David Roberts: Yeah. I mean, I really like your idea ’cause, like, there are good people in the green groups, there are good people in the abundance world, there’s good people in establishment, Democratic circles, there are good people in academia. It just seems like a lot of them get muted or distorted by these coalitional dynamics or by the dynamics of sort of group factional warfare, and I like the idea of just plucking the 30 best people out of all those worlds and making, like, a super team. But when I think about doing that in practice, like, then you’re a group. You know what I mean? Like, then you’re a group, and the other groups are yelling at you because they want their territory. You know what I mean?

Like, they want to be the top group. And, like, I’m so frustrated by those dynamics, and I just really have no idea how to get out of it. And maybe you’re right. Like, maybe the only way out is through, and we all just have big fights and come to some sort of consensus.

Jane Flegal: Not to be, like, conspiratorial about this, but I think that’s right, and I think, like, the one dimension of this that doesn’t get enough attention that I have witnessed is, like, there’s this sort of intergroup warfare that is, like, itself, like, frustrating and hard. But the real issue is that you have a very large donor class that is itself putting pressure on electeds with and through and informed by the groups. And, like, that is another constraint. If the electeds don’t have courage, that’s another constraint on their ability to just, like, use their judgment and, like, hone their skills around judgment and, like, just make decisions that they think are right because you have all these weird accountability structures, some of which are, like, not actually aligned with the electorate.

So it’s like, that’s weird.

David Roberts: Yeah, it’s like the donor class is almost the most influential group in practice and the least transparent, the least involved in these public fights because they don’t speak up for themselves, and they just work their... So people end up fighting over the downstream consequences of donor decisions without seeing why they’re made, why they ended up that way, because it’s, like, traces back to the donor class, you know, who’s very opaque.

Jane Flegal: Yep, and have concerns that are sometimes out of touch with the electorate in all kinds of ways.

David Roberts: Well, I think we’ve officially talked about everything.

Jane Flegal: Okay, great. Done.

David Roberts: Done and done, unless there’s anything else-

Jane Flegal: No. God.

David Roberts: You think we missed. All right. This has been lovely and fun, as I knew it would be. Congratulations to any stalwart listeners who have made it here with us. The true hardcore people, you’re the best. Yeah. Thanks, Jane. Good luck with all your work.

Jane Flegal: Thanks so much for having me, Dave, and hopefully I’ll be back again at some point, and we’ll talk for a shorter period of time about more fun things.

David Roberts: All right, thanks.

Jane Flegal: Thanks.

Conventional geothermal power depends on the subterranean presence of hot, permeable rock, which tends to cluster around tectonic and volcanic activity. That makes it a geographically limited resource. In the US, it’s almost all in the west.

But how much is there? The last comprehensive assessment by the US Geological Survey, in 2008, identified about 9,000 megawatts of discovered potential and estimated another 30,000 megawatts still undiscovered. That’s a ceiling of around 7 or 8 percent of current US electricity demand. Not nothing, but not a game changer.

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That is why most of the excitement in geothermal over the past five years has been about enhanced or advanced geothermal — various attempts to make the technology less dependent on geography. Here at Volts we’ve talked with Fervo, which drills horizontal wells and fractures the rock between them to build its own hot-rock reservoirs, and Quaise, which uses microwaves to drill super deep, on the theory that all rock is hot if you go far enough down.

A company called Zanskar is making a different bet. Its founders, Carl Hoiland and Joel Edwards, argue that the USGS numbers rest on old, crude data from an industry that stopped seriously exploring in the 1980s. They think there are roughly ten times more undiscovered sites than USGS estimates, and that each one can produce roughly ten times more energy than it estimates. If that’s true, we’re longer talking about tens of gigawatts, we’re talking terawatts — enough to supply all US electricity demand — all of it reachable with old-fashioned, easy-to-finance conventional geothermal drilling techniques.

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Hoiland and Edwards say their AI tools can find that undiscovered geothermal. Last year they found a “blind” resource in Nevada with no surface signs and no prior drilling, repowered a written-off plant in New Mexico, and signed a 100-megawatt power purchase agreement with Nevada’s utility to help power Amazon data centers. So the question is no longer whether they can find heat. It’s whether there are really terawatts of it to be found. I can’t wait to drill down on it with them.

Chapters

• 00:00 – Introduction

• 03:29 – Heat, permeability, and how resources have been found

• 04:49 – Why conventional geothermal stalled, and why the estimate is stale

• 09:22 – Applying AI to old exploration data

• 11:10 – The data Zanskar works with

• 13:09 – Models, field testing, and the feedback loop

• 15:02 – How much more resource is really out there

• 20:22 – Lightning Dock: reviving a written-off field

• 22:14 – What has changed in drilling technology

• 28:37 – Pumpernickel and the permeability question

• 31:08 – Natural permeability vs. enhanced geothermal

• 34:21 – Big Blind, the first blind discovery in 30 years

• 37:09 – Improving the models to keep getting better

• 40:51 – Financing exploration: the development capital facility

• 44:38 – The NV Energy PPA and data center demand

• 47:42 – The skeptical case and geographic limits

• 54:20 – Policy dependence and public lands

• 58:11 – What's next for Zanskar

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

• Volts (Website - Podcast - Apple Podcasts - Spotify - YouTube)

• Carl Hoiland (LinkedIn)

• Joel Edwards

  • Zanskar (Website - LinkedIn - Newsroom)

Company & Industry News

• Zanskar Inks 100 MW Power Purchase Agreement to Provide Carbon-Free, Firm Power to NV Energy

• Zanskar Reveals ‘Big Blind’ - The Discovery of the First Blind Geothermal System in the U.S. by Industry in Over 30 Years

• How AI is uncovering hidden geothermal energy resources

• A startup discovered a hidden source of abundant, clean energy

Books & Articles Discussed

• USGS - Assessment of Moderate- and High-Temperature Geothermal Resources of the United States (Fact Sheet 2008-3082)

• USGS - Electric-grade geothermal energy resources of the U.S.

• How Amazon is preparing for the energy needs of the future

Related Volts Episodes

• Catching up with enhanced geothermal

• Enhanced geothermal power is finally a reality

• Super-deep geothermal drilling ... with microwaves

• Getting better at mining the minerals needed for clean energy

• For data centers, a little flexibility goes a long way

Transcript

David Roberts: All right. So with that wretched pun, Carl Hoiland and Joel Edwards welcome to Volts. Thank you so much for coming.

Carl Hoiland: Thank you. It’s great to be here.

Joel Edwards: Yeah, thanks, David.

David Roberts: I should have perhaps mentioned in the intro Carl you’re the CEO, Joel you are now the CTO of Zanskar. So maybe Joel let’s start with you this is the easiest technical question in history but I think maybe it will help orient new listeners who are new to geothermal. So just briefly when you’re looking for geothermal resources, what are you looking for? What are the qualities, features that you’re trying to find that make something a good geothermal resource?

Joel Edwards: There’s really just two ingredients. You need exceptionally hot rocks that have open pathways for fluids to flow. And so actually we found that these two ingredients exist fairly commonly in the Western United States, Iceland, these other places that lots of people are familiar about. These systems themselves are sort of on the smaller scale in those broader regions, so you kinda have to find these sort of chocolate chips in the chocolate chip cookie, so to speak. So it does take some exploration, it takes lots of data collection, and you’re looking for these little chocolate chips where you have exceptionally hot rocks and you have rocks that are... Basically they have large open pathways in them, and you get these little active convection cells where you have hot water that’s sort of circulating through that system.

David Roberts: Right. Heat and permeability is what you’re looking for. So my second question is: how have they traditionally been found? I did a pod a few years ago with a company called KoBold Metals, I don’t know if you’ve heard of them, but they have a strikingly similar pitch to yours except they’re going after metals rather than geothermal resources. But it’s the same thing. They’re using AI to find metals, and one of the things they described to me on that pod is the way traditional metals deposits have been found just amounts to a dude walking around on the surface looking for sort of visible manifestations of metals. Sort of astonishingly analog. So I’m sort of curious, is that the same way that geothermal resources have traditionally been found? Like, how have they traditionally been located?

Joel Edwards: Yeah, that’s right. There is a lot of geologic, like walking along the surface, looking at different sort of relationships across rocks to try to find systems. That’s historically how they used to do it. In particular, the early explorers, they figured out, hey, we need, you know, those open pathways, we need permeability. So in theory, if we find, you know, in the Western US fault zones, which fault zones in the western US are pretty common across Utah, Nevada, California and so forth, particularly if we were look for young fault zones, we think that there would probably be geothermal systems there.

So in the early days, they would sort of drill just sort of sequentially along these mapped fault zones thinking that there was gonna be geothermal systems along those. And unfortunately, they found that the geothermal systems were a little bit rare, and they were not very predictable along those faults zone. So in other words, the vast majority of fault zones, they don’t have geothermal systems necessarily in a pattern along those, that these geothermal systems, they kind of crop up in sort of non-unique or non-obvious places. So it gave the perception from the 1970s and ‘80s, that exploration work, that these systems were rare. That perception has fed all the subsequent modeling.

David Roberts: Ah, I see. Yeah, it was a similar thing with the metals, just like that traditional way of finding them had an astonishingly low hit rate, and thus an astonishingly high sort of like per deposit discovery cost. ‘Cause there’s just a lot of missed, a lot of dry wells, a lot of wells that are… mines that didn’t find anything. So Carl, there are about 36 operating geothermal fields in the US, roughly 4 gigawatts total. That is only up about a gigawatt in the last decade. So explain to us why this technology has been- conventional geothermal has been kind of stuck in place for so long. Why has it been so moribund?

Carl Hoiland: You know, maybe the simplest answer I’d have to that is that we stopped looking. That idea that it was so hard, so challenging, that we had so many failures led to a belief that there weren’t that many out there left to find, and as a result, investment really shifted into other areas, into other ways of maybe engineering these systems, et cetera. And maybe on that last point, I like to point out you’re right, it’s an analog industry in many ways, the way that exploration has been done.

But it’s not unsophisticated, it’s not unscientific, it’s not deeply technical. It’s an industry that Joel and I think have been passionate about since we were kids, really. Humans have been exploring for natural resources for thousands of years. And it turns out it’s actually just really hard to apply some of these modern data science or statistical methods to it because it’s a sparse data problem, it’s a messy data problem. There’s conceptual understanding that needs to go into it. And so really the timing of the work that we’re doing is driven a lot by some of the changes in modern neural networks and the ability to apply much bigger models to the problem. And so when we went back and looked at some of these early estimates, you mentioned the ones that are almost 20 years old now-

David Roberts: And based on data that’s even older than that, I think. Like the estimate is 20 years old, but the data the estimates are using, I think dates back to like the ‘70s and ‘80s.

Carl Hoiland: Exactly right. And so as we started looking at the underlying datasets and the assumptions being made, assumptions about how many undiscovered systems there were, assumptions about how deep you could drill into them, assumptions about how productive each system could be, we started to realize that technology had come a long ways in those 20 years, and we were probably significantly underestimating the resource potential, maybe by orders of magnitude.

David Roberts: Yeah. This is again a parallel to KoBold, one of the things that KoBold boasts is using AI. Everybody’s using AI for everything these days. You guys are boasting you’re using AI. But one of the things that they were doing, KoBold is doing with AI, is just taking all these old records which turn out to be just this wildly kind of disparate data, like old field records and just notes from explorers and different databases, and using AI to sort of rationalize and systematize that information. Is that the same thing you’re doing? Is that your main use of AI?

Carl Hoiland: There’s a few different uses. One of them, yes, is that, taking all this existing legacy information and pre-training these models. But maybe ours is a little bit different. The geothermal industry is much smaller than the minerals industry, and as a result, we have much less data. You mentioned those 36 operating fields, and we often like to point out that half of them were almost found by accident. Right, the initial indication that there was an exceptional heat resource-

David Roberts: Mm, right

Carl Hoiland: was maybe a farmer drilling for water or gold company drilling for gold. And the other half of those sites had some seeping hot water at the surface, you know, boiling mud pots, fumaroles, et cetera. And so when you sort of hear this message of, “Oh, it’s all tapped out and there’s only a little bit left,” it reminded us of messages that were communicated in the late 1800s about oil and gas.

David Roberts: [laughs] Right.

Carl Hoiland: They sort of declared peak oil, get ready Pennsylvania, it’s all ending.

David Roberts: They were doing peak oil stuff right up until the early 2000s. I mean-

Carl Hoiland: Right. And so we’ve seen this pattern before of underestimating how much is actually beneath us. And I think the fact that the entire industry globally is still mostly at sites that were either found by accident or had hot water seeping out of the surface gave us a lot more confidence also to follow the statistics, follow the datasets towards this possibility of much larger undiscovered potential.

David Roberts: What is the information, like what is the data that you do have? You say it’s scarcer than in the mining industry, but what is there?

Joel Edwards: Yeah. On the data side, there are a few prior waves of exploration, so the ‘70s and ‘80s wave. There was a handful of oil and gas groups that got into the geothermal game, and they spent billions of dollars, exploration dollars, you know, adjusted to today, inflation-adjusted during that timeframe. And then in the 2008, 2012, the DOE funded a bunch of exploration campaigns, so there’s a few small datasets. And those datasets generally cover single digit percentages of total prospective land in the Western US, so a very small sample size. And then, of course, there’s adjacent datasets like people drilling for water wells.

There’s data in those, people drilling for oil and gas or mineral wells. Those are kinda harder to access, but there’s data about the subsurface there. The data is mostly well field. That’s sort of your direct indicator if a geothermal system’s at that location or not. And then there’s indirect datasets that come mostly from public sources like the USGS or from universities or national labs, and these are folks that go out and they do geologic mapping or they collect different types of geophysical or geochemical data, and they’re usually doing that in the context of scientific studies, right? And those are sort of indirect type datasets.

There’s data coming from now satellites that are circling the Earth, and they have instruments on the belly of those satellites that are recording. There’s a broad mix of datasets that basically they’re measuring some property of the earth at that location over some region, and none of those properties in isolation will tell you if a geothermal systems is there, but potentially combinations of those datasets can tell you if they’re there, if there are training datasets from wells that you can train models on top of. Carl said earlier, like, there’s a lot of sort of messy historical or sort of adjacent, not directly related type data as part of this sort of treasure hunt problem of finding systems.

David Roberts: But your secret sauce, the secret sauce of your company is that you feed all that existing data into the AI, and then the AI basically produces models that have probabilities, basically. It’s not deterministic since you have not done the actual exploration but you can produce models that say based on the data we do have it’s likely there’s something here right?

Joel Edwards: Yeah.

David Roberts: Is that the basic idea?

Joel Edwards: And producing models probabilistic models is not a unique thing to Zanskar right. There’s national labs and universities that do this and there’s even other companies that do this anybody can build a model right. You could go into Claude right now and probably build a probabilistic model of your own. The hard part is pairing that model with the field piece of it like you build a model it makes predictions. That’s great. Now you need to go out and you need to test those predictions. And then you need to feed all of that data back in and you need to make a new set of predictions. So you need this iterative loop between model building teams and field data collection teams.

David Roberts: And when you say collect field data one of the reasons people got scared off this in the first place is that it’s quite expensive to drill a deep well to find out if there’s something down there. Are there cheaper ways of doing that in the field to gather data in the field that are short of actual full-on deep drilling?

Joel Edwards: What you said is true. But there’s a lot of variance in that truth so whether you drill to 1,000 meters or whether you drill to 10,000 meters there’s a huge difference in cost.

David Roberts: Right.

Joel Edwards: So if you can figure out a way to basically test your prediction it might require drilling but not all drilling costs the same. So basically you want to find the cheapest cost of drilling you can to test that prediction at that location. And that’s where Zanskar spent a ton of time is figuring out how to drive down those drilling costs over the last five to six years.

David Roberts: So I think anyone would find it just intuitively plausible that if they haven’t explored since the ‘70s and ‘80s in earnest and they had these old techniques. They didn’t have AI back then. They couldn’t crunch these sort of numbers...that there’s more than they thought, that there’s more than the USGS thought. You’re not just saying that there’s more than they thought. You’re saying that they have underestimated by something like a factor of 30. You are saying they are off by an enormous amount. Like you’re claiming terawatts where they have tens of thousands of megawatts. They have a few dozen gigawatts. So that is I think an extraordinary claim. What is the evidentiary basis for that claim? Not just that there’s more than we thought but that there’s that much more.

Joel Edwards: Yeah. I might have a slightly different answer than Carl, but we’ve gone out and we’ve tested over 5 million acres over the last five years, so we have a large… very large sampling data set. So based on that hit rate across that 5 million acres, right, we’ve come up with the updated numbers. But there’s also, if you look at those prior estimates, their models, they had a really hard time predicting for different geographic provinces.

So for example, in the state of Idaho, there, you know, is something called the Snake River Plain, and it’s this large historical volcanic province. And basically, the old models had a really hard time understanding if there were geothermal systems there. Up in the northwest, there’s this large history of volcanism up there as well, and those models had a really hard time understanding if there were systems there. So there’s like geographic diversity across the Western US that the models were having a hard time accounting for. And then also just that frequently in this like five years of exploration, we keep finding systems in spots that surprise us, and we’re the people building the models. It sort of... We have a gap in our conceptual understanding of where these systems form, how long they live there, and how they die in the sense that’s just impacting our total model estimates.

Carl Hoiland: Yeah. And maybe the one thing I’d add to that is in addition to just more undiscovered sites than previously estimated, we’ve also come to realize that each one of those sites can produce much more power than our previous estimates were attributing to them.

An example of this is actually the work we did in New Mexico, where we acquired really a failing geothermal field called the Lightning Dock Geothermal Field, and it had been underproducing for years, had run into economic challenges, and we were able to acquire it because our models were looking at the same datasets that everybody else was looking at, but were coming to a very different conclusion about how much power potential it had. And when we came within a year of acquiring it and drilled into a deeper resource on the site, just that first well that we drilled was enough to bring the plant back to its full nameplate capacity, make it profitable as a facility, but it also proved out a much larger potential that could be as much as 10 to 40 times more than the initial industry estimates were for that site. And we’ve been finding that applies across many other fields as well.

David Roberts: It’s not just the Lightning Dock site then. There’s other sites where you found that there’s way more power potential in the site than had been previously assessed. That’s why you’re generalizing it out.

Carl Hoiland: And we’re finding that both in the drilling that we do, and then also as our models have gotten more sophisticated and more aware of what these systems are capable of, you also start to realize that how you design the well field has a big impact on power production, how you optimize the flow pathways in ways that we weren’t necessarily thinking about as rigorously in the past without these models.

David Roberts: Mm-hmm. Yeah, I wanna get into that in just a second, but one more question about the USGS survey. They are updating, as I understand it, that hydrothermal assessment of the Great Basin as we speak. Do you have any expectations about what the new assessment will say, or are you working at all with the people doing it? Are you in touch at all with the people doing that new assessment? Do you have any sense of whether they are going to come around to your way of seeing things in the new assessment?

Joel Edwards: Yeah. We’ve met with those folks and are familiar with their approach that they’re taking to the problem. The hard part for the updated assessment is that you’re still working with the same legacy data set functionally that you worked with in 2008. You do have new tools, right? Obviously.

David Roberts: Right.

Joel Edwards: You have improved modeling frameworks, and you have some improvement in the conceptual understanding of the system since then. But fundamentally, your benchmark data sets are more or less still the same. The industry hasn’t grown that much. It still will be a challenge for them to make predictions that are outside of the benchmark or the, you know, what they call the prior space.

David Roberts: Right.

Joel Edwards: We’ll see where it lands, and unfortunately... I wish we could, you know, share with them all our data, and then they could build a much more robust, updated model and go from there. But obviously, like, they have a mandate that whatever data they have in the model space, it needs to be published. So if we were to share, you know, then that would make all our sites public.

David Roberts: Are you gonna share your data at some point?

Joel Edwards: Of course, as we- You know, the tricky part is we make a discovery, we go through a process where we lease the geothermal rights for that discovery. And so the leasing program sort of dictates when we can make things public, obviously. There’s sort of a sequence to it. But yeah, hopefully over time, we would love to publish, you know, as much as we can.

David Roberts: All right. So let’s then talk about Lightning Dock. This is this existing geothermal well. It had, as drilled, the extant well had been really declining rapidly, more rapidly than the people who drilled it thought it would, and was not even keeping up enough to power the plant, more or less dead. You assessed it and decided there’s more on that site. There is more power in that site than they’re getting out in that well. Is that just through your standard testing and modeling that you... Like, why did you identify this particular site?

Carl Hoiland: This is not necessarily standard modeling, but this is sort of core to what we do at Zanskar. Going back to sort of this idea of how AI helps to solve these problems, one of the founding insights for the company was seeing how quickly neural networks were evolving, the ability... Joel and I think were in graduate programs in the 2010s when AlexNet came out in 2012, Transformer architecture in 2017, and obviously models just kept getting better and better. But what really impressed us was their ability to deal with massive unstructured data sets, at the time it was mostly images and image classification, and then to be able to interpret something about it.

And so kind of a really simplistic dummy concept I hold in my own head is if you think of a geothermal system like a cat or a dog underground, and all you’re seeing are the ears of that system at the top, do you know enough just based off of what you’re seeing in the ears to give a sense of how big is that cat? Where might his tail be today?

David Roberts: It’s like a CAPTCHA. It’s like one of those stupid online CAPTCHA things. Which of these images has a bicycle in it? Right.

Carl Hoiland: Right. And so even though you only have a little bit of the data, it’s actually powerfully predictive about what might be down there. And so we were looking at the same data sets as others, but getting a lot more visibility and fidelity into how the true potential of that system might be and where we might need to drill within it.

David Roberts: And so, as you mentioned, you also… Like the drilling technology used in that extant well, a lot of new drilling technologies come along since then, you know, a lot of it borrowed from oil and gas. Could you just briefly sort of give us a sense of what are the advances? What are the new things that you brought to that well? Is it like new kinds of drill bits? Is it new diggers? I don’t... As you can see, I know nothing about drilling technology. But like, what are the new bits?

Carl Hoiland: Yeah, quite a bit here. And some of this you’re hearing from across the geothermal industry is how exciting it is to be able to pull modern oil and gas drilling tech into our space and see cost declines come from that. So we used PDC bits, directional drilling assemblies, mud motors. A lot of the same technology you’re hearing that’s driving down the cost curves in EGS are also helping us in conventional geothermal to drive down cost. And so, Joel, maybe you could speak to how good those results were.

Joel Edwards: Oh, yeah. Relative you know, we bought a legacy site, so there was legacy wells that had been drilled there over the last, you know, 10 to 15 years.

David Roberts: Right. So you did have some data. You had more data. You had more than none.

Joel Edwards: We certainly had more than none. That’s right. Yeah, and relative, we generally know the rigs that were used and the tooling and so forth that was used on the prior wells that were drilled at the site. We just had a lot more success with this new well. Part of that is, you know, the fleet of drilling rigs that the oil and gas industry continuously funds, that fleet today is so much better than the fleets that geothermal have u- has used historically. Like, so much of that drilling rig floor is automated today in a way that it wasn’t. So that making connections, you know. As you go deeper, you have to connect in new rods. All the connections are faster, so tripping in and out of the hole.

David Roberts: Mm.

Joel Edwards: Obviously, as Carl mentioned, the downhole drilling assemblies, how they steer these bits and hit targets at depth is unreal. It’s a taxi service underground. And my head, you know, even has a hard time understanding how they’re communicating with the bit at that depth telling it where to go. And then obviously the drilling speed improvements and the drilling bit length, the run length improvements by using PDC bits had a huge impact, right? We didn’t have to trip in and out of the hole as much because the bits lasted longer and so forth.

David Roberts: Right. This is a big thing where you’re like, you drill down with the bit, your bit gives out, and you have to drag the whole rig up out of the hole, change the bit, put the whole rig back down. That has a been a big cost center previously.

Joel Edwards: Exactly, yeah. If you’re chewing through a bit every couple hundred feet, you’re tripping every couple hundred feet, and you basically lose a half day to a day-

David Roberts: Mm...

Joel Edwards: replacing that bit. And so you add that up, that’s how you’d end up with well fields. You know, a well would take 40, 50, 60 plus days to drill in geothermal, and now those timelines are collapsing down to, you know, weeks. That’s just like standard oil and gas. Oil and gas has been funding this technology development for especially the last 15 years with all the shale gas development. That’s coming into EGS. It’s also coming into conventional well fields.

David Roberts: And you just went deeper, did you not? I mean, just another of my question is like, one of the things I’ve heard is that as you go deeper, the costs do not rise linearly. It gets a lot more expensive quickly the deeper you get. So I’m wondering how you make that bet, that calculation, how deep to go, how much of that expense is justified. How do you make those calculations?

Joel Edwards: It’s a mix of a few things. There’s rig time, right? So you have basically a small city that’s on site, and every day that that city operates, there’s a cost, so there’s that burn rate. You have to construct a well, right? It’s not just making a hole in the ground. You have to put cement and steel, and you have to construct it.

So those are fixed costs that go into a well. The deeper you go, the more you have to construct, so it’s both the time of the rig that you have, that city that you have to operate, and then it’s also all the materials. And yes, at Lightning Dock we did go deeper. That new production well is roughly four times deeper than the first set of production wells. But we also… you can’t just drill deeper anywhere, right? You have to have the right targets. You have to hit the system in the right locations, otherwise, you know, you’ll have a, you know, maybe a tight hot well or a tight cold well. So it was the combination of going deeper into the system and also targeting that system at that depth.

David Roberts: I mean it’s worth saying there’s a lot of places where there’s hot rock but no permeability, and there are places where there’s lots of permeability but no heat, so it’s a fine target. And so now this new well you’ve dug here on this site, you claim is the most productive pumped geothermal well in the US. Is that based on this brief flow test you did, or is that an actual measured claim at this point?

Carl Hoiland: It’s actually a very well-measured claim at this point. We’ve been operating that well at full capacity powering the power plant for over 12 months now.

David Roberts: Hmm.

Carl Hoiland: And we saw no temperature decline in that period of time, which is very exciting. And we’re really measuring it by both the total amount of thermal energy that that well delivers, which is over 100 megawatts of thermal energy at the wellhead. And I mean, if you think about it, this is a well you can wrap your arms around. It’s not that big, and that’s as much heat as a small modular nuclear reactor would create. And then you’re pulling that into the power plant where you’re going to extract that heat and drive a power cycle, where we’re also generating more electricity for that well than Joel, I think still to this day, than any other well of its type in the country.

Joel Edwards: Yeah. So that metric David, the benchmark data set in the state of Nevada, they actually publish all the operating production wells in the state, so there’s over 200 wells, and most of those wells are pumped. So between that data set and then the other pumped wells in the country that we know about, we’re able to compare this New Mexico well, production well to that existing fleet of operating pumped wells. And this well in New Mexico delivers more thermal energy to the power plant than any other pumped well in the country.

David Roberts: Interesting. And so is the existence of that excellent resource that you found de facto evidence that there’s other excellent resources in that area? In other words, are you done with that site or are you drilling more wells on that site?

Carl Hoiland: I think the short answer is it sort of does the opposite. It strongly confirms that there is additional upside there regionally, and really at any other field that looks somewhat similar to it, which is not just in New Mexico where we find these types of fields all over the Western United States.

David Roberts: Let’s talk about Pumpernickel then. Just a fun word to say. This Pumpernickel site, the first well you drilled there was dry, was… did not turn out well, and then you drilled a second and got a big hit. I’m curious, what is your hit rate? A big problem in the early exploration was this low hit rate, and it’s very expensive to drill these wells. What is your hit rate? Is that measurable? Is that a metric that you can report?

Joel Edwards: Yeah, there’s ... Carl, you could jump in here as well … there’s many ways to measure hit rate. One way we measure it is we make model predictions, and those model predictions have a range of probabilities. And those model predictions, they’re predicting temperatures and permeability as a function of depth for your planned target. And so one thing we track is for every deep well we drill, did the outcome of that well fit within the range of probabilities, and how close were we to the median probability? So that’s one way. Another way is to drill the well and then obviously measure the performance of that well.

So for certain types of wells, this is a fun thing about geothermal that you can’t do in oil and gas, is after you drill a well, if it’s a certain type of well, you can open it up and you can let it rip and do what’s called a flow test, where you let that brine come to surface and you flash it into a pond, a retention pond, and you can measure the flow, the heat content, and the amount of volume coming out per time, and that’ll tell you the performance of the well. Those are two quick ways to assess your sort of hit rate. At the Pumpernickel site, the first well, it wasn’t a targeting failure.

We couldn’t complete the well to the target plan, to target depth because the drilling conditions were so difficult. So when you drill into really sort of productive geothermal resources, you have actually really difficult drilling conditions. It’s actually sort of fairly correlated that the better the resource, the harder the drilling.

David Roberts: Is that because the rocks are hot? Because they have gaps in them? Like, what makes it so hard?

Joel Edwards: Yeah, exactly. You have gaps. So you have a plumbing network. You can imagine like pipes under your house where you have this convecting hot resource that’s moving through the subsurface, and when you drill into gaps with a drilling rig, it makes it really challenging for the drilling rig. And of course, the irony is that that’s our resource. In this case, we ended up hitting shallower resource that made the drilling harder to get to our deeper target, so we ended up moving to the second site where we were able to get to the targeted depth and show basically, yeah, this has commercial conditions. It has the permeability, you know, the open space that we want, it has the temperature that we want.

David Roberts: Speaking of permeability, I was reading about the Pumpernickel site, and one of the things you really emphasize on your Substack about that is that permeability is the main thing, that in some sense heat is kind of easy to find, and it’s permeability, it’s good permeability that makes all the difference ‘cause that’s where you get your flow rate. And in the course of that discussion, you expressed some skepticism about enhanced geothermal because, of course, the thing about enhanced geothermal is that it is creating its own permeability through fracturing. I’m curious, do you have generalized skepticism towards enhanced geothermal for that reason? Tell us a little bit about how you think about permeability.

Carl Hoiland: Yeah, I can maybe comment on that a little bit. I think it’s less of a skepticism of whether EGS works and in what scale or places. It’s really just where will it fit on the cost curve relative to conventional geothermal-

David Roberts: Mm.

Carl Hoiland: Because so far, the type of permeability that we’ve been able to create artificially in engineered systems is an order of magnitude, and sometimes multiple orders of magnitude less than the type of natural permeability that we find in the Earth.

David Roberts: Just smaller gaps basically for people if people are trying to imagine this like if you’re doing the fracturing they do in fracking, you’re just creating hairline cracks as opposed to, I’m guessing bigger natural gaps you find in these areas.

Carl Hoiland: Right. And maybe you’re injecting, you know, some silica beads or things in there that will hold it open, but those are rarely, actually, so far never have they been as large as some of the natural spaces that you find in the earth which you can imagine can be cavern size.

And so when you have these cavernous openings, large aperture, we call them faults with permeability, you end up just getting flow rates and prices, really the cost of producing that type of resource is much cheaper. That’s what we get really excited about is finding out that that type of natural permeability exists in many more places than we previously thought, and in some cases the temperature is a leading indicator of it sort of a proxy for “oh, you’re getting close to permeability”. But in other cases it’s really hard to identify it without the data or the models leading you there.

David Roberts: So if I could summarize that and tell me if you would endorse this. A really good natural geothermal resource is gonna be cheaper to produce from than any conceivable enhanced geothermal site that creates its own permeability. Do you think that’s true?

Carl Hoiland: Definitely true today, and we think probably indefinitely into the future. There’s a similar comparison or analog here when you look at the oil and gas industry, that we are decades into the shale revolution. And the conventional fields, like the Ghawar oil field in Saudi Arabia, still produce oil at a significantly lower cost per barrel than even our best unconventional shale fields.

David Roberts: Same thing there with natural permeability versus induced permeability basically. The natural permeability is still better.

Carl Hoiland: In another kind of visual example of this, Joel mentioned the well that we drilled at Lightning Dock, it is actually still pump limited. If we had a stronger pump that could pull more fluid out of that, the permeability is sufficient that we could flow it at much higher rates than it is today.

David Roberts: Oh interesting.

Carl Hoiland: And that’s really just giving you a sense of how exceptional the permeability is down there.

David Roberts: And so then let’s talk about this third discovery. This is called Big Blind in Nevada and this is sort of I think the news that made everybody really sit up and pay attention because this was unlike the previous two we’ve discussed. This was genuinely new. There were no prior wells on this site to give you any data. There were no surface manifestations of activity on the surface. This was a genuine blind site. So how did you find it? In a nutshell how did you find it?

Carl Hoiland: Yeah, this is really our bread and butter. So Joel, I’ll let you kinda talk through how greenfield perspective exploration works.

Joel Edwards: Yeah, it’s that concept we talked about at the beginning David, that you build models. Everybody can build models, Zanskar builds models. But you have to pair your model predictions with tests in the field of those predictions. And so this is one of those cases where we had made a set of predictions in… across this part of the state, and we were out testing those predictions and ran into this system at this location. And this is a system that’s west of Tonopah, Nevada, so pretty remote. And like you said, there was no prior data at the site and if you or me or anybody were to walk across the site, there would be nothing at the surface that would clue you into that there’s a massive system below. That initial discovery was made at the end of 2023, and then we went through the permitting processes and we came back with a larger rig and drilled into that resource in...

What year is it now? It’s 2026. I think we drilled into it in 2025, and we encountered commercial reservoir conditions at around 2,000 to 3,000 feet. The thing that’s really exciting about this system in particular is how big it is. This system by the surface footprint of the heat flow anomaly is much bigger than Pumpernickel and much bigger than Lightning Dock.

David Roberts: Oh interesting. I guess you’ve just kind of started exploiting it right? I mean is it commercially operational? Where’s the state of play there?

Joel Edwards: No, we’re in the well field stage of the project. So we’re permitting additional exploration wells right now to go back to the site. So we’re still early stages and yes.

David Roberts: Still trying to figure out how big the site itself is, how big the resource itself is?

Joel Edwards: Exactly. We have a sense of sort of the surface area, how big it is. That’s why I can make that claim relative to some of the other projects. But we do not yet know at depth how big and hot the system is. It seems quite spicy. To think that this thing was sitting out there. There’s lots of exploration across the West for minerals and other things, and to just think that this had been missed for so long, you know, gets us really excited about the future.

David Roberts: So you had your models, and they gave you a sort of probabilistic sense, and then you go out and do some exploration in those probabilistic areas, and you just got lucky on this one. Or I guess not lucky, the model… The probabilities paid off in this spot.

Joel Edwards: Yeah, I know. Maybe the models got lucky. Maybe we got lucky. There’s luck in all this, and there’s also bad luck when we miss. And to be clear, we’ve missed way more than we’ve hit. Like, to make this sound like this thing has been working better, you know, than the legacy explorers. In the early days, our models were frankly much worse than expert explorers. And we do benchmark against expert predictions in our modeling space, and it’s really only… Our models really only in the last year or two have started to outperform. And, you know, every model that you build, sometimes your models get worse.

So it’s not like it’s up into the right. It’s like there’s a wobble. It’s sort of like the climate, right? Like some years it’s wobbling hotter and cooler, but you’re generally up into the right, and that’s very true for our modeling space.

David Roberts: So you think from now on over time, the more exploration you do, the more data you feed into the models, the better the models get. Over time, you think you’re gonna get better and better at finding these things?

Carl Hoiland: And that’s actually quite clear already from the data we’ve collected. Like Joel said, they started out much worse than humans. They caught up, and they’re performing better in many locations and areas. And we’ve seen it improve in two ways. As you put more data into the models, the same architecture ends up yielding higher precision, you know, better performance. But in other cases, actual changes to the architecture, the way we’ve designed the model itself with the same data yields an improvement in prediction. And so the teams are constantly driving improvements on both of those fronts.

David Roberts: Interesting. So maybe not up and to the right for every increment, but over time, in the fullness of time, you’re going up and to the right with your models.

Carl Hoiland: Yeah. And really those sort of side steps that Joel’s talking about are what might feel like even a step back is often in a certain type of metric, like precision or accuracy. But it usually reflects that we weren’t realizing that there was something less generalizable about the prior model. And so this step back is getting you to a more accurate representation of the uncertainty. So it’s still a better model, you’re just being more correct in your estimation of uncertainty for it.

David Roberts: Right. Interesting. Interesting.

Joel Edwards: You know, this manifests... It’s funny, you would expect our sort of hit rate, like when we find a system, to be like consistent and linear. But what I’ve found is that our hit rate is like, you know, like in sports, you get into like a streaky zone, like home run after home run or whatever, you’re hitting the threes like back to back to back. That’s the same thing in our models. Like, we go through periods where bang, bang, bang, like survey after survey after survey, we’re hitting, hitting, hitting, and then we go through like a cold slump for a period of time, and then we push out a new one. So it’s been a very like non-linear sort of spikiness to the discovery rate.

David Roberts: Is there any way to bring down the cost of drilling those exploratory wells, or is it just is what it is? Like exploring is expensive and it’s gonna be expensive. Is there a cost curve there anywhere?

Carl Hoiland: Yeah. We’ve been focused on a couple sides of that. One is just drilling fewer wells, and so as the models get more predictive, more powerful, I mean it just means we have to drill fewer of them.

David Roberts: Right.

Carl Hoiland: But the other side of it is really focusing on what are the most powerful data types or wells to drill that really vector you into the site faster, and driving down the cost of those data types or those wells. And so as Joel mentioned, we’ve brought a lot of data collection and drilling in-house primarily so that we could start to focus on how do we make this more efficient, how do we make this safer, how do we make this faster so that we can really drive down the cost of data collection during exploration? And in some areas, that we’ve seen significant cost declines, 50 to sometimes 90% cost declines.

David Roberts: Let’s pivot a bit. I’m behind schedule here as always. This stuff is too interesting. Let’s pivot a bit to financing. Financing has always been a tricky aspect of geothermal because by definition, if you’re trying to finance your exploration, you don’t have a resource to finance yet. You’re sort of financing the possibility of finding resources, and this has always been kind of a problem. So you guys have worked out this development capital facility, which is this sort of rotating fund. I’m gonna stop talking there before I say something stupid and wrong about it. Why don’t you just describe what the structure of that is? ‘Cause as I understand it, this is something that might benefit the industry generally, and not just you guys. But maybe Carl, you can tell us like how that’s built.

Carl Hoiland: To your point, historically, geothermal was seen as so risky that it was sort of like wildcatters out there just taking total random shots, and therefore anyone who was going to finance a project wanted you to have completed not only all the exploration, but really the well field and come with a basically ready-to-go project. There should be no risk left before we can bring in traditional project finance to build the power plant.

David Roberts: Which means exploration had to fund itself, which is obviously highly limiting.

Carl Hoiland: Had to fund itself, and when you combine that high cost of capital for exploration dollars plus the long timelines in certain geographies for exploration, it ends up adding a lot of soft costs to the final levelized cost of electricity, which also made the whole industry struggle to compete. One of the things that I think we were able to uniquely do is by drilling, as Joel said, so many sites and testing so much acreage, we could build out robust statistics around what our success rates were and how they were improving. And we found that for many financiers, they care more about just can you actually quantify the uncertainty to a robust degree more so than what the actual accuracy is.

David Roberts: Right.

Carl Hoiland: And so as long as you can quantify the risk profile, then we can price the capital. And that was something the industry just couldn’t do before. And so this facility that we announced, it’s a development capital facility. It comes in prior to the traditional bank style of project finance when you’re still developing the resource and proving out its full size.

David Roberts: Right. ‘Cause there are no projects yet.

Carl Hoiland: There’s no projects. But the way we can mitigate the risk there is by pursuing a portfolio of projects together where some failures will be made up for by great successes across the portfolio, and you have the statistics to know how to size and diversify that portfolio.

David Roberts: So you somewhat reduce the cost of capital than for exploration.

Carl Hoiland: Meaningfully reduce the cost of capital.

David Roberts: And it’s a rotating fund too. Talk about that a little bit. It’s not just a set amount of money that people have dumped into this.

Carl Hoiland: Yeah. So ideally, you use that capital to really prove out, get the projects ready for bankable finance, right? Complete the well field and the tests that need to be done. And at that point, you don’t need that development capital facility anymore for that project. You can bring in much lower cost debt financing and tax equity financing. And so then that capital can go back towards earlier stage projects to prove them out. And so you’re constantly recycling capital in the facility. And as the value of the assets in the facility grow, you can also draw more and more in an accordion-like manner.

David Roberts: And do you think this tool is gonna help other geothermal developers, or is it in some sense contingent on your specific track record and your specific tools?

Carl Hoiland: Our hope is the former, right? Our hope is that by quantifying not just our performance, but really the industry even with legacy tools’ performance, that you make this a more investable asset class. And I think many of the learnings that we’re taking about the resource sizes, their potential, their cost structures are helping investors get more comfortable with geothermal because at first glance it has looked scary to them until they really spend the time to understand it and it starts to look like a very attractive opportunity to diversify their investments. So our hope is that yes, this will spread beyond Zanskar.

David Roberts: Interesting. Okay. You guys have signed a 100-megawatt PPA with NV Energy in Nevada. Why with a utility rather than a private off-taker, and is that 100 megawatt PPA for a particular well or set of wells, or is that one of these sort of like probabilistic things, like we will be able to find 100 megawatts eventually with a set amount of risk? Tell us a little bit about the deal with NV Energy.

Carl Hoiland: Yeah. So NV Energy is a regulated utility in the state of Nevada, and really the benefit of working with and selling to them is that you’re now delivering power onto the grid. In addition to energy, you’re providing all the other ancillary services that geothermal can provide, spinning reserves, voltage support, and et cetera.

David Roberts: Firm. It’s firm, firm, firm.

Carl Hoiland: It’s firm power. But it is important to have customers on the other side who are asking for carbon free, who are asking for geothermal. And so it often ends up being more of a network of commercial drivers that are making this possible. In terms of how we deliver it, I’ll let Joel kinda speak to that portfolio approach of ensuring that we reach the 100 megawatts.

Joel Edwards: Yeah. Like you said, this is I guess a probabilistic framework. I hadn’t heard it put that way, but this is what they call a portfolio PPA. So that means there’s a small basket of sites that we’ve already sort of discovered or characterized and that we have lease positions at, and that we can deliver the 100 megawatts from any of those sites or from a combination of any of those sites.

David Roberts: I see. So it’s not like we promise we’re going to find new things that will be able to deliver this, it’s we have found things that are capable of delivering this. And you also have other geothermal developers, I think signing PPAs with NV Energy as well, Ormat, I think, signed up for 150 megawatts. To what extent is the data center pull behind people’s willingness to pursue geothermal in a more concerted way? Like is that a big driver for your success?

Carl Hoiland: In those two instances that you just mentioned, it’s actually a very large driver, and one of the primary reasons NV Energy was seeking out geothermal power is because of new hyperscaler demand in their geography, looking for carbon-free baseload to be able to offset the environmental impacts of what they’re building. More broadly though, we’re really seeing demand grow well beyond just data centers. We’re seeing it from manufacturing facilities, we’re seeing it from utilities themselves that are looking to decarbonize or just to provide more resilience to the grid.

And so really in each market it’s a different type of customer. In Nevada, the hyperscalers are a big driver of demand, but we’re also selling from our Lightning Dock Power Plant to PNM, a regulated utility in the state of New Mexico, and that’s very much just to meet their own needs.

David Roberts: Well, everybody’s gonna need more firm power. That’s practically the premise of this entire podcast. We’re electrifying everything, and you need some firm power if you’re gonna do that. So I expect there’s no worry about like exhausting demand here.

Carl Hoiland: No, not, certainly not anytime in the near future.

David Roberts: So I guess the skeptical case here against Zanskar would be something like the big obvious fields have been discovered, so what remains to be discovered is these little pockets here and there, which might amount to a successful company, but will not be sort of game changing, will not be amounts that substantially matter. So what is your pitch to those skeptics? I’m sure you’ve made a lot of pitches to a lot of skeptical investors who have asked exactly that question like, “What is the pitch?” That this is not just we can gather a few more small sites that other people have missed and cobble together a successful company but this is like something big and fundamental.

Carl Hoiland: Yeah. I mean, I often point to one of the most valuable companies in all of history as a company that was made by an oil discovery 100 years after the first peak oil declaration. And that’s the Ghawar field in Saudi Arabia, right? Aramco today is still massively valuable. And so the idea that ugh, the best stuff is tapped, we just don’t see that precedent in other natural resource industries. It’s more likely that the best resources are still ahead of us.

David Roberts: And even if it all plays out the way you say, even if it’s true, is it not still ultimately kind of a basin-and-range story here because in the West you have this unique, unique geography geology. You have these plates that are pulling apart, it’s letting… it’s making that permeability, it’s letting heat closer to the surface. So even if you end up producing hundreds of gigawatts, even if you reach the terawatt someday, it’s still coming out of the US west, right? I mean, still in some sense geographically limited. Is that not right?

Carl Hoiland: For the next decade or potentially two, that’s true primarily driven by drilling costs. But as drilling costs get cheaper you will be able to push into other geographies.

David Roberts: Hmm.

Carl Hoiland: And even in the near term if you end up having a terawatt of the most cost-advantaged power source on the planet we also believe demand will come to where you are.

David Roberts: [laughs] Yes, yes.

Carl Hoiland: So the ability to deliver carbon free baseload power at the lowest price point possible makes the Western United States exceptional, but that’s not to say we won’t see geothermal expand far beyond that as the cost of power generation and the cost of drilling continue to come down.

David Roberts: Well talk a little bit about that Joel what other types of geographies? Just… You just mean like on the edges of this basin and range area or like fundamentally different geographies? Like could you find conventional geothermal resources in the East or like in the South where they’ve never been found before? Like how geographically independent is it possible to get if things get way better?

Joel Edwards: This is a great arm waving question.

David Roberts: [laughs]

Joel Edwards: Maybe the data point I would point to is that across these different geographies that you mentioned, I’m from Iowa, generally there’s a certain depth at which people just haven’t drilled below and so the conditions below those drillable depths today are totally unknown. So for example everybody knows it gets deep, it gets hotter as you go deeper, what they don’t know is how their rocks respond to all that heat at depth. We think that rocks go through like phase transformations, you know the minerals change and things like that.

But I will say for the few wells that we have drilled that are deep, so think deep scientific wells like the one in Germany that went to 10 or 11 kilometers, the one in Russia that went a little bit deeper, In all of those cases where they went deep they all ran into conditions that they didn’t expect particularly those wells ran into water, they ran into well stability issues they did not expect to run into. So how can there be water, how can there be open pathways, open cracks at 10 kilometers down? Like intuitively it just doesn’t make sense.

David Roberts: Right ‘cause we know there’s heat, I mean it’s just logical that there’s heat down there. We know that through basic geography. It’s the permeability that is the question right? Is whether there’s enough permeability down in those depths and we just don’t know.

Joel Edwards: Exactly. Yeah will the well flow? But I will say in all those deep wells, the two I’m thinking off the top of my head and I think the others are true too as well, but they ran into water. Like water in the well bore when their teams thought that the wells would be dry.

David Roberts: If you find water that means you’ve found permeability.

Joel Edwards: Exactly. You’ve drilled a hole and there’s water seeping through the wellbore walls into your hole and it’s creating drilling stability issues. There’s permeability down there. We see this also true sort of in the western US where the climate today is very dry, we obviously live in a desert, but geothermal well fields or when you build underground mines or when your open pits get deep enough you run into, like massive volumes of brackish water. That brackish water is very old, but they have to install these huge pumping systems to de-water mines so that they can mine at those depths, right? So there’s a lot about, like fluid circulation in the deeper crust that we have very few data on and that we poorly understand.

And so it’s very hard for me or anybody to sit here and say, “We will never find a geothermal system in Iowa,” right? Because we’ve only drilled down to a certain depth in Iowa, and we just don’t know the rocks below that depth.

David Roberts: So theoretically go deep enough you could find stuff that we don’t know about yet. You could even say it’s likely to find stuff we don’t know about, likely to find some permeability at some depth. How deep can conventional geothermal wells go? I mean this is a whole premise for Quaise that we discussed is that once you get deep enough traditional oil and gas drilling equipment has never really needed to go that deep and hasn’t been designed to go that deep. Just the conventional tools you’re using how deep can they get?

Joel Edwards: Yeah I maybe Carl would have a little bit of a different answer, but I think the oil and gas well fields are a good analog. There’s oil and gas well fields down to 20,000 feet right now and those are conventional well fields like using conventional drilling technologies. I know those scientific wells that they drill down to 30,000, 35,000 feet, those wells took forever. They took like years of drilling in the same hole to get to those depths and it’s because, you know, like you said you’d get down to 35,000 feet, you would drill a couple hundred feet or less your bit would die. You’d have to come back out of the hole like just huge issues and the hole would be collapsing, right?

And so I’m real excited about what Quaise is doing ‘cause I agree with that thesis that there are certain depths where it’s hard to imagine conventional technologies working, I guess, unless there’s new stuff coming down the pipe that I’m not aware of.

David Roberts: Interesting. Okay, Carl, right now in our current political circumstances wind and solar are kind of getting hammered not treated well, but geothermal has kind of remained a bipartisan love child. Everyone seems to love it still. In one sense that’s great, still getting the tax credits, there’s… the DOE is engaged, et cetera, et cetera. Does that on the flip side ever make you a little nervous though? Like how policy dependent are you at this stage in your development, and how confident are you in ongoing policy support?

Carl Hoiland: You’re exactly right that there’s very strong bipartisan support, which is very exciting to see, especially at a time when it feels like very few things manage to secure that. It is partly because, like we said at the beginning, geothermal kinda has everything you want in an energy source, the small footprint, its base load, it’s carbon free, it’s domestic, doesn’t rely on foreign supply chains that are at risk and on and on and on.

Our goal really while we’re sort of in this infancy as an industry proving out these new technologies, is to come down the cost curve as fast as possible so that it no longer requires any sort of factor other than just a simple cost comparison of you’re the cheapest source of power, period. And we know that’s possible for geothermal because even with current off-the-shelf technologies and even our own cost of capital, if you just knew exactly where to drill every time and you never missed, it would already be cheaper than all of those other power sources on an unsubsidized basis. So we see the prize, and that’s what we’re driving towards. I’ll maybe let Joel comment a little bit on what are the risks in the meantime of getting from here to there?

Joel Edwards: Yeah, in terms of driving down the costs?

Carl Hoiland: If policy support shifts. Is there a risk that we’re getting too much attention? I mean, these are internal conversations we’re having.

Joel Edwards: Yeah. Geothermal has both the risk and the opportunity in the sense that it has one very, very, very large landowner called the federal government.

David Roberts: Yeah. I meant to say that 90% of identified geothermal resources are on public land, so in some sense there’s no way around policy.

Joel Edwards: Yeah. For geothermal to scale, it needs access to public lands, and the majority of those public lands are not national parks, right? These are Bureau of Land Management lands. So these were lands that you could have homesteaded but people didn’t wanna homestead, and so they were the sort of... The federal government came in and took ownership and management. It’s a risk and an opportunity. The opportunity is you have one landowner, you have one counterparty to negotiate with and to operate with, and that one landowner, if they’re sort of in agreement and they want you to scale, like you could scale. The risk is the inverse of that obviously.

And so we’ve seen, like the Biden administration, they put out, you know, improvements to the permitting stuff right towards the tail end of their administration, and then the Trump administration has done the same thing in the early days. So right now we’ve got tailwinds. If we can… The frustrating part for us is we’ve kinda been ignored or a nobody for so long that the way in which our landlord regulates us has been kind of slow and outdated and frustrating, and if we can get that streamlined, the industry will boom. It will take off because there’s plenty of hot rocks, there’s plenty of projects to go after right now.

David Roberts: So the, like the permitting, the soft costs, all the same things that all the other energy sources are struggling with, you guys have that problem too.

Joel Edwards: Yeah, that’s right.

David Roberts: I guess it’s hard for me to envision a circumstance in which the US is not going to need and want more firm carbon-free electricity. But I’ve not seen a lot of political things coming in the last decade, so yeah, that’s right. I wouldn’t wanna make any categorical statements about that. I’m sure you guys have some level of nervousness about it too. All right, final question. What is next? You’ve got a well that is commercially producing. You’ve got a couple of other wells that are in sort of the well development stage. Is it just steady as she goes, more exploration, more wells? Like what is the next big step here, and how fast do you think you’ll be able to scale up?

Carl Hoiland: We might have different sides of this to speak to. For mine, it’s a yes and all those things you mentioned, but also it’s been about 10 years since anybody has turned on a greenfield geothermal power plant in the United States, right? It just hasn’t been growing, especially in greenfield settings. And so our real goal now is to drive forward as many greenfield projects as possible and get them to commissioning.

We plan to do that in the next few years with half a dozen and to grow from there quickly, and I think that is really where you get to that point of this is a real industry, it can really scale, and the costs are what we think they are. And I think it really hits that runaway inflection point. Joel, from your side?

Joel Edwards: I’m really excited. The projects you mentioned, David, Big Blind, Pumpernickel, and Lightning Dock are really great exciting projects. Those are the only projects we’ve made publicly, you know, known.

Carl Hoiland: Mm-hmm.

Joel Edwards: We obviously have many projects behind that we’ve been working on for years. Maybe we discovered them in... Some… Our first discoveries were back in 2021.

David Roberts: I mean, I’m assuming that when you make a discovery, you don’t go out and wave a flag about it. You wanna get it per… you want to get it permitted and whatever locked down and-

Joel Edwards: Exactly...

David Roberts: whatever else before you announce it.

Joel Edwards: Exactly. Yeah. That’s the biggest sort of bottleneck to the process of publicly announcing it because many of the discoveries, they’ve got federal lands, they’ve got state lands, they’ve got maybe a little bit of private lands, and so it takes a little bit of land work to put together, you know, the position and so forth. So our first discovery was back towards the tail end of 2021. We’re still finding system, I…There was a system we found this weekend. I’m really excited to be more public about these things in the future and get people excited about this huge - We’ve been talking about this for a few years, that there are a lot of sites out there to discover.

There’s a lot of systems out there, and we’ve only announced, you know, one true greenfield blind. I’m excited to start announcing these and really getting everybody excited about geothermal because there’s other groups doing really exciting stuff. The EGS stuff is super exciting, and I think this discovery piece is equally as exciting if not more.

David Roberts: So you’ve announced one true greenfield blind discovery, but you’ve made others.

Joel Edwards: Yes.

Carl Hoiland: Yes. And I wish you could see internally the excitement is real and tangible every time. Like it just doesn’t get old every time a new discovery comes through the pipeline.

David Roberts: And in terms of the cost coming down over time, this is my actual final question. This is the cost of exploration getting cheaper with better models, better data, et cetera? Is it the cost of drilling itself getting cheaper? Where are the real opportunities for cost declines as you sort of attempt to outrun the need for subsidies? You know, this is what every new technology is doing, trying as best they can to escape that need as fast as they can. Where are the areas where you’re looking for real cost declines?

Carl Hoiland: Ooh, and some of these we’ve already seen. So finding better and bigger and lower-cost resources. You’re just starting with a better resource. Finding those where they’re closer to infrastructure, closer to the grid, which reduces your development costs. Drilling faster and cheaper, both with these technologies from oil and gas, but also applying our own AI and data science to the datasets to improve operations. And then also deploying software and AI throughout development and throughout operations of those assets. We’re sort of seeing opportunities to lower cost across that entire spectrum.

David Roberts: Hmm. Interesting. Well, what an exciting time for geothermal, I will say. I wrote a introductory article about geothermal, 2017-

Carl Hoiland: Wow...

David Roberts: 2018. Yeah, not to pat myself on the back, but like I nobody was talking about it then, and I went through all the conventional stuff, the advanced stuff, and everything. I think a lot of people sorta clued into geothermal from that. But man, even in those articles, I had underestimated the flood of interest and how fast it would all take off. So really exciting stuff. Thanks guys for coming on and, walking us through it.

Joel Edwards: Thanks David.

Carl Hoiland: Thanks so much David. Great to be here.

Joel Edwards: Appreciate it.

It’s been a while since I’ve spoken with you directly. I’ve been cranking out podcasts like crazy — more than any human being could be reasonably asked to consume, some might say — and falling a little behind on community threads and such. By way of asking forgiveness, here’s a picture of Abner.

I’ve got a lot to tell you about the upcoming month, but let me start by introducing Nate, who I recently hired to, among other things, think about how to improve this operation. You’ll likely see his name pop up in comments occasionally, he’ll answer your customer-service type questions, and he’ll be thinking about cool new ways to convey Volts content (thank him for the monthly best-of episodes). You can reach him at nate@volts.wtf.

First up, an upcoming event: I’ll be talking with climate policy analyst and author Leah Stokes about her new book, “The Carbon Wave: A Story of Democracy, Parenthood, and the Race to Protect Our Planet,” on stage at Seattle’s Town Hall on Monday Sep. 14, at 7:30pm. (Doors at 6:30 — you can buy tickets here.)

The book is about the fight for the Inflation Reduction Act, which took so long that several of the book’s protagonists had kids before it passed, including Stokes herself. (Twins!) You should come to this, it’s going to be fun.

🎉 The first ten paid subscribers who write to Nate expressing interest can get a free ticket to the event!

Subscribe now

On Sept. 20, I’m heading out to New York City for Climate Week. I always look forward to this. As a hermit in Seattle, it’s nice to meet up with friends in the real world and I love walking and cycling around the streets of Manhattan. There’s no place like it.

Over the course of the week I’ll be involved in four (at least so far) events. If you’re in NYC, drop by and say hi!

• At 9am on Tuesday the 22nd, I’ll be on a panel on the subject of “Data Centers: Community-Led Advocacy to Real Solutions,” at an event convened by the Southern Environmental Law Center. SELC Executive Director DJ Gerken will moderate and the other three participants will be the legendary Bill McKibben, Abre’ Conner of NAACP, and LaTricea Adams of Young, Gifted and Green. You can register for the event here or sign up to watch it virtually here.

  

• At 3:50pm on the 22nd, I will be interviewing Matt Traldi of the organization Greenlight America, a nonprofit that “supports local groups and volunteers who want to get utility-scale clean energy projects built in their communities.” We’ll be at an event called “Rural America & The Clean Energy Transition,” put on by Canary Media, which goes from 12pm to 7pm and is jam-packed with great stuff. You can reserve a spot here. (My previous conversation with Traldi on Volts.)

• From 9am to 1pm on Wednesday the 23rd, Climate Mayors will be holding its annual leadership forum. At some point in that, I will be leading a discussion with Phoenix Mayor Kate Gallego and Sunrun CEO Mary Powell on the current clean energy landscape and opportunities for mayors to lead. Not sure of the precise timing, or how to register — I’ll update the web version of this post (and post to Bluesky) when I find out.

• At 12:45pm on Thursday the 24th, I will appear with journalist Maxine Joselow of the New York Times in a discussion about opportunities for clean energy progress across the political divide, moderated by the Institute for Policy Integrity. Their event — ”Climate, Energy, and the Political Divide” — will run from 10:30am to 4pm and it’s also full of great stuff. You can register here.

So that’s that for Climate Week. Want to hear something crazy?

From NYC, I am flying straight to Copenhagen, Denmark, where I will embark on a week-long tour of the country’s “groundbreaking integrated infrastructure projects.” It’s meant to show off “industrial symbiosis,” an approach to development “where one sector’s wastes — energy, water, and materials — become valuable resources for other businesses.” The itinerary is wild — I’m going to be traveling all over the country. I may also record a pod or two!

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To be honest, at my advancing age I regard the idea of two straight weeks of work-related travel with no small amount of dread — not least because my previous attempt at international travel was cut short by an emergency appendectomy — but when the opportunity came up to join this thing, I knew I couldn’t pass it up. Denmark! Det er for vildt!

Anyway, that’s my upcoming month. Exhausting to contemplate! I’m going to record enough pods to cover my absence, so you shouldn’t hear any difference, but I thought you might like to know what I’m up to.

I’m going to miss Mabel though.

🎁 One other thing: September 12 is my birthday. Would you like to do something nice for me? Sign up for a paid subscription to Volts. I have no ads, no sponsors, no institutional backing of any kind. My sole income comes from folks who find the work I do valuable enough to pay the price of a coffee per month to keep it going. Become one of them and you will make this my best birthday yet.

Upgrade to paid for Dave's Birthday

Already a paid-up member of the Volts clan? You could always give a subscription as a gift to someone you think might be interested. A gift to someone else as a gift to me! Gift squared, if you will.

Mange hilsner,

DR

So last month, we tried something new around here, a compilation of clips from the month’s episodes strung together in a single place so that listeners could scan and see what they might have missed. I asked at the end of that one whether you found it worthwhile and useful, and many of you wrote in to say that you did, so we’re going to make it a regular feature.

Here’s how it will work. Every month there’s a best of episode. Paid subscribers get early access, and when the next one comes out, the previous one opens up to everyone. The July edition is open now, so if you haven’t heard it or you know somebody who’s been meaning to check out the show, that’s the one to send them.

As for August, it was wide-ranging, which is how I like it.

Data centers twice from opposite ends, including state lawmakers dealing with them and companies trying to improve them. Grid cybersecurity, public EV charging, a surprising run of bipartisan housing bills out of Idaho, why utilities can’t seem to adopt anything new, what a future administration ought to do with the tools this one is busy beating us over the head with, and a listener favorite out of Uruguay.

As always, I deeply appreciate all of you who support this work by becoming a paid subscriber. This podcast is 100 percent listener supported. I could not do it without you.

Chapters

• 00:00 – Introduction and how the best-of series works

• 01:59 – Saleem Chapman on why every market design fails ratepayers the same way

• 07:51 – Patrick Miller on Chinese inverters and commodity boards

• 12:22 – Ben Toews and Megan Egbert on how Idaho's housing bills happened

• 18:34 – Seth Cutler on why an IONNA site is technically a bakery

• 22:52 – Ramón Méndez Galain on getting every Uruguayan party to sign one plan

• 28:00 – Quinn Nakayama on why a utility would adopt something that saves money

• 34:16 – Varun Sivaram on workload tiers and who pays when flexing goes wrong

• 38:44 – Todd Tucker on the Defense Production Act precedent

• 44:20 – Closing note and what to send in

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Apple Podcasts - Spotify - YouTube)

• Saleem Chapman

  • Climate Cabinet (Website - LinkedIn)

• Patrick Miller (LinkedIn)

  • Ampyx Cyber (Website)

• Ben Toews (Idaho Legislature)

• Megan Egbert (Idaho Legislature)

• Seth Cutler

  • IONNA (Website)

• Ramón Méndez Galain (Climate Breakthrough)

• Quinn Nakayama (LinkedIn)

  • PG&E Research & Development (Website)

• Varun Sivaram (LinkedIn)

  • Emerald AI (Website)

• Todd N. Tucker (LinkedIn - Roosevelt Institute)

Company & Industry News

• Fixing the red state housing blues

• Utilities are cautiously learning to love startups

• Backed by 8 automakers, this start-up wants to change how you charge your EV

Books & Articles Discussed

• Climate Cabinet Education - Taming Data Center Turmoil

• Patrick C. Miller - Written testimony before the US-China Economic and Security Review Commission

• Roosevelt Institute - Building Up in 2029: How to Make Green Statecraft Durable

• Roosevelt Institute - Trump Wields the Defense Production Act to Promote Fossil Fuels

Related Volts Episodes

• What should state policymakers do about data centers?

• Grid cybersecurity: how big is the threat & what should we do about it?

• Another bipartisan housing miracle, this time in Idaho

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• He helped Uruguay decarbonize. Can he help other countries do the same?

• Why can’t utilities innovate?

• Making data centers flexible so they can serve the grid rather than stress it out

• Could we use Trump’s tricks to make good green policy?

Text Transcript

David Roberts: All right then, with no further ado, we begin with Saleem Chapman of Climate Cabinet on why a variety of electricity markets are failing on data centers and how states could do better.

One point that I think is important in the paper, and that is interesting to me, is that these risks, they’re not necessarily unique to a particular kind of market design. You know, as Volts listeners know, there are vertically integrated utilities some places. There’s what are called restructured markets. There’s ERCOT, whatever ERCOT is. One of the points you make in the paper is that people are making kind of mistakes. There’s this kind of the same failure pattern shows up in all kinds of market designs. Can you walk through that a little bit? Maybe some examples of, like, the different places that are, that are messing this up.

Saleem Chapman: Sure, yeah. So we, in this part of our paper, we looked at three different markets, that operate within three different states. And so if you start with, Georgia, which is the example of a regulated energy market-

David Roberts: Right. Old school, vertically, old school, vertically integrated ...

Saleem Chapman: Old school, vertically integrated, I think those of which most people would sort of be most familiar with and think about when they think about, utility structure. And so what we saw in Georgia is that the, Public Utility Commission approved a major gas expansion really built on justification that was derived from developer supply forecasts. And so in that instance, the process worked exactly as it should. There was nothing sort of bad faith about it, but it still, created a situation where ratepayers had significantly exposure, cost exposure, if those demand projections ultimately fell short.

David Roberts: Right. So the ratepayers are paying for the gas, the gas plant build-out, and if the demand doesn’t show up to absorb all that gas build-out, it’s the ratepayers who are paying for the stranded assets, basically.

Saleem Chapman: Exactly.

David Roberts: And then PJM though, PJM is a, is a competitive market, restructured market. Talk through that one a little bit.

Saleem Chapman: Yeah, so what we are seeing in a state like PJM is that you can have a single hyperscale, campus being brought online. At the cases that we looked at, it was 30% of local peak, demand within that particular region. And that triggered a capacity market event which ultimately resulted in, as you’ve-- if people have been following the PJM sort of issue, that you’re seeing sort of historical capacity prices year over year. And so what we are seeing there is that similar, the process worked exactly as it should, but by triggering that capacity market event, you had states all across the 13-state footprint that PJM covers having to take on some of the cost, that was associated with bringing that new facility online when they had no say in actual the decision-making around whether or not that facility would be approved.

David Roberts: Mm-hmm. Yeah. Who pays? This comes up again and again. And then there’s finally ERCOT, which people, you know, I think which people think of intuitively as, like, sort of the most free market, closest thing to a free market type of system. And they might think, well, in that kind of market, surely, you know, it’s the developer who takes the risk if it’s, you know, really working like a free market. But it’s, turns out there’s failures there too. Talk about that one real quick.

Saleem Chapman: Yeah, exactly. I mean, what we also know is as we are confronting this new period of technological innovation, we are also operating within a much more volatile climate than what we have historically had. And so in the ERCOT case, we saw hyperscale growth, colliding with extreme weather events. And so some of the emergency programs and gas dispatching that had to be put in place to meet that emergency event added billions in surplus charges that really surfaced as price volatility, but wasn’t actually visible as a line item on any individual ratepayer’s bills that said, you know, “This was driven by hyperscale growth.”

David Roberts: Right. Right. It shows up as price volatility in the market, which is absorbed by everybody who’s involved in the market.

Saleem Chapman: Exactly.

David Roberts: And so all these kinda come down to who is taking the risk and who is paying the price. So in all these cases, you take data centers’ demand forecasts, these developer demand forecasts, translate them into a bunch of costs, right, to anticipate meeting that need, and it is the ratepayers ultimately who are paying those costs to prepare. And so in other words, it’s the ratepayers who are taking on that risk. It’s the ratepayers who are paying. And then if the developer forecasts don’t pan out, the ratepayers are stuck with it. That’s like, that’s kind of the core theme through all those market, despite the market structures.

Saleem Chapman: That is the core theme, that ultimately this comes down to who’s taking on the risk and who’s capturing the value.

David Roberts:  Next up, we have Patrick Miller, cybersecurity expert on the Chinese inverters that everyone is worried about.

As I think people probably know, most inverters, you know, we’re talking about inverter-based resources. Most inverters come from China right now. There was this big Reuters investigation in 2025 which said that inspectors found all kinds of little undocumented communication devices inside solar inverters and batteries, and I guess, like, t-two questions. A, what do you do about what I imagine are now hundreds of thousands, if not millions, of those Chinese inverters that are already installed somewhere and running? Like, you can’t yank them all out. You c- there’s no practical way to audit them all. What do you do about those? And then what do you do about the new ones? You c- as you say, we have no jurisdiction over China. Like, how do we exercise any control over what China puts in those inverters?

Patrick Miller: Yeah. I’m gonna keep this at a non-technical level ‘cause it gets really technical really fast. So in general, you’re absolutely right. There’s a, there’s millions of these things out there, and they do have a lot of undocumented communications components in them. But I wanna make sure we’re really understanding what that means without any hype whatsoever. When China manufacturers a lot of this equipment, they literally do it on what’s called a commodity board. So you can imagine in your mind like a motherboard, right? It’s a- you know, it’s a, it’s a computer component where the chips and the memory and all those things sit, and they’ll buy literally millions of these at once. Mm-hmm. And they’ll buy them, you know, from a commodity manufacturer that just makes, you know, boards, literally, like generic board. And on that board, it’ll have all the things just in case you need them, whether you use them or not. They don’t buy specific boards with just these components. So when they g- uh, I mean, 99% of the ones I’ve seen that they’ve gone out and found stuff, it’s just been the commodity board. Yes, it came with a radio, it came with a modem, it came with a place for a SIM card. There wasn’t a SIM card inserted, but it has all those components on there in case the buyer of these commodity boards wants to use that functionality.

David Roberts: I see. I see. So not nefarious inclusion of these, right?

Patrick Miller: Not necessarily. So whenever you see those, you kinda have to take that with a grain of salt and think, well if there’s millions of these things out there, did they just use commodity gear and they’re just not, you know this is just part of the board that maybe it’s used, maybe it’s not. Now, they have found some of these things phoning home and, you know, the routing traffic through China, so that’s a different discussion. That’s at the software level, you know, up where the applications that you’re using, to manage these devices and that kind of stuff. So those are, those are different components, and we, there’s some supply chain there that we can impose because it’s software, right? We can inspect code. We can enforce certain rules, on how code is developed and what’s, you know, certain, like, transparency of the code. We need to look at the code before we’re willing to allow it, these kinds of things. And we’re not just gonna let updates from China happen without someone taking a look at it before it goes in, those kind of things. Well, yeah, I mean, you- So there are some gates we can put in place...

David Roberts: Well, yeah, I mean, you say there might be these elements on the boards just because the boards are sort of generic and created for maybe lots of different purposes. Could those, could those components of the board that aren’t being used be activated later? Do you know what I mean? Sort of remotely activated. Like that’s, I guess, is the worry.

Patrick Miller: Yeah. They’re there, and they could be activated. But they’d have to have... I mean, you could activate them, but you’d also have to configure them. Like, it’s hard to explain, but when you, when, just because you turn something on doesn’t mean it’s ready to be used. Like even a phone, you can turn a phone on, but you have to give it a SIM card that’s got an activation code, that’s got, you know, all these things have to happen before it’ll actually work on a cell network. I mean, you could get a phone out of the box and turn it on and it just doesn’t do anything. So those pieces of gear are there. That doesn’t mean even if you did enable it, that it would automatically work. So it does, it ups the ante in terms of just like flipping a switch and getting this like rogue network of these things to go do stuff.

Read more

Climate campaigners are extremely familiar with large-scale, organized misinformation campaigns. But in recent years, misinformation about climate solutions, specifically about clean energy, has grown almost as ubiquitous. Any time there’s a blackout or a grid failure, clean energy gets blamed. Any time electricity rates go up, clean energy gets blamed. Any time a clean energy project is proposed, community meetings and regulatory dockets are flooded with misleading health and safety claims.

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An organization called GoodPower is attempting to push back against this tide of slop. It runs message testing and polling, maintains a network of several thousand content creators it can deploy quickly to respond to events, works to get ahead of anticipated fighting before the opposition hardens, and is building a tool to identify manufactured comments in permitting proceedings.

I have been extremely skeptical about messaging professionals throughout my career. I can’t tell you how many pitches I’ve turned down from people and organizations claiming to have found the magic message that changes minds. My objection has always been the same: messaging itself — stringing the right words together — is only half the battle. The reason the right wing so often wins is not that it has particularly clever messages, but that it has an wide array of channels through which to distribute them, an army of people willing to repeat them endlessly, and above all, money behind them.

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The reason I’m excited to talk with GoodPower CEO Leah Qusba is that her organization doesn’t just test messages in isolation — it deploys them in real-world situations and has gathered data on what works and what doesn’t. We’re going to talk about the kinds of messages that work, the right timing for those messages, and the best ways for local leaders to discern true public opinion from astroturf campaigns.

Chapter

• 00:00 – Introduction

• 03:06 – What the disinformation claims, and who spreads it

• 05:57 – From Action for the Climate Emergency to GoodPower

• 08:38 – Building a creator network in non-political verticals

• 14:17 – Competing with talk radio and Fox News

• 18:26 – Winter Storm Fern and the rapid response system

• 23:26 – Measuring whether a deployment actually worked

• 27:24 – Pre-bunking and the 80-county experiment

• 33:18 – Getting people off the couch and into the room

• 38:10 – AI agents and where human judgment sits

• 42:05 – Keeping the C3 and the C4 distinct

• 47:13 – Battery fires, Moss Landing, and talking to fire chiefs

• 50:54 – TrueVoice and manufactured public comment

• 56:13 – Whether AI will overwhelm the comment process

• 58:11 – The best messages that actually land

• 1:04:22 – Super PACs, budgets, and what comes next

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Apple Podcasts - Spotify - YouTube)

• Leah Qusba (LinkedIn - Bio)

  • GoodPower (Website - YouTube)

  • Good Data Lab

  • Good Influence

  • Better Accelerator

• Sander van der Linden (Cambridge Social Decision-Making Lab)

Company & Industry News

• Ohio blocks big solar farm, despite apparently fake public comments

• As Ohio grapples with fake comments on clean energy

• Super PAC targeting conservatives against clean energy touts fifth Republican primary win

Books & Articles Discussed

• Sabin Center for Climate Change Law - Rebutting 33 False Claims About Solar, Wind, and Electric Vehicles

• Robert Brulle - Institutionalizing Delay: Foundation Funding and the Creation of U.S. Climate Change Counter-Movement Organizations

• Berkeley Lab - Queued Up: 2026 Edition

Related Volts Episodes

• The right-wing groups behind renewable energy misinformation

• Organizing local support for clean energy projects

• Giving clean electricity a political voice of its own

• A key Arizona race will test clean energy’s electoral power

• The high-stakes battle over energy affordability in New York

Transcript

David Roberts: All right then. With no further ado, Leah Qusba, welcome to Volts. Thank you so much for coming.

Leah Qusba: Dave, thanks for having me. Happy to be here.

David Roberts: I’m excited to get into this. Let’s start here. This is all about disinformation, misinformation, disinformation. Maybe just talk a little bit about that. What do we mean when we talk about that? What kinds of disinformation are we talking about? From whom? In what venues? Maybe give us a few examples of the kinds of things you’re going after.

Leah Qusba: Yeah, absolutely. I mean, I think there’s a pretty big body of peer-reviewed research now that shows that there’s a lot of false and exaggerated claims about wind, about solar, increasingly about battery energy storage, and there’s actually even new experimental evidence as recent as 2026 actually showing, like, the behavioral impacts, right? It’s one thing to get people to not like something. It’s another for them actually to be informed so much and inspired so much that they would wanna join opposition based on that information. So we focus on the dirty dozen. I think the Sabin Center says there’s 33 different meta-narratives out there attacking renewables that are false. We focus on about a dozen of the most pervasive ones out there.

David Roberts: Narratives specifically. Like, give me a couple of examples.

Leah Qusba: Yeah, you’ve heard these. Probably the one as old as time is it’s not reliable, right? When the sun stops shining, the wind stops blowing, you don’t have power, therefore the technology is not good.

David Roberts: Mm.

Leah Qusba: China makes solar panels and wind turbines, therefore we’ll be reliant on China. The most pervasive one right now is that solar, wind, and batteries threaten prime US farmland, that farming and renewables can’t go together, therefore we should all be freaked out.

David Roberts: And not to jump ahead a little bit, but I’m curious, who is disseminating those messages? To what extent, I guess I’m asking, is that stuff peer-to-peer, you know, sort of Fox tells it to the right-wing audience, and then the right-wing audience tells it to one another, versus more sort of coordinated, deliberate campaigns, funded campaigns deliberately spreading this stuff? Do you know what I mean?

Leah Qusba: Yeah, I mean, I think the best piece of research I’ve seen is from Robert Brulle, and he has a paper where he talks about this highly organized movement. It’s called the “US Countermovement Opposing Climate Action,” the “Climate Change Countermovement,” and it’s really both of those things simultaneously. It’s networks of conservative foundations and think tanks and corporations and trade associations, and then all these advocacy groups that are in the field. They’re all intricately networked together-

David Roberts: Mm-hmm…

Leah Qusba: and really work together as a unit, and it’s well-funded, and, you know, the money is really hard to follow ‘cause it’s a lot of dark money passed through these entities, but essentially fossil fuel interests.

David Roberts: So then let’s talk about GoodPower. Last year, you’ve been involved in this organization for what? 16 years now, for a while. Been through a couple of rebrands, couple of reorgs. Last year, you renamed yourself from Action for the Climate Emergency to GoodPower. I’m curious, two questions. One, what was behind that rebrand? What was the thinking behind this pivot? And then two, like, what does GoodPower consist in now? I’ve read your decks. There’s a lot of pieces of this puzzle. There’s research and the influencers and this and that. So maybe just tell us why the rebrand, and then what all are you doing now? What are the main divisions?

Leah Qusba: Yeah. So GoodPower, I’ve been at the organization, I just had my 17-year anniversary, and I mean, historically, when we were ACE and now GoodPower, we’ve worked with audiences across the ideological spectrum for a long time, and there was really two big reasons for the rebrand. One, we wanted a bigger messaging tent. It turns out the words action and climate and emergency can be polarizing in some places.

And then second, there was, like, really a pragmatic or, like, logistical reason. We serve a lot of media. We do a lot of strategic communications, about 300 million impressions we served just last year. You know, the algorithms, right, play this goalie where they only will serve content based on, you know, they wanna keep people on their platform, so they wanna keep people happy and scrolling, and it’s really difficult to sort of trick those algorithms with words like climate and action and emergency in your name.

So how do we create a bigger tent for more people to get under across the ideological spectrum? And then also, how do we be able to reach audiences with trusted messengers, whether they’re farmers and landowners or neighbors of projects, et cetera. So essentially, our mission is all around accelerating decarbonization. Like, how do we get to that end more quickly? And if time is our greatest enemy, we wanna get there more quickly. Well, what’s standing in our way, and how do we remove those roadblocks and have a more frictionless pathway to that goal?

David Roberts: This mirrors, I think, a larger pivot in a lot of climate groups, a lot of the climate movement, this sort of pivot to pro-clean energy rather than scary messages about climate. What are the pieces now? What are the main divisions of GoodPower? You’ve got a message polling and testing lab. What else?

Leah Qusba: Yeah. We’re basically a specialized content studio and marketing agency for clean energy and climate solutions. We’re a political and policy campaigning shop, and we’re an empirical research lab, sort of all in one.

David Roberts: And you have this network of creators. It says, “Across non-political verticals.” That is the piece that is most fascinating to me. Who are these people? Are these, like, YouTubers, TikTokers? Are they farmers that you go out and find? Like, who are the influencers? Who are the people who are ultimately carrying the message at the end of the pipeline?

Leah Qusba: Yeah, absolutely. I think part of the rebrand, right, it’s not about GoodPower’s brand or what we wanna say, and I think one of the plagues of either climate, clean energy communications is like we wanna say what we wanna say and what we think will work, and how about we just think about this differently and get out of the way and get the people in the places dealing with the thing and deciding if they want utility-scale solar or battery storage in their town. Why don’t we just go talk to those people who already have these technologies?

So I think part of our investment in sort of credible messenger networks, whether they’re influencers or subjects of our many mini documentary films that we make, is just going into communities and talking to people. And I think the second thing is people don’t go to the internet to be bored to death by all of these groups that care about decarbonization and clean energy and climate, right? They go to the internet to be entertained.

They go for food, fashion, culture, cars, gaming, right? How do we go where they already are, and how do we sort of inject our messages into culture? It’s really about getting into the cultural spaces where you’re gonna find audiences that are unreachable in other parts of the internet.

David Roberts: Yeah, but how do you do that? So you find someone who’s got an audience who maybe is talking about cars or sports or whatever, and you would like them to maybe sprinkle a little pro-clean energy messaging in there amidst that. How do you do that? Are you paying these people? Are you approaching them? Are you signing contracts with them? Are you just trying to convince them? What does the relationship look like?

Leah Qusba: We have all sorts of models. So let’s say we have a… This is one of my favorite stories. I live in the state of Wisconsin, and we do a lot of storytelling all over the country around communities that are quite satisfied with utility-scale renewable energy infrastructure, and there’s this farmer named Shelly. She’s in her 70s, she lives in southwestern Wisconsin. She’s had wind on her land for about 20 years. She agreed to have us on her farm and to film her over a three-day period and tell her story how these turbines put her kids through college, how it’s just part of the natural landscape. She farms all of the other acres around these turbines, so she’s still a farmer.

We don’t have to pay people like Shelly, right? Just like you don’t have to pay people to go on Reddit and talk about how fun it is to drive their Ford Lightning or whatever EV they’re driving, right? So that’s unpaid documentary style filmmaking that we do. And then on the other side of the spectrum, we work with influencers that are monetizing their social media handles. So we might work with a car bro, right?

And gosh, oil prices go through the roof because of a far off war in Iran and people are like, “Wow, I’m having to pay $5, $6 gas.” So we partner with a car bro who has a huge car audience, and we’re like, “Yo, I’m really sick of paying these prices. What relief is there?” “Oh, have you heard about electric vehicles? Actually over a five-year period, they’re cheaper now to maintain and to drive than a gas-powered vehicle. Maybe you should include this for your household in sort of your future purchasing plans for your next vehicle.”

David Roberts: So when we think about these influencers, they’re specifically not clean energy influencers. To the extent such a thing even exists, I don’t even know if, I don’t even know if there are such things in the world, but like these are influencers in other areas that you are approaching and making deals with, and you’re sort of getting some of your messaging in their channels.

Leah Qusba: The way you can think about that, I would have no interest in spending a penny on an audience that follows a clean energy influencer, right? That’s preaching to the choir. I wanna find the people who are really resistant. I wanna find conservative audiences who see EVs as a lefty lib thing to do and not as like pragmatic cost savings thing. So how do I find these audiences that don’t have the right information? I don’t wanna serve any media to people who are adopting EVs just fine or are already big supporters of clean energy.

David Roberts: So curious about this, like how open is that door that you’re pushing on? Do you find a lot of people willing to do this? Is this a fertile thing? Is it easy to find people and get these messages out into these channels? I mean, I imagine a lot of these influencers kind of have opinions of their own or thoughts of their own or, you know, what they call audience capture. “My audience wouldn’t like that. Like if I get political, my audience wouldn’t like it.” Just like how much resistance are you finding or how easy is it to do this work?

Leah Qusba: Yeah, we essentially have an internal creator marketing agency. About six years ago, we got sort of exhausted working with all these influencer agencies and having to basically just teach them all the messaging, and it was just really difficult. So we said, “You know what? We can do this ourselves. Why don’t we just slide into a bunch of people’s DMs and see if they wanna work with us?” And it turned out that worked, and it was really scalable, and then we built a really world-class team around that vertical.

And now, you know, it’s really, it’s a mutual relationship, so there’s some alignment there on our worldview around the energy transition or electric vehicles or other decarbonized technologies at whatever level of scale. And so it’s a mutual agreement that we wanna work together, and we basically create campaigns together. We brief things together, and some of our creators have been working with us for five-plus years, so there’s a real trusted relationship there.

David Roberts: Interesting. And one thing I’m curious about is I know media is shifting and changing, obviously, and, like, to a great extent, especially among young people, the big networks, the big sort of media channels that their parents and grandparents went to are not as big of a deal for them. But they’re still a pretty big deal. Like, you’re going up against, in a lot of these cases, talk radio, Fox News, like big organized, established, wealthy media channels, and you’re kind of doing it with this ragtag army of influencers. How do you not just get drowned out? Like, do you feel you can make yourself heard if, you know, the Eye of Sauron really turns to, like, an Ohio battle over a proposed solar field or whatever?

Like, if the right-wing media machine really turns its attention to that, do you have enough power to be heard amidst that kind of torrent of slop that’s coming from those channels?

Leah Qusba: I mean, let’s be real, though. We’re not just using creator marketing, right? That’s one possible tactic of, like, a layered campaign, and it depends on the goal of the campaign and the media diet of where we’re running that campaign. So if we’re running a campaign, let’s say, in rural northeast Oklahoma around a utility-scale wind project-

David Roberts: Mm-hmm…

Leah Qusba: so what do the people in that community consume in terms of their media? There may be transit or out of home advertising, AKA billboards. We do a ton of phone banking. We’re organizers and campaigners at heart at GoodPower, so we’re gonna call people and understand what people think about these technologies. They’re very favorable of wind in this part of Oklahoma because it dots the landscape and it’s invested tons in schools.

And then we do storytelling and find subjects. We filmed a Republican school superintendent that talked about the benefits to schools, and we talked to a county commissioner, and we talked to neighbors of these projects and landowners leasing their land. So it’s much more than just finding credible messengers. I think the point of credible messengers, though, to your opening statement, is the message is absolutely worthless … actually, the message is the messenger.

David Roberts: Mmm.

Leah Qusba: And we just need to evangelize that to anybody working on any campaign anywhere. Nobody trusts the internet. Nobody cares what brands have to say. Empower people to speak for themselves. You know, talk to the farmers, talk to the school superintendents, talk to the local community.

David Roberts: And I would imagine part of your goal, one of the ways that the right wing pulls off its messaging victories, is that they get people talking to one another about it. You know what I mean? They sort of end up deputizing these end users as kind of messengers, and there’s this enormous peer-to-peer effect. Is that something you’re trying to get going and tracking at all? Like, you can’t do all the messaging yourself. Ultimately, you need to convince some people that are gonna go out and carry your message for you. Is that a big piece of the puzzle?

Leah Qusba: Yeah, I would say in our campaign work, we call these amplifiers, but people who maybe don’t have a huge social following of their own, but they’re huge supporters of the work and, you know, the particular goal of the campaign, so they wanna weigh in. So maybe they’ll comment, maybe they’ll re-share, maybe they’ll amplify the content in some way. Every time we do that, algorithmically, the content becomes more viable.

David Roberts: Mm.

Leah Qusba: It becomes more exciting to the social platform ‘cause they see engagement. So the algorithm will help serve that content up to more people, reach new audiences, make it more, quote-unquote, “viral.” So there’s really a way of doing that, and I would say lots of campaigners have really understood the power of amplification networks. At GoodPower, we have about 1.2 million people in the GoodPower Action Network, so this is an opted-in list of mobile and email subscribers that we often send opportunities to amplify out to them. So yes, that is something we use.

David Roberts: Interesting. Well, let’s talk about, like, a test case. Let’s talk about, there’s this winter storm, Fern, in January, and this was a sort of, one of your sort of arms or divisions is you look for events that happen, and then go respond. We all know, we’ve all seen at this point, like, anytime something happens, something pops up, a big heat wave or a blackout or something, like, the anti-clean energy messaging swarms instantly around that. And so you are trying to send a counter-swarm, I guess you would say. Just walk us through, like, what that looked like around Winter Storm Fern. You heard about the storm. What did that trigger? What series of sort of actions did that trigger?

Leah Qusba: Okay, full disclosure, we are huge tech nerds over here at GoodPower. So we build original products that don’t exist, and we use AI-enabled tools increasingly to solve problems humans just can’t or are too big, right? We need agents and bots to do it. So this is one of those great examples. We have a rapid response program. So in order to do rapid response, first of all, understanding why, right? Whoever gets there first, people are scrolling, they ingest the headline, sometimes they don’t even click on the headline, and then they move on.

So there really is a premium on can you get your message out first before the public understanding hardens around the fake news or the disinformation, right? So premium on speed. How could we possibly do that? Well, we built, it’s called an agentic orchestration, but a bunch of agents that we trained every single night, they do this at 4:00 AM when we’re sleeping, and deliver this to our inbox in the morning. They’re looking at the news cycle. They’re looking at what disinformation clusters around renewables and energy are moving that day. They’re looking at the biggest social media posts out there that are relevant to that, and they’re also looking at the biggest news stories.

We get that served up at 6:00 AM. By the time we’re at our desks in the morning, we have a rapid response team that looks at that, and they say, “Okay, whoa, Winter Storm Fern, it’s in the forecast. This is gonna be huge.” Now, that’s a great example ‘cause it actually, we don’t have to do something that day. It’s in the forecast, so it’s coming up.

You know, there’s a lead time with extreme weather often, which is awesome, so it gives us more time. But we do have the capability to get lots of creators a brief, like that day, and get content online immediately, and that’s important because over the last roughly 20 years I’ve been doing this work, we have, like, never gotten better at rapid response.

David Roberts: Yeah.

Leah Qusba: We’re like a day late and a dollar short.

It’s all analog. We’re just not good at it, so we need to use these new 21st century technology tools to do it. So essentially with Fern, it was awesome because it was a pre-bunking campaign. We actually got out before the storm hit and, you know, power went out in 21 states or something like that, and people were upset, and immediately you saw the scapegoating of renewables.

David Roberts: Mm-hmm.

Leah Qusba: Our campaign, we basically had a bunch of creators brief. We had a few dozen go live. We generated millions of views on that content, basically saying, “Hey, if your power goes out” Don’t believe what you’re saying. It’s not renewables, it’s all these other things. Literally frozen coal and gas supply. It’s interregional transmission. It’s the broken grid. Even FERC says that that is the case, our own government. So in case you see disinformation, now you know, and that’s sort of a methodology we use that’s pretty empirically founded, where you can pre-bunk things before disinformation reaches someone. You basically inoculate them or make them impervious to it.

David Roberts: Yeah. We’re gonna get back to that in a minute, the pre-bunking stuff. So, you know, you have this system that alerts you to events. You got a rapid response team that says, “Okay, this event is coming up. Let’s send messages to our influencers. Let’s record some documentary content. Let’s do all the various things. Get that in front of the people who are gonna be affected by the storm.” And then when the storm hits, to some extent, you have a counterplay already on the ground. That’s the idea?

Leah Qusba: That’s right. And like since Winter Storm Fern, that was the last weekend in January. I remember it was my birthday and I was in Upstate New York, and it was very snowy. And since then we’ve gotten over 20 sort of rapid response, we call them reps, but different times we’ve mobilized this rapid response community, and we’ve served like almost 70 million impressions at this point in these high attention moments that have risen to the level. Like another example, Trump was on stage at Davos and said it costs $1,000 every time a wind turbine turns.

We deployed around that. Oil prices, record high, the Iran War. We’ve done a lot of stuff around volatility in that, you know, Americans are sick of importing that volatility into their energy bills and to the gas pump. So there’s been a lot of stuff since then, and we’re starting to get better and better at this and reach more and more scale each time we deploy.

David Roberts: Well, this is one of then my core questions, which is, you know, you have these deployments. How do you test their effectiveness? How do you measure your own effectiveness? ‘Cause in a sense, I know that the big number of impressions is, in a sense, the number that sounds biggest and it’s kind of the easiest to measure, but we don’t really know whether impressions matter or do anything. You know what I mean? Like that’s a middle point in the causal chain. What we wanna know is at the end of the causal chain, are people behaving differently or doing different things or believing different things at the end of all this? So how do you measure the effectiveness of a campaign? What is the methodology?

Leah Qusba: Yeah. So we have an in-house research lab called the Good Data Lab. It’s run by Dr. Sonia Sachdeva. She has her PhD in computational research, and she has a team of PhD level social scientists that study this stuff all day, every day. And we started this lab four years ago. We’ve completed 130 empirical studies, everything from, like, deep focus groups with county commissioners to tons of, like, message tests and randomized control trials. So we study the effects. What are the persuasion effects? I’m much less concerned or interested in how people feel and think, ‘cause we have, like, the feeling and thinking gap to action.

David Roberts: Yes.

Leah Qusba: I’m much more interested lower down into the funnel, like, how does this change behavior? Are there proxies that say, “Oh, wait, I wasn’t supportive, but if I were in a real-life environment, I would be”? And then actually going all the way down the funnel and seeing if that person actually did the thing they said they wanted to do. So we study all levels of the funnel, from just education and awareness to changing someone’s mind, to proxies for action, and then actual action.

David Roberts: Like, for instance, I would imagine that there are, you call these spark events, these things that come up that you didn’t respond to.

Leah Qusba: Right.

David Roberts: I would imagine that there are lots and lots of spark events, probably more than you can respond to. So do you ever use one that you don’t respond to as kind of a control group? You need control groups in these experiments to truly get a sense of your effectiveness. Like, what would…

You need to counterfactual what it would have been like had we not responded. Are you able to do that? And I’ve wondered the same thing about your ads. You know, you serve a lot of ads. Do you ever just sort of leave a zip code out and make it a control group so that you can compare what happened where there were ads with what happened where there weren’t.

Leah Qusba: Yeah. So we do that all the time. One of my favorite studies from Rapid Response that we did, and this was no affiliation with Senator Schatz, but what we did is we saw that Senator Brian Schatz gave a speech on the Senate floor. He was talking about energy bills and reliability, and we pick that up in this daily signal that we get in our inbox that I was describing to you.

And we said, “Hey, this is really interesting. Here we have, you know, a prominent elected official talking about this all-of-government approach of the Trump administration to stop renewables and connecting that to rising bills for Americans. This is really interesting. It’s a big news story. How do we get this out to people?” So we had our creators clip it up. We held out a control group that didn’t see the intervention.

I think they saw an Airbnb ad or a Morton Salt ad or something. But we had a statistically significant result that showed a huge decrease in favorability for Republicans and how they handle energy bills. It was an 11-point decrease, and we saw a 4% increase for Democrats for talking about these issues and acknowledging that we need every electron. We need, you know, the cheapest, fastest to power electron right now is solar and storage and wind.

So, you know, tests like that I think we do pretty routinely just to know, okay, well, what would happen if we didn’t do anything versus this treatment universe that does get exposure to the content, and how does this change how they think and how they act?

David Roberts: Interesting. Yeah, so you mentioned earlier this work on inoculations. Sander van der Linden, I think, is the guy who’s sort of become famous with work on this, sometimes called pre-butting. The idea is that if you can get to people before the misinformation reaches them and get good info in their heads, that is more… tends to be more effective than coming in afterward and trying to change their mind. I’m sort of curious how this plays out for you, though, because most of these, I mean, most of these things are almost by definition, you’re responding. These spark response things are responses to things that have already happened. So what’s an example of somewhere where you’re using this inoculation idea, you’re using this inoculation effect?

Leah Qusba: Yeah. Another term for that is basically just getting there first before the disinformation even is on the radar of the audience, right? So we call this ground softening. Any good campaigner listening will understand what that means. It’s like before you go knock on a door and talk to somebody, you should probably put a door hanger. You should probably give them a phone call or a text, maybe send them a mailer.

We gotta soften the field before we go have a conversation and make an ask to a voter to do something, right? So in the context of a community considering a huge new proposal for utility-scale solar paired with storage, let’s say, what if we went out a year before that project was announced, we started a low level of showing stories of other nearby counties or states that already have this infrastructure and are really happy with it, the economic benefits they got, right?

And we’re not just guessing here. We know this works ‘cause we did a longitudinal experiment for three months where we exposed 80 counties and held out another 80 counties in a control, and we looked at things like what are the perceptions around building more solar and wind and batteries? What was the baseline of support before this exposure, and after three months, what was it? Are people raising their hand saying, “Wait, now that I know, I would support and host-

David Roberts: Mm-hmm.

Leah Qusba: utility-scale renewables in my town?” We saw an 11-point gain over that three-month exposure. We exposed them to 22 different pieces of content, stories, real stories from real rural conservative people who already have these technologies in their towns. And then the coolest thing we did is we wanted to show the world, like, hey, marketing 101, when you turn off the ads, it decays. Just like when Coca-Cola turns off their ads, people go buy Pepsi and Gatorade or whatever else, right?

You gotta stay in people’s feeds, otherwise the other noise of the internet, the disinformation, et cetera, seeps in and it gets undone. I mean, that’s something every marketer understands. So we really need to have an always on low level, and we know just the precise amount of impressions that we need to sprinkle to make sure people really understand they’re hearing from people they trust that are in their affinity group.

David Roberts: Yeah.

Leah Qusba: You know, not what GoodPower’s saying, not what some other brand is saying. What is my neighbor saying about this that already has it, right? It’s just like TripAdvisor. Have you ever booked a hotel without looking at the Google reviews? No. You wanna hear from people that have lived it. It’s the best thing in our experience that has worked, and we have a lot of empirical evidence that shows that it works.

David Roberts: Interesting. Yeah. You really anticipated my next question, which is one of the sort of uncomfortable results of the research on inoculation is that the effects fade pretty quickly. Like, once you stop, the effects fade. I think this has been true of all… It’s been one of my real complaints about a lot of work and hype on messaging that I’ve been exposed to over the last 20-some years, which is like if you get people in a little conference room and expose them to messages and then ask them right afterward, they’ll be like, “Yeah, yeah” you know, like you change their minds.

But how long does that last? Does it change their mind in an enduring way? My big question is, if you need to keep it up to maintain that level of support, doesn’t that mean that, like, every campaign you launch ends up being a quasi-permanent campaign? Like, how can you afford to do that? You know what I mean? Like, to be sort of always on in these communities. Do you have to be sort of always on everywhere you go, or if you stop, do things just fade and go back to normal?

Leah Qusba: Yeah, I think it’s a really important question, and I think for us, right, we do a lot of campaigning where all the cheap, viable land is for wind, solar, and storage.

David Roberts: Mhm, yeah.

Leah Qusba: Those are very rural places. They’re conservative. They’re not population dense. So that longitudinal experiment in those 80 counties, right, that’s not actually a ton of people. So when you look at, we currently have about 300 local siting campaigns running at the project level, and what these are, I mean, when you look at the population density, sometimes it’s a few thousand people, right? You’re hard-pressed to spend, what, five grand on media? These are not expensive places, at least from our perspective in the local siting place.

Now, you multiply that by every month, every year, times the amount of counties. I mean, it can add up, but for our campaign work, this isn’t something that is necessarily, you know, hundreds of millions of dollars.

David Roberts: Right.

Leah Qusba: It’s not cheap, but we think it’s worth it. And the earlier you can start, you know, before the disinformation or the Facebook group, right, that is often housing a lot of opposition locally, before that forms, your best bet is early intervention. A win isn’t just who’s supporting and calling the county commission or submitting a public comment or showing up. It’s who stays home. It’s about flattening-

David Roberts: Yeah.

Leah Qusba: the curve, you know, to quote Fauci. How do we flatten the curve of opposition? I mean, that’s really, like, 75% of the battle.

David Roberts: Yeah. Draining some of the intensity of the opposition is really an underrepresented… So, well, let’s talk about the, you know, talk about the action at the end of this. So you’re not just trying to change minds, you’re trying to change people’s behavior. There’s a Kansas case study where you talk about sort of the action that resulted at the end of your intervention. Talk us through that a little bit.

Leah Qusba: Yeah, definitely. So we run, hundreds of these local project-level siting campaigns, and generally, they have a few different phases. First, research. What does the community feel and, you know, when’s the last time they elected a Republican or a Democrat, right? What’s the sentiment? Oftentimes these are tied to party lines, so we wanna know how the community feels. Second, we do our ground softening. So all of the stories, hundreds at this point, all of the credible messengers that already have these technologies, how do we expose communities thinking about these technologies and hosting these projects? How do we expose them to credible messengers?

And then finally, like the bottom of the funnel…How do we get them to submit public comments on an official open docket? How do we get them to show up in person either at a community meeting or an official hearing to give testimony, right? How do we get them to bring friends and reach out to loved ones, family, neighbors?

David Roberts: Yes. And I think people who are not involved in this stuff underestimate the difficulty of getting people off the couch to do anything on anything about anything, or talk to any, like anybody on Madison Avenue, you know, advertising products or anything. Like, getting people to go from positive sentiment to action is a huge push.

Leah Qusba: Yeah, and let’s just talk about that funnel. I mean, ‘cause you said, “Okay, well, is that really a reflection?” The total impressions we’ve served lifetime across our 300 siting campaigns in 40 states, about 40 million impressions. There’s about 53 gigawatts of clean energy tied up in these campaigns, but how many comments from those impressions? We’ve gotten 2,500 positive public comments. So now you know, you can do the math, how many impressions does it take, top of the funnel, to bring people through, right?

We did 76,000 phone calls to people. We got 2,500 comments, and we got about 600 people in person to mobilize and show up and RSVP and show up for hearings to give official testimony. So the marketing funnel is clear.

David Roberts: Yeah.

Leah Qusba: We know how many people we have to reach, and there’s a math problem here that we can do to really understand the ongoing cost. These campaigns also, it doesn’t end when a final permit is issued and that project goes to construction, right? People will forget.

Well, then they have to look at the thing. I’m from a, you know, I grew up around a lot of farmland. It’s a very intense wind area where I grew up in northeastern Wisconsin. Lots of farms, and essentially, I mean, your landscape changes. You gotta look at this stuff when you wake up and when you’re driving down the road. So you have to continue after the project is operational and remind the community, “Oh yes, but wait. The trade-off here is we got a new school, we doubled our tax base, we have long-term leases, they sponsored our Little League team. Like, we’re actually getting a pretty sweet deal here.” And every community has to sort of evaluate that trade-off for themselves.

David Roberts: Yeah, and I would just say sort of the other half of the comment I just made before, how difficult it is to get people to take action, those numbers of actual people taking action might look small, but they’re like, the other side of this is that it doesn’t take that many people to make a pretty big impact, because almost no one does anything, if you can get a few people to do something, it can make a very big impression. Like, if you’re having one of these small town siting meetings or permitting meetings or whatever, you can get two or three people to show up, that makes a big difference at a meeting like that, but-

Leah Qusba: It’s massive. It’s massive. These are tiny counties. And I will just say, too, the internet is really good at making a vocal minority feel like the majority. So actually being in person and seeing people show up that are in the community, these are tiny places where people know each other. And a county commission, a lot of the states we work in permit at the county level, some at the state level, you know, through the PSC or the PUC.

You know, they’re overwhelmed when they see 500 comments and some negative ones, and how do we make sense of this, and who’s showing up in the room, and it’s all quite confusing. Generally, if you’re a county commissioner and you’re like a full-time farmer and you’re maybe doing this off the side of your desk as a part-time thing, it’s incredibly difficult to make that decision, and everybody’s looking at you because you live in a tiny town.

David Roberts: Yeah, I would say if there’s one thing over my career that I’ve noticed that the whole right-wing media messaging machine is good at, it is precisely that. It is creating the impression of a lot of people, right? And you don’t need very many real people to create that impression. They are-

Leah Qusba: Exactly.

David Roberts: masters of creating that impression. It’s very effective. I wanna talk a little bit about, you have these AI agents sort of developing and testing messages, and they’re seeing the response, and then they’re revising and testing again, seeing the response again. And I see the value in some sense in automating a lot of this and getting AI to do this ‘cause you can do a lot very quickly. You can do a lot of testing and revising and retesting and revising very quickly. Maybe this is a cynical thing to say, but I’m not sure that the messages that are going to be the most efficacious are necessarily the messages that are the most strictly accurate.

Leah Qusba: I see what you’re saying, yes.

David Roberts: So, you know, like if you just put AI on it, and they’re running and testing and their goal is efficacy. You can see how you can stray into messages that might not seem strictly accurate, or, you know, there’s the line between accurate and inaccurate is very fuzzy. Like, does exaggeration count? You know, like-

Leah Qusba: Hallucination.

David Roberts: what metaphorical-

Leah Qusba: Right.

David Roberts: like metaphors, are they accurate? So I guess I’m just wondering, like, where is the human being in there making those judgment calls about what is too far or what is too much, or like what has gone beyond the bounds of accuracy? How do you police that?

Leah Qusba: This is so important, and just, you know, to clarify for the audience, we don’t actually use AI-enabled tools to generate content. I know some organizations do and have found efficacy with that strategy. We use AI-enabled tools in a different way, really around helping aware us of disinformation, big news stories, helping us categorize lots of content or making sense of large amounts of data, detecting AI manipulation sometimes in local dockets.

So we don’t use it for content. I think the problem we face, right, with the AI slop and all of the stuff on the internet, people just don’t trust it. They don’t trust what they see. It’s not good content, but who do they still trust? They trust each other. They trust their neighbor. So really, our entire organizational strategy, we work outside the US as well, in Brazil, South Africa, the UK, Canada. It’s really the same method though.

It’s the same playbook. Just empower the people, right? Rural speaks rural.

David Roberts: Mm.

Leah Qusba: Conservative speaks rural. We don’t need to say anything. We don’t need to manufacture anything. We don’t need AI agents to say anything. Just go talk to the person that already lives next to the utility-scale, battery energy storage system. How do they feel about it? What did they get?

David Roberts: Right.

Leah Qusba: You know, oh, people are saying BESS is flammable and starts on fire. Go talk to a firefighter and see what they have to say, right? They live and die about safety, so go see how they feel, and they have battery energy storage in their town. So I think we need to get out of the way as brands. I think that the age of the internet is over, where brands were important. I don’t think they are.

I think we’re in the user-generated era of the internet, and we as sort of practitioners and campaigners, we really just need to empower the people. And the message won’t be perfect, to your point, David. It’s gonna be unscripted. It’s gonna be raw. It’s gonna be authentic. It’s gonna be emotional. It’s not gonna be perfectly wrapped up in a bow like some high production $300,000 ad we created somewhere in a studio.

That’s not what the internet likes anymore. It’s not what people wanna see. They want authenticity, and they want somebody they trust. So it’s either in their own affinity group, like mom speaking to mom, or there’s universally credible messengers, like a firefighter or a nurse or, you know, somebody who everyone trusts and looks to for credible information. So our strategy is really about that. We are like a storytelling juggernaut in that respect, where we just try to get out of the way and empower people to talk to each other.

David Roberts: Here’s another question I was wondering about. You have under your umbrella a C3 and a C4, i.e., an educational branch that’s about countering misinformation and giving good information, and a sort of policy advocacy branch. I don’t know how good faith these complaints always are, but one of the things since people have criticized climate groups for in the past is you come in and say, “Science says blah blah blah.” Like, science says temperatures will go up by X amount if we increase emissions by X amount.

And then you stray beyond that and you’re like, “Well, then science says we should impose a carbon tax.” And a lot of people, I think rightly, are like, “Well, no, science didn’t say that.” Like, that’s a judgment call. That is policy advocacy you’re doing there. That is your judgment about what we should do about the facts. So I’m curious, like, how you walk that line between what is sort of your C3, just correcting information and what gets into policy advocacy. Like it’s information that like battery fires are rare these days.

That’s factual, it’s empirical. You should permit this particular battery proposal in your backyard. That’s not science, that’s not facts, that’s advocacy. How do you think about keeping those distinct?

Leah Qusba: I think it’s a really great question. I mean, I would say for us, if we don’t have the right development environment to build, then no amount of public support or social permission is gonna make that project succeed, and I think the US clean energy development pipeline, right, we have like a really significant attrition problem. I think it’s like 13% of generation and storage capacity that enters the queue actually reaches commercial operation.

So that’s unbelievable. There’s lots of things broken, and I think increasingly we’re in a new moment around social permission. It’s not just is the technology viable and is it affordable, it’s will people let us build it? So I think we’ve really focused on that. Where policy really comes into play is let’s say we’re in a community, say it’s a rural community that doesn’t yet host utility-scale renewables, so we have to make a blueprint, right?

So that’s called an ordinance, and then the ordinance, right, it can either be development friendly or it can be prohibitive like or it could even act as an outright ban, like something like, “Oh, we need three to five mile setbacks from any home,” which is basically an outright ban, you know, for wind, for example, that I’ve seen. And so right now in the US, we’re banning land faster than we’re permitting and building projects, and there’s a lot of people really concerned about this.

So the nexus of that, that’s really policy, right? How do we overturn short-term bans and moratoria? I mentioned how county commissioners, right? It’s a nerve-wracking thing, and I empathize deeply being from, you know, a community surrounded by a lot of farmland. Everybody knew everybody in the town I grew up in. Here you are being faced with all of this polarizing, you know, mixed feedback from your constituents.

David Roberts: Yes, people yelling at you, people getting really-

Leah Qusba: Right.

David Roberts: really mad. Your community members, who you know, getting very mad at you about things they’ve heard online. I hear stories like that all the time.

Leah Qusba: And so I empathize, and we’re also seeing legislative sort of model bills or model ordinances travel from state to state right now that are pretty scary when we think about outright bans on these technologies, and we’re losing land, I would just say, faster than we’re building the projects.

David Roberts: But this gets back to how do you just operationally and legally keep your C3 and your C4 distinct. I mean, ‘cause they’re both in some sense using some of the same tools, right? I mean, in terms of gathering sentiment, in terms of finding messengers, et cetera, et cetera. Do you worry about the chocolate and the peanut butter getting mixed up?

Leah Qusba: That’s a good question. We pretty much stick to education and awareness on the C3 side, and the C4 is where we have unrestricted lobbying or policy engagement that we can do. So we have a pretty strict separation between the two. Of course, education and awareness and changing somebody’s mind about how they think about these technologies certainly creates a readiness.

David Roberts: Mm.

Leah Qusba: It creates, you know, the conditions for a policy to succeed or not succeed, and I think increasingly we see that connection. You can have the most beautifully drafted policy at the state level, the federal level, locally, and it’s just destined to fail because you haven’t done the work of educating people, and these issues are quite dense.

David Roberts: Yeah.

Leah Qusba: You know, you start saying things like interregional transmission and you’ve lost your audience immediately, so.

David Roberts: Cost allocation.

Leah Qusba: Correct. “Offtake!” I mean, all of these things, how do we bring communities along? So, you know, we really prioritize both, but essentially the C4, the policy advocacy, sort of builds on the education and awareness that we’re doing on the C3 side.

David Roberts: Well, it’s another question, another sensitive question about the education side, which you teed up well here, which is there are some negative sentiments about clean energy that have a germ of truth. Like there have been battery fires. That is a thing that happened, you know, the Moss Landing thing did happen. It is true that mining for some of the materials for these technologies has pretty negative impacts on the communities where the mines are. Like, you know what I mean? It would be easier in some sense if these were just completely made up, but there is a germ of truth in some of these. How do you navigate around that? Do you find that it’s helpful to sort of acknowledge that there’s a germ of legitimate concern and then work around it? How do you think about that?

Leah Qusba: I’m so glad you asked this. I mean, this is one of the most important, I think, disconnects or maybe disagreements that communicators have across the field around how to deal with this, and I can give you our approach and sort of why we take this approach. But what is so cunning and brilliant about the disinformation machine is that there is always a kernel of truth, right? Wind and solar are unreliable, so they can’t power a modern grid.

Well, yeah, but now there’s this amazing invention called the battery. But, like, you have to kind of acknowledge, and then you’re down a rabbit hole, and you’ve lost the argument, and you’ve lost the audience ‘cause you have to acknowledge, right? So how do we deal with this? And there’s lots of different ways that people think about it. For us, we never wanna reinforce disinformation, so repeating the disinformation is not something we typically do as an organization.

And there’s different schools of thought and empirical research on this method, but essentially not reinforcing the disinformation by repeating it. How about you just tell the story you wanna tell? And then the disinformation, you know, it rolls off the audience because they’re like, “But no, this is meaningless to me because I just talked to my neighbor or saw somebody who looks just like me on TikTok driving an EV, and they’re loving it and having tons of fun, and they’re charging it for, like, less than $2 in their garage overnight.” I mean, I think for us it’s really, the approach is how do we fully supplant these narratives with credible messengers?

You mentioned the BESS and fires. This is actually a really good one, a good example. Yes, Moss Landing happened. That was a horrible tragedy, terrible fire, but those events are rare, right? So instead of talking about Moss Landing and reinforcing that narrative, we decided in all of our BESS intense hotspots around the country, you know, we went to Taos, New Mexico, all of the places where we’re advocating or that are big battery energy hotspots. We went and found the fire chiefs and fire marshals in all those places. They agreed to sit down with us.

David Roberts: Well, I was curious about this, ‘cause they’re often the ones, I often hear about them being the ones raising the fire concerns and lobbying against the batteries. Like, I often hear of fire people being on the wrong side of this.

Leah Qusba: We’ve encountered that, too. So we went into communities and we said, “Hey, we’re not manufacturing a story.” We said, “What do you feel about these technologies? Have you ever had a fire incident? Do you wanna go on camera with us and talk about it?” My favorite story is this one in Taos, New Mexico, the fire chief there, and he’s like, “You know the thing about battery energy storage and fires? We never had one.“ ”This technology is totally safe. We have tons of it in our community. It’s been a huge economic boon for us. You know, I am the voice of safety. I’m telling you, these technologies are really safe.” So instead of addressing Moss Landing, addressing fires, we just tell our own story delivered through the most credible messenger you could possibly have, which is a fire chief or a fire marshal.

David Roberts: Interesting. I got a bunch of other things I wanna ask you, and we’re running short on time, so let’s go. Let’s talk about TrueVoice, which is this really interesting, I think, AI tool you’ve built. So you know, anybody who’s been in a regulatory proceeding or any of these proceedings that involve public comment, I think people will understand intuitively it has become very cheap and easy to generate the appearance of a bunch of comments, basically. Like, this has become a very gameable system, and so you’ve built this tool called TrueVoice that is supposed to go through these comments and be able to tell the legitimate ones from the illegitimate ones or something like that. So what, just briefly, what is that tool? What’s it for?

Leah Qusba: So, like, imagine you’re a regulator, and all of a sudden 500 comments, you know, opposing a project. What do those 500 comments mean? You’re like, “Whoa, huge volume.” Are they 500 independent people independently reaching the same conclusion? Did one organization mobilize 500 of their people? Did 20 people submit repeatedly over and over? You know, are they all identical out of the box comments from a form letter? Like, you don’t really know, and the human eye can’t detect that.

So what TrueVoice does, it’s an AI-enabled product that we built in-house, and it essentially can make sense of these based on a number of indicators. Just because there’s a lot of comments or because some of them are from a form letter doesn’t mean they’re fake, right? But we can look at things like automation signals. Did they all come in at the exact same second?

David Roberts: Hmm.

Leah Qusba: Can we look in the voter file and see if these are real human beings, or are they Mickey Mouse and Donald Duck, right? How do we look at all sorts of different signals and make sense? And so we’ve got a bunch of case studies now where we’ve looked at various projects that we’ve worked on that are on our radar, both, you know, a fossil fuel example, a new gas plant, and also a lot of utility-scale renewable projects to just make sense for either the public service commission or, you know, whatever the jurisdiction is that’s considering this project, be able to help them make a more informed decision. Is the support real? Who is it from? Is it local? Is it from inside the county, or is it a bunch of people from outside the county that are weighing in that would be an indicator of astroturfing? So it’s just having more informed decision-making.

David Roberts: I found it somewhat darkly ironic that one of the case studies here is this Ohio Power Siting Board. This story got written up in Canary. I think you were involved in sort of… They found a bunch of comments that appeared bogus, and then Canary went and called everyone and could only find one of the people involved in the comments. So it was very clearly exposed that a lot, if not the majority of these comments were fake, and that was demonstrated, written about in the media, and then the Ohio Power Siting Board went ahead and denied the project anyway.

So, I’m wondering like how big an influence are these comments, or to what extent are these boards, regulatory boards, are these local boards kind of like coming in with their minds made up already? Like that story doesn’t really end the way you would like it to.

Leah Qusba: It does not end the way we would like it to, but now it’s a great accountability moment of like, okay, well why didn’t you sort of, you know, trust the voice of the people, and do you belong in this office? So it can turn into an accountability moment. I would say in the vast majority of case studies, the local public voices are determinative-

David Roberts: Mm.

Leah Qusba: on if something moves forward or doesn’t, or the lack thereof, right? If it’s a ton of opposition and no support, I would say it is determinative in these decisions, and increasingly, you know, one in three projects dies just in permitting right now. It’s highly expensive to the industry, all these delays and cancellations, and, you know, increasingly, LBNL has a great survey, but all the developers that we’re in touch with say the social permission and the opposition, the public support, it’s consequential.

David Roberts: Mm.

Leah Qusba: So unfortunately, yeah, Crossroads Solar, the findings we got through TrueVoice corroborated the Canary Media investigation, and we dug a little bit deeper. It actually quantified at automation at the docket level. It geolocated manufactured opposition, where it came from, to the host townships. It distinguished cleanly from sort of legitimate duplicate submissions, sort of accidental people pressing submit twice-

David Roberts: Right.

Leah Qusba: versus actual duplicate submissions from made-up people. And, you know, essentially this is the type of information we wanna surface and we wanna provide it to every stakeholder involved. The public should get to see-

David Roberts: Mm.

Leah Qusba: the TrueVoice report, the decision-makers, the media, the developer of course. Everybody should get to know the true story. Is there really local support? Is there really local opposition? What’s really at play here? And we saw, you know, increasingly, we do this work in the UK as well, and we first noticed this last year, all this, you know, this 5,000 AI-generated comments dropped on a local council in the UK, and now we see it everywhere. And so we feel like we’re answering this problem, of course, for ourselves in the work we do, but it’s essentially so much bigger than us, and if we can solve it, maybe we can solve it for everybody.

David Roberts: Yeah. I wonder if you worry at all, I mean, this is a very familiar question about AI in many different contexts, but in some sense, like… The AI that wants to fake the comments is going to learn also from-

Leah Qusba: Ah, yes…

David Roberts: from TrueVoice, and then you’re gonna get in this sort of arms race where the AI faking the comments gets better and more sophisticated at fakery, and then you have to get better and better. You know what I mean? Are you worried about this arms race?

Leah Qusba: I’m so worried about it in all the ways. Like, I actually think if you ask me, I have a pretty radical view. I just think the internet is unrecognizable, and like, new systems will emerge.

David Roberts: Mmm.

Leah Qusba: Like, I just don’t think people are gonna enjoy going there. Like, five years from now, we’re gonna see a very different set of systems sort of arise. So yes, I’m really worried about it.

I think in the context of TrueVoice, we have no illusions. We are very pragmatic. We understand their models are gonna get smarter. We’re gonna have to get smarter. But the point here is, can we run interference on this type of AI-driven manipulation or opposition manipulation? Can we, you know, open the eyes of decision-makers? Maybe the system changes. Maybe you have to show up in person to give testimony. Maybe the online comments, right, are weighted differently.

So how do we actually change the system within the system? I don’t know what will happen. I think it’s a really important question. And yeah, our models are gonna have to scale and become better and more relevant as theirs do, and hopefully we can just make it more expensive, slow it down.

David Roberts: Yeah.

Leah Qusba: Will we fully solve it? I don’t know, but maybe the system will respond.

David Roberts: Yeah, it’s tough, you know, because if you make everybody show up in person, that’s a different kind of filter. You know, it’s gonna filter out. I can tell you from local NIMBY meetings, it’s gonna filter basically for like old retired people who don’t wanna build anything, that’s, who have time to go to these meetings.

Leah Qusba: Right.

David Roberts: I guess there’s just no answer to that question. It’s a very difficult question.

Leah Qusba: Very difficult. Very difficult. We wanna slow them down, make it more expensive, run interference, and ultimately just give people more information.

David Roberts: Yeah. I meant to ask this earlier, but you made the very good point, I think, which a lot of people make and I think is starting to sink in broadly, which is that it’s messengers that matter more than messages. But nonetheless, you have done a lot of message testing, and I’m just curious like what you found. What messages land? I was sort of interested to see, one of the things that jumped out at me is that the whole competition with China frame, which just dominates among political nerds and among politicians and in DC just falls flat with the public. No one on either side cares about that. I’m curious what else you have found just in your message testing.

I mean, Is it just all the intuitive stuff like cost and convenience or what matter, you know, that kind of thing? Like, what have you found about messages themselves?

Leah Qusba: Yeah, definitely. I think messages, right, we have to get away from, and I think our biggest failure is sort of our own egos and wanting people to care about climate or wanting them to care about… And really essentially what it boils down to, we got almost 70% of Americans that live paycheck to paycheck right now. So we’re thinking, “Am I gonna keep my job? Everything’s more expensive. What about my health care? What about filling my car up with gas?”

We do this great series, it’s on our GoodPower YouTube channel, called What We Pay. And we’re telling these stories. There’s a story on there from Pennsylvania 10, this is Scott Perry’s district. He’s a House Republican, and we just talked to this family. They have an $859 utility bill. They pull it up on their screen.

We did, like, a mini documentary. They’re like, “Yeah, we have other bills due tomorrow, so we’re gonna have to choose which ones to pay.” So essentially, yeah, economic security, Republicans and Democrats all have to fill their gas up, their car up with gas. They all have to pay an energy bill. So I would say election cycle after election cycle, having economic security and feeling like one is getting ahead, I would say really helps. How do we tie that to the energy transition? Oh, well, how about we stop the tyranny of far off wars-

David Roberts: Mm.

Leah Qusba: and just break our dependence on this stuff, and just, you know what, charge your car in your garage for a couple bucks? That sounds pretty great, and if you look at Australia and if you look at Europe, EV sales are through the roof right now. I mean, the trends are everywhere globally, so I’m hoping to see that in the US. But I think the values argument around some of these technologies and how ideological they are and how polarizing they are across political lines is really holding us back. So I think what is working, definitely economic security. I think second, when we look at audiences in rural conservative places where most of the utility-scale renewables are being built-

David Roberts: Mm-hmm.

Leah Qusba: energy security, grid reliability, like keeping the power on around extreme weather, American competitiveness with the rest of the world, and keeping us ahead and making sure that, you know, we can build these technologies here. I would say, you know, the jobs message, while I feel like we’ve, some practitioners have kind of turned away from that, we still see a lot of potential and influence when you show really cool people in clean energy jobs that love their jobs, and they’re showing beautiful vistas from the top of turbines or women in solar or people on battery energy storage sites. There’s a ton of stuff on our YouTube channel about that. So I would say it depends on the audience. Sometimes a climate message really works for, like, a young audience under 30.

David Roberts: This is what I wanted to ask about. One of the big fights right now is I think, like, everybody, almost everybody has come around basically to thinking yes, obviously, like, cheaper energy, more reliable, better for your personal immediate life is the best thing, is the top thing, is the best thing to lead with. But now there’s this argument about, like, some people wanna say, but, like, yes, bolstering that with climate-will boost you a few points. And then other people will say, “No, if you throw climate in fact you polarize a bunch of people away. Even if you’ve got them on your side from that, then they’ll polarize them away with climate.” Like, I wonder specifically about climate, what you’ve found.

Leah Qusba: Can I just start by saying something maybe very polarizing? But I think this is just the most ridiculous false debate that is so dangerously distracting from the bigger issues. I’ll just say that. I mean, we-

David Roberts: They love it on social media though, Leah. They’ve-

Leah Qusba: They love it. They love it, and they, I’ve been reading all the blogs, and news stories, and Substacks, and everything about it. I mean, how we think about it is maybe a little different, but I think we can have our cake and eat it too. And to continue with the dessert analogy right, we think about it like a pie. So there’s some people right now, like 8% of young people under 35 rated climate as their top voting issue in 2024, right?

That’s a lot of people. So we wanna use a climate first message for them. And, you know, it’d be great if people who are kind of could be predisposed to being really driven around a climate message to get more of them, to increase the size of that slice of the pie. But then there’s other people who will never be driven by a climate message. I will reference my dad who is a staunch conservative Trump supporter, but he now loves solar because his HVAC guy has a side hustle doing rooftop solar, not because his daughter works at GoodPower, but because his HVAC guy convinced him, you know, he could save money.

So I mean, it really depends on the audience, and this sort of crude segmentation between should we say climate, shouldn’t we? When you look under the hood and really look at the nuances of how we communicate the audience segmentation, how we market, the answer is just not black and white like that.

David Roberts: Right. Yeah.

Leah Qusba: It’s, you know what? Use it if it’s advantageous. In most cases, it’s not incredibly polarizing.

It’s also, what I said, a logistical issue. When you say climate, how do the algorithms respond?

David Roberts: Right.

Leah Qusba: On TikTok, there’s evidence that your content is suppressed.

David Roberts: Yeah.

Leah Qusba: So it could be a logistical reason. It’s not even a polarizing thing. I’m less worried about the polarization of saying climate. I actually don’t think it’s that big of a deal for most people right now. We’re seeing it. We’re living it. It’s really a logistical thing with certain platforms deciding to suppress or serve your content to different audiences, and how do we get by the goalie?

David Roberts: Interesting. Okay, couple final questions. One is, there is this pro-solar super PAC out there, you’ve probably heard about them, who have taken a different tack on this. They are just finding politicians who have badmouthed clean energy and voted against clean energy, and they’re just taking them out. And in taking them out, they’re not necessarily saying anything about climate or clean energy. They’re just taking them out however they can take them out.

But then once they’re taken out, they’re like, “That’s what you get when you mess with clean energy.” Just a sort of like an 800-pound gorilla tactic here. Like, “We are a big enough industry now that you should not mess with us or we will hurt you.” And that just in a sense kind of bypasses the entire public persuasion, the entire messaging piece of it, all that stuff. It just goes straight to the sort of immediate interests of politicians, which are above all getting reelected.

And they have a budget similar to yours, and I’m just wondering, like, how do you weigh that strategy versus yours? Do you see them as a choice? Do you see them as complementary? How do you think about that?

Leah Qusba: Yeah. So I know the folks over there doing that work, and I think what they’re doing is really interesting. I think it’s really valuable. I think it is creating moments, both, you know, real impact electorally, but also media moments that are really important and sort of penetrating various spaces in a way that I haven’t really seen. So I think it’s really innovative and exciting. I don’t think it’s a choice.

I mean, we do, through our C4 some political activity as well, depending on the level of the ballot. I don’t think it’s a choice. I think it’s complementary. I think we can take these stories and understand how the community feels about them. We can tell those stories. So I think it’s creating this sort of viral media moment. It’s being picked up in the news. I think there’s a lot of exciting conversations that are happening that needed to happen and haven’t happened before.

David Roberts: Okay. By way of wrapping up, what would you do if you could 10X your budget?

Leah Qusba: Ooh, 10X our budget. Okay. Well, I’m gonna draw… Here’s what’s really funny about that. So we did 10X our budget in the last seven years. So that’s exactly what we did. We were $2 million back in 2019, and we’re now about $20 million this year. I would draw listeners to our 2030 strategic plan. It’s on our website at GoodPower.org. We have a roadmap to grow to 100 million, so I’m just gonna cheat a little and say we’re gonna 5X our budget by the end of the decade, and there’s a roadmap for how we would do that and where we would grow, and we’re making really good progress so far this fiscal year.

So I’m feeling a lot of momentum organizationally. I hope we achieve our goal. We have a time-limited mission here. Like, we wanna work ourselves out of a job and reach a decarbonized economy as quickly as humanly possible. And so I hope listeners will go there and check it out.

David Roberts: What’s up next then? Is the new money that’s coming in that you’re gonna raise just expanding current efforts, these influencer army, the TrueVoice thing? Are there other pieces, other programs that you’re gonna start soon? Is there other stuff coming up soon?

Leah Qusba: Yeah, we have a couple things in the pipes right now. So our 2026 midterm strategy-

David Roberts: Oh, yeah…

Leah Qusba: How do we get out the vote for these technologies on the messages and via the people who are gonna move, you know, disillusioned, disenfranchised voters to the ballot box to vote on these issues? And then the legislative session, right? Congress. What will happen in November? Nobody really knows, but we can plan, and how will we look at places where we’re gonna see zombie anti-renewable bills come back in places like Texas?

David Roberts: Well, all these governor… As you well know, there are, like, two dozen governor races happening, especially, like, energy bills are very implicated in all those races. I’m curious what your approach to those races are.

Leah Qusba: Yeah. And we’ve been involved in a lot of those places: Virginia, New Jersey, Georgia PSC again this fall, Montana PSC in ’24. So in these state level, and also, you know, the Arizona Salt River Project election, we ran a large program there around voter education. What is this strange election, one acre, one vote? So I think for us, it’s really growing incrementally. A lot of the work we do, over half of our budget is around marginal, right? How do we reach more people? It’s marginal expenses, working with more creators-

David Roberts: Mm-hmm.

Leah Qusba: telling more stories. It’s a function of paid media and breaking through these difficult, impenetrable narratives, right? Narratives. How do we trick the algorithm? So essentially, more does equal more for us, and a lot of the work we do is empirically proven. So it’s really a function of marginal resources that we have at our disposal to be able to grow and reach our impact, both in the US and a bunch of the global markets we work in.

David Roberts: Awesome. Well, thank you for coming on. It’s so exciting to me that something like this is underway, and I just know you’re gonna learn, if nothing else, learn an immense amount in coming years about what works and what doesn’t, and this, a lot of this is long overdue. So thank you for coming on and walking us through it.

Leah Qusba: Thanks for having me on, David. I really appreciate it.

In 2024, an oil company called Sable bought a pipeline from Exxon that had ruptured years earlier in one of California’s worst offshore oil spills. Its bet was that it could overcome or bypass California regulators and get the pipeline pumping again. It did not go well: The company was fined more than $18 million last year for doing pipeline repair work without permits. It is facing state criminal charges for environmental violations, a congressional investigation, insider trading lawsuits, and a shareholder-launched class action lawsuit.

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So Sable did what any criminal does these days: it turned to Donald Trump. Last year it asked the federal government to use the Defense Production Act to effectively force it to run the pipeline. The DPA, a federal judge recently confirmed, can override state law and regulation.

Todd Tucker, who runs industrial policy and trade at the Roosevelt Institute, a DC think tank, co-wrote a brief on the episode. His conclusion was not that the DPA should be repealed. Rather, it was that a future administration should use it, the same aggressive way Trump has, to push geothermal and offshore wind past state permitting barriers, to allocate electricity away from data centers that aren't paying their way, and to preempt state right-to-work laws.

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That's the through-line of a new Roosevelt collection he edited, Building Up in 2029. The 17 essays therein argue, in various ways, that even as the Trump administration has been tearing down climate policy, it has been opening up new tools of state economic power — equity stakes, emergency authorities, sovereign wealth funds — that the next Democratic administration can use.

But are dueling executive orders really, as the subtitle promises, “durable”? That’s one of many topics I’m eager to get into with Tucker, so let’s do this.

Chapters

• 00:00 – Introduction

• 02:32 – Did Biden's green policy prove durable?

• 09:39 – The Defense Production Act and the Sable pipeline

• 14:59 – Whether to leave the DPA on the table

• 15:35 – Executive orders and the durability problem

• 19:01 – Whether the Supreme Court treats Democrats differently

• 22:03 – Executive power and a disempowered Congress

• 25:05 – Senate malapportionment and filibuster reform

• 29:43 – Court reform and the major questions doctrine

• 34:13 – Manufacturing vs. deployment

• 42:52 – Permitting, abundance, and theory of power

• 49:20 – Public ownership and the U.S. Steel golden share

• 55:22 – What state capitalism could look like for green ends

• 59:56 – Shelley Welton on utilities as planning tools

• 1:02:42 – Speed vs. deliberation before 2029

Resources

People & Organizations

• David Roberts (Bluesky)

  • Volts (Linkedin - Apple Podcasts - Spotify - YouTube)

• Todd N. Tucker (LinkedIn - Roosevelt profile)

  • Roosevelt Institute (Website - LinkedIn)

• The 2035 Initiative, UC Santa Barbara

Books & Articles Discussed

• Building Up in 2029: How to Make Green Statecraft Durable

• Building Up in 2029 - full report PDF

• Trump Wields the Defense Production Act to Promote Fossil Fuels - Joel Dodge and Todd N. Tucker

• Use and Defuse the Cold War’s Unexploded Ordinance - Timothy Meyer

• Take Senate Reform Seriously - Will Dobbs-Allsopp

• Marshal the Power of Utilities - Shelley Welton

• Decarbonize America’s Growth Model - Daniel Driscoll and Jonas Nahm

• Construct Public Factories - Joel Dodge

• Politicians Shouldn’t Hide From Climate - The 2035 Initiative

• America Broke Something When It Gave Trump a Second Chance - Jamelle Bouie

• Industrial Policy and Planning: What It Is and How to Do It Better - Todd N. Tucker

• Trump’s Attacks on SCOTUS Are Personal, But Real Court Reform Should Be a Progressive Priority

Company & Industry News

• Attorney General Bonta Files Lawsuit Against the Trump Administration to Stop Executive Overreach Purporting to Authorize Illegal Oil Transportation in Sable Pipelines

• Attorney General Bonta Seeks to Halt Trump Administration’s Illegal Greenlight of Oil Transportation in California Pipelines

• Project 2025 Executive Action Tracker

• Where America’s Clean Energy, Manufacturing, and Emissions Trajectories Stand One Year After the OBBB

Related Volts Episodes

• Industrial policy: what it is, how Biden’s doing it, and how it could be done better

• A limited defense of Biden’s everything-bagel industrial policy

• Should we feel good about the trajectory of clean energy post-Trump?

• The progressive take on the permitting debate

• What’s up with clean-energy supply chains and global trade?

Transcript

David Roberts: With no further ado, Todd Tucker, welcome back to Volts. Thank you so much for coming.

Todd Tucker: Glad to be with you again.

David Roberts: Lots to discuss here. So I guess somebody had to take on the grim subject of how to rebuild green policy after all this. I’m glad you’ve waded into the breach. Maybe let’s start here, though. As I said, the subtitle of this collection is about how to create durable green policy. So maybe let’s start with Biden green policy and just discuss briefly. Why do you think that did not prove durable? Or did it prove durable? Or what does it teach us about durability? What do we learn from Biden’s attempts, do you think?

Todd Tucker: Well, I think, you know, especially after Harris losing the 2024 election, there was a tendency to go sort of into full doomer mode and make the claim that basically all of what Biden attempted to do was misguided, did not have political benefits, and did not have staying power. And I think that a few years out, that’s due for a reassessment, and I think that there’s, you know, good, bad, and ugly here.

I think the good is that a substantial portion of the tax credits that were passed during the Biden years did end up getting extended, or rather not eliminated, as part of the One Big Beautiful Bill Act in 2025, even though that was one of the top priorities that Trump, campaigned on, was getting rid of what he called the Green New Scam.

David Roberts: Yeah. Everything but wind and solar, basically. I mean, everything but the wind and solar tax credits.

Todd Tucker: That’s right.

David Roberts: All the tax credits except for the wind and solar tax credits.

Todd Tucker: That’s right. That’s right. And so, you know, for some of these more mature industries like solar, there’s a fadeout of the tax credits, but then for other kind of more classic, what you might call infant industries like hydrogen and geothermal and other sectors, there continues to be some tax credits.

So there has been more staying power than was initially thought. Some of the recent assessments also by political scientists show that, you know, especially at the UC Santa Barbara Institute, show that it was certainly not politically negative for the administration to have leaned into that, and I think there’s more of a debate about how positive it was.

But I think the general assessment’s that it was… communities that saw investments did tend to like that they were getting the investments, and in some cases, that also helped the pro-climate politicians that pushed them in the first place.

So that’s some of the good news. But I think part of why we pulled together this Building Up in 2029 collection, which included, you know, some of the folks that were policy implementers during the Biden administration at places like the Environmental Protection Agency and Department of Commerce, was the sense that there were some things that certainly could be done better and certainly a lot faster. You know, we basically, during the Biden administration, it took 2 years, 2021 and 2022, to get the policy passed, to basically agree on what the direction we were gonna be taking for, as a country was going to be.

And then, you know, 1 to 2 years to write the implementing legislation. Or, you know, to write the implementing regulations and actually get the money out the door. So, that is not fast enough, as it turns out, in our democracy in the 2020s. We need to be going faster so that people can see benefits even quicker. And, you know, the challenge that we’re gonna have in 2029, unlike in 2021, is that we now have a federal workforce that has been decimated by Elon Musk and DOGE. Depending on the agency of the federal government, we’ve lost up to 30% or more of the staff, so you’re gonna be trying to do more faster with fewer resources than you had before.

And so part of what we’re trying to do here is map out how do you deal with that cluster going forward? I mean, how do you move faster while also having less capacity? And so there’s a bunch of different ideas we have on that.

David Roberts: Yeah. I just wanna pause to say just for the record, the idea that you have to do fundamental changes to the economy, to the manufacturing base, to multiple agencies, to trade policy, all fast enough that it can manifest its results within 4 years is just an insane way to run a railroad. I know there’s no way around it. That’s the train we’re on. That’s what we have to do, but it’s insane. It’s an insane… You know, when you took a look at, out at China making these 50-year plans, et cetera, the idea that, like, you have to do this overnight is just insane. I mean, I think Biden gets a lot of crap for this, but, like, that’s just an insane thing to ask. It’s an insane thing to ask to do for this federal bureaucracy that we’ve built to move that fast. It’s just crazy.

One of the things you invoke in your introduction is the Jamelle Bouie column in The New York Times, which says, like, they had a plan ready to go. Speaking of changing things fundamentally quickly in the form of Project 2025, which I think listeners will probably be familiar with. Do you think this collection you’ve pulled together is something like that, or is it, like, a first step to that, or is that what you had in mind on the horizon? How big of a swing do you think you’re taking here?

Todd Tucker: Yeah, I mean, so some of the ways that it’s not alike is that the original Project 2025 was 920 pages. Ours is only 150 and change. And they had a plan for, you know, every federal agency, and ours focuses, you know, on a subset that are climate related. I think that that… our thinking was that while some people might just view climate as just kinda one issue that certain interest groups are interested in, you know, I think that all of the contributors to this collection, you know, 19 authors in all, sort of see climate probably the way that, you know, you and a lot of your listeners do, which is that it’s an all of government, all of the economic system kinda change.

And so it seems appropriate to be thinking about, in the same way that Project 2025 was kind of a systemic revisioning of government, I think that’s what we see needs to happen. Frankly, it needed to happen in 2021, but will even, you know, more so need to be happening in 2029. So we think that it’s worth thinking in terms of the need for climate policy, kinda at that more systems level, power level. In Jamelle Bouie’s column, he talks about even the constitutional theory of it all. And so do we think that while we certainly have policy ideas in this Building Up collection, we start with four chapters that are looking just squarely at the constitutional questions and sort of the governance questions.

David Roberts: Yeah. I have some questions about all that stuff, but let’s start just with the Defense Production Act as an example here. So maybe just briefly run us through the Sable Case, just so we can have the context for what we’re talking about here. Just briefly talk about the role of the DPA in that case.

Todd Tucker: Yeah. So as you established in your introduction, this is a case that has been kicking around, you know, California courts for years now, and a company, Sable. Sable is a Texas company that was involved in the offshore oil industry in California, and they had been tied up in litigation in California, you know, for about the last decade, trying to get approval to restart production out there. When Trump comes back into office, they start floating the idea of using this sort of FDR-era tool, you know, Defense Production Act, which had its roots in the second War Powers Act of 1941 under the Roosevelt administration, that gives government all this power to not only prioritize governmental contracts, but actually to reorient the structure of contracts, even in private markets.

And so that’s what Trump did here. He basically said, “Any companies that can help Sable produce oil in California need to prioritize contracts for Sable in order to get that going as quickly as possible.” And you know, this is something that the DPA is a tool that the Pentagon uses a lot for defense and national security purposes, but this is one of the more ambitious uses, again, sort of really going back to, you know, the mid-20th century in doing it for a non-national security purpose, really just more to benefit an individual fossil producer. It will have some impact on oil prices, which is ostensibly sort of a nexus here that merits DPA use, but not very much. I mean, it really is more of a handout to one of the president’s campaign contributors.

And so, you know what… The argument that we make in several Roosevelt pieces is that this precedent has now been set to use the DPA for clean as well. If it can be used for fossil for these purposes, then it can be used in a even smarter fashion for clean purposes. And you know, I think that, for instance, some of the hiccups in the offshore wind industry, sort of around 2023, would’ve looked very different if the federal government was stepping in to actually solve some of the supply chain and other challenges that Orsted and some of these companies had.

David Roberts: I mean, the question I wanted to ask is that the provenance of the DPA is sort of contested. It’s in court right now. There was a, you know, one judge said, basically, “Yes, you can use it to override California law and regulation,” but that’s gonna go to the Ninth Circuit, and there’s some speculation in your volume and elsewhere that if that gets affirmed, if a judge says yes, the DPA can override state law, that the Trump administration is just kinda gonna go on a bender overriding all kinds of California state laws and other state laws in other states, doing whatever it wants on the basis of the DPA.

And so I guess I would just sort of ask flatly, do you want the Ninth Circuit to uphold this judgment and affirm that the DPA can override state policy? Like, if you had your druthers, is this an affirmative good, or are you just talking about making the best out of something bad that’s happened? Do you know what I mean? Like, would you actually want the DPA to be used this way and to be affirmed as capable of being used this way?

Todd Tucker: It’s a totally fair question, and I am of two minds of it. You know, I think on the one hand, in the very near term, it is obviously troubling the way that the Trump administration is using not only the DPA, but earlier the International Economic Emergency Powers Act to impose tariffs. You know, he’s using a lot of the best of the New Deal legacy to hammer home things that are sort of narrow and shortsighted and to benefit his campaign donors. You know, as someone who’s worked a long time at the Roosevelt Institute, it gives me no joy at all that it’s Trump rather than Biden that is using these authorities to the maximum.

On the other hand, in part because of all of these problems and weaknesses in our democracy and the fact that, you know, a single senator from a single state can block all sorts of a policy from going forward and that, you know, filibuster rules make it really hard to do anything other than tax credits, right? We have all these kind of fundamental problems in our system, and tools like the DPA or the International Emergency Economic Powers Act give the executive branch a way to move forward even when Congress is being obstinate.

So, you know, I think what we argue for in this volume is that if these tools are gonna be on the table, we need to get rid of this asymmetry where, you know, right-wing anti-climate governments use their powers to the hilt, but when progressive governments are in power, they sort of hold themselves back in the name of these outdated norms.

David Roberts: Yeah, I guess I’m just asking, do you want this tool to be on the table? Like, if you had your druthers, would you take this tool off the table, or would you leave it on the table so that Dems can use it, if you had to choose?

Todd Tucker: I would leave it on the table. You know, I mean, everybody’s gonna have a different cost benefit of what is the damage that Trump can do in the next 2 years versus the good that a future administration could do by using it more aggressively. But I think we’re ultimately doing ourselves no favors as a country if we’re using the courts to take tools off of the table that could be used, frankly, in much more positive and useful direction by a pro-climate administration in the future.

David Roberts: Okay. So here’s a question. I was gonna bring this up later actually, but let’s just talk about it now ’cause if there’s any, I think, sort of like fundamental objection I had, or not objection, but just sort of pushback I had to a lot of the essays in this collection, it’s this idea that if Trump opens up the use of a tool, like say the Defense Production Act, then the tool is laying there. It can be used by anyone the same way, that the tools are agnostic to who’s using them and for what purposes.

But it just seems to me that that kind of ignores the political economy of the situation, which is if you are using, to put it in the bluntest way possible, the system is gonna react differently to Republicans using this than it will to Democrats using this, right? A Republican administration is using this to bolster powerful incumbents, to bolster the status quo, to defend… Do you know what I mean? To defend against what are seen as sort of wild-eyed reformers.

And so that gets treated one way by the courts, by politicians, by the media, even by the public. But if Democrats pick up these tools and start using them in the name of substantial radical reform, I just think the whole system will react very differently. Like, the courts will not be as friendly. The media will treat it… You know what I mean? The- suddenly the media will discover how radical and crazy it is. You know what I mean? Like, just the political economy is not a mirror image here. It’s not the two sides doing… Just because the tool is the same doesn’t mean the two sides will be doing the same thing or will be treated the same way or greeted the same way by the system. Do you know what I mean?

Todd Tucker: Yeah, totally. I mean, we have some evidence from the transition from Trump One to Biden that some of the tools that Trump put on the table, such as targeted tariffs in individual sectors, Biden not only didn’t get rid of them, but in some cases went further, you know, really increasing tariffs on Chinese electric vehicles and others. And I think at the time, a lot of people said, “This would’ve been hard for Obama to do it if he was the first one doing it, but it’s easier for Biden to do it given that now Trump has sort of put this on the table.” And so I think as a governing matter, whatever new team comes into office in 2029 is going to look at some of the tools that Trump has used this time around and is gonna face basically a fork in the road, which is that do we get rid of all this stuff on day one? Do we privatize all of these equity stakes that Trump has been taking in companies? Do we get rid of the tariffs, or do we try to get something out of them for our priorities? And, you know, what we saw in the Biden administration was that they didn’t get rid of them. They did try to use them for their own priorities.

So, I mean, I think just as a predictive matter, I predict that the next administration will come in and find ways to use these tools to its own advantage and for purposes like climate policy, and I think that they will absolutely face a differential standard from the Roberts Court or whatever Supreme Court we have at that time.

David Roberts: Yeah, I mean, don’t you think the Supreme Court is gonna suddenly discover some principles that rule out the use of these things the second a Democrat tries to use them? I mean, we’re gonna get into later a little, like, the balance of power among the Court and Congress and everything else, but if I was predicting, I would predict that the Supreme Court will continue to act as partisan hacks and will find ways to block this stuff. I mean, maybe there’s nothing you can do about that.

Todd Tucker: Yeah. I mean, no, absolutely, you know, which is why first essay of all of them is looking at how we need to reform the courts, right? I mean, that is absolutely front and center. But I think the question is, again, sort of from a early 2029 vantage point, do you choose not to govern so that the Supreme Court doesn’t tamp you down? Or do you try to do both things at once, which is reform the courts, but then also sort of get started going quickly to actually show some results and frankly invite the fight with the court, ’cause it’s gonna come one way or another.

David Roberts: Yeah, yeah. Well, let’s get into some of these sort of big, broad constitutional issues. And so, like, I guess another thing I’d say political economy-wise is the promise of the collection of essays is this is how to create durable green policy. But just on its face, it seems like placing these immense powers in the hands of the executive branch with basically, like, Congress and states being shoved out of the way, tying things to the whims of the executive seems like on its face the opposite of durable. It seems like precisely the kind of thing that is gonna swing wildly between administrations. So how do you see the relationship between this sort of empowerment of the executive branch and durability?

Todd Tucker: It’s a huge challenge. I think of it in terms of two different speeds.

David Roberts: Mm-hmm.

Todd Tucker: Basically, there’s the speed that is inevitably reliant on executive branch tools that are the tools you’re gonna be able to use for the first year or so of the administration. And then there’s the longer term project, which is how do you plug a 30% staffing gap at the Department of Energy? How do you ensure that the courts are reformed so that you have a fighting chance of seeing these things stick? You kinda need to do all of that. And in fact, I mean, also one of several of the recommendations we have is to get some of this stuff out of Washington over the medium term. You know, devolve more power and resources to state and local governments. You know, we have tons of local economic development agencies across the country at the city and state level that could be doing more than they’re doing now. We have utilities that are a really under-tapped tool for governing.

So it really is a kind of all of the above and moving at these different speeds. And you know, I think ultimately it’s also about some of these executive branch tools that have been abused, frankly, under the Trump administration. You need to be using them and then finding a way to sort of plug that gap going forward so that future administrations don’t abuse them in some of the same ways.

David Roberts: Yeah. Well, let’s talk about this. This is all about the balance of power between the executive and congressional branches. Like I think it’s pretty clear to obvious to everyone that Trump has arrogated enormous powers to himself, and Congress has become I mean, at least under Trump, Congress has basically become a rump. I don’t know what they’re for these days.

So like Tim Meyer’s essay in your collection has, proposes a kind of grand bargain where the president comes in, uses a bunch of these executive authorities quickly, as you say, but then makes a bargain with Congress that says, “If you will write these changes into law, then you can write statutory limitations on these powers.” A sort of bargain with Congress, like, “Let me do this thing, but then in an ongoing way, you can limit these executive powers.” This is the proposal. The minute I thought, what president is gonna wanna do that deal? You know what I mean? Like, can you imagine a president voluntarily, purposefully limiting their own power and limiting the power of the executive branch, I guess. Like, once it’s been empowered, once it’s, has all these new powers, it seems like any new president is gonna jealously guard them. Like, can you envision a president taking a deal like that, handing power voluntarily back to Congress?

Todd Tucker: Yeah, it’s a really daunting problem that we’ve had, you know, basically since the ’30s in this country, systematic disempowerment of Congress in policy area after policy area, and really aggrandizement of executive branch power. And so this has been a problem, whether it’s on trade or national security or sort of, you know, any topic you’d wanna name. This is a problem that we have that we need to fix, and it never seems like it’s the right time to fix it, but if you never fix it, you know, the problem sort of persist.

And so that’s where I think, you know, operating at some of these different speeds is important. We have seen in the past some instances of, you know, of sort of Congress reclaiming some of its power, but it’s been far too, infrequently.

But, you know, I think that what we’ve seen, especially with some of the developments in the Supreme Court in the last few sessions, they are quite taken with these doctrines, like the major questions doctrine, like the non-delegation doctrine, that are basically saying, “Hey, Congress, you need to get your act together. You’re a co-equal branch of government. Like, you need to start giving the executive branch clearer instructions on what you intend and not just allow these vague, all-purpose statutes to be construed, you know, one way by right-wing governments and another way by progressive governments.” And I think Tim’s… He knows what he’s talking about. He was a clerk for Neil Gorsuch, the author of the major questions doctrine. You know, that Congress does actually need to rise to this occasion, staff up better, and get a lot clearer, you know, not only to, frankly, obviously to survive under the Roberts Court and some of the current justices we have, but to have, you know, even in future courts, I think, will look for Congress to be more of an active player.

David Roberts: Meyer’s sorta take is that court reform is kind of wish casting, and it’s unrealistic, and the better route is just for Congress to get its mojo back and to reclaim its powers. But then you run into another problem addressed in the essay by Will Dobbs-Allsopp, which is that Congress, particularly the Senate is grossly imbalanced in favor of fossil fuel states, basically because of all the sort of the skewed representation of the populace in the Senate, I think is an old topic. Probably most listeners are familiar with the basic idea.

But Dobbs-Allsopp says, if you’re gonna re-empower Congress, at the very least you need filibuster reform because you’re never going to get this collection of small states that benefit from fossil fuel production to go along with any kind of substantial green reform. If you’re gonna re-empower Congress, you need filibuster reform. What’s your take on where filibuster reform should come in the priority list here? If you want Congress to start doing stuff, it seems like that has to be a piece of the puzzle.

Todd Tucker: Absolutely. You know, the, what they call the malapportionment between states is terrible, has always been terrible, and is projected to get far worse.

David Roberts: And can I just say, because I’m irritated by theoretical replies on social media already when we talk about this, and let’s just say for the record, the founders knew that. They knew that it was unfair. They knew that it was a kludge. They knew that it was not democratic. They knew that they were just doing it to talk basically reactionary states into coming into the union. There was no high-minded principle behind this Senate malapportionment. It has always been, everyone has always known it makes no sense and it’s not fair. I just wanted to put that on the record.

Todd Tucker: Yeah, absolutely. And you know, if you look at the power of the residents of the smallest state, our least populous state, Wyoming, they have about 70 times as much power as someone from California. So that’s bad. And then if you look at some of the ways in which-

David Roberts: Mm…

Todd Tucker: climate change is gonna change the patterns of demographic settlement across the country, that gap is gonna get twice as bad by the year 2100. So it’s a problem that’s bad, that’s getting worse. And so you asked sort of where should filibuster reform fall in the priority list. I say it has to be, you know, day one. This needs to be something that the climate movement, even if all you care about is emissions reductions, or all you care about is clean energy, this needs to be something that gets embraced very early on. In the past, I’ve talked about, on past episodes, about this everything bagel critique that Ezra Klein and others have popularized, which is that Biden was trying to do too much by glomming these labor right standards onto semiconductor investments. Well, you know, part of the reason that you had to do that was because of the filibuster and reconciliation rules which make it impossible to do labor law reform in a more sane way. And instead, you have to kind of do it in this very inferior way of trying to get these semiconductor venture capitalist and government to also become labor law experts. It’s really tough, right?

David Roberts: Yes. Thank you for making that point. It’s irritates the hell out of me when people talk about this as though that’s just what Biden wanted to do. As you know what I mean? As though that was just his preference. Everything that a presidential administration does these days has to be interpreted in the light of Congress’s inability to do anything. You can’t get a serious labor reform law through a Congress where the filibuster is in place. You’re never gonna get 60 votes for any of that stuff, so all of this is a kludge to get reform through other means. Like, because we have a dysfunctional Congress, everything falls out of that.

Todd Tucker: That’s absolutely right. You can get rid of the filibuster and pass fundamental labor law reform on the books.

David Roberts: It was on the table. It was on the table. You know, we had a law in 2022 or whatever.

Todd Tucker: Yeah, the PRO Act, right, which is something that unions have been pleading for forever. So obviously unions are gonna like that, but I think also the companies that we’re trying to invest in the clean energy sector, in the semiconductor sector, they would prefer that too because part of what they did not like about the Biden policies was the feeling that they were being targeted to offer better childcare, better protection for workers than what their competitors that weren’t taking the subsidies were getting. So if you wanna solve that problem, there’s one way to do it, and it’s filibuster reform.

David Roberts: Also, speaking of fundamental constitutional reforms, I think a lot of Democrats, a lot of progressives these days would tell you all of these grand dreams of green reforms and green policy are going to come to naught under the current Supreme Court. Like, the Supreme Court has made it as clear as it can make it that it is on Republicans’ side and on the side of fossil fuels and against these kinds of reforms, and they will come up with ways to nix anything Democrats try to do. And thus, if you want Democrats to do anything ambitious at all, you need court reform. And there’s actually, within your essays, within this collection, there’s disagreement about this, about whether it’s possible, whether to prioritize it, et cetera. I’m sort of curious, again, where you come down on that, because is that a day one thing too, or do you think that’s just, like, an impossible dream, you gotta work around it? What’s your take on court reform in light of these green reforms you want?

Todd Tucker: Well, you know, I mentioned we had some of the folks from the Biden administration participate and contribute chapters here. And I think it was interesting to talk to some of the lawyers. Their job during the Biden years was to try to Supreme Court-proof all of the regulations that they were doing, and that’s part of why it took forever, right? Which is that, you know, that’s really hard to do under the best of circumstances. But certainly it’s even worse with these kind of new anti-regulatory doctrines that are coming out of the Supreme Court.

David Roberts: Yeah, I mean, if you could just make up a doctrine, you know what I mean? Like, this is like the major changes or whatever the doctrine is. I mean, it’s just like, if it’s too big, we’ll kill it. There’s no legal logic to that. There’s no metrics. There’s no way to measure that. There’s no way you can write a law that can make its way through a Supreme Court that’s willing to just make up stuff to kill stuff it doesn’t like. Like, it just seems futile.

Todd Tucker: Well, and I think in one way that is liberating, right, for the next administration, which is that rather than spend 2 years trying to second-guess what John Roberts is gonna do. You can just acknowledge that they’re completely political actors and, you know, you should just try to do the policy that has the best policy and political return rather than trying to Supreme Court-proof it.

But that obviously presents sort of a parallel problem, which is that if this is still the court that you’re dealing with and we still have a system of checks and balances where people think you should basically be following court orders, what should you do? And that is where Supreme Court reform will need to come into play. And I think the idea that is easiest here is adding justices, because there’s nothing in the Constitution that requires that there be 9 justices. We have altered the number of justices, I believe, 7 times over the years.

So there’s nothing magic about 9 justices. You could add that. But then I think people worry that’s the easiest reform to do ’cause you could just pass a law in Congress and get it through. But I think people worry that that leads to tit-for-tat escalation, where Democrats add 10 justices and then Republicans then add 20 and then, you know, before you know it, you just kind of have 100 justices.

So I think that there’s some legitimate concern about that tit-for-tat escalation. The problem is the ideas that I think people feel like would be less escalatory and more sort of better policy options for the longer term are things like getting rid of lifetime tenure and having sort of rotation of lower court judges, like, onto the Supreme Court on a case-by-case basis. I like all of these ideas. All these ideas are great, but the problem with those is that they require a constitutional amendment, and if you think getting a law through Congress is hard, just wait trying to convince three-quarters of state legislatures that disproportionately benefit from all of this countermajoritarian aspects of our government, try to convince them to sort of do fundamental constitutional reform of the court.

So, you know, I think that probably in the short term, there’s no alternative to kind of that more escalatory adding of justices. But I think that over time, at some point, progressives and others are gonna have to get serious about what our vision is for sort of fundamental constitutional reform as well.

David Roberts: Yeah. As you can see, the checklist, the to-do list grows and grows. Let’s talk a little bit about manufacturing, which is a huge topic in the sort of green reform world. I think the Biden administration bought the idea that we need to grow manufacturing in the U.S., grow green manufacturing in the U.S., start manufacturing some of this stuff on our own, and took some steps to try to do that, although most of those steps got crushed.

But, Nahm and Driscoll, in your collection, make a sort of novel argument, which I’ve not heard put plainly before, which I found kind of interesting, which is they say, “Look, the US has mostly shifted to a service economy. That ship has sailed. The idea that you’re gonna lurch from, like, 7% manufacturing back to any substantial percentage of the economy being in manufacturing is a bit of a dream.

So instead, we should just accept that China’s gonna manufacture the stuff and make it cheap, and we should just buy the cheap stuff and use it to do what we do well, which is services stuff. And so when they talk about building a green coalition, they’re talking about building trades, utilities, grid software, installation, financing, all these kind of, like, services-related stuff. They say China’s doing us a favor. They’re manufacturing a bunch of cheap green stuff. Let’s just take it. Let’s just accept it. Let’s just import a bunch of it, install a bunch of it, and do what we do well.

And then on the other hand, in a different essay, Joel Dodge argues that the US government should quit trying to just persuade or lure or incent more manufacturing. It should just take charge, start owning factories, start building factories of its own, owning manufacturing facilities of its own, operating its own factories, like in the sort of World War II era. So again, there’s a little bit of tension within the collection about what is the role of manufacturing in green reform, and how much should we try to restore manufacturing, et cetera. I’m wondering where you come down on that set of issues.

Todd Tucker: Yeah. So we did not shy away from controversy in this volume. Go after Supreme Court reform in a big way or kind of basically fix Congress, prioritize manufacturing, or maybe not so much. You know, we intentionally added essays in here that are in some tension with each other, which is not unlike the original Project 2025, where you had kind of majority and minority reports on a variety of important questions. And part of the reason we did that is, again, sort of that learning from the Biden years, which is that on some of these fundamental questions, they didn’t come in with agreement across agencies or across the administration about what to do, and manufacturing is a great example. Biden was sort of Mr. Hard Hat, you know, Mr. Build It Here in America, right? Buy American.

But then his administration also did things like pause collection on tariffs on solar panels-

David Roberts: Mm…

Todd Tucker: because they wanted to do deployment faster, right? And so there’s a lot of tensions between building it here at home versus making the biggest dent, the quickest you can on emissions reductions, and we think the time is now to have those debates so that on day one, there’s more agreement about where to go so that you can actually start implementing instead of wasting a year or two debating.

And so on this manufacturing question, that’s a good example of where I think that there’s, you know, reasonable people can kinda have come to different conclusions here. So Jonas Nahm from Johns Hopkins and Daniel Driscoll from University of Virginia have an essay in here where they’re basically saying, you know, the US is at a fork in the road. All countries have what political scientists, economists call a growth model-

David Roberts: Yeah…

Todd Tucker: which is either more consumption-oriented or more production-oriented. And there’s kind of a path dependency there. Like, once you get good at producing, you can orient a lot more of your policy around production. Is conversely in the US context, which is more oriented around consumption. You know, Donald Trump has learned this the hard way, which is that if you put a bunch of tariffs on all the stuff we import, inflation’s gonna go through the roof, and it’s gonna be really hard to keep those tariffs in place, right?

David Roberts: And it’s not just gonna magically produce a bunch of factories and manufacturing here. It’s just gonna make the consumption more expensive.

Todd Tucker: That’s right. And companies have been leaning with that economic reality for decades now by offshoring production, right? So I think that, you know, what Nahm and Driscoll call for is for this… Let’s just be really realistic about sort of which path we’re gonna go down. We could either go down a path that leans into sort of what they see as the US comparative advantage, which is more on the consumption side and making sure that those solar panel installer jobs are good jobs, but then getting as much as we can from overseas as cheaply as possible. Or alternatively, we can try to lean against the growth model and prioritize more manufacturing, but that just to be realistic that, like, that might cost more, and that you have to kind of incorporate that into your budget estimates and, like, all of the government planning stuff that happens kind of behind closed doors.

On the other side of that, we have Joel Dodge, who talks about the history in the US, again, under FDR, of public factories. So just using the public sector, you know, in the same way that we do now for munitions in certain instances, to do that for a broader range of products. And then if you take out the need to get super profits like Wall Street demands, then you can actually do some of this manufacturing here, even if it wouldn’t be economical on a purely private-run capitalist equation. So-

David Roberts: Right…

Todd Tucker: I think, you know, we want the folks to debate this now. You know, I tend to be a little bit more-

David Roberts: Todd, you’re conspicuously not telling me which way you wanna go.

Todd Tucker: Yes. Well, so I won’t dodge that question. On Joel Dodge’s essay, I will not dodge the question. No, I mean, I think for me, I tend to be more in favor of building up the manufacturing sector in the US, but using tools like public factories, using tool… you know, other types of unorthodox financing mechanisms to make it more viable to produce more of that stuff at home because I think, if nothing else, a national security imperative in not having a single country monopolize so many of these core supply chains.

David Roberts: Yeah. I guess the only thing I would say maybe weighing slightly in the other direction, and this is just a pet peeve of mine, but people act like if you buy the solar panel from China, that China’s claimed all the value there.

But you’re installing the solar panel, you’re employing installers, and also notably, you’re generating cheap electricity. And cheap electricity is an economic value creator, is an economic value driver. And then you own it, and you get all that cheap electricity.

So the vast majority of the value of the panel is gonna come from 20 to 30 years of cheap electricity. So just this idea that only the manufacturer benefits. I feel like people need to get over that. If we have cheap EVs and cheap panels and cheap inverters, we’re gonna be producing an enormous amount of economic value with those machines, and we’re gonna own that value. We’re gonna claim that value. Just because we didn’t manufacture them doesn’t mean we’re, like, missing out on the whole thing. You know what I mean?

Todd Tucker: No, I think that that’s right, but I also think that these things we know from the economists that study manufacturing, that these things are ecosystems, right? So you might sort of be willing to lose the solar panels, but then that also means you’re losing out potentially on stuff upstream and downstream, which are useful for other manufacturing processes. So there’s a bit of a worry here that once you start giving up parts of your manufacturing ecosystem to another country, that it doesn’t just stop at the solar panels. It kind of goes upstream and downstream as well.

David Roberts: Well, I mean, we’ve already kind of given it up. That’s kind of Nahm and Driscoll’s point, right? Is like most of it, we’ve already kind of given up, you know? Not giving it up is one thing, but rebuilding it is a much bigger challenge.

Todd Tucker: Yeah, well, and I think if you use the kind of new type of cost-benefit analysis that they’re calling for in their piece, you’re probably gonna conclude that there’s some sectors like solar that don’t make sense for us to ever try to you know, get back into in any substantial way. But then there’s other more cutting edge technologies that we do want a piece of, and you just need to be orienting a lot of your policy calculations around sort of on which side of the ledger does a given industry fall.

David Roberts: Yeah. Yeah. Okay, let’s move to a different topic, which is another sort of critique, I think. I think if you talk to clean energy practitioners these days, they will tell you that the binding constraint on rapid decarbonization in the US is interconnection queues, transmission permitting, labor supply, all these kind of things that have to do with these sort of regulatory blockages that need to be cleared away. This is, of course, a long time… This is a hot topic these days, but the volume of essays is notably silent on this, for instance, permitting reform. And I guess I wonder why, ’cause if you do permitting reform right, if you unblock these blockages, among other things, you’re just gonna build out a crap load of clean energy, and that is going to change facts on the ground, which will then change the political economy going forward. Do you know what I mean?

So, like, it seems like even on a power analysis basis. That should be a piece of the puzzle. And yes, the volume is quiet on it. I’m sort of curious why.

Todd Tucker: Yeah, absolutely. I mean, you could go through the list of there’s a lot of things we didn’t cover. We didn’t have a dedicated chapter on transportation either, which is, you know, one critique that I’ve heard. Yeah, so I mean, I think part of it is that we feel maybe incorrectly, but somewhat optimistic that that is a problem that where there’s some bipartisan interest in moving forward, and we might actually resolve some of that sooner rather than later.

So I think we felt that by 2029, we hope to have dealt with some part of that. But if not, certainly it needs to be high on the agenda, and I, you know, if I were redoing it, I would probably try to find out someone to write a chapter on that.

But I think where we do come in is that some of these tools, like public factories, like using a federal sovereign wealth fund to make investments, are ways, you know, like using the Defense Production Act to get to go back to where we started this conversation. If Trump can use the Defense Production Act to preempt California zoning law, then, the next administration could do so to get the right of way to build out the electrical grid, right?

So our focus on that statecraft question, which is sort of, you know, what are the tools that the federal government can do affirmatively to, you know, build its own capacities here to move faster. Permitting in some ways is let’s figure out how to get the government out of the way in certain respects, and we’re all in favor of that too. But I think we were trying to think sort of proactively of what are the capacities that need to get built within the federal government-

David Roberts: Mm-hmm…

Todd Tucker: to actually, you know, move affirmatively in that sort of next generation of policy reform after hopefully, God willing, we’ve solved some of the permitting questions.

David Roberts: Yeah. I mean, one of the arguments in here is that FERC already has the more power than it’s used to override some of these things and sort of impose transmission permitting. One of the sort of critiques you make in the introduction, a lot of these arguments about clearing away government blockages and regulatory blockages are sort of these days abundance-coded, associated with the abundance movement.

One of the things you say in the intro is that abundance, and also the sort of recent wave of affordability politics, which everybody seems to be herding toward, are thin, thin programs with no theory of power. I’m very curious what you mean by that. What does it mean for a political program to have a theory of power to be thick, I guess?

Todd Tucker: Yeah. So a thick ideology or a thick political program would have, you know, kind of a theory of how the economy works in some sort of broad, whether you wanna call it macroeconomic sense or societal sense, that, you know, has a theory of the plumbing of how the parts of the economy and parts of the government kind of fit together. Typically, it’s gonna involve some theory as to the role that class and some of these classic sociological categories play in things. That would be a denser or thicker theory of change, and I think that, you know, social democracy is a good example of that that’s having a good moment these days in some of these recent elections.

So that would be a thick theory. And there’s nothing wrong with being, you know, thick or thin. I mean, these are just kind of different approaches that are useful in different ways. You know, I think both abundance and affordability are useful in certain specific applications and less useful in others. I think that it does make sense to have sort of part of our politics be looking at unintended consequences from some of the social democratic reforms of the past. You know, where we put in permitting rules, we put in environmental review. Over time, if you’re adding to that and not subtracting to it, things are gonna get pretty slow in terms of the plumbing of government.

So I’m sympathetic to some of those arguments from abundance. But I don’t think it… Once you’ve kind of acknowledged that, it doesn’t give you a lot more to work with. Like, how do we actually build the political movements that can carry out abundance? There seems to be a lot less interest in some of that, which is why I think it’s been interesting, you know, with the mayoral win of Zohran Mamdani in New York, as well as Janeese Lewis George now in DC, and there’s a variety of these kind of sewer socialists at the municipal level that are wholly embracing some of the ideas that the abundance movement talks about in terms of getting rid of red tape and sort of making government work faster. And that’s in part because they sort of think that the political yield to workers’ rights movements and sort of this broader coalition that they have are gonna do better if you’re actually showing results in a quick fashion.

So the abundance movement has been adopted, in essence, by a lot of these sewer socialists to flesh out the program. Similarly with affordability, everybody’s talking about it. Everybody wants to lower prices and keep the cost of living down.

But, you know, one aspect of price on the end, the flip side of it is the wages that workers are paid, right? And so, you know, one very easy way to bring prices down real quick is to get rid of the minimum wage, right? And pay people tiny amounts. But I don’t think that anyone thinks that that’s gonna be sort of better for society over the long term. So you need to be pairing some of these affordability and abundance instincts with a broader political program that focused on, you know, really meeting some of the existential challenges we have at scale.

David Roberts: Yeah. Well, relatedly, let’s talk a little bit about the dynamics of public ownership. You know, the idea of the US government owning or partially owning companies, I think, was universally derided as socialism until roughly five minutes ago when Donald Trump started doing it, and now all of a sudden, I guess that’s on the table.

So I’m sort of curious, you have this sort of like this table in the essays, which is like how much ownership and how much control that comes with the ownership, et cetera, et cetera. You know, it gets very complicated, like public ownership is not one thing.

So I’m sort of curious how you see those dynamics of public ownership, sort of should we be taking ownership stakes in big companies? And beyond that, should we be asserting public control over some of these companies? Which is kind of a different thing. Like it’s one thing just to have an ownership stake so you maybe make some money for the government if the industry does well. It’s another thing to say like, the public can start having seats on the board and having control over the decisions the company makes. Just curious, like, where you see that discussion.

Todd Tucker: Yeah, so I think we wouldn’t be having any of this conversation about state capitalism under the second Trump administration if it wasn’t for the practices of the Chinese government over roughly the last 40 years, which is substantial amounts of public ownership, public financing, public direction, which is their ability to build up their manufacturing sector was not a free market at all. I mean, it was very much sort of a system of, and still to this day, a lot of state intervention.

And so, you know, during the 2010s, the line that, you know, the Bush and Obama administrations, you know, had toed, we’re gonna try to change China’s economic model by using rules of the World Trade Organization to get them to be more like us, and obviously that did not work. And so then at some point, you’re left of kind of needing to figure out how you are gonna be, put yourself on an even playing field with China. And it’s in that context that I think some of these new tools, or at least relatively new to the US tools like public equity stakes, have come into play.

David Roberts: It’s quite interesting that the conventional wisdom used to be that over time China will come our way on economic policy because of the miracles of capitalism. They’ll see that, like, socialism doesn’t work. They’ll evolve in our direction. Instead, they stuck with their guns and kind of like smoked us on grabbing to manufacturing, grabbing ownership of a lot of these next gen industries, and now here we are going their way. It’s just like 10 years ago if I told you that was gonna happen, you would’ve laughed at my… Or 20 years ago, you would’ve laughed in my face.

Todd Tucker: As I’ve been writing about state capitalism, you know, in a bunch of pieces over the last year, there was even some debate as to whether we should be using that phrase state capitalism ’cause it sounds big and scary, and who knows even what it means.

David Roberts: Mm-hmm.

Todd Tucker: But I mean, you know, in the academic literature it basically is pretty simple. It’s that when the state gets more involved as either an owner or a controller of the means of production, then you’ve got some variety of state capitalism.

And so we’ve, you know, seen in the last year that the Trump administration has taken on tens of billions of dollars of equity stakes in everything from long-established companies like Intel in the semiconductor space to, you know, upstart rare earth companies that are, you know, in theory gonna help reduce some of our dependence on China. If you look at these different deals, all of them are a little different from each other, and in some cases there’s a lot of ownership. Like we now own 10% of Intel, the American public does. That’s a pretty big deal. That’s worth a lot of money.

David Roberts: It’s wild. I bet not 1% of the US public knows that.

Todd Tucker: That’s right, only the people that write for magazines that, you know, have called it everything from Maoist to socialist to fascist. I mean, it’s every ism you can imagine has gotten thrown at this. But it’s actually, like despite the big number, in some ways it’s a bit of a screwed up deal. I mean, you know, the administration as a condition of its ownership basically signed away any, the right to differ from the company management on any important topic that might come up before them. And by the way, to also basically get rid of like the requirements that Biden had in place for them to reinvest in domestic manufacturing.

So, you know, we’ve kinda gotten rid of the control that we had under Biden in exchange for more ownership. But then there’s other cases that are kinda the other, opposite end of the spectrum where we now have a, what’s called a golden share in U.S. Steel, and, you know, what does that mean? This is actually an innovation that Margaret Thatcher’s government came up with when they were starting to privatize some of their big utilities, which is a middle ground between letting the market figure it out and having it be totally publicly run, is having some kinda intermediate level of ownership or control, which, you know, in that case was called golden shares.

And so Trump does, has done that with U.S. Steel. As a result, we now have a government representative that advises the board of U.S. Steel. We don’t get any money from this. We didn’t spend any money to acquire this golden share, and we’re not gonna get any money from the golden share.

But we do have a federal veto over 10 different categories of corporate decision-making, ranging from changing their name to being based in Pittsburgh to like actual investment plans for a lot of their factories. So that’s a lot of control, little ownership. When you look at, especially when that deal was announced in 2025, you had a lot of folks from the Biden years going on the record saying, “We should have absolutely done that.” You know? “We needed a plan to basically get some of this Japanese investment into U.S. Steel, but we didn’t trust that the company was actually gonna follow through with it.” If you have that kind of a trust deficit, one of the best things you could do is have some type of ongoing government supervision of the company’s businesses. That’s what the golden share is.

David Roberts: What would it look like to use this new openness I guess we all have to state capitalism? For green purposes. What would public ownership, like how would that be deployed in the name of decarbonization?

Todd Tucker: Well, let’s stick with the example of U.S. Steel. You know, as you’ve had on your program many times folks talking about green steel versus dirty steel and, you know, some of the ways in which these big companies like Cleveland-Cliffs and U.S. Steel, their carbon emissions are, like, so much more than you would even think as a share of the country’s total, and you’re only talking about like a half dozen facilities across the country. They have been at this pivot point for the last few years where they could either reline all of their facilities to, you know, use green and cleaner methods or to sort of reline them so they keep using coal and natural gas. And if we had a golden share under the Biden years, we would’ve been able to tell that company, “No, you know, we need you to go down the decarbonization path. And by the way, we’ll give you some subsidies and other support, but we’re also as a board member of this company, gonna be instructing you to do that.” And I think, you know, one of the benefits of that versus more arm’s length regulation is that, you know, rather than having to sign on a 1,000-page grant or loan agreement, as they often had to do during the Biden years, you can just have the government in the boardroom kind of monitoring on a day-to-day basis more of the decisions and steering them in the direction you’d like to see them go.

David Roberts: Let me ask this. When people hear about this, one of the obvious applications that comes to mind is the U.S. auto industry, right? Like right now, they’re pulling back on EVs, et cetera. I mean, I think I’ve seen in my lifetime over and over again, like them make bad decisions, almost go under, get bailed out, agree to a bunch of stuff in the process of getting bailed out, and then backtracking on that stuff the second they can, just screw the American public over and over again selfishly, keeping us hooked on these giant SUVs, et cetera, et cetera, et cetera. Could you imagine the U.S. taking more control over its auto industry or buying some public stake in some of these companies so that we get something out of this and can actually manage a long-term shift to EVs in a way that’s not flitting back and forth with market conditions. How would you envision this state capitalism working in the auto industry, I guess?

Todd Tucker: Well, here’s the thing. I don’t even need to come up with a hypothetical because we’ve already done it, right? During the Obama years and the Great Recession, we did take, the government took equity stakes in both GM and Chrysler. And, you know, the difference I think between of the, what Obama did and what Trump did is that Obama came in and said, “We’re gonna make this timely, temporary, targeted, and get the heck out as soon as we can. We don’t wanna, like, change company management. We don’t wanna, you know, micromanage the company’s decisions. We don’t wanna do any state capitalism. This is an emergency measure, and we’ll get in, we’ll get out.” But, you know, imagine a different scenario where if in 2009 Obama had actually said, you know, “In addition to this green stimulus, we’re actually gonna use these equity stakes to require that these companies move in the direction that the global market’s going anyway, which is toward electric vehicles. Not because we care about the climate, although we do care about the climate, but because we want these auto companies to have a future into the next generation, and right now they don’t,” right? We would’ve had a completely different trajectory over the last 20 years had Obama used his leverage in the way that Trump is doing.

But again, whereas Trump’s using it to extend, in some ways try to lock in fossil fuel production, a different administration could be using it for clean and for green.

David Roberts: Yeah. And this gets back to my political economy point, which I just think the entire system would’ve reacted very differently to Obama doing that than they did to Trump doing what he’s doing because Obama would have been trying to push reform, and Trump is trying to defend a bunch of big bloated existing incumbents. Like-

Todd Tucker: And yet they called him socialist anyway, right? And I think that’s a bit of the lesson of the last 20 years is that they’re gonna name call you. Now Trump is escalating from socialist to communist, right? They’re gonna call you all sorts of names. You kinda, at some point you just need to decide what you wanna do and go forward with it. And if you can build a coalition to back you up, then you know, you gotta do that.

David Roberts: All right. We’re getting close to the end, but a couple more things I wanted to hit, which is there’s a Shelley Welton essay in your collection which argues, among other things, that industrial policy literature, which has sort of had a kind of a renaissance lately. Like everybody’s interested in industrial policy now in the last 10 years, has kind of ignored public utility law, which is, she says, a peculiar oversight because, you know, these utilities are kind of an example of a big industry crucially important to the economy, crucially important to decarbonization, which we already have considerable public control over, and it doesn’t really seem like we’re using that to the best effect. Curious what role you see a more muscular state capitalism, where you see utilities in that vision.

Todd Tucker: Well, you know, I think to get back to something we spoke about earlier, you know, what do you do to safeguard clean energy strategy regardless of sort of who wins the future election, right? I think that, one, that this is where, you know, in some ways we’re saying federalize stuff, and in some ways we’re saying sub-federalize stuff, right?

And so part of that is recognizing that there’s a lot of power in state and local governments to do local economic planning. But, and part of that’s recognizing the role that utilities play, you know, and in many cases, publicly owned utilities. And so Shelley Welton from University of Pennsylvania Law School contributed an essay where she sort of walks through this revival that we’re seeing kind of more in the law schools. I sort of see it percolating a bit in opinion pieces in the more public debate, but there’s now a… whole courses that are being developed to teach law students about networks, platforms, and utilities, NPUs.

David Roberts: Mm-hmm.

Todd Tucker: And a lot of that is going back to progressive era conceptions of how to, you know, use the power of railroads, use the power of electrical utilities as sort of a regional economic planning, device. You know, I think that we’ve-

David Roberts: Mm…

Todd Tucker: put a lot of these entities in kind of a box that tries to have them mirror as much as possible private sector practices, but in many cases, there’s not any reason in the law or in the governing documents that would keep them from prioritizing more build-out, quicker build-out of clean energy. And so it’s a complicated topic. We don’t get into all the ins and outs of it, you know, in this piece, but it, we think that, you know, these public utilities have a very undervalued role and underutilized role in doing industrial planning for the country.

David Roberts: Well, much like everything else, the public utilities we do have, TVA is hurtling in the direction of more fossil fuels.

Todd Tucker: So frustrating.

David Roberts: It’s so frustrating. That is a big tool that is being used for exactly the wrong purpose. Okay, we should wrap up, but I guess as a final question, you know, I just kinda wanted to wrap everything up by asking, this collection of essays presents us with a sort of big basket of things that are somewhat contradictory.

So on the one hand, several of the essays acknowledge, you acknowledge, I acknowledge one of the things that sank some of Biden’s initiatives is they didn’t move fast enough. You need to do big, fast things that create visible benefits for people quickly. I think we all can see that in, I think the conventional wisdom these days is that a new presidential administration can do maybe, like, one or two really big things, big bills, before it just sort of, like, loses its political capital, gets mired in the course of events, gets mired in opposition, gets dragged down, et cetera. There’s that on one side.

On the other side, we have here, we need filibuster reform. We need court reform. You know, we need these fundamental constitutional reforms. We need rebuilding of agencies. We need this new muscular state capitalism. We need, you know, rebuilding labor supply and making better use of unions and… You know what I mean? Like, there’s just so much that seems necessary to do to make this work, and then on the other side, you have this imperative for speed and sort of being less fussy and more crude and fast. And I just don’t know how it all kind of settles out.

So I guess I would just ask you, like, if we get a Democratic president in 2029, and they have, I don’t know, a 52-seat majority in the Senate, what do they do first? If you’re in charge, how do they prioritize? I mean, this was the everything bagel critique, right? The broader everything bagel critique is just liberals refuse to prioritize. They try to do everything every one of their interest groups wants at the same time, and consequently, it all gets kind of watered down and lost. So we need to prioritize, but, like, there’s so much to do. I don’t know that there’s any answer to this, but, like, what would you do first? What is your order of operations?

Todd Tucker: Well, I think, again, we could look at Project 2025. I mean, this was, you know, a very ambitious project. They were not sort of calling for the conservatives to pre-negotiate against themselves, in terms of the ambition of their agenda. Very expansive, and they’ve, by, according to the Center for Progressive Reform, have implemented, as of earlier this year, over 50% of the recommendations, including some small, some huge, right?

David Roberts: But you and I know that it’s much easier to destroy things than it is to build them. It’s much easier to repeal things than it is to pass them. It’s much… They have an easier job. They’re just nihilists. Like, you can come in and just throw bombs and destroy things. You can get a lot of that done quickly, but that’s not what we’re trying to do.

Todd Tucker: Absolutely right. This fundamental asymmetry where if you wanna destroy things, it’s actually fairly easy to do, and if you wanna build, it’s much harder. And so that’s why, you know, we sort of, we identify what we think of as some of the sort of structural constraints to doing a big climate policy and getting, dealing with those early.

So it’s not that they’re easy, but we do think that sort of defining, you know, getting rid of the filibuster and defining a somewhat more aggressive posture vis-a-vis the courts are sort of essential preconditions for even the, from the most modest to the most ambitious climate change policy. Like, you’re just gonna need that.

So I think those are some of the things that need to move faster. But then also you’ve gotta, between now and 2029, we don’t need to sit on our hands. We can actually be debating some of the trade-offs between these different priorities, and coming up with some agreement, probably getting rid of some of the stuff that we have in this volume, but then including some other stuff that’s not there, and have it be ready as a kind of governing strategy from day one so that we’re not spending years kind of debating the fundamentals of what we believe in. So that’s part of the reason to get this out early enough.

David Roberts: Does that sound like the Democratic Party that you know, Todd?

Todd Tucker: Well, I think that, you know, what we’re starting to see, and again, it’s early days, but what we’re starting to see with some of these progressive administrations at the city level across the country is that old idea that you can only do kinda one big thing a term might not be true if you have a kind of mobilization strategy to go along with your policy.

David Roberts: Mm-hmm.

Todd Tucker: And you know, I think that what I’m seeing is a lot of these mayors are doing sort of new things every week. So I think that it’s not a hard and fast rule of physics that we can’t be doing more. But I think it is certainly a rule, at least of political science, that if you’re not showing results quickly, you’re probably losing that opportunity to build more legitimacy.

David Roberts: All right. Well, we’ll leave it there. We have a lot of time between now and 2029, and God knows what could happen in the interim. So we’ll have to be sensitive to events as well. But anyway, thank you for, you know, starting this conversation, assembling these essays. These are interesting discussions, and I’m sure they’ll be ongoing.

Todd Tucker: All right. Great talking with you, David.

📌 Instructions to add paid episodes to your podcast app via mobile / desktop

As attentive Volts listeners know, the US grid is built for its peak loads, which only materialize for a handful of hours a year. The rest of the time, an enormous amount of grid capacity just sits there.

When a large load like a data center asks to hook up to the grid, conventionally what it’s asking for is continuous high power, including during those peak hours — meaning it raises the peak. And if you raise the peak, you have to build new grid capacity to serve it. That’s a big part of why it’s taking so long to get data centers connected these days: utilities study them, discover that they require a bunch of grid upgrades, and then everyone starts arguing about who pays.

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But what if data centers could ramp down their demand during those hours, so they didn’t raise the peak at all? A 2025 study out of Duke’s Nicholas Institute, which has since become somewhat famous in the industry, found that if new loads could curtail demand for just half a percent of their uptime, something like 100 gigawatts of new load could be added to the existing grid without the need for new generating capacity.

So how do you actually make a data center flexible like that? That’s the problem Varun Sivaram set out to solve when he founded Emerald AI in late 2024. The company sells software that orchestrates computing loads — throttling, deferring, and shifting them as the grid demands.

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Emerald has raised a lot of money fast, partly on the back of Sivaram’s credibility. He has an almost comically packed résumé: a PhD in physics, CTO of India’s largest clean energy company, chief strategy and innovation officer at Ørsted, managing director for clean energy at the State Department, author of a book, Taming the Sun. I could go on, but we need to get on with the podcast.

We’re going to get into what data center load flexibility actually means, whether it’s reliable or just a pinky promise, and how the grid benefits if it works.

Chapters

• 00:00 – Introduction

• 03:05 – Temporal, spatial, and resource flexibility

• 06:26 – What Emerald Conductor touches on site

• 08:35 – Who decides which workloads can flex

• 10:55 – Who is liable when a job slows down

• 13:45 – Who actually signs the contract

• 14:49 – Larger and faster grid connections

• 18:02 – Enforcing the flexibility promise

• 19:05 – What broke in the demos, from bad nodes to slow telemetry

• 26:41 – What flexing costs the compute jobs

• 29:21 – Why not just use batteries, and the demand merit order

• 35:44 – Training, inference, and substation-scale data centers

• 40:23 – PJM, ERCOT, and legal enforceability

• 44:50 – Renewables, gas, and consumer bills

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Podcast - Apple Podcasts - Spotify - YouTube)

• Varun Sivaram (LinkedIn)

  • Emerald AI (Website), Ayse Coskun (Emerald AI), Mansi Shah (Emerald AI), Shayle Kann (LinkedIn), National Grid (Emerald AI collaboration)

Company & Industry News

• Is data center flexibility a ‘regulatory fiction’?

• ERCOT: New Batch Connection Process for Large Electricity Users

• UK-First Trial of AI Grid Technology Demonstrates Data Centres Can Adjust Power Needs

• Emerald AI Teams with NVIDIA and Partners to Develop Power-Flexible AI Factory

Books & Articles Discussed

• Rethinking Load Growth: Assessing the Potential for Integration of Large Flexible Loads in US Power Systems

• Senator Dave McCormick: Master of Our Fate, America and the AI Revolution

• Emerald AI Integrates with NVIDIA DSX Flex to Unlock Up to 100 GW of Grid Capacity

Related Volts Episodes

• For data centers, a little flexibility goes a long way

• Can data centers be good grid citizens?

• Doing data centers the not-dumb way

• What should state policymakers do about data centers?

• Who is paying for all that data center power?

Transcript

David Roberts: So all right then, with no further ado, Varun Sivaram, welcome to Volts. Thank you so much for coming.

Varun Sivaram: Dave, thanks so much for having me. Been a longtime fan.

David Roberts: Yeah, it’s… This is long overdue. This is a long time coming. I’m excited to talk. I think the place to start is just the literal mechanics here. So you sell software called Conductor. It sits in between the grid and the data center. When the grid comes to Conductor and says, “Hey, I need you to drop 20 megawatts for two hours in some sort of peak or emergency event,” what does Conductor, what is it touching? What is it doing?

Varun Sivaram: Yeah, great question. And to answer this, let’s just back up a moment and say in order for a data center to be flexible, responsive to the grid, there are kind of three ways that you could do that, right? I call them temporal flexibility, spatial flexibility, and resource flexibility. The first way, temporal flexibility, is you might have some things that are running in the data center that don’t need to run that fast at that very moment.

David Roberts: Mmhmm.

Varun Sivaram: And so you might be able to slow down some of your AI computations or pause some of your jobs, reschedule jobs, and you can do this in many ways, by the way. You can downclock some of the individual GPUs or nodes, you can reallocate the number of GPUs working on a particular task. You can force a checkpoint and pause a run.

There are many, like, different ways to do this, but temporal flexibility is in time, can you flexibly change when work happens or the rate at which it happens?

The second is called spatial flexibility, and that’s in space, can you change where the work happens? The amazing thing about data centers is that they’re connected at the speed of light with one another. And so if you’re able to move an AI job from one location to another, it could be separated by 100 or 500 or thousands of miles-

David Roberts: Mm.

Varun Sivaram: and remain within the latency constraints of your customers. The customers might not even notice a difference while you have provided real grid relief in one location by moving work to another one. And then finally, there’s what I call resource flexibility, and this is where you step outside of the data center and you say, “Can we put some other stuff like batteries and generators near the data center that help that data center to reduce its net grid withdrawal or net impact on the grid for some temporary period of time?”

The correct way to solve this problem is to orchestrate all three of these alternatives together. They’re not alternatives, they’re complements, and I use orchestrate intentionally. Emerald Conductor is literally conducting an orchestra of available interventions, temporal, spatial, and resource flexibility.

And so you asked, Dave, you know, what does Emerald Conductor do? It kind of does all the stuff. It is ensuring that the GPUs and the scheduler and the AI jobs are temporally and spatially flexible in time and space, and it’s also making sure to coordinate with a local resource, let’s say a battery that is on site, so that we can use what’s available in the battery without running into its constraints on state of charge or discharge rate or durability. All of this is a very complex problem to solve, and we have developed an AI technology ourselves, which is underlying the Emerald Conductor platform. We are an AI that runs AI, and-

David Roberts: Mm-hmm…

Varun Sivaram: we have AI agents that are inside the data centers that are orchestrating all of these autonomous decisions.

David Roberts: Yeah, that was actually my second question. So you’re not just conductors, not just controlling the GPU, the computing. You also are in touch with on-site batteries or on-site backup generation, or, like, the cooling system? How far do the tendrils go? I mean, is everything on-site in one way or another? Are you touching it? Like, you can control all of it, basically?

Varun Sivaram: That’s exactly right, and we do a lot of this with our partners and our investors that are large Fortune 500 companies that are real experts in this.

We’ve announced our partnership with Siemens, for example, where Siemens has software that controls a lot of this technology on site, whether it’s the battery, the microgrid. We have other partnerships with folks like Eaton. They have these UPS systems, GE Vernova. We have a range of partners, and what we make sure to do is the Emerald Conductor serves as this brain that says, “Hey, what’s all the stuff on site that can provide me some flexibility within its constraints, and how do I fuse that or orchestrate it alongside all of the IT or computational flexibility, temporally and spatially, and put it all together?”

So yes, you can think of Emerald as the brain that turns the data center — or what we like to call AI factories, following NVIDIA’s lead — into a controllable power user. And I think this is a very profound point. Traditionally, you look at a data center or any other load, a car factory, as an unpredictable user of power that the grid has to provision for.

Like you said, David, in the intro, you said, “Hey, we build these massive energy systems and keep building our peak capacity,” but most of the time, transmission and distribution capacity is underutilized. Generation is underutilized. And so we’re really using the grid at 50% of what it could be doing. Well, if the data center itself or these AI factories become precise, controllable energy users, I believe that makes them energy technologies. That’s counterintuitive. Like, you think of nuclear power plants or batteries as energy technologies. But what if data centers were energy technologies?

David Roberts: Here at Volts, we’re very familiar with controllable load and all its many glorious benefits. So we’re gonna get into some of that. But on the computing front, I have some questions about just the computing front. So one of the things your framework has is these tiers of computing workloads. There are jobs that can’t be touched, that have to run all the time. There are jobs that can tolerate 10% throughput loss, 25%, 50%, there’s these tiers. So one of my questions is, who decides what’s in what tier? Is that something that the owners of the compute tell you, or is that something that Conductor analyzes the compute and makes its own judgments about what is and isn’t movable and controllable? Where do the tiers come from?

Varun Sivaram: That’s a great question, Dave. It’s the heart of what we’re doing, which is serving both sides at the same time, the energy grid’s needs and the AI customer’s needs.

Look, at the end of the day, AI customers are doing the most economically important work in America, right? Generating valuable tokens of artificial intelligence, and you don’t wanna mess with that in a way that’s going to degrade their expected quality of service. And so yes, today, for our commercial scale deployments, we receive tags from the customers, the users of AI compute, tagging which of their jobs has which flexibility parameter.

And it’s more than just, you know, this can be flexed and this cannot be. Some jobs, a benchmarking run, for example, you really can’t downclock the clock frequency of the GPU ’cause it’ll mess with the benchmarking run. Some jobs, a fine-tuning run, they can be deferred. They could also be downclocked. But some particular workloads, like a serving inference job, really can’t be downclocked or paused because the user expects an answer within a latency bound, and perhaps that needs to be geo-shifted.

So within different priority tiers, you know, low, medium, high, or on a scale of 0 to 100, as well as across different characteristics, preemptibility, throttle ability, the ability to be paused and checkpointed, or the ability to be moved within residency requirements. It’s a complicated set of constraints, and we feed this in through what we call the normalizer to turn it into actions that we can take, and then our AI agents take the actions.

David Roberts: Well, I’m sort of-- Well, I mean, one of the things I wonder is if somebody gets that wrong, who’s responsible? Like, who’s holding the bag at the end of the day? Like, if you could downclock the power, a job slows down, and for some reason that someone didn’t anticipate, that breaks a job or doesn’t get the result it wants, or there’s an unanticipated result, is that just on the compute load for mislabeling its job, or who’s responsible if something goes wrong with the jobs?

Varun Sivaram: Yeah, great question, Dave, and I’ll use this to mention, you know, this is high stakes, high reward in kind of three different dimensions. Number one, it’s massively high reward because if we make this all work, we can fit 100 gigawatts, as you mentioned from the Tyler Norris paper, we can fit 100 gigawatts of AI data centers onto the grid that we didn’t think we could fit, and we’ll walk through the benefits of that.

So massive reward. High stakes though is on both sides. If you don’t do this right, the grid could face reliability issues. On the other side, if you don’t do this right, the AI customers might face failed expectations, again, for the most economically valuable work in America. And the third dimension, of course, is a security dimension.

AI data centers becoming energy technologies and this fusion of AI and the energy system where we sit at the interface is a potential security threat, right? These are two massive multi-trillion dollar networks that are critical infrastructure for America’s economy. It’s the backbone of our future economy. And so we gotta make sure that we’re doing all of this in a very safe way that protects the reliability of the grid, is resilient to intruders or threats from abroad and domestically, and protects the integrity of the AI workloads.

Your specific question, Dave, is who pays if there’s a screw-up? And the answer to that specific question lies in the contracting, right? There will be, depending on the context, the grid, if they’re offering you a faster connection, they may say, “You know what? If you don’t curtail your power when we ask you to, there may be a financial penalty, or there may even be a technical penalty. I’ll flip your breaker.”

David Roberts: Mm.

Varun Sivaram: And so there’s a contract related to that between the data center and the grid, but the data center will say, “Look, you’re offering me power I otherwise wouldn’t get for 12 years. I’d love to get this power, and let’s find a way to mitigate this risk.” And Emerald Conductor exists in order to make sure that with 100% reliability, we are doing the thing the grid needs in order to fulfill your terms of getting that earlier power connection. And then, of course, there’s the question of, well, what if the customer said they didn’t want this job to be slowed down, and it got slowed down?

David Roberts: Mm.

Varun Sivaram: That’s also something that the reason you bring Emerald Conductor on is because it’s a production-hardened, production-grade software platform that ensures that you protect the workloads that you want it to protect. So I hope the risks are clear. The liabilities lie in contracting, but these are solvable problems because the reward is so massive.

David Roberts: On the contracting, like, who cuts you a check? I guess that’s a basic question. Like, who are you working for? Is it the utility? The, is it the data center operator itself? Is it the operator of the compute, which is sometimes different than who owns the data center? Like, literally, who are you working for?

Varun Sivaram: Great question. We are lucky, Dave, that we work for basically everybody in this ecosystem, and our objective is to make everybody else so much value that we’re sort of barely noticed. You know, utilities get a ton of value, and we should talk about this, Dave.

David Roberts: This gets to my next question, but first, I just wanna know, like, literally who comes to you and says, “Let’s sign a contract”? Who is that entity? Who is the counterparty?

Varun Sivaram: Yeah. To answer it bluntly, it is electric utilities, data center operators, leading AI companies that are using compute, cloud companies. It is everybody in the value chain is our counterparty because we provide services and software across the value chain.

David Roberts: Okay. And so then the next question is then, like, what’s actually being sold here? What’s the value? So the obvious source of value here is that an inflexible data center is gonna have to wait a long time to connect to the grid, whereas a flexible data center might be able to jump the queue and get hooked up earlier. I’m assuming that from the data center’s point of view, that’s the golden ticket there. Like, that’s the main source of value. Is that accurate?

Varun Sivaram: Yeah, roughly right. For data centers, you want larger and faster power connections than you would otherwise get. So you might be an existing data center, and suddenly, instead of 50 megawatts, you get 75 megawatts from the grid. That additional 25 was, you were gonna wait 10 years for, and now you get it immediately. And the reason is because you’re willing to be flexible with that new allocation of power, and the utility said, “Wow, I can just grant it to you because I don’t have to build out any grid infrastructure to provide it to you.”

So that’s larger connections. Faster connections is you’re building a new data center. Like you said, Dave, you’re waiting in a queue for 12 years, and instead, you now get connected much faster because, again, the utility can-- wants to connect you. You provide a valuable service, and you’re not requiring them to build out the grid and get permitting, et cetera.

David Roberts: Can I ask a couple of questions about that? One is, if I’m a built data center, I’m already up and running, and I have no immediate expansion plans, do I get any value from you or… Do you know what I mean? Is there a reason to do this other than wanting more power from the grid?

Varun Sivaram: Yeah, absolutely. Great question, Dave. So if I walk through what’s the value that we give to data centers, the number one value is larger and faster power connections. So if you are an existing data center and you wanna upgrade to the latest liquid cooling and latest NVIDIA GPU, you probably need more power, and so we provide that for you.

But your question, Dave, is what if you’re a happy data center that has no desire to do any upgrades and you just want to hang out? Would you ever work with Emerald? And the answer is you could, ’cause the second value stream is by making you a flexible, grid-friendly, grid-responsive participant, you can be paid. You can be paid by flexibility markets, by utility demand response programs. Now, to be clear, these are far less lucrative than the value of getting access to power than you otherwise wouldn’t have.

David Roberts: Yeah. That’s what I sort of wonder, like, that is a revenue stream. I mean, compared to the value of the compute, you know what I mean? Compared to, like, the value of the data center itself, it’s pretty small beans. I’m just wondering if any data center is gonna take risks with its compute for that prize, ’cause that prize is relatively small.

Varun Sivaram: You know, going forward, as we continue to, as the American economy increasingly uses AI inference, I expect that cost pressures on inference will grow, and power is the variable cost of inference, and so reducing your power cost will become more and more important. But you’re absolutely right, Dave. Today, the key driver of value in the minds of data centers and clouds and AI companies is, “Can I get the GPUs connected to power at any cost?” And as a result, optimizing the power cost is probably not top of mind right now.

David Roberts: Yeah. So another question about that is, if I am promising flexibility to the grid and the grid says, “Okay then, you can have the power,” and then I get hooked up to the power. What’s to stop me from just saying, “You know, upon review, it turns out all my computing is incredibly important and can’t be interrupted”? And what’s to enforce you actually being flexible once you’re hooked up?

Varun Sivaram: The contract upon which you connect. And so, again, that can be a contractual thing. Hey, you have the power so long as you’re complying, and you fail to comply, you know, you get a, maybe it’s a three-strikes policy or two strikes, and you fail to comply, you lose that connection. Or there’s actual physical breaker control. We flip your breaker and you don’t have access to the grid again. I wanna be clear, you said pinky promise early on, Dave. You said, “Hey, will demand response in the form of flexible data centers actually show up?” And my answer is yes, it will actually show up, and we need to make sure that it is enforceable and reliable for utilities.

David Roberts: Right. I wanna get into that a little bit later, that specific question a little bit later, but a couple more questions just about the mechanics of this working. So I read this, you know, you have this Hillsboro test case that you’ve written up. It’s, I think, 250 kilowatts, so it’s relatively tiny compared to what an actual data center’s gonna be.

And there’s a bit in there about what went wrong, where the errors were, and there’s a couple of cases where some of the computing nodes were either unreachable or unmeasurable or uncontrollable for some reason. And if that happens, I think just to have a buffer, you have to assume that that node is running at full power just to make sure you’re coming in under the load you need.

And then there was some issues with sort of control network getting congested when there’s a big event that requires a big power drawdown, sending messages out to all those nodes at once, you get congestion on the power network. All of this is one thing at 250 kilowatts, but then you scale up to, you know, whatever, 96 megawatts, which I think is the Manassas test you’re doing.

I wonder how those errors scale. I guess I’m just wondering, like, what are you worried ab- what are the sort of failure modes that you’re worried about? How many nodes turn out to be unreachable? What are you doing about this congestion issue? Like, what are the sort of failure modes that are keeping you awake at night at when you get up to scale?

Varun Sivaram: Yeah, such a great question, Dave. Let me back up and just give some background about what you read and then where we are. So you read the results of our fifth demonstration on GB300s, Grace Blackwell 300s, the latest NVIDIA chip generation in Hillsboro, Oregon with Portland General Electric. And you’re right.

That was a demo that was less than a megawatt. Now, we’ve done five demos all over the world, including in London with NVIDIA and with other partners like EPRI and their DC Flex program. And I’m excited that we’ve just exited the demonstration phase, and we’ve entered the commercial deployment phase. We’re now actually deployed at multi-megawatt scale at a whole data center, flexing it.

In fact, two nights ago, it was my personal dream to be able to do this, and I’ve thought about this for the last decade, we flexed at the peak of the duck curve. Dave, you and I have followed this duck curve forever. You may know me as the guy who first put a picture of a duck on the duck curve.

David Roberts: Were you, are you the one who drew that crude duck? I must have used that in, like, 100 posts.

Varun Sivaram: Well, no, no. Somebody else drew the crude duck. But in my book, Taming the Sun, I put a very sophisticated duck picture, a rubber ducky. But in any event, so we’re a level of order of magnitude or two orders of magnitude above that. And you’re right, later this year, the 96-megawatt Vera Rubin Test Center with NVIDIA and Digital Realty comes online, where Emerald will make it the world’s first, you know, 100-megawatt scale power flexible facility.

So your question is such a good one, which is what do you get scared is gonna break as you scale from kilowatts to megawatts to hundreds of megawatts, right? And the answer is you don’t know what you don’t know. There’s a lot of unknown unknowns, you can discover at each level. That’s why we did the demos. Our company believes deeply in open sourcing our research and our results, which is why we publicly published a report that said, “Here are the things that went wrong.”

David Roberts: Right.

Varun Sivaram: We’ve published, you know, peer-reviewed research in a Nature journal, scientific journal [NPJ Climate Action] saying, “Here was the code we used to make this all work.” We deeply believe in an ecosystem where all data centers can do this, and regulators can say, “I know how this thing works, and I trust it.” And they’ve done the hard work to go through demos, prove what doesn’t work, improve upon it, and actually make it work.

And so I think about when we first deployed in this multi-megawatt facility, whole data center, we’re flexing it, and we’re all sitting in that conference room around a bunch of laptops doing the first ever event where the utility says, “Hey, we need you to curtail.” The atmosphere, one engineer told me, felt like a SpaceX launch. I think that was our head of product, Mansi Shah. She said, “Hey, it feels like a launch.” You know, we all cheered. The curtailment happened. At some point midway through, the data center power briefly breached or went right back above the limit of the curtailment that the utility had asked.

David Roberts: Mm.

Varun Sivaram: And it was kind of like thinking, you know, the SpaceX rocket, it went all the way up, it came all the way down, and then it nicely landed, but then it kind of tipped over at the end. And we’re like, “Oh, what went wrong? What can we fix here?” And so we fixed it, and we continue to be deployed, and it’s been a fascinating deployment where we’ve learned a lot. So that’s how I think about this.

David Roberts: Well, like the nodes that you couldn’t reach or couldn’t measure, I mean, one of the things that I wonder about, is that an error in the construction or the design or the manufacturing of the node that is out of your control, you’re not making those. Or was it something about your measuring system that you can improve and then measure and test it better the next time? Like, you’re gonna get some bum nodes, I feel like, just the law of large numbers, you know.

Varun Sivaram: Great question, and I didn’t actually answer your question about, like, what keeps me up at night. So the way the Conductor platform is architected uses a principle called virtualization from the IT world, or abstraction.

David Roberts: Mm-hmm.

Varun Sivaram: The goal is no matter what the underlying hardware is and what the underlying telemetry, or the sensors that are reading to us the power data, no matter what it is, we should be able to make this thing work, right?

And we are creating an abstraction or virtualization layer above it so that if anybody looks at a data center, if you’re a grid operator, that data center presents itself to you as if it were a battery or a controllable generator. It looks to you like the same kind of thing, and you don’t have to worry about whether they’re using this measuring equipment or that GPU, but it does become my problem. And so Emerald’s problem that we’ve gotta solve is there will be problems with the equipment.

David Roberts: Right.

Varun Sivaram: You know, one of our demos, we ran into the problem where the telemetry, the stream of data-

David Roberts: Mm-hmm…

Varun Sivaram: only happened every 15 minutes, right? That’s crazy, right? You expect this to come every second or every 30 seconds so you can at least make some quick decisions, but suddenly we’re getting it every 15 minutes. And so our AI technology needs to account for this, and then make decisions understanding that it’s like you’re talking to somebody on Mars and the communication is delayed 15 minutes. That’s one example of a thing we have to engineer around. Ultimately, all of these are engineering challenges. You know, the one you mentioned, Dave, was what if nodes go down? GPU nodes go down all the time.

David Roberts: Yeah.

Varun Sivaram: GPU nodes sometimes don’t report correctly.

David Roberts: Yeah.

Varun Sivaram: This, by the way, this is not an NVIDIA issue. This is often it can be an installation issue, it can be a problems with other parts of the power equipment in the facility. Like, and you have to be able to be fault tolerant or error correcting.

David Roberts: Right.

Varun Sivaram: And so a lot of what we do is build in the buffers and the intelligence to take care of these faults.

So there’s a lot of engineering, but fundamentally my vision is… AI factory should be the most exquisitely controllable energy asset on the grid we’ve ever seen. They do things that nobody else can do, right? You can’t move your load from one location to another at the speed of light. Like, you can’t move an electric vehicle from Indiana to California in a couple hours. It-- let alone milliseconds, which is how fast we move AI workloads. You can’t control a big physical load in the same way you can control a data center from a laptop in a very graceful way that the customer barely notices.

So that’s why I’m so excited. That’s why Emerald does only one thing, AI factory flexibility. Whereas a bunch of other companies do a bunch of other things, which is great, we do one thing, ’cause we think AI is going to account for most of the American economy this century, most of the electrical load, and we’re going to make it a very community-friendly, grid-friendly asset.

David Roberts: In terms of what it costs the compute jobs to be capped or slowed down like this, you know, you have, in your test, NVIDIA attested that the performance was acceptable, that the performance of the jobs was acceptable. But you also acknowledge in this one white paper, and I don’t know if this has changed since then, that no one has actually done the actual testing of the throughput or the latency or the job completion, you know, sort of deltas. So I’m wondering, is it really costless to the jobs themselves, and how tightly measured has that been?

Varun Sivaram: I’m so glad you brought this up, Dave. The central question is, can we make sure it’s not costless, but as, call it inexpensive or as hassle-free for customers, for us to every so often gracefully reduce their power?

David Roberts: Because again, like these jobs are worth way more to these companies than power is, right? Like the cost to-

Varun Sivaram: And again, to the American economy. I mean, this is the lifeblood of the American future economy. We cannot screw this up. And so yes, Dave, to your question, we have in very great and meticulous detail measured this.

Our chief scientist, Professor Ayse Coskun, has done academic peer-reviewed work on ensuring the service level of critical jobs. We ourselves have published papers, for example, with Nebius, NVIDIA, and National Grid in London and EPRI, where we showcased not only that you could precisely meet over 200 grid events, but you could do so while protecting the throughput of… the token throughput, the other performance metrics of critical AI workloads.

There’s no such thing as a free lunch, Dave, and so therefore, there will be some jobs for which there is a reduction in performance or a delay, but we ensure that we are meeting the customer constraints so that if they designate a job that’s non-interruptible or non-preemptible or super high priority, that job culminates in the time that the customer expects it to culminate in.

So we have very detailed metrics tracking. We’ve published it. We’ve also done metrics tracking with Oracle, where we moved AI inference, serving inference workloads. Like Dave, you’re talking to ChatGPT. We’ve moved queries from Virginia to Chicago at the speed of light and kept it within the latency bounds that you would expect when you’re having that conversation with a chatbot. So Dave, you ask, you know, “Hey, is Varun actually informed about what he’s talking about?” And you want that answer to come to you before I give my next answer, right? And it’s gonna come to you on time, no matter if it, you know, got processed here or there within certain bounds. So yes, we have deeply studied it.

David Roberts: Got it. Okay, and here’s a question. This is actually the very first question that occurred to me when I heard about what you’re doing last year, and I’ve been wanting to ask it to you for ages, which is like, as you mentioned, a lot of these facilities have batteries on site, and one way to get flexibility is just to draw from the battery instead of from the grid, right?

I mean, this is the time-tested way of operating grid flexibility. And I’m just sort of wondering, like- isn’t that simpler and easier? And doesn’t it require much less engineering and all this sort of, like, very complicated real-time orchestration? You know, a battery, and it’s meterable. You can just flop over to the battery and flop back to the grid when you need to. Why not just do that? What is the incremental value add of this detailed load orchestration versus just a battery?

Varun Sivaram: Yes, yes, and yes, Dave, is the answer to your question intuitively, right? And then I’m gonna tell you why counterintuitively I have a different answer. But the intuitive answer is yes, yes, and yes. Of course, you should just treat this data center as a black box. Who the heck knows how much power it needs? But we’ll just stack a ton of batteries and generators right next to that data center, and so whatever the grid needs that facility to do, we’ll just take care of it with the batteries and the generators.

And that should work, right? And there are a few reasons to understand why that’s probably not the right solution.

The first is that it’s expensive. If the grid tells you, “Look, in order to connect you, I may need to curtail you. Now, it’s once in a blue moon, but I may need to curtail you for two hours or four hours or eight hours or 16 hours,” or with our multi-megawatt deployment, we actually just did a 24-hour event to prove that if the local substation went down and they had to repair for 24 hours, “could you curtail?” Good luck trying to size the super expensive battery to provide all of this flexibility.

David Roberts: Enough batteries to run your facility for 24 hours would be cost-prohibitive, I think.

Varun Sivaram: And even less than that is pretty cost-prohibitive. But, you know, wouldn’t it be nice if you only had to put a two-hour battery on your facility for part of your consumption, and the rest of it was done through this nuanced, sophisticated- computational orchestration, well, then you’re saving on CapEx, and it’s a better together approach where the battery does some of the work and the computational flexibility does more of the work. So yes, it’s a lot of complexity that goes into our Emerald Conductor platform, but it makes for an ultimately cheaper, better functioning system.

David Roberts: Real quick, just on the duration question, ’cause you brought it up and I wanted to ask about this. So I see the logic where a battery can do two hours, but if you have an event that lasts longer than two hours, orchestrating the computing doesn’t get any more expensive in hour three or hour five or hour 24, right? So, like, on a long duration event, I totally get the advantage here. But in practice, most of these events are not gonna be long, right? I mean, in practice, like, if you look at the bell curve, like, the bulk of the events are gonna be two hours and under, aren’t they? So is the orchestration of the computing just for kind of-

Varun Sivaram: It’s not-

David Roberts: the edges of that bell curve?

Varun Sivaram: It’s not for the edge cases. Now, I will say there is a journey that we’re gonna take the whole industry on, which is we’ll start by working with you on the edge cases to say, “Look, the load orchestration of the compute, the AI flexibility, we’ll do that for edge cases, but your traditional way of operating for the last two decades is never to touch the compute. We’ll largely leave you alone.” But where I wanna bring everybody is, in the long run, AI should really be flexing a lot more often.

David Roberts: Hmm. Not just during emergency events, you mean, like on a routine-

Varun Sivaram: That’s exactly right. In a way, of course, that’s respectful of the true performance constraints and requirements that customers need, but this is the most elegant way to provide flexibility to the grid at scale. And let me just walk you through what this means. Shayle Kann, who led our recent strategic expansion round from Energy Impact Partners, you know, he tells me the reason he wanted to invest was he had this aha moment. He said, “You know, in the electricity space, we have something called the supply curve or the merit order.” And we say, “You know, some things are really cheap to dispatch, some things are really expensive to dispatch, and you, like, arrange them in order, and then you do the cheap things first and the expensive things later.”

And he’s like, “I can now draw a similar curve, but for the things that you could dispatch at the data center.” And in many cases, there will be some AI jobs that show up as very short vertical bars on that merit order dispatch curve. Like, there will be things that are inherently flexible. The customer’s really not gonna mind if that batch inference job or fine-tuning job got slowed down for a bit. It literally was not important to them that it happened at that moment. And so …

David Roberts: So it’ll come before the battery on the merit curve of demand response, basically.

Varun Sivaram: … it comes before the battery, right? That’s exactly right, Dave. So you visualized the same thing that Shayle did. In the long run, Dave, again, I founded this company because I’m pretty deep AI maximalist. I think AI is going to be transformative in a good way. But if we have a ton of AI and it becomes a 50% or more user of the American power grid, we simply won’t be able to build our grid and generation fast enough. We need to build as much as humanly possible. We just won’t be able to build as fast in order to serve it all.

And I see a future, mid-century, 2040, when half the work is done by the underlying physical power grid, the power lines, the electrons, and half the work is done by the AI digital optical grid, the photons and the processing that’s happening at each node ramping up and down and across nodes when work is being transferred from one location to another via fiber optic cables. And that combination, that complementary physical grid and what I call the meta grid, the AI grid working together, that’s the thing that makes electricity affordable and reliable for communities and gets us all of the AI benefits that we want for our economy.

David Roberts: So you’re talking about moving from this is an emergency or peak shaving, you know, edge case to this demand flexibility is providing 40, 50% of the total picture.

Varun Sivaram: It’s the way the grid works in 25 years, and hopefully much earlier than 25 years, hopefully in 10 years. That’s the way the grid works.

David Roberts: Well, let me ask about this then, ’cause one of the things that’s happening in AI, I think listeners may be familiar with the sort of difference between training, inference. Training is when you’re training up these models and you’re doing… It’s a big burst, highly intensive. You need really sophisticated GPUs, et cetera, et cetera.

And moving to inference, which is actually using them in the field, it seems like when training is dominating, those are sort of batchable jobs. You can kind of defer them. Almost by definition, you can defer them ’cause they’re not as maybe time sensitive. But over time, it seems like on a sort of macro level, we’re moving more and more toward inference. More and more of the compute is inference, which again, is much more time sensitive. So is that shrinking the total pool of kind of controllable, movable compute load, is the move into inference tightening the parameters, I guess, is the question?

Varun Sivaram: Yeah, great question. And my answer to this is, it’s probably an oversimplification to separate the world of AI into a bucket called training and a bucket called inference. There’s actually a lot of small, small buckets. You have model fine-tuning. I think this will become a large user of compute as, you know, we start to… Enterprises fine-tune open source models to meet their needs. There’s inference that is extremely latency sensitive, sort of latency sensitive, batch inference that is not very latency sensitive at all. There’s a lot of different ways that we use compute.

I also, by the way, happen to think that we will continue to have large frontier training model runs, and counterintuitively, those are probably the ones that are least amenable to the kind of flexibility that the Emerald Conductor does. Because, look, if you’re training, Opus 5 or GPT-6, it’s a massive, highly synchronized operation across, in many cases, lots and lots of data centers. That is a complex use case that we probably wanna not work on right this second.

David Roberts: Can I just cut in and ask a question? ’Cause this occurred to me actually. Like, if you have Conductor running, say, at five different data centers, and there’s a compute job like, say, the training thing you’re referring to that is itself spread across those five data centers, can Conductor, can it conduct all five at once? Like, are the Conductors communicating with one another such that they can do sort of like macro conducting of multiple data centers at once? Does that make sense?

Varun Sivaram: Yeah, great question. It’s a project we’re doing together with EPRI and others like NVIDIA and Prologis. It’s called the Distributed Data Center… Substation Level Distributed Data Center project, where at the substation level you often have like some capacity, but not a whole lot, I don’t know, 5 to 20 megawatts. But you could build these distributed data centers at multiple substations, each of which is flexible. So every so often the substation’s gonna have 2 megawatts of capacity or otherwise 18 megawatts. And orchestrated together, those five or 10 or 15 distribution level data centers act as a virtual aggregated single data center-

David Roberts: Right. They can sort of move the compute to the substation that’s got slack at the moment, right, is the idea.

Varun Sivaram: Is the idea, or they can slow down or downclock compute that’s happening at a substation that’s constrained. So temporal and geographic or spatial flexibility, you put them together, and then, you know, as you correctly said, multiple smaller data centers can be aggregated into one larger virtual data center. And-

David Roberts: Mm.

Varun Sivaram: Look, we’re gonna be looking for power everywhere. And-

David Roberts: Right…

Varun Sivaram: the lower levels of our network, the distribution level, the substation level, there’s land, there’s power. It’s just, you know, not as convenient as getting a nice large one gigawatt chunk that’s firm. And as we prospect for power, these cool ideas are all gonna utilize this one fundamental concept, power flexibility.

That’s why we think of ourselves as a frontier research lab. We do frontier research on how to make AI power flexible, and it can be used in all these cool cases. Another cool example is you could theoretically put AI on a naval ship, for example, or in a forward deployed theater where there’s an imperfect power grid, and flexible AI compute enables you to handle fluctuating power envelopes. So you can really think outside the box. This is a fundamental attribute of compute, is its power flexibility.

David Roberts: So this is like multiple data centers aggregating, acting as one. This is not happening yet. That’s out on the edge of the sort of research and, you know, forward-looking type of thing.

Varun Sivaram: I think it’ll happen pretty soon. We have a project underway, but I do love the pun you made, Dave. It is happening on the edge. That is right.

David Roberts: Edge computing. Okay, let’s get back to the enforceability issue. So the market monitor in PJM recently called data center flexibility, quote unquote, “a regulatory fiction”, which means that PJM, it can ask for flexibility, but can’t really enforce it, can’t statutorily sort of expect it, and so refuses to kind of plan around it. So I’m wondering, like, would you support making flexibility, if someone says they have flexibility, making that legally enforceable, basically such that entities like PJM… You know, ’cause with a battery, it’s measurable. There’s a meter, you know what I mean? Like, you can measure exactly what happened.

You can enforce it. You can, in some sense, plan around it. This sort of aggregated stuff, I think PJM is not quite confident yet. So is there a way of making it mandatory and legally enforceable that you would support? Or how do you think about that? How do you think about that issue?

Varun Sivaram: Yeah. The answer is yes. Absolutely. If we’re gonna make this work, if data centers are gonna get faster and larger grid connections in return for promising flexibility, that promise needs to be legally enforceable and technically enforceable. And so I 100% believe that we need to prove to regulators, to governors, to utilities that data centers will 100% show up when they’re asked to show up if the reward they got was larger and faster connections.

And the market monitor is right to say, “Hey, historically, the performance just hasn’t been great of demand response.” But let me tell you, Dave, this is a new category, a new class of flexible power users. It’s an energy technology in its own right, more so than anything that’s come before it, and I believe it can be legally enforceable.

So the last thing I’ll say is I think ERCOT, Texas, ERCOT has done a great job of developing a framework, a legal framework for how this could work. They say a flexible data center is welcome to connect It’ll be a, what we call a provisional controllable load resource. It’ll actually be dispatched via the dispatch system. It can provide its willingness to curtail, and the willingness is an economic number, $2,000 a megawatt hours. You really don’t wanna curtail, but-

David Roberts: Mm-hmm…

Varun Sivaram: you know, hey, if we reach that condition, then we will dispatch you. And it’s a, you know, legally binding thing that you have to do, and a condition of being connected is that. That makes the data center the same sort of entity as a generator or a battery or anything else that is dispatched. It is legally equivalent, and I think we have the technology to make that possible.

David Roberts: Interesting. Well, on that note, you know, we were discussing earlier, like, if you’re just a fat and happy data center running along, like, why would you wanna do this? Once it is demonstrated that it is possible for data centers to be flexible, I wonder if you ever foresee a day where it simply becomes mandatory for all data centers to be flexible. In other words, right now I think there’s, like, data centers get grandfathered in if they don’t have this stuff installed, but theoretically, you could come along and retrofit an existing data center with this and make an existing data center flexible. And if that becomes possible, do you think that’s ever gonna become simply mandatory for all data centers?

Varun Sivaram: Well, look, I think it’s wrong to paint all data centers with the same brush. There are a lot of existing or legacy data centers that do a bunch of heterogeneous cloud computing tasks that probably aren’t great candidates for flexibility, and it’s really the AI factories going forward.

David Roberts: So AI specifically, not just all compute, but it’s AI specifically that you think is flexible.

Varun Sivaram: Well, that’s where we’ve chosen to focus. We believe that there’s technical room to run here, that there is an economic value driver. They really want access to larger and faster power. And we believe that the right way to do this is to provide incentives, the carrot approach, not the stick approach. The carrot approach is-

David Roberts: Hmm…

Varun Sivaram: if you want the power, here’s how you come get it, and, you know, if you wanna do the traditional route, go ahead and do the traditional route. It just might take forever. And I think that’s a workable solution that, you know, the AI community can get really excited about.

David Roberts: Interesting. Okay, and Volts is about decarbonization ultimately, so one of the things in that Duke study that everybody's constantly citing — one of their conclusions is that flexibility, all things being equal, favors renewables over gas. I think they found that 20% flexible demand avoids a fifth of new gas construction, and that sort of scales, like 50% avoids half the gas construction. But I’m curious about the mechanism of that, whether you believe in that and whether that’s part of your motivation here.

Varun Sivaram: Dave, it’s why I started the company. I sincerely, strongly believe that by making data centers flexible, again, as AI data centers become the largest user of electricity on the grid. Their flexibility, ceteris paribus, pulls new clean energy from intermittent renewables onto the grid.

David Roberts: Hmm.

Varun Sivaram: You know, I’ve spent my career in the renewable industry. Man, would I have loved to have an offtaker that’s a flexible data center. It’s massive. It is responsive. It helps me use my resources, my electrons when they’re produced. Like, this is a massive win for making the grid more amenable to connecting clean energy resources.

Dave, I’m sure you saw this report that came out in the last couple of days that said the net impact of data centers, published in Nature, a peer-reviewed journal, is going to be bad for climate because it’s going to increase the efficacy of oil and gas extraction, I think that was the primary driver of increased emissions, even as it, in a less pronounced way, advances renewable energy. I think that it has it flipped.

David Roberts: Well, also, and just also, it’s visibly right in front of us pulling a crapload of gas onto the grid. Like, whatever it might do in the future, right now it looks like hyperscalers are herding to gas. Like, the gas pipeline is jammed now, and gas companies, you know, their stock is rising, and they’re building on-site gas plants. So, like, when, if AI is gonna benefit renewables, when?

Varun Sivaram: As soon as we demonstrate demand flexibility and get it scaled up, which is what we’re doing. I mean, I just wanna be clear here, Dave, I think demand flexibility is something both parties can get behind, whether or not you care about climate.

If you do care about climate, you get a lot of clean energy on the grid. If you don’t care about climate, you get a lot of other benefits. Consumers pay lower power bills. Ceteris paribus, all else equal, a flexible data center will serve to reduce cost and affordability pressure on local bills because you don’t have to build out exorbitant infrastructure to serve higher peaks.

It tends to democratize AI by getting more GPUs onto the grid so everybody can get access to life-saving AI innovations. It improves grid reliability because flexible AI data centers can respond to the grid, be good grid citizens, you know, responding to lightning strikes, as we demonstrated in our demos in London. And all of these community-focused benefits happen if AI data centers become flexible. It’s why, you know, I strongly support Republican Senator Dave McCormick’s covenant for how you get data centers to be community-friendly, and plank one of that is just make sure that they have positive grid impacts and don’t raise rates, ceteris paribus, and flexible AI is the only way to do that.

There is no way to do it otherwise. You can’t say, “I’m just gonna go off the grid,” because then you’ll have an implicit cost increase by using equipment that can’t then be used on the public power grid. That’s also, by the way, a death spiral effect for utilities. You really don’t want data centers to just entirely go off grid or even worse, go into space.

So I really think that flex- and I’m not saying that out of jest. I actually, I really admire what Elon Musk and Starcloud and others are doing to bring data centers to space. It’s a remarkable achievement that they’re gonna be able to do that, but the best thing we can do right now is to use every last watt of electricity we’ve got on our existing system for AI, and the best way to do that is through flexible demand.

David Roberts: So you think that Nature paper is wrong?

Varun Sivaram: I think that Nature paper did not assume that Emerald AI and others, like Google by the way, Google is an absolute pioneer here. A set of actors doesn’t make AI flexible, and therefore a fantastic grid participant and citizen.

David Roberts: Mm-hmm. And so talk about the logic or the mechanics of how this lowers consumer bills, ’cause it’s not intuitive.

Varun Sivaram: Yeah, absolutely, and I think this is one of the most important parts of Emerald, right? Again, going back to Senator McCormick’s covenant, if you’re a data center and you wanna be welcomed by the community, don’t raise their power bills, all else equal, and be a good participant on the grid and don’t cause blackouts.

And this is possible today, and the reason it’s possible is if a data center shows up to town, by the way, chances are if a data center shows up and it’s a highly utilized data center, just that new load, the math probably already works out for that data center to support affordability. But to guarantee it, a flexible data center that’s willing to ramp down during peak demand and when the grid needs it, a hot summer day when everyone’s running their air conditioner, for example, that flexible data center can be connected utilizing the existing grid infrastructure.

David Roberts: Right. You don’t have to build new stuff. That, that’s the basic here is you don’t have to build new stuff. You’re using existing stuff.

Varun Sivaram: Well, to be clear, we will have to build a lot of new stuff, right? But Dave, what I would like is for the rise of AI demand to grow even faster than the new stuff we have to build.

Because that way, every new megawatt hour that a data center pays for on power bills, some portion of that goes to pay for the existing network- that it’s utilizing more highly, and that helps to, all else equal, reduce your bill. Now, there’s a bunch of other stuff that we’re doing where, like, weatherizing grids for fire risk, et cetera, and so your bill may end up rising nonetheless, Dave. But all else equal, the net effect of the data center coming, if it’s flexible, is to control that rate pressure. All else equal, it’s to reduce your rates, Dave.

David Roberts: And just it spreads the existing costs, the existing per unit costs of the existing infrastructure over a larger load, and thus kind of the per customer cost reduces.

Varun Sivaram: Nailed it.

David Roberts: This is… Did a whole pod on this dynamic. All right, all right. Well, final question. How long until it is standard for a data center to be flexible like you say? Five years, 10 years?

Varun Sivaram: In the year 2030, you can’t add a gigawatt of data center load to the American grid without it being flexible.

David Roberts: All right then, we will wrap up there. Thanks so much for coming on and talking us through this fascinating stuff you’re doing.

Varun Sivaram: You’re the best, Dave. Thanks so much for the time. It’s so great to do this with you.

David Roberts: Thank you.

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US electric utilities are caught between a rock and a hard place. On one side, electricity demand in the US is rising for the first time since the 1970s, partially but not entirely due to data centers, and utilities are responding with record capital spending. However, on the other side, residential electricity rates have risen around 40% since 2021 and, as you might have noticed if you’ve watched the news recently, the public is extremely pissed off about it. There is very little political patience for further rate increases.

In short, utilities are being asked to build lots more, lots faster, while raising bills lots less, or even reducing them. There is simply no version of that math that works out at their current levels of productivity. The only solution is, in a word, innovation: rapidly deploy new technologies, new methods of planning and interconnection, and new types of partnerships in order to provide more and better electricity service at lower cost.

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But that need has been visible on the horizon for well over a decade, and the record is not encouraging. American utilities spend about 0.2% of their revenue on research and development, lower than any other major sector of the economy. In 1992, NARUC, the utility regulators’ association, recommended they get to 1%. That was 34 years ago and they’re still nowhere close.

Why is an industry about to spend a quarter-trillion dollars a year in a political volatile environment so uninterested in figuring out how to spend more effectively? Is the technology not as ready as the start-ups claim? Is the utility business model fundamentally broken? Are regulators too hidebound and risk averse? Are the people and organizational processes inside utilities outdated and overly conservative or all of the above?

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To hash through these questions, I have with me today two longtime veterans of this space. Quinn Nakayama (a previous Volts guest) runs the innovation shop at California utility PG&E, so he has seen the problem from the inside. With him is Hanna Grene, who spent years at a grid software company trying, and largely failing, to sell utilities new tools, and who now leads energy go-to-market at Microsoft. I’m eager to hear their perspectives on this question, which has never been more urgent.

Chapters

• 00:00 – Introduction

• 03:44 – Why grid-enhancing technologies stall in the US

• 07:54 – Selling grid software into utilities: what goes wrong

• 11:08 – From a pipes-and-wires company to a technology company

• 12:38 – Pilot program hell and the last 30 percent

• 15:04 – Innovation as a bolt-on, and the three muscles

• 17:47 – The digital spine, data quality, and smart meters

• 23:56 – Org chart versus work chart

• 25:09 – Strategy, structure, people, process, technology

• 29:24 – Build, buy, and the ecosystem skill set

• 36:15 – Data leakage, shadow AI, and paying twice

• 41:12 – Why utility product cycles run five to seven years

• 46:27 – Human in the loop, and EPRI's SAFERai.power

• 49:06 – Advanced market commitments and the kingmaker problem

• 53:22 – EPIC, and whether software counts as infrastructure

• 01:00:05 – The CapEx incentive problem and final advice

• 1:04:34 – Digital Infrastructure as Capital Spend

• 1:06:53 – Final Advice

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Website - Podcast - Apple Podcasts - Spotify - YouTube)

• Quinn Nakayama (LinkedIn)

  • PG&E Research & Development (Website - LinkedIn)

• Hanna Grene (LinkedIn)

  • Microsoft Energy and Resources (Website - LinkedIn)

• Other Orgs Mentioned

  • Electric Power Research Institute (Website - LinkedIn)

  • California Public Utilities Commission (Website)

  • California Energy Commission (Website)

  • National Association of Regulatory Utility Commissioners (Website)

  • Schneider Electric (Website)

  • Yokogawa PXiSE (Website)

Company & Industry News

• EPRI Launches Effort to Reduce Risk in AI Power Sector Deployment

• SAFERai.power

• PG&E Announces Finalists for 2025 Innovation Pitch Fest

• Microsoft’s Grene on Why People Are Key to Utility AI Integration

Books & Articles Discussed

• Electric Program Investment Charge Program

• California Policy and Innovation Coordination Group - EPIC 5

• Grid Catalyst study

• A Primer on R&D in the Energy Utility Sector

• Yokogawa Acquires PXiSE

Related Volts Episodes

• PG&E tries to prove that a big utility can innovate

• Using more of the grid we’ve already built

• One easy way to boost the grid: upgrade the power lines

• Getting more out of the grid we’ve already built

• Why is NERC so worried about data centers

Related Volts Posts

• Free the smart-meter data!

• Transmission month: how to make the existing grid work better

Transcript

David Roberts: With no further ado, Quinn Nakayama, Hanna Grene, welcome to Volts. Thank you so much for coming.

Quinn Nakayama: Thanks for having us.

Hanna Grene: Thanks for having us.

David Roberts: Cool. So let’s start here, Quinn, let’s start with you. So here on Volts, I cover all kinds of cool new technologies to help the grid, grid-enhancing technologies, dynamic line ratings, advanced conductors, power flow controllers, grid-forming inverters, VPPs, all sorts of AI control systems, on and on, et cetera, down the line. Many of these technologies have been deployed for a long time and at some considerable scale in other places, like in Europe. Why in the US are they still a rounding error? Why are US utilities not deploying them at scale? I’ll just start with the simplest form of this question.

Quinn Nakayama: Thanks for asking a really interesting question regarding what Europeans are doing versus the United States, and I would say, well, part of it is some of those systems that they operate, especially in the kind of the DER-related space, operates in a completely different regulatory market. It’s not that these systems don’t work. The applications are fairly basic in what their capabilities are. In the DER-related world, the issue isn’t necessarily the technology itself.

It’s more of how does each regulatory market perceive the value of distributed energy resources across its entire sector, from the system view versus transmission view versus distribution view. You have to actually get to something that works, that actually reduces rates. If you put together a DER strategy that just compensates customers, but you don’t get the actual value from the utility side of the house, then rates just rise, you know? And we’ve seen that in various other type of DER-related programs like net energy metering, and so on and so forth. You can’t do that, right? So you know, I don’t think it’s really necessarily a technology issue.

For other type of technologies such as like dynamic line rating, such as other type of GET-related technologies, we are seeing a significant increase in adoption in the California utilities. What I would say is that, you know, we want-

David Roberts: Can I cut in? Just for listeners’ benefit, GETs, G-E-T-s Grid-Enhancing Technologies. I’m trying to explain all our acronyms as we go here.

Quinn Nakayama: Oh, yeah, I’m tracking, yeah. Grid-enhancing technologies, like advanced conductors, new types of conductor-related technologies. You have dynamic line rating. You have advanced power flow controllers. The one that really comes to the top of the mind where the Europeans use much more predominantly than maybe in the United States is probably dynamic line rating, and I think the California utilities and the United States utilities in general, first off, didn’t really have a major need five, seven years ago, data center things were interesting, but not really need. Most United States utilities across the board had flat, in some areas negative load growth.

David Roberts: Yeah.

Quinn Nakayama: And so, you know, being able to pivot extraordinarily quickly into a technology is really difficult for utilities to do. In California, I think we’re a little bit more ahead of the area. We already have ambient adjusted ratings. So dynamic line rating from our perspective just is a wind measurement tool and a much more granular temperature measurement tool.

Hanna Grene: Mm.

Quinn Nakayama: We feel like we’ve already been able to do some of the things that technologies such as dynamic line rating can do, which measures temperature and wind and other factors on a transmission line and enables you to push more energy through than maybe what the common ratings of those assets are. And so I would say that the need has really progressed very quickly for the utilities and much faster than a lot of utilities are able to react to. And so you’re not seeing that type of adoption as fast as, you know, the industry might hope.

David Roberts: Yeah. Yeah. I think this is a theme we’re gonna come back to, is just that the speed of demand rising and the speed of new technologies developing is much faster than the speed of utilities operating, which is sort of kind of what we’re getting at throughout here. Hanna, I wanna talk about your current role, but before we get there, previously you were at a company called PXiSE trying to sell these grid controlling software to utilities, and of course, like they desperately need that stuff and yet it was a frustrating thing many times. And I’m sort of curious about, I wanna kinda start with a story of failure.

Like, when you tried to sell these things to utilities that would help them manage distribution grids better, Why did it fail? What did they say when they didn’t buy it? Why aren’t they buying these things? What sort of things would you hear?

Hanna Grene: Well, I’ll give you a slightly different perspective. I don’t know that a gigawatt of global projects is failure.

David Roberts: Well, I mean, at the scale of the US utility sector, they’re not doing it on anything like the scale I think we would want them to, let’s say. Like, your company can succeed, but the sector is not, I would say, succeeding on this.

Hanna Grene: I think more broadly, if you open up and you look at digital grid controls, the retail sector globally has matured it much, much faster than say, you know, traditional T&D utilities. And there’s good reasons behind that. You know, as you integrate more and more hybrid power plants, just larger solar sites, more complex, you know, natural gas tied to batteries and connected to solar, we’ve needed on the generation side, both retail and integrated utility, we’ve needed more advanced controls faster than you have necessarily downstream in the distribution space.

Some of that has just come from market maturity, market need. Some of the most productive places in the world that have advanced DERMS systems and that have been early to market are places like California. I had the great privilege of partnering with Quinn, the PG&E team, and our partners at Schneider Electric to work on their DERMS system.

Hanna Grene: Distributed energy resource management system.

But places like California, places like Australia, we have more DERs. We’ve had more volatility and push to interconnect more devices within the distribution system, and so we’ve had a market need there. And so, you know, coming back to what Quinn said, I don’t know that this is a technology problem. Some of it has been more what is the problem we’re solving in the market, and does the market really need or demand this level of technology?

And, but I think anybody in grid controls, it’s been slow-going or bumpy at different times in the market. I mean, my goodness, if you’re sitting where we’re all sitting right now, the market is fast and chugging.

David Roberts: Mm-hmm.

Hanna Grene: And, you know, there’s a lot of capabilities that, you know, I might have heard like, “Well, we don’t need a Ferrari controller.” I might have heard that 10 years ago in parts of North America because, you know, we’re not California. We don’t have solar on every rooftop-

David Roberts: Right.

Hanna Grene: a Tesla in every driveway. But let me tell you, with data center demand, with reindustrialization, you know, even just with EV growth across middle America, I would sort of challenge the industry, like find me a grid that doesn’t need more advanced real-time controls than what we have today. Sometimes this all comes down to market maturity and market need, and we’re in a moment of market need. We’re trying to do hard things a lot faster than we’ve done them before.

Quinn Nakayama: Yeah, and I think if we’re to double down on that, right, Dave? Like, for example, we haven’t had to do a lot of changes to our applications or system softwares for the past, like, 100 years, right? Like, the utility industry has been fairly stable. So, you know, think about what a utility industry is. It’s a pipes and wires company. Yes, we transmit electricity, and we do, you know, it depends on the type of regulated or non-regulated type of utility, unregulated utility you are. Predominantly, you are a infrastructure company.

David Roberts: Yeah.

Quinn Nakayama: And so you put wires up in the air, and you dig trenches, and you put pipeline in the ground. And if you think about the type of skill sets that a utility really needs to excel at, it’s project management and engineering, right?

David Roberts: Yeah.

Quinn Nakayama: That’s what you need. You need to be able to design these suckers from an engineering perspective and make sure that they operate reliably and effectively, and then you need to have the project management capability to construct these things. And, you know, utilities are very similar to, like, a road construction or any type of infrastructure construction-related company. And now, you know, we are quickly needing to become a technology company.

David Roberts: Mm.

Quinn Nakayama: Those type of skill sets are completely different. How do you move from a project management and engineering over to having, for example, a chief technology officer or a chief product officer and then hiring people who have product backgrounds? That’s a complete mind shift and skill shift.

David Roberts: Well, relatedly, what you often hear, what I often hear from people, especially people who are in the business of trying to sell cool new advanced technologies to utilities is that they get trapped in pilot program hell, basically. Like, a remarkably high, like I was looking at this study, something like 70% of the startups they surveyed said, “Yeah, we were able to get a pilot from out of utilities.”

But very often that’s just where things stay. So talk a little bit about the dynamics of pilot projects, and who’s running those and why aren’t they… you know, you would think what you would want is for pilot programs to be a pipeline of things that then become programs, that then become integrated, but that very frequently doesn’t happen. Tell us a little bit about the pilot dynamic.

Quinn Nakayama: Yeah, and I’d love to hear from Hanna, who’s seen a lot of other utilities around, but I can give you my own personal perspective is that there is no world where a technologist comes to us and says, “Hey, listen, here’s a technology that works exactly in the ways that you need to do. It is 100% baked. All you need to do is click the install button or put this onto your assets, and boom, magically it resolves all of your related issues, and makes you a cup of coffee, washes your car, and takes your kids to school at the same time.” That doesn’t exist.

And so, you know, throughout my entire experiences, what I’ve found is that technologies typically are around 70%, 60%, 70% baked, and what is required is the utility subject matter expertise and our data to be able to then work with these companies to modify their products or customize their products,

David Roberts: Mm.

Quinn Nakayama: whatever you might wanna call it, to fit our needs. And so this is where the product development skill set really comes into play, Dave, where you’re not just testing something and saying, “Oh, here’s the reason why is it doesn’t work. Thank you very much. We’ll talk to you in four years when you can get it done.”

David Roberts: Mm-hmm.

Quinn Nakayama: A product development mindset would be, “Hey, listen, we’re gonna commit to you as a technology, and we’re going to expose all of our data and our subject matter expertise into your product technology, and we’re gonna get it to 100%.” That’s a different mindset.

David Roberts: But isn’t that what the pilot program is supposed to do? I mean, isn’t that what a pilot is?

Hanna Grene: Yeah, I wanna challenge the mindset a little bit because I think where we’re at today with technology broadly, but I work for an AI-leading company, so I will lean a little bit more into what we’re seeing with AI here. I think the trap you fall into when you talk about pilots or when you talk about even just, you know, sort of having a dedicated AI strategy, is you fall into a trap that becomes a self-fulfilling prophecy of making it a bolt-on.

David Roberts: Hmm.

Hanna Grene: Well, we’ll try that thing over there. And, you know, I think we’ll hear more from Quinn about some of this innovation muscle and, you know, you do have to create safe spaces to fail in a utility, and sandboxing and trying things before you scale them is important. But how do you create a process that brings it back into your core strategy as a company? And do you-

Quinn Nakayama: Mm...

Hanna Grene: have technology and innovation as a core strategy in your company? That’s a really important foundation to have, because otherwise you could sort of treat these things like side projects, and that’s where you end up into trouble. And so there’s three big things that I see in companies across not just utilities, but retail power providers. My team works directly with oil and gas companies as well that play in this space, and we get to co-innovate and sit with them and work on their strategy and help deliver AI outcomes with them.

And so there are three big things that I’ve seen that really are the differentiator between a company that sort of treats technology like a bolt-on and those who make technology part of their culture and part of their core strategy and make innovation part of their culture and core strategy. The first is really obvious. They’ve invested in and have a strong digital spine. Do they have a mature data strategy? Do they have a strong IT and data information organization? Like, have you put down some good foundations to the house that you’re gonna build on it? So you do have to have that strong digital spine.

David Roberts: How common is that in utilities, right? Like, I think intuitively you’d like to think they would have that.

Hanna Grene: More common than not, but everybody’s foundation needs some work.

David Roberts: Mm-hmm.

Hanna Grene: So you are in this, we are right now as an industry in a big upgrade and refresh cycle for core systems. You know, I would sort of say find me a utility that’s not going through some sort of modernization

David Roberts: Yeah

Hanna Grene: Whether it’s in their customer system, their supply chain system, their geospatial system, their grid, and that’s healthy and that’s normal. But modernizing those and building up that good spine is key, and it’s part of being ready for this future and delivering affordably, I would say.

Quinn Nakayama: Yeah. I would also say, like, you know, the digital spine is one thing, but, like, your data quality on that digital spine is a whole nother ball of wax. So, like, utilities writ large may have that digital spine available, but either the data that they have in their systems doesn’t exist because they never had to collect it before, or it’s poor, right?

So Dave, like, one of the things that I think about is, as a utility, we never really had to care whether you were on what phase of our secondary and our primary system. No utility had to really record that because you could get things to balance generally on the system and you were fine. Now, with all the solar, with all this EV, with all of this two-way power flow, that becomes really needed in order to operate your grid well and effectively and efficiently, but you don’t have any of that data recorded or it’s poor. And so, you know, the digital spine is one thing, but-

David Roberts: Well, one of the things people complain about precisely in this area is the smart meter thing, ‘cause this was sort of a wave of, like, supposed innovation a few years ago. Everybody was pushing smart meters. They got installed all over the place. But then, like precisely to what Hanna’s saying, that smart meter data never really got integrated, it seems like, or used particularly well, or like integrated into operations particularly well. I mean, you can buy private products now that make use of that smart meter data to do really sophisticated things at the household microgrid level, and still utilities don’t seem to be using that information. Like, isn’t that information out there? Isn’t the data out there from all those smart meters?

Quinn Nakayama: I would say yes and no. I would say a lot of the smart meters that are out there are your, what I would consider your flip phone type of smart meters, right? And so you wanna browse the internet on a flip phone, good luck with that. I remember back in my day when I was doing this, I could play Snake maybe, if you were lucky. Right? These AMI 1.0 meters basically read your meter.

Some of them might read voltages. Some of them might send that back. It really just depends on where you are on that journey. And to be able to go to an AMI 2.0, which is exactly your smartphone built into a smart meter, I think that you have those type of capabilities. PG&E does, for example. We are rolling out AMI 2.0 that really measures voltage at a second layer, 32 kilohertz type of resolution, and enables you to build apps onto that. But name me how many utilities have wide scale rollout of AMI 2.0, and I can count them on my hand.

David Roberts: Mm.

Quinn Nakayama: So, you know, you can’t program a flip phone to run massive apps that enable you to do all the things that you wanna do and you’re talking about on your podcast, Dave, until you get to that related infrastructure. I’m sorry, Hanna, I know I cut you off from-

Hanna Grene: No, it’s all good. I’m gonna come back to this. But it’s-

David Roberts: Yeah, Hanna, we interrupted, but how much of that data layer that you’re talking about here, you got two more on your list, but that data layer that you’re talking about, how much of that, in your experience, do they have that data to work with?

Hanna Grene: I sort of laughed when you said the AMI work we did a few years ago. AMI 1.0 rollout was like 22 years ago now.

David Roberts: Yeah, it’s all a blur. It’s all a blur. So,

Hanna Grene: you know, to Quinn’s point, it’s like, it’s time for the refresh, and the new meters are totally, totally different capability and very, very exciting to actually deliver more useful data in our low voltage networks and support customers. So we as an industry have more data than nearly any other peer industry. I think healthcare might hit higher than us.

David Roberts: Mm-hmm.

Hanna Grene: But we throw off so much data, this phenomenally engineered system that we all get to be a part of in the grid is the richest data resource. Our opportunity is to put it to work, and-

David Roberts: Mm.

Hanna Grene: this is really the, the gift that AI is gonna be able to give us in energy, is there’s not a utility out there that necessarily needs more data, but do we have that data in a clean and usable format? AI helps with that too.

David Roberts: Mm-hmm.

Hanna Grene: And then are we able to turn data into insights? If you go into any control room anywhere, you’re drowning in alarms, you’re drowning in data, but-

David Roberts: Mm.

Hanna Grene: you know, is that data usable? Is it insightful? Does it help you act? That’s a different proposition. So I think that’s really the opportunity in front of us. But yeah, do you have that digital spine? Is your data useful? Do you have a clear point of view on what you’re migrating and modernizing, and have you integrated AI into that vision? That, that’s the step one. The step two piece, to get through these quickly, the step two piece is people. The technology capabilities we have at our fingertips now are truly, truly incredible, and they can lift up and enable our industry to do more, faster, more affordably, which is the moderately crazy mandate we’ve been handed, right?

To go out and in some cases, some companies are talking about tripling the size of their generation capabilities in a very short number of years. I don’t waste a single second worrying about us losing jobs in energy. I spend a lot more time thinking about how do we empower people with this technology to do more in the really difficult and fun and fast-moving jobs that they have right now.

So what that looks like functionally is have you rolled out the tools to your people? Have you trained your people in AI capabilities? I’ll pick on Copilot ‘cause that’s what I live and work with. Have you skilled people up and, you know, given them the time and the capability to learn and to get familiar with tools like AI?

And then are you supporting it as a strategy? And some of that comes from tone at the top, from the executive level. Some of it comes from managers and team leaders who create space and have the mandate and the culture around them to be able to bring their team together and say, “Well, actually, how would we completely reinvent our residential interconnect process now that we have these tools? So are you creating those spaces, and do you have that culture?

David Roberts: Let me ask about this. There’s sort of giving tools to the teams and organization as currently constituted, but how much of this, the internal sort of the org chart, you know what I mean? Like, how much of this-

Hanna Grene: Yeah.

David Roberts: is how utilities are organized? Do they need to rethink the buckets or rethink the teams themselves? How much are they internally organized to innovate, I guess it would be the question.

Hanna Grene: I’d love to hear from Quinn’s perspective on this as well, but I will just say we at Microsoft, we already talk about org chart versus work chart.

David Roberts: Hmm.

Hanna Grene: And there’s a big difference between the people who report to me and the people that I and my team partner with on projects. And I think I sit at a big tech company, it’s not a utility, but I think you’re gonna see that more and more and more and more, and already in some companies, in energy you already are. Do you bring the right people together across disciplines to sit in a room and solve a problem, one team, one problem, one focus, versus sort of spend time in silos? In order to integrate technology and use AI effectively in an organization, you have to be cross-functional, so I think we’re gonna see this shift. But Quinn, are you already seeing it today?

Quinn Nakayama: Yeah, I would say structure is just a small piece of the overall issue for innovating quickly. You know-

David Roberts: Hmm.

Quinn Nakayama: there’s a couple of things that I think about. You need five things, or at least four things predominantly to make innovation work, the fifth thing being given. The first one is strategy. So let me go through the five. You need to have strategy, structure, people, process, and technology. If you don’t have those five things lined up, things are never gonna work. The strategy is usually the top-level strategy of the company or the utility that you’re talking with. Do you have the right KPIs at the very top that you can then attach your innovation to and saying, “We’re gonna make a difference on the following KPIs and move it from this to this”? And that is the-

David Roberts: What are KPIs, Quinn?

Quinn Nakayama: Key Performance Indicators. So, like, whether it’s your reliability Key Performance Indicator, whether it’s your affordability Key Performance Indicator, whatever it might be. You have maybe, like, a three to five-year trajectory that’s set at the very top of the company that says, “We’re looking to target between now and 2030 the following trajectory of our top-level metrics, and that’s our strategy.”

So if you can attach your innovation to those top-level metrics, you’ll have a more chance of succeeding because it’s really, really important to the company. And if it’s really important to the company, people will pay attention and they’ll invest. The second portion is what you’re talking about, Dave, which is your structure. Are you structured correctly to be able to take technology and roll it out quickly? There’s a question regarding whether you go centralized versus decentralized, and what’s the best way to do that, and we can spend a whole podcast arguing about organizational structure on centralized, decentralized.

You have Skunk Works. That’s the epitome of the examples of a centralized R&D, and then you have companies that just leave it up to their functional areas and do what you want. Hanna touched upon the people side. You know, I touched upon that a little bit on, like, what are the people that you have and how are they skilled to be able to adopt technology fast?

Then you just have process, and there’s actually a, there’s a process for innovation and product development. Venture companies use it all the time. Startups use it all the time. But, you know, a utility doesn’t have an innovation process.

David Roberts: You mean process just, like, iterating, assessing, et cetera, just a process for development?

Quinn Nakayama: You have the ideate, incubate, accelerate, and scale. There’s different words depending upon what consultant you talk to, right? They all brand it a little bit differently. But, like, you know, you wanna take all these ideas, you might have hundreds of them, and whittle it down to 10. Your no rate should be at least 90% or greater of every single idea that comes across your desk, ‘cause you don’t have the capacity to do all this related stuff.

David Roberts: Hmm.

Quinn Nakayama: Then you have the incubate process, where you really wanna get down to, what is this going to achieve for my business? Do I have an operating model? Do I have a business plan? Do I have the go-to-market strategy? These are all terms that a utility never really has to deal with, but if you’re a startup, you’re all about these three or four real big things. And unless you have that, you’re never gonna make it. The accelerate function is like, okay, I’m gonna take by quarter, what am I trying to achieve? And if it doesn’t hit those particular success metrics, we’re gonna fail it, and we’re just gonna move on to the next thing. Too many times do you sink too much time and effort into a technology, and then you burn away all this, like, people and capital, and it doesn’t work, and you should fail things fast, and you have very clear dictated ways to go through and accelerate.

And then scale, the scale portion is probably the hardest for utilities because every single functional area is, feels like they’re 30% to 50% underfunded. And so you’re gonna be asking them to take an additional haircut to be able to scale a technology. Like, if it doesn’t have a payoff within year, those VPs and those directors that are owning those budgets are not gonna give you more money to scale.

But if you can demonstrate that these technologies, through your accelerate phase, does pay off within year of a financial year, they’d be much more willing to fund it within their already constrained budgets that they feel like they don’t have. So, you know, you gotta have the process too. You can’t just deal with this on structure alone.

Hanna Grene: And I think kinda coming up a meta level, even on top of process, this is where I would land my number three on my like, you know, big three muscles that we see companies-

David Roberts: Mm-hmm.

Hanna Grene: exercising to effectively integrate innovation and digital technology. The third one for me is do you know how to build and use your ecosystem? And so your own internal process is part of that. This is a real skill set, and there are varying maturities of this across different companies in the industry. Do you know how to build and use your ecosystem? Do you know what you wanna buy that is not worth your time to innovate, it is not worth your time to rethink, you just wanna go buy it? Do you know what you wanna build? That is probably a pretty thin list-

David Roberts: Mm...

Hanna Grene: even though it is much, much, much easier to build new product and build new capability than ever before with AI. Writing code is no longer a problem. It’s really easy to build stuff. But what do you wanna be in charge of the care and feeding of long term, and what do you wanna own-

David Roberts: Mmm.

Hanna Grene: the enterprise scale behind? Enterprise scale is a very real skill set in development, and there’s a big difference between vibe coding something and rolling it out to 45,000 people-

David Roberts: Mm.

Hanna Grene: securely over time. And so what do you want to build, and then what do you wanna buy and build with? And I think this is the fastest changing part of the industry, and Quinn touched on it earlier too. What do you wanna look at the market and see and then build on top of? Some of that might be partnering with a company who has most of a solution, but I think even more it’s gonna be working with this is what my team does every day, so working with teams like mine to come in and build the capabilities that you need with AI to move you forward.

And that doesn’t mean you start from scratch. We have lots of blueprints. We have lots of capabilities. We work with a lot of partners. But do you have a core group of strategic partners who can innovate with you? They’re not just, you know, hawking you a $10,000 contract, but they understand intimately your strategy, and they’re part of your success team, and that’s a muscle.

David Roberts: Let me surface what might be a slight disagreement maybe between the two of you, or just flesh it out a little bit, ‘cause Quinn, one of the things you were saying, you said in an email to me, and I think you mentioned before, that when technologies get delivered to the utilities, they’re, like, 50 to 70% what the utility needs, and there’s that extra work of integrating them into the actual utility operations and flows.

You have said that utilities need to hire people to do that, who are good at that, engineers who are good at that final bit. But basically, like, Hanna’s business model at this point, I mean, I don’t know if she’d agree with this characterization, but it kinda seems like Microsoft is like, “Fine, we’ll do it.” You know, like, “If you won’t develop that internal expertise, just rent our engineers. They will come sit in your rooms and do that final 30% of development for you.”

Is there a tension between how much in-house expertise utilities need to develop on this stuff and how much they can rent from a partner like Microsoft, and is there any risk in renting from a partner that you get lock-in or if the vendor disappears or if something happens to the vendor, you’re, you’re bereft? Is there a tension there? Both of you.

Hanna Grene: Let me reframe a little bit first, ‘cause I wanna be clear on where I see the market need. You’re going to have a big, robust ecosystem of partners. Every utility does. A subset of them are gonna run your core systems. A subset of them are gonna be, you know, big technology platform providers who might sell you some core systems, but you also use a lot of their development tools.

I think we would sit in that space as Microsoft. And then there’s a subset of them that you’re gonna do innovation and, you know, create the future together work, and those aren’t mutually exclusive. You could have the same logos in the same buckets, but you’re gonna have different flavors of relationships. I don’t think any part of that ecosystem reduces the need for you to have a great set of in-house technology and innovation talent.

David Roberts: Mm.

Hanna Grene: So I don’t see them as duplicative. When my team gets to do what we get to do best, which is come in and develop with and accelerate with and partner with the utility, we are partnering with the phenomenal group of technology and innovation leaders on the other side of the fence.

Quinn Nakayama: Yeah.

Hanna Grene: And so it’s definitely not a replacement of, it’s high five and let’s go faster together.

Quinn Nakayama: Yeah, I don’t think Hanna and I are saying things that are actually conflicting with each other. Like when I talk about product development, I’m not saying that we are going to be doing all the build on our side, right? We don’t have that type of capability, and I don’t think we even are looking to do a significant amount of that related work, but we do have a lot of subject matter expertise when it comes to our engineering and how we do planning and how do we do construction and all that other type of stuff. We also have a all of our data.

So it’s about, like, working with a vendor partner to utilize all that subject matter expertise and data to be able to product develop their product so it gets it to 100%. And I think Hanna and I are saying the same things here. Here’s what I would tell you, though, is that this whole build by partner thing, you just have to be careful in the fact that, like, I can hear my CIO and CIOs across the entire country out there saying, like, “If you start to have a thousand applications that you’re working with on all these related startups, you have data flying everywhere.”

David Roberts: Yeah.

Quinn Nakayama: You have all these APIs that you need to maintain.

David Roberts: Yes.

Quinn Nakayama: And, like, the cost structure just becomes insurmountable. And so we have to weigh, do I wanna work with a startup or even a small technology company, versus do I wanna build this with the partners that I already have, the big partners like Schneider, SAP, Oracle, you know, and build it through there? Or is there, like, a matchmaking opportunity where these big companies can then do the B2B, right, the business to business transaction between them and a small startup, so that I don’t have to take all the integration risk, and they can create it like a module? Again, that might even be a strategy for a lot of these startups.

So some of this is us playing like a matchmaker related, and Microsoft does this really well, of trying to say, “Hey, listen, you know, these big utilities, they use these massive systems that they’ve invested a ton of money for. Instead of trying to go to them directly, maybe it might make sense if you try to work with them through GE Vernova, or work with them through Schneider, or work with them through SAP or Oracle. You might have a better chance of success.” And so that’s the balance.

David Roberts: Well, in addition to the sprawl and the budget sprawl, presumably there’s security questions, too. I mean, everybody-

Hanna Grene: Yes.

David Roberts: you know, is always mocking utilities for being so slow, but there’s a reason they’re slow, is that there’s a lot at stake, and they don’t have a lot, of a very big margin for error. And the more interfaces you open up, the more APIs you have, the more kind of things you have going on, the more attack surfaces you have, the more errors are possible, et cetera, et cetera.

Hanna Grene: Dave, I wanna punctuate this because it’s even more, We’ve always talked about attack surface area and endpoints and APIs, and then that’s all still true, but it’s the velocity of this has changed with AI. And there is a business model out there where you give company X a bunch of your data and they ship you back AI-driven insights on it.

And that is data leakage. That is not just your IP leaking, that’s not just your PII leaking, but that is a security risk. And I see this in a few different forms in companies a lot. The first is, this comes back to my people point, if you have not enabled your people with AI tools within your governed enterprise data environment, your people are super smart, and they’re gonna go use the best tools out there to get their job done. And we have a ton of survey data on this, and the number of people using AI at work keeps going up. The number of people using unsanctioned AI at work is, like, stayed the same because people are doing it. And so you do-

David Roberts: Well, this is a nightmare when you think about utilities. If you’re building a widget, but if you’re running a grid and your people are using LLMs on the side without telling you. That just gives me chills.

Hanna Grene: You’ve gotta give your people the structured enterprise environments and the training so that they can be successful with AI. And, you know, just one more point on this, and I wanna come back to the cybersecurity piece. I sort of feel like the way we’ve rolled out, some companies have rolled out AI tooling, where they’re like, “We’re a 40,000-person company, but we’ll give it to 200 people.” It would be like if you gave email to HR and legal- and a couple of people in C-suite, and you were like, “Let’s test the efficacy of email.” Like, it’s just not the right way to do this.

And so democratize the access to the AI tools, train people, set them up for success so that you don’t have this data leakage, and so that you get the broader benefits of people using this technology inside your company. But the other part of it is we talk about it as people paying twice. You’ve paid a company to give you some insight or capability back, but you’ve also paid them with your data.

David Roberts: Mm.

Hanna Grene: And this carries a cybersecurity risk, it carries IP risk, it carries legal risk. And so where we really want to encourage companies to think about, you know, building in protected enterprise environments. Like, your data is your data, is your data. Let me shout it again from the rooftops. Your data is your data. Like, we don’t backhaul it for our AI models. You know, we think you should be very critical of companies that do.

And so, you know, then you come back to this premise of do I have the right companies in the boat with me to go on this hyper-accelerated journey that I need to go on over the next three years to do things that we’ve never done at this speed and scale in this industry before? And that’s where, you know, it comes to do you have the smaller set of close partners who understand your strategy, can run with you, and can innovate alongside you and add those capabilities to you?

Quinn Nakayama: Yeah, I would say, like, I’m not trying to... Well, let’s say I’m not gonna defend the slowness of innovations adopting technology by any means. I will say that we do need to be faster. We do need to come with a product mindset. We do need to have, like, utilities need to start thinking about whether they need to have a chief technology officer to sit aside, to sit besides a chief information officer. Like, these are things that I think utilities need to think about. But the higher that you go on the innovation scale of your system, the larger your risks are. So-

David Roberts: Yeah...

Quinn Nakayama: as we innovate on, like, data centers and transmission, I’m not talking about 4,000 people losing power. I’m now talking about 300,000 people losing power. And so I can’t just be like, “Well Dave Roberts or these other podcasters are telling me that I’m not innovating fast enough. And so therefore, it’s their fault that I had this 300,000 customer outage because, you know, this technology didn’t do exactly what we need it to do.

And so I would say that, yes, we do need to innovate faster, but you’re right, there are risks involved with as we move higher up the energy supply chain, right? Or the energy transmission chain, the amount of risks that we carry that if we get this wrong could result in massive number of customers outages, and not to say that’s the reason why we shouldn’t do some things, but it’s just something just to consider as we’re going through how fast we can adopt these technologies and ensuring that those risks don’t happen as we adopt those technologies.

Hanna Grene: Totally, and I think for me, one of the mindsets that I, um, being at a tech company for the last five years and going through and living through AI projects the way we are right now, I think we’re gonna see some more shift on that process front that Quinn talked about. Traditionally, you know, as an industry, we will, like, plan a project for two years. You know, it’s sort of a planning phase, and then you get this hard ramp when you go into deployment phase, and then there’s a run rate phase and, you know, if you were plotting it on a chart-

David Roberts: Well, Hanna, you told me in an email, you said that these sort of, like, product development cycles at utilities, this is something that was kind of a revelation to you, are, like, five to seven years, and you just back that out and do that math, and you’re like, “If it’s five to seven years for everything, we’re doomed. We’re never gonna get there as fast as we need to get.” So I’m, I was wanting to ask you, like, what is going on during those five to seven years? As you say, at this point, you can build these AI tools and agentic systems and whatever, you know, on, like, months cycles. What is taking up those five to seven years? What is taking so long?

Hanna Grene: Well, we’re living in between, you know, a bridge between two worlds. And the world we’re coming from are these sort of big chunky core system implementations where, you know, if you were to chart it on a something that was like a graph, they would look like big blocks, right? That you were standing up a big block, running a big block, ramping down a big block, starting a new big block. And where we’re seeing this shift with AI, it’s going to look a lot more like a bunch of little loops.

David Roberts: Hmm.

Hanna Grene: Because the market is moving really fast, the capabilities are moving very fast. Future that I’m seeing is every company is gonna use multiple AI models. You need that strong data foundation, but you’re gonna use different AI models to do different things. You continue to need those strong systems at the base, but you’re gonna have different agents in different parts of your company, and so you need visibility into those agents. You need a very clear control plane to be able to see how people are using AI within your enterprise.

And then more and more for, you know, big things you do, meter to cash, like supply chain ordering, like interconnection, like planning, you are gonna have these more agentic systems that integrate AI into different parts of a big chunky process. But instead of that being a monolith of one big project that you undertake, you’re gonna be building and iterating, and building and iterating in a much faster manner. And that’s just the nature of how the technology is changing and how much easier it is to build and adapt with AI technology.

And so Agile has so much pre-existing culture around it as a software development capability, so I struggle not to use Agile. But the the activity will require more agility. And this interesting and extremely important intersection is gonna be how do you balance between that rigor and that safety culture that is essential to everything we do in energy, period, and the recognition that technology is moving a lot faster. And developing the process between the two is, I think, where a lot of the really productive and interesting work is happening right now.

David Roberts: I can tell you right now that there are listeners out there listening to you talk about integrating AI into this system and that system quickly, and just the hairs on their arms are going up. You know, a lot of people have a lot of leeriness about AI. You know, some of it informed, some of it not, but, like-

Hanna Grene: It’s true

David Roberts: there’s a lot of fright out there, and the idea of just rapidly integrating it into infrastructure I’m sure just makes a lot of people extremely nervous inside and outside of utilities.

Hanna Grene: Well, and that’s an important point to make. This is always a good point to remind everybody that our industry’s been using AI for 20 years. I think the part that’s rapid is the speed that the technology is evolving, not necessarily the speed that you’re integrating it into core infrastructure. So that’s the important part. It’s how do we as an industry stay up to breast and stay current with this technology that’s evolving?

How do we get the best from it? And then how do we very thoughtfully integrate it into the parts of our business where it makes sense? Companies have moved very quickly in some spaces, using it to improve customer experience, using it to improve things like billing, supply chain, safety for field workers. But you know, there will be more a methodology and a higher standard for anything that’s about core infrastructure and core operations.

And I should say, too, you know, my personal perspective, but the perspective of the team that I’m a part of, is human-led. And so you are using AI in cases to augment human capacity, to support automation of a process with human oversight, but we are very much AI-enabled, human-led operator-led, and I do think that’s an important distinction.

Quinn Nakayama: Yeah, and I think this is really important. Like, understands false positives, false negatives, and hallucinations so that they can find and catch those and identify those and feed those back into the system to make it smarter. But having automated decision-making is a whole nother ball of wax.

David Roberts: Yeah, you want somebody accountable at the end of the, especially on infrastructure.

Quinn Nakayama: That’s right. And-

David Roberts: If something goes wrong, you want a human accountable.

Quinn Nakayama: Yeah, and there’s like, for example, if you start to do AI-informed asset health ‘cause you have all these sensors out there, and they’re telling you, you know, how the pole’s doing or how the wires are doing, and if you have a whole bunch of false positives, your maintenance program is gonna be underwater. If you have a whole bunch of false negatives, you’re not aware of potential asset failures that may be occurring.

So having that type of human in the loop, taking a look at how that AI matures is gonna be really important. Now, one day, you may find yourself in a position where that type of dynamic doesn’t require human in the loop because the technology has matured, but I think you can’t just start there. You have to always have that type of human in the loop, make sure that it’s running, not hallucinating, not creating that positive negative value, and then just continue feeding it until it gets to that position.

And you’re right, Dave, the higher you go, the more consequences there are, the more careful you need to be, and that may lead to what may be considered slowness from the utility’s perspective on adopting some of these technologies.

Hanna Grene: And this is an area I spent some time recently with EPRI, which of course plays a big role in disseminating innovation out across our industry globally and helping us innovate together.

David Roberts: This is the utility trade group.

Hanna Grene: Yes, I, you know, I think of them as a lab for the industry. You know, less of a trade group, more of an innovation center that helps disseminate and hold R&D for our global industry, the Electric Power Research Institute. And something that we’ve sponsored and have been an early supporter to is what they announced just this week with SAFERai.power.

This is an initiative to actually work through AI use cases that might be more sensitive and to help drive some industry consensus on how you’d approach them, how you’d apply, you know, well thought out. We’ve been doing responsible AI work at Microsoft for over 10 years, and so, you know, just as one example, like how do you take things that companies have been doing for a long time to de-risk and be very thoughtful about where you use AI, and then build on top of them for the very specific critical infrastructure needs of our industry so that we’re not all having to individually make those calls as companies and as leaders.

David Roberts: Mm.

Hanna Grene: But you could go to a framework and say, you know, “This would be the way that I, the methodology by which I would assess this risk, and also the risk that it’s been assessed, and here’s how I can think about it.” So, you know, this is an area where the beauty of our industry and how we share and how we collaborate allows us to partner up and work together so that you don’t have to think about these things alone in a box.

Quinn Nakayama: I wanna double down on that. Like, Dave, one of the things that you’ll hear is the sales cycle in a utility is super long, and it crushes some of these startups, right? Like, or crushes some of these companies. It’s like, all right, even if I work with a utility, it’s like a three-year sales cycle, and then I get one utility, and then I get-

David Roberts: Yeah.

Quinn Nakayama: you know, I have to go to another utility, and the sales cycle is three to five years, and it’s just super slow. I think, you know, organizations like EPRI could be really helpful in doing, you know, I love the concept of advanced market commitments. Like, there could be a king maker-

David Roberts: Yeah.

Quinn Nakayama: out there. Like PG&E for example, we have to innovate on things like wildfire faster than the rest of the utilities, or maybe it’s drone-related technologies, or maybe it’s computer vision. Either way, whatever it might be.

David Roberts: Well, on all of these things, I mean, one of the big problems is that none of the utilities want to be the first to go, well, or even the second to go, really. All the utilities want to be the third to go. All the utilities want someone else to do the first thing. But, like, somebody’s got to do the first thing.

Quinn Nakayama: Right. And so let’s say PG&E is gonna be the first one, right? Just because in the West Coast you have wildfires, you have electrification, you have data centers, you have all this type of stuff all happening at the same time. Fine. We’ll be the kingmaker. That’s fine. What we would love to do is work with an organization like EPRI, as an example, and say, “Okay, fine. If I build it, can you do an advanced market commitment with seven different other utilities? And if we build it, they buy it too.” They’ll put up, let’s say, $10 million. I don’t know.

We’ll just throw that out there as a rough number of sales that says, “Hey, if PG&E can build it, builds it to these specifications, can prove that it works on their system and requires very minimal adjustments on theirs, yeah, I’ll buy $10 million year one.” You put, I don’t know, seven, 10 utilities together for that, you get a 70 million to 100 million dollar type of advanced market commitment. Sure, maybe it’s non-binding.

Fine. But, like, it sends a signal to the VCs out there, it sends a signal to any of the investor community out there, and they’re like, “Oh, well, you already have seven to 10 customers already lined up after the kingmaker does whatever they need to do to product develop into this space with their subject matter experts, with their data, and now there’s seven to 10 utilities waiting to just buy this once it gets done.” Like, there’s a lot of value there. There’s a value for the startup, and there’s a value for the VC community that gets that direction.

If we’re gonna be the kingmaker or the first mover in some of these technologies, then we want some of that value too, whether it’s, like, really low cost and a procurement agreement for the next five years. Maybe we’ll do a warrant. Maybe, you know, there’s other things that we can think about from a joint IP. There has to be something in it for us to be the kingmaker.

But if we can figure out how to create, you know, these type of coalitions of utilities together to say, “Hey, listen, we’ll let Duke, or we’ll let, you know, some of these other East Coast utilities be the kingmaker on maybe some technologies on transmission because they went first on data centers. We’ll do drones and wildfire-related technologies and computer vision, and this other utility over here will do, be the kingmaker on something else,” we could probably create really strong signals to the market that enables even faster product development happening on some of these type of technology companies, which would be really cool.

David Roberts: Well, quickly, we’re running out of time, and there’s a couple of key questions left I wanted to ask, and this gets at one of them, which is one of the things that we’ve not really talked about yet is funding. It’s just money. You know, utilities need to spend on this stuff. And as you know, Volts listeners know, the way utilities spend and make money is rather peculiar. A lot of this, I think R&D stuff gets put in the operations and management budget.

Then you need a rate case to make the money back. There are some utilities that are innovating in ways of putting stable pots of money aside to devote to these faster cycle innovation cycles. Quinn, how, how much is just the way utility budgets are structured in the way here, and what are some ways they can just spend better?

Quinn Nakayama: Yeah. I would say that a lot of this is talk to some of my peers and those, and they’re using the little tin can, and they’re going out everywhere trying to get small dollars from everywhere, and that’s the best they can do, and that really stifles innovation within their organization. I would say that California has been unique, right? We have something called EPIC, which is the Electric Program Investment Charge. It appears on your bill as a public purpose program, but if you were to dive underneath that, it has really enabled utilities in California to invest in R&D.

That has been a commission-led effort to say, to your point, commission utilities aren’t investing in R&D and innovation, so we’re just gonna force them to do so by forcing them to gather money, allocating it only for this related purpose under these type of priorities that the commission dictates. You go do the innovation and you de-risk these technologies.

And so since 2011, we’ve had four cycles of this. We’re about to go into our fifth cycle, and that has been the real catalyst for California utilities to innovate. Like, the biggest thing for us is we have to demonstrate its value. So if I can demonstrate that there is a per kilowatt hour cent reduction on customers’ bills as we think about the savings that are attributed to, you know, hey, if I get $50 million, can I turn it into $150, $200 million worth of savings? Like, that’s a pretty good, you know, worthwhile investment.

And so as long as you’re able to prove that and you’re not just working on things to work on things and doing research projects to write white papers, as long as it’s applied innovation that’s gonna move the needle, especially in areas of affordability these days-

David Roberts: Yeah.

Quinn Nakayama: which is like PG&E’s real sole view, right? How do we get our rates more affordable? And as long as you can show that type of payoff, then these type of R&D efforts that a commission can stand up and give to their utilities as a mechanism enables them to achieve some of the objectives that they might have as a regulator in their system.

David Roberts: California is somewhat unique in that, though. Hanna, do you find that a barrier when you’re working with utilities, just the pots of money that they have to draw from and the way money is allocated? Are you able to find funding for what you need?

Hanna Grene: Two pieces on this. The first is that a lot of the utility ratemaking mechanism is about CapEx versus OpEx, and I do think we are in-

David Roberts: Yes

Hanna Grene: it’s really important, certainly not just because of AI, but because of how we started this conversation with GETs and digital grid infrastructure, we actually need to reframe a lot of this investment in terms of digital infrastructure. Infrastructure is no longer- the best spend of a capital dollar may not be a pole or a wire or a sensor.

David Roberts: Yes.

Hanna Grene: It may be the digital infrastructure that enables that greater affordability and that greater customer outcome. And so I do think that there’s much more maturity in the market of that understanding now than there was five years ago. I’ve seen that evolution, but that’s really, really important for us to just recognize that software broadly is a massive component to how we’re going to optimize this grid and how we’re going to accelerate capital delivery and deliver it affordably, and we all need to get our heads adjusted to the idea of spending more on digital and about it being digital infrastructure.

That’s one piece. I think the other piece, and this comes back to where we started the conversation. When you start to sort of go like, “Well, R&D is a nice to have. Innovation is a nice to have. Technology is something that IT does for us over there in IT.” Those are traps.

David Roberts: Mm-hmm.

Hanna Grene: And I think the evolution I really wanna encourage us to think about broadly, all of us in energy, is to think about how technology is more and more and more, and certainly AI unleashes this, it is a tool for how you are going to deliver the future of your business across your people and attracting and retaining and growing talent, across your core strategy and how you deliver it into the market and for your communities, and in how you have, you know, a secure, healthy ecosystem across your hardware, your software, and the infrastructure that you operate.

And so technology must, and innovation therefore must be embedded in your core strategy. It can’t be a nice to have. It can’t be a bolt-on. And as wonderful as it is that we have these innovation and R&D funds in California, like you can’t wait for that cavalry to show up in your state. It needs to become a muscle and become part of how you deliver against your metrics.

David Roberts: Well, this brings me to my final question. Quinn, maybe this is where you’re going, but this is probably the question that my listeners have been waiting for me to ask this whole hour, which is, if the utility spends a capital dollar on a pole and a wire, they spend a large chunk of money, and they get a guaranteed rate of return on it, they make money that way. Whereas if you come in with some digital solution and you say, “Here’s a super cheap software-based solution that can help you avoid the need for that pole and that wire. Look, you can save money,” a normal business would be like, “Oh, good. I get to save money.”

But a utility business, if they save that money, makes less money. You know, this is something we come back to again and again and again on this pod. The utility wants to spend money. That’s how they make money. And almost everything we’re talking about under the heading of innovation is, one way or another, something that avoids the need to spend a bunch of CapEx on big infrastructure, i.e. something that is going to reduce an investor-owned utility’s profits.

And I just don’t know, it just seems to me like the very basic business model we’re talking about here, the very basic regulatory structure of these utilities is working against innovation almost intrinsically. How do you get around that? I guess is my question. Like, how do you work around that very basic mismatch of incentives?

Quinn Nakayama: I would say there’s a couple of things here. One is that used to be the case, and I would say that, well, if you take a look at a lot of the utilities that had 0 to 2% flat growth in their utility sector, and they weren’t building a lot of infrastructure, and all of them would be like, “Yeah, let’s do more capital. We need to figure out how to get our rate of return.” That may have been the case in a lot of utilities in the past.

Now, all these utilities, including ourselves, are like, “We need to get rid of some of this capital ‘cause we can’t spend it all without really ballooning rates.” Like, if there are ways that we can defer capital spend, if there are ways that we can have alternative ways.

David Roberts: It may be in California, Quinn, but look out at the country. Like, I see utility executives just, like, drunk on this. They’re like, “Heck yeah. Like, you want us to build a lot? We’re gonna build all we can build. We’re super excited to spend CapEx. We’re super to spend more and more.” Like, And I’m not sure that the political blowback has fully reached them yet, or, like, changed their mindset yet.

Quinn Nakayama: I would say there was a swing where all of these data centers happened very quickly that caused all this infrastructure to build, that be built out, that then caused this lag on the generation side. And, you know, more broadly, it was just, it just happened a lot faster than a lot of folks could react to. But if you think that this whole politics on raising rates and the blowout that’s happening on rates side isn’t on the top of executives’ minds across the entire nation, I think that’s just not true.

And I think the reason why is that, listen, you know, utilities actually don’t want legislation coming into their area. I don’t think that they actually, utilities writ large, because you have everybody commenting into areas that maybe people are not as well informed into. And the utility space is very complicated. It’s an engineering nightmare. It’s, you gotta think about protection, you gotta think about a whole bunch of other type of things.

And so I would say that most utilities out there, most utility executives are very concerned about customer affordability. They just need to figure out how exactly do they incorporate all of this AI data center-related large growth that’s happening super fast without coming across as being obstructionist toward that growth, and at the same time figuring out how to do this with less capital. I feel like, you know, that pendulum is vastly swinging the other direction now.

David Roberts: Hmm.

Quinn Nakayama: We have way too much capital everywhere. And wildfire, by the way, is not just a California problem. I don’t know if you’ve seen, but there’s wildfires happening everywhere.

David Roberts: Yes, I noticed.

Quinn Nakayama: So, like, hardening infrastructure for capital, everybody’s gonna be coming out of their ears with capital. Now it’s gonna be about how do you do, how do you meet these objectives that you have on these really big ambitions that the state has on load growth, the state might have on wildfire-related risk or whatever other catastrophes that they’re having with the changed climate that’s already out there, and then trying to do all of that with less money because the rate blowback is just gonna be too big. I think that in order for us to do this effectively, though I think we need to figure out how to take some of these O&M-related expenses-

David Roberts: Operation and management.

Quinn Nakayama: operation and management-related expenses and figure out how to peanut butter them a little bit more across a broader range of time, which smells like capital, but what I’m just trying to say is that when you have an operations and maintenance-related expense, it hits the ratepayer the next year, right?

David Roberts: Yeah.

Quinn Nakayama: A capital project that’s $300 million that’s spread over 40 years hits the ratepayer much less over a long period of time. That’s why I think even in a utility such as California, we don’t want a lot of O&M expenses on our books just because next year that’s gonna hit your rates. And a capital project can spend a lot more money, but hit the ratepayers very fractionally as ratemaking occurs in all of our areas. So that’s just something to consider. It doesn’t really necessarily have to do with a rate of return.

David Roberts: Hanna, how about you? Are you finding the utility, the basic incentive structures of utilities a barrier at all? Because you are selling solutions that reduce capital spending ultimately. Like, is that a problem for you?

Hanna Grene: It depends. I think depending on the management, the leadership, what part of the world we’re talking about, there are certainly leadership teams that have had the aha moment and said, “If I’m buying software to help me run the grid, it is digital infrastructure, not IT back office.” And so for me, I think I would encourage folks to think more about the evolution of we’re using technology to run a lot more of the core systems of how power and utilities companies deliver power to communities. And so technology is a lot, lot more on the CapEx side of the equation.

David Roberts: Hmm.

Hanna Grene: Technology’s playing a bigger role. Period. And that expands the tent beyond just an internal IT function, much more into a critical system that helps operate at all parts of the value chain. And so I do think when you click into that mindset and you’re like, whether it’s digital controls or AI or sensor that we’re pulling AI on top of, technology is gonna be a bigger and bigger and bigger part of how we optimize, how we operate, and how we do this with the resilience and safety that we need to deliver on as an industry.

And so if you accept that, and challenge you to find somebody who doesn’t see that as the road we’re all going down, we need to start thinking about software and AI as part of that core delivery and as part of that capital side of the equation. I’m an optimist. I think optimism helps you jump out of bed in the morning and go do hard things, and I love this industry, and I am an optimist about it.

And I have a lot more conversations about how we’re gonna use technology to support affordability and to help restore power faster from a storm, how we’re going to prevent the spread of a spark and identify fires before they spread, about how we’re gonna maintain affordability over the long run. I have a lot more conversations about how we use technology for that than I seen folks move pennies around.

It’s not to say it doesn’t happen, but we’ve got a lot to do in this industry, and I think the focus is on how we get it done.

David Roberts: All right, Quinn, any final words, any final advice to utility executives out there before we wrap this up on how to innovate faster and better?

Quinn Nakayama: Yeah. I wanted to reiterate what Hanna said earlier around, you have these ambitions that utilities have that will show itself up into the top-level metrics of how they are judging their performance over a multiple spans of years, and you’re gonna have gaps to those targets where, you know, a CEO or chief operating officer or the board of directors may say, “Okay, well, here’s your targets for the next five years.” And when you take a look at your budgets to be able to execute that, they just won’t be large enough to be able to hit some of those metrics, and so you’re gonna have gaps to targets. Great.

That is where innovation and technology lives, and that creates a beautiful conversation with all of the executives within your company. If you have this big gap to target, innovation and technology let us do the projects and the innovation required to be able to bridge that gap. And they’ll be very interested in that because, you know, they are looking at their targets that may be red or they may be amber for the next three years, and they’re scratching their heads and thinking, “Well, how do I do this by process alone?” And the answer is, well, technology is going to be the new process for you, so let us come in and let us do our thing.

Let us use our product development capabilities, let us use, you know, our startup mentality, our VC mentality, our venture process to be able to do this for you, and we can do it very fast. Let’s not do this in 5 to 7 years. Let’s do this in a year, less than a year. Can we come to market and get these really, really important areas for your business to be go back to green?

I think that’s where the beautiful internal partnerships can be had in creating a product development mentality and a chief technology type of capability within each one of the utilities. So that’s what I would say.

David Roberts: All right, Hanna, any final words?

Hanna Grene: If you own a process in your company and you aren’t stepping back and saying, “How would I totally rethink this considering the world has moved in three years since the launch of AI?” If you aren’t stepping back, and I mean, for me, this is so fun. It’s really an invitation. Engage with the smart people in your team, get in a room, grab a whiteboard, and think about how you would fundamentally rethink and re-run the part of the business that you operate. Because what we can do today, what is at our fingertips with AI, with the ecosystem of partners, it has changed really, really quickly, and that makes it exciting. So get creative and think about what you could do.

David Roberts: All right, well, we’ll wrap it there. We could talk about this forever. It is a hot topic, I’m sure, and will remain so for many years to come. So thank you two for coming on and sharing your perspectives.

Quinn Nakayama: Thank you. Appreciate it.

Hanna Grene: Thank you.

In the early 2000s, Ramón Méndez Galain was a particle physicist teaching at the Universidad de la República in Montevideo, Uruguay. At the time, the country was in a bit of an energy crisis — its plentiful hydropower was plagued by droughts, imported oil was $150 a barrel, and there were rolling blackouts — so it was considering building a nuclear power plant.

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Galain took a look at the proposal and concluded it was the wrong way to go — that renewables were a better option for the country. He wrote a proposal to that effect. The country’s president, Tabaré Vázquez, heard about the proposal and called him to offer him the job of energy secretary.

Galain took the job, and over the next seven years, Uruguay became one of the first countries in the world to almost completely decarbonize its power system, regularly running on 98 or 99% clean electricity. What’s more, the country retained public ownership of its power utility and its grid, while private capital funded the changes — something the big institutions like IMF and the World Bank predicted could not be done.

Galain went on to become Uruguay’s national director of climate change and its chief negotiator for the Paris Agreement before founding Asociación Ivy, a nonprofit that advises governments in the global south on how to redesign their electricity systems. Until recently, Ivy was working with one country at a time on a project-by-project basis, but in September 2025, Galain won a $4 million Climate Breakthrough award, which will allow Ivy to spread out and work with many countries simultaneously. His stated ambition is to reach at least 50 countries by 2035 and avoid on the order of two gigatons of emissions.

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It’s difficult to find another single individual who has had a greater influence on the spread of clean energy in the global south, so, I can’t wait to talk to him about Uruguay’s experience, what does and doesn’t transfer to other countries, how he tries to frame and sell decarbonization to other governments, and the role the global south plays in the larger decarbonization fight.

Chapters

• 00:00 – Introduction

• 03:09 – From particle physics to a nuclear proposal

• 05:46 – Taking the job as energy secretary

• 07:00 – The 2008 crisis: drought, expensive oil, blackouts

• 09:26 – Getting every party to sign the same plan

• 12:51 – Why climate was not the lead argument

• 15:42 – Attracting private capital without privatizing

• 20:22 – What a public utility made possible

• 23:06 – Planning a grid where wind and solar are the base load

• 29:26 – Thermal plants as insurance, and the last 2 percent

• 32:36 – EVs, smart meters, and building an electrostate

• 37:33 – Why bills fell less than generation costs

• 39:46 – What transfers to other countries

• 44:15 – Optimum curtailment, Colombia, and Haiti

• 50:51 – The political work, and the argument against the dominant narrative

• 56:36 – The Global South and the NDC as development catalyst

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Website - Podcast - Apple Podcasts - Spotify - YouTube)

• Ramón Méndez Galain (Ivy profile - Climate Breakthrough)

  • Ivy (Website)

• International Monetary Fund - Energy Subsidies

Company & Industry News

• Ivy - Climate Breakthrough Award 2025

• Ramón Méndez Galain elected REN21 President

• Uruguay’s Solar Decade: UTE’s Big Plan and EV Boom Explained

• Uruguay EV Sales Report: BEVs Surpass 40% Share

Related Volts Episodes

• Time to stop taking hydropower for granted?

• What’s going on with hydropower?

• EV charging for those without a garage

• What’s going on in electricity world?

Text Transcript

David Roberts: All right then. With no further ado, Ramón Méndez Galain, welcome to Volts. Thank you so much for coming.

Ramon Galain: Thank you so much for inviting me, David. It’s a big pleasure to be with you and with your audience.

David Roberts: Awesome. So let’s start with a story I’m sure at this point you’ve told a million times, but I thought, I’m guessing most of my listeners are not familiar with it. You were a professor teaching back in 2008. Tell us the story of how this sort of proposal for a nuclear plant came across your desk and kind of what happened next, how you ended up where you ended up.

Ramon Galain: Hmm. It’s a fantastic story, in fact, that yes, I told it many times, but every time I remember that and I’m really excited about what happened. I never imagined, you know, 20 years ago that I was going to be in the position I am right now. I never imagined that in life. Yes, I was just a university professor, a researcher, in fact, working in particle physics, working in subject that are far, far away from real world, people life.

David Roberts: Mm-hmm.

Ramon Galain: Because I work in trying to understand what happened in the first microsecond of the universe after the Big Bang.

David Roberts: Yeah. Right.

Ramon Galain: So because at that time, at the early time, universe was completely different than the one we know today. So I was really trying to understand the physics with many other colleagues all over the world. And yes, as you were saying in the introduction, I was perhaps the closest thing as a nuclear engineer and something like that because we don’t have nuclear engineers in Uruguay. We don’t because we didn’t and we don’t have nuclear power plants. But at that time, this was the first years of this century, and it was a kind of reborning of the nuclear industry because-

David Roberts: Mm...

Ramon Galain: more than 20 years passed after Chernobyl, and a global understanding that in principle we have learned from the Chernobyl lessons. Now we were ready in order to increase the participation of nuclear power all over the world. So yes, it was many people in my country, the president himself, were thinking about the possibility of going to nuclear. And so as a university professor and somewhere close to the subject- I understand that I can have to contribute to the discussion.

So I began to study the issue, to bring into my country experts from abroad, expert from nuclear countries. And then I rapidly understood that it was not that simple, that there is just one solution that solves all problems that you can have in a power sector, in the energy sector.

David Roberts: Mm-hmm.

Ramon Galain: So that’s why I began a journey in trying to understand all the issues in which are involved in a power sector, in energy business. And so in a way, I concluded I make up with different conclusions

David Roberts: And so I wonder, I mean, you drew those different conclusions, and then the president responded by offering you the job of energy secretary, which I’m sure must have come as somewhat of a surprise. Were you-

Ramon Galain: Big surprise...

David Roberts: scared, nervous to make that leap?

Ramon Galain: Yeah. I did something that no one has the right to do, that I took 2 weeks thinking what the answer should be, but they waited for me. And after these 2 weeks, I understood that, yes, it was possible for me to leave the... You know, these, when you’re in the academy sector, everything is very simple. I mean, in the sense that-

David Roberts: Yes.

Ramon Galain: you can dress whatever you, which way you want, you have a lot of freedom, you can think whatever you want to think, you can mistake, and this is the role of a scientist, to mistake and to think that, to try to find where different options exist. But if I was going to enter into the policy framework and the political sector, that things were going to change a lot of, for me. But in fact, I believed in the proposal I have written, and I had this tremendous appetite, you know, to try- what could happen, and I eventually accepted.

David Roberts: Okay, so at the time, just to give listeners kind of a little bit of context, at the time, Uruguay had a bunch of hydropower, which, as I understand it, depending on sort of the weather and the year, could swing anywhere from something like 40% to, like, 60 or 70% of the year’s electricity.

And then the balance was provided by imported oil, oil-fired electricity, which is just about the most expensive kind you can have. And so you had this combination of a drought, which had your hydro very low, and then historically expensive oil at the time. People might remember back then there was a little bit of an oil crisis. And so this was a crisis situation, and I’m wondering did that sense of crisis, is that part of why you were successful? Why you were able to do the dramatic things you were doing? Like, what was the sort of level of kind of panic at the time?

Ramon Galain: Yeah, absolutely. We’re living at the perfect storm because as you were saying, you were historically believing in our hydropower plant, but it was delivering less and less, and we are very sensitive to what is called the El Niño phenomenon. And when we have dry years, I mean, the hydropower generation can be less than half of the usual years. And yes, we are using oil because we’re trying to depend on gas, but we just had one single provider, which was Argentina. Argentina was having tremendous difficulty to supply their own-

David Roberts: Mm...

Ramon Galain: domestic demand, so it was not possible for them to sell us gas. And so we didn’t have that much options. We’re importing more oil, which was becoming more and more expensive. And so we were experiencing not only tremendous instabilities in the system, but also we’re experiencing lack of electricity at some moment and more and more expensive electricity.

David Roberts: Mm.

Ramon Galain: So it was really the perfect storm. And at the top of that, you know, the country economy was growing very rapidly. We’re growing at that time at 6, 7, even 8 percent per year.

David Roberts: Oh, wow.

Ramon Galain: And there was a very successful governments where the poverty was decreasing very sharply. Also, we were ended with not more than 8 percent of poverty in the country. The energy demand was growing and growing-

David Roberts: Mm...

Ramon Galain: with a very difficult energy mix.

David Roberts: Well, one of the most sort of fascinating, at least from where I’m standing here in the United States, sort of baffling aspects of all this is you came in a majority government. You had a political majority, but the president pushed you to basically generate political unity on this, to create a plan that every political party would sign off on, basically, so that these changes would be enduring and steady over time. And of course, I’m sure any country would love to have political unity to make their plans enduring over time. But how in the world did you get everyone from every side of politics to sign off on these very ambitious plans?

Ramon Galain: Well, this was one of the two or three most important issues that allows us to make this transition, because, yes, what is happening for the last 20 years in our Western democracies is that we’re going from one government to another government, and things change dramatically.

David Roberts: Yes.

Ramon Galain: And even, it’s even worse because the energy sector is, in a way, politicized and ideologized, which means that you put the ideology in that which is a technical and economical environmental discussion-

David Roberts: Mm...

Ramon Galain: which in fact has no meaning at all. So what I did is when the president asked me to lead a technical and political committee trying to figure out a long-term solution or long-term transition or a new framework for the energy sector in the country, my proposal was, let’s try to discuss what the benefits are for our constituencies, no matter if they vote right or left or center or whatever. I mean, what are the benefits of going to one direction or the other? And the crucial point was, let us not begin discussing about what we should do today, not even next year, not even during this government. Let’s try to imagine how we can think the country should be in 30 years from now.

David Roberts: Mm.

Ramon Galain: So we are thinking about 30 years in the future, everything becomes much more simple when we’re discussing. Because if you’re asking about what we should do now or next year, the o- your first thoughts are, and what am I gaining or losing in this direction? Should I have more and less power? Should I have more and less votes? Should I have more and less money?

But if you’re discussing about the future, the real future, you don’t imagine yourself 30 years in the future. I mean, it’s simple to discuss how you can imagine the country if you’re not in this imagination. So it was not that difficult to imagine the country that we would like to have 30 years in the future concerning the power sector, and then we make a kind of reverse engineering. So if we have to be in 30, you have to be in this point, where should we be in 25 years?

And when in 20, and when in 15? And then when we’re going back and back, it was becoming a little bit more difficult. But at the end of the day, if we have bo- want to face on this imagined future, then we have to take decision now. And this was the way that we built an overall agreement. But once again, the most important thing was that we build it according to the benefits of the new system we bring to our citizens, and this was the crucial issue.

David Roberts: Well, speaking of that, I’m curious what role, if any, climate change played in that discussion. Was that a big part of the puzzle, or were you focused more on just basic financial and security benefits. What was the sort of discussion like?

Ramon Galain: It was one of the most important point, but not the most important one.

David Roberts: Mm.

Ramon Galain: The point at that time, and now it’s much, much simpler, but at that time the point is that for any country, but particularly for a country, oil imported country, a gas import country, the most important was try to have the basis of our system based on our own national resources. Because if you have your own national resources, you don’t have to depend on fluctuation of energy commodity prices-

David Roberts: Right.

Ramon Galain: on decision of wars or whatever decision that you cannot take, but other takes for you, and you have to pay for the consequences of that. And renewables for us was for sure the best option, because renewables, you are not dependent on an energy commodity price. You are much less vulnerable to these geopolitical events all over the world and are your own national resources. So you are much more sovereign and much more independent, much more stabilized as an energy system. So when we build this agreement, in fact, we put together a lot of ingredients. One of them was climate, one of them, yes, was environment in general, but it was also economical issues, geopolitical issues, social issues-

David Roberts: Mm.

Ramon Galain: ethical issues even, and technological one. What we’re understanding in that moment, that renewables were ready to have their part in their share. We ended up with a much larger share than we’re expecting at the beginning. But in fact, we were based in a optimization of the power system according to our national characteristics. We had to prove, first of all, that renewables are the cheapest option. Today is very simple because today there’s no cheaper option than producing electricity with wind and solar. But at that time it was not that simple. It was not that clear at all. And of course we have to prove that it was possible to manage a system with a high share of variability, of variable sources like wind and solar.

David Roberts: Right.

Ramon Galain: Once again, today it’s absolutely proved that yes, we can do it, and we are the real proof because we have been doing this for the last 10 year. But at that time it was not that simple. So we had a lot of economical challenges, very difficult technical challenges, but also regulatory challenges and market design challenges. How to build a market which is appropriate for the characteristics of these new technologies that were emerging at that time, and now they are absolutely mature.

David Roberts: It gets into my next question, which is another fascinating aspect of all this, is how you financed this. Obviously, any big plan like this requires a lot of financing, a lot of money. And as I understand it, there was a lot of pressure from this, you know, s- international institutions, your IMF, your World Bank, privatized. You had one state utility, publicly owned utility, that ran the country’s grid, and as I understand it, there was quite a bit of pressure to privatize that utility and privatize the whole thing. You did not do that, and I think you had to push back to not do that. So talk about how you structured things so that you could attract private capital without privatizing.

Ramon Galain: Well, in fact, it was, we have a lot of challenges, of course. We were designing from the scratch. We had no experience to copy or to try to adapt, to try to understand from them. We were really, really invited. I mean, making a function that didn’t exist in the world, and in fact, we make a kind of agreement, and this was crucial. I mean, the agreement was not only in the political sector, it was also with the private sector, and the governance of the whole process was absolutely crucial because we share our vision, we share our benefits with the private sector, and we invited to have a public partnership with our public utility and bring in not only capitals, but bring in also knowledge, and bring in experiences, and bring in international contacts.

And we build a ecosystem, a transformative ecosystem where everybody was gaining, and it was crucial. It was kind of adaptive governance in the way we were all the time discussing, all the time having interaction, learning from each other, mistaken both from the public and private sector, and doing learning curves and trying to correct mistakes, and trying to discuss… because we built an option that was, in principle, the best for all of us.

And so we had all this overall national commitment in order to make this as a possible solution. And yes, I mean, we created something that was very interesting because something that you didn’t say so far, David, is that in fact, yes, we invested a lot of money. Yes, it was a lot of private and public investment, but the final cost was negative.

What do I mean by the final cost negative? I mean that the cost of electricity in Uruguay decreased by a factor of two after the transition. So it was real business, not a single subsidy in order to make it possible, not a single subsidy. Just created the appropriate investment conditions that were the most adequate in order to introduce the new renewable sources, which those conditions are completely different than the traditional one from the traditional that exist in all over the world power system.

And if you create these conditions, we made the proof that wind and solar are the cheapest option that we have today. And so the final cost of the electricity for the consumers decreased, and there were real option for investor to come. We received in total something like $6 billion investment in only 4 years, and 6 billion for Uruguay, which is one of the smaller economy in South America-

David Roberts: Yeah.

Ramon Galain: was 12% of the GDP. Now imagine-

David Roberts: Wow...

Ramon Galain: how much is the 12% of the GDP of United States. It has a lot of zeros, believe me. And so this was the amount of money that we got just proposing real business, no subsidized business, just making win-win solutions, and we proved it was possible. So that’s why this was a clue in order to attract a lot of investment.

Real business, real benefits, and talk, talk, talk, and talk, discussing and discussing, understanding each other, understanding how to build win-win-win-win solution for all the stakeholders, and having open ears, but at the same time, leadership. Because at the end of the day, we have to understand what everybody’s saying, we understand what everybody needs, but then you have to take decision.

And for that, public policies are crucial. The present power systems are not the ones we need in order to go through a transition, in order to take profit for the benefits, real benefits of renewables today. But if you make the appropriate changes, then there is an absolute explosion for the benefits for this new system that we can build today.

David Roberts: Do you think having the public utility was an important part? Do you think that was crucial to being able to succeed at making everyone succeed, everyone benefit? You think having the public utility in your hands was a crucial part?

Ramon Galain: It’s not mandatory. I mean, you can do the same with it in Uruguay in a system which is absolute and totally privatized. This is possible. But when you have a public utility, it’s much simpler because once there is a political decision that this is the direction to take, I mean, just discussing with the authorities of the public utility and making them to understand that it was the best for the country, it was just strategic decision.

It was not a competition of different stakeholders, each of them looking at their own pocket if there were more and less benefits. It was just at the end of the day, a political decision. And so, yes, it was simpler because we had new way of planning a system with high share of renewables. It’s much more complicated and much different than the traditional ones, and we needed long-term contracts. We tr- to transform completely the market design. The basis is that the public utility has long-term contracts with independent energy providers, and those contracts are coming from bids processes, very open bid processes with very open information.

David Roberts: Hmm.

Ramon Galain: So in this public to private partnership, in fact, private partners is competed to be in the market. They’re not competed in the market all the time, but they compete for the market. So they compete in order to have long-term contracts with the public utility, and this sharply decrease the risk perception by investors, so the cost of the money was sharply reduced. At the end of the day, this was the most important thing in order to decrease the cost because, you know, renewables, they don’t have as traditional energy production, they don’t have a fuel behind.

So the cost of electricity is just the cost of the money. The operation and maintaining costs are very low. There’s no fuel, so you just have to pay back the investment. And you have to pay back investment and practice a financial business, nothing more than that, then the most important is the risk perception for the capital cost.

And as we sharply decrease risk perception, having these long-term contracts with very clear understanding, very clear framework, very clear political agreement, long-term agreement, so this was the panacea for investors. And so that’s why they came a lot with a lot of money, but also they came with very low capital costs, and this was the most important key in order to decrease the cost of electricity.

David Roberts: Interesting. So my audience is full of grid geeks. We love the grid. We love talking about how the grid works. So as you say, a grid with a bunch of variable renewables looks and operates very different than one with traditional fueled power plants. But you did have, I mean, if you’re going to implement a bunch of renewables, I think it is very useful to have a giant amount of hydropower, right, to basically firm up that renewable energy. So I’m curious how you thought about structuring the grid from a technical perspective, and I’m curious how close the mix you ended up with was to the mix you imagined when you started out.

Ramon Galain: It was quite the one we imagined, but in fact, we didn’t know be- we were expected to be successful because we have to prove a lot of things that were not proven so far when we began on that.

Today, it’s very simple because today there are a lot of things that have already been proved. We have to prove that it was possible to manage not only the stability, the variability of wind and solar, but also the dynamic stability of the grid, which means some technical issues like maintaining the control of the frequency, of the tension. There were a lot of technical issues that wasn’t unsolved at that time. Today, they are solved, but at that time they were unsolved. So we have to imagine the thing we wanted, but we didn’t know if we were able to do it. So it was not a surprise, but it was something that we didn’t know from the beginning it was really possible to achieve.

So yes, the way you plan the system when you have this new technology, this new cheaper and more mature technology, which are wind and solar, the way we plan the system, the way you understand the system is completely different than the traditional one. In the traditional one, you have thermal power plants that you can put on and off as you will. I mean, perhaps not a nuclear power plant, perhaps not a coal plant. That has to be there for days or months because they have no flexibility, just a small flexibility. But the rest, you can put it on and off according to the demand. If the demand peaks, then you have to put more power plants, which are more and more expensive.

When the demand goes down, then you take out those power plant, but it’s just a human decision. It’s simpler. And if you have hydro, it’s fantastic. But then when there’s water, instead of using- paying for fuels, you just use water, which is free. Then it’s a perfect mix of hydro power with thermal power, what are called hydrothermal systems, as are beast that complicated, but they’re easy to manage in a way.

But when you have the variability of wind and solar, and if they are the cheapest one as they are today, then you have to rethink everything. In our case, our base load in Uruguay is that… is not hydro, is not thermal. Base load in Uruguay is wind and solar. And when I say that-

David Roberts: Hmm...

Ramon Galain: the base load is wind and solar, what I mean is that the total installed capacity of wind plus solar equal the peak demand of the country. So this means that when there is enough wind and enough sun in the country, and this is a nature decision, it’s not our decision, but when this happens, then 100% of electricity is just wind and sun, nothing more than that. And on that time, of course, we don’t use thermal power plant, but we don’t even use hydro because hydro, the role is not as base load, the role is not as peaker, the role of hydro is to follow the variability of wind and solar.

David Roberts: Mm.

Ramon Galain: So it’s a completely different role that the way we use hydro power plants all over the world. So hydro are there to provide a big storage, a big battery in the system-

David Roberts: Mm...

Ramon Galain: and to follow the variability of wind and solar. So this is a completely different issue. And what happened about thermal power plant, do have thermal power plant? And the answer is yes, we do have thermal power plant, but we have them in the way that you have the insurance for your car. When you have a car-

David Roberts: Mm...

Ramon Galain: you pay for the insurance, but you pay the insurance in order not to use it. You just pray not to have to use the insurance, but you know that you have to pay it just in case.

So this is exactly the role of thermal power plant in our system. We pay for them to be ready all the time just in case, but we pray for not use them. So and when I say pray, in fact it’s just one of the most important words in this new kind of system, which is planning. Planning is crucial. We have developed a new planning, completely new power planning platform in which not only we plan the expansion according to the lowest CapEx and OpEx of the new technologies within the- in order to decrease the cost, but at the same time that we expand or- and we found the optimum complementation of technologies, we also at the same time make a simulation of the operation.

At this time step of the evolution of the system, we make a s- uh, simulation of the operation of the system. So there is some technology which is missing for some reason, then we prove to add this technology and once again to simulate the operation of the system in order to understand if we need more grid forming or compensator or more spinning reserve or whatever. So at the same time, we are building the lowest cost system which is operable. You can operate at any kind of weather conditions or water condition or rain condition. So it’s a pure stochastic model, which is based on the probability of occurrence of different probabilistic scenarios for the future of your system.

And then you define which is the best complementarity of this technology. And so this planning is the one which is defined. You know what is the best solution today? The best solution is let’s try to put as much as wind and solar as possible because they are the cheapest option. And all the rest of the system, beginning with hydropower, if you have the chance to have them, or batteries or as the last resource thermal power plant, all the rest which are more expensive, their role is just to follow the variability of wind and solar. They are the queen-

David Roberts: Well, as you say, you have these thermal plants that are sort of mostly insurance, but when you have a low hydro year, say, or low wind and solar year, those thermal plants do ramp up a bit. Really, so like the clean energy percentage on some years is down to, you know, 93% or 92%. Sometimes it’s up to 99%. I’m curious, 2 questions about that. One is, have you replaced all your oil-fired plants with gas plants at this point? And two, is there any prospect or plan to eliminate that last bit of fossil? Is there anything else that you can imagine playing that role that won’t produce greenhouse gases? Is there any way to eliminate that last bit?

Ramon Galain: Absolutely. So the 2 questions are absolutely fantastic, David. First of all, when you are using 1% or 2% of electricity produced by some kind of fuel, it doesn’t matter what the fuel is, because-

David Roberts: Yeah...

Ramon Galain: at the end of the day, it’s only 2%, or 2% not only of the emissions, but only 2% of the cost.

David Roberts: Mm.

Ramon Galain: So yes, we are still having now the 2 possibility because we have diversified our providers. So we have gas, we have oil. But no matter what we use, I mean, it’s just a very small amount of the total cost of electricity. So the goal is just to use fuels as less as possible. If you use fuel as less as possible, no matter what the fuels are.

And so if you’re talking about emissions, what I can tell you is that in fact, our per capita emission, our per kilowatt hour emissions are something like 40 times smaller than the world average. I mean, I can give you 2 answers to your question. The first answer would be when the rest of the world is going to be 40 times smaller, then let’s talk about our last 1, 2%. But this-

David Roberts: Yeah, it’s a good problem to have.

Ramon Galain: Yes, of course. But in fact, this is one possible answer to your question. The other possible answer is that in fact today, what we are having in Uruguay is the less cost system. This means that could we be 100% renewable? The answer is immediately yes.

David Roberts: Hmm.

Ramon Galain: We could be 100% renewable, for example, adding batteries. But adding batteries, instead of having this last chance of having the last 1, 2, 3% of thermal power in the system would be more expensive.

David Roberts: Hmm.

Ramon Galain: So it is better just to have the old thermal power plant because we never had to build more power plants. In fact, we have decommissioned thermal power plants because we didn’t need them anymore.

David Roberts: Hmm.

Ramon Galain: So we have a few of them just there as this last insurance recourse. And so in fact, we could replace them by batteries, but as we have already paid back all this investment of thermal power plants-

David Roberts: Oh, right, right.

Ramon Galain: it’s better just to use them, you know? So yes, perhaps our plans shows that in 5 years from now we could be 100% renewable. But once again, it’s a kind of combination of different measures of emissions, of geopolitics, of different visions, and one of them is also cost

David Roberts: Right. Well, speaking of that, speaking of batteries, Uruguay is also, I think, setting itself apart from the Global South for the speed of its adoption of EVs.

Ramon Galain: Yeah.

David Roberts: It’s frequently being called the Norway of the South because it’s ramping up EVs really quickly, and I’m wondering if one of the opportunities posed by EVs is an EV fleet is a giant distributed battery, among other things. If you can hook it up to the grid and manage it correctly, I wonder if that might help you squeeze out some of those last bits of fossil fuel.

Ramon Galain: It will. No sure that it will. I mean, when you are an fossil fuel importer, as we are in Uruguay, and you have a 98, 99, 97% grid in your system based just on your own autochthonous resources, then you have all the benefits in order to go to EVs because-

David Roberts: Yeah...

Ramon Galain: this is the best for your sovereignty, for your economy. I made a calculation once, and I put that to my student university, which is a very simple calculation. What if, magically, 100% of our fleet would go from combustion engines to EVs? What if? And if this would happen, then we would decrease by a factor of 8 the cost of the energy to everything in the country because we will go, yes, about a factor of 8 if we replace imported derivatives oil with nationally produced green electricity.

So it is a huge amount of possibility that you’re having and huge impact in your economy. In our case, it will be a decrease of about 3 points of the GDP if we were able to go magically from 100% of our fleet from combustion engine to EVs. Yes. That’s why, for example, last month, we sold more EVs than gasoline cars.

David Roberts: Huh.

Ramon Galain: Yes. EVs were something like 43%, more or less, in total in the last month, and gasoline was about 41 or something like that. The rest being the diesel and other things. So there’s an exponential growth. So this is the new sold car, but in the total fleet we’re still not less than 4 to 5%, which is increasing very rapidly, but we are still at 4 to 5%. So yes, if we are able to have more than 15 to 20% of EVs in the fleet, then things will change dramatically. Because another interesting thing in Uruguay is that 100% of our consumer have intelligent meters.

David Roberts: Ah.

Ramon Galain: With intelligent meters, we invested heavily because when you have- trying to build an electrostate. There are many petrostate, but we are trying to build an electrostate. An electrostate means that you have a lot of other possibilities. One of them is the one that you are saying, is that yes, for example, I can give a very, very quick example. I have an EV for the last 3 years now, and I charge it during night because during night there is much more wind-

David Roberts: Mm...

Ramon Galain: than during day. And of course, during night there is less consumption. So during night, the electricity cost is much lower than during the rest of the day. So I charge my car from midnight to 7:00 AM, and so the cost in order to charge fully my car is only $4. And with $4 I made 500 kilometers, 300 miles. Okay? So this is what you can do when you take profit of fully renewable power system.

And so the future I could do it now, but it’s not ready yet in the country, that I can charge my car during the night, during the mid- during the whole night. Then I go to work, whatever I want to do, and when I go back at my place at 6:00 PM, 7:00 PM, which is the peak on demand in many m- with the high air conditioners and different things, then I plug the car in order to sell electricity to the grid.

This is absolutely perfect, and this is the kind of things that you can do if we have these intelligent meters. There are much other things that you can do when you have intelligent meters. Just to give you an example, if you have to irrigate a field, if you are a food producer and have to irrigate a field, you have to bring your plants a certain amount of water in a week, let’s say.

But you can-

David Roberts: Right...

Ramon Galain: irrigate and you need to irrigate, let’s say 40 hours during a week. But which 40 hours-

David Roberts: Right...

Ramon Galain: you have to irrigate? So let the utility to decide which are the, those 40 hours that you’re going to irrigate, and let’s connect automatically, and that’s when utility are having excess of renewable electricity, of uncontrolled electricity, and with less demand. So this is the moment that you are going to irrigate your field. And this you can do it automatically using intelligent grids and intelligent meters. So this is the kind of things that you can begin doing when you have such kind of new systems.

David Roberts: Okay. I have one more question about Uruguay, and then I wanna talk about your work with other countries. But final question, which is, as you say, you cut the electricity generation costs by 50%, over 50% at this point, which is remarkable, but electricity bills to consumers only fell by about 20%. So what’s happening to that money? Where’s that money going?

Ramon Galain: What happened in Uruguay is that in fact, differently what happened in other countries, is that the government and the finance minister uses the power grid and the power utility as an ATM. This means that there is indirect subsidy going from the electricity consumer to the rest of the economy.

David Roberts: Ah.

Ramon Galain: Because the minister used these efficiency increase of the corporate of the utility in order to have more money for public policy. At the end of the day, you know, it’s a public utility, so the owner is the government at the end.

David Roberts: Right.

Ramon Galain: The shareholders are the citizens. So the owner of utility uses this as source of incomes for public policy. So in fact, this has nothing to do with energy decision. It has to do with a economy decision in the country, and we need a redefinition of the fiscal platform, the fiscal structure of the country, and this is a decision that’s...

I used to say that one of the worst, my worst day, I’ve been Secretary of Energy for 2 consecutive presidents during 8 years, and one of my worst day was when I was about to finish the job and my colleague, the Minister of Finance, will say, “Fantastic job, you, Ramon, you did a fantastic job. Thank you so much. But then we need to leave you only part of the win you got.” “I’m going to take 80% of that.” So this was a very bad day for me. Then I understood that at the end of the day, what, this was the best for the country because at the end of the day, the most important point is the cost decrease.

What the country makes, the economy makes with this money is just as soon as it begins in the national economy, well, that’s good. There’s nothing to bury.

David Roberts: Right, right, right, right. You’re, have been pivoting recently to trying to basically help other countries in the Global South follow this path. And I know you’ve had this question a million times too, but in a lot of ways, Uruguay was just perfectly set up to make this transition.

It had a lot of hydro to use as that big battery, and the competitor to renewables was $150 a barrel imported oil, which is about the best enemy you could pick. You know, a lot of other countries that I know you’re talking to might not necessarily have that much hydro or any hydro to serve as that battery, and they might be- the competitor might be cheap gas rather than expensive oil.

So a lot of other countries are not gonna have those sort of natural advantages starting out. So I’m sort of curious, like, what parts of the Uruguay model transfer to other countries? What is it exactly you’re trying to encourage other countries to do? It can’t be exactly what Uruguay did. So what is it that you’re trying to sell them on?

Ramon Galain: Thank you so, so much for that question because, in fact, one important thing is that you have new technologies. Thanks to climate change, we have developed new technology. But then the new technology are there. We cannot avoid the fact that we have now wind and solar which are much cheaper than all the rest in all markets, not just in Uruguay, but in all markets. They’re the cheapest option today all over the world, and that they have the matur- technology maturities in order to make it possible. So this is worldwide. It’s not just for one single country.

And now let me, in a way, correct you if you allow me to say that, one thing that you say. When I’m saying that we decrease by a factor of 2 the cost of electricity, it’s not compared to 150-dollar barrels. It’s compared to 80-dollar barrel, and even compared to a much cheaper gas. If we, if I compare to the 150-dollar barrel, then I decrease the cost by a factor of 5.

Perhaps the most interesting point is the absolute point and not the comparison. The absolute point is that today we produce electricity by only 5 dollar cents per kilowatt hour. This is the cost, the average cost of all of the electricity we produce in the country. Not the bill, the cost to produce electricity.

David Roberts: Mm-hmm.

Ramon Galain: And this is a very low cost no matter where you are all over the world.

David Roberts: Mm-hmm.

Ramon Galain: So this is just one specific position I wanted to make. But yes, if we compare a country with hydro with a country with no hydro, some things are different, but not the most important point.

And precisely not now that we have batteries. The battery cost has decreased by a factor of 10 in only 12 years. This is a dramatic change, and you c- have seen, for example, what is having many, many system today in many power system that including batteries even with cost of last year or 2024 cost are already cost, make sense from the cost point of view.

So today the point is that we have different options, and I can tell you what we’re doing today. I created a nonprofit which is just financed by philanthropic funds, nothing more than that. We don’t have any hidden agenda or whatever. We are just financed by philanthropic funds that understand that is the Uruguayan experience is very interesting for the rest of the world, so we’re trying to share this experience. It’s a very competitive team which has a lot of technical knowledge, but also-

David Roberts: Yes...

Ramon Galain: the political expertise on how to deal with these kind of changes.

David Roberts: Mm-hmm.

Ramon Galain: And all of this based on a success story, which is Uruguayan case. So it’s a small team. We are not more than 30, but we are working now very heavily bringing, first of all, information to decision-makers and to the private sector in many countries in the Global South, trying first of all to simulate for them what will be the consequences for them if they go to the optimum definition of the system, not just based on political climate decision or goals, just on the optimal cost of the country using in a wide way, in a smart way, what the present technologies are right now.

David Roberts: ‘Cause as you said in Uruguay, the basis is to use wind and solar, the cheapest sources, as kind of the base load, and then everything else is about how to compensate for the rest.

Ramon Galain: And one of most important thing is that we’re trying to show in other countries that everything depends on a very heavy planning technology or planning definition, then in Uruguay is that we have the optimum curtailment.

Yes, there is curtailment because it’s better sometimes we have more wind and solar than we need because in order not to have less in other moments, and in order not to have to turn on a thermal power plant, which are more expensive. So there is that trade-off between having more and less curtailment, and what we have is the optimum curtailment. So the man pays for this curtailment because they know that this is the optimum to optimize or to minimize the total cost of the system. So with this in mind, we optimize system, and in large majority of the system, we are obtaining more than 80% of renewables in the mix as the optimum definition.

And if we made long-term intel of what is going to be the decrease of the cost of the technologies, and then we can go for much beyond 90%, even in a country without hydro. But many countries have at least 20% of hydro. And just a small hydro without a small battery, I mean, without a small dam, without a small power, water reserve, even this is just enough because the ramps that you have to manage are not month ramps. You don’t have to storage water for months, not even for days. You have to store water for hours. Because if you want to follow the variability of wind and solar, you just need to storage water for hours, for 12 hours, nothing more than that. And so it’s not that big hydropower plants neither. It’s just simple hydropower plants, and that-

David Roberts: Mm-hmm.

Ramon Galain: you have in many countries. For example, now we have worked heavily in Colombia. For Colombia, the optimum system, it was 95 to 96% of renewables in the mix because they have hydro. If you go to other countries, perhaps it’s not 95, 96, or 99, it’s perhaps 80%. But everything rests in the way you use the system.

So even if just one country is going to have its unique way of going, not to the transition, but just to optimizing the system according to the new technologies that are available in the market, though even if every country is going to have a different solution, a different optimum, there is a recipe which is the Uruguayan recipe, if you allow me to put it in this way, which can be repeated in any country all over the world. And the most important thing is how you plan the system, how you operate the system, how you remunerate the system. So this is the big difference with the traditional power system. So what the first thing to do is the planning. When you have a plan, you define which is the optimum combination of each technology needed in order to decrease cost and to have resource adequacy.

So you bid, no matter if it’s a public utility, a private utility, it’s a pool of utilities, it will no matter how the offtaker organize themself, but the offtaker, they bid not to have a short-term energy market, but they bid long-term contract. So the recipe is going from short-term energy market to a long-term capacity market. And so with that, you have long-term contracts, and this is the way to decrease risk perception by investors. And if you decrease risk perception in this system, which are mainly based in paying back money because there is no fuel behind, so this is the recipe in order to decrease cost. And this recipe, you can share it in any country, no matter if they have hydro, no matter of anything else, so.

David Roberts: And you’ve said that, I just wanna underline it, you think that any of these countries you’re dealing with, any country in the Global South can get to at least 80% renewables with proper planning and long-term commitment?

Ramon Galain: I say that any country in the world if they have today more or less reasonable wind and solar, and in the future with the advancement of the technology, any country in the world, if they make the appropriate system, can be, yes, at least 80% renewable.

David Roberts: I know you’re still relatively early in this work, but do you have another success story, another country that’s sort of taken you up on this that’s-

Ramon Galain: No. I can tell you 2 very completely different markets. Colombia is one of them, which they have hydro, so in there is, I would say is simpler. And I can tell you another example where we made a simulation, which is Haiti.

Haiti, it’s a very poor country, but they have wind. Mostly they have sun. They have a fantastic sun, and for them thermal power is expensive because they have to import everything, and so this is expensive. And for them, with the present cost of batteries, it’s better for them to have as much solar as possible with batteries, and with that, they have the lowest cost today. With that, they can have even 90% of renewables in the mix, and this is the optimum cost for them. So this is an example of a country with a very interesting sun, with very solar radiation. And so yes, present cost of technology, if you put them, if you combine them in the appropriate way, then it worked.

This is the most important. And once again, it’s not only the fact of cost, it’s the cost stability. It’s the economy stability.

David Roberts: Yes.

Ramon Galain: Remember what happened in your country when there was the Ukrainian war, the beginning of the Ukrainian war, 10% of inflation. So in Uruguay, I can tell you which is the cost of electricity today, tomorrow, in a year, in 10 years from now, because we don’t depend on any kind of wars or invasion or whatever. Just paying back an investment. So I can tell you from day zero, which is going to be the cost, because I just have to pay back an investment. Nothing more than that.

David Roberts: As you say, you can do these simulations for other countries, and you can advise other countries technically on their optimum systems.

Ramon Galain: And politically.

David Roberts: Well, this is my question. Like, I’m guessing in many cases, the reason there hasn’t been more progress in other countries is not technical doubt, it’s politics. In a sense, the political unity you generated in Uruguay is kind of the magic sauce here that’s missing in other places. Are you also advising on that? I mean, I don’t even know what that would look like, but how do you try to generate political unanimity in another country?

Ramon Galain: Absolutely. Absolutely. Because the first point is that just to simulate which is the optimum, and then to show that not only to the authority, but also to the private sector and to stakeholders, et cetera. But then the real work begins. Then-

David Roberts: Yeah...

Ramon Galain: the question is, and what can we do with this? And now we have this information, so what are you going to do? And so the second point is that your regulatory framework, your market design is not the most appropriate in order to take advantage of this new possibility of the new technology. Because of course, the old power system all over the world has been built according to the characteristic of thermal power plant.

David Roberts: Yeah.

Ramon Galain: And that’s fine, because till a few years ago, they were the best solution we have. So I’m not at all against thermal power plants or fossil fuels, but the point is that now we have new technologies.

So what can we do? We have to face it. So after bringing information, we help them understand what are the regulatory and the market design change they need to make. And after that, we help them in order to make this change possible. Of course, we have to deal with different stakeholders, and we have the incumbents, and we have to show the incumbents that there are national interests that are perhaps greater than theirs, and we have to create coalitions in order to make it possible. And then at the end of the day, the most important is for decision makers to make the political and social cost of doing nothing becoming unacceptable. And so this is the point. And so this is the way that you create, when the political system understand that this is the will for the constituencies, that’s it.

David Roberts: If you had to identify one country that you think is most likely to follow Uruguay’s example, the soonest, what country do you have most hope for at the moment?

Ramon Galain: We are just beginning. I mean, the first stages, I can tell you that there are at least 20 countries that want to work with us. We are just beginning the work in many of them.

And so I still cannot tell you, for example, that yes, Colombia could be the next Uruguay for sure. I can tell you that a small state island could also be crucial. For example, Jamaica, we’re beginning to work in Jamaica because in a s- for an island country, I mean, the cost of thermal power plants is so heavy for them because they have to import everything that that’s... Well, not Trinidad and Tobago, they’re safe. But the regular state island where they don’t have fossil fuels, the cost of fuels are very expensive. So there are now with the present cost of renewables and batteries and the new technologies, they are perfect example to be at least 90% renewables, and this will be the best for them.

But the point, of course, is that we still have a dominant narrative denying the truth, denying, saying, “Oh, is that possible to deal with the variability of wind and solar? Oh, but if you put batteries, it’s more expensive. Oh, but what happened with the spinning reserve and what happened with the stability of the dynamic stability of the system? We don’t have to manage that.” And what I used to say is that the human engineering has put a man in the moon. You, America, has put a man in the moon 50 years ago, and you are trying to convince that this human engineering is not capable to dealing with variability of wind and solar. I mean, we’re crazy.

But this is the point. The point is that we have a dominant narrative, and we are living in an era of different truth. And to separate what is the truth or is not the truth, this is something which is different even for decision makers.

And one last point, I’m not at all against the oil and gas industry at all, but we have to accept something which is very important, is that subsidies to fuel oil and gas industry is as high as $1.4 trillion per year. And this is not me which is saying that, is not the International Renewable Energy Agency is not Greenpeace. This is the International Monetary Fund, which year after year sending a report saying which is the amount of the subsidy, direct and indirect subsidy to the fossil fuel industry. And so this is something we have to take into account, that we have built an economy which is more and more based in subsidies to the incumbent system.

If you want to take profit of the new possibility, of the new technologies, of the new costs, of the new maturity of the new technologies, then you have to make changes. And this is on the profit of all of us because we are going to avoid all the heavy subsidies that we’re having today for the old fossil fuel industry.

And this is something that we have to understand also. We have to change many variables in the system. We have to change powers in the system, in the old system, I mean. And this, of course, takes some time. It’s a cultural change at the end of the day. But well, at the end of the day, as you were saying in America, it’s the economy, stupid. So at some time the economy will win. And now, once again, the driver for the transition, even if I’m a climate guy, the driver for the transition is no longer climate. It’s the economy. That’s it.

David Roberts: As a final question, this sets me up well for my very final question, which is sort of how you think about the role of the Global South in all this. I mean, in some sense, if you’re just look at it through a climate change lens, the total climate emissions from the Global South is still relatively small. I mean, it’s a rounding error compared to what you get from the US and China. So in a purely climate way, if you wanna just reduce emissions, it makes sense to go after the US and China.

But I wonder it seems like what you’re also offering these countries in the Global South is not just reduced emissions, but something like greater sovereignty and energy independence, and a kind of resistance, resilience against an energy colonialism, something like greater independence. Is that what’s most motivating you here? I’m curious about your mix of motives in working with the Global South specifically.

Ramon Galain: It’s exactly my claim. This is exactly my claim. My claim is that for Global South country today, except for a few big oil producers, but even Colombia produce oil, gas, and coal, but even for them it’s better to go to renewable because they increasingly shifting to a new economy that doesn’t exist in their country.

Look, in Uruguay, we created 50,000 new jobs. 50,000 new job for a country with only 3 million people is something like 3% of the total labor force of the country. So once again, you know, which is the labor force of the United States? So imagine what is 3%, it’s more than a million people. Okay? So this is the size of the impact for your economy of take- giving a place for this new economy. So yes, today this new power system are not just because of climate change. Climate change is the consequence of that mitigating climate change is the consequences of using the benefits of having lower energy, more independence, more human natural resources, more labor force, more work developing the country, more development.

When we voted, when we created those NDCs, nation determined contribution, was the base of the Paris Agreement, the C was commitment. 11 years ago, we have to commit, it was an obligation in order to avoid fossil fuels, in order to go to renewables. Today, to be NDC means national development catalyst. Making an NDC is making a catalyst for the development of your country. I mean, at the end of the day, we used to talk about developed and developing countries. Today we are all developing countries. We have to, all have to develop a new economy. The new economy is there, but we have to develop it, and there are huge opportunities in this renewable-based economy.

But you have to understand that. And yes, of course, I work in the Global South because I understand that there are a lot of much more improvement that we have to some way, quote, “suffer” decision taken in the Global North. So yes, for us, it’s having much more independence, has much more sovereignty, much more possibilities of developing.

David Roberts: Awesome. Awesome. Well, that sounds like a great place to wrap up. This was exactly as fascinating as I expected, Ramon. Thank you so much for coming on and walking us through it.

Ramon Galain: It was really a big, big pleasure, and please keep in touch, keep in contact.

Charging an electric vehicle at home is incredibly easy and convenient. Charging an EV almost anywhere else is … less so. If you live in a multi-family building, if you’re in a rental car, if you’re on a longer trip away from home, you’re in a bit of a crapshoot. More public chargers actually work these days than in the dark days of five years ago, but there are still plenty of duds, and even success remains a somewhat grim and dutiful affair. Chargers are often plopped on the edge of big parking lots, exposed to weather. Best case, there’s some kind of strip mall across that parking lot.

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If you fuel up a gasoline car, you can, at a minimum expect to find a working pump that is sheltered from the elements and attended by a place to kill a few minutes and get a snack or go to the bathroom.

Could EV charging stations be the same? That’s the bet IONNA is making. IONNA is a joint venture owned by eight major automakers — BMW, GM, Honda, Hyundai, Kia, Mercedes-Benz, Stellantis, and Toyota — that builds and operates public DC fast chargers. The idea is to pair high-powered, reliable, accessible chargers with amenities like canopies, restrooms, food, and lounges. At least in aspiration, it’s a modern version of the gas station.

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Today I’m going to talk with CEO Seth Cutler about the economics of charging EVs during a market slowdown, in a shaky economy, and what it might mean to actually enjoy charging an EV in public.

Chapters

• 00:00 – Introduction: can public EV charging be as reliable as a gas station?

• 02:30 – Public charging’s four phases, and IONNA’s phase-four bet

• 08:17 – IONNA’s origin story

• 09:55 – Scale, footprint & site strategy

• 11:52 – Rechargery @ vs. freestanding: the two site formats

• 18:45 – Can DC fast charging make money? Unit economics

• 21:29 – Demand charges & why fast charging is expensive

• 23:57 – Getting power: permitting, interconnection & utilities

• 29:18 – Site design, amenities & the monetization question

• 34:14 – Regional site customization: the gas station turned bakery

• 36:35 – The charging experience: apps & Plug&Charge

• 39:03 – Reliability strategy & metrics

• 42:47 – Headwinds: the EV market downturn & policy risk

• 46:54 – Business model, profitability & the IONITY comparison

• 50:09 – Geographic rollout: the chicken-and-egg problem

• 54:07 – Competitive position vs. Tesla

• 56:37 – Closing: vision, fears & timeline

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Podcast - Apple Podcasts - Spotify - YouTube)

• Seth Cutler (IONNA Leadership Bio)

  • IONNA (Website - LinkedIn)

• Other Orgs & Programs Mentioned

  • NEVI, the National Electric Vehicle Infrastructure Program (FHWA Fact Sheet)

  • IONITY (Website)

  • Electrify America (Website)

  • PG&E Flex Connect (Program Fact Sheet)

  • Tesla Supercharger Network (Website)

  • IRS - Alternative Fuel Vehicle Refueling Property Credit

Company & Industry News

• Ionna accelerates U.S. EV charging buildout

• IONNA expands in Florida, brings gas station reliability to EV charging

• A new way to fix grid bottlenecks for EV charging: flexible connection

• Why grid flexibility is now essential, and how PG&E is delivering it

• GM - IONNA opens its first Rechargery in Apex, North Carolina

Related Volts Episodes

• How to cram EV fast chargers into tight urban spaces

• America’s flagship automaker enters the home energy market

• EV charging for those without a garage

• EV charging for urban neighborhoods

• Making sure electric vehicles help rather than hurt electricity grids

Text Transcript

David Roberts: All right then. With no further ado, Seth Cutler, welcome to Volts. Thank you so much for coming.

Seth Cutler: Yeah, thanks for having me. Looking forward to talking with you.

David Roberts: All right. So before we get to what you’re calling public charging 2.0, let’s talk briefly about public charging 1.0. You were the chief engineer for Electrify America, which was Volkswagen’s sort of big bid to build a nationwide network of EV chargers. This was in 2018, 2019. Not to blame you for all this, but I think it’s safe to say when a lot of EV owners think about their negative experiences at public DC chargers, Electrify America is kind of towards the top of that list. A lot of those just ended up not working or working inconsistently or being a pain in the butt.

So maybe just tell us to begin with, what went wrong with public charging 1.0? What are the problems we’re trying to fix here?

Seth Cutler: Yeah, I look at public charging as actually four phases. And so I’ve been in the industry going on quite some time. Started my career with General Electric, ran GE’s charging business back in 2012 to 2017. We were focused on home charging and, and public L2 charging at the time. To your point, I was with Electrify America, I was with EV Connect, and now with IONNA. And if you look at where charging infrastructure started, you know, back in the launch of the Nissan Leaf, there was a need to put out, you know, public DC fast charging back in, you know, 2010 even, to support a vehicle that could only go 70 to 80 miles on a single charge.

David Roberts: Right.

Seth Cutler: And so at that time, it was about how do you just put chargers in the ground, irrespective of where they might go, put a single node in a single parking lot, irrespective of the amenity or whatever might be adjacent to it. So that was what I would define as phase one, was really the advent of public fast charging and just getting them in the ground. Phase two was really around, to your point, the build-out of networks. And I think, you know, Tesla obviously was first to market to go do that.

David Roberts: Mm.

Seth Cutler: EVgo was, you know, heavily focused at the time inside of cities, but we really wasn’t looking at connecting the cities. And Electrify America, which I was a part of early on, was really looking to be the answer to Tesla at the time back in, you know, the 2017 timeline.

And obviously, Electrify America brought, you know, high-powered charging, even higher powered charging than Tesla had done at the time, liquid-cooled cables, 800-volt architecture. So, you know, early technology into the market, which was then followed by what I refer to as phase three. Phase three was really around reliability and uptime. And when you look at, you know, kinda the post-COVID world, people driving again, electric EV adoption rates picking up.

David Roberts: Mm-hmm.

Seth Cutler: All of a sudden, now you had all this infrastructure out there that had been proliferated over, you know, almost 10 years at that point. And people found that at high utilizations, you had a lot of queuing.

A lot of queuing meant that the reliability and uptime that maybe, have been acceptable in 2017, 2018, was no longer acceptable when people needed to charge and a six-bay site became a two-bay site at that time. And folks, you know, either didn’t have the supply chain to support it or had never built out the operational processes in terms of being able to support that level of uptime to meet the needs of drivers.

And I think by and far, I’d say the industry has come a long way in 2026, 2025, than where it was in 2020 and 2022. And that brings us to kind of this current phase that I look at it as phase four of the market, and this is really where IONNA is playing, which is how do you think about the experience beyond just reliability?

You know, and the analogy I always give is… You know, folks typically don’t look to see which restaurants will cause food poisoning. They— It’s kinda taken as a, uh... kinda like the table stakes of, like, if I go here, I’m not gonna get sick.

But what they’re looking for at that point to judge where they eat is what’s on the menu, what’s the price—

David Roberts: Right

Seth Cutler: what’s the ambiance, what’s the experience I’m gonna have at that restaurant? And that’s really what we’re trying to do, is say, “Listen, the chargers have to work every time, all the time, on the first try.” That’s what we’re focused on. But we wanna make sure that the experience that they have beyond that is bar none a really great experience. Canopies, trash cans, squeegees, access to bathrooms, access to amenities, unique experiences. You know, we partner with Amazon in certain locations. So that’s how I look at the last, honestly, 16 years of charging in the United States and where, and where we are, and where IONNA is trying to play.

David Roberts: I’m sort of curious, has anyone, has you, IONNA, or anyone done any kind of sort of systematic polling or surveying of EV owners and asked them what they most want or expect out of these things? Like, I mean, obviously reliability, I think, but I wonder, like, what else do people want or are they asking for or are they complaining about? Do we know with any certainty?

Seth Cutler: Yeah, we’ve done a, we’ve done a lot of market research and market studies early on, and we continue to poll our customers. You know, in fact, we just finished June with, I think, five or six what we call customer clinics, where we went out and interacted with drivers at our sites.

David Roberts: Hmm.

Seth Cutler: ‘cause it’s one thing to interview drivers before you’ve deployed assets and talk to them of what would be interesting.

David Roberts: Right.

Seth Cutler: It’s another thing to do it in a parking lot with your equipment on site. And so, you know, we’ve gotten, we’ve gotten just from that activity alone, you know, I think nearly 1,000 responses from direct interaction with our employees and drivers. But look, I think it’s, there’s a lot of common themes, right? You know, so beyond reliability, it’s gotta be affordable. They’re looking for safety, you know, good lighting at night. They’re looking for canopy coverage where possible. They’re looking for what we refer to as car care, trash cans, squeegees, other things.

David Roberts: Hmm.

Seth Cutler: And they’re looking for amenities. And so, you know, that’s where we’ve been really focused is how do we make sure we can deliver all those things where possible? You can’t always provide a canopy at every site—

David Roberts: Hmm...

Seth Cutler: for lots of different reasons, but right now, 30% of our sites roughly have canopies on them, the ones that are deployed, and there’s more coming, right? We try to have this do loop of deploy, learn, test, deploy, learn, test over and over again with our drivers.

David Roberts: Well, talk about just IONNA a little bit then. Sort of like how did it come about? I guess, like whose idea was it? What’s the idea behind it? And then what’s kind of the vision? What’s the big idea?

Seth Cutler: Yeah, so look, the O- the OEMs founded the company. I think there was, there were talks back in 2015, 2016 about developing a joint venture in the US.

David Roberts: Hmm.

Seth Cutler: Obviously a Volkswagen, launched Electrify America as part of their needs in the market with things that were happening regulatorily, which I think at that time basically took away the need to have a joint venture launch in North America, particularly in the United States.

But you did see a joint venture launch in Europe, which was known as IONITY at the time. Back in, I think 2021, 2022, I think the OEMs recognized that charging was still not fixed in the US and with, you know, I think forward-looking perspective that electrification and eMobility was a real thing that was gonna happen at scale. The biggest issue today in the mar— or even back then was infrastructure, reliability, charging anxiety. Not range anxiety necessarily, but charging anxiety. Will the charger work when I get there? And so—

David Roberts: Mm....

Seth Cutler: the OEMs took it upon themselves to say, “Listen, we need to go do what we did in Europe, but do it here in the US.” In July of 2023, they publicly announced the formation of IONNA. I started in as employee number one in February of 2024 to take the vision and build a team and take that team and make a reality out of that vision, right?

And so what the vision was how do we remove the obstacle of charging being the reason why we can’t seem to move electrification forward from a transportation perspective. And we’ve taken that, the team has taken that into their own in terms of the type of experiences that we put out there, the types of sites that we deploy, and where we deploy these sites.

David Roberts: Well, what’s the sort of concretely, I know you have this 30,000 goal, but as I’ve been reading around, it’s hard to get a bead on 30,000 what exactly because there are, there’s chargers, there’s stalls, there’s sites, there’s, you know, there’s different ways of counting this. What is, what is your short-term goal like by 2030, say?

Seth Cutler: Yeah. So we talk about 30,000 charging bays. I think the industry sometimes call them stalls. We call them bays.

David Roberts: That’s like a parking spot basically. That’s where you park.

Seth Cutler: Exactly. Yeah. Yep, exactly. So like every one of our chargers we deploy today can charge two cars at a time. And so one charger serves two charging bays, and each site is made up of anywhere from, you know, on average roughly 10 bays. That’s how a site breaks out. A Rechargery for us is 10 bays on average. You’ll see some smaller, you’ll see some bigger, but that’s the average.

David Roberts: And how, and where, yeah… like where are you at? Like what’s been, what’s been built?

Seth Cutler: Yeah, it’s a good question. So we just turned on site number 143 last Friday. We’ll be approaching, you know, site 150 by next Friday. And so, you know, that’s roughly, just over 1,300, 1,300 bays that are live to the public right now across, just over 30 states. And so for, you know, for us going back, you know, company started February 24, one employee. We built it from there. Today, we’re just under 100 people, based in Durham, Raleigh, North Carolina, or Raleigh, Durham, North Carolina. And so really 2024 was setting up the company. We built this business essentially from zero, right? There was no—

David Roberts: Mm-hmm.

Seth Cutler: We’re not part of a bigger company. We’re not part of a division.

David Roberts: Mm-hmm.

Seth Cutler: Everything is separate from the OEMs. They’re equal stake owners inside of IONNA. And so ‘24 was go build a company, build an organization, and launch the first sites, the proto- what I call the prototype sites. And so you saw a mix of sites that we built, in different locations, some that were full-scale “Rechargeries” with 24/7 access to bathrooms where we built the amenity. Others where we built them as Sheetz.

David Roberts: Most of them so far are attached to s- are not the full Rechargeries, right? I mean, just by number. Most of them so far are not the full gas station vision yet. They’re attached to something else. Is that right?

Seth Cutler: Yeah, so we, you know, from a product, what we call a product archetype perspective, the majority of what we will build will be attached to an amenity. Over 70% will be attached to what we call a Rechargery. And we have two types of Rechargeries. One is called a Rechargery @. Those are partners with marquee partners such as a Wawa, a Sheetz, a Wally’s, a Hy-Vee, et cetera.

David Roberts: Mmmm.

Seth Cutler: And then the other part of the Rechargeries are ones where we’re building the amenity from the ground up. Now, we’ve got, I think half a dozen of those launched right now, and we have dozens more, dozens more that are working their way through permitting. Those obviously take longer because you can imagine—

David Roberts: Mm-hmm...

Seth Cutler: you know, permitting, et cetera, is a different process when you have to go through zoning to build a building or to operate a building.

David Roberts: So when one is attached, say, to a Wawa, we’re just talking about it would look like a bay, like one of the, like one of the pumps, you know, like a gas station pump. It would just be a version of that attached to a Wawa, you know, convenience store. Is that the kind of the idea there?

Seth Cutler: That is. And, you know, we just, we just launched our first Wawa with a canopy in Indiana. We’ve launched a canopy with Sheetz. We’ve done the same thing at Wally’s. So, what we’re trying to do, to your point, is provide a fueling experience at a location where you can get amenities that make sense for a fueling environment. And so that’s why a lot of what we, what we’ve built are co-located with those types of marquee partners.

David Roberts: Mm-hmm. And that’s gonna be— And the idea is the majority is going to be a bay sort of attached to someone else’s convenience store, and then you say 30%-ish are gonna be your own freestanding Rechargeries.

Seth Cutler: Yeah, so in the 70% of in the Rechargeries, there’s two types of Rechargeries: Rechargery @s, and then Rechargeries, full Rechargeries where we’re building the amenity. The 30% left over will be ones that potentially will be adjacent to a larger shopping complex or other types of amenities that might be nearby.

David Roberts: Mm, I see. I see. But just to be clear about this, you’ve built 1,300 or so far. Your target is 30,000 by 2030. So you’re gonna have to ramp up the pace. Like, the pace is gonna have to be ramped up substantially to get to that target, right?

Seth Cutler: Yeah. No, you’re do- you’re doing the math right. You’re right. Again, for us, it’s about coverage, and so we talked about 30,000 bays. We’ll figure out exactly how many sites that is and what that works out into. But right now, we have just under 600 sites that are contracted across the United States today—

David Roberts: Mm-hmm...

Seth Cutler: of which 200 are in construction or live to customers, which means there’s another 400 sites right now that are essentially in permitting working their way through.

David Roberts: Mmmm.

Seth Cutler: And so, and then we’re growing that pipeline as well. So, you know, in the two and a half years that we’ve been a company, a year and a half that we’ve been operational as a business in terms of sites live to the public, we’ve grown from, you know, zero essentially to, you know, just under 600 sites contracted that are, that are working their way to becoming operational.

David Roberts: And give me some sense of the proportion, I mean, insofar as you know yet, how many of those are gonna be located on, like, a convenience store that’s off the highway for long-distance travelers versus something in a city or something in a suburb? Like, do we know roughly the distribution where they’re gonna be?

Seth Cutler: Yeah, we know, I know a lot ‘cause, ‘cause we’ve got so many contracted. You know, what I can tell you is, going back to the 70%, I think we like the number 70. So 70% of our investment are inside of cities, 30% -

David Roberts: Inside cities? Interesting.

Seth Cutler: Yeah. Now, what I would tell you is what we, what we’ve tried to do, tried to do inside of cities is to build the sites next to interstates even if they’re in a city.

David Roberts: Mm.

Seth Cutler: So, you know, one of our, one of our most popular from a utilization perspective sites is in Houston, Texas.

David Roberts: Mm-hmm.

Seth Cutler: It’s probably, you know, 10 minutes out of downtown. It’s about a quarter mile, I think, off of I-10. That’s a Rechargery, full-scale Rechargery that we’ve built in Houston to serve the Houston market, but it also serves folks that are driving through the Houston market to the next town over.

David Roberts: Mm, got it. Interesting. So, you know, most of people, I think when they hear about this fast recharging, DC fast recharging, they kind of think about road trips, they think about interstates, they think about long distance, but mostly in cities. Like, who’s using in-city? You know, like, what is the customer for the in-city charger? Is it just people who live in apartments, don’t have their own home charging? Is it people who are passing through the cities? Do you have a sense of your sort of average customer to one of these things?

Seth Cutler: Yeah. So there’s four customer groups that we look at. You know, obviously to your point, we’ll start with the one that is probably that makes the most sense to fo- or the most obvious to folks, I would say is, you know, folks that are doing, you know, long distance travel for vacations.

David Roberts: Mm.

Seth Cutler: For sure that is a need. And, you know, right now, again, even in our early days, we already have, you know, national coverage across all of I-70, you know, all the way from California to Raleigh. Folks have already done that trip coast to coast. We’ve got coverage all the way up from, you know, New York City, essentially, down to Florida on I-95.

And then I-5 is being built out right now. We’ve got pretty good density all the way from Seattle all the way down towards LA and filling in. So we’ve got na- we’ve got coverage on all in these interstates. That’s your first customer group. Second customer group are gonna be your daily commuters. And th- and these are folks, to your point, that are gonna charge mainly at home.

But there are times, and I, and I’m in that situation, where you drove more than you thought you would, you didn’t charge at home, you’re gonna need a public charger, and it ha- it happens to the best of us when we try to charge at home. The sec- the second group are gonna be your daily commuters that are folks that live in an apartment building or an older home.

You know, I had a home I remember back in New England that I— there was no way I’d be able to put an L2 charger there, so I had to survive off L1.

David Roberts: Mm.

Seth Cutler: And honestly, it’s gonna be difficult to survive off of L1 or no charging at home. And so that’s where you’re looking for some sort of hub, charging hub inside of a city to serve your needs. And then the last group are really, is really fleet. And fleet breaks out into, you know—

David Roberts: Oh, right

Seth Cutler: into like Uber drivers and rideshare drivers, but also in terms of you know, fleet with a business, whether it’s, you know, some sort of service business, et cetera. So we look at all four of those groups and then figure out how to build sites that where we can, what we call stack use cases for all those customers to use, the same location.

David Roberts: So let’s talk a little bit about the economics just of the charging, just of the charging part itself.

Seth Cutler: Sure.

David Roberts: So I saw, you know, this study that says that a DC fast charging port generally needs about 15 to 25% percent utilization just to cover its costs. And once you fall below that, you get 10 to 15 or below, they’re losing money. And industry-wide utilization is hovering right around 15%.

So barely, basically like does not look like a good business, basically in terms of charging, especially with typical utility rates where they charge these demand charges, which we’ll get back to in a second. You know, the more power you’re running through it, the higher your demand charges and the worse the economics.

So you are both using the highest powered chargers out there, 400 kilo-kilowatts, and also charging a flat 39 cents per kilowatt hour, which is I think lower than the industry average. So how do you expect to make money on the electrons themselves?

Seth Cutler: Yeah, so one I would tell you is we’re building out a network, right? So there’s gonna be, there’s gonna be some sites that outperform other sites and some sites that underperform other sites. But at the end of the day, it’s a full network we’re building to provide customers with, honestly, the network that they can rely on for their everyday travel and vacation travel, right? And cognizant of the fact that it’ll all work out from a network effect perspective. Yes, secondarily, what I would tell you is I think you gotta take a little bit of a longer view on where the market’s at.

You know today there’s a charging gap, but we know vehicle sales are not gonna go to zero. So we know more cars will get sold this year, next year, the year after. We know that the types of cars coming to market are vastly superior to the cars that have been on the market. Longer ranges—

David Roberts: Mm...

Seth Cutler: faster charging, that’s going to lend itself to higher adoption rates. So, you know, if this was a baseball game, we’re probably still in the second inning, honestly, in terms of where the market’s gonna be and—

David Roberts: Mm-hmm

Seth Cutler: adoption is gonna be. And as more cars are sold, there’s more demand. As more demand gets there, obviously that bodes well for the charging world. And then lastly, you know, I think to your point about what the averages are, there’s probably some sites that in general, competitors and folks in the industry that that outperform and/or underperform other locations because again, in this next phase of infrastructure build-out, customers have choice, and with choice they’re looking for what is a great experience and what’s affordable. And that’s really what IONNA is focused on, is to make sure that we’re there for— we’re meeting customers on the road to where they’re trying to go. So that, that’s how we view it.

David Roberts: So let’s talk about the demand charges then. So just for listeners who aren’t familiar with this is sort of like, this is where the utility charges you not a flat fee for every kilowatt hour, but specific charges based on your highest use. And so DC chargers run into these demand charges wherever they go because you get these sort of like fast, intense draws of power. I wonder how you’re thinking about that.

I mean, well, the obvious question here is, the obvious way to avoid this is to have a little solar and battery on site so you’re can, you know, spread out your, spread out your usage, spread out your draw from the utility to avoid those spikes. Are you thinking about that? And otherwise, how are you trying to get around these demand charges?

Seth Cutler: Yeah. I’ll start with, you know, we— when we started the company early on, and part of what’s allowed us to scale so fast has been extreme focus, like this urgency and focus on getting the quality right and getting sites built fast. So we had opportunities to put batteries in place early on, and we made conscious decisions not to go do that because it’s very easy to get distracted and lose out on what the mission was and the mission continues to be, which is put the driver first and deliver the best experience to that driver from a charging perspective. So putting batteries in doesn’t help the driver. It does help IONNA potentially, if you can make the financials pencil—

David Roberts: Mm-hmm...

Seth Cutler: but it doesn’t help the drivers, and that’s where a lot of companies get lost, I think, in terms of what they’re working on. I think as we get into, you know, future years, as the network gets built, as we feel that we’re in a good spot and we think we can add benefit to drivers on the economics, we’ll look to put batteries in or do other things from a demand mitigation standpoint, demand charge mitigation standpoint.

But for right now, it’s not a focus of what we’re trying to do. And what I would tell you also, though, is, you know, a lot of the economics tie back to how well and efficient the company’s run. Because if you have a lot of, you know, G&A costs or, you know, general and administrative costs in terms of, you know, marketing expenses and development expenses and what it costs to run the business, you obviously need to charge more at the charging bay to cover those base costs.

David Roberts: Right.

Seth Cutler: And we have been hyper-focused on how do we remain efficient and agile, to ensure that we can, you know, run the business efficiently while ma- while achieving our goals for our customers and being an affordable option to drivers on the road.

David Roberts: How difficult is just getting the power? I guess maybe if you’re attaching to an existing site, like a Wawa or whatever, I don’t know why I keep coming back to Wawa, I just like saying Wawa. Presumably they have an interconnection agreement and power available. But a new site, like how big of a barrier is interconnection and like u- kind of utility hold ups and just getting a hold of the level of power you need, which is a, you know, a lot of power, especially get to higher utilizations, you know, it’s a lot of electricity. How big of a challenge is that?

Seth Cutler: Yeah, so actually, irrespective of Wawa or whether we build our own site or we build it on a corridor without a gas station nearby, we always get it on meter and transformer from the utility. So it’s the same problem irrespective of where we build. But yeah, I mean, the biggest problem for infrastructure is getting permits and getting power. The actual cycle time to build a site honestly is very fast. You know, we can build a site. We built— we have one site, this is internal to IONNA, legendary Tucumcari, New Mexico. We built the site in six days... um, and energized on the seventh, which I guess sounds funny as I say it, but that’s literally what happened.

David Roberts: Laughing… I’m guessing it takes longer than six days to get a permit for anything to do anything anywhere.

Seth Cutler: Exactly. And so that is the biggest challenge in infrastructure is how fast can you get a permit, how fast can you get power. I think some parts of the country are faster than others. Some parts of the country are slower than others. And so that’s what we’ve been working through, but that’s also why we’ve been growing our site pipeline and site funnel so fast because it allows the ones that move faster to kind of be your short cycle sites that you can build a network out. We got our Kansas sites on first.

It allows the longer, the longer lead sites that might take into the year timelines to measure, time to fill in and be your long cycle sites as we build out the network overall.

David Roberts: Yeah, you mentioned how you need to work with utilities and you view utilities as partners, and I know you probably have to say that, you have to be nice to utilities. But they are... They’re the ones that make the money on these demand charges, you know, and they make more money the more, the higher the demand charges that they charge you. And there are also some utilities that run their own competing charging networks, like in Florida. I guess I just wonder, like, how much of an alignment is there between your interests and the utilities’ interests? What is that relationship like?

Seth Cutler: Yeah, I mean, utilities are in the business of selling electricity to businesses. We’re in the business of selling electricity to consumers and buying electricity from utilities. So it is a very much a symbiotic relationship between IONNA and the utilities. You know, I think, I think like every, you know, large organization, there’s processes that they followed, and so we’ve done a lot of work to, as I’ve said in other podcasts, other interviews, to partner with them to say, “Okay, what is the process, and how do we help in that way?” Right? Yeah.

And so there are some utilities where, you know, we do some of the utility construction, portion. We’ve worked the utilities in terms of you know, we worked— PG&E is a great example of that. We work with them on their Flex Connect program of how do we make sure that we can, you know, mitigate demand during certain peak hours and peak days of the year.

David Roberts: Yeah.

Seth Cutler: There’s other utilities where we’ve undersized transformers and do, you know, whole site, energy management, to be able to meet the, whatever the requirements are for upstream power. So, you know, we’re— IONNA’s born out of partnerships. You know, we have eight OEMs we work for that are, that are staunch competitors but have to work together to drive the business forward. We try to treat it the same way with working with utilities to make sure we’re partnered with them to get these sites turned on as fast as possible.

David Roberts: Yeah. Yeah, I wonder, like, to the extent you can tell us, like, do utilities— do you find generally that utilities want one of these things? Like, you know, I always find utilities’ incentives and desires it’s somewhat mysterious. Like, have you found that they welcome and want one of these things and are trying to work with you, or is this like, “Oh, no, a burden, a big, spiky, unpredictable consumer,” you know, “This is a drag. Let’s make them jump through a bunch of hoops.” Like, what are the utility incentives here to the extent you can explain them?

Seth Cutler: Yeah, I have personally, and I’ve talked to quite a few utilities, not just in the last two and a half years being at IONNA, but, you know, in the course of my career-

David Roberts: Yeah...

Seth Cutler: I’ve never met a utility that has said, “We’ve— we hate EVs, we hate electrification.”

David Roberts: Mm.

Seth Cutler: “We don’t want your charging hubs.” That doesn’t happen, at least not in my experience. What does happen is they might say, “Hey, listen, you’re trying to put a charger on this city block, and the feeder feeding this charging or the block you wanna go do—

David Roberts: Right...

Seth Cutler: doesn’t have the, you know, existing power, so you can’t build it here.” Like, you can build it here, but it’s probably gonna take three to five years. And we’ve walked away from sites because of that.

David Roberts: Mm.

Seth Cutler: We’ve also, we’ve also kept sites. I’ve got a site right now in California where we bought the land, found out after the fact that there’s not enough power. And we’ll build it in 2028, and that’s okay, right? That’s okay because we’re taking a long-term view of how we’re building up the network and we need sites in 2028. It’s not just what we need now. So again, this goes back to, like, how do you make sure that you’re working with the utilities early on in terms of these are sites we’re evaluating, where does it fit with where you’ve got, capacity needs?

David Roberts: Right. This idea of these freestanding sites, I’m sort of vaguely fascinated by this. Like, is there, a template, like, that you’ll be following? Like, will they look the same wherever I encounter them? Are they gonna be, like, customized to different sites? And also, a second question about those is one of the sort of notorious things about gas stations is they don’t make a lot of money on gas. They make most of their money on selling you snacks and whatnot in the gas stations, in the, you know, in the stores. Are you gonna, do you view the sort of sales of amenities and stuff that are attached to your chargers as a serious revenue generator?

Or are they mostly just to lure people to the power and you make money on the power? Like, what’s the sort of revenue balance of selling stuff alongside them?

Seth Cutler: It’s a great question that we don’t know the answer to yet. Um—

David Roberts: Mmm.

Seth Cutler: But I’ll answer it this way, and I’ll give— And I think this is where some of the conversation gets more interesting in terms of what we’re doing and where we’re experimenting. You know, I think a lot of companies forget why they’re, why they’re there, right? And I think as I tell, as we talk internally at IONNA and we tell the team, like, this is a very simple business. We’re in the business of selling electrons. That’s what the business is.

David Roberts: Mm.

Seth Cutler: It doesn’t mean that there might not be other ways to monetize what I call the platform or the network later on, but if we try to get fancy and get cute and think of all the ways we could monetize it right now, we forget that there’s a driver, a mom, a dad, a grandparent, someone’s kid who’s trying to charge their car, who’s looking for a reliable, safe, affordable charging experience. And so we need to be hyper-focused on that.

David Roberts: Y-yes, but while they’re charging, they’re sitting around for 20 minutes. That’s, you know, like, t that’s a... No way you’re not gonna view that as some kind of revenue opportunity, these people sitting around for 20 minutes. I mean, a gas station, you’re sitting around for, like, five minutes, but max, you know. You have people sitting around for longer than at gas stations. They want something to do. What are you know, so what are you gonna give them?

Seth Cutler: Well, so we give them stuff today, right? We give them stuff today with our partners, with Wawa, with Sheetz, with Casey’s, et cetera, or they come to one of our sites where we built out an amenity. Apex, North Carolina, Houston, Texas.

David Roberts: Yeah, like, what does that look like? What does it— give us a, give us a visual.

Seth Cutler: Yes, it’s fair, right? So for those sites, let me answer your first question before, which was, are they gonna all look the same? And the answer is no. And that’s kind of something that’s really unique about how we built this out, and I can tell you why. We go deeper there. And then in terms of what we provide them, you know, typically, it’s driver lounge, 24/7 access, couches, chairs, seating, bathrooms, vending, or really what I would call full c-store with Amazon Just Walk Out technology, where they can go buy snacks, drinks, et cetera.

David Roberts: Mm.

Seth Cutler: And so each of those, each of those full-scale Rechargeries, and I think we’ve got just about six of them open right now with dozens more coming, that’s what it provides, is basically a, an IONNA base experience, 24/7 safe access, clean access to these facilities.

David Roberts: Do you require, I wonder how much human, you know, the charging— The chargers themselves do not require human attendance, but what about the amenities? What about selling the food? What about, you know, security? Like, are there human employees at these things?

Seth Cutler: There are not human employees based here 24/7. We have a lot of security built in terms of how you can access them, so you have to scan a QR code. We have other restrictions that we, that we, that we put in place. We’ve got security cameras built in.

David Roberts: Scan a code to get in the lounge thing.

Seth Cutler: Yeah, correct. A QR code. They scan, they scan a QR code and, you know, in some cases you have to actually be in a charge session before you can scan the QR code so that we’re restricting access to those folks who are charging.

You know, in some ca- depending on, in some cases, you know, we might, we might contract with local security that might, that might, you know, come by every so often. And even for sites, you know, honestly, even for sites where, we don’t have the amenity, you know, we put in certain cases 24/7 cameras and lighting, again, to provide safety and provide, to provide, you know, a field of vision at these locations.

So we’re constantly looking at beyond just the charging, what needs to take place. And, but just, but David, just going back to your other question before about providing someone an experience and how you monetize it are two different things, and that was where I was driving before, which is we’re hyper-focused on experience.

So that’s why we provide all these amenities. But it’s not like I have teams of people running around trying to figure out how to monetize drivers and how to how to make money off of them when they get there. What I’m trying to make sure is when they get there, it’s clean and it works.

David Roberts: Mm. And are the— Final question about the sort of like amenities thing is, are these customized at all regionally or like based on whether it’s in a city or on a highway somewhere? Like, I guess how much work is going into sort of customizing the experience on a location-based way?

Seth Cutler: Yeah, I mean, I think that’s actually the fun part. So, you know early on we said, we said, “Listen, we know we wanna do things differently. We wanna buy land. We wanna build our own amenities.” And in some cases, we went and bought a green field piece of land. It was a, you know, a piece of dirt or grass, right? And we, and we built... And our Houston, our Houston Rechargery is just that, where we built from the ground up an amenity, and we customized it for that location.

What could we fit there? We wanted to build no less than eight charging bays. What could we fit?

David Roberts: Right

Seth Cutler: Well, what could all we could fit was two bathrooms, outdoor seating, vending machines. That’s what we could fit, and we, and it’s a great site, and we know that ‘cause of how much people, how many people come on a daily basis.

But then we went and we found other sites. Hey, this is a, you know, we found in our Apex, North Carolina location, which is just outside Raleigh, the suburb to Raleigh. We cut our first ribbon there. That was a 100-year-old gas station. We thought, “Well, that’d be real, that’d be really cool, right? Let’s take a 100-year-old gas station and make it the service station of the future,” right?

David Roberts: It was closed down?

Seth Cutler: It was, yeah, it was clo— I mean, it was a service station that was opened in the early 1900s, shut down in the ‘60s or ‘70s, and became a I think they were selling kitchen granite top... right, and when we took it over.

So that was, that was unique ‘cause we made, we made that into an experience. That one has a local entrepreneur that sells baked goods out of that site. Right? And the reason for that was because the zoning requirements meant that you couldn’t have a refueling center, but you could have a local restaurant or bakery. So that’s, so it’s classified as just that. And—

David Roberts: Oh, so it’s technically a bakery with chargers attached.

Seth Cutler: Exactly. Yep, 100%, right? So that, so what, we’ve been very flexible as we work with cities and towns, and very flexible with the types of sites that we’re buying or leasing to, again, bring really great charging to customers. And we’ve done that in, you know, there’s like, there’s a list of sites I can give you. Each one has a story of an old gas station of an old natural gas station, of an old car dealership of an old Subway’s restaurant that we’ve taken over, and we’ve converted it to an IONNA Rechargery.

David Roberts: Interesting. The chargers themselves, you’re working with eight automakers. I’m sure they all have their own apps. They all have their own gizmos. How do you make the, like, the literally the plugging in and charging itself, how do you make that consistent across all those apps, across all those different kinds of vehicles, across the two basic kinds of hookups? What does the charger look like, and what does the software look like, and what is the experience like? Am I scanning a card? Am I tapping a card? Am I... You know, is it, is this something where it recognizes the car when I pull up and I don’t have to do anything? What is the experience of charging itself like?

Seth Cutler: Yeah. Well, I’ll start with the one thing you don’t do is download an IONNA app because there is no IONNA app.

David Roberts: Oh, really? There’s no separate app.

Seth Cutler: There’s no app, you know, and there’s, and there’s no intention to make a mobile app. And the reason for that is because, to your point, every OEM, every automaker has an app today. ChargePoint has an app. Presto has an app. EV Connect has... I can go on and on. So we actually have 14 different apps that you can use at IONNA, but none of them are IONNA.

David Roberts: Hmm.

Seth Cutler: And on top of that, every charging station has a credit card reader on it. And we’ve got, you know, Plug&Charge and AutoCharge with, you know, a significant number of OEMs, even beyond just our eight, right? So we have the eight investors that we’ve turned on Plug&Charge for most of them, the rest coming very soon. But we’ve also turned on—

David Roberts: So that means— So just to, just to clarify for listeners, that means I can drive up, grab the charger, stick it in my car, and it recognizes my car and will charge it to my account without my scanning anything or tapping any, or doing anything.

Seth Cutler: Exactly. A frictionless experience for drivers.

David Roberts: And that’s for some OEMs, but not others.

Seth Cutler: Yeah. So on our eight OEMs today, the majority of it has have it activated, and the rest are, the rest are getting ready to launch this year. But we’ve also turned it on for Ford drivers, Rivian drivers, and Volvo drivers as well. So again, we’re looking for ways to reduce friction in the charging world for all drivers that drive EVs.

David Roberts: Do you think that’s gonna... Do you think the sort of momentum is everything’s gonna end up there? Like, just Plug&Charge is gonna be kind of the default within a few years?

Seth Cutler: I think so. I mean, I think it’s a, I think it’s a great experience, right? You’re not, you’re not fumbling with key cards or credit cards, et cetera. So I do think so. I think it just takes time.

David Roberts: And how do you ensure reliability? Like, I’m sure all the other previous makers of chargers wanted reliability as well and probably boasted a lot about it, and then they, you know, still today you show up to a lot of these and they just don’t work. Like, what are you doing to ensure high reliability?

Seth Cutler: I think there’s three, there’s three ingredients that go into making this reliability cake, we’ll call it. Number one is, you know, really around alerting, monitoring and diagnostics, and we’ve built a lot of in-house tools in terms of our ability to monitor and to detect when there’s an issue at a location or on the network as a whole or at a site. And so that then leads to operationally how we’ve built our processes and how we respond to things. So if there’s an issue, how fast can we respond to the detection? Do we have parts on site? Are we storing parts in hubs near sites? And do we have labor nearby?

David Roberts: Right. Yeah, and do you, are you sending an IONNA employee, or do you have, like, contractors? Like, if there is a problem, who are you sending and what— and whose equipment are they using to fix it?

Seth Cutler: It’s both. So we have, we have IONNA employees, and we’re staffing up more in terms of IONNA employees going out to sites, and we have third-party vendors that we also rely on for labor. So it’s, so it’s a combination of both, and it’s dependent upon how fast we can get someone to that site. Which is, which is really that third pillar I was gonna tell you was, is really culturally how we built the organization.

You know, we have this idea of driver first, and it lends itself to how do we get biased towards action of, you know, if we... So I’ll give you an example. If we see an issue or a perceived issue at a site, customer calls in and says they had a problem charging, we do what’s called a health check. We automatically roll a truck within less than 24 hours with some parts on hand. We have a Pelican case of parts that we go to the site with to validate was it a real issue or was it something that happened with that particular customer?

Because what we don’t wanna do is get a call in or see some sort, some sort of feedback on social media and assume it was probably the driver or it was a one-off situation. We wanna get eyes on the site as fast as possible and validate that the next driver won’t have a problem.

David Roberts: Got it. And what are you, and is the promise here. Yeah, like, is there a, is there a percentage reliability? Is there some sort of target or cutoff here? Like, what can you realistically promise? I mean, I assume 100%. I mean, the thing is, like, gas stations, people don’t think about it, but you basically get 100% reliability at gas stations. Like, you know, every gas, every gas pump works to a, you know, maybe with, like, a .001 remainder. Is that kind of what— Is that the goal here? Basically, like, it all, it all works all the time. Like, what is s- is there a metric you’re shooting for?

Seth Cutler: Yeah, we have several metrics that we, that we shoot for internally. You know, it kinda goes back to, like, our utilization. There’s certain things we don’t share externally in terms of the actual statistics and numbers. But what we are looking for is to ensure that drivers can always get a charge on their first try. And, like, things do break. I mean, I think I if you go to a gas, a gas station, there’s lots of data actually on gas station performance that if you looked up, you might be surprised at how low the numbers are in terms of what numbers they hit.

David Roberts: Hmm.

Seth Cutler: But, like, if you go to a gas station, and it’s been a while, but, like, you know, you might see yellow bags... over the handle, right? Because—

David Roberts: Right. Yeah...

Seth Cutler: they are broken but and things do break. These are mechanical devices. They’re electromechanical devices. Things break. So it’s really a question of when they break, how fast can you action it? And the only way you can action it fast is did you detect it? Did you have parts nearby, and did you have labor to go fix it? And that’s where we’re hyper-focused on is all three of those.

David Roberts: Mm-hmm. A broader question, which is, you know, I’d like, I don’t know if you just saw the article that was just out in The New York Times a couple of days ago, basically about the US EV market is not in good shape, you know, unlike EV markets almost everywhere else, which are booming right now for obvious reasons. EV sales are slowing down in the US. The consumer credit is gone as of this month. The credit for building chargers, I think, is going away next year. These NEVI grants from the, from the DOE, from the Department of Energy, have been clawed back or eliminated by the Trump administration. And like, it’s grim. It’s a grim time.

Are you worried at all? I mean, and not only is it a grim time, but some of the automakers are US automakers. I think even some of the ones involved in your, in your consortium there are explicitly pulling back on EVs, canceling EVs, canceling models and such.

So are you worried about launching during this, what is clearly a downturn? And I’m not sure anybody knows exactly how long it will last. Are you worried about launching in this environment?

Seth Cutler: No, actually. And the reason, the reason I say it like that is because— I think, I think EVs are a really great product, in terms of their performance, in terms of their acceleration, in terms of, you know, how quiet it is to drive it. And when you look at, you know, where battery prices are going—

David Roberts: Mm.

Seth Cutler: Charging speeds are going—

David Roberts: Mm.

Seth Cutler: The range that they’re going, it’s a great product. And great products always win out. You know? Like, you know, there’s lots of examples throughout the, you know, course of human history about industries that were never gonna go away until they went away because the new incumbent, device or technology was just a better solution.

And I think that’s honestly where we are with electrification. It’s taking time to get there, but I have no doubt. And I think— look, I think to add to that, I mean, I think, look, right now charging is still a problem in the US. It’s got a lot better.

But we know that we’ve added sites this year, and we see a really great turnout of drivers coming to our sites, and we’re learning from them. And we also know that more EVs are gonna be sold this year and next year, without a doubt.

And so to me, that tells me that there’s a really good market today that’s gonna be even bigger in the future that we’re gonna go serve.

David Roberts: How much is your business or your business plans or your business projections, your revenue projections, et cetera, sensitive to government policy, sensitive to sort of incentives and regulations at the, at the government level? Are you trying to build something that can operate independently of those?

Seth Cutler: I think we went after NEVI for one or two sites, but didn’t actually collect it or spend it. You know, we are not looking to build out a NEVI-funded network. We’re not, we’re not actively going out there and trying to go find grants.

David Roberts: We should say what NEVI is. I didn’t write down what it stands for. What... National-

Seth Cutler: Yeah. National Electric Vehicle Infrastructure.

David Roberts: Yeah. These are grants from the DOE for charging infrastructure.

Seth Cutler: Right, that they push out to the st-ates. And it was a way to, you know, if you think back before IONNA was here, was it was a way to try to get the market moving, to get infrastructure out there, particularly on corridors. And so we’re not looking for federal or state grants to go build out this network. We’re moving at a speed to really unlock electrification in partnership with the OEMs.

David Roberts: So you think that even the OEMs that are pulling back on selling EV vehicles are going to remain committed-

Seth Cutler: Yeah.

David Roberts: To building out charging infrastructure?

Seth Cutler: I think the future is electric. I think there’s probably a debate as to whether it’s 30%, 20%, 50%, but I think the future’s electric, and I think that’s why, that is why IONNA exists today with eight OEMs, because that’s where the future’s going. And it’s not just going that way in the US, it’s going that way globally.

David Roberts: Yeah. And part of this, I guess, you know, and I was trying to get around this with the sort of economics questions, but, like, already this, you know, the DC charging is not a great- business just purely in terms of revenue, and you’re sort of like, in some sense, doing it in the most expensive possible way. You’re owning your own land. You’re building amenities. You’re investing a lot of CapEx.

I wonder to what extent. Is this whole enterprise kind of a loss leader for the OEMs to help them sell more cars, to help them sell more EVs? You know, like, not that there’s anything wrong with that, but, like, is this meant to be a money-making play, or is this meant to be, let’s make it easier to sell more cars, sell more EVs, and that’s where the profit will be made?

Seth Cutler: No, IONNA needs to be- IONNA is financially independent, or financially independent, it’s a separate entity, right? And so we have to be profitable over time. Infrastructure as a whole needs to be profitable over time, because if electric infrastructure charging is not profitable, electrification won’t work.

David Roberts: Hmm.

Seth Cutler: But again, I think you see around the world where it can work. It requires, obviously, a higher density of vehicles being sold, which is where the market is going in the US.

David Roberts: Mm-hmm.

Seth Cutler: But yeah, we are working to become, you know, profitable over time, for sure.

David Roberts: Yeah, and speaking of which, IONITY, you mentioned this earlier, it’s kind of a parallel similar venture in Europe, a bunch of automakers getting together, investing in charging stations. It’s been up and running longer than you. It’s had a lot more investment than you. And IONITY now is reaching to the point where they don’t need to be funded by the automakers anymore. They have reached a point now where they’re getting, like, infrastructure funds, and, like, banks will come finance it because it’s stability and a sort of ubiquity now that they’re getting the access to big institutional capital.

How far away is IONNA from that? ’Cause that’s, you know, IONITY is operating in a market where EV sales are growing at, like, 30-plus percent, whereas they’re shrinking here. So I wonder, how far away are you from being able to access bigger, cheaper capital?

Seth Cutler: Yeah, so right now we are well-capitalized to achieve our goals and the mission that we’re on. So I’m not really worried about, you know, outside capital or about, you know, what that timeline looks like before we go even talk about that.

I think for us, you know, it was always go demonstrate that you can build sites and deliver a different experience. We’ve done that. Demonstrate you could build something across the country that you would start to drive customers to a, from a network approach. We did that last year. This year’s really around giving, scale and density in key geographic markets, which is what we’re currently working on.

So I think we’re well on our way in terms of what our, what the goals are that we laid out, you know, two and a half years ago, and we’ve got what we call this multi-wave strategy that we’re on in terms of how we think about each year and what gate we’re trying to pass as we move at this IONNA speed to get sites live for customers.

David Roberts: And, speaking of the geography, one question here is like the obvious sort of like, I guess, capitalistic incentive is to go with your chargers to where the EVs are, you know. So like go to California or go to, mainly go to cities, you know, like that’s kind of where most EV owners are. How does this, and maybe this just isn’t your business and you don’t care, but, like, how do more rural or sparsely populated or just, like, unsaturated markets where there aren’t a lot of EVs yet, how are they gonna get charging?

There’s always this chicken and egg thing, right? Are you willing to go sort of invest in a place that doesn’t have much EVs yet, assuming they will come if you invest? Or, like, what’s- how do you think about that chicken and egg, problem?

Seth Cutler: Yeah, so I mean, we just opened a site in Gary, Indiana. It’s three days old or four days old, and it’s doing really well. So that is not California, and it’s not the first place-

David Roberts: Yeah...

Seth Cutler: you’d go think to go put chargers. But honestly-

David Roberts: Yeah...

Seth Cutler: it’s outpacing some of our utilization in California sites that have been open six to nine months. And, you know, again, we went out and said from early on, “We’re gonna build a network.” Some of that’ll be California, some of it will be Florida. Today in Florida, I think we’re up to about 20 sites across the state. We’re one of the largest networks now, high-powered charging networks in the state of Florida as a whole. And so, to your point, there’s demand, there’s supply. California has a lot of demand, but also has a lot of supply, and we’re still building there.

David Roberts: Mm.

Seth Cutler: But there’s also places like Gary that have demand but don’t have enough supply, and so we go put a charger there, and all of a sudden you see that demand get sucked, soaked up by a new IONNA Rechargery. So we’re trying to meet the needs of both. I would say we’re trying to meet the needs right now wherever there’s demand, today, and then we have a big pipeline of sites where we think there’ll be increased demand in the future.

David Roberts: Mm. So I’m guessing to some extent, like, the sites that can guarantee high utilization can, at least in some timeframe, help subsidize the sites that do not yet have high utilization. Is that kind of how you’re thinking about it? To get back to the sort of network point.

Seth Cutler: Exactly. It’s a network. It’s a network, right? And I think, like, you think back to, like, the telecom world, you know, if you bought a cell phone back in the early ’90s and I said to you, “You can only use it in this town,” it would be very useless to you if you’re trying to go across the country. But it doesn’t mean that you’d have a ton of activity as you were driving.

So it’s a similar situation with the network effect. There’s some sites right now that are lower than other sites in the network. But as a whole, the network is performing, or is on track to perform to where we want it to be for the year and going forward. So we recognize that.

We also recognize that, you know, we’ve seen this as, you know, if we built one site on a corridor, it may not perform great. But when you start opening the other sites in that same corridor and you can provide a full network to that driver on that interstate-

David Roberts: Mm...

Seth Cutler: you start to see the network effect take place, along all those sites now.

David Roberts: Yeah, I mean, there is gonna be some element of build it and they will come here. You know, like, there is some truth to that. There is, like, people will wait to buy until they are confident that there’s a network around them. I don’t know if that’s, like, measurable or quantifiable, but there is, that dynamic definitely exists.

Seth Cutler: Well, exactly. And, you know, to that point, which we didn’t talk about is, you know, as part of our relationship and partnership with the OEMs, we’ve launched discounts, charging discounts with our OEM partners, right? And so that was kinda step one of this. Step two will be you’ll start to see us, much more prevalent in dealerships now, partnering with the OEM to talk about the benefit of IONNA, which is not just reliable infrastructure, but from an affordability standpoint, there’s now, you know, potential charging packages coming and discounts that we’re offering, et cetera. So this is definitely, a network in partnership with the OEMs in every way possible, including unlocking future sales of EVs.

David Roberts: Right. So you go into a dealership and you s- and part of the benefit of buying this EV versus that one is you get access to a reliable network at a set relatively cheap price for electricity. That’s gonna be, like, a sales incentive at some point. Let me ask briefly, quickly about Tesla. They are the, kind of the 800-pound gorilla here in this space. I think they have something like half the ports in the country. They already have, I think, or at least they boast 99% uptime. They’ve opened their network now where I think everybody can hook up to them, almost everybody. What is your value proposition relative to Tesla?

Seth Cutler: Honestly, Tesla’s done a great job building out their network. They were one of the early ones, and they’ve done a great job in terms of the integration between, you know, the vehicles, and their charging network.

I think IONNA has a real opportunity to deliver the same value, to all eight of our investors, our me- what we call our member OEMs, and beyond. And so we’re hyper-focused on, you know, what is that end-to-end experience that you can have with any one of the OEMs that are invested into IONNA, everything from, you know, navigation and routing and searching and search optimization because, that’s that entire ecosystem and approach. And I think that’s what we can go deliver, not just for one manufacturer, but for all eight and beyond.

David Roberts: So kinda the idea is any EV you buy among these eight OEMs, you’ll have the same ease of experience and uptime that Tesla is now providing to Teslas.

Seth Cutler: Exactly.

David Roberts: And I think they’ve kind of slowed down their investment. I mean, didn’t they pull back on the, on their whole charging network and their whole charging team? Am I making that up? They s- are kind of taking their foot off the accelerator on that part, aren’t they?

Seth Cutler: Yeah, I mean, I can’t really comment on what they’re doing. I’m too hyper-focused on what we’re doing and taking care of drivers. So I... You’d have to ask Tesla what Tesla’s doing on that front. But I mean, they- look, they’ve done a great job, there’s no doubt about it, early on in building out reliable infrastructure and really, I’d say blazing a trail. But yeah, what we’re focused on is really thinking about that entire driver experience beyond just charging, in terms of what happens at that site from, you know, lighting, canopies, trash cans, amenities, et cetera.

David Roberts: All right, final question as we wrap up. So a two-part question. Sort of as you look ahead five years, call it, five years, 10 years, I’d like to hear, A, your sort of fondest hope. Like, what will it look like if you succeed? And then also I’d like to hear, like, what keeps you awake at night? Like, is it access to power? Is it competition from other chargers? Is it getting a return on your CapEx? Like, what is your greatest challenge or fear also?

Seth Cutler: Yeah, those are good questions, David. You know, I think- Look, I think there’s... On the what success looks like, there’s two things I look at for that.

One is people still talk about charging reliability, and I think when people stop talking about it, then I know, like, the industry as a whole has been successful, right? Like you think about the old Verizon commercials, they’d walk around saying, “Can you hear me now?”

David Roberts: Yes. Right, right, right.

Seth Cutler: No one talks about that anymore. Do I have enough coverage?

David Roberts: Right, right, right.

Seth Cutler: Cell phones are so ubiquitous in everything we do in terms of that, right? So that’s number one.

And then I think the other thing too is that we’ve unlocked electrification in this country where charging is not the reason why people don’t buy cars. So that’s, that would be the first pillar.

And then in terms of my biggest fear, you know, look, I think the business, and I’ve seen... It’s been interesting being at IONNA for two and a half years because of how fast we’re moving to build sites and grow the business.

You know, in a typical startup world, you take time to go plan things out and have a product, an idea, and then launch your product and get iterations on it. And we’ve been moving so fast that two and a half years at IONNA, and honestly, in some ways feels like we’ve been here five to seven years in a normal startup venture, right? And so we’ve had to grow up from building a business, hiring people, launching our first site, which is our product, to having, you know, honestly, we’ll have 150 sites open by end of next week.

David Roberts: Yeah, those transitions are notoriously difficult from like the 15-person company to the 100-person company, et cetera. These are sort of notoriously just in terms of execution.

Seth Cutler: Exactly, and so that’s what keeps me up at night is, you know, making sure that we mature, fast enough to make sure that we never compromise on that driver. ’Cause as I was saying, you know, earlier in the podcast with you is like there’s real people tied to the charging at all hours of the night, and I just wanna make sure that we’re never compromising on that. But that takes us making sure that we’re maturing and growing up and scaling to the needs of the drivers out there.

David Roberts: All right. All right. Well, super interesting. Super interesting. And in your success world, this world where people no longer are talking about charging anxiety, where charging anxiety is gone, can- is that by 2030? Is that the idea here, or do you think that’s a longer-term thing? Or is this something that, like, people listening to this pod can anticipate, you know, having in a reasonable timeframe?

Seth Cutler: I’m honestly hoping it’s next year. I mean, I think that’s where I know I wanna be from an IONNA perspective, and I, and I’m hopeful that the whole industry gets there as well.

David Roberts: Well, all right. Your lips to God’s ears, I guess. All right, Seth. Thanks for coming and talking us through this. Super interesting. I’m always, you know, the charging experience is on the minds of every EV owner, so thanks for coming and talking through it with us.

Seth Cutler: Absolutely. Thanks for having me, David. Great conversation.

Roughly a year ago, I did an episode on the Montana housing “miracle,” a burst of bipartisan pro-housing bills out of a red state where you wouldn’t necessarily expect them. Turns out I wasn’t the only one paying attention.

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Next door in Idaho, they were facing many of the same problems: a rapidly growing population, an influx of wealthy out-of-staters, suburbs sprawling out into the wilderness, and rising housing costs locking out the locals. Inspired by their neighbor’s example, in 2025 the legislature convened a Land Use and Housing Study Committee composed of state legislators, developers, industry representatives, and city administrators. The committee was charged to meet between the 2025 and 2026 legislative sessions to scour land-use laws, housing codes, and other regulations to find ways to cut constructions costs, speed building, and keep costs down.

That committee’s recommendations yielded several bills this past session, many of which passed, a few of which didn’t. The reasons for both the successes and the failures are quite interesting and do not fall along conventional partisan lines. We’re going to get into all of that with my guests today.

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Ben Toews is a Republican state senator who represents north Idaho’s district 4, which includes Coeur d’Alene. He is the sponsor of the core Senate bills and the lead Senate champion of the whole package. Megan Egbert is a Democratic state representative out of Boise; she was a member of the interim study committee. Needless to say, they come at the housing issue from very different perspectives, but, remarkably, have ended up on the same side in the housing fight. I can’t wait to talk to them all about it.

Chapters

• 00:00 – Introduction and the Idaho housing package

• 02:43 – How each guest came to the housing issue

• 06:39 – Inside the interim housing study committee

• 09:05 – SB 1354, ADUs by right, and Dillon’s Rule

• 12:52 – The 5,000 to 10,000 compromise, and HOAs

• 15:03 – SB 1352 starter homes, manufactured homes, lot splits

• 16:28 – HB 706 and single-stair buildings

• 18:11 – The permitting shot clock and the 6-day rule

• 19:48 – Living with the compromises, and why counties were left out

• 22:54 – The two bills that died: duplexes and YIGBY

• 28:41 – HB 389, the property tax cap, and the growth undertow

• 34:41 – What the public understands about growth

• 37:23 – Regulatory reform on supply side vs. incentives for housing

• 43:59 – The February deadline and city resistance

• 48:52 – Horizontal vs. vertical density

• 56:03 – What comes next for the committee & Idaho housing

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Website - Podcast - Apple Podcasts - Spotify - YouTube)

• Ben Toews (Idaho Legislature) & Megan Egbert (Idaho Legislature)

  • Idaho Land Use and Housing Study Committee

  • Idaho House Business Committee

• Other Orgs Mentioned:

  • Idaho Freedom Foundation (mobilized to kill property tax cap loosening)

Company & Industry News

• Governor Little signs two bills cutting local zoning rules

• Lawmakers approve bills to expand starter homes and ADUs in Idaho

• Set of bills overriding local zoning rules on denser housing clears the Senate

• Infrastructure, zoning, incentives: Idaho housing study committee homes in on recommendations

Bills Discussed

• Idaho Senate Bill 1354, Accessory Dwelling Units

• Idaho Senate Bill 1352, Starter Home Subdivisions

• Idaho House Bill 706, Single Stairway Building Exceptions

• Idaho House Bill 389 (2021), Property Taxes

• Idaho Freedom Foundation - House Bill 842, Taxing Districts, Budget Limits

• Idaho Freedom Foundation - Senate Bill 1354, Accessory Dwelling Units

Related Volts Episodes

• A closer look at Montana’s housing “miracle”

• What YIMBYs are learning from their victories across the country

• Why housing is a pass/fail question for climate

• Want less sprawl and more urban infill? Try a land value tax!

• Why climate funders don’t fund housing policy, and why they oughtta

Text Transcript

David Roberts: All right then, so with no further ado, Ben Toews, Megan Egbert, welcome to Volts. Thank you so much for coming.

Megan Egbert: Yeah, thank you for having us.

Ben Toews: Thanks for having us on.

David Roberts: Awesome. Ben, let’s start with you. You are a longtime business owner in the state, and I’m curious just to hear briefly how you sort of came to the housing issue. I understand it had something to do with you trying to build something. Nothing radicalizes people about housing in America more than trying to build something. Tell us how you sort of came to be engaged on this issue.

Ben Toews: Yeah, certainly. We recognized that there’s a serious issue with affordable housing, especially for the next generation to own their own home. The cost in our area is around $550,000 on average for a single family dwelling. And so, back in 2020, we purchased, a small piece of land. It had a PUD, so it had, 20 units already set up to be built on it, and, it was gonna be small homes, probably average 1,000 square feet. The range would be 700 to 1,200 square feet, and it was on small lots, and I was like, “We can sell these. We’re hoping to sell these in the $300,000 range,” open the door for the next generation to be able to get into a house. And, partway through the process, the city came back to us and we went to renew the PUD, and they said, “Sorry, you can’t do that. There’s new green space requirements, and your plans don’t, match those requirements.” And so they shut the whole project down. And so it was very frustrating. I wasn’t in the legislature at the time, but I saw it as a real issue back then, and I... and it just became more and more of an issue.

David Roberts: Awesome. And Megan, same question to you. You were a librarian for many years and then became a lawyer, an employment lawyer, and were appointed to the legislature a few years ago and then ran and won your seat. What brought you to the housing issue specifically?

Megan Egbert: Yeah, it was actually during the pandemic, myself, like many other Idahoans, were faced with no childcare while we were still trying to work. Which was a very frustrating experience that I know many can relate to. And, I have the, you know, fortunate ability of having a mother-in-law, father-in-law who live out of state, who are retired, who were willing to look for a home here to help with childcare during this time. And I think that that was the first eye-opening experience for me was, you know, they were moving from Chicago, or in theory, were willing to move from Chicago- to Idaho to be close to family. And there was just no options. It was not even a possibility to move here during that time. And then, you know, the second thing that has happened is I have older children. My oldest is 20 years old. She works in the medical field. She works at a hospital that’s about, you know, a 20-minute drive from our house, and she recently, she’s still living at home, started looking for a studio apartment, you know, in a, in a suburb of our capital city here, Boise, and cannot find a studio apartment, that costs less than my mortgage for a 4-bedroom house. And so I think there’s just 2 examples of why this, you know, became so important to me. And then mostly it’s just because this is the most important issue facing Idahoans right now. We know this from multiple surveys and just from our own conversations with people, is that Idahoans are getting priced out of living in Idaho.

David Roberts: Mm-hmm. Well, let me stick with you for a second, Megan. I wanna hear a little bit about this committee, this interim housing study committee, you were on. This was modeled on a similar committee they set up in Montana. I’m sort of curious, you had this room, you have these free market North Idaho Republicans, you got Boise Democrats, you got realtors, home builders, a developer, and the apartment association, the city of Boise. It kinda sounds like the setup for a joke. I’m sort of... I’m very curious how that went down in the room, how that felt in the room, and sort of like what you learned through that experience that you didn’t know going in.

Megan Egbert: Yeah. It was an amazing experience. I will say, though, I came to it late. I took somebody’s spot on the committee, when they stepped down from the legislature, so I was trying to do double duty of catching up. I think the beauty of the committee comes in… is exactly though, what you were just explaining of, you know, how different the perspectives were that were on it. And you know, I myself, although, am technically a Boise Democrat, I probably find myself agreeing more with the free market North Idahoans- uh, on many, many issues, this being one of them probably. And I was mentioning before we started here, I grew up in North Idaho. And it was eye-opening for me, I think, that we got to travel the state with this one perspective that we were looking at, right? So we have industry folks, we have legislators, we have cities, counties, we have representatives from everywhere, and we got to travel the state and look at this one problem. And I think the most eye-opening part for me was that it became very clear that this is not a Boise problem. This is not a Coeur d’Alene problem. This is a statewide problem, and I think anybody who participated in that committee would have to say the same thing. We can talk about local control all we want. Local control makes a lot of sense when something is simply a local problem. This is not. This was impacting the entire state, and there was these common themes that kept coming through in the process.

David Roberts: Interesting. Interesting. All right, Ben, I want to do, a little work here just going through the bills. So there’s a, there was a lot of bills involved. I think there were, like, 8 bills involved totally. I think 6 of them ended up passing, 2 didn’t. I wanna start with the 6 that passed. I think what’s kind of interesting here is you introduced a bunch of these bills early in the session. They ended up getting stuck in committee, basically. Didn’t make it out of committee. So you kind of had to go back, regroup, do some discussion and some compromise with some of the opposition forces, do some rewriting, and then came back later in the session and then ended up passing a bunch of them. So I kind of want to go through the bills and talk about what happened and talk about some of these compromises that you had to make to get them through. So let’s just walk through the bills. We’ll start with SB 1354, the ADU bill, ‘cause I think that’s one of the big ones. Just talk about what that does.

Ben Toews: Yeah, so first of all, Idaho operates based on something called Dillon’s Rule. Essentially any local municipality, whatever power they have is actually granted to them by the state. There’s some states that have a home- that’s a home rule, and, the cities probably in their constitution actually have certain, powers that are granted to them. But Idaho is different than that, and with that means that there’s no reason why at the state level we can’t make some of these decisions, especially when they have to do with property rights. That specific bill gives homeowners or property owners the ability to build an ADU on their property by right, and stops the cities from stopping, from stopping those builds. The importance of ADUs, can’t really be overstated. It opens up the possibility for, you know... Traditionally, they’re called mother-in-law’s quarters. But, right now I have, 2 college-aged daughters living in my home and one’s building-

David Roberts: Same. Same, Ben. Same.

Ben Toews: And one of them’s building out a van to live in because she has zero ability to see a path to homeownership. And even like Megan was saying, even renting is difficult. So she’s building out a van and planning to live in it, and I’m like... I mentioned it in hearings a few times, I’m like, “Hopefully the cities aren’t listening, but my daughter’s probably gonna be living in her van against some city code.” And that’s the reality of what we’ve come to. But that bill, yeah, it’s just meant to open up the doors for families to live or live together on the same property. It allows, maybe retired people to downsize and live on the same property as their grown children. What does that do? It opens up inventory in the, you know, in the larger homes for people to buy. And when inventory gets opened up, it can drive the price down. So really important bill. I- what I- some of the things I love about it can create supplemental income for homeowners, so it could open the door for them to be able to, afford to buy a house if there’s an ADU on it. I had a neighbor a few doors up from me. She was, a stay-at-home mom, and she was able to stay home with her 2 daughters, because she had a vacation rental and an ADU on her property. Up until the city came and shut that down. And then she went to work, and, one of her daughters was essentially a latchkey kid from having Mom at home to, you know, coming home from school without her mom there. That’s the stuff that drives me crazy and makes, these types of bills so important.

David Roberts: And, so one of the, one of the sort of compromises, not just on this bill, but on almost all the bills, is originally they were supposed to apply to cities with 5,000 or more residents, and that got bumped up to 10,000 or more. Does that bother you at all? Why did that come about?

Ben Toews: Yeah. Really we’re talking about rural communities, smaller cities, and, this is really probably gonna impact places where there’s populate- more population density, more so than rural community anyway. So we didn’t feel like that was a major concession, and it kinda... Obviously for political reasons, you have representatives and senators that are, that are in communities where their district might not even have anything over 10,000, people in it, so suddenly they don’t really care about it. So it, opens up the possibility for them to vote and not have to worry about their cities being upset.

David Roberts: Right. Right. And one other thing about that bill is the homeowner association, this is... HOAs of course are sort of a, you know, a fraught topic when it comes to housing. And I think the where you ended up on this bill is a new HOA can prohibit these ADUs, but an existing HOA can’t remove the right to build ADUs without, through the unanimous consent of the HOA. Is that, is that roughly right?

Ben Toews: Correct. That’s exactly right. Yeah. Essentially you can’t change the rules once people, sign into an agreement, and whatever they signed onto should be what it stays at. The idea of letting, an HOA change the rules, I think it’s wrong really. And the sad thing is, I mean, we had to make those concessions to get this through. The frustrating thing is people would say, “Well, if you don’t, if you don’t want the HOA rules, then don’t buy a house in an HOA.” Well, somebody told me that around 90% of the homes that are being built are in HOAs. So I think that’s really not an honest argument, because if you don’t have any other options, if there’s only 10% of the inventory is not in an HOA, you really don’t have that option.

David Roberts: All right. So other bills. There’s SB 1352 about starter homes. Just quickly tell us what that one does.

Ben Toews: Yeah. So it allows, it allows starter home subdivisions to be built, on lots 4 acres or more. A starter home subdivision can be something that has smaller lot sizes. The idea there is to, a lot of the cities will block smaller builds, and obviously the dirt is, like, one of the biggest costs of a, of a single family residence. So restricting the cities from having minimum lot sizes that are larger than 1,500 square feet actually allows some of these smaller homes to pencil and the developers to be able to build them.

David Roberts: Right. And that’s gonna, that’s gonna allow up to 12 homes an acre, so just allow smaller homes to be built. Then there’s a bill on manufactured homes

Ben Toews: Yeah, the manufactured homes. I mean, manufactured homes are not the same as what we envision. I lived in manufactured homes 3 times, 3 different manufactured homes in my childhood, and the manufactured homes today are completely different than they were back then. They look a lot like, a stick-built home, something that you’d see in a regular neighborhood. And so that bill allows by right for, manufactured homes to be put in a single family, zoned area.

David Roberts: Interesting. Interesting. And then here’s a bill that’s really interesting to me ‘cause this is a hot topic. They’re the hot topic everywhere where housing comes up. HB 706 is about single-stair buildings. Talk briefly about what that does.

Ben Toews: Yeah, so, it’s really requiring double, 2 stairways, in these smaller apartment buildings. Really makes it cost-prohibitive to build those. So the single stair... And I didn’t actually champion this one, it was Senator Rabe that championed it. But, it allowed for just one stairway as long as you had, a variety of things like sprinkler systems. It’s a really common sense bill. The idea of having to have, 2 stairways when you have all these other safety mechanisms, was pretty ridiculous, but it was a battle anyway. It got passed by one vote.

David Roberts: Just quickly, who... A battle with... Who’s out there trying to insist on 2 stairs, 2 staircases?

Ben Toews: That would be mostly the firefighters.

David Roberts: Ah, yes. This is... Yeah, that’s always... I mean, I don’t wanna get stuck on this, but that’s peculiar to me ‘cause in Europe, you know, if anybody goes to Europe, these are... these single-stair buildings are absolutely ubiquitous there. And they, and they enable design that’s much more friendly and costs that are much lower. And they’re not... They don’t have any, like, epidemic of apartment buildings burning down in Europe.

Ben Toews: No, the studies, the studies show that there’s, like, I think it was zero fatalities, but - Ali had all the information.

David Roberts: There’s a big fight in Seattle right now too. They’re gonna have some real single-stair champions out there in Seattle right now. Okay. Then there’s... This is also an interesting one. This one is about permitting shot clock, basically like a time limit on permitting, you know, ‘cause everybody knows when it comes to building things, permitting is a huge gateway you have to pass through. What does this one say?

Ben Toews: you know what, I have... I don’t have that information right in front of me, but the idea is, the details of it, but the idea is just to make sure that these projects can be approved in a timely manner. A lot of times they’re getting stopped up and sometimes they’re getting blocked completely just by kind of, you know, delay, delay, delay. Around 25%. They’re estimating around 25% of homes now are... the cost is in, you know, the whole process with the cities.

David Roberts: Yeah. Well, just for the record, it’s 6 days. There’s a 6-day-

Ben Toews: 6 days,

David Roberts: yep ... It says the city has to give you a permit within 6 days, and if it doesn’t, then you can bring in a third-party inspector, do the inspection yourself, and the city has to give you your fee back, your permitting fee back. So... And that one passed unanimously. Everybody seems in favor of that one. And then finally, the final one that passed is about lot splits. I don’t know if you have anything in particular to say about this one real quick.

Ben Toews: Yeah, it’s really, it’s really meant for... It’s a financing mechanism to allow a lot split to, make it easier to finance like an ADU on your property. So allowing it to be 2 separate pieces of property so that banks can loan on them separately.

David Roberts: All right. 6 bills that passed, and that is, a lot. That’s a that’s a, that’s a lot of, that’s a lot of reform. That’s a lot of legislating, thus the, thus the miracle. I wonder, how do you feel about the compromises you make, you had to make and the opposition you ran into, do you feel like there was just a lot of fear? Was there a lot of sensible opposition, or is it mostly just people scared of change? And how do you feel about the compromises you ended up having to make? Do you feel pretty good about how things came out?

Ben Toews: it’s a little bit mixed. I think that they had some realistic concerns. And I lis- I sat down and had conversations and listened to the concerns and incorporated amendment after amendment. But here’s the here’s the really frustrating thing, is I would take all of their amendments, like, I took every amendment they asked for on the twin home duplex bill, and I expected them to go neutral or to support it, and they still opposed it. And so after I dealt with that a little bit, I was just like, you know, it’s tough to negotiate with someone when it doesn’t seem like you can ever satisfy their demands. So, but I mean, I think we incorporated some good changes. We definitely narrowed the impact of the bills, but, the way... I’m totally an incrementalist. I believe that, moving things forward, we can maybe allay some of their fears about what might happen. To me, most of them were irrational fears, and so I tried to deal with the ones that were reasonable and try to narrow it enough to get the votes to get it through. But, I mean, the na- the natural next step when you’re doing incremental, legislation is you narrow it to what, will get it done, and then you just expand it. So we’ll look at areas of impact as a way to expand the legislation in the next session.

David Roberts: Okay. And one other question about the compromises is these are cities of 10,000 and more, but counties are excluded from the scope of these bills. I’m just curious about that because isn’t... aren’t the sort of unincorporated areas in counties, isn’t that where a lot of the sort of exurban sprawl is happening? Do you worry about excluding counties? How do you feel about that?

Ben Toews: It took one major organization off the fight. So it was very, it was very helpful. That was my comment on areas of impact. Those are county areas that the cities are growing into. Most of, like, a starter home subdivision, you’re not gonna see that put out in the middle of a county ‘cause it’s gonna hook to city sewer and water.

David Roberts: Mm-hmm.

Ben Toews: And so, the concept is that the natural area to move to is the area of impact that’s inside the county and the most likely place to actually build, those starter home subdivisions. The ADUs on the other hand, there’s no reason why we shouldn’t move those into the counties right away.

David Roberts: Hmm. All right. There were 2 bills, 2, I think, significant bills that ended up not passing, and they both didn’t pass because of the House. They both kind of died in the House Business Committee On a 7 to 7 tie vote, and I guess it, if you get a tie vote it doesn’t pass.

Megan Egbert: Correct.

David Roberts: I wonder if you have any insight into those. One of those, Ben referenced it briefly, is this duplex bill. Talk a little, just talk briefly about what that said and what your diagnosis is for why, for why for why this one got stuck.

Megan Egbert: Yeah. So the duplex bill would’ve created a new section of code that would’ve prevented HOAs, cities or counties from banning the construction of duplexes in residential areas where single family homes were already allowed. This is something that, like, in my own city, in the city of Boise, they’ve already allowed this, for decades actually. This, it passed strongly on the Senate side. I suspect that if we would’ve had more time here towards the end, we could’ve gotten it through the House side as well. I am, you know, very hopeful that this is one that we will see come back this session. Um- you know, to me it’s very similar to the ADU bill. You know, the first-

David Roberts: Yeah. This, well, this was my question. Like, if they’re, if they’re okay with ADUs and they’re okay with small lots with starter homes, and they’re okay with all this other stuff, why would duplexes be a red line? I don’t, I wouldn’t totally get it.

Megan Egbert: Yeah. It’s perplexing to me. You know, what, the first place I rented out of, you know, moving out of my parents’ house, because back then we could move out of our parents’ house. I w- You know, I join you both in having 2 college-age, you know, students, who live at home. But the first place I moved into was a duplex where it was an older couple on one half of it and then they rented out the other half, you know, to compensate for some of their mortgage on the property. It makes a lot of sense. The only argument I heard about this one, which I do not agree with actually at all, but, you know, somebody said that duplexes, you know, decrease your property value if there’s duplexes in your neighborhood. I think that’s pretty absurd. We’re literally just talking about, you know, the same type of dwelling as a house. It just has, like, a wall in between it.

David Roberts: Yeah.

Megan Egbert: It actually saves on infrastructure. You know, there’s a lot of reasons that duplexes make sense. So I’m very hopeful that we can bring that one back with a little bit more time. And then the other one was what we referred to as kinda the Yes In God’s Backyard.

David Roberts: Um- Yes, YIGBY.

Megan Egbert: YIGBY!

David Roberts: This was, there was one of these in Montana too. I think that these have popped up in several places.

Megan Egbert: Yeah. I think this is also a really important one. So this would permit the development of mixed use and multifamily development on land that’s owned or leased by a religious organization. So as an allowable use without any special approval from elected officials. And there’s some exceptions in there of course. But it would also ban, you know, them from restricting the building height, like arbitrarily. It would put some sideboards on what they could declare for the setbacks, and like parking minimum requirements. All the ways that we sometimes see people try and get around these things to begin with. But this one is so important in Idaho I think because, you know, we’re... We have a lot of religious entities in our state, and they actually own a lot of land.

David Roberts: Yeah.

Megan Egbert: Like I did a, an internship before for the city looking at this specific issue, was part of what I was tasked with doing, because there’s a lot of faith-based communities out there that want to do something about housing. Of course, it’s the biggest issue facing our state right now. Why would they not want to help? And they are so restricted from being able to help. So this one-

David Roberts: Wasn’t there a big fight in Boise specifically about there was a church that was gonna build a bunch of homes for homeless people? There’s a record of this happening-

Megan Egbert: Yeah, we’ve had a few different things, right? There was a church that was going to use its land, to build some housing, and I believe that it got denied. That might be the one that you are talking about. And unfortunately, sometimes in this process, we think by having this process, whether it’s planning and zoning or city council, these hearings, you know, that we can, somehow hear from the majority of stakeholders. But I think that’s not oftentimes what happens. We just hear from a very vocal minority group.

David Roberts: Yes. A notorious feature of housing politics-

Megan Egbert: Correct ...

David Roberts: is that the people who show up don’t necessarily represent, you know-

Megan Egbert: Correct ...

David Roberts: the broader polity, let’s just say.

Megan Egbert: Yeah. So to me, this bill is really just extending some of, you know, our other ADU type ones about, you know, the rights that you should have when you own property, and really just extending those to religious organizations as well.

David Roberts: And do you think that one, is coming back? Both these you’re gonna, you’re gonna push for next session?

Megan Egbert: Yeah, I’m very hopeful this one will come back as well. I think there was just a lot of misunderstandings around this one, specifically around people thinking that this would, you know, allow them to open, homeless shelters, which is not the intent of this piece of legislation. So I think that there’s some education work for us to do with the committees, but I am hopeful this one will come back as well.

David Roberts: Interesting. Interesting. Okay, that’s the concrete legislation that was on the table this session, and as listeners can tell, that’s, it’s a lot. There’s a lot involved. It’s a very, active session. Ben, I wanna come back to you and talk about what I think is a sticky and sensitive issue there in Idaho specifically. So without getting too deep into the details, basically, Idaho has this law that caps the amount of property tax that cities are allowed to gather, and it caps the growth of property tax. And it’s a little bit complicated in practice, but the upshot is, basically, as I understand it, like, if a city approves a big new subdivision, the infrastructure costs that they have to pay to support that subdivision show up immediately. But the property tax that they would use to pay those infrastructure costs doesn’t show up immediately. It shows up later, and it shows up in sort of, a cut-off limited form. And so this kind of sets up a dynamic where rapid growth hurts city budgets, which is supposed to be sort of an inversion, I think, of what you would want. Like, cities are supposed to benefit from growth, and this sort of makes them kind of averse to growth. And so this was, I think, by common agreement in the legislature off the table during these, during these sessions for all this housing bill. But I wonder, like, do you not view this as kind of an undertow pulling against all these reforms, like making cities averse to growth in some way? And one other thing before I turn it over to you. All these bills have provisions in them, loopholes, I guess you would say, or provisions basically saying cities can opt out of these laws, obeying these laws if they can show that they can’t support the infrastructure needed to build the new housing. But if you have this property tax provision in place, it almost seems like, by definition, mathematically, they can’t support the infrastructure because they can’t raise the property taxes. So I just wonder, like, do you worry that this provision is going to undercut almost all your reforms? And I guess I just wonder how you think about that whole issue.

Ben Toews: Yeah, definitely. I’m very familiar with House Bill 389 that was passed in 2021, before my time in the legislature. I wasn’t a part of the debates, so I don’t know all the rationale. I think the concept was probably not thinking about how quickly Idaho would be growing. And the idea was just to try to make sure that, you know, the local property taxes weren’t going up really quickly. I think it doesn’t make sense at all in the, in the case where an area is growing quickly, and I think that the philosophy that growth should pay for itself is something that’s, pretty well understood, and, you know, I think most people agree that growth should pay for itself, and this kinda... This definitely stops that. So I’d love to see us, do something to reverse that, or at least, at least change it for areas that are growing quickly, because I think it is a, I think it’s a pretty serious problem. I definitely think it can have a negative impact, ‘cause the exact places that we need these homes built, are the places that are running into those caps, right?

David Roberts: Mm-hmm. Politically speaking, do you see any prospect? I mean, 2 bills to loosen, not even remove the cap, but just loosen the cap a little bit, died this session in the legislature. Do you see any prospect politically for that change? I mean, the Idaho Freedom Foundation, the sort of anti-tax group, basically mobilized and killed both those attempts. Do you see politically any prospect for that changing in the future?

Ben Toews: I actually, I believe there’s an appetite for it in the Senate. I don’t remember where those ones died, but I think there’s more likely an appetite in the Senate. My perception is that there’s, House leadership has actually, been opposed to changing that and had maybe championed the original legislation. Maybe Megan can speak to that.

David Roberts: Yeah, Megan, what’s your take on the, on the pro- on the whole property tax mess?

Megan Egbert: Yeah, it’s definitely a problem. I think there’s no arguing that. It, I’m pretty sure it did die on the House side. Or one of the fixes at least. The House Bill 842, which was proposing basically doubling the ceiling, died on the House side. I will just say though, you know, this is an election year, and, you know, what we’ve seen in Idaho is, elections can drastically change the appetite, of one of the bodies, so I’m hopeful that we are going to continue talking about some solutions, ‘cause it’s a huge problem. It’s a huge problem for, like, our ambulance districts, our fire districts. And, so I’m hopeful that we might get some new ideas and some new votes on the House side that could, increase the appetite for it this year.

Ben Toews: Yeah, and I sit on the local government tax committee, and it was like there was Band-Aids being set, sent over to us to try to fix all of the issues, and it’s like a, it’s a bigger issue than a Band-Aid’s gonna fix. So we passed a few pieces of legislation to try to stop the bleeding a little bit, but there needs to be some major reform.

David Roberts: Interesting. And Megan, you traveled around with this committee and talked to a lot of diverse people on the committee. Do you know if the public makes the connection? You know, like, obviously if you go to the public and say, “Hey, we wanna cut your taxes or limit the rise in your taxes,” all things being equal, people are gonna be like, “Yeah, that sounds great.” Do you know if they make the connection between that issue and the housing issue, if people understand this?

Megan Egbert: No, I think as a, as a general idea, people understand, like, personal property rights and those type of things. I think the thing that’s really hard, really complex about housing is the knee-jerk reaction that we see from some municipalities actually make the situation worse, right? So people think that their, you know, city is being overcrowded, and so they might want to set a higher density for lot requirements, right? Like, really high, like 8,500 square feet or something like that. And they think that that is going to help, and in reality what happens is the opposite, right? Because all that means is that now you’re pushing people out to areas where there is no infrastructure.

David Roberts: Mm-hmm.

Megan Egbert: Because, you know, our college-aged kids can’t afford a 8,500 square foot lot. We’re really just limiting then who can live there, and then it just becomes a bigger and bigger problem. And I found that that’s one of the hardest things to explain to this about, for a lot of people. That they’re feeling it, right? They’re feeling it in their taxes, they’re feeling it in the demands on the streets, you know, on the roads around their houses. They’re feeling it just in terms of the p- our population is growing. The thing that I think we have to do a better job of connecting is we can’t just stop growth. It’s not possible. We can’t just tell people- And sometimes the ways that we’re trying to curb it are actually making it worse for everyone in many of these scenarios.

David Roberts: Yeah. Well, I think more to the point, you can’t stop growth and still have all the amenities and nice quality of life you want. Like, you can point to cities where growth stopped- and it did not turn out well for them-

Megan Egbert: Correct.

David Roberts: For those cities.

Megan Egbert: Correct. But then your children can never live there. So if you’re wanting them, you know, to stay here and, you know, they will have to go somewhere else. So yes, it’s... You can do it. Everything will stop, and, you know, the age will stop as well.

David Roberts: Yeah. Here’s a question I wanna ask both of you. I’ll start with you, Megan. So, the interim committees, this committee’s recommendations, the ones that ended up getting kind of taken up, made into bills, and passing were almost all regulatory reforms on the supply side, which sort of kind of by definition cost the state nothing to implement. They’re just reforms of regulations. Then there was a sort, you know, the other recommendations which have to do with subsidies or financial incentives for certain types of housing or maybe in certain places. None of those made it. And I, and I think that probably just has to do with the sort of, sort of ideological balance of the, of the legislature. You know, regulatory reforms appeal more in a red state. But I wonder, Megan, do you think that regulatory reforms are gonna be enough, or do you think for certain, you know, maybe smaller homes or low-income homes, et cetera, that at a certain point you’re gonna need financial incentives. You’re gonna need the state to spend some money to get things rolling.

Megan Egbert: Yeah. I think it’s a definitely a yes and question. So part of it, I think you nailed it, was just like what is the appetite of the legislature right now? Most of that certainly focused around regulatory measures. We actually broke into some kind of interim committees or some smaller committees within the full housing committee. And I was the lead on one that dealt with finance.

David Roberts: Mm-hmm.

Megan Egbert: And part of the other thing is that last year we were really facing a budget situation in our state as well, where we had to make some pretty drastic cuts to our statewide budget in the middle of the fiscal year even. And so that wa- it was also off the table for that reason as well, right? So we have made, you know, workforce housing type investments in the past. I am of the belief that, you know, when I first joined the committee, housing policy wasn’t completely new to me, but thinking about it through a statewide lens was. And, you know, within the first few hours of reading reports and getting information, I was like, “Okay, this is one of those really sticky problems where there is not going to be a solution.” It’s not going to be we pass this piece of legislation and we are going to fix, you know, the housing situation in Idaho. It’s gonna take everything. It’s gonna take everything for multiple years trying different things, adapting it as we learn more. So I am hopeful that in the future we might be able to talk about some financial incentives again. I think it’s really important. But I don’t think we were there for the last session, and I don’t know that we’ll be there for this session.

David Roberts: Ben, I’m curious about your take on this same, on the same question. Do you think that just regulatory reform sort of just like kind of unleashing, un-inhibiting the market is going to be enough? Can you see yourself ever coming around to the need for more sort of direct state funding or intervention in this way?

Ben Toews: I’m definitely more, looking at lowering regulatory barriers and letting the market fix the problem. I think it’s obvious based on, more of my ideology. And I am encouraged. Like, I literally this morning, went through a housing development. These are kit-built homes. They literally drive a semi with everything to build a house. They can build it in 21 days. And, they’re selling for in the $300,000 range, and, they’re perfect starter homes. I do think that there’s a, there’s a huge demand. I was told over and over again, that from the cities and from different people, if there’s really demand, you know, it would be taken care of. Well, no, it’s, that’s not the case. And I’m already seeing how the market can solve the problem. I also, I love there’s some actually, some local nonprofits that are, been pooling money and helping with, down payment, helping pay the down payment, and then, when somebody sells the, if they sell the property in the future, it replenishes that fund. And, I love, more private solutions to that, obviously. And I do think that when people care about their community and they’re, they care about the next generation, we can have more and more of those, having a big impact.

Megan Egbert: Yeah. No, I actually agree with a lot of that. And, you know, in talking about kinda the private-public partnership thing too, I think when we, when we think about money, you know, we always jump to the conclusion that if we’re going to somehow financially help affordable housing in Idaho, that we’re looking at, like, you know, free giveaways, you know, the government intervening. But I think some of the more creative ideas that we discussed too is maybe that’s not what’s right for Idaho, but is there a way that we can incentivize through, you know, tax breaks or something else, people who are using their land in that way where they are ensuring that there’s going to be, an affordable cost for any housing that’s built on it, in the future. So those type of things too I think are more likely what we might see in the future, from Idaho.

Ben Toews: Yeah, I love the idea of incentivizing developers, and if they’re willing, um- To make it based on income level or to have, you know, some restricted deeds where it’s for homeowners. Those are the things I believe that it’s so, SO important. It can’t be overstated how important it is that people own homes where they can put down roots and become a part of the community. And I mean, I’ve lived in apartments, I’ve lived in a lot of different situations, and I just believe that it’s really important. I know it’s not always possible, but as much as we can, I’d love to see more and more people being able to own their homes. Usually it’s the, you know, the most common, wealth creation for the average person is, owning a home and building equity in that home, and then they use that equity to either, you know, get a bigger home or to start a small business. You know, that’s really what drives a lot of what makes our, Idaho so special.

David Roberts: I wanna return to that in a second, but real quick, Ben, cities have until February, sometime in February, to bring their codes into compliance with this law. Some cities are more enthusiastic about that than others. I think there has actually been quite a bit of resistance in Coeur d’Alene, your district, to this. And you, as you said, you’re on the, sort of the city committee, the local, you know, the local, control committee. I’m curious, you know, we’re coming back to this issue of local control versus sort of state control. What are the mechanisms the state has to force compliance on this stuff, basically? What do, what does the state do if cities push back or resist or drag their feet? Are there enforcement mechanisms? How do you navigate that?

Ben Toews: The, I mean, the hope would be that the cities would follow the law. Uh- Yes. And I think that-

David Roberts: Well I don’t know if you’ve seen California’s experience on this.

Ben Toews: Yeah. I think there’s obviously, they have some liability they have to look at when, they’re not following the law, and a developer can, you know, can go and sue the city and say, “You have to follow the law.” So that’s one, and that’s comes from the private sector. I mean, there are other mechanisms we have. I really would hope that we wouldn’t get there, but, there are, there are tax funds that are flowing to the cities. There’s a lot of different ways, levers we can pull, but I’m hoping that we don’t get to that point, and it’s February 1st when they have to have it incorporated. I’m actually not as concerned that they’ll ignore it completely, as they’ll find other loopholes that they can use to block it. I think that’s more likely.

David Roberts: Yeah. Mm, that’s just... Yeah, and that also makes enforcement trickier too because, you know, some of the loopholes are of dubious legality, and then you get into legal s- you know, legal disputes, and it gets tricky

Megan Egbert: Well, and I would just add too though, you know, 2 things. One, I think there’s always gonna be, you know, some potential bad actors out there, but I also feel like we are hearing from a lot of cities right now who are actually really thankful for this. Like, they recognize that this was necessary. They did not know if they were going to be able to do it at that local level, because of that very vocal minority that we’re talking about.

David Roberts: Right. And so I think that there’s a lot of people who know that this is going to benefit the state, even at the city level. And then the other thing that I think we’re dealing with a little bit is just some misinformation. Like some cities not fully recognizing yet, you know, the, you know, I’ve heard people, for example, with the starter homes talking about, you know, infill. This isn’t about infill, right? So, like, there’s still some misinformation out there too about the legislation that was passed. So I think once, you know, again, hoping everybody is just operating in good faith, once they get it in place, once they see, you know, that it’s actually very workable for Idaho, it’s going to feel a lot better. It’s just change is hard for everybody, and we just have to work through that part.

Ben Toews: Yeah, I agree, and I think there is political pressure at some point for the local city council and the mayors, you know, because even though they’re that really loud vocal group that tries to stop it, there’s probably 10 people for every one of those. And there is definitely an appetite for change. I mean, all the polls show that it polls very highly for us to figure out how to help, people get into homes and deal with housing issues. So I think that there, at some point, the political pressure, knowing that there’s solutions on the table and they’re not, implementing them, that should help as well. But I just wanna point out that those small number, the people that are out there working hard, raising families, those are the people that often aren’t gonna be having the time to go to the city council meetings and, you know, weigh in. And so I think that they’re gonna have to weigh in at the voting booth since they’re not at the city council meetings.

David Roberts: Well, also, like, someone who might be able to buy one of these ADUs doesn’t necessarily know that they’re in that constituency, you know what I mean? That’s sort of like a they’re not gonna go mobilize for something that might happen in the future that they might be eligible for, you know? They don’t have the same direct kind of involvement.

Ben Toews: Right

David Roberts: Quickly on this philosophical issue. Ben, you have this op-ed where you sort of distinguish what you call horizontal density from vertical density. Horizontal, I think, refers to getting more people in homes, home ownership, versus vertical, which means building up and more rental basically. And you express a pretty clear preference for the former over the latter. I’m just curious, I mean, there are a couple of bills here, the single-stair bill, the YIGBY bill, you know, would mostly be about, subsidized rental housing. I’m just curious of what’s behind that distinction and why you think, you know, renting is inferior in some way.

Ben Toews: Certainly. Yeah. I mean, and like I said, I rented my first house. I lived in multiple apartment buildings growing up, so, I don’t... I mean, I understand that you just have to find a place to live and if the situation doesn’t allow, then you know, you might not be able to. But the clear preference from the vast majority of people is to own their own home. And the difference is that, obviously, with rent, you’re perpetually, you know, you’re not building any wealth and you’re just perpetually working and paying the rent. The rent can go up. It’s outside of your control. You think about the stability that comes from owning a home, building equity, having a monthly payment that you know what it’s gonna be for 30 years. That creates stability and it, allows people to build wealth, and that’s really important, I think, for our society. I also think that, there’s a, there’s more... Like when I was in, when I was younger and we were living in apartments, I mean, I might live in one city one year and then another city the next year. And so I like the stability and the way that it allows you to put down roots and become more a part of the community when you’re able to own your own home, and that’s why I’m such a proponent of what I call horizontal density. Like, I’m like, if we have to build houses closer together, fine, but people need a way to put down roots. And so, yeah, that’s the long and the short of it.

David Roberts: Do you worry though that the fact that in America, I think maybe more so than a lot of other developed countries, that most people’s wealth is in their home is part of what’s driving homeowners’ resistance to some of that horizontal density? Do you know what I mean? Like, if your property value is your wealth- You know, that’s what... Then you’re gonna fight off anything that you worry might lower your property value, like more homes or whatever. I mean, there’s, to some extent-

Ben Toews: Yeah, if you add supply, if you sup- add supply, then you’re potentially, your house is worth less. I can, I can kinda see that. I think a lot of them are not well-founded fears. Like a starter home subit- subdivision has to be on 4 acres. It’s not infill. It’s not putting tiny homes in your backyard in a, in a fancy neighborhood. So I think that a lotta times pe- it comes down to people, you know, not reading the legislation, not understanding what it actually does and kind of projecting fears, into their specific situation. But I would say that it’s a very interesting cross-section in both chambers of who voted for it and against it, and I couldn’t help but think that people were mostly thinking about their own house instead of thinking about their constituents that were voting against it. You know, because, if you’re thinking about your constituents, the average age when somebody buys their first house now is over 40 years old.

David Roberts: Oh, geez.

Ben Toews: I bought mine when I was 20, I think I was 24 when I bought my first house. And I think about what that has, done for me. I still live in that house right now, and how much of a blessing that’s been, and I really want that for the next generation.

David Roberts: Megan, I wonder if you have any, or you wanna weigh in on this sort of distinction between homeowners and renters. I know that equity was a big part of what drew you to the housing issue in the first place, the sort of, the equity issues involved in the way we’ve zoned traditionally and stuff like that. Do you have any thoughts on this question?

Megan Egbert: Yeah. I mean, like most things, I would say I don’t disagree at all, with what Ben is saying. But, you know, because my district is a little bit different, I might just approach it a little bit differently. I get asked all the time, “Well, what are you doing for renters,” right? There’s always going to be some renters who, regardless, who just aren’t at that place yet where they can buy a house. And, you know, I am kind of a purist when it comes to supply and demand here. I actually believe that building more affordable housing, starter homes, you know, that people can begin purchasing, is going to drastically help renters because it’s just going to mean that there is more and more, you know, supply out there. So I don’t think it’s like an either/or. I am, because my district is a little bit, you know, different, sometimes I do think that we need some vertical, compression here as well. But I think the most important thing is that we are creating opportunities at different price points for a variety of Idahoans, because that’s what we need right now.

David Roberts: Well, in a city like Boise, don’t you think we do need some infill? I mean, just-

Megan Egbert: I absolutely do. It’s the only choice really when you’re talking about a city this big. You can build up or you can build out, in Boise, right? And the consequence of building out is that you are eating into ag land. And so that’s not an option that I think our state is, should be interested in at all. And so for a place-

David Roberts: And you’re jacking up those infrastructure costs every time you build out.

Megan Egbert: Correct. Correct, because then people are further away from the infrastructure, right? And then you’re jacking up the costs for transportation and everything else, because then they’re having to commute to where their jobs are, right? So yeah, in my city, you absolutely, we need to be able to build up. We need to be able to build up a lot easier, but that’s not necessarily the case for everywhere. But I do think for a place like the capital of the state... that’s really important, because the alternative is just not an option, right? We can’t eat into ag land. We have a huge amount of public lands in this state. And, you know, we have historic neighborhoods here. We, any pre-war city in Idaho already has, you know, high-density neighborhoods in it. We know that it can work here. So we might be a little bit different than some places, though.

David Roberts: All right. We’re almost out of time, so I guess I would like to wrap up with a look at the future. Megan, is this committee-- is the committee done, or is it gonna, is it gonna reconvene? Is it still doing, is it still making more recommendations? What’s the status there?

Megan Egbert: Yeah, I mean, my understanding is it’s not necessarily done, but it’s also not necessarily, you know, meeting regularly right now either. I think we still have some work to do from our initial investigation, and some of the lessons learned last year. And we still need to see, you know, how the implementation of the bills that did pass, how that goes. You’re always gonna need to do some tweaking, I think- um, based on what you learn. So I’m hopeful that it was just the beginning, but that we’re probably gonna pause a little bit just to take some time and reflect on what has happened and how it’s working. But I would suspect that we’re gonna see some more bills based on the work that we did, in this upcoming session.

David Roberts: Hmm. Ben, I know you are gonna have another go at the duplex bill, and I, and I know that this YIGBY bill will probably come up again. Gonna try to push that through. Are there other... Like, what’s left on the legislative-- Are there big pieces of a legislative agenda that you think are still outstanding? Are there other bills, other areas you want to cover in coming sessions, or do you think maybe, like, it’s time to pause and see what happens?

Ben Toews: Well, anytime you have a suite of legislation like we did go through, there’s gonna be areas that you need to go back and do, you know, kinda look and see if there’s cleanup areas. So there’ll be a few cleanup bills just to, um... And it’s actually really, it works really well that the February 1st is that deadline, because we’ll be back in session and, we’ll take care of any questions that are out there. We’ll close any loopholes is my goal. And then, there’s actually a lot of opportunity for just natural expansion with incremental expansion with the existing legislation. So, I’d see that incremental expansion on the starter home subdivision. I’d see the twin home duplex bill coming back. YIGBY for sure. We’ll look further at shot clocks and things to lower regulatory barriers as far as the timing of permitting. And the cost of permitting. Sometimes it’s a constraint that has to do with, just they don’t s- don’t have enough, manpower to get that done. So there’s potential for saying, “Well, why can’t we have some type of private parties, as a relief valve if things are getting, you know, getting extended out too long for permitting?”

David Roberts: But, you know, cleaning up the existing bills, passing those 2 outstanding bills, there’s not any big, new bill that you think covers something that really should’ve been covered this time that you, that you have top of mind?

Ben Toews: No, I think it’s just building on our successes right now.

David Roberts: All right. All right. Any final words, Ben? Any final words, Megan, you wanna do, before we wrap up?

Megan Egbert: Just thanks for having us. It was a great conversation.

Ben Toews: Yeah, I really appreciate it. Yeah, I appreciate being able to get the word out. Like you said, if people don’t know about the opportunities for housing, they can’t make their voices heard because they don’t know that, you know, that the possibility’s even there. So I think that it’s important to, what you’re doing to get the word out.

David Roberts: Awesome. All right. Well, thank you both for coming on and walking us through it. Yeah.

Ben Toews: Thank you.

Megan Egbert: Thanks.

As clean electrification proceeds, more and more of the US economy is going to be dependent on the electricity grid, and the electricity grid is going to be more and more dependent on power electronics, software, and computing.

If there’s one thing we all know about computers these days, it is that they can be hacked — accessed and controlled from the outside by bad actors.

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Fears about the vulnerability of the electricity grid to hacking and manipulation have been steadily rising in recent years. Most of the power electronics — the inverters, transformers, and controllers — used to build the electricity grid come from China. If you listen to the doomsayers, they’ll tell you that China is embedding malware on all these devices, with the goal of creating some sort of apocalyptic kill switch that could take out the entire US grid at a stroke.

How much of that cybersecurity threat is real, and how much is hype?

I’ve been meaning to get to this subject for years and I’m excited that I have the perfect guest with me today. Patrick Miller helped write the original cybersecurity rules for the US bulk power grid—the NERC Critical Infrastructure Protection standards—in the 2000s. Then he became the first person in the country with delegated federal authority to enforce them, auditing utilities on the government’s behalf. Since then, he has founded a nonprofit, run a Department of Energy program, and built a consulting firm, all to advise and educate utilities and regulators worldwide on cybersecurity threats.

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It’s an unusually broad range of experience and it has made him a prized voice in the field, a level head in an area filled with uncertainty and fear. I’m eager to talk to him about how cybersecurity threats might manifest in our increasingly distributed grid and how grid engineers and regulators should be managing those threats.

Timestamps

• 00:00 – Introduction

• 02:47 – What state utility commissioners get wrong about cyber risk

• 04:50 – Real attacks on the grid so far: Ukraine, Poland, and the US

• 06:57 – IT versus OT, and why grid devices are hard to protect

• 10:30 – The NERC CIP standards: scope, requirements, enforcement

• 17:40 – Distributed resources outside the CIP perimeter

• 20:54 – Dropping the threshold to 20 MVA, and federal jurisdiction

• 29:12 – Chinese inverters and the commodity board

• 36:09 – Volt Typhoon, Salt Typhoon, and China's intent

• 39:26 – Data centers as a new attack surface

• 43:19 – The trade-off between security and speed

• 47:44 – Cyber-informed engineering and analog safeguards

• 54:05 – AI on offense and defense

• 1:02:21 – Squirrels, balloons, and physical threats

• 1:04:24 – CISA cuts, CIRCIA, and harmonizing the rules

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Website - Podcast - Apple Podcasts - Spotify - YouTube - LinkedIn)

• Patrick Miller (LinkedIn - Personal Site)

  • Ampyx Cyber (Website - Blog)

• Additional Orgs Mentioned:

  • NARUC Cybersecurity for Utility Regulators

  • CISA CI Fortify

Company & Industry News

• NERC inverter-based resource registration initiative enters final stretch for asset owners

• CISA tells critical organizations to prepare for cyber outages

• Rogue communication devices found in Chinese inverters

Books & Articles Discussed

• NARUC and DOE - Cybersecurity Baselines for Electric Distribution Systems and DER

• NERC - Petition to Revise the Rules of Procedure for Inverter-Based Resource Registration

• Patrick C. Miller - Written Testimony before the US-China Economic and Security Review Commission

• CISA - Known Exploited Vulnerabilities Catalog

• CISA - Cyber Incident Reporting for Critical Infrastructure Act

Related Volts Episodes

• The cybersecurity implications of a clean-energy grid

• Why is NERC so worried about data centers?

• Let’s dig a little deeper into virtual power plants (VPPs)

• Are plug-in DERs going to spark a grid revolution?

• Making sense of the data center backlash

• What’s going on in electricity world?

Text Transcript

David Roberts: All right then. With no further ado, Patrick Miller, welcome to Volts. Thank you so much for coming.

Patrick Miller: You bet, David. Thank you so much for having me on the show.

David Roberts: Really excited for this. This is, something I’ve been circling around for a long time, as I said, and I’m excited to dig in. So you, among other things on your extensive resume, you run a program for NARUC, the National Association of Regulatory Utility Commissioners, a training that brings state utility commissioners up to speed on cybersecurity. I guess where I’d wanna start is when those commissioners come in, I suspect that they, like me, like I suspect most of my audience, are... don’t know much, and have all kinds of weird preconceptions. So I’m curious, sort of like, what’s the first thing you kinda tell them to get grounded, and what sort of misconceptions are they carrying around with them?

Patrick Miller: A great place to start. Yeah, I do a lot of work with NARUC to help the state commissioners. As you know, where the federal regulations don’t reach, it’s pretty much left to the states, and in a lot of cases, you can end up with like, you know, 50 different directions.

David Roberts: Yeah, we’re gonna get into that later.

Patrick Miller: Okay. So, typically where I start with them is they come from varied backgrounds. They’re almost always a legal background- or in some cases they may have some infrastructure. They may have been a-- I’ve seen CFOs and other, like even general counsel from various utilities, whether it’s, you know, telecom, water, gas, electric. You start with the fact that they probably don’t understand all the technical things, and the typical questions they come with, they usually sit on one side or the other of a pretty, you know, wide divide. They either think that, you know, everything’s fine, nothing is hackable, this is all a bunch of hype- or they think, oh my God, everything is hackable and China is here to eat your children. You know it’s just, you know. So it’s kinda one or the other. There’s a few that are in the middle, but it’s a slim few.

David Roberts: That’s funny. That’s funny. Well, hopefully we can find some, chart some course in between, in between those.

Patrick Miller: That’s my goal.

David Roberts: Yeah. Yeah. So before we get into some of the details, maybe just to level set, I kinda wanna know- Are we talking about something that might happen or something that has happened? Like, have there been notable cybersecurity attacks on grids that have had negative effects, or is this mostly something that people are worried could happen?

Patrick Miller: Well, there’s a bit of nuance in the answer. There have been attacks on grid companies. We do know that. There’s public evidence of that. Most of these have been situations where the attacker is broken into the system and hasn’t done any damage yet. They just pre-position themselves. They’re holding that access. So in theory, they would use it for something, you know, bad or nefarious later on. What we don’t have is, direct examples in the US where, you know, actors have broken in and actually directly caused damage. We do have evidence of this in Ukraine, more than once, so at least a couple of extra- uh, exercises there, and then one in Poland recently. And when I talked to my contacts in Poland, they say they’ve got a long list of things they just haven’t published yet. So there are some threat actors that are definitely breaking into power systems and definitely causing direct damage, direct harm, blackouts, that kind of thing, just not in the US.

David Roberts: Just curious, in Ukraine, is that, are those state actors? Is that Russia doing that or do we know?

Patrick Miller: Yeah. No, it’s definitely Russia. Yeah, and same with Poland.

David Roberts: So this is s- this is something that’s being used as a warf- a proxy for warfare kind of thing.

Patrick Miller: it is. It’s a proxy for warfare. It’s also a proxy for influence. So, you know, Poland is the major channel that Ukraine gets supplied through, so-

David Roberts: Hmm...

Patrick Miller: Poland’s also been under heavy attack from Russia as well, with basically the same system, same type of attacks.

David Roberts: Okay. So for the US, though, we’ve documented access, but we’ve not yet had anyone, like ‘cause a blackout, say, or something like that.

Patrick Miller: Right. Right.

David Roberts: Okay. So I thought I’d start with a basic distinction here. I think a lot of people, when they hear the word cybersecurity, they think about IT. They think about information technology, protecting passwords, protecting data, preventing identity theft, that kind of thing. But a key distinction here is that, is that cybersecurity in the way that you are dealing with it is mostly about OT, operational technology, physical processes, and those are different. That’s a different approach. So talk a little bit about that distinction and how it, how it’s meaningful for cybersecurity.

Patrick Miller: Sure. Sure. I mean, IT still plays a role. I mean, information technology is how any company runs these days. You pretty much can’t work without your email and your corporate systems and your data. You know, all your customers are in there, all of your billing is in there. In the OT world, in the operational technology world, it’s the actual interface to the physical world. So, like the sensors that take things like fan speed or oil viscosity or temperature. So this is like, you know, think of how much voltage is on the wire, for example. That’s sensed by a digital component now. And the OT is what directly touches the physical world. Like, it’s the last line. So you would click on a screen somewhere, like a picture of a breaker, you click on it, and it will open an actual breaker out in the field. And that travels from someone’s IT system, like a, you know, standard workstation. It’s a Windows machine with a program on it that runs a, kind of an operational window into what they’ve got in their field. So they’ve got transformers and breakers and all the things they use to operate their power system. They can operate those from, like, a control center, through this kind of IT/OT partnership versus send someone out in the field to actually go open that breaker, right? So that’s the automation that we get with this OT. But these systems are not like, um... The OT systems are not like, you know, Windows or Unix or a database or a web server. They’re literally purpose-built devices. They do one thing. They, like they open the breaker. They sense the voltage. They don’t have, like, a, an operating system. They’re not... You know, they’re basically just what’s called firmware and a configuration file. You just turn it on, and it reads a configuration, and it does its thing. So they’re very interesting. And, um-

David Roberts: It seems like on, it seems intuitively like that would be a little simpler and maybe a little easier to protect. Is that right or wrong?

Patrick Miller: it’s easier to hack as well, so, because there’s not a lot of... I mean, they weren’t really built... I mean, think about this. When we first built this out, they were never really connected to anything, right? They were just by themselves. So now that we’ve networked everything and we’ve made control centers that can control, you know, everything in the field, so you know, generation assets, transmission assets, distribution assets, with all of that connectivity, you end up with devices that were never really meant to be connected that have some kind of connection to them. So they weren’t designed, to be protected in the same way. So we have to come up with really unique and interesting, you know, ways to isolate them and limit access and that kind of thing because I mean, realistically, you know, to update them, you have to reboot them in almost all cases. If this thing is required for the grid to run, you don’t just reboot it because you get a blackout.

David Roberts: Right.

Patrick Miller: So you end up with, you know, you gotta wait for the right moment. So you have these, this kinda mishmash of various things. So our main protection is just to isolate the heck out of ‘em and architect it so that it’s very difficult to get to them unless you know what you’re doing.

David Roberts: Hmm. Okay, talk a little bit about these, we’re gonna start with the bulk transmission grid. We’ll get to the distribution stuff later, which is really my true interest. But let’s talk a little bit about the NERC CIP standards, the Critical Infrastructure Protection standards. So you were instrumental in developing these and then in enforcing them. They’re about the bulk transmission grid. Just give us a little texture of like what do they involve? Like what do they require of people? And they’re sort of unusual. I mean, the grid world, the electricity world is full of all kinds of standards that are mostly voluntary. These are not voluntary. They are mandatory and enforceable. So talk a little bit about what they consist in, what they ask people to do, and how they are enforced.

Patrick Miller: Sure. Let’s start with who is required to follow the law ‘cause everyone thinks, “Oh, it’s the whole US power grid.” There is no distribution in scope at all, and it’s only some generation and some transmission. So there’s a handful of exclusions for transmission, so it covers a pretty big, you know, area of the transmission system. Generation, if it breaks a certain threshold, which, you know, to give out some numbers, it’s 75 MVA aggregate behind a single point of interconnection, they have to register with NERC, and they’re required to follow the laws. There’s a lot of generators out there that aren’t 75-MVA, so, and a lot of the times they would even generate facilities to be 74.5 so they could get right under the threshold. But that’s changing. We’re taking that threshold down. It’s gonna go down to 20 MVA and connected to actual distribution environment. So that’s-- the threshold’s getting lower because a lot of those smaller generators have actually had an impact. So that’s who’s gotta participate. The rules they have to follow, it basically, they have to declare, which systems are critical, and these are systems that if for some reason they were, there was a problem, whether you needed it or it got hacked, if it would cause an impact to that system within 15 minutes, that’s a critical system. You gotta protect those. And protecting them means you gotta have security policies in place. You gotta background screen your people and train your people. You gotta restrict who has access to those systems, and you gotta remove their access when they leave. You have to put ‘em inside of a, what, it’s called an electronic perimeter. It’s a firewall, really, and most people understand what a firewall is. It’s kind of a way to protect the systems from other dangerous networks. Then you have to have a physical boundary, so you gotta lock the systems up. You can’t just, you know, let anybody have access, and track who has access to ‘em and-- ‘cause honestly, if I can get my hands on it, I can hack it. Then you do the systems themselves, so you secure each individual system with everything from, like, password security to anti-malware to logging and tracking and monitoring and then of course you have to have incident response plans. You have to test your plans. You have to have backup plans in case you need to restore a system and test those. And then you gotta res- you restrict their configuration, so if you wanna make a change to the systems, you gotta track ‘em all, approve ‘em all. And then there’s the information about the systems that if hackers got it would be really bad. You have to protect that information. And then there’s supply chain security, so you don’t wanna buy from, like, North Korea or China or-- So you gotta, like, “Well, do we really wanna buy from these people? We’re taking a big risk here.” The next piece is the, communication between control centers. There was a Chinese hack recently on-- They basically hacked all the different telecoms. So control center to control center, you have to encrypt that so if someone were to somehow get in the middle of that communication, they couldn’t see what’s happening.

David Roberts: Hmm.

Patrick Miller: And then the last piece is, what, there’s some physical security, additional stuff for, like, really big, sort of transmission substations. The last one that just got adopted is. The monitoring the traffic between those critical systems as they talk to each other so we can see what they’re saying to each other, and that’s the last piece. That pretty much covers the, what the requirements are for the body of the standards.

David Roberts: That seems like a pretty... That’s a lot. That seems like a lot.

Patrick Miller: It is a lot.

David Roberts: So these are like, so these are mostly large entities being asked to do this, right? Large power companies, transmission-

Patrick Miller: Even some smaller ones. I mean, if you have transmission, like if you break 100 kV, and you’ve got transmission, there’s a chance you’re in scope.

David Roberts: Hmmm

Patrick Miller: And if you’re a generator above 75, then you are in scope. So it actually covers a fair number, of the utilities. It’s just which systems, fall into what they call, you know, high, medium, and low ‘cause there’s some categorization in CIP. Most of the systems are in the low impact space.

David Roberts: Hmm.

Patrick Miller: So they don’t have to go through all of those things. They gotta go through some of those things, but if they’re medium or high, they gotta do all that.

David Roberts: This is, and this is a little bit of a subjective question, but like how big of a pain in the arse is that? I mean, if they’re building systems that are 74.5 MVA, this probably indicates that they’d rather not take all this on. Is this something that you can like hire a guy-

Patrick Miller: Yeah...

David Roberts: who will do this for you? Or is, I mean, like how elaborative a process is this? How much time does it take for them to do this?

Patrick Miller: It’s pretty elaborate and what they really expect is they really expect kind of a level of diligence and the reality is if you wanna participate in the, you know, grid critical infrastructure ride, you have to be this tall to ride the ride. And it’s, the expectation is high for a reason and you know, when I was, you know, auditing it and, you know, writing violations and enforcing, we took it very seriously in the fact that no, this is the North American power system. Right. You have to keep the lights on.

David Roberts: Right. Right. Right...

Patrick Miller: So yeah, you’ve gotta have a real program with real people doing real things, and you gotta take it seriously.

David Roberts: And presumably these fines are big enough to really, these are not just things that they could absorb and brush off.

Patrick Miller: The number that gets thrown around is $1 million per day per violation. That’s actually gone up with inflation. It’s over 1.8 million per day per violation. That’s never been seen though. So what they typically do is they’ll write the penalty, and if the utility is like, “Oh, okay, what if we put all this stuff in place and we fix these things and we put this money toward improvements, can we take that cost down?” Usually that’s how the settlements work out so that it’s less of a, you know, go spend a bunch of money on the penalty and then go spend a bunch of money on, you know, fixing it. They try to get them to incentivize the fixes instead. So it works out in a pretty good way where it drives the incentive to do better.

David Roberts: And who is this we that is doing the enforcing? Is this the federal government? Is it some department of the federal government? Who’s the enforcement arm?

Patrick Miller: It’s a branch. So, it, the authority comes out of FERC, the Federal Energy Regulatory Commission. They have basically delegated this down to NERC, which is the North American Electric Reliability Corporation. They’re now called the ERO or Electric Reliability Organization. So they do the enforcement stuff, for FERC. And there are six regions of NERC, so whatever region you’re in, your region audits you.

David Roberts: Hmm.

Patrick Miller: And if you’re in a bunch of regions or all regions, there are some com- uh, utilities that are big enough to actually cover all regions, you get audited. They kinda take turns, and one of them will lead, but the rest of them participate. So yeah, you get, you get audited by your region, and then that goes upstream to NERC and to FERC, and then the penalties come back down.

David Roberts: Okay, interesting. Okay, so here’s the, here’s the bit I’m really fascinated by, which is the CIP standards were designed for the bulk power system, but, you know as listeners of this podcast are very aware, all the action these days is out on distribution systems. All the stuff that we cover every day here, rooftop solar, batteries, EV chargers, virtual power plants, sit outside that sort of regulatory perimeter and are, and in states, as you say, beyond FERC jurisdiction. And so, you know, you get something like a virtual power plant, you get the size and scale of a power plant that might have come under the bulk, the bulk standards. But instead of a single point of, you know, regulation or access or physical whatever, a VPP consists of thousands of devices scattered all over thither and yon, which just, like, intuitively to me sounds like a cybersecurity nightmare. Like you have, your attack surface, as they say, is, has become, you know, exponentially larger. So I’m just curious, like, what are grid s- what are the s- what’s the cybersecurity community thinking about this? How do you reach these distribution grids? What sort of standards do they need, and who’s gonna enforce them? Like, how do you standardize an approach when you have 50 different regulatory bodies involved?

Patrick Miller: Yeah. This one has been a really interesting challenge. So you’ve got some examples where those smaller assets, whether they’re, you know, run by VPPs or in some markets like in Texas where it’s kind of a QSE market, and the-- what we now have just lumped them into a big term called inverter-based resources because it kinda captures all of them, under this umbrella term. So there have been inverter-based resource, we’ll say challenges, disturbances, you know, also known as blackouts, in Texas a few times as a result of these. So, they’re one of the good examples. There’s been some other disturbances and things in the California area. It’s caused some strain in some other ones. We’ve got a pretty good-

David Roberts: Now, are we talking about accidents, or are we talking about attacks?

Patrick Miller: No, these are just, like, grid physics problems.

David Roberts: Right. Right. Right

Patrick Miller: Yeah, so not attacks, let’s be clear. So what they did, just because those grid physics problems, manifested, they were like: Well, what if someone, like, caused this to happen with a hack?

David Roberts: Mm-hmm.

Patrick Miller: That would be even worse. So those two things converged, and basically NERC went out and did lots of studying and invited lots of different participants and stakeholders to the mix, and they came back with this inverter-based resource study. And as part of that, they took that threshold that we were talking about, that 75, MVA for generators down to, 20 MVA. So, and they-- It used to be 75 MVA connected to a 100 kV system, which is basically transmission.

David Roberts: Mm-hmm.

Patrick Miller: They took that down, and now it’s 20 MVA connected to a 60 kV system, which is distribution.

David Roberts: So give a, give us a system. What is 20-- Like, what, would that, would that include, like, a residential rooftop solar generator? Like, how big is that?

Patrick Miller: It wouldn’t include s- this is like a small scale, uh... Like if, like if a whole, a small neighborhood, for example, or a, it’s mostly commercial operations. It’s not likely gonna be rooftop. That it’s, it was mostly generated for people that maybe had some battery storage that they were feeding back in, for example, and they were on the market as a result of that. So it was trying to capture those that are big enough to matter, and they looked at all the way down to rooftop, like, “Where do we draw the line?” So they took it up to 20 MVA because they figured this is big enough in aggregate, if someone were able to control it could cause problems. So based on both the grid physics and the security aspects, they’ve drew this line for what’s called inverter-based resources. They now have to register. They have to do some things. They don’t have to do security things yet, but that’s likely gonna be coming in the future. But we’re starting down the path of roping them into those federal regulations so that there’s less of a state-by-state mix, because there, as you’ve s- probably covered, various states have their own rules about how things are done.

David Roberts: Yeah. How does that work? I mean, how does the f- how do the feds even have jurisdiction here? Doesn’t, isn’t that violating sort of the kind of state federal boundary that everybody cares about so much in this, in the grid?

Patrick Miller: Oh yeah. This has been, it’s been hotly contested. I mean, it’s, I mean, nothing short of a bar fight, really. But what the result of this was, and FERC has, pretty much put their foot down and agreed with it, is that in these situations, it’s affecting an interstate transmission system-

David Roberts: Mm...

Patrick Miller: as a result of their ability to influence it with those smaller resources. So the aggregate possibility has, they’ve -- And they’ve actually done a pretty good job of proving it with physics. It’s not just a speculation. They can, they can show their math.

David Roberts: Yeah. This is, that line has become more arbitrary, every day, just around the physics, just around the technology of everything, and I’ve been wondering. I’m sure this is a species of problem that is gonna pop up more and more, that line between what is and isn’t interstate, what is and isn’t, bulk, is fuzzy at best.

Patrick Miller: Yeah. Yeah, and we haven’t even talked about, like, VPPs that could control assets all over the country.

David Roberts: Yeah, right. I mean, a VPP that’s aggregating resources across multiple states. So you say right now it’s about physics. What would, I mean, I guess the sort of the nightmare scenario here is like you gain, you know, a hacker or whoever, you know, and I, and I again speaking here from a very low base of knowledge, but like a hacker gets access to one battery through an inverter and like via that creeps into the other batteries it’s connected to and creeps its way. Do you know what I mean? Like, it gets in a back door through one thing and then accesses the whole system through that thing, which makes me think then that like you have to ensure that every one of those batteries has protections. Like, is that the threat here?

Patrick Miller: Y- y- yes. To be short and sweet about it, yeah. Well, we did some work with, NARUC, as we mentioned earlier. We did what’s called the cybersecurity baselines for distribution and DER aggregators. Because those DER aggregators are a lot like a VPP in a lot of cases. They aggregate at a point much like a VPP does. So when you’ve got virtual power plants and distributed energy resource aggregation points, you have at your fingertips a very large amount of potential to affect- you know, regional problems, just because you could say, well, you know, if you did it across the whole board, yes, that would cause problems. But if you wanna focus in a certain area and cause a problem at the right time to cascade things, you could, you could do that. So we wrote some standards, and it was basically some very lightweight things. You know, like have passwords, don’t connect these things to the internet directly without a firewall. Really simple stuff, kind of basic things like, you know, if you’re gonna have remote access, put some multi-factor.

David Roberts: Mm.

Patrick Miller: Give them a one-time, you know, phone code to actually log in so that you can’t just like log in with default credentials.

David Roberts: Are there, are there any of the-- ‘cause one of the things that pricked my ear about the bulk, about the bulk standards is, that I hadn’t really occurred to me, ‘cause, you know, I was just thinking about kind of the technology angle of it, but the personnel angle is also obviously a thing? Are there any of those personnel-based standards gonna be applied down at the VPP level, the aggregator level?

Patrick Miller: So far it hasn’t gotten to that stage. And states can certainly go do this on their own, right? And that’s kinda what it was designed for. When we wrote these, what we call the baselines, we based them on, a DHS work called the Cyber Performance Goals, and it was just lightly tailored to fit the distribution environment and for DER aggregators. But it was designed so that states could use it as a model to actually go write their own regulation, and it would give them something to work from. A blank page is always the hardest place to start.

David Roberts: Yeah, right.

Patrick Miller: And the ones that wanna go further and do, you know, go their own route and do their own thing, they’re gonna do that anyway. But there’s a bunch of them that don’t really have anything to work with, so that was designed to give them something, and hopefully, honestly, get some degree of uniformity in the approach.

David Roberts: Yeah. So it’s like a floor, a floor then, a federal floor that states can build on if they want to.

Patrick Miller: At this point it’s just a suggestion. It’s a nice-to-have.

David Roberts: Interesting. And this is another just sort of intuition of mine, which is that once you’re down to, like, 20, that 20 MVA level, you know, you’re not talking about individual residences, but you are talking about some pretty relatively small operations. Like if I’m a, you know, I could have a warehouse, you know, with a bunch of solar panels on my roof and a stack of batteries, I could break that threshold.

Patrick Miller: Yes.

David Roberts: So you’re-- I just feel like there’s a limited amount you’re gonna be able to demand from like a mom and pop, like somebody who owns a warehouse. Like these people are not going to be... You’re never gonna get them to be cybersecurity experts. You’re never gonna get them to hire dedicated personnel or employees just to focus on this. Like I’m just wondering like how far can you get? I- d- don’t eventually you need to start building the safety into the devices themselves? Is that not sort of like where this needs to go eventually?

Patrick Miller: Yes, and we’re also trying to do that at the same time because the way the system is designed, as you’ve already well articulated, there’s not an easy way to do this. You can’t just make all the warehouses out there with rooftop solar and, you know, warehouse-level rooftop solar and batteries, which most of them kind of will break that threshold. You can’t make them become like cybersecure and follow these federal guidelines and get audited, for example.

David Roberts: I mean there’s too many of them

Patrick Miller: And there’s not enough people to do the audits, right? So, you know, on the reverse side of that. So what we’re also trying to do is to actually, you know, do this at the supply chain level. So I’ve testified to Congress on this and some of my other counterparts have. Dr. Stewart is another really smart one, Emma Stewart. She’s brilliant on this subject. Probably the, I would say the global expert on this really. We’ve taken a strong push to get the device-level security to a place where you don’t have to be a cybersecurity expert. And this is not an easy thing to do because we buy a lot of our equipment that, you know, not from the US. So imposing rules on China is a little challenging.

David Roberts: Yes. Yes. And I-- and also I would imagine that like for every barrier you put up to hackers or bad actors, you’re making some incremental trouble just for the people who are just trying to use the device. You know what I mean? Like one more little gateway for the, for normal everyday use of the device, which I’m sure like the people using the devices are gonna resist somewhat and the manufacturers are gonna resist somewhat. So this does seem like a really sticky wicket.

Patrick Miller: Yeah. It’s not an easy one, but, I mean, we have to try all fronts, and if we get an inch out of all the fronts, we actually can cover a larger amount of territory. So it just takes a, you know, takes a whole village of effort to try to make the needle move really.

David Roberts: Well, you’ve set me up for my next question, which is, as I think people probably know, most inverters, you know, we’re talking about inverter-based resources. Most inverters come from China right now. There was this big Reuters investigation in 2025 which said that inspectors found all kinds of little undocumented communication devices inside solar inverters and batteries, and I guess, like, t-two questions. A, what do you do about what I imagine are now hundreds of thousands, if not millions, of those Chinese inverters that are already installed somewhere and running? Like, you can’t yank them all out. You c- there’s no practical way to audit them all. What do you do about those? And then what do you do about the new ones? You c- as you say, we have no jurisdiction over China. Like, how do we exercise any control over what China puts in those inverters?

Patrick Miller: Yeah. I’m gonna keep this at a non-technical level ‘cause it gets really technical really fast. So in general, you’re absolutely right. There’s a, there’s millions of these things out there, and they do have a lot of undocumented communications components in them. But I wanna make sure we’re really understanding what that means without any hype whatsoever. When China manufacturers a lot of this equipment, they literally do it on what’s called a commodity board. So you can imagine in your mind like a motherboard, right? It’s a- you know, it’s a, it’s a computer component where the chips and the memory and all those things sit, and they’ll buy literally millions of these at once. Mm-hmm. And they’ll buy them, you know, from a commodity manufacturer that just makes, you know, boards, literally, like generic board. And on that board, it’ll have all the things just in case you need them, whether you use them or not. They don’t buy specific boards with just these components. So when they g- uh, I mean, 99% of the ones I’ve seen that they’ve gone out and found stuff, it’s just been the commodity board. Yes, it came with a radio, it came with a modem, it came with a place for a SIM card. There wasn’t a SIM card inserted, but it has all those components on there in case the buyer of these commodity boards wants to use that functionality.

David Roberts: I see. I see. So not nefarious inclusion of these, right?

Patrick Miller: Not necessarily. So whenever you see those, you kinda have to take that with a grain of salt and think, well if there’s millions of these things out there, did they just use commodity gear and they’re just not, you know this is just part of the board that maybe it’s used, maybe it’s not. Now, they have found some of these things phoning home and, you know, the routing traffic through China, so that’s a different discussion. That’s at the software level, you know, up where the applications that you’re using, to manage these devices and that kind of stuff. So those are, those are different components, and we, there’s some supply chain there that we can impose because it’s software, right? We can inspect code. We can enforce certain rules, on how code is developed and what’s, you know, certain, like, transparency of the code. We need to look at the code before we’re willing to allow it, these kinds of things. And we’re not just gonna let updates from China happen without someone taking a look at it before it goes in, those kind of things. Well, yeah, I mean, you- So there are some gates we can put in place...

David Roberts: Well, yeah, I mean, you say there might be these elements on the boards just because the boards are sort of generic and created for maybe lots of different purposes. Could those, could those components of the board that aren’t being used be activated later? Do you know what I mean? Sort of remotely activated. Like that’s, I guess, is the worry.

Patrick Miller: Yeah. They’re there, and they could be activated. But they’d have to have... I mean, you could activate them, but you’d also have to configure them. Like, it’s hard to explain, but when you, when, just because you turn something on doesn’t mean it’s ready to be used. Like even a phone, you can turn a phone on, but you have to give it a SIM card that’s got an activation code, that’s got, you know, all these things have to happen before it’ll actually work on a cell network. I mean, you could get a phone out of the box and turn it on and it just doesn’t do anything. So those pieces of gear are there. That doesn’t mean even if you did enable it, that it would automatically work. So it does, it ups the ante in terms of just like flipping a switch and getting this like rogue network of these things to go do stuff.

David Roberts: Right. So are we currently trying to impose standards on these imported inverters? Like, is that, is that something that’s happened, is gonna happen, is in the works?

Patrick Miller: Yeah. States like Texas and Florida have, like, banned certain Chinese gear. The feds have banned certain Chinese communications gear. What we’re trying to do, at least myself and some of my friends that are pushing this, we’re trying to get a place where we can actually just get transparency into what they’re selling. It doesn’t make sense to go rip and replace all this gear. They actually make quality stuff. I mean, we used to have... A long time ago, China made, you know, garbage, and we... It would break, and you’d have to go buy new stuff. They actually make some pretty, you know, fairly high-quality gear now.

David Roberts: Yeah, I’m familiar from the EV space that that story is no longer that story no longer applies.

Patrick Miller: Yeah. So but if, by and large, a lot of the stuff we have out there, it’s gonna work. It’s gonna work as designed. It’s got, you know, it’s gonna fit within, like, the engineering specs that it says it’ll do. So with that, is there a way to basically live on a diet of poison fruit? And that’s really kind of the approach we’re gonna have to take is what if we needed to, I don’t know, repurpose this, you know, so we can take out some of the Chinese com- you know, software components or firmware components and put our own on it? That’s an option we’ve got where we could just basically just say thank you for the equipment. We’re gonna repurpose it to our own needs and we’re gonna put our own software and firmware on it and run it that way. Or we can force anything sold wherever it comes from to just have certain degrees of transparency. We can, we can inspect it, and that way we can sample batches and say, okay, you know, X number of them to a high degree of certainty we think are not tainted with some sort of bad code. So there’s different avenues that we’re trying to push. None of them are, you know, like a switch. None of them are easy. None of them just, you know, roll out and make everything, make the problem go away.

David Roberts: Well, hasn’t the Trump administration discussed a, discussed a wholesale ban of these, which I assume is like—

Patrick Miller: absolutely a bad idea...

David Roberts: not a good idea.

Patrick Miller: Yeah, not a good idea, no. W-we, I mean, what we typically do now is when we buy this gear and we don’t have these assurances, we just isolate the heck out of it so that it just can’t talk to anything. Like it doesn’t get to talk to anything except through this very slim channel, and we inspect every single thing that it does, says. You over-monitor it so that just in case something did go wrong, you’d know. So you can’t prevent it from happening, but you can certainly detect it. I mean you can prevent a lot. You just can’t prevent everything. But what you can limit it down to, and then you just detect on that narrow band of what’s actually allowed, and it gets you a little bit more assurance that things are gonna be okay.

David Roberts: I guess I’d just ask flat out, like, do we have reason to think that China wants to or is trying to do anything nefarious with these inverters? Like, just flat out. Like, is there-- do we have evidence, not just sort of vague suspicions, but do we have evidence that they are-- want to do or trying to get away with something?

Patrick Miller: Uh yeah, short answer is yes. There’s a campaign called Volt Typhoon. And the one I mentioned earlier where they broke into the communications network is called Salt Typhoon, so this is the Typhoon series of actors. Volt Typhoon was, um... And it’s still ongoing, and it’s not like it was, you know, like one group and then we, you know, sent them home and they went away. It’s an active campaign that is still ongoing, and they are trying to f- And they’ve-- we’ve actually found them, and there’s documented evidence of this, it’s public record, where we found them embedded in utilities and various different systems, and they ha- Like I said, they haven’t done anything bad. What they do is they don’t break in and come in the front door with, like, a marching band behind them. They don’t announce their presence. They don’t do-- They don’t drop ransomware. They sneak, they come in very quietly, and they immediately hide. And they don’t even drop, like, malware, so they’re not using-- Once they’re inside, they’re not using malware. They’re using the tools that already exist, so we call it living off the land. They’re very good at this, and it’s extremely hard to detect, but we’ve found a few cases where we can see what they’ve done. It shocked everybody because we were quite surprised at how good they were first, but also how deep they’d gotten embedded. But yeah, so there’s documented evidence that they’re actively trying to do this. They have done it. They’re still trying.

David Roberts: But do we know why? Like, what are they up to? What do they envision doing with that access?

Patrick Miller: They haven’t openly communicated this to us, so we-

David Roberts: I would, I would imagine...

Patrick Miller: all we can say is our best guess is ostensibly it is to exert influence over us, whether there is a particular trade situation, whether there is a particular Taiwan situation, you know, those kinds of things. So it is, they’ve got us in a very tight spot, if we ever, you know, decide to take action against them in some way where they needed to leverage that.

David Roberts: But it does seem like if they came out and said, “Hey, guess what? We have access to a bunch of your energy resources, and we’re gonna shut them down if you don’t do XYZ,” that would amount to something like a declaration of warfare. Like, that would cause the US to freak the hell out, I would imagine, and do all kinds of crazy things. That would not be a small step to take. It’s not like a trade, you know, that would not be... That would be more than a trade dispute.

Patrick Miller: Yeah. One would think. So far we’ve found them, like, in our communications n- like literally almost every single communications backbone, all the major telecom providers, and they, like, they admitted it. They didn’t just, like, shy away from it and act like they didn’t do it. No, they openly admitted it, and we didn’t do an act of war then. So I mean, the, so the, you would think the answer to that question is yes, but maybe is probably the response. I’m not really sure.

David Roberts: Wild. Wild. I guess it would look very different if they actually did something, right? I mean, the fact that they haven’t done anything sort of, I guess, lets all this kind of simmer in the background. Let’s talk about data centers. This is something I did a, I did a, an episode recently, you know, NERC, the Reliability Corporation put out some alerts about data centers. Just because the way data centers are built, they’re very sensitive to perturbations, they’re very sensitive to grid conditions, and they are prone to just switching off and dropping off the grid all of a sudden, which if you’re a, you know, gigawatt data center, you know, gigawatt of demand disappearing all of a sudden can destabilize the grid quite badly. And so that was, those worries were mainly about just the normal operation of these things, like the way they operate is somewhat of a threat, somewhat of a, you know, potential threat to the grid. But then it occurs to me as I’m researching this, like, what if you caused that to happen on purpose? Like, what, you know, what if you got access to those systems and made that happen on purpose? You could destabilize grids via data centers. So is the profusion of large data centers, is this yet another sort of attack surface, and is anyone doing anything about it?

Patrick Miller: Yes. That, what’s called a Level 3 NERC alert, for those that wanna look it up, it was for what’s called the computational load entity. And we’ve looked at these things, and this has been an issue in some areas. Texas is another example again. They have a lot of Bitcoin farms, and they would basically automatically shut off, so they would just absolutely draw enormous amounts of power until, you know, Bitcoin prices or whatever coin they were mining, whatever thing they’re doing, whatever crypto situation they’re in, would hit a certain price threshold, and they would just drop, and it would just swing their grid hard. So they’ve put some rules in place there. And then we saw some other situations that, I mean, recently was the one in PJM. A data center dropped 3 gigawatts-

David Roberts: Good Lord...

Patrick Miller: of power at once and swung. They can typically stabilize these things. I mean, most disturbances, we can stabilize them within seconds to m- you know, a few minutes at best. This took 10 minutes to stabilize, which is a very long time in power curves.

David Roberts: Yes, this is unprecedented. This is not something that has happened in history. This is a new th- a new thing in the world.

Patrick Miller: Yeah. So when we look at these things, as I mentioned, the IBRs, we look at it not just from a-- We start with the grid physics components, and we look at this from an all hazards perspective. So cyber threat, backhoe, whatever the threat is, if that system drops or comes back online and starts drawing and we didn’t expect it- Um, those things can cause grid, you know, problems. So we take a look at this from an all-hazards perspective, and cyber is one of those hazards, and we’re looking right now at how do these computational load entities affect the grid, and what do we need to do to figure out how to balance this? ‘Cause typically you have to have some sort of reserve capability or ride-through capability. Other, like, grid physics components, whether it’s, like, static VAR compensators, and they’re larger grid components that can absorb these swings, and, you know, kinda help us ride it out without, like, lopping off a big area just because you’re having a disturbance.

David Roberts: Right. Didn’t Texas just pass some ride-throughs standards re-re-just recently?

Patrick Miller: Yeah, they did. And we’re looking at a bunch of ride-through stuff for the NERC standards as well.

David Roberts: So those would also guard against a deliberate malicious taking those things off the, off the grid, like-

Patrick Miller: Yeah. Intentionally by design. Like I say, when we’re-- I’ve been on the standards writing process with NERC for 20-something years now. We look at it from, we call it all hazards, whether it’s a cyber threat, whether it’s a squirrel, whether it’s a backhoe... you name it. Or earthquake, flood. What happens to the grid physics, and how do we actually stop that from being a problem?

David Roberts: Interesting. Interesting. Here’s sort of like a broader question. One of the other things I was worried about as I sort of approached this whole subject, and I contemplate the sort of, as I said, the sort of incredibly distributed attack surface we are developing on the grid- which is that there’s got to be, just intuitively, there’s got to be some trade-off here between sort of security and speed. Like we, you know, we want to decarbonize the grid quickly. We want to electro-we want to electrify quickly. There’s a great deal of urgency behind doing that as quickly as possible, and I just think intuitively, like the more standards you put in place, the more requirements you put in place, the more personnel are involved, the more audits are involved, et cetera, et cetera, that is inevitably going to slow things down somewhat. How do you think about that trade-off?

Patrick Miller: I also, speaking as a recovering regulator, I’m a big fan of regulating only absolutely the bare minimum that you have to regulate- and then let other forces operate above that threshold. So you will see things like, business agreements. If you’re an unreliable partner, you’re probably not gonna get a lot of business. If you’re trying to grow, a bunch of, you know, build a bunch of assets and grow a bunch of business, your insurance company is not gonna wanna do business with you, and you’re not gonna get insurance for your plans if you can’t show that you’ve got some degree of responsibility in the mix. So there’s other forces that push the, these components around a bit, too.

David Roberts: So just sunlight, just exposing who’s doing what you think is, does some of the work?

Patrick Miller: Well, it’s gonna be hard to hide ‘cause you know, if a disturbance happens, we typically know where it came from. Um- uh, like in the Spain blackout, for example, one of the bigger problems they had, they were able to come to a fairly rock solid conclusion, but there were still little gaps here and there because some entities just said, “No, we’re not gonna give you our data,” and some entities just said, “We don’t have the data. We don’t log it.” But in the US, you’re kinda required to keep a lot of data and, you know, we use a lot of data on our, just our operations, and we even, like, resell a lot of our data to third parties and that kind of thing for being a data broker, an operational data broker. So we have a lot of data. If something happens, we’re gonna be able to reconstruct that, and honestly, if a disturbance or a blackout happens, FERC is gonna show up, and it’s not gonna matter. You’re gonna have to prove it and show what you did, and you’re gonna get, you know, you’re gonna get that black eye or you’re gonna get the stigma, for operating, you know, rogue, or, you know, irresponsibly. So there are some things that will help. Are they perfect solutions? No. Does it prevent it from happening? No. But every time we’ve tried to prevent a problem through regulation before it happens, there’s a lot of rightful pushback that says, “Prove it. Show me that this is a real problem.” So until we have, unfortunately, it’s a, it’s always a rear view mirror approach.

David Roberts: Yeah. And when you say you’re gonna find who’s responsible, are we talking about- The entity running the power plant, the manufacturer who sent the equipment, the software company that wrote the software or some of, some of each? Like who’s typically, who are you gonna find that was at fault if you, if something goes wrong?

Patrick Miller: The answer to that is yes. And for different reasons, right? Like if you caused a problem where my insurance company is trying to prove that it wasn’t us, but it was somebody else, they’re likely gonna send in some forensics teams to go figure out what happened. And if there’s software liability or hardware liability, they’re gonna chase that liability chain as far as they possibly can because, you know, hell hath no fury like an insurance company that’s been scorned. So you know, that’ll happen. FERC will come in. They’ll wanna do typically like a 1B investigation, especially if it causes a blackout, they send in a blackout investigation team, and those are some solid engineers that go do that work. They’re good. It’s like an NTSB investigation. So, you know, from all different angles, there will be sunlight on that event.

David Roberts: Mm. Okay. Well, this again sets me up for my next question really well, which is I think one of the sort of like disaster movie scenarios that people have in their head is that you get access in one little spot, and then, and then there’s some sort of cascade and, you know, next thing you know, the whole East Coast is out or the whole country’s out or whatever. And so, I know a lot of your work and a lot of focus has gone into thinking about just how would you contain an event if it happened. Like how do you... And you call this cyber informed engineering.

Patrick Miller: Engineering. Yeah.

David Roberts: So just that, that’s like what, how do you build your devices and your systems so that things don’t cascade, basically, I think is the simple way to put it. So talk a little bit about what that means. Who’s responsible for that, and what does it look like?

Patrick Miller: Sure. This is putting in some, we’ll call them analog safeguards. So we put in some things that just aren’t digital. They’re just literally an electromechanical thing, and we used to have, like, electromechanical relays and protection systems, and we’re looking at putting those things back in.

David Roberts: Interesting.

Patrick Miller: Now, they don’t, they don’t operate with the same level of, like, precision that we can do with digital stuff, like a PMU or a phasor measurement unit, unbelievable precision in terms of what it can protect. An old electromechanical one, eh, not nearly close to that. But, you know, it sure does come in handy if someone hacked the system, right? So-

David Roberts: If that’s all you’ve got, it’s better than nothing, I would imagine.

Patrick Miller: Right. So we’re looking at those kind of things, and a lot of other just kind of really physics-based behaviors. So, like, one of the best examples, I go back to, like, a water system ‘cause it’s easy to visualize, where electrons just aren’t as easy. So, like, if the concern is, too much chlorine getting dumped into the water, because someone hacked the system and said, you know, “Put all the chlorine in right now,” what we’ve done is let’s make the pipe that delivers the chlorine super tiny. So even if you set the, you know, 5 billion parts per million, it just couldn’t do it. Let’s make the pump a little tiny pump that can only deliver so much at once. Let’s make the battery supply for that pump only operate at a certain amount, right? So the pump just can’t over, you know, can’t over pump for example, and the reservoir that feeds it, let’s make it really super small. So there’s ways to do this, you know. Now correlate that to the grid physics size, side. There’s ways to put in these analog gates and checkpoints where, you know, key areas are key, whether it’s, you know, generation resources or large transmission through, throughput. We can do this on that scale and just... And it’s relatively inexpensive to put these things in, and it gives us a lot, kind of a safety underpinning. So think of, like, a float valve that operates based on pressure versus a digital sensor. So we’ve got-- We’re looking at those approaches. But, you know, you have to remember, we don’t have one grid. We’ve got four.

David Roberts: Yes. Yes, and each distribution grid, in some sense, is its own little thing.

Patrick Miller: Is its own, right? So, I mean, we got the HVDC, A- sorry, AC/DC ties that break up all the grids, so you couldn’t just black out the whole country at once or all of North America at once. That’s just not a reality despite movies. And then the, I mean, when I get the conversation around could they just hack all the things, and I’m like, if you really went out and did, like, an asset inventory of just all the things that are out there on the grid right now, even the really important ones, and you just got those, the number of different devices would absolutely blow your mind. Like, it’s an incomprehensible number. Their ability to hack that diversity of systems is just, it’s impossible. Well, it’s astronomically improbable. I won’t call it impossible. Even with AI, it’s just improbable. So could they do key points and cause regional problems? Yeah, that, that’s a concern, but nationwide or continent-scale blackouts are just not a realistic thing.

David Roberts: And so when you talk about these physical, these analog sort of gate limiters and type things, is that something that’s a manufacturer responsibility? Is that at the device level, or is that at the system level? Is the utility the one doing that? Who’s overseeing that?

Patrick Miller: Yeah, this is typically the utility. Yeah, this is typically the utility that puts this in so that they can basically protect parts of their system that are very difficult to replace. Because reality, one of the bigger concerns we’ve got is, I’ll keep it simple, the, what are called protection systems relays, they’re designed to keep the grid from burning down, basically. Like, no uncertain terms, like literally burning down. So, and this is keep transformers from exploding, all this kind of stuff. If we can, if we can put those re- you know, like a, like a, for example, an electromechanical or dumb relay- on some of these really expensive transformers, another really expensive piece of equipment, even if they did hack it, this piece of equipment’s gonna keep it protected. So those are the kind of things that we’re looking at. Really big generators, for example, obviously you could, there’s ways to desync and resync a really big generator, and you can actually torque the shaft and, there’s even some that have modeled like actually getting the generator to go boom. That’s a problem. Yeah. So you put these kinds of pla- these, devices placed in the right spot there to keep the generator safe as well. So this is to keep our big components that take a long lead time to build, that are really difficult to replace or fix, we’re protecting those critical components with this kind of protection.

David Roberts: Got it. So even if someone got in, caused some event, we have some reasonable confidence that it would remain reasonably localized.

Patrick Miller: Yes. I mean, now, like I say, is there still a chance for problems? Sure. And is every big utility doing this for their critical stuff? Eh, some are some aren’t. So, you know, it- there’s no rule to do this, no requirement to do this yet, but it’s those that I think most of them are doing it out of the financial incentive to if replacing that transformer is gonna cost us, you know, how many hundreds of millions of dollars and a minimum of a two- to three-year lead time- and now we’re up against, you know, Google and Facebook and Amazon supply chain... who are buying the equipment out in front of us, so we can’t even get in the front of the line if we wanted to. So yeah, they’re-- I think most of them are realizing this is just a good business decision, too.

David Roberts: Right. Well, once again, you’ve teed me up for my next question, which is about AI, and of course, when everybody th- when anybody thinks about computing these days, that comes up, which is, which is that, you know, maybe the number and diversity, of devices would be daunting for any sort of human hacker, but of course, now we’ve got these giant super intelligent robots who can just go at it without pause. So in your mind, does AI heighten the threat here? And then conversely, on the other side, are, is anyone putting AI to the task of building better defenses? What is the current role of AI in all this?

Patrick Miller: That’s another podcast in and of itself really.

David Roberts: I bet.

I’ll keep it to the two key things. AI is really good at finding vulnerabilities. So we are concerned about its ability to find vulnerabilities in key equipment that we’re concerned about. So yes, it will definitely accelerate that arms race. At the same time, we’re using AI to patch those vulnerabilities. So the manufacturers can, well, they’ll see there’s a problem, and they’ll write a patch for it, and we can... The challenge is this is, like, grid equipment, so we may have to do things like, “Okay, general public, are you okay if we have, like, a blackout window and we schedule it? Because we gotta patch stuff.” Because most of the time you can’t just, like, take these systems offline.

David Roberts: Yeah, like a operating system update.

Patrick Miller: Yeah you know. Yeah, gotta reboot.

David Roberts: It’s, a it’s enough of a pain in the butt on your, on your personal computer, but if the whole, if the whole grid has to do it.

Patrick Miller: Yeah. If you gotta reboot a section of the grid, that’s a problem. So we’re looking at ways to try to work this into operations. Some of it’s gonna be redundancy or, you know, moving the grid, the power over to a certain line while you know, restart those systems and try to get, build this into our operations and our behavior practice, ‘cause we haven’t done this yet, right? We gotta figure out how to make this work. So we’re in the process of that as an industry, and obviously the manufacturers have definitely, the light bulb has gone off, and they’re reacting, and they’re using AI to write patches for the vulnerabilities that the bad guys are finding. Now, the next piece is, one of the bigger concerns that is not, we don’t have an answer for yet. It’s the ability to model the grid was pretty difficult in the past. It took a lot of computing horsepower. AI is actually really good at this, and you can model large sections of grid, if not the whole grid. You can overlay other infrastructures like transportation and communications and gas and-

David Roberts: Mm.

Patrick Miller: the ability to cause a multi-infrastructure cascade by key component attacks in just the right number and frequency of basically like the sequence of infrastructure is to cause a larger problem. So we’re worried about that. It’s being discussed. It hasn’t really... Like we’re trying to model it ourselves and figure out, oh, you know, if they’re doing it, we should probably be looking at these same kind of key weaknesses and how do you get these cascading interdependencies down, this kind of stuff. So the thing that started is DHS CISA, C-I-S-A, put out what’s called CI Fortify.

David Roberts: This is the, Cybersecurity and Infrastructure Security Agency. I wrote that down so that I wouldn’t have to remember.

Patrick Miller: I love how it’s got security in its name twice. That’s really secure. Yeah. But they put out one called CI Fortify. The goal is at least if there’s a problem to get these, and it’s not a requirement yet, this is still a suggestion, but to have these environments disconnect. Just what does it take for you to island yourself off and we, you know, we, in the business we call it turtle mode. How do you how do you like clamp down the shell until the danger passes and you peek open and you see that things are okay and then you can, you know, pop your arms and legs out and keep going. So it’s trying to get, owners and operators of all the different infrastructures to go do an exercise on what’s a day without connectivity look like, what’s a week look like. Can you, can you lock down in turtle mode and still operate and keep essential services running even if not everything is working but enough is? So we’re at least trying some approaches.

David Roberts: So these are like water systems, transportation systems-

Patrick Miller: Gas, electric...

David Roberts: whatever, all the, all the d- gas systems. Man, that’s a whole, that’s a whole new Pandora’s box right there.

Patrick Miller: Yeah.

David Roberts: Trying to get multiple infrastructures to coordinate their behaviors just seems like it’s a whole new layer.

Patrick Miller: Well, if they can even do it on their own, great. Well, let’s just start with them, figure this out, what it looks like in your own little environment. And then we’ll look at what it does when, in terms of the interdependencies, that cascade out. But, yeah, I mean, think of, like, the dependence of electricity on the gas, right? We have a lot of gas generators, especially now for AI. There’s almost all of them are gonna be gas generators. So, it’s amazing to try to think about this and wrap your head around it. But like I say, that, that’s something we are at least discussing. We’re starting with, you know, at the asset owner level, could you do this? Could you operate? And then we’ll figure out what is-- Well, now, when you’re doing it, what are the interconnectivity, what’s the interdependency issues? And then we’ll take, kinda take it out from there. But, it’s on our minds.

David Roberts: It’s interesting. It’s hard not to, you know... It’s hard to hear about this stuff and not get a little sci-fi dystopian about it, about a future where sort of like our massive super intelligent AIs are just battling their massive super intelligent AIs. And at some point, like, it’s gonna be hard for any human to even really know what’s going on anymore, to wrap their head around any of it. You know? Like, eventually it’s just gonna be the robots the robots battling over our infrastructure.

Patrick Miller: That’s why we’re trying to put in a lot of that cyber informed engineering, underpinning so that, you know, even if the cyber causes problems, physics is still physics, you know?

David Roberts: A couple of final, couple of final questions. One, that I’m just curious about. One is, and maybe this is naive to even ask it, but like, are we trying to sneak-you know, are we trying to sneak stuff into China’s systems too? I mean, I kind of assume we are.

Patrick Miller: I mean, if we’re not, then shame on us. I mean, and I really think those are kinda table stakes for nation states at this point, so.

David Roberts: Geez.

Patrick Miller: And we’re remarkably capable at what we do. I mean, we’re arguably the best in the world at cyber anything, so one would have to believe that that’s a reality. Yeah.

David Roberts: It’s just gonna seem like the, all the, all these forces are pushing toward, you know, kind of reversing the trend of the last century almost towards greater trade and greater independence or interdependence. Like, it seems like this is gonna wanna cause countries to want to domestically manufacture everything so that they can keep an eye on everything. You know what I mean?

Patrick Miller: Yeah. I think there’s, there is a push for that right now. There’s a lot of balkanization of manufacturing, of you know, sovereignty of various things. What we’ve seen in most cases that actually solves the problem, and I’m working on various different channels. I’ve got operations in Europe as well. It’s about, it’s transparency so that there are open frameworks, and everyone operates against the framework, and everyone can see what’s in there, and transparency. Think about what happened with encryption. There used to be, like, you know, export rules on certain types of encryption. Well, now we just make it so that it’s you know, it’s open. Everyone can see it, and it gets all the transparency that’s needed, and it still works. So there are ways to do this where you have transparency into how it’s done, what’s being done, and everyone can agree upon kinda what the standards are. And then once... And there’s, you know, IEEE. There’s IEC. There are bodies that do this already and do it very well. So yeah, I think it’s gonna... We’ll have a push where everyone goes into their little hole for a while and realizes-... “Okay, we can’t do this. We just can’t s- we just can’t survive like this.” So the pendulum will swing, and then it will have to swing back, and all of us that are pushing the pendulum back the other direction, we’re all going, “Look, you know the solution to this is transparency, so let’s just start there now.”

David Roberts: Interesting. Another question is, when you read, or at least when I’ve read about attacks on the grid that actually do damage, it’s squirrels or, like, rednecks with rifles shooting- shooting at transformers. Like, how do you, how do you rate the physical threats to the grid relative to the cybersecurity stuff?

Patrick Miller: Orders of magnitude worse than the cyber. Orders of magnitude, without question. Yeah, absolutely. It’s been, it’s largely squirrels, raccoons, snakes-... uh, scorpions. I’ve seen a whole bunch of different things. Mylar balloons, believe it or not, are actually a bigger threat than cyber. Um- You know, so, you know.

David Roberts: Has anybody weaponized Mylar balloons yet?

Patrick Miller: No. But there was, there was, like, a Twitter account called, like, Mylar Squirrel, and it would track all the, attacks on, well, just things that happened to the grid from, like, squirrels to balloons to raccoons to... Yeah, I think it’s, it stopped, but, it’s far bigger issue. I mean, and it causes a lot more damage, than cyber.

David Roberts: And you think the vulnerability is greater? Like, I mean, that’s what’s-

Patrick Miller: From the physical standpoint? Oh, absolutely, yeah. I mean, you can physically dam- Well, that’s what’s I mentioned earlier, the physical protections for big transmission in the CIP standards, there’s a specific standard for that. Like, you actually have to protect the transformers from gunshots. Like, you have to put up ballistic protection for the transformers. Yeah, because they’re, I mean, that’s, it’s a bigger threat.

David Roberts: Yeah. I wonder, that’s another one that just seems like as the grid distributes, as, you know, everything moves outward, again, you’re just like, you’re not gonna get every warehouse to hire armed guards and you know, put up, put up ballistic fences. Like again, your just, your attack surface is so huge.

Patrick Miller: It is. One of the good things about that is if you distribute the attack surface to a much, you know, more diffuse, set of assets, you actually take the threat away in a lot of cases ‘cause they physically can’t get everywhere.

David Roberts: Right. Right. Any single attack will be, it’ll have smaller consequences, I guess. Okay, so let’s wrap up with this question. Right now the aforementioned CISA, the Cyber Security and Infrastructure Security Agency, is getting cut much like much of the rest of the federal government is getting slashed its budget and staff. I’m just curious your sort of overall assessment. You’ve written an essay actually saying that critical infrastructure cyber regulation is headed in the wrong direction. I’m sort of curious your overall assessment, like are we doing this correctly and what is, if not, sort of broadly speaking, what is the course correction you would like to see?

Patrick Miller: Oof.

David Roberts: Again, a whole other pod if we- if we fell into that.

Patrick Miller: That is a whole other pod. I’ll keep it short. I do lament the cuts to CISA. It is-- American infrastructure needs this desperately. We’ve got a mix of things. The regulators are all different. We need something that is a centralized and a harmonized effort that helps all of them, and most of what they’ve done so far has been fantastic outreach. They’ve done some really good information products that have helped a lot of people. They raised the floor for a lot of those- those asset owners that you mentioned that just don’t-- They can’t whole-- They can’t hire a security team.

David Roberts: Mm-hmm. Right.

Patrick Miller: But they can take this template and apply it- because it’s free from CISA, and CISA did the work for you, and you don’t have to wonder, “Is this gonna work?” You’ve got an authoritary, authoritative source to get good stuff that helps you and raises the floor. So I would love to see more funding in CISA. I would love to see more activity from CISA. I don’t want them to become a regulatory agency, but I love what they do with, you know, their known exploited vulnerabilities list, which this is a different thing. When you hear of a vulnerability that happens like, you know, Microsoft says, “Oh, we have a problem. Go do something,” what CISA does is if no one is exploiting this, okay, probably lower priority. But the minute someone’s actually, like attackers are actually using this, it goes on this special list that CISA maintains. That gives us the priority and ‘cause when you’ve got 100 vulnerabilities to deal with- well, which ones matter? This tells you. So that kind of work is absolutely useful, and they need to be doing more of that. Now, the follow on of kinda where should we go and what would-- if I had one rule that I could change, and I get this question as a former regulator and someone who writes a lot of regulation all around the world at this point. I like the CIRCIA. It is C-I-R-C-I-A. It’s an incident response reporting act that was put out. It’s gotten a lot of negative attention ‘cause people don’t wanna report their incidents, and I get it. No one wants to air their dirty laundry.

David Roberts: Right. Right. Yeah, I guess it’s embarrassing and it-it-

Patrick Miller: It’s embarrassing, right? And in some cases, you gotta put it on your 10-K right now, and you gotta report to the SEC. But people get around that, and their lawyers step in and they, you know, they water it down. My issue with this is we don’t know what is working. We don’t know what the attackers are doing. We don’t have any actuarial data without this kind of reporting. We need something there. And I’m not saying like, you know, make them divulge everything, but we should have a at least some data that we get that’s useful, like a handful of things. Because the corollary is if, you know, we know that if I, you know, eat bacon cheeseburgers every day and I smoke and I never exercise and I never move, you know, Patrick’s likely to die at age 45 of these conditions because we have, you know, hundreds of years of actuarial health data. We don’t have anything like-- We’re basically guessing. So without this what is happening, what’s working, we don’t know where to put our money and our protections. I think this would actually really benefit us. If we could do one thing, we need to see what’s actually happening.

David Roberts: And is that a federal-

Patrick Miller: Because it helps us make regulations. It would be-- It’s a federal law.

David Roberts: Is that a federal rule?

Patrick Miller: Yeah, it’s a, it’s a federal rule for critical infrastructures and there’s, you know, a handful of them, that get roped in first, that kind of thing. But we don’t... Right now it could happen and, you know, if it wasn’t a big enough issue, they could just hide it and which, you know, I get companies may wanna do that, but the rest of the industry and the rest of the populace, we need this data to know where we’re, where, what’s working and what’s not. It helps regulators, it helps insurance, it just helps everybody all around.

David Roberts: And when you say that cyber regulation is headed in the wrong direction, what do you think we’re... What do you mean by that? What do you think we’re doing wrong?

Patrick Miller: I think we are, we need to harmonize a lot of our regulations. Like, each individual infrastructure has their own, you know, authoritative body and they’re all going in different directions. They’ve all got different penalty structures. They’ve all got- If you are a company that owns a gas infrastructure and an electric infrastructure or an electric and a water infrastructure, you got different, an entirely different compliance organizations and different experts. The software companies have to write different versions of the software. I mean, we could standardize a lot of this stuff because realistically, I mean, this is all the same stuff. It’s flow control, whether it’s gas, electric, water, transportation, it’s all flow control. So we’re kinda doing the same things. The technologies are all roughly the same. We could make this a lot easier for a lot more organizations, and then we could even introduce easier guidance. So we wouldn’t have guidance for just, like, the gas operators or the electric operators. We’d have guidance. So we need to get to a place where we’re not doing this in such weird silos. And I get there are differences, don’t get me wrong, but there’s a core component of this outside of those, you know, fairly small number of differences that could be done in a uniform way with a lot less wasted time and effort and money.

David Roberts: Interesting. All right. Well, this has been so fascinating. Thank you so much. Thank you so much, Patrick. I feel like 100%-

Patrick Miller: Absolutely...

David Roberts: 100% better grounded at this point. Thanks for walking us through it.

Patrick Miller: Sure. Anytime.

State policymakers are under enormous pressure when it comes to data centers. There are dozens of them banging on the door, demanding to be hooked up to grids. Utilities and the PUCs that regulate them are responding inconsistently at best, often allowing ordinary ratepayers to bear the financial risks, and the public is furious about all of it.

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What should polcymakers do? Many in the environmental community are pushing for an outright ban, but most states don’t want to do that, at least not permanently. They want the investment and tax revenue that come with data center development. But they need a response, a strategy that protects their ratepayers and their communities from exploitation and abuse.

To address that need, Climate Cabinet recently released a series of papers called “Taming Data Center Turmoil,” recounting the rise of the hyperscalers, describing why giant data centers pose unprecedented risks, and outlining a detailed set of recommendations for how state policymakers should manage those risks. This is not pure, wonky technical analysis from a think tank — Climate Cabinet is an advocacy group, and the thrust of these recommendations is very much about consumer protection.

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Nonetheless, this is the first time I’ve seen a comprehensive strategy laid out in one place, so I thought I would have one of the key authors of those papers, Saleem Chapman, join me to discuss them. Chapman is a longtime sustainability and environmental justice administrator who has worked for the Clean Air Council, the Philadelphia Office of Sustainability, and the Pennsylvania Department of Environmental Protection. He’s now leading electricity affordability policy at Climate Cabinet. We’re going to discuss the threats and the promise of data centers and the tools state policymakers have in their toolbox to manage the risks and maximize the benefits.

Timestamps

• 00:00 – Introduction

• 02:49 – How Climate Cabinet came to the data center fight

• 03:58 – Three things that make hyperscalers unlike past industrial loads

• 07:51 – Warning signals: forecast opacity, gas dependency, unconditional subsidies

• 13:44 – Siting near overburdened communities and the Memphis case

• 15:34 – State preemption versus local control

• 18:31 – The same failure pattern in Georgia, PJM, and ERCOT

• 23:52 – Why not just ban data centers outright

• 28:07 – The framework, and what to require before approval

• 34:54 – While operating: real cost pricing and on-call load flexibility

• 37:39 – Scenario-based planning and the utility incentive problem

• 39:37 – After the deal: new and matched clean energy

• 43:48 – Siting standards and performance-tied incentives

• 50:27 – Existing facilities and the threat to build elsewhere

• 55:41 – Which states are ahead, and step one for lawmakers

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Website - Podcast - Apple Podcasts - Spotify - YouTube)

• Saleem Chapman

  • Climate Cabinet (Website - LinkedIn)

• PJM Interconnection

• ERCOT

Company & Industry News

• Pennsylvania data centers face increased oversight under new law

• New Jersey lawmakers send data center tariff bill to governor

• POWER Act, lawmakers seek to regulate new data centers’ power and water usage

• NAACP sues xAI for illegal pollution from data center power plant

Books & Articles Discussed

• Climate Cabinet Education - Taming Data Center Turmoil

• Southern Environmental Law Center - xAI built an illegal power plant to power its data center

Related Volts Episodes

• Making sense of the data center backlash

• Doing data centers the not-dumb way

• Spreading the good news about electrification

• What’s going on in electricity world?

Text Transcript

David Roberts: With no further ado, Saleem Chapman, welcome to Volts. Thank you so much for coming.

Saleem Chapman: Thank you for having me.

David Roberts: Excited to get into this, but maybe before we just jump in, tell me quickly how you came to this or how Climate Cabinet came to this. Why did you guys feel like this was a needed intervention, and how did you come to be heading this work for them?

Saleem Chapman: Yeah, thank you for that question. So it really starts on drawing on my experience as a former executive in state and local government. I know from that time what it feels like to sit behind a desk as a public servant and feel the weight of expectations to solve deep structural problems. And you quickly realize that the hardest challenges aren’t necessarily finding the right ideas. It’s about having the information and tools to make good decisions in a complex and rapidly changing environment. And so I think that that’s one of the most unappreciated aspects of the data center debate is the governance challenges. You know, most of the conversations focus on the outcomes people want, but less attention is really paid to, the institutions that actually have to make the decisions.

David Roberts: So before we get into recommendations, I wanted to talk about data centers just for a minute. One of the, the first paper, you know, we’ve had large industrial users hook up to grids before. That’s not a new thing. There are aluminum foundries, there are manufacturing facilities, there are large customers, but what the first paper argues is that data centers are not like those previous large industrial customers. So maybe just say, you know, they say there are three things that make the hyperscalers unique. Maybe just go through why this is a unique phenomenon that requires a unique response.

Saleem Chapman: Yeah. So there’s, as you alluded to, there are three dynamics that are really shaping the entire data center conversation. The first is what I call the timing mismatch. So, hyperscalers operate on a completely different timeline than our electricity grid. They can plan and build massive campuses in one to three years, but the generation and transmission infrastructure needed to serve that load often takes five to 15, sometimes even longer. And so from the grid perspective, demand can show up almost overnight, but infrastructure to support it can take years to catch up. Then there’s the scale and geography. So a simple... A single hyperscale campus can request as much electricity as a small city in one interconnection request. And we also know that those loads are clustering in places like Northern Virginia, Pennsylvania, Texas, and Georgia. There’s this really good stat that in 2023, only 15 states accounted for 80 percent of data center electricity demand. And so if you look at this from a national perspective, you can certainly miss the very real constraints that utilities, governments, and communities are facing in those specific regions. Which brings me to the third dynamic that I think is really important to this conversation-

David Roberts: Hmm ...

Saleem Chapman: And that’s uncertainty, because you have utilities, regulators, and developers who are making these billion-dollar investment decisions without knowing exactly how much demand will actually materialize, when it will arrive, or how advances in computing efficiency will change that outlook. And then we also know that hyperscalers are remarkably mobile compared to some of those other traditional examples you pointed to. They tend to sort of build wherever power is available, permitting and economics are most favorable, and they can certainly shift future investment just as quickly. And so it makes, those planning dynamics even more difficult because you actually don’t know what the projected load will actually materialize into tomorrow.

David Roberts: Yeah, I always think of it, I don’t know what the right analogy is, but I think of it like as like a bee or something buzzing around an elephant. Like, these, these hyperscalers are, they’re making these incredibly fast decisions, flitting here and there geographically, and like the electricity grid and electricity regulators are just slow, this slow lumbering beast that’s like can’t even keep track, much less like move fast enough. Okay, so speed, they’re building faster than grids can catch up. There’s scale. They’re just enormous single uses. And then this geography thing. They can build anywhere, basically anywhere there’s power. They’re not tied to particular communities. They’re not tied to particular economies or geographic features. All of that is, I think, new in the world. And so, and so it’s not so much... I mean, I, I think one of the good things you emphasize in the paper, it’s not so much that people aren’t using the existing regulatory tools properly. It’s just that the existing regulatory tools were not built for, they’re not built for this. Okay. The second paper gets into the specific risks that data centers pose to communities, to states, and I would kinda wanna go through these ‘cause some of the, some of them I think are obvious, but some of them are not obvious, and some of them, in particular, don’t really show up from the typical risk analysis, you know, procedures that grids undergo. So let’s go through some of those. There are eight risks. If you wanna just start where you think is best.

Saleem Chapman: Yeah. And, you know, there’s one way of thinking about these as risk, which is certainly how we frame it in the paper, but I also like to think of them-

David Roberts: Mm ...

Saleem Chapman: As warning signals, right? So how do we actually be able to have dynamics which allow us to, with some degree of reasonable certainty, be able to predict the outcomes that we can expect? And so the three of those sort of warning signals or risks that keep coming up, time and time again for me, the first is forecast opacity, and it’s that, you know, those demand numbers that we often see that’s characterizing news headlines-

David Roberts: Yeah ...

Saleem Chapman: Often comes from the developer themselves and are unverified, which certainly implicates how much we actually know about what demand will actually ultimately reach the grid.

David Roberts: Yes. And developers, of course, have their own incentives regarding how they want to pitch those forecasts. They’re not necessarily objective analysts in this matter.

Saleem Chapman: That’s absolutely correct, and what we also have to understand is that different players have different motivations. You know, there’s the separating of sort of the major tech companies, the Googles, the Metas of the world from sort of the speculative developers who are sort of oriented toward, you know, build it and then they will come. And so you have to sort of understand, as you were just saying, the different motivations of those actors and respond accordingly.

David Roberts: All right, so that’s one is just the uncertainty of the demand. We just-- Like, there’s a lot of big projections of demand coming, but we don’t know how much weight to place on those forecasts.

Saleem Chapman: Exactly, which brings me to the second, because the demand is ultimately what’s leading to what we’re building out. And so the next, sort of warning signal I’ll call attention to is gas dependency, that a lot of these deals are locking in new fossil capacity, uh for 30 years when the contracts by which are leading to them needing to be built are operating on much shorter time horizons.

David Roberts: Right. So a hyperscaler sign, like a five to 10-year contract. Build some gas. Again, we don’t know for certain if they’ll be there after 10 years. But if you build a big gas plant to provide them, the gas plant will definitely be there for 30 years. Once again, a timing mismatch.

Saleem Chapman: Exactly. Which brings me to the third warning signal, and that’s unconditional subsidies, right? We’re seeing, states and local jurisdictions hand over pretty significant incentives, with really no clawbacks and no conditions if the project ultimately under-delivers. And so that’s really critical because it plays into part as to how much value the public is seeing from these development projects.

David Roberts: Right. And we’ll get to, we’ll get to how to add conditions to those. But again, this is like, this gets to the mismatch with the past too. Like, certainly big local or state subsidies for giant industrial customers are nothing new. But like, if you give a, you know, if you give an aluminum foundry or whatever a bunch of incentives to build, you’re pretty certain they’re gonna build, and it’s gonna be there for a long time. But again, like, give these big subsidies to data centers, and we don’t really know if they’ll fully build out what they say they will or how long they’ll be there.

Saleem Chapman: Yeah, no, I just wanna point to, ‘cause you keep alluding to something that I really wanna call attention to, ‘cause I think a, the core issue around data center debate is really that our energy institutions were designed for a really different era. They were built around a world of slow, predictable growth, where demand changed gradually and infrastructure could be planned over decades. And we know today’s economy does not look like that anymore. So whether you’re talking about AI, advanced manufacturing, or even electrification, which I think a lot of your audience would be supportive of, they’re all moving on faster timelines, than the institutions that’s responsible for managing the grid.

David Roberts: Yeah. And this, and you mentioned, you know, the time mismatch between gas plants and data center building, but I think that same time mismatch is true of other infrastructure too, as you say. Like, if a giant hyperscaler says, “We’re coming to X in your state,” and then the utility starts building, you know, power lines or substations or whatever. That infrastructure takes a long time to build, and it lasts a very long time, and if you’re building it for a particular data center and the data center doesn’t show up, who ends up paying for that, right? That’s one of the key things going on. Who ends up paying for that infrastructure?

Saleem Chapman: Exactly, which is why our policy series, Taming Data Center Turmoil doesn’t-- looks beyond just the question of whether a community is to say yes or no to a data center. It’s really looking at how do we identify the pathways, policies, and actions to enable responsible growth. And ultimately, it just comes down to what does it look like for these projects to earn a general social license to operate?

David Roberts: Yeah. Yeah. One other risk I did wanna mention on your list here is, and this again is a familiar one from-- We have a long history of this, which is citing these things near vulnerable communities, basically near communities that are already burdened. Talk a little bit about that risk.

Saleem Chapman: Yeah, really important one to elevate and certainly one near and dear to my heart. You mentioned in my, overview of my background that, you know, sort of I came to age in this field of working on environmental justice issues. And so we have seen data centers certainly operate without a genuine social license. The project that immediately comes to mind to me, is the one in Memphis, the xAI project Colossus. And that’s exposing a few different things. And certainly we can get into the conversation as to whether or not, you know, gas behind the meter should be banned, or should we be incentivizing other fuel technologies, and that’s a worthy conversation to have. But there’s also another issue here that I think gets less attention and, you know, is what does it look like when these actors are subverting our permitting processes? What does it look like when they’re failing to engage affected communities? And as you just alluded to, what does it look like when they’re increasing cumulative pollution burden in these communities? And those are all things that are needing to be wrestled with, and I’m really encouraged, that there are really thoughtful organizations like, the NAACP and other environmental justice organizations who’ve really taken that issue head on. Certainly we want to sort of do our best to make sure that we’re elevating attention to it, and really taking their lead on this work who sort of are more best positioned to work with, the communities that are most exposed to these issues.

David Roberts: Yeah, and, and one other one that I wanted to mention too is that some states, I think some state governments are so eager to have these things to the point that they’re passing laws that override local authorities, basically, that prevent local authorities from exercising, citing, and permitting oversight. And, you know, I’m so, I’m so am-- Uh, you know, I have such mixed feelings about this one because, like, on the... You know, I do a lot of stuff about housing on this pod and NIMBYs. In that, in the housing world, I think there are good, there are often good arguments to move authority to the state level and remove some of the ability of local NIMBYs to block things. I think there’s a robust argument in that. But then something like this, a giant industrial customer, it’s a different, a different thing. So do you- Are there examples there or talk a little bit about this, where the authority should lie?

Saleem Chapman: Yeah, I think that, how I often tease it out is, you know, you have to think about at what avenue are you trying to engage with this issue. So if you’re talking, as we were just discussing around sort of the land use implications and the implications of that that has on neighboring communities, certainly that is a local issue. If you’re talking about sort of the energy implications and how that impacts ratepayers and affordability, that’s sort of more within the state purview. And so that goes back to sort of where I opened, which is our approach as Climate Cabinet really has been how do we solve the real governance challenges around these issue? There are a lot of significant trade-offs, that policymakers and leaders are gonna have to evaluate, and so we just are trying to provide them with the framework and the right decision-making and analytical capacity to make sound, durable choices.

David Roberts: Right. And so there are all these risks and as we said at the beginning, like, the conventional regulations and the conventional approach here don’t always see all those risks. Those risks are not really codified to show up in those, in those processes. Like, the risk of just a single customer being, you know, 15 to 20% of a utility’s demand in a whole demand, you know, in a whole utility area, like that’s never-- We never contemplated that before. The timeline thing, saying the dedicated infrastructure, all of that is sort of new. So some of this is just gonna have to be state policymakers updating those regulations to take account of those things. One point that I think is important in the paper, and that is interesting to me, is that these risks, they’re not necessarily unique to a particular kind of market design. You know, as Volts listeners know, there are vertically integrated utilities some places. There’s what are called restructured markets. There’s ERCOT, whatever ERCOT is. One of the points you make in the paper is that people are making kind of mistakes. There’s this kind of the same failure pattern shows up in all kinds of market designs. Can you walk through that a little bit? Maybe some examples of, like, the different places that are, that are messing this up.

Saleem Chapman: Sure, yeah. So we, in this part of our paper, we looked at three different markets, that operate within three different states. And so if you start with, Georgia, which is the example of a regulated energy market-

David Roberts: Right. Old school, vertically, old school, vertically integrated ...

Saleem Chapman: Old school, vertically integrated, I think those of which most people would sort of be most familiar with and think about when they think about, utility structure. And so what we saw in Georgia is that the, Public Utility Commission approved a major gas expansion really built on justification that was derived from developer supply forecasts. And so in that instance, the process worked exactly as it should. There was nothing sort of bad faith about it, but it still, created a situation where ratepayers had significantly exposure, cost exposure, if those demand projections ultimately fell short.

David Roberts: Right. So the ratepayers are paying for the gas, the gas plant build-out, and if the demand doesn’t show up to absorb all that gas build-out, it’s the ratepayers who are paying for the stranded assets, basically.

Saleem Chapman: Exactly.

David Roberts: And then PJM though, PJM is a, is a competitive market, restructured market. Talk through that one a little bit.

Saleem Chapman: Yeah, so what we are seeing in a state like PJM is that you can have a single hyperscale, campus being brought online. At the cases that we looked at, it was 30% of local peak, demand within that particular region. And that triggered a capacity market event which ultimately resulted in, as you’ve-- if people have been following the PJM sort of issue, that you’re seeing sort of historical capacity prices year over year. And so what we are seeing there is that similar, the process worked exactly as it should, but by triggering that capacity market event, you had states all across the 13-state footprint that PJM covers having to take on some of the cost, that was associated with bringing that new facility online when they had no say in actual the decision-making around whether or not that facility would be approved.

David Roberts: Mm-hmm. Yeah. Who pays? This comes up again and again. And then there’s finally ERCOT, which people, you know, I think which people think of intuitively as, like, sort of the most free market, closest thing to a free market type of system. And they might think, well, in that kind of market, surely, you know, it’s the developer who takes the risk if it’s, you know, really working like a free market. But it’s, turns out there’s failures there too. Talk about that one real quick.

Saleem Chapman: Yeah, exactly. I mean, what we also know is as we are confronting this new period of technological innovation, we are also operating within a much more volatile climate than what we have historically had. And so in the ERCOT case, we saw hyperscale growth, colliding with extreme weather events. And so some of the emergency programs and gas dispatching that had to be put in place to meet that emergency event added billions in surplus charges that really surfaced as price volatility, but wasn’t actually visible as a line item on any individual ratepayer’s bills that said, you know, “This was driven by hyperscale growth.”

David Roberts: Right. Right. It shows up as price volatility in the market, which is absorbed by everybody who’s involved in the market.

Saleem Chapman: Exactly.

David Roberts: And so all these kinda come down to who is taking the risk and who is paying the price. So in all these cases, you take data centers’ demand forecasts, these developer demand forecasts, translate them into a bunch of costs, right, to anticipate meeting that need, and it is the ratepayers ultimately who are paying those costs to prepare. And so in other words, it’s the ratepayers who are taking on that risk. It’s the ratepayers who are paying. And then if the developer forecasts don’t pan out, the ratepayers are stuck with it. That’s like, that’s kind of the core theme through all those market, despite the market structures.

Saleem Chapman: That is the core theme, that ultimately this comes down to who’s taking on the risk and who’s capturing the value.

David Roberts: And so before we get into specific recommendations, I guess one question, which I bet a lot of people in the audience have, which is given all these extraordinary and unprecedented risks, all the downsides here, all the risks of sort of ratepayers being stuck with stranded assets, with having to pay for this, you know, long-term infrastructure, et cetera, et cetera, et cetera, why not just ban these things? That is... I mean, that’s certainly on the table. There’s a lot of groups out there advocating for this. Why not just a ban?

Saleem Chapman: Yeah, really good question. And I think it really comes to where we thought as Climate Cabinet, we could offer most value in this space. And so for us, what we were hoping to do is understanding that many state lawmakers are relatively under-resourced, compared to the complexity and pace of this issue that they’re being asked to navigate, that we really have to work to strengthen the capacity of state policymakers because each jurisdiction is gonna have to evaluate their trade-offs, right? Like, yes, these are causing really complex issues that are having burdens on ordinary households and ratepayers, but at the same time, some of these jurisdictions are wrestling with some really significant revenue generation issues and problems as well. And so there is no one-size-fit-all solution. I think what we wanna do is to make sure that we’re laying out, all of these clearly, so that there can be transparency in the decision-making and that state lawmakers ultimately have that analytical capacity to make those decisions. Now, with that being said, we are also looking at this issue as sort of what we believe is the underlying dynamic, and that’s what I keep coming back to, is that whether our legacy energy systems can adapt to a rapidly changing technological world. And so what we’re seeing on the data center side is revealing some of the same underlying challenges that we see when we talk about clean energy solutions deployment, right? Because on one side, you have distributed energy resources like rooftop solar, batteries, microgrids, and so forth, are challenging a system that was built around large centralized power plants and one-way electricity flows. And then on the other side of the equation, you have hyperscale data centers that are creating unprecedented concentrations of demand and pushing the grid to respond faster than it has historically has. And so we’re ultimately gonna come back to the conversation. It’s bigger than any single technology. Really what we’re talking about here is our energy systems and governance frameworks and whether they can adapt to the speed of change.

David Roberts: Yeah. I like that way of putting it, sort of like supply is disaggregating and spreading out even as demand is hyper concentrating in unprecedented ways. Both on, both sides of those are kind of confusing the traditional, the traditional process.

Saleem Chapman: Yes. And so we have to continue to make sure that the public interest is protected as our energy landscape continues to evolve, and I think that’s really the crux of this issue.

David Roberts: Yeah. And I did just wanna say here, on the ban question, ‘cause I don’t know that in the circles where bans are popular that this always gets as much visibility, but it is really true that these facilities produce a lot of investment and a lot of tax revenue. And as you say, lots of communities and lots of states need and welcome investment and tax revenue. There is an upside here that can be captured. There is value to be captured here for the communities. It’s not all risks and downsides.

Saleem Chapman: Exactly. And I think it’s also important too to really make sure that we’re highlighting how do we create the right accountability structure around these things so that way if they aren’t-

David Roberts: Right

Saleem Chapman: Generating those, that value that we ultimately project, that we’re actually able to make a change that is aligned with that.

David Roberts: Right. All right. So let’s go through then, you have this sort of pretty elaborate structure where you’re recommending for state policymakers how to approach this and specific policies, and they’re broken down. There are nine elements in three tests, and the, and the way the tests are broken down is what to do before one of these big things, these big data centers, before it’s approved, then there’s a whole set that are recommended while it’s operating, and then there’s another set after the deal is done. So I wanna go, I kinda wanna walk through those, but let’s start with what should policymakers be doing and thinking about before they approve one of these things? You have three, you have three recommendations there.

Saleem Chapman: Yeah. So what it ultimately boils down to, our first test is really about has the developer or the company demonstrated that the demand is real, and has put its own meaningful capital behind that commitment? And so given the uncertainty around future data center growth, policymakers have to be careful about building infrastructure based on speculative demand, projections that may not materialize. And so all the sort of three, policy elements that are included underneath that first test is in alignment with that goal.

David Roberts: Yeah, and so one of them is verified forecasting. I’m not totally sure how that’s gonna work. Like, I, I see that you don’t want to just accept what the developers say, you know, because as we say, as we, as we mentioned, they have their own incentives. But where do policymakers look for better demand forecasting? Are there, are there available like outfits, independent analysts? Where do they go to sort of stress test or vet these projections?

Saleem Chapman: Yeah, I think that, you know, there’s a various array of opportunities available to different jurisdictions. The sort of practice example that we call out is that we believe that there’s opportunity within a PUC or some other uh, independent state entity that hasn’t necessarily been, borderline formed yet to basically do that independent analysis.

David Roberts: So like a state, some sort of state agency?

Saleem Chapman: A state an- a state agency or some sort of quasi, government entity that has enough independence, that can actually provide a reasonable analysis that isn’t connected to a developer.

David Roberts: Yeah. I mean, I, I know there are people who would question in some cases whether the state PUCs actually have that independence, whether they’re not also captured by these giant hyperscalers. I mean, at a certain point you have to trust somebody, but-

Saleem Chapman: Which it-- I mean, you bring up the good point, and I know I’m probably perhaps sounding like a broken record, but I think that’s why it’s really clear-eyed to keep this conversation focused on the governance and institutional piece of it. So there are some really key questions that you’re raising and I’m continuing to raise about whether or not our energy, public institutions are actually up to the task. And I agree, that, that is a realm of where a lot of these conversations and solutions are gonna be found.

David Roberts: And then you also say the committed capital here, requiring some committed capital. What does that, what does that look like? Is the idea that developers put up money up front such that if they don’t do what they say they’re gonna do, it’s their money on the line? Is it that simple?

Saleem Chapman: Absolutely. And this isn’t a unprecedented or novel concept. There are other sectors within the economy where, project developers are asked to sort of put together bonding requirements or a letter of credit to basically state that there’s, that they are financially, responsible if their project doesn’t materialize as they had described.

David Roberts: And this also uniquely has to do with grid upgrades. You recommend what’s called cause and pay interconnection, meaning that if the hyperscaler, if the data center is the cause of a grid upgrade, if the grid upgrade is made for the data center, then the data center should commit to up front before they’re allowed to, before they’re allowed to, before they’re approved, they should commit up front, “We will use a minimum amount of that upgraded infrastructure, or if we don’t, we’ll pay for it. We’ll pay penalties,” basically, just so that we avoid this thing where the ratepayers get stuck with the infrastructure costs. Is that accurate?

Saleem Chapman: That is, incredibly accurate. And sort of what we’re trying to get at there is this idea, as I spoke to earlier, that different players within this space are needing different tools to sort of attack how they’re looking at the issue. And so we think sort of the cause and pay interconnection will do a good job as sort of, creating more thoughtful speculative development, so that if those developers don’t, aren’t able to attract the customers that they’re looking for, that ratepayers aren’t stuck with, that energy demand.

David Roberts: Right. And presumably this would give developers an incentive, as you say, to be less speculative, to not just go around throwing demand forecasts here and there, you know, with no downside. Like, if they’re on the hook for if they throw a big projection and then they, a bunch of infrastructure is built in response, they’re on the hook for paying for it, that gives them an incentive to lock down their operations too, to make sure that their projections are more accurate in some sense.

Saleem Chapman: Yeah, you’re picking up on sort of our thinking around this, is that how could we find integrated intersectional solutions to these issues? And so we’re hoping that within that first test that those three will sort of come together and be mutually reinforcing.

David Roberts: All right, so that’s before approval. Make sure you got, you got verified demand projections. Make sure that the, that the hyperscalers and developers are putting capital up front so that if whatever they say is gonna happen doesn’t happen, they are the ones paying for it in terms of bonds and stuff like that, but also in terms of infrastructure commitments. That’s beforehand. And then there’s a set of recommendations for while these facilities are operating. One is real cost pricing. Tell us a little bit what that means. That’s gonna be a utility thing, right?

Saleem Chapman: Yeah, so essentially what we’re asking for here is that, is the project paying the full cost, and accounts for the burdens it creates? And so essentially here is we wanna make sure that depending on the time of usage during the day, that that’s actually reflecting the actual stress that that facility is putting on the grid.

David Roberts: And this is something Volts listeners have heard a lot about over the years. This is just instead of a flat volumetric rate, pricing that reflects locational and time-sensitive factors, because when you have a single facility that’s 20% of your load, it matters a lot when it’s drawing power, right?

Saleem Chapman: Yeah, and the goal here is really to leverage the unique characteristics of these facilities, as we talked about toward the earlier parts of this conversation, is their mobility. And so what we’re hoping here is that this will sort of function as an incentive, to grid these hyperscale campuses to actually move to where there’s headroom on the grid, given that there was sort of the less cost implications associated with those places.

David Roberts: Right. Right. Right. So if rates reflect the locational and time-sensitive factors, that will in some sense guide them to put the facilities not just where land is cheapest, but where there’s power, where there’s power overhead. Another one is, what you call on-call load flexibility, which I think is really interesting. There’s a lot of talk about this, about making data centers more flexible, but what do you mean in terms of, like, a requirement for data centers?

Saleem Chapman: Yeah. So I think anyone who is accustomed or knowledgeable about demand response, this will sort of mirror that. Essentially what we’re asking for is that when the grid is underneath a high-stress event, which, you know, we’re in summer now, and so we’re encountering a lot of those, to make sure they actually have the flexibility on hand to be able to sort of reduce the amount of energy they’re drawing off of the grid. And this idea is really just about how do we make these facilities more of an asset to the grid rather than a liability.

David Roberts: Right. Right. And specifically, like, they should be called on to ramp down before residential customers are asked to sacrifice.

Saleem Chapman: Absolutely. Absolutely.

David Roberts: And then the third one here is scenario-based planning, which is, um... Talk a little bit about that. In contrast to just, the developer forecast.

Saleem Chapman: Yeah. So I think again, we, we’re getting-- we’re looking at this from an institutional lens and understanding that in a lot of cases, utilities are incentivized to build as much as possible, right? To build capital. And so what we ultimately want to do is to make sure that when they’re making those capital planning decisions, that they aren’t necessarily just solely based on the most optimistic projections, but they actually are also accounting for the potential downside risk if those projects don’t materialize as they expect them to.

David Roberts: Yeah, it’s a, I mean, one of the kinda, one of the awkward facts here is that developers have incentives to be very rosy in their projections, and then kind of the utilities also do. The utilities also are incentivized to accept those rosy projections because, like, that just means the utility needs to build more, and of course, they wanna do that anyway. Just an incentive mismatch we come back to on this podcast quite frequently.

Saleem Chapman: Absolutely. You know, the example that always sticks out to me is that, some utilities have as much of a 11% guaranteed rate of return on the capital that they’re building and tell me another business-

David Roberts: Yeah

Saleem Chapman: Where just doing the thing, guarantees you 11% return.

David Roberts: Yes, and so if a developer comes along and says, “Hey, you need to build a gazillion things,” you know, who at the utility is gonna be the one to be like, “No, maybe not.” It, you know. So, like, state lawmakers are gonna have to do something to impose that kind of discipline on utilities via their PUCs, I think, like, ‘cause utilities are not gonna do that on their own.

Saleem Chapman: And that’s what we’re trying to get at on the scenario-based planning.

David Roberts: And then after the deal is done, there’s three more, and these I think are really interesting, and in some sense, these are some of the most kind of ambitious recommendations. One is new and matched clean energy. I was a little disappointed you didn’t use the Beyoncé acronym, Bring Your Own New Clean Energy. But talk a little, talk a little bit about what new and matched clean energy means.

Saleem Chapman: Yeah, no. I- we love the acronym too here at Climate Academy, so we’re right there with you, Dave. The idea that we wanted there was to have something that really emphasized the hourly aspect of it. Because ultimately, a lot of these projects, you know, are buying renewable energy credits that aren’t necessarily within the region, that they’re operating within, and also isn’t necessarily matched hour by hour with their energy usage patterns.

David Roberts: Right.

Saleem Chapman: And so what we wanna avoid is that, you know, during a hot summer day when the grid is experiencing peak demand and a hyperscaler is drawing a significant amount of load off of the grid, that that actually isn’t fossil fuel-based energy, that they actually are offsetting that hour by hour with additive clean energy. So we love the acronym. We just wanted to make sure we were emphasizing more nuance in the debate.

David Roberts: Yeah. But I wanna poke at this one a little bit because if you are serious about, I mean, if you’re gonna tell a data center all the additional energy you’re gonna, all the additional demand you’re gonna add has to be met hourly by clean energy, that’s a big demand, and it’s a big change from the present circumstances because as you know, like as you mentioned in the Georgia case, a lot of this demand is being met by new gas, either in front of the meter or behind the meter. So I guess, are you, are you guys serious that you want state policymakers to say, “No, this can’t be met with gas. You have to use clean energy”? Like how strict do you imagine this being?

Saleem Chapman: Well, I think the key issue here is really to make sure that the public is getting a fair rate of return from these major infrastructure investments. And, you know, certainly it is an ambitious vision, but ultimately we also know that that’s where we need to be moving toward if we’re actually gonna be responding to climate crisis with the same velocity that it’s currently onsetting. And so for us, what this debate is about how do we set a challenge for some of the most innovative, companies in our economy right now to try to meet. You know, five years ago, well, certainly we weren’t talking about AI to any significant of a degree that we are today. So we know that technological change is possible, and so that we wanna make sure that we are, setting the imagination and vision for where we ultimately know we needed to go, and I feel very confident that, these actors can respond to that.

David Roberts: And this is like, this is one of the things where I wanted to emphasize some upside because, you know, we’re talking so much about risks and downside. Like, these entities have lots of money, and they’re, and they’re highly incentivized to get on the grid. And so, like, it would just be crazy not to use this opportunity to get them to fund, you know, the clean energy that we all need and want.

Saleem Chapman: Yeah, which, which I wanna highlight on something here ‘cause I think you bring up a good point. You know, when we were talking about the massive amount of capital that was gonna flow into clean energy development through the Inflation Reduction Act, a lot of the conversation was how could that stimulate private capital, into this space. And so obviously, that as a policy mechanism is no longer available to us, but this one is, and I certainly think it’s behooving on policymakers, at the states to take advantage of it.

David Roberts: In some sense, like, much more incentive for the private sector than almost anything the IRA could have done. Like they’re-- It’s, and it’s they feel it’s not being imposed on them. They feel the incentive. It’s their own, you know, their own goals rely on it. The second one here is siting standards. This I think is important, and this is the kind of thing that I imagine that just like, the, your average person on the street sort of imagines they’re already doing, but they’re not, but they’re not necessarily. Like, about where you put one of these things in terms of communities. So just talk a little bit about the kind of siting standards you’re referring to.

Saleem Chapman: Yeah. So I think it gets back at what we were talking about earlier in the conversation about making sure that we are preserving the flexibility and authority of local governments to make those land use decisions um, given that they’re, can be most responsive to the dynamics that they are seeing. And for us, you know, this is about that it’s really hard at the state level to really be able to understand when these infrastructure developments are gonna have system-wide consequences. And you see to a certain type of way that states are really kind of struggling to figure that out, right? Like, if you look at some of these policies that’s been recently, proposed or adopted, you know, they’re doing size thresholds at 50 megawatts in some cases at 75 in other. And ultimately at the core of what they’re trying to do is really understand when are they having these massive significant consequences. Because ultimately that’s how communities experience these projects, right? Like, they’re experiencing them through their electricity demand, the water use, the noise, the truck traffic, and the land use. And so we just wanna make sure that, one, that those decisions are reserved for the level of government that can be most responsive to it, and second, that we ultimately have the frameworks in place to be able to assess those cumulative impacts. I mean, I think what we saw, again, from, the illustrative example in Memphis is that there’s a significant way for this project to be done wrong. You had an, already environmentally overburdened Black neighborhood, in Boxtown in Memphis that then had to have this additional environmental burden laid on top of them. And so, you know, cumulative impacts is a longstanding debate, in environmental justice community, and so this is just another forum by which it speaks to the need of those types of policies.

David Roberts: Yeah. And you, and you get here really to the need for state capacity. You know, we come back again to the need for state capacity. Like, you need the ability to do these sort of analyses, ratepayer risk, and different site alternatives, and their relative risks, and all this kind of like you need state capacity to do that. And also, because you keep raising the Memphis thing, this is like the Memphis example, the, the AI facility that Elon is putting in Memphis, is just like outright breaking several laws. Like, there are laws in place, you know, like there are air quality laws that they’re just flat out breaking. So in some sense you don’t even... You need state capacity, but you also just need state willpower. You know what I mean? Like, you could hold that facility accountable for the laws it’s breaking, and it just doesn’t seem like Tennessee is doing that.

Saleem Chapman: Well, yes, I think we can all agree that we need our state actors and policymakers to be taking advantages of the tools that are available to them, but it’s sometimes isn’t that straightforward. So even in the case of the Memphis example, that facility was subverting, local regulations by, only operating for 364 days because there was this stipulation within the regulations that said that if a facility was portable, it was exempt from certain requirements. Which goes back to where we started this conversation, that for us as Climate Cabinet, I know most people know us for our Moneyball approach to electing state and local climate champions, but we also have a robust policy program focused on strengthening the capacity of state lawmakers, and this is just another example of why we really need to make sure that we are improving the ability of our institutions to govern.

David Roberts: All right, and so the last one on the list here is, has to do with these incentives, you know. So people know that whether it’s like a big industrial facility or a sports stadium or whatever it is, you often have states competing for these things by offering big tax breaks and tax incentives. But as you say, this particular kind of customer poses risks that don’t necessarily, that aren’t necessarily the same as, you know, a sports stadium or something like that. So you’re talking about tying those incentives to performance. Say a little bit about what that would look like.

Saleem Chapman: Yeah. So I think if we follow sort of the traditional trajectory of how this works, right? You have a government entity provide an incentive to some sort of project, then the project sort of, materializes, and then subsequently they evaluate the economic impacts of that. And more often than not, it shows that the projected economic impacts actually didn’t meet, um- ... What was, what was actually materialized, right? Like those two things didn’t match up.

David Roberts: Yes, a familiar story.

Saleem Chapman: Yeah, a very familiar story. And so ultimately what we wanna do is to say that, okay, there could be very important use cases for incentives to be used, even though I think we know that that isn’t necessarily the biggest influencer in the decisions that these, data center providers are using to make their decisions, right? It’s not the biggest factor. Ultimately speed to power is the biggest factor. Yeah. But-

David Roberts: It’s in the mix, though.

Saleem Chapman: It’s in the mix, exactly. So if you are gonna give incentives, then you should make sure that they are conditioned on actual performance. So if you do that economic impact study and it’s not passing muster, right? That the benefits actually aren’t materializing as projected, that you’re actually requiring back some of that investment that you made.

David Roberts: Right. Right. And that’s, and that seems to me like good to do for incentives for data centers, but also, like, really state lawmakers ought to be doing that for all kinds of these big incentives. You know, like if the sports stadium doesn’t draw the audience or whatever, then you get some of that tax abatement back. You get some, you know, you get some of that incentive back for the citizens who paid for it in the first place. Like, performance-tied incentives seem like a good idea across the board.

Saleem Chapman: I couldn’t agree more.

David Roberts: Okay, that’s a, that’s a big... It’s kind of a menu there for lawmakers who are contemplating when these things are thinking about coming to your state. So one question this sort of raises is, a lot of that is about conditioning new interconnection agreements, but of course, in a lot of cases, these things are kind of already built. There’s a lot of places where these things are already up and running, and it would be kind of perverse if new data centers faced all these requirements, et cetera, and the old ones are just kind of grandfathered in and allowed to run the way they’ve been running. So is there any way to get at already built and running facilities?

Saleem Chapman: Yeah. So we addressed this a bit in the policy paper we just, released last week, that there is sort of a different approach needed for existing facilities. And we recognize that, you know, the avenues for making that change is much different than sort of a new data center project, because ultimately you have to wait, for those projects to come up for some sort of renewal period where you actually have the opportunity window to be able to institute new requirements. But to, as you alluded to, this is about avoiding creating a two-tier system, where there are, you know, new developers that have to face requirements that existing actors, don’t.

David Roberts: And then I think one of the things, that hyperscalers and land developers are going to be thinking, and I’m sure you’ve heard this, and I’m sure they’re out there saying this to state policymakers, which is, “Look, all this sounds nice, but if you, if you, State X,” you know, Virginia, whatever, “impose this sort of network of tight requirements on us, we’re just gonna go elsewhere.” This is why states throw these unconditional incentives at customers. It’s why states, you know, states are generally wanting these things and kind of begging them to come, and I think developers are gonna be saying this to state policymakers, and I think state policymakers are going to be having this fear that, like, if we become the state with all these requirements, they’re gonna go to a different state. So what is like... How do you respond to that and, like, what is the-- is there a track record here to point to? How do you respond to that-- what I’m sure is a very common complaint?

Saleem Chapman: Yeah, so when we look at the Virginia example, which is a really good case study, we are seeing that that is a evolving policy environment. Obviously, the issue has gotten increased attention in recent years, but it has been evolving for a significant period of time. There’s a reason why Virginia is perhaps the world’s most mature data center market.

David Roberts: Yeah, and they’ve taken... The state government there has just done more stuff, data center-related stuff, than almost any other state.

Saleem Chapman: Exactly, yeah. I think we see session after session, that there is a huge volume of legislation that’s being proposed to sort of address this issue. In 2025, there were more than 30 data center bills put on the board, and then this year you saw them pass the first of its kind tax on data center electricity consumption. I think neither of those dynamics, the fact that it’s getting more attention and ultimately translating into durable policy outcomes, is gonna stop Virginia from being a highly successful market in attracting data center development. There is broader dynamics at play, which is why you’re seeing these data centers cluster, in specific places, right? If it was just down to the economics of it, we would see a much more dispersed network of development, but that just isn’t bearing out.

David Roberts: So you say if a state is attractive to data centers, that’s gonna be true even if they put, even if they put some of these requirements in place. The factors that are drawing data centers there will be in place regardless, even if these restrictions go into place.

Saleem Chapman: I think so because, you know, I think what we’re seeing here is now is that the politics around this issue is converging, right? Like, whether you’re looking at blue states or red states, you’re seeing that there’s an aggressive approach to sort of try to mitigate the impacts on ratepayers. Like, let’s just look at the last 60 days alone. You had a Democratic governor in New York, pass the first statewide moratorium on data center development, and then in Texas, you had a Republican governor basically say that data centers have to self-fund their infrastructure.

David Roberts: Mm.

Saleem Chapman: I think as the landscape is changing across the board, data center, developers are realizing that they’re gonna have to adapt to this new environment, which ultimately might require more of them. And like I said before, I think that setting the standard high is important because these are some of the most innovative companies, in the world, and certainly within our economy, and I have all the confidence in the world that they can meet the challenge.

David Roberts: Is there a particular state that you think is doing better or worse? Like, I... Just quickly, do you wanna, like, to grade a couple of states? Like, who’s-- who would you look to as being sort of ahead of the, curve? As you say, there are, like, almost every state, there’s like, I forget the stat. It’s like 300 bills in state legislatures have been introduced about this in just the past session or two. So everybody’s grappling with it. Is there a, is there a state you think is sort of ahead of the others?

Saleem Chapman: Well, I look at the issue like this, is that we have to tease out, volume from actually outcomes.

David Roberts: Mm.

Saleem Chapman: And so what our framework is allowing states to do is to say that, you know, “Here’s how we take meaningful steps forward, given the political and policy window we have available to us, and then here’s how we do the work of what remains.” And so if we return back to the Virginia example, you know, I highlighted how they just passed a first-of-its-kind tax on data center electricity consumption. But if we evaluate that, we know that that is primarily a revenue mechanism and doesn’t necessarily provide a comprehensive approach to cost allocation. It doesn’t encourage operational flexibility-

David Roberts: Mm. ...

Saleem Chapman: that makes data centers a great asset, and it certainly doesn’t address cumulative impacts. What I’d sort of like to sort of look at is that even in a region, that has confronted this issue perhaps in a more tangible way than any other place, it’s still requiring an incremental approach. Certainly we have, you know, benchmark policies out there. There’s a really good policy, being considered right now in Illinois, the POWER Act, which is incredibly comprehensive. But even that, uh, based upon our analysis, has some significant gaps. And so what we ultimately wanna provide is a consistent and comprehensive framework, that state legislators could use to evaluate the policy environment over multiple legislative sessions.

David Roberts: Have you thought about doing what, shoot, what is the right wing group that does this? I can’t think of their name. It’s a state, it’s a state-based group, but they basically create model legislation, like, you know, just off the shelf. Like is there... Have you thought about creating like a bill that covers all of these things? Something like a comprehensive bill as a kind of model for states to draw on?

Saleem Chapman: We thought about it. As I was saying earlier, I think where we thought the most important place to start, is really ensuring that policymakers have the information, analytical capacity, and tools to make sound and durable choices. Because they’re being asked to do this, to make these very long-standing generational decisions on incredible time pressures.

David Roberts: Yeah.

Saleem Chapman: And so that was our starting point, is to really help them do some sense making around this issue. And then once we have a better understanding of how these dynamics are playing out in different states, what trade-offs they’re making, then ultimately, I think we might be in a better position to make a model bill that might be applicable across multiple different states. But right now we see, what’s most clear is that this is a local challenge, not a national one. And so, there’s gonna be some things that are translatable, but a lot of this is gonna have to be done on a state-by-state context.

David Roberts: Right. Right. Okay. So that sort of covers the waterfront. I guess as a final question, if I’m a state lawmaker who’s reading and listening to all this, you know, it’s a little overwhelming. There’s a lot involved, there’s a lot going on. Is there a sort of like- I wake up Monday morning what do I do first? What, what’s kind of step one here for state lawmakers who see this train coming down the tracks at them?

Saleem Chapman: Yeah. So I think the first step is to understanding, where in the project life cycle are you trying to address.

David Roberts: Right.

Saleem Chapman: The next step is to really understanding, okay, what has been currently done in your state. That’s certainly something that Climate Cabinet could help with. We actually were able to put together, a legislative portfolio review for lawmakers in Pennsylvania, where at the latter part of June, they were considering as many as 30 different data center related bills.

David Roberts: Jeez.

Saleem Chapman: And so we were able to help them understand, okay, what was the cumulative impact of the bills that were under consideration, and where the gaps remain so that it could set them up well for potential follow-up legislation. So call the Climate Cabinet, we could help you with that. But once you sort of understand the policy environment, it’s then to really understand, okay, how can we begin to sequence these mechanisms in a way that gets us to a comprehensive environment? You alluded to the fact that a lot of these policies are ambitious. They will take a time perhaps that extends over multiple legislative sessions.

David Roberts: Mm.

Saleem Chapman: But certainly there is a starting point, and so once you find that starting point, we can help you with the sequencing that comes after that, which is a little bit of a teaser for our upcoming paper for us.

David Roberts: About sequencing specifically?

Saleem Chapman: About sequencing specifically.

David Roberts: All right. All right. Well, we’ll stay tuned. All right. Well, Saleem, thank you so much. This is really interesting. This is the, this is the state legislative issue right now. The sort of it’s right on everybody’s plate, and I just thought it would be good to just to lay out a framework to help them not feel overwhelmed. So I hope this is helpful to them, and I hope they get in touch with you. Thanks for coming on.

Saleem Chapman: Me as well, and thank you for having me, Dave.

David Roberts: All right. Awesome.

We are trying a little something new this month at Volts.

I put out one to two podcasts a week, and each one of them is pretty long. And while I’d love to think that all of you listen to each and every one of them with tender loving care, I know that in reality it can be overwhelming, and you probably skip an episode here or there.

So what follows is a kind of highlight reel for the month, snippets from each episode for you to scan through to get a taste of what you may have missed. If any one of them grabs you can always go back and listen to the full episode. It’s right there in the feed.

This is a bit of an experiment, so I’d love to hear from you if it is useful. As always, I deeply appreciate all of you who pay for subscriptions. This newsletter and podcast, 100 percent audience funded. Your support is the only way I can do this work, and I am endlessly grateful.

All right, here we go.

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Timestamps

• 00:00 – Introduction: a new format for Volts

• 01:22 – Arizona: winning the utility elections nobody watches

• 07:04 – Minnesota: the smart meter data nobody uses

• 12:40 – Spokane: how property taxes reward empty lots

• 17:31 – Hawaii: the education gap in state energy policy

• 22:13 – The data center backlash is a politics story

• 27:41 – Why America can't build transit: procurement

• 32:41 – Clean energy after the IRA: the glass debate

• 38:26 – Silicon anodes: the other half of the battery

• 44:47 – Closing: tell me if this worked

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Apple Podcasts - Spotify - YouTube - Instagram)

• Charlie Fisher

  • Arizonans for a Clean Economy (Website - LinkedIn)

• Greg Miller

  • Center for Land Economics (Website)

• Chris Lee (LinkedIn)

  • Electric Innovation Initiative (Website - LinkedIn)

• Jigar Shah (LinkedIn)

  • Energy Empire (Website - Episodes - Apple Podcasts - Spotify)

• Will Poff-Webster (LinkedIn)

  • Institute for Progress (Website - Author page)

• Stephanie Pollack (LinkedIn)

• Lily Bermel (Columbia Center on Global Energy Policy)

• Rick Costantino

  • Group14 Technologies (Website)

Company & Industry News

• IRA clean energy gains mostly on track despite OBBBA, says MIT study

• New report says Trump hasn’t squashed Biden’s clean energy buildout

• Group14 opens factory to produce battery materials for flash charging EVs

Books & Articles Discussed

• Glass Half Full: Building a Decarbonized U.S. Power Sector

• The Transit Abundance Playbook

• Stop Paying More for Less Transit

• The path forward for the clean energy transition

Related Volts Episodes

• A key Arizona race will test clean energy’s electoral power

• Forcing utilities to justify their distribution system spending

• Want less sprawl and more urban infill? Try a land value tax!

• Spreading the good news about electrification

• Making sense of the data center backlash

• The US is terrible at building public transit. Here’s how to get better.

• Should we feel good about the trajectory of clean energy post-Trump?

Text Transcript

David Roberts: We begin in Arizona. Charlie Fisher and Ning Mosberger-Tang on winning utility elections that nobody is watching. Explain a little bit because I had trouble believing this when I was reading about it. It is flummoxing. I mentioned it in the intro, but explain a little bit about how the SRP election works. It sounds like it is transported from a different, earlier era of history. It’s wild to me that it still exists. Explain how these board members are elected and who gets to vote.

Charlie Fisher: Yes, you are right. It is from a different era. This system was initially established pre-statehood. SRP is unique because it was essentially created by a group of landowners, farmers, ranchers in the early 20th century. They came together, formed an association, and put their land up as collateral to convince the federal government to build Roosevelt Dam, which was our first big dam here in central Arizona. That was the beginning of the system. The fact that we still elect these folks on a system based on the early 1900s is clearly a problem.

The way that it works is there are 14 governing board members. Not to get too in the weeds, but there are two separate governing boards because SRP is technically two separate entities — water and power. For this discussion, we’ll just talk about the power side. The SRP district governing board is 14 members. On top of those 14 members, there’s an elected president and vice president. The president, vice president, and 10 of the 14 board members are elected on an acreage-based voting system, which, you mentioned at the top, means only eligible landowners have the opportunity to vote.

You have to own land in SRP service territory, and there are whole swaths of ineligible voting lands in SRP service territory. Just figuring out whether you are eligible is a challenge in and of itself. They are elected on four-year terms where half of the body is up every other year. The elections are held in April of even-numbered years when no one is thinking about elections.

David Roberts: The whole thing seems designed to absolutely minimize turnout. You don’t even know if you’re eligible to vote. You don’t know when the election is. These must have traditionally been tiny, tiny-turnout elections.

Charlie Fisher: Absolutely. Just to give you a sense, there are around 750,000 people who are eligible to vote in SRP elections. Looking back to 2022, when some grassroots climate and clean energy activists had started running and picking up seats, 6,972 people voted in 2022 out of 750,000 eligible for an entity that delivers water and power for over 2 million people in central Arizona. We knew that was the first problem we needed to solve — we needed to raise awareness and increase turnout.

David Roberts: Let’s talk then about how you do that. This is not a normal election. It’s not a normal voter base. A lot of the voter base doesn’t even know whether it’s the voter base or not. What was your strategy for targeting voters? You can’t just put ads on TV and stuff like that. This seems like a case where you really do have to go find people one by one. What was the strategy for increasing turnout?

Charlie Fisher: This was one of the most difficult questions for us, our team, our coalition to answer because it is so obscure. We did a huge amount of research into all of the eligible voters and did both qualitative and quantitative research to get as much data as we could on these folks: what is their voting history in other elections? We could really get a sense of who these folks are, what makes them tick, and what motivates them.

The other challenge was at what acreage, at what amount of land does your property not just become your home and the place that you live and your single largest asset, but become more of a business and a financial relationship. That very much changes the incentives of how you want to vote for SRP board members.

David Roberts: This is a big question I have. My gut says the more acreage you have, the more likely you are to vote for conservative candidates. But is that true? Does that hold?

Charlie Fisher: I can’t say for sure, but that was our theory as well: if you have 10 or more acres, and we set our threshold at one acre or less for a number of reasons. If you have more than 10 acres, you view your property as an investment, a financial, wealth-building tool rather than a place that you live. That was our first, and there was no hard science behind it, but we ended up deciding that if you have an acre or less than an acre, there’s a high probability that your home is where you live and that you will be persuaded and deeply affected by rising utility prices.

We looked at the districts that were going to be voting, the district board seats that were going to be voting in April, honed in on those ones, set our acreage cap at one, and then we talked to folks that we knew were good voters in other elections and were completely unaware that they even had the opportunity to vote in SRP.

David Roberts: Next up, Minnesota regulators Sydnie Lieb and Pete Wyckoff on where your utility bill actually goes. This is something that is shocking, I think, to listeners who are not familiar with this stuff. We spent a lot of money. This is not just true in Minnesota, but all all over the group. We spent a lot of money putting these advanced smart meters on homes and businesses all over the place. And we’re not using the data they’re producing in any meaningful way. And in a lot of times, the utilities won’t even tell you what that data is. It’s insane. Like we have the intelligence capacity out there. We’re not using it. It’s wild.

Pete Wyckoff: Or not.

Sydnie Lieb: It’s ridiculous. I mean, the way I describe it when I’m talking to people is I could be plugging in two electric vehicles in my garage and the utility would still assume that I was gonna get another one in the next five years based on whatever electrification load forecast they have. Because they’re not choosing to look at the data and go, this person’s already plugging in two EVs. They’re definitely not gonna increase the load at this location. Right. And they have that data and we’ve all paid for that data. And it is not that complicated to use it properly. So better forecasting and also allowing that forecasting to not happen behind a black box. The load forecasting needs to be able to have all kinds of interveners come into the process come into the regulatory space and say, We think your forecast is off by 10%. Or we think, you know, we think you’re going to get that much load, but we think it’s going to take 15 years, not 10. And if we do that, we can delay these investments. That’s the big one. I also think getting again back to the software side of things, the utility needs to do power flow modeling of their system. They need to understand where the constraints are. They need to, again, be bringing in better data from AMI to understand where they have a lot of DERs, where they have a lot of electrification happening, and how they can make all those things work together to better utilize the system. And then lastly, there’s a lot of folks talking about grid utilization and really excited about that. I feel really strongly that those folks are going to run into a brick wall when they try to implement what’s happening at the legislature. I think. Folks think that they’re gonna give the utility a seventy percent utilization target on their system. And then the utility is gonna come back and say, We looked at this, the system can’t be reliable at a 70% utilization factor. Trust us. Trust us. We’re not gonna talk to you about it. We’re not gonna let you talk to our engineers. Our engineers say it can’t be done. And that whole thing needs to happen a lot more transparently. And that needs to happen everywhere in the country where they’re trying to do grid utilization.

Pete Wyckoff: I think that’s our big theme here, or one of our big themes is show us the data. Show us how we as regulators can reproduce what you’re claiming. Right. The other thing that we haven’t really talked about is moving beyond this prudence test. So basically if they want to spend something in a distribution system, they come in to the and say, We put a new transformer here. Here’s the receipts. We got it from a reputable supplier. It works. And the system’s better than if we’d done nothing. So the analog there is most people think, you know, the FDA test to see whether a drug works well. No, they just test to see if a drug works better than nothing. So, so that’s the prudent test. Can you beat a placebo of doing nothing?

David Roberts: That’s a pretty low it’s a pretty low bar, especially in this kind of

Pete Wyckoff: What we really want, and back to the medical analog, and it’s only since Obamacare that that the government’s been looking at this at all is saying, Hey, there’s actually five things we could do for that medical condition. Which of them works better than the others? Right. And that’s what we’re asking. Not just did the thing you do actually happen? Show us the receipts and show us you got it, you know, not from some shady guy at the corner, but from a reputable supplier, right? But also was it The best thing you could have done if there were really five things you could have done.

David Roberts: Right, right, right. One of the questions I’ve had about all this is it just seems to me, not to, you know, I’m not in the habit of expressing sympathy for utilities, but in this case, like it just seems like forecasting distribution demand, distribution system demands has gotten wildly more difficult and complicated really rapidly. Like there’s all these new technologies coming on board in distribution systems as we’re talking about. And then there’s like, Data centers. We really have no, you I mean, you are now having to guess how fast our EV is gonna spread. How many people are gonna be charging at home versus here or there? How many people are gonna get solar panels? How many data centers are they gonna build in this area? How you know, there’s just like it just seems like the whole thing’s gotten a lot more difficult, which I guess goes to your point that like we need to make it more transparent how they’re doing this, but it is kind of like a much more complicated thing these days.

Pete Wyckoff: It’s much more complicated, but you know we have AI now and we have we have, you know, advanced in com computers and we have these smart meters and yes, it is much harder. It is a much more complicated thing, but we also have many more tools that if we decide to deploy and use them for getting on top of that complexity.

David Roberts: Then Greg Miller and Kitty Klitzke on land value taxes and why the tax code has it backwards. This was a twenty year process for me. But I think what I started to notice over the years is just like public policy, taxes can be kind of an unintentional source of social engineering. And so when we tax the value of a building, we disincentivize quality, we disincentivize good materials.

David Roberts: Yeah.

Kitty Klitzke: And we disincentivize maintenance.

David Roberts: So that’s why that gets to what the guy said to you before. The reason people now are building with cheaper materials and building cheap tiki tacky buildings rather than nice quality buildings is that they get taxed more the higher the value of the building they build, basically.

Kitty Klitzke: That’s surely a part of it. I think it also affects the way that things are financed. I don’t see raising the land value as the thing that we tax over the building as penalizing. I think what we’re doing is we’re actually changing the stakes. When we upzone and incentivize land, it increases the expectations for speculators, right? So I can’t tell you how many times I’ve gone and You know, an area’s been recently upzoned. A landowner owns this huge piece of land. And I’m coming in and talking to them about why they need a street vacation so they can maximize the use of the lot, all these stories about what they’re doing. And so we do the street vacation, and then the land just still sits there for sale. All they’re trying to do is maximize the value of that lot. They had no intention of developing it because developing things is a lot of work. And so we’re raising the value. And keeping the stakes extremely low for someone who wants to speculate. They’re paying almost nothing in property taxes. But they’re slowly like building the value of this piece of land by us upzoning it, incentivizing it, and then maybe doing a little bit of administrative work. And the land just goes up hugely in value.

David Roberts: Right. So Spokane is raising the value of the land. Yes. And they are benefiting from it.

Kitty Klitzke: With very little risk, right? And meanwhile the neighborhood’s sitting there experiencing this vacant lot, like all the nuisances that come with that, whether it’s raccoons and stray cats or squatters and crime, we experience all those nuisances associated with that vacant lot that is usually in a prime location and it just sits there because they’re waiting for the person to pay the right price and they’re doing the minimal amount of work to get more money out of that. But when you take away the risk of higher property taxes and all of the things from the part of the building, we’re doing what we can to incentivize a higher quality building and make it easier to build that building. They don’t have to consider it in their finances, having their property taxes go up. So I think it’s kind of a virtuous cycle and Like that experience in Capitol Hill, this made it very real for me. These kinds of policy decisions that are very hard to change because they involve taxes. And I feel like there are a lot of boogeymans with taxes. Yep. But if we don’t get serious about what we’re doing wrong and what we’re truly incentivizing and disincentivizing with our tax system, the problem is just gonna continue to fester. I was in Peru the last few weeks and I noticed that There’s a lot of unfinished looking buildings everywhere. There’s rebar sticking out of the beams, tops of buildings and things. And someone on the bus I was on finally asked someone why this is. They don’t tax buildings that are incomplete as highly as complete buildings. And so people just don’t complete the building. You’ll see the two or three story window with rebars sticking out of the top floor. To imply that there’s going to be another floor someday. So please don’t tax me. And I think they were probably trying to make it easy for developers, trying to ease the burden on somebody who’s trying to build their building or their house. But what it’s resulted across the country from Lima to Cusco, these weird-looking, unfinished, substandard-looking housing that might be nice inside, but looks terrible from the street.

David Roberts: Yeah, tax policy is full of unanticipated consequences.

David Roberts: Here’s Hawaii State Senator Chris Lee on electrification and the people who actually write energy law. Honestly, the thing I’m most curious about from you, the thing I’m you know, the thing I don’t really have direct visibility or access into is just what is the state of knowledge or the state of education among state legislators generally? Are they like they coming to this just sort of as blank slates? And do you find that there are divisions along partisan lines or age age lines or rural urban lines? Like who knows what? What is the kind of the level of education you’re starting with here when you encounter these people for the first time?

Chris Lee: Yeah, you know, so I’m not here to crap on anybody, but I think across the country fair to say, and I this was me too, when I first got elected, right? You have a ton of people who go through months of campaigning. Sorry, this is like unpacking, you know, peeling back the political skin on this whole thing to take a look at what’s what’s ticking on the inside. First of all, I’ve never met anybody who hasn’t run for office not wanting to do good. Nobody like sacrifices their time and family and personal privacy and probably, you know, 10 times higher paying jobs out in the private sector to do this stuff unless they really care. That said, you go through like, you know, six months or a year of campaigning, trying to get to know everything and then promise the world. And you get elected and you’re like, oh shit, like I don’t actually know what to do. And so I would say there’s a lot of great intention, a lot of great people on both sides of the aisle. But a lot of that gets filtered through, you know, the standard evening news, like sound bites and political polarization, all that stuff. But at its core, people are looking for real solutions. And especially at the subnational level, right? It’s very different than national politics and what you’re seeing on CNN and everything else. People are connected. And so you’re walking door to door in your own communities in most cases, in the states around the country and in the legislatures and at cities and everything. And those folks, unlike you know, the president or Congress, who I think everybody’s mostly been given up on as as real agents of change can actually make a difference at that local level and you’re expected to. You’re expected to fill the potholes, you’re expected to fix the schools, you’re expected to deliver on cheaper power or other things. And so that’s where there’s this desire to do something. And I think when you’re coming in, it, you know, it takes, in my experience, and that with I think a lot of my colleagues who I’ve heard talk about this too across the country, it takes probably five or six years to get up to speed to understand the lay of the land for policy, what’s working, and especially in the energy space, and even transportation space where you have like complex regulatory parameters and investment cycles and all these things that are just not….

David Roberts: It’s all changing really quickly too.

Chris Lee: Yeah, I mean, i the world today, even even you know, since I’ve been around, or even like five years ago, is drastically different than it is today. And so you gotta be on top of that. And that’s where I think there’s a disconnect because you’ve got industry and investors and technology advancing at such a rate that… what’s happening a year ago, right, is in many cases like not even relevant, much less like understood by folks. So we’re trying to close that gap. I think that is the single biggest thing holding back any sort of progress on not only like electrification, but just stuff in general these days.

David Roberts: Yeah. Well, one of the questions I had was people come into these state legislatures, they don’t have a lot of staff. You know, these are not necessarily like super well funded offices. And so I’m wondering how much of what you’re doing here with EII is just kind of serving as kind of proxy staff, just you know, just a source of information and analysis that these people can tap into.

Chris Lee: Yeah, you know, it’s it’s crazy. In some states, I’ll give you a couple of examples. Like I you know, the big ones, right? Texas, California, New York. I mean, they’ve got a lot of staff and everything, but smaller states like Vermont and others where you have folks, the same folks making the same decisions on billions of dollars of budgets and all that stuff, have no staff, no office, no capacity whatsoever. You’re basically elected and you know, you’re handed like a pad of paper, like good luck.

David Roberts: From there, over to Energy Empire with Jigar Shah and Arnab Pal on the data center backlash. I think a huge piece of this, and this is what I think is the central problem for our side, which is full of technocrats, is there is a large element of just sort of animal spirits to this. People feel like rich, powerful people are running rampant. They don’t have to follow any rules. They don’t face any accountability. This feels like they’re betting our future. It might work out, it might not, but none of them will be hurt by it if it doesn’t work out. Just another classic example of, like, they’re not gonna pick up the pieces if this all falls apart, or if the, if the demand doesn’t show up, or if, you know, a bunch of empty warehouses get built. They’re not gonna be hurt. There’s a lot... There’s a huge element of this, of just people feel like the wealthy and the rich and the powerful are just out of control, accountability is dead, and this is something they can grab onto and sh- and control. Like, this is the only piece of that they have any control over, so they’re grabbing onto it and blocking it. I don’t th- I mean, I think a lot of it is not any sort of rational calculation or empirical calculation of the effects or, you know, calculations about decarbonization or anything else. It’s just, like, this is a place where I can throw myself in the gears and stop the wealthy elite from just rolling over us. So, and again, like, that’s their fault that people feel that way.

Arnab Pal: And look, so I 100% agree with that, and I think right now people feel like they can’t control the political system. They, their vote may not matter as much as it did in the past, so their ability to block projects at the local level is their version of a vote. But you guys were talking about this being a communications issue. Like yeah, probably, but I really think it’s just a trust issue. And I think no matter what the tech industry said, like even if they came out and said, “We’re gonna help everyone, we’re gonna build schools, we’re gonna build this 100% clean, and we’re gonna bring down your bills,” which is what I think we all would wanna advocate for, I think the vast majority of the public would be like, “Yeah, I’ll believe it when I see it.” And-

David Roberts: Yeah, I, I, I trace everything, I mean, anybody who’s followed me for any time online knows I trace everything back to low social trust. This is sort of, you know, you talk to social scientists, they say you wanna do anything good collectively, you have to have social trust. The less you have, the less you can do, and it is coupled with our diseased and degraded information environment. So nobody feels like they can get a straight story. Everybody feels like everybody’s talking their own game. Nobody knows what’s really going on, so, like, this is just something concrete. It’s something that they can grab onto and not feel like the world is this impenetrable chaos controlled by forces out of their, you know, beyond them.

Arnab Pal: And the trust issue, I think, is backed up by the numbers. So only 8% of data center opponents actually live near one, and 70% of Americans oppose to a data center near them, which is what Gallup shows, and the Searchlight Institute found that 54% would oppose one within five miles. I, I guess what we’re trying to figure out here is, like, I think our technocratic industry is like, “Well, here’s how we figure out a way to do this without emissions, and here’s how we bring people in.” Like, are we solving for the right problem, or should we be solving for something else?

David Roberts: Well, I mean, maybe, maybe Jigar has a different perspective, but I think they’re trying to solve those problems ‘cause those are the kind of problems they know how to solve. Like, and this is, this goes beyond data centers. This is a larger social and political problem, is how do you solve the degraded information environment? How do you solve low social trust? How do you get your hands around these animal spirits, this vague, free-floating miasma of discontent and anger? I don’t know how to solve that. The tech guys don’t know how to solve that. Like, you know what I mean? Like, it seems like solving that requires many, many years, many fundamental reforms that don’t seem anywhere in evidence. This is not a technocratic problem that you can just solve with a few switches or paying a little extra for this or that. This is a bigger problem in our politics, so, you know, they kind of are trying to solve what they know how to solve.

Jigar Shah: Yeah, I mean, I, I do think that part of the problem with this, I think as you know, is that we sit here today in 2026 and we don’t have universal healthcare, right? We were promised that Obamacare was gonna work. As somebody who was on, like, you know, the exchanges for a while, like, that sucks. It sucks even more now, right? And so, you know, like, things ... What did, what did you call it in your podcast? The enshitification- ... Sort of everything, right?

David Roberts: Yes.

Jigar Shah: And so…

David Roberts: And there, so anybody who loses their job risks ruin, and here comes an industry, comes along saying, “Hey, we’re gonna destroy all your jobs. Let us build these data centers so we can do it.” What did they expect to happen from that?

David Roberts: Also this month, Will Poff-Webster and Stephanie Pollack on why this country can’t build transit.

Stephanie Pollack: So let’s take a step back, ‘cause I’d actually like to convince some of your listeners that procurement is actually not technical. It’s the most important thing. Because agencies don’t build, right? They oversee others building.

David Roberts: Hmm.

Stephanie Pollack: Procurement is how you buy the team that’s gonna deliver your project. So again, if we do the house renovation thing, procurement is how you would pick your general contractor or your plumber or your electrician.

David Roberts: Mm-hmm.

Stephanie Pollack: And if you were renovating your house and you talked to a couple different companies, you would definitely think about price, right? But you would also, like, check their references, and, like if someone told you they didn’t do what they promised or they took two times as long or they changed the price four times in the middle, even if their initial price was low, you’d never hire them, right? You’d pay a little more upfront, and you’d get what you wanted. In public procurement, in many areas, but particularly in transit, mostly we make them take the low bidder. So even if they-

David Roberts: By law.

Stephanie Pollack: By law, federal and sometimes state. So even if you’re looking at this bid and you know this company and they screwed up the last project they did for you, but they come in $100 less, you have to pick them. Other countries-

David Roberts: And if, and this just creates the obvious incentive for these bidders-

Stephanie Pollack: Companies that are really good at figuring out what the right number is.

David Roberts: Right.

Stephanie Pollack: So, and in other countries and in some states, they actually literally choose not to use federal money because of the procurement rules. They use what’s called value-based procurement. You’re trying to get the best value for your money, and that doesn’t always mean the lowest cost. So we actually had to go to the state legislature in Massachusetts to get permission for the MBTA to use value-based procurement. And just to give a quick example of the difference it makes, and we talked before about how communities care about these projects and they want them to be nicer and they want other things. So with the Green Line, there was a very expensive parallel community path for cyclists and pedestrians, and there were just parts of the Green Line where building it was gonna be really expensive, and we tried and we couldn’t figure out how to do it within this cap, which was set by, honestly, the governor and the board said, “We’re just not gonna spend more than X billion dollars on this project.” So the way we did the procurement was not just that we said, “Tell us how you’re gonna build it,” but we also said, “Here’s the cap. Here’s stuff you have to build, seven stations, a maintenance facility. Here’s three things the community has asked for. Whoever can build the most of those three things and stay under the cap is actually gonna win.” And the winning bidder figured out how to build all three extra community desired amenities within the cap, even though the staff couldn’t do that, right? So you can, you get way more for your money if you switch from a mindset of least cost to a mindset of best value.

Will Poff-Webster: And concretely, most states require lowest bid procurement or something where you’re allowed to consider the expertise of the contractor or the past work of the contractor, but only for a small percentage of the total bid, and most of it still has to be on price. And so our author, Anthony Potts, says anytime the federal government is putting money into a transit project, they should require that the state exempt the transit project from lowest bid procurement and allow best value, like Stephanie was able to do on the Green Line. And then Alon Levy also writes a piece about how we should know how much transit components cost, and we should, have unit-based procurement where you’re able to do procurement based on the cost of each foot of concrete, and you just add up the number of feet of concrete you use rather than having a massive lump sum up front that can be adjusted for reasons that no one can really understand, and then the transit agency is on the hook for some change order coming from the contractor. And the transit agency wants it built, so they just pay them off and, and pay for that change order.

David Roberts: I mean, you’d like to states to change these laws. I mean, ultimately, wouldn’t you, rather than doing exemption after exemption, it’d be nice if states came in and, and reformed this.

Stephanie Pollack: So the good news is that states are actually reforming procurement on highways, on bridges. Colorado has pretty much switched all of its infrastructure bidding to best value instead of low cost. Utah has been a national leader. And they actually have to choose between accepting federal money and then following the federal rule, and using their legal state mechanism for a smarter procurement.

David Roberts: Ah.

Stephanie Pollack: We should never, never penalize a state that is doing innovative things on procurement by making them follow federal law.

David Roberts: After that, Lily Bermel on where clean energy actually stands now that the IRA is gone. one of my questions I had about all this is it seems like there’s been a real effort to spin this report as a positive in the most positive way possible. So like for instance, you talk about this 2.5 year time lag for solar and batteries. Talk, first just say what you mean by that.

Lily Bermel: Sure. I think, yeah. One, first thing I’ll say is the report represents a really specific framing, and the result is very positive. So I wouldn’t say that it’s spin, for one. But number two, on the two and a half year lag, what I did there was, was really wanting to figure out how far behind the current trajectory is compared to what the IRA would’ve put forward. So I was trying to think of creative ways to do it, and I thought of this concept of, of what I coined a lag analysis. And basically what that does is it looks at a given year, so say 2031, and it looks at how many gigawatts of energy will be deployed. So for solar, the Energy Innovation model shows about 333 gigawatts of solar will be deployed. At what point, how many years later, will OB3 reach that time period? And it’s, it’s only two and a half years later. And so for me, again, when I was doing this research, that was much smaller than I thought. And so that doesn’t even equal two and a half years worth of capacity or deployment lost because it’s still being deployed at about, you know, 75% of that high level. It’s just looking at the total levels of deployment and at what point in time will you reach that milestone.

David Roberts: Yeah. Well, this gets a little bit at what I mean, which is that 2.5 year number is the, is the per year average over the 10 years. But if you look, like the report says, by 2035, we’ve lost a cumulative 44 deployment years—

Lily Bermel: Mm-hmm

David Roberts: On clean capacity and 56 deployment years on generation. And like if you look at wind, even the per year average on wind is 11.5 years deployment, all of which sounds to me bad. You know what I mean?

Lily Bermel: Yeah.

David Roberts: Like, like another way of looking at this is we got 30% less of the clean energy than we would’ve gotten and 25% or like even more, like 33% less of the emissions losses, and that seems bad to me. Like those seem like big numbers to me, I guess.

Lily Bermel: Yeah. I mean, you’re right. It’s bad. Any energy lost is bad, and that report does not hide that in any way. Page one, it talks about how Trump’s policies are leading to less clean energy, less investment, fewer jobs, canceled projects, all the like. And so on the lag, right? That was, that was my honesty that, and rigor in the analysis that those lags compound and they add up every single year.

David Roberts: Yeah. Yeah. And they get, and they get bigger and bigger over time is the thing.

Lily Bermel: They get bigger. And just as you asked earlier about the 74% number, you know, how, why is that rosy when wind sucks? It’s, it’s the same thing on this side. Like wind is clearly the laggard and the down weight in all of these numbers, and then at the individual technology level, solar and batteries fare far, far better than wind.

David Roberts: Yeah, and it’s also worth saying, I think that when you, there’s 2.8 gigatons of CO2 is the difference between these two cumulative 10-year difference—

Lily Bermel: Yep ...

David Roberts: Between these two scenarios, and that’s also a lot. And that’s... And, and unlike clean energy progress, you can’t, you know, I’m not telling you anything, you can’t get that back. Like, it’s a cumulative, it’s a cumulative measure how much is in the atmosphere. So all of which is just, this is just me arguing for my natural pessimism, arguing for the glass half empty perspective. Like, it just seems to me like ev- your analysis shows, and as you say, it doesn’t hide it, it says it right in the analysis, that these are big, these are big hits, basically. Even if not as bad as some people might have thought or feared, they are big.

Lily Bermel: Yeah, I’m glad you pointed out that 2.8 gigaton number. That’s the amount of emissions that the current policy scenario will see over a 10-year time period. And actually, right before this, I did the math. That’s equal to about two, like, 2024 sized worth of power sector emissions. So that’s just in the power sector. And again, I focus on that, that 10-year window because to me, it, it highlights that urgency of like, this is real. These losses are real. It’s tangible. You, you know, you can calculate it or estimate it. And it’s also the window that policy can do something about it. Like, this is not 2.8 gigatons that automatically happen the moment they signed the piece of paper for OB3.

David Roberts: Right.

Lily Bermel: This is something that right now, you know, permanent reform negotiations can address, and that next Congress will have the opportunity to address, and the next administration will as well.

David Roberts: Right. None of, none of these are locked in. Yeah, we should, we should say that. None of these numbers are locked in. They’re, they’re out to 2035, so-

Lily Bermel: Exactly ...

David Roberts: We could, we could change this reality.

Lily Bermel: Exactly. And I think one more thing I’ll say about the framing is that any person in the climate community know- knew that the IRA was not enough to get us to net zero by 2050, and it put us within a stone’s throw distance of it, which was really exciting and invigorating. And so, you know, when you know that what is this glass that we’re measuring, it’s, it’s the current compared to the prior, what we have now versus what we thought we had and what made us really excited, and the glass is, is pretty full, more full than we thought. You know, of course there is so much more to do. We don’t just wanna fill up the glass. We wanna do way better than that.

David Roberts: And to close it out, Rick Costantino of Group14 on the half of the battery nobody thinks about. So if you listen to Volts at all, or if you follow clean energy at all, you probably know that batteries are everything. Everything is batteries. If you have a problem, throw a battery at it. That is practically the slogan of my podcast. And so we’re gonna talk about batteries today, a battery innovation, a very exciting battery innovation. So I think the place to start is, I think most people know batteries these days, or batteries typically are an anode and a cathode, and an electrolyte in between them. They’re sending ions back and forth. When you charge and discharge, you’re sending ions back and forth from the anode to the cathode. And I’ve been following battery chemistry innovations for a while now. I’ve written about a bunch of ‘em. I’ve done podcasts on a bunch of ‘em. Maybe you’ve heard, you know, they started, like Tesla is using nickel magnesium cobalt. There’s lithium ion, there’s lithium iron phosphate. Lot of different chemistries you may have heard about flying around. But what you may not know is that all of that innovation, all of those varieties, are cathodes. Those are all cathode materials. The anode, basically since lithium ion batteries were invented back in the early 1990s, have been made of graphite, and that is, that was true then, it’s true today. So to start with, Rick, why don’t you just tell us what is the role of the anode, and why has it been so resistant to change and innovation?

Rick Costantino: Okay, great. That’s a great setup. And yes, batteries are, a lot of our joy and a lot of our frustrations, and we’re trying to improve them. And so like you said, last 50 years, lithium ion batteries have really been using that same, you know, anode, that graphite anode. And, the bottom line is that it, that it works. It’s what was started originally. It’s a very ubiquitous material, and it works, it works very, very reliably. And at the time it seemed like a very logical choice, you know, to pair. And over the last, you know, about 50 years or so, there’s been lots and lots of advancements in the battery except for that anode. We’ve been using that same graphite chemistry, you know, for this whole time. For this whole while though there’s been an interest in developing, you know, new anode materials, and particularly silicon, which is, which is basically the new, the new material that Group14 and other companies are developing as this, as the anode. it’s quite difficult. Those challenges have been met recently with technology. But until now, it really hasn’t been possible to commercialize those types of batteries.

David Roberts: Yeah, so silicon has been... People have been talking about silicon anodes for a decade now. I’ve followed on and off. There have been lots of attempts that have not really gone anywhere. Maybe start by talking about the challenges of making silicon work, why it’s been so hard to make it work.

Rick Costantino: Sure. One thing I should mention is that the cathode is what brings in your amount of energy, brings in lithium ions, right? And as you mentioned, you’re sort of bringing the cathodes, bringing that lithium from the cathode to the anode back and forth again, and of course, electrons are going the other way. So your energy density of your battery depends on how much cathode you can bring and how much lithium you can get in the cathode. And so the reason people are interested in silicon as a new anode material is because you can store a lot more of the cathode. So basically, you know, in your battery, your anode takes up a lot of the volume. So if you can have a more powerful anode that has a much higher capacity for absorbing, you know, the lithium atoms, you can shrink, you know, your anode. So imagine shrinking your anode, so now you can make your cathode bigger, so you can bring in more lithium into the battery. So people are interested in silicon and other, you know, anodes that have a higher energy density that can actually store more lithium than the, you know, than graphite can.

David Roberts: 10 times, as I, as I understand it. Graphite’s made of carbon. I think it’s like 1 atom of silicon can hold 4 lithium ions, where it takes, like, 6 carbon atoms to hold a single lithium ion, something like that. You can hold a lot more lithium ions with a single atom of silicon.

Rick Costantino: That’s right. It’s about 10 times the capacity on a mass basis. And, you know, the way that graphite works, if you kinda remember your old carbon, structures, you know, you know, graphite is carbon, and it’s a particular form of carbon where it’s in layers. And the way that graphite takes up lithium is that it can intercalate between those layers. And so but there’s only so much lithium that you can store. It’s very, it’s a very reliable way to store it, but it’s a very limited way that you can store it. But with silicon, it actually forms an alloy with the lithium, so it’s, so not only does it store more, about 10 times on a gravimetric basis or also volumetric basis, but it also can, it can absorb and give up that lithium much more rapidly. Now it’s basically thermodynamic. It wants to exist in that alloy state, so it’s not really a matter of kinetics and sort of pushing carbon layers out of the way. It’s about forming an alloy that nature naturally wants to form.

David Roberts: But when silicon absorbs lithium, it swells. This is, as I understand it, the big problem, and if you have an anode that’s swelling, you’re eventually cracking your battery, you’re ruining your electrolyte, et cetera. This has been the challenge, right?

Rick Costantino: That’s right. That’s been the key challenge, for silicon for a long time. It does, expand quite a bit, about 400, about 4 times its, you know, volume when it absorbs lithium ‘cause it forms this new phase. Lithium, it has to go somewhere, it has to form this form, this lithium silicon alloy. And so every time that it absorbs that lithium, it decreases the volume. The consequence of that is that it has a bigger interface. And so, you know, there’s something around that material called the solid electrolyte interphase, or SEI, and you want that to be very stable. And if that’s constantly growing and shrinking, it can actually, you know, crack over time, and it can, it can form separate kind of particles, and that could absorb more and more lithium irreversibly that you can’t exchange back and forth each time. And this can also, you know, cause shorts in your battery. So silicon has been a great material to, you know, charge and discharge once, but to have it in a recycled battery has been, has been quite a challenge.

David Roberts: And that’s it for July. If any one of these conversations grabbed you, go listen to the whole thing. As I said, this was an experiment. I genuinely don’t know whether a thing like this is useful, so tell me. Drop a comment. Send me a note. Be honest. If people like it, we’ll keep doing it. Thanks as always for making this possible. See you next time Thanks everybody.

Lithium-ion batteries, as all you savvy Volts listeners know, are generally composed of an anode and a cathode, with an electrolyte in between them. As the battery charges and discharges, the anode and cathode exchange lithium ions — thus the name.

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In the last 30 years, the cathode material in these batteries has undergone all kinds of innovation. You can find cathodes made of varying combinations of lithium, cobalt, nickel, manganese, iron, and aluminum, depending on the application. NMC, LFP, LMO — all these acronyms refer to different cathode materials.

But anodes have not seen as much innovation. Historically, they have almost always been made of graphite, 95 percent of which comes from China. In the last decade, however, a number of companies have attempted to use silicon in the anode, as silicon unlocks much greater energy density and faster charging times.

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At a Pacific Northwest Climate Week event held by Canary Media on Tuesday, July 14, I spoke with Rick Costantino, the CTO of Group14 — one of the leading companies involved in this effort and one of the first to reach real scale. We discussed the challenges of working with silicon, the solution his company has patented, where silicon anode batteries are showing up today, where they might be tomorrow, and the enormous performance boost they promise.

Timestamps

• 00:00 – Introduction and the graphite anode problem

• 01:54 – Why silicon, and why it kept failing

• 06:26 – From pharma to batteries: Rick's path

• 09:24 – How SCC55 works: silicon in a carbon scaffold

• 14:38 – The payoff: energy density and charge speed

• 18:59 – A drop-in material, and scaling in South Korea

• 21:11 – Where the batteries go: phones, EVs, drones

• 24:29 – Cost versus graphite

• 26:20 – Cycle life, calendar life, and safety

• 31:26 – Supply chain and the silane bottleneck

• 36:26 – Pairing with LFP, DOE support, and phones

• 40:30 – Bringing the cost down, and competitors

• 43:27 – The five-year outlook

Resources

People & Organizations

• David Roberts (Substack - Bluesky)

  • Volts (Website - Podcast - Apple Podcasts - Spotify - YouTube)

• Rick Costantino

  • Group14 (Website - LinkedIn)

• U.S. Department of Energy

Company & Industry News

• Group14 opens factory to produce battery materials for flash charging EVs

• Group14, the Washington company at the center of the EV lithium battery revolution

White Paper: Sionic Energy and Group14 Whitepaper on Life Cycle

Text Transcript

David Roberts: All right. Hello, first of all, Rick Costantino from Group14, welcome to Volts. Thank you so much for coming.

Rick Costantino: Thank you very much.

David Roberts: And, thanks to all of you for coming. I’m excited for this. So if you listen to Volts at all, or if you follow clean energy at all, you probably know that batteries are everything. Everything is batteries. If you have a problem, throw a battery at it. That is practically the slogan of my podcast. And so we’re gonna talk about batteries today, a battery innovation, a very exciting battery innovation. So I think the place to start is, I think most people know batteries these days, or batteries typically are an anode and a cathode, and an electrolyte in between them. They’re sending ions back and forth. When you charge and discharge, you’re sending ions back and forth from the anode to the cathode. And I’ve been following battery chemistry innovations for a while now. I’ve written about a bunch of ‘em. I’ve done podcasts on a bunch of ‘em. Maybe you’ve heard, you know, they started, like Tesla is using nickel magnesium cobalt. There’s lithium ion, there’s lithium iron phosphate. Lot of different chemistries you may have heard about flying around. But what you may not know is that all of that innovation, all of those varieties, are cathodes. Those are all cathode materials. The anode, basically since lithium ion batteries were invented back in the early 1990s, have been made of graphite, and that is, that was true then, it’s true today. So to start with, Rick, why don’t you just tell us what is the role of the anode, and why has it been so resistant to change and innovation?

Rick Costantino: Okay, great. That’s a great setup. And yes, batteries are, a lot of our joy and a lot of our frustrations, and we’re trying to improve them. And so like you said, last 50 years, lithium ion batteries have really been using that same, you know, anode, that graphite anode. And, the bottom line is that it, that it works. It’s what was started originally. It’s a very ubiquitous material, and it works, it works very, very reliably. And at the time it seemed like a very logical choice, you know, to pair. And over the last, you know, about 50 years or so, there’s been lots and lots of advancements in the battery except for that anode. We’ve been using that same graphite chemistry, you know, for this whole time. For this whole while though there’s been an interest in developing, you know, new anode materials, and particularly silicon, which is, which is basically the new, the new material that Group14 and other companies are developing as this, as the anode. it’s quite difficult. Those challenges have been met recently with technology. But until now, it really hasn’t been possible to commercialize those types of batteries.

David Roberts: Yeah, so silicon has been... People have been talking about silicon anodes for a decade now. I’ve followed on and off. There have been lots of attempts that have not really gone anywhere. Maybe start by talking about the challenges of making silicon work, why it’s been so hard to make it work.

Rick Costantino: Sure. One thing I should mention is that the cathode is what brings in your amount of energy, brings in lithium ions, right? And as you mentioned, you’re sort of bringing the cathodes, bringing that lithium from the cathode to the anode back and forth again, and of course, electrons are going the other way. So your energy density of your battery depends on how much cathode you can bring and how much lithium you can get in the cathode. And so the reason people are interested in silicon as a new anode material is because you can store a lot more of the cathode. So basically, you know, in your battery, your anode takes up a lot of the volume. So if you can have a more powerful anode that has a much higher capacity for absorbing, you know, the lithium atoms, you can shrink, you know, your anode. So imagine shrinking your anode, so now you can make your cathode bigger, so you can bring in more lithium into the battery. So people are interested in silicon and other, you know, anodes that have a higher energy density that can actually store more lithium than the, you know, than graphite can.

David Roberts: 10 times, as I, as I understand it. Graphite’s made of carbon. I think it’s like 1 atom of silicon can hold 4 lithium ions, where it takes, like, 6 carbon atoms to hold a single lithium ion, something like that. You can hold a lot more lithium ions with a single atom of silicon.

Rick Costantino: That’s right. It’s about 10 times the capacity on a mass basis. And, you know, the way that graphite works, if you kinda remember your old carbon, structures, you know, you know, graphite is carbon, and it’s a particular form of carbon where it’s in layers. And the way that graphite takes up lithium is that it can intercalate between those layers. And so but there’s only so much lithium that you can store. It’s very, it’s a very reliable way to store it, but it’s a very limited way that you can store it. But with silicon, it actually forms an alloy with the lithium, so it’s, so not only does it store more, about 10 times on a gravimetric basis or also volumetric basis, but it also can, it can absorb and give up that lithium much more rapidly. Now it’s basically thermodynamic. It wants to exist in that alloy state, so it’s not really a matter of kinetics and sort of pushing carbon layers out of the way. It’s about forming an alloy that nature naturally wants to form.

David Roberts: But when silicon absorbs lithium, it swells. This is, as I understand it, the big problem, and if you have an anode that’s swelling, you’re eventually cracking your battery, you’re ruining your electrolyte, et cetera. This has been the challenge, right?

Rick Costantino: That’s right. That’s been the key challenge, for silicon for a long time. It does, expand quite a bit, about 400, about 4 times its, you know, volume when it absorbs lithium ‘cause it forms this new phase. Lithium, it has to go somewhere, it has to form this form, this lithium silicon alloy. And so every time that it absorbs that lithium, it decreases the volume. The consequence of that is that it has a bigger interface. And so, you know, there’s something around that material called the solid electrolyte interphase, or SEI, and you want that to be very stable. And if that’s constantly growing and shrinking, it can actually, you know, crack over time, and it can, it can form separate kind of particles, and that could absorb more and more lithium irreversibly that you can’t exchange back and forth each time. And this can also, you know, cause shorts in your battery. So silicon has been a great material to, you know, charge and discharge once, but to have it in a recycled battery has been, has been quite a challenge.

David Roberts: So let’s talk about then how you solved this problem, and this, I think, gets, interestingly to your origin story. You’re not an electrochemistry guy. You’re not a battery guy originally. You have been thinking about how to deliver silicon in a completely different context. So talk about where you came from and sort of what transferred over.

Rick Costantino: Yeah. So, you know, despite, being CTO and co-founder of a battery materials company, I am not a battery guy. So I hire really good electric chemists that teach me, you know, about batteries every day. And often I find that not knowing what’s supposed to work or not work has been really helpful to invent new ways of looking at things, but as long as you’re careful. So, you know, so my background as a chemical engineer, I actually worked in the pharma industry for more than a decade and, you know, worked in the heyday. I worked for a company called Genentech, which was one of the first, you know, biotechs on the planet, and it was all exciting and, uh... But in 2009, I ended up, doing some, consulting work. My company at that time was doing drug delivery and at that point, because we didn’t own the actual active pharmaceutical ingredients but a delivery technology, when all those companies downsized their departments looking at sort of new ways to market their pharmaceuticals, they decided they didn’t want our delivery technology anymore, so I ended up consulting.

David Roberts: But when, and when you say deliver, you mean like getting the drug to where it needs to be in the body?

Rick Costantino: Yeah. Actually, I-- So the technology I invented was, biodegradable microspheres where so instead of sort of injecting a solution of your, let’s say, your peptide or protein once a day, you can inject it inside a microparticle, which, you know, in a way is not too dissimilar to thinking about a, an energy storage particle, and that particle in your body would degrade over say days or weeks or even months. So we, for example, had a growth hormone product that instead of injecting it once or multiple times per day, you could inject it once a week. Or for indications like schizophrenia, Risperdal, instead of injecting, you know, every day, you can inject once even a month. This is very, very important for some of these kind of disease states. So that was a very interesting technology. We also were developing vaccine technologies, and one of my expertise was freeze-drying with the way to, you know, freeze and then, you know, remove that solvent, by under vacuum, and it’s a great way to, you know, take a pharmaceutical preparation and make it stable, like, for example, for third world storage and things like this. So that was my expertise. So I was consulting, and one day I got a call from Rick Luebbe who was the CEO of a company called EnerG2 at the time. And he said, “I heard that, you know, you’re expert in freeze-drying. I saw that you’re consulting. I saw you wrote this book on freeze-drying. I’d like to hire you know, for your help.” And I said, “Oh, great. What pharmaceutical are you working in?” He’s like, “Oh, no.” He’s like, “I’m working on a battery material.” And I said, “That’s a really dumb idea.” I’m like, “Freeze-drying is really expensive and really energy intensive. It’s gotta be a better way to do what you’re doing.” So kind of long story short, you know, I helped them solve their freeze-drying problem, but I sort of quickly realized that there was a much better way to engineer that battery material using some of those same kind of principles, and we kind of reinvented the way to make the carbon as a completely solvent-free, kind of processing that we call Dryrolysis, and it’s actually the basis for making the carbon scaffold, the carbon backbone that we now make our silicon carbon, composite material. So that’s how I got into batteries.

David Roberts: And so you have this scaffold, as you say, a scaffold made of carbon. And so the idea, as I understand it, this is I’m sure very simplified, is that you absorb, you put silicon inside the scaffold and so that when it swells, when it absorbs the lithium ions, it does that inside the scaffold rather than bumping up against other stuff. Is that roughly correct?

Rick Costantino: Yeah, that is correct. And so we, you know, at the time, had this carbon technology, and we were developing this for a different kind of battery called a ultracapacitor. And so this is a sp- very special batteries that are, that are very important. They’re niche batteries. At the time, we thought they were all gonna make us rich and famous, but we were, we were wrong. But they’re a very interesting technology where you have a lot of surface area, a lot of volume inside of that carbon material so it can, it can absorb different ions in this mechanism. So these ultracapacitors have a very, very, fast charge and discharge, but they don’t, can’t hold very much energy. So they’re used for things like regenerative braking to kind of store energy in very, very short timeframes. So that was our technology and, but we realized that that wasn’t gonna make us rich and famous, so we had to pivot to something else, and we got very interested in lithium ion. And we, you know, we were using hard carbon as a kind of an alternative for replacing graphite. And of course, everybody wanted to, you know, work on silicon, like you said. And everybody had this challenge of this silicon expansion issue. And so at the time, there were many companies that were making different types of silicons, and they came to us and said, “Hey, can you take your carbon and coat it, like, around our silicon material?” That was kind of gen one idea, was, “Okay, let’s just protect the, you know, silicon with a coating of carbon,” like a little magic shell, like the ice cream with the chocolate kinda coating. And that worked pretty well. It improved the silicon quite a bit. You know, it didn’t really keep it from expanding completely, but it sorta helped, you know, keep it a little bit more stable. it improved it a little bit, but it really didn’t look like a game changer, and it really wasn’t a great sort of business kind of opportunity for us, just, you know, improving other people’s materials. So we pivoted to, “Okay, how could we make it-- how could we make that material better?” Kinda still use this equation of silicon plus carbon. So kind of our gen two approach, I’ll get to the gen... the final gen three in a second. The gen two approach was we took a, an existing alloy of silicon aluminum alloy and etched away that aluminum to create a porous silicon, and then we put that inside a carbon, and that worked really well because now we had this sort of nano-sized, kind of silicon features en-encased in carbon, and that worked pretty well. The problem was we created this enormous amount of byproduct, this aluminum alloy, aluminum salt, and we said we had to help create a whole nother business to sell that, and we said, “That doesn’t make any sense either.” So then we came up-- we literally, you know, went through a period where we went kind of the drawing board and said, “Let’s kinda rethink this whole thing.” And it’s, you know, it’s kinda hard to convince your CEO to go in a new direction after you’ve invested all this time and money. But we went a new direction, and we thought of the problem of a different angle and said, “Look, we know how to make carbon. We know how to engineer it. Instead of thinking about, like, adding carbon to the silicon, let’s figure out a way to make a silicon scaffold, a place to grow the silicon inside.” And that was kind of our a-ha moment where we said, “Okay, let’s create a porous carbon.” So think of kind of a sponge of... We created a carbon, and we’re growing the silicon inside of that, of that carbon material. So we have kind of a, think of a micron-sized, you know, porous carbon particle sponge, and inside of that we’re growing nano-sized amorphous domains of silicon. So now the silicon, has the freedom of kind of being inside of that carbon scaffold. So you can think of the Group14 material, it’s, by weight it’s about half and half, carbon and silicon, but by volume it’s about one-third silicon carbon and one-third void. So every time that particle kind of absorbs the lithium, you know, can sort of help, you know, maintain that expansion within the particle so we can get the best of both worlds. We can get the high capacity, of the silicon but get the good stability and surface, features of the carbon itself.

David Roberts: And so this material you’ve made, it’s called SCC55. If you haven’t thought to think of a cleverer name for your material than the-

Rick Costantino: That’s also kind of a funny story. You know, when you’re only five employees, you know, you only have so many, big marketing team. So- So you know, marketing team came up to me and is like, “Okay, we gotta figure out what to call the material.” And I said, “Well,” I said, “We call it SCC55. That’s Silicon Carbon Composite 55.” And they’re like, “That’s a great name. I’m gonna use that one.” I’m like, “Okay.” You know, but you know, it does speak to kind of the simplicity and the novelty of it. It literally took us like fif- 55 iterations. And you know, some of our competitors, you know, advertise they’ve done thousands of combinatorial things, and you know, while I think that’s great, I’m also quite proud that, you know, we just, you know..

David Roberts: you don’t, it only took you 55

Rick Costantino: We gotta figure out the next one. I wanna call it, you know, fif- do we go 55BCD or do we do 56, 57? But you know, so I gotta figure out what the next generation’s gonna be.

David Roberts: As I, again, as I understand it, you, it’s not a s- it’s not a set ratio of silicon to carbon. You can vary that ratio. You can use more silicon relative to carbon, and as I understand it, the more silicon you use relative to carbon, the better your energy density, et cetera, the more performance you get out of it. But presumably there are trade-offs. Sort of what’s the trade-off when you increase the percentage of silicon relative to carbon?

Rick Costantino: Great question. So the core technology is, as you said, it’s flexible, so we can sort of modulate, for example, the ratio of silicon to carbon. We can modulate how much, the volume. We can modulate the particle size, to some extent the shape, et cetera. Now we’ve sort of have one particular flagship product that seemed to work pretty well across, you know, for different customers, so we kinda fixed that one design. But our manufacturing platform is quite flexible, and we actually, we’re already working on designing kinda multiple next i- you know, iteration products out of our pilot plant in Woodinville, Washington, which we’ve finally transitioned from, you know, commercial production back to what I wanted to use it for as our sandbox. So you can, you know, create different, you know, materials using the same core technology and there will be trade-offs. You know, the higher, if you want higher capacity, you have to have more silicon. So there might, you know, might be, it might be a bit, you know, more expensive to produce silicon versus the carbon, for example. And silicon, you know, has less conductivity generally than carbon ‘cause it’s a semiconductor, whereas carbon is more conductive. But you can, you can compensate for that with other, you know, kind of tricks on the particle design as well. So there are some trade-offs, but there’s also ways to mitigate, those trade-offs. But different customers want different things, so we’ll, you know, we’ll kind of tailor different products as kind of the market, demands them.

David Roberts: So let’s get to- The meat of the issue, which is if you replace a graphite anode with an anode made of SCC55, what do you gain, and how much?

Rick Costantino: Okay, you know, great question. And, you know, the key benefit that you get is the increase in energy density, you know, which is whatever was in the holy grail for the, for the silicon material. Now, we’re not getting the 10 times the density, because our material’s half silicon, half carbon, so we’re about 5 times, of the capacity. So one way that my CEO likes to describe it is every 5 tons of Chinese graphite you import, you produce 1 ton of domestically of Group14 material. So we’re kind of that equation. Uh-

David Roberts: Five, 5 times the capacity is not a, that’s not a small thing.

Rick Costantino: Still pretty good. That was kind of the big benefit that you get is the energy density. But the other benefit that you get, and we didn’t really fully honestly appreciate this as we were kind of forming the the company and exploring the technology, was the increased rate capability that you get with silicon. And, you know, this was something where, again, because, the way silicon interacts, with the lithium ions fundamentally differently than how graphite interacts with the, with the lithium ion, you can get much faster charge and discharge. So whereas your, you know, normal battery based on graphite might take tens of minutes or hours even to charge, you can charge in less than 20 minutes, less than 10 minutes. We’ve got customers that are creating batteries you can even charge in just a few minutes, even less than one minute, which is mind-boggling. So, you know, once you can start charging that rapidly, then maybe this sort of range anxiety, certainly charge time anxiety goes away, and maybe even range anxiety with you can truly go that fast. Now, to reap the benefit of that, you have to kinda rethink other parts of the battery, ‘cause the batteries haven’t been designed for 50 years to do that. So you’re gonna have to think about how to maintain, you know, how do you generate a lot of heat when you charge and discharge that quickly, for example. But once you understand and that’s what you wanna do, we have customers who are making some pretty phenomenal batteries, across different, at different industries.

David Roberts: So if I take a set battery with a set amount of cathode, the same sized anode, but made of SCC55, I get, I can store 5 times as much energy, and I can charge in minutes rather than hours.

Rick Costantino: Yes, exactly. Some of our customers are quite aggressive and wanna completely dispense with the graphite and use our material, you know, silicon-based anode instead. And for those customers, they’re able to get maybe up to 40 or even 50% higher energy density for that same, that same physical battery, that same, that same dimension of battery. Or you can make your battery smaller for the same energy, or you can make it lighter, depending on what, you know, whether it’s even taller, whatever. So those are kind of the gains you can get. Now, other customers ha- are choosing, instead of going all the way into the silicon material to start with, they decided they wanna sort of have incremental improvements. So for example, we’re see, you see this more in the cell phone arena, where there’s been a series of cell phones, and we are now in over 20 million cell phones in Asia. And materially we actually made in our plant in Woodinville, Washington, so it’s kinda fun. And-

David Roberts: And just to, and just to be clear, ‘cause I’m not sure we’ve actually said this out loud yet, but you’re making the material, selling it to battery makers, and then the battery makers are designing batteries and building batteries around the material. You’re just in the material business.

Rick Costantino: That’s right. So I like to use the analogy we’re the Intel inside, so we don’t make the computer. We, you know, we make the chip, so we don’t make the battery. We make the material to make all the batteries better. And we’ve early on, you know, decided that making batteries is really hard and lots of folks do it really well. So I aspire, you know, let’s make the world’s best materials and let’s let everyone else, you know, figure out how to make the best batteries out of it and let those end users make the best devices, the better, the better cell phones, the better cars, the better computers, the better drones, the better whatever.

David Roberts: And this gets to the scaling issue, too, ‘cause one of the things that has brought down, I think, a lot of previous efforts to make silicon anodes is they often are entirely novel technologies that would require entirely novel factories. And, no, it takes a lot to talk a battery maker into scrapping factories and building entirely new factories. Your material works in extant lithium ion manufacturing facilities. Is that, is that categorically true?

Rick Costantino: That is categorically true. So we design the material as a drop-in, so we... It’s a black powder. It looks, you know, kinda like graphite. It processes very similar to graphite. Now, if you’re completely displacing your graphite with our black powder, you may have to do things a little bit differently, but you’re using the same equipment. But you may have to change your recipe a little bit, your stir rate and so forth.

David Roberts: Yes. This was the analogy I thought of. It’s like a bakery. Like you don’t need new machinery in your bakery, but you do have to tweak the recipe of your bread if you’re using a new kind of flour, for instance.

Rick Costantino: That’s a good way to think about it. Yeah. Exactly.

David Roberts: And so when you’re talking about scaling- Currently, you’ve got a factory, you’ve got this-- your Woodinville factory’s now returned to being your sandbox and your little innovation box. You’ve got a factory built now in South Korea producing the material, selling it to battery makers. It’s going into batteries. The batteries are going into phones. Where else are the batteries going?

Rick Costantino: Yeah, so I can’t talk too much about specific customers, unfortunately. You know, but we’ve been engaged with most of the world’s battery production. I think now we’ve got something like 150 customers, I think is the latest number.

David Roberts: Battery makers-

Rick Costantino: Battery makers

David Roberts: who want your material

Rick Costantino: Who want the material. We’re engaged with something like 95% of the world’s battery-making capacity has- is looking at our material at some stage or another, either commercialized already or about to commercialize. And that was, you know, by our early design. So we took a very different strategy to commercializing our material. Like from our very start, we were very interested in commercial partnerships and supply chain partners. Our very first investors were BASF, when we spun out of the EnerG2 company I mentioned, and of course the US Department of Energy was one of our early investors, our first project. Our first, Series, B was with ATL and our s- first Series C is with SK Materials in Korea, which is the company we’re now partnered in the plant we mentioned. And so we’ve been always interested in partnering with either cathode makers or other carbon makers or electrolyte or other companies or folks that produce the silane gas that is also used to make our silicon material. So we’ve always wanted to be part of that supply chain to make sure that we knew what the market, how the material would use it, and make sure that we were kind of in lockstep with where the industry was going because so many things have changed about our assumptions from when we started producing this material. But we’ve been able to kind of stay ahead of the technology and stay with the market.

David Roberts: And you have some kind of deal with Porsche, but as I understand it, there’s not a car with a battery with this stuff in it that a customer can buy yet.

Rick Costantino: not yet. Yeah, Porsche was, Porsche was one of our investors, and we were going to say Porsche. It was reminding me to say that. All right. So, otherwise I get in trouble for-

David Roberts: We’re in America here

Rick Costantino: Yeah, exactly. But, yeah, so they’re one of our investors and they’ve been, they’ve been with us, and yeah, we c- I can’t comment on any specific timelines, but certainly, you know, they have a lot of long tradition and interest, you know, in high performance vehicles and, you know, they made the realization that, you know, electric, is k- you can get some pretty darn high performing electric vehicle, so.

David Roberts: So but in theory, we are talking on some time horizon about EV batteries that hold lots more energy, get lots more range, and charge lots faster. That’s kind of the, that’s the scale, that’s the scale market, presumably. That’s the, that’s the big fish. I don’t know what the analogy is. That’s the big market you’re gonna go after eventually, presumably.

Rick Costantino: Yeah, that is the big market and that was sort of our founding market, you know, for the company, although I’ve heard some predictions that, you know, kind of either, you know, AI or other data storage could be a bigger market for silicon batteries. And again, and the performance by the way is so different from a lithium-ion standard battery that they’re, people are now calling these batteries silicon batteries, and that terminology has really caught on, so the market could even be bigger. Non-EV applications could be bigger, for silicon batteries.

David Roberts: And are you in drones now?

Rick Costantino: Oh, yes. Yeah, we’re definitely in drones. Um- And again, we’re in batteries that we are- And you know, if you think about your ability to carry payload and, you know, a lot of payload and to go long distances is very, very important for drone applications. So yeah, so drones is a b- is a big application for silicon batteries.

David Roberts: Well, let’s talk about cost ‘cause I think that’s what everybody’s interested in, and I think, you know, one way to ask about cost is how much is a pound of your material versus a pound of graphite? And then another way of thinking about it is the per energy output cost. So talk about both those. Presumably the material itself on a volumetric basis is more expensive than graphite just because it’s d- a custom manufactured as opposed to, and graphite has a very long history of scaling.

Rick Costantino: Yeah, folks have been optimizing graphite for quite a long time. You know, it’s definitely spending more, but you know, you’re paying for a high performance material, and you know, part of that is, as you said, is the sort of, you think about the cost and you know, you know, what do you charge per kilogram or per mass, right? But you know, we keep trying to convincing the procurement folks of our customers, you know, “You should be think about is how much you’re paying per energy storage unit, right? So how much you’re paying per milliamp hour, right?” So when you’re buying gas, you know, you’re not, you’re not thinking about how much per you’re paying per gallon. Well, nowadays it’s so high maybe we’re all numb, but you know, you think about like what, you’re gonna pay more for higher octane gas, right? ‘Cause, and you’re gonna get more miles for the dollar. So if you think about batteries on a sort of kilowatt hour per dollar basis, you can actually have less. You can actually have a savings even though you’re paying more money per mass for the anode material, you can make batteries that have lower cost. And I can, I can go through the spreadsh- I can’t do it in the room right now, but I c- I can go in the spreadsheet and we’ve spent many hours with the procurement people and they understand it and finally they say, “Well, we still want you to charge us less money.” So any new technology’s gonna have a premium, and then there’ll be a market for that. And so any, you know, companies that wanna be at the forefront will pay that premium. And over time, you know, as we get to larger scales and our, as our supply chain gets more mature, those costs will come down. But, you know, right now, you know, I think it’s a pretty good, kind of value proposition and I think the really savvy players in the market are seeing that, and we’re already seeing pretty good traction.

David Roberts: What about cycle life? This is always a question that faces any new, any new battery. There are lots of fancy new types of battery chemistries that I’ve read about over the years that sort of crash on the shore of you can only charge and discharge them a limited number of times before they burn out and everybody wants resilience in their batteries. So how does this replacing graphite with this material affect cycle life?

Rick Costantino: It’s a very good question and, you know, we’ve designed, you know, the material to keep that silicon in its best possible form that we can think of, again, which is that nano-sized amorphous form. It’s been academically studied that that’s the best form of silicon. It’s just really hard to create that in a commercializable form, and again, we do it by putting it inside the carbon scaffold. And so, you know, we have customers that can achieve the same cycle life as the graphite battery, and it may not be easy the first time. You can’t expect to use exactly the same recipe, just if you’re changing your flour, you can’t expect, you know, if you’re gonna use, you know, potato flour or whatever instead of, you know, wheat-based flour, you’re gonna make a very different cake. So you gotta change your recipe accordingly. Um- And but you can get a really good result. We’ve, we published a white paper, fairly recently, if anyone’s interested I can, you can come approach me, I can give you the link to it, where we had over 15 customers using our material across different chemistries, cathodes, and different chemistries that were able to achieve 1,500, even 2,000, even 3,000 cycles. So that’s, we’re back to the m- So we say that 1,500 cycles or 2,000 cycles is now the new normal versus 1,000 cycles. So you can get, you can get a good result, but you may have to work at it, and like I said, if you are, using kind of small amounts of our material, you know, changing for graphite, it’s easier to get a good result right away, but if you’re more aggressive, it may take more work. And one of the things that we learned is that, you know, you have to, you have to also get, you know, pretty good at making batteries yourself to show your customers sometimes. And so we’ve developed in Woodinville, we have a pouch line to make pouch batteries, the same kind of batteries in your phone, and we can make those there, and we’ve gotten pretty good at it. It’s taken us a while, but, you know, once you can make a battery that’s pretty good and show your customer, “I got a good result, you guys must be much better than we are at it, you’ve been doing it for this long time.” So if you can show the material works firsthand and show that first data and then present them a data package, say, “Look, here’s the recipe how we did it, you guys can certainly get a better result than we did,” it really helps to kind of speed the conversation.

David Roberts: I read that paper about cycle life, and it says you can, some customers have matched lithium ion cycle life, but it doesn’t say much about temperature or depth of discharge or the conditions in which that works. Is it more sensitive to heat or cold? Does it, does the depth of discharge matter? Do any of those conditions under which it’s cycling and oncyc- and recycling affect this material differently than graphite?

Rick Costantino: Yeah, all those things can matter, and all those things were kind of different in the different studies. And in that example, it was whatever data we had to beg the customer to let us present anything. So we’re, I think, on our own developing a more robust data set that when we kind of publish, get ready to publish our own white paper, we can go in more in-depth these things. But generally, you know, as you go to higher or lower temperatures, it gets more challenging for the battery. So higher temperatures, you have to worry a lot more about the kind of thermal runaway, and as you get to colder temperatures, you have to worry about the viscosity of the electrolyte and so forth.

David Roberts: But that’s, but that’s any battery. Is it, is it different for your material than graphite in these conditions?

Rick Costantino: Um, in principle, no, but you do have to keep in mind that, you know, if you have more energy to deal with... I’ll give you anecdote. So the first time one of our customers came back to me, he went, “Oh my God, we did our first nail test,” where they kind of literally shoot a nail through the battery.

David Roberts: Right, right, right.

Rick Costantino: And he said, “Man, we shot this nail through and it had this huge, you know, flame, and it’s like, man, it released, you know, 50% more energy than we’ve ever seen before.” And I’m like, “Well, how much more energy was in the battery, you know, before you shot the nail through?” And he’s like, “Oh, 50%.” Well, what do you expect, you know? And the customer solved that issue, right? So now they’ve realized that they had to redesign the electrolyte to store the energy.

David Roberts: So safety and preventing thermal runaway will be a bigger deal if you’ve got more energy packed in it.

Rick Costantino: Right. But it... Yes, yes, exactly.

David Roberts: What about, calendar life, briefly? Calendar life is the other, there’s cycle life and then there’s calendar life, which is just if you sit it on a shelf, how long does it take for it to sort of begin to degrade? This has also been a problem for silicon traditionally.

Rick Costantino: That’s a good question. So far, we haven’t heard, any sort of commercial, barriers to commercialization regarding calendar life. so our customers don’t necessarily tell us how they’ve solved the problem or whether they see it or not. And believe me, our customers, if they have a problem, they come to me as first person. And so that has not, that has not stopped them. Now I suspect there may be more challenges there, again, because you’re storing more energy, it’s a little different, maybe recipe or chemistry, you may have to, you have to redesign things a little bit. But you know, when you talk about, you know, this calendar life question, you know, if you think about buying a lead-acid battery off the shelf for your car or whatever in the old da- you know, that thing might be on the shelf for 5 or 10 years. So is a lithium-ion battery gonna really sit on the shelf for 10 years before somebody goes to grab and use it? It’s gonna be outdated by, no one’s gonna even know how to plug it into their device anymore. So I don’t know if the jury’s out on how long do we really need a calendar life and how important it is, but I think in principle, you know, there’s no reason why sol- co- should be that different. So I think, again, so far it has not been a barrier to commercialization.

David Roberts: Let’s talk about supply chain, which is a big advantage that you are promoting here. I don’t know if we mentioned this earlier, but China produces, what is it, 90, 95% of the world’s graphite and has started putting export duties on it is not just theoretically, is using it as a kind of industrial tool, weapon, pressure, whatever, counter to tariffs, whatever, you wanna call. So you, silicon is everywhere, pretty easy to get, but you are using a particular form of gas, silane gas, to create this material. So tell us a little bit about what that looks like and where you get the silane gas and who makes the silane gas. What-- Tell us about the supply chain for that.

Rick Costantino: Sure, and this sort of, this general question of supply chain, even from our very first, inventing this material, we were very keen on understanding the complexity of the supply chain. And we realized, you know, very early that US energy dependence is not just about just this energy, you know, generation, but energy storage, and vast majority of these anode materials, vast majority of battery production, et cetera, in China and Asia. And so building that infrastructures is really important, and this sort of, this silicon kind of carbon revolution, you know, the kind of the invention in the US and protecting that has been very important. And so the, you know, so the material that we produce, we produce both the carbon and the silicon. And we produce the carbon itself we produce from essentially commodity chemicals that you could really get anywhere in the world that are not very super exotic. And the precursor that we use for the, for the silicon is silane gas, SiH4. It’s kind of the most sort of elemental, you know, kind of most simple form of that, of that, of silane, of silicon in the form of a gas. And so there’s not much production in the US, except for a company called REC Silicon that is now, kind of owned by Hanwha. It’s the long story. I don’t, I don’t even know what the latest in this, in this soap opera is. But basically, we kind of realized early on that we were gonna have to control our own destiny. So we acquired a technology, from a German company to create, silane gas, which we think is the most efficient way to do it on the planet. And so we have that technology, we have a plant to do that in Germany, and so we’re ready to deploy that technology anywhere in the world for future plants. So right now we’re kinda sourcing silane that’s already commercially made in the US, for example, out of REC Silicon in Butte, Montana, or in Korea through SK, which is, which is our partner and the Korea company. But we have the ability to actually produce our own plant from scratch and build in the silane plant in it. And really the vision is not just building the silane, but putting the whole supply chain. So for example, our battery customer, it’d be great to be next door to them, and maybe the automaker next door to them. So you have the whole kind of this, the whole supply chain kind of in the same geographical region. So we have a technology that we can meet the needs locally, whether we wanna build just a, just our standalone plant, or whether we wanna be part of a larger chain, you know, built just for that, for that region. We’re looking at both kind of options depending on where in the world.

David Roberts: So just to clarify, the manufacturing of the silane gas is somewhat of a choke point currently that you’re working on overcoming, but the materials, there are no materials choke points. You just gotta build enough production capacity.

Rick Costantino: So the material to make silane gas is metallurgical-grade silicon, which is a commodity you can buy anywhere in the world, and that’s made basically from quartz, from SiO2, so.

David Roberts: So in theory, you just said this, but I wanna run through it again. In theory, someone making EV batteries could in the same compound, on the same site, create, manufacture the gas, make the anode, make the cathode, make the battery, vertically integrate the whole supply chain in a single location.

Rick Costantino: Right. And that, and certainly that vision makes a lot of sense for some areas. Yes, exactly.

David Roberts: And, another thing I forgot to mention earlier, which is one of the things that I thought was really exciting about this, and maybe people had intuited this, but this anode works with any cathode, any lithium-based cathode chemistry, LFP, NMC, if everybody knows all the acronyms, and also solid state batteries. What’s your relation to s- the solid state world right now?

Rick Costantino: Good question. So I guess solid state as kind of the more formal definition of like, you know, not like being a solid, you know, we, there are solid, state, anode architectures that actually prefer to use silicon, and some companies that have advertised silicon works really well with that, and we have some customers that are, that have solid state architectures that look at our material as their anode active material. Now, some folks may call solid state as a kind of a pure metallic, you know, lithium anode. That’s different. That’s not really solid state. That’s really a very, very different battery. But I guess solid state is defined as being a solid phase. You know, silicon is, or even, or a silicon carbon composite is a very, suitable material for that kind of anode.

David Roberts: And just I’ll editorialize briefly here, like if people are familiar with LFP batteries, lithium iron phosphate, they are cheaper to make, and they use much more common materials. Tesla uses them in some of their cars and overseas, but mostly they’re used for grid scale storage ‘cause they’re cheaper to make and the materials are cheaper, but they lack the energy density of your NMC batteries for your high-end performance. So if you could pair this anode, which increases energy density by 5 times, with the cheapness and materials advantages of LFP, that kind of seems like the magic, the magic battery right there.

Rick Costantino: I wanna take you when I talk to procurement guys with our customers. ‘Cause the way you described this makes sense to me. Yeah. And so, you know, LFP, you know, it’s cheaper type of batteries basically, and pairing it with a premium anode material makes a lot of sense. In terms of getting improvement per dollar, it can make a lot of sense.

David Roberts: Is someone making LFP batteries with these anodes yet?

Rick Costantino: Yeah, yes. The, again, I can’t talk to any specific customer, but if you look at our, for example, some of the papers, our white paper and some other things, we’ve presented some examples of LFP chemistry that works really well with SCC55.

David Roberts: You were getting a bunch of money from the DOE back when the DOE was different. Now it’s different. Are you still getting that money from the DOE? What’s your current relationship with Department of Energy, sorry.

Rick Costantino: Good question. It’s certainly been a pretty wild ride for us, but we’ve kind of-

David Roberts: You’re not alone, my friend

Rick Costantino: But we’ve really weathered it all, right? So we’ve, we sort of ascended on a, on kind of Trump 1. We’ve raised a bunch of funds under Obama, and Trump 2, we’re, you know, here we are. We’re still have multiple awards. We have two big awards at Moses Lake, one for our commercial manufacturing plant, our 2,000 ton per year plant. We’re building two of those modules in Moses Lake, and we’ll have, we’ll have those, by middle of next year, we’ll have both of those running.

David Roberts: Those, the Moses Lake plant got moved back by a year or two. It’s still on track?

Rick Costantino: Still going. It’s been delayed a little bit. We had to open up our Korea one first.

David Roberts: And that’s just for the material or for silane gas too?

Rick Costantino: That’s for making the material. We also have a, an award for silane gas production, and that one will be, will be deployed after that.

David Roberts: And you’re still getting those awards. They have not-

Rick Costantino: We’re, again, they’re, we haven’t talked specific timelines at this point, but those programs are still moving. They’re just not, they’re a little delayed.

David Roberts: Also, I forgot to ask ‘cause everybody loves their phones, um, are the batteries that they’re putting in phones with this stuff, are the batteries lasting longer? Are you, are you getting substantial increases in battery performance in phones? ‘Cause everybody loves that.

Rick Costantino: Yes. The main batteries that we’re in that we’ve-- that have been advertised has been the Honor, the Magic phone is- which is basically, which is more the AI enablement, so it’s not so much about higher energy density, but about higher c- sort of computational, capability.

David Roberts: Mm-hmm.

Rick Costantino: And about higher sort of, charging and discharging rate capability, frequency switching for those batteries. And, you know, again, I don’t really understand why frequency... And this is one of those things where, like, we had no idea how important. So, you know, you talk about rate capability, like being able to charge and discharge rapidly, but being able to change the rate at which you’re charging and discharging very rapidly-

David Roberts: Hmm

Rick Costantino: it has been huge. And I don’t understand why that’s so important, but apparently it is. And I’ll tell you another anecdote. One of our customers, he had a test where they were, they were basically charging a battery, you know, discharging it, and every second, they were kinda stopping and waiting and then, and then trying to charge again. And they could, they could only, they couldn’t do this with graphite at all, and they could do it with silicon.

David Roberts: Hmm.

Rick Costantino: And then, and then he said, “Wow, and I did it, I could do it at a millisecond.” So I said, “Well, actually, why don’t you try a microsecond?” And he said, “Well, I can’t do that. My equipment can’t do that.” I said, “Well, then change your equipment.” And he eventually figured out how to do it, and then it worked at milliseconds. So now I’ve challenged him to do nanosecond, but he hasn’t figured out how to get the equipment to do that yet. But apparently this is very, very important for AI, this frequency switching capability. And again, it’s because it’s an alloy, because it’s a different mechanism.

David Roberts: Okay, I got-- I’m running out of time. I got two questions left. One is just about cost curves. I always, I always ask of any technology, what pieces of this puzzle are-- can you work on that will bring down costs over time? Presumably scaling up the manufacturing of silane gas will be a big piece. What else is gonna bring down the cost of this material over time?

Rick Costantino: Yeah, I think, bringing down the, you know, getting the silane gas is gonna be a key piece to it, and just getting at scale, right? So of course our first, plant is the most, is the hardest one to get up and running. And I think as we get more of the plants, we’ll get more of that economy of scale. So understanding how to get more efficient, understanding how to increase the throughput through the same equipment. And, you know, we’re already working on designs to increase the throughput of our plant maybe another two or even tenfold more, with the same kind of a technology. So we’re constantly kind of challenging ourselves to get more efficient at how we can produce the material.

David Roberts: So that’s scale. That’s mostly scale. The material itself, are you gonna get... Is the, is the goal over time to increase the amount of silicon relative to carbon, ‘cause that’s kind of what you’re getting your performance out of it, is the goal over time, is there such a thing as, in the future, a 100% silicon anode? Are you always gonna need the carbon for the lattice? What’s the, what’s the theoretical maximum amount of silicon you could get in there?

Rick Costantino: Yeah, it’s a good question. So at some point there’ll be, diminishing returns where your material inside the sponge is more than the sponge itself. Sort of a 50/50 mixture seems to be kind of a nice sweet spot. We certainly, I think, can improve that to maybe a 60/40, maybe 70/30 equation or something. Getting beyond that, I think you’re going to lose this sort of nano size domain of the silicon, so it’ll be a different challenge. There may be other ways to build or grow your silicon inside the anode material, and we’re looking at some other technologies as well. But this seems to right now be a nice, a nice sweet spot for the technology.

David Roberts: And are you worried at all about competitors on your heels? Is anybody else doing this thing, and do you anticipate other people doing this thing? Do you anticipate the inevitability of China stealing this and doing this thing? Like who... How worried are you about competitors?

Rick Costantino: We are very aggressive in defending our IP. You know, you kinda mentioned China, that clearly is an issue. It’s been quite in the news right now. Uh, one of our competitors, has filed against a Chinese company actually, and we’ve published our own, opinion on that. And so I will let you guys read our opinion rather than me kind of espouse it here, but we feel quite strongly about our specific position, I- the strength of our position. We feel quite strongly about the US, needing to keep the dominance.

David Roberts: Are there other US companies trying to put silicon in a carbon lattice specifically?

Rick Costantino: there are other there are other distinct technologies where folks are looking at silicon anode materials.

David Roberts: Okay. Really final question, asking you to speculate. In 5 years, what percentage of lithium ion batteries will have this material in their anode?

Rick Costantino: I would say 80%, maybe 100.

David Roberts: All right. All right. Ambitious. Awesome. Well, Rick Costantino, thank you so much. This is absolutely fascinating. Thanks everybody for coming.

The Inflation Reduction Act, the Democrats’ historic climate bill, was signed into law by Joe Biden on August 16, 2022. Several people I know devoted their lives and hearts to the fight for that bill, at no small personal sacrifice, and I covered its many twists and turns closely. At least in my world, there was enormous elation at its passage, a sense that the US was finally doing something serious about climate change after decades of lassitude, that all the years of frustrating work and heartbreak had not been in vain.

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Less than three years, later, on July 4, 2025, Trump signed the One Big Beautiful Bill Act (OBBBA), which seemed to crush the IRA entirely. By then, Trump’s EPA had already reversed many of Biden’s key climate-related regulations, like the Mercury and Air Toxics Standards, and more would fall in 2026, like the tailpipe standards.

All of this violent destruction of their life’s work left many climate advocates in a funk from which they have not entirely recovered.

But a new report that has gotten a lot of attention lately says to turn those frowns upside down. “Glass Half Full: Building a Decarbonized U.S. Power Sector” is a research commentary out of MIT’s Center for Energy and Environmental Policy Research, written by Lily Bermel. She’s currently a visiting fellow at Columbia’s Center on Global Energy Policy; before that, she worked under previous Volts guest Brian Deese at MIT, and before that, worked on John Kerry’s State Department climate team.

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The report uses Energy Innovation’s Energy Policy Simulator to compare what would have happened in the electricity sector under the IRA versus what did happen under the OBBBA. Its basic argument is that things worked out better than many people predicted, that many of the clean energy and emissions gains are on track to be achieved regardless, and further, that there is reason to believe that the incentives Republicans took from renewable energy are not what it most needs to continue growing in present circumstances. Within that argument is a great deal of nuance and some interesting details, so I’m excited to have Lily with me today to dig in. Let’s go.

Timestamps

• 00:00 – The IRA, the OBBBA, and the case for optimism

• 03:25 – OBBBA - Why Bermel ran the analysis

• 05:50 – The headline numbers: 74, 71, 67

• 08:07 – Deconstructing clean: solar and batteries hold, wind takes the hit

• 12:14 – The lag analysis, and the 'glass half full' perspective

• 15:27 – 2.8 gigatons, and losses you can't get back

• 18:01 – The third scenario, and Trump I versus Trump II

• 21:49 – What the model leaves out: manufacturing, LPO, loans

• 23:07 – Interior's permitting campaign against wind and solar

• 27:22 – The demand surge and behind-the-meter gas

• 32:15 – Nuclear restarts, geothermal, and clean firm

• 35:31 – Booms, busts, and the electrification wave

• 42:22– Transmission, interconnection, and the ceiling

• 46:41 – Tax credits versus permitting reform

• 51:46 – Durability, polarization, and preemptive surrender

• 60:01 – Can enough storage make renewables firm?

• 66:48 – Grid utilization versus building new grid

• 70:52 – Final reflections: 2021, and what Bermel would do with a trifecta

Resources

People & Organizations

• David Roberts (Substack - Bluesky LinkedIn)

  • Volts (Apple Podcasts - Spotify - YouTube)

• Lily Bermel (LinkedIn - Columbia CGEP)

  • MIT Center for Energy and Environmental Policy Research (Website)

  • Columbia Center on Global Energy Policy (Website)

• Michael Thomas (Distilled - Cleanview Newsletter)

Company & Industry News

• IRA clean energy gains mostly on track despite OBBBA, says MIT study

• New report says Trump hasn’t squashed Biden’s clean energy buildout

Books & Articles Discussed

• Glass Half Full: Building a Decarbonized U.S. Power Sector (The report)

• How green energy will survive Trump to fight climate change

• Queued Up: 2026 Edition, Berkeley Lab interconnection queue report

Related Volts Episodes

• Doing data centers the not-dumb way

• A fireside chat with Jigar Shah

• Making sense of the data center backlash

Text Transcript

David Roberts: With no further ado, Lily Bermel, welcome to Volts. Thank you so much for coming.

Lily Bermel: Hi, Dave. It’s so great to be here. Longtime listener, so thanks for all that you’ve taught the climate community so far.

David Roberts: Thank you. Thank you. Well, let’s start. Before we get into the report, just tell me what put this bug in your ear? Why, why did you do this? What, what made you want to do this analysis in the first place? What question were you trying to answer?

Lily Bermel: Sure. I think I resonate a little bit with what you said about people who feel like they’ve dedicated their life to climate change. I was, not one of those amazing thought leaders who led to the creation of the IRA, but rather, have just been deeply motivated by climate and emissions reductions throughout my career and in my life. And so as I think with almost everyone in our community, the 2024 election, but really 2025 was a distressing time. There was a lot of debate, a lot of change in policy, and a lot of real, you know, attack on clean energy. And so, not only were there the emotional ups and downs throughout the negotiation process that led to the One Big Beautiful Bill Act, but I felt a little bit confused after the fact, in just trying to grapple with the question of how bad is this really going to be? And therefore, you know, once you one day have clarity on that question, what do you do about it and how do you move beyond this moment? So for me, that was the question that I sought out to answer, really looking at the world we just left, Biden policy really represented by the Inflation Reduction Act and the power plant regulations, and comparing that to what we now inherited, represented by the One Big Beautiful Bill Act, I’ll call it OB3, without those regulations in place. And so-

David Roberts: Oh, is OB, is OB3 the term? Good. I’ve, I’ve been gr- I’ve been grappling around for some non-awkward way to refer to that bill. I’m gonna adopt that.

Lily Bermel: I say OB3. I’ve heard O3BA, O triple BA. I don’t know. I don’t like any of the names, but I, so I do whatever rolls off the tongue, yeah, fastest. Exactly. And so the question that I was asking was, of the clean energy future that the old policy promised in the power sector specifically, how much will still show up over the coming decade? And that decade’s important because that’s, one, the near term impact, but then also where the next policy decisions will have the ability to influence and change. And so what I found is that for clean capacity, 74% will still show up on the grid, and emissions reductions in the power sector, 67% of those will still occur on average over the coming decade.

David Roberts: Yeah. Okay, so this, I wanna be clear upfront about what’s in the model and what isn’t. So right now we’re gonna talk about what’s in the model, and then once we sort of discuss those results a little bit, then we’re gonna talk about some things that didn’t make it in and how they might influence our thinking about all this. So just to be clear, the model compared not just the IRA, but the IRA plus Biden’s key climate regulations. And I’m wondering, like, that included the tailpipe regulations, also the mercury regulations, most of the big ones. Yes?

Lily Bermel: Yep, you’re right. So the two models include the presence or lack thereof of the regulations, and the regulations in scope for this report are the power plant ones. So that’s the mercury and Air Toxics Standards, the Section 111 power plant rules, and the effluent limitations guidelines.

David Roberts: Right, versus a world with the OBBB and none of those regulations.

Lily Bermel: Exactly. Yep.

David Roberts: Since they all, since they all got nuked. I mean, you said this, I said this, but just to underline it, this is just about the electricity sector, not other things outside the electricity sector, which we might touch on in a minute.

Lily Bermel: Exactly, yep. Power sector only, laws plus regulations or lack thereof.

David Roberts: Right. So 74% of the clean capacity, meaning clean energy built and 71% of the clean energy generation from the IRA trajectory still show up in the OBBB trajectory. Yes?

Lily Bermel: Yep.

David Roberts: And then what happened about, emissions?

Lily Bermel: Right. So emissions in the power sector, the math is quite simple. It literally takes the current policy environment divided by the prior policy environment and looks at it as a percent. And so I see that 67% of the emissions reductions will still occur on average over the coming decade. And the analysis dives into, you know, what technologies are preserved at what share, and, and it’s interesting to see that, the fossil fuel plant is really sticky. And to me, a lot of the emissions increase that happens today is because of the retention of coal, without those regulations.

David Roberts: Right. So you, so there are three buckets you compare. There’s clean electricity—

Lily Bermel: Yeah, perfect ...

David Roberts: There’s fossil electricity, and then there’s the emissions.

Lily Bermel: Yeah.

David Roberts: Clean electricity we just covered on, 74%, 71%. Emissions reductions, 67% were preserved. And then on the fossil electricity score, it is, it is interesting. Talk a little bit about what happened there.

Lily Bermel: Sure. And I think this is almost perhaps where I was most surprised in doing the analysis. I saw that the capacity of the fossil fleets did not really change much between scenarios.

David Roberts: Meaning not a lot, not a lot more built.

Lily Bermel: Right. So the capacity in the OB3 scenario is 4% higher than the prior trajectory, but the composition changes, right? So you have more coal and less gas, so it’s more emissions intensive per unit.

David Roberts: Right. 19% more emissions.

Lily Bermel: So then the 19% comes from the generation.

David Roberts: Or sorry, more, more fossil generation, right, than...

Lily Bermel: And so what that speaks to is, you know, fossil power, fossil fuels are dispatchable and can ramp up or down. And so even though the capacity is more or less flat, it will run for more hours of the day to fill in for the less clean energy that’s built.

David Roberts: Right. And briefly, let’s pick apart the clean electricity bucket because the composition there is really interesting. So solar and batteries retain 80, something like 80%, around 80% of their capacity in generation.

Lily Bermel: Yep.

David Roberts: And wind is down around 50% or a little bit below 50%. So the average there of 70 whatever percent sort of hides the fact that solar and batteries survive quite well, and wind gets hurt quite badly. So can you explain why, what in your estimation explains that sort of disjunct there? Why do solar and batteries prove so resilient and wind gets hurt so badly?

Lily Bermel: Sure, yep. So that 74% is an average, and it represents the aggregate clean number. So in it, you can decompose it to all of those different numbers, basically weighted by the technology. So solar, interestingly, you can break it down between utility scale and distributed, and distributed is, is far, far more resilient. About 95% of its capacity is preserved. And I attribute that to thinking about the, the strength of net metering and other state level policies that—

David Roberts: Mm-hmm ...

Lily Bermel: Enable its deployment. And if we’re seeing rising prices in the utility scale sector, that will incentivize folks to keep building on the distributed side. For solar and batteries, I think those are seeing great cost declines, and the battery still retained its tax credit, so it’s able to benefit from that as well. On the wind side, that, again, you can break out into onshore and offshore. Offshore is so tiny of a pipeline that the model shows that it will probably all get built ‘cause it’s so small, so that’s 100% preserved for offshore. But onshore is the biggest casualty of, of everything. It dips below that metaphorical glass half full threshold. And we only see 47% of its capacity preserved, and I attribute that to, it’s a little bit like wind was already struggling. It was already down and yanking the tax credit was kind of beating it on its way down. A lot of its struggles are it’s extremely transmission constrained. It’s only, you know, able to be built and utilized in a specific region. It doesn’t see the same cost declines that we’re seeing because of innovation from on the solar and battery side, and it’s just, like, more CapEx heavy. It’s a hard technology to manage in that so it was already suffering, and now it’s taken a beating.

David Roberts: Right. It’s basically a measurement of how credit, how much these technologies depended on the credits, on the tax credits, ‘cause that’s the main thing. The tax credits go away, which ones we’re most dependent on. It turns out wind really needed them, solar and batteries somewhat less.

Lily Bermel: Yeah, I would say, yeah, the difference shows the impact of the credits, and then what remains shows the market momentum behind it.

David Roberts: Right. And so one of my questions I had about all this is it seems like there’s been a real effort to spin this report as a positive in the most positive way possible. So like for instance, you talk about this 2.5 year time lag for solar and batteries. Talk, first just say what you mean by that.

Lily Bermel: Sure. I think, yeah. One, first thing I’ll say is the report represents a really specific framing, and the result is very positive. So I wouldn’t say that it’s spin, for one. But number two, on the two and a half year lag, what I did there was, was really wanting to figure out how far behind the current trajectory is compared to what the IRA would’ve put forward. So I was trying to think of creative ways to do it, and I thought of this concept of, of what I coined a lag analysis. And basically what that does is it looks at a given year, so say 2031, and it looks at how many gigawatts of energy will be deployed. So for solar, the Energy Innovation model shows about 333 gigawatts of solar will be deployed. At what point, how many years later, will OB3 reach that time period? And it’s, it’s only two and a half years later. And so for me, again, when I was doing this research, that was much smaller than I thought. And so that doesn’t even equal two and a half years worth of capacity or deployment lost because it’s still being deployed at about, you know, 75% of that high level. It’s just looking at the total levels of deployment and at what point in time will you reach that milestone.

David Roberts: Yeah. Well, this gets a little bit at what I mean, which is that 2.5 year number is the, is the per year average over the 10 years. But if you look, like the report says, by 2035, we’ve lost a cumulative 44 deployment years—

Lily Bermel: Mm-hmm

David Roberts: On clean capacity and 56 deployment years on generation. And like if you look at wind, even the per year average on wind is 11.5 years deployment, all of which sounds to me bad. You know what I mean?

Lily Bermel: Yeah.

David Roberts: Like, like another way of looking at this is we got 30% less of the clean energy than we would’ve gotten and 25% or like even more, like 33% less of the emissions losses, and that seems bad to me. Like those seem like big numbers to me, I guess.

Lily Bermel: Yeah. I mean, you’re right. It’s bad. Any energy lost is bad, and that report does not hide that in any way. Page one, it talks about how Trump’s policies are leading to less clean energy, less investment, fewer jobs, canceled projects, all the like. And so on the lag, right? That was, that was my honesty that, and rigor in the analysis that those lags compound and they add up every single year.

David Roberts: Yeah. Yeah. And they get, and they get bigger and bigger over time is the thing.

Lily Bermel: They get bigger. And just as you asked earlier about the 74% number, you know, how, why is that rosy when wind sucks? It’s, it’s the same thing on this side. Like wind is clearly the laggard and the down weight in all of these numbers, and then at the individual technology level, solar and batteries fare far, far better than wind.

David Roberts: Yeah, and it’s also worth saying, I think that when you, there’s 2.8 gigatons of CO2 is the difference between these two cumulative 10-year difference—

Lily Bermel: Yep ...

David Roberts: Between these two scenarios, and that’s also a lot. And that’s... And, and unlike clean energy progress, you can’t, you know, I’m not telling you anything, you can’t get that back. Like, it’s a cumulative, it’s a cumulative measure how much is in the atmosphere. So all of which is just, this is just me arguing for my natural pessimism, arguing for the glass half empty perspective. Like, it just seems to me like ev- your analysis shows, and as you say, it doesn’t hide it, it says it right in the analysis, that these are big, these are big hits, basically. Even if not as bad as some people might have thought or feared, they are big.

Lily Bermel: Yeah, I’m glad you pointed out that 2.8 gigaton number. That’s the amount of emissions that the current policy scenario will see over a 10-year time period. And actually, right before this, I did the math. That’s equal to about two, like, 2024 sized worth of power sector emissions. So that’s just in the power sector. And again, I focus on that, that 10-year window because to me, it, it highlights that urgency of like, this is real. These losses are real. It’s tangible. You, you know, you can calculate it or estimate it. And it’s also the window that policy can do something about it. Like, this is not 2.8 gigatons that automatically happen the moment they signed the piece of paper for OB3.

David Roberts: Right.

Lily Bermel: This is something that right now, you know, permanent reform negotiations can address, and that next Congress will have the opportunity to address, and the next administration will as well.

David Roberts: Right. None of, none of these are locked in. Yeah, we should, we should say that. None of these numbers are locked in. They’re, they’re out to 2035, so-

Lily Bermel: Exactly ...

David Roberts: We could, we could change this reality.

Lily Bermel: Exactly. And I think one more thing I’ll say about the framing is that any person in the climate community know- knew that the IRA was not enough to get us to net zero by 2050, and it put us within a stone’s throw distance of it, which was really exciting and invigorating. And so, you know, when you know that what is this glass that we’re measuring, it’s, it’s the current compared to the prior, what we have now versus what we thought we had and what made us really excited, and the glass is, is pretty full, more full than we thought. You know, of course there is so much more to do. We don’t just wanna fill up the glass. We wanna do way better than that.

David Roberts: Yeah, yeah.

Lily Bermel: And again, I think that’s pretty clear in the report ‘cause a lot of it’s dedicated to talking to, talking about solutions and how to move forward.

David Roberts: Yeah. And, and I meant to ask this before actually.

Lily Bermel: Mm-hmm.

David Roberts: Why not a third scenario that’s neither IRA nor OBBA? In other words, like, I don’t think anybody thought that none of this clean energy build-out would’ve happened absent the IRA. You know what I mean? So I don’t even know. Is it even possible to sort of estimate that kind of... It’d be a lot of kind of guesswork, I guess. But did you think about trying to include that scenario?

Lily Bermel: Oh, yeah. I, I totally did. And I’ll say that, again, this is in the throes of last year, but I, I mean, I’ve heard this recently from some high-level former Biden, you know, DOE officials, like, a real concern that clean energy was kneecapped. And so I think, yeah, it, it would be silly to think it’s all gone, but I think there is a line of thinking that thinks the majority of things were lost. And so again, why I took that, that specific framing. I asked Energy Innovation, who, that team is amazing. They were really kind in giving me their, their modeling, their data. So it’s, it’s all their work, and I just did some extra math on top of it. But I asked them about that pre-2021 scenario because of course that’s, like, the other counterfactual. And one thing that they told me is that it was built with different demand assumptions, so I can’t apples to apples compare it. It’s like, mathematically illegal, you know? But, but you can kind of reason through, like, what’s the difference between Trump I policy and Trump II policy on paper. And Trump I policy also had zero regulations. Trump I policy also had wind and solar tax credits phasing down, and that’s the same in Trump II. Trump II also has the clean firm tax credits and more LPO funding, Loan Programs Office and, and more. And so you can imagine that on paper they’re a little bit similar, but there is better policy this time around. And then we also have higher demand, which is being a demand pull and an incentive to deploy as much energy as fast as possible.

David Roberts: We’re gonna get to that. So I guess—

Lily Bermel: Yeah ...

David Roberts: You could say Trump II policy is better on clean energy than Trump I policy for the simple reason that—

Lily Bermel: Low bar ...

David Roberts: For the simple reason that Democrats passed a bunch, and they were not able to get rid of all of it, basically. So yeah, as you said, and as, as, as Jigar Shah, as previous chair, uh, guest Jigar Shah said—

Lily Bermel: Mm-hmm ...

David Roberts: If we just went from Trump I to the OB, O triple B, it would look pretty good. It would look, it would look like a pretty strong energy bill.

Lily Bermel: Yep, and, and that comment, I mean, I remember him saying that in the fall, and that’s a little bit what perked my ears up to this originally because he was saying, right, if we only had OB3, we’d be shouting from the rooftops and, like, overjoyed. And Jesse Jenkins too was like, “The Republicans on a trifecta, you know, party line vote just agreed to create investments and spend money on zero carbon technology for a decade.” And that’s incredible. That’s great.

David Roberts: Just not wind and solar. They really just-

Lily Bermel: Just not wind and solar.

David Roberts: They really just hate wind and solar.

Lily Bermel: Totally.

David Roberts: Which I, which I think is just gets to sort of the kind of symbolic culture war aspect of, of, of a lot of it. They just-

Lily Bermel: The sacrificial lamb

David Roberts: They, they just wanted to own the libs. They just took enough of the chunk out of it to own the libs, but, you know, they, they didn’t seem that concerned about the policy per se. Okay. So let’s then talk about a variety of things that for various reasons could not make it into these model comparisons, ‘cause they, like, some of them, they weigh in different directions, these, these things that got left out. They’re interesting to, to walk through, I think. So I think the first thing to say, and this gets back to my, to my glass half empty insistence, which is, which is that it left out all the non-electricity sector stuff, which has left out the EVs, which took the biggest hit, I think, probably like policy-wise were hurt worst. A lot of the clean and manufacturing stuff got hit.

Lily Bermel: Yep.

David Roberts: A lot of the LPO stuff, the loan programs office stuff, the grants, loans—

Lily Bermel: Yeah ...

David Roberts: All that stuff, did not-

Lily Bermel: Yeah. Well, on that real f- on that real fast, I mean, the report’s only about the power sector, so—

David Roberts: Yeah, yeah. Yeah ...

Lily Bermel: You know, it, of course it doesn’t include EVs.

David Roberts: And to say the, the, the, the news out, the news outside of the electricity sector—

Lily Bermel: Yeah ...

David Roberts: Is grimmer than the news within it, I guess is what I’d say.

Lily Bermel: Yes, and I think it is actually really valuable. My, my CGEP colleague, Noah Kaufman, has a really great point about how, you know, when you take such a narrow view, like, a strength of the Biden industrial policy for climate was that it was a whole of economy, was that the manufacturing tax credits spoke to the demand, tax credits spoke to the transition funding for fossil fuel communities. And so, you know, when you look at one, one part—

David Roberts: All of which spoke also, as he said, to the international community and the international dynamic, just the signal to the international community that the US had its shit together was in and of itself a, an important thing.

Lily Bermel: Right. And so, I mean, part of that, right, again, on this beat, like I think it’s, it’s helpful to not then wonder what happened or prognosticate or theorize about the future based on vibes. It, it helps to have the data to point us in the right direction.

David Roberts: Yeah. Okay, so another thing this, that you couldn’t get in the report necessarily is that the Trump administration has not just removed the tax credits from wind and solar, they’re also very specifically going after wind and solar permits in a variety of ways. They’ve sort of launched this- You know, it’s like the negative, it’s like the mirror image. It’s like a whole of government effort against wind and solar.

Lily Bermel: It’s creative.

David Roberts: How... yeah, how big… It’s hard to model, for one thing, because it’s just hard to know, like, what exactly is going on and how much of it’s gonna stick. But, like, what’s your sort of assessment of how big of a piece of the pie? How much worse would that make the OBBB scenario look if you could’ve included it, I guess?

Lily Bermel: Yeah. I think first just to start with, you know, why could it not fit in the model? This, again, was an exercise that reminded me that a model is just a camera. It just captures a moment in time of what we think might happen.

David Roberts: Yeah.

Lily Bermel: It’s not a thermometer, and it’s not a live weather forecast. So with that aside, plus it’s just, like, simply hard to figure out, like, how deep and how intense, and how far-reaching are the Trump administration’s efforts on restricting renewables.

David Roberts: And how are the legal cases gonna settle out?

Lily Bermel: Totally. And the investment environment

David Roberts: Yeah ...

Lily Bermel: and like I think about the July 2025 memo from the Department of the Interior right after the law was signed where they said, you know, “Any wind and solar project that wants to get permitted on public land has to get signed by the secretary” with a 69 line item list of things that they had to check off. Like—

David Roberts: Yes ...

Lily Bermel: Egregious. And now that’s been vacated by a judge. It no longer has legal standing. It’s not in place. And but, you know, there still is an impact of that last year.

David Roberts: But does, but does that matter? Are they gonna follow the law that the judge says? Who know like, who knows, you know? The fact that a judge ruled on it doesn’t even settle the question anymore with this administration.

Lily Bermel: I think, yeah, I mean, the whole constitutional law thing is a whole other other question we need to defer to our lawyers about. But I’ve been at least, comforted and, and yes, on a delay, speaking of a lag. I’ve been comforted that the, the judges have come in and tried to stop actions that are overbearing, far-reaching, or outright illegal, ranging from impoundment to the stop work orders to the wind projects, where all five instances a judge came in and said, “you can’t do that.” Yeah.

David Roberts: Right. Speaking of offshore wind, you know, the, the, the model had all that getting built, but they’re, they are doing their best to scuttle those things or buy off those leases or whatever.

Lily Bermel: Yeah. And so to me, those, those countervailing forces does, do matter, but of course, like, it’s hard to measure how chilled is an investment environment and what impact does that have. I think two things that have helped me think about this, that, like, the near term pipeline is very robust. Like, yes, because of the safe harboring of the tax credits, they’re available. Projects are able to benefit from them if you qualify, you know, by all these really technical standards through 2030, and that matters. And so- I wanna point out that the data that I use is pretty validated by the Rhodium Group, by Jesse Jenkins’ REPEAT Lab. And so Rhodium Group finds that, you know, deployment through 2030 is very strong and robust because of that safe harboring.

David Roberts: Right.

Lily Bermel: And the second way that I’ve liked thinking about it is Alfred Johnson, who’s CEO of, of Crux Climate, who does the tax equity, you know, financing platform, he calls the grid something like light years, where what we see today, what gets deployed this year, was because of construction and permitting decisions made years ago

David Roberts: Right. Right, right, right. So all this, all this stuff Trump is doing now is theoretically will show up 5, 10 years from now.

Lily Bermel: Yeah. So it’s a bull for right now, but then it’s a bear for, like, Trump will have a lingering effect, but on, like, discrete concrete projects. Yeah.

David Roberts: Right. Right. Yeah. So we’ll just say that Trump’s executive branch campaign has some nebulous negative effect on the scenario that is difficult to measure, but that will also compound over time.

Lily Bermel: Yeah.

David Roberts: The other thing that was hard to get in is just this extraordinary surge in demand. Talk about that. Talk about why, what d- what the sort of demand numbers were in the model versus what is showing up in real life.