Data center moratoriums now span 38 states, more than 120 of them, holding up $130 billion in projects. On this episode of Volts, cross-posted with Energy Empire, David Roberts talks with hosts Jigar Shah and Jamie Nolan and Arnab Pal of Deploy Action about why the backlash landed and what a better deal looks like. For a rounding error against what these projects cost, developers could put batteries in basements, solar on roofs, and money into local schools, and buy their way to consent.The conversation gets into the utility spending, spend-to-earn incentive, gas coded as firm against renewables, NERC’s May 4th reliability alert, and the politics of affordability heading into the midterms.
Today we have a special treat for you Volts listeners. Many of you, I’m sure, listen to the podcast “Energy Empire,” co-hosted by (many-time Volts guest) Jigar Shah and Jamie Nolan. Jigar and Jamie recently invited me onto the pod, along with Arnab Pal, the head of Deploy Action, a nonprofit working to ease the barriers to clean energy deployment in the US.
Our subject was the data center backlash: what’s driving it, where it might go, what role utilities play in it, and how hyperscalers should proceed. It was a fun and lively conversation. If you’d like to see the video version, you can go the Energy Empire website, but if you are a sensible person who understands that podcasts are and should always remain an audio medium, here it is for your listening pleasure. Enjoy.
Timestamps
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
Resources
People & Organizations
Volts (Website - Podcast - Apple Podcasts - Spotify - YouTube)
Jigar Shah (LinkedIn)
Energy Empire (Website - Apple Podcasts)
Arnab Pal (LinkedIn)
Deploy Action (Website)
Searchlight Institute (Website)
Breakthrough Institute (Website)
Books & Articles Discussed
Searchlight Institute - Seizing the Data Center Buildout for Grid Modernization
Grist - Data centers are straining the grid. Can they be forced to pay for it?
Ezra Klein and Derek Thompson - Abundance
Related Volts Episodes
Text Transcript
Jigar Shah: Dave, how are you?
David Roberts: Good. Good, Jigar. Good to talk to you.
Jigar Shah: Good to talk with you. I feel like the episode that we did together on doing data centers the dumb way has set off a fire chain of comments, and now we’re back.
David Roberts: I got a lot of feedback about that episode. A lot of people really liked it.
Jigar Shah: Oh, that’s good. You didn’t get a lot of negative feedback?
David Roberts: No, no, no. People are so desperate just to, to hear someone who knows something about this, and people are, are in a fog. So I think it was very helpful.
Jigar Shah: Well, I wanted to bring in Arnab Pal into this conversation. He runs Deploy Action and was really the energy behind getting the grid utilization stuff passed in Virginia and getting some of the other things done in California. And so like, he’s sort of on the ground working with politicians, but also working with legislators who are trying to pass some of this stuff. ‘Cause I, I feel like some of this is just 101 stuff, which we covered last time, but now we’re moving into like polling data and like governors who are, who are inundated with hate mail. And so…
David Roberts: Public opinion, which involves a, a large measure of ... Animal spirits, let’s say.
Jigar Shah: Well, let’s start by, like, where is your head at in how essential it is that we win the AI race and that AI is gonna change our lives forever? ‘Cause, ‘cause ultimately, all of this comes down to the fact that I think people believe that this is a technology of the future that we need to own, right?
David Roberts: Yes, but I, like I think much of the public, have not really been persuaded of that, mostly because there don’t seem to have been many attempts to persuade as opposed to bang me over the head with a mallet about it. If you ask me, the proximity of cheap, boundless energy says much more about humanity’s bright future than AI. I think that’s the revolution that’s exciting. That’s the revolution I’m excited about. It’s bizarre to me that it’s been shunted to some sort of asterisk, after AI. I, I, I’m much more interested in the energy revolution. And about AI, I just don’t know. I think like most people, I just don’t know. I know that it looks ridiculous to me that every corporate CEO, every university president, every sort of wealthy elite is trying to force this down people’s throats beneath them. I mean, I’m as irritated at that as anybody else, but as to the long-term effects, I have no idea, and I don’t really think anybody else does either. Whereas I know boundless cheap energy is going to be a very good thing.
Arnab Pal: Yeah. So Dave, I, I think the two are, I think you, you could agree with this, are very related in that people’s unknown of AI is, I think, causing their inability to wonder at this energy future that you’re talking about. And I think we’re, we’re seeing that play out with all these data center m- moratoriums, where we’re seeing them across, there’s 120 of them across 38 states. There’s 75 projects that’s worth $130 billion. You’re seeing national legislation from Senator Bernie Sanders and Congresswoman Alexandria Ocasio-Cortez with the federal moratorium. And, and you’ve covered this, you know, energy transition for almost 20 years, and I think we all agree that, you know, the data center revolution could be a part of the next big energy transition. So has any build-out in that time generated this kind of organized opposition this fast? Because two years ago, no one was really talking about this.
David Roberts: I think you can’t understate the, the spectacular incompetence of the, of the communications and the way this has been rolled out. I mean, I think if hyperscalers had said from the beginning “The AI revolution and decarbonization go together, are part of the same revolution, and we’re willing to pay the extra money and take the extra time to ensure that building out these giant data centers is going to strengthen the grid and fund a lot of clean energy”, I think they could have harnessed a lot of goodwill. But instead, they’re in the paper saying, “You have to do our thing, and to do it, you have to abandon your climate goals.” I mean, it said-- I read that explicitly in a UK paper the other day. The data center industry is saying to the UK government, “You gotta abandon your climate goals, because we have to do our thing fast, and we’re not patient enough, and we don’t care enough, and we’re not gonna spend enough to do it in a clean way.” I think it could have been, and still could be if done right, part of the same broad push for an abundant, clean future. But they just have completely botched the PR aspects of this. And it doesn’t help that, like, Elon Musk is out there buying turbines on truck beds and saying, “Screw you,” to the locals and, and, you know, polluting the air, et cetera, et cetera, out of just this unbelievable arrogance about AI that the public has not bought into. I mean, and they have, they have no one to blame but themselves for backlash.
Jigar Shah: Well that, I think that is obvious, and it has been a pattern that’s repeated itself since Bill Gates stepped in it in the late ‘90s, right? They wait until they do it all wrong, and then they’re like, “Oh, what’s all this backlash? We should pay people to help us with this.” I mean, I was interested, there was one Nevada hearing which I thought capsulated it really well, where they basically compared the AI data centers to the 19th century Gold Rush, and they basically stood at the precipice of the new Wild West, right? And it does feel like that. I mean, that is what you’re talking about with Elon Musk in Memphis, right, with unregulated gas turbines. But it’s also the folks in Loudoun County in Virginia where when there is a... You know, the vast majority of diesel generators are only permitted to 100 hours a year worth of runtime. The diesel generators for Loudoun County are permitted for 800 hours a year of runtime and they run the entire month of August such that anybody with any sort of underlying asthma conditions can’t breathe in northern Virginia. Like, it does feel like at some point they are coming at this saying, “We are gonna make so much money that we really just don’t care about your well-being at all.”
David Roberts: And I would add, I mean, I think a huge piece of this, and this is what I think is the central problem for our side, which is full of technocrats, is there is a large element of just sort of animal spirits to this. People feel like rich, powerful people are running rampant. They don’t have to follow any rules. They don’t face any accountability. This feels like they’re betting our future. It might work out, it might not, but none of them will be hurt by it if it doesn’t work out. Just another classic example of, like, they’re not gonna pick up the pieces if this all falls apart, or if the, if the demand doesn’t show up, or if, you know, a bunch of empty warehouses get built. They’re not gonna be hurt. There’s a lot... There’s a huge element of this, of just people feel like the wealthy and the rich and the powerful are just out of control, accountability is dead, and this is something they can grab onto and sh- and control. Like, this is the only piece of that they have any control over, so they’re grabbing onto it and blocking it. I don’t th- I mean, I think a lot of it is not any sort of rational calculation or empirical calculation of the effects or, you know, calculations about decarbonization or anything else. It’s just, like, this is a place where I can throw myself in the gears and stop the wealthy elite from just rolling over us. So, and again, like, that’s their fault that people feel that way.
Arnab Pal: And look, so I 100% agree with that, and I think right now people feel like they can’t control the political system. They, their vote may not matter as much as it did in the past, so their ability to block projects at the local level is their version of a vote. But you guys were talking about this being a communications issue. Like yeah, probably, but I really think it’s just a trust issue. And I think no matter what the tech industry said, like even if they came out and said, “We’re gonna help everyone, we’re gonna build schools, we’re gonna build this 100% clean, and we’re gonna bring down your bills,” which is what I think we all would wanna advocate for, I think the vast majority of the public would be like, “Yeah, I’ll believe it when I see it.” And-
David Roberts: Yeah, I, I, I trace everything, I mean, anybody who’s followed me for any time online knows I trace everything back to low social trust. This is sort of, you know, you talk to social scientists, they say you wanna do anything good collectively, you have to have social trust. The less you have, the less you can do, and it is coupled with our diseased and degraded information environment. So nobody feels like they can get a straight story. Everybody feels like everybody’s talking their own game. Nobody knows what’s really going on, so, like, this is just something concrete. It’s something that they can grab onto and not feel like the world is this impenetrable chaos controlled by forces out of their, you know, beyond them.
Arnab Pal: And the trust issue, I think, is backed up by the numbers. So only 8% of data center opponents actually live near one, and 70% of Americans oppose to a data center near them, which is what Gallup shows, and the Searchlight Institute found that 54% would oppose one within five miles. I, I guess what we’re trying to figure out here is, like, I think our technocratic industry is like, “Well, here’s how we figure out a way to do this without emissions, and here’s how we bring people in.” Like, are we solving for the right problem, or should we be solving for something else?
David Roberts: Well, I mean, maybe, maybe Jigar has a different perspective, but I think they’re trying to solve those problems ‘cause those are the kind of problems they know how to solve. Like, and this is, this goes beyond data centers. This is a larger social and political problem, is how do you solve the degraded information environment? How do you solve low social trust? How do you get your hands around these animal spirits, this vague, free-floating miasma of discontent and anger? I don’t know how to solve that. The tech guys don’t know how to solve that. Like, you know what I mean? Like, it seems like solving that requires many, many years, many fundamental reforms that don’t seem anywhere in evidence. This is not a technocratic problem that you can just solve with a few switches or paying a little extra for this or that. This is a bigger problem in our politics, so, you know, they kind of are trying to solve what they know how to solve.
Jigar Shah: Yeah, I mean, I, I do think that part of the problem with this, I think as you know, is that we sit here today in 2026 and we don’t have universal healthcare, right? We were promised that Obamacare was gonna work. As somebody who was on, like, you know, the exchanges for a while, like, that sucks. It sucks even more now, right? And so, you know, like, things ... What did, what did you call it in your podcast? The enshitification- ... Sort of everything, right?
David Roberts: Yes.
Jigar Shah: And so…
David Roberts: And there, so anybody who loses their job risks ruin, and here comes an industry, comes along saying, “Hey, we’re gonna destroy all your jobs. Let us build these data centers so we can do it.” What did they expect to happen from that?
Jigar Shah: No, I mean, exactly what happened. But I think that when you’re a governor, I mean, every governor I’ve ever met believes that they are the person who’s in charge of economic development for their state, right? So they want these data centers. I mean, they can say whatever they wanna say, right? Governor Abbott’s up there talking tough to data centers now, et cetera. But, like, in general, they’re the economic development person for their state, so they want it in the state, right? And I think my sense is this is not dissimilar to fracking, where everyone’s gonna hate stuff, and then, but we’re still gonna get whatever it is, 15 gigawatts of new data centers that get built every year. Just won’t be in that neighborhood that killed it’ll be in some other neighborhood that didn’t kill it, right? So part of what I’m concerned about in this moment is that the data shows that because we have low social trust, that people will just take free stuff. They’re like, “We’ll support your project if we get a battery in our basement,” right? The battery that I can touch and feel and have the title to, right? Like, that you can’t take away when you go bankrupt, right? And so part of what I’m trying to understand is how do we take this moment and actually, you know, create a third way, right? Because there’s gonna be a group of people who are always gonna believe the data centers are causing cancer and, you know, and I should wear tinfoil, right? Then there’s a group of people who legitimately are like, “The electric utility really is setting this up to screw me,” right? They’re getting a neg- they’re getting an economic development rate. I have a much higher price, et cetera. And oh, by the way, they’ve, like, banned my ability to, like, get data out of my smart meter. I can’t seem to, like, do net metering anymore. Like, I can’t even take advantage of the solutions that might save me money, right? That we’ve all worked so hard to get the cost down by 97% of, right? And so is there a moment in here where you take this and leverage it to get all this other stuff unstuck, right? Permitting reform. Not federal permitting reform. I mean, like, state and local permitting reform so we can match, like, Australia in terms of, like, solar installations.
David Roberts: I mean, I think you have to ... The only way forward I see for the, for the data center industry particularly, is very concretely at the local level. Like, the wild thing is- The amount of money involved in these big data centers, you can make them, like you can plant bioswales around them, you can help the environment, you can dump money into the community, you can build schools, you can put batteries in people’s basements and solar panels on their roofs. You can concretely reduce their energy bills. You can make their community richer. You can make their environment cleaner, and it amounts to a rounding error on the amount of money involved in these things. You can do all that stuff for trivial amounts of money. It’s insane to me that they’re not already doing this. They should have people lining up begging for data centers because I want schools, I want cheaper electricity rates, I want battery, I want microgrids. Like, I want these things, too. They could do all that with so little money. The amount of money they’re losing by having these things blocked dwarfs what it would take to just do it the right way. It’s just these tech guys are so arrogant and they’re so high on their own supply that they, that they just won’t do it the right way. So that’s, I mean, there is a moment, but they have to be willing to do it. And, you know, as you know, utilities have to be willing to work with them and do it the right way. Like one of the things I’m worried about, Jigar, is I want, like on one hand, I’m sort of mixed feelings about this. I’d love to hear your thoughts. On the one hand, I’m all for milking these jerks for all the public money we can get out of them. They have money coming out of their wazoo. Let’s get as much of it as we can for public benefit. I’m all for that. But I’m a little leery about establishing a precedent where large industrial customers, everyone has a bespoke rate, everyone is paying super high rates, everyone et cetera, et cetera, because as there’s a lot of other large industrial customers coming along behind, we want to electrify industry. We don’t want to establish a precedent where every large industrial customer on the grid faces this cripplingly high bill that not all of them are gonna be able to pay. So there’s a, there’s a fine line there, getting public benefit without establishing poor precedence, I think.
Arnab Pal: But Dave, there, there’s precedence of this, what you’re just saying, in other industries. I’m gonna take the real estate industry as a good example, ‘cause I think there’s some overlap. You know, when a big housing developer wants to build, like, a 1,000-home project or a 5,000-home project or expand a city, like, they often build schools as a part of the process, right? They often pick up the tab on some of the roads and that’s sort of how they get this approved. Is there a pathway for these data center companies to still do that? Or do you think the opposition is so strong that it doesn’t matter anymore?
David Roberts: I think they can do that if they go in early and they’re patient and they’re earnest and serious about community engagement, and they’re willing to spend the time. But this is... I think there’s another side to that precedent. Like, just in Seattle right now, there’s this fight about these fees that are charged to developers that are, that are... The money is used for affordable housing, right? And that sounds on paper great. You got these rich developers coming in, we’re gonna milk them for a little money for affordable development. But the practical effect of that is it’s slowing down building, and we desperately need to build more housing. And just building more housing, period, full stop, is better for people who need housing, even on the low end of the scale, than bespoke one-off affordable housing projects. So this is, this is exactly my point. I don’t want to establish a precedent which inadvertently slows the electrification of industry, basically. That’s my worry.
Jigar Shah: Well, I mean, I think that on your tariff issue, I don’t know that I have a problem with 30 and 40 megawatt data centers. I really have a problem with 1,000 megawatt data centers.
David Roberts: Yes.
Jigar Shah: So creating a set of rules for things that are above 100 megawatts, I’m fine with, ‘cause I feel like- ... Everything else that you’re talking about is sub 100 megawatts, and so, like, I’m not overly worried about industrial manufacturing and, you know, lithium processing and all the other stuff that we’re talking about there. I think what I’m more, what I’m more concerned about is that- You’ve got all these governors in the crosshairs right now. They’re all basically forced to be anti-data center and anti-utility, I think-
David Roberts: Mm-hmm ...
Jigar Shah: To run for governor and win this fall. Is that your sense too?
David Roberts: Y-yes. I mean, it’s, th-there’s just nothing easier than identifying a big corporate villain and bashing on them, right? I mean, that is, that is politics at the easiest setting, right? And so, under pressure, people are gonna default to that. So this is what, I mean, this gets back to, this is something you and I have been talking about for I guess years now, Jigar, which is there is a win-win-win here. Like, the utilities can say to their customers, “We let this data center come attached to our grid, but we got a bunch of money out of them to pay for you to have solar panels on your roof and batteries in your basement, and we got them to help fund a transmission line.”
Jigar Shah: But they don’t believe in it.
David Roberts: We, we milked them.” And then the data centers can say, “Hey, we made your community better.” And then the politicians can say, “Hey, we forced the utilities to milk the data centers.” Like, everybody can say, “We-
Jigar Shah: No, but Dave, what they’d rather say instead is that they got the data centers to pay for all of the upgrades to transmission systems, which will reduce your bill by .1 cents per kilowatt hour. And here’s a bunch of fancy math that I’m showing that shows that the 10% rate increase I’m charging you was for someone else’s mistake, not the data center. And oh, by the way, I still hate the fact that you’re putting a battery in your garage and a solar panel on your roof. Like, in that world, where they still hate the fact that you’re taking advantage of your power independence in any way, shape, or form, is it not good practice to hate the utility company?
David Roberts: I mean, you’re not gonna get any resistance from me for hating on utility companies, Jigar. I’m about to record a whole podcast in a week or two about why they won’t do this stuff. But they are in a, between a rock and a hard place now. Like, they’ve got to, they need an out somehow, right? They need some way out of this. And even if they don’t believe in the broad promise of distributed energy like we do, or even if they don’t believe in the scale of distributed capacity could make a difference like we do, even if they think it’s just little trinkets on a Christmas tree, they need a PR win. Like, how are they, how do they not get that by now? They need something concrete to show people.
Arnab Pal: So look, I think you’re right on the PR win, but the reason why I brought up the housing example is ‘cause I think that’s a place where public sentiment shifted over time, and I think the underlying causes was just pricing, right? So if you look at the old guard left, California’s the best example, like the NIMBY environmentalist movement, which has sort of held guard to make sure there isn’t development across the coastline in California, there isn’t development even in the suburbs. They’ve lost those battles to a new movement of folks that are saying, “Hey, we need to build more housing to break down costs.” And if you..
David Roberts: I don’t know if I’m calling that fight over yet
Arnab Pal: No, but but it-
David Roberts: They’re still fighting
Arnab Pal: Compared to where it was 20 years ago,
David Roberts: Yeah
Arnab Pal: it’s a completely different ballgame. And there is a parallel here where if you actually can convince people of the actual real math, not the math that Jigar’s saying, that like, “Hey, this new load growth will actually reduce costs if we hold utilities accountable in that process,” like there is a real sort of hunger for like costs need to come down across the board. And if you can actually bring down someone’s utility costs by 20 or 30%, which is what I think some of this demand side work can actually do, I don’t think people are gonna care. They’re gonna be like, “Yeah, my bills went down,” and that’s the most important thing.
David Roberts: But I think to Jigar’s point, you can’t do that unless utilities cooperate. Like you can in theory do that, but they have to cooperate. They have to be involved in that. You can’t do it over them or past them or through them. They are the gatekeepers. They have to be enthusiastic participants in that, and they’re being... We’re having to drag them every step mo- I mean, most of them, not all utilities, et cetera, et cetera. But like most of them..
Jigar Shah: I mean, I would say the vast ma jority. I mean, you know, municipal utilities, rural electric co-ops, they seem okay with the bargain, right? ‘Cause they’re saying, “We report to the city council. We report to the Kiwanis Club. So like, we’ll like sorta do that,” right? Where the investor-owned utilities always have some sort of like, they always have a private jet that they’re taking to the thing, by the way. And then they take the private jet in, and then they cry about the fact that like, “Ugh, our stuff is so old. You don’t, you wouldn’t imagine how old our stuff is. We need to upgrade it all.” And I was like, “But you were investing 20 billion a year in 2003. You’re now investing 200 billion this year. At what point do I not believe that you’re spending money on repairing old stuff? But instead, I just think I’m paying for your corporate jet.”
David Roberts: Well, as you know, the biggest line item of rising costs right now is distribution spending.
Jigar Shah: Right.
David Roberts: And I just, I just recorded a pod about how distribution spending is done and determined. And I, I don’t know if a lot of people know this, but like if you’re a vertically integrated utility, you wanna do spend on generation or transmission, you have to do a bunch of modeling, a bunch of projections.
Jigar Shah: Right.
David Roberts: You come under intense regulatory scrutiny about whether you’re optimizing that spending. And distribution spending’s just a black box. They just call it all mandatory. They just say, “We have to do this.” And if you open that black box and look inside, lots of times they’re not even tracking the age of their stuff. They’re just replacing it on a schedule. That is where they can, are doing all the gold-plated spending, and they’re not even getting the regulatory scrutiny about that. So I mean, I’m all for exposing them to the light and putting them under tons more discipline, but to do that you need legislatures and you need regulators on board too. Like, you know, anything you blame utilities for, there’s some refracted blame for the regulators for letting them get away with it, and legislators too.
Arnab Pal: But Dave, th- there’s... So I agree with all that, but there’s a bias even amongst the people that wanna hold utilities accountable, and I’ve seen this from energy efficiency from decades ago, where everyone thinks every solution is supply side, meaning, “Oh, we have to build geothermal. The answer is nuclear. The answer is solar.” Nobody wants the answer to be efficiency. And, you know, all the states that put in energy efficiency measures over the last 40 years, they, while even if their kWh rates are higher, their overall bills are lower, it has worked, and there is a similar thing we can do with the distribution system. But why is that bias still there? Why are there people who don’t believe that, you know, utilizing more of the distribution system, putting batteries in, isn’t actually a real solution?
David Roberts: I mean, this is something I started pounding the table about when I wrote for Grist in like 2012, which is once you look into utility regulation, you find this very basic incentive, which is the more they spend, the more they make. The way they make money is by spending money, and energy efficiency, if you do it right, means they need to spend less money, and that is true of virtually every distribution system bit of spending. All these, batteries and solar panels and microgrids, they all are substitutes for a bunch of gold-plated spending on infrastructure. So that very basic perverse incentive is at the core of utility regulation, of investor-owned utility regulation in this country, and I just, we keep talking around it. And you know, efficiency programs are a great example. Like, you know, like a utility will do the amount of efficiency that they are required to do by law and by regulation and not one micron more, because every bit they do means they get to spend less money. So you’re not gonna get utilities enthusiastic about efficiency, pursuing it earnestly and in good faith and with some passion, unless it’s a municipal utility, unless it’s a utility that is just incentivized to reduce cost for its customers. Every investor-owned utility is gonna fight that. They’re gonna fight distribution side spending. They’re gonna fight all of it. And I don’t, I mean, you know, I’ve banged my head on this a million times. I don’t know what to do about it. Like, there are ways around it. You can do performance-based regulation. You know, you can nibble around the edges of it. You can do kludges to get around it. You can do mandates to force them to do it. But ultimately, I feel like- If we’re gonna electrify everything and the whole economy’s gonna be on the grid, and we need to, desperately need to optimize not just for like utility costs, but like for macroeconomic reasons. Like if the whole economy’s on the grid, we’re talking about the macroeconomy now. Like, I don’t know how we get there with that incentive in place. Like, it’s just, that’s just the elephant in the room that I feel like we have to deal with sooner or later.
Jigar Shah: But I think there’s another answer to that question, which is that part of the thing that bothers me, and I wrote about this with Raj Panju back in 2015, is that there is a distinct desire on the part, particularly by the right, but it could be by other people as well, to believe that what we’re pushing is feminine in nature.
David Roberts: *Laughing*
Jigar Shah: Right? Have you heard about this?
David Roberts: Oh, oh yes.
Jigar Shah: You know how, like, there’s this masculine energy and, like, feminine energy?
David Roberts: Pure masculinity… Yes, I’m very familiar.
Jigar Shah: Right? As if solar panels are like-
David Roberts: Everything is gender
Jigar Shah: Like solar panels are like sunflowers blowing in the wind. They’re not, like, hard, like real, manly.
David Roberts: You’re telling me I have to wait, I have to wait on the weather? I can’t just force my way, I can’t just force it to do what I want when I want? Yes, that is a huge piece of it.
Jigar Shah: Right, but the latest version of that is the EIA has now come out with this data showing that we have triple the amount of natural gas that we, you know, they were predicting a year and a half ago getting installed, right? And when you talk to, like, people like Duke Energy, Duke Energy will say, “That’s the only way to run a grid is building CCGTs that happen to be three times more expensive today than they were two years ago.”
David Roberts: It’s firm. Yeah. It’s firm like a muscle Jigar.
Jigar Shah: But I mean, I guess what I’m trying to understand is that, like, I get the fact that the governors were checked out for 40 years. They were like, “We have a public service commission, we have this, we have that. I don’t need to know anything about this.” Now it’s a number two political issue. They have to know something about it. I mean, hell, even Abigail Spanberger was on a entire episode of Politico for their energy podcast talking about her energy agenda for like 26 minutes. Like, no governor ever did that before, right? And so, like, so it does feel like in this moment they have to actually make some big decisions on these things, right? And so if you’re currently in a place where you’re spending all of your available energy just being anti-data centers, what else could you use that passion and, like energy for in this moment to help these governors get a handle on this?
David Roberts: I mean, I wish I knew. Like, I’ve, I, I have listened to people explain to me why capacity that you get out of your already existing grid is somehow inferior or less firm or less manly than new capacity you build with a power plant. Or people explain to me why solar plus batteries plus a big interconnected grid is not firm- in the right way, not as firm, not quite as tumescent as a big, you know, nuclear power plant. And I don’t know why. I don’t know why they think that way, and that attitude is sifting up into the political, I can tell you, into the political class. They all are being convinced all over again that renewable energy is weak and inconstant and unreliable. So I don’t know how you get around that other than just showing them. I mean, at the very basic level, this is what I did a podcast with Steve McBee about this, about just the clean electrification industry’s inability to speak up on its own behalf and to articulate its own case and to get good information to lawmakers. Like, a lot of the legislators, like, a lot, even, like, senators who are in charge of energy committees don’t really understand the revolution that is underway across the world in clean electrification. They think it is, a nice little extra. So part of it is just, is just the industry getting a little swagger, getting a little confidence, and not having its main vehicle for lobbying and communication be half composed of gas. You know, that might help too if it had its own voice-
Jigar Shah: I think that’s exactly right. I mean, I, I certainly think that Chip Roy saw a little swagger.
David Roberts: Yeah. Also the, I mean, finally somebody got whacked on the nose. I mean, you can, you can debate about the practical, you know, the pragmatic, the outcome of that, whether it really mattered.
Jigar Shah: I don’t think you can debate it at all. I think that, I think when you promote stupid ass shit, you should lose your job. Like, I think that’s,
David Roberts: Yes
Jigar Shah: I think that’s pretty clear, right?
David Roberts: We need, we need, we need two or three of those, I think, to really get…
Jigar Shah: We’re gonna have two of those
David Roberts: To really get the full effect. Like they need to see…
Jigar Shah: Yeah, Ralph Norman
David Roberts: That it’s a real steady thing.
Jigar Shah: Yeah, I think we’ll get two or three of those this cycle alone. I, I think in general, one of the things that’s happening right now, like at least on the ground where I’m operating, is that almost everybody in a decision-making role in Texas understands how powerful solar and battery storage are, and that their grid has been saved by solar and battery storage. And I would suggest to you that almost nobody understands it outside of talking points in the PJM. Like, every governor is using the right talking points, but if you ask them what’s being said in a closed-door room, I think they’d rather have more natural gas plants built than 10,000 megawatts of battery storage. We’re at roughly 19% of the peak in Texas being battery storage. It’s 0.2% of the peak in PJM being battery storage.
David Roberts: Yes. And they, and they, you know, pol- politics, the higher you are, the more risk-averse you tend to be. And because this is the information environment they’re surrounded by, to really commit to solar and batteries, to really commit to distributed capacity would be a huge gamble for them. They f- I mean, I think they feel that way. It’d be a huge risk, a huge... They would be going out on a limb, whereas gas plants, they understand, and they are surrounded by gas lobbyists, and now you have clean energy industry groups telling them that gas is firm and that you need firm gas, and that if you build renewables, you just have to build gas back up anyway. Like, that’s what they’re hearing all around them. So, like, it’s, it’s, it... I, I don’t think you can ever look to, like, politicians for bravery, you know? Like, we need to surround them with better information, and the industry’s got to do that for itself.
Jigar Shah: What’s your take, Arnab?
Arnab Pal: I gotta jump in on this energy efficiency and solar is feminine piece, because I, I got a bunch of friends that drive Rivian R2s and Ford Lightning F-150s, and I know some farmers in Pennsylvania that lease their land for solar panels that would disagree. I would say renewables are gender fluid, Jigar.
David Roberts: Well, but, like, like, pardon me for bringing the woke perspective here, but there’s nothing wrong with feminine energy. Like, like, look around at what masculine energy is doing in the world and in the country right now. Don’t you think we could use a little bit more feminine energy? Like, I don’t wanna tr- I don’t wanna try to claim that, like, EVs are tough, too, and they can tow just as much. You know, I don’t wanna, like, compete on that ground. Like, it’s a dumb regressive, you know, dipshitty way to approach this whole subject anyway. Like, tell me it’s feminine, that’s fine. I was like, “Oh, so it’s more practical and more, like, results-focused. Great.”
Arnab Pal: Yeah, no, I, look, I agree with that. I, I just think it can mean different things to different people. I don’t wanna, I don’t wanna box, I don’t wanna box us into one, to one stereotype here. We should be-
David Roberts: I’ll take, I’ll take gender fluid.
Jigar Shah: Oh, my God. All right. So let’s move on to the next phase, right, which is that on May 4th, the NERC, the North American Electric Reliability Corporation, issued a level three essential actions alert. Its highest severity, and one it rarely uses, after multiple incidents where more than a gigawatt of data center load dropped off the grid in seconds, fast enough to threaten frequency stability across whole interconnections, right? And so at some point, right, like, I guess what I’m trying to understand is, are they trying to move fast and break things?
David Roberts: I mean, this is yet another example of a problem that is 100% foreseeable and 100% solvable with a trivial amount of money. Like, they all could’ve just put more batteries in. You know what I mean? As, as, as this is the Volts slogan, everything is batteries. I mean, they could’ve just put more batteries in. They could’ve had more buffer. They could have avoided this ever happening, but they just are arrogant, and they don’t care, and they just think that because they can wave AI around, everybody has to defer, everybody has to get out of their way, everybody has to accommodate to them. Like, that is such a solvable problem. I did a whole podcast on it. And I can summarize the whole podcast in one word, just do more batteries. You know? But they didn’t. Like, it’s, it- it’s wild.
Arnab Pal: I think we talked about this a little bit, but, you know, there’s a consensus forming around groups like the Searchlight Institute and the Breakthrough Institute, and we’ve seen a paper published in March proposing an American grid infrastructure fund where hyperscalers pay into a dedicated fund in exchange for faster connections, and then that money would flow from utilities for large scale transmission and generation. Now, you said this crowd treats distributed capacity as a marginal efficiency play, and this is sort of what we’ve been talking about how it’s really undervalued and not looked at. So make the affirmative case for distributed capacity as serious supply.
David Roberts: Well, I almost don’t, I mean like capacity is capacity. I don’t know how else, I don’t know how else to put it. Like you turn, you flip the switch and something comes on or it doesn’t. Like you don’t know if that capacity is coming from, from distributed energy or a VPP or a new power plant. Like it’s either there or it’s not. And they, I mean, this is very frustrating ‘cause this is just yet another example in the energy world where the obvious answer is both/and. And I think really if you got any of these people in a room and could talk to them, you could get everybody to that page very quickly. Yes, it’s both/and. Yes, obviously we need to maximize distributed capacity because we’re under an incredible time crunch, and we’ve got gigawatts and gigawatts of spare capacity laying around, so of course you want to exploit it. Like what is the argument against exploiting it? Like it’s just mind-boggling to me, so of course you want to do that. And then of course it is also true that behind data centers are coming the electrification of transportation and industry and heating and cooling and the rest of the economy. And so of course we’re gonna have to two X or three X our grid. Like how big it’ll have to get I think we can disagree on. I think I have a lot more faith in distributed capacity than they do. I think these projections for how much more heavy infrastructure we’ll need are overblown, but I know we’re gonna need a lot. So like of course we want to do both. I don’t know why we always end up in this, like it’s hard for me not to see that as a species of those people’s fanatical obsession with lecturing the left, with lecturing hippies, with somehow saying that the existing groups or the existing movement is doing it wrong. Like, for some reason, that is the only way they know how to frame anything. And I get it, because that framing gets you attention in DC. That framing gets... Then you get- then you can get a bunch of conservatives who say, “Oh, you’re bashing the left? I’ll come amplify you.” I don’t know why these people don’t notice that the right comes along and amplifies their criticisms of the left, but then when it comes to their solutions, you know-
Jigar Shah: Yeah. Well, the thing-
David Roberts: The right vanishes. They get used over and over again to bash the left. I don’t know why we can’t all just have a little solidarity. We need it all.
Jigar Shah: The nuanced problem that I have with this entire line of thinking is that you have to assume that the current structure of electric utilities and the regulators is competent. And so, like, you basically have to assume that this money will go into a common pool and be competently spent by the people we’ve just been bashing. And so I would much prefer that money go into a battery in my garage than to go to these people, right? And so, like, I think one of the big challenges that we have in this moment is that- You know, we do clearly have the technology today that we didn’t have 15 years ago when RMI put out that report around, what is it? What, unplugging from the grid or whatever it was called. Like, we have the technology today for me to meet 92% of my electricity needs under a NEM 3.0 structure where I don’t get paid anything to export into the grid, right? Where I just put solar panels on my roof and battery storage, and I just make sure my battery’s empty at 10:00 AM every day, and I fill it up with cheap solar power and then run my house on, on the battery. That whole construct is like 12, 13 cents a kilowatt hour. And so you’re like, “You’re charging me 19. I could just do 92% of what I do for like 12 to 13 cents a kilowatt hour,” right? And so, like I think that it is shocking to me that having worked for 20 years to get the cost of solar down by 97% and to get Wall Street to love doing securitizations and bonds and all this other stuff for solar power, that we’re still trying to figure out how these solutions are marginal.
Arnab Pal: But Jigar, the... Like, you know, I think it’s easy to throw around the term competence. I think there’s plenty of competent people at the utilities. There’s plenty of competent, competent regulators. Their job is to do what the laws tell them to do, and if the laws allow them to rent-seek, they’ll rent-seek. That’s what they’re supposed to do. You know, let me give you a good example of this going back to California. You know how the rate structure is in California. Generation rates have not gone up. They’ve been flat for decades in California now, or at least the last decade or so. That’s because it’s decoupled and they can’t make money off of it, right? It’s our job to change the rules. So if we do do this and we work together with the data centers, the hyperscalers, we have to change the rules so that the utilities are either incentivized or required to use more of their grid and to do what we’re talking about. That is on us, and not just the three of us here, on all of us.
Jigar Shah: Well, it’s kind of on you. I mean, it’s, it’s kind of on Deploy Action
David Roberts: I’ll say amen to that, and I wanted to add one other thing in this discussion. There is a ton of focus now from these same people about permitting reform, about making it easier to build, about removing barriers to building. And again, like in principle, I agree. Like, all that stuff is true. But it’s, but it’s interesting to me that it’s always the solutions on that score that get amplified and that get taken up and that are, quote-unquote, bipartisan are all about cutting this and cutting that, cutting this, deregulating this, deregulating that, cutting this regulation, cutting that regulation. The other side of that, even if you read the original Abundance book, the other side of that is fully staffing the relevant agencies and regulatory agencies and overseeing agencies and government agencies and all these regulatory and governing bodies, fully staffing them and funding them. That’s another way to speed things up, is by spending money on state capacity, is by spending money on government capacity, on creating fully funded, robust, competent government. And for some reason, that side of things, even though it’s like half the Abundance pitch constantly falls out of this discussion, and we’re always left with the slash this and slash that. So, like, I would like to fund, to, you know, to Jigar’s point about I’d like to have competent people in charge of this, I would, you know, you can create competent federal agencies, but they need funding and they need staff. And so if you’re making common cause with people whose mission in life is to slash government and to slash money for government and to funnel taxes, you know, tax cuts to rich people, then maybe you should, like, look in the mirror and think about whether it’s in your best long-term interests to form common cause with these people. Maybe you should couple your calls for greater speed with calls for greater state capacity. I just wanted to make that point.
Arnab Pal: Yeah, and look, I think that point, that’s the most under-talked about, point in this whole process. Like, like, let’s just do some simple math, right? A utility executive makes between half a million and a million dollars a year. The regulator at the Public Utilities Commission is making $150,000. Like, how, wow are we-
Jigar Shah: I don’t know which utility CEO you’re talking about. That’s-
Arnab Pal: No, I said executive. Yeah, yeah, I said executive.
Jigar Shah: Laughing
Arnab Pal: I, I said executive. Utility CEO is making over $10 million.
Jigar Shah: Right
Arnab Pal: I understand that. But, you know, director to VP level executive starts out at between half a million and a million dollars a year, but that’s still five times as much as the regulator’s making. So, like, we’re creating a system where the folks that are doing the regulating aren’t gonna be able to stick around long term, right?
David Roberts: And think about NEPA reviews, too. Like, everybody wants to put these restrictions on NEPA or just put, like, “NEPA review must be done in a year.” But if you don’t fully fund and staff the agencies that are responsible for those reviews, all you’re doing is saying, “We’re not gonna do those reviews,” right? So why is fully funding and staffing the people in- involved in those reviews not part of this discussion? Why is that not as big a part of this discussion?
Jigar Shah: All right. So as we get towards the end of this conversation, I wanna make sure we talk a little bit about the midterms, ‘cause you’ve got 36 governors that are running for reelection or election this fall. This is clearly going to be an issue, right? You’ve got major Republican governors from Texas to Wyoming that have put out pretty harsh press releases saying that they are gonna stand tough against those data centers, right? And so what I’m trying to understand is that if you’re actually running a campaign this fall, right? We sorta know what Mikie Sherrill did last year, right? She really was talking about the rate freeze, right? Which, you know, I’ve got my quibbles with, but that’s fine. I think it worked. I think Spanberger was just like, you know, “I’m gonna be more competent,” and she passed a pretty comprehensive set of bills in Virginia that now she has to actually try to implement, which Dominion is gonna try to thwart her at every move, I’m sure. And so I’m just trying to understand again, like where you channel all of this enthusiasm, anger, conversation. I mean, like we generally operate in this niche. I mean, you don’t find it boring, and I don’t find it boring, but other people find it boring. And, but it has broken through, right, to the point where there’s a lot of our friends who generally find us boring, like who are now interested in these topics when they, when they call us up.
David Roberts: I always joke, I used to... You know, I spent like the first 15 years of my career going, “Ah, I wish more people would talk about this stuff,” and now I’m like, “Oh, God. What, what was, what was I thinking?”
Jigar Shah: So what’s your sense of like what should the pundits be talking about? What are their angles they should be talking about? What should they be, you know, like when they’re pushing th e governors who are running for office in an interview on topics like, you know, like when we’re talking about data centers, like how should all of this be handled this fall?
David Roberts: I mean, I stopped understanding politics at all about 10 years ago and haven’t understood it since, so I’m probably the wrong person to ask. I mean, I’d like to think that a comprehensive package of competent, good policies that... I mean, you can take a whack at utilities. Like I think cutting back on utility ROE is a perfectly legitimate populist policy that also has merit, and like requiring data centers to pay into a fund that’s used for community benefit or used for building out the grid or used for distributing capacity or all three is a populist policy that has merit. I just think there’s a, you want governors with staffing and good information who can navigate this, who can make the populist gestures, who can respond to the populist energy, who can, who can show, who can demonstrate that they get it, they understand the anger, and they’re responding to it without being pushed into dumb shit that’s going to have long-term detriment. Like that’s the trick here. That’s the line to walk, and I don’t know any, you know, I don’t know that there’s a formula for that state to state. Like you just have to, you just have to think of what are ways where I can signal I hear you, I understand the anger, I’m responding to the anger, but let’s not do anything that’s gonna hobble us later. I don’t even mind necessarily if you pass like a one-year moratorium or a six-month moratorium, something like that. Just get through-
Jigar Shah: Bite your tongue, Dave Roberts
David Roberts: Just get through the election. Just, just do a moratorium that lasts through the election, then everybody will tune back out and you can, like, do competent policy. But as long as you know what you’re doing, right, and you have some eye on the long-term needs here and the long-term direction of things. It’s just like, this is always the trick in US government is th- the public is ill informed, most of the people yelling at you are ill informed. You need, in some way, to respond to them in a way that shows that you hear them, but you need to respond in a way that doesn’t inadvertently cripple your state or cripple the future grid or, you know, cripple the growth of the things we want to see grow. And I don’t know that there’s a formula for that. I just like, just be, be careful. Very carefully. That’s the, that’s my answer.
Jigar Shah: Well, Arnab, we had Granholm on and, you know, she gave us a little bit of a playbook. What’s your playbook?
Arnab Pal: Yeah, so I think my playbook is much simpler. I think there’s all of, you know, from what I’ve learned, all of politics, and I’m with Dave, I don’t know how to predict things anymore. I don’t think anyone does. But all of politics really comes down to two emotions, hope and fear. And in the absence of hope, fear always wins, and this is true all across the board. And it’s like, you know, Donald Trump’s president for a lot of reasons I have no idea, but when there’s no one else that’s hopeful, the fearful candidate will win. And in, in our situation where candidates aren’t at play, fear is winning because it’s the fear of AI, it’s the fear of data centers, it’s the fear of the tech companies, and the only way to beat that is to offer genuine hope, which is like if I’m Governor Pritzker, if I’m Governor Shapiro, if I’m Governor Sherrill, if I’m incoming Governor Becerra, and yeah, I’m calling that one right now, Jigar, just so you know.
Jigar Shah: You heard it here first.
Arnab Pal: Yeah, you heard it here first. But I, I wanna go
David Roberts: California’s gonna elect a Democrat? What?
Arnab Pal: Yeah. I will, I want to go to the public and be like, “This is our opportunity to cut you in on the next industrial revolution,” right? “This is our opportunity to bring you in, and here’s how it’s gonna help you.” And not only say that, it’s like, “I will make sure that we are not taken for a ride by these technology companies, because I am confident at what I would do.” And that’s what I would say if I were a governor.
David Roberts: And let me just render myself a cliche by saying, well, let’s look at this Mamdani guy. Like, he struck an incredible balance of personal happiness and joyful warrior energy and hopeful energy, and he had a few headline policies that responded to that populist energy. Not necessarily policies that technocrats loved, like a rent freeze or whatever, or government grocery stores. Like, all the technocrats are lecturing him. But ultimately, those are pretty small ball policies, but they send the right signal, and then behind that, he’s just governing competently. He’s just governing as a competent technocrat. So, like, that’s the mix there. Like, get the right energy, a few high-profile policies that make people happy and think you’re fighting for them, and then behind the scenes, just do government well.
Jigar Shah: It doesn’t hurt that he figured out a way to get the Knicks to win the championship.
David Roberts: Yeah that was a real coup.
Arnab Pal: But Dave, on the Mamdani point, you’re right. And Jigar, I know we’re, we’re, we’re getting to the end here, but they always ask him about Donald Trump, about anything, and his answer is simple. “If it will help bring down costs for New Yorkers, I will work with him.” That is the politics of hope, and everyone leans on the fact that, oh, he’s a Democratic socialist. That’s not his draw. I know so many people in New York City that are not socialists at all that voted for him.
David Roberts: No one knows what that means-
Arnab Pal: Yeah.
David Roberts: No one knows what those words mean outside of political obsessive circles.
Arnab Pal: Yep. Yep. And it’s... Like, that’s the type of frame we have to take to this. It’s not finding a different bad guy. It’s being like, “If it will help you, we will do it.” It’s like, you know, you ask Jigar, like, are we pro data center or anti data center? We’re neither. We’re, if the data centers can help the public around it, we’ll support it. If not, I don’t know why we would support it, right?
Jigar Shah: That’s right. Well, with that Dave
David Roberts: We are all... I’m, and I, and I’ve said this a million times, and I’ll just say, I’ll just say it one more time, but, like, we are all of us who want h ope and competence all fighting against an information environment filled with fear and lies and misinformation and terrible dynamics at every level. And like, sooner or later, somebody’s gotta think about how to address that problem. We can’t just work around it. We can’t just tiptoe around the results of it forever. Sooner or later, like, somebody’s got to engage with improving the information environment. I don’t know who that is. Everybody can play their part, but like, that’s gotta be on the table.
Arnab Pal: I think that’s you and Jigar.
Jigar Shah: Yeah, exactly.
Arnab Pal: Cause you got, you got a job to
David Roberts: Niche podcasts are the future.
Jigar Shah: Exactly. With that, Dave, I feel like every time we talk, I’m driven to drink. And, we’ll need a whiskey at the end of, end of the thing.
David Roberts: It’s five o’clock somewhere.
Jigar Shah: But thanks for joining us and doing with, this with us. I do think this is a super important topic, and I do think that we do have the right people around the table, and I think a lot of the investment that you’ve made in informing people over the last few years has unearthed a lot of solutions that are ready for prime time. And so I think we actually have data centers that are willing to pay for people’s trust, and I think solutions providers that can provide it.
David Roberts: Here’s hoping
