Speaker 1: Welcome to Zero. I am Akshatarati. This week Hyped just Right.
Speaker 1: Whatever the mood on climate these days, there's always big
Speaker 1: ideas in the climate technology space, but it can be
Speaker 1: hard to get your head around all the different types
Speaker 1: of technologies making waves and to separate what's real and
Speaker 1: what's low carbon smoke and mirrors. So this week I'm
Speaker 1: teaming up with Shale Khan to play a game of overhyped,
Speaker 1: under hyped, or hype just right. Shale is a venture
Speaker 1: capitalist at Energy Impact Partners. This episode is a collaboration
Speaker 1: with the Catalyst podcast that Shale hosts, where he interviews
Speaker 1: tech experts about decarbonization. Together, we're going to talk about
Speaker 1: some of the climate technologies that are working, the ones
Speaker 1: that are going nowhere, and some that we can't wait
Speaker 1: to see their full potential. Chill, Welcome to Zero.
Speaker 2: Thank you, Akshat, Welcome to Catalyst.
Speaker 1: Well, this is a different kind of podcast and we're
Speaker 1: making it across an ocean, but with similar politics in
Speaker 1: the background.
Speaker 2: Yeah's what's going I mean, I have a question for
Speaker 2: you. You're in London, right yep? Okay, so and you you
Speaker 2: work for Bloomberg Green and one thing that I have
Speaker 2: found is that in the US, places where like green
Speaker 2: or clean or climate is in their name have been
Speaker 2: having an interesting set of discussions around nomenclature. Is that
Speaker 2: true for I mean, Bloomberg is obviously based in the US,
Speaker 2: but so I'm curious how you see it from the
Speaker 2: Bloomberg perspective high level, but also in the UK and
Speaker 2: in Europe.
Speaker 1: Yeah, so Bloomberg News is a global news organization, but yes,
Speaker 1: it is US headquartered. I would say there isn't that
Speaker 1: much muzzling of terms as it's happening in the US government,
Speaker 1: but there's certainly a backlash on the politics here. So
Speaker 1: there is a party called the Reform Party that's on
Speaker 1: the rise over here, doing in the polls better than
Speaker 1: the main two parties Labor and Conservatives, and they are
Speaker 1: against net zero. So we are usually a step behind America,
Speaker 1: but then eventually catch up.
Speaker 2: Well in this case, I'm not sure I want you
Speaker 2: to catch up, but let's see what happens, all right,
Speaker 2: So this is going to be fun. What's our plan here?
Speaker 1: So we're going to do something different where we're going
Speaker 1: to go through a number of topics that our producers
Speaker 1: have selected. Where we're going to say whether we think
Speaker 1: it's under hyped, overhyped, or hyped just right, and explain
Speaker 1: our positions for why we think. So, let's start with
Speaker 1: meeting load growth for electricity, which is a hot topic everywhere,
Speaker 1: but specifically within that, What do you think about distributed
Speaker 1: energy resources? What are they and where do you land?
Speaker 2: And right? So, distributed energy resources is like a grab
Speaker 2: bag category of a bunch of different things. I would
Speaker 2: say the way I define it is anything that you
Speaker 2: deploy at a customer site, So it's sitting behind the meter,
Speaker 2: the customer side of the meter that either generates energy,
Speaker 2: stores energy, or shifts load. So canonical examples generates energy,
Speaker 2: think rooftop solar stores energy, think power walls and batteries,
Speaker 2: home batteries, batteries of buildings. Shifts load, think smart thermostats
Speaker 2: right where you can shift it. And there's a broader
Speaker 2: array of things that fall within that, but they get
Speaker 2: grouped together, and is distributed energy resources. On the question
Speaker 2: of deer's for meeting load growth, which is a question
Speaker 2: here is it over hyped, under hyped, or hype just right?
Speaker 2: I think my argument here would be in the circles
Speaker 2: that I travel in which are pretty like wonky energy
Speaker 2: tech circles. It's becoming increasingly hyped because we're just starting
Speaker 2: to see this way of announcements that are inexorably coming
Speaker 2: where there are going to be partnerships between hyperscalers or
Speaker 2: data center operators and third parties who do aggregations of
Speaker 2: drs to deliver capacity, to get data centers on the
Speaker 2: grid and things like that. Like that's coming, no question,
Speaker 2: and so it's starting to bubble up into the hype world.
Speaker 2: But I think that is my world is a pretty
Speaker 2: small portion of the world, and broadly, I think even
Speaker 2: in data center universe, it has not really been considered
Speaker 2: very much yet. Like mostly it is we're going to
Speaker 2: build a data center, can we get grid capacity? If not,
Speaker 2: can we build a big gas turbine? And so my
Speaker 2: argument is because of all that, it is still under
Speaker 2: hyped as of today.
Speaker 1: Yeah, that's an interesting perspective. I would say in my world,
Speaker 1: which is a little bit broader because I talked to
Speaker 1: policy folks, and I talked to big businesses and I
Speaker 1: talked to vcs, is that it actually used to be
Speaker 1: more hyped because it was way in which everybody was
Speaker 1: justifying having all these big renewables goals being set up
Speaker 1: because look, don't worry about it. I know it is variable,
Speaker 1: but we'll have these technologies that are just going to
Speaker 1: come online within the next few years and they'll make
Speaker 1: it easier to manage this variability in renewables. At that time,
Speaker 1: it was pretty hyped. Now I would say it's under
Speaker 1: hyped because it's not something people talk about that much.
Speaker 1: But those solutions are actually starting to bubble up. So
Speaker 1: we had the CEO of Octopus Energy, which is the
Speaker 1: largest utility here in the UK, on the pod and
Speaker 1: this year they've launched a bid Lee's program where you
Speaker 1: can just pay monthly to get a bid electric car
Speaker 1: and they would give you twelve thousand miles of free
Speaker 1: range in a year as long as you make sure
Speaker 1: that you put your car into the charging port whenever
Speaker 1: you're home, because they'll use the car for a virtual
Speaker 1: power plant. Essentially, that sort of thing is now becoming
Speaker 1: very frequent, Like I get text messages from Octopacology saying, hey,
Speaker 1: twelve pm to two pm today, free electricity, use all
Speaker 1: you want. And so I feel like, now those technologies
Speaker 1: are here and they can actually be put to use
Speaker 1: and so they're kind of underhype because you could actually
Speaker 1: now see those things out there.
Speaker 2: Yeah, I think that DRS are a second We're in
Speaker 2: a second wave now, right, Like I've talked about this
Speaker 2: before on the pod, but there was a wave of
Speaker 2: excitement around DRS, which I think is what you are
Speaker 2: referring to maybe a decade ago, and at that point
Speaker 2: it was like, Oh, we're going to decentralize the grid
Speaker 2: and maybe this is going to disintermediate utilities, and none
Speaker 2: of that happened. But I think what is interesting that's
Speaker 2: different is the frame of the question here, which is
Speaker 2: is it overhyped, under hyped, or hype just right for
Speaker 2: the purpose of meeting load growth? And that was that
Speaker 2: was not a thing we cared about a decade ago
Speaker 2: when DRS first emerged. So I think this second wave
Speaker 2: that we're seeing now DRS as a solution to managing
Speaker 2: load growth is interesting. It's one of the things that
Speaker 2: makes it more attractive now, alongside a bunch of other
Speaker 2: factors as you mentioned, like the rise of evs and
Speaker 2: EV chargers as a significant dr source of capacity is
Speaker 2: another one. Okay, so we're on the same side here.
Speaker 2: We will think it's currently under hyped. Let me ask
Speaker 2: you another one that I've talked about a little bit
Speaker 2: before on this spot, which is putting collocation with generations,
Speaker 2: so basically putting generation largely gas on site with data centers.
Speaker 2: Is that as far as meeting the load growth challenge?
Speaker 2: Do you think that is overhyped? Under hyped? Drype just right?
Speaker 1: I think it is hyped because I have been reporting
Speaker 1: on gas turbines, which are currently, as my editor put it,
Speaker 1: the la booboo of climate solutions.
Speaker 2: That's a very I get it.
Speaker 1: That seems right, very high in demand, and there's a
Speaker 1: year's waiting list before you can get the one you want.
Speaker 1: And so sure you know, in principle, if you could
Speaker 1: get a gas turbine, you would build it close to
Speaker 1: where the data center is. But can you even get
Speaker 1: a gas turbine?
Speaker 2: Yeah, there is that. So you think it's hyped just right,
Speaker 2: because like it, it is a thing that would happen
Speaker 2: a lot. But the supply chain bottleneck is the is
Speaker 2: the rate limitter. I think that is generally true. I
Speaker 2: do think so I've talked about a little bit before
Speaker 2: on my pod. I think it is a little bit overhyped.
Speaker 2: The degree to which not to say that we don't
Speaker 2: need a ton of new generation, and not to say
Speaker 2: that we don't need a ton of new capacity on
Speaker 2: the grid, but the degree to which that capacity needs
Speaker 2: to be co located with the data center, to me,
Speaker 2: is a little bit overhyped. We will see it happen.
Speaker 2: It's already happening in some places, right, You're seeing this
Speaker 2: in the US. We have the Xai Colossus data Center
Speaker 2: has a bunch of gas turbines. Meta is building a
Speaker 2: big facility that's going to have a bunch of gas,
Speaker 2: and a number of these projects will. But I think
Speaker 2: it's going to end up being the minority of new
Speaker 2: data centers, not the majority of new data centers. I
Speaker 2: think the implications from what you would see in the
Speaker 2: news is that like every new data center is going
Speaker 2: to come equipped with a bunch of gas turbines. Again,
Speaker 2: not to say that we won't build a ton of
Speaker 2: new gas generating capacity. I just don't think it's all
Speaker 2: going to be collocated with the with the data centers.
Speaker 1: Yeah, I mean the reason we are bringing this up
Speaker 1: is because building the grid has been so hard, Right,
Speaker 1: the goal would be with co location, you don't have
Speaker 1: to wait for a grid connection to come through before
Speaker 1: you can build your data center ensure if you can
Speaker 1: pay really high prices for the gas turbines, which some
Speaker 1: tech companies can, then you might be able to do it,
Speaker 1: but most places won't.
Speaker 2: It's also there's an interesting embedded question in that too,
Speaker 2: which is at some point will costs matter? Well, no,
Speaker 2: actually two questions. At some point will costs matter and
Speaker 2: at some point will uptime not matter quite as much? Right,
Speaker 2: because if you have the same uptime requirements for your
Speaker 2: AI data center as cloud data centers have historically, and
Speaker 2: you want to front run your grid connection by installing generation,
Speaker 2: you can't just build gas turbans, right. You have to
Speaker 2: build a lot of infrastructure because you have to have really,
Speaker 2: really high reliability. So you're going to build your gas turbans.
Speaker 2: You're going to build You're going to oversize some batteries
Speaker 2: that's going to be really high CAPEX. You might add,
Speaker 2: you know, additional layers to your UPS system. Like, there's
Speaker 2: a lot that you would build, and that comes at
Speaker 2: a real cost. Now where we are in the cycle
Speaker 2: right now, you know, the reality is that the energy
Speaker 2: total embedded energy cost in compute is small compared to
Speaker 2: the capex of the of everything else, but mostly the chips.
Speaker 2: So maybe energy cost doesn't really matter, even if you're
Speaker 2: deploying a bunch of more capex into that stuff. But
Speaker 2: there's an interesting question of will that ultimately matter, which
Speaker 2: would dictate the degree to which this equation of speed
Speaker 2: to power versus cost of power shifts a little bit.
Speaker 2: I think it it will shift. I just don't know
Speaker 2: when that is.
Speaker 1: There's also the chance that you know, these guys would
Speaker 1: go and build the power capacity where the grid connection
Speaker 1: is available, which there are many parts of the world
Speaker 1: where there is grid connection available. So yeah, I think
Speaker 1: it is a little too hyped. With co location for
Speaker 1: data centers, some will get it, but most people won't.
Speaker 1: Let's come to the next topic, which is falling on
Speaker 1: from trying to build the grid here at zero. We've
Speaker 1: done a series called Bottlenecks because we are seeing these
Speaker 1: bottlenecks to build the grid, especially in Europe and North America,
Speaker 1: show up in so many places. There's so many bottlenecks
Speaker 1: that it's not just about permitting and politics but about
Speaker 1: actual objects. So where is generating capacity on your hype meter.
Speaker 2: And the hype meter as a bottleneck. Right, So the
Speaker 2: question is basically, are we overly and like over hyped
Speaker 2: would mean we're too worried about it. Under hype would
Speaker 2: mean we're not worried enough about it. I think that,
Speaker 2: you know, the long lead times or gas turbans in
Speaker 2: particular is very well established and reported and understood by everyone,
Speaker 2: which I guess argues that it's it's hyped because people
Speaker 2: do appreciate that that is a real challenge. There also, though,
Speaker 2: has been a lot of good data to suggest that
Speaker 2: generating capacity in the next few years is not the
Speaker 2: dominant bottleneck, Like there is enough capacity in enough places
Speaker 2: to deliver the kind of load growth for the next
Speaker 2: few years that the grid will need. So I think
Speaker 2: this will get to the next one where I think
Speaker 2: there is a real concern. But I would say generating
Speaker 2: capacity to me, might be a little bit overhyped. The
Speaker 2: cues are long if you want to build new gas turbans,
Speaker 2: but I don't think that is going to be the
Speaker 2: rate limitter on load growth at least through like twenty thirty.
Speaker 1: I think that is right. We spoke to a utility
Speaker 1: CEO the next or CEO in the US, who said,
Speaker 1: you know, if gas turbines are going to be that expensive,
Speaker 1: that's just going to make solar prose batteries so much
Speaker 1: more attractive, and we will build those instead. So there
Speaker 1: is certainly no reason to think all forms of generating
Speaker 1: capacity is in a bottleneck, and so all sorts of
Speaker 1: other things could be built. But there are other challenges
Speaker 1: in bottlenecks which are much more severe to me, that
Speaker 1: we need to worry about.
Speaker 2: So that maybe gets to the next one I think,
Speaker 2: which is which is transmission deliverability basically is the way
Speaker 2: to put it. Do you think that is overhyped underhyped
Speaker 2: as a bottleneck.
Speaker 1: I think it's super under hyped. Let me give you
Speaker 1: a European example, which is that the Netherlands has twelve
Speaker 1: thousand businesses waiting for an electricity connection. Companies like ASML,
Speaker 1: which is like the Netherlands' biggest company, most valuable company,
Speaker 1: isn't a to build extra factory because it cannot get
Speaker 1: an electricity connection for the next few years.
Speaker 2: And is the Netherlands in the same situation as the
Speaker 2: US where we just basically stopped building new transmission lines
Speaker 2: years ago, like we I mean not zero but effectively
Speaker 2: zero for the past few years. Is that the situation
Speaker 2: and in Netherlands or in Europe in general, or is it?
Speaker 1: No, No, it's not that severe because a lot of
Speaker 1: European countries are interconnected and they have been building more
Speaker 1: interconnections between them. It's more like there are places around
Speaker 1: Europe where there is more generating capacity, and there are
Speaker 1: demand centers which are typically further away from those generating capacity,
Speaker 1: that aren't getting the power supply as it's needed. So
Speaker 1: the transmission hasn't been able to keep up with the
Speaker 1: demand that is showing up.
Speaker 2: And I don't think of that. Maybe I should know better,
Speaker 2: but I don't think of the Netherlands as having been
Speaker 2: a big data center hub historically, do you know?
Speaker 1: No, I don't think so. I mean, it certainly has
Speaker 1: some industry. A lot of it is, you know, oriented
Speaker 1: towards electricity because it's high end manufacturing. But no, I
Speaker 1: don't think it's a big data center hub.
Speaker 2: Yeah, which I mean is even more concerning if you
Speaker 2: think about the context of there's this big, long queue
Speaker 2: to get grid connected in a market that hasn't yet
Speaker 2: seen the boom in like very large load interconnection requests
Speaker 2: that we're seeing in lots of other places.
Speaker 1: There is the aspect of dr like distributed energy resources
Speaker 1: that is affecting the grids in Europe. So Netherlands has
Speaker 1: the highest per capita rooftop solar in the world, which
Speaker 1: you know for a European country, it'll be like, oh,
Speaker 1: that's odd, but you know that's what you get. You
Speaker 1: get cheap solar panels, and you get some policy available
Speaker 1: and you'll deploy a lot of solar panels. But it's
Speaker 1: causing real problems at the transmission and distribution network locally
Speaker 1: because the grid has been built over the last hundred
Speaker 1: years and many of the objects of the grid are
Speaker 1: much much older. So that brings us to the next topic,
Speaker 1: which is transformers. Transformers are this object that said, between
Speaker 1: generation between a power plant and your home, because they
Speaker 1: have to make sure that the voltage at which power
Speaker 1: is delivered is just right for the devices that you
Speaker 1: are going to attach to it. Where do you land
Speaker 1: on whether transformers are over hyped, under hyped, just right hype.
Speaker 2: So again, if the question is overhyped, under hyped as
Speaker 2: a bottleneck to load growth to meeting load growth, then
Speaker 2: I think that they're overhyped. I want to clarify. Transformers
Speaker 2: are incredibly important, and there is a bottleneck, and the
Speaker 2: lead times are very long, and I've witnessed it firsthand,
Speaker 2: both from the utility side and the load side. It
Speaker 2: is a problem. I don't think it is the rate
Speaker 2: limiting factor. Even today, with long lead times, it's an
Speaker 2: annoyance to get anything built. Things will still get built,
Speaker 2: and certainly those lead times for transformers are so shorter
Speaker 2: than they are for gas turbines. But I do think
Speaker 2: we also will see a lot of new transformer manufacturing
Speaker 2: capacity come online in the next few years. It's the
Speaker 2: lead times are going to come down, and I think
Speaker 2: we'll see a way of new technology. I'm an investor
Speaker 2: in a company called hair and Power, which is building
Speaker 2: solid state power electronics. You know, I think stuff like
Speaker 2: that is going to revolutionize that sector. But even in
Speaker 2: the absence of things like that, I don't think it
Speaker 2: is going to be the thing that stops the load
Speaker 2: growth from getting met. So I'm going to say overhyped
Speaker 2: on that one.
Speaker 1: I would go under hyped if I look at the
Speaker 1: non data center crowd because transformers are needed for everything,
Speaker 1: and in my reporting, like I've come across many many
Speaker 1: projects like housing projects that are completely on hold for
Speaker 1: eighteen months because they're missing this one object that they
Speaker 1: need before they can power the area, and so it
Speaker 1: is affecting a lot more people. But the people who
Speaker 1: can afford to pay for it can jump the queue
Speaker 1: and get the object, then yes, they can. They can
Speaker 1: get there. And then on the manufacturing side, again, my
Speaker 1: reputting says, these companies are very conservative. They will invest,
Speaker 1: but only if they have surety that there will be
Speaker 1: demand for transformers for twenty years or so, which they
Speaker 1: are not yet sure will. No.
Speaker 2: I totally agree with that, and it's already evident in
Speaker 2: the fact that we've had these long lead times for
Speaker 2: transformers back to I don't know, twenty twenty one, twenty
Speaker 2: twenty two. It's not a new thing, and it has
Speaker 2: been persistent for longer than I think a lot of
Speaker 2: people expect it, in part because of the conservatism of
Speaker 2: that industry, who, to be fair to them, they've gone
Speaker 2: through cycles before where they've overinvested and then been underutilized
Speaker 2: and so on, and so they're reticent to do that again.
Speaker 2: I think that the expansion of capacity is not entirely
Speaker 2: going to come from the incumbents, though, I think there's
Speaker 2: going to be a wave of upstart companies, whether they're
Speaker 2: doing traditional oil filled transformers or solid state stuff like
Speaker 2: Karen is doing. I think they're going to fill in
Speaker 2: a lot of the supply gap in the next few years,
Speaker 2: even if the hitachies of the world, you know, expand
Speaker 2: capacity slower than you would want them.
Speaker 1: To join us after the break for more of my
Speaker 1: conversation with Shilkhan, and Hey, while I've got you here,
Speaker 1: fancy writing us a review on Apple podcasts or Spotify. Recently,
Speaker 1: Jfred nineteen eighty eight wrote zero will prompt even mildly
Speaker 1: interested listeners to get pumped about green politics and technologies.
Speaker 1: Thanks to you, Fred.
Speaker 2: Let's take at version for a second. Here, you had
Speaker 2: a thing that I have no context on, but you
Speaker 2: want to talk about this that's relevant to my day job,
Speaker 2: which is you wanted to talk about VC as a
Speaker 2: tool for scaling climate tech. You're gonna grill me on
Speaker 2: something here.
Speaker 1: I just don't know what I would happily really on
Speaker 1: many many topics, but this one. I wanted to put
Speaker 1: us on the hype or under hype, because you know
Speaker 1: it's your business. But from the perspective of venture capital
Speaker 1: helping scale climate solutions. I think VC is overhyped because
Speaker 1: that model might work in America, and I don't know
Speaker 1: if it's working because there are not that many companies
Speaker 1: that have really been VC oriented big climate champions right now,
Speaker 1: but rest of the world are building climate solutions and
Speaker 1: a lot of those companies aren't VC backed. Your BVID
Speaker 1: wasn't a VC backed company while it became an electric
Speaker 1: car giant. So to me, that is one model. It
Speaker 1: can work in certain cases, and it's not working in
Speaker 1: so many cases that perhaps it's time to look at
Speaker 1: other forms of idea is that would allow maybe existing
Speaker 1: companies to pivot towards climate solutions, which also can happen.
Speaker 2: I think what we've broadly seen historically is that venture capital,
Speaker 2: particularly venture capital in the US, I will say, plays
Speaker 2: an outsized role relative to the dollars that go into it.
Speaker 2: Plays an outsized role in getting new technologies into commercialization
Speaker 2: right like from the lab to the market. And usually
Speaker 2: there's one or two pioneering companies that are venture backed
Speaker 2: that do that and are the first. So if you
Speaker 2: want to talk about bid, like what would bid be
Speaker 2: if Tesla hadn't been Tesla. It's an interesting question. If
Speaker 2: there had never been a Tesla, would BID still be
Speaker 2: what it is today? Would it have scaled as quickly?
Speaker 2: Or was the existence proof of a company like Tesla
Speaker 2: the thing that caused BID in the Chinese government to
Speaker 2: deploy a lot of capital into it. You've seen versions
Speaker 2: of that, I think a lot of times. Yeah.
Speaker 1: Other example would be CTL, which is the largest battery company.
Speaker 1: You know, what would it be if LFB lithimyin phosphate
Speaker 1: had not been invented in America and then first commercialized
Speaker 1: by E one to three, which is a venture back company.
Speaker 2: That's right now, That's a good example of there is
Speaker 2: a separate question that I think is a good question,
Speaker 2: which is do the investors, the venture investors, and the
Speaker 2: companies that they invest in, reap the full reward of
Speaker 2: that invention and commercialization? And A one two three is
Speaker 2: a perfect example of like, that company went public and
Speaker 2: then went bankrupt pretty quickly. So maybe the answer to
Speaker 2: that is no, although some early investors did make some
Speaker 2: money on it, So I don't know that. That is
Speaker 2: a different question, and that's one that I grapple with
Speaker 2: all the time. But if you're just taking the big
Speaker 2: step back thirty thousand foot ecosystem view, I still think
Speaker 2: it is true that again relative to the dollars deployed,
Speaker 2: because where are the dollars actually getting deployed. They're getting,
Speaker 2: you know, in total volume, they're either getting deployed into
Speaker 2: the bids and c atl's of the world, or they're
Speaker 2: getting deployed in infrastructure. Right, the real goes to building
Speaker 2: big solar projects and things like that. But on an
Speaker 2: impact two dollars invested ratio, I would still claim venture
Speaker 2: capital plays an outsized role.
Speaker 1: I would just put it back on one thing, which
Speaker 1: is there's a phrase that Dan Wang, this guy who
Speaker 1: wrote Breakneck, used which I liked, which is America is
Speaker 1: good at going from zero to one, like creating something
Speaker 1: that didn't exist, But China is good at going from
Speaker 1: one to hundred, really like giving you the solution at
Speaker 1: the cheapest price possible. But a lot of that zero
Speaker 1: to one in America happens because of the level of
Speaker 1: science funding and the talent that it has, and the
Speaker 1: basic sciences and the research, which in the current administration
Speaker 1: is going to go down or is going down already,
Speaker 1: And so there is a risk that that thing that
Speaker 1: V see enables, which is translation of this immense amount
Speaker 1: of basic science into a usable product, becomes harder.
Speaker 2: Yes, I agree with that, and I think it is
Speaker 2: incumbent to power on the US to do everything that
Speaker 2: we can to maintain that position as the part of
Speaker 2: the world that is best at going zero to one
Speaker 2: and then arguably competing for the one to one hundred
Speaker 2: as well. But I don't think it's a foregone conclusion
Speaker 2: that we will. I'm saying historically, it is clear to
Speaker 2: me that that is true. Looking forward, you know, we've
Speaker 2: got work to do there.
Speaker 1: I have another weird one that I've picked for you,
Speaker 1: which is, what do you think about the hype on
Speaker 1: the Paris Agreement helping shape businesses towards climate solutions? Under
Speaker 1: hype are just hyped, right?
Speaker 2: So I don't think I have a good answer to
Speaker 2: this one, because, to be totally honest, I don't hear
Speaker 2: about or think about the Paris Agreement at all, like
Speaker 2: basically zero. So maybe that tells you something. It's certainly
Speaker 2: in my world it's not hyped. I can tell you that,
Speaker 2: but I couldn't tell you whether it should be hyped
Speaker 2: or not. Do you have a view. Are there things
Speaker 2: that are like downstream of the Paris Agreement that are
Speaker 2: affecting my world that I just don't know, you know,
Speaker 2: came from Paris or is it just sort of a
Speaker 2: it's there and it's a big geopolitical thing, but it's
Speaker 2: not really affecting business.
Speaker 1: Yeah, I would say this is the bit as a
Speaker 1: journalist that I find fascinating because I see many worlds
Speaker 1: and the Paris Agreement actually works as I've seen across
Speaker 1: all these worlds. But some people have very strong views
Speaker 1: and other people have no views. So let me explain.
Speaker 1: In climate diplomacy, Parasagreement is this document that was agreed
Speaker 1: on in twenty fifteen by all countries in the world,
Speaker 1: which is in principle voluntary, but sets a goal of
Speaker 1: one point five or two degrees celsiaful warming that all
Speaker 1: countries must keep to. It was twenty five years in
Speaker 1: the making, That's how long it took to come to
Speaker 1: a conclusion, and then what you got was a voluntary agreement.
Speaker 1: And a lot of the people in Diploma see are
Speaker 1: happy and sad at the same time, like we have something,
Speaker 1: but it's not good enough, and they think about it
Speaker 1: a lot. We meet at COP meetings every year, which
Speaker 1: we're going to do in Brazil next month in November
Speaker 1: at COP thirty, and we'll talk a lot more about
Speaker 1: those words. And the people in that world continue to
Speaker 1: be frustrated by Paris. But Paris's impact on businesses is
Speaker 1: actually quite big because it has become translated into government policy,
Speaker 1: and then government policy gets translated into all forms of
Speaker 1: directions that businesses are taking, which they may not always
Speaker 1: explicitly tell you it is because of Paris. They'll say
Speaker 1: it's because of government policy. And every government has its
Speaker 1: own policy, but its tentacles have far reaching impact, even
Speaker 1: if most people don't see the direct connection.
Speaker 2: I believe that, and I also think probably I'm colored
Speaker 2: by the fact that I'm in the US, where you know,
Speaker 2: our relationship to parents has been fraught and back and
Speaker 2: forth over the years, as opposed to like Europe, where
Speaker 2: it's been consistent, and so probably the policies have had
Speaker 2: more time to take hold. But it is interesting your
Speaker 2: point that like people either have very strong opinions about
Speaker 2: Paris or no opinions. I'm clearly in the latter camp. There.
Speaker 2: All right, we're short on time, but I think we
Speaker 2: should do a quick grab bag of additional We could
Speaker 2: just do a few technologies and decide whether we think
Speaker 2: they are over hyped, under hyped, hype just right. All right,
Speaker 2: So let's start with a battery chemistry, sodium ion batteries
Speaker 2: over hyped, under hyped, hype just right.
Speaker 1: So I know you've done a couple of episodes, so
Speaker 1: you probably have a better more informed view on this.
Speaker 1: My view is that, as somebody who's written about batteries
Speaker 1: for the last decade, getting new chemistries out to a
Speaker 1: commercial use case is really hard. When companies do that,
Speaker 1: kudos to them. But given the pace at which lithium
Speaker 1: ion chemistries have fallen in price and the amount of
Speaker 1: manufacturing capacity that's been built the world. If I look
Speaker 1: at Bloombaginif projections, sodia mine will make an impact, but
Speaker 1: such a sliver even after twenty thirty years, that I
Speaker 1: feel like today sodia mine is overhyped because people think
Speaker 1: it could make a big difference, but really it may not.
Speaker 2: I think it's hyped just right. Largely. First of all,
Speaker 2: I don't think it's that hyped, to be honest, People
Speaker 2: talk about it, but you know, I think for all
Speaker 2: the reasons you described, and everybody having had the same
Speaker 2: history that you're talking about, people are reticent to like
Speaker 2: go all in on this is the next big battery
Speaker 2: chemistry apart from clickbaity articles. But I think there is
Speaker 2: a degree of hype that is warranted, largely because it
Speaker 2: seems pretty clear that some of the big Chinese manufacturers
Speaker 2: c ATL included are investing a lot is sodiumyan and
Speaker 2: are actually deploying I mean, your point about getting new
Speaker 2: battery technologies into the field is true. They're doing it
Speaker 2: though in China, and so it's coming. The question to
Speaker 2: me is is you know sort of the one you're
Speaker 2: alluding to, like, what portion of the market does it
Speaker 2: take up? Right? And the last version of a big
Speaker 2: chemistry shift, which is a smaller chemistry shift than this
Speaker 2: one that we saw was lf the rise of LFP,
Speaker 2: and that has been a huge deal, huge deal. Right,
Speaker 2: Will sodium ion be the next wave of the same
Speaker 2: type of a thing or is it going to be
Speaker 2: a more niche solution because it's lower energy density and
Speaker 2: so on. I don't think we know that yet, but
Speaker 2: it's coming from from c at L and its cohort,
Speaker 2: So let's just see what happens.
Speaker 1: The next one is advanced geothermal. Where do you land
Speaker 1: on hype, under hyped, just right?
Speaker 2: So in the US, advanced geo thermal is very hyped.
Speaker 2: I would say it's hype for a bunch of reasons.
Speaker 2: Some of them you know, legitimate success of companies like
Speaker 2: Fervo Energy, you know, sort of pioneering it. But also
Speaker 2: there's a political lens to that because our new administration
Speaker 2: are our Secretary of Energy in particular, Chris Right is
Speaker 2: super bowlish on g thermal in general. He likes geothermal
Speaker 2: and nuclear and those are the two sort of like
Speaker 2: overlapping clean energy things that I think he's full throatedly
Speaker 2: in support of. And so as a result of that,
Speaker 2: it is highly hyped that maybe warn't like, let's see
Speaker 2: where it goes. But it's very early days. Like you know,
Speaker 2: Fervo is hoping to have its first hundred megawatts of
Speaker 2: its first big project online sometime next year. So I
Speaker 2: guess my argument here would be it's somewhere in the
Speaker 2: hyped just right to maybe slightly overhyped stage in the US.
Speaker 2: I'm curious, though, from your sort of more global perspective,
Speaker 2: the degree to which advanced geothermal has talked about.
Speaker 1: So this is one where typically the rest of the
Speaker 1: world is following the US on its hype cycle, and
Speaker 1: so clearly there's a lot more talk about advanced geothermal
Speaker 1: because US has shown some success already and surely, you know,
Speaker 1: being able to apply shiel drilling type technology could make
Speaker 1: many other parts of the world, which don't always have
Speaker 1: great geotone resources, suddenly more valuable. The difficulty, I feel
Speaker 1: like is that it's overhyped because the level of other
Speaker 1: types of talent and infrastructure that you need to deliver
Speaker 1: on advanced geo thermal exists in the US, but will
Speaker 1: take a long time in other parts of the world
Speaker 1: to build. So engineers who can manage shale type drilling,
Speaker 1: or like a study of the subsurface that would allow
Speaker 1: you to do it in the right way, all of
Speaker 1: that just takes a long time, and I don't think
Speaker 1: that expertise exists in the rest of the world quite
Speaker 1: as much, and so we are going to see not
Speaker 1: as many projects built as many people think there might be.
Speaker 2: It's an interesting point, right because one of the reasons
Speaker 2: that it is so attractive in the US is that
Speaker 2: we do have all of this expertise from oil and
Speaker 2: gas that is being leveraged for advanced geothermal. But of
Speaker 2: course we are a country that has that expertise, has
Speaker 2: the resources, has been drilling, has been doing horizontal directional
Speaker 2: drilling for a long time, invented it in fact. So yeah,
Speaker 2: that's a good point. Okay, last one, continuing on the
Speaker 2: same vein of technologies that Secretary of Energy Chris Right likes,
Speaker 2: advanced nuclear over hyped, under hyped hype.
Speaker 1: Just right, Yeah, it's got the similar vibe as advanced
Speaker 1: geothermal in that you know, in principle, wouldn't it be
Speaker 1: nice if we could build small modular nuclear reactors because
Speaker 1: then we could make many of them and try and
Speaker 1: then lower the price of nuclear which has been going
Speaker 1: up and up and up in Europe and North America.
Speaker 1: And again the hype is following on from America, where
Speaker 1: you know, countries like the UK are now asking Rolls
Speaker 1: Royce to make a small modular reactor. But the reality
Speaker 1: is the only countries that have functioning civilian small modular
Speaker 1: reactors are Russia and China. And the countries who have
Speaker 1: been building nuclear not just domestically but also around the
Speaker 1: world are Russia, and China and Asia if you want
Speaker 1: to include os like eight thousands, right, agreed, Yes, South
Speaker 1: Korea too. And so do suddenly imagine that you know
Speaker 1: a new technology will unlock nuclear in Europe and North
Speaker 1: America to me is overhyped.
Speaker 2: I think there's an interesting question we're heading into in
Speaker 2: nuclear world, which is sort of between I don't know
Speaker 2: what to call advanced nuclear and not advanced nuclear. But
Speaker 2: let me just like I'll frame up to groups. Group
Speaker 2: one says we need to just we have a couple
Speaker 2: of technologies that are kind of the front runners from
Speaker 2: large OEMs, right, So this would be the eight one
Speaker 2: thousand from Westinghouse and maybe the br X three hundred
Speaker 2: from Gatachi, which is an SMR that's a you know,
Speaker 2: three hundred megawatt reactor. Those are the furthest along. They're
Speaker 2: bankable OEMs. Forget all this other noise. We need to
Speaker 2: go deplay as many of those as possible. Right. And
Speaker 2: then the other argument is there's a whole bunch of
Speaker 2: new technologies coming from a whole raft of companies that
Speaker 2: could be deploying SMRs or microreactors or whatever, and some
Speaker 2: of those need to go win as well. And you know,
Speaker 2: I don't think it's clear yet which direction we had
Speaker 2: if either. One thing I do worry about is that
Speaker 2: I personally think in the long run, nuclear probably ends
Speaker 2: up looking like gas turbans look today, which is there.
Speaker 2: You know, in the gas turban world, there are basically
Speaker 2: three OEMs that control like seventy seventy five percent of
Speaker 2: the market. It's an oligopoly essentially, and I don't see
Speaker 2: a really strong reason why it would be different in nuclear.
Speaker 2: So we need to get through this winnowing. We need
Speaker 2: to call the herd a little bit to get to
Speaker 2: the point where we're deploying enough number of individual reactors
Speaker 2: to get down that cost curve, and that's going to
Speaker 2: be a messy process to get there. I guess my
Speaker 2: answer is that I think advanced nuclear, if I broadly
Speaker 2: define it to include all of those things, seems hyped
Speaker 2: about right to me. But I worry that we are
Speaker 2: overhyping too many individual technologies, reactor types, companies relative to
Speaker 2: what we actually need to do in that market.
Speaker 1: Yeah, that's an interesting one. I mean on gasterbinds. Yeah,
Speaker 1: it's semens, ge and Mitsubushi, which are the three giants
Speaker 1: to the extent where China has been trying to make
Speaker 1: a gasterbine manufacturing industry, and it's not really succeeding because
Speaker 1: it's just so specialized and the supply chains are so tight,
Speaker 1: and the supply chain also ends up being one where
Speaker 1: the same parts are used by jet engines, for example.
Speaker 1: So like real complications nuclear, to me, it's hard to
Speaker 1: see if it comes down to those three, especially with
Speaker 1: the kind of political layer attached to nuclear, where transfer
Speaker 1: of fuel and which country can build in which country
Speaker 1: is tightly coordinated by the IAEA, the International Atomic Energy Agency,
Speaker 1: That makes it much harder for me to see just
Speaker 1: the sort of market forces that drove gasterbine MNA happening
Speaker 1: in nuclear.
Speaker 2: Does that argue in what you're saying for their actually
Speaker 2: being more OEMs than there are in gas service?
Speaker 1: I think there will be national champions and more of them,
Speaker 1: whereas siemens G and Mitsubushi are more than national champions. Yeah,
Speaker 1: sure their country support them, but they also have such
Speaker 1: large customers in other countries.
Speaker 2: It's interesting because I could see an argument for what
Speaker 2: you're describing sort of pushing in the reverse direction, which
Speaker 2: is that actually it's going to be getting through the
Speaker 2: gauntlet of being a nuclear reactor OEM is going to
Speaker 2: be so hard because of all the additional layers that
Speaker 2: even fewer companies are going to get through it. Adding
Speaker 2: the national lens to it maybe complicates it a little bit,
Speaker 2: but I could see that being an argument for maybe
Speaker 2: there aren't three, maybe there's really one or two, rather
Speaker 2: than they're being thirty.
Speaker 1: Well, you're imagining a more peaceful world than I think
Speaker 1: we are going into. But I hope you're right.
Speaker 2: All right. I think we covered a bunch of stuff here.
Speaker 2: This was fun. Thank you Akshav for doing this with me.
Speaker 1: Yeah, this is great fun. Thank you for suggesting the idea,
Speaker 1: and thank you for listening to zero And now for
Speaker 1: the sound of the week. That is a machine making
Speaker 1: a copper heat Sinc. Which helps remove heat from chips
Speaker 1: running in AI data centers. They require huge amounts of
Speaker 1: electricity to run, much of which is wasted as heat,
Speaker 1: and that's why data centers are transforming power demand around
Speaker 1: the world. This was the subject of a recent Bloomberg
Speaker 1: Big Take linked in the show notes. If you like
Speaker 1: this episode, please take a moment to rate and review
Speaker 1: the show on Apple Podcasts and Spotify. Share this episode
Speaker 1: with a friend or with someone who thinks their technology
Speaker 1: is underhyped. This episode was produced by Oscar Boyd and
Speaker 1: Daniel Waldorf. Our theme music is composed by wonder Le.
Speaker 1: Special thanks to shil Khan, Samersati, Moses Andem, Laura Milan
Speaker 1: and Sharan chen i'm Akshatrati back soon.