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Speaker 1: Welcome to zero I am Akshatrati this week. Edison's twenty

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Speaker 1: first century legacy. The General Electric Company was officially founded

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Speaker 1: in eighteen ninety two, but its story starts much earlier

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Speaker 1: with the inventor Thomas Edison. He didn't just invent things

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Speaker 1: and sometimes take credit for others inventions, but he also

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Speaker 1: had a lot of business ideas. He made and sold

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Speaker 1: lamps and light bulbs, and fixtures and sockets and power

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Speaker 1: plants and the grid. The list goes on. He was

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Speaker 1: able to do all of that because he had some

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Speaker 1: hefty backers, including J. P. Morgan and the Vanderbilt family. Eventually,

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Speaker 1: a bundle of his businesses and some others were consolidated

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Speaker 1: into GE, and from there on it was a behemoth.

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Speaker 1: GE was one of the original twelve companies listed on

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Speaker 1: the Dow Jones Industrial Average in eighteen ninety six, and

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Speaker 1: as recently as twenty fifteen, GE was number twenty four

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Speaker 1: on the Fortune five hundred list of global companies. Now

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Speaker 1: that's all changed. A breakup that began last year has

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Speaker 1: concluded with GE splitting off into three separate companies, one

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Speaker 1: focusing on healthcare, another on aerospace, and the third is

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Speaker 1: ge Vernova, which carries Edison's biggest legacy, and my guest

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Speaker 1: today is its CEO, Scott Straisik. G Vernova is the

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Speaker 1: biggest player in making turbines for gas power plants. It

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Speaker 1: also makes plenty of wind turbines. It's got its hands

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Speaker 1: in building nuclear power and carbon capture, and some of

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Speaker 1: its other business lines include solutions for the grid, such

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Speaker 1: as software and batteries. Since its initial list earlier this year,

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Speaker 1: g Ivanova's share price has skyrocketed, but the company faces

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Speaker 1: plenty of challenges, especially in the wind business. I sat

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Speaker 1: down with Scott when he was in London earlier this autumn.

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Speaker 1: We talked about the end of coal, the growth of

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Speaker 1: gas and how far renewables can go. You get to

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Speaker 1: run the most iconic part of g as I would

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Speaker 1: see it. Yes, the electricity business. Do you feel a

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Speaker 1: weight of responsibility, a weight of history. Yes.

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Speaker 2: It's a real privilege to have the opportunity to lead

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Speaker 2: g Ivanova, and part of that privilege is because of

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Speaker 2: the history. At the end of the day, twenty five

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Speaker 2: percent of the world's electricity comes from our equipment and

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Speaker 2: partnership with our customers every day, and there's a lot

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Speaker 2: of pride inside Gevanova for what that means, especially as

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Speaker 2: we go into this cycle today with real load growth

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Speaker 2: at a time that we need to transform the electric

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Speaker 2: power system and we need to simultaneously decarbonize it. So

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Speaker 2: that's really at the heart of even our name Vernova

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Speaker 2: Verde Green Nova New New Grain Innovation. We didn't when

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Speaker 2: we decided to call this company ge Vernova, want to

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Speaker 2: run away from ge which represented the electrification of the

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Speaker 2: world the last one hundred years. But we also know

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Speaker 2: the world is changing and with that we need to

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Speaker 2: change and that's where ge Vernova really comes from from

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Speaker 2: a branding perspective to decarbonize the electric power system.

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Speaker 1: And we've seen a rapid increase in the stock price

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Speaker 1: of gie Vnova since it became a company of its own,

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Speaker 1: and that's been the case also for some of your

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Speaker 1: peers in the electricity infrastructure business, Seemen's Energy Mitsubushi heavy industries.

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Speaker 1: Some of the boosts can be tied to the federes

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Speaker 1: of cutting interest rates, which would make it cheaper to

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Speaker 1: borrow money for infrastructure, but the trend started earlier in

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Speaker 1: the year. Why are investors so optimistic about your growth?

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Speaker 2: We talk a lot about the fact that we're in

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Speaker 2: the early innings of an investment supercycle here, and when

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Speaker 2: you really think about previous investment supercycles in the world,

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Speaker 2: at least during my lifetime, you think about globalization in

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Speaker 2: the eighties and nineties and the impact that had on economies.

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Speaker 2: You think about the Internet and software in the twenty

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Speaker 2: and twenty tens, and we look at where we are

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Speaker 2: with Gevanova and our position in the electric power system,

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Speaker 2: and we're in the early stages of that next investment

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Speaker 2: supercycle that's going to transform economies, and through that process,

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Speaker 2: we see incredible opportunities for us to grow and serve

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Speaker 2: those markets while simultaneously having an incredible impact on the world.

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Speaker 2: So it's early for us as a new public company,

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Speaker 2: but one in which both inside the walls of Gevanova

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Speaker 2: and outside there's a lot of optimism and a lot

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Speaker 2: of ambition for what we can become, and we're excited

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Speaker 2: about that.

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Speaker 1: You're visiting here in London where the UK is just

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Speaker 1: shut down its last coal power plant. It's brought to

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Speaker 1: end a technology that ran for one hundred and forty

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Speaker 1: years and that the UK just doesn't find useful anymore,

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Speaker 1: and that's made big headlines around the world. What is

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Speaker 1: less known is that gas generation, which is what was

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Speaker 1: replacing coal alongside renewables, has also been falling in recent

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Speaker 1: years quite dramatically. G has a big gas business. But

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Speaker 1: if you look at the UK as a country that's

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Speaker 1: advanced in the energy transition, and you see that gas

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Speaker 1: generation is starting to fall, why are you so optimistic

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Speaker 1: about the growth of gas in the world.

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Speaker 2: Well, I'd start by saying, we in the company every

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Speaker 2: day talk about prior to Number one is to grow

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Speaker 2: renewables as fast as the world can afford. That's new win,

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Speaker 2: that's new solar and storage. But there can be limiting

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Speaker 2: factors to that, and those limiting factors is really where

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Speaker 2: gas plays a critical role as a force multiplier to

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Speaker 2: enable even more wind and solar to be built. Because

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Speaker 2: the reality is, as that renewables penetration rate gets higher

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Speaker 2: and higher, it needs a complementing source of fuel that

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Speaker 2: you can turn on and often that you can control.

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Speaker 2: So part of that gas growth is simply coming from

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Speaker 2: the fact that it is the enabler to allow the

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Speaker 2: electric power system to continue to add more intermittent zero

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Speaker 2: carbon power sources like wind and solar. That is leading

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Speaker 2: to new capacity getting added to the world for new

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Speaker 2: gas to enable new wind and solar. At the same time,

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Speaker 2: there's a lot of demand cycles right now where baseload

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Speaker 2: power is needed with high levels of reliability. When you

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Speaker 2: think about the hyperscaler demand for new data centers, they

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Speaker 2: need to work twenty four hours a day, seven days

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Speaker 2: a week with baseload power. That is driving new demand

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Speaker 2: cycles for gas. You also have parts of the world

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Speaker 2: that don't have necessarily the same resources that the UK

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Speaker 2: has that need more power dense solutions because they may

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Speaker 2: not have the wind in solar conditions. There's a lot

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Speaker 2: of places in Asia that are analogous to that where

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Speaker 2: new gas build right now is replacing coal, much like

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Speaker 2: we've seen take place in both the UK and the US.

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Speaker 2: That's a catalyst for growth for gas in the near term.

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Speaker 2: So the role of gas will evolve over time, there's

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Speaker 2: no question about that. Nominally, we see gas continuing to

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Speaker 2: grow through the next decade with the amount of electrons

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Speaker 2: it provides the system, but the proportion of gas in

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Speaker 2: that system in totality will come down as these other

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Speaker 2: zero carbon power sources grow at a faster rate. Than

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Speaker 2: gas grows in the world.

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Speaker 1: What about storage eating into the gas business because batteries

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Speaker 1: are getting cheaper and batteries can fill in the gaps

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Speaker 1: when renewable aren't either hitting or when the demand is

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Speaker 1: greater than what even renewables are able to provide. Does

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Speaker 1: that not make you pessimistic about gas given battery prices

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Speaker 1: will continue to fall.

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Speaker 2: Battery prices will Storage is an important part of the system.

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Speaker 2: But storage is an important part of the system for

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Speaker 2: really daily peaking. Storage is a great solution for four

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Speaker 2: hour duration up to maybe eight hour duration where economics

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Speaker 2: can make real sense. A lot of the gas role

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Speaker 2: is not for daily peaking. It's really seasonal. It's where

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Speaker 2: in the summer and parts of the world that high

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Speaker 2: electric demand goes up for air conditioning or in the

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Speaker 2: winter where heating drives real demand. That it's not four

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Speaker 2: hour batteries or eight hour batteries. It's ninety days of

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Speaker 2: much higher load demand which gas serves. And those aren't

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Speaker 2: examples where lithium ion batteries or really any other technology

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Speaker 2: that's on the forefront in the near term for storage

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Speaker 2: is going to displace gas. That seasonal peaking is exactly

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Speaker 2: what Gas is so well equipped to serve, has been

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Speaker 2: serving and will continue to serve for a very long time.

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Speaker 2: In the US. An example is Arizona. I mean, this

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Speaker 2: is a state in the US that does have very

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Speaker 2: good solar and wind conditions. So in a state like

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Speaker 2: Arizona that can count on that fuel, that solar and

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Speaker 2: that wind that has a fairly narrow bridge period that

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Speaker 2: it needs to fulfill, storage is a great solution. They

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Speaker 2: can count on consistent solar and wind for most of

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Speaker 2: their twelve months of the year to a larger extent

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Speaker 2: than many markets can. Places in comparison in the US,

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Speaker 2: like the Northeast for their winter peak or in the

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Speaker 2: Southeast doesn't have the same high quality wind and solar

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Speaker 2: conditions when they really need peak conditions. Those are cases

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Speaker 2: where gas is still going to run and is going

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Speaker 2: to run a lot.

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Speaker 1: Before your current role, you were CEO of ge Power,

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Speaker 1: which consisted of all of g Vernova minus the renewables

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Speaker 1: business and the electricity infrastructure business. You've been running Vernova

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Speaker 1: for three years, even though the company itself was spun

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Speaker 1: off earlier this year. While the infrastructure business is working

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Speaker 1: for you, why is the renewables business such a problem.

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Speaker 2: Well, let's take it into pieces. The reality is we

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Speaker 2: have three businesses now inside Vernova. You make reference to

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Speaker 2: the power business and it really thriving today financially and

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Speaker 2: driving real profitability. What was once renewables has now been

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Speaker 2: broken out into two business segments, our win segment and

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Speaker 2: our electrification segment, when both onshore and offshore electrification, both

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Speaker 2: the physical expansion of the grid and grid software. If

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Speaker 2: we start with that electrification business, that's our fastest growing

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Speaker 2: business today. That's a business that we've said is going

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Speaker 2: to deliver high single digit EBIDAH margins this year with

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Speaker 2: real growth potential and margin accretion potential in the future.

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Speaker 2: So we're really bullish on electrification and that becoming a

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Speaker 2: much larger piece of the g I Vnova portfolio. Wind

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Speaker 2: is a business that will have a better financial year

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Speaker 2: in twenty twenty four than in twenty twenty three, but

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Speaker 2: will not be profitable yet. The wind industry has been

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Speaker 2: a challenging industry, no question about it. We're further along

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Speaker 2: today an onchore wind. Our onshore wind business is set

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Speaker 2: up to deliver high single DIGITI BADAT margins this year,

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Speaker 2: while offshore wind remains a loss making We've been open

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Speaker 2: about the fact that we have an existing tough backlog

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Speaker 2: that we're going to have to fulfill on for the

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Speaker 2: next few years that is going to be in the red.

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Speaker 2: But on the other side of that, we're going to

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Speaker 2: have a thriving on sure wind business and hopefully a

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Speaker 2: very different economic model for offshore wind with future orders

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Speaker 2: that we take materially different economics than the economics that

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Speaker 2: we have on our existing backlog. And we say win

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Speaker 2: playing an important role in both g i Vanova and

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Speaker 2: in the world, So you have to kind of look

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Speaker 2: at the dynamics a little bit differently between the grid

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Speaker 2: and wind and understand both on their.

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Speaker 1: Own US and Europe, for you, are about sixty five

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Speaker 1: percent of the business right now, those businesses have seen

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Speaker 1: flat or very slow increase in electricity demand that's now

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Speaker 1: changing as you talked about with AI data centers, but

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Speaker 1: also general electrification needs, whether that be electric cars or

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Speaker 1: move to heat bumps here in the UK for example.

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Speaker 1: And that's been good for your business, that's what you're

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Speaker 1: hoping will help you decarbonize faster, except it's not been

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Speaker 1: good for offshore wind. You've just got nine hundred jobs

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Speaker 1: when everything is growing, why is the offshore business so hard?

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Speaker 2: Well, I think there's a reset happening right now, and

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Speaker 2: that reset is with the end customer pricing, whether it

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Speaker 2: be with states in the US or federal governments in Europe.

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Speaker 2: And as that reset happens, that gives the industry a

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Speaker 2: new chance to thrive. But offshore wind is also a

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Speaker 2: very long cycle business. It isn't an industry that is

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Speaker 2: orders today that fulfill tomorrow. These are five plus year

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Speaker 2: cycle from order to commissioning of new wind farms out

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Speaker 2: at sea, and this is going to take some time.

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Speaker 2: So we believe offshore wind matters for the world. It's

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Speaker 2: going to play an important role in the energy transition.

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Speaker 2: But we have to get the industry back to health,

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Speaker 2: and that's really what we're focused on right now is

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Speaker 2: executing on our existing backlog, serving our customers and the

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Speaker 2: markets that we're committed to while we get better at

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Speaker 2: offshore win.

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Speaker 1: After the break, I ask Scott how Gevnova is weathering

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Speaker 1: the fallout from turbine accidents. By the way, if you've

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Speaker 1: been enjoying this episode, please take a moment to rate

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Speaker 1: and review the show on Apple Podcasts. On Spotify. It

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Speaker 1: helps other listeners find the show. The other issue you've faced,

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Speaker 1: especially over this summer, has been the news about g

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Speaker 1: Vernova's blades being broken in a few places. So there

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Speaker 1: was a blade that broke in Nantucket and at closed beaches.

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Speaker 1: There was an issue with installing blades here in the UK.

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Speaker 1: The offshore business in general is struggling in the US especially,

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Speaker 1: there's politics that comes into picture with clean energy versus

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Speaker 1: fossil fuels, and that feeds into these headlines. How are

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Speaker 1: you feeling about what just happened over the summer with

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Speaker 1: the blades and whether that will have real negative impacts

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Speaker 1: on the offshore business even more than what the business

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Speaker 1: has done based on economics.

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Speaker 2: We've had a tough summer, without question. The last many

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Speaker 2: months have been difficult for us with offshore, and we've

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Speaker 2: also learned a lot about We've also learned a lot

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Speaker 2: through that process. We've learned a lot on blade manufacturing

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Speaker 2: path forward, We've learned a lot on standard work at

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Speaker 2: executing out at sea, and through this process I have

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Speaker 2: even more conviction that as a business will come out

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Speaker 2: of this as a better win company.

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Speaker 1: On the other side, is the technology in question of

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Speaker 1: manufacturing blades, like what is the problem that led to

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Speaker 1: the blades breaking apart and how does that affect perception

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Speaker 1: of the business.

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Speaker 2: Two distinct dynamics. There's a dynamic where there was a

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Speaker 2: blade deviation from a manufacturing process in one of our facilities.

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Speaker 2: That's real, and that caused our escape in the Atlantic.

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Speaker 2: In the North Sea. The issues do not have to

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Speaker 2: do with manufacturability and are distinctly different related to our

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Speaker 2: execution of putting together the commissioning of the blades out

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Speaker 2: at sea. Both are things we've got to be but

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Speaker 2: I'm highly confident we can do both better and we're

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Speaker 2: taking the learnings from this summer and we're going to

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Speaker 2: make a better business frum.

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Speaker 1: But the technology is not in question.

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Speaker 2: We have a high degree of confidence in our holiad

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Speaker 2: X wind turbine and the technology we're using. We've got

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Speaker 2: opportunities to get better today and that's exactly what we're going.

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Speaker 1: To do now. On this podcast, we talk a lot

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Speaker 1: about what we can do to decarbonize and reduce emissions quickly,

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Speaker 1: but it is a climate podcast and we are living

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Speaker 1: through an era where we are getting more and more

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Speaker 1: extreme weather events. Big storm strikes that take down electricity infrastructure.

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Speaker 1: It happened after Hurricane Helene, it happened after Hurricane Milton.

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Speaker 1: How are you thinking about those challenges for your business?

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Speaker 1: Are there solutions you can come up with that make

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Speaker 1: the grid more resilient or is that actually good for

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Speaker 1: business because you get to sell more of your electricity

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Speaker 1: infrastructure because you know these storms are going to come

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Speaker 1: more and more.

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Speaker 2: No, to be clear at the start, I mean our

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Speaker 2: true north is to both electrify and decarbonize the world.

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Speaker 2: Because as a company, we believe that the climate change

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Speaker 2: challenge that we have is real and it's very well

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Speaker 2: illustrated with the extremes of these storms and the frequency

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Speaker 2: with which they're happening. And our true north is to

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Speaker 2: electrify and decarbonize the world. That can allow us to

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Speaker 2: change the arc of climate change and have an impact

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Speaker 2: on the frequency of these storms taking place. Now while

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Speaker 2: we're in this world today with the extremes of weather,

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Speaker 2: there are things we can do, certainly in our grid business.

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Speaker 2: We can underground a lot of the infrastructure for the

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Speaker 2: grid that today is above ground. As an example, that

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Speaker 2: can make a much sturdier electric power system in the

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Speaker 2: US in storm risky locations or in wildfire risky locations

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Speaker 2: where we underground the entire electric power system. Those are

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Speaker 2: examples of things that are enabling growth in our grid

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Speaker 2: business today that ultimately leads to a sturdier electric power

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Speaker 2: system and one that we're committed to serve in a

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Speaker 2: very real way. But we want to change the arc

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Speaker 2: climate change here with what we're doing, so these storms

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Speaker 2: don't happen with the frequency that we're happening, and we

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Speaker 2: have conviction that inside Gevnova we can do exactly that.

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Speaker 1: Beyond the supply chain issues that have come from either

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Speaker 1: the pandemic or from storms, there have been other issues

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Speaker 1: in the electricity infrastructure business that have more to do

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Speaker 1: with the industry itself. So for the past eighteen to

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Speaker 1: twenty four months, we've seen a shortage of transformers in

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Speaker 1: the US, in Europe, actually globally, but US and Europe

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Speaker 1: particularly have been affected. Ge Bnova makes transformers. Why do

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Speaker 1: you think this shortage existed in the first place, and

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Speaker 1: what are you doing to address it.

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Speaker 2: Like many parts of the electro power system, there hasn't

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Speaker 2: been authentic growth in at least fifteen years. That includes

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Speaker 2: with transformers, the reality is weren't out sing a steep

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Speaker 2: uptick in demand, and with it we're investing. One good

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Speaker 2: example is in the UK. We make heavy duty transformer

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Speaker 2: and valve equipment in the UK and Stafford in the UK,

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Speaker 2: and we're doubling our capacity in these facilities to serve

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Speaker 2: this market. So these aren't historical factories, the most recent

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Speaker 2: paths that have been experiencing real growth. They're going to

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Speaker 2: be incredibly important factories for the world in the years

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Speaker 2: that come, and we're investing substantial capital into them to

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Speaker 2: serve that growing market.

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Speaker 1: Another area that gi Venovo wooks on is corbon capture. Now,

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Speaker 1: carbon capture is a set of technologies that can be

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Speaker 1: applied to many different sources of carbon dioxide. They can

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Speaker 1: come from industry or they can come from on gas facilities.

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Speaker 1: But the one that you are working on is tied

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Speaker 1: to power plants. The only two pop plants in the world,

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Speaker 1: both coal pop plants, that have corbon capture technology attached

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Speaker 1: to them. Working at a scale. But given your focus

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Speaker 1: as gas and the world is building more gas, the

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Speaker 1: technology said that you have to develop and ready is

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Speaker 1: gas cobbon capture. What specifically is needed to get gas

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Speaker 1: poplins to have carbon capture in an economic fashion.

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Speaker 2: We're excited about the potential here, but it's going to

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Speaker 2: take time. At the end of the day, gas does

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Speaker 2: not have a very high carbon concentration out of the

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Speaker 2: flu of carbon to capture, which makes it harder to

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Speaker 2: catch that carbon in an economic way. We're working on

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Speaker 2: technology that first through the exhaust gas recirculation process, condenses

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Speaker 2: the carbon that allows it easier to catch. That's something

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Speaker 2: that we will leverage in BPT side in a project

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Speaker 2: here in the UK that we're getting ready to start

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Speaker 2: to build. Through condensing the carbon through the thermodynamics that

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Speaker 2: make it easier to catch. We're also investing in new

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Speaker 2: carbon capture technology. We believe solid sorbent technology think sponges

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Speaker 2: with chemicals that as air flows through, catches the carbon

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Speaker 2: and puts it into the carbon pipelines is going to

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Speaker 2: be a critical carbon capture technology for the future. And

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Speaker 2: today we have a running direct air capture plant capturing

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Speaker 2: carbon out of the air at a really small carbon

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Speaker 2: concentration level that ultimately we see a pathway to apply

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Speaker 2: to gas plants, but that's going to take time because

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Speaker 2: today we're running a prototype at our research center that

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Speaker 2: we will industrialize over the second half of this decade

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Speaker 2: and really commercialize into the next decade. But we think

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Speaker 2: it's going to be important part of the equation.

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Speaker 1: So when should we expect a gas poplint with a

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Speaker 1: g Vernova carbon capture unit to be.

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Speaker 2: Ready next decade?

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Speaker 1: Nine?

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Speaker 2: Oh, I think it'll be sooner than twenty thirty nine.

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Speaker 2: But we're probably not at a point that we're ready

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Speaker 2: to call a year at this point. But we're working

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Speaker 2: hard to industrialize this decade and it will be commercialized

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Speaker 2: and running next decade. But we've got work to do.

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Speaker 1: Another technology that you're working on that has a more

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Speaker 1: definite date for deployment is small modular nuclear reactors. Now,

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Speaker 1: nuclear as a technology has gone through quite a journey,

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Speaker 1: what an explosive and useful technology. Growth during the seventies

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Speaker 1: after the oil crisis, and then a steady decline in

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Speaker 1: the West in the nineties and the two thousands. But

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Speaker 1: if you look at the growth for nuclear, it's mostly

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Speaker 1: in Asia, it's mostly in China now, and even when

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Speaker 1: it comes to small modular nuclear reactors, which are fraction

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Speaker 1: of the size, so if a large power plant is

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Speaker 1: one Gigaward. Small modular nuclear reactors are to fifty three

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Speaker 1: hundred megawart. The only place there exists one that can

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Speaker 1: be powering the grade is China. So what is Jivan

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Speaker 1: overdoing that will stop the growth of China and yet

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Speaker 1: another decarbonization technology.

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Speaker 2: We're incredibly excited about our small modular reactor. These are

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Speaker 2: three hundred mega op blocks of power that use existing

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Speaker 2: boiling water reactor technology. The combustion chamber is really the

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Speaker 2: exact same technology that's been licensed in the world to

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Speaker 2: use today and is running in the world today, but

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Speaker 2: we've modularized and scaled the balance of plant around that

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Speaker 2: combustion chamber in comparison to the question on carbon capture,

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Speaker 2: where it's a next decade thing. With small modular reactors,

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Speaker 2: the first one will be running in twenty twenty nine

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Speaker 2: in Canada with Ontario Power Generation. We will be in

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Speaker 2: construction on that first three hundred mega op block of

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Speaker 2: power in twenty twenty five and are incredibly excited about

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Speaker 2: the pipeline of activity we have in four provinces in Canada,

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Speaker 2: in the US with Tennessee Valley Authority, progress we're making

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Speaker 2: both in Poland, in the UK with a nuclear dynamic

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Speaker 2: and in Scandinavia in which all of these markets are

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Speaker 2: going to matter for nuclear. Now, this sentiment shift with

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Speaker 2: nuclear in the West is real, you know. You just

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Speaker 2: think about the cop in Dubai and heads a stake.

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Speaker 2: Committing to tripling the nuclear capacity in the world between

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Speaker 2: now and twenty fifty is a step change with what's needed.

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Speaker 2: That's going to include baseload, large gigawat size new nuclear capacity.

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Speaker 2: It's going to include a lot of small modular technology

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Speaker 2: like our three hundred megawap block of power. It's going

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Speaker 2: to play an important role.

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Speaker 1: The world has about two terror awards of gas poplines installed.

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Speaker 1: About half of those are in some form or the

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Speaker 1: other linked to ge Yes. But with ge Vnova, you've

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Speaker 1: also made it very clear that the future of the

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Speaker 1: company is a decarbonized ge Yes. So with a huge

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Speaker 1: gas power business and a growing gas power business, how

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Speaker 1: exactly do you deliver on the decarbonization side, do you

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Speaker 1: have to retire your gas business?

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Speaker 2: Well? No, We say every day that a dollar invested

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Speaker 2: in gas is not a dollar invested in carbon forever,

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Speaker 2: and that's exactly why we had the conversation on carbon

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Speaker 2: capture and why we're investing in carbon capture because we're

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Speaker 2: going to need to decarbonize those gas power plants. It's

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Speaker 2: why we're investing in hydrogen combustion with our gas turbines,

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Speaker 2: and we've made the commitment that one hundred percent of

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Speaker 2: our gas turbine fleet can be hydrogen combustion capable at

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Speaker 2: one hundred percent by the end of this decade by

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Speaker 2: twenty thirty. Now we need the green hydrogen fuel to

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Speaker 2: show up at scale for that to become a reality,

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Speaker 2: but our gas turbines are going to be ready. So

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Speaker 2: we're focused on investing into our gas business for that growth,

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Speaker 2: but that investment includes investing into the decarbonization of gas.

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Speaker 1: The other question that is pertinent in Europe and the

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Speaker 1: US is the use of artificial intelligence and the demand

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Speaker 1: on electricity that is growing as a result. For many

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Speaker 1: in the climate space, that seems like a problem because

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Speaker 1: you're getting demand increase for electricity in applications that don't

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Speaker 1: yet seem to be productive or beneficial to society, and

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Speaker 1: so it's seen as a cost, as a carbon cost

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Speaker 1: that is increasing. But you see it differently. You see

437
00:26:28,400 --> 00:26:32,280
Speaker 1: the demand growth as a good thing for decarbonization.

438
00:26:32,560 --> 00:26:35,159
Speaker 2: How exactly, no question. I mean, it gives me that

439
00:26:35,280 --> 00:26:39,480
Speaker 2: much more optimism that we're going to move decarbonization technologies

440
00:26:39,480 --> 00:26:42,639
Speaker 2: to the left because the reality is these hyper scale

441
00:26:42,640 --> 00:26:46,000
Speaker 2: are customers for us that need more power to grow

442
00:26:46,040 --> 00:26:50,840
Speaker 2: their business, care deeply about their sustainability commitments, and I

443
00:26:50,880 --> 00:26:52,680
Speaker 2: can tell you with the amount of time that I'm

444
00:26:52,680 --> 00:26:55,679
Speaker 2: spending with this customer archetype in the C suite of

445
00:26:55,720 --> 00:27:00,320
Speaker 2: these companies, this is real their commitment to sustainability. I

446
00:27:00,480 --> 00:27:04,920
Speaker 2: leave this last year really in which we've spent substantial

447
00:27:04,960 --> 00:27:08,760
Speaker 2: time with these hyperscalers number one believing the growth is real,

448
00:27:09,400 --> 00:27:13,600
Speaker 2: but number two that over time they will drive the

449
00:27:13,640 --> 00:27:18,800
Speaker 2: carbon intensity of that power powering data centers down, and

450
00:27:18,880 --> 00:27:21,040
Speaker 2: as they do that, the rest of the world will

451
00:27:21,160 --> 00:27:25,320
Speaker 2: draft off of that scaled investment they're making that allows

452
00:27:25,400 --> 00:27:30,160
Speaker 2: us to industrialize decarbonized technologies faster than we would otherwise.

453
00:27:30,560 --> 00:27:33,720
Speaker 2: So I hear the pessimism at times with rooms that

454
00:27:33,760 --> 00:27:36,879
Speaker 2: I walk into that this is a bad thing, that

455
00:27:36,920 --> 00:27:40,760
Speaker 2: we're going into a growth cycle. But I've never seen

456
00:27:40,960 --> 00:27:45,840
Speaker 2: an industry that doesn't thrive advancing technologies at an easier

457
00:27:45,880 --> 00:27:49,479
Speaker 2: pace when there's growth than when it's flat demand and

458
00:27:49,520 --> 00:27:52,000
Speaker 2: we're going into our first growth cycle, and we're going

459
00:27:52,040 --> 00:27:54,520
Speaker 2: to take advantage of it. And part of taking advantage

460
00:27:54,520 --> 00:27:58,320
Speaker 2: of it is industrializing these products at scale faster than

461
00:27:58,320 --> 00:27:59,280
Speaker 2: we would have otherwise.

462
00:28:00,119 --> 00:28:04,000
Speaker 1: As I've obsessed about the story of electricity, which goes

463
00:28:04,160 --> 00:28:07,000
Speaker 1: all the way back to fifteen eighty from the study

464
00:28:07,000 --> 00:28:10,000
Speaker 1: of magnetism done in a scientific way, which of course

465
00:28:10,119 --> 00:28:13,119
Speaker 1: led to being able to create electricity using magnets in

466
00:28:13,160 --> 00:28:16,719
Speaker 1: the first place. One thing that most people realize is

467
00:28:16,760 --> 00:28:21,160
Speaker 1: electricity lost to fossil fuels in the late nineteenth early

468
00:28:21,280 --> 00:28:25,320
Speaker 1: twentieth century because fossil fuels are easier to move their

469
00:28:25,440 --> 00:28:30,639
Speaker 1: dense sources of energy. But one that people missed is

470
00:28:30,680 --> 00:28:35,919
Speaker 1: that electricity itself is a complicated source of energy. To

471
00:28:35,960 --> 00:28:41,120
Speaker 1: be able to produce, move, and consume electricity requires scientific

472
00:28:41,200 --> 00:28:45,040
Speaker 1: understanding and technology development that just wasn't there in the

473
00:28:45,160 --> 00:28:49,480
Speaker 1: late nineteenth and early twentieth century. The story is completely

474
00:28:49,680 --> 00:28:54,000
Speaker 1: different today. It's still not as easy to move as

475
00:28:54,080 --> 00:28:58,200
Speaker 1: fossil fuels are, and yet technology developments have made it

476
00:28:58,480 --> 00:29:02,800
Speaker 1: so much easier to manage electricity. What do you see

477
00:29:03,520 --> 00:29:07,320
Speaker 1: happens over the next century, regardless of climate, regardless of

478
00:29:07,520 --> 00:29:11,600
Speaker 1: carbon to the story of electricity, Well.

479
00:29:11,400 --> 00:29:15,000
Speaker 2: I think the appreciation for one of the most complex

480
00:29:15,120 --> 00:29:18,400
Speaker 2: machines the world has today that we don't talk about,

481
00:29:18,440 --> 00:29:21,080
Speaker 2: which is the grid itself, is going to get much

482
00:29:21,120 --> 00:29:25,600
Speaker 2: better understood and invested into, not just to simply expand it,

483
00:29:25,640 --> 00:29:28,600
Speaker 2: but lead to a whole other level of sophistication on

484
00:29:28,720 --> 00:29:32,440
Speaker 2: how we manage the electrons flow. To your point, that

485
00:29:32,640 --> 00:29:37,000
Speaker 2: system has massive opportunity today, and admittedly is built today

486
00:29:37,640 --> 00:29:43,160
Speaker 2: in an underwriting case with coal one directional electrons going

487
00:29:43,200 --> 00:29:47,000
Speaker 2: from a base load power plant to the home. We

488
00:29:47,040 --> 00:29:50,760
Speaker 2: now live in a world where, admittedly the electricity is

489
00:29:50,800 --> 00:29:55,080
Speaker 2: coming from more varied sources, the fuel isn't always dependable

490
00:29:55,200 --> 00:29:58,480
Speaker 2: depending on the wind in the solar the electrons aren't

491
00:29:58,520 --> 00:30:00,400
Speaker 2: just going to the home, but are come out of

492
00:30:00,400 --> 00:30:05,000
Speaker 2: the home from solar panels and EV trucks, and that

493
00:30:05,280 --> 00:30:09,160
Speaker 2: brains of the grid needs to uptick itself to best

494
00:30:09,400 --> 00:30:13,400
Speaker 2: leverage an incredible machine that's under our feet every day.

495
00:30:14,040 --> 00:30:17,200
Speaker 2: Those investments are going to transform the electric power system.

496
00:30:17,880 --> 00:30:20,320
Speaker 2: So we tend to spend a lot of time talking

497
00:30:20,320 --> 00:30:25,760
Speaker 2: about the power generation sources and that's real, wind, gas, nuclear,

498
00:30:26,400 --> 00:30:30,080
Speaker 2: but there will probably be three times more investment in

499
00:30:30,200 --> 00:30:33,760
Speaker 2: making this incredible grid and machine work in a more

500
00:30:33,800 --> 00:30:37,760
Speaker 2: optimal way that's going to allow the electric power system

501
00:30:37,800 --> 00:30:41,240
Speaker 2: to further displace fossil fuels. That is going to happen,

502
00:30:41,480 --> 00:30:44,320
Speaker 2: that is going to be appreciated. The amount of capital,

503
00:30:44,760 --> 00:30:47,280
Speaker 2: the amount of human talent that's going to go into

504
00:30:47,320 --> 00:30:51,400
Speaker 2: that is incredibly exciting and for us, as an example,

505
00:30:52,120 --> 00:30:56,440
Speaker 2: when I was evaluating where we wanted to base gi Vanova, candidly,

506
00:30:56,440 --> 00:30:59,080
Speaker 2: it's a big reason why we chose Cambridge, mass as

507
00:30:59,120 --> 00:31:02,640
Speaker 2: our corporate headquarter because the reality is there's a huge

508
00:31:02,720 --> 00:31:07,560
Speaker 2: software intellect in Cambridge, with the schools. There's a system

509
00:31:07,680 --> 00:31:12,040
Speaker 2: thinking at places like MIT that are critical for us

510
00:31:12,040 --> 00:31:15,560
Speaker 2: to bring together to optimize this incredible resource we have

511
00:31:16,120 --> 00:31:19,200
Speaker 2: in a way that the electric power system can continue

512
00:31:19,280 --> 00:31:23,280
Speaker 2: to take over that role from fossil fuel. And we're

513
00:31:23,280 --> 00:31:28,080
Speaker 2: going to see incredible invention in this regard that's incredibly exciting.

514
00:31:28,240 --> 00:31:31,040
Speaker 1: The story of electricity is exciting because it's going to grow.

515
00:31:31,920 --> 00:31:36,040
Speaker 1: But the things that make people go cool are electric cars,

516
00:31:36,040 --> 00:31:39,040
Speaker 1: are heat pumps. It's not really the grid. The grid

517
00:31:39,080 --> 00:31:43,360
Speaker 1: is seen as this complex, big, boring machine that kind

518
00:31:43,360 --> 00:31:46,000
Speaker 1: of sits in the background. People walk past transformers, never

519
00:31:46,080 --> 00:31:49,240
Speaker 1: knowing there's a transformer. People look at pylons going, oh,

520
00:31:49,360 --> 00:31:52,400
Speaker 1: we have to see those cables again. What do you

521
00:31:52,520 --> 00:31:56,959
Speaker 1: do to make the story of the grid cool that

522
00:31:57,000 --> 00:31:59,960
Speaker 1: people want to actually work on the grid challenge?

523
00:32:00,480 --> 00:32:02,760
Speaker 2: No question, it's an important one because we have a

524
00:32:02,760 --> 00:32:05,640
Speaker 2: lot of innovation ahead of us in the electric power system.

525
00:32:05,720 --> 00:32:07,440
Speaker 2: I mean, for me, I kind of start at home.

526
00:32:07,480 --> 00:32:09,800
Speaker 2: I have a twelve year old son. My twelve year

527
00:32:09,800 --> 00:32:13,640
Speaker 2: old son loves electric vehicles. My twelve year old son,

528
00:32:13,680 --> 00:32:15,560
Speaker 2: here's me spend a lot of time talking about the

529
00:32:15,560 --> 00:32:18,560
Speaker 2: fact that that just transfers the problem or the opportunity

530
00:32:18,640 --> 00:32:21,560
Speaker 2: the electric power system that needs to decarbonize for there

531
00:32:21,600 --> 00:32:25,280
Speaker 2: to be any net benefit. But it isn't just about

532
00:32:25,280 --> 00:32:28,120
Speaker 2: the twelve year olds like my son. It comes back

533
00:32:28,160 --> 00:32:31,520
Speaker 2: to really getting kids coming out of college today and

534
00:32:31,640 --> 00:32:35,000
Speaker 2: coming into our industry because in so many cases I

535
00:32:35,080 --> 00:32:37,560
Speaker 2: talk with young people that say this is their generation's

536
00:32:37,560 --> 00:32:41,080
Speaker 2: biggest challenge. Yet a few minutes into the conversation, where

537
00:32:41,080 --> 00:32:43,800
Speaker 2: then ask them where they're going with their careers, it

538
00:32:43,800 --> 00:32:46,760
Speaker 2: has nothing to do with this. And that's really why

539
00:32:46,760 --> 00:32:50,160
Speaker 2: we chose Cambridge as our corporate headquarters because Boston is

540
00:32:50,200 --> 00:32:52,760
Speaker 2: a city that has more college students than almost any

541
00:32:52,760 --> 00:32:54,960
Speaker 2: other and I was either going to cry in my

542
00:32:55,040 --> 00:32:57,240
Speaker 2: beer over that or we were going to go to

543
00:32:57,240 --> 00:33:00,440
Speaker 2: where the students were. Because this industry is going to

544
00:33:00,440 --> 00:33:04,120
Speaker 2: transform economies, it's going to transform the world. But we

545
00:33:04,160 --> 00:33:08,000
Speaker 2: need kids having that view that by adding to the

546
00:33:08,040 --> 00:33:11,720
Speaker 2: electric power system, electrifying the world and doing it in

547
00:33:11,800 --> 00:33:17,560
Speaker 2: a decarbonized way, this is their generation's biggest opportunity. And

548
00:33:17,600 --> 00:33:19,800
Speaker 2: that's why we're in Cambridge, It's why we're right in

549
00:33:19,840 --> 00:33:23,960
Speaker 2: the middle of the college campuses, because we need this

550
00:33:24,040 --> 00:33:27,800
Speaker 2: next generation to understand this investment supercycle that we're going

551
00:33:27,840 --> 00:33:30,600
Speaker 2: into in their role they can play. I think it's

552
00:33:30,600 --> 00:33:34,200
Speaker 2: incredibly exciting. We're seeing real momentum there and we need

553
00:33:34,200 --> 00:33:36,320
Speaker 2: to make it real for them, for opportunities for them

554
00:33:36,320 --> 00:33:39,240
Speaker 2: to play a leadership role with us transforming the world

555
00:33:39,280 --> 00:33:40,560
Speaker 2: and transforming this industry.

556
00:33:41,600 --> 00:33:52,640
Speaker 1: Thank you, Scott, thank you, thank you for listening to zero.

557
00:33:53,040 --> 00:33:54,560
Speaker 1: And now for the sound of the week.

558
00:33:55,320 --> 00:33:59,880
Speaker 2: Mary had a little damage and everywhere that's very wet.

559
00:34:01,800 --> 00:34:04,360
Speaker 1: That's the sound of one of the earliest audio recordings

560
00:34:04,680 --> 00:34:08,320
Speaker 1: made by Thomas Edison on a phonograph. If you like

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00:34:08,400 --> 00:34:10,760
Speaker 1: this episode, please take a moment to rate or review

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Speaker 1: the show on Apple Podcasts and Spotify. Share this episode

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Speaker 1: light bulb all by themselves. You can get in touch

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Speaker 1: at zero pord at Bloomberg dot Net. Zero's producer is

566
00:34:22,440 --> 00:34:25,640
Speaker 1: Mighty Lee Rau. Bloomberg's head of podcast is Sage Bauman

567
00:34:26,080 --> 00:34:29,120
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568
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569
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