Batteries vs. Gas Peakers: Price and Role

This is part 2 of my conversation with Nat Bullard. Check out Part 1 here:

We talk a lot about the grid of the future. The truth is, that future is already showing up in Texas.

Batteries are being built at record pace, data centers are chasing cheap and reliable power, and Texans are adding gigawatts worth of backup systems in homes, schools, and factories.

I sat down with energy analyst Nat Bullard to ask a simple question: if we look at what is actually being built — not the rhetorical arguments happening online, but what is actually happening around the world — where are energy systems headed?

We started with a comparison of batteries and gas peakers. Batteries respond in milliseconds, don’t rely on fuel deliveries during a freeze, and can make money all day providing grid services between scarcity events. Increasingly, duration is less of an issue as prices fall.

As Nat reminded us, during Winter Storm Uri it was “largely things in the thermal fleet” that failed. Winterizing batteries is likely much less onerous and complicated than winterizing gas plants.

Behind-the-meter systems are also booming. One- to ten-megawatt batteries can turn schools or factories into mini-resilience hubs. If Texas keeps adding storage at this pace, we could end up with the equivalent of dozens of peaker plants—only more responsive and decentralized.

Nat concluded with a description of his family as a mix of, a ground source heat heat pump, a mini split, and a Franklin stove. A small hybrid system built to ride out different conditions.

That is a good picture of where ERCOT is headed: a mix of gas and batteries, large wires and local resources, data centers and smart devices. The question is whether we design structures to speed up that hybrid grid on purpose or stumble along and end up there eventually anyway. The first path costs a lot less.

The more we learn from what’s actually happening — the focus of Nat’s excellent annual decarbonization presentation — the more cost effective our decisions will be for Texas.

Timestamps:

* 00:00 – Introduction

* 01:30 – Price and attributes of batteries compared to gas peakers

* 03:45 – The optimal generation stack; a portfolio approach

* 07:00 – “Ruthlessly practical” developers

* 09:00 – Distributed batteries and community resilience

* 12:00 – Australia’s rapid installation of distributed storage

* 15:00 – Texas Energy Fund’s viability

* 16:30 – Global solar scale and trends

* 21:00 – Electrifying countries without electricity

* 23:00 – The absurdity of arguments against distributed energy

* 25:00 – Automated flexible demand; using buildings as thermal batteries

* 30:00 – Winter problems in ERCOT

* 31:30 – Primary energy is a deeply flawed metric

* 35:00 – Looking ahead to Nat’s 2026 Decarbonization slideshow

Resources:

Guest & Company

* Nat Bullard - LinkedIn

* Halcyon - Company Website + LinkedIn

* Nat Bullard’s Famous 200-Slide Presentation

* Nat’s NY Climate Week Presentation (From Disparity to Data)

Referenced in this Episode:

* Energy Capital Podcast with Bill McKibben

* The Energy Capital Podcast with Zach Dell

* The Energy Capital Podcast with Bret Biggart:

* The more recent podcast with Zach Dell et al.

Studies & Policy Documents

* GridStrategies Report on Data Center Demand

* International Energy Agency Solar Projections

Doug’s Platforms

* LinkedIn

* YouTube

* X (Twitter)

Transcript:

Doug Lewin (00:06.422)

Welcome to the Energy Capital podcast. I’m your host, Doug Lewin, and welcome to part two of my conversation with Nat Bullard. Nat, as you heard last week, is the co-founder of Halcyon. He is also the one who puts together a fantastic energy transition and decarbonization presentation that comes out every January, which we talked about in this podcast. All around, one of the great experts on all things energy transition and decarbonization. I learned a ton from talking to Nat. I couldn’t let him go after the usual 45 to 50 minutes. We ended up going long, so we split it into two parts. This is part two.

As usual, please go to douglewin.com and subscribe. Please become a paid subscriber if you are not already. This is a free episode, but it is not free to produce, and your support is extremely important to us. And you’ll get all kinds of benefits: access to the entire archives, grid roundups, reading and podcast picks, special episodes of the Energy Capital podcast that are paid only, like those with John Arnold and Dan Barcelo from T1, Rudy Garza from CPS Energy, et cetera. And please leave us a five-star review wherever you listen to your podcasts. Please enjoy part two with Nat Bullard. Thanks for listening.

So that kind of leads me to where I wanted to go next. You obviously do a whole lot of tracking of batteries. We’ve been talking about electric vehicles a lot. Obviously batteries first started their performance improvement and cost declines because of their use in computers and phones. But now we’re seeing them go into cars on a mass scale and now onto the grid in a really mass scale. I mean, how do you think about that as far as the price comparisons for batteries, particularly gas peakers? Combined cycle, I would almost put in a little bit of a different category because you’re talking more about something that’s going to have a much higher utilization. These days, I think there weren’t a lot being built. There were very few being built, particularly in Texas, but I think just about anywhere with data centers, I think we’ll see some more built.

But still in Texas, for instance, in the Texas Energy Fund—this is obviously the subsidy program the Texas legislature put in place a couple of years ago, $7.2 billion in subsidies for gas plants—something like 80% of the projects that applied and were chosen, I think it actually is closer to 85%, were peaker plants. And that’s because we do have an energy-only market. Like you said, in a market, people respond to incentives. The incentives are for short bursts of very high prices. And when you start to stack the peakers up against batteries, and of course the old thing was, you can only go an hour or two, an hour or two is enough for 90, 95% of the high prices in the market. And for the rest, now we’re starting to get to where batteries are going to four or five, six, even longer hour durations. So how do you think about both the price comparison and then the attributes? How do you think differently about the attributes of a peaker versus a battery? Are they really doing the same thing?

Nat Bullard (03:13.294)

What’s so funny—we had this four-hour standard, more or less. And what’s fascinating about that to me is that is largely an artifact of regulation, not of anything technical. In California back in the day, all you would get paid for was four hours worth of storage. So guess what? Everybody optimizes around this artificially binding constraint that I think we’re starting to see people move past. Again, energy-only market—if there was any place that is going to be ready to do more, or for that matter, to do less, it would be Texas. And also to combine things. When I talk to the biggest of the developers, what their view is, is to meet, let’s say a 500-megawatt load for a data center, the quickest path, the critical path is probably going to be mostly renewable electrons. And within that almost entirely, probably solar, a bunch of batteries. And then you have a combustion turbine to serve the rest of the purpose, but it comes in kind of after the purpose served, obviously, by the generation, but also by the storage.

And that kind of stack is the one that seems to be moving the quickest, probably at the lowest cost, and probably the best fit for anybody who’s out there operating. It’s also the one in the future that, if you want to think about future-proofing it, you’re not talking about having to rip out 600 megawatts of solar and 3,000 megawatt-hours of batteries or whatever you might be doing. You’re talking about keeping those, improving them with software, with new hardware, and then altering the final step at the end. If you were to make this a zero-carbon or zero-net-emissions in the long run, maybe the combustion turbine is running on hydrogen. Maybe you’re doing some kind of durable binding, verified carbon removal to cover the cost of the emissions that are there.

So I guess my way of thinking is to be a bit more ecumenical about all of this and also watch what the smartest people who build stuff are already doing, watch how they’re going about it and thinking about doing this and viewing these things as generally part of a portfolio approach as opposed to either “if this then that” or an “either/or” approach. Not like if I’m doing this I therefore have to do that, but I’m doing that because it makes the most sense and not I’m doing this or I’m doing only that. Now there are constraints elsewhere. Again, Texas is a unique market where if you have the land and the wherewithal to go build a 500-megawatt data center, you probably can locate the land and have the wherewithal to do a similar amount of power generation. It is less the case in, say, Pennsylvania or in Maryland. So it’s going to be different elsewhere, but you all have a unique market down there for this kind of thing.

Doug Lewin (05:51.948)

Yeah, it’s incredibly challenging here too, but I think it is more doable than in those other places. I also think that there is too much kind of either/or. I think there’s actually benefits to having both on the system—gas peakers and batteries. Obviously batteries, whatever the duration is, they are duration-limited at some point. They’re going to run out. Now the sun will come back up and charge them or wind blows and charges them or turn the gas plant on and charge them, if you have enough power to do that. And we also get times when the gas plants aren’t working, particularly in extreme cold. We’ve had severe problems with that. Having a battery that can operate while you’re getting people to the site to figure out what’s going on with the gas plant to get it working, right? Or getting that gas plant turned on so the battery can recharge. There’s actually, I think, a bit of a symbiosis there.

And from the emissions perspective, if gas peakers allow you to displace other much more higher emitting baseload plants and still have the capabilities of those thermal units, you may not get your system to zero, but if you get it damn close, because we’re nowhere close to zero right now. So like, yeah, it’ll still be progress.

Nat Bullard (07:10.252)

That’s right. The best renewable developers I know are relentlessly practical people. I would argue that power developers in general are relentlessly practical, but renewable developers, maybe I should uplevel a little bit, are ruthlessly practical. And if this is going to be the path to market, then that makes most sense. As a quick thought experiment, when you mentioned about batteries, batteries operating until you can go turn on your combustion turbine is fascinating, right? If you think about during Winter Storm Uri, what assets had seized up was largely things in the thermal fleet that had seized up and were not able to provide this, that, and the other services at that time. If you’re a new battery, winterizing it is probably more straightforward than winterizing an existing thermal plant.

I remember at that moment, because I still had access to all this North America-wide data, during Winter Storm Uri, people were like, does this mean gas plants don’t work? And I said, let’s take a quick look at Saskatchewan right now, which is at the heart of the polar vortex that has dipped down to Texas. And it was like well below zero degrees Fahrenheit and everything’s running. But that’s because that’s within the normal design parameters. So a lot of this is thinking about how are we going to parameterize our future? And it’s a lot easier to parameterize brand new assets for something different than those that are already existing.

So I appreciate your practicality in thinking about this. I know that developers think that way. I know that given the capability that all grid operators want to think that way too. So let’s watch closely to see in an energy-only and competitive market, what moves fastest, what moves first, what has the most flexibility, literal and figurative, what’s the most supple in terms of how the capital markets are going to treat it, what has the most supply, what can provide the most capacity, you name it. All of these things, I think, will become more clear and less ideological one way or another over time.

Doug Lewin (09:11.342)

I want to ask you also just what you’re seeing. I don’t know how much you’re tracking this, but residential battery—we’re recording on October the eighth and today Base Power in Texas announced they just raised their Series C of a billion dollars. And by the time this podcast comes out, there’ll be another one out where Zach Dell was on a panel that I’d moderated at Gulf Coast Power Association, where he said they’re doing 20 megawatts per month at this point. It’s a small company on kind of a growth trajectory. And that’s just one company, right? Tesla’s doing batteries. I mean, I want to test this against you. I am very, very bullish on distributed batteries. We’ve also seen, by the way, there is some good data on this. Maybe this will make it into your slideshow in January. I’ll send you this slide.

There is a slide that ERCOT has on distributed energy resources in Texas. The fastest growing segment in Texas—well, the bulk battery storage is growing—but on DERs is between one and 10 megawatt batteries. There’s developers all over ERCOT putting in 9.9s, because when you get above 10, you reach a certain threshold where you change your status and the way you interconnect. There’s just tons of these 9.9-megawatt batteries. So between garages and this one to 10 segment, which literally doubled from ‘23 to ‘24, I really think this is going to be a mega trend and one that is really, really good for the grid for the very things we were just talking about, these reliability and resiliency problems, having batteries scattered all over. Is that something you’re tracking? Have any thoughts or stats or anything like that on?

Nat Bullard (10:49.526)

At Halcyon, we’re tracking now—we just set up another subscription to cover this—is going to be looking at the grid-tied battery and energy storage systems. So those that, again, go through a kind of public certification and necessity process. The speed with which these things are happening is fascinating because it’s consumer-led. Obviously, policy and regulation informs it. But there are other dynamics at work. There are neighborly dynamics to it. As we know, if you’re the only house on the block that’s got power during another winter outage, your neighbors are going to notice. And hey, you’re going to invite your neighbors over to charge up.

My folks when they were still with us, when they had a farm in coastal Virginia and they had a gen set because hurricanes would come and knock things out for like a week at a time. And just as an anecdote, the only thing that they ran their gen set for was the chest freezer full of meat and fish that people would give them in exchange for cords of firewood. And so people will find a way to put power to use and do something with it and help each other out.

I would say that the one to 10 megawatt—was that the battery size that you quoted?

Doug Lewin (11:58.666)

Yeah, yeah, exactly.

Nat Bullard (12:00.814)

So again, listen, why is it 10 megawatts? No reason, except there’s a tripwire and regulatory above that at which you shall not pass. But I mean, I’ll give you something fascinating. So I was looking recently at some data from Australia, smaller in every way than Texas, and they have a new incentive for batteries. So Australia has installed just under 800 megawatt-hours of batteries residential only in two months under a new support mechanism. Like these things go really quick and you can watch how people optimize up to their limit. And what’s really cool was that they do it with smart providers who are ideally looking out for their best interests, but they do it according to their ability and according to their need, according to their financial ability and according to their need for stored power. And that’s really cool.

What other models are going to get built on top of that? I think is a really good question for us to be thinking about and to be asking. But also it’s one that we can observe. We’ll be able to see that as markets take off and start to ship more and do more. It’s funny, I can’t remember who it was. I was listening recently talking about vehicle to grid. I think it was on Shayle Kann’s podcast and the discussion was like, we should think about rebranding it from vehicle to grid to vehicle to home. Vehicle to grid—I’m supporting the abstraction of everybody. Vehicle to home—I am in a blackout, but I can watch telly. Like that’s different.

Doug Lewin (13:26.006)

Absolutely. And like you said, help your neighbors. I think that’s really—people want to do that kind of stuff. Some people will—there are people, I’m not doing that as long—if it came to it, of course you’d help your neighbors and you’d be happy to do it. I just actually recorded a podcast with Brett Biggart. He’s the CEO of Freedom Solar, which is the, or one of the largest installers in the state of Texas. And he said, attachment rate in Houston right now is 90%. So 90% of the solar installations they’re doing—for new systems, 90% of the systems they’re installing include storage at this point, which kind of makes sense, because if you’re in Houston and you just lived through Hurricane Beryl and you’re worried about the next hurricane, why would you get solar without storage? So I really do think we’re going to see this more.

Nat Bullard (14:10.22)

And you know, I’m also fascinated to think of this not just as an installation, but as the beginning of a relationship in the sense that’s not just a relationship with a vendor, but a relationship with how you think about power and the grid. Like if you’ve even done this, you were probably not going back and you’re going to have somebody come to you in four or five years, buying your old battery off of you and getting you twice as much storage for the last money or whatever it might be. There’s a lot of different ways we could cut this. But for people to come in and be like, do you want to get much more for the same dollars or do you want to pay less and get the same as you’re getting right now? Like there will be a lot of things that come in here and there’ll be a lot of innovation in terms of getting these things to market for everybody. And let’s see what happens.

It’ll be done, I think, in a—it’s definitely not permissionless because you literally need permission to do this—but it will be done in a much more literally distributed fashion than the Texas Energy Fund. This isn’t the Texas Energy Fund approving $7 billion that goes out to what, no more than 30 entities. How many total plants are gonna draw funding from the Texas Energy Fund?

Doug Lewin (15:22.798)

That’s a good question. I think it’s 15 to 20 or something like that. Yeah, right. The sizes vary as some of them drop out and others get in, but we’ve seen some as big as a gigawatt, some as small as 100 megawatts. I think it’s like, because they’re trying to get 10 gigawatts, it’s probably about 15 to 20.

Nat Bullard (15:38.04)

But we’ll see that much equivalent instantaneous storage capability deployed probably by the same time that the Texas Energy Fund plants have been built. And into what market? This is another great question for those of you who are thinking from a market’s perspective. When the Texas Energy Fund assets are fully commissioned at whatever price point it is, what market are they competing in? Are they competing in a market that’s installing a gigawatt-hour of distributed storage a month in Texas? It’s entirely within the possibility that that will be happening four or five years’ time. And then what? Right?

One of the things that you do such a good job of, and I would hope to be able to do, is ask the next question for people, which is if you’re in the combined cycle business in Texas, are you watching what the Base Powers of the world, the Freedom Solars of the world are doing when they’re watching battery installation or their attachment rates because an electron is an electron. Obviously there’s plenty of other qualitative things that come into it, but it’s really worth keeping an eye out on this stuff as it goes.

Doug Lewin (16:34.734)

It absolutely is. All right. So you, if I’m not mistaken, you started your career as a solar analyst, right? At NEF?

Nat Bullard (16:41.5)

I did.

Doug Lewin (16:42.5)

So solar, obviously we’re in a moment right now as one of your slides showed, I think 600 gigawatts of solar installed in 2024. Is that about right? It looks like we’re probably trending higher. Chinese capacity, again, one of your slides crested over a terawatt. I believe last year or maybe in 2023 they have a terawatt of capacity that they could produce. That is astounding. I think most of the audience probably knows this, but just to be sure to put that in perspective, the entire installed base of the United States of America is about 1.2 terawatts. So the Chinese could produce that entire amount in a given year. So when you’re talking earlier about exporting to Africa and other places, right? Latin America, Southeast Asia, et cetera, they’ve got plenty of capacity to do that.

Let’s talk a little bit about the outlook for solar. Are we going to reach a point where we’re like, okay, yeah, 600 gigawatts, 800 gigawatts, like that’s where it’s going to stop? Or do you see that that kind of growth is going to continue as we pick up with data center load growth and that kind of thing?

Nat Bullard (17:47.158)

It is a fascinating technology that I think confounds other ways of thinking by analogy. And you just have to sort of YOLO it and think about the incentive of building for the manufacturing side, Red Queen style. You’ve got to run to stand still. You’re always competing against more efficient plant, more efficient models. Your equipment depreciates very quickly. So there’s no such thing as like a 15-year-old solar manufacturing line that I know of that anybody would pay anybody for. So everybody’s doing more constantly. There’s always an urge to sort of tap these companies down so that they can make more money. It never seems to work in a durable fashion, but like the upstream issues of solar manufacturing are meaningless to the downstream advantages of anybody trying to buy and install and build comfortably within capability that we’re shipping a terawatt of PV modules every year, which would account for, currently there would be like multiple single-digit percent of total electricity demand every year being added from just solar electrons.

The question is, to my mind, less how much of that can be built and more what’s the rest of demand going to be? And how much demand inception is there going to be by this? Like if I think about all these exports to sub-Saharan Africa, for instance, that’s providing electricity that didn’t previously exist. It’s not displacing demand for electrons. It is potentially displacing potential future demand for thermally generated electrons, but it’s not displacing some existing demand. That’s only happening in places that have a grid. That’s more of an example as your guest Bill McKibben talked about in Pakistan. So I just think we should watch carefully how the rest of the world is approaching this and think as well about how a system will begin to design itself around the kind of native conditions of very, very low cost, but variable as available electrons with this generation profile and just lay that in. This is a truth. And now what?

Either what are you going to do to match your demand to that supply or what are you going to do to mitigate it? What are you going to do to smooth it, store it? How are people going to sort of configure themselves around that? And that’s where flexibility on the demand side is to me, the more interesting question for the future than it is. How much solar are we going to manufacture? That’s a question that is honestly, it’s almost like hilarious. Like it’s fever dream stuff for me as an analyst almost two decades ago, right? The IEA would come out and be like, there’s no problem meeting that narrowly defined net zero goals of solar already to the middle of the century, because there’s just so much being made and there’s so much capacity. Like you just have to sort of take that as a given and then start to think more creatively and constructively about every other thing that happens to outstrip that.

Doug Lewin (20:48.238)

Totally. I think that’s exactly right. And I think also your point about Africa is a really good one, right? And again, you have this slide of 10 or 12 different African countries and some of them as much as 57% of their power is coming from—these are countries that—and this is one of the things that drives me crazy about some of the crowd that is pro-fossil fuel and anti-everything else. I don’t mind people that are pro-fossil fuel. I do mind people that think that somehow emissions and pollution just aren’t a problem. Like even if you didn’t believe in climate change, we’ll put that aside. There’s pollution that obviously impacts human health from fossil fuels, and we should at least take that into account.

But the people that are just pro-fossil fuel and anti-everything else are like, if you hurt fossil fuel production, Africa will never get electrified. And I’m like, how long have we been producing fossil fuels? Stop kidding yourself that the United States or anybody else is going to fund the buildout of a macro grid. You’re going to build central station plants and you’re going to build high voltage transmission lines and you’re going to build an entire distribution system in Burkina Faso. No, you’re not. But you might put solar panels and batteries and LED light bulbs, just like the Pakistan example Bill McKibben gives, right? They’re literally—forget this about solar—they’re solar modules. They are modular. You could do one at a time and add to them. And the fact that it is producing power in concert with what is one of the most important energy uses for human health, which is air conditioning, which still a lot of the world does not have to any appreciable measure.

Like solar and air conditioning go so well together. And to think that somehow if we don’t fully develop fossil fuels, Burkina Faso is not going to get electricity. It’s insane. And it kind of drives me crazy. So I do think this is one of the places where solar will really stand out is really bringing power to billions of people around the world that just don’t really have it in any appreciable way.

Nat Bullard (23:03.872)

And one other thing to add on that, and it’s brought me back to my point about thinking about distributed storage in Texas is to ask the permission framework on which this happens. No one that’s importing solar modules from China to Zambia or to Mongolia is looking to whatever policy and politics-driven examples are happening elsewhere and saying, well, if this is being said in the United States, then I guess I shouldn’t do this. They don’t care. There’s essentially no overlap there whatsoever. And so another way to view this is that these are rhetorical discussions that we tend to have that are becoming increasingly academic.

And so it reminds me of the old joke about the French philosophers that that’s all well in practice, but how does it work in theory? Like this is sort of how these arguments are now starting to go. And so I would urge us all to be as observational as possible about all of this. And to also remember what is being observed and what is being adhered to elsewhere. Like, I don’t really think that there are a lot of solar module importers in Algeria who are following policy and politics-driven discussions elsewhere at the moment and using those as the basis for their business.

Doug Lewin (24:25.9)

Right. They’re just buying Chinese panels and batteries and electric vehicles as fast as they can.

Okay. So you talked about flexible demand. I want to talk about that next. And this might be a good last segment for this, coming back to where we started. The load projections for data centers, you have a great slide. I think this is the first time I saw this slide. I think Grid Strategies had a really good report that had something like this too, because I hadn’t seen quantified the data center demand in Texas, and you had a slide on this that in 2023 it was about 22 terawatt-hours. I would imagine in your next iteration of the slideshow, that number is going to be much, much higher.

And one of the things that is really interesting that is happening here right now, Nat, we talked earlier about the 85.5-gigawatt peak. That was in 2023. In 2024, it was a little less. It was like 85.1 or something. This year, throughout the summer in 2025, we were right at about 84. Now, it wasn’t as hot this summer as it was the last few, but it was still—people around here say it was a mild summer, but they’ve got recency bias. It was actually in the top third for hottest summers ever recorded compared to the last three years before that, which were all top six, not even top 6%, top six out of 150 years. It seemed cool.

So we’re seeing this lowering of the peak, but a significant increase of the minimums. Every single minimum this year is higher, and some of them, some months 20 to 25% higher. Some of that is driven by climate change, because even though it’s not as hot in summer, the nighttime lows aren’t as much. But a lot of that is being driven by data centers, and it’s being driven by flexible demand. So there’s flexible demand on the bulk side of data centers, crypto miners, those kinds of entities using power more off peak. I’d love for you to talk a little bit about the potential you see there, but then also that flexible demand on the smaller sites. We’ve already talked about residential batteries. That is like the ultimate flexible demand, right? You’re going to fill those batteries when there’s plenty of power, but we can also think about homes, if they have some minimum level of insulation at least as thermal batteries and actually moving demand around to create a system that has higher utilization, lower peaks, lower net peaks. How do you think about that? How are you tracking that? And yeah, what do you see as some of the trends in that space?

Nat Bullard (27:06.678)

I’m not tracking it much yet, but I’ll walk through my thought process on how I consider this, which is there’s no one who wants to go and set this up on their own. There’s also no one who wants to have no control over things. So there needs to be a really subtle, well-designed behavioral economics sort of modality here to have people saying like, yeah, use my home as one way or another, a thermal asset for the grid. Crypto mining—great. Like that’s a pretty clear incentive structure for people to be like, do this now, don’t do that then. Homes and consumers are a little bit more subtle, a little bit more fickle. Maybe it would be another way to say it. So I want to watch very closely to see what emerges that acknowledges that aspect of consumer nature. Right. How do you make it so people don’t feel like they’re getting surge priced, but they do want to opt out of something. How do people feel rewarded in a way that’s not just virtue signaling for doing something at the right time.

And you already alluded to it. How do you optimize other things around that? Well, if your house is a lot better insulated, then your thermal envelope is going to be better and your thermal battery capability, so to speak, is also going to be much better. Like if your house is essentially a leaky sieve, because it’s from the 1930s and it hasn’t been insulated, then you are going to pay a price for not cooling it at that moment. If it is insulated, then it’s much less of a big deal to you to go and do a ride through. This is why the classic old industrial and large commercial demand response was something like an industrial freezer, right? Things are chilled to well below zero degrees C. It’s not like a 30-minute ride through is going to make 80,000 pounds of beef rot instantly. Like there’s enough time for 30 minutes, whatever it might be for things to be okay.

You need a housing stock and a capability that’s better designed around that. That could be part of the package that goes into designing that to begin with, which is I’m not asking you to boil and bake here. What I’m asking you to do is in exchange for this, I’m also going to make sure that your house is more comfortable for everything. I do think this is a really important thing to consider. This is anecdotal data because I’ve seen it written about in multiple markets, but you have people in parts of the United States. It’s more common in Appalachia and in the mid-Atlantic who have an older home for which they have summer power bills higher than their mortgage. Like that’s not a state of affairs that we should be encountering. And how do we remedy that? It’s not just cheaper power. It’s a better thermal envelope. It’s a better business model to help shave the peak off for them or to pay people for not using it at certain moments.

But it’s very episodic. Not everybody’s like that, obviously. It can be very, very acute. But how do we, in a full stack, policy, regulation, society, behavior, business model, economics, finance, come together to make sure that we can meet all of those needs for everybody involved in a smart and quick and reliable way?

Doug Lewin (30:18.754)

That’s a huge question. Yeah, right? Look, it’s one that I’ve spent a long time on, I’m going to spend a lot more time on. You were talking about gigawatt-hour of batteries a month on the residential side. We could see that kind of scale. I also wonder if we can’t start to get to gigawatt scale of reduction of, for instance, winter peak in Texas. We’re worried about winters and Winter Storm Uri. We’ve got all this inefficient resistance heat. We know the heat pump technology is out there. I was really heartened in that conversation I had with the Freedom Solar CEO, Brett Biggart, that one of the ways he’s responding to the removal of the tax credits is he set up an HVAC company. Because he’s like, I have these relationships with people that have solar and storage. They probably have a really inefficient HVAC. Next time it breaks, I’d like to give them the high-efficiency heat pump.

If we can think about the integrated demand side, we can have a system that can take much more load growth. Again, not just data centers, it’s industrial electrification, transportation electrification, all of these things, which leads me to one other thing I did want to ask you about is one of the smartest people I’ve ever heard talk about energy. I am curious about how you think about primary energy. There’s been this big debate at the federal level around—it was Chris Wright, the secretary of energy said the other day, he doesn’t think in his lifetime we’ll ever get to 10% of global energy being solar. Now we were just talking about 600 gigawatts in 2024. He’s kind of playing a game there where he’s talking about primary energy as useful energy. Solar’s probably already pushing four or 5%, something like that. But this is where I think that the shift has to happen is we have to think about like, how do we use energy in the maximal possible way with as little waste as possible, then you’re really optimizing the economy.

Nat Bullard (32:12.568)

So the way that I think about that one is that the solar competition with primary energy is like, how good is it competing with 60% waste? How good is solar competing with mostly exhaust heat, rejected heat and emissions? To be less cheeky about it, what I think we’re likely to see is more and more things that are directly electrified by the final energy that is provided by solar and therefore changes the frame. So the good reliable modeling to think about the long future when it’s deeply decarbonized is that actually primary energy demand goes way down because you’re removing that waste heat rejection element of the equation. And you’re going to a world of even resistance heat in Texas that would be powered by solar directly. Like imagine it’s on your roof. You’ve got solar on the roof. You’ve got your battery. You have your even inefficient resistance baseboard.

What you do not have in there is the coal plant that’s maybe running at 30 to 35% efficient, all the transmission and distribution losses, all the conversion losses in the middle to then reconvert that into resistance heat. Like that’s something that is more cognitive at first than anything we need to think and imagine that that’s going to be the way that things go. But I would not bet against solar, particularly not in a lifetime fashion. That requires a suspension of disbelief in a way in the trend that was happening. It also is not using some very evidence-based imagination, I think, to think about what might be happening in the future and to be relatively neutral about all that kind of thing.

It’s a matter of what you’re competing with. And then as with any of these distributed technologies that get cheaper and better over time, not just what do they engage with at first and not just what do they displace. Well, what do they create? Like what different models are going to be created out of that process that changes the way that we think about this as the equivalent of thermal fired primary energy.

Doug Lewin (34:21.078)

Yeah. And on the piece of resistance heat, right? The bigger thing would be at night, right? When it’s really, really cold, you would have to then run your resistance heat with batteries where you would have some losses, but still far less than with fossil fuels. That’s of course partly why you’d want to have a heat pump because otherwise you’d have to size the battery to an absurdly high level. But your point remains, you’d have no waste.

Nat Bullard (34:45.235)

You know, my family farm’s frontier technology model for running the farm throughout very cold winters, ground source heat pump, one mini-split unit upstairs and a Franklin stove. Great.

Doug Lewin (34:58.853)

Yeah, that’s one way to do it. And it worked.

Nat Bullard (34:59.448)

The house was a little dry. Not going to lie to you. It was a rather low humidity house, but yes, price was right.

Doug Lewin (35:08.344)

There you go. All right, last thing. So earlier, I think at the beginning, I asked you one of those multi-layered three-part questions, and I don’t think we got to the third part, which is what’s coming in the 2026 slideshow? Drop a couple of nuggets to the audience of what they can look for that might be different in the 2026 slideshow.

Nat Bullard (35:27.682)

I’m not—if it’s going to be thinking about trade flows again, how that’s manifesting in markets outside the US. It will be thinking about pricing, how changes in electricity impacted pricing. I will be calling you up and asking you, Doug, what’s the very best ERCOT data set for me to pull in terms of volatility and prices here. I will do my best to look at other markets as I always do outside the US to try to help everybody see things as clearly as possible.

My one last thing I always hope is that I get a good clear view of the present moment. That’s my goal. That in and of itself, I think, helps us talk longer about the future. The challenge in thinking about the future is that a lot of people don’t even adequately understand the present moment. People are living in different, informationally living in a different present, not just a different future, but a different present. And how can I pull this in really quick? I had a couple of dinners in New York at Climate Week. Even people in the US are well informed. One of the arguments is like, look at India, India’s emissions are going to go crazy. I was like, India’s emissions from fossil fuels topped last year and were rather flat in the first six months of this year. Like I didn’t know that. It was like, well, I’m not saying you should have known it, but it’s something to know. Let’s put it that way.

I’m very accommodating in terms of what people know and don’t know because we all have areas of focus. We all have things we look at. My motivating pathology is to try to look as broadly as I can across all of these sorts of things. And in so doing, be as useful as I can to everybody in terms of the information.

Doug Lewin (37:04.94)

Yeah, and it’s always worth spending time with. I’m already looking forward to seeing the next iteration. Nat, thank you so much for doing this. Is there anything that I should have asked you that I didn’t or anything else you just wanted to say you didn’t have a chance to yet?

Nat Bullard (37:17.672)

Nope. I’ll drop a couple links in the show notes for everybody. Come take a peek at what we’re doing. Bring your custom curated hand-loaded list of docket IDs if you’re that kind of person directly to Halcyon.io and we will get you sorted out to go and dive in and start looking at what’s there.

Doug Lewin (37:35.539)

I’ll have a bunch of links for folks in the show notes to find you. Nat, thanks for doing this. I enjoyed it.

Nat Bullard (37:39.372)

My pleasure, Doug. Thank you.

Doug Lewin (37:42.126)

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