1 00:00:11,000 --> 00:00:14,880 Speaker 1: Hello, and welcome to another episode of the odd Locks Podcast. 2 00:00:14,960 --> 00:00:19,040 Speaker 1: I'm Joe wisen't Thal and I'm Tracy Hallaway. Tracy attention 3 00:00:19,160 --> 00:00:21,880 Speaker 1: that we keep coming back to, I think is that 4 00:00:21,960 --> 00:00:27,360 Speaker 1: in this moment of high inflation, high energy costs, there 5 00:00:27,360 --> 00:00:30,080 Speaker 1: seems to be I guess maybe maybe the way to 6 00:00:30,160 --> 00:00:34,599 Speaker 1: describe it is a tension between long term planning and 7 00:00:34,720 --> 00:00:37,960 Speaker 1: short term pain. And so in theory, this is a 8 00:00:38,080 --> 00:00:40,960 Speaker 1: good case to be investing in sort of new energy, 9 00:00:41,560 --> 00:00:46,800 Speaker 1: perhaps decarbonization technologies that reduce our reliance on fossil fuels 10 00:00:46,800 --> 00:00:49,640 Speaker 1: in the countries that have particular access to them. But 11 00:00:49,720 --> 00:00:51,720 Speaker 1: at the same time, there's also a lot of impulse 12 00:00:51,760 --> 00:00:55,760 Speaker 1: to just get the price down right now. Yeah. To me, 13 00:00:55,880 --> 00:01:00,400 Speaker 1: it comes back to just the cyclicality of the energy industry. 14 00:01:00,480 --> 00:01:04,080 Speaker 1: And if you think back to when we had um 15 00:01:04,200 --> 00:01:07,280 Speaker 1: the oil prices going down quite suddenly and everyone was 16 00:01:07,280 --> 00:01:11,000 Speaker 1: talking about a glut in shale oil and all this 17 00:01:11,400 --> 00:01:16,840 Speaker 1: energy industry capacity had expanded too quickly and now you know, 18 00:01:16,880 --> 00:01:19,920 Speaker 1: there wasn't enough demand to actually justify it. And then 19 00:01:19,959 --> 00:01:23,320 Speaker 1: fast forward to today and it seems like we're in 20 00:01:23,360 --> 00:01:26,520 Speaker 1: completely the opposite problem, and so it just seems kind 21 00:01:26,560 --> 00:01:29,800 Speaker 1: of crazy to me to be swinging from you know, 22 00:01:30,120 --> 00:01:35,280 Speaker 1: access to shortages on like a five to seven year timeline, 23 00:01:35,560 --> 00:01:38,560 Speaker 1: and it seems like it's really bad for as you mentioned, 24 00:01:38,600 --> 00:01:41,240 Speaker 1: planning for the future, right, how are you supposed to 25 00:01:41,280 --> 00:01:44,560 Speaker 1: attract investment into the space if you're going from feast 26 00:01:44,600 --> 00:01:47,560 Speaker 1: to famine all the time. So I guess one question 27 00:01:47,640 --> 00:01:51,960 Speaker 1: that arises is can the state? Can the government player 28 00:01:52,080 --> 00:01:57,040 Speaker 1: role in ameliorating the swings on both sides, essentially reducing 29 00:01:57,080 --> 00:02:00,080 Speaker 1: the volatility, And the government has this infinite balance, it 30 00:02:00,720 --> 00:02:06,160 Speaker 1: doesn't have to optimize for profits itself. Obviously, you know, 31 00:02:06,480 --> 00:02:08,840 Speaker 1: in theory it doesn't want to waste money, but itself 32 00:02:08,919 --> 00:02:11,280 Speaker 1: does not. The government itself doesn't have a profit motive. 33 00:02:11,760 --> 00:02:13,880 Speaker 1: And can there be sort of a role for planning, 34 00:02:14,240 --> 00:02:18,840 Speaker 1: for thinking strategically for public investments such that we don't 35 00:02:18,880 --> 00:02:21,200 Speaker 1: have these so that we actually have like a strategy 36 00:02:21,280 --> 00:02:24,560 Speaker 1: of vision that's not just sort of at the whims 37 00:02:24,560 --> 00:02:28,160 Speaker 1: of these incredible swings that we have in what seems 38 00:02:28,160 --> 00:02:32,160 Speaker 1: like a fairly short period of time. Absolutely, and I 39 00:02:32,200 --> 00:02:34,280 Speaker 1: think you put it well like that's the question whether 40 00:02:34,280 --> 00:02:36,920 Speaker 1: there's a role for the government to come in as 41 00:02:36,960 --> 00:02:42,359 Speaker 1: a source of stability and an extremely cyclical market. And 42 00:02:42,400 --> 00:02:47,720 Speaker 1: also I don't think anyone's really talks through exactly what 43 00:02:47,760 --> 00:02:52,400 Speaker 1: the different roles are for the government versus private investors. 44 00:02:52,440 --> 00:02:55,079 Speaker 1: And I still think, you know, when you look at E. 45 00:02:55,280 --> 00:02:59,360 Speaker 1: S G. For instance, UM, there seems to be a 46 00:02:59,400 --> 00:03:02,320 Speaker 1: lot of onus placed on private capital and this idea 47 00:03:02,360 --> 00:03:04,440 Speaker 1: that well capital is going to come in and fix everything. 48 00:03:04,480 --> 00:03:07,680 Speaker 1: But actually I still think you need the government to 49 00:03:07,680 --> 00:03:09,799 Speaker 1: come in and do a lot of this. But anyway, 50 00:03:09,880 --> 00:03:12,320 Speaker 1: this sort of question about what the different roles are 51 00:03:12,480 --> 00:03:16,280 Speaker 1: for private versus public capital, I think is a fascinating one, right. 52 00:03:16,320 --> 00:03:18,239 Speaker 1: And there's one other phenomenon. You know, we talk a 53 00:03:18,280 --> 00:03:23,360 Speaker 1: lot about gas and gasoline prices, and the other thing 54 00:03:23,400 --> 00:03:26,840 Speaker 1: that's going on in energy to especially going to the summer, 55 00:03:26,960 --> 00:03:30,600 Speaker 1: is concerns about the grid, like various regional grid operators 56 00:03:30,880 --> 00:03:34,280 Speaker 1: warning that blackouts are going to increase, uh this summer, 57 00:03:34,400 --> 00:03:37,880 Speaker 1: potentially lots of concerns once again about the Texas grid, 58 00:03:37,920 --> 00:03:40,800 Speaker 1: but not just Texas, it's really everywhere is worried that 59 00:03:40,840 --> 00:03:45,160 Speaker 1: this sort of like baseload power has seen under investment, 60 00:03:45,640 --> 00:03:47,960 Speaker 1: and so lots of big questions about the sort of 61 00:03:48,000 --> 00:03:50,400 Speaker 1: what role can the public sector play and all of 62 00:03:50,440 --> 00:03:53,840 Speaker 1: these challenges, both short term and long term. So I'm 63 00:03:53,920 --> 00:03:56,160 Speaker 1: very excited. We have a very special guest today. We're 64 00:03:56,160 --> 00:03:58,880 Speaker 1: gonna be speaking with Jigger Shaw. He is the director 65 00:03:59,320 --> 00:04:03,160 Speaker 1: of the Loan Program Office at the Department of Energy 66 00:04:03,480 --> 00:04:06,120 Speaker 1: and in a prime spot to be thinking about and 67 00:04:06,120 --> 00:04:08,880 Speaker 1: addressing some of this stuff. So, Jigger, thank you so 68 00:04:09,000 --> 00:04:12,840 Speaker 1: much for coming on odd lot. Oh it's great, thanks 69 00:04:12,920 --> 00:04:16,440 Speaker 1: for having me. It's ah, you're you're a staple in 70 00:04:16,520 --> 00:04:21,880 Speaker 1: my podcast listen. Uh you absolutely absolutely flattered, dear. So 71 00:04:22,040 --> 00:04:23,560 Speaker 1: what do you tell us, like, just give us the 72 00:04:23,600 --> 00:04:26,560 Speaker 1: sort of quick summary of like what you do, what 73 00:04:26,640 --> 00:04:29,480 Speaker 1: you do at the d o E, and your background, 74 00:04:29,560 --> 00:04:33,080 Speaker 1: like how you got into this role. Yeah, no, it's 75 00:04:33,160 --> 00:04:35,599 Speaker 1: it's it's a good question. I'm a mechanical engineer by training, 76 00:04:35,680 --> 00:04:40,720 Speaker 1: and my my career has really largely been about figuring 77 00:04:40,720 --> 00:04:45,760 Speaker 1: out why technologies that are already fully proven don't scale, right. 78 00:04:45,800 --> 00:04:49,520 Speaker 1: So I started UM in the solar industry and uh, 79 00:04:49,560 --> 00:04:53,200 Speaker 1: you know, started sun Edison, which largely invented the power 80 00:04:53,279 --> 00:04:55,839 Speaker 1: Purchase Agreement, which is now attracted you know, over two 81 00:04:55,839 --> 00:05:00,479 Speaker 1: trillion dollars of capital uh into uh solar objects right 82 00:05:00,520 --> 00:05:03,920 Speaker 1: around the world using that financial structure, and then you know, 83 00:05:03,960 --> 00:05:08,120 Speaker 1: after that, did some nonprofit work with Richard Branson and 84 00:05:08,279 --> 00:05:11,600 Speaker 1: understood a lot more about lots of other sectors UM, 85 00:05:11,680 --> 00:05:14,400 Speaker 1: and then started Generate Capital with two co founders in 86 00:05:14,839 --> 00:05:18,880 Speaker 1: twenty fourteen, where we really changed the entire way that 87 00:05:19,440 --> 00:05:23,640 Speaker 1: infrastructure investors thought about, UH, first of a kind deployment 88 00:05:23,880 --> 00:05:28,120 Speaker 1: and scaling up new sectors because you can imagine the 89 00:05:28,200 --> 00:05:32,520 Speaker 1: vast majority of people before that we're in fund structures, 90 00:05:32,520 --> 00:05:35,360 Speaker 1: and fund structures, you know, you get paid more if 91 00:05:35,400 --> 00:05:37,839 Speaker 1: you make a higher I R R, and that doesn't 92 00:05:37,880 --> 00:05:41,400 Speaker 1: quite work for commercialization. So we flipped the script on 93 00:05:41,480 --> 00:05:43,919 Speaker 1: that and created the first sea corp to do that 94 00:05:43,960 --> 00:05:48,320 Speaker 1: back in before tax rates went down. UH, and then 95 00:05:48,360 --> 00:05:50,600 Speaker 1: got tapped for the the you know d O WE 96 00:05:50,680 --> 00:05:54,279 Speaker 1: Loan Program's Office as a perch by which we you know, 97 00:05:54,320 --> 00:05:57,479 Speaker 1: helped to commercialized technologies UM from the U. S. Government seat. 98 00:05:58,560 --> 00:06:00,880 Speaker 1: So I'm gonna go ahead and clean and say that 99 00:06:00,960 --> 00:06:04,240 Speaker 1: I wrote some very unflattering things about Sun Edison, but 100 00:06:04,480 --> 00:06:08,880 Speaker 1: I did it. I think it was around uh so 101 00:06:09,000 --> 00:06:11,680 Speaker 1: after you had left the company, and it was mostly 102 00:06:12,120 --> 00:06:14,480 Speaker 1: it was mostly about the leverage that they taken on 103 00:06:14,520 --> 00:06:18,560 Speaker 1: and very undisciplined after I left, so they deserved all 104 00:06:18,600 --> 00:06:23,800 Speaker 1: of the criticism hard blog posts. Okay, but actually I 105 00:06:23,800 --> 00:06:26,000 Speaker 1: want to go back to something you just said, which 106 00:06:26,080 --> 00:06:32,040 Speaker 1: is this idea of proven technologies that are nevertheless difficult 107 00:06:32,200 --> 00:06:36,080 Speaker 1: to scale. So what is the issue there? Because you know, 108 00:06:36,160 --> 00:06:38,320 Speaker 1: you would assume that if someone comes along and says, 109 00:06:38,360 --> 00:06:42,200 Speaker 1: I have this amazing new technology to produce energy, you know, 110 00:06:42,320 --> 00:06:46,560 Speaker 1: hopefully uh, you know, cleaner way than than we do traditionally, 111 00:06:47,600 --> 00:06:50,840 Speaker 1: you would naturally expect people to get very excited about 112 00:06:50,880 --> 00:06:53,479 Speaker 1: it and for some private investors to start pouring money 113 00:06:53,520 --> 00:06:58,120 Speaker 1: into it. But historically that hasn't been the case. Yeah, 114 00:06:58,200 --> 00:07:02,440 Speaker 1: it's a weird thing, right, I mean, the what happened 115 00:07:02,440 --> 00:07:05,000 Speaker 1: after the Arab oil crisis in the nineteen seventies as 116 00:07:05,080 --> 00:07:07,400 Speaker 1: we invented the Department of Energy, right, we put it 117 00:07:07,400 --> 00:07:10,960 Speaker 1: in place, And what happened on the technology front is 118 00:07:11,040 --> 00:07:15,280 Speaker 1: America has figured out how to make things smaller and 119 00:07:15,320 --> 00:07:18,160 Speaker 1: more uh you know, sort of bite sized. Right, So 120 00:07:18,320 --> 00:07:20,560 Speaker 1: the phone in your pocket is more powerful than all 121 00:07:20,560 --> 00:07:22,800 Speaker 1: the computers that you know, it took to put a 122 00:07:22,800 --> 00:07:24,440 Speaker 1: man on the moon. The same thing is true with 123 00:07:24,480 --> 00:07:27,480 Speaker 1: solar panels. It's the same solar panel that you put 124 00:07:27,600 --> 00:07:30,800 Speaker 1: thousands of in one field and make utility scale solar, 125 00:07:30,960 --> 00:07:34,400 Speaker 1: or twelve of them on your roof for residential solars. 126 00:07:34,400 --> 00:07:36,880 Speaker 1: So when I first started sun Edison back in two 127 00:07:36,920 --> 00:07:40,720 Speaker 1: thousand three, we had signed contracts with Whole Food, Staples, 128 00:07:40,800 --> 00:07:44,640 Speaker 1: I Kea, and others right of way and people said, 129 00:07:45,160 --> 00:07:48,480 Speaker 1: that's great, Jugger, but you only need sixty million dollars 130 00:07:48,480 --> 00:07:51,840 Speaker 1: of capital, And I was like, only like sixty millions 131 00:07:51,880 --> 00:07:54,400 Speaker 1: a lot. And I started this company by taking out 132 00:07:54,400 --> 00:07:57,480 Speaker 1: a home equity loan on my house, and so you know, like, 133 00:07:57,960 --> 00:08:00,640 Speaker 1: so I feel like that's a big number. And most 134 00:08:00,680 --> 00:08:03,480 Speaker 1: of these folks are like jigger. Infrastructure investors don't get 135 00:08:03,480 --> 00:08:06,760 Speaker 1: out of bed for less than two und fifty million dollars, right, 136 00:08:06,800 --> 00:08:09,920 Speaker 1: And so if you can't aggregate up two hundred fifty 137 00:08:09,960 --> 00:08:13,000 Speaker 1: million dollars with projects, then you know you're not gonna 138 00:08:13,000 --> 00:08:16,240 Speaker 1: get any attention from us. And I'm like, well, but 139 00:08:16,360 --> 00:08:19,480 Speaker 1: we miniaturized the technology. It's no longer billion our scale 140 00:08:19,520 --> 00:08:22,200 Speaker 1: just to get in. You could do it at scale 141 00:08:22,200 --> 00:08:24,760 Speaker 1: and up rooftop. And so we ended up getting money 142 00:08:24,840 --> 00:08:28,240 Speaker 1: from Goldman Saxes, you know, Special Situations Group, and you 143 00:08:28,280 --> 00:08:30,600 Speaker 1: know they made a nice seventeen percent rate of return 144 00:08:30,680 --> 00:08:33,199 Speaker 1: to to do the first set of deals, and then 145 00:08:33,280 --> 00:08:36,360 Speaker 1: once we got to that multi hundred million dollar scale, 146 00:08:36,840 --> 00:08:40,000 Speaker 1: we got Walls far Ago and Union Bank of California 147 00:08:40,080 --> 00:08:43,080 Speaker 1: and lots of other folks to come in. But you 148 00:08:43,080 --> 00:08:46,160 Speaker 1: know that's happening in battery storage. I mean when Generate 149 00:08:46,280 --> 00:08:49,360 Speaker 1: Capital first started funding battery storage, I think the check 150 00:08:49,400 --> 00:08:53,240 Speaker 1: size that STEM needed at the time was twenty million bucks, right, 151 00:08:53,400 --> 00:08:55,920 Speaker 1: and you know they had all these battery storage deals, 152 00:08:55,960 --> 00:08:58,400 Speaker 1: like you know, behind the meter. I think one of 153 00:08:58,400 --> 00:09:01,080 Speaker 1: their first customers was like a print press company who 154 00:09:01,120 --> 00:09:03,480 Speaker 1: really needed it because they were paying like fifty cents 155 00:09:03,480 --> 00:09:06,200 Speaker 1: of kilo one hour because of demand charges. And so 156 00:09:06,320 --> 00:09:09,360 Speaker 1: you have all these weird niche projects where you have 157 00:09:09,480 --> 00:09:12,640 Speaker 1: very high rates of return for new technology, but it 158 00:09:12,679 --> 00:09:16,440 Speaker 1: amounts to like fifty million million, seventy five million initially 159 00:09:16,920 --> 00:09:19,520 Speaker 1: of capital needed before it goes to trillion dollar scale. 160 00:09:20,040 --> 00:09:22,880 Speaker 1: Can you talk about that model, you know, for for listeners, 161 00:09:22,960 --> 00:09:26,480 Speaker 1: and when I say listeners, I also kind of mean myself, uh, 162 00:09:26,480 --> 00:09:29,560 Speaker 1: but for listeners who maybe don't understand it. What was 163 00:09:29,679 --> 00:09:33,400 Speaker 1: that model that you pioneered at Sun Edison, that original 164 00:09:33,440 --> 00:09:35,400 Speaker 1: model when you say, you've got these deals with Whole 165 00:09:35,440 --> 00:09:38,800 Speaker 1: Foods and others. What was the sort of uh, the 166 00:09:38,840 --> 00:09:42,960 Speaker 1: sort of breakthrough business model that you pursued there. Yeah, so, 167 00:09:43,080 --> 00:09:44,880 Speaker 1: I mean when I worked with Whole Foods, I remember 168 00:09:44,960 --> 00:09:48,480 Speaker 1: it was great. The guy who ran the store in Edgewater, 169 00:09:48,559 --> 00:09:51,440 Speaker 1: New Jersey really wanted to put solar panels on his roof, 170 00:09:51,520 --> 00:09:54,600 Speaker 1: and he said, Jerry, yours is the first model. Lets 171 00:09:54,640 --> 00:09:56,920 Speaker 1: me do this because every other model I had to 172 00:09:57,000 --> 00:09:59,800 Speaker 1: pay four and fifty thousand dollars for these solar panels 173 00:10:00,200 --> 00:10:03,240 Speaker 1: and wait for ten years to get my payback. Right, 174 00:10:03,360 --> 00:10:05,520 Speaker 1: what we did was we said, no, we'll own the 175 00:10:05,559 --> 00:10:09,200 Speaker 1: panels and we'll just charge you for the electricity every month. 176 00:10:09,400 --> 00:10:11,880 Speaker 1: And so it's pay as you save. And when I 177 00:10:11,920 --> 00:10:15,240 Speaker 1: talked to the CFO above him of the Eastern Region, 178 00:10:15,360 --> 00:10:17,640 Speaker 1: she was like, you know, this is two thousand and three. 179 00:10:17,880 --> 00:10:20,640 Speaker 1: Whole Foods is growing so fast, jigger that I either 180 00:10:20,720 --> 00:10:23,920 Speaker 1: can buy a solar system or open a new store. 181 00:10:25,120 --> 00:10:27,800 Speaker 1: And so I'm not going to buy a solar system. 182 00:10:27,840 --> 00:10:29,839 Speaker 1: And so as soon as we were able to give 183 00:10:29,920 --> 00:10:33,600 Speaker 1: them this pay as you save contracts, she was like done. Like, 184 00:10:34,120 --> 00:10:36,040 Speaker 1: I mean, really the contract was a way to get 185 00:10:36,080 --> 00:10:40,440 Speaker 1: past the CFO right the because they were saying, look, 186 00:10:40,480 --> 00:10:43,440 Speaker 1: you know, like we shouldn't be putting our capital into 187 00:10:43,640 --> 00:10:46,400 Speaker 1: this kind of asset, right, Like, that's not our core competence. 188 00:11:03,280 --> 00:11:06,280 Speaker 1: So if we fast forward to today, you're at the 189 00:11:06,320 --> 00:11:10,480 Speaker 1: Department of Energy, Now, what exactly are you doing over there? Well, 190 00:11:10,520 --> 00:11:13,760 Speaker 1: it's all the next generation of entrepreneurs, right. So when 191 00:11:13,760 --> 00:11:17,480 Speaker 1: you think about where I was in two thousand three, 192 00:11:17,600 --> 00:11:19,600 Speaker 1: and you know, after we did the Goldman Fund and 193 00:11:20,120 --> 00:11:22,800 Speaker 1: we had you know, five million dollar pipeline, you still 194 00:11:23,040 --> 00:11:25,440 Speaker 1: had a hard time breaking through with banks. And so 195 00:11:25,840 --> 00:11:28,640 Speaker 1: a lot of banks would say, look, I don't get 196 00:11:28,640 --> 00:11:31,920 Speaker 1: paid that much, and you know, like you're basically asking 197 00:11:31,960 --> 00:11:35,120 Speaker 1: me to do something weird. I have to basically write 198 00:11:35,120 --> 00:11:38,160 Speaker 1: twelve white papers to educate my investment committee on this 199 00:11:38,200 --> 00:11:41,680 Speaker 1: new asset class. And it's so much easier for me 200 00:11:41,760 --> 00:11:44,679 Speaker 1: just to do a really weird real estate deal. And 201 00:11:44,760 --> 00:11:48,400 Speaker 1: so why am I like spending all this time on it? Right? 202 00:11:48,440 --> 00:11:52,520 Speaker 1: And so largely there isn't real technology risk. Sometimes there's 203 00:11:52,559 --> 00:11:55,679 Speaker 1: perceived technology risk, like in fuel cells for instance, or 204 00:11:55,960 --> 00:11:59,680 Speaker 1: in hydrogen where people are just afraid of it um, 205 00:11:59,679 --> 00:12:03,160 Speaker 1: But most of the time it's just getting their attention, right. 206 00:12:03,200 --> 00:12:07,120 Speaker 1: They they just really need someone to be first, and 207 00:12:07,200 --> 00:12:10,400 Speaker 1: so they come into loan program's office. We give them 208 00:12:10,440 --> 00:12:15,160 Speaker 1: money first and do a proper underwriting due diligence. You know, 209 00:12:15,200 --> 00:12:17,760 Speaker 1: we're really respected for you know, how much of a 210 00:12:17,800 --> 00:12:20,400 Speaker 1: pain in the ass we are to get through. And 211 00:12:20,400 --> 00:12:22,640 Speaker 1: and then after we do the first deal, a whole 212 00:12:22,640 --> 00:12:24,720 Speaker 1: bunch of banks say, all right, we're happy to be 213 00:12:25,200 --> 00:12:28,640 Speaker 1: the second money in because we can read Department of 214 00:12:28,679 --> 00:12:30,880 Speaker 1: Energies white papers and we can do all of that. 215 00:12:31,040 --> 00:12:32,840 Speaker 1: We don't have to do that work, and we can 216 00:12:32,880 --> 00:12:35,079 Speaker 1: do the next phase of it, and we're proud to 217 00:12:35,640 --> 00:12:38,400 Speaker 1: play that role across I think twenty sectors or so. Now, 218 00:12:39,000 --> 00:12:41,080 Speaker 1: so I started off, you know, in the beginning, we 219 00:12:41,080 --> 00:12:43,680 Speaker 1: were talking about this tension because uh, you know, in 220 00:12:43,760 --> 00:12:46,240 Speaker 1: the long term, it looks like there's still plenty of 221 00:12:46,280 --> 00:12:50,880 Speaker 1: returns and possibilities for some of the new energy technologies 222 00:12:51,240 --> 00:12:53,840 Speaker 1: to change the way we get get our energy. And 223 00:12:53,840 --> 00:12:55,880 Speaker 1: I know, wind and well, I'm sure we'll talk about 224 00:12:55,880 --> 00:12:59,880 Speaker 1: that and solar and hydrogen, all these new technologies. On 225 00:13:00,000 --> 00:13:05,200 Speaker 1: the other hand, like right now in June of two, 226 00:13:05,559 --> 00:13:09,000 Speaker 1: there's concerns about whether just the grid is going to 227 00:13:09,040 --> 00:13:12,440 Speaker 1: stay up for Americans this summer, and in the Midwest 228 00:13:12,480 --> 00:13:15,680 Speaker 1: there's warnings about that, and obviously in Texas going back 229 00:13:15,720 --> 00:13:18,520 Speaker 1: to sitting aside everything else, like, how would you diagnose 230 00:13:18,640 --> 00:13:21,720 Speaker 1: the issue, like what is going on, whether it's under investment, 231 00:13:21,800 --> 00:13:24,440 Speaker 1: or what is going on such that this has suddenly 232 00:13:24,480 --> 00:13:27,640 Speaker 1: become a concern again about whether the lights will stay 233 00:13:27,640 --> 00:13:30,120 Speaker 1: on through the year. Well, I mean, you know, I 234 00:13:30,120 --> 00:13:32,719 Speaker 1: think there's entire books that have been written about so 235 00:13:32,760 --> 00:13:34,480 Speaker 1: I don't know that I could answer this question in 236 00:13:34,480 --> 00:13:37,600 Speaker 1: a minute, But what I'd say is, we have a 237 00:13:37,679 --> 00:13:41,720 Speaker 1: lot of old infrastructure, right. So the average coal plant 238 00:13:41,760 --> 00:13:45,280 Speaker 1: in this country is almost fifty years old, right, And 239 00:13:45,360 --> 00:13:48,240 Speaker 1: so when people say, oh, those environmentals are shutting down 240 00:13:48,320 --> 00:13:52,679 Speaker 1: coal plants, I think old age is shutting down coal plants, right, 241 00:13:52,720 --> 00:13:54,600 Speaker 1: And the same thing to have natural gas plants. We 242 00:13:54,720 --> 00:13:57,240 Speaker 1: built a tremendous amount of natural gas plants in this 243 00:13:57,320 --> 00:14:01,000 Speaker 1: country to deal with air conditioning. Remember, conditioning wasn't a 244 00:14:01,080 --> 00:14:04,120 Speaker 1: thing in this country until the early eighties. That's when 245 00:14:04,160 --> 00:14:07,240 Speaker 1: most people got air conditioning. And because it created this 246 00:14:07,400 --> 00:14:11,840 Speaker 1: huge spike in demand during the day, um, we built 247 00:14:11,880 --> 00:14:14,440 Speaker 1: a whole bunch of natural gas peaker plants and those 248 00:14:14,520 --> 00:14:17,240 Speaker 1: natural gas peaker plants were built in largely the late 249 00:14:17,280 --> 00:14:20,520 Speaker 1: eighties and then into the nineties, right, and so they're 250 00:14:20,520 --> 00:14:24,560 Speaker 1: all old today because they were never made to last 251 00:14:24,640 --> 00:14:28,240 Speaker 1: more than let's say years, Right. And so now we're 252 00:14:28,240 --> 00:14:32,080 Speaker 1: sitting here and saying, should we reinvest in more coal 253 00:14:32,160 --> 00:14:35,680 Speaker 1: plants and more natural gas plants, or should we use 254 00:14:35,840 --> 00:14:39,640 Speaker 1: the next generation of technologies to you know, provide generation 255 00:14:39,720 --> 00:14:43,120 Speaker 1: for our grid. And then at the same time, because 256 00:14:43,560 --> 00:14:46,560 Speaker 1: we weren't really thinking about the dexterity of demand, we 257 00:14:46,560 --> 00:14:49,320 Speaker 1: were only thinking about the dexterity supply. So today you 258 00:14:49,360 --> 00:14:52,560 Speaker 1: can do whatever you want at home, and the generators 259 00:14:52,560 --> 00:14:54,800 Speaker 1: have to ramp up and down to meet what you 260 00:14:54,840 --> 00:14:59,320 Speaker 1: do at home. Right, But tomorrow you could really easy 261 00:14:59,440 --> 00:15:03,600 Speaker 1: ramp up in down people's EV chargers at home, people's thermostats. Right, 262 00:15:03,640 --> 00:15:05,840 Speaker 1: You could do lots of things if you gave them 263 00:15:05,880 --> 00:15:10,160 Speaker 1: an incentive to do that. And it's cheaper to ramp 264 00:15:10,240 --> 00:15:13,920 Speaker 1: people's uh, you know, EV chargers and air conditioners than 265 00:15:14,000 --> 00:15:16,440 Speaker 1: it is to build a new power plant. What do 266 00:15:16,440 --> 00:15:18,080 Speaker 1: you mean? What are you sorry? Can you explain that? 267 00:15:18,120 --> 00:15:20,680 Speaker 1: What do you mean? It's cheaper to ramp people's EV 268 00:15:20,840 --> 00:15:24,360 Speaker 1: chargers or so So I live in a nice neighborhood 269 00:15:24,360 --> 00:15:27,680 Speaker 1: in Bethesda, Maryland, right, and every time I go for 270 00:15:27,720 --> 00:15:31,200 Speaker 1: a walk, someone's got a new electric vehicle right. Right. 271 00:15:31,320 --> 00:15:34,760 Speaker 1: You can imagine that these homes in this circuit, when 272 00:15:34,760 --> 00:15:38,440 Speaker 1: it was built in or whatever it was, wasn't built 273 00:15:38,480 --> 00:15:40,680 Speaker 1: for a bunch of electric vehicles to plug in. Right. 274 00:15:41,280 --> 00:15:43,680 Speaker 1: So the utility companies coming in and saying, well, we're 275 00:15:43,680 --> 00:15:47,480 Speaker 1: going to spend seventy million dollars to redo the distribution grid, Well, 276 00:15:47,520 --> 00:15:49,840 Speaker 1: it's a lot cheaper for the utility just to put 277 00:15:49,840 --> 00:15:52,720 Speaker 1: in a one thousand dollar bi directional charger in my 278 00:15:52,760 --> 00:15:57,280 Speaker 1: garage and say, when everyone's plugged in at the same time, 279 00:15:57,360 --> 00:15:59,760 Speaker 1: we're going to ramp everybody down from ten kill a 280 00:15:59,760 --> 00:16:02,200 Speaker 1: while of draw to only one kill a lot of 281 00:16:02,280 --> 00:16:05,200 Speaker 1: draw so that we don't have to upgrade this entire 282 00:16:05,240 --> 00:16:09,400 Speaker 1: distribution circuit, but instead we actually just make sure that 283 00:16:09,600 --> 00:16:13,520 Speaker 1: we're not over burdening the distribution circuit all at the 284 00:16:13,560 --> 00:16:18,000 Speaker 1: same time. Right, Because most of the time my distribution 285 00:16:18,040 --> 00:16:21,600 Speaker 1: circuit here on my block, I think the average capacity 286 00:16:21,640 --> 00:16:24,760 Speaker 1: factor is maybet which means it's only being used roughly 287 00:16:25,320 --> 00:16:28,960 Speaker 1: at the time, right, But they're going to increase that 288 00:16:29,280 --> 00:16:32,120 Speaker 1: and pay seventy million bucks to do that and drop 289 00:16:32,120 --> 00:16:36,000 Speaker 1: it down to right just because a bunch of people 290 00:16:36,040 --> 00:16:40,760 Speaker 1: bought Tesla's right. At some point, that math doesn't work, right, 291 00:16:40,800 --> 00:16:45,359 Speaker 1: So we've doubled the cost of transmission and distribution infrastructure 292 00:16:45,360 --> 00:16:47,600 Speaker 1: in our country. We used to pay roughly two cents 293 00:16:47,640 --> 00:16:50,440 Speaker 1: a kilo one hour for transmission distribution. Now we pay 294 00:16:50,520 --> 00:16:54,040 Speaker 1: roughly four cents. And that's largely because we keep over 295 00:16:54,120 --> 00:16:57,240 Speaker 1: building it and then using it less and less on 296 00:16:57,360 --> 00:17:00,440 Speaker 1: an average basis, right, And so if you want to 297 00:17:00,560 --> 00:17:04,359 Speaker 1: use it more, well you fluctuate the way the loads work. 298 00:17:04,960 --> 00:17:08,640 Speaker 1: Because your house is thermal storage, right, like when you 299 00:17:09,040 --> 00:17:11,320 Speaker 1: when you turn on your air conditioner, unless it's a 300 00:17:11,440 --> 00:17:15,119 Speaker 1: super leaky house, then it maintains that temperature for like 301 00:17:15,200 --> 00:17:19,199 Speaker 1: six to twelve hours. Right, So you could put the 302 00:17:19,240 --> 00:17:21,720 Speaker 1: temperature down to sixty eight when we have excess power 303 00:17:21,720 --> 00:17:23,960 Speaker 1: and capacity in the grid and let it float up 304 00:17:24,000 --> 00:17:27,000 Speaker 1: to seventy two, you know, when you have a lack 305 00:17:27,040 --> 00:17:31,520 Speaker 1: of capacity or generation in the grid. But that whole 306 00:17:31,600 --> 00:17:34,920 Speaker 1: approach is not something that we do. Instead, Warren Buffett, 307 00:17:34,960 --> 00:17:38,280 Speaker 1: I think, proposed that that he wanted to get paid 308 00:17:38,320 --> 00:17:41,119 Speaker 1: like six billion dollars to build natural gas plants in 309 00:17:41,160 --> 00:17:45,440 Speaker 1: Texas with on site natural gas storage just in case 310 00:17:45,440 --> 00:17:48,600 Speaker 1: a polar vortex hit once a year. Why would you 311 00:17:48,640 --> 00:17:53,480 Speaker 1: do that reversus paying poor people or paying middle class 312 00:17:53,480 --> 00:17:57,080 Speaker 1: people or wealthy people to like fluctuate their loads. So, 313 00:17:57,800 --> 00:17:59,760 Speaker 1: I mean it's the issue. Then it's not that we 314 00:18:00,160 --> 00:18:04,360 Speaker 1: don't have enough energy, it's that we're not particularly good 315 00:18:04,560 --> 00:18:08,480 Speaker 1: at I guess calibrating the flow of it depending on 316 00:18:08,680 --> 00:18:13,280 Speaker 1: changing demand, is that right? Yeah, The asset utilization of 317 00:18:13,320 --> 00:18:17,040 Speaker 1: the entire grid is going down, right, And when you 318 00:18:17,080 --> 00:18:19,879 Speaker 1: pay a fixed amount of money for something and the 319 00:18:19,920 --> 00:18:22,960 Speaker 1: asset utilization goes down, then the cost of it goes 320 00:18:23,080 --> 00:18:26,359 Speaker 1: way up to use it because you're not using it 321 00:18:26,480 --> 00:18:29,480 Speaker 1: very often, right, And so so we've got to figure 322 00:18:29,520 --> 00:18:33,240 Speaker 1: out how to optimize for asset utilization and stop optimizing 323 00:18:33,320 --> 00:18:38,600 Speaker 1: for cost per kilo one hour at this particular place. Right, 324 00:18:38,680 --> 00:18:40,840 Speaker 1: What we care about is system costs, because all the 325 00:18:40,880 --> 00:18:44,720 Speaker 1: system costs are shared amongst the rate payers, is they're 326 00:18:44,760 --> 00:18:48,560 Speaker 1: referred to, and and so they don't care that the 327 00:18:48,720 --> 00:18:51,160 Speaker 1: levelized cost of energy of that solar plants one point 328 00:18:51,240 --> 00:18:53,560 Speaker 1: six cents of kill one hour, or that nuclear plants 329 00:18:53,600 --> 00:18:56,360 Speaker 1: seven cents of kill one hour, or that pumped hydro 330 00:18:56,520 --> 00:18:59,800 Speaker 1: storage facility costs two billion dollars. What they care about 331 00:18:59,880 --> 00:19:03,720 Speaker 1: is to provide me with reliable electricity? Right? What do 332 00:19:03,800 --> 00:19:08,280 Speaker 1: I have to pay at my house? Right? And so 333 00:19:08,400 --> 00:19:12,119 Speaker 1: we evaluate things on an individualistic basis as opposed to 334 00:19:12,160 --> 00:19:15,080 Speaker 1: a system wide basis, and so that has led to 335 00:19:15,320 --> 00:19:18,320 Speaker 1: a bunch of individual decision making that has led to, 336 00:19:18,840 --> 00:19:22,320 Speaker 1: you know, no optimization at the system level. At what level, 337 00:19:22,480 --> 00:19:26,399 Speaker 1: whether it's the federal government or the regional power authorities? 338 00:19:26,440 --> 00:19:30,080 Speaker 1: Like what would have to change in order to get, 339 00:19:30,119 --> 00:19:34,199 Speaker 1: as you say, a sort of a superior evaluation of 340 00:19:34,240 --> 00:19:36,280 Speaker 1: the grid so that we actually so that we stop 341 00:19:36,359 --> 00:19:41,280 Speaker 1: optimizing for this sort of individual level get system wide allocation? 342 00:19:41,359 --> 00:19:44,639 Speaker 1: What what? What incentive structure or regulatory change? Like, how 343 00:19:44,680 --> 00:19:46,800 Speaker 1: do you how do you get to that? Uh? That 344 00:19:46,920 --> 00:19:50,399 Speaker 1: different approach? So, I mean, we do a lot of 345 00:19:50,400 --> 00:19:52,359 Speaker 1: this modeling at the Department of Energy, but we do 346 00:19:52,440 --> 00:19:56,160 Speaker 1: it on a nationwide basis, which is not that helpful 347 00:19:56,400 --> 00:19:58,720 Speaker 1: and a decision making the side of things because the 348 00:19:58,720 --> 00:20:00,800 Speaker 1: decision is made at the low the level. Right. So 349 00:20:01,160 --> 00:20:04,119 Speaker 1: each state has a public service commission, and that public 350 00:20:04,200 --> 00:20:06,800 Speaker 1: service commission is one that makes this decision you could 351 00:20:06,840 --> 00:20:11,520 Speaker 1: imagine the Public Service Commission is is hugely under resourced, right, 352 00:20:11,560 --> 00:20:14,520 Speaker 1: and so they get ten thousand pages of documents from 353 00:20:14,520 --> 00:20:16,720 Speaker 1: the utility and then they have to read it all 354 00:20:16,800 --> 00:20:19,280 Speaker 1: and say here the twelve assumptions in here that we 355 00:20:19,320 --> 00:20:21,440 Speaker 1: don't like, please go back and make these changes or 356 00:20:21,480 --> 00:20:24,200 Speaker 1: whatever it is. But they don't really have the ability 357 00:20:24,280 --> 00:20:28,120 Speaker 1: to do all of that modeling themselves. And so like 358 00:20:28,240 --> 00:20:30,240 Speaker 1: what has happened in the past is, for instance, the 359 00:20:30,240 --> 00:20:33,399 Speaker 1: city of l a Um owns one of the largest 360 00:20:33,440 --> 00:20:36,600 Speaker 1: municipal utilities in the country, l a w P, and 361 00:20:36,680 --> 00:20:39,320 Speaker 1: they hired the National Renewble Energy Laboratory to do a 362 00:20:39,359 --> 00:20:42,280 Speaker 1: comprehensive study called l A one hundred and that it 363 00:20:42,320 --> 00:20:45,679 Speaker 1: has said, here is the you know, four ways for 364 00:20:45,720 --> 00:20:49,960 Speaker 1: you to optimize the system for decarbonization and reducing prices 365 00:20:50,000 --> 00:20:53,960 Speaker 1: for everybody. And so now they're implementing that l A 366 00:20:54,000 --> 00:20:57,000 Speaker 1: one hundred study because they pay the National Energy Laboratory 367 00:20:57,040 --> 00:21:00,199 Speaker 1: to do their own thing. That made sense. But I 368 00:21:00,240 --> 00:21:03,720 Speaker 1: think that unless you empower the public service commissions to 369 00:21:03,840 --> 00:21:07,399 Speaker 1: be able to do their own independent analysis, which we 370 00:21:07,440 --> 00:21:09,760 Speaker 1: could do. We have resources that Department energy, but they 371 00:21:09,800 --> 00:21:12,320 Speaker 1: would have to ask us to do it. Um, Then 372 00:21:12,359 --> 00:21:15,399 Speaker 1: it's hard to equip them with what they need to 373 00:21:15,560 --> 00:21:18,600 Speaker 1: negotiate with the utility because remember, the utilities are not 374 00:21:18,640 --> 00:21:22,199 Speaker 1: bad people, but they've been given a monopoly license and 375 00:21:22,240 --> 00:21:25,160 Speaker 1: they have shareholders. They get paid based on how much 376 00:21:25,480 --> 00:21:29,040 Speaker 1: iron they put in the ground, right, So the more 377 00:21:29,040 --> 00:21:32,200 Speaker 1: money they invest, the more shareholder equity returns they make. 378 00:21:32,960 --> 00:21:35,639 Speaker 1: So I'm fascinated by the idea of you know, you 379 00:21:35,680 --> 00:21:40,320 Speaker 1: mentioned the banks having to write white papers on new 380 00:21:40,359 --> 00:21:44,800 Speaker 1: types of technology. Um. And I can just imagine someone, 381 00:21:44,920 --> 00:21:48,040 Speaker 1: you know, trying to wrap their heads around some new 382 00:21:48,040 --> 00:21:51,760 Speaker 1: emerging energy technology and trying to convince their investment committee 383 00:21:51,800 --> 00:21:54,080 Speaker 1: to put a bunch of money in it. But how 384 00:21:54,119 --> 00:21:57,280 Speaker 1: does how does the d OE actually go about it? Like, 385 00:21:57,359 --> 00:21:59,280 Speaker 1: can you give us some color on on what it's 386 00:21:59,320 --> 00:22:01,919 Speaker 1: like if someone approaches you with a new idea or 387 00:22:01,960 --> 00:22:06,520 Speaker 1: a new project, what is that process of approval actually 388 00:22:06,520 --> 00:22:11,920 Speaker 1: look like? And how do you judge one project over another? Yeah, 389 00:22:11,920 --> 00:22:15,600 Speaker 1: it's a great question, um, And I'd say that the 390 00:22:15,680 --> 00:22:18,439 Speaker 1: first part of it's easy because look, what the Department 391 00:22:18,560 --> 00:22:22,280 Speaker 1: Energy does mostly is invest in R and D and so, 392 00:22:22,359 --> 00:22:24,920 Speaker 1: and we're increasingly doing a lot more on the commercialization 393 00:22:25,000 --> 00:22:28,119 Speaker 1: side under Secretary Grant Home. But you know, when you 394 00:22:28,119 --> 00:22:31,199 Speaker 1: think about what we have is we have ten thousand engineer, 395 00:22:31,320 --> 00:22:34,679 Speaker 1: scientists and experts who work on our platform at extraordinary 396 00:22:34,760 --> 00:22:38,200 Speaker 1: natural laboratories across the country. So there's not a single 397 00:22:38,280 --> 00:22:41,240 Speaker 1: new idea that we ever get pitched, right, that idea 398 00:22:41,400 --> 00:22:44,560 Speaker 1: is new to the marketplace. But the person who invented 399 00:22:44,600 --> 00:22:46,919 Speaker 1: the patent probably works at one of our national apps 400 00:22:47,160 --> 00:22:51,080 Speaker 1: and did it twenty seven years earlier. So so the 401 00:22:51,080 --> 00:22:53,879 Speaker 1: the so the technology part of it doesn't scare us 402 00:22:53,880 --> 00:22:56,399 Speaker 1: because we've got all these experts in the platform. On 403 00:22:56,560 --> 00:22:58,520 Speaker 1: your the second half of your question, i'd say that 404 00:22:58,600 --> 00:23:02,200 Speaker 1: we don't compare produc jecks to each other. Right, if 405 00:23:02,240 --> 00:23:05,080 Speaker 1: if they qualify for the Loan Programs Office and they 406 00:23:05,119 --> 00:23:08,359 Speaker 1: can get through the gauntlet, then we'll give them alone. Right, 407 00:23:08,400 --> 00:23:10,479 Speaker 1: they have to be you know, technology, they have to 408 00:23:10,520 --> 00:23:13,080 Speaker 1: meet our innovation standards, they have to meet our greenhouse 409 00:23:13,119 --> 00:23:16,800 Speaker 1: gas emission reduction standards. But if they qualify, we don't say, well, 410 00:23:16,840 --> 00:23:19,679 Speaker 1: this one saves one percent more than you do, so 411 00:23:19,760 --> 00:23:21,800 Speaker 1: therefore we're going to give it to this one, not 412 00:23:21,880 --> 00:23:23,560 Speaker 1: that one. We'll give it to both of them, because 413 00:23:23,920 --> 00:23:27,000 Speaker 1: from our perspective, it's about starting the flywheel, right, It's 414 00:23:27,000 --> 00:23:30,040 Speaker 1: about putting the first and second and third projects out 415 00:23:30,040 --> 00:23:31,840 Speaker 1: the door, and then they're going to have to win 416 00:23:31,880 --> 00:23:36,240 Speaker 1: on their own merits in the battlefield we call capitalism. 417 00:23:36,280 --> 00:23:39,080 Speaker 1: So what are you doing, Like, what specific areas are 418 00:23:39,160 --> 00:23:43,280 Speaker 1: interesting right now? Do you in terms of technologies that 419 00:23:43,440 --> 00:23:47,280 Speaker 1: you're potentially backing or thinking about backing or see is 420 00:23:47,400 --> 00:23:50,360 Speaker 1: very promising? Like what are the what when you look 421 00:23:50,400 --> 00:23:56,080 Speaker 1: at the opportunities, what what's exciting? Well, we spend a 422 00:23:56,080 --> 00:23:59,280 Speaker 1: lot of time in twenty or so different sectors, right 423 00:23:59,280 --> 00:24:01,000 Speaker 1: there's a lot of teas that have been done around 424 00:24:01,000 --> 00:24:04,520 Speaker 1: how you decarbonize the grid, how you decarbonize the economy, etcetera. 425 00:24:04,760 --> 00:24:06,919 Speaker 1: I'd say that where we're getting the most interest right 426 00:24:06,920 --> 00:24:11,040 Speaker 1: where people are actually submitting applications are in nuclear energy, 427 00:24:11,320 --> 00:24:17,840 Speaker 1: in carbon sigiustration and storage, hydrogen battery storage, transmission, e 428 00:24:18,000 --> 00:24:22,119 Speaker 1: V charging, UH rollouts, but also critical minerals. You can 429 00:24:22,160 --> 00:24:25,800 Speaker 1: imagine with all of the rise and costs of critical minerals, 430 00:24:25,800 --> 00:24:30,119 Speaker 1: we're getting a ton of interest for people to you know, 431 00:24:30,200 --> 00:24:33,520 Speaker 1: to mind more critical minerals here, to process them more efficiently, etcetera. 432 00:24:33,680 --> 00:24:36,680 Speaker 1: You mentioned battery storage, and I'm very like. I feel 433 00:24:36,720 --> 00:24:39,879 Speaker 1: like I read very mixed things, whereas some people talk 434 00:24:39,920 --> 00:24:43,240 Speaker 1: about like, okay, batteries are really key and they're particularly 435 00:24:43,240 --> 00:24:46,920 Speaker 1: going to be crucial for increasing our ability to rely 436 00:24:47,000 --> 00:24:50,399 Speaker 1: on renewable sources like solar and wind because then they 437 00:24:50,480 --> 00:24:52,680 Speaker 1: we can preserve the energy at night or when the 438 00:24:52,680 --> 00:24:56,200 Speaker 1: wind isn't storing. And then others say, you know what, 439 00:24:56,480 --> 00:24:59,120 Speaker 1: it's a pipe dream. People have been pitching grid level 440 00:24:59,160 --> 00:25:02,400 Speaker 1: battery storage for years. It's not going to get cheap enough, 441 00:25:02,600 --> 00:25:06,000 Speaker 1: and we're like not even close to having battery capacity 442 00:25:06,040 --> 00:25:09,120 Speaker 1: to meaningful, meaningful you move it in, and not being 443 00:25:09,119 --> 00:25:11,760 Speaker 1: an engineer myself, I don't really have any way of 444 00:25:11,800 --> 00:25:14,639 Speaker 1: evaluating these competing claims. How do you think what is 445 00:25:14,680 --> 00:25:19,000 Speaker 1: the battery storage opportunity and what is like where can 446 00:25:19,040 --> 00:25:22,600 Speaker 1: battery storage play a meaningful role in accelerating adoption of 447 00:25:22,680 --> 00:25:27,679 Speaker 1: some of these non carbon based UH power sources. Yeah, no, 448 00:25:27,800 --> 00:25:31,919 Speaker 1: it's a fascinating question, you know, like the the the 449 00:25:31,920 --> 00:25:36,800 Speaker 1: whole narrative around storage fascinates me because it's actually not 450 00:25:36,880 --> 00:25:40,679 Speaker 1: that complicated, but everyone makes it super complicated, right, I 451 00:25:40,760 --> 00:25:45,199 Speaker 1: need the simple, the simple sm So you guys have 452 00:25:45,320 --> 00:25:48,280 Speaker 1: been studying supply chains on your podcast for a long 453 00:25:48,320 --> 00:25:52,520 Speaker 1: time now, right, And the largest supply chain in the 454 00:25:52,800 --> 00:25:57,480 Speaker 1: entire world that is real time only is the electricity market. 455 00:25:57,960 --> 00:26:02,560 Speaker 1: Yeah right, every single millisecond of every single day, the 456 00:26:02,600 --> 00:26:08,480 Speaker 1: supply and demand has to equal each other. That is exhausting, right. 457 00:26:08,560 --> 00:26:13,119 Speaker 1: Think about like how transportation feels works, or or agriculture, 458 00:26:13,240 --> 00:26:16,520 Speaker 1: there's like storage everywhere. You have grain elevators, you have 459 00:26:16,640 --> 00:26:19,199 Speaker 1: tank farms, you have all these things. We don't have 460 00:26:19,280 --> 00:26:21,520 Speaker 1: storage on the grid. The only time we built storage 461 00:26:21,560 --> 00:26:23,400 Speaker 1: was in the nine seventies. We had this thing called 462 00:26:23,400 --> 00:26:25,960 Speaker 1: pumped hydro. And the reason we built it is because 463 00:26:26,680 --> 00:26:29,280 Speaker 1: the nuclear plants of the nineteen seventies were designed to 464 00:26:29,359 --> 00:26:31,720 Speaker 1: never be turned down, and so you had all this 465 00:26:31,840 --> 00:26:34,080 Speaker 1: excess power at times, and so we needed to dump 466 00:26:34,080 --> 00:26:37,159 Speaker 1: the extra power. So that's just pushing water up and 467 00:26:37,160 --> 00:26:39,840 Speaker 1: then you let it down. That's exactly right, right, And 468 00:26:39,920 --> 00:26:45,200 Speaker 1: so now what we're saying is we basically have found it. 469 00:26:45,320 --> 00:26:50,000 Speaker 1: By adding storage into this supply chain, it makes everyone's 470 00:26:50,080 --> 00:26:53,040 Speaker 1: job easier. You don't have to do this real time 471 00:26:53,080 --> 00:26:55,959 Speaker 1: thing all the time. You can just store power. And 472 00:26:56,000 --> 00:26:58,960 Speaker 1: so when you have some circuit that you know has 473 00:26:59,000 --> 00:27:01,679 Speaker 1: a squirrel that gets you know, fried on it and 474 00:27:01,720 --> 00:27:03,800 Speaker 1: so like it goes down, you can use a battery 475 00:27:03,840 --> 00:27:06,440 Speaker 1: to to like fix that problem if something happens, to 476 00:27:06,520 --> 00:27:09,440 Speaker 1: use a battery, right, And so so that's why we 477 00:27:09,480 --> 00:27:11,680 Speaker 1: have battery storage. Right. We've been working on it since 478 00:27:11,720 --> 00:27:14,280 Speaker 1: the nineties. I've been working on it like with Sandy 479 00:27:14,280 --> 00:27:17,760 Speaker 1: and National Laboratories, etcetera, since nineties. And and so the 480 00:27:17,840 --> 00:27:22,360 Speaker 1: technology though, got cheap because we started using lithium mind 481 00:27:22,400 --> 00:27:26,800 Speaker 1: batteries for laptops and cell phones. And then Elon Musk said, well, 482 00:27:26,840 --> 00:27:28,679 Speaker 1: that supply chain is there, so we should use it 483 00:27:28,680 --> 00:27:31,520 Speaker 1: for electric vehicles. And so then that got even cheaper. 484 00:27:31,960 --> 00:27:35,119 Speaker 1: The cost came down using rights law. Right, it's not 485 00:27:35,320 --> 00:27:39,040 Speaker 1: new information, right, the learning curve has been around for decades, 486 00:27:39,640 --> 00:27:42,640 Speaker 1: and you know, after five or six cumulative doublings of experience, 487 00:27:42,680 --> 00:27:44,440 Speaker 1: the cost has come down to the point where people 488 00:27:44,480 --> 00:27:48,040 Speaker 1: are like, this is cheaper than building a natural gas 489 00:27:48,040 --> 00:27:50,720 Speaker 1: peaker plant. That's what a Yes figured out back in 490 00:27:51,880 --> 00:27:54,560 Speaker 1: so they started building a bunch of battery storage because 491 00:27:54,600 --> 00:27:58,439 Speaker 1: it was cheaper than running their their peaker plants. And 492 00:27:58,480 --> 00:28:01,399 Speaker 1: then people just kept growing and then but just the 493 00:28:01,440 --> 00:28:03,640 Speaker 1: sheer scale of it, I think it's hard for people 494 00:28:03,680 --> 00:28:09,000 Speaker 1: to fathom. Yeah, so I'll just give you a sense. So, um, 495 00:28:09,040 --> 00:28:13,080 Speaker 1: when you think about electric vehicles, Uh, the President has 496 00:28:13,240 --> 00:28:16,399 Speaker 1: said that we're gonna have fifty electric vehicles by right 497 00:28:16,480 --> 00:28:19,800 Speaker 1: being sold every year. To do that, we'll need eight 498 00:28:19,880 --> 00:28:27,040 Speaker 1: hundred gigawatt hours of um of uh battery storage. Right 499 00:28:27,080 --> 00:28:29,840 Speaker 1: to put a kill one hours of battery and your 500 00:28:29,880 --> 00:28:32,600 Speaker 1: four f one fifty lightning and your sixty six kilo 501 00:28:32,640 --> 00:28:37,000 Speaker 1: one hour battery pack and your hyundaionic right and and 502 00:28:37,040 --> 00:28:40,200 Speaker 1: so that's eight hundred giga what hours right, um, And 503 00:28:40,240 --> 00:28:42,239 Speaker 1: just put that in perspective. You know, we use like 504 00:28:42,360 --> 00:28:47,120 Speaker 1: four thousand tarowatt hours, right, So that's like four million 505 00:28:47,120 --> 00:28:50,840 Speaker 1: giga what hours per year in the United States. Right. So, um, 506 00:28:50,920 --> 00:28:53,400 Speaker 1: So eight hunred gig one hours the total amount of 507 00:28:53,480 --> 00:28:56,120 Speaker 1: utility scale battery storage that we expect to be on 508 00:28:56,160 --> 00:28:59,920 Speaker 1: the grid by a hundred and fifty giga what hours, Right, 509 00:29:00,720 --> 00:29:03,280 Speaker 1: So we will have eight hundred gig at hours of 510 00:29:03,320 --> 00:29:08,880 Speaker 1: batteries sold in people's cars in one year. The total 511 00:29:09,040 --> 00:29:12,800 Speaker 1: cumulative amount of battery storage on the grid in utility 512 00:29:12,840 --> 00:29:14,760 Speaker 1: scale battery storage will be a hundred and fifty gig 513 00:29:14,800 --> 00:29:17,560 Speaker 1: one hours. And then blow your mind even more, we 514 00:29:17,680 --> 00:29:21,560 Speaker 1: just closed alone for hydrogen storage right in a salt 515 00:29:21,600 --> 00:29:25,680 Speaker 1: cavern in Delta, Utah. That one salt cavern will store 516 00:29:25,720 --> 00:29:28,040 Speaker 1: a hundred and fifty gigo at hours where the hydage group. 517 00:29:43,880 --> 00:29:48,120 Speaker 1: So when it comes to designing the supply chain for energy, 518 00:29:48,240 --> 00:29:52,400 Speaker 1: as you mentioned, who should be the ultimate standards setterer there? 519 00:29:52,440 --> 00:29:55,080 Speaker 1: Because on the one hand, you have the government, which 520 00:29:55,320 --> 00:29:59,080 Speaker 1: clearly has priorities of its own, and you would assume 521 00:29:59,200 --> 00:30:02,280 Speaker 1: that increase battery storage or something like that would be 522 00:30:02,320 --> 00:30:04,440 Speaker 1: part of it. But on the other hand, you do 523 00:30:04,600 --> 00:30:08,800 Speaker 1: have pools of private capital that are often funding a 524 00:30:08,880 --> 00:30:11,640 Speaker 1: lot of these projects and efforts, and I'm sure they 525 00:30:11,680 --> 00:30:14,800 Speaker 1: have their own preferences as well about how these things 526 00:30:14,840 --> 00:30:17,880 Speaker 1: should work. So who should be the standard setter here 527 00:30:18,040 --> 00:30:21,360 Speaker 1: or or how should these two um groups kind of 528 00:30:21,800 --> 00:30:26,320 Speaker 1: oh work together. It is a fascinating question, and every 529 00:30:26,400 --> 00:30:29,640 Speaker 1: question you ask, I think like needs its own one 530 00:30:29,680 --> 00:30:33,200 Speaker 1: hour podcast. We could do a series, We could have 531 00:30:33,760 --> 00:30:36,280 Speaker 1: like a five episode series with you. We might do 532 00:30:36,400 --> 00:30:38,800 Speaker 1: maybe we'll do that later in the year. But like 533 00:30:38,920 --> 00:30:42,280 Speaker 1: I think that I think when you think about your question, right, 534 00:30:42,440 --> 00:30:44,720 Speaker 1: like who should be the standard bearers? So Department of 535 00:30:44,840 --> 00:30:48,920 Speaker 1: Energy writes a report, right, and says, here's the status 536 00:30:49,160 --> 00:30:51,600 Speaker 1: of all the technologies that we've done R and D 537 00:30:51,800 --> 00:30:53,760 Speaker 1: in and here's where we think the pathways will work 538 00:30:53,800 --> 00:30:56,880 Speaker 1: and the roadmap and all that stuff. Right, And then people, 539 00:30:57,120 --> 00:30:59,360 Speaker 1: you know whatever, Sometimes they ignore it, sometimes they read 540 00:30:59,400 --> 00:31:01,960 Speaker 1: it it's great, um. And then at some point you've 541 00:31:02,000 --> 00:31:04,480 Speaker 1: got venture capitalists, right, and then they fund companies and 542 00:31:04,520 --> 00:31:07,200 Speaker 1: they have you know, all these different companies. And remember 543 00:31:07,240 --> 00:31:09,720 Speaker 1: like in two thousand nine it was like Heinrich Fisker 544 00:31:09,840 --> 00:31:13,360 Speaker 1: versus Elon Musk, right, and there was like Fisker Automotive 545 00:31:13,360 --> 00:31:16,360 Speaker 1: and this kind of thing, right, And why did Elon 546 00:31:16,440 --> 00:31:20,520 Speaker 1: Musk win versus Heinrich Fisker. It wasn't because his technology 547 00:31:20,600 --> 00:31:24,920 Speaker 1: was better or execution around like you know this particular 548 00:31:25,000 --> 00:31:27,080 Speaker 1: thing or that particular thing. It was because like a 549 00:31:27,240 --> 00:31:30,080 Speaker 1: raw grit and perseverance and all the things that you 550 00:31:30,120 --> 00:31:35,160 Speaker 1: know we herald entrepreneurs for right. And so he succeeds, right, 551 00:31:35,240 --> 00:31:37,840 Speaker 1: and he you know, now has the most valuable car 552 00:31:37,880 --> 00:31:40,680 Speaker 1: company in the world, and it's it's wonderful, right. But 553 00:31:40,800 --> 00:31:42,920 Speaker 1: it didn't like come out of some sort of like 554 00:31:43,040 --> 00:31:45,560 Speaker 1: thing that I wrote up in a roadmap at Department 555 00:31:45,560 --> 00:31:48,000 Speaker 1: of Energy, you know, in two thousand and seven and 556 00:31:48,040 --> 00:31:51,520 Speaker 1: said this is exactly how the electric vehicle market will work, right, 557 00:31:51,520 --> 00:31:55,640 Speaker 1: and so so that happens that way, right. But then 558 00:31:55,760 --> 00:31:59,600 Speaker 1: when you get to trillion dollars scale, right, then the 559 00:32:00,120 --> 00:32:04,320 Speaker 1: structure investors don't care. That's the interesting thing, right, what 560 00:32:04,480 --> 00:32:07,640 Speaker 1: they care about, and they're the large bucket of money 561 00:32:07,680 --> 00:32:09,680 Speaker 1: that is going to spend the ten shillion dollars to 562 00:32:09,720 --> 00:32:12,840 Speaker 1: decarbonize the United States and the larger numbers to de 563 00:32:12,920 --> 00:32:16,800 Speaker 1: carbonize the world. And for them, they want to contract 564 00:32:16,800 --> 00:32:18,880 Speaker 1: that they think is going to pay them back. That's 565 00:32:18,880 --> 00:32:21,920 Speaker 1: all they care about, right. They don't care whether it's 566 00:32:21,960 --> 00:32:26,560 Speaker 1: lithium ion batteries or nickel metal hydride batteries, or zinc batteries, 567 00:32:26,640 --> 00:32:30,920 Speaker 1: or iron air batteries, or hydrogen storage or pumped hydro 568 00:32:31,120 --> 00:32:33,959 Speaker 1: or whatever it is. What they care about is is 569 00:32:34,000 --> 00:32:37,440 Speaker 1: this asset likely to be used for the entire period 570 00:32:37,520 --> 00:32:40,120 Speaker 1: of the loan or the equity I'm investing in it 571 00:32:40,320 --> 00:32:43,440 Speaker 1: because they're gonna make a six eight percent return, right, 572 00:32:43,440 --> 00:32:45,280 Speaker 1: They're not getting paid to like take a whole bunch 573 00:32:45,320 --> 00:32:47,760 Speaker 1: of risk. So what they want to know is what 574 00:32:47,920 --> 00:32:50,600 Speaker 1: is the regulatory infrastructure why does the utility want to 575 00:32:50,640 --> 00:32:53,400 Speaker 1: do this? Like is this likely to get you know, 576 00:32:53,520 --> 00:32:57,479 Speaker 1: like used for the period of time that's required, etcetera. Right, 577 00:32:57,520 --> 00:33:01,520 Speaker 1: and so so you've got this interplay between the choices 578 00:33:01,520 --> 00:33:04,400 Speaker 1: that the infrastructure investors have though in front of them, 579 00:33:04,440 --> 00:33:06,680 Speaker 1: are limited. Right. They don't get to look at the 580 00:33:06,920 --> 00:33:09,920 Speaker 1: entire landscape and say here the twenty seven technologies for 581 00:33:10,000 --> 00:33:13,200 Speaker 1: us to look at, and we pick this one. They 582 00:33:13,240 --> 00:33:15,960 Speaker 1: get to only invest in the things that they get pitched. 583 00:33:16,480 --> 00:33:19,360 Speaker 1: And so if only two of those seven entrepreneurs are 584 00:33:19,480 --> 00:33:22,720 Speaker 1: competent and capable of actually getting to what we talked 585 00:33:22,720 --> 00:33:24,920 Speaker 1: about the beginning of the podcast, which is two or 586 00:33:24,960 --> 00:33:27,720 Speaker 1: fifty million dollar scale, then those are the only two 587 00:33:27,720 --> 00:33:31,360 Speaker 1: applications that they get to choose between. When we talk 588 00:33:31,440 --> 00:33:34,720 Speaker 1: about these infrastructure investors, hey who are we talking about? 589 00:33:34,760 --> 00:33:36,680 Speaker 1: Like where where do they sit in this sort of 590 00:33:36,720 --> 00:33:40,040 Speaker 1: like you know, the constellation of private capital? And then 591 00:33:40,080 --> 00:33:42,280 Speaker 1: how do you see your work with them? And how 592 00:33:42,280 --> 00:33:45,080 Speaker 1: do they think about you? And you think about you know, Okay, 593 00:33:45,120 --> 00:33:47,560 Speaker 1: you provide these sort of initial loans, then maybe a 594 00:33:47,600 --> 00:33:50,160 Speaker 1: handoff to them like who are we talking about and 595 00:33:50,200 --> 00:33:53,120 Speaker 1: how much do you do work with them? Yeah, it's 596 00:33:53,160 --> 00:33:57,240 Speaker 1: a good question. They're generally not American. So the American 597 00:33:57,360 --> 00:34:00,200 Speaker 1: names are generally insurance companies and they've got their own 598 00:34:00,880 --> 00:34:04,560 Speaker 1: conversation that we can go through. But um, it's usually 599 00:34:04,720 --> 00:34:07,400 Speaker 1: Canadian and Australian companies. So this is like ods Super 600 00:34:07,600 --> 00:34:11,520 Speaker 1: q I, c Ontario Teachers, aim COO out of Alberta, 601 00:34:12,080 --> 00:34:14,320 Speaker 1: c p p I B, right, the Canadian Pension Board. 602 00:34:14,640 --> 00:34:17,520 Speaker 1: These are the folks who you know, um, like remember 603 00:34:17,520 --> 00:34:21,120 Speaker 1: when like City of Chicago sold their parking meters or 604 00:34:21,440 --> 00:34:24,359 Speaker 1: someone like invest in toll roads. It's always them, right, 605 00:34:24,360 --> 00:34:27,480 Speaker 1: They're the ones doing the cool stuff on the infrastructure side, right, 606 00:34:27,760 --> 00:34:30,879 Speaker 1: it's and so it's not cowpers or Calisters or newar 607 00:34:30,960 --> 00:34:34,600 Speaker 1: Common or some of those folks. It's usually those big 608 00:34:34,840 --> 00:34:39,560 Speaker 1: infrastructure investors. And what they're looking for is outside returns, right, 609 00:34:39,600 --> 00:34:43,719 Speaker 1: because if you have a municipal bond backed project, you're 610 00:34:43,760 --> 00:34:47,839 Speaker 1: making three percent, right, So they're looking to make six 611 00:34:47,840 --> 00:34:50,399 Speaker 1: to eight which is higher than three, right, And so 612 00:34:50,480 --> 00:34:53,000 Speaker 1: that's that's what they're solving for. And they're saying, well, 613 00:34:53,000 --> 00:34:54,400 Speaker 1: they got to be early, they have to move a 614 00:34:54,400 --> 00:34:57,719 Speaker 1: little faster, they've got to have bigger staff, right, so 615 00:34:57,760 --> 00:35:00,680 Speaker 1: they can like network with folks, etcetera. And sometimes they 616 00:35:00,719 --> 00:35:03,040 Speaker 1: invest in the company. So like c pp I B 617 00:35:03,040 --> 00:35:05,240 Speaker 1: bought out Pattern Energy, which is one of the largest 618 00:35:05,600 --> 00:35:08,960 Speaker 1: wind and transmission line developers in the country, because that's 619 00:35:08,960 --> 00:35:11,680 Speaker 1: how they could get access to proprietary deal flow. Otherwise 620 00:35:11,719 --> 00:35:14,880 Speaker 1: they were getting out competed by other cheaper forms of capital. 621 00:35:16,560 --> 00:35:20,080 Speaker 1: So is it just inevitable that people will have to 622 00:35:20,239 --> 00:35:24,239 Speaker 1: choose between paying higher rates for energy in order to 623 00:35:24,360 --> 00:35:30,200 Speaker 1: incentivize investment or um, we'll just have to deal with, 624 00:35:30,280 --> 00:35:32,840 Speaker 1: you know, creaking infrastructure because no one wants to actually 625 00:35:32,840 --> 00:35:35,640 Speaker 1: pour money into it. Like, is that just a tension 626 00:35:35,760 --> 00:35:41,120 Speaker 1: that that we can't get around? Well, it's certainly the 627 00:35:41,680 --> 00:35:45,080 Speaker 1: It's certainly the default point of view. Right. The default 628 00:35:45,080 --> 00:35:47,480 Speaker 1: point of view is that you know, you wait for 629 00:35:47,520 --> 00:35:50,799 Speaker 1: things to break, supply chain costs go up and then 630 00:35:50,800 --> 00:35:54,120 Speaker 1: incentivizes a bunch of people to invest, and then you know, 631 00:35:54,200 --> 00:35:56,880 Speaker 1: supply chain costs come down. Right, So that's the default 632 00:35:56,880 --> 00:35:58,840 Speaker 1: of view. I mean, you know, when you think about 633 00:35:59,520 --> 00:36:03,360 Speaker 1: the speech that Brian Desk gave on industrial policy, um, 634 00:36:03,480 --> 00:36:05,680 Speaker 1: and then you know, as re client wrote that, you know, 635 00:36:05,760 --> 00:36:07,480 Speaker 1: big piece in the New York Times about it, and 636 00:36:07,520 --> 00:36:10,440 Speaker 1: I think he defined it as industrial policy is the 637 00:36:10,480 --> 00:36:13,080 Speaker 1: idea that a country should chart a path to productive 638 00:36:13,120 --> 00:36:17,799 Speaker 1: capacity beyond what the market would on its own support. Right. 639 00:36:18,000 --> 00:36:20,080 Speaker 1: And so I think we are at a crossroads where 640 00:36:20,120 --> 00:36:25,040 Speaker 1: I think we're asking ourselves should we be proactively dealing 641 00:36:25,080 --> 00:36:27,600 Speaker 1: with all these supply chains? And if we are going 642 00:36:27,680 --> 00:36:31,960 Speaker 1: to do that, what tools do people want us to use? Right? 643 00:36:32,000 --> 00:36:35,399 Speaker 1: Remember when you think about us commodity supercycle, right, which 644 00:36:35,400 --> 00:36:39,160 Speaker 1: we went through during the Bush administration. You know, there's 645 00:36:39,200 --> 00:36:42,080 Speaker 1: three ways to dealing with the commodity supercycle. Right. One 646 00:36:42,200 --> 00:36:44,680 Speaker 1: is you've got to get more of the raw materials. Right. 647 00:36:44,719 --> 00:36:47,439 Speaker 1: You gotta mind more, you gotta produce more, you gotta 648 00:36:47,719 --> 00:36:50,040 Speaker 1: do whatever it is. Right. The second thing is you 649 00:36:50,120 --> 00:36:52,880 Speaker 1: use what you have more efficiently, right, Like you get 650 00:36:53,200 --> 00:36:56,560 Speaker 1: cars that have better mouse per gallon you like, you know, 651 00:36:56,760 --> 00:36:59,799 Speaker 1: have batteries that use less lithium than the previous version 652 00:37:00,120 --> 00:37:02,200 Speaker 1: to get the same amount of output. Right. And then 653 00:37:02,200 --> 00:37:04,719 Speaker 1: the third is you find substitutes, which is largely what 654 00:37:04,800 --> 00:37:07,120 Speaker 1: I do for a living. Is you know, you fund 655 00:37:07,200 --> 00:37:09,920 Speaker 1: all of the different technologies, all the different things that 656 00:37:09,960 --> 00:37:14,160 Speaker 1: would you know, reduce the amount of the base commodity 657 00:37:14,200 --> 00:37:17,920 Speaker 1: that you need. And that process is slow, so so 658 00:37:18,000 --> 00:37:20,239 Speaker 1: that process is not something that's going to happen in 659 00:37:20,239 --> 00:37:23,200 Speaker 1: twelve months. But you need to do all three of 660 00:37:23,239 --> 00:37:27,040 Speaker 1: those of those things, right, and that can be planned, 661 00:37:27,520 --> 00:37:31,320 Speaker 1: but there needs to be a framework that everyone agrees 662 00:37:31,360 --> 00:37:34,600 Speaker 1: to and then each of the technology fits into one 663 00:37:34,640 --> 00:37:38,239 Speaker 1: of those three things. Right. Either you're you know, streamlining 664 00:37:38,280 --> 00:37:41,400 Speaker 1: permitting so that you can get more minds built or 665 00:37:41,560 --> 00:37:44,640 Speaker 1: more things built. You're you know, investing in R and 666 00:37:44,719 --> 00:37:47,239 Speaker 1: D so that you can like make the use of 667 00:37:47,239 --> 00:37:50,719 Speaker 1: those minerals more efficient, right, or you're investing in alternatives 668 00:37:50,760 --> 00:37:54,560 Speaker 1: because and scaling up those investments early when you don't 669 00:37:54,640 --> 00:37:57,520 Speaker 1: need them. Right. That's the biggest problem is when commodity 670 00:37:57,560 --> 00:38:00,279 Speaker 1: prices are low, people are like, well, why are you 671 00:38:00,440 --> 00:38:02,560 Speaker 1: making that investment? We don't need it. Well, because it 672 00:38:02,600 --> 00:38:06,680 Speaker 1: takes ten years for that technology to get to match maturation, 673 00:38:06,800 --> 00:38:09,279 Speaker 1: so we can scale it to trilling our scale. Can 674 00:38:09,320 --> 00:38:13,600 Speaker 1: you talk about speaking of funding alternatives, and you mentioned 675 00:38:13,600 --> 00:38:16,239 Speaker 1: that just today we're recording this on June nine, but 676 00:38:16,360 --> 00:38:19,839 Speaker 1: just today that you funded a hydrogen project, and I'm 677 00:38:20,160 --> 00:38:22,120 Speaker 1: I'm still a little unclear in my head, like where 678 00:38:22,239 --> 00:38:25,200 Speaker 1: hydrogen fits intell this, Like when we think about cleaner 679 00:38:25,280 --> 00:38:28,040 Speaker 1: fuels obvious or cleaner source of energy, Lots of talking 680 00:38:28,040 --> 00:38:31,319 Speaker 1: about solar, lots of talk about natural gas or sorry, um, 681 00:38:31,400 --> 00:38:35,480 Speaker 1: when some talk about uh nuclear, what is how should 682 00:38:35,480 --> 00:38:38,120 Speaker 1: we understand, you know, when we talk about this vision 683 00:38:38,200 --> 00:38:42,040 Speaker 1: for expanding capacity, how should we understand in your view, 684 00:38:42,560 --> 00:38:44,880 Speaker 1: the role that hydrogen has to play on all this? 685 00:38:45,680 --> 00:38:47,560 Speaker 1: Now that's a good question. I look, I think that 686 00:38:47,640 --> 00:38:52,440 Speaker 1: people get confused because they're thinking hydrogen and what they 687 00:38:52,440 --> 00:38:55,759 Speaker 1: should be thinking instead is energy carrier. Right. So if 688 00:38:55,800 --> 00:38:59,919 Speaker 1: I say to you the wind and solar industry, right, 689 00:39:00,080 --> 00:39:02,440 Speaker 1: and also natural gas and coal and other things, right, 690 00:39:02,480 --> 00:39:05,920 Speaker 1: they have a lot of surplus capacity in the spring 691 00:39:05,920 --> 00:39:07,719 Speaker 1: in the fall, right, because there's not a lot of 692 00:39:07,719 --> 00:39:10,759 Speaker 1: air conditioning or heating being used then, and so and 693 00:39:10,800 --> 00:39:14,680 Speaker 1: we have a lot of excess grid capacity. So what 694 00:39:14,719 --> 00:39:18,960 Speaker 1: could we do to store all of that capacity so 695 00:39:19,000 --> 00:39:21,120 Speaker 1: that we can use it in the winter and summer 696 00:39:21,160 --> 00:39:23,799 Speaker 1: when we need it? Right? Like it put it all 697 00:39:23,840 --> 00:39:27,680 Speaker 1: into big batteries. But those batteries have a degradation rate 698 00:39:27,719 --> 00:39:30,120 Speaker 1: of like you know whatever, it is, like point two 699 00:39:30,160 --> 00:39:33,520 Speaker 1: per day. So if I store it and I stick 700 00:39:33,520 --> 00:39:35,799 Speaker 1: it there for ninety days, then by the time I 701 00:39:35,840 --> 00:39:40,439 Speaker 1: need it, it could be like gone, right, So that's 702 00:39:40,480 --> 00:39:43,200 Speaker 1: not a great energy carrier for seasonal storage. I could 703 00:39:43,280 --> 00:39:45,920 Speaker 1: use pump hydro, but then if I just sit sit 704 00:39:46,080 --> 00:39:49,800 Speaker 1: up there, it might evaporate. Right, there's some evaporation that happens, etcetera. 705 00:39:49,960 --> 00:39:52,240 Speaker 1: And then I could put hydrogen in a salt cavern 706 00:39:52,280 --> 00:39:54,600 Speaker 1: and guess what, that doesn't degrade at all. So the 707 00:39:54,680 --> 00:39:57,400 Speaker 1: hydrogen just sits there. And a lot of people argue 708 00:39:57,440 --> 00:39:59,600 Speaker 1: with each other over points that are meaningless, like so 709 00:39:59,680 --> 00:40:02,759 Speaker 1: for in sends, people will say, well, hydrogen doesn't make 710 00:40:02,760 --> 00:40:05,440 Speaker 1: any sense because the round trip efficiency is way lower 711 00:40:05,440 --> 00:40:09,200 Speaker 1: than it is for lithiumine battery storage. Okay, factually true, 712 00:40:09,760 --> 00:40:13,560 Speaker 1: but LITHIUMI and battery storage is not good for seasonal storage. 713 00:40:13,600 --> 00:40:15,719 Speaker 1: On top of that, you can't get paid only like 714 00:40:15,800 --> 00:40:19,160 Speaker 1: four times a year to like use lithiumine battery storage. 715 00:40:19,160 --> 00:40:21,080 Speaker 1: You have to get paid to use that every day 716 00:40:21,239 --> 00:40:24,239 Speaker 1: or else it doesn't petzel for hydrogen storage. If I 717 00:40:24,320 --> 00:40:27,520 Speaker 1: store a bunch of hydrogen in a salt cavern and 718 00:40:27,520 --> 00:40:30,359 Speaker 1: then Texas needs it at nine thousand dollars of mega 719 00:40:30,400 --> 00:40:33,520 Speaker 1: an hour for like two days, that whole thing is 720 00:40:33,520 --> 00:40:38,080 Speaker 1: paid off, right, And so each thing has its own 721 00:40:38,920 --> 00:40:41,399 Speaker 1: like thing that it does within a system. That's why 722 00:40:41,400 --> 00:40:43,400 Speaker 1: I'm saying, like everyone's like, well, this is more expensive, 723 00:40:43,480 --> 00:40:46,319 Speaker 1: this is like worst round trip efficiency. I get it. 724 00:40:46,760 --> 00:40:49,719 Speaker 1: But on a system wide basis, each one of these 725 00:40:49,719 --> 00:40:53,399 Speaker 1: technologies helps to make each other resilient so that when 726 00:40:53,400 --> 00:40:55,560 Speaker 1: we have more extreme weather, when we have all these 727 00:40:55,560 --> 00:40:58,480 Speaker 1: other issues, we actually have tools that we can use 728 00:40:58,560 --> 00:41:02,520 Speaker 1: to keep the grid going. Sorry, but Tracy, just one 729 00:41:02,680 --> 00:41:04,960 Speaker 1: real short question here, can you? I don't. Can you 730 00:41:05,000 --> 00:41:08,320 Speaker 1: just give me the real sketch of hydrogen stored in 731 00:41:08,360 --> 00:41:10,200 Speaker 1: assault cave? Like, what do we actually talk about here? 732 00:41:10,200 --> 00:41:12,799 Speaker 1: How does that work? So? Salt caverns have been used 733 00:41:12,800 --> 00:41:15,080 Speaker 1: for years, right, We use it for the Strategic Petroleum Reserve. 734 00:41:15,120 --> 00:41:16,840 Speaker 1: We use it to store all the natural gas that 735 00:41:16,880 --> 00:41:21,640 Speaker 1: everyone is like on pins and needles around every single day. 736 00:41:21,800 --> 00:41:26,280 Speaker 1: And we've been using it for temporary storage for hydrogen 737 00:41:26,680 --> 00:41:30,279 Speaker 1: near refineries for decades, like forty years. So it's not 738 00:41:30,360 --> 00:41:34,040 Speaker 1: like a new technology. This is the first ever commercial 739 00:41:34,719 --> 00:41:38,279 Speaker 1: you know, salt cavern storage. This particular salt cavern just 740 00:41:38,360 --> 00:41:41,399 Speaker 1: happened to be there. So, um, there's an eighteen hunter 741 00:41:41,480 --> 00:41:44,200 Speaker 1: megawatt coal plant that's on top of this salt cavern 742 00:41:44,840 --> 00:41:48,160 Speaker 1: and um Group Paddington Ventures looked at it or twelve 743 00:41:48,200 --> 00:41:51,400 Speaker 1: years ago and says, this is a really cool salt cavern. 744 00:41:51,800 --> 00:41:54,080 Speaker 1: At the time, they didn't know they were using for hydrogen. 745 00:41:54,120 --> 00:41:56,759 Speaker 1: They just said salt caverns don't happen every day, and 746 00:41:56,840 --> 00:42:00,120 Speaker 1: salt cavern's basically trapped things. So even though hydrogen is 747 00:42:00,200 --> 00:42:03,840 Speaker 1: super light, right, it's number one on the periodic table, 748 00:42:04,320 --> 00:42:06,760 Speaker 1: it doesn't escape from a salt cavern. A salt cavern 749 00:42:06,840 --> 00:42:10,400 Speaker 1: has this crystal sort of lattice and so it keeps 750 00:42:10,440 --> 00:42:13,399 Speaker 1: things in right, and so there's some money that has 751 00:42:13,440 --> 00:42:16,800 Speaker 1: to be spent to make it usable to pump stuff 752 00:42:16,800 --> 00:42:19,480 Speaker 1: into it and then pump stuff out of it. But 753 00:42:19,520 --> 00:42:22,839 Speaker 1: otherwise it's a natural phenomenon and it's you know when 754 00:42:22,840 --> 00:42:24,799 Speaker 1: you see it. And right now there's a run on 755 00:42:24,840 --> 00:42:27,279 Speaker 1: salt cavern so everybody their mother is trying to buy 756 00:42:27,360 --> 00:42:30,000 Speaker 1: up salt caverns and the Western United States right now. 757 00:42:30,080 --> 00:42:33,239 Speaker 1: So it's, uh, it's always interesting. This is this disc 758 00:42:34,360 --> 00:42:36,600 Speaker 1: I already it's like ten or two at least ten 759 00:42:36,800 --> 00:42:40,919 Speaker 1: follow up episodes coming on, Like it's like we gotta 760 00:42:40,960 --> 00:42:44,040 Speaker 1: fight like someone that we gotta like find someone who's 761 00:42:44,080 --> 00:42:46,759 Speaker 1: like making a read like a salt camera that has 762 00:42:46,840 --> 00:42:49,960 Speaker 1: to exist somewhere anyway, Sorry, keep going, but I'm just thinking, 763 00:42:50,000 --> 00:42:52,759 Speaker 1: like there's just so many anyway, keep going, No, no, 764 00:42:52,840 --> 00:42:55,320 Speaker 1: and so like, And so you this one salt cavern 765 00:42:55,400 --> 00:42:57,640 Speaker 1: can store a hundred and fifty gig of what hours 766 00:42:58,360 --> 00:43:02,040 Speaker 1: of of hydrogen, right, which is an enormous amount of hydrogen, right. 767 00:43:02,120 --> 00:43:04,400 Speaker 1: I mean it's the same amount as we expect to 768 00:43:04,400 --> 00:43:07,520 Speaker 1: be on the grid for lithium mind battery utility scale 769 00:43:07,520 --> 00:43:12,080 Speaker 1: battery storage by and so it's it's this extraordinary thing. 770 00:43:12,160 --> 00:43:16,319 Speaker 1: And then they've got two and twenty megawatts of um electroalizers, right, 771 00:43:16,360 --> 00:43:21,080 Speaker 1: which turn electricity excess electricity into hydrogen, right, split water 772 00:43:21,320 --> 00:43:25,440 Speaker 1: into hydrogen and oxygen um. And then you know, but 773 00:43:25,560 --> 00:43:29,440 Speaker 1: because there was a coal plant there now which has 774 00:43:29,480 --> 00:43:34,759 Speaker 1: extended its life through UM, the grid capacity to run 775 00:43:34,760 --> 00:43:37,120 Speaker 1: those electroalizers is already there because it's there for the 776 00:43:37,120 --> 00:43:40,720 Speaker 1: coal plant. So it's the perfect project because the grid 777 00:43:40,800 --> 00:43:44,439 Speaker 1: is already built around this site, and so you don't 778 00:43:44,440 --> 00:43:46,799 Speaker 1: have to like add another billion dollars worth of grid 779 00:43:46,800 --> 00:43:49,600 Speaker 1: infrastructure because it's already been built and it's already there. 780 00:43:49,640 --> 00:43:53,160 Speaker 1: And so they could probably expand the electric electrolysis and 781 00:43:53,200 --> 00:43:57,400 Speaker 1: electroalizer capacity there to two thousand megawatts under the existing 782 00:43:57,400 --> 00:44:02,000 Speaker 1: grid conditions there. So so you could imagine in the future, uh, 783 00:44:02,040 --> 00:44:05,160 Speaker 1: this project, you know, being an anchor for a hydrogen 784 00:44:05,239 --> 00:44:08,759 Speaker 1: hub and people co locating a green ammonia plant, right, 785 00:44:08,760 --> 00:44:10,680 Speaker 1: and then turning that hydrogen instead of turning it back 786 00:44:10,719 --> 00:44:13,719 Speaker 1: into electricity, they turn it into fertilizer, or they turn 787 00:44:13,760 --> 00:44:17,600 Speaker 1: it into green chemicals, right, and people use hydrofluoric acid, 788 00:44:17,680 --> 00:44:21,279 Speaker 1: hydrochloric acid, you know, things for industrial processes, and so 789 00:44:21,360 --> 00:44:24,880 Speaker 1: it's a it's a pretty exciting time to think about 790 00:44:24,920 --> 00:44:27,960 Speaker 1: all these things because supply chains are getting disrupted and 791 00:44:28,000 --> 00:44:32,759 Speaker 1: people are wanting to see how we do things here 792 00:44:32,760 --> 00:44:34,799 Speaker 1: in this country, and well that happens to be the 793 00:44:34,800 --> 00:44:37,880 Speaker 1: president's goal as well as to onshore and and you know, 794 00:44:37,920 --> 00:44:39,680 Speaker 1: build up a lot of the capacity that we have 795 00:44:40,040 --> 00:44:43,960 Speaker 1: here in the country. What's the most exciting project or 796 00:44:44,200 --> 00:44:46,719 Speaker 1: technology to you right now? Like where do you see 797 00:44:46,719 --> 00:44:50,719 Speaker 1: the most potential or what gets you the most excited. Honestly, 798 00:44:50,800 --> 00:44:53,400 Speaker 1: it's hard to answer, because I'm excited about things in 799 00:44:53,480 --> 00:44:56,160 Speaker 1: all sorts of sectors. Like I'll give you an example 800 00:44:56,600 --> 00:44:59,680 Speaker 1: there's a company that has figured out a way to 801 00:45:00,040 --> 00:45:04,439 Speaker 1: tke um these sort of like uh, you know these 802 00:45:04,480 --> 00:45:07,320 Speaker 1: like nutrients right when you have a chicken farm and 803 00:45:07,520 --> 00:45:11,480 Speaker 1: they say that that you know, their manure like pollutes 804 00:45:11,560 --> 00:45:14,759 Speaker 1: the ocean and creates algae blooms. They they have a 805 00:45:14,800 --> 00:45:18,000 Speaker 1: way of just spinning all of the nutrients into their 806 00:45:18,040 --> 00:45:21,480 Speaker 1: component parts and going back to nitrogen and phosphorus, etcetera, 807 00:45:21,520 --> 00:45:24,879 Speaker 1: and then selling it. It's groundbreaking, right because right now, 808 00:45:25,080 --> 00:45:27,399 Speaker 1: like there's a lot of these uh whether they say 809 00:45:27,440 --> 00:45:29,520 Speaker 1: like birth control and that kind of stuff that's in 810 00:45:29,880 --> 00:45:33,880 Speaker 1: waste our treatment plant waste they have right now, waste 811 00:45:33,880 --> 00:45:36,520 Speaker 1: our treatment plants have to spend money to dispose of 812 00:45:36,560 --> 00:45:40,040 Speaker 1: what they call p fas. This company could just spin 813 00:45:40,080 --> 00:45:43,680 Speaker 1: it back out into its um essential elements and sell 814 00:45:43,719 --> 00:45:47,120 Speaker 1: it back into the marketplace, right I mean, and so 815 00:45:47,239 --> 00:45:49,640 Speaker 1: like it literally could be game changing. Right, we don't 816 00:45:49,680 --> 00:45:53,040 Speaker 1: have to mind for as many of those elements because 817 00:45:53,080 --> 00:45:55,680 Speaker 1: we can get it from our waste tream. Right. There's 818 00:45:55,680 --> 00:45:59,440 Speaker 1: other folks who have created next generation business model innovation 819 00:45:59,640 --> 00:46:03,560 Speaker 1: around car rentals, right, I mean, you know, fifty of 820 00:46:03,560 --> 00:46:06,800 Speaker 1: Americans basically just live from car payment to car payment, 821 00:46:07,360 --> 00:46:09,279 Speaker 1: and you know, and for those of us who don't 822 00:46:09,320 --> 00:46:12,839 Speaker 1: live on the coasts, right, I mean, many people's car 823 00:46:12,880 --> 00:46:16,560 Speaker 1: payments are larger than their house payment. Right. They're paying 824 00:46:16,560 --> 00:46:18,680 Speaker 1: like seven hundred bucks a month for that f one fifty, 825 00:46:18,760 --> 00:46:21,000 Speaker 1: and they're paying four hundred bucks a month for their mortgage. 826 00:46:21,360 --> 00:46:24,120 Speaker 1: And so, you know, like figuring out how to get 827 00:46:24,160 --> 00:46:27,520 Speaker 1: people off of car payments but instead into something that 828 00:46:27,600 --> 00:46:30,719 Speaker 1: looks like cars as a service where you never have 829 00:46:30,760 --> 00:46:32,720 Speaker 1: to do maintenance in your car. You have to do anything, 830 00:46:32,760 --> 00:46:36,719 Speaker 1: because electric vehicles don't require maintenance compared to uh in 831 00:46:36,800 --> 00:46:38,919 Speaker 1: jone combustion engine cars. Right, so you can just rent 832 00:46:38,960 --> 00:46:40,600 Speaker 1: it for a hundred fifty bucks a week for as 833 00:46:40,600 --> 00:46:43,440 Speaker 1: long as you need it, and whenever there's a problem, 834 00:46:43,480 --> 00:46:46,239 Speaker 1: you just give it back and get another car that works. Right, 835 00:46:46,280 --> 00:46:49,560 Speaker 1: I mean, just the amount of reduction of stress for 836 00:46:49,640 --> 00:46:53,160 Speaker 1: people is worth every penny, right, I mean, but there's 837 00:46:53,200 --> 00:46:57,359 Speaker 1: just technology after technology manufactured homes. Right, there's a lot 838 00:46:57,400 --> 00:47:01,400 Speaker 1: of innovation and manufactured homes now where the old school 839 00:47:01,480 --> 00:47:06,080 Speaker 1: manufactured home industry basically you know, continues to sell you 840 00:47:06,160 --> 00:47:08,680 Speaker 1: these these houses for like five six thousand ars a 841 00:47:08,760 --> 00:47:12,920 Speaker 1: year because of the except the auxiliary dwelling unit marketing California, 842 00:47:13,000 --> 00:47:15,359 Speaker 1: the places there's all these startup companies who can now 843 00:47:15,440 --> 00:47:18,560 Speaker 1: three D print a home that's basically net zero for 844 00:47:18,719 --> 00:47:23,520 Speaker 1: ninety thou bucks, right, and so you could just radically 845 00:47:23,640 --> 00:47:28,200 Speaker 1: change like home affordability but also make them net zero 846 00:47:28,360 --> 00:47:31,840 Speaker 1: energy users, um and so like, the amount of innovation 847 00:47:31,920 --> 00:47:34,640 Speaker 1: Americans are capable is amazing, and a lot of what 848 00:47:34,640 --> 00:47:36,680 Speaker 1: we're doing at the Loan Program's Office is figuring out 849 00:47:36,680 --> 00:47:41,360 Speaker 1: how to tie them to institutional capital at infrastructure scale 850 00:47:41,560 --> 00:47:45,200 Speaker 1: because their innovators, right, they their brain is like how 851 00:47:45,200 --> 00:47:47,960 Speaker 1: do I make this technology work? And how do I 852 00:47:48,080 --> 00:47:51,200 Speaker 1: manufactured at scale? Right? I mean what Elon must say 853 00:47:51,239 --> 00:47:56,120 Speaker 1: manufacturing Hell that he was in in eighteen. They're there, 854 00:47:56,400 --> 00:48:00,080 Speaker 1: so they need partners like us to help figure out, Okay, 855 00:48:00,120 --> 00:48:02,360 Speaker 1: if you do this, this and this, here's a billion 856 00:48:02,400 --> 00:48:05,560 Speaker 1: dollars they can actually like get the rollout to occur. 857 00:48:06,880 --> 00:48:09,880 Speaker 1: Jigger show. This is a great conversation, actually kind of 858 00:48:09,920 --> 00:48:12,000 Speaker 1: inspiring there at the end. We have so many like 859 00:48:12,080 --> 00:48:15,960 Speaker 1: negative conversations these days about shortages. It's exciting to be 860 00:48:16,080 --> 00:48:20,120 Speaker 1: reminded that there are people working on big solutions to 861 00:48:20,200 --> 00:48:23,399 Speaker 1: these things, and maybe they'll come to fruition and uh, 862 00:48:23,600 --> 00:48:28,040 Speaker 1: no joke, literally like ten episodes to do maybe maybe 863 00:48:28,080 --> 00:48:30,279 Speaker 1: five of them with you alone. But thank you so 864 00:48:30,360 --> 00:48:32,200 Speaker 1: much for coming on odd Locks. That was a real treat. 865 00:48:32,719 --> 00:48:50,960 Speaker 1: Thanks for having me. I wasn't joking, that wasn't kind 866 00:48:50,960 --> 00:48:54,719 Speaker 1: of inspiring, Like it is good to be reminded that 867 00:48:54,760 --> 00:49:01,160 Speaker 1: there is entrepreneurship and potential technological breakthroughs or technological breakthroughs 868 00:49:01,160 --> 00:49:05,120 Speaker 1: that already proven they just need commercialization or investment. That 869 00:49:05,400 --> 00:49:09,120 Speaker 1: not everything is like this, Not everything is so dire 870 00:49:09,200 --> 00:49:11,040 Speaker 1: that people are working on People are working on a 871 00:49:11,040 --> 00:49:15,239 Speaker 1: lot of this stuff well totally. And I know we uh, 872 00:49:15,480 --> 00:49:18,360 Speaker 1: we've talked a little bit about the fertilizer shortage, but 873 00:49:18,400 --> 00:49:20,680 Speaker 1: it's nice to hear that there's a company that has, 874 00:49:20,680 --> 00:49:23,640 Speaker 1: you know, an active solution to actually try to capture 875 00:49:23,920 --> 00:49:27,080 Speaker 1: some fertilizer from from wastewater and things like that. But 876 00:49:28,000 --> 00:49:33,080 Speaker 1: it does seem like jiggers emphasis on the scaling up 877 00:49:33,280 --> 00:49:36,480 Speaker 1: problem and I guess the problem of incentives. And it's 878 00:49:36,520 --> 00:49:38,879 Speaker 1: almost like every time you come up with a new 879 00:49:38,920 --> 00:49:44,640 Speaker 1: technology or um a new way of doing things, it 880 00:49:44,760 --> 00:49:48,040 Speaker 1: feels like it's hard for the system to adapt to 881 00:49:48,160 --> 00:49:51,839 Speaker 1: it because they've already adapted to the way things are 882 00:49:51,960 --> 00:49:55,040 Speaker 1: being done, and they've become very good at extracting money 883 00:49:55,120 --> 00:49:58,400 Speaker 1: from the current system. And so once you start messing 884 00:49:58,440 --> 00:50:01,480 Speaker 1: around with the way the whole system misfunctioning, it just 885 00:50:01,560 --> 00:50:04,239 Speaker 1: feels like it's hard to get everyone on board. Does 886 00:50:04,280 --> 00:50:06,680 Speaker 1: that make sense? No, it does. And it's pretty clear 887 00:50:06,760 --> 00:50:10,520 Speaker 1: that the existing system has all kinds of perverse incentives. 888 00:50:10,800 --> 00:50:13,200 Speaker 1: And this is something we've talked about before and he 889 00:50:13,239 --> 00:50:16,000 Speaker 1: mentioned it. Now. You know, if the if the publicly 890 00:50:16,200 --> 00:50:21,840 Speaker 1: owned utilities are largely UH, their shareholder return is a 891 00:50:21,960 --> 00:50:26,319 Speaker 1: function of, well, we spend X on investment, and so 892 00:50:26,400 --> 00:50:28,800 Speaker 1: we're going to raise the rate to X plus some 893 00:50:29,000 --> 00:50:32,040 Speaker 1: y percent. Does that create the incentive to just spend 894 00:50:32,120 --> 00:50:34,920 Speaker 1: more even if it's not the most efficient thing? Do 895 00:50:35,000 --> 00:50:39,960 Speaker 1: the existing Is there an existing um incentive to come 896 00:50:40,000 --> 00:50:42,560 Speaker 1: up with ways to use the grid more efficiently such 897 00:50:42,600 --> 00:50:44,839 Speaker 1: as that we've talked about in the beginning of the conversation. 898 00:50:45,480 --> 00:50:50,440 Speaker 1: These are they're hard economics problems, like the technology is exciting, 899 00:50:50,719 --> 00:50:55,279 Speaker 1: the financing is exciting potentially, but the economics to get 900 00:50:55,320 --> 00:51:00,239 Speaker 1: to those excuse me, to get to that state is tricky. Yeah, 901 00:51:00,280 --> 00:51:02,560 Speaker 1: I think that's exactly right, And that's really where it 902 00:51:02,560 --> 00:51:08,880 Speaker 1: feels like energy infrastructure investment is different to traditional infrastructure investments. 903 00:51:08,880 --> 00:51:11,840 Speaker 1: So you know, if someone proposes, oh, this bridge is 904 00:51:11,880 --> 00:51:15,239 Speaker 1: really old and we need to redo it that, you know, 905 00:51:16,520 --> 00:51:20,200 Speaker 1: sure it might be complicated in certain ways, but you're 906 00:51:20,200 --> 00:51:23,400 Speaker 1: basically building another bridge. Whereas if someone says, oh, we 907 00:51:23,440 --> 00:51:25,719 Speaker 1: need to talk about hydrogen power, we need to talk 908 00:51:25,719 --> 00:51:28,400 Speaker 1: about how we're storing electricity, we need to think of 909 00:51:28,480 --> 00:51:32,040 Speaker 1: new ways to capture waste products from the energy that 910 00:51:32,080 --> 00:51:34,840 Speaker 1: we are producing, it just feels like you're almost building 911 00:51:35,360 --> 00:51:38,240 Speaker 1: a new system every time, or at least it's hard 912 00:51:38,280 --> 00:51:41,759 Speaker 1: to sort of bolt those onto the existing system. You know. 913 00:51:41,800 --> 00:51:45,880 Speaker 1: It's also interesting, you know you asked that question at 914 00:51:45,880 --> 00:51:48,480 Speaker 1: the end. It's like, well, what what what's most interesting 915 00:51:48,600 --> 00:51:50,520 Speaker 1: to him? And it is sort of one of the 916 00:51:50,680 --> 00:51:53,399 Speaker 1: striking things that I sort of got throughout the whole 917 00:51:53,400 --> 00:51:57,360 Speaker 1: conversation is sort of with different solutions to different problems, 918 00:51:57,400 --> 00:52:01,280 Speaker 1: Like some places, maybe it's pumped hydros some places, maybe 919 00:52:01,360 --> 00:52:05,000 Speaker 1: it's hydrogen some places, maybe it literally is putting more 920 00:52:05,080 --> 00:52:08,840 Speaker 1: lithium ion batteries directly plugged into the grid. But I 921 00:52:08,840 --> 00:52:10,880 Speaker 1: guess it's sort of like this all of the above 922 00:52:11,400 --> 00:52:15,040 Speaker 1: way of thinking because the electricity system is obviously, or 923 00:52:15,080 --> 00:52:19,520 Speaker 1: the energy system overall is obviously like extraordinarily complex. And 924 00:52:19,640 --> 00:52:21,080 Speaker 1: so the idea that there's just going to be sort 925 00:52:21,120 --> 00:52:23,839 Speaker 1: of one fuel that solves it or one new thing, 926 00:52:24,320 --> 00:52:26,439 Speaker 1: it really is just like what do we have here, 927 00:52:26,480 --> 00:52:30,120 Speaker 1: what infrastructure is here? Oh there's a salt cavern here 928 00:52:30,160 --> 00:52:31,880 Speaker 1: or something like that, Like how do we get it 929 00:52:31,960 --> 00:52:34,360 Speaker 1: so that what we have in place or what what 930 00:52:34,560 --> 00:52:38,319 Speaker 1: exists locally can be used in in the best way. Yeah, 931 00:52:38,320 --> 00:52:41,600 Speaker 1: which again comes back to that scale problem. Um and 932 00:52:41,680 --> 00:52:44,360 Speaker 1: almost the beginning of the conversation where Jigger was talking 933 00:52:44,400 --> 00:52:48,879 Speaker 1: about Sun Edison and creating basically micro solutions that are 934 00:52:48,920 --> 00:52:54,160 Speaker 1: extraordinarily efficient for one particular house or building or one 935 00:52:54,200 --> 00:52:57,400 Speaker 1: particular area, but they become hard to do at scale. 936 00:52:57,440 --> 00:53:00,759 Speaker 1: And almost everything in this world, certainly in finance, is 937 00:53:00,760 --> 00:53:03,440 Speaker 1: a scale business. It's a volume business, right, and so 938 00:53:03,560 --> 00:53:06,520 Speaker 1: it becomes very hard to get people, I think, excited 939 00:53:06,640 --> 00:53:10,560 Speaker 1: about these individual solutions. I think we should start a 940 00:53:10,640 --> 00:53:15,160 Speaker 1: salt cavern read by day that would buy buy up 941 00:53:15,239 --> 00:53:18,000 Speaker 1: all the salt caverns that we can and then uh 942 00:53:18,440 --> 00:53:20,719 Speaker 1: floated on the market. I think that could be a 943 00:53:20,760 --> 00:53:24,320 Speaker 1: good business. So I was googling a little bit during that. 944 00:53:24,480 --> 00:53:27,239 Speaker 1: And first of all, salt caverns are beautiful, um. And 945 00:53:27,320 --> 00:53:29,200 Speaker 1: second of all, yeah, it looks like a lot of 946 00:53:29,200 --> 00:53:32,440 Speaker 1: big energy companies UM have been snapping them up. I 947 00:53:32,440 --> 00:53:36,480 Speaker 1: saw Traffic Bureau was buying some of them. I mean, yeah, 948 00:53:36,600 --> 00:53:40,480 Speaker 1: let's do the salt cavern reat first person episode. It 949 00:53:40,480 --> 00:53:42,399 Speaker 1: looks like there might be a read already that has 950 00:53:42,400 --> 00:53:46,960 Speaker 1: salt caverns. Anyway, play that that on ironically, like ten 951 00:53:47,000 --> 00:53:50,040 Speaker 1: episodes out of that one, right, yeah, I think so? 952 00:53:50,200 --> 00:53:54,680 Speaker 1: Wait there is a salt cavern reat. Oh my gosh. Okay, 953 00:53:54,680 --> 00:53:56,840 Speaker 1: well yeah, okay, now we have to do an episode 954 00:53:56,840 --> 00:53:59,719 Speaker 1: on salt caverns. Okay, shall we leave it there before? 955 00:53:59,760 --> 00:54:03,640 Speaker 1: We planning like an entire ten part series. Okay, this 956 00:54:03,719 --> 00:54:06,640 Speaker 1: has been. This has been another episode of the All 957 00:54:06,680 --> 00:54:09,520 Speaker 1: Thoughts Podcast. I'm Tracy Alloway. You can follow me on 958 00:54:09,560 --> 00:54:12,319 Speaker 1: Twitter at Tracy Alloway and I'm Joe Why Isn't All? 959 00:54:12,400 --> 00:54:15,680 Speaker 1: You can follow me on Twitter at the Stalwart. Follow 960 00:54:15,719 --> 00:54:18,959 Speaker 1: our guest on Twitter Jigger Shaw. He's at jigger Shaw 961 00:54:19,200 --> 00:54:23,280 Speaker 1: d C. Follow our producer Carmen Rodriguez at Carmen armand 962 00:54:23,520 --> 00:54:26,960 Speaker 1: followed the Bloomberg head of podcast Francesco. Leave at Francesco 963 00:54:27,120 --> 00:54:30,040 Speaker 1: Today and check out all of our podcast at Bloomberg 964 00:54:30,320 --> 00:55:00,360 Speaker 1: unto the handle at podcasts. Thanks for listening one