Speaker 1: Welcome to zero I am Akshatrati this week. Edison's twenty
Speaker 1: first century legacy. The General Electric Company was officially founded
Speaker 1: in eighteen ninety two, but its story starts much earlier
Speaker 1: with the inventor Thomas Edison. He didn't just invent things
Speaker 1: and sometimes take credit for others inventions, but he also
Speaker 1: had a lot of business ideas. He made and sold
Speaker 1: lamps and light bulbs, and fixtures and sockets and power
Speaker 1: plants and the grid. The list goes on. He was
Speaker 1: able to do all of that because he had some
Speaker 1: hefty backers, including J. P. Morgan and the Vanderbilt family. Eventually,
Speaker 1: a bundle of his businesses and some others were consolidated
Speaker 1: into GE, and from there on it was a behemoth.
Speaker 1: GE was one of the original twelve companies listed on
Speaker 1: the Dow Jones Industrial Average in eighteen ninety six, and
Speaker 1: as recently as twenty fifteen, GE was number twenty four
Speaker 1: on the Fortune five hundred list of global companies. Now
Speaker 1: that's all changed. A breakup that began last year has
Speaker 1: concluded with GE splitting off into three separate companies, one
Speaker 1: focusing on healthcare, another on aerospace, and the third is
Speaker 1: ge Vernova, which carries Edison's biggest legacy, and my guest
Speaker 1: today is its CEO, Scott Straisik. G Vernova is the
Speaker 1: biggest player in making turbines for gas power plants. It
Speaker 1: also makes plenty of wind turbines. It's got its hands
Speaker 1: in building nuclear power and carbon capture, and some of
Speaker 1: its other business lines include solutions for the grid, such
Speaker 1: as software and batteries. Since its initial list earlier this year,
Speaker 1: g Ivanova's share price has skyrocketed, but the company faces
Speaker 1: plenty of challenges, especially in the wind business. I sat
Speaker 1: down with Scott when he was in London earlier this autumn.
Speaker 1: We talked about the end of coal, the growth of
Speaker 1: gas and how far renewables can go. You get to
Speaker 1: run the most iconic part of g as I would
Speaker 1: see it. Yes, the electricity business. Do you feel a
Speaker 1: weight of responsibility, a weight of history. Yes.
Speaker 2: It's a real privilege to have the opportunity to lead
Speaker 2: g Ivanova, and part of that privilege is because of
Speaker 2: the history. At the end of the day, twenty five
Speaker 2: percent of the world's electricity comes from our equipment and
Speaker 2: partnership with our customers every day, and there's a lot
Speaker 2: of pride inside Gevanova for what that means, especially as
Speaker 2: we go into this cycle today with real load growth
Speaker 2: at a time that we need to transform the electric
Speaker 2: power system and we need to simultaneously decarbonize it. So
Speaker 2: that's really at the heart of even our name Vernova
Speaker 2: Verde Green Nova New New Grain Innovation. We didn't when
Speaker 2: we decided to call this company ge Vernova, want to
Speaker 2: run away from ge which represented the electrification of the
Speaker 2: world the last one hundred years. But we also know
Speaker 2: the world is changing and with that we need to
Speaker 2: change and that's where ge Vernova really comes from from
Speaker 2: a branding perspective to decarbonize the electric power system.
Speaker 1: And we've seen a rapid increase in the stock price
Speaker 1: of gie Vnova since it became a company of its own,
Speaker 1: and that's been the case also for some of your
Speaker 1: peers in the electricity infrastructure business, Seemen's Energy Mitsubushi heavy industries.
Speaker 1: Some of the boosts can be tied to the federes
Speaker 1: of cutting interest rates, which would make it cheaper to
Speaker 1: borrow money for infrastructure, but the trend started earlier in
Speaker 1: the year. Why are investors so optimistic about your growth?
Speaker 2: We talk a lot about the fact that we're in
Speaker 2: the early innings of an investment supercycle here, and when
Speaker 2: you really think about previous investment supercycles in the world,
Speaker 2: at least during my lifetime, you think about globalization in
Speaker 2: the eighties and nineties and the impact that had on economies.
Speaker 2: You think about the Internet and software in the twenty
Speaker 2: and twenty tens, and we look at where we are
Speaker 2: with Gevanova and our position in the electric power system,
Speaker 2: and we're in the early stages of that next investment
Speaker 2: supercycle that's going to transform economies, and through that process,
Speaker 2: we see incredible opportunities for us to grow and serve
Speaker 2: those markets while simultaneously having an incredible impact on the world.
Speaker 2: So it's early for us as a new public company,
Speaker 2: but one in which both inside the walls of Gevanova
Speaker 2: and outside there's a lot of optimism and a lot
Speaker 2: of ambition for what we can become, and we're excited
Speaker 2: about that.
Speaker 1: You're visiting here in London where the UK is just
Speaker 1: shut down its last coal power plant. It's brought to
Speaker 1: end a technology that ran for one hundred and forty
Speaker 1: years and that the UK just doesn't find useful anymore,
Speaker 1: and that's made big headlines around the world. What is
Speaker 1: less known is that gas generation, which is what was
Speaker 1: replacing coal alongside renewables, has also been falling in recent
Speaker 1: years quite dramatically. G has a big gas business. But
Speaker 1: if you look at the UK as a country that's
Speaker 1: advanced in the energy transition, and you see that gas
Speaker 1: generation is starting to fall, why are you so optimistic
Speaker 1: about the growth of gas in the world.
Speaker 2: Well, I'd start by saying, we in the company every
Speaker 2: day talk about prior to Number one is to grow
Speaker 2: renewables as fast as the world can afford. That's new win,
Speaker 2: that's new solar and storage. But there can be limiting
Speaker 2: factors to that, and those limiting factors is really where
Speaker 2: gas plays a critical role as a force multiplier to
Speaker 2: enable even more wind and solar to be built. Because
Speaker 2: the reality is, as that renewables penetration rate gets higher
Speaker 2: and higher, it needs a complementing source of fuel that
Speaker 2: you can turn on and often that you can control.
Speaker 2: So part of that gas growth is simply coming from
Speaker 2: the fact that it is the enabler to allow the
Speaker 2: electric power system to continue to add more intermittent zero
Speaker 2: carbon power sources like wind and solar. That is leading
Speaker 2: to new capacity getting added to the world for new
Speaker 2: gas to enable new wind and solar. At the same time,
Speaker 2: there's a lot of demand cycles right now where baseload
Speaker 2: power is needed with high levels of reliability. When you
Speaker 2: think about the hyperscaler demand for new data centers, they
Speaker 2: need to work twenty four hours a day, seven days
Speaker 2: a week with baseload power. That is driving new demand
Speaker 2: cycles for gas. You also have parts of the world
Speaker 2: that don't have necessarily the same resources that the UK
Speaker 2: has that need more power dense solutions because they may
Speaker 2: not have the wind in solar conditions. There's a lot
Speaker 2: of places in Asia that are analogous to that where
Speaker 2: new gas build right now is replacing coal, much like
Speaker 2: we've seen take place in both the UK and the US.
Speaker 2: That's a catalyst for growth for gas in the near term.
Speaker 2: So the role of gas will evolve over time, there's
Speaker 2: no question about that. Nominally, we see gas continuing to
Speaker 2: grow through the next decade with the amount of electrons
Speaker 2: it provides the system, but the proportion of gas in
Speaker 2: that system in totality will come down as these other
Speaker 2: zero carbon power sources grow at a faster rate. Than
Speaker 2: gas grows in the world.
Speaker 1: What about storage eating into the gas business because batteries
Speaker 1: are getting cheaper and batteries can fill in the gaps
Speaker 1: when renewable aren't either hitting or when the demand is
Speaker 1: greater than what even renewables are able to provide. Does
Speaker 1: that not make you pessimistic about gas given battery prices
Speaker 1: will continue to fall.
Speaker 2: Battery prices will Storage is an important part of the system.
Speaker 2: But storage is an important part of the system for
Speaker 2: really daily peaking. Storage is a great solution for four
Speaker 2: hour duration up to maybe eight hour duration where economics
Speaker 2: can make real sense. A lot of the gas role
Speaker 2: is not for daily peaking. It's really seasonal. It's where
Speaker 2: in the summer and parts of the world that high
Speaker 2: electric demand goes up for air conditioning or in the
Speaker 2: winter where heating drives real demand. That it's not four
Speaker 2: hour batteries or eight hour batteries. It's ninety days of
Speaker 2: much higher load demand which gas serves. And those aren't
Speaker 2: examples where lithium ion batteries or really any other technology
Speaker 2: that's on the forefront in the near term for storage
Speaker 2: is going to displace gas. That seasonal peaking is exactly
Speaker 2: what Gas is so well equipped to serve, has been
Speaker 2: serving and will continue to serve for a very long time.
Speaker 2: In the US. An example is Arizona. I mean, this
Speaker 2: is a state in the US that does have very
Speaker 2: good solar and wind conditions. So in a state like
Speaker 2: Arizona that can count on that fuel, that solar and
Speaker 2: that wind that has a fairly narrow bridge period that
Speaker 2: it needs to fulfill, storage is a great solution. They
Speaker 2: can count on consistent solar and wind for most of
Speaker 2: their twelve months of the year to a larger extent
Speaker 2: than many markets can. Places in comparison in the US,
Speaker 2: like the Northeast for their winter peak or in the
Speaker 2: Southeast doesn't have the same high quality wind and solar
Speaker 2: conditions when they really need peak conditions. Those are cases
Speaker 2: where gas is still going to run and is going
Speaker 2: to run a lot.
Speaker 1: Before your current role, you were CEO of ge Power,
Speaker 1: which consisted of all of g Vernova minus the renewables
Speaker 1: business and the electricity infrastructure business. You've been running Vernova
Speaker 1: for three years, even though the company itself was spun
Speaker 1: off earlier this year. While the infrastructure business is working
Speaker 1: for you, why is the renewables business such a problem.
Speaker 2: Well, let's take it into pieces. The reality is we
Speaker 2: have three businesses now inside Vernova. You make reference to
Speaker 2: the power business and it really thriving today financially and
Speaker 2: driving real profitability. What was once renewables has now been
Speaker 2: broken out into two business segments, our win segment and
Speaker 2: our electrification segment, when both onshore and offshore electrification, both
Speaker 2: the physical expansion of the grid and grid software. If
Speaker 2: we start with that electrification business, that's our fastest growing
Speaker 2: business today. That's a business that we've said is going
Speaker 2: to deliver high single digit EBIDAH margins this year with
Speaker 2: real growth potential and margin accretion potential in the future.
Speaker 2: So we're really bullish on electrification and that becoming a
Speaker 2: much larger piece of the g I Vnova portfolio. Wind
Speaker 2: is a business that will have a better financial year
Speaker 2: in twenty twenty four than in twenty twenty three, but
Speaker 2: will not be profitable yet. The wind industry has been
Speaker 2: a challenging industry, no question about it. We're further along
Speaker 2: today an onchore wind. Our onshore wind business is set
Speaker 2: up to deliver high single DIGITI BADAT margins this year,
Speaker 2: while offshore wind remains a loss making We've been open
Speaker 2: about the fact that we have an existing tough backlog
Speaker 2: that we're going to have to fulfill on for the
Speaker 2: next few years that is going to be in the red.
Speaker 2: But on the other side of that, we're going to
Speaker 2: have a thriving on sure wind business and hopefully a
Speaker 2: very different economic model for offshore wind with future orders
Speaker 2: that we take materially different economics than the economics that
Speaker 2: we have on our existing backlog. And we say win
Speaker 2: playing an important role in both g i Vanova and
Speaker 2: in the world, So you have to kind of look
Speaker 2: at the dynamics a little bit differently between the grid
Speaker 2: and wind and understand both on their.
Speaker 1: Own US and Europe, for you, are about sixty five
Speaker 1: percent of the business right now, those businesses have seen
Speaker 1: flat or very slow increase in electricity demand that's now
Speaker 1: changing as you talked about with AI data centers, but
Speaker 1: also general electrification needs, whether that be electric cars or
Speaker 1: move to heat bumps here in the UK for example.
Speaker 1: And that's been good for your business, that's what you're
Speaker 1: hoping will help you decarbonize faster, except it's not been
Speaker 1: good for offshore wind. You've just got nine hundred jobs
Speaker 1: when everything is growing, why is the offshore business so hard?
Speaker 2: Well, I think there's a reset happening right now, and
Speaker 2: that reset is with the end customer pricing, whether it
Speaker 2: be with states in the US or federal governments in Europe.
Speaker 2: And as that reset happens, that gives the industry a
Speaker 2: new chance to thrive. But offshore wind is also a
Speaker 2: very long cycle business. It isn't an industry that is
Speaker 2: orders today that fulfill tomorrow. These are five plus year
Speaker 2: cycle from order to commissioning of new wind farms out
Speaker 2: at sea, and this is going to take some time.
Speaker 2: So we believe offshore wind matters for the world. It's
Speaker 2: going to play an important role in the energy transition.
Speaker 2: But we have to get the industry back to health,
Speaker 2: and that's really what we're focused on right now is
Speaker 2: executing on our existing backlog, serving our customers and the
Speaker 2: markets that we're committed to while we get better at
Speaker 2: offshore win.
Speaker 1: After the break, I ask Scott how Gevnova is weathering
Speaker 1: the fallout from turbine accidents. By the way, if you've
Speaker 1: been enjoying this episode, please take a moment to rate
Speaker 1: and review the show on Apple Podcasts. On Spotify. It
Speaker 1: helps other listeners find the show. The other issue you've faced,
Speaker 1: especially over this summer, has been the news about g
Speaker 1: Vernova's blades being broken in a few places. So there
Speaker 1: was a blade that broke in Nantucket and at closed beaches.
Speaker 1: There was an issue with installing blades here in the UK.
Speaker 1: The offshore business in general is struggling in the US especially,
Speaker 1: there's politics that comes into picture with clean energy versus
Speaker 1: fossil fuels, and that feeds into these headlines. How are
Speaker 1: you feeling about what just happened over the summer with
Speaker 1: the blades and whether that will have real negative impacts
Speaker 1: on the offshore business even more than what the business
Speaker 1: has done based on economics.
Speaker 2: We've had a tough summer, without question. The last many
Speaker 2: months have been difficult for us with offshore, and we've
Speaker 2: also learned a lot about We've also learned a lot
Speaker 2: through that process. We've learned a lot on blade manufacturing
Speaker 2: path forward, We've learned a lot on standard work at
Speaker 2: executing out at sea, and through this process I have
Speaker 2: even more conviction that as a business will come out
Speaker 2: of this as a better win company.
Speaker 1: On the other side, is the technology in question of
Speaker 1: manufacturing blades, like what is the problem that led to
Speaker 1: the blades breaking apart and how does that affect perception
Speaker 1: of the business.
Speaker 2: Two distinct dynamics. There's a dynamic where there was a
Speaker 2: blade deviation from a manufacturing process in one of our facilities.
Speaker 2: That's real, and that caused our escape in the Atlantic.
Speaker 2: In the North Sea. The issues do not have to
Speaker 2: do with manufacturability and are distinctly different related to our
Speaker 2: execution of putting together the commissioning of the blades out
Speaker 2: at sea. Both are things we've got to be but
Speaker 2: I'm highly confident we can do both better and we're
Speaker 2: taking the learnings from this summer and we're going to
Speaker 2: make a better business frum.
Speaker 1: But the technology is not in question.
Speaker 2: We have a high degree of confidence in our holiad
Speaker 2: X wind turbine and the technology we're using. We've got
Speaker 2: opportunities to get better today and that's exactly what we're going.
Speaker 1: To do now. On this podcast, we talk a lot
Speaker 1: about what we can do to decarbonize and reduce emissions quickly,
Speaker 1: but it is a climate podcast and we are living
Speaker 1: through an era where we are getting more and more
Speaker 1: extreme weather events. Big storm strikes that take down electricity infrastructure.
Speaker 1: It happened after Hurricane Helene, it happened after Hurricane Milton.
Speaker 1: How are you thinking about those challenges for your business?
Speaker 1: Are there solutions you can come up with that make
Speaker 1: the grid more resilient or is that actually good for
Speaker 1: business because you get to sell more of your electricity
Speaker 1: infrastructure because you know these storms are going to come
Speaker 1: more and more.
Speaker 2: No, to be clear at the start, I mean our
Speaker 2: true north is to both electrify and decarbonize the world.
Speaker 2: Because as a company, we believe that the climate change
Speaker 2: challenge that we have is real and it's very well
Speaker 2: illustrated with the extremes of these storms and the frequency
Speaker 2: with which they're happening. And our true north is to
Speaker 2: electrify and decarbonize the world. That can allow us to
Speaker 2: change the arc of climate change and have an impact
Speaker 2: on the frequency of these storms taking place. Now while
Speaker 2: we're in this world today with the extremes of weather,
Speaker 2: there are things we can do, certainly in our grid business.
Speaker 2: We can underground a lot of the infrastructure for the
Speaker 2: grid that today is above ground. As an example, that
Speaker 2: can make a much sturdier electric power system in the
Speaker 2: US in storm risky locations or in wildfire risky locations
Speaker 2: where we underground the entire electric power system. Those are
Speaker 2: examples of things that are enabling growth in our grid
Speaker 2: business today that ultimately leads to a sturdier electric power
Speaker 2: system and one that we're committed to serve in a
Speaker 2: very real way. But we want to change the arc
Speaker 2: climate change here with what we're doing, so these storms
Speaker 2: don't happen with the frequency that we're happening, and we
Speaker 2: have conviction that inside Gevnova we can do exactly that.
Speaker 1: Beyond the supply chain issues that have come from either
Speaker 1: the pandemic or from storms, there have been other issues
Speaker 1: in the electricity infrastructure business that have more to do
Speaker 1: with the industry itself. So for the past eighteen to
Speaker 1: twenty four months, we've seen a shortage of transformers in
Speaker 1: the US, in Europe, actually globally, but US and Europe
Speaker 1: particularly have been affected. Ge Bnova makes transformers. Why do
Speaker 1: you think this shortage existed in the first place, and
Speaker 1: what are you doing to address it.
Speaker 2: Like many parts of the electro power system, there hasn't
Speaker 2: been authentic growth in at least fifteen years. That includes
Speaker 2: with transformers, the reality is weren't out sing a steep
Speaker 2: uptick in demand, and with it we're investing. One good
Speaker 2: example is in the UK. We make heavy duty transformer
Speaker 2: and valve equipment in the UK and Stafford in the UK,
Speaker 2: and we're doubling our capacity in these facilities to serve
Speaker 2: this market. So these aren't historical factories, the most recent
Speaker 2: paths that have been experiencing real growth. They're going to
Speaker 2: be incredibly important factories for the world in the years
Speaker 2: that come, and we're investing substantial capital into them to
Speaker 2: serve that growing market.
Speaker 1: Another area that gi Venovo wooks on is corbon capture. Now,
Speaker 1: carbon capture is a set of technologies that can be
Speaker 1: applied to many different sources of carbon dioxide. They can
Speaker 1: come from industry or they can come from on gas facilities.
Speaker 1: But the one that you are working on is tied
Speaker 1: to power plants. The only two pop plants in the world,
Speaker 1: both coal pop plants, that have corbon capture technology attached
Speaker 1: to them. Working at a scale. But given your focus
Speaker 1: as gas and the world is building more gas, the
Speaker 1: technology said that you have to develop and ready is
Speaker 1: gas cobbon capture. What specifically is needed to get gas
Speaker 1: poplins to have carbon capture in an economic fashion.
Speaker 2: We're excited about the potential here, but it's going to
Speaker 2: take time. At the end of the day, gas does
Speaker 2: not have a very high carbon concentration out of the
Speaker 2: flu of carbon to capture, which makes it harder to
Speaker 2: catch that carbon in an economic way. We're working on
Speaker 2: technology that first through the exhaust gas recirculation process, condenses
Speaker 2: the carbon that allows it easier to catch. That's something
Speaker 2: that we will leverage in BPT side in a project
Speaker 2: here in the UK that we're getting ready to start
Speaker 2: to build. Through condensing the carbon through the thermodynamics that
Speaker 2: make it easier to catch. We're also investing in new
Speaker 2: carbon capture technology. We believe solid sorbent technology think sponges
Speaker 2: with chemicals that as air flows through, catches the carbon
Speaker 2: and puts it into the carbon pipelines is going to
Speaker 2: be a critical carbon capture technology for the future. And
Speaker 2: today we have a running direct air capture plant capturing
Speaker 2: carbon out of the air at a really small carbon
Speaker 2: concentration level that ultimately we see a pathway to apply
Speaker 2: to gas plants, but that's going to take time because
Speaker 2: today we're running a prototype at our research center that
Speaker 2: we will industrialize over the second half of this decade
Speaker 2: and really commercialize into the next decade. But we think
Speaker 2: it's going to be important part of the equation.
Speaker 1: So when should we expect a gas poplint with a
Speaker 1: g Vernova carbon capture unit to be.
Speaker 2: Ready next decade?
Speaker 1: Nine?
Speaker 2: Oh, I think it'll be sooner than twenty thirty nine.
Speaker 2: But we're probably not at a point that we're ready
Speaker 2: to call a year at this point. But we're working
Speaker 2: hard to industrialize this decade and it will be commercialized
Speaker 2: and running next decade. But we've got work to do.
Speaker 1: Another technology that you're working on that has a more
Speaker 1: definite date for deployment is small modular nuclear reactors. Now,
Speaker 1: nuclear as a technology has gone through quite a journey,
Speaker 1: what an explosive and useful technology. Growth during the seventies
Speaker 1: after the oil crisis, and then a steady decline in
Speaker 1: the West in the nineties and the two thousands. But
Speaker 1: if you look at the growth for nuclear, it's mostly
Speaker 1: in Asia, it's mostly in China now, and even when
Speaker 1: it comes to small modular nuclear reactors, which are fraction
Speaker 1: of the size, so if a large power plant is
Speaker 1: one Gigaward. Small modular nuclear reactors are to fifty three
Speaker 1: hundred megawart. The only place there exists one that can
Speaker 1: be powering the grade is China. So what is Jivan
Speaker 1: overdoing that will stop the growth of China and yet
Speaker 1: another decarbonization technology.
Speaker 2: We're incredibly excited about our small modular reactor. These are
Speaker 2: three hundred mega op blocks of power that use existing
Speaker 2: boiling water reactor technology. The combustion chamber is really the
Speaker 2: exact same technology that's been licensed in the world to
Speaker 2: use today and is running in the world today, but
Speaker 2: we've modularized and scaled the balance of plant around that
Speaker 2: combustion chamber in comparison to the question on carbon capture,
Speaker 2: where it's a next decade thing. With small modular reactors,
Speaker 2: the first one will be running in twenty twenty nine
Speaker 2: in Canada with Ontario Power Generation. We will be in
Speaker 2: construction on that first three hundred mega op block of
Speaker 2: power in twenty twenty five and are incredibly excited about
Speaker 2: the pipeline of activity we have in four provinces in Canada,
Speaker 2: in the US with Tennessee Valley Authority, progress we're making
Speaker 2: both in Poland, in the UK with a nuclear dynamic
Speaker 2: and in Scandinavia in which all of these markets are
Speaker 2: going to matter for nuclear. Now, this sentiment shift with
Speaker 2: nuclear in the West is real, you know. You just
Speaker 2: think about the cop in Dubai and heads a stake.
Speaker 2: Committing to tripling the nuclear capacity in the world between
Speaker 2: now and twenty fifty is a step change with what's needed.
Speaker 2: That's going to include baseload, large gigawat size new nuclear capacity.
Speaker 2: It's going to include a lot of small modular technology
Speaker 2: like our three hundred megawap block of power. It's going
Speaker 2: to play an important role.
Speaker 1: The world has about two terror awards of gas poplines installed.
Speaker 1: About half of those are in some form or the
Speaker 1: other linked to ge Yes. But with ge Vnova, you've
Speaker 1: also made it very clear that the future of the
Speaker 1: company is a decarbonized ge Yes. So with a huge
Speaker 1: gas power business and a growing gas power business, how
Speaker 1: exactly do you deliver on the decarbonization side, do you
Speaker 1: have to retire your gas business?
Speaker 2: Well? No, We say every day that a dollar invested
Speaker 2: in gas is not a dollar invested in carbon forever,
Speaker 2: and that's exactly why we had the conversation on carbon
Speaker 2: capture and why we're investing in carbon capture because we're
Speaker 2: going to need to decarbonize those gas power plants. It's
Speaker 2: why we're investing in hydrogen combustion with our gas turbines,
Speaker 2: and we've made the commitment that one hundred percent of
Speaker 2: our gas turbine fleet can be hydrogen combustion capable at
Speaker 2: one hundred percent by the end of this decade by
Speaker 2: twenty thirty. Now we need the green hydrogen fuel to
Speaker 2: show up at scale for that to become a reality,
Speaker 2: but our gas turbines are going to be ready. So
Speaker 2: we're focused on investing into our gas business for that growth,
Speaker 2: but that investment includes investing into the decarbonization of gas.
Speaker 1: The other question that is pertinent in Europe and the
Speaker 1: US is the use of artificial intelligence and the demand
Speaker 1: on electricity that is growing as a result. For many
Speaker 1: in the climate space, that seems like a problem because
Speaker 1: you're getting demand increase for electricity in applications that don't
Speaker 1: yet seem to be productive or beneficial to society, and
Speaker 1: so it's seen as a cost, as a carbon cost
Speaker 1: that is increasing. But you see it differently. You see
Speaker 1: the demand growth as a good thing for decarbonization.
Speaker 2: How exactly, no question. I mean, it gives me that
Speaker 2: much more optimism that we're going to move decarbonization technologies
Speaker 2: to the left because the reality is these hyper scale
Speaker 2: are customers for us that need more power to grow
Speaker 2: their business, care deeply about their sustainability commitments, and I
Speaker 2: can tell you with the amount of time that I'm
Speaker 2: spending with this customer archetype in the C suite of
Speaker 2: these companies, this is real their commitment to sustainability. I
Speaker 2: leave this last year really in which we've spent substantial
Speaker 2: time with these hyperscalers number one believing the growth is real,
Speaker 2: but number two that over time they will drive the
Speaker 2: carbon intensity of that power powering data centers down, and
Speaker 2: as they do that, the rest of the world will
Speaker 2: draft off of that scaled investment they're making that allows
Speaker 2: us to industrialize decarbonized technologies faster than we would otherwise.
Speaker 2: So I hear the pessimism at times with rooms that
Speaker 2: I walk into that this is a bad thing, that
Speaker 2: we're going into a growth cycle. But I've never seen
Speaker 2: an industry that doesn't thrive advancing technologies at an easier
Speaker 2: pace when there's growth than when it's flat demand and
Speaker 2: we're going into our first growth cycle, and we're going
Speaker 2: to take advantage of it. And part of taking advantage
Speaker 2: of it is industrializing these products at scale faster than
Speaker 2: we would have otherwise.
Speaker 1: As I've obsessed about the story of electricity, which goes
Speaker 1: all the way back to fifteen eighty from the study
Speaker 1: of magnetism done in a scientific way, which of course
Speaker 1: led to being able to create electricity using magnets in
Speaker 1: the first place. One thing that most people realize is
Speaker 1: electricity lost to fossil fuels in the late nineteenth early
Speaker 1: twentieth century because fossil fuels are easier to move their
Speaker 1: dense sources of energy. But one that people missed is
Speaker 1: that electricity itself is a complicated source of energy. To
Speaker 1: be able to produce, move, and consume electricity requires scientific
Speaker 1: understanding and technology development that just wasn't there in the
Speaker 1: late nineteenth and early twentieth century. The story is completely
Speaker 1: different today. It's still not as easy to move as
Speaker 1: fossil fuels are, and yet technology developments have made it
Speaker 1: so much easier to manage electricity. What do you see
Speaker 1: happens over the next century, regardless of climate, regardless of
Speaker 1: carbon to the story of electricity, Well.
Speaker 2: I think the appreciation for one of the most complex
Speaker 2: machines the world has today that we don't talk about,
Speaker 2: which is the grid itself, is going to get much
Speaker 2: better understood and invested into, not just to simply expand it,
Speaker 2: but lead to a whole other level of sophistication on
Speaker 2: how we manage the electrons flow. To your point, that
Speaker 2: system has massive opportunity today, and admittedly is built today
Speaker 2: in an underwriting case with coal one directional electrons going
Speaker 2: from a base load power plant to the home. We
Speaker 2: now live in a world where, admittedly the electricity is
Speaker 2: coming from more varied sources, the fuel isn't always dependable
Speaker 2: depending on the wind in the solar the electrons aren't
Speaker 2: just going to the home, but are come out of
Speaker 2: the home from solar panels and EV trucks, and that
Speaker 2: brains of the grid needs to uptick itself to best
Speaker 2: leverage an incredible machine that's under our feet every day.
Speaker 2: Those investments are going to transform the electric power system.
Speaker 2: So we tend to spend a lot of time talking
Speaker 2: about the power generation sources and that's real, wind, gas, nuclear,
Speaker 2: but there will probably be three times more investment in
Speaker 2: making this incredible grid and machine work in a more
Speaker 2: optimal way that's going to allow the electric power system
Speaker 2: to further displace fossil fuels. That is going to happen,
Speaker 2: that is going to be appreciated. The amount of capital,
Speaker 2: the amount of human talent that's going to go into
Speaker 2: that is incredibly exciting and for us, as an example,
Speaker 2: when I was evaluating where we wanted to base gi Vanova, candidly,
Speaker 2: it's a big reason why we chose Cambridge, mass as
Speaker 2: our corporate headquarter because the reality is there's a huge
Speaker 2: software intellect in Cambridge, with the schools. There's a system
Speaker 2: thinking at places like MIT that are critical for us
Speaker 2: to bring together to optimize this incredible resource we have
Speaker 2: in a way that the electric power system can continue
Speaker 2: to take over that role from fossil fuel. And we're
Speaker 2: going to see incredible invention in this regard that's incredibly exciting.
Speaker 1: The story of electricity is exciting because it's going to grow.
Speaker 1: But the things that make people go cool are electric cars,
Speaker 1: are heat pumps. It's not really the grid. The grid
Speaker 1: is seen as this complex, big, boring machine that kind
Speaker 1: of sits in the background. People walk past transformers, never
Speaker 1: knowing there's a transformer. People look at pylons going, oh,
Speaker 1: we have to see those cables again. What do you
Speaker 1: do to make the story of the grid cool that
Speaker 1: people want to actually work on the grid challenge?
Speaker 2: No question, it's an important one because we have a
Speaker 2: lot of innovation ahead of us in the electric power system.
Speaker 2: I mean, for me, I kind of start at home.
Speaker 2: I have a twelve year old son. My twelve year
Speaker 2: old son loves electric vehicles. My twelve year old son,
Speaker 2: here's me spend a lot of time talking about the
Speaker 2: fact that that just transfers the problem or the opportunity
Speaker 2: the electric power system that needs to decarbonize for there
Speaker 2: to be any net benefit. But it isn't just about
Speaker 2: the twelve year olds like my son. It comes back
Speaker 2: to really getting kids coming out of college today and
Speaker 2: coming into our industry because in so many cases I
Speaker 2: talk with young people that say this is their generation's
Speaker 2: biggest challenge. Yet a few minutes into the conversation, where
Speaker 2: then ask them where they're going with their careers, it
Speaker 2: has nothing to do with this. And that's really why
Speaker 2: we chose Cambridge as our corporate headquarters because Boston is
Speaker 2: a city that has more college students than almost any
Speaker 2: other and I was either going to cry in my
Speaker 2: beer over that or we were going to go to
Speaker 2: where the students were. Because this industry is going to
Speaker 2: transform economies, it's going to transform the world. But we
Speaker 2: need kids having that view that by adding to the
Speaker 2: electric power system, electrifying the world and doing it in
Speaker 2: a decarbonized way, this is their generation's biggest opportunity. And
Speaker 2: that's why we're in Cambridge, It's why we're right in
Speaker 2: the middle of the college campuses, because we need this
Speaker 2: next generation to understand this investment supercycle that we're going
Speaker 2: into in their role they can play. I think it's
Speaker 2: incredibly exciting. We're seeing real momentum there and we need
Speaker 2: to make it real for them, for opportunities for them
Speaker 2: to play a leadership role with us transforming the world
Speaker 2: and transforming this industry.
Speaker 1: Thank you, Scott, thank you, thank you for listening to zero.
Speaker 1: And now for the sound of the week.
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