WEBVTT - Tesla Layoffs, Blackstone Earnings, Energy in Focus 0:00:02.920 --> 0:00:12.600 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 0:00:12.640 --> 0:00:14.400 with Alex Steinehl and Paul'sweenye. 0:00:14.520 --> 0:00:17.720 The real app performance has been in US corporate high yield. 0:00:17.880 --> 0:00:20.240 Are the companies lean enough? Have they trimmed all the fats? 0:00:20.320 --> 0:00:23.880 The semiconductor business is a really cyclical business. 0:00:23.600 --> 0:00:27.200 Breaking market headlines and corporate news from across the globe. 0:00:27.240 --> 0:00:29.880 Do investors like the M and A that we've seen? 0:00:30.080 --> 0:00:31.000 These are two. 0:00:31.040 --> 0:00:33.159 Big time blue chip companies. 0:00:33.320 --> 0:00:36.920 The window between the peak and cut changing super fast. 0:00:37.080 --> 0:00:41.680 Bloomberg Intelligence with Alex Steinel and Paul'sweenye on Bloomberg Radio. 0:00:43.120 --> 0:00:45.479 On Today's Bloomberg Intelligence Show, we dig inside the big 0:00:45.479 --> 0:00:47.839 business stories impacting Wall Street and the global markets. 0:00:47.920 --> 0:00:49.960 Each and every week we provide you inp research and 0:00:50.040 --> 0:00:51.720 data on some of the two thousand companies and one 0:00:51.800 --> 0:00:54.440 hundred and thirty industries our analysts cover worldwide. 0:00:54.480 --> 0:00:56.440 Today, we'll look at what earning some of the world's 0:00:56.520 --> 0:00:59.160 largest alternative asset manager tell us about the health of 0:00:59.160 --> 0:00:59.960 financial markets. 0:01:00.000 --> 0:01:02.200 Plus, we're going to discuss how energy companies are working 0:01:02.200 --> 0:01:04.200 to satisfy high demand for power. 0:01:04.520 --> 0:01:07.759 But first we dive into the eb space and Tesla. 0:01:07.760 --> 0:01:10.640 This week Tesla announced it is slashing headcount by more 0:01:10.680 --> 0:01:13.880 than ten percent. CEO Elon Musk cited duplication of roles 0:01:14.120 --> 0:01:15.480 and the need to reduce costs. 0:01:15.520 --> 0:01:18.360 We also heard that senior vice president Drew Baglino and 0:01:18.440 --> 0:01:21.440 Rohan Patel, vice president of public Policy and business Development, 0:01:21.480 --> 0:01:23.560 have also departed. So for more on this, we were 0:01:23.640 --> 0:01:26.800 joined by Steve Mann, Bloomberg Intelligence Global, Autos and Industrial's 0:01:26.800 --> 0:01:27.560 research analyst. 0:01:27.959 --> 0:01:30.360 We first asked Steve for his take on this week's news. 0:01:30.440 --> 0:01:33.000 It's actually worse than I thought I thought. You know, 0:01:33.040 --> 0:01:38.480 the first quarter sales drop was you know, hopefully close 0:01:38.520 --> 0:01:41.280 to the end, but you know, there's seems to be 0:01:41.520 --> 0:01:43.120 the light at the end of the tunnel is not 0:01:43.319 --> 0:01:46.960 really here yet. And it looks like their plans are 0:01:47.000 --> 0:01:50.840 running just pretty much well below capacity at the moment, 0:01:51.560 --> 0:01:54.440 and there's still a lot of cost headwinds facing them. 0:01:54.920 --> 0:01:57.200 They're trying to balance a lot of things in terms 0:01:57.200 --> 0:02:01.240 of deliveries, production, they're raising prices. I don't know how 0:02:01.280 --> 0:02:05.200 long that's gonna last. So execution is key for the 0:02:05.240 --> 0:02:08.520 company in the next you know, six to the nine months. 0:02:09.000 --> 0:02:11.080 Steve, where are we now or where is the market? 0:02:11.080 --> 0:02:13.200 When you talk to investors in terms of getting a 0:02:13.240 --> 0:02:17.040 sense of where EV demand is in the US and 0:02:17.080 --> 0:02:18.640 then maybe globally. 0:02:18.560 --> 0:02:21.720 Well, EV demand is waning. I think the interest rate 0:02:22.440 --> 0:02:25.280 is not helping, you know, it's uh they're looking to 0:02:25.600 --> 0:02:27.480 you know, as you know, the FED is probably not 0:02:27.520 --> 0:02:31.120 going to cut rates anytime soon in the next couple 0:02:31.120 --> 0:02:33.919 of months, next quarter or so, so that's going to 0:02:33.960 --> 0:02:38.600 condude away on big purchases like automobiles. We're seeing that 0:02:38.760 --> 0:02:43.240 across the board in the US as well as in China. 0:02:43.639 --> 0:02:46.040 Trying is a little bit worse for Tesla because there's 0:02:46.040 --> 0:02:50.480 so much new competition there. But you know, sales is 0:02:50.520 --> 0:02:54.280 slowing for GM, sales is slowing for Ford for just 0:02:54.280 --> 0:02:59.280 had to cut production of their lightning recently announced about 0:02:59.320 --> 0:03:02.640 a couple of weeks go. So I think this year 0:03:02.840 --> 0:03:05.600 will be tough for the industry. Now, you know, we 0:03:05.680 --> 0:03:09.720 probably won't see any improvement until as far as I'm concerned, 0:03:09.720 --> 0:03:10.600 in twenty twenty six. 0:03:11.040 --> 0:03:13.560 Steve, Why twenty twenty six, Why is it going to 0:03:13.600 --> 0:03:14.119 take that long? 0:03:14.840 --> 0:03:15.120 Yeah? 0:03:15.200 --> 0:03:18.560 I think what the EV market is is facing today 0:03:18.840 --> 0:03:23.160 is that we had early adopters, especially on the high end, 0:03:23.960 --> 0:03:26.720 they're you know, they're pretty much tapped out. You know, 0:03:26.800 --> 0:03:29.880 they've they can buy only so many the market is 0:03:29.919 --> 0:03:32.960 relatively smaller than the mass market. I'm looking at twenty 0:03:33.000 --> 0:03:36.680 twenty six because if you look at the Inflation Reduction Act, 0:03:37.120 --> 0:03:39.800 it's bringing in on shoring a lot of the EV 0:03:40.000 --> 0:03:43.120 battery production in the US. Hopefully it will cut costs. 0:03:43.560 --> 0:03:47.000 And at the same time, in twenty twenty six, where 0:03:47.040 --> 0:03:51.200 we're looking at more affordable evs coming into the market, 0:03:51.360 --> 0:03:55.200 that's going to expand the addressable market for EV's And 0:03:55.240 --> 0:03:58.320 that's why we're we're thinking, you know, twenty twenty six 0:03:58.800 --> 0:04:01.800 will probably be a better, better time for the EV 0:04:01.920 --> 0:04:03.640 market than it is today. 0:04:04.360 --> 0:04:07.760 So how about profitability in that scenario, Steve, It's tough 0:04:07.760 --> 0:04:09.960 to make an argument that, you know, these evs can 0:04:10.000 --> 0:04:13.800 be profitably manufactured at a higher price point. How are 0:04:13.840 --> 0:04:15.800 they going to adjust their cost structure to get be 0:04:15.840 --> 0:04:17.960 profitable at maybe a lower price point, I don't know, 0:04:17.960 --> 0:04:20.480 thirty thousand dollars or something like that. 0:04:20.480 --> 0:04:22.120 That's a good question. I think if you look at 0:04:22.120 --> 0:04:26.400 the EV startups in the US, the only one that's 0:04:26.560 --> 0:04:31.599 really still profitable is Tesla. You saw Fisker being delisted. 0:04:32.080 --> 0:04:36.400 There's risk of them filing bankruptcy. Both Lucid and Rivian 0:04:36.920 --> 0:04:39.640 will need, you know, billions of dollars just to get 0:04:39.680 --> 0:04:42.040 them through the next couple of years. We're not sure 0:04:42.080 --> 0:04:44.600 if they're going to get that money given the slowdown 0:04:44.960 --> 0:04:47.960 and the EV market. But on a bright side, I 0:04:47.960 --> 0:04:51.200 think Tesla is still generating cash. You know, they're making 0:04:51.240 --> 0:04:53.960 some of the cuts today I think really to maintain 0:04:54.120 --> 0:04:57.560 cash generation so they can continue to invest for the 0:04:57.600 --> 0:05:00.680 long term, you know, for them, I think what's really 0:05:00.720 --> 0:05:05.279 important for them is the AI, the FSD, the full 0:05:05.320 --> 0:05:08.280 self driving a system that they're trying to build out. 0:05:09.040 --> 0:05:11.440 That that's gonna be the future of the automotive industry. 0:05:11.480 --> 0:05:16.480 It's really those software based subscriptions that's going to drive revenue, 0:05:16.920 --> 0:05:19.880 not so much of the automaking. So if they're trying 0:05:19.920 --> 0:05:23.120 to get there, trying to maintain cash, maintain some level 0:05:23.120 --> 0:05:26.320 of profitability to make those investments to get them there. 0:05:26.360 --> 0:05:29.559 Let's go to the SVP departing. So Drew Baglino leaving 0:05:29.560 --> 0:05:32.880 the company, as I mentioned, senior vice president. Who is he? 0:05:33.080 --> 0:05:35.000 Do we care? Like how big a deal he was 0:05:35.040 --> 0:05:37.000 in Tesla? What did he do walk us through it? 0:05:37.520 --> 0:05:40.200 He looks like to be the right hand person for 0:05:40.360 --> 0:05:43.440 Elon Musk. So it's a big loss for the company, 0:05:43.480 --> 0:05:46.560 no doubt about it. But you know he's he's a 0:05:46.600 --> 0:05:51.280 powertrain engineer for the most part, energy engineer, so he's 0:05:51.320 --> 0:05:53.320 you know, he's really involved in the battery if you 0:05:53.320 --> 0:05:56.560 saw him on battery day. I think, you know, if 0:05:56.600 --> 0:06:00.200 you look at Tesla and what Elon Musk have been 0:06:00.279 --> 0:06:04.920 saying about Tesla's future, which is on AI, which is 0:06:04.960 --> 0:06:09.400 on full self driving, is it a big loss. I mean, 0:06:09.440 --> 0:06:12.160 you can you can argue that, hey, you know, Tesla's 0:06:12.200 --> 0:06:16.040 moving on to the next phase. It's not about building 0:06:16.600 --> 0:06:20.000 the motors, not about building the batteries. They've gone through 0:06:20.040 --> 0:06:23.800 that process over the past fifteen eighteen years. You know, 0:06:23.839 --> 0:06:28.320 I think, you know, looking forward, they probably need somebody 0:06:28.440 --> 0:06:33.159 more people around AI. You know, developed them algorithms for 0:06:33.279 --> 0:06:34.359 the future of the car. 0:06:34.560 --> 0:06:37.360 Our thanks to Steve Man Bloomberg Intelligence, Global, Autos and 0:06:37.360 --> 0:06:38.679 Industrials research channels. 0:06:38.720 --> 0:06:42.640 We move next to the world's largest alternative asset manager, Blackstone. 0:06:42.720 --> 0:06:45.680 Blackstone reported higher quarterly earnings than expected, and the firm 0:06:45.720 --> 0:06:48.440 also collected more fees from big retail funds and credit 0:06:48.480 --> 0:06:50.920 strategies during the first quarter and all of this helped 0:06:50.960 --> 0:06:53.479 compensate for a slower pace of deal exits. 0:06:53.760 --> 0:06:56.440 For more, we were joined by Paul Goldberg, Bloomberg Intelligence 0:06:56.440 --> 0:06:59.279 senior equity analyst. We first asked him for his take 0:06:59.360 --> 0:07:00.760 on the latest coutally results. 0:07:00.920 --> 0:07:03.159 The numbers, I would break them up in three buckets. 0:07:03.240 --> 0:07:07.160 One the fee growth, which was fairly decent, but not 0:07:07.360 --> 0:07:11.440 the double digit bracknate growth that we've seen in years 0:07:11.520 --> 0:07:16.160 prior to the painful twenty twenty three and late twenty 0:07:16.240 --> 0:07:19.000 twenty two. The second one is key themes, and those 0:07:19.040 --> 0:07:21.880 things are getting better. So you do get a private 0:07:21.920 --> 0:07:26.640 credit business that was working pretty well. You have a 0:07:26.640 --> 0:07:29.720 wealth management business that you mentioned that's working pretty well. 0:07:29.760 --> 0:07:32.560 They've reached two hundred and forty billion dollars in assets 0:07:32.560 --> 0:07:35.040 in the wealth management with their goal of to fifty, 0:07:35.120 --> 0:07:39.520 so they're pretty much at their goal. And lastly, the 0:07:39.560 --> 0:07:42.720 painful part is the deal activity in terms of deployments 0:07:42.760 --> 0:07:47.320 and particularly realizations that produce performance fees, and that sort 0:07:47.360 --> 0:07:50.440 of becomes still a pain point for Blackstone and that's 0:07:50.680 --> 0:07:53.120 a drag on their earnings. 0:07:53.600 --> 0:07:55.720 Paul, what have they been saying about that, because again, 0:07:55.920 --> 0:07:57.360 you're right, we haven't seen a lot of m and 0:07:57.400 --> 0:07:59.680 a activity. We haven't seen a lot of IPO activity 0:08:00.120 --> 0:08:03.880 types of exit events that would allow them to realize 0:08:03.920 --> 0:08:06.360 some returns on their investments. What are they saying about 0:08:06.440 --> 0:08:07.680 the next six to twelve months. 0:08:08.720 --> 0:08:11.040 Well, I would actually look a little bit beyond that, 0:08:11.200 --> 0:08:14.000 because on the call they were really talking about twenty 0:08:14.040 --> 0:08:17.600 twenty four and before they were really hopeful for the 0:08:17.640 --> 0:08:19.960 second half of twenty four to get better. But then 0:08:20.040 --> 0:08:23.600 Jonathan Gray was actually unplumber tivity. He kind of mentioned 0:08:23.600 --> 0:08:27.080 that the more activity, return of activity is probably going 0:08:27.120 --> 0:08:29.280 to be more of a late twenty four and into 0:08:29.320 --> 0:08:31.760 twenty five matter. So I would look a little bit 0:08:31.800 --> 0:08:34.840 beyond the next six months, maybe the next nine to twelve. 0:08:35.240 --> 0:08:38.800 If they have a hard time exiting investments, how do 0:08:38.880 --> 0:08:40.920 they then raise more money for new funds? How does 0:08:40.960 --> 0:08:41.400 that work? 0:08:42.760 --> 0:08:45.719 Well, I think it's the issue not just we're kind 0:08:45.720 --> 0:08:47.920 of very focused on the private equity when we talk 0:08:48.000 --> 0:08:50.920 about that, but the third of their business is private equity. 0:08:51.000 --> 0:08:54.960 The third of their business is real estate, and there 0:08:54.960 --> 0:08:57.800 are still there are some opportunities, and performance in real 0:08:57.920 --> 0:09:00.960 estate gotten a little bit better, so they fundraising came 0:09:01.000 --> 0:09:03.600 back to some extent, the b read b cred the 0:09:04.200 --> 0:09:08.319 retail funds. The outflows kind of stopped there, so perpetual 0:09:08.400 --> 0:09:13.120 vehicles are doing pretty well for them. And the last category, 0:09:13.200 --> 0:09:16.440 the credit category, that had just been a very strong 0:09:16.480 --> 0:09:19.079 grower and that's reached out about a third of their 0:09:19.080 --> 0:09:20.000 assets at this point. 0:09:20.520 --> 0:09:20.760 Paul. 0:09:20.880 --> 0:09:24.800 Yeah, you mentioned real estate, and of course historically Blackstone's 0:09:24.800 --> 0:09:26.880 been a big, big player in the real estate business. 0:09:26.880 --> 0:09:29.400 What is their call on office A Do they have 0:09:29.440 --> 0:09:32.320 a lot of exposure there? And B how concerned are 0:09:32.360 --> 0:09:32.839 they about it? 0:09:33.480 --> 0:09:36.600 There was nothing discussed in terms of office really on 0:09:36.679 --> 0:09:40.560 the cold they have about one or two percent of 0:09:40.679 --> 0:09:44.200 total assets in commer in office space, maybe even less 0:09:44.240 --> 0:09:47.319 than that, so it's a fairly small amount. They are 0:09:47.640 --> 0:09:50.880 super focused on the multifamily. During the quarter they made 0:09:50.920 --> 0:09:53.959 it ten billion dollar deal for air communities that take 0:09:54.040 --> 0:09:57.080 private deal, so they're still very focused on that. That've 0:09:57.080 --> 0:10:00.199 been for over the last ten to fifteen years. They 0:10:00.240 --> 0:10:06.240 also tooked gave some specific numbers around the logistics and infrastructure. 0:10:06.520 --> 0:10:09.320 So there's about fifty billion dollars of investments in that 0:10:09.440 --> 0:10:13.240 already we're talking about. That's five percent of the total 0:10:13.240 --> 0:10:15.480 assets just in that private credit. 0:10:15.559 --> 0:10:20.360 Paul, what's Blackstone say about this business. It's obviously just 0:10:20.400 --> 0:10:23.680 a booming business. Assets under management is skyrocketing. There's some 0:10:23.720 --> 0:10:27.040 calls for maybe some greater transparency, maybe in some regulation 0:10:27.080 --> 0:10:29.520 of the private credit business. What's the Blackstone take on 0:10:29.559 --> 0:10:30.480 that part of the business. 0:10:30.600 --> 0:10:33.559 It's been very strong. As I mentioned, it reached about 0:10:33.600 --> 0:10:36.719 thirty of their assets three hundred plus billion dollars. They 0:10:36.720 --> 0:10:39.600 do have a lot of different vehicles there that do 0:10:39.800 --> 0:10:42.320 a lot of direct lending, but they also have the 0:10:42.440 --> 0:10:45.839 largest business development company which is geared towards retail b 0:10:46.000 --> 0:10:49.280 cred that's a huge vehicle for them. There was a 0:10:49.280 --> 0:10:52.120 lot of growth first quarter. There are actually some questions 0:10:52.120 --> 0:10:55.719 because you had a syndicated loan market with blending from 0:10:55.760 --> 0:10:58.560 the banks. Come back to some extent reclaim in some 0:10:58.679 --> 0:11:01.720 of the module that the private credit got last year. 0:11:02.280 --> 0:11:05.200 But it's a long term game, so over time there's 0:11:05.200 --> 0:11:07.719 still a lot of opportunity for private credit. We ran 0:11:07.800 --> 0:11:10.680 some numbers, but think if you think of investment credit 0:11:10.760 --> 0:11:14.600 potential for replacement, especially for those insurance companies, it could 0:11:14.640 --> 0:11:18.760 be a forty trillion dollars addressable market. When private credit 0:11:18.880 --> 0:11:21.920 is we're talking about one point six one point seven 0:11:21.960 --> 0:11:25.680 trillion right now, So there's a lot of opportunities still 0:11:25.720 --> 0:11:28.320 to take the incremental one two three percent of that 0:11:28.480 --> 0:11:29.520 market still. 0:11:29.720 --> 0:11:31.839 Before we let you go. So Blackstone set the tone. 0:11:32.040 --> 0:11:34.040 What do you think the other big asset managers are 0:11:34.040 --> 0:11:34.679 going to come out with. 0:11:35.320 --> 0:11:37.960 It's a little bit difficult because the earnings for them 0:11:38.040 --> 0:11:41.640 kind of idiosyncratic to some extent because these are private investments, 0:11:41.640 --> 0:11:46.160 they're large, and sometimes they move in different different directions. 0:11:46.360 --> 0:11:48.880 There's about two weeks until the next one report, so 0:11:48.960 --> 0:11:51.640 there's most of them reforced over the end of April 0:11:51.679 --> 0:11:55.000 and early May. I think from what we've seen from Blackstone, 0:11:55.000 --> 0:11:57.440 the private credit is going to hold fairly well, which 0:11:57.520 --> 0:12:01.680 is a positive for companies like Apolla and error private 0:12:01.679 --> 0:12:04.880 equity realizations exits is still a little bit more difficult, 0:12:04.920 --> 0:12:07.720 so it might give some pain to the guys like 0:12:07.800 --> 0:12:12.000 Carlisle KKR. They actually pre announced their realizations a few 0:12:12.040 --> 0:12:13.640 weeks before the end of the quarter, so we know 0:12:13.720 --> 0:12:17.200 the numbers were pretty light, so that's not going to 0:12:17.200 --> 0:12:19.400 be a surprise. But on the other hand, the rates 0:12:19.400 --> 0:12:22.000 is stained higher for longer. They brought out the Global 0:12:22.360 --> 0:12:24.520 the rest of the business from Global Atlantic, so the 0:12:24.520 --> 0:12:27.520 insurance business is going to do well and provide them 0:12:27.520 --> 0:12:29.079 some earnions in that area. 0:12:29.280 --> 0:12:32.840 Our thanks to Paul Goldberg Bloomberg Intelligence Senior Equity ANAST. 0:12:32.679 --> 0:12:34.640 Coming up, We're going to discuss how energy companies are 0:12:34.679 --> 0:12:36.840 working to satisfy a high demand for power. 0:12:37.000 --> 0:12:39.760 You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 0:12:39.800 --> 0:12:42.440 depth research and data on two thousand companies in one 0:12:42.520 --> 0:12:45.400 hundred and thirty industries. You can access Bloomberg Intelligence via 0:12:45.480 --> 0:12:46.560 b I go on the terminal. 0:12:46.679 --> 0:12:49.559 I'm Paul Sweeney and am Alex Steel and this is Bloomberg. 0:12:53.760 --> 0:12:57.640 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:12:57.720 --> 0:13:00.480 weekdays at ten am Eastern on fo car playing and 0:13:00.559 --> 0:13:03.440 broud Otto with the Bloomberg Business App. Listen on demand 0:13:03.480 --> 0:13:07.800 wherever you get your podcasts, or watch us live on YouTube. 0:13:08.320 --> 0:13:11.680 This week, Bloomberg Intelligence Radio visited Bloomberg a neipp's annual 0:13:11.800 --> 0:13:14.400 Energy and Climate Summit in New York. The summit brings 0:13:14.400 --> 0:13:17.720 together corporate executives, government officials, and industry leaders. 0:13:18.000 --> 0:13:20.480 This year, speakers at the event covered topics ranging from 0:13:20.520 --> 0:13:25.040 clean power, trade, federal US policy, hydrogen and climate technology. 0:13:25.320 --> 0:13:27.360 We begin with power and we were joined by David 0:13:27.400 --> 0:13:31.439 Crane Undersecretary for Infrastructure at the US Department of Energy. 0:13:31.240 --> 0:13:33.320 David says, the demand growth of power in the US 0:13:33.400 --> 0:13:34.880 is going to be more than we thought. So for 0:13:34.880 --> 0:13:37.160 the last ten years, power demand was up just fifty 0:13:37.160 --> 0:13:39.040 basis points a year, and now we're looking at five 0:13:39.040 --> 0:13:41.440 to six percent a year. And we first asked David, 0:13:41.679 --> 0:13:42.720 what all of this means. 0:13:43.040 --> 0:13:45.360 Well, five to six percent in our world is huge. 0:13:45.360 --> 0:13:48.600 I mean that's like tiger economies from the nineteen nineties. 0:13:48.679 --> 0:13:51.360 And because of the long lead time of most things 0:13:51.400 --> 0:13:55.000 in the electricity sector, those five to six percents per 0:13:55.040 --> 0:13:57.720 year pile up if you're not getting after it. So 0:13:58.520 --> 0:14:01.520 what it means is and what's very important all this 0:14:01.600 --> 0:14:04.560 as we look at these transitioning to the clean energy economy, 0:14:04.559 --> 0:14:07.480 all these new technologies, is you always have to ask 0:14:07.480 --> 0:14:10.760 the time question, what you need and what time frame 0:14:11.000 --> 0:14:14.000 and what are the solutions that fit that land within 0:14:14.040 --> 0:14:14.800 that time frame. 0:14:15.480 --> 0:14:15.720 You know. 0:14:15.800 --> 0:14:18.160 A couple of summers ago, my summer read was the 0:14:18.240 --> 0:14:23.360 grid Frame Wires between Americans and our Energy Future. I 0:14:23.400 --> 0:14:25.360 read that on the beach and people are laughing like 0:14:25.680 --> 0:14:27.160 a geek. So I feel like I know what I'm 0:14:27.160 --> 0:14:29.760 talking about here, and what I know is we need 0:14:29.920 --> 0:14:33.760 constant investment in our energy grid. And if Alex is right, 0:14:33.800 --> 0:14:36.400 the energy demand is going to keep increasing. That's even 0:14:36.400 --> 0:14:39.000 more so. What are some of the key issues that 0:14:39.040 --> 0:14:41.080 you need to tackle or trying to tackle at least 0:14:41.120 --> 0:14:42.160 in the short term here. 0:14:42.160 --> 0:14:44.120 Well, first of all, I need to tackle what your 0:14:44.200 --> 0:14:47.200 summer reading is, beach does Paul, I think you got 0:14:47.200 --> 0:14:48.720 to get a life exactly? 0:14:49.000 --> 0:14:49.560 If that's what. 0:14:51.240 --> 0:14:54.120 I think, Well, I mean one big one, the missing link, 0:14:54.880 --> 0:14:57.680 and I mentioned this on stage as well, is permitting reform. 0:14:57.720 --> 0:15:00.280 The I mean, we're very supportive permitting reform. It takes 0:15:00.280 --> 0:15:03.920 a lot of different permutations. I'm personally not a policy person. 0:15:03.920 --> 0:15:07.680 I'm the implementation person. But we just need to do 0:15:07.760 --> 0:15:12.040 things faster because just the scale of infrastructure that exists 0:15:12.120 --> 0:15:16.120 under this new legislation, just in my area, by the 0:15:16.200 --> 0:15:19.560 end this year, we will have invested in over one 0:15:19.600 --> 0:15:22.880 hundred infrastructure projects that are over one hundred million dollars 0:15:22.920 --> 0:15:28.360 each and so we're straining the system in many different ways. 0:15:28.440 --> 0:15:31.920 But permitting it should not be the bottleneck. 0:15:32.080 --> 0:15:34.200 So to break that down a little bit, when we 0:15:34.240 --> 0:15:37.360 say permitting, what are we talking about? And I say 0:15:37.360 --> 0:15:38.920 that in terms of like are we going to have 0:15:38.960 --> 0:15:41.560 to move power lines underground? For example? Do we need 0:15:41.600 --> 0:15:43.920 more transmission lines if we're going to set up that 0:15:44.000 --> 0:15:46.720 hydrogen hub or a new nuclear facility and we need 0:15:46.720 --> 0:15:48.560 to get that to the grid. Does it mean we 0:15:48.600 --> 0:15:50.720 need to just kind start over and like do a 0:15:50.720 --> 0:15:53.040 new grid. Like there's a lot of ways that infrastructure 0:15:53.080 --> 0:15:55.480 can be used. What does it actually mean for you? 0:15:56.200 --> 0:15:59.720 Well, of the two that you mentioned specifically, any of them, okay, 0:16:00.120 --> 0:16:04.680 I would leave aside undergrounding wires because that's more of 0:16:04.720 --> 0:16:06.280 a climate mitigation thing. 0:16:06.400 --> 0:16:08.880 It's where you need to do it. It's very important. 0:16:08.880 --> 0:16:12.440 But in terms of solving the demand issue, the transmission 0:16:12.440 --> 0:16:14.480 thing breaks into sort of two parts, and the answer 0:16:14.560 --> 0:16:16.720 is yes and yes we need both. One is we 0:16:16.760 --> 0:16:21.000 need more transmission lines to move the energy around the 0:16:21.000 --> 0:16:25.000 country or at least around regions. But then we also 0:16:25.280 --> 0:16:29.880 need this thing which is grid innovation, which is a 0:16:29.960 --> 0:16:33.400 series of technologies which are not in the popular mindset, 0:16:33.400 --> 0:16:37.520 things like reconductoring where you basically take in existing rights 0:16:37.560 --> 0:16:41.000 away in the towers and you take down the ceramic 0:16:41.720 --> 0:16:44.960 circular things and in some cases the wires, and you 0:16:45.120 --> 0:16:48.480 what we call reconductoring, and you can get two to 0:16:48.600 --> 0:16:52.160 three times the amount of power over the same line, 0:16:52.480 --> 0:16:54.640 and you don't need a right away. It's cheaper and 0:16:54.680 --> 0:16:57.160 that's good for rate payers. And we just in fact 0:16:57.160 --> 0:17:00.560 publish a report about this at the DOE called Grid 0:17:00.560 --> 0:17:03.760 Innovation Lift Off Report, And so there's that, and there's 0:17:03.800 --> 0:17:06.080 a host of other things. But basically we need all 0:17:06.119 --> 0:17:07.240 of the above right now. 0:17:07.400 --> 0:17:10.040 And is this a federal funded issue or is this 0:17:10.119 --> 0:17:12.719 a federal end state issued How local does it get? 0:17:12.760 --> 0:17:15.439 Because I think of Texas with its own grid, and 0:17:15.440 --> 0:17:18.280 I'm wondering how should they be integrated, for example, for 0:17:18.359 --> 0:17:18.960 the national grid. 0:17:19.119 --> 0:17:22.200 I mean, we're not gonna want that, Yeah, exactly, Yeah, Paul, 0:17:22.240 --> 0:17:24.840 that's what I'm not touching. I mean, there's a reason 0:17:24.880 --> 0:17:28.439 that Texas is a sovereign onto itself when it comes 0:17:28.440 --> 0:17:31.959 to their electric system. But we have a lot of 0:17:32.080 --> 0:17:34.480 financing tools in the tool chests, but most of them 0:17:34.520 --> 0:17:37.480 are set up as sort of matching funds. We put 0:17:37.560 --> 0:17:41.520 up up to fifty percent against fifty percent coming from 0:17:41.600 --> 0:17:45.520 basically anywhere else that's not federal government. So we say 0:17:45.840 --> 0:17:49.800 fifty plus percent from non federal sources. And if it states, 0:17:49.840 --> 0:17:52.000 if it's the private sector, that's all good. 0:17:51.920 --> 0:17:53.359 With us, and that's what you need to see in 0:17:53.440 --> 0:17:55.719 order to commit the money after that. Yes, yeah, So 0:17:56.320 --> 0:17:58.720 how does this all square? So stuff you're talking about, 0:17:58.720 --> 0:18:01.240 like reconstituting the grid like that, like that's not sexy 0:18:01.240 --> 0:18:04.320 cool stuff like clean tech and hydrogen. Right, how much 0:18:04.359 --> 0:18:07.440 of your job is on the energy that we're gonna 0:18:07.480 --> 0:18:09.719 need in fifty years and how much of that is 0:18:09.840 --> 0:18:12.840 how do we get more transmission mechanisms? How do we 0:18:12.880 --> 0:18:15.560 get that plug that we can't get so we can 0:18:15.680 --> 0:18:16.439 change the grid? 0:18:17.440 --> 0:18:19.320 You know, Alex, I was getting a little hung up 0:18:19.320 --> 0:18:22.639 on what's actually sexy in the world of electricity, But 0:18:22.760 --> 0:18:26.000 I'm glad that you can distinguish between hydrogen on one 0:18:26.200 --> 0:18:28.880 in transmission. But what I'd say is, first of all, 0:18:28.960 --> 0:18:32.080 nothing that if I thought that what I was doing 0:18:32.200 --> 0:18:35.119 was just affecting things in twenty fifty, like you know 0:18:35.400 --> 0:18:37.000 at my age, I wouldn't be doing it. 0:18:37.280 --> 0:18:37.760 But we are. 0:18:37.800 --> 0:18:41.440 We're aiming for the Biden administration goal of zero carbon 0:18:42.119 --> 0:18:45.640 electric sector by twenty thirty five, and so the premise 0:18:45.680 --> 0:18:48.959 of your question is correct because of this new awareness 0:18:49.000 --> 0:18:52.520 of demand issues. I would say that what I've been 0:18:52.560 --> 0:18:54.880 focused on my two years at the DOE is what 0:18:54.920 --> 0:18:57.639 does the system look like sort of between twenty twenty 0:18:57.640 --> 0:19:01.359 eight to twenty thirty five first of a fast following 0:19:01.880 --> 0:19:06.160 commercial But because of this new concern, I think we're 0:19:06.200 --> 0:19:09.240 going to be even looking at more. 0:19:09.080 --> 0:19:10.639 Three to five year solutions. 0:19:10.640 --> 0:19:13.040 And that's where things like the grid innovation is important, 0:19:13.040 --> 0:19:14.040 because that's a three to. 0:19:14.040 --> 0:19:14.879 Five year solution. 0:19:15.119 --> 0:19:17.879 Our thanks to David Crane, under Secretary for Infrastructure at 0:19:17.880 --> 0:19:19.640 the US Department of Energy and. 0:19:19.640 --> 0:19:22.119 Staying on Power at Bloomberg's Any App Annual Energy in 0:19:22.160 --> 0:19:25.159 Climate Summit, we were also joined by Pedro Pizarro, President 0:19:25.200 --> 0:19:27.040 and CEO of Edison International. 0:19:27.280 --> 0:19:30.119 Pedro discussed the transition to clean energy and how to 0:19:30.119 --> 0:19:33.080 satisfy the demand for power that we're seeing right now. 0:19:33.320 --> 0:19:36.000 With regards to demand, we first asked Pedro just how 0:19:36.080 --> 0:19:37.560 high it is and who's calling. 0:19:37.840 --> 0:19:40.360 I can tell you from a Southern California Edison perspective, 0:19:40.400 --> 0:19:44.280 our utility we had had flat growth for the last 0:19:44.359 --> 0:19:47.000 fifteen years. We're now seeing something like two percent load 0:19:47.000 --> 0:19:50.240 growth and in our state a lot of atas transportation electrification. 0:19:50.880 --> 0:19:53.639 I'm also chair of the Edison Electric Institute, which represents 0:19:53.680 --> 0:19:56.399 the investor owned utilities across the country. About seventy percent 0:19:56.440 --> 0:20:00.840 of the load two years ago. EI members. We're forecasting 0:20:00.920 --> 0:20:03.160 something like a two percent load growth over the next 0:20:03.240 --> 0:20:06.679 years ahead. The most updated numbers are four point seven percent, 0:20:07.080 --> 0:20:09.000 and I have colleagues in some states that are seeing 0:20:09.080 --> 0:20:12.119