Clean energy is the cheapest, fastest-growing source of power in the country, yet politically it barely registers. Republicans gutted its tax credits last year without fearing any consequences. The Invest in Tomorrow Coalition, a super PAC backed by clean energy investors, is trying to change that the old-fashioned way: by punishing the industry’s enemies. It went six for six in this year’s primaries; it’s now spending at least $15 million against seven Republican House candidates in the midterms. Its chair, Tom Matzzie, makes the case for fear as a political asset, explains why the industry has been so slow to throw elbows, and describes what it would take for clean energy to become a lion instead of a gazelle.

Chapters:

00:00 - Introduction

02:55 - How the Invest in Tomorrow Coalition started

06:23 - Why a super PAC, and the idea of mythic power

09:50 - Punishing opponents to send a message to Congress

12:55 - Proving impact, and the permitting bill

17:13 - How ITC picks its general election races

21:41 - Does knocking out extremists help Republicans?

24:53 - Free riders and barriers to industry politics

28:58 - Who funds ITC, and why the industry underinvests

32:44 - Why clean power stays politically weak

38:28 - Did the IRA’s red-state investments pay off?

40:35 - Fear of Trump’s retaliation

45:05 - Avoiding the Democratic PAC label

49:30 - Presidential primaries and the ethanol playbook

53:20 - Gas inside the clean power trade groups

58:37 - Where ITC goes after November

Collectively, the electric stack (batteries, motors, chips, power electronics) has gotten about 99% cheaper since 1990. It is quietly remaking every machine that turns electricity into motion, heat, or work. Problem is, China makes most of it. Sam D’Amico, co-author of “The Electric Slide” and founder of Impulse Labs, is betting the US can still claim a piece of that stack. He’s starting with a battery-powered induction cooktop. We talk about why domestic manufacturing matters, what America would actually have to build to compete, and how Silicon Valley’s founder world really thinks about climate change, geoengineering included.

Chapters:

00:00 – Introduction

02:52 – From VR headsets to kitchen appliances

07:07 – How a pizza oven inspired a battery stove

10:07 – Peak demand, at home and on the grid

13:25 – Which appliances could use a built-in battery

16:46 – Electric stack 1: the four technologies

20:28 – Electric stack 2: power electronics and motors

25:21 – China bets on hardware, the US bets on AI

30:08 – Why not just buy it all from China?

33:51 – Why engineers need to be near the factory

38:39 – How much does the US need to make at home?

45:19 – US EV policy and letting Chinese cars in

47:49 – Batteries in appliances vs. one home battery

52:04 – Impulse’s plan: its tech in other brands’ stoves

55:17 – What’s next after the stove

57:14 – Has Silicon Valley stopped caring about climate?

American homes are filling up with batteries, EVs, and smart thermostats that could be coordinated to make the grid cheaper and more reliable — but almost none of them are. To understand why, it helps to watch what happens when the company best in the world at this tries to do it here. In Britain, Octopus Energy has built a giant virtual power plant out of its customers' devices. In the US, it has spent six years running into walls. Now it’s bought Uplight, which runs customer programs for 85 utilities. I talked with Nick Chaset, who runs both, about what's in the way and whether distributed energy can ever scale with US utilities … the way they are.

Chapters:

00:00 – Introduction

02:02 – Octopus’s past year and the Uplight investment

05:18 – What makes the UK market work for Octopus

11:12 – Texas: fast growth, flattened volatility

14:57 – Will flexibility put itself out of business?

19:16 – Why Octopus stays out of Pennsylvania and New York

22:17 – Does residential retail competition have a future?

24:41 – Why utility programs trail Octopus on participation

32:17 – The demand stack and what planners can count on

39:11 – Kraken, Uplight and the overlap

46:04 – Consumer protection and the aggregator model

51:17 – Data centers and the social license to operate

55:11 – Do we need dynamic pricing?

58:30 – Five years out

Denmark gets a large share of its power from wind and other renewables and has cut its emissions roughly in half since 1990, but independent analysts doubt it will hit its 70 percent target for 2030. Kristian Jensen, CEO of Green Power Denmark and a former Danish minister of taxation, foreign affairs, and finance, argues the next stage is electrifying how Denmark uses energy: heat, transport, and industry. I talk with him about district heating and heat pumps, EVs and vehicle-to-grid, municipally owned grid companies and hourly power prices, biomass, carbon capture, power-to-X, solar’s “fields of iron” backlash, a grid oversubscribed with data center requests (an October 1 agreement has since put most data centers at the back of the queue), and whether the country’s political consensus will hold.

Chapters

00:00 – Introduction: Denmark and industrial symbiosis

02:44 – Is the 70% target for 2030 out of reach?

06:24 – Carbon capture and storage, and the peatlands lag

09:57 – Why electrification has lagged: biomass and wood pellets

14:45 – Few batteries, many interconnectors

16:48 – Data centers and the grid-connection prioritization bill

21:34 – Municipally owned grid companies

24:32 – Smart meters, hourly prices, and thermal batteries

28:40 – The solar backlash and local ownership

35:04 – Agrivoltaics and biodiversity

37:24 – District heating: heat pumps, geothermal, and finance

43:24 – The EV transition and vehicle-to-grid

47:45 – Road pricing and fiscal room

50:07 – Power-to-X and eSAF

54:21 – Can Denmark build enough clean power?

57:12 – Will the political consensus hold?

On this episode, recorded live at Climate Week NYC, I talk with Matt Traldi. He’s the founder and CEO of Greenlight America, which finds the local meetings where clean energy’s fate is being decided and recruits supporters to attend. Traldi argues that siting and permitting approvals turn on who shows up, and that local partners, conservative groups included, outperform outside advocates. We discuss how to measure impact, recent wins and losses, blue-state resistance, data center backlash, and Greenlight’s growth.

Chapters:

00:00 – Introduction

02:09 – What Greenlight does and why Matt started it

04:41 – How Greenlight finds the decisions that matter

07:27 – Growth, and the tax credit deadline sprint

13:38 – Who shows up to local hearings

19:39 – Winning in conservative communities

22:35 – Bodies in the room, measuring impact, and win rates

27:46 – Losses, wins, and “there is no bag”

32:44 – Blue-state obstacles and organized opposition

36:31 – When data center backlash spills over onto clean energy

42:31 – Which projects Greenlight won’t back

45:38 – Lessons from housing and growing an organization

50:17 – Audience Q&A: disinformation and state permitting reform

54:39 – Audience Q&A: developers and elections

59:30 – Audience Q&A: funding local groups and designing community input

The proposed bipartisan federal permitting bill is 417 pages filled with extremely consequential provisions that have left the climate community some mix of excited, infuriated, and confused. In an attempt to bring some clarity, I asked Daniel Palken of Arnold Ventures, a veteran of Senate permitting fights, to walk through what’s in it. We cover the blockbuster transmission reforms, the rule making data centers pay more than their share of grid costs, the wins for geothermal, and the fossil carve-outs. Then we get into NEPA reforms that render the act toothless, limits on state water permits, and the permit-certainty sections that have lawyers worried about “forever permits.” And finally: whether it restrains Trump, why Democrats shouldn’t wait for a better deal, what the modeling says about emissions impacts, and Daniel’s odds of passage. This is a long one, folks. Buckle up.

Chapters:

00:00 – Intro: the bipartisan permitting bill

04:15 – Why permitting reform matters

12:23 – Agency staffing and capacity

16:59 – Past permitting attempts

20:26 – Transmission 1: planning and federal backstop

28:28 – Transmission 2: who pays and grid upgrades

38:17 – Data centers 1: paying more for grid access

43:20 – Distributed energy and geothermal

49:06 – Oil, gas, and mining provisions

57:06 – Data centers 2: will they go off-grid?

1:00:19 – NEPA 1: courts can’t halt projects

1:08:57 – NEPA 2: the main objections

1:17:10 – State water permits

1:23:35 – Endangered species

1:27:37 – Permit certainty 1: limits on revoking permits

1:36:43 – Permit certainty 2: lawsuits and damages

1:48:12 – Politics 1: Trump’s wind blockades

1:52:57 – Politics 2: why not wait for a better deal?

1:58:33 – Politics 3: elections, courts, and modeling

2:10:57 – Politics 4: next steps and odds of passage

On September 14, I sat down with Leah Stokes in front of a live audience at Seattle’s Town Hall to talk about her new book, The Carbon Wave. It’s an insider account of how the Inflation Reduction Act got made, braided with the story of the high-risk twin pregnancy she went through while helping to make it. We get into why electrification is the heart of decarbonization, the enduring mystery of what’s going on in Joe Manchin’s head, what it means to trade your carbon footprint for a carbon wave, and how much of the IRA survives. It was followed by questions from the audience.

Chapters:

00:00 – Welcome and housekeeping

03:05 – The twins, the NICU, and writing the book

08:51 – Carbon footprint vs. carbon wave

13:39 – Sam Ricketts and 100% clean electricity

18:13 – Why electricity is the core of the solution

23:28 – Utilities and the politics of change

26:18 – Tech companies and data centers

29:11 – Inside the Manchin negotiations

33:57 – Why Manchin got to yes

38:46 – Trump, setbacks, and where things stand

42:55 – Clean energy politics and the global shift

46:25 – Audience Q&A: the transmission gridlock

48:59 – Institutions, speed, and structural reform

53:27 – If Democrats win the House, what next

55:43 – Permitting reform

59:06 – State utilities, coal, and getting involved

Volts published seven conversations in September, which is a lot for anyone to listen to. We’ve rounded up the highlights into less than an hour. Enjoy!

Heat pump water heaters use a fraction of the energy of conventional electric resistance heaters — which use more electricity in a year than an EV — but they're only 2 percent of the market, mainly because they tend to cost more, be slow and loud, and require a plumber and an electrician. Reservoir is a Boston company trying to fix all that, with a smarter, quieter machine and its own plumbers. I talk with CEO Luke Winston-Almanzar about how it works, what it costs, and its potential role in demand response programs.

Chapters:

00:00 – Introduction

03:06 – Why water heaters

06:34 – How gas, resistance, and heat pump water heaters work

09:33 – Size and slow recovery: predictive heating and party mode

15:31 – Installation and vertical integration

22:19 – Cutting electric resistance backup

20:31 – What Reservoir builds and what it sources

23:41 – Tankless gas, virtual capacity, and the booster heater

27:11 – Recirculation, freeze protection, leak detection, and Legionella

32:03 – What it costs and what it saves

36:01 – Placement: small rooms, basements, and cold climates

42:37 – Noise and durability

48:19 – Demand response and virtual power plants

53:22 – A. O. Smith’s CO2 split system and Reservoir’s moat

55:54 – Policy headwinds after the IRA

59:29 – What’s next for Reservoir

Home batteries like the Tesla Powerwall are nice, but what about people who can’t afford them, or renters who aren’t allowed to install them, or people who just don’t want the hassle of dealing with a permit and an electrician? A company called Pila is selling small (1.6 kWh) batteries that simply plug into a normal electrical socket. They can serve as backup for a refrigerator or other appliance in the event of a blackout, but they can also “mesh” with one another to form a network, pair with rooftop solar, or participate in VPP programs. CEO Cole Ashman explains the value proposition.

Chapters:

00:00 Introduction

02:26 Lessons from Powerwall and Span

05:33 What Pila is and how it works

07:14 How long a fridge runs on one battery

09:28 Fire risk, LFP chemistry, and New York City

16:02 Why the price went up, and cost per kilowatt hour

19:55 Who is actually buying Pila

23:00 Financing models and free batteries

27:04 Do the bill savings add up?

32:05 Why utilities want small batteries in VPPs

36:58 Pilots with Holy Cross Energy and Brooklyn SolarWorks

41:09 Solar pairing and the Pila mesh network

47:14 Camping batteries and built-in storage

54:19 Utilities and visibility at the grid edge

55:58 Bidirectional outlets and the next five years

1:00:10 Clean energy as invisible infrastructure

Back in 2011, I wrote that fossil fuel interests had a much better media game than clean energy. My example was Frank Maisano, a media relations guy for coal utilities and the natural gas industry. Thirty years on, he’s still at it — still writing his newsletter, still connecting reporters to sources, still better at it than anyone on the clean side (sigh). So I’m finally talking to him about it: clean energy trade groups nobody in Washington fears, Trump’s daft efforts to kill renewables, the PAC picking off dirty-energy Republicans, permitting and data center fights, and the climate denial shop he worked for in the ‘90s. Spoiler: he regrets nothing.

Chapters:

00:00 – Introduction

03:46 – What a DC media strategist actually does

09:50 – Republicans, Trump, and a narrow House majority

15:29 – Why tax cuts beat energy in the OBBBA fight

18:54 – Competing with China on AI without the electric stack

21:15 – Paying $4 billion to hand back offshore wind leases

28:07 – Red-state wind and the orders keeping coal plants open

32:52 – Clean energy trade groups and the building trades

38:41 – Gas as a bridge, and what longer term means

44:55 – Whether a half-gas trade group can serve clean energy

48:43 – A coherent clean vision against an incoherent coalition

51:14 – Do the green groups still scare anyone

55:18 – Permitting reform and the Whitehouse-Capito path

59:46 – Data centers, animal spirits, and the midterms

1:06:48 – The revenge PAC, and whether it is working

1:12:31 – Congress, the courts, and what Democrats could do

1:18:53 – COP, climate change, and the client he would turn down

Verrus is building data centers designed to address every objection the public has raised: they use batteries instead of diesel generators, which makes them grid assets that help hold down power prices; they use closed-loop cooling, which uses a tiny fraction of the water; their equipment is quieter; and as a bonus, they squeeze more servers into the same grid connection. Yet both of Verrus’s proposed sites, in Michigan and Oregon, are mired in fierce local opposition. In this episode, CEO Nelson Abramson walks through the engineering — and the politics that the engineering hasn’t quite solved.

Chapters:

00:00 – Introduction

02:43 – Three decades in data centers

05:05 – What a Verrus data center looks like

07:39 – The medium voltage power plane

12:13 – UPS batteries vs. the big LFP battery

17:27 – Priority aware capping and provisioned utility capacity

22:31 – Why not buy the pieces off the shelf?

25:42 – Duration: what happens when four hours runs out

34:28 – Diesel backup and what customers ask for

37:15 – How flexible is compute, really?

42:37 – Noise, fans, and the sound studies

48:42 – Water use and the 12 million gallon question

52:19 – Industrial land and by-right zoning

56:07 – Public opposition, recall petitions, and community benefits

1:00:07 – Oregon, Salem, and the moratorium

1:03:56 – Ride-through, NERC, and losing the moat

1:07:11 – What V2 looks like

Jane Flegal has worked inside philanthropy at the Hewlett Foundation, industrial emissions policy at the Biden White House, and carbon-removal market development at Frontier; she's now a senior fellow at the Searchlight Institute, writing some of the smartest climate policy analysis around. We cover a lot of ground: industrial policy versus market approaches, what the IRA got right and wrong, philanthropy's proper role, data centers and the case for an infrastructure fund, and behind-the-meter gas, among other things. This is a long one, and spicy!

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

Zanskar argues that the US is badly underestimating its conventional geothermal resources — that there are far more undiscovered hydrothermal systems, and that each one can produce far more power, than people think. They think AI can help find those resources, and they have drilled three sites to back it up, including a “blind” discovery in Nevada with no surface signs and no prior exploratory wells. If they're right, terawatts of firm, carbon-free power are reachable with off-the-shelf drilling technology. Co-founders Carl Hoiland and Joel Edwards make the case.

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

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

Disinformation about clean energy is showing up everywhere — online after every blackout, at county commission meetings about siting new projects, in regulatory dockets stuffed with fake comments. GoodPower, which combines a C3 education arm with a C4 advocacy arm, is trying to fight back with a network of thousands of content creators, rapid-response campaigns around storms and grid failures, and an AI tool that detects manufactured public comments. I talk with CEO Leah Qusba about what they've tried, what they've measured, and what actually works.

Chapters:

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

Even as he has torn down climate policy, Donald Trump has normalized the use of more powerful & aggressive tools of economic statecraft, like equity stakes in private companies, new federal authorities, and sovereign wealth funds. The Roosevelt Institute recently issued a collection of 17 essays exploring how a future administration could use the tools Trump has assembled for decarbonization. I talk with Todd Tucker, editor of and contributor to the volume, about these new industrial planning tools.

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

Typically, AI data centers are large, inflexible loads that the grid has to build around, which is one reason utilities take so long to connect them. Emerald AI has designed a “digital brain” that can ramp down, move, or delay computing jobs in a data center on demand, making a data center a flexible asset to the grid. I talk with CEO Varun Sivaram about how the software works, what flexibility costs the compute, why it beats just installing batteries, whether utilities can enforce it, and what it would mean for clean energy.

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

When it comes to innovative new grid technologies, every utility wants to be the third in line to try them. None of them want to be the first to take risks and iron out new processes. That's one reason grid-enhancing technologies, better software, and smarter internal procedures stay stuck in pilot purgatory, even as the industry faces the biggest buildout since rural electrification. PG&E's Quinn Nakayama and Microsoft's Hanna Grene discuss what's actually blocking utility innovation — and Quinn offers a novel proposal for paying someone to go first.

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

Ramón Méndez Galain helped Uruguay decarbonize its grid (today it’s 98% fossil-free) while keeping the utility public and letting private capital foot the bill. Now he’s trying to export the same playbook across the global South. We talk through how Uruguay pulled it off — the hydro “battery” for wind & solar “baseload,” the cross-party political deal, the market redesign — and what actually transfers to countries without the same advantages. We also discuss why, seven years on, no other country has followed Uruguay’s path.

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

As the U.S. EV market slows and federal charging support recedes, IONNA, a fast-charging network backed by eight major automakers, is still expanding. On Volts, CEO Seth Cutler makes the case that public charging is entering a new phase focused on reliability and customer experience, but the economics remain difficult, with low utilization and demand charges squeezing margins. With roughly 1,300 bays live and a target of 30,000, IONNA is testing whether a multi-brand network can offer a Tesla-like charging experience while building a sustainable business.

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

Last year I did a pod on Montana’s surprising burst of bipartisan housing legislation. Turns out Idaho was watching. This year its legislature passed six housing bills of its own (two others failed). Republican state Sen. Ben Toews and Democratic state Rep. Megan Egbert join me to walk through what passed, what didn’t, and what they gave away to get it done — plus the property tax cap that quietly works against all of it, and why duplexes turned out to be the red line.

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

Could the US grid be brought down by Chinese hackers? To find out, I talked with Patrick Miller, who helped write the cybersecurity rules for the bulk power system and became the first person with federal authority to enforce them. We get into what's actually been hacked, why those "rogue devices" in Chinese inverters are less sinister than they sound, and why squirrels still do more damage than hackers.

Chapters:

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

State legislatures are writing data center rules faster than they can verify the demand forecasts underneath them. Fifteen states accounted for 80 percent of data center electricity demand in 2023, a single hyperscale campus can arrive as 15 to 20 percent of a utility's demand, and the transmission to serve it takes five to 15 years to build. On this episode of Volts, David Roberts works through Climate Cabinet's Taming Data Center Turmoil series with Saleem Chapman, who leads the group's electricity affordability policy work, on why Georgia's regulated utility, PJM's capacity market, and ERCOT's competitive market each left ratepayers holding the risk, and what a state can require before it approves a project, while the facility operates, and after the deal is done.

Chapters:

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

Chapters:

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

Materials in lithium-ion battery cathodes have continuously evolved since the 1990s, but anodes have stubbornly remained graphite. Now, finally, there’s some innovation on that side: silicon anodes, which engineers have struggled to master for a decade, are finally coming into wide commercialization. They enable up to five times the energy density of graphite anodes, charge many times faster, and are poised to revolutionize the battery market. In this episode, I talk with Rick Costantino, co-founder and CTO of Group14, which is selling a silicon-carbon composite material for anodes. They’re already selling to dozens of large battery manufacturers and expect silicon anodes to completely take over the market by 2030.

Chapters:

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

The Inflation Reduction Act (IRA) established substantial tax credits for wind and solar power. Trump’s One Big Beautiful Bill Act (OBBBA) eliminated those tax credits. How much damage did that do to the overall trajectory of clean energy in the post-Trump world? A new research commentary argues that the damage was less than many had feared and that the road forward for clean energy is less about restoring those credits than about easing the permitting and interconnection constraints inhibiting renewable energy. Today I talk with author Lily Bermel about the modeling her commentary is based on and the somewhat controversial conclusions she draws from it.

Chapters:

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 Decomposing 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

42:22Transmission, 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

America once led the world in building transit and now leads the world in what transit costs, roughly three times the international average per mile, measured not against authoritarian megaprojects but against Italy, Spain, and Japan. On this episode of Volts, David Roberts talks with Will Poff-Webster of the Institute for Progress, who put together the new Transit Abundance Playbook, and Stephanie Pollack, former head of the Massachusetts Department of Transportation and former acting administrator of the Federal Highway Administration. Their argument is that the costs are a policy choice: federal funding rules teach transit agencies to plan on a napkin and do the real work years later, to hire the lowest bidder over the one they know will deliver, and to defer to anyone holding a veto, while highways operate under looser versions of the same rules. As Pollack puts it, "if you hate transit, you should spend less on it." A surface transportation reauthorization bill is coming, and two of the playbook's proposals have already reached the House version.

Chapters:

00:00 Introduction: why cars work against cities

03:25 Agency culture or federal law: where does the fix come from

11:31 Planning: how federal funding enforces bad habits

20:10 Overdesign: the Green Line stations and the frequency-first test

23:40 Buses: why every agency orders a custom fleet

26:53 Procurement: lowest bid versus best value

32:56 Veto points and Italy’s conference of services

39:56 Permitting: environmental review as a NIMBY tool

45:28 State capacity: why consultant brain took over

51:46 Labor costs, automation, and Section 13(c)

56:19 Is any of this politically achievable?

1:03:28 Final question: one reform each

Data center opposition has gone from nonexistent to organized in about two years, roughly 120 moratoriums across 38 states, and it does not track proximity: Gallup finds 70% of Americans oppose a data center near them, while only 8% of opponents live near one. On this episode of Volts, David Roberts joins Energy Empire hosts Jigar Shah and Jamie Nolan, along with Arnab Pal of Deploy Action, for a crossover conversation, and his argument is that everyone is solving the wrong problem. The hyperscalers could buy their way to consent for a rounding error, batteries in basements, solar on roofs, funded schools, lower bills, and they refuse, which David reads as a symptom of low social trust that no amount of better modeling touches. “This is not a technocratic problem that you can just solve with a few switches,” he says. Thirty-six governors go to the ballot this fall having to answer for it.

Chapters:

00:00 Intro: a Volts and Energy Empire crossover

01:25 Has the AI case been made? Energy vs. AI as the real revolution

04:23 The backlash by the numbers, and hyperscalers' botched PR

08:20 Animal spirits, low social trust, and the information environment

12:46 Enshittification, lost jobs, and why governors still want data centers

15:50 The local playbook: schools, bioswales, batteries in basements

17:18 Bespoke industrial rates without setting a bad precedent

22:33 How utilities earn: spend-to-earn, the distribution black box, efficiency

30:11 Gendering the grid: gas as firm, renewables as soft

37:57 NERC's level-three alert and the case for more batteries

39:29 Both/and: distributed capacity as serious supply

45:33 Abundance's missing half: state capacity, staffing, NEPA

48:55 The midterms: 36 governors and the politics of affordability

53:33 Hope vs. fear: the Mamdani lesson and the information environment

Most of the energy decisions that touch daily life in America get made in state legislatures, and the people making them are increasingly new to the job. In smaller states, a freshly elected lawmaker gets a pad of paper, no staff, and about 150 lobbyists at the door, then votes on billion-dollar energy budgets in a landscape where the technology changes faster than anyone can track. On this episode of Volts, David Roberts talks with Hawaii state Senator Chris Lee, co-founder of the Electric Innovation Initiative, a bipartisan network betting that education moves electrification faster than mandates: put lawmakers in front of working technology, connect them across state lines, and let affordability carry the argument where climate framing will not. As Lee puts it, "nine times out of ten, people just don't know what they don't know."

Chapters:

00:00 Introduction

03:39 How electrification clicked: the 2008 iPhone moment

06:10 The education gap: why the initiative exists

11:35 Proxy staff and cross-state validation

15:44 What lands on the tours: eVTOL to the data-center win-win

20:51 Plain 'electrification': the bipartisan framing bet

26:28 Climate hushing and Hawaii's two-track proof

30:17 Policy that spreads: e-buses, heat pumps, RFPs

37:37 Utility business-model reform: Hawaii's PBR law

42:03 Affordability after the federal subsidies

45:22 Hawaii under pressure: LNG and the Lahaina grid

51:53 State power against federal hostility

55:19 The ten-year vision and the closing advice

Property taxes are two taxes stapled together: one on the land, one on whatever gets built on it. Put up an apartment building and the bill goes up. Pave the lot for parking and it stays low. It discourages building and rewards land speculation. The answer? Tax the buildings less and the land more. The idea of a “land value tax” goes back 150 years, but implementing it today involves navigating tricky constitutional issues. In this episode, I talk with Greg Miller of the Center for Land economics about the rationale for such taxes, and with Kitty Klitzke, a Spokane, Washington council member, about the difficulties of putting it in practice in a real city.

Chapters:

00:00 Introduction

03:22 Henry George and the case for taxing land

08:12 How property taxes work now, and what a split rate changes

11:26 Land value taxes and upzoning as complements

15:18 The Pennsylvania record and the reassessment problem

18:51 Vancouver, and why homeowners outlast the policy

24:03 Estonia, Singapore, and the Scottish Islands

26:53 Washington's uniformity clause and the building exemption

33:18 Kitty Klitzke on twenty years of Spokane infill

43:27 What Spokane needs from the state legislature

45:25 Single family homeowners and the Division corridor

48:34 The assessor objection

52:45 What the Spokane modeling shows

59:31 The plan for next session

1:01:44 Virginia, Kentucky, and cross-partisan momentum

Minnesota regulators Sydnie Lieb and Pete Wyckoff on why utility distribution spending — now a third of capital budgets and the biggest driver of rising bills — escapes the scrutiny the rest of the grid faces, and how to fix that.

00:00 - Introduction

04:23 - How distribution is regulated differently than generation and transmission

09:25 - Why distribution matters now: an aging system and the build-more incentive

14:00 - Contestable “mandatory” spending: undergrounding, DERMS software, capitalization

22:19 - Reliability standards and the cost of chasing 100 percent

28:42 - The MISO comparison: valuing a lost hour, and the scale of the numbers

35:12 - Non-wires alternatives: batteries, the Xcel project, and modeling gaps

40:31 - What regulators should require: AMI forecasts and beyond the prudence test

47:22 - The speed objection: does more analysis slow things down?

50:10 - Why spending caps and rate freezes are the wrong fix

52:40 - Spending more anyway, and recent Minnesota PUC disappointments

55:09 - Restructured markets: does the same logic apply?

58:38 - The vision of a well-functioning process and scaling it nationally

Following a stunning clean energy victory over right-wing donors on an obscure Arizona utility board, organizers are setting their sights on a much bigger prize: the state’s powerful utility commission. I chat with Charlie Fisher and Ning Mosberger-Tang about how they used disciplined messaging to overcome massive opposition spending and historically abysmal voter turnout. We discuss whether this localized ground game can scale to a massive statewide electorate and help build a durable, nationwide clean energy political machine.

You might have noticed that it’s kind of hot out there. And it’s only going to get worse: global demand for cooling is projected to triple by 2050. Finding a way to cool spaces and people without frying the planet is a crucial climate challenge. I’m joined by RMI’s Ankit Kalanki to unpack the hidden world of AC refrigerants and testing standards, the crucial distinction between lowering temperatures and dehumidifying, new AC technologies on the horizon, and the building and urban design changes that can take some of the pressure off.

In this episode, I talk with GM Energy executive Aseem Kapur about General Motors’ move into bidirectional EV charging and home energy management. We dig into the practicalities of turning hundreds of thousands of EVs into mobile backup generators, how to navigate a patchwork of 4,000 different utilities, and what it takes to get everyday consumers to see their cars as grid assets.

The UK has just released its seventh carbon budget, recommitting to the aggressive climate targets suggested by its nonpartisan Climate Change Committee. Can the Labour government actually hit those targets while keeping energy prices for the British people under control, even amidst a newly hostile political landscape? In this episode, I talk with the UK’s new climate minister, Katie White, about those challenges and more.

The North American Electric Reliability Corporation has issued a historic warning about AI data centers. I chat with energy experts Colin McCormick and Doug Bryan about the unique electrical engineering challenges of giant computational loads that can abruptly drop hundreds of megawatts of power in the blink of an eye. We dive into the upcoming regulatory battle between hyperscalers and operators, the sudden rush for firm gas generation, and how software updates and battery storage could eventually make data centers a tool for grid stability instead of a liability.

Why is the latest fossil fuel crisis pushing the world toward rapid electrification instead of a drilling boom? To find out, I chat with Tim Sahay and Kate Mackenzie, hosts of the Polycrisis newsletter and podcast, about the concept of “polycrisis” and the global rise of manufacturing-heavy electrostates. We examine the massive global diffusion of cheap electrotech and discuss why American climate wonks need to look past domestic policy and start paying attention to international macroeconomics.

In the US, clean energy tends to get bogged down in red tape, but there’s one category that you can install immediately, with no one’s permission, because it plugs right into your wall outlet. This week, I chat with James McGinniss of David Energy about plug-in DERs — specifically, small batteries that commercial tenants can install without permits or landlord sign-offs. We explore the economics behind these micro-projects, look at how they aggregate into virtual power plants, and break down why this hyper-local approach could eventually outcompete massive utility infrastructure.

Why is clean electrification, the most exciting, dynamic, hopeful sector of the US economy, still such a 98-pound weakling in DC backroom fights? In this episode, I talk with investor and entrepreneur Steve McBee about Amped, his new effort to boost the industry’s political influence and give it a little swagger — by telling a more compelling story, getting better information to lawmakers, and pulling hundreds of billions of dollars in stranded capital off the sidelines.

Conventional punditry loves the narrative that woolly-headed progressive standards over-burdened federal climate spending and slowed everything to a crawl. In this episode, I talk with Betony Jones about her time designing labor policies at the DOE and what she learned from interviewing dozens of companies that received federal funding. We explore the difference between bad rules and weak administrative capacity, how the DOE successfully streamlined century-old Davis-Bacon compliance, and why creating high-quality jobs is essential for global competitiveness.

As affluent homeowners defect to heat pumps, the massive costs of maintaining America’s aging gas pipelines are being concentrated onto a shrinking base of customers who can afford it least. To understand how to prevent an impending utility death spiral, I talk with the Building Decarbonization Coalition’s Kristin George Bagdanov and Panama Bartholomy. We discuss the legal limits of a utility’s “obligation to serve,” the potential for gas companies to transition into geothermal thermal energy networks, and why the US has suddenly become the global leader in heat pump sales.

Are data centers and electrification going to break the US power grid, or are they the secret to making it cheaper for everyone? In this episode, I talk with Pier LaFarge of Sparkfund about Minnesota’s landmark decision to let Xcel Energy deploy batteries directly into local distribution networks. We look past the politics and map out how a battery-saturated system can socialize the benefits of load growth, ushering in an era of boringly reliable, low-cost energy by 2030.

Ben Eidelson and Anay Shah run the Stepchange podcast, which recently put out a magisterial four-hour (!) episode on the history of the US electricity grid. I talk with them about some of the colorful characters and stories involved, the big fights and broad lessons learned, and how the history echoes in today’s political and technological struggles.

Boiling water to make steam for industrial processes consumes an enormous amount energy around the globe, yet it has proven remarkably resistant to electrification. In this episode, I talk with Addison Stark of AtmosZero about why replacing the standard fossil-gas boiler requires an entirely new approach to industrial heat pumps. We discuss the engineering behind his high-temperature system, the challenges of scaling up, and the growing imperative to get free of global LNG markets.

Most people think that coordinating the behavior of thousands of distributed energy resources requires some kind of third-party middleman, like an aggregator managing a VPP. My guest today, veteran research scientist Bruce Nordman, believes there’s a better way: dynamic, time- and location-specific retail prices, communicated directly to consumer devices, which would cut out the middleman and leave more value with customers.

Today, coordinating a whole-home retrofit — or even just getting a heat pump — involves confusing research, a parade of contractors, and wildly varying quotes. It’s a broken system that practically pushes people to just buy another gas furnace. In this episode, I’m joined by Zero Homes CEO Grant Gunnison to discuss ways to improve this system for both customers and contractors.

Historically, investing in energy infrastructure has been the exclusive province of wealthy individuals and large institutions. But that’s changing, and my guest today is part of it. I’m joined by Energea co-founder Mike Silvestrini to discuss how his platform allows retail investors to back international solar projects with buy-in as low as $100. We talk about the unique risks and rewards of building microgrids in emerging markets and why an unapologetic, yield-driven approach might be the best way to do real good in the world.

Heatmap’s Robinson Meyer joins me to unpack the sheer madness of the current news landscape. We discuss the energy implications of the Iran war, the vexed politics of permitting reform, Microsoft’s retreat from carbon dioxide removal, the lessons of the IRA, the lingering pastoralism of the environmental movement, and much more.

There are some circumstances — think disaster recovery zones or forward military bases — that cry out for portable, reliable, resilient power. I talk with Lauren Flanagan about Sesame Solar’s self-contained nanogrids, which use solar PV, batteries, and hydrogen storage to provide energy that works around the clock in remote or inclement environments.

Why do climate funders prefer cutting checks for electric vehicles over fighting for dense, transit-oriented housing? I talk to Ben Holland, who recently interviewed major climate foundations about their anti-urbanism bias, and returning guest Caroline Spears, who is working to pass climate-friendly housing policy at the state level. We discuss why obsessing over easily quantifiable emissions reductions is blinding the movement to massive, tractable wins, and why ignoring zoning reform is no longer an option for serious climate advocates.

With load growth projections all over the map and politicians zeroing in on high electricity prices, I take a step back in this audio essay to ask how we should build the grid in the face of massive uncertainty. The answer lies in modular, distributed technologies that strengthen the system regardless of whether the AI bubble eventually bursts.

In this "What the F is Happening" episode, I'm joined by Jane Flegal and Jesse Jenkins to perform a wake for the Inflation Reduction Act after the passage of the GOP's "Big Beautiful Bill." We sift through the wreckage to see what was saved versus what was buried, analyze the political forces that determined the outcome, and debate the core theory of change behind the IRA — and what lessons advocates should and shouldn't learn as they chart a path forward.

This week on "What the F is Happening" (periodic episodes in which we reluctantly discuss current events) we talk with Adrian Deveny, a former Senate aide who was in the trenches for the IRA's creation, about the House GOP's "Big Beautiful Bill." In its current form, it amounts to wholesale destruction of the last four years of climate policy. We ponder the bill's chances of becoming less catastrophic in the Senate amid the lack of meaningful pushback from the industries being kneecapped and the predictable folding of "moderate" Republican opposition.

I talk to Emily Pontecorvo (Heatmap) and Jeff St. John (Canary Media) to grapple with the latest Trump administration moves impacting climate and energy policy. We discuss the executive orders targeting state climate programs and propping up coal plants, the baffling new tariffs threatening energy supply chains, and the flurry of lawsuits challenging the administration's actions.

In this month's mailbag, I rave about my new EV (despite my lifelong aversion to cars), explain why our political system would never permit a "decarbonization Trump", wrestle with solar geoengineering, and share my thoughts on why home batteries are so much pricier than the ones rolling around in our cars.

In this episode, I speak with Canary Media journalists Clare Fieseler and Julian Spector to assess the early impacts of Trump's executive orders on clean energy. We explore what's actually happening with offshore wind projects, manufacturing investments, and tax credits from the Inflation Reduction Act.

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Text transcript:

David Roberts

Hello everyone. This is Volts for September 13, 2024, "A tool that enables solar first home electrification." I'm your host, David Roberts. Californians who want to decarbonize their homes face something of a conundrum. If they electrify their cars and appliances without getting rooftop solar, they could end up paying higher overall bills thanks to California's notoriously expensive electricity and cheap natural gas.

If they install rooftop solar before electrifying their cars and appliances, they could either undersize the system for their eventual needs or oversize it and over-produce and export solar power to the California grid. Thanks to California's recent NEM 3.0 decision on rooftop solar compensation, utilities pay much less for that exported rooftop solar power than they used to.

The most economical strategy for most homeowners is likely to be some mix of electrification, batteries, and rooftop solar. The more a California homeowner stores and consumes their own cheap rooftop solar power, the more value they get out of that solar and the lower their total bills. It is a complex calculation, though, that most homeowners are in no position to make. That's where the startup Balto Energy comes in. Founder James Quazi, a longtime energy modeler and entrepreneur, has built a tool that can use a home's utility bills to create a model of its consumption patterns, predict what they will be as appliances are electrified, and recommend the maximally economical approach.

It's part of a larger effort to help contractors and solar companies navigate a post-net-metering world. I'm excited to talk to Quazi about why his tool is needed and how it works, how it will empower contractors, and what California's present says about the future of clean energy policy in the rest of the country.

With no further ado, James Quazi, welcome to Volts. Thank you so much for coming.

James Quazi

Thank you for having me. That was a great intro.

David Roberts

Thanks. So, you know, I sort of went over it a little quickly in the intro there. But let's talk a little bit about this conundrum for Californians who are trying to decarbonize. So, just by background — I don't even know if everyone's been following the California rooftop solar wars, I kind of assume everybody has — but just by way of background, California recently basically issued a new policy on rooftop solar, and the long and short of it is that they're going to compensate homeowners much less. It used to be that basically you could get paid the retail rate for your excess solar, and now they're just going to pay much, much less than that.

On the surface, this really damages the economical case for solar for homeowners, they'll get compensated much less. This has resulted in a huge blow to the solar industry in California. There are solar companies shutting down, jobs being lost, etcetera, etcetera. So, talk a little bit about the conundrum and how you think about solving it.

James Quazi

Yeah, so about a year ago, the net energy metering policy in California changed from NEM 2.0 to NEM 3.0, now called Net Billing Tariff. The difference is, as you mentioned, that now customers get paid on a schedule. Each hour per year is a different rate. But generally, you can think of it as between like $0.05 and $0.08 for exported energy, while imported energy for me in San Diego is between $0.38 and $0.52 an hour. So it degrades the value proposition for residential solar for a homeowner. For contractors, it's also proven really difficult. So in the past, it was really easy to have rule of thumb sizing or heuristics, or if you took annual energy over the last twelve months and you designed a system that produced around that same amount of energy, it was generally going to be a good value proposition for the homeowner.

But now, what you need to understand is, like, how much of that solar production is actually coincident with the load on the house, because the export of energy is devalued.

David Roberts

Right. So, the economics now have shifted to make it so that, I mean, maybe this was true already, but more true now that the ideal thing for Californians with rooftop solar to do is to consume as much of the generated power as conceivably possible.

James Quazi

That's absolutely correct. So, if you can think of it as, and I'm sure your listeners are familiar with the terminology, like LCOE. So, the cost of solar, residential rooftop solar, is somewhere between, let's say, $0.10 and $0.12 a kilowatt-hour to produce, whereas the retail rate is much higher depending on the IOU that you're a part of. To the extent that you can consume cheap on-site electricity, you are hugely benefited as a customer.

David Roberts

Right. So then the question becomes, well, there's a bunch of different ways of approaching this question, but from this sort of like, if I'm trying to sell solar, right, I need a little bit of a new pitch, right? Because before, with full retail compensation, it's kind of a no-brainer, you could make a lot of money, but now you can make a lot less money. So this changes the value proposition for solar. So, explain exactly how the sort of calculation shifts.

James Quazi

Sure, I would actually reframe it a little bit in terms of, like, I believe so in the previous net metering paradigm. We often saw simple solar paybacks in the five to seven years. I believe that those paybacks are still available to homeowners, but it's just a different set of products and services than simply rooftop solar on the roof. So, I think our goal is to help retool the solar industries, to help look at a house as a whole, maybe converting a lot of the energy on site that we previously ignored, whether that's natural gas or gasoline, and then power that all with cheap onsite renewables, and that will drive the value proposition for that homeowner.

David Roberts

Right. It's still worthwhile getting solar, even maybe still a comparable payoff period, but a different approach. And basically, it's going to be a little bit more of a complicated approach. Right? Like, it's one thing just to stick solar on the roof. Like, how much energy do I use, let's stick that much solar on the roof. Pretty easy. Once you bring in the whole home, just the combinatorial, you know what I mean? Just the calculations get a lot more complicated.

James Quazi

For sure. So, like, I think in two respects. One, it's more complicated for the contractor to feel confident in the system that they're proposing and the financial outcome for the homeowner. And then two, from a homeowner's perspective, it's more complicated to understand and digest and comprehend a suite of services that might include solar and a battery and a heat pump and an EV, than it is simply like panels on a roof. Our goal at Balto Energy is to sort of do the modeling and ingest the complexity and then deliver it in a way that's consumable for both a contractor and a homeowner.

David Roberts

Right. So, talk briefly about what your tool does. What is the outcome supposed to be? What is it trying to accomplish?

James Quazi

Yeah, so our perspective on it is that oftentimes in the past, if you asked for a solar quote, you would get maybe one option, two options, or three options, max. Really, like, if I take my own house as an example, so I live in San Diego, I can fit up to 30 panels on the roof, which is constrained by roof geometry, area shading, what have you. So let's call it maybe 20 to 30 different flavors of solar systems that I could possibly engage in. If I layer on batteries, I could have 1, 2, 3, 4 batteries. And then EVs, one or two EVs, and heat pump or not heat pump, water heater or not water heater.

And our first step in the process is to ingest an address and then interval bill data. So, we need hourly electric reads and daily gas.

David Roberts

And that, just to be clear, this is the sort of raw information that's going into the model?

James Quazi

Yeah, that's correct.

David Roberts

It's utility bills. And this, these are available from the utility. There's no, it's not difficult to get this information.

James Quazi

Somewhat loaded question. It should be available. I just finished listening to your podcast on "Free the energy data." I have —

David Roberts

That's why I ask. I'm wondering how straightforward it is to get the raw data that you need.

James Quazi

I would say that having been in this industry for 20 years, it's much easier now than it has ever been before. That being the case, there are still hurdles. There's a lot of missing intervals. There's patchwork to be done. There are services that provide synthetic intervals. It's not as clean of a dataset as I would ideally like, but it's generally like the authorization, and there are a couple of third-party companies now that do it and are making it easier.

David Roberts

Is it notably easier in California than it is in other states? Different in California than in other states? Or is this just a utility by utility thing across the country?

James Quazi

Our focus is in California right now. So, I have the most depth and experience there for this problem. Even within California and the IOUs, it is utility by utility.

David Roberts

So are you restricted geographically where you can sell your product based on the utilities, whether you can get these to utility information or not?

James Quazi

Our position is that to accurately model a home's energy use and consumption profiles, you need two things. One is you need a physics-based model of the building, and then you need to be able to calibrate that with what is actually happening in the home. I've done a lot of energy modeling, auditing, that sort of thing. I think the one definitive thing that I've learned is that the best site observed data is actually bills. It will help you ferret out how people use their home, what their preferences are, and is actually the ground truth data.

So, our position as a company is because we want to be able to confidently project — like, let's say if I converted a gas furnace to a heat pump, and I want to know on an hourly basis, what is the energy input to that system. To do that accurately, I believe that you need interval data.

David Roberts

So you are in some sense beholden to utilities here or dependent on utilities to be forthcoming?

James Quazi

Yeah, I think, unfortunately. And then to "Free the energy data" podcast. Yes, this is true, and it is being in some ways held hostage, and that's not great for the industry. I would say that our success rate right now is like, it's significant enough that we see this as somewhat of a hurdle, but not a deal breaker.

David Roberts

Right, right. So, I mean, getting utility bills seems straightforward enough. You just ask the homeowner and they give them to you. But when you say a physics-based model of the house, you have to go do that in person. Can you construct that from publicly available data?

James Quazi

Yes, you can. We've done this in several iterations in the past. So, the background engine that does this is an NREL product called EnergyPlus. And it has, let's say, a full set of data requirements, which you can imagine has a lot of physical attributes of the specific house. And what we do ourselves and through partners, is comb, let's say, permit record databases and MLS listings. And we can get close enough with that set of information to build the first model. And then it's really, in comparing that model to the billing data, what's actually happening on an hourly basis, that allows us to calibrate it.

David Roberts

Interesting. So, you don't have to do a site visit to do any of this, really. You could theoretically do all of this modeling remotely?

James Quazi

Yep. Everything like roof geometry, shading, building modeling, tariff engines, all the things that are sort of the processes to get to an output, can be done remotely.

David Roberts

All right. And so, you put all this information into the model, and then what is the model supposed to do? And here's a question I had also: Am I the homeowner, interacting with this model in any way, or is the model a tool for contractors?

James Quazi

Our plan, at the very start, we're working with a set of contractors, and we're in Napa and Sonoma to start, most notably Northern Pacific. Our plan is to deliver a tool to a solar contractor that they can use to propose a wide range of solutions that a homeowner might want. I think that this will become a customer-facing tool or exploratory tool in the future, but we are definitely starting with solar contractors.

David Roberts

Interesting. Yeah, because one of the questions I had about this is just that I'm sure I'm not telling you anything as someone who's worked in energy for a long time, but just like, people are pretty lazy, and the way people make decisions about appliances and stuff like that is generally to ignore it until it breaks and then go to Home Depot. So, like this comprehensive, long-term, holistic planning, I'm just like, wondering, like, how many homeowners are really that committed?

James Quazi

So, let me give you an idea of, like, what the output of the tool is, then where I see this going. So, you know, back to my house, 30 panels, batteries, EV's, all the things. What we want to do is expand the solution set for all possible outcomes for that house. So, if I permutate those things, it ends up being a set of maybe like a couple hundred to a thousand different individual pathways. It could be 28 panels —

David Roberts

And these are like mixes of the number of panels, the number of batteries, what kind of appliances, that kind of thing.

James Quazi

That's absolutely correct. And then what we've created is sort of a decision-making framework that allows you to search that space for the thing that's right for you. At first, contextualized in one of three goal seeks. So the first one being a very standard solar approach, which is "Deliver me the best financial outcome." The second one, which we're seeing a sort of increasing adoption around, is like, "Yeah, I want a great financial outcome, but I also want to power this set of critical loads or my entire house through an outage of this duration. And I'm not cost-sensitive around that."

So, like, if I need to add a battery or two batteries and it provides that service, that's fine. And then the third one is a sort of immersion. Ten years ago, when I was in the solar industry, it was like there was a time when we thought we had to deliver day one savings to get adoption. And it turned out there was a segment of the population, mostly retirees or people that were about to retire, who, let's say, had a $150 utility bill. And they're like, "You know, saving money isn't as important to me as, you know, I experienced the grid cost is volatile, but always volatile in the upward direction.

And if you are going to put on the system and it has a 20-year lifespan, can you lock in this $150 for 20 years? And I don't experience any increase in costs." So those are starting points. I will say that I think there's more out there. So, there are a segment of customers that could be interested in just like the environmental outcome, and there's ways to calculate that based on grid dynamics. That's where we're starting, and I think we'll kind of learn our way into the solution.

David Roberts

Right, so you can tweak the model depending on what your goals are, depending on what your aims are. And I guess one of the questions I had about it is, like, in California at least, grid electricity is so expensive and natural gas is so cheap, and solar compensation is now so low, that it seems like the most economical outcome for homeowners is always going to be to electrify all your appliances and put a bunch of rooftop solar to power your appliances. It seems like that's always going to be the cheapest outcome, is it not? And that's also always going to be the most environmentally preferable outcome, right?

Because it's zero carbon. In other words, what if I, as a contractor, just came to you and said, "Look, I can do all these complicated calculations, but trust me, you want to electrify all your appliances and put rooftop solar on your roof. That's what it's going to end up showing you." Does it ever show otherwise?

James Quazi

So, if we were to implement generalized or rules of thumb, I think that would be a good one. What I have seen is there are time when your're roof constrained, so you might not have the roof capacity to power all the things, and then you'd want to make better decisions. To the extent that you have vast plains of south-facing, west-facing roof area, we want to make sure that we're installing the right amount of solar and batteries. So, I think that there's an optimization problem there. But, I think you're right in the sense that to the extent that you can self-consume a ton of energy that you generated on-site, that will be the best outcome for you.

David Roberts

So then, if I'm a homeowner and I run this model, or a contractor comes to me and runs this model, and the outcome of the model is the most economical approach for you, the homeowner, is to buy a heat pump, buy a heat pump water heater, buy an induction stove, et cetera, buy a bunch of batteries and put a bunch of rooftop solar on the roof. On the one hand, I might believe, I might find it perfectly plausible that that is the end state that will yield the lowest ongoing operating costs for my house. But on the other hand, that's a daunting upfront investment. Do you know what I mean?

In a sense, if I'm a homeowner and a contractor comes to me, he's like, "I'm selling solar. And by the way, I have this fancy tool that shows me that you also need to buy a bunch of other stuff from me." I guess I'm just a little suspicious.

James Quazi

I think the intent of the tool is to allow a homeowner to make the best decision for them. To the extent that the best decision is, in fact, a larger PV system, more batteries, maybe a heat pump, and all of those things in aggregate end up being expensive directionally , but have great payback. I think that hits on like sort of the second vein of Balto. So the first is like, how do we create a decision framework and compute engine to give you the scenarios and help you make a decision? Once you've made a decision —

David Roberts

Will the model also crank out a preferred order of operations for that? You know what I mean? Not just like an end state that would be best, but like, what steps in what order are economical?

James Quazi

This is getting back to the solar-led electrification vision for this. Our position is that solar and storage should lead always , and we should be building 20 or 25-year products for the future energy consumption. The tool is there to say, can we share a vision of the future and what applies and things you'll be engaged in, whether that's EVs or heat pumps or whatever. Once we have that, can we build 25-year renewable infrastructure on site to support those things over time? We think that there are interesting ways. And I'll touch on the financing in a little bit about how to transact this and make it consistent.

David Roberts

Yeah, I want to get to the financing in a minute, but before I leave this question. So, why always solar and batteries first? Or put it this way, why shouldn't I put a little bit of solar and batteries on, enough to power my current appliances? And then, you know, when I switch out my furnace for a heat pump, just stick a couple more solar panels on the roof. Why not do it incrementally like that?

James Quazi

Yes, I myself have a background, and then we've got some deep partnerships with contractors. They are not a fan of that approach for a number of reasons. One is if I take a five-kilowatt system and then I append a three-kilowatt system on later, that is not the cost of an eight-kilowatt system. It's much more costly.

David Roberts

Because just coming out to the site again and all—

James Quazi

Redesign, permitting. Yeah, all the things. And then separately, depending on the time lag between system one and system two, there are at times, compatibility issues with modules that make it more difficult. I think solar's gotten inexpensive enough where if you were going to engage in one of maybe the three big electrification projects, which would be EV, heat pump, heat pump water heater, I mean, you should be sizing for at bare minimum that. And I would argue for the whole thing if that's what you intend to do, on day one. And then if you're doing other things, let's say that have a more de minimis impact on your meter or your electrical consumption, like a stove, then maybe it's fine to wait.

But to the extent that, like, you're considering solar and storage and one of the other things, I think it makes a lot of sense to size appropriately for future loads.

David Roberts

So, you would say to any homeowner contemplating solar that the financially smartest thing to do is to size a system for your projected total need in the future, not your current need.

James Quazi

Yeah, no, I feel strongly that that is the case. I will take myself as an example again. I have an EV. I am considering a heat pump. I have a tankless hot water heater that is in a closet and is not easily replaceable with a heat pump water heater given form factor. But given those things, I did size the PV to the anticipated heat pump. Even if that doesn't happen on day one, it might happen on year one, three, five, or seven, right?

David Roberts

So, are you not then, while you have the solar that's oversized for your current needs, are you not sort of financially losing out in the interim, in the meantime?

James Quazi

So, I think that again, the export value for solar today directionally is much lower. So, there is some value, it's not a lot. I would categorize it as you're not optimizing the system today.

David Roberts

Suboptimal, then let's see.

James Quazi

But I think that what you're really doing is putting together the infrastructure to adopt more products in the future.

David Roberts

Right. A contractor comes to me as a homeowner, says, "Let's look at how much solar you will need once you've electrified your home," basically, and install that amount. Do you envision these same contractors who are trying to sell solar, selling these other things to homeowners as well? Sort of like offering, like moving beyond solar to offer kind of total home electrification packages type of things.

James Quazi

I think there's going to be a couple of different flavors, and we'll see what sorts out. In San Diego, one of the biggest residential installers actually has historically had a heat pump division of their company. That's probably not the norm. I do see a lot of solar installers — I mean, certainly, a solar installer is now installing storage by default. A lot of them install EV chargers. I've seen some interest in heat pump water heaters as the installation is quite a bit easier than heat pumps, HVAC. So, I think that we'll see some adoption of product over time.

I do believe that the heat pump is probably the one thing that is a set of expertise that is probably different than what solar providers have in-house. What they can do, and we anticipate doing, is a lot of pre-wiring work. It's taken as an industry axiom that HVAC products get replaced when they break. To the extent that that infrastructure, whether it's a 240 circuit to the existing furnace location, is not in place, it's very likely that the existing thing gets replaced with something very similar, and then we're locked into this pattern for 15 years.

So, we're very interested in, again, sizing appropriately, but then also doing some of the pre-work that allows these things to be adopted.

David Roberts

Trey, interesting. And so, from your perspective, you're going to put the tool in the hands of contractors, and then to some extent, the contractors are going to figure out exactly how best to use it and what kind of packages to offer and stuff like that. Is Balto out being a contractor, like running this, interacting with homeowners?

James Quazi

No, we are not. So, what we're doing is providing a toolset, which is computational tools, finance tools that allow existing contractors today to be more effective.

David Roberts

Got it. And so, talk about the financial side of this. So, I'm guessing I'm borderline illiterate when it comes to money issues. But I'm guessing that part of the promise of this is that if you can more accurately and reliably project future energy needs in a home, you're going to have an easier time financing the sort of oversized solar system that you want in anticipation of those loads. Is that right? Part of this is like giving confidence to financial institutions to finance these things, right?

James Quazi

Yeah, that's exactly right. So, I would say that the first step is having a shared vision of what the future of this home looks like. So, what are the appliances that are on the list and off the list? EVs, whatever the case is. And then, from past learnings at Solar City and Dandelion, really what you have to do is package it in a way that people can experience the savings at the same rate as they chunk off the capital cost of these projects. And then, in terms of energy savings over time and confidence, I think the goal there is, and we could think of it as if you were getting a loan.

One factor in the loan might be your debt-to-income ratio. How much debt do you have, and can you actually service this loan over time? And our position is, to the extent that these suite of products actually lowers your obligations to pay, so your utility bills, that should be factored into any financial product as well. Does that make sense?

David Roberts

Yeah. So, it's almost like future income increases, almost like.

James Quazi

Yeah, so if I had, like, if my obligations to pay a loan provider were $1,000 a month, just randomly, and I made x amount of income, if the obligation was less, if it was $500 a month, given all these energy savings, I would have a greater ability to pay back that loan, and that should be factored in.

David Roberts

Oh, I see, I see. So, is the idea here just for this tool you've created to give confidence to homeowners who are going to banks and stuff, or are you getting in the finance game at all?

James Quazi

Our intention is to provide the financing for it as well. I mean, like, I think any time we're trying to make the process as seamless as possible. So, it's sort of like a one-stop shop in terms of assessing what's right, what's the best fit for you in terms of these projects, and then packaging it in a way that — we're hoping it incentivizes people to do more sooner, but to the extent that they want to do things over time, it is also like a flexible facility that allows you to adopt a heat pump water heater in year three, if that's what you want.

David Roberts

So the contractors are the ones offering the homeowners this sort of financing package?

James Quazi

Yep, that's correct.

David Roberts

Right. And the contractors are able to do it because they have this information from your tool that gives them confidence?

James Quazi

Hand in glove.

David Roberts

Right. So, just having gone over all this, let's rewind and just imagine I'm a homeowner, and a contractor knocks on my door. What do you envision the contractor sort of like, what is the homeowner facing pitch from the contractor? Because there's a lot of complicated stuff going on behind the scenes for the contractor. What is the homeowner hearing? What is the pitch to the homeowner?

James Quazi

Yeah, we see it as a stepwise process. So, because our go-to market is through solar contractors, the first step is to say, if I were any other solar contractor, and you called me for a solar and potentially storage system, what I would have done is looked at your current electrical bills and size the system this way, and this is what... "You want a five kilowatt solar array and one battery, 110 kilowatt hour battery." The next step is to say, "Hey, listen, we're actually in that world. We're only looking at one of probably three silos of energy that you're using."

So, we're ignoring the natural gas side of the bill. We're ignoring everything that's happening at the pump. But, if we look at your energy spend holistically, here are a suite of options that are available to you. And this is the differential sort of financial outcome versus just a solar system, versus, like, resiliency versus bill stability kind of thing.

David Roberts

So, the idea here is, I go to the contractor and say, "Hey, I've been thinking about solar and battery," and the contractor says to me, "Well, hey, what about this larger package? You could have even bigger savings, and you could have resilience," and stuff like this. So, it's a little bit like an upsell for a contractor.

James Quazi

Yeah, I mean, I would think of it as like, being able to more holistically address energy spend. Like, that's our goal, is to say, "It's not just one flavor that we're dealing with. We're looking at the entire house and things, and we want the best solution for you."

David Roberts

It makes me wonder how long it will be before homeowners think that way, or if they ever will. Because homeowners just think of products as separate products. I don't know that a lot of homeowners, especially outside our world, even sort of think of the home as a system, right? With certain energetic inputs and outputs that should be dealt with as a holistic system. Like, that's just — I'm not even sure homeowners are at all accustomed to thinking that way.

James Quazi

I wonder if I myself am, like, blinded by sort of a friend group or whatever the case is. But I would say that, like, I don't know of a lot of people that aren't at least considering an EV, right? Even if they're not, like, actively join in. But it's like, "Hey, listen, this is actually a real option." I don't think that heat pumps are very far behind that curve. It's interesting, like when people, like historically, when people inquire about solar, we often times have thought of that as they want bill savings. But I am not entirely sure that that is the reason.

David Roberts

Do we know? Have we done surveys and polls? I'm so curious. I would also assume, just out of a sort of, I guess, a low, like a background degree of cynicism, that that's going to be the dominant motivation. But is it? Like, I don't feel confident about that at all.

James Quazi

Well, I don't either. My belief is that bill savings are part of a decision-making process, but probably very rarely the primary driver. And that is the thing. And even if you look at, like, the funnel conversion metrics of, like, the solar industry as a whole, it's just like, for every hundred people that inquire, single-digit people actually do the things. And our perspective is like, you know, they're getting stuck somewhere in the process. And it's oftentimes with questions that cannot be answered, and that's when they stall out. And that is our reason for expanding the set to everything that's possible in your home and letting you search that, because we think we'll figure out what are the motivations. I think that there's a strong cohort of people that are just anti-utility.

David Roberts

That's a piece of it. There's an environmental piece of it. There's a sort of independence, anti-utility piece of it. There's a vague mix. There's just social contagion, there's just peer pressure. You see it around you. It's the whole stew of motivations. I'd love to understand that better. So, I mean, it kind of seems like what you'd want is for your tool to be in the hands of everybody involved in any of those products. Do you know what I mean? Like, if I want an EV and I go to the car dealership, you know, it'd be cool if the car dealer could say to me, "Hey, you know, save even more money if you threw in a heat pump with this and a solar panel."

You know, like if, or the heat pump, people are like, "Hey, throw in an EV and solar panels." Like, it'd be nice if homeowners confronted the idea of total electrification everywhere they looked, right? I mean, that'd be ideal.

James Quazi

Yeah, 100%. I really think that's the vision, and that's where we're going. I think the entry point into a lot of this stuff will be varied. Like, it will be through an EV at the start, or a broken furnace that gets replaced by a heat pump or whatever the case is. I think our goal is to engage homeowners in a way where we have a persistent bill connection. I think that this is why that episode resonated so much with me. If we have an address and a persistent daily, hourly, monthly, whatever the case is, bill connection, you can drive insights over time to a homeowner at very meaningful times to intercept them.

Right now, I think this business, like solar in general, is very transactional. We think of it as like, we get leads in the top of the funnel, we set them at this rate, we convert them at this rate, we install them. It's a 30% gross margin, and then that's the end. Whereas, I don't believe that that's the way the products will be adopted and people will have to, I mean, internally we call it energy literacy. Like, how do I start to understand the problem and the solutions?

David Roberts

Right. So, in the same way, you sort of have a financial advisor, you could have like a home advisor, basically. A home energy advisor.

James Quazi

And we also think it's got to be low impact, so it can't be like, "Hey, you've got to go do this detailed sort of appliance audit or whatever the case is." So it's bills and address, and then, you know, this is a great state of change problem where utility rates are constantly changing, prices of products are changing, incentives are changing, and there's always a chance to message. I very viscerally feel this in the sense that, like, when I took four years off and then reengaged with the industry, I was like, "Wow, we like, crossed the threshold, like, the point of no return, where electrification now makes sense for everyone," and I had missed it, and this is the only thing I'd ever done.

David Roberts

Yeah, I mean, it's moving so quickly. I will say, though, one thing I hear from, you know, and there's been articles written about this. It's just like, it's all out there from people who have tried to do this total electrification thing. It's just incredibly difficult, just incredibly difficult to synchronize everything and arrange everything. And so, in that context, the idea of having a kind of home advisor where, like, your hot water heater breaks and you just call your home advisor, you figure out, like, what's the right approach here, what's the economical approach, where to look, what kind of thing to get?

A lot of people would very much welcome having one of those, I feel like.

James Quazi

And I think that this speaks to the general funnel conversion in the industry, but generally, a lead comes in, and then what we're trying to do is furiously convert them to a sale and install as quickly as possible, hopefully within 30 days, hopefully in one set. And I just don't believe that that's the way that people will consume products. It will be through a bunch of different experiences over time. And I think that's a meaningful difference. Like, you know, we're in such a rush to do all the things. Like, I'm in a rush to do all the things at once, but I think we have to also meet people where they are and, like, engage them in some way over time so they can make a decision, so they can make another decision.

David Roberts

I hope it changes because, honestly, like, you know, I've thought about solar. Ten years ago, we did one of those sort of, like, online audit things, and it was like, "No, you're too shaded." But I think it's just changed since then. Uh, just like, what's possible. But, like, I know that if I got a solar contractor and sat down at a table with that person, that they would just be sweaty and desperate, you know what I mean? To sell me just like it, exactly like I feel at the auto dealership, which is just like, "Ew," kind of uncomfortable, you know what I mean?

And rushed and don't feel like I have a full sense of all the pieces in play, and that I can't trust the person I'm talking to, to help me out, you know what I mean? I'm sort of, like, adversarial. I hate that whole model, you know what I mean? And just like, I would be, I don't know how representative I am, but I'd be inclined to spend more money if I just had a person who was like, had the big picture, had the model, had the data in hand, said, "You know, like whenever you're ready, this is the right first step."

Just like a better environment for homeowners to deal with these things and think about these things.

James Quazi

Yeah, no, I get it. I feel very similarly. I totally understand from the other perspective, like solar sales reps are expensive and they're hired to do one thing. I just don't know that it's the way that most people want to adopt the things.

David Roberts

Yeah, I can't believe that it's going to go to truly, truly mass penetration running on this model. It's going to have to evolve into something else. As we near the end here, let's pull the camera back a little bit and talk about the Agile Electrification project. My understanding basically is that the NEM 3.0 decision in California threw the solar contracting world into a bit of a tizzy. And there are efforts now to organize and figure out how to move forward and how to help contractors and what the right approach for contractors is in this new world.

So, tell us a little bit about what the Agile Electrification project is.

James Quazi

It is an industry-sponsored project that's hosted at the Design and Innovation Center at UCSD. The genesis of it was a lot of, quite honestly, hammering around NEM 3.0. It was like if you read Canary or any of these publications, a lot of it is doom and gloom. This industry is down 70%.

David Roberts

Yeah, there's a lot of "sky is falling" sentiment flying around.

James Quazi

Yeah, I think there have been. And you know, a lot of people are like, "Hey, listen, a lot of the bad actors are going to get flushed out with this," which I believe. I also believe a lot of some good actors will go out of business. So this is like a real issue. In times of turmoil, there's oftentimes opportunity and there's a group of people, contractors, manufacturers, investors, who have come together in this venue where sometimes it would be competitive or driven by business interests and they're coming together to solve problems for the industry. So right now it's a series of three projects to expand from there.

One is like energy modeling for the entire state of California. It's something that everyone needs. We want to do it and open source it. Another one that we touched on earlier is understanding customer motivations and understanding where they got stuck and how to unstick them, because our general sense is they want to save money. And I don't know if that's the primary motivation. And then the third one is around incentives and rebates and how to, like, it's a constantly evolving landscape and just staying on top of it is like a challenge and maybe a full-time job.

So, it's how to open-source that aspect of it, and how to qualify people for rebates and make sure that they're up to date, make sure they're not over-allocated, and deliver that information to the people on the ground that are actually installing the systems.

David Roberts

Right. And so, I'm stuck on this point. I just wanted to reiterate one more time. So, it's your belief that, because I think this sort of popular belief is that the NEM 3.0 decision has radically reduced homeowner incentives to get solar power, that it's just not as worth it anymore to get solar power. What you're saying is, with the right holistic approach, solar power is as valuable as ever and just as worth getting as ever. Is that your position?

James Quazi

That is my position, yes.

David Roberts

Do you think that that is widely, like solar contractors believe that, or are you having to sort of buck them up and convince them of that?

James Quazi

Well, I think we're in a stage right now where, I mean, we set up the simplest possible website, have done very little marketing. We've had directionally 75 to 100 contractors sign up and say they're interested. I believe that the contractors are looking for solutions. For sure. That is definitively true. I think they should believe this because it is true that there is a great value proposition in homeowners. I think the issue here, maybe the persistent issue that's undeniable, is that it's more complex. Describing the value proposition has become more complex. For sure. There's no way around that.

So, we're trying to find ways to — I mean, the back-end compute engine is great. The real challenge is finding ways to deliver that information to customers in a way that's actionable.

David Roberts

For sure. Final question then. A lot of this seems very Californian. The fears and the solutions and all of it seems sort of very customized to California's current circumstances. How applicable is all of this, do you think, outside of California? Would your model be helpful to a homeowner in, I don't know, like Arkansas?

James Quazi

Yeah. So, I would take it in two flavors. One is, I think there's the expectation, for good reason, that these policies in California will get exported to other states. So, it will become hugely relevant soon.

David Roberts

You mean rooftop solar compensation getting cut way back? It's already happened in a couple of other states. I mean, it's definitely a trend.

James Quazi

Yeah. So, that's true. NEM 3.0, or like the difference between export energy valuation and import and parity, does not have to be true for this general value proposition to hold true. So, to that extent, I would say that it's portable anywhere. We chose to start in California because it is by far the biggest solar market. It accounts for about 50% of solar and there was a demonstrated need. I will say that it's a very complex problem to solve and it has geographic sides to it. So, as you move location, utilities change and their tariffs change and the way that they charge and weather changes.

David Roberts

The information they make available.

James Quazi

Exactly, exactly. So, we've tactically started it in California for those reasons and constrained it. But there's no reason why this shouldn't be applicable to, like, any other place.

David Roberts

Right. It's sort of interesting. The big fear, or I guess the thing that solar people used to say to utilities when warning them away from NEM 3.0, is like, "Look, if you cut compensation too much, we're just going to self-consume and then install more electric appliances and then slowly wean ourselves off the grid and then not need the grid anymore. And then you're losing customers." The much-fabled death spiral. It seems like you're organizing to make that real, to make that happen.

James Quazi

I have some thoughts on this. I really do think, and I don't know the answer, but at some point down the road, we're going to have a fork. That fork will be either we find a way to use essentially distribution resources to cooperate, and I think that is the best societal outcome, or we find that we can't cooperate and everyone has to be their own, like a little micro picogrid, and that we have to build the infrastructure to do it. And, you know, I think that it's probably more likely that that's going to happen, which is unfortunate, but I do think that, as always, the affluent will serve themselves first and make good decisions and the rest of the costs will be pushed on to everyone else. And actually, in my heart of hearts, what I think will happen is we'll find a way to cooperate, but only after we've sort of incurred a huge amount of pain.

David Roberts

That sounds like the American approach that I know and love. We'll stumble through some disasters and then eventually get our act together.

James Quazi

Yeah, you end up doing the right thing when you're forced to. So, I think that that's the way I see it happening.

David Roberts

All right, well, cool. James, this is really interesting. I've been meaning to look into solar in California, how they're dealing with all this. And this is a really interesting approach. I mean, it's never funny. Until I sort of read about this, it never occurred to me, even though it's really obvious, that like, of course, electrifying your appliances and getting your battery and getting your solar panels are — that's like the same thing. You know what I mean? Like, that's all one. That's all one thing. Like I said, it's like a switch that kind of flips in your mind.

You're like, "Oh, like, it's a holistic system." It would be interesting to try to train homeowners to think that way more. Thank you so much, James. Thanks for taking the time.

James Quazi

Thank you. Appreciate it.

David Roberts

Thank you for listening to Volts. It takes a village to make this podcast work. Shout out, especially to my super producer, Kyle McDonald, who makes my guests and I sound smart every week. And it is all supported entirely by listeners like you. So, if you value conversations like this, please consider joining our community of paid subscribers at volts.wtf. Or, leaving a nice review or telling a friend about Volts, or all three. Thanks so much, and I'll see you next time.

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David Roberts

Contemplate, if you will, the California State University system. It is the largest public-university system in the country — by some accounts, the largest in the world — with more than a half-million students and some 55,000 faculty and staff, spread across a sprawling network of 23 campuses, from the top of the state to the bottom.

What if I told you that it was your job to decarbonize that entire system — the buildings, the energy infrastructure, the transportation, the food, the construction materials, all of it — and you had just over 20 years to do it. Would you panic? Possibly short circuit? I'm pretty sure I would.

As it happens, though, that is someone's job. Her name is Lindsey Rowell and she is the Chief of Energy, Sustainability, and Transportation at the Chancellor’s Office. She is on the hook for developing and implementing a plan to make the entire CSU system carbon neutral by 2045, with minimal use of offsets.

You might think, to accomplish something so vast, she would have a team of dozens and a budget of billions. But this is a public university system, so of course she doesn't — instead it's duct tape, baling wire, and ingenuity. I had a great time talking with her about how to approach this unwieldy project. I think you will find her pragmatism and good humor refreshing.

Every policy or regulation ultimately must be implemented by someone on the ground. This is what that looks like.

All right then. Lindsey Rowell, welcome to Volts. Thank you so much for coming.

Lindsey Rowell

Thank you so much for having me.

David Roberts

This is really interesting, a lot of really interesting stuff here — I have a million questions to get through to ask you. But for starters, why don't you just tell us a little bit about the California State University system, which is different than the University of California system. Just getting that right up front.

Lindsey Rowell

Let's get that out of the way. We are so different. Sure thing. So, California State University system, whether you realize it or not, you probably know it. We are the largest public university system in the country, by some metrics in the world, depending on who you ask on which day. So we have 23 campuses in the system spread across the state, from the very tippy top up in Humboldt and down to the very, very bottom of the state in San Diego. So we cover the entire space in California, and we've been educating students for about 150 years.

So we have really old universities. We also have a few satellite locations that offer specialty coursework in nursing or business. And we educate about half a million students with about 55,000 faculty and staff. So we are a huge, hug organization, and the schools, probably people are most familiar with without realizing that they are CSU schools, are the California Polytechnic University at San Luis Obispo — it's one that a lot of folks don't realize as part of our system. And we have three Cal Polys now, Humboldt is a Cal Poly and Cal Poly Pomona, and then, of course, San Diego State is one of our biggest.

San Diego, Fullerton, and Long Beach are three of our biggest institutions in Southern California. Reason?

David Roberts

Are they all four-year undergrad colleges, or are there some vocational stuff or community colleges?

Lindsey Rowell

So no community colleges. The community college system is a separate but friendly sister organization, complete state organization. And the CSU is a four-year institution and graduate program. So we have masters, and we do have educational doctorate programs at a few of the campuses. So four-plus years.

David Roberts

So 23 campuses?

Lindsey Rowell

Yes.

David Roberts

Across the state. That's a lot. So tell us, then, what laws you are like — what are your mandated goals here? And are they mandated by the state of California, or does CSU have its own separate goals, or are these all just sort of state goals that you're implementing?

Lindsey Rowell

So, without getting too boring into the legislative dynamic of the CSU, we're sort of a quasi-state agency. So what that usually means is that most regulatory and legislative mandates are applicable to us where we're mentioned specifically. Part of that is due to the fact that we are called out specifically in the government code. So we are our own authority having jurisdiction, if you want a technical term, and then we are self support — a portion of our work is self support through student tuition and endowments and so forth. So what that means is the CSU often sets more ambitious goals.

I cannot think of anything off the top of my head where we are not, at the very least, meeting California's goals. As California gets more robust in its challenges towards climate change, I think the gap between California requirements and CSU requirements is closing. But, yes, we align with the state in pretty much everything we do, either by intent or by statute.

David Roberts

The broad framework I've been thinking about this in know, I think a lot about policy and laws and politics and getting laws passed, but every law that passes, someone has to do it, right? Someone has to implement it. And so I've just been giving a lot of thought to, who are the people out on the front lines implementing these things? So part of why I'm asking is, what happens if you don't meet them. Are these self imposed goals where if you don't meet them, for whatever reason, you're just like, "Ah, we swung and missed. Bummer." Or is there some legal penalty if you don't reach them?

Like, what happens if you don't meet these goals?

Lindsey Rowell

That's a fun question because my first answer is the world ends. That's what happens. So government, as you know, is generally a carrot sort of organization, not a stick organization. I mean, punitive response to not meeting legislation is usually reserved for the private sector. And government agencies are, you know, sort of pressured to respond to these mandates, but without, you know, punitive expectations if they don't make them. That said, though, and I'm going to offer a little prediction — this is Lindsey Rowell's prediction, this is not the CSU's prediction, disclaimer — that because the intensity of the climate crisis just ever increases. And it's funny that we're doing this today, David, because I just saw all the news of the massive waves in hitting the California coastline.

I don't think I've ever seen that in my lifetime due to Pacific storms. And so what I predict is going to happen is there's going to be this sort of the incentive approach, right, where there's programs to support government agencies meeting these standards and goals, and then there'll start to be some hand slapping, maybe there will be some tightening of the purse strings with regard to funding that comes our way. And then I do think eventually there will be punitive damages in the form of carbon taxes or more direct funding cut offs.

David Roberts

Right. So sticks will show up eventually.

Lindsey Rowell

I think they've got to. I mean, I think at some point you can't rely on folks to do this work voluntarily. And I think governments often have to choose between the two pennies that they have to rub together, as one of my staff likes to say, which I think is a great metaphor.

David Roberts

Well, actually, wait, we have to rewind because we skipped what the goals actually are, right. CSU imposes its own goals, but what is the goal? I forgot to get that on record.

Lindsey Rowell

That's actually a great one. We should talk about that. So, the CSU, we have a new sustainability policy. And I say new. Actually, I'm thinking that it's not so new anymore. So we passed a new sustainability policy right after I came back to the CSU. So this is January of 2022. And the new sustainability policy, the overarching goal, is carbon neutrality by 2045.

David Roberts

And is that the same as the state?

Lindsey Rowell

Yes, that's the same goal as the state. Now, campuses have individual goals that might be more aggressive. Some are targeting as early as 2030, which is terrifying, but great to see that ambition out there. So that's the overarching goal. But within that, mostly what we've done is aligned with the AASHE STARS program, if you're not familiar. AASHE is the Association for the Advancement of Sustainability in Higher Education, and they have a tracking system, and it sort of captures everything with regard to sustainability across the board, in curriculum, in student basic needs, in diversity, equity, inclusion.

So we've sort of aligned our policy to tackle all of those overarching umbrella criteria and then the various credits underneath those. So we have a lot of goals, but the overarching one that is sort of the point to it all is this carbon neutrality by 2045 as a system.

David Roberts

And what's your job? You have to do that.

Lindsey Rowell

Explaining that to my mother for like 15 years, we just had Christmas: "What do you do for a living?" Basically, our role at the chancellor's office is to sort of advise and facilitate and implement these goals through policy, through programs. So we do a lot of program development and more recently, a lot more advocacy. So you were talking about your interest in policy and legislation. We have gotten very heavily involved on the state and federal legislative side, trying to express the need that the CSU has to inform the powers that be of the group of individuals that we serve, which is, generally speaking, disadvantaged communities, underrepresented minorities, first-generation college students.

So, as we sort of pursue all of this, our jobs kind of touch everything. We also do broad-scale procurement. We do direct access energy procurement for 14 of the campuses, meaning we buy energy on the wholesale market, then transmission and distribution to the utilities, and then bundled service for the rest of the campuses. So we have all of that. We do climate action planning for the campuses, water conservation, sustainable procurement, waste management, sustainable foods.

David Roberts

Yeah, I was going to say, I mean, this is the point of all this setup, is to get this in readers' minds, is that you are sitting in your office having to think about how to get 23 campuses, physical campuses across the state, to carbon neutrality by 2045.

Lindsey Rowell

Right.

David Roberts

And when I start thinking about that —

Lindsey Rowell

It gives you anxiety?

David Roberts

— it causes a pain behind my right eye. My hands start to shake. To me, that's just like a huge — maybe you've grown accustomed to it over time, but to me, it just seems like such a huge, sprawling thing. It kind of makes my brain short circuit.

Lindsey Rowell

It does that to us. We spend a lot of time sort of mentally advocating for each other, just going, "We can do this. We can do this. We got to just fly forward and it's eating the elephant just one bite at a time."

David Roberts

Yeah, no kidding. The first thing I wanted to ask is just, this seems like, among other things, it's going to take a lot of resources. It's going to take a lot of money to do this. So I was just like, what is your budget? Do you have the budget to achieve this?

Lindsey Rowell

To all legislators and decision-makers listening, we do not. So we have about a $7 billion deferred maintenance backlog.

David Roberts

Oh, goodness.

Lindsey Rowell

Yeah. And that's not, "woe is us", sort of — that's not that kind of a comment because the UC and the community colleges of the state at large, this is something we deal with. They're chronically underfunded organizations, as government organizations tend to be. I mean, when we talk about the numbers needed for this type of work, especially decarbonization, just electrification. So let's just talk about electrification plans. The numbers aren't even real numbers, David. They're not numbers that you and I — and we hear them. We hear Jeff Bezos has $65 trillion or whatever. We know that's a figure. But when someone says to you, "Oh, just to electrify your central plant, that serves a campus that occupies, I don't know, let's say, 4 million square feet, is going to cost you, for starters, $350 million for the engineering and the basic equipment change out."

So that doesn't include things like switching everything over to the proper coils that can take the lower temperature hot water to circulate to buildings. That doesn't include any of the offsetting renewable energy and all of that that's required to actually get to net zero. That's an insane number. So when you start to think about that across a whole campus, the number is probably closer to 500 million, a billion per campus and then 23 campuses.

David Roberts

Yeah, it adds right up.

Lindsey Rowell

Huge numbers. They're huge numbers.

David Roberts

Yeah. So I guess that's kind of where I want to start before getting into the details. Just like, how am I not to conclude that this is just impossible what they're asking you to do? The scale of what they're asking you to do with the money you have available to do it, how do you get around that basic —

Lindsey Rowell

Let me give you some of my —

David Roberts

Coping strategies?

Lindsey Rowell

I was going to say my coping strategies, the little things I hang on to as signs of progress. First of all, so for the CSU, we have managed to keep our energy use level over the past almost two decades, despite adding thousands and thousands of square feet. So we're good at energy efficiency, and we've managed to do it with no direct — we have no direct budget assigned for that kind of work. So this is usually nickel and diming an operational budget. This is capturing incentives through utility programs or federal grant programs.

So we do a lot of sort of little things where we chip away at the problem, and that actually is tremendously effective. One of our campuses, one of our energy managers, his name is Kenny Seeton, and I can take his name in vain because we're good friends and he's been around for as long as I have in the CSU. And one of the things he does so well is he'll do things like he'll have $1,000 left on his purchasing, his pro card, at the end of the month, and he'll buy a bunch of lamps or he'll buy a bunch of meters and he'll just keep them in his office until he's got 100 of them. And then he'll rally his team and be like "All right, guys, this weekend we're going to go through and we're going to install all of these."

He'll probably be the first campus to meet the net zero goals, and he's done it all without a dedicated energy budget.

David Roberts

Amazing.

Lindsey Rowell

So, the answer to your question is so fluid. I think the federal government is finally starting to put some real money behind these efforts.

David Roberts

Yeah, I was going to ask, like, IRA, the Inflation Reduction Act, actually just showering money down on everything. Are you going to be able to harvest some of that?

Lindsey Rowell

Yeah, we're really, really trying. So that's a big part of our advocacy program. We've kind of got a two-path, two-pronged approach. One is sort of short term, what can we capture from the Inflation Reduction Act? Which includes stuff that we're kind of already doing, centered around investment tax credits for renewable energy. It also includes the energy efficiency tax credits, things like that, that have traditionally not — we've had to capture through third-party developers. The difficulty, and this is the second prong, the sort of longer-term approach in making legislators understand what it's like to have this money on the ground is a couple of things.

One, we don't have the upfront cash for this type of work. So when a campus has to make a decision, when they say, "Oh, 40% of this or 60% even of this renewables project, the solar project that we want to do is going to come back to us." We still have to come up with the $7-$10 million upfront to do the project.

David Roberts

Because you get it back in tax —

Lindsey Rowell

Exactly.

David Roberts

Under taxes. Right.

Lindsey Rowell

And the problem that we have with that is that that money takes away from something else. And every time I sort of bring this question up with folks, let's just say "the folks," the question is always sort of like, "Well, why don't you have money?" The question is always like, "Well, why don't you just take some money from somewhere else?" It's like, no, you don't understand. That's like saying, "I have $0 in my checking account, write a check, and then —" it doesn't work like that.

David Roberts

Haven't some of the tax credits been made direct pay?

Lindsey Rowell

They are, but they're still reimbursable. And so the issue with that upfront capital means that for us, it's typically not that much more advantageous for us to own one of — a solar system is just the easiest example because power purchase agreements have been around for a million years. When campuses do that, the benefit they have, I mentioned our $7 billion deferred maintenance backlog. Well, what does that tell you? We don't have the money to maintain things. So the last thing we need is to own a sophisticated piece of equipment. That we may or may not have the staff who really knows how to manage it other than basic maintenance.

We're still going to have to contract out to switch out the inverters every 5-10 years, whatever, as they degrade. So we haven't found that particular element of the program as directly advantageous. I don't want to disparage the program because I think it's incredible that this amount of money and effort is getting put towards this work, but we need bigger chunks of money available to really invest.

David Roberts

Are you asking the state government? I assume you're up in Sacramento —

Lindsey Rowell

Yeah.

David Roberts

— nagging the relevant people.

Lindsey Rowell

We're working with legislators in Sacramento and in DC because a lot of this money — this amount of money has got to come from the federal level. Right. The state has, California has a lot of money —

David Roberts

But a lot of debt, too.

Lindsey Rowell

Has a lot of debt and it has a huge population that it has to serve and we need big federal dollars that are coming. And so just trying to help folks understand the actual set of circumstances when someone needs to cut a check —

David Roberts

That's what it comes down to.

Lindsey Rowell

Yeah, what it comes down to because we don't want to lose a lot of money through administrative processes. And the other thing with that that I think is really important to mention that I think does not get understood on the Hill, for example, is that when you have a rigorous process for these programs, the institutions that get left behind are the same institutions and the same people that get left behind for every other social economic climate program there is: It's the poor people with no resources. They don't have the money to contract for consultants to help them do these applications.

David Roberts

So the application process itself is a barrier.

Lindsey Rowell

Yeah, yeah. So there needs to be some streamlining, and I think the federal government has heard that. But, of course, when these statutes are written, they come with a lot of legal constraints that they have. So it's just tremendously complicated. It's not like someone on the Hill can wave a magic wand and just go "Oh, we'll just do it like this." Because they also are responsible for taxpayer dollars, and they better make sure that if they're going to put a trillion dollars towards something, it's going to get spent where they said it's going to get spent.

David Roberts

Right. Well, let's talk some nuts and bolts. So you said you have a $7 billion with a B deferred maintenance backlog. I'm wondering if there are things you can do that would serve the dual purpose of maintenance and decarbonization. In other words, could you try to dig out of that hole in a way that also serves your carbon goals?

Lindsey Rowell

Yes, 100%. That is actually our approach and has been forever. So we really look at opportunities to dovetail energy projects with maintenance projects for the simple reason that if you're going to cut into a hard lid and send some tradesperson up there crawling around, like, why do that twice?

David Roberts

Yeah, right.

Lindsey Rowell

Just the simple economics of that, of patching and painting and laying down equipment and bringing contractors out, is a lot cheaper to do one time than multiple times. One of the things we like to say in our unit is that all maintenance is energy efficiency. Right. You make pipes stop leaking, you make equipment more efficient, you change out fans that aren't working and dampers that are stuck and fix economizers, you're not only addressing your maintenance issues, but you are making things operate more efficiently. So we look at that approach, and luckily, this is an advantage that the CSU has with regard to how we spend our funding.

We have this operational budget, and we don't have to say this money is going specifically for this project. We make that designation ourselves in our office. So as long as we're capturing it completely for the purposes of the Department of Finance, the scope can be the scope. So there's a little bit of flexibility there to make sure that money is being spent where it's supposed to be spent.

David Roberts

And I'm going to guess, as I was thinking about this, 23 campuses getting to zero carbon. My intuition was that buildings must be the big ticket item in terms of the heating and cooling, the amount of infrastructure required to heat and cool them, the construction budget itself, the embedded. Because one thing I thought was important to mention, I forgot to mention it earlier, but we should put this in the context of your goals, is that when you talk about carbon neutrality, you're also talking about scope 3 emissions.

Lindsey Rowell

It's so scary.

David Roberts

Yeah, that's the most mind-blowing part to me, and I'm going to return to this later because for readers who are not familiar, scope 1 and 2 emissions are sort of the emissions from the energy that you're directly using. But scope 3 is the emissions sort of embedded in the materials you use, the energy that people use to transport themselves to the campus, like all sorts of sprawling stuff that goes well beyond the campuses. So we'll return to that later. But I'm assuming that. Am I right to say that buildings are sort of item one on the list here in terms of emissions?

Lindsey Rowell

Yeah, I think so. I mean, the estimates from the Department of Energy are all kind of — they shift a little bit, but generally we say between 30 and 40% of our emissions in the United States are attributable to buildings. Right.

David Roberts

You think that's true of your system, too?

Lindsey Rowell

Yeah, I would say campuses are easiest to understand if you think of them as little cities, right. There's big buildings with various operations. All in all, it's operating on a curve that is similar to a city, right? Like early morning to midday and some into late night. And then there's a variety of practices between labs or a library or an office, whatever that's happening in there. And then they're spread out. Right. There's geography and landscaping and agriculture. There's everything.

David Roberts

Food. We're going to get to that later, too. But let's talk buildings. You must have some really old. You've been around a century. You must have some big old, drafty buildings, I'm guessing.

Lindsey Rowell

Yeah, Chico and San Jose have been around a very long time. Sacramento State just celebrated its 75th birthday, so there's a few things that have gotten taken care of through sort of seismic updates. After the 1989 quake, a lot of buildings across, not just for the CSU, but across the state, really got retrofitted to accommodate the moving and shaking that is our lovely state out here on the west coast. And at that time, windows, building skins, rooftops were replaced. Insulation was making buildings more efficient as part of just a general practice of making them more safe.

But that said, there are still buildings from the 1980s and even the early 90s, when we were still kind of getting hip to a lot of these sort of efficiency practices. So, yeah, there's a lot of just general work to do. And then on top of that, the big thing, obviously, is the distribution of energy around the system.

David Roberts

Yeah. Can you even generalize across 23 campuses? How are they generally heated and cooled?

Lindsey Rowell

Yeah, I can actually generalize. So pretty much every campus, in fact, I can't think of one off the top of my head, has a core campus that's served by a central, like a district energy system.

David Roberts

Oh, all of them?

Lindsey Rowell

Yeah.

David Roberts

Oh, interesting.

Lindsey Rowell

Some of them have buildings that are sort of off the loop based on where they are on the campus property or who owns them, you know, if it was a public-private partnership or something like that. But, yeah, generally speaking, we have a district energy system at every campus. Some of them have co-generation. Although we had three campuses as part of the cap and trade program in California, we now are down to one. The other two have successfully decarbonized to get under the threshold for emissions to no longer need to be a part of that program. So that's really tremendous.

And then we did have our one campus, Channel Islands, had a large 25 megawatt co-generation system that was partnered with the southern California energy utility for grid stability and parity. So that's generally the situation. Some campuses have really sophisticated tunnel systems, which are awesome because it makes maintenance and protection systems really great. But of course —

David Roberts

Oh, it just like shelters the infrastructure, basically.

Lindsey Rowell

It does. And it means everything runs underground where temperatures stay more stable, access.

David Roberts

So what are these district heating systems running on? You said there were three that were co-generation. What are the rest of them? Are most of them natural gas?

Lindsey Rowell

Natural gas boilers, yeah.

David Roberts

Are there any geothermal?

Lindsey Rowell

No, we have no geothermal. In fact, didn't think that geothermal would really be a feasible option for us, but have recently learned that some of the newer geothermal technology, as it relates to ocean chilling could really maybe be something we use.

David Roberts

Yes, I'm familiar and excited about those developments.

Lindsey Rowell

This is the best thing about this job. Right. There's always something changing in the technology that you get to learn.

David Roberts

So you have lots of natural gas based district heating systems. What do you do to a natural gas based district heating system to decarbonize it? Do you just switch out the natural gas boiler for what, a big heat pump? What do you do?

Lindsey Rowell

Yeah. So that's where sort of the individual campus dynamic is going to become a bigger factor depending on how far they're moving heating — so our chilling is almost all electric. Most campuses have electric chilling, and that can be offset with renewables, which is fantastic. And then a lot of campuses have and or are looking at thermal energy storage, allowing them to benefit from that. So that's been really exciting. I love that work, and it's really just a good old fashioned energy project that's really solid.

David Roberts

Can I ask what kind of thermal storage people are looking at?

Lindsey Rowell

Campuses have like a two phase ice system. Most of them have chilled water.

David Roberts

Interesting.

Lindsey Rowell

Like water tanks, which works fantastic for 99% of the state. Humboldt is our little outlier up there — the place that never gets warm.

David Roberts

Right, the non-warm California campus.

Lindsey Rowell

Yeah, the one non-warm or San Francisco, I guess, could be —

David Roberts

Yeah, I guess this should have occurred to me earlier, but I guess heating itself is not a big issue. Mostly you're dealing with air conditioning.

Lindsey Rowell

Right. So, the boiler replacement is mostly — so, you know, our temperate climate gives us a couple of benefits. One, the boilers that are out there on the market can serve our purposes if we can figure out a way to lower temperature and circulation without causing major issues with our distribution system, like leaking Victaulics and other valves in the system. And also if we have coils throughout our units, our air handlers and units throughout buildings that can function on that lower temperature hot water. If they can't, then we're talking about — there's major engineering you're having to take out, replace a natural gas boiler with electric heating boiler.

Can't get the water up to circulating at 185 degrees. It's circulating at 145, maybe 155. And you've got coils in your units that maybe are only thresholded at 165. All of that stuff has to get replaced.

David Roberts

So if you switch out the boiler, there's a bunch of other reengineering —

Lindsey Rowell

There can be. And for most of our campuses, it seems like that all of those secondary effects are needed, although I don't know, if it keeps getting warmer, maybe we won't need to heat at all.

David Roberts

Do all of your campuses have, like, energy people, managers, somebody whose job it is to?

Lindsey Rowell

Yes, aside from vacancies that occur through attrition and things like that, part of our requirement is that every campus have an energy manager. They do a tremendous amount of work on this. But like the central plant, the district heating question with the boilers, a lot of these campuses, their domestic hot water is tied to their district hot water, their heating hot water. So for them to just — they can't just turn off their boilers in the summer. For example, one of our mechanical review board members loves to — he's like, "Why are they running the boilers in the summer?

It's like, "Well, you still got to have hot water in your labs and your lavatories." So sort of this, like, well, I guess I would say lack of foresight, but it's not really that. Right? Lack of crystal ball, when years ago, these systems were created.

David Roberts

So if you can get the systems onto electricity, basically, you can call that carbon neutral by buying renewable energy certificates, basically, by vouchsafing that the electricity is clean. Is that the idea?

Lindsey Rowell

Not allowed in the CSU.

David Roberts

Oh, really? You guys are really playing on the hard setting, then.

Lindsey Rowell

That's not true. It's not not allowed in the CSU. It's not allowed by Lindsey. So if someone else comes along and says, "You're stupid and this is impractical", they can —

David Roberts

"Good God, woman, make things easier for yourself for once."

Lindsey Rowell

I know this is a deep, dark hole that we've dug ourselves, but my feeling about offsetting is that our points of pride in the CSU are that the community that we serve stays here. So our students tend to live and work in the communities where they go to school. One in ten workers in California has a CSU degree. I feel that buying credits is a misrepresentation of our obligation to the people that we serve. And so, our working policy now, within my group and with the support of my team, our team, is that we will not purchase offsets until we get to that point where we just, like, can't.

We don't have the money, or that we're at that last 5% or 10% to get over the hump. And realistically, we'd like to keep it in the family. Right. Where we have a CSU fence line, and we go, okay, if we're buying offsets, it's through a campus over generating, and we're accounting for it at another campus that can't.

David Roberts

We might be talking about two different things. Two things to keep distinct. One is carbon offsets.

Lindsey Rowell

Sure. And one is renewable energy credits, and...

David Roberts

One is renewable energy credits. Offsets. I can see absolutely the case for not relying on offsets. I get. But for your electricity, if you don't rely on renewable energy credits, you are having to self generate in real time the electricity you're using —

Lindsey Rowell

That is what we're angling for.

David Roberts

Which is super hard.

Lindsey Rowell

Yeah, it is super hard. I'm kind of conflating the two. Because —

David Roberts

You don't want to do either.

Lindsey Rowell

Yeah, they're interchangeable in my mind. So really, what we want to see happen is that we exhaust all opportunity to generate on our campuses the offset that we need and own those credits. Now, the fact I was born at night but not last night, I know that that is a huge undertaking.

David Roberts

Yeah, as part of this, you must be trying to install quite a bit of —

Lindsey Rowell

We are.

David Roberts

Yeah. Renewable energy on your campuses.

Lindsey Rowell

We are. Tremendous amounts of renewable. And also looking at, like I said, maybe an opportunity for geothermal, like large scale geothermal that a single campus wouldn't be able to use. But we could sort of account for that again in the family.

David Roberts

Right. Sort of sell it to another campus, more or less, kind of. I mean, surely if you have 23 campuses in California, some of them are sitting on top of some geothermal.

Lindsey Rowell

Oh, for sure. Especially up north, and then it looks like down south and in the Imperial Valley, there's possibly some opportunities, and we're starting to investigate that as how do we do a partnership on that in a way to afford it.

David Roberts

Would be nice to get like a real power plant sized power plant.

Lindsey Rowell

Oh, it'd be so cool. If anyone out there wants to write me a check...

David Roberts

Yeah. Because everything else is just like little bits here and there. So I guess you're like covering all your roofs with solar panels. Parking...

Lindsey Rowell

Yeah, mostly parking. Roofs are tricky just because of warranties and access and that kind of thing, and the age of our buildings. But we're really trying to do this to where the CSU is in and of itself, carbon neutral and net zero. And we've set the goal that way, knowing that getting to 0% is like, that's not a real thing, right? Functional zero. And knowing that we're probably going to hit a wall at some point where it's like we're constrained by finances, we're constrained by property, we're constrained —

David Roberts

Well, yeah, land.

Lindsey Rowell

Yeah. There's a whole bunch of potential hurdles there that might just put up a brick wall that we can't get through.

David Roberts

Could you theoretically own a big solar field that's not on one of your campuses, like somewhere else?

Lindsey Rowell

I mean, some of the campuses. Cal Poly SLO has actually done that through the RES-BCT program for the PG&E. They've put in a large — you know, now, for the purposes of this discussion, don't quote me, because I can't remember if the campus actually owns the property or if it's a lease agreement, but it's off the campus proper. They've got a large system that they installed to serve, like their equine center and their ag center that are off the campus grid, basically.

David Roberts

Is there a campus that is generating as much electricity as it is using yet?

Lindsey Rowell

There's a couple campuses that are close. So Long beach is actually pretty close. I think Fullerton is pretty close. Sac State is going to be pretty close. Several of the campuses are under contract for solar and microgrid systems that are going to get them close, at the very least, going to position themselves for meeting those longer term goals.

David Roberts

Yeah, I do see now why a geothermal power plant would really come in.

Lindsey Rowell

That'd be cool. It'd come in super handy.

David Roberts

Yeah. Speaking of microgrids, I love me some microgrids. And campuses are sort of kind of the iconic place to do it. You have control of the whole system. So do you have microgrids, islandable microgrids set up anywhere yet?

Lindsey Rowell

So, we don't have islandable microgrids. The regulatory environment in California to actually come off grid is extremely, I'll say, complicated. You could do a whole show on that, David. Actually, it would be really interesting to hear how people characterize that situation, but we're really approaching it right now through the lens of resiliency, because since the paradise fire in northern California in 2017, the public safety shut offs that the utilities are allowed to enact to protect the grid during inclement weather has affected campuses pretty severely. They've lost power for five, six, seven days.

David Roberts

Yeah. And it occurs to me that you must have some labs and stuff where a blackout is a big deal.

Lindsey Rowell

Yes, that's very true. We have labs, we have vivariums, we have critical ops. We have archives, all kinds of stuff that needs to be protected. And obviously, we have generators, but no one designs a generator to run for ten days. So even on e-circuits, it's still more than we're capable of supporting over a long period of time. So, we're looking at a lot of this as an opportunity to reconfigure our electrical system so that only the appropriate operations are served by emergency circuits, and that we have battery backup that offers some longer term, and then also, at least in the interim, pair it with our — some campuses have fuel cells. All of them have generators. So use that microgrid operation for a resiliency purpose. Not so much for islanding right now.

David Roberts

So is there a campus currently where if the grid goes down for one of these planned outages, it can stay on? Is that, like, up and running anywhere, or is this just a gleam in your eye?

Lindsey Rowell

Well, I guess I should ask a clarifying question. If you mean are there any campuses that could continue business as usual?

David Roberts

Well. How about continue some modified, reduced version of business as usual. So their vivariums, right, and labs can stay going, let's say.

Lindsey Rowell

Yeah. So every campus can do that to a degree. Right. So every campus has enough backup. But I wouldn't say — I'm going to infer what you're asking and basically say, could you go to minimal operations where some classes or some research?

David Roberts

Yeah, yeah, yeah.

Lindsey Rowell

Basically the answer to that is "no." There's enough backup generation to allow enough time so that a faculty member, for example, could make alternative arrangements for their critters that they're researching somewhere or something like that. Or make a note on their data that there was a disruption. There's enough time to kind of get your affairs in order.

David Roberts

Right.

Lindsey Rowell

Okay, we're going minimal ops, and this one room is going to be available. Ideally, we'd have something like that, although I would say, interestingly, the pandemic has changed that. Right. Our ability to pivot to an online pedagogy has, like, wow, suddenly we can do that. So a very few classes that can't just go, "okay, we're going to catch up on labs when we get through this outage in a few days."

David Roberts

So, beefing that up, it seems to me, was mostly about installing more solar and more batteries. Are you just going nuts on storage?

Lindsey Rowell

We are. We're really trying. It's difficult because, again, we're doing that through third party power purchase agreements. But we have a few campuses, actually, that are under contract right now for solar and battery. So kind of the building blocks of their microgrids. And then we'll look towards expanding into microgrid controllers and all of the secondary electrical work. Actually, we have quite a few. Several of the Sonoma State has broken ground on theirs. Cal Poly Humboldt, Cal State San Marcos, they're all moving forward with their microgrid plans, and that's just to name a few.

David Roberts

Final electricity/building question is, since you have these semi self-contained campuses, can they serve as virtual power plants? Can they sell grid services? Is that even up and running yet in California? Is that doable yet, or is that something you have on the horizon?

Lindsey Rowell

I'm so glad you asked that question. I'm super duper, duper excited about virtual power planting.

David Roberts

Me too. I need to do an episode just on them.

Lindsey Rowell

Yeah, yeah, you really should, because I'm just learning about this — yes. So the answer to your question is yes, no, yes, yes. It's not happening yet in California. There's definitely some regulatory hurdles here. There used to be sort of virtual net metering and aggregated net metering programs in place with the utilities that have gone away over the time or morphed into different things and so there's some regulatory issues to deal with there. But my team and I have really been talking about the coordination between our microgrids and our thermal energy storage as a real opportunity to virtual power plant among our campuses and also —

David Roberts

Demand shift.

Lindsey Rowell

Yeah, demand shift. And also as an opportunity as we're talking about these sort of what do we do with the campuses that can't put renewable energy right. Can we help support each other in this sort of regional way? So, we're just in our infancy sort of investigating this, but so excited about the possibilities.

David Roberts

Yeah, I wonder and maybe things aren't far enough along for you to know this, but I don't have any sense of what the scale could be on that. Would you imagine being compensated for grid services in your various campuses being a real substantial income stream? Or is this more like a frill? Do you know what I mean? Like how are you thinking about it?

Lindsey Rowell

So my first response to that is I don't know, but my second response is based on California's history with how it operates within the confines of utility regulation and with our new NEM 3.0 requirements, I cannot see this being an income stream. That's me and my crystal ball. I would be very surprised, but I would say maybe the benefits would be more like "grid stability is good for everybody" kind of a thing.

David Roberts

Yeah. VPPs are great just for their —

Lindsey Rowell

For their own merits. Right. Just the purpose.

David Roberts

So one final question about buildings, which is just something that occurred to me as I was thinking about this, is, are you out building new anything, new campuses or new —? Because I would imagine building new stuff that works for these goals is a lot easier than retrofitting stuff. But are you even doing any new stuff? And is sort of tightening requirements for new stuff a big piece of this?

Lindsey Rowell

Yeah, I think we're in an interesting time for that. I mean, we are building new buildings in alignment with our master plans for campuses. Post-COVID, though, I think there's a need to analyze the asset and real estate needs. Are they the same as they were? What is the next generation going to expect with regard to their on campus experience versus their online experience? And then, you know, looking at population growth in California, which has slowed, do we look at building new institutions to serve communities that know rural or have a long commute to a four year institution?

Or does that not make much sense? Do we do satellites or do we do remote learning centers? So I think there is a lot of uncertainty there. Not in a bad way, but just in a "Jeez, everybody, this was a global pandemic. What a weird thing to have happened. And now it's brought up all these questions." And then I think the other thing is, there's a very real understanding among our capital team, of which my group is a part, that the most sustainable building is the building that's already built.

David Roberts

Yeah.

Lindsey Rowell

So all of the folks that I work with, my peers in the executive leadership sort of group, are very aware of this. And instead of being like, well, we're going to just do business as usual. Everybody's really cohesively talking about, do we need to rethink our strategy? Do we need to start thinking about what buildings can be saved? How can we reduce waste?

David Roberts

Right. Infill, versus sprawl.

Lindsey Rowell

Yes, that risk is — the liability that we have. The further out we spread our boundaries in terms of our assets is real. Right. This is all stuff, space that has to be insured. And then we've got space that if it's not serving its function anymore, do we really need to demo it or should it be retrofitted? So, I think that's a conversation we're having, and I think we're probably going to be seeing maybe a shift in how we evaluate whether a new building needs to be constructed versus an old building being rehabbed.

David Roberts

Interesting. Let's talk a little bit about scope 3.

Lindsey Rowell

No.

David Roberts

Honestly, for any institution, scope 3 is a little bit overwhelming and baffling. But for something like campuses, like you say, they are little cities. So, scope 3 involves a lot. The first question is just, do you feel like you have reliable tools to measure and assess scope 3 emissions? Because the whole field around scope 3 emissions seems a little bit nascent to me. What's your take on that?

Lindsey Rowell

Yeah, I was just going to say no, I don't feel like we have the tools and go farther to say that anyone that tells you that they do is lying.

David Roberts

People are working on them, allegedly.

Lindsey Rowell

The colleagues, the folks that I work with, we all sit around the tables going, "What are you guys doing with scope 3? What are you doing with scope — ?" Or somebody called it scope 4, because we've got scope 3, like transportation, and scope 4 is the embodied carbon piece, or scope 3a, whatever. And everybody is just going "Where do you even start?"

David Roberts

Where do you begin?

Lindsey Rowell

It's so massive. The transportation piece is getting a little bit better configured. Although I think the definition of what is our responsibility and what is other people's responsibility and how do we avoid double counting or not counting is still a question. But we're trying to do better on sort of our programmatic elements of that related to alternative transportation and fuels and that kind of thing.

David Roberts

Well, I mean, if any student at any one of your 23 campuses drives their car to the campus —

Lindsey Rowell

That's us.

David Roberts

Boom, you've got some scope 3 emissions there. So you have to theoretically get all however many thousand students. You said some mind-boggling number. You have to get them all to the campuses without driving. That alone is like, how on earth do you do that? I mean, I know you can do some carpool programs, but you don't control public transit. You don't control zoning decisions —

Lindsey Rowell

Boundary responsibility. Well, it's the same thing with embodied carbon. Right? Like, I don't control how lumber is milled and where it comes from.

David Roberts

This was my other question, which is, even if you could measure the amount of embodied carbon coming in through building materials, say, that doesn't necessarily mean that there's a source of carbon-free building materials even available to you.

Lindsey Rowell

So where we are with this now, which is to say, not far. So there are some firms, like, working on sort of software tools to help start tracking this. The state of California does require environmentally preferable purchasing or reporting on construction materials and things like that. So we do do that. The cynic in me is like, is this even close to, like, is this even accurate enough to merit tracking?

David Roberts

Right, right.

Lindsey Rowell

But the optimist in me is like, okay, well, we got to start somewhere. So tracking what you're using is a place to start, and then at least you can put rules of thumb to it. Right? Like, how many pounds of steel do we use? How many pounds of lumber, how many pounds of concrete? And as a rule, regardless of where it comes from, what is the carbon impact of those materials, even though the specifics of where they come from and how they're milled and all that stuff has an impact, it at least gives you some framework to start from, because where it is right now is just like pulling numbers out of the damn sky. Just don't know.

David Roberts

There's a lot of dreamed up numbers in that general vicinity.

Lindsey Rowell

I mean, for organizations like mine, or ours, not mine, right.

David Roberts

Do you even have the staff? Do you have the staff to do this?

Lindsey Rowell

Exactly. Like, the administrative and transactional costs associated with tracking that information is — I couldn't even begin to. You could have someone in every unit for every project doing only that. Only that.

David Roberts

Yeah. Really seems like a place where you really badly need better tools, like standardized, off the shelf.

Lindsey Rowell

Very, very much. I feel like this is a supply chain matter, right, ideally. But because it doesn't work to rely — we have to try and take responsibility on our own. We can't force industry to make these adjustments.

David Roberts

It does seem like, though, especially in scope 3, you are, to some unavoidable degree, dependent on developments that you have no control over. Right. Like what the state does or even what the federal government does.

Lindsey Rowell

Right, so at this point, it's more about just understanding what we use. When we feel like we can track that with some degree of accuracy, we'll feel like we've made a tremendous success. We are including scope 3 as part of our carbon reduction.

David Roberts

That's crazy; that's just crazy.

Lindsey Rowell

I'm going to retire before all this.

David Roberts

In your mind's eye, when 2045 rolls around and CSU is carbon neutral, how are people getting to school? What does the zero carbon, just the transport alone, just the transport angle alone, what would it look like for that to be truly carbon free? No more gas cars, I guess. No more gas cars on the street.

Lindsey Rowell

We have the best chance of it in California, right. Like we're moving away from petrol, as it were, in California. So my thought is that if things were to go my way, it'd be a combination of things. Obviously, where — we have good public transit, we have good programs for students, shuttle systems and stuff that aren't necessarily related to the community programs, regional transit and things like that, that we have a little bit more control over, and then electric vehicles and mobility devices which have their own issues. I mean, we've got concerns related to lithium ions, and everything is a rabbit hole but —

David Roberts

Once you scope 3 it, all of a sudden, EVs are not as uncomplicated as they seem.

Lindsey Rowell

Exactly. And I think the other combination with that is, do we have students coming to school when they don't need to be?

David Roberts

Right.

Lindsey Rowell

Like, are students coming to school for classes where they really don't need to be? Could you be doing this class once a week instead of three times a week, and the rest of the class is held online? I don't know the answer to that. I don't know that that is the answer. But I think all of those avenues need to be investigated so that we understand what students need, what they want, and how we can meet these goals while giving them both of those things. The college experience that they want, and the education they need. Think about how much reduction that would be to just have someone for one class going, well, I only have to come to campus one day a week.

David Roberts

Yeah. That's an easy lever to pull. For sure.

Lindsey Rowell

Yeah, for sure.

David Roberts

One can imagine ways of decarbonizing that do not serve resilience, that leave campuses sort of brittle or vulnerable. Talk a little bit about just the effects you've seen of climate and severe weather on your campuses and how you're thinking about resilience as part of decarbonization.

Lindsey Rowell

Well, so this is such a hard question because we just had fairly recently in California a hurriquake. Have you heard of this?

David Roberts

No.

Lindsey Rowell

New weather phenomenon.

David Roberts

Oh, good. Have fun.

Lindsey Rowell

Our campus, San Bernardino, out in the inland empire, was hit by torrential rains from a hurricane. At the same time, there was an inland earthquake — and they had like four inches of water on their gym. And they're out in what we would refer to as kind of the low desert. They're not in a place where you think of flooding exactly. You definitely don't think of being impacted by a hurricane. And then they also suffer the wildfires from sweeping through the valley there. Poor campus. We use them as an example. And they're such good sports about it, but so there's that.

And then, like I said, we had a couple of days ago, now I've got phone calls out to our campuses in San Jose to see if their Moss Landing Institute was impacted by these waves coming in off the coast. They've got research right up butted up against the ocean where they impacted by that? So wildfires and public safety shut offs are the main impacts. Right. And then, of course, drought across California because this is a desert state, most of it. And we go through decade long periods of drought. One of the things we're trying to do is we've developed a resilient infrastructure guidelines model.

So it's a tool to allow campuses, when they're planning projects and capital construction to think about their designs in terms of the resiliency hazards, potential climate hazards and resiliency impacts their campus might face as a result of where they are geographically, their age, the condition of their infrastructure, so on and so forth, and then use that for those projects, but then also for their utility master planning efforts and their critical infrastructure reports to kind of help prioritize how they should be looking at their infrastructure upgrades. Because if you're a campus that has been experiencing drought, you're not necessarily going to think about prioritizing your stormwater plan, stormwater infrastructure. But if you don't and you find out that three other institutions in your immediate area have had massive millions and millions and millions of dollars worth of damage and shutdown resulting from water intrusion because they didn't have a good stormwater infrastructure. Maybe you need to be thinking about that a little bit more.

That needs to be bumped up the priority list, perhaps more. So that's one of the tools we're using. It's actually pretty sophisticated and we've been working on it for a couple of years, and then it's intended to stay kind of a living document because the climate is changing.

David Roberts

Indeed.

Lindsey Rowell

Universities are changing.

David Roberts

Yeah, that's truly a moving target. I've burned up all my time, so I don't have time to talk about food. But obviously I feel like I should at least mention it because among all the many other things that you have to worry about, once you're talking about decarbonization and scope 3, and everything else is food incoming food service, food waste. Could you give us like a one or two line how you're thinking about food, answer?

Lindsey Rowell

I can summarize food by saying it is almost as difficult as scope 3.

David Roberts

Interesting.

Lindsey Rowell

Yeah, we should talk about this at another time. We can get into some of this, David, but it is tremendously difficult. It's another thing that crosses those boundary lines. And then the one thing that I think people in your audience definitely will not know is that the way most, this is true of most universities, not just ours, is that the way food works on their campuses is through auxiliary services, meaning they have contracts for food providers through their 501(c)(3).

David Roberts

Right. So once again, you're dependent on, you need someone to provide carbon free food service or else what can you do?

Lindsey Rowell

Right, right. And then you've got all the safety policies. Right. Because we spend a lot of time on the food waste side, too, going, okay, we have students who are food insecure and you're going to throw away all this food from some box lunch thing, can we give it away? And you got to go through risk management for all that. Like everything else, it's just a rabbit hole. And that is. Oh, man, that is a tough one.

David Roberts

Interesting. Yeah, it's something that I think my sort of like, energy nerd world crowd doesn't think about a ton. Same with kind of agriculture.

Lindsey Rowell

Yeah. Interesting to see how they cross.

David Roberts

Final question here is, just as I said earlier, it is sort of, I don't know, like amusing and poignant to me to imagine you sitting in your office thinking about basically how to transform a decent chunk of the state in the next few years. So you've been given this mandate, which, you know, thanks a lot. So what when you think about California politicians now and regulators, what do they not get? And if you had to sort of prioritize a couple of things that you would ask from them besides money, like give me some money, obviously. But in terms of law or regulatory support, are there a couple of top line items that would make your life easier?

Lindsey Rowell

Yeah, I think the government really needs to facilitate partnerships a bit more. I don't know that any one organization like ours, or even the UC, which is obviously a huge and well recognized, world renowned organization, has an easy time developing relationships with nonprofits, with commercial interests, supply chain groups, and those partnerships are imperative. And I think the thing that frustrates me with the money question is, the money is out there. We know it exists; like, the actual physical pieces of paper are available. And I tend to think that there's probably a lot more interest among the community, be it business, be it private philanthropy, anywhere, that they would like to know how they can help, how they can be a part of this.

And I don't feel like the government does anything to try and facilitate those partnerships. And so we're all sort of feeling around in the dark in this room, trying to find who we are and then also not waste each other's time. Right. Do I have what you want? Do you have what I want? There is some organization that could happen here that I think would be really helpful —

David Roberts

Are not duplicating efforts. It seems like there's got to be lots of big organizations that need roughly the same things you need.

Lindsey Rowell

And there's services, there's firms that do this kind of work, certainly, that have a lot of these contacts. But for organizations like the community colleges and the CSUs, they don't have the funding to go out and hire people for these sort of theoretical connections. So I would really like to see, other than the money — don't forget the money — but other than the money, sort of that. And then also related to these programs, just streamlining, what do you, as a legislator and your aides and the people within the organizations over whom you are responsible, what do they really need to see?

Are we doing reporting? Are we punching numbers? Are we investing time and staff and money in information that you're never going to look at, is never going to get verified? It's not useful to anybody. And can that be simplified?

David Roberts

Yeah, a lot of it. Just about. It seems like communication between legislators and regulators and people like you who are out in the implementation swamp, better communication would be a great thing.

Lindsey Rowell

Yes.

David Roberts

Thank you so much, Lindsey. This is just fascinating. Like decarbonization in general is just a giant puzzle, and every little piece of it is a puzzle, but you've got your hands on a really big piece of the puzzle. So I'm sure it feels overwhelming and slightly ridiculous what you're being asked to do. But I will say it comforts me to know that there are people like you out there really doing the ground, the block and tackle work of making this happen.

Lindsey Rowell

Yes, it's comforting to me to know that there's people like you out there spreading the word that this work is going on.

David Roberts

Oh, good. Well, we've comforted one another in the storm.

Lindsey Rowell

The marginal success of the day.

David Roberts

Beautiful. All right, thanks so much, Lindsey.

Lindsey Rowell

Thank you, David.

David Roberts

Thank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf. So that I can continue doing this work. Thank you so much and I'll see you next time.

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Text transcript:

David Roberts:

Of all the so-called “difficult to decarbonize” sectors, cement is among the most vexing. Making cement produces CO2 not merely through fuel combustion (in kilns that reach temperatures of up to 1400 C), but also through chemical processes that split CO2 off from other molecules. It is responsible for roughly 8 percent of total global carbon emissions.

Most gestures at decarbonizing cement to date are fairly desultory — things like adding special additives or injecting a little CO2 when the cement is mixed into concrete. The only widely available method that could theoretically produce no- or low-carbon cement is post-combustion carbon capture and sequestration. And there are plenty of people who would question whether that's actually viable at all, much less widely available, given that it would roughly double operational costs for a cement plant.

There are lots of startups out there attempting to solve this problem (as reported by Canary last month). Perhaps the most intriguing is Sublime Systems, a team that has developed something truly new and exciting: a system for manufacturing cement that requires no high heat (thus no combustion emissions) and uses inputs that contain no carbon (thus no chemical emissions). That makes the cement, at least potentially, not just low-carbon but zero-carbon. What’s more, the company says that, in form and performance, its product is a perfect drop-in substitute for traditional Portland cement, so it wouldn't even require any changes in the construction industry.

A carbon-free drop-in cement substitute — at scale and at competitive cost — would be genuinely transformative. I contacted Sublime CEO Leah Ellis to talk about cement chemistry, the company’s process, and the plan for reaching megaton scale. This one was truly fascinating and educational for me; I think you will really like it.

All right then. Leah Ellis, CEO of Sublime Systems, welcome to Volts. Thank you so much for coming.

Leah Ellis

Thank you so much for having me.

David Roberts

I'm excited today to talk about concrete, everybody's favorite subject. But first I wanted to ask you, I know you and your partner originally were trained as and educated as battery scientists. I'm just curious how you ended up here. What drew you into this area, this problem?

Leah Ellis

Yeah, my co-founder is a professor at MIT, Yet-Ming Chiang, and he's in the material science department, and I'm a chemist by training. I like to think of chemistry as the central science that combines everything from physics to biology. All of the good stuff you can sort of spread into anything from a foundation in chemistry. So I did my PhD in lithium-ion batteries. I worked with a prolific inventor, Jeff Dahn, and after that I wanted to continue working with an inventor. As you may know, in academia, there are so many different styles of research.

I mean, some people like microscopy and mechanisms, but I really like the creative aspect, like discovering something that could be useful or to solve problems. And not many academics and professors think through that lens. So I've always been very lucky to work with prolific inventors, both in my master's and my PhD. So for my postdoc, I sought to work with people who thought like that. So my co-founder, Yet-Ming Chiang at MIT, is a prolific inventor and also a serial entrepreneur. So Sublime is his 7th startup, and five of the previous six have been very successful.

So I didn't join him with the aspiration of becoming a founder. I really knew nothing about entrepreneurship or anything like that, but I did want to invent, and I did love the way he approaches his work from a problem-solving standpoint. So that's what brought us together.

David Roberts

And he's the one who sort of flagged the problem of concrete to you.

Leah Ellis

That's right. So I was always aware that cement was one of the biggest levers for decarbonization. But I suppose after my PhD, where I'd worked with one of the most illustrious battery scientists, I sort of always had thought that my career would be in batteries. Like, I thought I'd painted myself into a corner. And so when I first met Yet-Ming Chiang, he asked a question that at first I thought was a trick question. He was, "Hey, Leah, like, you've got this Canadian grant to come work with me, and I know you're a battery scientist, but aren't you a little bit bored of batteries?"

And I thought that was a trick question because he's the battery guru and I didn't want to insult him, but honestly, I sort of shared his opinion that, well, maybe this isn't his opinion, maybe it's just my opinion. But I think batteries are exciting, but I think there's like sigmoidal growth in any technology where it starts out slow to build momentum, and then it goes through a period where it's super hyped, and then you sort of squeeze all of the innovations out of things. And I think with lithium-ion batteries, which was my expertise, it comes to making the cans a bit bigger and the separators a little bit thinner and tweaks. And you know — I don't know, I just want to do something totally outside the box.

And I think that's what Yet offered me the chance to do when he said, "If you're bored with batteries, why don't we think of a way to apply our electrochemical toolbox to cement?" And so the way he came up with that electrochemical cement tagline was he spends a lot of time thinking about reducing the emissions in the utility sector. And I think we have all of the technology needed to do that. I mean, not saying it will be easy to deploy solar, wind, long duration storage, but at least we have the technology. So that's not necessarily where most of the early stage R&D is needed.

And so he was thinking at the time, like, how do we use low cost renewables, assuming that we'll figure out all of the utility stuff and really get to low cost intermittent renewables? And how do we take intermittent renewables and apply that to decarbonizing the next biggest tranche of emissions, which is cement? So cement, if it were a country, would be the third largest emitter after China and the US. So it's 8% of global CO2 emissions back in 2018, it fluctuates, but it's like 7% or 8%. So it's big game hunting when it comes to decarbonization. So we've always worked backwards from that electrochemical cement tagline.

David Roberts

And it's 8% of current emissions. But also, you make the point that's just going to go up, right? There's just going to be more and more cement as far as the eye can see.

Leah Ellis

Right. And as everything else, I hope, goes to zero. I think these so-called hard to abate sectors like cement and steel, they may be both seven or 8% now, but in coming years, as the grid gets decarbonized, these numbers are just going to get larger because neither cement nor steel are going to go away. And in fact, we're going to use more cement, especially in places like India and Africa, that will undergo a phase of dirty growth unless we develop and deploy these clean technologies in time.

David Roberts

Right. So, let's talk about cement then. I mean, if you're looking for the big problem with no solution yet, it seems like you really nailed this one. So, let's talk about cement. I've been reading sort of the background materials of your company and reading about cement in preparation for this. I have tripled my knowledge about cement over the last 72 hours, starting from an extremely low baseline. What is interesting to me is that the process whereby cement is made, the emissions mostly come from trying to get lime. So, let's talk a little bit about how cement is made.

So, cement, the recipe for cement, as you say on the website and in all these briefing materials, is calcium silicate hydrate (CSH). There are, I'm sure, details that matter, but that's the basic recipe for the basic kind of cement that we've been using for hundreds of years. CSH, they call it calcium silicate hydrate, and that is made of lime and silica and water. We can talk about silica and water later, but they're pretty easy to come by. So, mostly it's about getting lime, it's about how do you get lime? And the way we get lime now is starting with limestone.

So, maybe you can just briefly describe the process whereby conventional cement is made. How do we get from those raw materials to the cement that we are familiar with in bags, mixing with water, et cetera?

Leah Ellis

Yeah, as you say, cement, the principal ingredient is lime, calcium oxide. And fun fact is, that's where Sublime Systems got their name. I was looking in a rhyming dictionary for something that rhymed. No shortage of cement puns. I can keep them coming if you like. Or maybe you don't like.

David Roberts

That's excellent.

Leah Ellis

So, lime is calcium oxide or hydroxide. It's a reactive calcium that reacts with silica and water to make cement. Or when cement reacts with water, then it becomes concrete, that calcium silicate hydrate phase you mentioned. So, today, and historically, the path to making cement has been by thermally decomposing limestone, which is calcium carbonate, which is 50% by weight CO2.

David Roberts

Yeah, that kind of blew my mind. I don't know anything about chemistry, so all chemistry blows my mind.

Leah Ellis

Yeah, it is mind-blowing. I mean, you think of cement, which is the world's largest industry by mass. So we use more cement than any other material besides water. And the prime ingredient in cement, it's about 65% weight calcium oxide. And then that comes from limestone, which is 50% by weight, CO2. So you just do the math. It's very easy to visualize. Just the massive CO2 emissions is staggering.

David Roberts

So the emissions from cement are almost all around this process of getting lime. They're 50/50 — you break it down 50/50. So 50% is getting the kiln hot enough to break limestone down, which requires extremely high temperatures. What is it, 1400?

Leah Ellis

Yeah. So the way we make Portland cement, which is the modern cement that we've been using for the past almost 200 years, is you take limestone and then heat it first to 900 degrees Celsius. And that is the temperature at which limestone decomposes into reactive lime and CO2, and then to make Portland cement, which is a specific chemistry of cement, you heat it further to 1400 degrees Celsius, at which point the lime and the silica fuse together to make a phase called alite tricalcium silicate. And then that is quenched. So it's dropped very quickly from that hot kiln and sort of freezes that phase.

That when you grind the cement into a powder that now reacts very vigorously with water, it releases a lot of that extra heat and that turns into the hardened concrete.

David Roberts

So just to give people a visual here, a conception, this process of heating lime up and getting the lime out of the limestone, that's where all the emissions come from. They're about 50/50 the emissions.

Leah Ellis

Yeah, about 50/50. And of course, it depends on the design of the kiln. Some of them are more efficient than others, but it's about 50% limestone emissions, 50% fossil emissions. And to get to that very high temperature, you often require a very high caloric, luminous flame, which requires bituminous coals — is often the primary fuel for this type of kiln.

David Roberts

Right. So it's 50% this special kind of coal heating up this special kind of kiln to the extraordinarily high temperature of 1400 C. And then the other 50% is the CO2 in the limestone being broken out and then vented, I guess emitted. Which is just the reason I'm harping on this point, is just that I think a lot of people think of decarbonization as primarily an energy thing. But it's worth noting here that even if you find a decarbonized way to get that heat, that 1400 C heat, you're still left with 50% of the emissions. Right, because you still have CO2 coming out of the limestone as it's heated.

Because we've talked a lot on this pod about alternative sources of heat and about heat batteries, thermal storage batteries that conceivably could get up to 1400. They have that in their sights. But I just want to emphasize that even if that problem is solved, you still got 50% of the problem left, which is all the CO2 that's embedded in limestone attached to the lime. So that's our current cement. 50/50, heating up lime, breaking the lime out of the limestone. Let's talk about ways that people have tried to approach, before we get to Sublime's approach, let's talk about other ways people have thought about this.

It's a big problem. And if you think about decarbonization long enough, you end up here. What else have people tried to do with cement? I know there are a couple of things floating around, but maybe you just tell us sort of like, what are the other alternatives here?

Leah Ellis

Yeah, there are, as you say, not many technologies, if any, besides Sublime's, that can address both halves of the cement CO2 problem, the limestone and the fossil fuel, simultaneously. So you could electrify the heat in some way with a thermal battery or find some sort of electric kiln. And electric kilns have material problems. It's difficult to get things that withstand that temperature — the heating elements — if you're using resistive heating, for example.

David Roberts

Is anyone doing that yet? Is there an electrified heat source specifically making cement yet, or is that just an idea?

Leah Ellis

Not that I know of. I mean, I think that would be the obvious solution, I think is to electrify the kiln. And I know there's some efforts with plasmas and solar concentrators and stuff like that, but I think that one would be, if it was easy, someone would already be doing it.

David Roberts

Getting extremely high heat with electricity is vexing.

Leah Ellis

Right. And you can do it. The challenge is, like, can you do it efficiently? And then even if you do it, have you really solved the whole problem?

David Roberts

Right.

Leah Ellis

So, there's that. And then I'd say, like, what the industry is doing right now. And to their credit, they are doing everything they can to decarbonize, especially in the past three to five years. So there's a focus on alternative fuel. So, cement actually plays an interesting role in the garbage ecosystem because it's such a high temperature. It's just a really great place to dispose of things because everything at that temperature vaporizes into CO2 within a matter of seconds. So it's a great place to burn tires. It's a very clean way to burn tires.

David Roberts

What, in cement kilns?

Leah Ellis

Oh, yeah.

David Roberts

They're throwing tires in there?

Leah Ellis

Yeah, I've actually visited a kiln that had this tire injection port, and I was able to stand on top of it and watch them drop tires into this kiln. About every 20 seconds, a hatch in the kiln, rotary kiln, would open, and it would drop in. I actually have a video I can send you a link to. It's one of the coolest things I've ever seen, but, yeah. The plant manager told me that the tire turns entirely to CO2 within 20 seconds. I think many of us have seen a tire fire which creates, like, black, choking smoke.

But if you get to 1400 degrees C, it just undergoes complete combustion almost instantaneously. So tires, like tar shingles, unrecyclable plastic, medical waste, solvent waste. The list goes on. In fact, I have an employee that used to work at a cement kiln close to the US-Mexican border, and they would bring all kinds of contraband that was seized at the border and they would just unload pallets of contraband into the kiln. So, almost anything goes. But that can't be your entire fuel source. So that's a supplementary fuel source.

David Roberts

Does anything except coal work here? Like, is there a substitute for this specialized coal here that can get to that kind of heat?

Leah Ellis

Yeah, I mean, some of them use like a blend of natural gas and other things. And often it takes a blend of fuels to really get up to that temperature. So first you have to start with propane and get it to a certain temperature, and then you add more oxygen. More coal is the typical fuel that's used. And so besides all of these giant cement plants, if you look at them on Google maps or something, there's usually you can see a little mountain of coal besides the kiln.

David Roberts

Right, but for decarbonizing that, you basically just have to capture the CO2 after it's emitted, right? From the kiln.

Leah Ellis

Yeah. So the ways the industry is decarbonizing now include alternative fuels and then what's called supplementary cementitious materials. And then of course, post-combustion carbon capture, which hasn't yet been proven at scale. But there are plenty of pilot plants because that's really the only other way, in my opinion, besides Sublime Systems that can get you to a fully decarbonized cement.

David Roberts

I mean, theoretically, right, that there's no carbon capture working even close to 100%, as far as I know, on any industrial facility. Theoretically, we could get to mostly decarbonized.

Leah Ellis

Theoretically. And I'm afraid to share your opinion that post-combustion carbon capture has never been successfully demonstrated at scale for cement and for coal either. I mean, I sure hope it works because I think that is, if it worked, it would be the most expedient way to decarbonize existing assets. But I think there have been many challenges in employing post-combustion carbon capture at scale.

David Roberts

Among other things, it basically doubles the operating cost, right? I mean, it's just like adding another industrial facility onto your industrial facility. And I just come back just on first principles. I was like, however we solve this problem, it's not going to be through some Rube Goldberg system where we double the cost of every single concrete plant and then bury kajillion tons of — and then build CO2 pipelines to all of them and then carry all that CO2 and bury it. It's just like, there's no way that's going to be it.

Leah Ellis

Yeah.

David Roberts

Although that's kind of where people are going. That's sort of the only option.

Leah Ellis

I like to use the leaky tap analogy when talking about climate change. So imagine you have a tap that's leaking or gushing water. There's really three ways to fix it. And one is to stop this flow of emissions and through carbon avoidance technologies like Sublime Systems like renewable energy. And then the other thing you could do is put a bucket right underneath the tap and collect it point source. And of course, that's just a patch solution if you don't have the means or the ability to fix the tap right away. And that, of course, is point source carbon capture.

And then the third way you could go about fixing this problem is mopping the water off the floor. And in this case, the analogy is director carbon capture, which is collecting the water in a much less efficient, more energy-intensive, more dilute way. And I don't think it makes sense to mop the water off the floor unless you've done steps one and two to mitigate the stem of the flow of CO2.

David Roberts

I just want to mention these materials you're talking about adding to the process.

Leah Ellis

Yes, that's important.

David Roberts

Just to explain that. So you want the lime to react with the silicates. That's the point of all this. But through this process, you end up with a lot of lime sort of left over that has not reacted with a silicate. And so you add these supplemental materials and that kind of boosts more of the lime to react. Is that basically right?

Leah Ellis

Yeah, that's right. So that phase that I mentioned that is made in the kiln is called tricalcium silicate, or alite. And that is three calciums, tricalcium to one silica. And then that hardened phase of concrete that cement turns into as it hardens into concrete is calcium silicate hydrate. One calcium to one silica to one water, approximately. So Portland cement has three times more calcium than it really needs. Those two extra molecules of calcium are just on for the ride. They don't significantly contribute to the strength or to the durability — in fact, they make today's cement maybe less durable than, let's say, Roman concrete was.

So this actually started decades ago. Let's say in the '60s, '70s and '80s, people started using coal fly ash, which is a silicate, and blending that into cement. And at first they did it to save cost, because at that time, coal, fly ash, people would pay you to take it off their hands and it dilutes the cement, so — they did it for cost saving reasons. But really it makes better cement when you balance out that calcium to silica ratio and you also can lower your CO2 emissions. But that being said, you can only lower the CO2 emissions of your concrete by about 30% before you start having too much silica to calcium, and then that starts deteriorating your performance.

So, there's fly ash, and that is going away. So the cement industry is now moving, trying to find other sources of supplementary cementitious materials. These include natural sources of silicates like the Romans used, volcanic ash, so pumice, certain types of calcined clays. All of these are being developed as ways to dilute the Portland cement with no or low emitting minerals, which do in fact make better concrete at the end of the day. But again, these supplementary cementitious materials can't, like, they can only solve 30%. Maybe you could get to 50% if you accept some differences in performance, but they can't get you to zero because these are bringing silicates, they're not bringing that lime, and there's no way to decarbonize lime, unless I think you're going about our process, which uses renewable energy and non-carbonate sources of calcium.

David Roberts

Right. These materials you add, they're going to come back into our story later. A little Chekhov's gun there. All right, so I've made you and the audience wait for 20 minutes now. So let's talk about how you solve this dilemma. So we've got limestone that has to be broken down into lime. And right now, the only way we know how to do that is heating it up extremely high with a fossil fuel kiln, which emits things, and then you break it out of limestone and it gets emitted. So you need basically what you and your partner came to, where all of this sort of leads you as you sort of analyze this process, is we need some other way to get lime.

Basically, that's the nub of the concrete problem. Basically, we need a way to get lime that does not involve emitting a bunch of CO2 as we break it out of limestone and does not involve super, super, super high temperatures. We need a room temperature way to create decarbonized lime. So I think anybody who sort of reviews the process of how cement is made from a carbon perspective, is going to end up there, right? Lime is the thing. So then you say in your Medium post, once the goal was clear, it took us less than a year of focused effort to invent a way to make carbon neutral lime at ambient temperature, which kind of like, blew my mind a little bit.

I guess it's just that no one had looked before. Or it's just crazy to me that once you started looking, there it is. Which to me indicates that they must not have been looking very hard before.

Leah Ellis

I think that's true. I don't think people had been looking very hard before, maybe for two reasons: So, one reason is that never before have we had a pathway to low cost renewable energy. Which is why something like this may have been invented decades ago, but it wouldn't have made sense. So I like to call Sublime the electric vehicle of cement making, because we're replacing these high temperature fossil fueled kilns with something at ambient temperature that avoids combustion but —

David Roberts

I love this. Can I just pause and clap here? Because I swear, like, almost every one of my pods, no matter what technology you're talking about in terms of modern technology you're talking about, it's super, super, super cheap renewables that are unlocking these possibilities, like one after the other. Stuff that it would have been too energy-intensive and expensive to do up until very recently. But renewables getting so, so, so cheap is just like one after the other, unlocking all sorts of possibilities in all sorts of areas. You wouldn't even necessarily think, right, like cement. The first thing you would think is like, renewable energy can do that, right?

But it turns out there it is again. There's cheap renewables coming to our rescue yet again. Sorry, go ahead.

Leah Ellis

Yeah, well, totally. I mean, it expands your toolbox and just like an electric vehicle, if you were to power your Tesla with a coal fired power plant, I mean, there's really no point. Same with us. We use the same or similar number of kilowatt hours in terms of energy for our process. But if you're going to power that with a coal fired grid or just fuel it with coal directly, there's really no point. And so I don't think I'm really that smart. I think someone 30 or 40 years ago would have arrived at this conclusion. I think it's obvious in retrospect.

David Roberts

So many discoveries seem that way, right?

Leah Ellis

Yeah. And then the other reason why I think my co-founder and I were special in being the ones to discover this obvious in retrospect pathway is that we blurred the lines. I think many people, especially in academia, they're sort of pigeonholed into their area of expertise. And I don't even credit myself for this move. I think it was my co-founder, who's a tenured professor at MIT, very celebrated. He's already made his career, so he's quite comfortable putting it on the line, being exploratory and cross-pollinating two disciplines that don't see each other. Like civil engineering, is where cement lives.

Electrochemistry is in material science or in the chemistry or physics departments, and those often don't touch. And the grad students may not even meet each other on campus. And so I do think it required a certain degree of boldness and courage on the part of my co-founder. And I was just trying to make him happy and be his conspirator and co-inventor, but that original concept definitely came from him.

David Roberts

So let's talk about how you do it, then, how you make lime with an ambient room temperature process that does not produce CO2. It turns out to involve another theme that comes up a lot on Volts, turns out to involve an electrolyzer. So, walk us through a little bit how you end up with lime.

Leah Ellis

Yeah, and I have to say, it may be quite simple in retrospect, although there's a lot of high tech technology and patent applications will be filed. But at a high level, it is so simple. I can explain this to someone with high school chemistry. So, when you do water splitting, you make hydrogen at one electrode, oxygen at the other electrode. But if you start with neutral pH, water or a brine, you make acidic solution at one electrode and an alkaline solution at the other electrode as a function of that water splitting reaction. Now, once you have that pH gradient, you can use it to drive a chemical reaction.

In this case, the dissolution of calcium from a mineral. If you're using limestone as a source of calcium, which we don't, you can think of this as like a Mentos and Coke reaction, where you have a carbonate reacting with acid to dissolve those minerals and release the CO2. So we could use limestone, and we could capture all that CO2, which, just like the Mentos and Coke, the CO2 would be cold, clean, and compressed. If we do this in a pressurized unit, and we could likely collect a lot of money for 45Q tax credits. But we chose to abandon that path and go for that true zero approach of using a non-carbonate source of calcium.

So, there are many calcium silicates, both natural minerals and also waste materials that are calcium silicates. We can dissolve the calcium from those minerals, leaving behind a reactive silicate. Those calcium silicates are inert. You put it through a reactor, the acidic side of the electrode dissolves the calcium, leaving behind a — so we've broken those inert bonds — leaving behind a reactive silicate. Then the calcium swings over to the negative electrode, precipitates as a hydroxide. Now you have reactive calcium, aka lime, and you have a reactive silicate and you dry those off into free flowing powders, blend them together, and now you have a cement that is very much like Roman cement where Romans, they didn't make Portland cement at 1400 degrees Celsius.

They made what's now called a pozzolanic cement, where they took volcanic ash, the silicate, and they took lime, which they made at 900 degrees Celsius, that first step. And they blended those together with water to make a cement that has evidently stood the test of time. So we're following that old recipe.

David Roberts

It's all lime, silica and water.

Leah Ellis

At the end of the day, yeah.

David Roberts

At the end of the day you're getting your lime. So you're precipitating lime out of lime containing calcium silicates.

Leah Ellis

That's right.

David Roberts

And so that would be your raw material instead of limestone. So just on the materials side, you're going to need a lot of whatever that is. What is that going to be? What is that material that you're going to break the calcium out of that you're going to be able to find in bulk that does not contain CO2?

Leah Ellis

Yeah, broadly, it's basaltic minerals. So anything with 10% calcium, more or less could be a suitable input material. So basaltic minerals, this is the type of rocks that are typically used as aggregate in concrete. So we can almost use the same supply chain that people use for aggregate can be used as input for our material as well.

David Roberts

So there's no choke point there. That's an abundant material. There's no worries about finding enough stuff, basically.

Leah Ellis

Yeah, that's right. There are no worries about finding stuff. Although of course, even for cement plants today, making sure that your quarries are in close proximity to your market, it is a big exercise to site a plant and to minimize transportation costs because cement is so massively produced, which makes it very cheap and it's also very heavy. So there is a game here that we are also playing alongside any other cement company about siting your plants in proximity to market or in a way that you could float it by boat, since that way it travels very inexpensively. So you find cement plants on the Mississippi River, on the Hudson, near ports where the cement can float.

David Roberts

Got it. You know, you're talking about using just sort of aggregate, just sort of like junk rock as an input. Is there any input you could use where getting rid of it would actually be an extra value stream? Like some sort of waste that you could dispose of by doing this.

Leah Ellis

We have looked at loads of waste. So we have an ARPA-E grant that looks at ponded bottom ash. So there's billions of tons of ponded bottom ash. Like historical. So this isn't the fly ash, the stuff that comes out of the top of the smokestack. This is like the bottom ash, like the stuff with heavy metals that sort of is at the bottom. It's the icky stuff that they've ponded for hundreds of years. So there's billions of tons of this that needs remediation. This is the stuff they'll pay you to take it away. And with our process of dissolving the metals, extracting it, leaving behind a silicate, and then precipitating the metals and isolating them, could be a way to clean up bottom ash.

We've also looked at other things, like you could even use our system to recycle demolition debris. So dissolving the cement and turning it into fresh cement. We've looked at eggshells, we've looked at municipal incinerated waste, we've looked at clamshells, I don't know. For s***s and giggles we've tried out a laundry list of things to make sure they work. But really what we're going for is to optimize our process around materials that are widely abundant, and especially in places like India and Africa. Because Sublime's stated mission is to have a swift and massive impact on global CO2 emissions.

And we know that both India and Africa are going to undergo a period of dirty growth if their population is going to grow and enjoy the same quality of life that we do, and if they build carbon intensive cement and steel plants. Those plants are designed to last 50 to 100 years. So if we work quickly to scale up this technology, we want to make sure that all greenfield cement plants in these developing regions are made with technologies that will avoid CO2 emissions for decades to come. So we really have a small window of opportunity to really get ahead of generations worth of CO2.

David Roberts

Yeah. So you need a cheap and abundant feedstock, which makes sense. But getting back to this, like, say you're using bottom ash, the way you're getting lime out of this stuff is that lime precipitates out at a particular pH level, right? Sort of like a threshold. And presumably other chemicals will precipitate out of that mess that you throw in there at other pH levels.

Leah Ellis

Different pH. Yeah.

David Roberts

Right. So could you, if you're just dumping a bunch of sort of bottom ash slurry into your machine, you can pull out the lime. Can you also pull out some of the other, like those heavy metals you're discussing that we don't want in our water or soil? Could you precipitate those out too? Like, can you isolate other things other than lime if you wanted to repurpose this in the future for some reason?

Leah Ellis

Yeah, you could. And in fact, if we're using basaltic minerals, those aren't only containing calcium and silica. Those are also containing iron, magnesium, aluminum, which we are isolating as a function of our process, like you say. And what my director of R&D likes to say is, "We use the whole rock just like hunters use the whole deer." So all of these things are coproducts. And in fact, things like magnesium are actually worth more than cement.

David Roberts

Oh, really?

Leah Ellis

We're actually not — yeah, I mean, it's a fine chemical.

David Roberts

Are you pulling out enough magnesium out of these materials that that could be a —

Leah Ellis

So it could offset the cost?

David Roberts

Yeah, like a meaningful value stream.

Leah Ellis

I mean, we think so. Although our focus is cement, we know that people invest in us to have that swift and massive thing. So we are focused on doing this cement work. And everything else is just gravy. We actually haven't factored those costs in and done that business development work to see how much it sweetens our cost, because we're just focused on making the cement. And I have to say one of the reasons why Sublime has a cost advantage over other ways of decarbonizing cement is that, as you said before, we're not adding on to a Portland cement kiln.

Adding carbon capture is going to at least double the cost of making cement. And because our technology is carbon avoidance, it's green cement, not blue cement. We are replacing the kiln with a new technology. Now, we may not be able to compete on cost with our first plant because cement has undergone almost 200 years of improvements and redesigns of the kiln where they had wet kilns, semi-wet kilns, and dry kilns. And finally, these five-stage preheater, precalcinator kilns, which I won't get into, but they've undergone tremendous efficiency improvements over the past 200 years. And so we think we can get really, really close.

And I don't think any other technology can do that because they're always adding on to a Portland cement kiln.

David Roberts

I mean, it seems like if you could sell the magnesium, you bring down the cost of your cement and make it more competitive.

Leah Ellis

Totally.

David Roberts

So instead of a kiln, you have an electrolyzer, which does not require high heat. All this process you're talking about with the metals precipitating out is an ambient room temperature process. Yes?

Leah Ellis

Yup.

David Roberts

And you end up with lime. And then you can mix lime with the silicates that you also got out of your raw material. Or do you have to bring in extra silicates to mix with the lime? Once you've got the lime. And what are they?

Leah Ellis

No, we're using our own silicates. And of course, if we want to get the desired calcium to silica ratio, it may mean blending in certain inputs to get to the right ratio. But yeah, it's just a tweak to get the input ratios to match the output ratios of what we want.

David Roberts

And so this cement that you are producing with electricity and non-CO2 containing rocks, I assume you have produced it. And it has been through whatever tests, whatever governing bodies put cement through?

Leah Ellis

It has. So our cement meets what's called ASTM C1157, the performance-based specification for hydraulic cement. This was a standard that was created 30 years ago. And really this standard is so important because previously cement was defined by the crystal structure of what was made in the kiln. So that alight tricalcium silicate phase that you can only make, it's only thermodynamically stable at those volcanic temperatures. So you cannot solve for alite, you know, unless you go through that thermal process. So, actually, when we were at MIT, my co-founder and I, we believed that if you weren't making Portland cement, nobody would use it.

That was the prevailing myth at the time. I got out and networked with the industry and spoke to the customers and realized that people who work at a readymix concrete producer, those folks running the spinning trucks, they don't know what alite is. They've never heard of tricalcium silicate. They talk about slump, they talk about alkali silica reactivity and set time and finishing properties. And so we realized that it was the performance of this cement that matters. It's not the chemistry and the standard bodies have prepared for this moment. And all of this work with supplementary cementitious materials, which are gaining traction, especially in Europe, is just winds of change that are blowing in the right direction.

Because as you start blending cement with other things, it becomes much less about the chemistry that you're making in the kiln and more about the ultimate performance.

David Roberts

So the standard is about performance.

Leah Ellis

There are multiple standards. So there are three standards baked into the international building code. One is for pure Portland cement. The second one is 50% Portland cement, 50% SEM. So a blended cement. And then the third one is pure performance-based. So we don't care what you do, as long as whatever you have performs this way. And there's an exhaustive list of tests that you have to do. You want durability and strength and freeze-thaw and chloride ingress and all these different things that you test to make sure that your cement is performant. So we've done those tests.

We do them in-house. We have a world-class cement testing lab, but that's not good enough. We send it out to an accredited third-party lab, we test it again, and then — just so that we don't waste our customers' time — and then the third test is done by our customers. And that's really the test that matters. And so this quarter, we finished our pilot plant early January this year, and then spent a few months optimizing our production, ramping it up, testing it in-house, testing it with the third party, and now we're testing it with the customer, and the results have come back very strong, positive, and we're working with some of the best people at Boston Sand and Gravel.

David Roberts

Well, presumably, what you would want to hear from a customer is just nothing. They just used the cement and it worked fine and —

Leah Ellis

It works exactly.

David Roberts

There's nothing to report. I said those supplementary —

Leah Ellis

Cementitious materials.

David Roberts

Yes, thank you. I said they would come back into the story. Those supplementary materials that are being added into traditional cement to incrementally lower its carbon intensity, those are the silicates that you're using to mix with your lime. So you're actually just using the lime and the supplementary materials and just skipping, basically, the Portland cement kiln part of it.

Leah Ellis

Yeah.

David Roberts

And so you've produced this cement that is now passing performance tests being used in the field. It's working well. One point I did want to make before we leave behind the process part is if you use a feedstock that doesn't have CO2 in it and you use renewable energy to power your electrolyzer, then you've got bona fide zero carbon cement, the holy grail. But you make the point. And I think this is maybe just worth pointing out. Even if your process uses limestone as its feedstock and thus has CO2 in it, and even if it uses average US grid electricity.

Right, which is not clean. Even if you do both those things, you still end up with cement that's lower CO2 than conventional cement.

Leah Ellis

That's right.

David Roberts

So basically, switching to this process immediately improves the carbon performance of cement, even if you don't have your electricity and your feedstock dialed in perfectly yet.

Leah Ellis

That's true, although we will accept nothing less than perfection.

David Roberts

Well, you say in the medium post that you're currently 70% decarbonized. Does that just mean there's still some limestone in the process?

Leah Ellis

Yeah, exactly. But it is our goal to get to 90%. And so when we model our megaton plant with optimized feedstocks, optimized electricity, we just did a lifecycle assessment with Climate Earth, which is the cement industry's preferred lifecycle assessment partner. So we did show that we can get to 90% lower emissions than today's Portland cement using our process at scale.

David Roberts

Why 90 though? What's the 10% left over?

Leah Ellis

Oh, I believe that was from the mining and transportation. And those are sort of outside of our gates. So again, if you're traveling by truck or going back and forth between the quarry and the kiln and that type of thing.

David Roberts

Ah, interesting, interesting.

Leah Ellis

But I'm sure those will go to zero too, as all those heavy trucks get electrified.

David Roberts

So, your big plant that you are envisioning here, your mega-scale plant, your full-sized plant to be certified as basically super low carbon, let's say 10%, 90% carbon-free, you're going to have to find the right quantity of feedstock, a non CO2 containing feedstock, a steady, large supply of that, and you're going to have to somehow certify that your electricity is completely clean, which is going to get you in the same sort of tricky situation that the hydrogen people are in right now, which is how do you certify that electricity is totally clean? You can't just use grid electricity, right? Because then you're taking the clean electricity from someone else. You basically are going to have to like — it's additionality.

You end up with the additionality problem. I don't know, that's probably way down the road for you. Maybe you haven't even thought about that.

Leah Ellis

Well, we do think about this. So we have a kick-ass head of project development and strategic sourcing. So shout out to Becky and she's doing the work to cite our megaton plant. And we're looking at places that have renewables. And I know the hydrogen folks, as you say, struggle with this too. So we require — anything six cents a kilowatt hour or less is fine with us. And we're looking to site first in places with a high degree of renewables. And again, it doesn't have to be zero, although zero would be great, but it's just as low as reasonably possible.

David Roberts

Would you ever build your own renewables attached?

Leah Ellis

Yeah, we might. We're looking at that too. And then to your question of additionality, we're actually gearing up to publish something recently that shows that because Sublime Systems is a great way to use a renewable electron because it has similar embodied energy as today's kiln. But you're not just using that renewable electron to replace a fossil electron, you're also getting avoided carbon through avoiding the limestone as well. And so when you calculate the amount of CO2 avoided per kilowatt hour, you compare that over many other technologies using that the highest and best use of a renewable kilowatt hour could be for Sublime cement.

David Roberts

Interesting.

Leah Ellis

According to our calculations.

David Roberts

Interesting. So let's talk a little bit about scale and about cost. Right now you've got basically a little lab set up. You're producing this stuff, but on a very small scale.

Leah Ellis

Well, I wouldn't call it little. It is a fully functioning, continuous pilot plant that can do up to 250 tons a year. But it is small. And we affectionately call it our cement plant for ants, if you know the Zoolander reference.

David Roberts

Which is just to say that scale will bring lower costs.

Leah Ellis

But totally, it's all about scale.

David Roberts

Right. Insofar as you know, the costs now, currently, because as you say, traditional cement is very cheap. So are you currently in the ballpark or what's the sort of timeline? How do you see getting into the ballpark? Where are you now and where are you kind of targeting?

Leah Ellis

Right. So where we are now is definitely less than cement plus post-combustion carbon capture.

David Roberts

That's a low bar, but yes.

Leah Ellis

Well, is it a low bar? So one of the things is that cement is very inexpensive, and that is a double-edged sword for us. So that makes it very difficult for us to compete on cost with a new technology that hasn't yet achieved scale. But on the other hand, that makes it — the so-called green premium — really that small. Especially when you compare it to other things like direct air carbon capture or sustainable aviation fuels. And also, if you think about the total installed cost of concrete. So 80% of the total installed cost of concrete is labor, and it's often unionized labor.

The cement is 10% of that, and the aggregate is the remaining 10% so even if we were to charge a two to four x green premium, really, it doesn't really affect the overall cost of a building that much.

David Roberts

Right.

Leah Ellis

But your carbon savings are huge. So, again, if you're thinking all across clean tech, that green premium or the carbon credits, if you think of dollars per ton of CO2 captured or avoided, I think Sublime cement is really attractive. When you do that analysis, especially as we come to scale.

David Roberts

How big does the green premium need to be currently to bring you down to Portland cement costs?

Leah Ellis

Yeah. So presently we're scaling up. I mean, I don't even dare calculate what it costs at pilot scale because it's so handmade. But at this next level of scale that we're doing. So between where we are now, which is pilot scale, and where we need to be at megaton scale, we do have to build what we're calling the kiloton plant.

David Roberts

An in-between plant.

Leah Ellis

Exactly. An in-between plant. And that is to validate the product, the process, the economics, the performance, to enable us to attract low-cost project finance so that we can build the megaton plant, ideally many megaton plants, and work with partners to deploy this all over. So at that megaton plant, you don't have the economies of scale that we would have at the megaton.

David Roberts

Kiloton

Leah Ellis

Yeah, at the kiloton. You know, we like to say the megaton plant is like achieving Costco level status. And at the megaton plant, I do think we'll be able to compete on costs.

At the very least, we'll be able to undercut cement decarbonized by post-combustion carbon capture by a long shot. So I'm very confident saying we'll be the cheapest low carbon cement, especially after we crunch the numbers with all the co-products that you mentioned. But at the kiloton scale, I think this is at the farmers market pricing. So the people who will be taking offtake from our cement, from that plant, they will realize that they're paying a higher price for something that's special, for something that comes with the added value of a lower profile of harm against the planet.

And the premium that they're paying is reinvested into our technology, into the people that are making this happen, and that it is very much catalyzing this technology that I believe will be obvious in retrospect in a post-carbon world.

David Roberts

Right. Well, they'll have warm feelings, but I think there are also — we'll talk about this in a second — but there are also some entities who are under sometimes self-imposed, sometimes legally imposed requirements to find low carbon cement. Some people are doing it because they need it, not just because they'll feel good about it. So, scale wise, the kiloton plant is roughly when?

Leah Ellis

So that depends on a lot of things, but we're ready to have that. We are on track to have that built and commissioned and operational by early 2026. But of course, that timeline requires everything to go perfectly. But we're all geared up for that.

David Roberts

And that will be a working, like, you'll be selling concrete. It'll be a full-size selling concrete plant. No longer just a test or a demonstration.

Leah Ellis

That's right. We'll be selling cement to concrete producers.

David Roberts

And then, assuming everything goes well. Of course, everything never goes well. Assuming everything goes well, you have your kiloton plant in early 2026, you're selling cement, it's working, your customers are happy, your financiers get more confident. They extend to you some low-cost capital for you to scale up. Then you build your megaton plant, everything goes well. When does that happen?

Leah Ellis

That could be as soon as 2028. Again, these are very aggressive timelines, and this assumes everything goes well. But once that kiloton plant is built and validated, assuming we have sites ready to go, those megaton plants could be built as quickly as within two years.

David Roberts

And then a megaton plant produces how much?

Leah Ellis

A million tons a year.

David Roberts

A million tons a year. And so to replace any meaningful amount of cement supply, you would need a bunch —

Leah Ellis

Hundreds of them.

David Roberts

Hundreds of those eventually. Have you thought about, I mean, you're selling cement. Have you thought about licensing the process and just having other people work on joining you and trying to scale up?

Leah Ellis

We do all the time. So, like I said before, we're capitalists around here, as you know. So I hope we'll make a healthy profit for the investments. But the goal is to have a swift and massive impact on global CO2 emissions as quickly and as bigly as possible. And I hope we'll make money along the way, and I expect we will, because that's how value is measured. But really, it's all about speed and scale, because we could do this ourselves. But really, I'll just be honest here, we're nerds. What gets us fired up is this technology and the product that we're making.

There's a lot that we don't know. One of the reasons why the cement industry has taken so long to change is because innovation is not part of their DNA, per se. They run operations like nobody's business. They keep these megaton plants up and running around the clock with high-quality, reliable material that's distributed in the most efficient way to get everything built with minimal disruptions. It's really, truly remarkable.

David Roberts

Yeah, you pretty quickly get beyond the science part to just logistics and stuff like that. There's like a whole set of those considerations for large-scale businesses that are unique to scale, I think.

Leah Ellis

Exactly. So the operational know-how is there. And I think we would be foolish to try and reinvent the wheel entirely by ourselves. And I mean, would we be able to build? So let's just say we address half a gigaton of CO2 emissions per year. So cement is 8%. Let's say we set our expectations low, aim for 1% of CO2 emissions or half a gigaton. That's like 500 megaton plants. So how will we get to 500 megaton plants by 2050, if that's our goal, working backwards, we would need at least ten up and running by 2030, let's say.

So I really think if we're going to get this s**t done, we have to take what we do well and merge it with what the industry evidently does well, which is the operational logistics and know-how. And so, we speak to cement majors almost every week, and they're coming to us, and they have a legitimate desire to not be the world's largest CO2 emitters. And this is also an interesting fact. So cement companies, they have the highest scope one emissions of any company. You would think it's Aramco or Exxon, but no, they're making fuel that other people are burning. It's cement companies.

David Roberts

Yeah. Scope three, that gets the oil companies.

Leah Ellis

Yeah, totally. But cement companies, it's their scope one, so they have a great big X on their back, especially in Europe.

David Roberts

Well, it also seems like, I know there are improvements. It's not fair to say that you're sort of stuck with what you're stuck with when you're using fossil fuels. I know there have been improvements in the kiln process and in the input and the kind of kiln, but there's a certain sort of baseline, like when you're using limestone and you're using Portland cement process, there's a certain floor, right? Whereas when you're using electrolyzers technology and you have a bunch of different feedstocks to choose from and a bunch of different metals that you can pull out of those feedstocks, it just seems like you're opening up a lot of new areas for innovation.

Basically, the runway for cost declines seems huge here.

Leah Ellis

Yeah, I believe so too. And I think what's really exciting is that if Sublime succeeds, and I believe we will, that technology that we're starting to build now, and that will continue to improve over time, will be the way we make cement for the post-carbon world, like, for the next millennia. So I feel like this is a really cool place to be where cement innovation happened with the Romans. And we still go back and visit those monuments that they made. And then cement was innovated a second time by the British with Portland Cement. And now we're creating new cement in America that's for this post-carbon world.

And so often when you think of buildings and the architecture, the way you make a building is often a representation of the values of the people who've built it. And so I think it's a very exciting time for us to be making this new material and to be incorporating it into the most cutting-edge buildings that we're building today. For some of the best and most forward-thinking companies.

David Roberts

These electrolyzers, are they a special kind of electrolyzer that you need custom built, or are these just normal, off-the-shelf electrolyzers? What is there to say about the electrolyzers?

Leah Ellis

They leverage a lot of existing technology. So electrolyzers broadly are very similar. You've got electrodes, often with a carbon backing, often with a rare earth catalyst, you've got separators. There's kind of like assembling a sandwich of electrode, separator, electrode. And so many components of our electrolyzer exist and have been scaled up to megaton scale, and we're simply taking that and leveraging that for our own purposes.

David Roberts

So like your own kind of sandwich, but made with standard ingredients.

Leah Ellis

Exactly. We're taking the bread and the mayo and the lettuce, and we're just slapping them together in our own special way.

David Roberts

Right, but in terms of electrolyzers for your process, you're the one making them. So that'll scale up too, and presumably get cheaper too.

Leah Ellis

Yeah, exactly. And I think many of the trends we see with hydrogen and all these other electrochemical things taking off, I mean, we do anticipate that as well — we've got the dropping price of renewable electricity, especially intermittent renewable electricity — and I believe we'll also see electrolyzers come down in price as well.

David Roberts

Yeah, yeah. I talked to the woman in Iceland who's making ammonia directly with electrolyzers. I clearly need to wrap my head around electrolyzers better and do a whole episode on electrolyzers, because I had thought they were just for hydrogen, but now people are doing all sorts of other things with them. Anyway, so final, I promise, question: What sort of policies would help you? I mean, I think some of them are obvious, just like lowering, requiring lower CO2 emissions, maybe requiring government procurement. Like government could say, we're going to buy lower cost cement. What are the other sort of big buckets of policy that you think would help accelerate this process?

Leah Ellis

Government procurement would go a long way because the US government, in its various forms, army, GSA, federal highway administration, DoT, procures 60% of the cement produced in the US.

David Roberts

Oh, wow.

Leah Ellis

So if we don't have a commitment from them that they want this cement, it makes it more than twice as hard. But the policy change that I would really like to see, and what really grinds my gears is that when you look at tax incentives and production tax credits and also the voluntary carbon market, they reward disproportionately direct air carbon capture. For example, I'm forgetting the acronym. Is it 42? Oh my gosh. Can you remind me what?

David Roberts

45Q? That's the carbon capture one.

Leah Ellis

C three. Anyway, the carbon capture one, it's $180 a ton for direct air carbon capture, $80 a ton for point source carbon capture, and zero for carbon avoidance. And we applied for a production tax credit for our low carbon production of cement and we were discouraged from submitting a full application. And I think it's unfair, using that leaky tap mop bucket analogy, that you should be incentivized more for mopping up CO2 than for fixing the tap. And I believe there should be a technology agnostic implementation of the tax credit to put all of these things on a level playing field and then let the invisible hand of capitalism choose the most efficient way to decarbonize.

I don't think the government should be picking winners.

David Roberts

Well, this is the danger of industrial policy, right, is that once you get down in the gears, you're going to inevitably sort of get some things and skip other things and get out of balance. Presumably there are other policies besides carbon capture, policies that would help you, right?

Leah Ellis

Yeah, I actually think direct carbon capture is great. I'm definitely not anti-direct carbon capture. I'm just advocating for carbon avoidance to be valued the same as a ton of carbon removed from the air, especially when the carbon avoidance is technology enabled, like Sublime Systems. I think there's a role for this premium, this farmers market stage that we're at, to get that added boost so that we can get to a stage where we don't need that incentive anymore. But you will never get there with DAC. It'll always need to be propped up somehow.

David Roberts

Yes, I know. Have you gotten help from the LPO? From the loans office?

Leah Ellis

No, they haven't helped us yet. Although had some interesting conversations with Jigar Shah and others from the LPO. And I do hope that once our kiloton plant is built, we will definitely work with LPO.

David Roberts

It seems so obvious this is such a huge opportunity here and exactly at the stage of business that they're designed to help. Okay, so some sort of production tax credit would be great. Some sort of government procurement strategy. Is there anything like that in place? Is there demand pull? I know that a bunch of companies are saying they want to reduce their own emissions. A bunch of concrete companies are saying, where are we at on demand pull? Like, is there a big developing market for low carbon concrete that's going to help pull you through this?

Leah Ellis

I am seeing huge demand for low carbon cement and I would say that our customers are leaning into us just as much as we're leaning into them and they want more of it sooner. It's one of those things, though, that's difficult to manage. And I think maybe like setting up a carbon market, people are not used to seeing new products in the cement world and so getting these advanced market commitments and these offtakes. Right now, when people build a new cement plant, cement is vertically integrated with concrete, oftentimes. So you never need an offtake for building a new cement plant and even the supplementary cementitious materials.

The industry just knows that if the product meets a certain quality, that there will be, at a certain price, it will be bought.

David Roberts

Right, right.

Leah Ellis

So these offtake agreements have sort of never been done before until now. But, yeah. so we're still in the stage of figuring that out and standardizing those agreements. And one day I hope there will be a sort of book and claim model for selling our material as well as other low carbon cements.

David Roberts

Yeah, it does seem like, especially once it's wider known that this is available and that it performs as well, it just seems like there's just going to be huge demand from every which way. Leah, this has been absolutely fascinating. I've been meaning to dive into concrete forever and this was a good excuse to learn. It's funny. I'm going to finally learn how it works right on the cusp of it changing to a new process. But thank you so much for — I feel like you've really found the right target here. This is such a leverage point for so much change.

So thank you for coming on and walking us through it.

Leah Ellis

Thank you so much for having me, and for being an enthusiastic listener as I talk about my favorite subject for a full hour.

David Roberts

Awesome. That's what we're here for. All right, thanks so much.

Leah Ellis

Thank you.

David Roberts

Thank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf. So that I can continue doing this work. Thank you so much and I'll see you next time.

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Text transcript:

David Roberts

Building the machines and batteries needed to decarbonize the economy will require enormous amounts of a few key minerals. The proven reserves of those minerals, sitting in mines now operating, are nowhere close to enough to satisfy what is expected to be skyrocketing demand.

Without the minerals, we can’t make the clean-energy economy. And we don't know where the minerals are going to come from.

What's worse, exploring for new mineral deposits has been getting less and less efficient over the last several decades, as the amount of investment needed per successful discovery has risen. We seem to be getting worse at finding this stuff right when we badly need to be getting better.

That state of affairs has drawn in several new startups that endeavor to use machine learning and artificial intelligence to improve mining’s hit rate. The most talked-about is KoBold Metals. With financial backing from Bill Gates, Jeff Bezos, and other big-name investors, KoBold is now exploring for minerals on four continents.

To get a better handle on mining and how we can improve at it, I contacted KoBold CEO Kurt House. We talked about the projected gap between supply and demand, the somewhat primitive way current exploration works, the massive data-gathering and coordination project the company has undertaken, and the role of justice and equity in this AI-accelerated future of mining.

Kurt House, CEO of KoBold Metals, welcome to Volts. Thank you so much for coming.

Kurt House

I'm so pleased to be here. I'm a huge fan. I listen to the podcast all the time, so it's fun to talk to you live.

David Roberts

We're going to talk about something that is of great interest these days, which is finding the stuff that we need to build the clean energy economy. This is something I did a series of articles on a couple of years ago, and it's come up repeatedly over the years. People talk about possible shortages of materials as one of the bottlenecks that might slow the clean energy transition. So maybe let's just start there with setting some context, talk a little bit about the big four minerals that you focus on and sort of what we know about how much we have access to and how much we project we're going to need.

Kurt House

Perfect setup question. So, the energy transition is fundamentally about getting off fossil fuels. It's fundamentally about electrifying the economy to the greatest extent possible. So we electrify transport, all electric generation becomes renewable, et cetera, et cetera. That requires a lot of very specific materials and very specific materials because different elements have different physical properties, obviously, and they do different things better and worse than others. And some of those elements are really difficult to substitute for, for very, very deep physical reasons. So KoBold is focused on what we call "the materials of the future," and those are lithium, cobalt, copper and nickel.

That's not at all to say that there aren't other important materials for the energy transition.

David Roberts

Are those four the most important? By just mass, just, we need most of those —

Kurt House

No, by total mass, it'd probably be aluminum and steel, iron for steel. The reason these are so important, there's two orthogonal reasons that we focus on these. One is how difficult they are to substitute for in specific applications. And I'll talk about that. And then the orthogonal element to it is that they are exploration problems. So aluminum is really useful in a whole bunch of reasons, but it's not an exploration problem. There's just gobs of bauxite, aluminum silicon oxide on the planet, and we know where it is. It's just a matter of processing it in more efficient and less carbon intensive ways.

So, it's a metallurgical challenge. It's not an exploration challenge. In the case of lithium, cobalt, copper and nickel, you could take any forecast you want, but basically the end state is something like 2 billion electric vehicles on the planet, plus a whole bunch of renewable energy build out. And any way you slice it, those are just gigantic numbers, and they require gigantic amounts of lithium, cobalt, copper and nickel. And then you can say, "Okay, that's how much we need at, say, 2050 to be mostly off fossil fuels by 2050, how much exists in the reserves of current mines?"

So if we take all the mines that are producing today, and they're going to produce out for the next several decades, that's another number. That's another quantity. And that you also have to add in all of the other uses for these minerals. Right. If the economy just goes on, and there's lots and lots of uses for nickel and copper, in particular in stainless steel and all manner of electrical applications for copper that just happen anyway. So you have to add up those, plus the energy transition metals and compare them to existing mine supply and existing mine reserves, and you get a gap.

And then, if you multiply by current commodity prices, that gap is about $15 trillion.

David Roberts

Good Lord.

Kurt House

We call that — exactly — the "missing metals gap". And so it's not the total amount of metal we need. We actually need a lot more. But that's the value of the metal that we need to find, right? We need to find and then develop into mines.

David Roberts

That represents metal we need, but we don't yet know where it is or where it's going to come from?

Kurt House

Exactly. Because I've subtracted out existing mine supply. Right. And not just existing mine supply, but existing mine supply, plus mines that are in late stages of development. We know they're going to be mines. We've just included that in existing mine supply. So it's really the things that we need to find new deposits that no one in the world knows where they are right now. And then we need to develop them into operating mines — to build new mines. And then those mines need to go into production, and they need to operate for many, many years to produce the necessary amount of metal.

And the value of that metal, roughly speaking, is $15 trillion.

David Roberts

And that all needs to happen — if you look, like, 2050 used to be a lot farther away than it is these days. And now if you look at those lines, they're going up and to the right pretty steeply. So all of that stuff needs to happen much more quickly than it has in the past.

Kurt House

Exactly right, David. And that is what makes this so difficult. So, in round numbers, in very round numbers, it's about 1000 new deposits need to be found, and then 1000 new mines need to be developed.

David Roberts

Wow.

Kurt House

And that, obviously, that's a function of I'm using sort of median mine production. It could be 700 if they're bigger or whatever, but it's order of magnitude 1000. It's a huge number. And then you can say, "okay, well, how fast are we building new mines today? Finding new discoveries and building new mines today?" And the answer is, "not nearly fast enough."

David Roberts

Well, this is something you told me about last time we talked, which has stuck in my head ever since. You called it "Eroom's law of mining," which is Moore's law backward. Explain what you mean by that.

Kurt House

Yeah, precisely. So, Moore's law. The audience will be very familiar with Moore's law. Right. One of the most remarkable demonstrations of human ingenuity of all time, which is that the density of transistors on chips has doubled every 18 to 24 months for 55 years now. And the result is a ten to the 10th order of magnitude increase in computational speed, computational power. So we get better and better and better computation, and that's why you and I can talk remotely in real time from far — everything else that people know. Okay, that's Moore's law. So go back to 1990 and look at how much money the industry was spending in aggregate on exploration, and then divide that number by the number of good new discoveries they were making per year.

David Roberts

Right? Dollars per discovery.

Kurt House

Dollars per discovery. And by good discovery, I just mean a discovery that definitely becomes a mine. It's a good tier one, tier two discoveries, we'd say, in the industry, but it becomes a mine. That number was about $300 million in today's dollars. In 2023 dollars, that was about $300 million per good discovery. Today, that number is about $3 billion. It's gotten an order of magnitude more expensive to find the next deposit. We're getting worse. So we call this Eroom's law, because over the last 40 years, we've gotten ten x worse at exploration, we have to put in ten times the amount of resources to find the same amount of stuff.

Or put it another way, we'll find one 10th the stuff if we invest the same amount in exploration. And exploration expenditure is basically flat, roughly speaking. So we are way, way, way behind and we're spending roughly half a percent a year of what would be needed based on the current exploration effectiveness, dollars per discovery. So on the current rates and current expenditure investment, it will take about 200 years for humanity to find enough deposits.

David Roberts

$3 billion. If you think about 1000 new mines needed —

Kurt House

There you go.

David Roberts

1000 times $3 billion adds up to some large —

Kurt House

$3 trillion. And that's just exploration expenditure. That's not including the cost to actually build the mines, which is a lot more.

David Roberts

So let's break this down a little bit or unpack this a little bit, because with Moore's law, I think people get, on the one hand, getting more computing power out of tinier and tinier spaces gets harder and harder. Like the job gets harder and harder because you're working with just less space and tighter materials and et cetera. But our improvement at doing it is growing faster than the difficulty, basically. Like, we're getting better faster than it's getting harder, I guess, is the way you would put it. If we just remained the same good at doing that, productivity would be declining because it would be getting harder and harder and we wouldn't be getting better.

That seems to be what's happening in mining. It's not that we're getting dumber or worse at mining, it's just that finding the stuff is harder because we've already found the easiest stuff. So finding stuff gets harder and harder, but we're just not getting better at it.

Kurt House

You explained it perfectly. That's exactly right. Another example that I've used, that's even a better example because you just took Moore's law a step further. But another example I use is like fastballs in Major League Baseball were like 85 miles an hour in 1970, and then today they're like close to 100 mph. It's objectively harder to hit that fastball, but batting averages are about the same. Right? So pitchers got better, batters got better. Right. And your point is exactly right is that — are we actually getting dumber? I don't think so. We're not actually getting dumber. It's that the search space is getting way harder because, as you say correctly, the easy things have been found.

And what is an easy thing? It's actually really easy to understand. An easy thing is a deposit, an ore body that's going to be mined, that's sticking out of the ground that a skilled field geologist walks up to the outcrop, looks at the outcrop, identifies ore minerals in the outcrop, and says, "These are ore minerals right here. We should explore this because there might be enough of them to constitute a mine here."

David Roberts

Yeah, you told me that when we talked before, and it blew my mind a little bit because one of the things I'm finding out about this as I do this job more and more is just like normal american consumers are so used to everything going digital and everything being sort of like fancy and computerized now that when I go ask about other areas, I'm often struck by how analog they remain, sort of how kind of primitive they remain. And something you told me is that almost all, like literally almost all of the discoveries we've had and the mines we now have come from someone just seeing something on the surface, like literally the same way they found stuff to mine in 1800.

Kurt House

Yeah, it's absolutely right. If you were to build a time machine and bring the best exploration geologists from 1960 to today, they would be very comfortable working in the industry. Very comfortable. You have to teach them email. Right. You have to teach them a few things —

David Roberts

Zoom meetings.

Kurt House

Exactly. Zoom meetings. But in terms of the field work and the techniques, they would be very similar.

David Roberts

And so should we envision groups of people out walking around looking, or how do we search the surface today?

Kurt House

Yeah, I mean, field geology is a skill, and it's a hard skill to learn. It takes a lot of practice. And there are very skilled field geologists that KoBold employs, and they're absolutely essential to our business. They're fantastic. And just because a technology or technique is old doesn't mean it's bad. There's a lot tried and true methods just sort of continue for some good reason. Right. And so field mapping, for instance, which is basically, if you walk along the ground, think about, you're either walking along bedrock that's an exposed outcrop, or you're walking along soils or something else that's kind of covering the bedrock.

And so field mapping exercises are, there's actually a lot of kind of tricky geometry to it, and it's about identifying the outcrops. It's about making measurements about where the outcrops go underground and then extrapolating in a kind of heuristic way what those rock bodies would look like underneath the cover. Those are sort of useful techniques, and that's what historic field geology is all about.

David Roberts

And so, historically, when someone finds something sticking out of the surface and they say, "hey, this looks like an ore concentration. This looks like a concentration of some ore that we would like to mine" at that point, then what, the mining company just goes in and just starts poking holes down, digging down and looking?

Kurt House

Yeah. Once you find an occurrence, you might call that an occurrence, mineral occurrence. Then you go and explore to see if it's large enough and sufficiently high concentration to be an economic deposit. It's a good lead. Not every occurrence turns into a mine, but every mine at one point was an occurrence. Right.

David Roberts

Right. That's what I'm trying to get my head around is, what does that look like? What do those holes look like? Are they narrow, little pokey holes, or is this, like, a big operation when you're digging down, exploring?

Kurt House

So, for the exploration component, they're very narrow holes. Think a few inches in diameter that you drill. And what you're trying, you're extracting core samples. Right. You're extracting to characterize the full geologic body and to characterize the deposit. Right. And understand what the composition is, what the grade is, how extensive it is. Does it keep going at 100 meters deep, at 500 meters deep, or does it stop at 20 meters deep? Those are all the questions that you try to answer.

David Roberts

Of the occurrences that geologists find and say, "Hey, mining company, this looks promising." What percentage of those pan out into a mine?

Kurt House

Very low. Yeah, very low.

David Roberts

Oh, really?

Kurt House

Yeah. Well, less than 1%.

David Roberts

No shoot. No kidding.

Kurt House

No shoot. No kidding.

David Roberts

1%! I guess that explains the $3 billion.

Kurt House

Yeah, that's right. I'm glad you came full circle back to that, because the reason we've gotten on an underlying cause for Eroom's law, but a more directly observable cause, is that the success rate has dropped. And so you're spending — the individual success cases are sort of just as economic as ever, and they're wildly economic. The difference is your false positive rate has increased or your success rate has decreased. And so you spend more small investments on things that don't pan out. To make the numbers simple, imagine each little small investment characterization effort is $10 million.

David Roberts

So that's to go poke all the little holes and look, that's $10 million.

Kurt House

Exactly. That's to go see if that occurrence is actually an economic deposit. Right. And we're using round numbers here. 40 years ago, you might have gotten 1 out of 30, and today you get 1 out of 300.

David Roberts

Yeah. So $10 million. If you're having to do it 100 times to find metals —

Kurt House

That's the problem.

David Roberts

This isn't in danger of making mining overall uneconomic. Right. If you find the minerals, you're going to —

Kurt House

Right. So the individual success cases are still as good as ever. Actually better than ever, really, because you still spend, say, $10 million, roughly, and then you fail, fail, fail. And then the person that succeeds — and these are often different groups, right — the one that succeeds spends $10 million and then has something that's worth billions.

David Roberts

Right.

Kurt House

And all of the successes, sort of, by definition, have to pay for the failures or the industry just won't attract any capital at all in the aggregate. So you can kind of assume that the successes are worth something like $3 billion, and that's about right. And so the success cases do incredibly well.

David Roberts

A bit of a lottery vibe to it.

Kurt House

For sure. I mean, this is where the word eureka comes from. Literally. The unit economics of exploration are just superb. They're fantastic. They've always been fantastic.

David Roberts

Right.

Kurt House

And so if you can imagine, okay, if you could build a technology or a set of technologies to increase your success rate just marginally, just a little bit better, maybe two or three times better than the industry, then you'd have an incredibly valuable set of technology and company because you could turn exploration into a science. Yes, you're going to fail a lot, but if you fail nine out of ten times, as opposed to 99 out of 100 times, then you make superb money. Because every success —

David Roberts

If you think of it as a lottery, I mean, winning the lottery twice out of 100 times is a lot more than winning it 1 out of 100 times, right?

Kurt House

Exactly.

David Roberts

Because the winnings are very large. And I just want to get this on the record before we move past. As we're talking about exploration, just by way of background-background. None of the things we're discussing in terms of the difficulty of finding and extracting minerals are about absolute scarcity.

Kurt House

Correct.

David Roberts

All four of the minerals you cite —

Kurt House

yes.

David Roberts

are, on an absolute basis, far more common than we could ever use, right?

Kurt House

Absolutely. There's roughly in the top kilometer of the earth's crust, there's enough nickel to give every man, woman, and child on the planet about a million electric vehicles. So it has nothing to do with the number of atoms in the earth's crust. That's not a problem at all. In fact, right below your feet right now, below your house, or wherever you are, I would bet long odds that the concentration of nickel, say, in the ground below you is about 100 parts per million. That's about what it is in the background concentration of the earth. And so that's there.

And we could mine it. We could do it. We could go and mine 100 ppm. In fact, that would be a spectacularly good platinum mine if you had it in that concentration. But it would cost us like $100,000 a kilogram to extract it. The current nickel price is $16 a kilogram.

David Roberts

Right. So what you need to find is concentrations of these things. And the reason that the vast, vast, vast majority of the concentrations we found of these minerals are close to the surface is just that the surface is where we're looking. So what we find tends to be adjacent to the surface.

Kurt House

Exactly right. And it is the mother of all selection biases. Right. Understandably so. You could pose an alternative hypothesis: You could say, "Okay, yes, we found all these things at zero meter elevation, but how do we know? Maybe that's just where they form. Maybe they form when the right minerals contact the atmosphere or something." You can make up a scientific hypothesis.

David Roberts

Maybe they drift up toward the surface for some reason.

Kurt House

Yeah, exactly. That would be a reasonable scientific hypothesis. We know for certain it's not true for these four minerals. We know for certain because we know the pressures, temperatures, and oxidation conditions in which these minerals form, and they form deep in the subsurface. So actually, that's really good news, because that tells us that as we descend into the subsurface, take 100 meters depth slice as opposed to a zero meter depth slice. Your strong expectation should be that the aerial density of deposits increases because since they form deep in the subsurface, a kilometer deeper, it's only the rare few that have been moved to the surface through tectonics and erosion and then been exposed.

Right. And so we really have high confidence they're there in high concentration form. They're just way, way harder to find.

David Roberts

Right. And talk a little bit before we get to how your company is making that easier. Talk a little bit about what we're looking for. We talked before; you mentioned composition, depth and grade; just quickly sort of go over those. What makes for a good deposit? A promising deposit.

Kurt House

Yeah, those are sort of the big three. There's lots of small details, but grade is king. That's a phrase you hear in the industry all the time. And the reason that grade is king is really obvious. Like concentration really matters. So imagine this. Imagine you're looking at two different deposits, let's call them copper deposits. Okay. One copper deposit — so the average grade coming out of copper mines around the world today is 0.6%.

David Roberts

Yeah, I've heard about it. And that's been declining, pretty sharply declining. Right. I've been reading about that. It's very alarming.

Kurt House

Yeah, it has —

David Roberts

Because we need a lot of copper.

Kurt House

We need a lot of copper. And we've been creaming the curve. We've been getting the lowest cost stuff first.

David Roberts

Right.

Kurt House

So 0.6%. So that means if you mine a ton of rock, you do all the work to get a ton of rock out of the ground. You get 1000 kilograms rock. Right. And you get 6 kilograms copper. 0.6%. So you get 6 kilograms of copper for every one ton of rock that you mine.

David Roberts

God, that just seems crazy.

Kurt House

It is crazy, seems crazy, but stay with me on this. So the ton of rock, all your costs go into mining the ore. The rock. Right. The costs scale with ore. Revenue scales with metal, because you don't sell the ore, you sell the metal. Right.

David Roberts

Right.

Kurt House

So now imagine a different deposit that is 6% copper instead of 0.6% that deposit. Now you spend the same amount of money to get that one ton of rock out of the ground. So their costs are the same. But now you get to sell 60 kilograms copper instead of 6. So you sort of, by definition, have a 90% plus profit margin because the costs — the other operator was there and maybe breaking even at 0.6%. And now you're selling 54 more kilograms of copper for no incremental cost.

David Roberts

So find distinctions in the concentration of the mineral in the ore make a huge difference.

Kurt House

An enormous difference.

David Roberts

That's great.

Kurt House

Yeah. So grade is king. The second most important variable is composition, which really gets down to the ore minerals themselves. Right. So a good example here is nickel. And so you actually can find relatively high grade nickel in silicate form. So olivine is a nickel silicate mineral that can get relatively high concentrations. It's not uncommon to get 1% nickel silicates, but it's very hard to process, very expensive to process that. Alternatively, you can get nickel sulfides at 1% or 2% that are very easy to process, relatively speaking, very easy. So a 1% nickel sulfide deposit is way better than 1% nickel and silicate deposit.

And then depth obviously matters a lot. It matters kind of less than you might think. Believe it or not, there's a big distinction between whether it's an open pit mine, i.e. just a big hole that you're digging in the ground, versus an underground mine where you're digging tunnels. There's a relatively large distinction there in terms of cost of operations. But once you go underground, depth doesn't actually matter that much. I mean, up to a point, you can't go 10 km below the earth, but the difference between 300 meters and 700 meters doesn't matter that much, actually.

David Roberts

So digging that additional 100 meters down is not a huge cost.

Kurt House

It doesn't matter a lot. Yeah. I'd much rather have higher grade deeper than lower grade, shallower.

David Roberts

So what would be like a really high grade, say, for copper? You say 0.6 is the average these days. That seems — I mean, what do I know about. I have nothing to compare it to, but it sounds low.

Kurt House

It is low.

David Roberts

What's a really good grade?

Kurt House

Over 3% is superb. Like superb, superb.

David Roberts

Got it.

Kurt House

Over 5% is absolutely world class. And there's almost nothing like it out there.

David Roberts

Interesting. Okay. What we've established is currently we're finding minerals based on some exploration geologist on the surface, squinting at rocks, finding good rocks. And then you poke a bunch of holes. If you find a decent looking rock, you poke a bunch of holes around it, find out if it's down there in the 1 out of 100 times that you find suitable deposits down there. You dig down there and open a mine. And this is why 98%, 99% of mines and deposits have been near the surface or close to the surface.

Kurt House

Correct.

David Roberts

So this is all background for current mining. And the productivity of that is declining, presumably just because the big obvious surface concentrations that we could find, we've mostly found. And so now we're like squinting, we're going after harder to find stuff, et cetera. And the whole productivity of the sector is declining, even as we desperately need it to 10x its output in the next 20 years. All in all, an alarming situation.

Kurt House

That was a perfect summary.

David Roberts

So then along comes KoBold. So just tell us, how is KoBold going to help that situation? What is it you do to help miners?

Kurt House

Yes. So KoBold's main objective is to improve the success rate of exploration, right? Exactly. This problem. The declining success rate of exploration is Eroom's law that's resulting in the higher cost, the more cumulative expense to make a discovery. And so our objective is to improve the overall success rate or really the exploration efficiency or effectiveness, which is dollars per discovery. That's our real goal. We want to have our own exploration success rate of closer to $100 million per discovery, as opposed to $3 billion per discovery.

David Roberts

And that's the money side. What about the percentage side? Like you said, 1% success rate. Now, we're skipping ahead a little bit here, but if KoBold continued to advance and miners really took it up and took it seriously, what would a really good success rate look like?

Kurt House

Yeah, well, let me actually correct you on one thing. We're not a service company or a SaaS company at all. We don't provide, we don't sell anything to mining companies. Yeah, we are a full stack exploration, development and mining company ourselves, started in Silicon Valley. We are Silicon Valley's mining company, so to speak. Right. Your confusion is totally understandable, and it's common.

David Roberts

I thought you were striking deals with big mining companies.

Kurt House

We do, but only on co investment into particular projects. We own — we don't get paid anything for services or anything for software. We make money by making discoveries, and we partner with mining companies on their properties as well as we have our own. So we have something like 60 projects worldwide, and about half of those we own 100% by ourselves, and about half of those we own in partnership with other companies. Partnerships are very important to us because we want to extend the reach of our technology. And lots of companies own a lot of ground that they're not exploring.

And so we can sort of leverage that opportunity and say, "Okay, this is interesting ground. It's actually worth more in our hands than it is in your hands, because we can deploy our technology, let's work it together, and we'll both benefit from any discovery."

David Roberts

So you're co-mining those, you're both involved in the mining?

Kurt House

Very common misconception and very understandable, because if you look at our team, it's about two thirds of the technical staff have never worked in the mining business before. They come from Google and Apple and Meta and Silicon Valley and all the tech monopolies that you know and love or hate, and they probably never will again. Right. They don't think of themselves necessarily as working for a mining company. I mean, of course they do. They understand the business, but they think of themselves as working for a tech company. And they are deploying their skills as data scientists, software engineering, software engineers for this purpose.

David Roberts

Right. So you own big machines that dig up the earth.

Kurt House

Principal asset are licenses to deposits. Right. Our principal assets are the deposit itself or the deposit itself. And then, of course, we use all kinds of capital equipment to explore and ultimately develop the deposits.

David Roberts

Okay, so if you own these yourself, then you don't have to speculate what better discovery rate would look like. Presumably, you have established one. 1 out of 100 is the baseline here. What does your discovery rate look like?

Kurt House

Yeah. So I prefer dollars per discovery. And the reason I prefer — I'm going to answer your question, but it's important to think about the different metrics. The reason I prefer dollars prefer discovery is we encourage lots of little projects that falsify their hypotheses fast and for low money. Right. So, there was a project we had recently where one of our scientists had a hypothesis about a particular deposit. They came up with a clear falsification criteria. We staked the property for probably $1,000. We went out to the field. They made several measurements, geochemical measurements. It falsified the hypothesis.

We moved on from the project at something like $5,000. Right. It's an extremely efficient condemnation. And that's really important because there is an enormous amount of uncertainty in this business. That is the nature of the data science problem is it's a sparse data problem, and we're making inference on very select data about the physics and chemistry of the Earth crust, trying to make predictions with quantified uncertainty and then seeing how accurate those predictions are and then updating our models accordingly. So we want lots and lots and lots and lots and lots of shots on goal. So I don't actually track total number of attempts because actually the numerator is high.

But dollars per discovery, I very much do track. And we are on track for we have made one major discovery, which is public. It's in northern Zambia. Cumulative exploration expenditure up to the point of that discovery was actually less than 50 million.

David Roberts

That's quite a bit better than 3 billion.

Kurt House

Yeah, exactly. So we're very much on track in that sense, except that we only have one that's totally unambiguous, and then we have a lot more that we're working toward. So we'll see. It'll take time, we'll see over the next five or ten years. But I'm very encouraged that we are on track at this point.

David Roberts

Okay, well, so let's back up. What the company does is gather data, use AI, machine learning to analyze the data in order to predict where you're going to find concentrations, basically.

Kurt House

Correct.

David Roberts

That's the nutshell. So let's talk about the data. I think when people hear this, their first thought is like, "Well, if the data was there, why weren't other people using it to find these things?" Do you know what I mean? If the data was publicly available, what's your magic sauce? So, first of all, let's just talk about, and this struck me, too, the last time we talked, is just the wild range of data that you guys are gathering. Talk a little bit about your data gathering.

Kurt House

For sure. So that is the right question for any kind of AI/ML technology ever, any application is, what is the data? Right.

David Roberts

What are you learning from?

Kurt House

Right. The algorithms, with all due respect, the algorithms are pretty straightforward, actually. They're brilliant, but they're easy to replicate and they're kind of a commodity at this point. What the real secret sauce of any AI company is, do they have superior data source?

David Roberts

Yeah, so I should mention, I was going to mention later, but I'll just mention now, obviously, KoBold is not alone in this. There are several companies now trying to use basically data gathering and AI to improve success rates in mining exploration. There's a bunch in Australia, I think there's one in Europe. So insofar as you're competing, I mean, it's probably a giant market, and there's room for plenty more entrants, I would imagine. But insofar as you're competing, that's going to be the arena in which you're competing is who can find the cleverest new sources of data to improve their results.

Kurt House

Yeah. There's a lot of truth to what you just said. I will mention on competition — this is useful — I am really rooting for those other companies. And the reason is I literally never think about competitors. And that sounds cocky, but it's not really, because let's say we need 1000 new mines for the energy transition. If KoBold is responsible for 50 of those new mines, we are going to be wildly successful beyond my possible imagination. And that's 5% of the problem.

David Roberts

Right.

Kurt House

And so we still need other people to find and develop the other 900-plus mines. And so what is it that's going to stop KoBold from getting from 1 to 50? It is not that someone finds that one first because there's another 950 we need to find. Right. What it is, is that we just fail to find it. Right. So we are fundamentally just kind of competing with ourselves, in a sense.

David Roberts

Right. More of a pass-fail than a grade relative to competitors.

Kurt House

Yeah, totally. It's just like, if you're like what I tell my son in track, you're just focusing on your own pr. Just get your own time down and the rest will work out. Right.

David Roberts

All right, so let's talk about data.

Kurt House

Yeah, so, data. So this is really interesting. Right? So humans have been collecting information about the physics and the chemistry of the earth's crust for a very long time. Yeah.

David Roberts

Mining is real old.

Kurt House

Really, really old. Right. In some ways, they've been doing this for. I mean, we've been doing this for millennia. In some ways, certainly in the last century, been collecting information in more and more sophisticated ways. And virtually all of that information is in the public domain, actually. And the reason it's in the public domain is either it was actually collected at the public's expense in the form of various state geologic surveys around the world and then made public. That's thing one. Thing two: It was collected by academics and then made public.

David Roberts

Right.

Kurt House

That's thing two. Thing three is created by private companies, but almost always, with some exceptions, the rules. The laws in every jurisdiction out there are that when you have an exploration license or a mining license, you are required to submit the data that you collect.

David Roberts

Oh, interesting. That's by law. Everywhere by law.

Kurt House

That's right. And these are really good rules, actually, because what you don't want, if you want efficient exploration of resources, you don't want everyone collecting the same data, proving the false positive again and again and again. Right. That's bad. So usually the way the rules work is the company gets a couple of years to husband the data by themselves, and then they have to make it public. Right. And that's true in basically every jurisdiction we operate in. So there's a huge amount of information. We'll get to what the information is in a moment. But the challenge is that this is the messy data of all messy data problems.

Right? So it has been collected. You're talking about everything from modern worldview three, high resolution, high spatial, high band resolution spectral imagery all the way to 1920s handwritten drilling reports. Right? That's all the information. And there's everything in between. And so it's every media, every storage media, from paper to cloud storage, every storage media you can imagine.

David Roberts

Microfiche?

Kurt House

Microfiche, you know, magnetic tape, you name it — it's all out there. And then it's every jurisdiction; every sub-jurisiction has different formatting requirements over time.

David Roberts

To what extent has there been a kind of shared format for this? Or is it all completely disparate?

Kurt House

Basically none. I mean, people could quibble with me and they could point out some standardization efforts in the past, which is not wrong. But basically, to first order, if I show you 100 data sets that we found in the public domain, they're going to be in 100 different formats.

David Roberts

Oh, good grief.

Kurt House

Yeah. So the first thing that we do, and this is a major effort, we've been doing this for five years, and we're going to continue to do it for many more years, is we identify these data stores, and then we ingest the data, bring it into our system. Which could mean, it could mean, digitizing paper records, right? And we have those operations around the world, including a very extensive one in Zambia, which is really cool. We digitize the paper records, we do various optical character recognition techniques on those records, and then we use various extraction, NLP and other extraction technologies to extract the data, transform it into what we call our universal data schemas.

So we are the major effort to create a standardized format for all of this data, which is our own proprietary format.

David Roberts

When I'm thinking about this process, how much of that is done by AI and machine learning versus some poor schmuck squinting at two columns of numbers and typing things in?

Kurt House

Great question. So I like to say that KoBold runs on AI, HI and HS. So that's artificial intelligence, human intelligence, and human sweat. And the last one may be the most important. It's hugely important. And we're automating things all the time. There's all kinds of methods of automation, but these are really hard problems, because not just is the data in all these myriad formats, but what the data is requires real scientific judgment. Right? Different. A magnetic survey collected in 1965 is just hugely different than a magnetic survey collected in 1990.

David Roberts

So this is not something like, you can't hire like a teenager to do data entry kind of thing. You need an expert to be looking at.

Kurt House

Yeah. The things that you could easily outsource to a low skilled person that's automated, we just automate those things. But then there's lots and lots and lots of areas where human judgment is really needed. And the technology basically makes the humans much more productive. Right. Because it enables them to see, like, kinds of data fast, to see what the units were, to see what the data collection method was. It highlights the relevant information for humans, but it is definitely a human in the loop process, and it's, for all intent and purposes, will stay that way for a very long time. It requires a lot of investment.

David Roberts

Right. So this sounds like the bulk of your value add then, mainly like this precisely. Gathering and standardizing information.

Kurt House

I would say it slightly differently. But I think it's a reasonable assertion. I would say it's the least ambiguous value add. Right. Like, it's clearly really valuable to get all the information and make it all usable. That is like, nobody will disagree with that. Right. And so that's definitely the case, then, once we have the information, I should talk about what the data types are in a second. Once we have the information in accessible form, then there's just a huge number of scientific computing and AI algorithms that interrogate the data and do all manner of things to predict where we're likely to find compositional anomalies and concentration anomalies.

David Roberts

So what are some of the kinds of data like? Presumably people have dug down and pulled up cores.

Kurt House

Yeah. So we'll start with geophysics. So the earth's gravitational field changes from place to place on the planet because the density of the rocks beneath you change from place to place. Yeah, it's really cool. And you can actually measure these changes with gravitometers that existed in terms of sufficient precision for 50 years. People have been doing gravitational surveys for many, many decades in different places and different evolving technology platforms. But that's one type of geophysical data. The earth's magnetic field changes from place to place as you go around the earth because the background field gets distorted by the magnetic properties of the rocks in the near surface.

There's various types of electromagnetic data that tell you something about the distribution of conductivity of the rocks in the subsurface. Right? And there's electromagnetic data that's based on active surveys as well as it's based on passive surveys. There is all manner of imagery. Right? So aircraft and satellite imagery in the visual and in the wider non visual bands. And that can tell you lots about both outcropping rocks as well as the materials overlying outlying rocks. There's all manner of chemistry. Right? So you referenced this just now. There's groundwater chemistry, there's soil chemistry, there's sediment chemistry and streams.

And then there's rock chemistry, both from outcrops and from deep drill holes. Then there's mineralogic data. So chemistry tends. We use that as a shorthand for the elemental concentrations in a rock sample. So the percentage of copper, the percentage of nickel, the percentage of cobalt, et cetera, and the percentage of weird stuff, too. And those trace elements are really important. The percentage of caesium, the percentage of tantalum. Right. This stuff tells you a lot. So you end up getting, if you have 50 or 60 element concentrations, you can do some very sophisticated high dimensionality sort of machine learning to predict how the rocks are changing in the subsurface.

And then there's mineralogic data, which tells you about not just the elemental concentrations, but what minerals they're in, the forms of the molecules themselves. Right. Is it nickel in silicate, which would be less interesting than nickel in sulfur? Right. And you need to actually understand the molecular form, not just the elemental concentration.

David Roberts

So how close — and maybe this is like too sprawling of a question to answer, but how close are you? Well, a) are you still finding new sources of information? And b) how close are you to ingesting and systematizing and standardizing all the data that you do have?

Kurt House

The last question, I would say we're way ahead of anyone else in terms of aggregating all of the information about the earth's crust. And we got a long way to go.

David Roberts

Oh, really? It's still early days with the information that's available.

Kurt House

That's available. Yeah. I would be shocked if we've already fully aggregated a few percentage points.

David Roberts

Oh, interesting.

Kurt House

There's a huge amount, yeah.

David Roberts

So that's good reason then to think that there's lots of Runway for improvement here as more and more information comes into the system.

Kurt House

For sure. Maybe the neatest innovation we have, data science innovation, kind of foundational innovation, is something we call efficacy of information. And what this is is we ingest all of this legacy information and we make these predictions. We have, in most cases, very sparse data, we have little hints of data here and there. So we have a huge amount of uncertainty. And the game now is to make a set of decisions that will decrease our uncertainty. That will maximally decrease our uncertainty. Right. And so that's actually the way we think of exploration. We think of it as an information problem.

That's about the maximum reduction of uncertainty. No other mining company talks that way. Right? Talks about sort of information theory and maximally reducing uncertainty. But it's fundamentally the way we think of exploration, of the exploitation process. So efficacy of information technology, what it does is it actually indicates what information we should collect that will reduce our uncertainty the most. Right. Which is different than what information you should collect to find a deposit. Like, it's a different question. It's no, how do we decrease our uncertainty the most? I'll give you a fun example, a very tangible example of this.

So we have a lithium prospect in Quebec. And the way we got on to this prospect was by initially searching old records for the lithium mineral that we're looking for is called spodamine. So that's an aluminum silicate lithium mineral. And so you can imagine that you'd go look for spodamine, and there's the word in old geologic records, but it turns out that that's not very fruitful. And the reason that's not very fruitful is because unlike copper and nickel, people have not been looking for lithium for all of human history. In fact, they weren't even really looking for lithium ten years ago.

It is an extremely new thing, and that makes it really interesting. So most geologists weren't even thinking about it. They weren't thinking about spodamine 40 or 50 years ago. So if they weren't thinking about it, they were less likely to see it also. And this is non obvious at all, but it turns out that the spodamine mineral is really, really hard to detect in rocks, which some minerals are easy to see for a skilled geologist, and some are really hard, and spodamine just turned out to be really hard.

David Roberts

So you're looking for proxies, then it's what you end up doing.

Kurt House

Exactly. So we're looking for proxies, things that we have figured out through basic science and through data science that correlate with the presence of spodamine. So we found some old reports that were just littered with those proxies. So we send people out, but we didn't send them. We actually staked a big claim, 300 square kilometers of area, and this is an area that has snow on the ground most of the year. So you have a narrow window to send people out and collect new information. And it's expensive. Right. This is another cool element of the data science challenge of exploration, is that the marginal cost of data is very high.

Right. And that's really different than like a SaaS company or a social media company that's getting swamped with data, and they're trying to find subtle signals in the noise. We have this high marginal cost of data, so the whole game is to collect the most useful next piece of information. So we have this big area, we have maybe two weeks in the field, helicopter supported. So this is not cheap. Ten highly skilled people supported by a helicopter for ten days. And so we use machine learning algorithms to tell them where they're likely to find the right rock sticking out of the ground.

Okay? And so the algorithms were trained on data that we had a priori, and the team goes out there and they find a couple of good examples, and they say, "Yeah, this is good. This is a pegmatite. This is the sort of rock type we're looking for." And it had this white moss growing on it, it's a white like rock and has this white moss growing on it. Most of the places that the ML sent them, most of the places were not the right rocks with that white moss growing on them. They were just fields of white moss.

It was bad, it was false positives all over the place. So we sent them to all. So it was really bad, right? So they're in the field and they're on satellite, and they're like, "You guys, data scientists, this is not right, this is moss, these aren't pegmatites." But that's okay, that's the way this iterative process works. So the team goes, "Okay, we have a few true positives in the pegmatites you did find, and we have lots of true negatives now, right? Those false positives are the same thing as true negatives, right? We know those are not the right things."

So that's really, really good training data.

David Roberts

Somebody's going to go write a moss algorithm now.

Kurt House

Exactly right. So we include that into the model as not the thing we're looking for, as well as some positive cases of the thing we're looking for. The model gets way better, way more predictive in just a couple of days, inside the window of the field campaign. So then the new model, while the people are still out there, the new model says, "Okay, here's a much more precise model. Many fewer predictions, some novel new predictions, many fewer predictions. Go check out these that are like 50 km away." And they were spot on. They were exactly right.

And now, the model was really predictive. Just a little bit of high quality training data made the model way, way better and got people to not just the right pegmatype deposits, but pegmatite deposits that were rich in spodamine, which is the lithium bearing mineral. So that could be a new lithium discovery, and we're able to make it way faster and for way less expense because we directed the team so efficiently in the field.

David Roberts

Right. This kind of gets up. My next question, which is most of what you're doing, is assessing and analyzing existing data sources that you've gathered. And the next thing I was going to ask is, are you yourself producing another data set? Are you doing any sort of large scale scanning or, I don't know, whatever it would be to produce another data set. But it sounds like you're doing something much more targeted than that.

Kurt House

Yes, both. So, yes and yes. So the targeted exploration is critical for efficient exploration, and then we are collecting new data, highly selective, high quality data, like I just described, like those moss covered fields good, strong, true negatives, okay? But here's what we also did, and it was really cool. We actually have a whole hardware program where we're developing new measurement techniques and new data types, and we have something we've invented called the KoBold hyperpod, which is a camera that we designed that is the highest spatial resolution and highest spectral resolution of any camera used in mineral exploration.

We mount it to the side of a Cessna aircraft or a helicopter. So after we found this remote, good outcrop, we then flew over it with the hyperpod. And the hyperpod, to make this really clear, so the satellite imagery has a pixel resolution of about four meters. So it's about a four meter spatial resolution, okay. And then it had a band resolution, spectral resolution of eight different bands. So eight different wavelengths of light. The intensity was being measured. So you can imagine for a four x four pixel, you would get eight numbers, okay? The hyperpod. The new hyperpod has, in a four x four area, 20 pixels, so it has 20 times the spatial resolution.

So you get 20 different pixels for every one pixel, and then every pixel has 80 times the number of bands. So it's 80 times the band resolution going all the way up to three microns, like really long wavelength. So we collect much more rich information, 1600 times as much information about that outcrop than you had from the satellite imagery. And then we fly a wide area, we fly that camera around a wide area, looking for more of the same. So in this way, the whole exploration machine becomes much more effective at every stage, because the software enabled the more effective exploration, which found the better training data.

And the novel hardware then collected really good quality data, which then gets used to find the next prospect after that.

David Roberts

So you're laddering up then, and ought to be getting better and better at this, basically, because.

Kurt House

Correct.

David Roberts

The more information you get, the better data you have. So we're getting close to the end. One or two other things I wanted to get before we're done. One is just about what you found so far. You said you're relatively new at this. You found one big demonstrated deposit of what is the —?

Kurt House

Copper and cobalt, mostly copper, a little bit of cobalt in Zambia.

David Roberts

And it's new that you're looking for lithium. That was a relatively recent announcement, I thought.

Kurt House

Yeah, we've been — so we started looking for nickel, copper, and cobalt. And for the first two years of the company, actually, for the first three years of the company, we exclusively looked for those three. We started our lithium program about a year and a half ago, and it's a very different search space in really interesting ways, but we've spun up a really exciting lithium program. Now we're exploring on four continents. We're exploring in Asia, Australia, North America, and Africa for lithium, and we have projects on all four.

David Roberts

Oh, wow. So you have one big demonstrated find on your record now, and you're exploring in other places. You're exploring in a bunch of other places.

Kurt House

Yeah. We have nickel, copper, and lithium projects in twelve jurisdictions, I think Greenland, Quebec, Ontario, Saskatchewan, Nevada, Alaska, Western Australia, Namibia, Botswana, Zambia, South Korea. So, yeah, we're exploring all over the world for those key metals.

David Roberts

Okay, and final question, and this is, I'll get yelled at by my audience if I don't ask you this, which is just, we've been discussing all this as a sort of purely mechanical kind of a technical challenge, but obviously, anytime you talk about mining, I'm sure you're very familiar, having been in the space for a while, first thing that leaps to people's mind is environmental degradation and social problems. The mining there are, quite famously, a lot of bad mines, a lot of bad conditions at a lot of mines. How do you think about the equity justice angle in your work?

Kurt House

Yeah, I'm so glad you asked. It's so, so important. Right. So the mining industry has a spotted history, for sure. For sure. There's some good stories and there's some very bad stories, for sure. These are things we take enormously seriously for a whole host of reasons. Sort of with the giant picture, the big picture, which, of course, we started with in the beginning, which is just humanity has a choice, right? We either get off fossil fuels or we fry the planet. And I don't think that's an acceptable choice. And so what does it mean to get off fossil fuels?

It means massive electrification, and that, just because of physics, requires a lot more of these key materials. If we're going to solve climate change, we need to find and develop these materials one way or another. My view is very strong, that if the mining industry doesn't act exceptionally well in development over the next ten years, then reasonable local stakeholder opposition to any projects will thwart that effort. Right. It'll thwart the effort to get the materials. So we have to be absolutely best in class, and we strive to lead in that way. So most companies will start a major community relations program once they're there to actually develop a deposit.

We start it earlier. We start when we're exploring. Right. Even though we know most of our projects won't actually come to fruition, we want to make sure the places we are exploring are places that we are welcomed and we want to be, we want to be welcomed by the locals and we want to work with the locals so that we remain welcomed by the locals. And that means a huge number of things. But it means fundamentally, it means a really serious investment, right. With an entire group inside the company that's dedicated exactly to that. And people that spend all day, every day talking to the local community about their concerns.

At this point, KoBold, the majority of KoBold employees are actually in Zambia. And so one of the things we are trying to lead on heavily is to mostly hire Zambians for our major project in Zambia. It is kind of standard operations that when there's a big project like this, western companies move in and bring in a lot of expats to do the high priced jobs. We have a strong commitment to not do that. Right. We have some expats, of course, for very specific technical expertise, but mostly we're hiring local and we're training local very aggressively. And that's in our long term interest.

We want to have the best zambian workforce that we can possibly have because we don't want to just develop one project in Zambia. We want to develop ten projects in Zambia. And we're investing in all the neighboring countries. And so the more capabilities we have in that country, the more effective we'll be in the neighboring countries.

David Roberts

Let me ask you this, since I discovered that you're an actual mining company. It's nice that you are making efforts to do this, right in terms of dealing well with the locals and labor standards and stuff like that. Is there demand side pull for better standards? Is there now a market force pushing for better standards, as one would hope?

Kurt House

Great question, and this is a great coda here for the conversation, because I think your audience can help here. I think demanding high environmental standards and high labor standards in your key critical materials in end use products is something that every listener can do. You guys should actually tell when you buy your next iPhone, you should ask, right? Like you should ask about these things.

David Roberts

Are there programs or standards or certificates or something? Like what can a consumer use to know?

Kurt House

Yes, there are programs they're starting. They're nascent. Right. And so they need just grassroots consumer support. Right. So right now, no products that you buy — you don't have two different prices. Like a price for a —

David Roberts

"Dirty phone."

Kurt House

Yeah, dirty phone or a clean phone. Maybe that's impossible because maybe no one would want to advertise their phone as a dirty phone. But you definitely want companies advertising their phones as clean phones, right? You definitely want that. And honestly, I would say the diamond industry, even though I think diamond exploration is kind of stupid and wasteful, they've actually done a pretty good job here with the so called Kimberley process and things like that, because blood diamonds were a horrendous issue.

Still are. But they did a pretty darn good job with that. Such that the provenance can be relatively tracked. So there are techniques, but it really requires sustained consumer engagement so that all the companies involved, so the entire industry takes it up. The providence of our metals will be exceptional. You'll be able to track every — once we're producing, our mines aren't producing yet, but once they're producing — you will be able to track every gram all the way back in the entire supply chain in an extremely transparent way. And we hope we can set an example that way.

David Roberts

Awesome. Well, that's something listeners can do, especially if listeners are associated with institutions. Try to get institution procurement or government procurement aimed in the right direction is a big piece of the puzzle, too. Well, Kurt, this has been absolutely fascinating. Mining is not something I thought I would ever have to get into or care about. But as you say, you pull this string and here's where you end up. So I'm glad somebody's out there working on it. Thanks for coming on and walking us through it.

Kurt House

It was a great conversation. Thanks so much for having me, David.

David Roberts

Thank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf. So that I can continue doing this work. Thank you so much and I'll see you next time.

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David Roberts

Last week, for the first time ever, a commercial offshore wind farm delivered power to the US grid. It was an important milestone — and also the rare bit of good news for an otherwise beleaguered industry. Everywhere else, costs are up, contracts are being renegotiated, and projects are getting canceled. It all sounds pretty bad, especially for a sector that barely even exists yet.

What’s going on? How much of this turmoil is temporary and how much reflects lasting structural changes? Is the US offshore wind industry going to die before it even leaves its crib?

To gain a little clarity on these questions, I contacted Samantha Woodworth, a senior wind industry analyst at Wood Mackenzie. We talked about the converging difficulties facing the industry right now, efforts to renegotiate contracts that were signed in the Before Times, the odd role that ships play in the whole mess, and the industry's prospects in coming years and decades.

Samantha Woodworth, welcome to Volts. Thank you so much for coming.

Samantha Woodworth

Well, thank you so much for having me. I'm happy to be here.

David Roberts

This is exciting. I have 411,000 questions. The more I dig, the more questions I have. So I'm excited to get into this. It seems like we're really at a hinge point here for offshore wind in the U.S., and there's lots of sort of contradictory signals happening. On the one hand, literally today, the day we're recording, we heard that the first power from an offshore wind turbine is being delivered in New York today. So I think, unless, correct me if I'm wrong, that marks the first actual power from offshore wind being used in the U.S.

Is that correct?

Samantha Woodworth

Essentially, yeah. I mean, it's the first commercial-scale offshore wind farm in the U.S. flowing power to the grid. It is a super-duper exciting day.

David Roberts

Yeah, that is exciting. And also, I think just a couple of days ago or maybe yesterday or very recently, there were some announcements of new offshore wind procurement. But then on the other hand, we have all these other stories coming. So let me just, in terms of the quote unquote crisis of U.S. offshore wind, let me summarize quickly what it seems like what I've gathered is going on, and you can fill in the details and tell me if I'm missing anything.

Samantha Woodworth

Absolutely.

David Roberts

Basically, a bunch of contracts were signed for offshore wind amidst a period of great enthusiasm in the Before Times, like pre-2019, back when things were normal, I don't know.

Samantha Woodworth

Yeah.

David Roberts

Were they normal?

Samantha Woodworth

More or less.

David Roberts

What's normal? But economic circumstances, let's say, were a lot better back then. So you sign these contracts, you sign up, and these projects take a long time to build. So in between the signing and today, we've had a pandemic. Inflation. Russia invaded Ukraine and screwed up the entire globe's supply chains. Now everything looks much, much, much more expensive than it did then. And so now these wind companies are stuck with these contracts premised on much lower prices, much lower inflation, much lower interest rates, et cetera, et cetera. And they're sort of scrambling.

Some of them are getting canceled, they're trying to renegotiate, et cetera, et cetera. Is that roughly accurate as a summary?

Samantha Woodworth

Yeah, yeah, definitely the shortlist of things that has kind of compounded to be a perfect storm of issues within the U.S. offshore space. And unfortunately, it's hitting hard everywhere. It's not just the U.S. offshore wind space that's getting absolutely derailed by these issues, but because the U.S. offshore wind space is so new and so young and doesn't have the robust foundation like even U.S. onshore wind does, they're definitely feeling the effects a lot harder with a higher magnitude.

David Roberts

Got it. So this is a global phenomenon, though. These are not U.S. specific trends here?

Samantha Woodworth

That's correct, yeah. Inflation, the pandemic recovery. There's a couple of U.S. specific things related to treasury guidance and that sort of thing. But for the most part, offshore wind is feeling these effects globally. Onshore wind is feeling these effects globally. It stinks — the timing for U.S. offshore, just because we were so close to getting all of these projects greenlit, and it just was the perfect storm of poor timing.

David Roberts

Really terrible. Really, really terrible timing for this industry in particular. They were just like a toddler, just sort of standing up and taking their first steps and like, now this.

Samantha Woodworth

Yeah.

David Roberts

We're talking about all these different things converging. If you had to rank them, what's the sort of biggest? Is it interest rates that are the main thing here, or could you rank them? Is it all just a mess?

Samantha Woodworth

Project costs and the effect of inflation are probably the biggest issue that we've been seeing with the offshore space. That's obviously what's causing the projects to come to the table and ask to renegotiate contracts or even just eating those massive termination penalties with a plan to rebid in subsequent tenders. Even local governments, the states that are soliciting offshore wind, are beginning to include clauses in these solicitations that allow for projects to index their bid price with inflation as a way —

David Roberts

Interesting.

Samantha Woodworth

Yeah, to help mitigate that potential for, God forbid, inflation keep going up.

David Roberts

Yeah, I want to get back to those tenders and the renegotiations and all that in a little bit. There's some interesting details here, but I guess one of my big questions is, if you listen to a skeptic, an offshore wind skeptic, what they will say is this shows basically that offshore wind was an artifact of weirdly low interest rates. The sort of weirdly low interest rates that held sway for the past decade. And basically, they can't compete in a world of normal interest rates. Does that seem true to you? And did no one see interest rates coming?

Was all this done on the assumption that interest rates were going to stay weirdly low, near zero, forever?

Samantha Woodworth

I would disagree with that. I mean, we've had the sort of foundational pieces in place to make offshore wind into a successful industry, including tax credits, financing regimes and that sort of thing. It is not unreasonable to think that interest rates would increase, but I don't think anyone could have predicted that they were going to just so rampantly go out of control post pandemic. The magnitude to which this issue happened is really what was causing the projects to no longer be viable. Interest rates fluctuate a lot anyway, but it's one of those things where I think this isn't something that anybody could have really predicted or should have been able to predict.

It's obviously going to cause a good amount of revisiting of how these contracts are scoped and how they're written, whether that is including index bids and whatnot. But it really is one of those things where I don't think anybody could have possibly predicted, you know. 7%, 8%, 9% —

David Roberts

Right. The severity of it.

Samantha Woodworth

Yeah. And if you look at Europe, too, you have commercially viable projects there that have similar remuneration mechanisms to what's being set up in the U.S., and they remained economically viable. So again, it just has to do with the nascence of the industry and not having as robust of a foundation or backbone or infrastructure as, say, in locations in Europe.

David Roberts

Right. Speaking of that infrastructure, let's talk a little bit about the supply chain. So there's sort of two supply chain stories, and I'm curious how they apply to offshore wind. One is just Russia invading Ukraine, you know, and then cut off the gas from Russia, and then everybody's scrambling for clean energy, and basically supply chains get jammed up in a way that is screwed up everybody for a while, screwed up all industries for a while, but particularly this industry. That's one story. And then the other story is just specific to offshore wind in the U.S., which is just, we don't have the supply chain in the U.S. yet, just because, as you say, the industry is nascent.

And now we have these laws sort of mandating that we have to use domestic content or use domestic manufacturing or use domestic ships, which we'll return to later. So now the industry is having to wait on a supply chain standing up. Which of those is responsible for the current woes?

Samantha Woodworth

I think it's a combination of both, really. I mean, like I had said, the whole renewables industry is feeling the effects of the supply chain disruptions caused by the pandemic, as well as caused by the conflict between Russia and Ukraine. As you mentioned, the local supply chain, especially for offshore wind in the U.S., is pretty non-existent. As it stands now, there are a number of idle facilities and newly proposed facilities that are being thought of to help address that. Unfortunately, even if all of those come online, we would need more to be able to meet demand.

But it's a very good start. That being said, I think it was Siemens Gamesa announced that they're no longer planning on building a blade manufacturing facility in the U.S. because of just how volatile the offshore wind market has become here and how —

David Roberts

Ugh.

Samantha Woodworth

Yeah, I know, it's a huge bummer — how projects are no longer guarantees at this point.

David Roberts

Well, this is a chicken and egg thing, right? I mean, the problem with the supply chain.

Samantha Woodworth

Yeah. And no one wants to spend millions of dollars to create a new manufacturing facility if the demand isn't going to be there for several years later if the project's delayed, God forbid, the project gets canceled. Right. So that's definitely one of the big issues that we're running into in the U.S. as far as just even establishing that local supply chain. We have a decently robust supply chain for onshore, but obviously we really don't have anything that can quite cater to offshore yet, just the scale and the scope. So we really need to make sure, especially this latest tranche of projects that are getting awarded, like New York's third auction, that the preliminary winners were announced a couple months ago, I think.

That as well as New Jersey, Massachusetts, Connecticut, Rhode Island, you know, the onus really is to get the pricing of those contracts right so that we can have that certainty in the project pipeline again, and therefore convey that certainty into establishing a robust supply chain of labor, of manufacturing, of port infrastructure, of ships, of everything we could possibly need to really foundationally have it.

David Roberts

At the same time, if you're proposing a project whether and how much that stuff will be available is very germane to the price you can ask. Right, this gets back to the chicken and egg thing. In a sense, you need that stuff around, or at least some idea that it's going to be around before you can properly assess your own project.

Samantha Woodworth

Yeah, but you know, we kind of knew going into creating this industry that we were going to be heavily reliant on Europe for not even just best practices, but being able to source these components because they have most of the offshore wind manufacturing in Europe and we were already going to be reliant on them for vessels, installation vessels anyway. So you can kind of get an idea of what these projects are going to cost. Just knowing where you would have to source supply chain at first, really the kind of question becomes, "all right, if we were to build these in the U.S., how would the costs be different? And what certain standards do these local supply chain and these local manufacturers have to adhere to?"

Actually, with regard to that Siemens Gamesa cancellation of that facility, they're still planning on honoring all their contracts and their firm orders with U.S. projects. They're just saying that they're going to have to be imported from Europe.

David Roberts

Interesting. So on the one hand, you have this perfect storm, right? You have interest rates making everything more expensive, you have inflation making parts, et cetera, more expensive, all this stuff. But on the other hand, you also have, just a couple, a year ago, the passage of IRA, which contained — the Inflation Reduction Act — which contained kajillions of dollars for green projects, I assume has a lot of money available for offshore wind, a lot of money available for onshoring of manufacturing. Like all that stuff is getting showered with money right now. Is that money just not enough to — is the support in IRA just not enough to sort of offset the severity of all this stuff that's happening?

Samantha Woodworth

There's definitely a piece of that. I think, again, nobody wants to be the 100% footing the bill for all of this. Right? And I don't think that the way that the feds are looking at it is necessarily the same way that each state individually is looking at funding and getting all of these programs and infrastructure in place. And a lot of states are kind of acting in a vacuum too. Until very recently, with that three state, at least procurement, consortium that Rhode Island and Massachusetts and Connecticut are doing. That's the first regional agreement to actually do these projects together and will likely spur regional supply chain development, as opposed to just state by state supply chain development, which is going to be really good.

But it seems like in trying to get all of this stuff established again, nobody wants to be the only one footing the bill, but it seems like each entity that's trying to get it established is operating kind of within its own vacuum.

David Roberts

Yes. For a policy head like me, when I hear this, like, all these chicken and egg problems like, this can't happen until this happens. This can't happen until this happens. I think, hey, what about government?" What about some planning? What about some policy here? This seems like a great. But I thought IRA would have done some of that.

Samantha Woodworth

Yeah, and that's the thing. It obviously promised a whole bunch of money towards it, but ultimately, we haven't really seen anything like an offshore wind working group or like a supply chain working group, or there haven't been any sort of results like that that have stemmed from the Inflation Reduction Act. So I would agree and say there needs to be more actual action taken. I mean, yes, you can try and throw money at problems and hope they go away, but really, there needs to just be a whole bunch of stakeholders sat down at this table to figure out, okay, realistically, how is this going to work?

And realistically, where is the money going to come from?

David Roberts

It's like, the bill looks a lot bigger than it did, and now you got to get back together and figure out how to divvy it up. I want to return to policy in a little bit, but in the context of all this other stuff, how big a problem is NIMBYism for offshore wind specifically? I know sort of legendarily the first offshore wind project off of Cape Wind.

Samantha Woodworth

Oh, the Cape Wind project yeah.

David Roberts

Just got mired in NIMBY BS for years and eventually died.

Samantha Woodworth

Yep.

David Roberts

And I know there's been fights like that. Is that a big piece of the puzzle in the current woes?

Samantha Woodworth

So actually, it's kind of funny you bring Cape Wind up. I was an intern at the New Bedford Economic Development Council back when that project ultimately got mothballed. And I had asked the same questions, too, because it seemed like policy wise, everything was in place; they were ready to break ground. This was going to be such a boon for the New Bedford economy, and then, as you know, it just kind of fizzled out and died. And NIMBYism was a large piece of that. The reason that it is a bit less of a piece now when we're talking about U.S. offshore wind today is just purely based on the location of the projects.

Cape Wind was going to be in state waters within sight of Nantucket and Martha's Vineyard instead of out on the outer continental shelf where it'll be visible somewhat, but not as in your face as the location for Cape Wind would have been.

David Roberts

Yeah, these are like 40 miles out or something crazy like that, right?

Samantha Woodworth

Exactly.

David Roberts

Surely you can't see a turbine that's 40 miles away, can you? I don't know.

Samantha Woodworth

Yeah, I'm not sure.

David Roberts

It doesn't seem like it would be particularly oppressive in your visual field.

Samantha Woodworth

Yeah, I think you would need some binoculars or a telescope or something if you want to be that mad about it.

David Roberts

Are there problems where — because it does seem like the one place where NIMBYism could happen is all these farms need cables going to the shore at some point and that is some degree of disruption. And I remember reading — I don't remember the specific project, but I remember reading about a community that was rallying to fight having a cable from an offshore wind farm come under their town. Like at the end of the project, it literally wouldn't even have been visible. Just digging up and burying it. They fought and fought and blocked. Is that a pattern or is it?

Samantha Woodworth

Yeah, the NIMBYism has definitely evolved away from the "I don't want to see the turbines" piece — obviously that still exists. But a lot of the NIMBYism pieces that we're hearing about are exactly what you said: Local towns, municipalities not wanting gigantic cables put underneath their lands, having the disruption of that construction as well as there have been a whole bunch of unexplained whale deaths and people are trying to attribute those to the pre-development sonar activities and things that are done for site assessment.

David Roberts

I was going to ask later about the whales, but let's just talk about the whales. Is that BS? Is there anything to that?

Samantha Woodworth

So NOAA has been documenting an unexplained mortality event in humpback whale populations in the northeast for years and years and years now, well before even Block Island Wind Farm was developed. You know, I personally don't believe that offshore wind farms are killing whales, but you could make the argument that because a lot of these whale deaths are attributed to ship strikes, increased construction activities in offshore wind project areas could, in theory, cause more ship strikes, which then would cause more whale deaths. There has not been any sort of research or tracking that has said that that is the case. But it is also such a new thing that there's also not a ton of data monitoring ship strikes at offshore wind project sites.

And I mean, no one in the offshore wind industry wants to kill whales. Let's be real.

David Roberts

Are there ways to — I mean, I guess if we don't have a lot of data and a lot of science about this we probably don't also have a great idea how to avoid it. But are there better and worse ways to do this, ways that are more or less whale friendly?

Samantha Woodworth

All these projects have contracted with biologists and researchers and that sort of thing to analyze whale migratory patterns. What sort of marine life of all kinds is going to be impacted by these activities? It's kind of just more monitoring and making sure that if all of a sudden you're getting a ping that there's a whale in the vicinity, you make sure you give it a wide berth until it's gone on its way.

David Roberts

What about the disruption of fisheries? Because that's been a thing, too, isn't it?

Samantha Woodworth

Yeah, definitely. And I think, obviously, again, the offshore wind industry isn't in it to make it so fishermen can't make their livelihood scalloping — whatever they might be fishing. But at the same time, there's always going to be some sort of impact, right, to marine life, to fisheries, to anything in the ocean when you put up these massive projects. The onus is obviously on the developer to make sure that they're mitigating as much of the disruption as possible. And that's why they have — it's called the NEPA process — that's why all these projects go to open comments multiple times, they get redesigned multiple times to try and minimize that impact on user groups as well as actual, like, the environment.

So obviously, we have to have trust in the developers that they're doing everything they possibly can here to minimize that impact on user groups and the environment. But at the same time, they have a legal responsibility to do that.

David Roberts

And I've heard sort of, like, vaguely over the years also that sometimes offshore turbine platforms can sort of induce fish. I'm so out of my depth here. I have no idea what I'm talking about.

Samantha Woodworth

Like, create new marine ecosystems?

David Roberts

Create a habitat. Thank you. That's what I was looking for. Create a habitat for fish. Is that true?

Samantha Woodworth

It's not something I don't think really gets considered very often. But you figure in a lot of areas, they will strip down and sink aluminum car frames to create new reefs. If you're creating a new stable, kind of unmoving foundation down there, the ecosystem will adapt. And if it likes the components, I guess there's no reason to think that the ecosystem wouldn't grow around the foundation of an offshore wind turbine. It wouldn't create a new reef somewhere, or that sort of thing is definitely something that can happen. And I think it will. I think it's one of those things that it kind of gets overlooked that these will create additional habitats once they're put in.

It's not like we're going to be pulling them out every ten years for maintenance or anything.

David Roberts

One of the things I've been talking about a lot on the pod lately is this problem of NIMBYism and preparing developers better for it and how current practice is not great among developers. They're not particularly sensitive. They're not doing the early outreach that they need to be doing. They're not cognizant of the political climate into which they are wandering unprepared. So they're getting chewed up. What's the story there in the offshore wind industry? Does it seem like they are sensitive to the NIMBY issue and doing what they need to do to avoid it? Or are they kind of like stepping on rakes because they're not clued in about this?

Samantha Woodworth

It kind of depends, developer to developer. We have definitely seen some developers that do a better job of it than others. I think it was really hard for the industry to conceptualize NIMBYism as it's evolved away from the "I just don't want to see the turbines." And once that became no longer the issue, I think there was a little bit of a pause. Kind of a "oh, there are other issues that people have with this?"

David Roberts

I mean, I can't believe people have an issue with a cable going under their town, even though I know it. So I can imagine trying to anticipate that could be difficult.

Samantha Woodworth

Yeah. And I think that's really what it was, is once we all thought that the turbines were so far offshore you can't see them, so it shouldn't be an issue anymore. I don't think anyone was really able to anticipate what other sort of local opposition stances there would be. Naturally, the grassroots environmental concerns exist across the board, but that's something that all renewable energy developers have a decent amount of expertise with at this point.

David Roberts

Well, also, as I keep pounding the table, this is not spontaneous resistance that is happening in these places.

Samantha Woodworth

Exactly.

David Roberts

It's very well funded. You just have to assume it's going to be there because there's a giant well-funded movement making sure it is there.

Samantha Woodworth

Yeah, and I think there probably was a little bit of the industry being taken aback by all the new local opposition stances that came up. But again, the onus is on the developers to make sure that they are doing an adequate job of mitigating disruptions to stakeholders due to these projects, as well as making sure that they are designing their project in a way that tries to make everyone happy. Obviously, it's not really entirely feasible to make everyone happy, but you want to get darn close.

David Roberts

Yeah. What would make a wealthy community happy about something underneath their town? If you can't even imagine why they're mad, it's hard to imagine what would make them happy.

Samantha Woodworth

That's definitely a piece of it, too. Those sorts of —

David Roberts

Just money? Like, they already have money. Right? They're rich.

Samantha Woodworth

Well, and you figure that's, I think, when you start to see the developers coming out with pledges as far as, like, economic development and we'll build a school.

David Roberts

Benefit sharing. I have a whole pod coming out on that. Yeah. I was just wondering if that, how sort of evolved that thinking is in this particular industry.

Samantha Woodworth

Yeah, that's, I think, the next step at that point when you're like, I can't not put the cable underneath your town, but here I will do something good to bolster the town's economy and the town's resources and whatever. That's when you start getting into that benefit sharing piece and honestly negotiating permit approvals, especially at the local and municipal level, based on that sort of benefit sharing.

David Roberts

Just for listeners' benefit: So some of these wind farms, the proposals in various stages, some are in areas with wholesale energy markets, restructured utilities, as they say, where there's competition among utilities, and some of them are taking place in old school, vertically integrated monopoly utilities. And I think this is an interesting difference. So right now, the ones that are in the restructured areas, listeners will know if you're in a competitive wholesale market, you're just bidding your power, you're offering your power, and the state is choosing the lowest bid. It's a competitive process. So in those areas —

So what's happened, as we said, is these big farms came in, they entered these auctions, won these auctions by saying, "we will offer our power to you, New York, at x per kilowatt hour." And now everything's gone wrong, and they cannot possibly sell power at those prices anymore. And they've been trying to renegotiate those PPAs, those off take contracts that they settled, but, like, New York, for instance, just said "no," refused to renegotiate, and now these two projects in New York have gotten canceled. So I guess one of the things I'm wondering is, what are the dynamics there?

Why wouldn't New York renegotiate? What is the source of the resistance? I guess if you have an auction, and someone wins with a deceptively low price and then comes back to you afterwards, it's like, "actually, I want more money." It kind of screws the other participants in the auction. But what are the dynamics there? Why don't states want to renegotiate?

Samantha Woodworth

To your point: That's a good piece of it is — you don't want to discourage the competition by allowing somebody who bids, let's say, an unrealistically low price, which I don't necessarily believe any of the winners of the previous New York auctions did. I think they bid prices that worked at the time. But part of that is maintaining that competitive process. I know that NYSERDA has been batting around the idea of doing a very quick fourth solicitation; they're calling it like a "fire" solicitation, that would allow those projects to essentially rebid as soon as that solicitation is opened.

David Roberts

Let's just review the facts real quick. If people have not been keeping up, there's two big projects, both by Ørsted that just got canceled.

Samantha Woodworth

Right. Are you talking about the ones that the PUC denied their renegotiation, or are you talking about the ocean wind projects that Ørsted just came out a couple weeks ago and said, "we're not doing these anymore."

David Roberts

Oh, are those different?

Samantha Woodworth

Yes. Yeah. So the two projects, the Ocean Wind projects that Ørsted just recently canceled, are located in New Jersey.

David Roberts

Oh, New Jersey. That's what I meant. Right, right. Those are the two big canceled projects that everybody's very angsty about. And they got canceled because New Jersey wouldn't renegotiate the PPA, right? So is the idea to have another auction, is the idea that these same canceled projects might bid into this new auction and win it and then be able to go forward after all?

Samantha Woodworth

So I don't believe that the Ocean Wind projects got canceled because of the PUC. So the ones that got canceled because the New York PUC denied renegotiation, that was Empire Wind, Sunrise Wind, and Beacon Wind 1 were the projects that had petitioned the Public Service Commission in New York to renegotiate the contracts. The Public Service Commission said, "nope, we're not letting you do that." Then they announced the winners of the third solicitation, and there had been some mention of a very quick follow up solicitation to, in theory, let those projects that wanted to renegotiate, cancel, eat the contract termination fees and rebid in such a quick succession that it, in theory, wouldn't affect their project timelines.

David Roberts

Right, assuming they win.

Samantha Woodworth

Yes, exactly. Assuming they win.

David Roberts

So those projects are not 100% for sure canceled.

Samantha Woodworth

Correct.

David Roberts

They're just in limbo-ish?

Samantha Woodworth

Essentially, yes. Developers haven't come out and said we're canceling. They haven't come out and said we're breaking our contracts and hoping to rebid. There's just been kind of radio silence from those projects.

David Roberts

I'm sure there's a lot of angsty meetings happening in a —

Samantha Woodworth

I'm certain, I'm certain.

David Roberts

When we talk about these contract cancellation fees, is that a substantial hit to them? Like, is that something they would really rather avoid?

Samantha Woodworth

Oh, definitely. I believe Commonwealth Wind is likely to pay something along the lines of $50 million, close to it, for terminating those contracts. South Coast, I believe, is paying a little bit more than that. So, yeah, it really highlights just how much project costs have become an issue with a lot of these projects and how bad the inflation problem has affected these projects, because if you're willing to eat $50 million —

David Roberts

I was going to say you have to be pretty desperate. So those three New York projects are right now trying to figure out, "do we just cancel and eat everything, or do we just eat the contract cancellation cost and rebid and try to keep moving forward?"

Samantha Woodworth

Exactly. Yeah. And I think that all hinges upon, obviously, whether or not NYSERDA does this flash solicitation that they'd been hinting at.

David Roberts

I have no idea how long that process takes. Could they do it quickly?

Samantha Woodworth

They're going to have to get their ducks in a row really fast if they want to do it in the kind of near future. Generally, the RFP process can take anywhere from, I don't know, like eight-ish months to over a year just because you're in theory, supposed to release a draft and then allow for public comments. So it is a long process by design. So it'll be interesting to see, you know, kind of what they can do in a very quick timeframe or what they're expecting to be a quick timeframe.

David Roberts

So those three New York projects are in limbo. The two New Jersey Ørsted projects are just flat canceled?

Samantha Woodworth

Yes, those are flat out canceled. Ørsted cited project delays, permitting timelines, and inflation as the primary reasons.

David Roberts

Permitting timelines. I thought that had, like, I thought by the time they were at this stage, they would have had the land, or I guess it's not land, ocean land. What do they call it out there? They would have had what they need in terms of permitting, like they're still waiting for?

Samantha Woodworth

I think generally when they say permitting in that regard, they're looking for those state municipal, local level permits for that interconnection infrastructure where it makes landfall, especially if it has to go through any sort of sensitive habitats like marshlands and that sort of thing. Ocean Winds, neither of those projects had gotten altogether that far in the BOEM permitting process. They were still doing environmental reviews. Their construction operations plan hadn't been approved yet, so they were still kind of in the middle of that whole permitting process.

David Roberts

Just for listeners. BOEM is the Bureau of Ocean Energy Management. That's in charge of federal waters. And all of these post Cape Wind, all these projects are far enough out that they're in federal waters, right?

Samantha Woodworth

Correct.

David Roberts

So here's a thought I had, or a question I had. If you're in a wholesale energy market and you're in a competitive market and all your costs go up and you have to renegotiate your contracts, you're just like, it's a mess for you. But if you're in a vertically integrated regulated monopoly utility area, isn't this a little easier for you because you can just offload the increased costs onto your captive ratepayers? Is that — are they having an easier time?

Samantha Woodworth

So in theory you can. It's the Public Utility Commission's job to make sure that you're not unduly burdening ratepayers with your cost recovery. But as we kind of saw with the Coastal Virginia project, there are a number of cost overruns, and unfortunately, they are going to end up ultimately passed to the customer. And that is kind of the big difference there, is that the utility still has to go through the process of proving need and necessity and public good of the project and getting the cost recovery approved by the Public Service Commission. So the burden of proof is on the developer, on the utility at that point.

But ultimately, if that gets approved, the effect is going to be felt by ratepayers, whether, you know, up or down.

David Roberts

Yeah, it's like the Vogtle nuclear plant in Georgia. Right?

Samantha Woodworth

Exactly.

David Roberts

They weren't competing with anyone. There was no auction. It was just them and the regulators. And they're, "ah, costs are going up again." And the regulators are very chummy with them. They're like, "yeah, take it out of the ratepayers," but at least then the projects go forward, right? At least those projects would go and get built.

Samantha Woodworth

Yeah. So that at least at the very end there, you have a pretty much guarantee that the project is going to get built in some form or fashion because generally the utilities, too, will also tie in other, a bit more contingency planning into it in that regard. They're going to kind of tend to — I would say err on the high side of costs — when they present their numbers, as opposed to when you're in a competitive bidding scenario. You want to bid low cost.

David Roberts

Right, right, right. You say now that they're talking about doing a process where bids are tied in some way to inflation rates. You say that's standard in Europe?

Samantha Woodworth

Well, there isn't much, actually that's standard in Europe as far as remuneration mechanisms go. It really varies market to market and country to country. But at least in the Massachusetts, the most recent tender that they released, as well as the draft materials for the upcoming Rhode Island and Connecticut tenders that are being put out as part of that tri-state consortium or tri-state regional procurement, those all allow for developers to submit — you can either submit a fixed bid like you normally would, or you can submit an indexed bid. There's different stipulations around each that are very, very in the weeds, so I won't bother going into them.

There are certain criteria you have to meet and to do if you want to do an indexed bid versus a fixed bid. But allowing for that indexation to inflation is obviously a good option, especially considering no one wants to think about it. But God forbid, like I said, inflation keeps going up.

David Roberts

Yeah. If we've demonstrated anything in the past few years is that no one, including the alleged experts, has any friggin idea what's going to happen to it. So it does seem like indexing is good, although I have to say from a state's perspective, you want to be careful saying "we'll pay no matter what happens with inflation."

Samantha Woodworth

Well, that's why I'm saying there's other stipulations around it that, like I said, it goes really into the weeds. But that's just one way that some states are trying to address the issue of "if inflation skyrockets again, none of these projects are getting built." They want to obviously avoid that. The states have already said — they have targets, they want offshore wind energy. They've put a lot of money and investments into the industry already. So having projects get scrapped is really not good on them or for them either.

David Roberts

Yeah, I mean, the backdrop to all this, I mean, maybe you and I probably know this, but it's just worth saying. It's just like the northeast in particular really needs some new power. It's very congested and very — this is not some luxury for them. They badly need these things. Tell us, what is the deal with ships and the Jones Act? What's going on there?

Samantha Woodworth

Sure. Yeah. So, the reason the Jones Act was such a big talking point for the offshore industry is that it essentially precludes foreign vessels from being able to go into U.S. waters, U.S. ports, pick up components, and bring them to the project site for the offshore wind projects.

David Roberts

What exactly does it say? It's illegal for a foreign ship to carry from a U.S. manufacturer to a U.S. consumer, like a U.S. to U.S. trip. Is that specifically?

Samantha Woodworth

Essentially, yes. So, the whole point of it was to kind of prop up the U.S. shipping and shipbuilding industry years and years ago by making it so that any shipping activity that happens within U.S. waters between U.S. ports has to be done by U.S.-built and U.S.-flagged vessels.

David Roberts

Yes. And so now what's happening is you need special ships for these things, yes?

Samantha Woodworth

Correct.

David Roberts

And we don't have them?

Samantha Woodworth

Correct.

David Roberts

Which is like a real problem.

Samantha Woodworth

So, you know, we have the one vessel that Dominion's building, Charybdis, that was supposed to be done this year; unfortunately, due to supply chain troubles —

David Roberts

Doh!

Samantha Woodworth

Yep. I don't know, did you see that one coming? You know, the timeline for that has been delayed somewhat, I think, to next year, maybe even 2025. I'm not entirely sure on that one.

David Roberts

One ship is not going to do the job, presumably.

Samantha Woodworth

That's the thing. And so there was a proposition at one point that was going to say all the foreign installation vessels that we bring over have to have either a full U.S. crew or a crew flagged from the vessel's hailing port. Obviously, that's like another bunch of hurdles to jump through when we're trying to attract European vessels to come across the pond and do these projects for us. That provision never passed, thank goodness, because honestly, it probably would have choked the offshore industry a lot.

David Roberts

Well, how is this not just going to bring everything to a halt? Is there any way around this? You can't build one without a ship? We don't have the ships. It's illegal to bring a ship over from where they're building ships. What's the solution to this puzzle?

Samantha Woodworth

So there's two hypothetical workarounds. The first is what was used to do Block Island Wind Farm, the Coastal Virginia Demonstration Project, which was to basically ferry things back and forth from a foreign port. So they set up in Halifax. And —

David Roberts

Ah!

Samantha Woodworth

Yeah, obviously not really a very good solution.

David Roberts

Not economically ideal, let's say.

Samantha Woodworth

Especially if you're trying to build an 800-megawatt wind farm, as opposed to a 20-megawatt wind farm.

David Roberts

Right.

Samantha Woodworth

So that was the first of the suggested workarounds. Scalability, obviously, huge concern with that one. The current workaround that's being used for the Vineyard Wind Project is to have U.S.-flagged feeder barges and a foreign installation vessel. So instead of having the installation vessel come to port and pick up components, the installation vessel just stays stationed at that project site, while the U.S.-flagged feeder barges are the ones going from project site to port to pick up these components. Then you transfer them to the installation vessel and then it gets installed that way. Obviously not ideal either, but —

David Roberts

Every economist in the audience right now is getting hives.

Samantha Woodworth

I know, I know, I'm sure. Obviously not ideal, but when we look at Vineyard Wind specifically, actually, another piece of good news for today is that the first five turbines of that project already installed, and they're planning to flow power very soon. That project wasn't really adversely affected, timeline-wise, by using this feeder barge workaround.

David Roberts

They did the barge thing and it worked.

Samantha Woodworth

Yes. It didn't seem to really impact the actual construction timeline at all. Obviously, it's going to be a bit more expensive because not only are we paying a premium on getting the foreign installation vessels.

David Roberts

Yeah, you have to get the vessels anyway. Like, you still have to get them.

Samantha Woodworth

Yeah. And so obviously we have to pay a premium to incentivize European vessels coming over here because they have a ton of demand in Europe anyway. So it's going to be a bit more expensive using that workaround because you're paying a higher day rate for the installation vessel as well as the day rates for the barges. But at least it's not impacting timelines detrimentally. Or at least it hasn't in the one example we have. So it is a viable workaround is what we've learned.

David Roberts

Seems so crazy, though. Is there no prospect or chance of Congress just like for once doing a think, you know, they could just sit down and in five minutes pass an amendment to the Jones Act. You know, saying, "except for offshore wind." Is that not even on the table?

Samantha Woodworth

Yeah, it's not really on the table. It is funny, and a little sad, because obviously the whole point of it was to prop up the shipping and shipbuilding industries in the U.S. The U.S. shipbuilding industry has just continued to decline. But that was always the question when this issue first got brought up was whether or not they would ever pass an amendment. And it was a pretty emphatic no, because it is a policy that is rooted in nationalism and a lot of people in government still believe that it is a good policy.

David Roberts

So then are we going to get a shipbuilding industry? Like, is there anything on the horizon other than the one, the one ship?

Samantha Woodworth

That's the interesting piece. Right. So we have the one ship that is going to be done within the next year or so. There haven't been any contracts signed about or like to build additional Jones Act installation vessels. There have been a lot of proposals and potential contracts, expected contracts around other hybrid vessels related to maintenance and that sort of thing, which, you know, obviously equally as important, once the industry gets off the ground, you don't need the installation vessel really anymore. You need those Jones Act compliant operations and maintenance vessels. So having those is going to be really important because we know that feeder barge workaround works.

We can get these projects built even if we don't have more Jones Act installation vessels. A lot of the problem, though, has to do with just shipyards being able to build these. So there is a continuous kind of arms race going on in the offshore industry right now about bigger and better turbines.

David Roberts

Yeah, I was going to ask this. What are you even building the ships for? Right. It seems like a moving target.

Samantha Woodworth

Yeah. So most of the fleets that would be available to the U.S. right now can install turbines anywhere between 12 and 14 gigawatts in size. But we're already hearing talk of 16, 18, 20 gigawatt platforms coming in the future. So obviously, the bigger the turbine platform, the bigger the ship is going to need to be. In theory, Charybdis is supposed to be able to install those 16-megawatt turbines. But Keppel AmFELS, the shipyard where it's being built, is one of only a handful that can handle ships that big. And the other ones are contracted for military contracts and are unlikely to want to pick up a commercial vessel contract.

David Roberts

Interesting.

Samantha Woodworth

They've already got cushy navy contracts, so why would they bother building a commercial vessel of that size.

David Roberts

Especially in an industry that is in spectacular turmoil.

Samantha Woodworth

Exactly, it is kind of another chicken and egg problem, in a way.

David Roberts

That is just — what a dumb, what a dumb problem to have. It's just so dumb. So, long story short, you anticipate us hacking our way around this for the foreseeable future with barges.

Samantha Woodworth

Yeah, exactly.

David Roberts

Well, that's ridiculous. But such is life. One question that comes up a ton, especially as I live out here in Seattle, is about west coast wind. You know, all the action and all the news stories are coming out of the east coast, they're way ahead. But there's a lot of thinking, dreaming out here on the west coast about offshore wind. Where is that? Is it just a gleam in our eye? Is somebody doing something? Are there laws being passed? Are there companies bidding on anything? What's happening on the west coast?

Samantha Woodworth

So we had the California auction — I think that was towards the end of last year, and that was a pretty well received, well subscribed auction. California has its super ambitious offshore wind targets. Oregon has their more realistic, I'd say, offshore wind target. So obviously, the whole industry out there is expected to be floating, just given the water depth.

David Roberts

Yeah. Just for listeners' benefit, on the east coast, they have a nice little shelf off the coast that's relatively shallow, so you can just put concrete foundations on the floor of the ocean. West coast of the U.S., it drops off like a mile or two offshore to be very deep. So you can't put anything on the floor.

Samantha Woodworth

Exactly. So, you know, the option for technology would be floating wind turbines that are just anchored to that deep, deep, deep seabed. Floating technology is still kind of in the commercialization phase in Europe.

David Roberts

Is there an operating commercial floating wind turbine anywhere?

Samantha Woodworth

There's a few, I believe, in Denmark and maybe Germany. But overall, the technology itself is still in the commercialization phase, still trying to figure out, "okay, is this economical? How can we do this economically?" Especially just because floating, it takes so much more of everything than fixed bottom does. More labor, more steel, more concrete, literally everything, more space.

David Roberts

Why is that exactly?

Samantha Woodworth

The technology is a bit more complicated because you need to make sure that you're ballasting everything right, so it's not going to capsize in the first heavy gale. And as far as needing more space, you are constructing these turbines port side and towing them to where they're going to be anchored. You're not constructing them at the project site.

David Roberts

But then you don't have the ship problem, right?

Samantha Woodworth

That's true. You don't have the ship problem because we have lots of U.S. flag tugboats. But, yeah, you don't have the ship problem. But then you run into the issue of you just need exponentially more port space to be able to construct these massive turbines and then tow them out of the harbor. So it has its own specific set of constraints and problems and idiosyncrasies, if you will.

David Roberts

How close is that? Is there a port that could do it? Obviously, based on everything we've said to date, no one really knows, and it's very up in the air. But when might this happen?

Samantha Woodworth

A lot of retrofitting would need to happen to any port to be able to construct floating offshore wind. But we have some very good, large ports on the west coast that are already hubs of wind energy imports, like Long Beach, Los Angeles, even like Vancouver, Washington, Portland, that sort of thing. You know, it's definitely doable. It's going to take time, though, and I think it's going to take a lot more time than anyone really wants it to, naturally.

David Roberts

Well, you have to get the ports ready. You have to settle this technology question, I guess. You got to get bids like all that just based on how long it took on the east coast. It's hard to be super optimistic.

Samantha Woodworth

And, I mean, I know California has tried very hard to implement policies that would allow for fast tracking of these projects, at least through the paperwork phase, as it were, so they can start getting more focused on the physical infrastructure needed. But I think they're also still trying to figure out how the contracting mechanisms are going to work in CAISO. And frankly, they have enough problems with their electricity grid as a whole with integrating the exceptional amount of renewables that they're targeting.

David Roberts

Well, like some steady baseload offshore wind would be super helpful.

Samantha Woodworth

In theory, yeah, as long as the existing wires can handle that much power. So California has its own grid struggles that it needs to address first, I think before it can really think about actually making these projects into a reality, I think they're going to be able to do it. I think it's going to take —

David Roberts

When is the target in law? Like, what are we saying we're aiming for?

Samantha Woodworth

5 megawattts operational by 2030, and I think it was —

David Roberts

This is California?

Samantha Woodworth

Yes. 5 gigawatts, rather, by 2030 and 25 gigawatts by 2045.

David Roberts

2030 is not very far away.

Samantha Woodworth

No, it is not.

David Roberts

Do you think there's going to be 5 gigawatts of operational offshore wind off of California by 2030?

Samantha Woodworth

I do not think so. I think we will have one to two projects operational by then, but I don't believe we will be hitting 5 gigawatts.

David Roberts

It just seems like on both coasts, there's just this hump you need to get over. You need to get the supply chain going and then build a few projects, and the costs come down each time you build a project. And the costs come down each time you scale up your manufacturing. And it just seems like there's this hump we need to get over, and things will get smoother once we're on the other side of it. But, man, it's a big hump.

Samantha Woodworth

Yeah. And I mean, obviously the hump got a lot bigger with all of these unforeseen circumstances, post pandemic and whatnot. But we all kind of have to remember that these are the same, or at least similar growing pains that the U.S. onshore industry went through in its infancy. Storage is seeing similar growing pains right now. Solar had their fair share, too, in the infancy of that technology. So the growing pains, I think, seem a little greater in offshore just because the projects are so much bigger and so much more expensive and require so much more —

David Roberts

And we have less time and we have ambitious targets and we have a lot more media attention on the whole thing.

Samantha Woodworth

Exactly, exactly. But as we've seen before in all the other technologies, you know, we can get these industries going in the U.S. and we can get them going in a sustainable way. So I don't really have any doubt that that's what's going to happen with offshore. We're just really in the growing pains phase right now, and it just happened to coincide with a really, really, really bad bunch of macroeconomic issues.

David Roberts

What about the Great Lakes? Is that a real thing?

Samantha Woodworth

So the Great Lakes is kind of interesting. I know that Icebreaker — Ohio regulators, I think, early last year approved the project, which was totally not expected by anyone, including the developers of the project, who said, "oh, no, we need to do this now. We got to get the wheels spinning again."

David Roberts

If you were building on the Great Lakes, would that be a standard platform hooked to the seabed, like just the kind they're building off the east coast? It wouldn't be any special technology or anything?

Samantha Woodworth

Yeah, it's a fixed bottom. It's also state jurisdiction, obviously, instead of federal jurisdiction. So these are all — would be significantly smaller projects. I think Icebreaker, at most, it was going to be 20 something megawatts.

David Roberts

Interesting. But they're doing it. They're moving forward.

Samantha Woodworth

Yeah, in theory, that one's moving forward. It's been radio silence since that approval. But Canada, Manitoba had looked into doing Great Lakes offshore wind way, way, way back in the day and then kind of tabled the whole thing because they said they needed to do more environmental reviews, since obviously the Great Lakes are a source of water for —

David Roberts

Yeah, I can only imagine the NIMBYism that's going to take hold when this gets well.

Samantha Woodworth

And that's why Manitoba has a moratorium on offshore wind development in the Great Lakes at this point, while they do more research and that sort of thing. But that moratorium has been in place for, I think, like ten years now. So that one's going to come with its own set of hurdles, especially as it pertains to the fact that those lakes are drinking water for millions of people. So you're definitely going to have, permitting wise, a significant number more hurdles. But for powering load centers like Chicago and that sort of thing, I think it would be very, very beneficial.

David Roberts

Very handy. But if I had to pick one that's going to take longer than anybody thinks. That would be my bet.

Samantha Woodworth

Exactly.

David Roberts

One other thing. What about, and this is something I wrote about, jeez, when I was back at Grist, I want to say in, like, the mid-2000s, this idea of an east coast transmission backbone out in the ocean, that you just sort of hang projects off, because obviously, if every project has to build its own connection to the shore, that's NIMBYism, that's money, that's time. And if you could just connect to this backbone, and there could just be one or a small number of big connections to the shore, then it seems like you'd open up, you'd make things a lot easier for subsequent projects. I've heard talk about that for ages.

Is that real? Is that going to happen?

Samantha Woodworth

So that's definitely something that we've heard from both, like, New Jersey and New York. We're talking about doing a meshed grid system for their projects. And there are a lot of positives, let's say, about doing it that way because it's beneficial both to grid reliability, but it's also beneficial to the project, like asset owners as well, because essentially the way it works is that you have that grid interconnecting at multiple points on land and also connected to multiple projects. And so basically, if one point on land has too much power flowing to it at one time and it's congested, but another point needs more power, you can shift what point that power is getting or where that power is getting flowed.

David Roberts

The whole east coast becomes one big shared grid.

Samantha Woodworth

Yeah. And honestly, I frankly think that is a brilliant idea, and I hope that it gets built, because I think —

David Roberts

I loved it back in the 2000s when I wrote about it.

Samantha Woodworth

I think it makes a lot of sense, because then the asset owners aren't having their generation curtailed and losing money that way. While we're not adversely affecting grid reliability by injecting excess electrons into an overly congested location.

David Roberts

And plus, you just cut the whole NIMBY thing out completely. It's all taking place out in the middle of the ocean where nobody's going to see it.

Samantha Woodworth

Well, sort of —

David Roberts

Except for the big connection spots.

Samantha Woodworth

Yeah, exactly.

David Roberts

You're reducing your NIMBY battles to a couple of key central battles.

Samantha Woodworth

Yeah. And I mean, you still have that NIMBYism about where the lines interconnect underneath, or any sort of onshore grid expansion that would be needed to flow the power, which is just super difficult to get approval for any upgrades or new transmission lines, even if they're underground these days. So that's definitely a huge piece that needs to be addressed. And honestly, that's kind of the big piece that I always harp on is the fact that our existing onshore infrastructure needs to get addressed and those projects getting fast tracked. But as far as the mesh grid goes, overall, I think that idea makes a lot of sense.

The reason that there hasn't been a ton of movement on it, I don't think is just purely because of cost.

David Roberts

We'll talk about planning. I mean, that's like multiple states, the federal government. That's a lot of planning.

Samantha Woodworth

Yeah. And God forbid that everybody talk to each other.

David Roberts

I know you'd have to have a lot of jurisdictions working together to get that going.

Samantha Woodworth

Yes. So I think that's a big piece of it is like getting everybody together and getting all of the permitting and stuff, getting it done easily. I think also, again, it goes back to that question of "who's going to foot the bill?" Generally, the asset owner is the one that is paying for the lines to connect their project to land or to whatever point of interconnection. So. Okay, well, I only want to pay for the line that connects my project to one point. Who's going to pay for the interconnected interconnection?

David Roberts

Clearly that's something the States would have to get together and somewhat pay for.

Samantha Woodworth

Exactly.

David Roberts

It would pay itself back so richly over time.

Samantha Woodworth

But it's the time value of the dollar. Right. The dollar later doesn't mean as much as the dollar right now. So the states, they should have a hand in funding pieces of that, probably most of it. But as it stands now, the way that it's always worked for onshore and for solar is just the developer pays for those upgrades.

David Roberts

We know how well that's going.

Samantha Woodworth

Yes.

David Roberts

How well that system is working.

Samantha Woodworth

Yeah. So there definitely needs to be a paradigm shift, I think, if we're going to get these mesh grids built. I think, again, they are a fantastic idea, but it's just the complexities there and then, yeah, where's the money going to come from?

David Roberts

Just on the technology side, I mean, you have sort of two buckets here. You have the fixed and the floating. Floating, as you say, is still somewhat in the technology development stage. Is fixed — is there a set technology now or are we still in a place where we might see big, fundamental, new, different kinds of technologies come into play? Or do you think on the fixed side, is that like they know what they're doing now and they're just replicating?

Samantha Woodworth

There's multiple different ways that fixed bottom is done and construction methods, let's say. And obviously, which ones get used it depends on the project location and all the characteristics of the seafloor and that sort of thing. I think that we'll continue to see technological developments on the fixed bottom side, but generally, as far as overall design goes, I think we're pretty well established as far as you have these handful of designs to choose from based on your project site characteristics.

David Roberts

So we'll get incremental improvements.

Samantha Woodworth

Exactly.

David Roberts

And some scale, some learning from scale, maybe. What about on the floating side? Because I've seen some cool, sort of like, animated demos of exciting, completely new, like the turbines that are sort of laying kind of on their side and then get blown erect by the wind when they need it, and all sorts of crazy stuff on the floating side. Where is that in terms of figuring out what we're doing?

Samantha Woodworth

It's definitely more in the technology development phase. I think there's kind of the one overall design that is being kind of used as the baseline for most of these projects, but there are definitely lots of creative designs out there that are being posited. And ultimately, though, I think the one that we are currently seeing as most often used as the rendering is still proving to be what would be the most economical option.

David Roberts

And that's just like some buoys to keep it steady and cables to the seafloor?

Samantha Woodworth

Essentially, yes.

David Roberts

And this notion of offshore wind turbines sitting out in the middle of the ocean, not connected to any grid, but instead just making hydrogen or making ammonia and serving as kind of like an ammonia gas station for ships, is that anything other than like, a dreamy idea in someone's head? Is anyone seriously doing that?

Samantha Woodworth

So there are a couple of projects that are in development in Europe that are going to be directly tied to hydrogen production. So it is not entirely a pipe dream. I know that that's also something they're talking about in Canada, because Canada wants to be a net hydrogen exporter.

David Roberts

Oh, interesting.

Samantha Woodworth

So they're proposing a couple of gigawatt scale onshore projects to power those. But then Nova Scotia is also talking about interconnecting offshore projects as part of that, because Canada itself, you know, especially in the east, in the maritimes, doesn't really need any more renewable energy. They have so much hydro power.

David Roberts

Yeah, they need to figure out how to sell it in various forms.

Samantha Woodworth

Right, exactly. But I could also see them putting in these big offshore projects, using them to power their electrolyzers, but also becoming a net energy exporter to New England. We already buy hydro from them why wouldn't we buy offshore wind?

David Roberts

Or buy ammonia?

Samantha Woodworth

Or ammonia. Yeah, exactly. So in other countries, that's definitely materializing. The hydrogen economy in the U.S. is kind of a little bit on the slower side. But I think we could definitely see, especially once state targets have started to be met and there's no longer a push to have these solicitations and have these projects directly tied to the grid, I could definitely see some of these projects contracting for providing power to electrolyzers.

David Roberts

That's probably a ways out.

Samantha Woodworth

Yeah, I mean, that's definitely, you figure right now these projects are being proposed to sort of help with the decarbonization goals of all these states. So really I think we're going to just continue to see there be utility contracting and offtake until those goals are either within reach or met, and then we'll start seeing the offtake landscape changing for offshore wind as it is.

David Roberts

We still need a lot of clean electricity —

Samantha Woodworth

Exactly.

David Roberts

— around here. Summing up, I mean, you sort of touched on this, but I guess the big question on most people's mind, and the big question on my mind, the big question on everybody's mind is just sort of which of these troubles that have all converged on this industry at once, which are temporary and which are structural? In other words, how temporary is this versus are we, in some way, to some degree, permanently downgrading our hopes for offshore wind? Or do you think this is all in some sense temporary?

Samantha Woodworth

I think in some sense this is kind of all temporary. When all of these kind of macroeconomic problems kind of came together, I know that we were talking, "oh, inflation will be back to normal next year." And obviously that wasn't the case. Obviously, I think that volatile piece of it that'll eventually return to normal. But I also think that it kind of has provided us a good lens with which to look at the future for offshore wind development. And knowing that these are things that should be considered as part of the due diligence process.

David Roberts

Like interest rates particularly — probably going to stay. It's not going to go back down, I don't think, anytime soon.

Samantha Woodworth

Yeah. So in order to adapt to what is kind of our new normal, to use a super cliché phrase, it is definitely requiring our understanding of how our own power markets work kind of be revisited and how getting these projects to fruition, how we revisit that as well. I think in some ways the renewable industry as a whole will be forever changed by all of these issues. But I don't think that it's going to be changed in such a way that is going to be irreversible or overly detrimental to the health of the industries. I think it's just going to force us to adapt, and I think ultimately we're going to be able to.

We've seen these growing pains before in all the other technologies. It stinks that those normal growing pains are converging with unexpected exterior stressors. But overall, I think really what it's shown us over and above how susceptible these projects can be to unexpected stressors like inflation or a pandemic, I think it's really shown us to temper our expectations as far as timelines go. I don't personally believe that we're going to see a ton of these projects get canceled. I think we're just going to see a lot of timelines get extended. As far as getting those projects online.

David Roberts

Are there policy tools? One of the things — it comes up for me again and again, and is it would just be crazy of us to let high interest rates strangle the clean energy transition or substantially slow it down. Are there ways to carve out cheaper money for something like offshore wind? Or just more broadly, are there obvious policy steps that could be taken here to make things somewhat easier on this industry during its time of trouble?

Samantha Woodworth

That's kind of a little out of my realm of expertise. I think, though, given the fact that a lot of this is tied to tax credits and essentially government subsidies, it's going to be really hard to sort of disentangle funding from the health of the economy.

David Roberts

Yeah. Okay. Literally, final question, which is just the reason we're talking about all this, is that the potential for offshore wind in the U.S. is big. Just give us, by way of wrapping up, really wrapping up. Just give us some sense of like, what is the prize out there that makes it worth fighting through this tangle to get there?

Samantha Woodworth

Renewable energy. It really is kind of that light at the end of the tunnel, right. We've seen in the other technologies, we've watched it go from not technologically viable, to technologically viable, to outright economic on its own without subsidies. Offshore wind has the potential to do that as well. And it is on just such a larger scale that it really does have the potential to green our grid in an incredibly huge way.

David Roberts

Yeah. Do we have any numbers on that? I mean, I should have told you beforehand so you could grab some, but when we talk about the potential for offshore wind in the U.S., do we have gigawatt estimations of what's out there?

Samantha Woodworth

At the end of the day, we're still expecting close to 15 gigawatts operational by 2030, which is not a small number.

David Roberts

Yeah, and that's all east coast. That's what we expect by 2030. Is all east coast or is there —

Samantha Woodworth

Yep, it's all east coast.

David Roberts

And so is there another 15 waiting for us on the west coast? Like, is the potential on the west coast as big as it is on the east coast?

Samantha Woodworth

Again, because of the technology, I think the implementation is going to take a lot longer. But floating farms are generally larger just because the economy of scale is there. So, having successful floating wind on the west coast, it has the potential to be a huge impact on the overall energy transition in the U.S.

David Roberts

Despite all these troubles, just the hope is pretty amazing. It's just like steady, around the clock, power generated way out where you don't have to see it. That just shows up in your cables. That seems worth fighting for.

Samantha Woodworth

Absolutely.

David Roberts

All right, well, thank you. I'm sorry I kept you so long. I've been digging into this stuff and it's very interesting.

Samantha Woodworth

Don't apologize. I could talk about this for another 2 hours.

David Roberts

So many moving parts here, like social stuff, political, economic. It's just all in chaos right now. Really fascinating story to watch develop. So, thanks for coming on and walking us through it.

Samantha Woodworth

Not a problem. Thank you again for having me, David.

David Roberts

Thank you for listening to the Volts podcast. It is ad-free, powered entirely by listeners like you. If you value conversations like this, please consider becoming a paid Volts subscriber at volts.wtf. Yes, that's volts.wtf. So that I can continue doing this work. Thank you so much and I'll see you next time.

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David Roberts

To hit its climate targets, the US must build an enormous amount of new clean energy infrastructure. Much of that infrastructure is going to be built in rural communities, and the resistance of those communities to that infrastructure is one of the greatest threats to the clean energy transition.

I've done a couple of pods on this subject and will probably do more. Today, we're going to get something of an international perspective.

When I was in Australia, I interacted with a broad network of scholars and activists who are thinking seriously about the social mechanics of community buy-in. One of those scholars and activists is Jarra Hicks, who got her PhD at the University of New South Wales with a dissertation on community-owned wind farms in rural (or as they call them in Australia, “regional”) communities. She now runs the Community Power Agency, a nonprofit organization that is working to ensure a “faster and fairer transition to clean energy.”

Among other things, Hicks has co-authored a benefit-sharing guide and runs an online benefit-sharing course, both meant to help renewable energy developers better navigate this tricky territory.

I've been meaning catch up with Hicks ever since I returned from Australia. Last week I finally got the chance — we talked about the problem of rural resistance, the balance between community engagement and speed, and the many varieties of benefit sharing. I think it will be clear to everyone how this knowledge transfers into the US context. I enjoyed it immensely and hope you do too.

All right then. Jarra Hicks, welcome to Volts. Thank you so much for coming.

Jarra Hicks

Yeah, thanks for having me.

David Roberts

This is a topic of great, great interest in the U.S. right now, but I thought it would be interesting to get a perspective from another country as well, especially since you seem to have devoted your life to learning about this. So I think there are going to be some lessons that are transferable, but let's just start maybe with how you came to this subject of your PhD and of your professional work.

Jarra Hicks

Yeah, sure. So I was really lucky. I got the chance to visit a lot of communities that were doing renewable energy projects, and these were communities that were really embracing renewables. They loved renewables and they were getting great outcomes for their communities and for the planet. And I wanted to see more of that. I wanted to see more communities who were really passionate about renewables and able to get a lot of great benefits from being involved in the energy transition. And I wanted to see more communities who felt positive about this change. And if we go back, I first got involved in this in the early two thousands.

And at that time, there were a lot of communities who were pushing for more renewable energy uptake. And in Australia at that time, there really wasn't a ton of renewable energy, and probably similar in the states, communities were really wanting to get behind renewable energy as a means of taking action on climate change. And at that time, there was an absence of national policy supporting renewables. So it was about a grassroots movement to get renewables up and running. So we saw programs like communities coming together to organize a bulk purchase and install of solar panels at a community scale.

So helping reduce the barriers for people, helping them understand the technology, helping them install it in their homes. But we also saw communities coming together to establish commercial-scale projects like little two-turbine wind farms. And this was really motivated by communities wanting to take positive action on climate change.

David Roberts

Did that switch at some point to resistance? Because that's the opposite of the problem we have now.

Right, well, I guess, yeah. So what we're seeing now is there is emerging resistance to large scale renewable energy projects. And so it is, it's a really different landscape. But what I've learned through my years of being involved is that it's really possible for communities to not only accept renewable energy projects but to really love them and to welcome them in their communities. And it's about the way we go about these projects, and it's about the way we make opportunities for people to really be involved and to genuinely participate in that process.

What was the PhD work, what was the specific focus of your PhD?

Jarra Hicks

So, my PhD looked at small community-owned wind farms. So using commercial-scale turbines, 900-megawatt turbines, 1 MW turbines, but just one or two or three of them at a time. So these are small wind farms that are owned by the community. And those projects, they've emerged from a community desire to have their own energy or to have clean energy to take action on climate change. And these communities went through different processes to set up these enterprises so that they could have community-owned wind farms. And my PhD was really looking at what are the social outcomes that can occur in a community when they go through this process together.

And ultimately, what I was looking at is how can we do renewable energy development in a way that brings people along and that helps people to feel positive and confident and comfortable about renewable energy, and that creates a business model that delivers benefit back into communities as well. And through my career now, I've been able to learn about what is it that helps to create a positive relationship between communities and large scale renewable energy projects and to translate some of those learnings into the commercial large scale renewable energy practice of development.

David Roberts

Social license, as they call it. Talk a little bit about how you think about social license, just sort of in the abstract. What is social license and why is it particularly so important for renewables?

Jarra Hicks

Yeah, so it's a term that's used to describe the ongoing relationship between a project, the project proponent, and the local community or the society hosting that project. It's a dynamic relationship. It's not a once-off license that you might get for other aspects of project approval. It's not a once-off stamp, and there it is. It's dynamic and ongoing. It's constant. It's through the development process, it's through the operation phase of the project. It's lifelong. And it's about creating and maintaining a level of acceptance and approval for a project in the community that is hosting that project.

And at its strongest, it's about actually embedding that project into a place so well and so much that people can identify positively with it. Like it can even become a symbol of that place, or it can become a characteristic that people feel proud of. But when it's missing, or if there is no social license to operate, that's when we see broad-scale opposition and protests that can hamstring a project or stall it for years or even sometimes kill a project in the water.

David Roberts

Yeah, I want to spend a little bit of time on that, on the negative side on bad process. Starting with just: Is it as big a problem in Australia as it is in the US right now? Because in the mean, I think I would rank it on top of the forces pushing back against the spread of renewables right now. I would put community opposition rank it number one. There are projects dying right and left of this stuff. Is it that big a problem in Australia? Like, is the Australian renewables community as gripped by this problem as they are over here?

Jarra Hicks

It's definitely a big concern, and I would say it's becoming a more difficult thing by the day in Australia. Part of what's going on is that communities are getting sick of the relationship with a company that is extractive. They're getting sick of that scenario where a big company comes in and takes something in a way that feels extractive, it doesn't feel fair, and it doesn't provide a benefit, a genuine, lasting benefit in that community. And it doesn't engage with people in a way that helps them to feel like they're being treated with respect. I have a three-year-old kid and if I just try telling him what's going on and being like, "Right, we're leaving the house now. Come on." He doesn't really like it. People don't really like just being told what to do. People respond much more positively if you're like, "Hey, it's going to be important for us to go and do this thing soon. And we could ride the bike there or we could drive the car there. And while we're there, we could do something fun for you as well." taking the example of my three-year-old kid. The renewable energy equivalent is about working with communities through a process that feels fair and good. So it's about doing your engagement well. It's about doing your engagement early enough so that communities genuinely have a role to play in designing a project that is going to be appropriate and well received in that place.

It's about doing engagement in a way that allows people genuinely to influence some outcomes of the project. And it's about doing your engagement in a way that is appropriate for that community too. Like, are they online literate or do they rely really on the newspaper and the radio and face-to-face engagement? it's about all those things. But it's also about delivering positive and tangible benefits. So there's really two elements. It's about it being done well in terms of the process and done well in terms of local people's experience of the outcomes from that project. In the academic research on this that's been done across the US, Europe, and Australia, the language is around procedural fairness and distributional justice.

David Roberts

Do you in Australia, as we do in the US, have an active and well-funded political force pushing against you on this? In other words, trying to sow confusion where you're trying to remove it, trying to raise fears where you're trying to calm them, that kind of thing. Is there something organized like that nationwide, or is this spontaneous community pushback?

Jarra Hicks

There is both. I would say that there's definitely organized, particularly anti-wind sentiment that has deep links politically within conservative politics and that historically has been proven to have links with the fossil fuel industry as well. And that's been the case for over a decade with regards to the anti-wind movement in Australia. So that is a really difficult political context and they are often really good at doing fear-based campaigning and also capturing the media, and it's a real concern. Part of my way of thinking and strategy for how to address that is if we can be doing our practice well as renewable energy developers, if we can be engaging people well and with respect, we've got good process and we've got good strategies for delivering benefit locally, delivering local jobs and local procurement and other benefits, and we're in those communities having good relationships and good conversations, then that's the only thing really that we can do to inoculate against that fear-based and organized campaigning.

David Roberts

Another thing that comes up when I hear this, and I've talked to some renewable energy developers about this and they feel caught in a dilemma, I guess you would say, which is there's this incredible need for speed and this incredible demand for what they want to do from the sort of nation at large, but this incredible pushback at the local level. So when they go fast they run into problems, right? They're told if they go too fast they run into problems. But the only alternative is going very slow. And going slow A, costs more money and B, doesn't serve that interest of speed that's built into the sort of climate targets that the US has.

So how do you wrestle with this dilemma between process and speed? When I hear more process, more engagement with the community, especially on a bespoke — as you say, every community is different, and if you really want to do this well, you're going to do research beforehand, you're going to do polls or surveys, you're going to have someone who's there on a full-time basis. I mean I can imagine how to do it very well. All of that to me sounds very slow. How do you think about the relationship of quality, I guess, and speed when it comes to community engagement?

Jarra Hicks

I have a bunch of thoughts on that. I think at a project level, if you have dedicated engagement staff working alongside your project development team and they are able to be on the ground doing the good work in the community, like there every step of the way with your project development team from when that project is first conceived and you're first doing feasibility studies, I don't think this needs to take any more time. In fact, the experience that I have seen with projects in Australia is that it can actually speed up the project development and approval process. So doing good engagement and good benefit sharing.

You know, I've spoken to projects whose experience is that it has sped up their approval process and that that's had a really substantial dollar value for them because it's made it easier and faster. And this one particular project I'm thinking of, there had been no wind projects approved in that state for two years because wind energy projects had become quite controversial and political and they got their project approved really without a hitch because they had done great engagement, good benefit sharing, and also because it was a well-placed project, it was a strategically placed project. So I think that good practice does not need to slow you down. I guess the other points that I would make, I think that a lot is to do with the practice of developers on the ground in communities.

But the scale and the pace at which we need to do this transition as whole countries and as a whole planet requires that we put some emphasis on creating the right social context for this transition so that our society and our communities really understand why it's needed, they feel comfortable with the technologies, but even more than that, they are enabled and supported to participate themselves. So what I've seen with community energy and what I really believe is that if we have policies that support people to get involved with renewables in their homes, in their businesses, in their communities, that that's going to create a social context of support that will assist us with getting large scale projects happening faster as well.

David Roberts

I meant to mention as you went past that, that these community engagement people at the renewable energy developers who I talk to also always say that they're underfunded relative to their opposition, that they go in completely unprepared for the scale and intensity of opposition, and that their bosses don't yet understand how important or significant their job is or how the kind of fight they're fighting. Do you have a sense that renewable energy developers are starting to get the significance of this and resource it appropriately?

Jarra Hicks

I do feel like that's a change that's very much underway in Australia, also globally, but there's a long way to go. I think there's a recognition now that social license and the social aspects of this energy change are really important. I think people are starting to use the right words, but I think people are still learning what that means in practice, particularly when it does need to be quite nuanced and locally appropriate in different contexts. But the things that I've seen helping to shift that practice and that sort of emphasis and that resourcing towards more community engagement in Australia, the things that are helping, I think, are industry bodies who are helping people do peer-to-peer learning, and policies that reward better practice.

So, for example, in Australia, we have a range of merit-based criteria that companies need to report against in order to be able to access renewable energy incentives or to be able to have grid access to new transmission lines. So that puts like weighting criteria around social outcomes and around community engagement practice, benefit sharing, local procurement, all of those things. Increasingly as well, in the private power purchase agreement market, we're seeing criteria around those social aspects included as well, like say a university who wants to sign a direct power purchase agreement. They want to know that the community has been happy with that project and it's delivering some good social outcomes as well as has good environmental credentials as well.

That's also like a market thing that's helping change behavior.

David Roberts

A little demand pull there.

Jarra Hicks

Yeah, so I think those things are helping. One gap that my organization has helped to address as well is like writing a bunch of guides and guidelines, working with policymakers to write those guidelines, doing research to inform those guidelines. But also we have set up a professional development course that is targeted specifically to renewable energy developers and training them up in community engagement and benefit sharing practice.

David Roberts

Yeah, I was going to say, what do you do if you're a developer? I mean, if you got into renewable energy to do renewable energy, this is not necessarily something you understand or have any strength in or — besides the guides are your guides the only guides you're aware of in terms of just like off the shelf help? Because I know a lot of developers are looking for help now, but it's hard to standardize, as you say, it's hard to standardize this stuff.

Jarra Hicks

Yeah, well, I think the industry bodies play a role there. So in Australia, it's the Clean Energy Council. They have written guides, we've written guides with them. They've also funded research that's helped us to understand better what type of practice is creating better social outcomes. And that's a piece of research that we did a few years ago. I think it is difficult because the energy industry is dominated by engineers and technical people for sure, but we need to increase the awareness that people with a community development training, community engagement training, even social work, those types of skill sets can be brought in and skilled up enough into the renewable development process that they can help on those social aspects of developing a project.

David Roberts

So talk just a little bit about what a good process looks like because it seems like it would be easy, when you're talking about community benefits, it seems how it would be easy for this to look like you're just coming into a community and saying, "if you let us build this, we'll buy you a bridge." Just sort of like very transactional. So what does good community engagement look like? And what are the sorts of things that you can offer a community that don't just look like you're trying to pay them off?

Jarra Hicks

Yeah. So the key there is that it needs to be relational. So good engagement is all about forming good relationships locally. That starts with your host landowners, and it broadens out to the neighbors and then the near community and then the broader community around a project site. It's about spending as much time as possible face to face, and even if that needs to be online, but ideally in person, face to face, having direct conversations, having some of those conversations one on one, having some of them in group environments, and building that up over time, sustaining your engagement and offering a range of different ways that people can engage with the project.

So, don't just do one focus group. Think about doing a few focus groups in a few different areas. Think about having an online survey. Think about having a stall in the street where people can have casual conversations with you and fill out a physical survey. Think about pairing your online comms with a letter mail out. So one of the keys, I think, is sustaining the comms and engagement over time and through a diversity of methods, but starting that conversation with the community early enough so that the input can inform the project as it develops. Like, I understand a lot of stuff is commercial decisions, but there are going to be things that actually will be useful if you incorporate local knowledge.

And those are things like really obvious places in the landscape that are special to people or that have First Nations heritage and significance. If you can access local knowledge early on to know where those are, your project is going to be better off. You're going to avoid the costs of maybe making a mistake in terms of sighting. There's going to be micro sighting decisions that you can include local people in. Like you might reach out to local biodiversity or land care groups to help you understand the nuances of local riparian zones or connectivity among different areas of different vegetation types locally.

These are pretty niche local knowledge — things that can really help if you reach out to local groups. And I would say every single point of connection you can make with a local person and a local organization builds up a richer, stronger network of relationships between the project and the community. And that, that gives you more resilience, I think, against the challenges when they emerge. People know who to come to if they're hearing whispers about something that doesn't sound quite right. All of those things help over time. And in terms of benefit sharing, I think the key really is that it's paired with good engagement and that that conversation starts early.

So when you're first speaking to the neighbors and you're first speaking to local groups, you're saying, "Hey, we don't know exactly what it's going to look like yet, but we are going to offer a per megawatt amount to a community fund. And the amount we can offer will vary based on the commercial aspects and the generation profile of this project. But where that money goes and how it contributes to the community, we want that to be a decision we make with the community. And so we're going to be setting up a local reference group, we're going to be talking to people, and we're going to be working with you to design that benefit sharing package and then to govern it and make the decisions about where that money goes over time."

So, it's really about creating opportunities for people to be involved, to participate. Fundamentally, I think that's it.

David Roberts

What do communities tend to ask for when they are allowed to be involved? Are there patterns? Are there predictable things that work?

Jarra Hicks

A lot of projects end up setting up some kind of grant fund, like an annual grant fund, because it is really flexible and it can be really responsive to whatever it is that the community is wanting to do, or whatever the need is at the time. But I've also seen really great programs like allocating a portion of the benefit fund into a revolving loan program that can support low-income households to install solar panels or solar hot water or heat pumps, and that money is brought back and then recycled over time and can go on to help the next household. I've also seen programs where a portion is allocated to an annual grant fund and a portion is allocated to a sort of longer-term legacy fund where it might go into an interest-earning account for a few years, and then after five or so years, it's got a bigger chunk of money to do a bigger strategic project in the community, and to go out and seek matching funding from state government or whatever it is, so that the community can achieve something that is a bigger, more strategic need, that has a longer-lasting impact. So I think really it's about being able to work with a community to identify what are the things that are going to have a significant impact on the challenges that are being faced by that community, that are unique to that place, that will really help to create a step change.

You know, for a lot of small regional communities renewable energy is a really unique opportunity that comes once in multiple generations. And if we can use this opportunity well, we can deliver some really awesome outcomes. And some of the great examples I've seen are renewable energy developers partnering with domestic violence organizations to be able to repurpose worker accommodation into temporary accommodation for people experiencing domestic violence. So after the project has been built, that accommodation is then able to be gifted or co-owned by a local service and a local government to be able to have an ongoing positive benefit in a community.

David Roberts

And these are all just things that developers are coming up with. Communities —

Jarra Hicks

No, well, in conversation with the community. It takes being on the ground, having conversations, going through a process that is basically like a community development process or a community planning process, thinking about having local conversations with people, thinking about what are the real needs here and what could we do and who could we work with to make a great impact.

David Roberts

This also brings me to something that I was glad to see that you are working on and writing about, which is it seems there are going to be places where these projects are concentrated and there's going to be a bunch of projects in particular regions. And it just seems like developers going one by one by one by one by one to each of these little communities and working out bespoke deals — it seems like you could do something more regional, more regional in impact, something a little bit more with a little bit more structure and something that could pool the benefits of multiple projects and maybe do bigger things for public benefit, things that you couldn't do with the revenue from a single project. And you've been writing a little bit about that.

So just describe what regional benefit sharing, what that means.

Jarra Hicks

Sure. So it's exactly that. It's in areas where there's going to be a high density of projects: How can we coordinate benefits, but how can we also coordinate other things that are going to have a significant impact but also a significant possible positive benefit for communities like coordinating housing, coordinating jobs and training, coordinating employment opportunities and local procurement opportunities? But in terms of the benefits, it's about saying, "yeah, how can we work together?" first of all, to administer our programs so that we don't overwhelm the community and confuse everyone and create engagement fatigue.

David Roberts

Yeah, I mean, you can imagine communities like, "What did you get? Well, what did you get?" And just all the rumors going back and forth. There's just a lot of process happening over and over and over again.

Jarra Hicks

Yeah, and totally. And if there's ten different grant funds all in the same area, how do you remember which one are we applying for now? And all the time that goes into those applications? So there's a way of streamlining the administration of the benefit sharing and streamlining the governance as well. So if you've got a local committee involved in helping to make the decisions about what gets funded, being able to have one committee that might oversee a number of different grant programs that are all in the same geographic region, that makes a ton of sense, being able to have some common resourcing of the administration.

So rather than having one staff person in every company, you pool that and you do it together. That makes sense. It makes it easier for the community, probably. It also makes it less cost for the company. But then there's also a whole other level is like, how do we pool some of that funding at a regional scale to do something strategic, bigger, with more lasting impact on the real issues? So with benefit sharing, there needs to be layers, right? Benefit sharing is partly about creating a positive relationship and an experience that is of fairness from a project.

And so that does need to relate to the community that is most immediately affected by that project. So you need to make sure that your benefits are experienced by the neighbors and by the immediate community who are hosting the project. If it was all going to the region, that probably wouldn't feel fair for the people who are literally the ones who see it every day. So, a portion of the benefit sharing from any project needs to stay in that most immediate community. But I think a portion of the benefit sharing budget, there's an opportunity to pool it with other projects within that region so that you can have that bigger fund and you can do those more strategic projects.

David Roberts

But who's doing that? Is that developers coordinating with one another? Because that seems — I don't know how well that's going to work. Is this like a nonprofit entity? Is this a government, a regional governmental thing? How would you structure this so that it feels fair to all the individual communities involved and to all the individual developers involved?

Jarra Hicks

I think that's a great question, and to my knowledge, we're still very much figuring that out the world over. I'm not aware of examples of where this has actually been done yet.

David Roberts

Oh, really?

Jarra Hicks

I am aware of foundations, like existing foundations that are providing some administrative and governance services to developers around their benefit sharing programs. But I'm not aware of anybody who is regionally coordinating a bunch of projects to do something more strategic. And that's the work that we are thinking through right now. And we're basically out there seeking partnerships with other people who want to figure that out with us. But I imagine we're going to see a bunch of different models. And I think this is partly the role of the state. When we talk about needing to coordinate renewable energy development so that we can keep the lights on and meet our climate targets and our net zero emissions targets, there is a role for the state to coordinate that process, and this is part of that coordination that needs to happen.

It is not just a technical change. It's also a social process. We need the state. In Australia, this is definitely the case. I can understand why it's happened, but we've been mostly focused on the technical and the market aspects of setting up this renewable energy transition, rather than resourcing and trying to coordinate or putting as much emphasis onto the social aspects. Within that, I include the impacts on housing, the need for additional training and jobs, and workforce development. There are just so many layers to it.

David Roberts