Grid utilization vs expansion: The 100 GW debate

Hey, it's Stephen.

Before we start the show, I want to give you a quick heads up on something we've been working

on at Latitude Intelligence.

Utilities are in the middle of figuring out how to serve all this data center load.

We know that.

We talk about that a lot on this show.

They're basically building a new rate structure from scratch.

Twenty-five utilities across 19 states have already filed these data center specific tariffs,

and that didn't even exist five years ago.

So our analyst, Nick Zenkin, just published a white paper breaking them down.

The first comprehensive look at how these tariffs are actually being designed across the country.

And what stood out to me is how quickly the industry has moved to protect against risk,

long contracts, demand minimums, big financial backstops.

But we're not really designing these tariffs to capture the upside, either.

The flexibility that data centers could actually provide to the grid.

And that trade-off is going to matter more and more over time.

So if you want to understand how this next wave of load is going to get built, and who's

going to pay for it, I'd really recommend taking a look at this white paper.

You can find it at latitudemedia.com slash research, or just find a link in the show notes.

I think it's going to be worth your time, particularly if you're in this market building

right now onto the show.

Latitude media covering the new frontiers of the energy transition.

Yeah, Brian, do you like my shirt?

I do.

It's awesome.

I dressed up because I knew I was recording with a modern-day landman, as the New York Times

calls you.

Oh my God.

I expected nothing more than to get made fun of for that.

Seriously, why didn't you call me?

Like, why couldn't I have been there with you and dressed you and made sure you were in

a white linen shirt, which would have been far more appropriate for the New York Times?

Yes, yes it would have.

I thought you might show up with like a Stetson and Wrangler jeans today.

Oh, next time.

That's a missed opportunity.

I need to just lean into this whole landman thing.

I'm expecting a Netflix show.

Yeah, me and Billy Bob.

Yeah.

Yeah.

When you get them out of the oil industry and get them into the data center industry.

From latitude media, this is open circuit.

We are entering an electricity super cycle.

It's reshaping how power gets built, what kind of power gets built, and who controls it.

Across the US, developers are scrambling to lock up land with access to electricity.

And the grid, this more than century old machine, is being pushed in ways it wasn't designed

for.

And this is feeding a new debate in the industry about what to do with the grid.

Because for all this talk of scarcity, the system we've built sits idle much of the

time.

A new report from Brattle suggests the grid is only being used about half the time and

that better utilization could unlock 100 gigawatts of capacity while saving rate pairs tens

of billions of dollars.

So the question is, do we build our way out of this moment with more transmission, more

generation, more steel on the ground, or do we use what we already have, more efficiently,

more flexibly, more intelligently?

The obvious answer is that we need both.

But there's a surprising amount of disagreement on this front and we're going to weigh in.

A look at grid utilization versus grid expansion is coming right up.

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They offer Yale's financing and deploying clean energy certificate.

This certificate is a fully online 10 month program built for working professionals who

want to shape the clean energy future.

The program focuses on building real world skills and clean energy policy, technology, project

finance and innovation all in just five hours a week.

Learn more and apply at cbey.yale.edu or just follow the link in the show notes.

And good news.

You can use the discount code OpenCircuit26 to save $500 on tuition.

Applications close April 20th, 2026.

The AI revolution is intersecting with a critical moment in the energy sector.

I'm Stephanie Wong, host of Where the Internet Lives, a podcast from Google and latitude

studios about the unseen world of data centers.

This season explore the new era of AI innovation.

Here from Google leaders on energy for AI and AI for energy.

And how to build data centers that are good grid citizens.

Find where the internet lives wherever you get your podcasts.

After four sold out shows, latitude media is bringing transition AI to San Francisco.

The two day conference on April 13th and 14th will bring together the people and companies

who are successfully getting digital and energy projects cited, financed and built

in the AI era.

The solutions are getting more sophisticated, but there's still no uniform blueprint

for building at gigawatt scale.

Join attendees from Google, PG&E, EDF, Energy Impact Partners and AES to align on what's

real, what's possible, and what can get built.

Head on over to latitudemedia.com slash events, or just click the link in the show notes,

and there you'll see a full agenda and you can register for transition AI 2026.

As a bonus for our listeners, use the code pods 10, that's P O D S 10 pods 10 for a 10% discount.

Welcome to the show.

I'm Stephen Lacey, the executive editor of latitude media.

Thanks so much for being here.

Joining me this week are Caroline Goelen and Brian Janus.

Caroline is our frequent co-host and chief growth and policy officer at NRG.

She is with us from Sarah Week in Houston, Caroline.

Good to see you.

How Sarah Week.

Exhausting, as always.

Yeah.

It's good. It's good this year.

Yeah.

What's the vibe?

I think the vibe is concern, honestly.

There's a lot of undertone of concern right now.

Just geopolitically, locally, very different from last year, I think.

Yeah.

I'm going to get some more of your thoughts on how the current moment is resonating because

Sarah Week is considered like the Super Bowl of NRG conferences, so it sets the tone for

the industry.

Let's turn to Brian Janus.

Brian is joining us from Seattle.

He's the co-founder and chief commercial officer of Cloverleaf Infrastructure, a company

pushing the boundaries of powered land for digital infrastructure.

Brian, how are you?

Good to see you.

I'm great.

Thanks for having me.

I thought about being called a wild catter in modern day land, man.

I take it that New York Times article, highlighting, like, profiling you, went around a lot.

It got a little bit of circulation, and yes, I've been made fun of a lot, particularly

by people on this podcast.

Thank you, Caroline.

I thought it was great.

This is very loving, by the way.

Of course.

It was a really good article.

I mean, I cut out a picture and put it on my wall.

That's great.

Like, you know, next to all the pop stars I've loved for my entire life, right?

I've signed in town.

I'll sign that for you.

So you can have an autograph.

Yes.

Thank you.

I mean, I was thinking maybe a tattoo, like, on my right.

I would be back.

You and my mom can both hang that up in your living room.

I'm glad to know that's the cohort I hold with you and your mom.

If you couldn't tell Brian and Caroline know each other well, Brian is the former VP of

energy at Microsoft and Caroline is, of course, the former global head of energy market

development and innovation at Google.

So you two were building clean energy strategies at Google and Microsoft at a time that kind

of bridged the early hyper scale days, the commercial breakout of renewables and into the

early A.I.

days.

Would you, Brian, would you recognize this market a decade ago?

No, not at all.

I mean, it was just such an entirely different time in sort of the sort of Uber energy system

development, right?

When we were building out the cloud, there was excess capacity everywhere, right?

We had overbuilt in the 2000s and so, you know, going and asking a utility for, well,

and at the time, of course, we were asking for much smaller franchises every year, but

going and connecting a 50 or 100 megawatt data center did not entail the complexity that

we have today.

And the focus during that decade of the cloud build out in the 2010s was really around

energy, right?

We found megawatt hours and, you know, procuring, you know, via, you know, PPAs, largely virtual

power, PPAs, as many megawatt hours as you could get, capacity was an afterthought.

No one was really thinking about capacity enablement, time to market, resource adequacy.

That just wasn't part of the calculus.

And I remember, you know, this is around 2020, this is even before A.I. took off.

Just looking at growth rates through this decade, if you, if you, we just kept the same

growth rate that we had been on in the prior decade, it was pretty clear that by mid decade

we were going to have a problem that the size of these additions every year was going to

continue getting larger and it was going to start to cause constraints.

Of course, then, you know, chat GPT-3 comes along in November of 22 and then it becomes

really clear, you know, in the first half of 23 that, that we have a real problem.

And I remember having a discussion with some folks in Microsoft early in 23 and there

was a debate about, you know, whether we're going to run out of ships or run out of power

first, right?

And I'm just in the, in the back of the room chuckling, I'm like, guys, we're going to run

out of power before we run out of ships, that's where the constraints are going to come.

Yeah, we had that same conversation, I think I remember talking to Brian about that.

Sometimes later we're like, yeah, we were both those people in the corner going, so we're

on a two-year, I mean, now like 18-month chip destruction cycle.

At best, we get a two-year planning cycle for where we're going with load and we plan

power over 30-year cycles.

The two just never matched.

And I think we were all sort of in that struggle from, I guess, 2021 to 2023, those of us who

could see what was happening to try to explain the timeline by which power, which is not

a real commodity, you know, in the way that the rest of the tech world thinks about commodities

works.

You know, and then Brian left and just solved the problem on the other side.

That's great.

I would wait.

And then I left and I'm trying to solve the problem on the other side too.

I'd wager to say that the difficulty of explaining that and bridging that gap was a good part

of the reason why Carolyn and I both have different jobs right now.

Yeah, and Carolyn, at Sarah Week right now, like, is how sophisticated is the conversation

around load growth and serving AI specifically?

Oh, I think it's getting incredibly more sophisticated.

I think it's also becoming what I see happening and I actually was in a roundtable about this

yesterday.

What I see happening is the tech companies for such a long time, we call it each other tech

companies.

Everyone else called us hyperscalers.

Now I guess we need to refer each other as hyperscalers.

The tech companies, we were having this global conversation about our energy portfolio.

We were having this global carbon conversation, you know, our sustainability role, our role

in driving innovation, in spurring new technologies in creating a decarbonized grid.

And we missed the local conversation about what our footprint was doing.

And so I think that marginal, large margin between this sort of theoretical abstract conversation

about what our capital was going to do in a decarbonization rhetoric versus what our capital

needs to do at a very local level and the power system and the grid.

That is the leap rock that I've seen over the past two years, really, right?

So I would say three years ago, it's zero week, it was still much more a global conversation,

driving global financial markets, driving new technology.

Last year I saw it sort of with the onset of the nuclear conversation, I think it became

a little more grassroots this year.

It's very clear that this is about local impacts, right?

And interestingly enough, that's juxtaposed against what's going on in the Middle East

right now, which is a global geopolitical impact, right?

So it's a very different change.

I would say that we as a tech industry fail to get the local conversation, right?

Which is why it's great that Brian is doing what he's doing because his entire focus

is the local community.

We fail to get that local conversation right, not because we're doing the wrong things

or because we don't care, but because we've been stuck between these two stratosphere,

I think for quite some time, you know?

And I'm hopeful that the tip of the spear is going to be more about the local community,

more about the local power impacts, unless about sort of the global theoretical space moving

forward.

But you can see that transition and that conflict on stage big time here this week.

Yeah, Brian, does that resonate for you?

I think a lot of people would be familiar with your business model in our audience, but

like just kind of recap how you're thinking about projects on this very local level.

Like what is the business model and how are you thinking about local impacts when you're

pulling together capacity?

Yeah.

So I mean, our big challenge is as we think about enabling this, you know, hyper scale

AI ecosystem is around, how do we unlock power capacity as we were just talking about?

And then how do we generate local support for the build out of this infrastructure?

Because all data centers are local, as Caroline is saying.

I mean, we need to have good support at the community level.

And this has always been a challenge.

We've seen it, you know, most notably in Europe over the years of getting this stuff built.

But clearly that's become, you know, the topic to do in the United States as well is,

you know, going to ask these communities and really having to have a frank conversation

with them about why they should want this, you know, in their neighborhood or in their

county.

And I think there's a lot of misconceptions out there about the benefits that he's bringing.

And you know, my favorite story from the last several months is, you know, we were in

a fairly rural county in Georgia and we were talking with the head of the county commission.

And he said, you know, he's a rural rural county and we want to stay a rural county.

And that's why we want a data center because if, you know, someone comes and builds an auto

factory here, there's going to be 5,000 people that move to town and we're going to have

to build a new high school.

And if someone builds a distribution center on this site, you know, we're going to have

traffic 24 hours a day because better data center is perfect.

You know, it brings jobs, but not too many jobs that we have to build a new high school.

And high school we have just gets better.

It brings tax revenue.

And so I think a lot of this is about educating communities about the truly the benefits

that these things bring in terms of jobs and tax benefits.

And then also working with the community to find out like where is and is not the right

fit for these things because not every community is the right fit for a data center.

But we have to build them.

So it really is about the kitchen table politics and I mean, literally kitchen tables.

The Cloverleaf team sits at kitchen tables every week speaking with landowners and community

leaders about what sort of benefits this AI infrastructure build out can mean for these

communities.

So Brian and Caroline are both going to be with us at Transition AI coming up in San Francisco

on April 13th and 14th and Brian is going to dig even deeper and present some real-world

examples of how Cloverleaf is unlocking and orchestrating capacity.

And of course, Caroline will be with me and Jigger for a live episode of Open Circuit.

So if Sarah Week is the super bowl of energy conferences, let's think of Transition

AI as like the NFL Combine or something where these ideas get tested and brought into

the real world.

That's only if I don't think Jigger's job though, Stephen F.

That's right.

That's right.

Oh, you know, we can work on that actually.

Don't let him hear this.

Oh, he'll hear it.

He'll hear it.

And I'll have a very long text message.

It'll be great.

Well, let's turn to this Brattle report now and talk a little bit more about how do we

utilize the grid because this Brattle report is challenging, you know, one of the core assumptions

in the transition right now, the assumption that we're fundamentally short on power.

And so Brattle comes in and says, hold on, are we as short as people say we are?

I want to interrogate that a little bit.

But, you know, this report concludes that like, you know, the grid is only used half of

the time.

And so before we spend trillions of dollars rebuilding it, maybe we should step back and

ask whether we're leaving capacity on the table.

So we've, of course, built the grid to serve peak demand, a handful of hours out of the

year, which means a huge amount of infrastructure sits unused a lot of the time.

And so the argument that Brattle is making is if you add load in the right places at the

right times or shift demand to better align with existing capacity, you can spread those

fixed costs across more usage.

And that puts downward pressure on rates.

And so Brattle's modeling shows that like, this could unlock another hundred gigawatts

of capacity and potentially save a hundred billion dollars over a decade.

And so I don't think we're talking about eliminating new infrastructure.

Just changes kind of how much you need when you need it.

So I want to interrogate this analysis.

First let's just start with a hundred gigawatt number.

Again, Brian, this is literally what you do.

Go out and find ways to unlock capacity.

Does that seem accurate to you?

It does.

Yeah, I think it seems, it seems right on because, and this is, you know, that work was sort

of built on the work that Tyler Norris and team did it do last year.

So then they got to sort of a very similar answer, which is if you had, you know, just a

couple of percent more flexibility in the system, which is, you know, the inverse way of

saying improving grid utilization, then you can add a lot more capacity to the system.

And so I think this focus on utilization and this conversation is super important.

And, you know, part of that work was, I think, spun up by the utilized coalition, which

is just formed that's focused on this issue.

But when you, we have this conversation about affordability, like the only answer to affordability

is improving utilization, because with the current capital cost and, you know, inflation

impacts to building infrastructure, there is no way if we keep utilization the same that

we're not going to drive rates up, regardless of, you know, how we structure, you know, rate

design and how we, you know, isolate costs to different customer classes, you're still

going to face up with pressure on rates if you don't do something about utilization.

Caroline, what was your reaction to the report and this 100 gigawatt number?

Yeah, I mean, I generally think that that's probably the ballpark that of capacity that

we're leaving on the table.

I think it's harder to get at, maybe than most of these reports, you know, suppose.

I think that there is a, there are a lot of barriers between what we can, like, theoretically

capture in some modeling and what we can actually drive.

And I think there's ways to unlock it, but there's no question that our distribution system

and our transmission system is underutilized.

And also, we are not putting in place the regulations or the policy structures to think of that

as an asset that needs to be delivering speed to market needs to be, you know, utilize

above 60, 70%, it's not built that way.

And I think we're, as a country with all this new load coming on, at real risk of just

building a bunch of loops and building the same old system we've had for a long time.

And you can ring fence those transmission costs and you can ring fence the generation

costs for, for data center growth.

But that's only 40% of where grade costs are going to go, overall energy costs are going

to go over the next, you know, five years.

And so when you think about bringing on electric vehicles, when you think about new CNI,

new residential growth, you know, if 50% of all rates have been subject to increased

distribution costs, that's a huge aspect of, as, you know, as Brian said, upward pressure

on rates that we're just ignoring, right?

And so I think that there are regulatory ways to ensure, and I will say this, I was also

saying is, Brian, being the architect of one of these and me being the architect of

the other, we never went to market as hyperscalers trying to get residential, you know, customers

to pay for our system.

But there's a regulatory process to ring fence that there is an regulatory process in place

right now to make sure that utilities and, you know, overall T&D owners are doing absolutely

the best that they can to ensure that that is the most utilized asset and that they're

investing in the lowest cost way to get customers online and to make the grid interoperable.

And I think some utilities are doing it on their own.

They don't need it, you know, they see the light in there and they are putting that

customer sentiment forward and some aren't, right?

But it's not uniform across the grid.

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AI is pushing economic and technological progress into a full out sprint.

And the energy sector is at the center of it all.

Explore the new era of AI innovation in the fifth season of where the internet lives.

An award-winning podcast from Google and Latitude Studios.

What does it take for a data center to be a good grid citizen?

How is AI revolutionizing agriculture, medicine, art and manufacturing?

And what does that mean for the future of energy demand and digital infrastructure?

Find where the internet lives wherever you listen to podcasts or click the link in the

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On April 13th and 14th, latitude media is offering the chance to hear from the experts

on the front lines of the AI energy infrastructure build out.

And AI 2026 is a two-day in-person conference in San Francisco, addressing the challenges

of building at gigawatt scale in the face of AI load growth.

And the programming includes two live recordings of our two original podcasts that's catalyst

with Shale Khan and OpenCircuit with me, Caroline Golan and Jiger Shah.

Shale's going to be interviewing Google's new chief of AI infrastructure, Amin Vedat.

And you're not going to want to miss that.

So our podcast listeners get a 10% discount.

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When you check out, you can follow the link in the show notes or go to latitudemedia.com

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We will see you April 13th and 14th in San Francisco for Transition AI.

I want to bring in the debate over this report.

And I'm seeing a lot of conversation over on energy Twitter.

I'm still calling it energy Twitter, not energy X. It sounds way better.

But there's been a lot of heated discussion on this.

And I think that the disagreements, there's a couple different camps.

One is more philosophical and one is more technical.

So I think some folks seem to believe that this obsession with utilization and distributed

resources is kind of a small-ball idea for a historic moment to build out new transmission,

for markets.

I wonder, I'm sure you guys know people who are involved with the utilized coalition,

et cetera.

Do you think there's a fair characterization of the utilized proponents that it's small-ball?

I don't think so.

No.

I actually think it's a fundamental building block to get to the point where we're actually

building large-scale transmission in this country, which is the hardest of all things

to build.

And we've had this conversation with utilities because, of course, they're, especially

the vertically integrated utilities.

I mean, their default is, well, I want more capital spend and more rate-based, like that's

how I make money.

So when you come and bring me a DLR project or a VPP or something like this, they look

at that and go, well, I don't really make money on that.

And our response to that is, well, what you make money on is load growth long-term.

And so if you are able to say yes to more customers because you can take some of these

lower capex, more efficient solutions that lead to greater utilization, you're still

going to get long-term capex investment in your system.

It's just you're now bridging to win that capex is sort of realistic to deploy because

the fact of matter is, if your answer to every new customer is, well, I'm going to go

build a combined cycle plant and I'm going to go, you know, upgrade a 500 KV transmission

line, your answer is always going to be five years out or seven years out or ten years

out, right?

And that's not good enough for this market.

You know, I still get calls from CEOs of some of the big tech companies and foundation

models and everyone else saying, hey, do you have any power 12 months from now?

Do you have a slide?

And I was like, well, no one has power 12 months from now, like, you know, like, but it

happens all the time because they, that's sort of, as Caroline said earlier, like their

planning cycles are still 18 to 24 months out, right?

They're not, even when we see all these big announcements about, I think the latest one

I saw yesterday was, or this week was open AI and Helion doing 100 gigawatts by 2035.

Great.

Like, maybe I'd take the under, but, you know, it's, all those things are not solving the

problem that they actually have today, which is they're trying to turn on a lot of GPUs

in 2026 and 2027 and 2028.

And what I think this whole utilization discussion helps with is, hey, there is available

capacity if, if you know where to look and it's, it's difficult and, you know, at least

for the, sort of the non-energy person to think about how we would orchestrate those solutions.

But they are there.

One way that I would like to ship the conversation a little bit and it's, you know, I'm, I'm

two weeks in at NRG, but it's been, you know, fabulous to be sort of on this side of the

aisle, but, which is that I think the conversation is always about how are we going to meet hyperscaler

demand growth?

Like, how is this country going to meet the challenge of building 100 gigawatts of demand

for the AI transition?

And I would challenge the conversation to be, how is this country going to take the capital

that presents itself in this load growth and invest in the system that is best for everybody

else moving forward, best for the communities, best for the residential customers, best for

the other C and I customers.

And I think if you take that posture first, you start to look at, to Brian's point, those

foundational elements that we absolutely need irrespective of whether it's 100 gigawatts

or 70 gigawatts or 30 gigawatts, right?

I think one of the problems that we always had at Google and Brian, I'm sure you shared

this was that I was always looking for a way to get our energy strategy decoupled from what

was an erratic load growth projection from where we were going with cloud or where we

were going with AI, right?

And so, and in part, that's what you're doing with cloverleaf, but I also think we should

challenge ourselves as an ecosystem to say, what's the grid that we want that gets us

out of this frenetic, well, we're 50 megawatts short on that node.

So we can't interconnect you for six years, whereas if you were 200 megawatts less, we

could interconnect you tomorrow.

Are we have one solution for interconnection right now?

And we, it's pretty old.

It's the same thing we've been doing for 50 years.

And we haven't thought about or really at scale deployed alternative solutions.

And we don't have any solutions for a, you know, coming society that has mass scale

electric vehicles that has the smart home that has, you know, rooftop solar and storage

at scale, you know, which is all coming down in price and all coming down in, you know,

accessibility.

And so I think the conversation needs to be more about that in general, in general.

But whether this is hype or not, I don't think it's hype.

I think it's both and, too, said Stephen, like we need, we need to build new power for

the long term.

And actually the problem with the scenario that Brian set up is that hyperscalers have

a really hard time in planning for more than five years.

So we get to like, what do you have in two years?

Well, I don't have anything.

And then we come back two years later and say, well, what do you have for the next two

years?

I think I'm back two years later.

I was like, what do you have for the next years is opposed to saying, well, what should

I be building now?

And of course, you're going to be building new power plants absolutely for the next five

years out.

But in this race to gigawatts, what is the best thing we can actually do to one, create

that bridge power that's clean and affordable?

And also is going to leave the grid in a better place, right?

Everyone benefits if we utilize the assets we have and everyone benefits if we redirect

our focus into saying, how do we get the most capacity and the most savings out of the

existing system?

And that's going to be through deploying things like, you know, standalone storage behind

the meter assets of the CNI and residential space, dynamic line rating, you know, gets

non-wire alternatives, whole things.

That's how you're going to get the most set of this system.

It's a win-win because it's to Brian's point.

We're still going to build those power plants.

We still have to build those power plants.

You know, that's going to happen.

But if we don't do this now, we're going to build a Frankenstein grid and we're going

to build a bunch of loops to know where and that's ultimately, that's the capital waste.

I think that could happen.

I'm not as worried about generation capital waste.

I think it will get there because I think training will continue.

I'm much more worried about grid capital waste.

Well, I think there's still a question in my mind about, you know, how many of these

mega projects, and I've got just in the last week what we had the Python Ohio, you know,

USB energy at, you know, $33 billion for nine gigawatts.

We had next era in Southwest Pennsylvania for gigawatts at, I forget the $17 billion.

You've had the end-scale project, you had Fermi before that, I mean, you go down the list

and you can quickly get to 60, 80 gigawatts of these sort of mega projects that I'm not

convinced are even financeable because what's notable in all these projects is the one missing

piece is the actual customer signing up for a 20-year-off take.

Sure you have a developer who wants to build it, sure you have a big bank or sovereign that

wants to lend money to it, but you don't see the customers right now signing up.

And as Caroline's saying, the hyperscalers really don't plan that far out for this stuff

such that they could underwrite a $33 billion project.

Not to say that none of those will get built, but it's a lot harder than people think than

just a press release for a groundbreaking to get a project like that off the ground.

I mean, I can drive, you know, an hour from my house out to the Washington coast and find

the old SATSUB cooling tower that was supposed to be a nuclear power plant that's now just

a giant concrete edifice that you can see from the road, which is fun little, fun fact

when you're driving the family out there and you can point that like, hey, we tried to

build a nuclear plant and we failed because it's actually really hard to build big things

in this country.

So I think people are underestimating how difficult it's going to be to really execute

those mega projects that, you know, this path of least resistance that Caroline was just

talking about is far more elegant, it's faster, it's cheaper, and it's more sustainable.

So it is the right solution, again, not that we're not going to build power plants.

We will, but, you know, we should build a whole lot less of those if we're focused on

this issue of utilization.

Well, and we should build them responsibly.

I mean, I think that's the problem that you see happening.

You know, we've got car batteries and lawn mowers being strapped together in a way and

those are supposed to be very short bridge solutions.

But they're getting 15 year contracts because the timeline for building out transmission

into central Ohio is longer than that, right?

And so I think what's going to happen is there's only a certain book of turbines that can

and will be built in this country because there's only a certain companies, one of them

I work for now, who actually know how to build them and the workforce and the labor to do

it.

And if those are built responsibly and done well and integrated well, then that's going

to be good for long-term reliability.

What's going to happen for everyone else who doesn't build those and they strap together

some Frankenstein behind the meter solution?

And they're not doing that, they're not doing that because they prefer that approach.

No one prefers that approach.

They're doing that because they can't get transmission to pipe in generation anywhere

that they're located, right?

So the reality of the congestion and the lack of alternatives on the transmission side

is what's going to drive a lot of irresponsible behind the meter growth, which is not good

for the community, not good for the environment and ultimately, you know, financeable in the

short run.

But I think long-term has some real pain points, it's not good.

Can I bring in another piece of this debate?

I think the other track is a little bit more technical, which is like what value do distributed

resources actually bring?

So I think when a lot of people talk about opening up new capacity, utilizing the grid,

they're thinking about virtual power plants, you distribute energy, demand response, et

cetera.

That's a big component of what people are talking about.

And you know, we see some push back in the energy community, I think articulated by

Jiao Wang, who's a research scientist, who's very active in these debates, and his argument

is basically that like not all capacity is interchangeable, right?

If you've got a, let's say one gigawatt data center showing up in a specific location,

you can't necessarily solve that by turning down a gigawatt of load somewhere else on

the distribution system, like it doesn't actually solve your constraint.

Does that resonate with you?

It does, and it's partly why citing and planning for these things is so important that, you

know, and this is the same, I've had to see the inverse argument where people have come

to me and said, well, you know, such and such utility said, I couldn't get power for

10 years, so I have to build a gas plant.

I was like, well, maybe you're just building data center wrong place.

Like maybe you should think more strategically about where you place that asset because it's

not true that you can't connect any data center for 10 years in this country.

There's lots of places you can connect them.

So understanding the transmission system first, and this is how we do our planning and

citing, is we do transmission load flow analysis, as we look at withdrawal points, and then

we start to study what resources are available, and I will be talking about this at the transition

AI conference around how we specifically have done that with level 10.

But this is where I think the lack of sophistication of a lot of the folks that are trying to

develop these assets comes into play, because yes, it is true.

If you just take a dart and throw it somewhere on the transmission system and then complain

because the utility won't connect you for 10 years, it's like, okay, well, if that's

the level of sophisticated planning you're doing, then you're right.

You need to build your own gas plant behind the meter, but I just don't think it's true

that those resources that we've been talking about can't contribute a material amount

to enabling load growth, if it's done strategically.

Yeah, I mean, I agree with Brian, I also would say, though, that this is, there's a difference

between real electrons and paper electrons, and part of the problem we have in this country

right now is there are real electrons out there, but they don't exist on paper because

of the way we do load planning, the way we do resource adequacy, how aware a utility

is of where things are placed, where their demand is, where their load is going, so just

that visibility into their system.

So yes, I think that's true, but I would push back on that a little bit in saying that

I think that's an easy way to explain why we don't invest in the market signals to grow

the BPP as a legitimate commodity, right, because I think with a really strong, interoperable

visible system, you know, and a good partnership, you can work with the utility to say, where

should I go, where congestion is going to be top of mind, where can I go, where you are

looking at a place that distribution relief or distribution investment is going to free

up transmission capacity, and the problem with that is not only just planning, but it's

also that we don't have markets like value signals for this, whether you're in a vertically

integrated space and they do their resource planning, and BPPs or, you know, DRs aren't

given the platform to have capacity value within the resource plan, or whether you're

in PGM, and you're not allowing aggregated BPPs to play in a special auction, or even,

you know, in ERCOT, where there actually isn't a price signal for an aggregated BPP yet,

outside of just, you know, an energy signal, and we're working on that in ERCOT, but I think

it's also a market signal situation, and I think it's sort of a cop out for not investing

in that, because, you know, like what Paige is doing over at tapestry, they're actually

trying to figure this out right now, right, like how can you actually create the market

signals for placement, where maybe it's not a one-to-one swap, but it's probably at least

a two-to-one swap, right, on something like this, because you actually know how to operate

your grid so well.

Yeah, those lack of price signals, I mean, that's a very real issue, and I think it kind

of goes to why the industry, it is like the data center industry and, to an extent, the

IPP industry have sort of coalesced around this, like, well, let's just go build these

mega-energy campuses, because the barriers to entry from a market standpoint are fairly

low there, at least conceptually, again, I challenge on the financing side.

But the ability to deliver that actually is a lot harder than people think, because of

the financing, because of the scale, whereas the market barriers around VPPs and other solutions

are actually higher as Caroline was noting, but the ability to deliver them is actually

really easy.

There's very little friction in actually deploying those solutions in the real world,

from a physical standpoint.

So it's not surprising that the market sort of coalesces around what seems like the

easy path on the front end, which is just build big power plants, and is not paying enough

attention to this harder path because of the way that markets are designed, but really

is, in the long run, the faster, easier path, if we can coalesce around getting the

market signals right here.

Yeah, especially for the bridge solution, I mean, that's what I really think.

I think it's a false argument to say that the VPP, the utilized concept, I guess, you

would tell that, is the equivalent to building new power plants.

I think the better conversation is what we see happening in these insane behind-the-meter

solutions, because to Brian's point, they're being told that it's going to take 10 years

to get transmission or build a gas plant.

That's the really irresponsible thing that's happening right now, and that's the better

comp.

That's the better data point for me in terms of if you're looking for the argument, because

I think it is going to be a both-and on building new power, and I think that what we're missing

is sort of the real trade-offs long-term for the community, notally, and from a financial

perspective between those two, that Frankenstein approach, first, like, hey, yeah, you could get,

I mean, I remember sitting with a said utility at one point, and we couldn't interconnect

because of 200 megawatts, right?

This was a multi-gigawatt project, and we couldn't interconnect because of 200 megawatts.

And finally, they looked at me, and when we had this conversation through, and the gentleman

said, actually, if you invested in X, Y, and Z on these three distribution units, I think

I could get you 200 megawatts.

But that conversation had never happened before, and an interconnection conversation before,

right?

They had never been forced to get there.

So I think that if we had not had that conversation, if we had not pushed on that, what would

have happened?

We would have considered, and we never would have done it at Google, but we would have

considered one of these Frankenstein approaches, you know?

And that's the trade-off conversation that I think needs to be more relevant and happening

with utilities.

I can't think of two better people to have this conversation with, and I hope it was

clarifying for folks.

I want to take a turn here, and run through some big themes in the news.

Everyone is talking about vibes right now, vibe coding, vibe working, vibe forecasting,

vibes are ubiquitous at the moment.

And now a lot of people are suddenly paying close attention to energy that were never involved

in energy, and a lot of takes on the energy industry seem to be based on vibes as well.

So I want to run through some of the tapes that I see.

Even what does vibes mean?

I mean, you wrote that in the show notes, and I was like, shoot.

Feelings.

Feel it.

OK, so it does just mean feelings.

There's not, like, it doesn't stand for something that I'm not cool enough to understand

right now.

It was too early for me to text my 15-year-old at this point, but that meant it just

means feelings.

OK.

Yeah, sort of how you feel, guide your point of view, or maybe some technical thing that

you're doing.

OK.

Sleep deprivation is a vibe, then we can go for sure.

Yeah, how do you mean, have you been paying attention to the vibe coding space with

cloud code?

And no, no, I know it's really incredible.

OK, I will do that.

I'm apologies for a cloud code that I haven't been paying attention to right now.

Yeah, I mean, anyone can sort of take a feeling that they have, like, an idea and execute

it, like, an expert coder.

And oh, OK, yes.

OK, now I know what you're talking about, but also, no, I am going to have any attention.

I told Stephen I was going to vibe code a jigger emulator for this podcast, so I could

always get the right jigger sort of answer, but that is literally something you could

do.

I could throw all the jiggers podcast set, cloud code, and it could spit out.

Totally.

That's right.

That's right.

OK, now I understand what you're talking about.

OK, but also, please don't do that.

Jigger needs to be singular in the world of frenetic rants about energy issues.

All right, so I'm going to run through a few of the storylines.

I've got a bunch here, but we'll see how many we can cover.

And I want you to answer, is it real or vibes?

Cole is back.

That's vibes.

Yeah, I mean, I think Cole, OK, am I just supposed to say yes or no or get my answer?

You can, I want to get, yeah, I hear a little bit of an answer.

OK, OK.

I think Cole is staying online longer than it would have stayed online a few years ago.

I don't know anyone who's building new Cole.

So back or just like hanging out for a little bit longer than it probably was going to

a few years ago.

That I would agree with.

Not making a comment.

I don't think it's making a comment.

I wouldn't call it a comeback.

Yeah.

Don't call it a comeback.

This is the golden age of gas.

I think that's, I mean, I definitely think we're going to see growth in gas generation.

I think a lot of this conversation we've been having right now will dictate whether that

growth is predominantly, you know, baseload, you know, combined cycle plans or whether it's

more peaking and flexibility, simple cycle plans.

Like, you know, like, I mean, I'm a huge believer in decarbonizing the grid.

And I also believe that 50 years from now, we're still going to have gas plants online.

Like, we cannot operate this system without it.

I think it actually be foolish to try to do that and not, you know, for very extreme

events, you know, like even the heatwave we're seeing right now in the middle of spring,

you know, have some amount of flexible gas to lean on at least for the foreseeable future.

So I think really the debate should be around, are we building new base load gas plants

that we're going to have to run at a high utilization, or we can, can we lean on this issue

of flexibility and build more, more peaking plants?

I think it's a very Western view to say that gas went away.

Gas never really went away globally.

If you look at electrification needs across Asia and Africa, gas never went away.

Good growth went away.

And capital investment was on the offset, and you weren't offsetting with building natural

gas.

You were offsetting with building renewables, but I don't think gas ever went away.

Certainly, the Iran conflict might complicate many country expansions of systems to import

LNG.

Absolutely.

I mean, I think that was one of the themes here at Zero Week was that, you know, even

if the conflict ended tomorrow, we are dealing with three years minimum of institutional interruptions

and impact.

Solar and batteries aren't real capacity.

That's not true.

Completely disagree.

I mean, I think Google's announced a minute just last week about what they were doing

in Minnesota, and the degree they were leaning on, you know, renewables to enable interconnection

of gigawatt scale site.

We did the same thing.

It was constant last year that's now the OpenAI Oracle Stargate site.

That site leaned on 1,500 megawatts of wind solar storage as part of its capacity stack.

So I know we hear that a lot.

I mean, I've heard that a lot out of the current administration that, you know, and others

have echoed that, but it's just not based in fact.

Yeah.

And I think it's even more interesting on the distribution system.

Like I think it's actually more, I think we're finally starting to have this conversation

about what can distributed solar and storage do for reliability and capacity aggregation

on the distribution system, as opposed to utility scale, which is what, you know, anyone

was ever interested in thinking about, you know, SMRs are the only real solution.

SMRs have been the only real solution for the last decade, and they'll probably continue

to be.

I've heard this most of my time at Microsoft.

No, I believe in new nuclear.

I think it's really hard to scale.

I think, you know, we need to see a more concerted effort between the large energy consumers

around betting on certain technologies to make it work.

But we can power the energy system without SMRs.

Would it be helpful?

But is it necessary?

No.

It's not the only solution.

But it's one I'd like to see in the mix.

Yeah.

In an era of capacity constraints, levelized cost of energy doesn't matter anymore.

To whom?

Well, I think, let's see if some of these mega projects actually get financed, right?

Because when you look at the cost of, you know, at least the stated cost of the two projects

I just mentioned earlier, you know, they were like $3,500 at KW, which translates

into a very high LCOE.

And what I would say, and I think this is where people sort of misunderstand this issue,

cost still matters and margins still matter to these business, but speed is the imperative.

And so where their price and sensitive is around short-term capacity, bridging for two

years, right?

They'll pay a lot for that.

But if your answer to bridging two years is building a 40-year asset, then you're not

really using the right tool to solve that problem, right?

And so they will pay a lot of money to go faster.

And it's about, and this is where that, this whole utilization conversation comes back

around because if those solutions can deliver that bridge, there's, again, a lot of price

and sensitivity there, which means there's a lot of solutions we can bring to market because

there's a willingness to pay.

But I don't think a lot of people are going to be signing up for $150,000, a megawatt hour

power for 30 years.

Like that's just, there's not a lot of appetite for that.

Yeah.

I couldn't agree more.

In fact, that's a great way of, you know, pulling it all together, which is that I do actually

think that the LCOE for certain customers, if you have power for 2020, it really doesn't

matter because there's no way.

And the math is sort of, you know, Brian, check me out my math here.

But generally speaking, I would say that 10 cents is the LCOE for power across the board

that we were used to, you know, for the past five years, or 10, sorry, 10 cents a KWH,

sorry.

And, and if you think about that and what the value of compute was, compute is at least

200% more valuable than the cost of power at that time, at least, and now it's probably

even more.

Even more?

Yeah.

So there's no way that the cost of power is ever, ever going to become that demonstrative

of a barrier in terms of continuing to want to grow and chase market share.

And we're in a market share.

You're not going to be able to say, hey, we're just not going to run for the next couple

of years.

No, no.

Then your business is over.

Hey, many more, right?

And so I think that's why these utilization and VPP solutions, we've just never explored

what's the actual strike price for that.

We're just assuming that the strike price is what we've been putting forward for the

past couple of years, which is like maybe 5% above avoided cost.

No, no, no.

I think the strike price is much, much, much higher in terms of getting those, those on

the grid.

But I think the LCOE does matter to residential customers and to CNI customers that are going

to be part of the system for a very, very long time.

So we should invest in the things that are going to make their lives better in the short

term.

All right.

Final one here, for two people who are building a lot, America has lost its muscles to build

big things.

In space.

No, I'm sorry.

I believe that's true.

I think that we, that's just not a muscle that we've exercised enough.

And there's way too much friction in the system.

And it's unfortunate because China does not have that constraint.

So as we think about winning the AI race, which is also about winning the energy race, we're

not good at this as a country.

We just have lost that muscle.

I believe we can get it back.

But part of the way we're going to have to get it back is, as I mentioned before, focus

on affordability and doing this the right way.

Because if what we're doing is just driving up everyone's energy rates, then that's going

to be even further ahead when forgetting big things built in this country.

Yeah.

I think there are very few players in this country that know how to build big things.

The only thing I would add, you know, we always say if there's a welder's away, I would

say if there's a workforce, there's a way.

And we don't have the workforce right now.

And that's my bigger concern.

Capital's not a problem.

But you don't have enough skilled labor out there that actually knows how to do a lot

of this.

And that's, that's, you know, another reason why I say, power plants are going to get

built solar, wind, gas, it's going to get built, and storage is going to get built.

And it needs to get built and we, and we wanted to get built.

But there's only a limited amount of workforce that knows how to do that, right?

So what can we do with our existing system when that is a, it is a real factor.

And I'd like to see a lot more going into developing that workforce.

Caroline Gollin is the chief growth and policy officer at NRG.

Thanks Caroline.

Make sure you stay hydrated there at Sarah week.

Oh my gosh.

Just like I need an IV of caffeine straight into my right arm.

Brian Janice is the co-founder and chief commercial officer at Clover Leaf Infrastructure.

Brian, so good to see you.

Likewise.

Thanks for having me, Steven.

And remember Brian and Caroline will both be at Transition AI.

Tickets are selling fast, the crowd, the, the, the, the level of quality of people buying

tickets is really great.

So please come join us in San Francisco April 13th and 14th.

Open Circuit is produced by Latitude Media.

The show is produced and edited by me, Sean Markwan and Anne Bailey.

Find all of our episodes of Open Circuit on YouTube and of course the audio versions anywhere

you get your shows, your podcasts, and for more in-depth stories on all the topics we

cover, go to LatitudeMedia.com and you can get transcripts of this show there.

Thanks everyone.

We'll catch you next week.