Energy Capital Podcast

Last year, ERCOT stunned observers when it projected that electricity demand in Texas could double within five years. That announcement kicked off a wave of meetings, legislative hearings, and proposals. But now?ERCOT’s latest projections say we might need to triple our electric supply.The Texas Energy and Power Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a paid subscriber.The driver? A massive wave of industrial electrification and data centers, including artificial intelligence and crypto operations.This is unprecedented growth. And with it comes an urgent question:Can the ERCOT market keep up, or will policymakers get in the way?“I DO think the market structure today is very well suited…”That was ERCOT CEO Pablo Vegas testifying before the Texas House State Affairs Committee on April 9.In response to a question from Rep. Rafael Anchía about whether the market can meet rising demand without heavy government involvement, Vegas was clear:“I do. I think the market structure today is very well suited to support the growth trajectories that we're seeing...”Vegas emphasized that Texas’ light regulatory touch allows capital to flow, deals to be made, and new generation to come online quickly.But at the very same time, lawmakers are advancing bills that directly undermine that market structure, including SB 819, SB 715, HB 3356, and SB 388.These bills would make it harder for new energy generation to come online, just when we need it the most.We need every electronRep. Anchía put it bluntly:“It sounds like we're going to need every electron… from new generation, from conservation or energy efficiency... We need all of it.”Vegas agreed. Yet the legislation moving through the Capitol would limit the very resources that are fastest and cheapest to deploy.Natural gas, for instance, takes years to bring online. Vegas estimated that even under the best conditions, new thermal generation won’t show up until 2029 or 2030.Meanwhile, ERCOT’s mid-range forecast calls for 44 gigawatts of new demand in that same timeframe.If 10 gigawatts of gas shows up by 2030 — an optimistic outlook — where’s the other 34 gigawatts coming from? If you don’t have enough power, your economy can not grow.The answer is already in the marketVegas pointed to a real solution—bilateral contracts between data centers and power developers:“They have the money… they want speed to market… it makes sense that we would see supply develop through that too.”This is market design 101. Buyers and sellers can find each other, strike deals, and build what they need—without governmental interventions into the market and costly mandates.Companies like Meta, Google, Amazon, and OpenAI, and many more, are ready to pay their own way. And if they can be flexible, we can accommodate a whole lot more demand.The solution is baked into the problem.Let the market do what it’s built to do.Do Texas lawmakers still trust markets?This is the core question.If we really believe in competition, then we must resist the urge to rewrite market rules just because some outcomes are inconvenient. In fact, many of the state’s largest generators and industry groups oppose further changes to ERCOT’s structure this session.The more policymakers try to force outcomes, the more they’ll delay them.We’re in a pivotal moment. The ERCOT CEO, the industry, and basic economic logic all point to a clear path: let the market respond to rising demand.That doesn’t mean doing nothing. It means:* Preserving a stable and predictable market environment* Supporting all-of-the-above resource development* Investing in efficiency, transmission, and demand-side solutions to free up headroom on the gridIt also mean rejecting bills that slow progress, raise costs, and create massive regulatory uncertainty.Show Notes: ERCOT Load Growth & Forecasts* ERCOT Presentation to the Board of Directors (also presented to House Committee on State Affairs) - this was the presentation Chairman Anchia and ERCOT CEO were looking at as they talked.* ERCOT 2025 Long-Term Load Forecast Report - Details projections of electricity demand growth, highlighting the impact of data centers and industrial electrification.​* ERCOT Load Forecast Overview - Provides access to ERCOT's long-term and mid-term load forecasts, including methodology and historical data.Bills Impacting the ERCOT Market* Senate Bill 819 (SB 819) - Requires wind and solar projects to undergo burdensome new permitting and siting restrictions. This bill would stifle economic growth in rural Texas, where renewables are a key driver of tax revenue and jobs. More on that bill here and here.* Senate Bill 715 (same as House Bill 3356) - Would require generators to procure their own firming capacity, forcing inefficient redundancies and discouraging investment.This bill undermines ERCOT’s competitive market design and adds massive costs to consumers of all kinds.* Senate Bill 388 (SB 388) - Mandates that 50% of new capacity be “dispatchable,” but excludes battery storage. This bill could raise energy costs and mean the economy could grow only as fast as gas turbines are available.Legislative Hearings* Texas House State Affairs Committee – April 9, 2025 Hearing - Access video recording of the committee hearing where ERCOT CEO Pablo Vegas testified on market readiness. He starts right at about 1:00:00, or one hour in.Thank you for being a subscriber. If you’re already a paid subscriber, thank you! If you’re not, please become one today. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe

Everyone’s talking about the rise in electricity demand, especially from data centers. However, far too few are talking about what to do about it. In this episode of the Energy Capital Podcast, I sat down with Tyler Norris, a fellow at Duke University’s Nicholas Institute and co-author of a recent study Rethinking Load Growth.What Tyler and his team found is extraordinary: by curtailing just 0.25% to 1% of a data center’s annual load—primarily during the most stressed hours—Texas could add up to 15 gigawatts of new data center load in ERCOT without adding any new capacity. That’s nearly the total demand of the entire city of Houston.Even more striking: 90% of the time, at least half the load would still be retained. It’s not about shutting everything off, it’s about smarter operations during a handful of peak hours. This is exactly what we need as we try to integrate unprecedented load growth. Tyler’s research offers a better way forward.We dove into the details:* The difference between legacy 24/7 data centers and newer AI-focused facilities, which offer greater flexibility.* How heating and cooling loads vary seasonally, and why winter peaks—not summer—are currently the biggest challenge in Texas.* What load factor really tells us about underutilized grid capacity and how ERCOT compares to other U.S. markets.Tyler also explained how even small changes in behavior or technology, just 0.25% to 1% shifts in demand, can unlock massive headroom, especially during those critical winter mornings and summer evenings.We talked policy, too. From ERCOT’s Controllable Load Resource program to proposed emergency response products with 24-hour notice, there’s momentum to better align incentives for large loads that can respond during grid emergencies. Tyler called this “speed-to-power” a key motivator, if data centers can get online faster by offering flexibility, that’s a win for them and the grid.But it’s not just about data centers.Tyler and I also explored how residential winter weatherization, efficient heating upgrades, and demand response on the household level could free up even more capacity for Texas’ growing electricity needs. This builds on ideas I explored in “Texas Needs a Vision for Customer-Side Solutions” where I argued that the most affordable path to reliability includes smarter demand-side management. We will need demand and supply side resources. We also talked about a novel idea in Texas: whether data center operators could pay into programs that reduce peak demand systemwide, benefiting all consumers.Finally, we discussed ERCOT’s national leadership in interconnection performance, outpacing other U.S. grid operators by a wide margin, and why other states should take notice.Tyler’s work is a big deal. It challenges some major assumptions in energy policy and offers a roadmap for smarter, more flexible load integration. As electricity demand soars, this kind of thinking is going to be critical not just for Texas, but across the country.Read the report: Rethinking Load Growth – Nicholas InstituteAs always, thanks for listening and please share this episode if it helps you understand this moment a little more clearly. We’re going to need every tool on the table to build a cleaner, more resilient grid.Timestamps* 00:00 – Introduction & why this matters* 02:00 – Tyler’s background & origin of the study* 04:00 – Takeaways from Rethinking Load Growth* 07:30 – Exactly how much capacity could be freed up in ERCOT * 09:00 – Does flexibility mean complete shut down or something else?* 11:30 – Are data centers truly inflexible?* 16:15 – The ERCOT grid is vastly underutilized in the vast majority of hours in the year* 22:30 – Grid is more underutilized in winter, but peaks could be higher* 25:00 – Residential demand flexibility could free up even more headroom, data centers that are inflexible could pay for residential demand reductions* 30:00 – Solar creating more headroom, reducing loss of load expectation (LOLE) in summer; winter is bigger problem, particularly in the South* 35:00 – Why demand response stalled in the 2010’s* 36:30 – Policy solutions: speed-to-power / speed-to-interconnect for flexible loads and Controllable Load Resources (CLRs) in Texas* 39:00 – “All-of-the-above” for demand side resources* 42:00 – Differentiating types of large loads* 46:00 – Can residential customers benefit from large load growth?* 50:00 – ERCOT’s interconnection success story * 55:00 – DeepSeek & the future of AI efficiency* 58:00 – Final thoughts and what’s next for Tyler’s researchShow NotesResearch & Reports* Rethinking Load Growth (Tyler Norris, Duke University Nicholas Institute)The foundational report explored in this episode. Quantifies how much flexible load (like AI data centers) could be integrated into U.S. power systems.* EPRI Data Center Load Flexibility Initiative - Ongoing research effort exploring demand-side solutions and flexible operation strategies in data centers.Grid & Flexibility Context* Overview of Demand Response in ERCOT - summary presentation detailing ERCOT’s demand response programs, including the role of CLRs and their impact on the Texas grid.* Load Resource Participation in the ERCOT Markets - outlines how load resources, including Controllable Load Resources (CLRs), participate in the ERCOT markets, providing ancillary services and contributing to grid reliability* NERC Reliability Risk Priorities Report 2023 - Cited in the episode as identifying controllable loads as a key reliability solution. Reinforces ERCOT’s perspective that CLR participation is an optimal reliability pathway.Legislation & Policy* Texas Senate Bill 6 (2025) - Referenced in the conversation as a bill addressing data center interconnection and demand-side solutions, including a 24-hour emergency response service.* Tyler Norris Congressional Testimony (2025) - Tyler’s formal testimony on interconnection delays, praising ERCOT’s “connect and manage” model and calling for structural reforms nationally.* FERC Order No. 2023 - National interconnection reform discussed indirectly in the conversation, setting new timelines and process changes to address backlogs.Also Mentioned…* Abundance by Ezra Klein and Derek Thompson - Referenced as part of the broader national conversation about energy abundance, demand growth, and large flexible loads.* SPEER Incremental Demand Response Report (May 2015* Toward a More Efficient Electric Market (June 2013)TranscriptDoug Lewin (00:03.938):Welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. My guest this week is Tyler Norris, a researcher at Duke University, who, along with a team of researchers at Duke, produced an impactful report called Rethinking Load Growth. What they looked at here is what everybody in the energy world is talking about these days: how are we going to accommodate all of these data centers that are coming?And Texas is likely going to get more than its share of data centers than a lot of other places for a variety of reasons. It's easier to interconnect here. There's a lot of low-cost renewables available. There’s a lot of things that Texas has going for it. But how can we accommodate all that load without causing grid reliability problems or raising costs?Tyler and his team in Rethinking Load Growth talked about one of the ways to do that: if these data centers have even a small amount of load flexibility, it frees up large amounts of capacity. We talked about how even a quarter of 1% or half of 1% could free up many gigawatts of space. The same holds true when you get down to the residential side—if we could do some things there to reduce demand, we can also free up space for data centers.This is an active conversation right now at the legislature Senate Bill 6, House Bill 3970. These are bills that include different concepts for how to integrate large loads. It was a very timely conversation. I hope you enjoy it. I learned a lot from Tyler and from the paper. We'll put a link to that in the show notes. And as always, please give us a five-star rating. It really does help people find the podcast.This is a free episode, but it is not free to produce. We have both the Texas Energy and Power Newsletter and paid episodes of Energy Capital Podcast available to you if you subscribe at douglewin.com. And thank you so much for listening, and thanks for your support. Let's dive in.Tyler Norris, welcome to the Energy Capital Podcast.Tyler Norris (02:00.768):It's great to be here thanks so much, Doug.Doug Lewin:Yeah, thanks for doing this. Excited to talk to you. This report that you’ve put out—Rethinking Load Growth: Assessing the Potential for Integration of Large Flexible Loads in U.S. Power Systems—obviously got a lot of attention, lots of folks talking about it all around the industry.Before we jump into that, just very briefly, tell the audience a little bit about yourself and what your focus is there at Duke, at the Nicholas Institute.Tyler Norris:Yeah, sure thing. I'm a fellow and pursuing my PhD in electric power systems at Duke University's Nicholas School. I'm a somewhat non-traditional PhD student in that I came into the program with about 12 years of experience in the energy sector. I started at the Department of Energy working on tech commercialization programs, spent a couple of years at SMB Global doing their North American electricity market outlook, and then spent about five and a half years in large-scale solar and solar-plus-storage development at Cypress Creek Renewables.There, I ended up doing a lot of work in front of public utility commissions, working with consultants on electricity simulation models, and trying to get better outcomes for resource planning and interconnection. That was the part of the job I loved the most. I figured if I could go deeper in a PhD program, I could be of greater service.Just briefly—a lot of interest has been on grid interconnection, especially for large generators. But it turns out that a lot of the study methods for large generators are similar for large loads from an interconnection standpoint. So that's why we’ve gotten into the large load interconnection side of this too.Doug Lewin (03:37.782):Yeah, it’s really fascinating. For the longest time, nobody really talked about large load interconnection it wasn’t a thing that came up much unless you were way, way in the weeds in some technical forum. And now it is the topic du jour, which brings us to your study Rethinking Load Growth really getting into large flexible loads.Why don’t we start at the highest level? What are some of the main takeaways? What do you want people to know about this report, some of the key findings?Tyler Norris:Sure. Maybe I’ll just give a quick backdrop. This emerged from conversations with state utility regulators and other state-level regulators last year through the Nicholas Institute, which is a think tank at Duke University. Everyone's talking about how to accommodate load growth. What the regulators were saying is that we’re hearing the new data centers are 100% inflexible, that we have to treat them as firm loads.But at the same time, we were seeing EPRI launch its data center flexibility initiative, and other announcements—including from the Secretary of Energy’s advisory board—recommending progress on data center flexibility. So there was kind of this juxtaposition. That was the prompt for us: dig into this and figure out what the potential might be from a technical standpoint.We do a qualitative characterization of why there’s a thesis right now that AI-specialized data centers can be more flexible than the sort of legacy computational loads. We also did some modeling, which I think caught people’s attention primarily. We looked at how much new load you could add to any given electricity market or balancing authority if the load was able to be flexible—or more specifically, curtailable, for a limited number of hours in the year during the most stressed grid conditions.Tyler Norris:In traditional demand response programs for peak shaving, they’re typically in the range of 1 to 2% of the max uptime of the new load. We’ve seen that in a couple key demand response programs. So we ran it initially assuming the new loads—hypothetically—could be flexible for 1% of their maximum uptime in a given year.The numbers were so substantial in terms of how much new load you could add to a variety of balancing authorities that we decided to run it at 0.5% of the max potential uptime, and then again at 0.25%. And it turns out we were quite surprised by the volume.Just to put numbers on it at 0.5% curtailment, we looked at 95% of the country’s load across 22 balancing authorities. It aggregated to about 98 gigawatts of new load you could add. At the 0.25% level, it aggregated to 76 gigawatts.As people are probably aware, that exceeds even the upper-end forecasts for data center load growth we expect over the next five to seven years.We want to be clear—this is a first-order technical potential assessment. There are various limitations to it that we talk about in detail, including that we didn’t account for transmission constraints. That would require a much more extensive and longer-term study. And you couldn’t even do it for 22 balancing authorities because it would take so much time. But the headline is sort of… yeah, go ahead. Doug Lewin:Yeah, yeah, no, you're all good. This is the Energy Capital Podcast. We talk about Texas and ERCOT, and I know you've been on a bunch of podcasts talking about the national picture. We're going to really drill into Texas and ERCOT here.So at that 0.25% level, 6.5 gigawatts of data centers could come online without any new capacity needed. At a 0.5% reduction, 10 gigawatts, and at 1%, 15 gigawatts.Those are pretty extraordinary findings. Can you talk a little about what that 0.25%, 0.5%, and 1% actually mean? Like, 1% of the hours out of the year—there’s 8,760 hours so you’re talking about 87 hours.But is that 87 hours of the data center being shut off completely? Or is it maybe the data center running at 50% for 100-and-something hours? What exactly does that look like?And I also just want to make sure I’ve got this right—that basically, you wouldn’t need to add new capacity to bring on 6.5, 10, or 15 gigawatts at those curtailment levels. You're not saying we don’t need new generation, of course we do, but that with load flexibility, we can accommodate a significant amount of data center growth more efficiently. Is that the right way to look at it?Tyler Norris: (9:57.078)Yeah, thanks Doug. Great prompt there.So first, yes it's a percent of the maximum possible uptime. One of the surprising findings was we assumed you’d have to shut off the new load entirely during a number of hours. But what we found is that we’re primarily talking about partial curtailment events. At the 0.25% level, that translates to about 85 hours on average in which some amount of curtailment would occur. But in about 90% of those hours, at least half of the new load is retained. And that 90% figure actually held pretty consistent across the different curtailment limits. In many cases, 75% of the load is retained even during curtailment events. So it's rare that you're talking about going all the way to zero, or even anywhere close to zero. This is interesting because it opens the door to partial flexibility. For example, if you were using battery storage, instead of sizing it at 100% of the max draw of the load, even 20 to 25% could give you a lot of flexibility. And the duration of these events on average is relatively short, three to five hours. Of course, it varies from balancing authority to balancing authority. And yes, that’s an average—so extreme weather events might push it higher. But overall, that average is informative.Doug Lewin:Yeah, that’s super interesting. Batteries would be one way to do it—putting batteries onsite. You could also have other types of onsite generation.What I found especially interesting in your paper was the discussion of different kinds of data center load. You started this by saying everyone’s been saying data centers are flat, 24/7, 365. I hear that all the time too “they can't be moved around.” But in your paper you get into the differences between inference and learning, and also the huge cooling loads, which I don’t think are talked about enough.So yes, batteries. But there’s also some load onsite that could be shifted. Can you talk a bit about that?Tyler Norris: (12:07.298)Yeah, sure. Maybe we can take that in a couple parts.First, I want to say that data is still limited. This is just a feature of the industry right now, and a constraint facing all independent researchers. Lawrence Berkeley National Lab recently did a congressionally mandated data center energy usage report it’s probably the best public analysis we have.But even they prominently state that there are a lot of limitations because we just don’t have good hour-by-hour, season-by-season usage data for data centers.That said, let’s start with cooling loads. Because in some ways, it’s fair to say these are 24/7, 365 constant loads, but even that starts to break down a little when you look at interseasonal variation.It’s kind of intuitive put a data center in the South Pole versus the Sahara Desert, they’ll have different cooling needs. And this extends to other geographies.You can go right now Google, to their credit, publishes the Power Usage Effectiveness (PUE) of all their data centers around the world each quarter. In their North Carolina facility, for example, PUE is around 1.06 in winter versus 1.25 in summer.Doug Lewin:Which means that in the winter, they're getting much more efficient use of the energy they're using more of the energy per unit of computing power than in summer, right?Tyler Norris: (14:05.026)Yeah that’s right. There could be other contributing factors, but presumably the difference in cooling needs is a big one. So we can see some variation.Then, with legacy computational loads—CPU-dominated, real-time cloud services, especially global data centers—you got constant flat loads. But with AI-specialized data centers that are GPU-heavy, that picture starts to change.Some are used entirely for training workloads; some are a mix of training and inference; others might be all inference. It’s still a bit unclear. For training—like neural nets and foundational models—power usage can vary dramatically, even sub-minute. It can jump from max draw down to zero. With inference loads, they also vary, and demand is still uncertain. I don’t think even the hyperscalers fully know what global inference demand will look like.There’s also cooling load, batchable workloads, and other flexible components. So bottom line: not all of these are 100% flat, around-the-clock loads.Doug Lewin: (16:14.422)Yeah. So this brings me to the next point here, which you make really well in the study—this key metric of load factor.I think we’re at a moment right now where everyone’s talking about abundance—Ezra Klein’s book is out, I’m going to an event tonight with the Abundance Institute, which is a right-of-center think tank. There’s this question of: how do you do abundance if you have scarcity on your grid at some times?But the fundamental point is—we actually do have an abundance of energy for the vast majority of the hours in the year. It’s really about managing the peak.You put some great numbers and graphics on this in the report. Load factor is basically how much energy is used compared to the overall functional capacity of the grid—not nameplate, but usable. And you show the load factor for ERCOT at 53%, which turns out is right at the median or mean, can’t remember which.So our grid is vastly underutilized. You write in the report:"A system's potential to serve new electricity demand without capacity expansion is determined primarily by the system's load factor—a measure of the level of use of system capacity—and grows in proportion to the flexibility of such load, i.e., what percentage of its maximal potential annual consumption can be curtailed."So basically, we are in a situation where ERCOT could take on a lot more data centers, using the slack that’s there—as long as they come in with some amount of flexibility.Can you talk a little about ERCOT’s potential relative to this load factor metric?Tyler Norris:Yeah, sure. I appreciate you walking through that, because I think intuitively we all know the grid is built around peak, but when you sit with the numbers, it’s kind of extraordinary. So, to put it another way: more than 10% of the system is built to serve about 35 hours a year of extreme peak load. That means there is headroom—it’s just outside those rare extreme swings, like heat waves and cold snaps.ERCOT’s load factor landed at 53%, and just to define it: it’s the average demand over the maximum peak demand, based on nine years of hourly load data. That 53% was both the average and median. ERCOT actually has a higher load factor in the summer—around 65% on average. But what’s interesting is ERCOT is one of the few systems where the winter load factor is actually just below that average, which means more headroom is available in the wintertime.That’s partly because you do get those occasional polar vortex-style cold snaps—Winter Storm Uri being the most dramatic example—but outside of those, there’s a lot of unused capacity. So yeah, we could peel back more ERCOT-specific metrics. But the takeaway is: if a new load can be flexible for even a small amount of time, you can add a meaningful amount of demand to the system. Now again, as I mentioned earlier, the numbers we quote—6.5, 10, 15 gigawatts—those should be viewed as first-order technical potential estimates. When you layer in transmission constraints and intertemporal generation constraints, some of that potential gets eaten away.But even if it’s only half of those numbers, that’s still substantial. Also worth noting: our headroom estimates do not include the reserve margin. So in some cases, if you did factor that in, the true headroom could be even higher.Doug Lewin: (20:34.774)Yeah the load duration curve you included in the paper is really amazing. It reminded me of when I worked at SPEER (South-central Partnership for Energy Efficiency as a Resource). We did reports on demand response potential and I remember being struck by those curves.For listeners, I’ll include a screenshot and a link to the paper in the show notes. But it looks like a skateboard ramp—or a hockey stick, but flipped. On the left side, for a few percent of hours each year, you get these huge peaks. Then it quickly drops off, and for the vast majority of hours, there's massive headroom.ERCOT has more room than most other systems. And like you said, utilization is even lower in the winter, which suggests something for future research: it would be useful to break this out by season, because I imagine that ramp gets even steeper in the winter.That brings us back to the question of: how do you manage those peak hours? So if you want to say anything more about winter vs. summer, go for it. But I want to layer in another question for you to take after that…Tyler Norris: (22:58.336)Yeah, really quickly on the winter vs. summer comparison: we didn’t include this in the report, but we did look at the average duration of extreme peaks and of curtailment events.We found that the average duration is substantially lower in the winter than in the summer. That tells us the nature of the peaks in winter is spikier—you get a cold snap for a few days, and especially in the mornings (6–9 a.m.) when everyone wakes up and turns on heating, you get this quick spike—but then it dissipates fast.In contrast, summer peaks are more sustained—they extend from mid-afternoon to the middle of the evening. So the loss of load expectation is increasingly shifting to winter mornings.But the good news is that a little bit of flexibility in the wintertime gets you a long way.Doug Lewin:Yeah. What I’m wondering, Tyler—and I don’t know if you guys looked at this for the report—is whether there’s potential for load flexibility throughout the system, not just at the data center level. Could there be some kind of fund, for example, where data centers help reduce residential peak load, which would free up even more headroom for them?And then there’s also the broader question of what AI itself could do—optimizing loads in ways that don’t reduce comfort, and might even improve it. Like pre-cooling, for instance. I mean, you could imagine a future where AI is kind of self-aware of its energy use and shifts its own cooling load. The potential is huge.But the main question I want to ask out of all this is:Isn’t there real potential for residential load flexibility to help free up space for data centers?Tyler Norris:Yeah, I love that question because you can start to think about flexibility in a variety of ways. Why are we focusing on the large loads right now? Partly because so much of the near- and medium-term load growth appears to be coming from these very large commercial customers.Some of the numbers are eye-popping—up to 50% of U.S. electricity load growth over the next five to seven years could come from AI-specialized data centers, according to some forecasts. So this growth is coming fast, and we need to plan for it better. But the opportunity it presents is that these loads are so large-scale and under the control of sophisticated operators—who also have a high willingness to pay. They can incorporate new technologies and systems more easily. So from a bang-for-your-buck standpoint, if you can get one 200-megawatt data center to be flexible, that might be a better return than signing up thousands of residential customers for demand response.That said, if data centers are unwilling or unable to offer any flexibility themselves, one option is for them to procure flexibility from others—like a virtual power plant or distributed capacity procurement.So maybe they pay customers to install smart thermostats or smart water heaters, right? Those water heaters could pre-heat two hours earlier before that 6 a.m. winter peak instead of coming on when everyone wakes up. Even weatherizing homes would help—anything that puts downward pressure on peak demand creates system headroom. And again, we should emphasize—part of why AI-specialized data centers could be more flexible is because training workloads are significantly more batchable and deferrable than real-time inference or cloud services.There’s solid literature on this—it’s proven that in a lot of cases, you can front-load or defer computational training loads by a few hours and reduce demand during peak.Doug Lewin:Yeah, yeah. That’s exactly the point I was getting at—training vs. inference vs. cooling, etc.Before we move on, I just want to circle back to something you said about weatherization and resistance heating. I loved this study—it answered a lot of my questions but raised like 50 more. So for researchers listening—and Tyler, maybe for a future paper—I'm especially curious about ERCOT, where we’re adding huge amounts of solar and storage.We’re at over 30 gigawatts now, on our way to 40 or 45 GW in the next 18 months or so. It seems like winter is now becoming the real problem, not summer. With all that solar/storage coming online, the summer risk is going down, but the winter spikes—especially early morning—are getting more prominent.We’ve got some demand flexibility on the residential side, but it really comes down to heating loads. Can we replace inefficient resistance heat? Because if we can, we create more headroom. I’ve even started talking to data center folks about this. If they really want to interconnect in ERCOT, we need to be talking about winter nights and mornings.Did this show up in your study? Or does this suggest that we may need to reassess how we’re looking at seasonality as this resource mix shifts?Tyler Norris: (31:51.038)Yeah, absolutely. This is a critical aspect—this shift in loss of load expectation from summer afternoons to winter mornings is now happening in a growing number of jurisdictions.The Southeast has seen it too. It’s partly because solar and storage are victims of their own success—they’re reducing summer peak risk, which is great. But what’s left now is those rare, intense winter spikes. And like you said, those resistance heaters—there’s a big opportunity there, but they are inefficient. And when they all come on at once, it creates a challenge. We all know: solar doesn’t produce much from 6 to 9 a.m. in winter. Maybe if we changed time zones… but I doubt that’s catching on.The good news is those morning peaks are short—in some systems, even 2-hour battery storage can make a meaningful dent. And definitely 4-hour storage can help. It’s not sexy, but just getting people off those strip heaters—honestly, I think people would be surprised how much progress we could make with that alone. Also, a quick example from here in the South: Winter Storm Elliott a couple years ago was the largest rolling blackout event Duke Energy has seen.The primary cause? Thermal unit failures, mostly gas and coal—similar to Winter Storm Uri in Texas. But there was also a big morning spike because of that polar vortex. So, even though solar doesn’t produce during winter mornings, it could help charge batteries the day before—or even save fuel in the hours leading up to an event, which helps with reliability. We need to get better at analyzing the synergistic capacity value of different resources. Groups like E3 have done some great work on this, but we still don’t fully account for the interactions between solar, storage, thermal, demand flexibility, etc.Doug Lewin: (34:17.206)Yeah, completely. And I think one of the big takeaways for people listening is that even small, incremental changes—a half-percent here, 1% there—can free up significant headroom, as long as they are timed correctly.It doesn’t matter what the measure is—energy efficiency, demand response, batteries if it matches the time of system need, it adds real value.You wrote in the paper that demand response participation stalled in the mid-2010s. Can you talk about why that happened?Tyler Norris: Yeah. From an academic standpoint, you’d want to isolate all the variables. But I think the overarching trends were pretty clear.First, we became long on capacity in a lot of markets. That drove capacity prices down. At the same time, we were in a low-growth environment. So when capacity market prices decline, there’s less incentive for demand response participation. There were also new restrictions on participation from aggregated DERs in some markets, which had an effect. But the biggest macro factor was just low growth and low prices. That’s all changing now, though. Just look at PJM—huge increase in capacity market prices in the past couple years. Even aside from price spikes or supply chain issues, we’d expect more participation. But more significantly, we’re seeing more interest in load flexibility because of the speed to power advantage—getting online faster. So let’s talk about that. Is that kind of a core policy solution?If you’re talking to a policymaker trying to figure this out—someone who wants these data centers because of the economic development, national security, and tax base benefits—but who’s also very worried about another Winter Storm Uri or Winter Storm Elliott, what do you tell them?What are the policy mechanisms that can help us manage this responsibly? Is offering faster interconnection in exchange for some load flexibility one of them?Tyler Norris:I think so. That’s one of the conversations we’re hearing, and ERCOT, as is often the case, is out on the leading edge here in terms of creating service constructs.So the Controllable Load Resource (CLR) product—that’s a service ERCOT created. They improved it a couple of years ago to more explicitly quantify and characterize the trade-off between flexibility and faster interconnection.And I think in that case, they were trying to design a product that could allow new large loads to get online within two years.That’s meaningful. I’m sure there are ways that product can be improved or optimized, and there are always challenges with real-time control. But maybe there are variations we could develop that still preserve the core idea: faster interconnection in exchange for measurable flexibility.Just one more thing—back to the winter conversation. With polar vortex-style events, we can often forecast them days in advance. Sometimes even a week or more. Forecasting is getting better, especially with the help of AI.So, for those events, we may not need fully real-time controllable loads. Even day-ahead or multi-day-ahead flexibility could add a lot of headroom.Doug Lewin: (39:50.742)Totally. And I think this is where we need to talk about all of the above on the demand side, just like we do on the supply side.There are controllable loads—and those are great—but there are also other forms of demand flexibility. You actually quote ERCOT in the paper, this was from a NERC presentation I think. and they say:“The optimal solution for grid reliability is more loads to participate in economic dispatch of Controllable Load Resources.”That’s a strong statement: optimal solution for grid reliability. But of course, there are other approaches too. In Texas, we’ve got Senate Bill 6 on the table right now. (We’re recording this on April 3rd, and I might already have articles out by the time this episode airs.)I think that bill is mainly focused on large loads and their integration. I don’t think it fully does what we need, but there’s one part I do like: it creates a new emergency response product with 24-hour notice. Today, Texas has about a gigawatt of emergency response service—about half of that is demand-based—and the current notice periods are 10 minutes and 30 minutes.But with these winter storms, like we were just saying, you see them coming. A 24-hour notice product could open up participation from loads that aren’t suitable for real-time dispatch but are willing to cut usage in an extreme circumstance. That’s a form of flexibility, too. So I think the main point is that there are many different kinds of demand flexibility. They each have different value and should be valued accordingly. But we need all of it—or else we’re going to be very limited in the amount of load we can add.Tyler Norris: (41:47.798)Yeah, I think that’s really well said.And to your point about the 24-hour notice product—look, we probably shouldn’t expect AI-specialized data centers to participate in demand response just based on economic incentives alone.Unless prices go extremely high—which could happen in submarkets—or unless we redesign price signals, it’s unlikely that price alone will drive widespread participation.That said, there’s some interesting research potential around that. If the addition of a large load increases the loss of load expectation for everyone else, you could argue for a price signal or fee on that new load, based on the burden it imposes on system reliability.That would be a shift in how demand response pricing works, but it's worth exploring.Still, I think the main driver of flexibility in these cases isn’t going to be price—it’s going to be faster interconnection, and participation in emergency programs to mitigate blackouts.Doug Lewin:Yeah. And this brings up another issue I wanted to ask you about.As we talk about new loads trying to come onto the grid—whether just normally or through some expedited process—should we start distinguishing between different types of large loads?Because not all large loads are created equal. Within data centers, there’s a huge difference between those doing cloud, inference, or training work.But also, outside of data centers, we’ve got big new loads from industrial electrification—fracking operations electrifying, steel mills, semiconductor manufacturing, etc.Do we need to start classifying loads differently in policy, rate design, or demand response program eligibility?Because if the only criterion is flexibility, well… crypto miners are extremely flexible. But if it’s crypto mining vs. a Samsung chip plant, most people would probably choose the chip plant.Did this come up in your work? Or maybe this is an idea for future research?Tyler Norris:Yeah, absolutely. We were focused here on AI-specialized data centers, because this is such a big, fast-moving trend that everyone’s trying to get their arms around.But you’re right—flexibility could apply more broadly. We often shy away from the idea of industrial facilities offering flexibility because no one wants to interrupt a manufacturing line. which also gets really expensive. But look, if these large factories have their own onsite power options or onsite batteries, I mean, it's the exact same principle. So let's not discount that some of them might have an interest in doing that. may not. I think the other thing is, yes, of course they also want to interconnect quickly, but it's just not the same like breakneck speed to market and also this global like, you know competition that has major national security implications in terms of the AI race. So that's a little different, I suppose. But ideally, should, for any large load or small load for that matter, that could offer flexibility that creates a value for the broader grid, we should be making sure that there are service contracts that acknowledge and enable that. Let's not discount it. There is something about just the scale of the day. actually this is a good question. So how many of the non data center loads are like over a hundred megawatts and I don't have a good data sheet in front of me. My sense is that even some of the largest factories we're talking about, like not a lot of them go beyond, you know, the hundred to 200 megawatt range. So like in Duke Energy's case, they've rolled out all these new sort of guardrails to require like more upfront security and guarantees from new large loads, but the threshold they established was over 100 megawatts. And there's probably always going to be some degree of an arbitrary threshold there. But you can also think about in terms of the number of upgrades to the system that are being triggered by it. So maybe you do it, and there's a dollar threshold cut off. But I think it is probably useful to think about this when we are talking about truly quote unquote hyperscale facilities. And you're talking about billions of dollars potentially of system upgrades and new generation resources that may be required.Doug Lewin: (45:55.714)Yeah. You write in the paper about the potential for lower ratepayer costs from load flexibility. And I think about this a lot—affordability has to be front and center. It needs to ride sidecar with reliability. I don’t care which one is A or B—they’re tied together.But I’ll be honest: I’m worried that these big, sophisticated customers are going to work the system to lower their costs, and everyone else is going to end up paying more. Sure, they have a high willingness to pay now, but as competition ramps up and margins tighten, they’ll have more pressure to control their costs.So is it really feasible that residential and small commercial customers could actually benefit from this growth? I want to believe the answer is yes—tell me it’s yes.Tyler Norris:I think the answer is yes—but it depends on smart policy and regulatory oversight.We’ve already seen, in just the last 6 to 12 months, multiple jurisdictions—at least in the Eastern Interconnect—starting to put meaningful guardrails in place. It starts with more upfront security posting, so that if a large customer backs out, ratepayers aren’t left holding the bag.Doug Lewin: (47:38.606)Yeah—that’s also part of Senate Bill 6 here in Texas.Tyler Norris:Exactly. And that’s sort of the basic first step. I imagine we’ll see more jurisdictions follow suit.But there are more ambitious ideas, too. In Indiana, for example, after seeing massive forecasts for data center load, there were proposals to fully firewall the costs—like, assign 100% of any triggered system upgrades (whether for generation or transmission) to the new load, not existing ratepayers.We used to have a paradigm of “meet any new load at any cost.” That just doesn’t hold anymore when growth is this large and fast—and when the willingness to pay from these customers is so high.If you start sending the full price signal—in this current environment—it seems like they’re willing to pay it. But obviously they’ll try to reduce costs over time, so now’s the moment to get the policy structure right.Doug Lewin:Yeah. I think the piece you put your finger on in this paper—load flexibility—is the key to that affordability piece. Because if we can actually control those peaks, that helps with reliability, and it helps with prices, because that’s when prices are highest.So I think the potential is there. If we get the policymaking construct and the pricing construct right—if—then I think large loads could bring in new resources, offer flexibility, and maybe even pay into a fund to help reduce residential peaks and create more headroom.I can see that scenario. But I don’t know if that’s the most likely one to play out. That “if” is doing a lot of work.Tyler Norris:Yeah, agreed. This is why we need regulators to take this moment seriously and get as smart as possible, as fast as possible.That was one of our goals with the paper—to provide some technical framing. But all of us need to be helping regulators and stakeholders level up their understanding. We’re all learning this in real time.Doug Lewin: (49:28.268)The learning curve is almost as steep as your load duration curve.Before we end, Tyler—this has been fantastic—I just want to ask you one more thing.You’ve done a lot of work on interconnection, and you recently testified to Congress on this. I’m going to read a quote from your testimony earlier this year:“While load flexibility can help, interconnection delays remain a major obstacle to deploying new generation. The volume of projects stuck in interconnection queues has quadrupled. However, one market—the Electric Reliability Council of Texas (ERCOT)—has taken a different approach and is achieving significantly greater interconnection performance than other U.S. markets. Between 2021 and 2023, ERCOT interconnected at least 70% more generation capacity than any other organized market, despite serving a load that is half the size of PJM.”I’m often critical of ERCOT, but I also want to give credit where it’s due—and this seems like a major success story. Can you talk about what ERCOT does differently, why it works, and what the rest of the country might learn from it?Tyler Norris: (51:23.042)Yeah, I don’t think you can overstate the significance of what ERCOT has accomplished over the past five years.It didn’t become clear just how different ERCOT’s performance was until the other queues melted down—and that’s only become obvious in the last three to four years.It’s rare that you have one market that is so fundamentally different in performance—and where that performance is clearly attributable to a different set of rules.ERCOT is an energy-only market. It doesn’t study and assign costs to new generators based on deliverability studies, which are essentially used to determine whether they can qualify as designated capacity resources.Doug Lewin:So it’s a more administrative process elsewhere—someone decides what’s “deliverable” and assigns cost accordingly. But in ERCOT, that step isn’t necessary?Tyler Norris:Exactly. In all the other organized markets, interconnection and capacity eligibility are tightly linked. So when a new generator comes in, they usually request Network Resource Interconnection Service—the type that allows them to participate in the capacity market.That triggers a very rigorous set of study criteria, and any upgrades that are identified get assigned 100% of the cost to the contributing generator. This creates a huge bottleneck.Now, there are other factors behind the queue problems, but the most fundamental one is this rigid linkage between interconnection and capacity eligibility. It creates a binary outcome—you’re either fully capacity-eligible or not.But we should be clear: this is a policy decision, and what it’s done is create a high barrier to entry for new generation. And in a constrained environment, that leads to price spikes—which is exactly what we’re seeing in PJM.Now, we probably can’t just copy-paste ERCOT’s model into the rest of the country, but we should be figuring out how to adapt its efficiencies. That’s going to be a major task going forward.Doug Lewin:Yeah. There’s no pure energy-only or capacity market. They all have pieces of both. It’s really a question of where you set the dial.But I really appreciate you highlighting that. I think it’s underappreciated. There’s definitely a negativity bias in this space—we talk more about what’s going wrong than what’s going right.And this is something ERCOT is doing right—Connect and Manage has worked. It’s put more generation on the grid than any other market. So thank you for pointing that out in your congressional testimony.All right, I’ve got one final question, and then we’ll wrap.You mentioned it earlier, but I want to circle back to it: DeepSeek.How does DeepSeek change your outlook on load growth, if at all? Just for folks listening: DeepSeek is a Chinese AI model that surprised a lot of people. And part of the conversation was: are GPUs getting so efficient that maybe we won’t see as much load growth?Has that shifted your thinking?Tyler Norris:Yeah, so some quick background:Before DeepSeek, the consensus was that the U.S. was about three to five years ahead of China in developing large foundational models.So when DeepSeek launched—and showed comparable performance to our most advanced public large language models—it was a shock. Especially given all the efforts to restrict China’s access to cutting-edge GPUs.Now, it turns out DeepSeek wasn’t a new foundational model. They built on open-source U.S. models and used clever engineering to optimize efficiency.We don’t know what they spent—it’s not publicly available—so it’s hard to judge. But it does highlight that efficiency gains are possible through optimization.That said, the initial reaction created a bit of a lull in projections. But within a few weeks, things were back in full swing. The forecasts for data center load growth are still massive. Hyperscalers are continuing their investment. OpenAI is full steam ahead on Stargate.So for now, it looks like we’re still on the high-growth trajectory.But what DeepSeek did do was inject more uncertainty, especially around inference loads. Some of this work can now be done locally, which is what Apple has been pushing.So it’s not just a question of “how much energy?” but where and when it’s being consumed.Doug Lewin:Yeah, so interesting. There’s so much more to explore.Tyler, this has been great. Your report is a huge contribution to this conversation—Rethinking Load Growth. We’ll include a link in the show notes.Before we close, tell listeners where they can find you online—and is there anything I didn’t ask that you wish I had?Tyler Norris:You can find me on LinkedIn and follow some of the work through Duke University’s Nicholas Institute. And no, this was terrific really enjoyed the conversation, Doug.Doug Lewin (59:37.748):Awesome. Tyler, thanks so much. Really appreciate it.Thank you for listening to the Energy Capital Podcast. I hope you enjoyed the episode. If you did, please like, rate, and review wherever you listen to your podcasts.Until next time, have a great day. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe

If it passed, Senate Bill 819 would be one of the most damaging energy bills we’ve seen in years. It would slow down Texas’ economy, hitting rural areas the hardest. It’s a direct attack on Texas energy producers and a threat to consumers, landowners, and communities across the state. But don’t take it from me, listen to the witnesses from Armstrong, Nacogdoches, Schleicher, and Tom Green Counties.Two weeks ago, the Senate Business & Commerce Committee held a public hearing on the bill. I’ve watched hearings at the Texas Capitol for more than 20 years, and I’ve never seen this level of public opposition to an energy bill. Over 100 Texans registered their opposition and 50 Texans, from every corner of the state, waited all day to testify in person against the bill. They spoke clearly and urgently: SB 819 is a mistake.This post is free but it’s not free to produce it. Please support the Texas Energy & Power Newsletter with a paid subscription. You’ll get access to the full archives, the Grid Roundups, and select Energy Capital Podcasts, including this one with Jane Stricker of the Houston Energy Transition Initiative. Thank you!The witnesses included ranchers, veterans, landowners, farmers, and local Chamber of Commerce leaders. These are people who live where these projects are actually built and they don’t, as one of the witnesses put it, want Austin to tell them what they can and can’t do with their land. As I wrote in A Time For Choosing, this bill doesn’t just target renewables. It threatens core principles like private property rights, economic freedom, and private investment in Texas infrastructure.Take Armstrong County, a rural region with fewer than 2,000 people. Over the life of its two wind farms and new projects, more than $100 million in revenue will flow to local landowners and school districts. And 90% of the county voted for Donald Trump. In Schleicher County, a county that’s lost more population than almost any other in the U.S., wind and solar have stepped in as oil and gas declined.In Nacogdoches County, a solar lease is helping one family hold onto their land and send their kids to college; it also funds local schools for the whole community. In San Angelo, oil and gas companies are collaborating with renewable developers to build new projects and attract manufacturers and data centers. Michael Looney from the San Angelo Chamber talked about how he was surprised oil and gas companies were working with solar energy developers. This is becoming even more common.These aren’t fringe cases. As I’ve written in Clean Energy Boom Is Already Great for Texas, clean energy projects are already creating jobs, tax revenue, and manufacturing growth across the state.And then there was former Texas Land Commissioner Jerry Patterson. A Republican, veteran, and longtime advocate for gun rights who reminded the committee that renewables have helped keep electricity prices lower in Texas. He warned that bills like SB 819 will drive prices up for consumers and businesses at the exact moment we need more affordable, reliable power.We’ve already seen what happens when we over-rely on volatile gas markets. In Grid Roundup #47, I wrote about how gas price spikes drove up electricity costs for families and businesses—and why renewable energy is one of the best tools we have to stabilize prices.We’re at a crossroads. The state needs more electricity. ERCOT has warned of reliability challenges. Data centers, manufacturers, and residents alike are demanding low-cost power. And yet, instead of focusing on transmission, energy efficiency, and modernizing the grid, we’re wasting precious time on bills that would limit development, raise costs, and hurt the very communities they claim to protect.🎧 I’ll share more audio clips and analysis on the podcast feed, and we’ll also be releasing one-off videos and testimony breakdowns over on our YouTube channel. In the meantime, please share this post, subscribe to the newsletter, and help spread the word about what’s really at stake.As always, thanks for listening and let’s keep working for a better Texas energy future.Timestamps:01:26 - Sen. Menendez & Sen Kolkhorst Exchange02:19 - Navy Veteran: Sean Salas05:53 - Rancher & Farmer: Mike Ollinger (Armstrong County) 07:51 - Farmer Brian Zbylot (Nacogdoches County)10:21 - Conon Emmons, Sen. Sparks, El Dorado (Schleicher County)14:28 - VP Chamber of Commerce, Michael Looney, San Angelo 17:47 - Former Land Commissioner Jerry Patterson Show Notes:Further Reading & Related Posts: * Senate to Hear Another Anti-Energy, Anti-Growth Bill – My preview of the SB 819 hearing, outlining what was at stake before testimony began.* A Free Market, If You Can Keep It – How these proposals conflict with conservative economic principles and market freedom.* To Avoid Power Outages, We Need to Diversify Supply – Why limiting renewable development undermines grid resilience.* More Gas Plants Withdraw From Texas Energy Fund – Notes from the same legislative cycle showing the fragility of supply-side-only strategies.* Clean Energy and Grid Reliability: February 21 Reading Picks – A curated list of articles and podcasts discussing clean energy’s role in supporting grid stability.* Texas Energy Fund and Data Centers: April 2 Roundup – Explores the intersection of energy policy and large-scale electricity demand growth from data centers.Transcript:Doug Lewin (00:00) Two weeks ago, there was an incredible hearing at the Senate Business and Commerce Committee. They heard Senate Bill 819, a bill that would greatly restrict the ability to develop renewable energy in Texas and restrict private property rights—and thus also hurt economic development, particularly in rural areas, drive up energy bills, harm grid reliability. The list of damage from that bill is quite long.I'm Doug Lewin, host of the Energy Capital Podcast, author of the Texas Energy and Power Newsletter, and today we're going to take you through some of the extraordinary testimonies and moments that were discussed during that hearing.It really was extraordinary. I've been watching hearings at the Capitol now for over 20 years, and I can't ever remember seeing a bill on anything energy related with half this many witnesses opposed. They registered 100 people opposed to the bill—50 of them testified in person to the committee about their opposition to the bill and anything like it at all. Those stayed around all day waiting for their turn to speak. Again, never seen anything like it.I want to start with a little exchange between Senator Kolkhorst, the author, and one of her colleagues, Senator Jose Menendez, who's on the committee. Let's take a listen.Sen. Menendez and Sen Kolkhorst (01:26)Senator Menendez: "You know, the fact is what makes this country great is we have property rights. And my concern is that some of your setbacks, particularly the 3000 foot setback, that's almost a taking in a sense."Senator Kolkhorst: "I think 3000 feet is strident. Like when I first did SB2 last session, I didn't even like it when we filed it, but we filed it."Doug Lewin (01:45)Pretty extraordinary, right? She filed a bill that she wasn't sure about. She then was thinking that the numbers in her own bill were too strident. Why file it? The whole thing is kind of bizarre and begs a whole lot of questions, but let's hear from the folks who took time out of their lives to come to testify on this outrageous bill.Let's start with a veteran, a renewable energy worker, and a constituent of Senator Kolkhorst's.Sean Salas (02:19)"Chairman, members of the committee, my name is Sean Salas. I represent myself and I'm a constituent of Senator Kolkhorst. And I'm here to oppose Senate Bill 819. I'm a six-year veteran of the United States Navy Special Operations Community from Richmond, Texas, not the city. During my service, like my fellow veteran here, I operated in some of the most challenging environments where energy reliability and security were critical to mission success.The experience has given me a deep appreciation for the importance of a stable, diverse, and resilient energy grid, something that, in my opinion, SB 819 threatens to undermine. Texas has been a long leader in energy innovation, embracing wind and solar alongside traditional sources to strengthen our grid and create jobs. I've been privileged to work in this industry since getting out of the military to support and raise my family. To that end, I brought my daughter here to show her what it means to be a voice, to fight for something that's important and something that you care about.This bill places unnecessary barriers on renewable energy development, discouraging investment and slowing progress at a time where energy independence is more critical than ever. The additional permit requirements and fees will stifle economic growth, particularly in rural communities where renewable projects have provided jobs and financial security for landowners and for people like me.During my time in the Navy, I saw firsthand how dependence on limited energy sources could create vulnerabilities. A strong, self-sufficient Texas should embrace energy diversification, not legislate against it. I urge you to oppose SB 819 and stand for an energy future that is strong, independent, and built on innovation. Let Texas lead, as we always have. Thank you."Doug Lewin (04:09)Let Texas lead indeed. Very compelling testimony there from that constituent.We're going to take a little tour around rural Texas. The next several witnesses you're going to hear from are from rural counties throughout the state, counties that very much rely on the income from renewable energy.This next gentleman is from Armstrong County. If you probably don't know where Armstrong County is, I'll confess—preparing to record this, I didn't know where it was till I looked it up. But it was the home of one Charles Goodnight, and you'll hear this man say he manages the Goodnight Ranch Wind Farm. Charles Goodnight was a Texas legend cattle rancher. He was actually the inspiration for Woodrow Call in Lonesome Dove. Taylor Sheridan played him on an episode in the series 1883 in the first year of the first season of that series.In Armstrong County, there are less than 2,000 people. There are less than 400 registered voters. Of those that voted in the last election, over 90% voted for Donald Trump. In that county, over the life of the projects of the two wind farms they have now, there will be over $50 million in payments made to landowners, made to local governments. Another farm under development would add even more money, $120 million combined in tax payments and payments to landowners in a county of less than 2,000 people.Let's hear from this next witness from Armstrong County.Mike Olinger (05:53)"Yes, my name is Mike Olinger. I'm from Armstrong County. I'm a rancher, farmer. I was on the school board for two terms, county commissioner for two terms. We got clean energy. We got schools that need help. We got counties that need it. Y'all don't realize what small counties need. We don't need to be punishing the small counties because we don't have oil and gas. This is the only revenue we've got since 1900, and that was the railroad track. We're strictly ranch land and dry land farm ground. I invite anybody to come to our county and I can show them around."Doug Lewin (06:32)Again, really compelling testimony. You heard Mr. Olinger say there, they do not have oil and gas in that region of the state. They do have a lot of wind and sun. And it is very important that they be able to develop that, as he said, for the schools, local governments, the landowners—really vital to the lifeblood of rural communities in Texas.So that was one of the smallest counties in Texas. Let's switch now to a county in the eastern half of the state that's actually one of the larger rural counties. It's about somewhere around 50 or 60 in rank and population out of the 254 counties in Texas—talking about Nacogdoches County. It is, interestingly, not a particularly sunny part of the state. Again, in the eastern part of the state, not like desert out in West Texas. But you're going to hear this next witness talk about what a solar farm development means for him and for his community, for the schools. This gentleman is a constituent of Senator Nichols, who is on the committee and subsequently voted for the bill coming out of committee, kind of shockingly, against the interests of his own district and constituents, like the one you're going to hear from right now.Sen. Nichols Constituent (07:51)"I'm a landowner here. I appreciate you giving me the opportunity. I'm speaking against this bill. I'm a constituent of Mr. Nichols. So this project that you see here is Elia Springs. That was my family farm. Like you, Senator, my kids learned how to work hard there, farming watermelons, 40,000 a summer. That's the reason why I ran out of child labor and they all ran off to college. I'm happy to say I'm still paying for their college with the revenues that we produce from the solar farm.Nacogdoches County used to be the number one county for dairy production. And then we put it into pine trees and we made money off of natural gas. So I'm here because as landowners, I don't want somebody from Austin—the last time I was here was 25 years ago—I'm here because I don't want people in Austin telling me and George and other rural landowners what we can do with our land. That's why I'm here, because it dramatically impacted our community. We have $30 million worth of revenue coming into our school district now. It changed our community and it changed my family. And I'm thankful that I don't live in California where I couldn't have done this project."Doug Lewin (09:07)No one should tell us what to do with our land. Indeed, very compelling testimony there from the gentleman from Nacogdoches County.We're now going to move over to the western part of the state, to Schleicher County. This county is actually in Senator Sparks' district. Senator Sparks is not on the Senate Business and Commerce Committee, but he is carrying Senate Bill 715, which would be equally damaging to Senate Bill 819 if passed.Mr. Emmons from Schleicher County talks about how important renewables are to that county—a county of less than 2,000 people out near San Angelo. It is one of the counties that has experienced the most population loss of any county in the entire United States. The renewable projects there have delivered over $100 million in tax payments to local governments and payments to landowners. And there are more renewable projects under development, which would be under threat from Senate Bill 819, but also Senate Bill 715, Senate Bill 388. This whole parade of terrible bills coming from the Senate would put counties like Schleicher County in dire straits. Let's hear from Mr. Emmons.Conan Emmons (10:21)“Chairman Schwertner and members of the committee, thank you for the opportunity to speak today. My name is Conan Emmons and I'm a constituent in Senator Sparks' District 31, although I realize he's not on this panel. I'm here to strongly urge you to oppose Senate Bill 819. I'm a resident of El Dorado in Schleicher County, speaking for myself today. I am a landowner and rancher, even though I'm wearing a suit because I thought it was appropriate, and very involved in our community.In the last 10 years, El Dorado has closed five major oil field support companies. That's a rate of one every two years. The largest remaining one just closed its doors last month. In the same 10 years, my very modest oil royalty check has been cut 95%. Fossil fuel production and supporting companies used to be thriving in our community, but it is a fading resource. And as it fades, so does our community, our population, and our employment.When an American owned and run company like Apex comes into our community and wants to use wind as a resource, something we have a lot of in Edwards Plateau, it offers hope to our community, not only to the landowners, but to the school districts, the county, the hospital districts, and anyone hoping to stay in El Dorado to find good employment. Senate Bill 819 is a threat to the possibility of a thriving economy and industry in and around communities like ours.As a landowner, I should have the right to negotiate a lease on my land for hunting, grazing, electricity production, or whatever else I want. ERCOT warns us we must add affordable power quickly to meet rising demands. So I can think of no reason to tie the hands of a company trying to use an abundant resource to fill a much needed demand. And again, I urge you to vote in opposition to Senate Bill 819 and protect landowners' rights and rural economic growth. Thank you for your time."Doug Lewin (12:14)That was really compelling to me, particularly talking about the decline of oil and gas in Schleicher County. We're going to hear this story more and more in coming years. It's not that oil and gas aren't tapped out. There's still probably oil and gas down there, but the easy stuff that could be had is had, and we start to see these declines and Schleicher County is kind of a poster child for that. The wind is going to continue to blow and the sun is going to continue to shine. And as Mr. Emmons said, in a place like El Dorado, you need whatever kind of opportunities you have. And why would the legislature try to limit those kinds of economic opportunities in counties that are 80, 90% Republican and desperately need these opportunities?From there, we're going to move just next door to a nearby county, Tom Green County, where San Angelo is. We'll hear from Michael Looney, who's the head of the Chamber of Commerce in San Angelo. San Angelo has well over a hundred million dollars worth of tax payments, royalty payments from renewable energy. And what you're going to hear that I think is really compelling here is how in places like San Angelo, there is no sense of oil and gas pitted against renewables.It's all energy. It's all economic opportunity. And I think what happens, unfortunately, in the minds of some politicians in Austin is they think they're doing some solid for oil and gas by attacking renewables. When in fact, a lot of folks in the oil and gas industry work in renewables or work across them. We're seeing this a lot with land men working in both renewables and oil and gas. We're seeing it in the geothermal industry. We're seeing it from landowners who may or may not have had oil and gas royalties but want renewables royalties either on top of the oil and gas royalties or because they don't have oil and gas there.And so really what you see in most of the state is not this kind of competition, but more of this kind of true "all of the above"—not like when some politicians say it and they really mean to disadvantage one thing or the other, but really truly all of the above. So let's hear about that from Mr. Looney from the San Angelo Chamber of Commerce.Michael Looney (14:28)"Thank you. Michael Looney, vice president of economic development with the San Angelo Chamber of Commerce, speaking to oppose this bill. For some perspective, San Angelo is a West Texas city of 100,000 population with a diverse economy relying heavily on agriculture, steel manufacturing, renewable energy, data centers, technology, hardware manufacturing, medical device manufacturing, oil and gas companies, and O&G component manufacturing. We're a quickly growing city with an increasing attraction of new businesses to our region. Kind of an isolated city, so we're kind of designed to self-rescue and self-preserve.San Angelo and Tom Green County, especially our rural school districts, have greatly benefited from the presence of wind and solar power plants, of which we have three solar power plants and two wind fields in our county. The San Angelo Chamber of Commerce represents the economic development efforts of both the city and the county. And we have been engaged by ranchers and farmers that have benefited from the long-term leases offered by renewable projects. They have demonstrated to us that the land that they lease is surplus, unproductive land. And the renewables developments require no water consumption. They offer an alternative income source for the ranching and farming, cow-calf operations, and they allow the benefit of a backstop source of funding for them from the renewables projects, which keeps the family operations going.Interestingly, with such a high percentage of our economic horsepower derived from the O&G sector, we have been involved with solar plant projects that were in actual collaboration between the solar developers and O&G companies, which we found intriguing because we'd always presumed that there was opposition to one another, the two different sectors. The presence of our local solar and wind power projects has served to attract several new manufacturers that now have operations in San Angelo and several large-scale data centers."Doug Lewin (16:31)Mr. Looney made some really good points there, right? A lot of times renewables are being developed, as he said, on unproductive land, doesn't take water, it still just helps the economy. It baffles me that the legislature is trying to stifle this industry that has meant so much to so many.We're going to end with testimony from former Texas Land Commissioner and state senator, Republican Jerry Patterson. Commissioner Patterson is well known throughout Texas political circles. He carried the first open carry, not concealed carry, handgun law in the state of Texas and was involved when he went to the land commission office in some of the early renewable deals. He really deserves a whole lot of credit for the development of the renewable industry. And he makes a point that was made throughout the day, but we haven't had a clip on it yet. It's about the reduction in cost for consumers that comes from renewable energy and the increase in bills that are headed your way if Senate Bill 819 or any these other anti-renewable bills pass. Let's hear from Commissioner Patterson.Jerry Patterson (17:47)"I'm Jerry Patterson, I represent myself and I oppose Senate Bill 819. So the question is, why should we encourage instead of discourage wind and solar development? And the answer is because we can't afford not to. And when I say afford not to, I mean the positive effects of zero fuel cost generation against the retail price of the commodity to the consumer."Doug Lewin (18:17)Commissioner Patterson makes such an important point. Energy bills have gone up in recent years. That's mostly because of increased spending on the distribution grid, but also because of increased cost of natural gas. In 2022, gas was between six and eight dollars. This year, it was two dollars the last year or two, and we saw prices go lower. Gas is back around four dollars, and with some of President Trump's tariff announcements, it's come down a little bit, but we're still seeing relatively elevated prices for gas. It's a volatile fuel. We don't know where its cost is going to go. And we know that having a zero marginal fuel cost, a fuel that literally costs nothing, that bids into the market does have a price-suppressive effect. This is extremely important for businesses that want to come to Texas where energy is one of the biggest inputs, whether you're talking about chip manufacturing, steel mills, petrochemical facilities, data centers—these folks want low cost power.And by the way, so do residential and small commercial consumers. They need low cost power. In the state of Texas, 35 to 40% of residential consumers self-report choosing between power, medicine, and food. That is unconscionable and unacceptable. And if bills like this were to pass, we would see a rise in energy costs as renewables were, as it were, disadvantaged.On top of that, we would start to see more energy shortages. We have seen over the last summer or two, and you don't have to take my word for it, ERCOT CEO Pablo Vegas, PUC Chairman Thomas Gleason, talking about how solar and storage in the summertime have kept us out of energy emergencies and conservation alerts. So price suppression, economic development, grid reliability, all of these things are very much at risk with these bills.Since the hearing occurred, and again, 100 people testified against—50 in-person folks from every corner of the state talking about how this bill would hurt them—the committee passed it out anyway, seven to three. And it will pass on the Senate floor. There's no drama or doubt about that whatsoever. We don't know what the House will choose to do with it. The Senate will pass it. It would be really damaging to the state as you heard from a lot of the witnesses that we played today.We'll keep track of this. We'll bring you some clips from the Senate floor debate if there even is one. Often in the Senate, there's not because the votes are all there anyway. But if there is, we'll bring that to you. And we'll continue to monitor other energy bills. House Bill 14, which would accelerate nuclear in the state. There are all sorts of energy efficiency bills, transmission bills, distributed energy resource bills. There's so much that legislators could do to make the grid stronger, to lower costs for their consumers and to stimulate economic development. It's sad that they want to spend precious hours of their very short legislative session on bills like these. But here we are.To follow along, please go to douglewin.com and subscribe to the Texas Energy and Power Newsletter and the Energy Capital Podcast. You can follow me on Twitter, BlueSky, LinkedIn—easy to find on all of those social media channels, but please do go to douglewin.com. It is a reader-supported publication, and if you can purchase a subscription, that would be greatly appreciated and help support the podcast. Thanks for listening. See you next time. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe

We recorded this episode in front of a packed room at Geothermal House during SXSW, and it couldn’t have been more timely. Energy demand is rising fast. Energy policy is fraught. And into this moment comes geothermal — a resource that’s clean, always-on, right beneath our feet, and dare I say, bipartisan.I sat down with Jamie Beard, the founder of Project InnerSpace, to talk about the opportunity geothermal represents and the unique chance we have to get it right from the start. Jamie is one of the most compelling voices in the energy space, and her message is clear: if we want to move fast on clean energy, we need to recruit the people who know how to drill.That means engaging the oil and gas industry — not as an opponent, but as a partner. As Jamie puts it, “If you want to turn the ship, recruit the sailors.” And in Texas, where drilling is the culture, we have a huge advantage. The workforce is here, the infrastructure is here, and the resource is far better than most people realize.Geothermal is often assumed to be limited to places like California, Kenya, or Iceland. But thanks to recent mapping work, we now know that Texas has significant geothermal potential across much of the state. Texas is also leading on policy, with the best geothermal legislation in the country, according to Beard.We talked about how this industry is being built from the ground up, with oil and gas veterans, startup founders, and policymakers all playing a role to start the Texas Geothermal Energy Alliance (TxGEA), build a legislative agenda, and pass a suite of bills all in under 18 months. That kind of speed is rare in energy and it shows what’s possible when there’s alignment.Jamie and I also talked about something deeper: how geothermal might be one of the few energy solutions that brings people together. It appeals to climate hawks on the left and oil-and-gas energy dominance advocates on the right. It can be described in the language of abundance, emissions-free power, energy security, or innovation — and all of those frames are true.The message is simple: no purity tests — just shared goals. As Jamie said, “If we could just get over ourselves. I get that you're calling this energy security. I call it renewable and emission-free. We both love it… We should do this.”And right now, there’s a window of opportunity. Demand from data centers and AI is skyrocketing, and the companies behind them care more about speed and scalability than price. That makes geothermal’s unique attributes — 24/7 power, co-location potential — especially valuable.If we move quickly, geothermal can scale up during this inflection point and ride its own learning curve, just like shale did a generation ago. But it will take investment, supply chain support, and a lot of new people entering the space.Jamie’s closing message is one I’ll echo: Geothermal needs you. Whether you’re an engineer, entrepreneur, creative, or just curious — this is the time to get involved.In this conversation we cover:* Why geothermal is uniquely suited to meet demand growth* How bipartisan policy wins are accelerating deployment* The intersection of AI, data centers, and dispatchable clean power* How Texas became a testbed for the next generation of geothermalAs always, please like, share, and leave a five-star review wherever you listen to podcasts. Your support helps bring these critical energy conversations to more people.Timestamps:3:00 - How Jamie came to work on geothermal9:00 - Oil and gas industry connections to geothermal15:00 - Geothermal in Texas22:00 - Working across partisan divides27:00 - Learning curves for geothermal are similar to shale drilling30:30 - Data centers and demand33:30 - National security imperatives for geothermal 38:00 - The cost of geothermal power compared to gas40:30 - The turbine crisis and the entrepreneurial opportunity in turbines43:00 - Geothermal needs YOU! “Jump in and try”Shownotes:Project InnerSpace: Pioneering Geothermal InnovationTexas Geothermal Energy Alliance (TexGEA)* Project Innerspace on Twitter, YouTube, and Linkedin* Jamie Beard on LinkedIn* Jamie’s viral TED Talk: The untapped energy source that could power the planet* Wired’s feature on Jamie: To Save the Planet, Start Digging (Wired) * GeoMap™ Beta Release: Project InnerSpace released this interactive tool to serve as a pivotal resource for geothermal prospecting, providing comprehensive data on geothermal resources. ​Other Podcast Episodes:Drilling for Geothermal Power and Storage with Cindy Taff, Energy Capital Podcast.Catching up with enhanced geothermal. Volts Podcast.The Potential for Geothermal Energy to Meet Growing Data Center Electricity Demand. Rhodium Group.The Future of Geothermal Energy. IEA.Mapping Texas' Geothermal Potential* Geothermal Play Fairway Analysis (GPFA): A Texas/Gulf Coast Case Study: A study conducted in early 2024 applied GPFA methodologies to assess geothermal resources in the Texas Gulf Coast region. The analysis integrates critical risk elements to enhance exploration success rates.* Presidio County Geothermal Assessment: Published in May 2024, this assessment identified substantial undeveloped geothermal resources in Presidio County, highlighting the potential to meet local energy needs and contribute to the broader grid. (presidio)* The Future of Geothermal in Texas Report: A collaborative effort by researchers from five Texas universities, this comprehensive study evaluates the state's geothermal resources, technological developments, and the role of the oil and gas industry in scaling geothermal energy. ​Regulatory Framework and Policy Updates* Senate Bill 786 (2023): This bill amended the Texas Water Code to transfer regulatory authority of closed-loop geothermal injection wells to the Railroad Commission, streamlining the permitting process for geothermal projects. ​* Railroad Commission's Proposed Rules: In October 2024, the Railroad Commission proposed new rules to implement SB 786, outlining operational standards and enforcement measures for geothermal wells. Technological Innovations in Geothermal Energy* Quaise Energy's Deep Drilling Technology: A Houston startup, Quaise Energy, is developing technology to drill deeper into the earth than ever before to access "superhot" rock for geothermal energy, harnessing it without drill bits by using electromagnetic waves to melt or vaporize rock. ​(Houston Chronicle)* Sage Geosystems' Energy Storage Solutions: Led by former Shell VP Cindy Taff, Sage Geosystems is developing innovative methods to produce and store geothermal energy, contributing to a more stable and sustainable electrical grid. ​(AP News)Educational and Collaborative Initiatives* HotRock Geothermal Research Consortium: Based at the University of Texas at Austin, HotRock collaborates with Project InnerSpace to advance geothermal research and develop tools like GeoMap™ Beta for resource assessment. ​* Geothermal Events and Forums: Various events, such as the "Future of Geothermal in Texas" forum held on March 26, 2024, provide platforms for discussing technological breakthroughs and policy solutions in the geothermal sector. ​(Geothermal Rising)Industry Perspectives and Media Coverage* Geothermal Everywhere: An article discussing the vast potential for geothermal energy beneath the entire U.S., with a focus on Texas' unique geothermal resources. (​C3 Solutions)* Geothermal's Breakout Year: An article published on January 2, 2025, discusses how geothermal startups achieved significant funding and project milestones in 2024, driven by increasing demand for carbon-free energy from data centers and industrial sectors. ​Texas Geothermal* Geothermal Energy in Texas: The University of Texas Energy Institute's comprehensive report on the future of geothermal energy in the state, including analyses of resources, technology, and policy recommendations.* Austin Energy's Advanced Geothermal Pilot: Announced on November 14, 2024, Austin Energy partnered with Exceed Energy Inc. to develop a pioneering geothermal project near its Nacogdoches facility. Expected to be operational in 2025, this project could signal a new era of green energy innovation in Texas. ​(Energy News)Transcript:Doug Lewin (00:07.342)Hello and welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. My guest this week is Jamie Beard, the founder and executive director of Project Innerspace, an organization devoted to advancing geothermal technologies. Look, we talk about a lot of different technologies on this podcast, talk a lot about distributed energy resources, nuclear. There is little that I'm more bullish on than geothermal particularly in Texas, because it leverages the skills of the oil and gas industry. You're going to hear all about that in this podcast. And let me just say about Jamie, she's got an amazing bio. We're going to link to that. You can read about it. There was an amazing article Wired did on her, a feature. She's given a TED Talk that is one of the most watched of any energy talk on TED Talks ever. You can learn a lot about her from the show notes, but let me just say this about her there are are a lot of people that know a lot about the technical aspects of geothermal. There are a lot of people that are very networked within both the oil and gas space and the renewable space, policy space, et cetera. I don't think there's anybody that has those two things sort of in the quantities and qualities that she does. TXGea being the Texas combination of technical expertise and really understanding how these different geothermal technologies work, as well as the sort of social capital she has of kind of knowing everybody in the geothermal space.Jamie is absolutely amazing an inspiration and this conversation was so much fun to record. We did it live on the sidelines of South by Southwest in downtown Austin in mid March. At Geothermal House was what Project Innerspace called it. It was a great conversation. I'm looking forward to listening to it again once we put it out there. I learned so much from Jamie. I hope you enjoy it. This is a free episode, but it is not free to produce.We have both the Texas Energy and Power newsletter and paid episodes of Energy Capital podcast that are available to you if you subscribe at douglouin.com, D-O-U-G-L-E-W-I-N.com. We are also really putting a focus on our YouTube channel where you can see the video for this if you're listening to it right now. You can see the video at our YouTube channel, so go find that as well. Thank you so much for listening and thanks for your support.Doug Lewin (02:27.042)I've been looking forward to this for a while. We've been talking about doing this for a while. Jamie, having kind of a fanboy moment because you are like, there is so much happening in geothermal and as much as anybody, I know it's you're going to say, and it's true, it takes a village and there's thousands of people involved, but as much as any one person is responsible, you are, you have been incredible. Can we just start, just tell people a little bit about yourself and about Project Innerspace and what is going on here at South By what you did last week in DC which are about to do it CERAWeek?Jamie Beard (04:23.342)Yes, yes. That's a lot. Let me break it down. How did I get into geothermal? Back in the day, in the early 2000s, I was actually, well, even before that, I was a energy and regulatory attorney at a big law firm. And I was an environmental activist and a climate activist. And I was certain that if I joined a law firm, I would be able tochanged the world from the inside out and that was a very wrong assumption. I was defending the worst behaviors and not getting what I wanted to get done in the world. So I moved into entrepreneurship and joined a startup company that was working in the energy space and this was early 2000s. So this was like early shale boom. This was boom times in oil and gas.You know, as a climate activist, I hated oil and gas back then. I mean, it was a visceral reaction for me in oil and gas. I just assumed there would never be a place for me to collaborate at all with industry. And in fact, the opposite, that I was going to work to bring the industry down with my professional career. then in our startup, we started having some really interestinghigh temperature results in our technology. We were doing an energy storage technology and we started to sell that technology into defense space and oil and gas. And so all of a sudden I found myself deploying prototypes on rigs in oil and gas. And I was forced through osmosis meeting people and talking to people in industry who were by the way in the middle of the shale boom.I mean, so they were doing amazing s**t. Like they were going out, doing something, maybe it didn't turn out perfectly in the field that day. So they would get together in their trailer that night and like, what do we do different? How do we try it differently? What should we change? And then they'd go out and do it again and like hit it out of the park. And they were doing this every day.I don't think people appreciate how innovative the oil and gas industry has been over the lastRight? so for me, all of a sudden oil and gas changed from this monolith evil I want to bring them down to holy s**t. These people are amazing and fast and there's serious grit and there's a ton of technological talent and innovation and iteration. And wow, what an asset. They're getting s**t done about the same time. And a lot of people in this room were inspired by this report as well.And they're getting s**t done.Jamie Beard (05:46.958)this report called the Future of Geothermal Energy came out. was an MIT, an MIT publication. And that report was like, wow, so geothermal is this thing. It's this huge resource. It's thousands of times everything we'd ever need. But there's these pesky engineering and technological challenges. And they're mostly about drilling in the subsurface. And man, how are we going to solve those? And for me, it was just like, You know, it was just this moment where it was like, well, that's oil and gas. I just saw it. So that's how I, know, and you know, I spent some years saying, God, somebody should do this. Somebody should go do geothermal. We should get geothermal going. And finally, I just decided, if no, I'll just do it. So we'll start some s**t. Let's go start some s**t.So you did this TED Talk that really kind of went viral, just a ton of views called TXGea being the Texas Untapped Energy Source That Could Power the Planet. I encourage folks to go watch it. on YouTube in 15 minutes and it's fantastic. After this podcast, go watch it. I want to ask you a question about that. What do you think, looking back, because it was almost four years ago, what did you most get right and what if you were going to do that again? What might you change about what you said during that attainment?And just some background for you all, David Biello, RNC, was my curator for my talk. So that's how we know each other. And he really ran me through the ringers on my script.I've probably watched it four or five times because I've done a few podcasts in geothermal and I go back and like refresh my it's really fantastic.Jamie Beard (07:20.034)Well, thank you. That's awesome. I think so one thing that I underestimated back then that's still, it's probably gonna be more of a thing now in the Trump administration as geothermal becomes kind of a Republican charge increasingly, which I don't think is bad. But back in the geothermal, back in the Ted Talk days, I underestimated how hard a conversationThis was for a far left room, a very liberal audience, particularly the argument that oil and gas could save the day for geothermal. I went through this personal journey over many years of seeing oil and gas and learning the value of oil and gas and realizing there was this awesome potential. And I underestimated that most people in the world who are thinking about climate and energy and tend left probably haven't been on that journey. And they wouldn't have instantly the perspective that this was gonna be awesome. So like the Ted Talk, the room was very cold. Like so you can't see it in the video, but the audience was very cold, particularly when I got to the part where like, how are we gonna do this? Well, it's gonna be Exxon got, you know, that was a hard sell and it's still a hard sell.And I think now that you know we had Secretary Wright at MAGMA, you mentioned MAGMA, that was amazing. You've got the Trump Administration coming out for geothermal. That was awesome, that is awesoe that will probably be awesome for geothermal. At the same time. At the same time there is the risk of tipping geothermal into a massive amount of polarization and drama and there is a risk there.Doug Lewin (09:35.854)I want to talk more about the oil and gas connection here because I think it is so important to talk about. one of the folks you had speaking here earlier today, I recorded a podcast with Cindy Taft of Sage Geosystem. She was 35 years in Shell. I interviewed for a previous podcast. did Tim Latimer with Fervo, former oil and gas person. And I think that there is really something here because you have these two things happening at once. Well, there's a lot of things happening at once, but let's consider these two. A lot of automation happening in the oil and gas space and less jobs per barrel produced. I mean, like significantly less jobs needed per barrel produced. As a matter of fact, compared to 2014 to today, oil and gas jobs in Texas according to the Federal Reserve of Dallas, about 300,000 10 years ago, about 200,000 now there's an energy expansion and transition happening. Transitions can be kind of painful to existing workforce. And here you have this renewable emission-free power source, not just power source, but heating and cooling as was talked about a lot today. we'll talk about that as we go through this as well, that involves drilling and skill sets related to drilling. So I'm a big fan of this concept in life of pivot, right? It's like, if you think of basketball, the player keeps one foot where they are and one foot kind of moves around. Isn't that what's happening here? Can you talk more about the oil and gas industry and what it means for geothermal and what geothermal might mean for the oil and gas industry?Jamie Beard (10:02.034)Yeah, I mean pivot is a great word and we actually had a conference for oil and gas called pivot that many folks like kind of that was their entry into geothermal from oil and gas. And I think the word pivot is great because it's faster than a transition. I don't know if you all know Bob Metcalfe, he coined that term years ago about geothermal. Pivots are easy for oil and gas. And if you think about it for geothermal, we've heard it on all the panels today, there's so much skill set overlap, 80, 90 % skill set overlap across industry. So there's really not a whole lot that you need to do to do geothermal. You can do oil and gas, you can do geothermal, minimal training changes, minimal effort to make that switch. If you look at trying to switch oil and gas from oil and gas into solar, you run into.Doug Lewin (11:38.296)That's not a pivotJamie Beard (11:40.034)That's like a completely different. Something completely different, right? I think the avalanche that we're seeing in all of this infusion of oil and gas brains into the space is because it's so easy to transition their skill set and they're doing it en masse right? So it's like the barrier for entry is so low. There's so much overlap that they realize in engaging a little bit in sessions like this and they're like, wow, no, I can contribute to this conversation right now.with what I know and I might be able to make a difference. And so along that vein, we need to flood the space with more of that, right? So geothermal right now in my view suffers a little bit from not enough innovation, not enough growth mindset, not too much incremental thinking and not enough exponential thinking. And a lot of that type of brain power is coming out of entrepreneurs that are jumping out of oil and gas and seeing these massive 100X opportunities. So like we need more of that, 100X more. So there are awesome startups out there, let's do that 100X. There's awesome Cindy Tafts and Tim Latimer's, let's do that 100, 1000X. And the more brains and the more ideas and the more energy we infuse into geothermal, the more growth mindset, I think the faster we go, the bigger we are, the way, you know, it's the way to put geothermal on the map.Doug Lewin (13:12.054)Yeah, you said, I think it was in the TED Talk, I wrote down a quote, I think it was from there, where you said, if you want to turn the ship, recruit the sailors, right? In the energy world, the sailors are people in oil and gas space. It's where the money is, it's where the technical expertise is. I also, my company, I named my company Stoic Energy, because I'm a big fan of the Stoics, and Ryan Holiday and his books, and he wrote a book called The Obstacle is the Way, right? What stands in the way to progress is the way to progress. This is like a real tangible, example of that. can fight the oil and gas industry all day long, or you can figure out ways to actually work together, which is what you're doing.Yeah, and I think it's important also to note that oil and gas is not a monolith. So in the us and them mentality of the world where everybody's polarized and there's the pure and the good and the evil and the villains, and often oil and gas, unless you're in Texas, oil and gas gets thrown into the villain pile, I think we need to pause and say, wait a minute, we're talking about an industry that's made up of literally millions of individuals globally.And those individuals are truly individual, right? So within oil and gas, you have an enormous amount, a huge amount of disciplines and cultures and viewpoints and politics. And so, you know, it's hard once you start meeting people in oil and gas to start to say you're a bad, you're evil because you're, know, and so it, for me,It was about engaging with the people and then realizing, wow, these folks wanna be champions within their industry. They want to help the industry into new things and into pivots. And so many of the oil and gas entities that are engaging in the geothermal space now are doing that because of internal champions, like really bad-ass oil and gas employees that were like, we want to help do this. I'm gonna start organizing luncheons.Jamie Beard (15:11.31)And then we're gonna start having group sessions and then they'd move it up the chain and then they'd pitch it to their C suites. And then all of a sudden we have $100 million investments and Ken Wisian mentioned some of them have departments now. That's absolutely right. That's all happened in the last three, four years. And it's because of internal champions in these entities. That's awesome.It really is awesome. Keep it going. It's one of the reasons I love working in Texas because you do get this. If you're in the energy space in Texas, you're working with people in renewables, you're working with people in oil and gas, you're working with people in energy efficiency. It's all happening here. Let's talk a little bit about Texas because there is a lot happening on geothermal in Texas. Where are you seeing geothermal?We mentioned, I just mentioned earlier a couple of the companies that are headquartered in Houston, but there's also some projects on the ground that are getting going. Talk about Texas and its sort of role in the geothermal space and ecosystem.So, you know, back in the day when we started rabble rousing in Texas a little bit, it was really about it being the epicenter of the oil and gas industry. So if you've got the entities and the people here, we can get something started. Since then, though, with some of the mapping that's been done, the Geomap project and others, we've come to realize that Texas is actually massively resourced as well for geothermal and not just along the Gulf Coast, which was previously understood, but like massively resourced across the state for things like data centers and that's that's kind of the rhodium report.Doug Lewin (16:45.538)Can you talk about that? Because I'm still under the impression that it's kind of more of that like Eagleford kind of bend along the coast where the best, that's still the best resource. Okay, so you've actually found through research over the last year or two that the resource is better than we understood before in Texas?Jamie Beard (17:04.876)Yeah, and broader in more parts of the state. And I think what that means is that because Texas is a friendly regulatory environment, it's used to drilling, the culture is drilling, oil and gas is here, it's easy to permit projects. And we heard that from, in our past panels, including Representative Darby's comments, there's a lot legislatively that's been happening in Texas. And it is, let's be clear, legislatively, Texas has absolutely hit it out of the park.It is by far the fastest and most aggressive geothermal legislation that has been passed in any state. And let's be clear, they did it in a year, start to finish, right? So, TXGea gets off the ground, builds a legislative agenda, and gets it passed and signed by the governor within 18 months.TXGea being the Texas Geothermal Energy Alliance. But I want folks on the podcast to know so they can go find a great organization. Matt Welch, Barry Smitherman, Jade, yeah, they're doing great work.Yeah, and so if you look at that and you look at that track record and you've yes, pilot projects, yes, the geothermal startups are, this is literally the epicenter of most startups. So there are more startups in Texas than the rest of the states combined. This is becoming an epicenter of innovation as well and that's largely because the entrepreneurs are coming out of industry. They're already here and they just set up shop in Houston.So if you look at it, Texas is this kind of epicenter that I think we need to make a model for other states, really easily other oil and gas states, right? Because there's similar regulatory environments, similar cultural acceptances of drilling, but really all states. How do we make geothermal easier to produce? How do we go fast, you know, et cetera? So Texas is kind of the place to be for geothermal right now, but let's not keep it there. Like this is like where do we go next?Doug Lewin (20:13.538)What starts here changes the world. Isn't that what the university down the street says? Yeah. Yeah. So I also want to kind of go a little deeper into the kind of the polarization and the kind of overcoming of polarization. We've talked some about the oil and gas industry and getting involved. And you mentioned earlier you had Secretary Wright at your event. You've talked about how the left may be a little apprehensive about geothermal. But it does seem to me like that's you, too.This is a technology that can be a place, kind of a water's edge, where people kind of come together. Can you talk about the support you've seen in DC from both Republicans and Democrats? I mean I so, you know, in Texas right now, as we're recording here on what is today, March 11th, there are bills at the legislature that seemed very designed to hurt renewable energy, particularly wind and solar. My fervent hope is that both in Austin and in Washington DC, legislators will focus on what they want more of, right? If you want dispatchability ability, if you want flexibility, if you want base load power, like do the things you need to do to get more of that rather than punching down at certain energy resources. And I think there's hope that that could happen. It's gonna take building a lot of consensus, talking to people across divides on things like nuclear power, energy efficiency. And again, I think geothermal is one of those that because it's emission free kind of appeals to a lot of folks on the left and Democrats, not that they're the only ones that care about emission free, there are others, of course. And on the right, because it is using a lot of the oil and gas technology. And again, not to stereotype, there are people on the right who care deeply about emissions too, but that's the way people can kind of get together, have conversations across divides and hopefully build some consensus. Do you see that happening with geothermal?Jamie Beard (21:17.312)No, this is a good question. So, and we've actually seen this in throwing these events. The two different groups of people, left and right, use very different sets of terminology to describe why they love geothermal.And so the challenge we have in events like this is you have to pick a terminology to use in a single event and use it. Like you gotta make signs and stuff. And so when you have a, and like you said, on the right, at MAGMA in DC, it was aimed at the right because we need to get the right up to speed about what geothermal is, because it's showing up in executive orders. And it's catching people off guard. They don't know what it is, right?If we lean right, but we adopted terminology for that, which was all about oil and gas workforce, it was about energy security, it was about dominance, it was about abundance, it was about drill baby drill. We're gonna go to San Francisco and do San Francisco Climate Week in a month. And I guarantee you, none of those terms are gonna show up in any signs because they don't speak to that demographic, right? But what does is climate change. climate mitigation, energy transition, right? But they're all the same thing. I mean, so the thing is, if we could just get over ourselves and realize that like, look, I get that you're calling this energy security, I call it renewable and emission free. We both love it, holy s**t, we should do this, right? But here's the problem. It's the purity test, right? So. Yes so you mentioned like, with the Trump administration, it looks like maybe there's gonna be some punching down on renewables, solar and wind may suffer, et cetera. You're right. There's a reality with the Trump administration that some winners and some losers, this is gonna happen. And when you approach that with a purity test like I have to agree with every single thing that administration does and says in order to get behind geothermal and get behind the administration's support of geothermal. It's just not gonna happen, right? So the way we thread the needle is where can we agree? Like is there a path, like purity test aside, I don't care what you think about social issues, I don't care what you think, whatever. Geothermal, what do you think? And if we can just do that as humans we might be able to fix our s**t, right? But the purity tests, it's really hard, right? And there were, you know, there was even pushback on magma from the left because it was called magma. Now y'all, I think it was, I think it's really fricking funny that we call it, we made the red hats and all that stuff. And at MAGMA there was an audience full of MAGMA hats listening to Chris Wright talk about geothermal. That was awesome but there was pushback like, no, that sounds like MAGA, you're clearly playing off this thing that we hate. We need to get over ourselves. And if we can't get over ourselves, we're not gonna make progress.I actually think if I can get, you know, even higher level here for a minute, like beyond energy, our whole democracy depends on our ability to do exactly what you're saying, right? It's just like you were saying with oil and gas where there's too much sometimes a caricature of who is in oil and gas. And when you actually talk to people in oil and gas they're a lot more complicated and complex than you thought they were. Doug Lewin (23:17.312)Right. And so one of my favorite podcasts I ever recorded was with David Spence. He wrote this book called Climate of Contempt about how like we're not going to be able to deal with climate change unless we can talk across divides. And I struggle with this too, because a lot of times I'm like, what do mean you don't believe in climate change? Like it's of course it's happening. It's science. But like you said, you have to sometimes get over yourself in order…Jamie Beard (24:55.822)Does it matter that you, does it matter if we're gonna work together and we both like geothermal, does it matter what you think about climate change? No.Doug Lewin (25:02.452)No, no, and, and if I say that it does and I just shut down having a conversation, then there's no chance of us understanding each other and both of us changing. He actually, David Spence in his book, Climate of Contempt has this quote from Ted Lasso that is be curious, not judgmental. And I just love that. That's like a great way to enter these conversations in order to try to get over some of these divides. So I really appreciate what you're doing. And I, and I think what you're describing as some of the things that are happening internal to those companies, those things don't happen, right? Unless the initial conversation happens and somebody sees, this isn't a threat. Maybe this is an opportunity. And just think about how you react differently if there's a threat in front of you versus an opportunity in front. Jamie Beard (26:01.388)Right. And look, there and right now we're in this environment of agitation politically where everybody's scared and nobody really knows what's going on. And there's there's all of this angst and the angst is starting to come out with statements about geothermal like, well, you know, because the Trump administration looks like they're going to support it, maybe we should be really concerned. Maybe we should be skeptical. And these are entities that in the Biden administration had been really excited. And I think when you start mixing visceral emotional reaction about politics generally with a concept like geothermal, we lose, right? Yeah, for sure. So, I mean, we just, need to find a way to narrow path, agree, no purity tests, agree on this one thing and go. And if we did that for geothermal over the next two, four years we could run really fricking fast.Doug Lewin (27:39.452)Yes, we could. And look, and I understand the concerns that a lot of folks, including Secretary Wright, have over intermittency of renewables. So again, if you want to deal with that, develop these other sources. So it does look like DOE is going to put some significant support behind geothermal. That's really exciting. I want to ask you about learning curves, because this is obviously a big thing in everything going on with energy transition and energy expansion, right? We have seen a huge drop in the cost of solar, 90 % and a huge drop in the cost of batteries, again, 90%. I don't even think this story has gotten enough play yet, but batteries in 2024, 20 % price reduction just in 2024. This is the big question around nuclear. Can small modular reactors actually have a learning curve? Because nuclear has not had a learning curve. It's gone up.What do learning curves look like on geothermal? Where are we at as far as cost? And how does that compare to other resources? And are we starting to see declines? Are they rapid? Are they incremental?Jamie Beard (28:29.388)Yeah, so the oil and gas entrepreneurs that get into the field and do geothermal stuff, Tim and Fervo is one example, Cindy in Sage is another, within a well or two are seeing massive reductions in cost, 50 % cost reductions, et cetera, right? All of this though is expected because remember, geothermal has not benefited before this kind of rush of innovation and technological innovation from the oil and gas industry.Geothermal had not benefited from new or even recent drilling technologies. I mean, the industry was drilling decades behind oil and gas in terms of capabilities.Doug Lewin (29:29.329)And because of a lack of investment or lack of people or all the above?Jamie Beard (30:17.138)That's actually a complicated question. is a squeeze in capital in geothermal. Geothermal is massively undercapitalized. Undercapitalization does not help when you're trying to innovate. So you actually get risk adverse when you're undercapitalized. So you cannot fail. Therefore, you should not try anything that might fail. So that crushes innovation.And when you're dealing with innovating drill bits that are going miles below into high temperature, have to, like you're gonna fail sometimes.And when you fail with drilling, it's often expensive failure. So the industry has not been incentivized to try new big bold things. And because of that, there's not been a whole lot of technological progress in terms of trying new things, bigger, bolder, faster, deeper and cheaper. But we're starting to see that now in the startups. And I think, when I mentioned the shale boom in my open, I mean that as the analogy. I mean it in a lot of different ways. Cost scale industry are iterating very fast in the field to make changes to drive costs down and doing it really fast. like zero to six, 10 year span going from zero to world changing geopolitics completely scrambled, right? Geothermal's right there in that early curve. And I think that's really, it's something that we need to remember. Like we've done, this is not impossible. We've done it before.It's shale. We've got the model and we know the curves of shale. Let's do it again because it's the same technology but for a different purpose.Doug Lewin (31:49.148)Yeah, and those curves for the shale boom were awesome. Yes, yes. All right. So we cannot have any conversation about energy going more than what have we been about 30 minutes without bringing up data centers. Data centers have changed the whole conversation in the energy landscape to demand projections now, particularly, by the way, within ERCOT, even where I've seen independent analyses where they kind of take a haircut to all of the demand projections that the regional transmission operators and independent system operators are putting out themselves. still looking at eight, nine percent annual growth rates. That is so some people will say that's unprecedented. It's not unprecedented. We experienced that in the 50s and 60s when we were just still like electrifying homes period and adding air conditioning in the state of Texas. So that is the kind of growth rate we're talking about.You also have, obviously, customers with large balance sheets that desperately need power. And you guys have just put out a report today that geothermal can meet a very large portion of the data center demand. So can you talk a little bit about the, the report you all put out, and the sort of accelerant that this data center demand might be for this nascent industry?Jamies Beard (32:17.138)Yeah, for sure. So that report was really cool in that it put a number on an opportunity. And the number is, look, two thirds of data center demand growth could be economically serviced by geothermal and 100 % could be serviced hard stops, meaning it'd be more expensive to do it, but we could do it. And here's the thing about data centers right now. Economics don't really matter. So like that makes this report even cooler because we could do two thirds economically, but data center developers and the Open AIs of the world don't give a s**t how much it costs right now. They just want it done. And that makes it a perfect pivotal opportunity for geothermal to jump in and get on the learning curve in an environment where cost is not the driver, speed and scale is. And again, like back that up with the oil and gas industry, you know speed and scale, speed and scale.They're going to do the natural gas developments for data centers anyway. Let's slip geothermal in here. Let's do some co-production. Let's build hybrid systems. Let's get geothermal cooling in. Let's do the 50 % efficiency reductions with geothermal cooling. Like now is the moment over the next five years to get all of the different ways geothermal can apply to data centers done in pilot projects. And then it's just a matter of scaling. I think that here's the quiet part on the data center thing. Yes, demand growth, yes, that's scary, potentially unprecedented. Yes, it's probably gonna be a big piece of the US grid in almost no time. And yes, that's interesting. But there is a really potentially more interesting kind of national security angle to data center development and AI growth that many of the tech majors, it's actually driving their decisions about growth and building data centers. And really what this is is geopolitical. This is about war and this is about competition with China and this is about being afraid that rogue actors will be the first to achieve AGI, artificial general intelligence or super intelligence.And if that were to occur, essentially apocalypse now, the world ends, it's scary. And there's an amazing paper called Situational Awareness. If you want some very disturbing bedtime reading, that's a good one to read. It's one of those things that you read it and you realize how far ahead of the curve China is on investment in almost every way in geothermal and AI and also in building out energy capabilities, right? So when you look at this from a US perspective and know, Innerspace is global and we don't take nationalistic positions, but if you're a US hyperscaler and you are paying attention to these national security implications and this race to AGI and super intelligence for AI this is driving a lot of the urgency, right? It's competition with other actors and achieving this. And how do you power that growth? Well, you gotta get it from somewhere really fricking fast. And that's what's kind of contributing to this price insensitivity. It's like, we don't just how fast can you build it? We'll pay it.Doug Lewin (35:01.76)Yeah, I mean, this is another place where I think Republican, Democrat, anything in between or to the side of that, if you're an American, you have an interest in making sure that we have enough power to meet these data center loads, that there is AI development in this country. There is a race going on. And that should be another kind of a water's edge kind of a space, I think. You said a minute ago, China is developing as China, did you say it? Maybe I misheard you. Is China ahead of us in geothermal?Jamies Beard (35:49.76)Yeah, in terms of investment massively ahead.Doug Lewin (36:01.76)In terms of investment… but they don't have, there's not shale formations?Jamies Beard (36:17.24)China has drilled the deepest geothermal well in the world now. mean, it's a government research program. But the important part about China is this, when China decides they wanna do something and own something, they just do it. And about five or so...Doug Lewin (36:28.19)Is it Sinopec or like who's? I mean, it all is government. There's not a lot of hearings and buy-in and all that. It's just like somebody decides.Jamies Beard (37:13.24)And there's no protests and slowness and what, right? You just go. And about five or so years ago, China decided to dump a billion dollars into geothermal. And so like, if you look at US investment, I mean add up all investment and startups plus government investment, we need to hurry up, right? Because that, it's a pole position. China's learning a lot of stuff and they're on the bleeding edge of, and again, there's not a whole lot of information sharing about these research programs. So we don't entirely know, but we do know that there's investment in a race. And so like from my perspective, that's awesome. Like drill the deepest well, how did that turn out, right? But again, if you're looking at it from a US national security perspective, who's gonna own, I mean, taking on the Trump administration talking points of energy dominance and AI.If you look at it from that perspective, we are in a race and have to hurry up.And it just seems like one of those areas where we should have every advantage because of what you were talking about. We have industry. this should be a race that we win. Doug Lewin (38:00.206)I do want to come back to a minute to the I don't think I followed up properly on the question around like learning curves and all that. Like where are we right now if you're to line up? Like we are seeing very large numbers for just gas turbines for combined cycle plants. We're seeing now IRPs around the country, prices that are in the $2,200 a kilowatt, $2,400, $2,500 a kilowatt kind of a range. And to put that in perspective, like just a couple of years ago, we were looking at like $1,000. So we've just seen this way beyond any sort of inflation kind of a trajectory. Those are really high numbers. Like how far away are we from actually like crossing this? I know you can't say.Like, because there's so many different companies, different technologies, and it's a little opaque because people don't always say, but like, are we in a $3,000 $4,000, $5,000? Like, how far off are we for geothermal, for KW? How far away are we to where like the lines might actually cross?Jamie Beard (39:02.136)Yeah, so this is another thing and one day, Tag, try to nail a geothermal startup down on what they've signed on their PPAs. Most of this is not publicly available, But the best I can guess is they probably signed at $100 per megawatt hour for these.Doug Lewin (39:07.206)That's what Jigar Shah now says, it's like everything's $100 a megawatt hour, everybody needs to their head around.Jamie Beard (39:08.136)It's a fair guess yeah, but I don't know for sure like get him Tim or Cindy to tell you okay But but like that but I think there's a consensus amongst startups that are doing bold things in the field that they can get it down aggressively so like within a short number of years and a couple of wells down to 80 and then potentially 60. And you start over a five year period taking huge chunks out, right? As you iterate in the field. But again, like this is Jamie guessing. I think Cindy actually, y'all might be able to back me up. Cindy actually may have said 80 and 60 on her panel today.Doug Lewin (40:02.139)Yeah, and of course you can't forget that there's not the cost of gas, right? Which now is up over four bucks, which is kind of shocking. One more question before we kind of move to close here. There is, as I was just talking about, the capital cost of turbines has really kind of gone through the roof. There's Heatmap News called the gas turbine crisis. Geothermal needs turbines too so this is a problem in the geothermal space I take it.Jamies Beard (41:01.206)Yeah, so the trend has been forward-looking entities in the space have locked up the so so geothermal uses different types of turbine technologies a little bit different than natural gas and there's very few suppliers of those technologies and you know forward-looking entities over the last few years have actually moved to to lock in those supplies in case they have rights of first refusal and things on supplies. And what we're looking at in terms of a geothermal boom is the potential of actually hitting a ceiling because we can't build the surface equipment because there's no supply chain and there is no supply. And so, you know, I look again at this administration that's really all about breaking rules and doing really big, bold things that have never been done before.I mean, you can look at that catastrophically and a lot of people are feeling that way. I look at it and think, well, hell, then let's go ahead and, you know, Defense Production Act, turbo machinery and surface equipment. Like that may have never been done before at a time that we're not in war, but maybe we try that now because we already know that there's a shortage. And if we keep going over the next few years, there's going to be a massive shortage and we're going to hit a ceiling.So there's some opportunity to do some pretty big, bold things on behalf of executive order style fast moves. And the turbo machinery and surface equipment piece of geothermal is going to be a pain point. It's a pain point for natural gas for sure. Geothermal is probably worse because there's even fewer suppliers that have locked up the chains.Doug Lewin (41:19.495)I am also hearing there's big opportunity there. Obviously, there's a really steep capital cost and all of that to actually be able to manufacture rank and cycle engines. if somebody can get it together, there's a huge opportunity.Jamies Beard (41:39.495)God, like if you're an entrepreneur looking for a way to get into geothermal turbine machinist surface equipment, figure out how to make turbines work better, so more efficiently. I mean, there's so much, everybody's focused on the subsurface piece and nobody is paying attention to the surface. The surface is where all the entrepreneurship needs to happen now.Doug Lewin (41:19.495)VCs and investors that are listening pay attention to that as well. Jamie, I can't thank you enough for doing this, not only the podcast, but the event you're doing here in Austin, the one you're about to do in Houston, the one you did in DC for bringing people together and having these important conversations, supporting this industry, bringing people together, really like making it happen. We'll put a link in the show notes to your TED Talk, to the Wired piece about you. I hope everybody.Jamie Beard (42:35.719)People look into being entrepreneurs in this field.Doug Lewin (42:59.758)Anyone who knows who Jamie is and knows what Project Innerspace is, just a fantastic organization. I want to ask you though, before we close with anything that I didn't ask you that I should have, anything else you'd like to add before we end?Jamies Beard (43:01.495)I always want to make a pitch in every, whenever there's any demographic we can reach, I always want to make a pitch, a closing pitch to people who are looking for something new, entrepreneurs or people in oil and gas, anybody. And we're at South South by Southwest, so it's creatives and artists and filmmakers and everybody in between musicians. Geothermal needs you. There needs to be new talent, new brains, new energy, big thinking into the space.So if you're excited about anything you've heard today at Geothermal House or anything, jump in and try. I mean, this is blue sky territory, it's frontier land, there's massive opportunities and geothermal needs, a lot of excited, interesting, interested people. Doug Lewin (42:48.438)Jamie, where do they go if they want to learn more? Where would you direct people? Obviously, Project Innerspace's website, we'll put a link to that in the show notes. Where else should people go?Jamie Beard (43:39.395)Yeah, I think, you know, there's a lot of startups right now that are hiring. So like you should Google, you should Google geothermal startups and look at their look at their their personnel pages. I mean, there are there are startups out there that have 20, 30 openings right now on their teams. So if you're looking to jump into a to a startup, geothermal is hiring. If you're looking for more of the nonprofit space, Project Innerspace is hiring. So yeah, I mean, figure out what, if you want to start a company, ping us and we can give you some advice in the space. But there's room everywhere in geothermal for all types of people. So if you've got the interest, give it a shot.Doug Lewin (44:19.495)You're an amazing resource and inspiration. Let's all give a round of applause for Jamie.Thanks, y'all.Thank you for listening to the Energy Capital Podcast. I hope you enjoyed the episode. If you did, please like, rate and review wherever you listen to your podcasts. Until next time, have a great day. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe

For this episode, I talked with former North Carolina Representative and CEO of the Conservative Energy Network John Szoka. John’s a veteran, a conservative Republican, and businessman. He’s committed to clean energy not despite his conservative principles, but because of them.John is focused on helping policymakers and business leaders understand the economic and national security benefits of clean energy. John talks about renewable energy, batteries, and distributed energy resources in terms of competition, innovation, affordability, security, and local empowerment.We talked about how the United States needs to learn to build again. One major obstacle we kept coming back to was permitting reform. While often overlooked, it’s one of the biggest barriers to building the energy infrastructure we need. Even when there’s alignment on transmission planning and market coordination, projects still get stuck in years-long approval processes. Szoka makes a compelling case that these delays hurt both the economy and the environment—and that streamlining permitting can, and should, be a bipartisan priority.Szoka also shared his perspective on how the U.S. can lead globally by accelerating the deployment of advanced technologies—like next-generation nuclear and high-voltage transmission—while supporting domestic manufacturing and workforce development. It’s a vision grounded in John’s conservative values, aimed at national competitiveness and long-term reliability.We also touched on the Inflation Reduction Act, the growing demand from data centers, and how America can maintain and extend its energy leadership while bolstering its commitment to resilience and innovation. John brings a clear-eyed view of what it means to balance innovation with practicality and how conservative leadership can play a key role in making the energy transition work.At a time when energy debates often get stuck in zero-sum framing, this conversation is a reminder that clean, reliable, and affordable energy isn’t a partisan goal—it’s a national one. We need more people like John: grounded in experience, open to evidence, and focused on what works.As always, thank you for listening, and please share the episode and/or leave us a 5-star review wherever you listen to podcasts. Thank you!Timestamps* 00:00 – Introduction* 02:54 – Szoka’s energy journey * 07:10 – Conservative principles and energy policy* 09:08 – Senate Bill 819 & private property rights* 17:57 – Fighting misinformation in energy policy* 24:07 – Texas vs. other states* 27:30 – All-of-the-above strategy: gas, nuclear, geothermal* 30:45 – Transmission as a national priority * 31:39 - Are we still a nation of builders?* 37:16 – The demand side and energy efficiency* 42:04 – Energy policy & national security overlap* 45:15 – Microgrids & resilience for military bases* 48:35 – Texas’ unique energy landscape* 50:29 – Bipartisanship in action: North Carolina House Bill 951* 57:16 – The Inflation Reduction Act (IRA): a conservative take* 1:03:25 – Final thoughtsShownotesGuest Background* John Szoka – LinkedIn* CEO of Conservative Energy Network * Conservative Texans for Energy Innovation* NC General Assembly - Bills introduced as a Representative Key Legislation & Governance Structures* House Bill 951 (NC): Passed in 2021, this bipartisan legislation required Duke Energy to reduce carbon emissions 70% by 2030 and reach net-zero by 2050. Read the full text of HB 951.Military’s Role in Energy Innovation* Military Microgrids. Microgrid Knowledge.* Joint Base San Antonio: Assuring Energy Security at the Largest Base Organization in the Department of Defense. Ameresco.* U.S. Army Improves Resilience at Fort Cavazos with New Microgrid. Microgrid Knowledge.* Fort Bragg (now Fort Liberty) was cited by Szoka as a leader in adopting energy efficiency and microgrid solutions. Read more about Fort Liberty’s Energy Security Initiatives.* Army’s Net Zero InitiativeBooks and Reports* SUN SHIELD: How Clean Tech & America’s Energy Expansion Can Stop Chinese Cyber Threats. Carnegie Mellon Institute for Strategy & Technology* Superpower: One Man's Quest to Transform American Energy by Russell Gold* Climate of Contempt: How to Rescue the U.S. Energy Transition from Voter Partisanship by David Spence * Podcast: How to Overcome Ideological Divides and the Climate of ContemptTranscriptDoug Lewin (00:00.0)Welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. Today, I'm joined by someone who brings both deep policy and political experience to the energy conversation, the CEO of the conservative energy network, John Soka. He's a rare voice in today's political landscape, committed to clean energy, not in spite of his conservative principles and values, but because of them. John served 10 years in the North Carolina House of Representatives, Doug Lewin (00:35.726)In many different leadership positions, including as the House Republican Conference Leader, Chairman of the Energy and Public Utilities Committee, Chairman of the Joint Legislative Commission on Energy Policy, he sponsored a number of major bills that passed and became law to take advantage of low cost clean energy and help rate payers. John is also a veteran, graduated from the United States Military Academy, served for 20 years, and after he retired as a Lieutenant Colonel from Fort Doug Lewin (01:03.234)Bragg, he has owned several businesses, including a manufacturing business, has two US patents. I would be remiss if I didn't say he earned his master's degree from the University of Texas at Austin, Hook'em. John is now leading the conservative energy network, which is active in 25 states, including Texas, operating as the conservative Texans for energy innovation. They see firsthand what happens when bills like Senate Bill 819, which I've been covering a lot at the Texas Energy and Power Newsletter, Doug Lewin (01:32.472)get enacted in other states. What happens when the heavy hand of government starts to regulate private property rights, limit the ability of rural landowners and communities to earn revenues from renewable energy and battery storage? We talked about all those things. We talked also critically about how the ability to build things in the United States. John called us a nation of builders, has kind of gotten away from us a little bit recently in the United States and how we need to get it back. Doug Lewin (02:00.504)We need to build new generating sources, new transmission, and much, much more. We talked about what it looks like when Republicans take the lead on clean energy. What's the conservative vision for an energy future that includes renewables, batteries, energy efficiency, gas, nuclear, a true all of the above vision? This is a timely conversation with everything happening in the United States. We talked about the Inflation Reduction Act and what to expect out of Congress. We talked about what's happening in Texas right now. Doug Lewin (02:30.146)Very timely conversation. hope you enjoy it. And as always, please like, rate, and review the Energy Capital Podcast. Please send a note to friends and colleagues to listen to the Energy Capital Podcast. Your word of mouth is really making a difference. This podcast is really catching on and your support is absolutely vital for that. Thank you for listening and I hope you enjoy the show. John Soka, welcome to the Energy Capital Podcast. John Szoka (02:52.558)Well, thanks for having me. Doug Lewin (02:54.478)It's great to be talking with you today. I've been looking forward to this. Obviously CEO of conservative energy network. I have so many questions for you, John, but let's, let's just go ahead and start with just a brief bit of your background to start the conversation. I want to start with your, your time in the North Carolina legislature. You were an elected official, obviously Republican elected official and shared the energy and public utilities committee, the joint legislative commission on energy policy. Doug Lewin (03:23.736)Can you talk about that experience, what you learned there that you bring to this position in the conservative energy network? It probably helps also to help our listeners just understand what the conservative energy network is real briefly, if you don't mind. John Szoka (03:36.382)Absolutely. Well, briefly, the conservative energy network is a network of state organizations under the umbrella of CEN. We operate in 26 states and we do two major things. One, we have people that work in each one of the 26 state capitals that mainly educate state legislators on energy issues, solar, entre-wind, batteries, nuke, geothermal. John Szoka (04:02.028)Any kind energy you can think of, they educate them on it. And one of the main things that's needed is education, because there's a lot of miss and disinformation. And let me use myself as an example, kind of tying into how I became the energy chair in North Carolina. When I first got to North Carolina legislature, here's what I knew about energy. When you go to the wall switch and you flick the switch up, lights go on, and when you push it down, the lights go off. And I had a lobbyist come to my... John Szoka (04:30.286)office who represented North Carolina Sustainable Energy Association. She asked me, what do you think about solar? And I said, it's just a bunch of garbage and it wouldn't exist without massive solar or federal subsidies. And she said, oh, that's interesting. We have a different viewpoint. And I go, oh, what's that? So she told me what their viewpoint was. And the two points here was one, I knew that she was a Republican representing this solar association. So she was already kind of the trusted John Szoka (04:58.86)messenger of information. And then two, she told me something that went against what I thought I knew. And because it was from a trusted messenger, thought maybe I need to examine what I'm thinking. Long story short, I did went on this six month journey of investigating solar and onshore wind and found out that what I thought was true was not true. So I went from being a skeptic of renewable energy to the champion of it in the legislature. John Szoka (05:28.498)And second term there, I did a lot of things and really got involved. And eventually I was the chair of the energy committee, the co-chair. Doug Lewin (05:38.232)John, real quick, what year was that when you had that conversation with? John Szoka (05:42.222)That was John Szoka (05:42.682)in 2013. I was elected in 2012, took office 2013. So it's a little bit different today. There's a lot more people who know more about renewable, but there's still a lot of folks who go on to public service with the same attitude I did when I was first elected. Doug Lewin (05:57.792)No, look, and I think that that perspective of like, you know, what I know is when you flip to switch the lights come on, like that is the vast majority of people, right? I mean, I, you know, I haven't worked on energy forever. And there's just certain thing is kind of what do they say about a technology you don't understand? It's like magic. It's electricity still a little bit like magic to me. Right. And I think it's really important to understand that people, particularly policymakers, but it's true for the general public if they want to get involved in public policy, which which I'm hopeful. Doug Lewin (06:27.136)a large number of people do, they may just not understand that. I think, really anything about energy, and that's okay, right? As long as you know you don't know and you ask questions, right? You learned, you became an expert over your years there. John Szoka (06:41.614)And you're absolutely right. It's okay not to know. And it's okay to have wrong ideas that you firmly believe in. What's not okay is to be so secure in your ignorance that you make bad decisions. That's not okay. Doug Lewin (06:57.89)Yep. Yep. So, so talk to me about, mean, as you're going through that process and like you said, you come in with this perspective that solar is just heavily subsidized. It's not really worth that much. You, you obviously have enough of an open mind that you can, you can learn about this stuff, but you also have conservative principles, right? That, that can you talk about how conservative principles, overlap with this area of Doug Lewin (07:27.778)you sort of clean energy, energy, you know, it's called a lot of different things, energy expansion, a lot of people in Texas call it and some people call it energy transition, some don't like that. But but whatever you call it there, we're in a moment in energy, right? Things are changing. And so even as your viewpoint is changing, you have principles that aren't changing. Can you talk about what those are and how those interact with your work on energy? John Szoka (07:42.776)Fast. John Szoka (07:51.786)Absolutely, John Szoka (07:52.446)because conservatives believe in a number of principles that don't change. We believe in free markets. I think markets, generally speaking, are better than directives from government in figuring out what the public wants and how they're going to pay for it. I think that as a legislator, constituents come first. And with energy, affordability is a big issue. You might have the best John Szoka (08:18.132)idea in the world, but if it's going to cost a gazillion dollars, why would you push that just for the sake of whatever? So affordability is obviously something that's, you know, we talk about clean energy, land, you know, do you get to tell me what I get to do on my land? Shouldn't be like that. And yet there's a lot of people who think that because they don't like fill in the blank, whatever form of energy it is. John Szoka (08:45.826)that they can tell me what I can do on my land. I can't put solar on there. I can't put wind. I can't put a nuclear station, you know. It's like, you know, we have property rights in this country and people should be able to use their own land for whatever they decide is the best use of it. I mean, I can start from there and continue on down, but those are kind of like really underpinning ones. Doug Lewin (09:08.386)Yeah, yeah, free markets, private property rights. mean, so one of things I definitely want to ask you about, and that's a good segue right into it is we're obviously recording here at a time when Senate Bill 819 is about to be considered in the Senate. We're recording the day before the hearing. We're recording on March 26. The hearing will be on March 27th. This is a bill that it's very interesting, you know, in Texas, I think if any legislator of either party. Doug Lewin (09:35.704)put forward a bill that really restricted oil and gas development on private property and said, as a, you know, there's a whole organization, right, in Texas called TIPRO, the Independent Producers and Royalty Association, right? There's a long history of people making money off of oil and gas wells on their land or oil and gas deposits, you know, beneath their surface. And the Texas legislature, Doug Lewin (10:01.752)barely regulates that at all, very, very lightly. And if anybody put forward a bill and said, you've got to ask anybody within 20 miles if you can earn money from a gas well on your land, whether they're a Democrat or Republican, they'd be in a lot of trouble. And yet here we are with a bill very similar to one that passed last session. So you could certainly talk about that bill. But I know this is something that you guys work on around the country. We keep seeing these different siting proposals. Doug Lewin (10:30.488)come up, tell me a little bit about your work there, what you think of some of these proposals. And again, kind of how, how does that, how do those conversations go when you're talking to a, a, a self-described conservative Republican who wants to limit what somebody can do on their own private property? Like how do they even defend that? John Szoka (10:50.278)That's a great question. And the way I talk to him is I don't do that initially. The first thing I do when I'm talking to a state legislator or a congressman or a US Senator whoever is I show them a copy of our mission and our goals and our principles and, you know, private property rights is on there, free markets is on all these things. So I start with an initial like we agree that we as conservatives believe in all these things, right? John Szoka (11:16.942)And I say, yeah, of course we do. We believe in all that. And then I kind of explain the issue on energy and increasing demand all across the nation. We have to meet this somehow. So how are we going to do it? And then they say, yeah, we need to do that. And I say, well, look at your state of Texas, for example, you're leading the country in solar and wind. And they look at me and I pull up the ERCOT Alert app, which I love that. I keep it on my phone. I think I showed it to you last week. John Szoka (11:46.99)I say, if solar and onshore wind are so bad, why is it that right now, as we're talking at 11 a.m. or 3 p.m. or whatever it is, that 75 % of the energy going into ERCOT grid right now is things that you say you really don't like? And they go, well, pump, pump, pump, pump, pump. I say, I can answer what it is. It's because it's the lowest cost at this time of day for the 12 hours when the sun is shining. So. John Szoka (12:16.28)People don't do it in Texas. The ERCOT doesn't put it on the grid to satisfy some liberal mandate from Washington, D.C. or from anywhere else. Doug Lewin (12:25.29)No, we're a market that's yeah, it's economic dispatch. It's whatever the lowest cost is against dispatch. John Szoka (12:31.022)And then if nothing else, sometimes, usually the light goes on and people start thinking about it and they kind of fall off their hard held false beliefs that it's just a bunch of liberal gobbledygook. You know, they say, I didn't know that. And it's like, that's why I'm here. that scene is repeated day in and day out in all the 26 states we work in, not only at the federal level, but at the state level. John Szoka (12:58.7)And I've got people down at the local level that deal with siting. People just don't know because energy is so incredibly complex, they need to be educated. Doug Lewin (13:10.254)Yeah, I think, you know, on the, on the private property rights, I was, uh, as I was researching to write an article about Senate bill eight 19, I found this quote from Ronald Reagan where he says, I'm quoting this is from, is a time for choosing speech. said, what does it mean whether you hold the deed or the title to your business or the, or property, if the government holds the power of life and death over that business or property. Doug Lewin (13:35.374)I don't know if you've seen this lot in North Carolina. I've talked to a lot of people in Texas who have ranches and farms and say, but for the wind and solar on my land, I wouldn't have been able to keep it. John Davis, a former Texas legislator has had a, I put a picture of him and his ranch in that same article. The ranch's been in his family since the 1880s and he didn't think they were going to be able to hold onto it till he got some wind turbines. Like what gives the government the right to tell you, you can't, you know, earn some money from your land. John Szoka (14:05.134)100 % dead on. There's two farmers I'm aware of in my own county that leased out their land for utility scale solar. I remember one, he's passed now, but he was kind of a cantankerous old cuss, just to say. And if he was sitting here, he would say, you're damn right I am, I love it. Doug Lewin (14:26.794)You John Szoka (14:28.686)But I, what Joe ran as they're putting things in, I said, I asked him a question, said, what do you say to people, because there are some in the legislature, not me, because I knew what it was like, said, what do you say to people who say that they should have a say on what you do on your property? And he went off. I couldn't stop him for about six or seven minutes. It's my land. John Szoka (14:52.064)Over here I cut the trees 50 years ago and I did this over here and I improved the drainage. And by the way, I don't like the Corp of Engineers. And he went on and on and on. He said, I'm leaving this for my kids because none of them want to farm, but the land is important to me and needs to make money. This is the best way to do it. And that is that type of story, the one you just said, the one I just said, is repeated time after time after time all across rural America. And yet. John Szoka (15:21.07)There are people who are maybe this guy's neighbors or somebody else's neighbors who say, can't do what you want to on your land. And it baffles me how they can really think that when they're conservatives and they're tied to the land. it's not like you're having a subdivision. mean, you build a subdivision with houses. It's not going away. know, mean, solar. could lease this up. You could take it all out and farm the land. John Szoka (15:51.222)Wind, yeah, it takes up a little bit of land, but you farm around it. Doug Lewin (15:55.724)Yep. And even solar, right? We're starting to see a lot of agri-volt takes too, which I'm really excited about because we, you know, like there's, the ability to do certain kinds of farming. can't do everything when there's solar panels for sure, but some kinds of farming and agriculture work, work quite well with it. Yeah. And we're, you know, we're the, stories are important because it's important to really like understand that there's people behind the numbers, but in Texas, the numbers are pretty staggering too, right? Something on the order of a little more than $20 billion. Doug Lewin (16:24.908)in landowner payments, local government tax payments, with a line of sight to about 50 billion. That's just within the state of Texas. I it's been pretty transformative to rural Texas and I think large parts of rural America, right? John Szoka (16:38.99)It John Szoka (16:39.59)is and it baffles me particularly in the great state of Texas why somebody would put this bill forward and why anybody else would think it's a good idea. mean, you know, most conservatives say we're for all of the above and then the ones who don't like something except fill in the blank, except solar, except wind, except geothermal, except, you're there for all of the above and let marketplace forces work. John Szoka (17:08.018)Or you're really not and you're just trying to pick a winner or loser, which we all say we don't pick winners or losers. So yeah. Doug Lewin (17:14.828)And look, think, you know, there, there are certainly some, you know, stories out there of developers who did things the wrong way, whether it be solar, but that is not like, can't, you know, that's sort of throwing a baby out with the bath water, you know, like you, you, gotta make sure that like, I don't know if this has ever come up in it. Have you seen any good examples of where, like, I don't know if you guys did this in North Carolina or maybe in other States where like, Doug Lewin (17:42.622)There's got to be a way to, you know, deal with the really bad ones without doing like Senate Bill 819 does, which painting with this really broad brush and making it that almost, you know, no renewables can be developed. You can answer that one. I actually what I really want to get to next. And you can you can put that answer in there if you want to really want to get to is what I think is causing these bills more than the few bad cases. I really think there's just. Doug Lewin (18:10.2)there's so much misinformation rolling around the particularly the internet, Facebook posts, and then you know, somebody looks at it the algorithm drives them 10 more stories about, you know, like solar panels polluting water or something like as if solar panels are like worse for water than, you know, can find animal feeding operations or oil and gas operations, like there's a million things that cause environmental harm. Doug Lewin (18:37.974)And if you're stacking them in a list like solar and wind are somewhere on the list, but they're not near the top. But I think the misinformation just bounces around so much, all these different stories of all the negatives. And that's the way the algorithms work, right? You click on that, then you're not going to get a positive story about a farmer or rancher who now has his farm or ranch because he's got solar with that story never appears in your algorithm. How, how, how did you combat that when you were at the legislature? How do you deal with that at? Doug Lewin (19:07.906)conservative energy network. know I know I'm asking a really big question here. John Szoka (19:11.502)That is a big question. And how long do we have? 45 minutes now. John Szoka (19:18.574)In North Carolina, once I finally understood how solar worked and how onshore wind worked and what they did or didn't do to the environment, it was like we get in closed caucuses, you know, and we'd have these arguments. And I had somebody tell me, well, that's all great. But did you know that solar panels leach cadmium and other heavy metals into the ground? And it's like. I've heard people say that, that's really not true. And then. John Szoka (19:47.682)I'd have to reference to do something. Too many of these arguments that are on Facebook and the internet, they're all based on emotions because it's much easier to kill an idea than it is to support it. So the only real answer to that is you have to have enough of the facts behind you to recognize when they're saying something that's completely bogus. Wind turbines, for example. Wind turbines kill all the birds. OK, I've heard that one a lot. I was a meeting of various states. John Szoka (20:19.714)Republican energy chairs. And I threw the question out there, I was talking about energy, obviously, and said, what's the biggest killer of birds in the country? Yeah, biggest killer of birds. Is it wind turbines? Like half the hands went up. Yeah. So I threw the chart up there that showed, well, if you want to save birds, get rid of cats. Because by far and away, cats kill more birds than any wind turbines. And actually, a couple more from oil producing states. John Szoka (20:45.23)The amount of birds killed by wind turbines are less than birds that are killed in oil on the surface near oil wells when it escapes. So you have to have facts, but you can't go like, got a fact I'm going to shove it in your face. I mean, that doesn't do it. You got to say it with a little bit of love, maybe a little bit of lightness and humor, and then tell a story about John Szoka (21:11.562)something that happened in a meeting you were at or whatever and we don't make up stories, God knows, we're 26 states, I've got a gazillion stories to tell. But it's just the education or I should say the lack of education about the admittedly complex subject of energy that it just it's a never-ending struggle. Doug Lewin (21:33.58)Yeah. Well, and, and I appreciate the way you, you, you put that, right. That you can't just sort of like put it right in somebody's face. You have to kind of like listen a little bit and, and, and absorb not be super judgmental of where I mean that, that, that approach is, I think, you know, I don't know 80 % of it, right. Cause you have to be able to like establish some kind of a Doug Lewin (21:57.698)bond with somebody before they can actually learn anything from you. And that takes patience, a lot of patience. John Szoka (22:03.694)You know what one of the most powerful questions in a conversation like that is that you ask whoever you're talking to? It's interesting. Why do you think that? Because there's a lot of assertions out there and then I have to come back and tell you, well, I saw it on Facebook. And then I try not to laugh out too. Did you look any further than Facebook? Right. Right. Because it's easy to repeat talking points. John Szoka (22:32.824)but it's much more difficult to have the facts behind it. And usually people don't have the facts, they're just parroting what they heard. So if you, as the educator, know the facts, it's much easier to combat these firmly held wrong beliefs. Doug Lewin (22:52.62)Yeah. And I guess there's even some opportunity to try to like replace those falsehoods and misinformation with, you know, fact based information on the other side too. Right. I mean, it's really hard because you're, these algorithms are so powerful. to try to inject some truth in there is really tough, but I assume you're trying to do that too. Right. John Szoka (23:16.942)just try and do that through our organization and we post on Twitter and Facebook and try and amplify things. But the sheer amount of negative, it's difficult to overcome. I mean, what do you see on the news every day? Negative, pick a topic, it's never positive, it's always negative. Doug Lewin (23:38.534)I know it's a well-documented human thing, right? Negativity bias is a real thing. People are likely to click on the, you know, what is it? If bleeds, it leads. They've said in the news for generations, right? And people are going to click on the negative stories. It's just kind of the way it goes. So I want to ask you, you mentioned you work in 25 states. Texas is obviously one of those. You've been head of the organization for what, just about two years? John Szoka (24:06.094)Going on two years, yeah. Doug Lewin (24:07.694)So can you talk to a little compare and contrast like some of the other states you work in, what's different about Texas? What do you like about Texas that you've seen so far? Where do you think Texas has something to teach other states and where is Texas maybe behind a little bit where Texas could learn from some pure science? John Szoka (24:24.738)Well, since I live in North Carolina, let me establish my Texas creds, I may. was stationed there at Fort Hood for three years and then the Army, well, the Army, then the Army sent me. Doug Lewin (24:35.201)The great place. Isn't that what they call it? The good place? The great place? John Szoka (24:37.71)Look, love Fort Hood. Now, Fort Kavassos, I knew General Kavassos. He was there. He's a great American. When I was there, was Fort Hood. And then I got my master's degree in operations research from UT Austin, looking for horns. So sorry for any Aggies listening. Doug Lewin (24:56.558)I had Governor Perry on so the Aggie hit a big Aggie flag behind him for anybody that watched the video so if Aggies are feeling upset go look at the Perry video. John Szoka (25:07.025)I didn't John Szoka (25:07.746)want to offend any of your listening audience. And I own property in Texas. I was there for like six years. I got a good feeling. I love the state of Texas. But to your answer or to your question is, frankly, what the Texas legislature did last session and this session, I can't really explain why they're going off on a tangent to do some of the things they're doing. But what they're doing, we see that in other states as well. John Szoka (25:35.694)There's a bill about to be filed in North Carolina that talks about onshore wind and you have to notify everybody within 20 miles of where it's going to be because somebody doesn't like the flashing lights on top of the wind turbines because sometimes you have some Air Force jets flying around there as a training area. I mean, they don't even care about the flight paths, but you got to have that. FAA says you have to have it. I mean, people glom onto the little issues that they think John Szoka (26:06.094)are like really, really important and they might be to 20 constituents in their district, but in the overall scheme of things, it's not. So this stuff's popping up all over the country and actually in my opinion, it's been getting worse over the last four or five years. We went from, I don't know, like 200 county moratoriums and really restrictive ordinances five years ago to there's over a thousand today. John Szoka (26:32.398)what we do and what you do on your podcast, and what a number of other groups do too, is try and stamp out the missing disinformation. I think it's, I always use the analogy, if you're gonna fight a forest fire, would you rather stomp on the match that some evil guy just threw in the pine straw before it spreads? Or do you wanna come in three days later when you got 100,000 acres burning? Pick one, which one you want. And there's not enough people doing what we do. John Szoka (27:01.398)and I'm including you in that and other groups as well, to actually educate people about the truth of energy. Doug Lewin (27:08.46)Yeah. And I think, you know, in relation to the things you're talking about, the Texas has done, or in some cases, like almost done, right? Some of these bad proposals did not pass last session, thankfully, because of a lot of the good work in the House. And hopefully that'll happen again this time. But what I often say on these things is like, and I'm curious your perspective on this. A lot of times I think what's going on with sort of the anti-renewable bills is what Doug Lewin (27:36.718)They're really they think that they want more gas plants or they want more nuclear plants or they want more geothermal or they want more whatever. And they think that if you stop wind and solar batteries, then you'll get more of these other things. Senate Bill 388 that just passed this one. I've written about it a lot on the the newsletter. It says you have to have a megawatt of gas for every megawatt wind and solar. That really slows down wind and solar. There's another approach, which is like legislate for the things you want. Doug Lewin (28:05.25)like build those up. Texas legislature passed the Texas energy fund last time the Senate and House governor all got together on that passed it, we're going to get some more gas in the state. There's a nuclear bill that is moving through the house. The day we're recording again, March 26, it just passed committee. It would put $2 billion towards new nuclear in the state of Texas passed on a 10 to one vote bipartisan support, like Doug Lewin (28:30.21)do those things. You only have so many legislative days. You only have so many priorities you could actually move, right? Focus on the things you want. So I'm curious what you think of that kind of approach. And then also, you know, nuclear, geothermal, are you guys working on those things at conservative energy network? Are there other technologies generating resources that that you're excited about and are sort of sort of within your purview or prioritized in your work? John Szoka (28:56.846)Well, to your first point, I do agree that it's always better and usually a better vote getter. If you're for something, I mean, if you're a negative Nellie and you're against everything, pretty soon people don't listen to you and that clues your constituents. It's better to be for something. So if you want to incentivize A over B, okay, go incentivize it. But still, there's some element of the free market that has to go in there. As far as incentivizing nuke, John Szoka (29:27.552)I'm not necessarily against that. I'm kind of for it because we as a country allowed it to die out. The supply chains, the knowledge base of people who actually know what to do in a nuclear power plant. So there is a role for government to incentivize certain technologies. But at some point in time, incentives need to go away and things need to compete on their own. If you incentivize John Szoka (29:56.618)option C, whatever it might be, and it comes to fruition and start building it and it's costing $200 a megawatt hour, you know, it's probably time to pull the plugs on that one and let solar wind, nuke or geothermal, whatever it's going to be. the answer to the rest of your question is yes, we do work in geothermal. Most of that work is in the West and in Texas. Now, there's just not the hot rocks close enough to the surface to do it on the East Coast. North Carolina. John Szoka (30:25.72)Makes me particularly sad that you got to drill like so far down that it's just not economical. Nuclear, yeah, we'll work for that. But it's not to replace anything we currently have. And the one thing you didn't mention was transmission. We do a lot of work in transmission because that's important. You can generate all electrons you want, but if you can't get them from where they're generated to where they're needed, and there's a heck of a lot of work needs to be done in that. John Szoka (30:55.535)not only at FARC at the national level, but within certain states too. And some states are further along and spurring new transmission lines than others. Doug Lewin (31:04.854)Yep, Texas has a big decision ahead of it. The Public Utility Commission sometime in the next month or so is going to decide on a 765 kilovolts or 345 kilovolt, what they're calling backbone for the state. And we don't have any 765. I don't know if you guys have any that's like extra high voltage. don't know you guys have any. don't think. I don't know. Yeah, we don't have any here yet. But I think I think it's time. It's like for for a modern economy. I mean, that John Szoka (31:25.08)We have any North Carolina, but I'm not. Doug Lewin (31:33.586)the Chinese are putting up 765 like, like it's going out of style and we don't have any yet. It's like we, we, we are in a race, you know, particularly on, on AI and meeting this kind of load growth and where it's harder here, right? It's a democracy. We argue over stuff. and, that, and that's proper. We should have a democracy. We should argue over stuff and we should build to like, we need to, we got to figure out how to, how to, you know, make sure that we make sure that we build. John Szoka (32:02.446)We are nation builders to your point. If you go back 100, 200 years, we've always been building things. We make stuff and we're pretty doggone good at it. China wouldn't be where it is if they didn't steal most of our plans and technology. I mean, seriously. So, yeah, we need to be able to Doug Lewin (32:21.292)Yeah, there's all kinds of IP that is, if you know, everybody kind of knows if you take your IP over there, it's probably going to get stolen. But yeah, we I think John, though, like, to a certain extent, it's gotten away from us a little bit. I'm not sure we are right now in 2025. And nation of builders is in our DNA. It's in our history. I don't know that we're really living up to that right now. John Szoka (32:44.91)And I'd agree with that too. think we've at the state level and pretty much every state, even the great state of Texas and at the national level, we've made things so complex to protect the one person or the one child or the one puppy from potential injury on a one in 10 gazillion chances that we over legislate this stuff. We over protect ourselves. You cannot. John Szoka (33:12.93)I got this theory and it has to do with liberalism is that if you pass a bill to do protection and then it goes for a year or two, my liberal friends will come back because there's always a failure on it. No matter what the topic is. It's like, you know, we passed this bill two years ago and it was a good thought, but it just wasn't tight enough. We need to put more on and more. And all of a sudden, I mean, I think that's what happened to EPA. Hell, I grew up in Cleveland, Ohio, where the where the river burned. OK, I know what bad pollution looks like. John Szoka (33:41.752)Yeah, I can breathe on some days because there's so much crap in the air from the coal plants. There's a boy scout I saw the forest in northern Ohio and eastern or western Pennsylvania dying. You need regulation to protect people, but you can't protect anybody from every possible bad thing that might happen in the world. And I think that's where we are now. We need to loosen some of that stuff up. Doug Lewin (34:04.94)Yeah, I mean, like so much else in life, right? It's like the extremes and the polls typically don't work. It's really about sort of where do you turn that dial to the optimal point where there is protection of the public. Like you said, some regulation is obviously needed. Nobody wants the river to be on fire. I think everybody can agree on that. But but if it does go too far, you do slow down building of things and we need to build that we need we need to manufacture in this country. We need to build transmission. Doug Lewin (34:34.178)lines, we need to build power plants of lots of different varieties. And that's all so it really is that question about so you think, and this is probably obvious, because you're a self described conservative, but like the dial has been turned too far towards sort of regulation, and it's become too heavy handed, and we need to kind of turn that John Szoka (34:53.454)I agree. And I think there's too many reviews of reviews of reviews. mean, take transmission line, for example, I was at a conference about a year ago and there was a major utility in PJM that talked about how it took 19 years to build a nine mile stretch of high voltage transmission line because of all the hoops they had to jump through. That's just ridiculous. I mean, John Szoka (35:22.126)Even today, in the best of circumstances, it's going to take 10 years to do all this. We don't have 10 years to wait to build more transition. We don't have 10 years to wait to build more generation. We got a huge issue and we got it right now, today. What are we going to do now? Doug Lewin (35:37.336)Yeah. Somewhere behind me, I've got that book, super power by Russell Gold, where he's talking about the effort to build a major transmission line. and, it not only wasn't done in 19 years, it was never completed because every state had veto power over it. And like, those are lines that really would have helped the country at, at multiple points over the last, you know, many years. It is something that I, that I think is, is valuable about Texas's independence from. Doug Lewin (36:07.03)FERC and why I'm somewhat defensive of it is that we don't have to go through some of those federal, there's of course still state processes and there's due process and that needs to still be there. We can build transmission faster in the state and that's going to be put to the test. That's the claim everybody in Texas makes. We're about to find out with this high voltage project, so we'll see. John Szoka (36:31.566)I hope so. know the capabilities there because I've talked to some of the largest private builders of transmission in the country and they tell me that they can. But the expense just continues to skyrocket because of all the hoops they have to jump through. And again, I don't want burning rivers. I don't want air. can't breathe and I don't want to kill all the wildlife because wildlife is basically a trust. They're in trust. They belong to everybody. We don't want to kill them. But you know what? John Szoka (37:02.133)I think humans are at the top of the food chain and we need to build stuff to make everybody's life better no matter income level, matter race, gender, whatever, whatever, whatever. I don't care. We need to build stuff. Doug Lewin (37:16.27)Let me also ask you, just shifting gears just a little bit, but kind of staying in this realm of different technologies and solutions that help with our energy challenges. I have spent a large part of my career and talk a lot on this podcast about demand side solutions, energy efficiency, demand responses, distributed solar and storage, all these kinds of things. I am hopeful, because I think there's different ways to go about Doug Lewin (37:45.954)getting an active demand side, getting more participation from the demand side, like reducing peak demand to increase reliability, paying people to participate in programs, all voluntary, if they want to put money back in their pockets. Those programs are most prominent, not exclusively at all, because Arkansas, Oklahoma, a lot of red states have really good energy efficiency programs. But it's more associated with like California and Massachusetts. Doug Lewin (38:13.782)Right. I think that there's opportunities for conservatives to really figure out how to kind of bring a market lens to that demand side. This is sort of something I think about a lot and I think might actually work in Texas. But if you had, did you, did you work on energy efficiency at the North Carolina legislature? John Szoka (38:31.736)I personally did. Yeah, I did. As a matter of fact, I had a bill that passed the House almost unanimously and died and my friends in the Senate. And basically it was just, it was looking at the inventory of state-owned buildings and categorizing them by age and size. If you got a 50,000 square foot warehouse and it's 20 years old and we're going to keep it, we probably have to update HVAC and whatever else we got. John Szoka (38:59.968)So let's do a study of those and use performance contracting to figure out when we do it, how do we save money on energy costs? Because you can build all the buildings you want, but if they leak heat and air, I mean, you're just going to pay, pay, pay. I thought it was a great bill. So did a lot of contractors. My friends in the Senate, thought their exact quote was, well, if the Department of Administration wanted to do it, they can already do it. Well, they could. John Szoka (39:29.538)But a legislature exists to provide direction to different parts of the government. So I was trying to do is say, you guys do this and we'll end up saving money. Some of the universities in North Carolina actually did it on their own. And guess what? They saved hundreds of thousands of dollars from campus to campus of their own energy costs. Then it just went back to the state budget. John Szoka (39:54.968)because they weren't incentivized to do it. Like if you save a million dollars, you get to keep 50 grand or a hundred grand, which was another part of the thing. it, Doug Lewin (40:04.312)That's a great way to do it, John, too, because you do you not only incentivize them, but then you can actually use those dollars from the savings to go to the deferred maintenance, right, which if you talk to anybody. There, yeah, there's so much deferred maintenance, which basically just means you got people in public schools and, you know, county building, state buildings, all that stuff, just like using. Doug Lewin (40:26.274)duct tape and whatever they can to like keep stuff running along rather than upgrading. So give them some incentive to save money and then let them keep a portion of that to knock out that deferred maintenance. John Szoka (40:36.366)And here's why those kind of ideas don't get traction for the most part. Because they're boring. Doug Lewin (40:43.31)maintenance is boring John that's exciting come on I know I know John Szoka (40:48.93)to John Szoka (40:49.11)you and me. But maybe money is boring unless it's some large muscle action where I'm going to cut the Department of whatever at the state. That's exciting. The things that are simple, that can save taxpayers literally millions and tens of millions of dollars, they're boring. And you have to get people excited about voting for a boring bill. And it's hard. Doug Lewin (41:17.005)Yeah. John Szoka (41:18.894)I wish it were easier to get people excited about that kind of stuff. You you talk about energy efficiency too. We could build a heck of a lot more energy efficient houses and buildings and everything else. Usually it costs five to 10 % more when you design it to be more energy efficient. And because governments usually force lowest bidder awards on the contracts, we don't do it. so to state government. Doug Lewin (41:43.934)the Doug Lewin (41:44.125)life cycle right when yeah John Szoka (41:46.414)Exactly, John Szoka (41:47.114)man. So you're going to spend $10 million on a building and spend five times as much on the energy if you spend $11 million, you'd save money in long run. But we don't do that. Doug Lewin (41:56.91)Yeah, a lot of progress to be made, a lot of potential on the demand side. So I want to ask you also, I should have asked earlier, it's obviously a big part of who you are. You're a veteran with a long distinguished service in the US Army. For those that are listening and not seeing the video, you've got a I want you for the US Army with Uncle Sam right behind you. You retired as a Lieutenant Colonel. Doug Lewin (42:26.062)Can you talk a little bit about how energy policy and national security overlap and where your military experience has informed your work at any part of your career, whether it's a legislator or now it's CEN? John Szoka (42:41.966)John Szoka (42:42.587)Well, energy is national security. I mean, we could talk about foreign players trying to come into the grid and all that kind of stuff. But if you look at a military base, you have to have a secure, reliable, unattackable, if that's a word, energy source. I go back to when I was still on active duty here at Fort Bragg. John Szoka (43:06.926)There was a major Corps command post exercise. They were all off in Kansas doing this thing and I wasn't there. I was a staff officer at Corps, but as myself and a brigadier general, we were staging out hurricane relief to, was a hurricane that hit the US Virgin Islands. And the Army has one of the, it's got these specialized battalions of nothing but generators that can generate untold amounts of energy, bigger than anything you've ever seen. John Szoka (43:36.782)We're air shipping this stuff out and shipping some of it by sea to get down to the Virgin Islands. Now, like two in the morning when planes are going out on time and we're looking at each other, instead of playing cards, we were talking about this very thing, energy. Well before I got in the legislature, and it was like, what would happen right now if all the energy to Fort Bragg went out? How are we going to get this stuff out of here? I it'd be crippling. At the time, it only had one main line in and John Szoka (44:05.208)The major utility provider around 2004 or 2005 actually put another two redundant lines in there. John Szoka (44:13.486)Just imagine where, I mean, it was bad enough if energy would have been interrupted shipping supplies and energy generation equipment down to St. Thomas. What about if you're shipping out ammunition to a war front or you're sending soldiers somewhere? You could be literally crippled at home. know, Norfolk, largest naval base in the world. You know, not every ship is at sea all the time. These are national security issues to make sure John Szoka (44:43.522)that all elements of the military and the command structure has enough energy in the event of a natural disaster or a national disaster that comes from some foreign ill-intentioned agents. John Szoka (45:03.534)I'm going to loss for words about how important it is, but it's extremely important. Doug Lewin (45:07.628)Yeah, I mean, you can't you can't overstate how important that is, right? mean, having having that reliable power on site, this is another place, John, where I think so we were just talking about energy efficiency and saying it's not sexy. think something that kind of is sexy. Well, you saying it was it was boring. You didn't say not. That's what that's what way it gets referred to all the time is like, energy efficiency is not sexy. It's boring. Nobody wants to talk about it. But when you expand the aperture a little bit and you look at the demand side and energy efficiency is part of it, but you also get into, for instance, micro Doug Lewin (45:36.16)which I think are very exciting, sexy, whatever word you want to put on it. Everybody wants to talk about these, you know, these days. There was a great report, we'll put it in the show notes, it was out of Carnegie Mellon that talked about how microgrids and distributed energy resources are fantastic for national security because they can be islanded and detected from the rest of the grid. So if you had the kind of malicious attack you're talking about, which would usually be some flavor of cyber attack, Doug Lewin (46:05.89)that could cripple the grid. These are nightmare scenarios, and they're sort of like what you call a tail risk. It's not super high probability, but it's not zero. And we've got to be prepared for those kinds of things, just like you're saying. This is one of the areas where the military, and I would hope that this would spread across a Democratic or Republican administration, having that power on site. And that could be a mix. Again, it's not. Doug Lewin (46:31.566)It's not about any one source. It's about just like on the bulk grid. It's about having that mix. You have some solar, you have some storage, you have some gas, you have some diesel. I give all those things because the redundancy is good. And solar and storage is part of that because you can have outages of your natural gas system. New York without natural gas. Just at one point in the last couple of years when we were in a winter storm and gas supplies, that was more a natural disaster, obviously, than a malicious actor. Doug Lewin (47:01.71)So I think there's huge potential for that kind of thing. I don't know. It might have been you you were out of the military in the 90s that may have been like before right before Those kinds of solutions if you talk to your counterparts of the military about things like micro grids or on-site John Szoka (47:18.958)Yeah, and I'm going to tell you the problem with that is. It's not the concept of it. It's the fact that the Department of Defense, whether it's the Democrat administration or Republican administration, on federal land, state of North Carolina, one the first bills I filed in 2013 was called the Energy Freedom Act that was going to allow Fort Bragg to have on-site generation for that exact reason that we've been talking about. And the monopoly utility here, because the law John Szoka (47:49.384)North Carolina said then and still says if you generate electricity and put it on the grid, your utility had to be treated like that. Department of Defense recognized that. So they weren't going to go go against state law, even though it's federal land. I had a major blow up with our utility in North Carolina. John Szoka (48:13.518)If I were Secretary Hedgepeth, I would say, you know what? Defense overrides your state law on federal property. I'm going to do exactly what you just suggested. I'm going to have our own generation. And if you don't like it, well, too bad. But that's not the policy of do you do then or now. I think it'd be a great policy change. Doug Lewin (48:35.874)Yeah, you know, it's, it's interesting, obviously in Texas, in most parts of the state, some parts of the state, we do have monopoly utilities, but in most of the states, of course, and within within ERCOT, outside of the municipals, there, there is the ability for a customer to cite their own energy without having to, you know, go through that tortuous utility process and the whole mother may I associated with all of that. So we do have at a lot of the military bases, there's a actually Doug Lewin (49:04.526)One of them in San Antonio is within a municipal utility, but CPS Energy worked with, I believe that's Fort Sam Houston has a pretty major microgrid. I'll put it in the show notes. If I get it wrong, whatever the right base is will be in the show notes. And then, you you mentioned Fort Cavazos where you said you spent several years, they have a microgrid up there. And as a matter of fact, during Winterstrom URI, they credited that for saving some tens of millions of dollars to Doug Lewin (49:32.48)US taxpayers because they were able to generate some of their own power on site. John Szoka (49:36.462)And that, Doug, is why I like living in Texas, why I like Texas so much and why I still like Texas, even though I don't live there anymore. But, you know, you asked me the question, different states across the nation. mean, Texas is really unique in the way that it handles energy. And there's going to be some oddball bills that come by every once in a while, and hopefully people do the right thing and vote them down. But the rest of the country, by and large, does not John Szoka (50:04.224)treat energy like Texas does. Whether in an RTO structure, whether in a vertically integrated monopoly utility, it ain't like Texas. Doug Lewin (50:15.756)Yeah. Well, you know, you're, you're welcome here anytime. Come back to, to Texas early and, and often, keep visiting here. we, we, we need your voice in the state. want to ask you just another question or two before we wrap. I'm also curious again, from a legislator perspective, you know, how and when, under what circumstances you would work across the aisle. I, we talk about principles earlier. I can tell Doug Lewin (50:42.104)I haven't known you a long time, but I could tell even as long as I've known you, you're, you're a principled guy. You're never going to compromise on your principles. Compromise is kind of like not compromising principles, but compromising on, policy is kind of like the heart of our system. If it doesn't, if it doesn't happen, things kind of break down. I think it's part of what we're experiencing as a country is everybody's kind of run to the polls on, both sides and, and the center. Doug Lewin (51:07.918)maybe isn't holding. hope that's wrong. I hope the center does kind of hold and we can work across. How and when can you give examples of when you worked across the aisle, you know, still staying true to your conservative principles? John Szoka (51:19.182)Yeah, I mean the last big bill that I was a primary sponsor of was House Bill 951 passed in 2021, right? It's the, at the time, majority Republican House, majority Republican Senate, and Democrat governor who were about like, if you watch me, it's like my fingers going way apart. Most things were like really far apart. So the utility... John Szoka (51:48.558)on a performance-based rate making. We worked on that. And then... John Szoka (51:56.398)past, but the one mistake that we put in there, it was at the discretion of the utility. And as of yet, they haven't used it, which is a little surprising to me because I think they could use it. And for listeners who don't know what that is, instead of being paid on capital improvements, it's there are other goals that can be set that the utility can be paid their rate of return on, which is kind of thinking outside the box. There have been a couple of states that have done that. John Szoka (52:24.34)None really have used it that much to my surprise. Anyway, they wanted Doug Lewin (52:28.366)Doug Lewin (52:28.706)that. well, before before you move on, I want to just I want to double click on that just for a second. Because this is something that has come up a lot in Texas, particularly after Hurricane Barrel. There were some hearings in the Senate that there were discussions where legislators Senator Cole Coors, Chairman Schwartner, they were asking questions of the PUC chairman about Doug Lewin (52:51.398)are customers incentives aligned with the utility incentives because as the utility business model may be broken where your incentive is to deploy capital and make a return and there aren't really a very clear performance metric, not even much less an incentive, just a metric. Like what are you, what are you judged on? And so if we, if you don't define that, Doug Lewin (53:17.742)What are you doing as as right. mean, you're, basically like trying to spend money. And so I think probably the reason why in North Carolina, it's not being used. was less to the discretion of the utility is it's sort of the burden to hand, right. Or, you know, like you. Yeah. John Szoka (53:32.174)It is. John Szoka (53:34.615)I mean, the utility model worked great from the 1920s, 30s and the electrification of America. I mean, we saved tens of billions of dollars doing it the way we did. Today, is it the right model? I don't know. I don't know what to replace it with, but I don't think it really serves the needs of rate payers as well as a different model could. John Szoka (53:58.904)But working across the aisle, so that was a piece of it. And the other piece of it, well, North Carolina showcased the case against coal ash. Remember back to the Dan River coal ash spill. So we passed legislation, made the utility, excavate millions of tons of this stuff and bury it in line. Anyway, so part of that is part of the fallback from or fallout from that was. John Szoka (54:25.582)shutting down coal plants and yeah, you got CO2 reduction. So we went back and forth and how many are gonna shut down the utility, utilities, the stranded asset, blah, blah, blah, all this stuff, very complicated. So basically what we said was we set in the statute, this is a Republican House and Senate, mind you, reduction based on the 2005 standard of carbon, % reduction by 2030 and carbon neutral by 2050 at least cost. John Szoka (54:54.514)And we said, and we kicked it to the utilities commission, be the arbiter of this. And North Carolina is called the carbon plan. And the utility has to come in every so often and say, here's how we're going to meet that at least cost. And we talk about that. Now, first of all, usually the enemy, if you want to say, isn't really the other party, it's the other chamber. When you're both of the same party, it's... John Szoka (55:23.854)I mean, this thing, we all worked on it in the House and the Senate for just under a year. And somebody asked me what it was like doing that. And I said, it's like this. It's like, imagine going to work every day and in your office, there's a dentist chair and the dentist comes in and pulls every one of your teeth and you have no novocaine while he does that. And then the next day you come in and do the same thing. It was painful. then it's not just chambers and parties. Then you have Doug Lewin (55:46.689)Yeah. John Szoka (55:51.744)all the other interest groups and you got utilities want something, the people who own industry want something, business owners want something, everybody wants something and trying to get all that in one big plan. I mean, if you don't work with the other party, with other people, you're never going to get anything done. Doug Lewin (56:09.102)So that bill, it was 951, it was the Energy Solutions for North Carolina Act or something along those lines that did pass and it had bipartisan support. John Szoka (56:17.678)on the back right now. John Szoka (56:21.198)I did parsing John Szoka (56:21.809)support, great votes in both chambers. The governor had a big signing ceremony at the mansion where Republicans and Democrats, I love that line from Ghostbusters, you when they're talking to the mayor, I don't know, maybe it's too old for most, but it's like cats and dogs living together, you know, it's like those Republicans and Democrats all in one place, a big kumbaya moment. then we went back to our corners after that ceremony. But live parsing, I mean, my experience. Doug Lewin (56:45.89)Yeah, yeah, yeah. John Szoka (56:50.478)Most enduring bills, maybe not the best, but enduring are ones that have bipartisan support. When you ram something through just because you can, when the pendulum goes the other way, it gets undone. Doug Lewin (57:06.318)Yep. Uh, one last question and then I'll, I'll, I'll ask you, you know, what I forgot to ask you, what you want to add to it. But one more before I do that. Um, the, got to ask you about the inflation reduction act as well. So like we, we talked about the United States being, you know, we're, we're, we're a nation of builders. We've always built, we've always invented all that kind of stuff. We have seen a huge increase in manufacturing, a lot of it in North Carolina, a lot of it in Texas, a lot of it throughout the South. Doug Lewin (57:34.058)Obviously, you know, President Trump ran on repealing at least parts of it. He was never like super well, maybe not never. He was usually not super specific about that. And now there's, course, the 21 House Republicans sent a letter to the speaker and said, we want to be careful with that. What are your thoughts on the IRA? What's your thoughts on what's what's specifically worth keeping needs to be kept? Maybe what shouldn't be kept? Doug Lewin (58:00.906)I, know, any, any thoughts on, on the IRA? I'm not asking you to make a prognostication because nobody could figure out what's going on right Right. But, but if you want to prognosticate, feel free, but more kind of, yeah, where, where do you think, you can take any part of that you want, but particularly like which, which aspects of it you think are most important to protect. John Szoka (58:21.539)high end my policy people and CEN took a really deep dive into the IRA last May before we knew who was going to win the election. Because at the time, if you go back to last May, nobody even knew it was run on a Democrat side. At least they thought that didn't change. But look into the future. It's like what things in the IRA are good policy and should be kept? What things in the IRA are they John Szoka (58:49.966)probably could work if they had some tweaks because there's a little too much, maybe too many Christmas ornaments on there. It's just not structured right. And then which things from a conservative viewpoint should, you know, they should never been in there in the first place. They never had bipartisan support in the entire history of whatever idea it was. So you get rid of that. So we did this, came up with a big report that we did not make public, but I share with congressional members and US Senate members. John Szoka (59:19.766)on occasion, going to say who or where, but through a conservative lens, and we've made some very specific recommendations. then overall, I think when you break down those three things, there are things in there that even though no Republicans voted on it, are really Republican and Democrat shared ideas from previous bills that had great bipartisan support. I don't think anybody's going to argue against creating jobs. John Szoka (59:46.642)in bringing industry back to the United States and supporting new industries, which is a part of it, which that's part of this picking winners and losers thing that I don't like to pick winners and losers. John Szoka (59:59.886)The other big failing, I think, was when you say we're going to run incentives for 10 years, you can never control how much money you're going to spend. For example, when the IRA is passed, the CBO graded it like it was going to cost $280 billion. The latest grading of the CBO, I think, is over a trillion. So, you know, you got our friend inflation, you got this, you mean everything costs more. So now you go from John Szoka (01:00:30.03)280 billion dollars, roughly whatever the number was around there, and you go to a trillion dollars. In congressional speak, I think now they're talking real money. the problem with the 10 years is some of these things when you're trying to build an industry, like the supply chain for offshore wind, the supply chain for advanced nuclear, it's going to take that long to do it. Doug Lewin (01:00:58.508)Yeah. John Szoka (01:00:59.278)All energy is subsidized in the US. Nobody can prove to me that oil and gas is not subsidized. It's just buried in the tax code and it's been there forever. And you know what? Doug Lewin (01:01:10.702)mean, it's, it's right? Yeah. It's, yeah, it's intangible drilling costs. It's oil depletion allowance. And is, I have this conversation all the time. People like wind and solar so heavily subsidized, like oil and gas has been subsidized for its whole existence. And look, if you want to get rid of all the subsidies, get rid of all the subsidies, get rid of all the oil and gas subsidies, all the nuclear subsidies, all the wind and solar subsidies. Guess what you're going to do? You're going to make power a lot more expensive for everybody. Nobody's getting reelected. Good luck. John Szoka (01:01:39.502)And the next people just go back to the way it was. So it's okay to subsidize energy because it's a national priority. America runs on good, inexpensive energy. If we don't have that, I guess I can say this, we're screwed as a nation. But again, conservative principles, don't pick winners and losers. Let's recognize, that everything is subsidized and then try and balance those and then let John Szoka (01:02:09.206)Markets do what markets are going to do if you got balanced subsidies. Everybody's kind of playing on the same level playing field and then let markets do it. If technology A ends up with dismal failure, well, you know what? Stop subsidizing it and reinforce success where you got things that are worth. Doug Lewin (01:02:26.764)Yeah, yeah, yeah. I'm particularly interested in what happens with the provisions that are related to manufacturing, because I, you know, we're seeing these plants. There was just another announcement just last week of an eight hundred and fifty million dollar plant over a thousand permanent jobs in Rockdale, Texas, about 50, 60 miles north of where I'm sitting right now in Austin. Like, you know, those kinds of plants probably don't stick around if the IRA provisions that pay the incentive based on Doug Lewin (01:02:56.771)manufactured components in the United States. So it's going to be interesting to see how, how and which parts they go out. John Szoka (01:03:03.788)Yeah, it is. the problem that they have is on the campaign trail, know, no tax on tips, no tax on social security. We're going to do this. We're going to do that. You got to have a bill pair somewhere. I guess I just say I'm glad I'm not a congressman right now. Doug Lewin (01:03:25.981)John, I have thoroughly enjoyed this conversation. I do want to ask you, I always do this at the end. there anything I didn't ask you that you wish that I had or anything else you'd like to add before we end? John Szoka (01:03:37.614)Man, I don't know about that. You've done a pretty good job of grilling me here this afternoon. I think he asked all the pertinent points because we've talked about generation, we talked about transmission, we've talked about conservative principles and how those should be applied to generation, distribution, transmission. Look, I'm always available. Any of your listeners want to talk to me, they can just look up a conservative energy network. It's all spelled out, .org. Learn more about us. John Szoka (01:04:07.79)get in contact with me and it's really been a pleasure to talk to this afternoon. I really appreciate it. Doug Lewin (01:04:13.218)Thanks, John. Yeah, we'll put a link to all your social handles and the website and all that so folks can find you real easy. And yeah, it's been a pleasure, John. Thank you so much. Thank you for listening to the Energy Capital Podcast. I hope you enjoyed the episode. If you did, please like, rate, and review wherever you listen to your podcasts. Until next time, have a great day. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe

Texas has long been an energy powerhouse, but the grid is facing unprecedented challenges. Between surging demand from industrial electrification, hotter summers, and data centers and the retirement of aging power plants, we need more advanced firm power sources and we need them fast.In this episode of the Energy Capital Podcast, I sat down with Doug Robison, the founder and president of Natura Resources and former oil and gas executive, and Rusty Towell, founding director for Abilene Christian University's premiere research project called the NEXT (Nuclear Energy eXperimental Testing) Lab. Natura, in partnership with ACU, is pioneering molten salt reactors, a next-generation nuclear technology that promises higher efficiency, greater safety, and the ability to scale quickly.Unlike traditional nuclear plants, which operate at high pressure and require massive containment structures, molten salt reactors run at low pressure, eliminating many of the risks and cost barriers that have made nuclear difficult to scale in the past. As Doug puts it, “Remove pressure, and everything changes.”That’s exactly what Natura is doing in Abilene, where their first 1 MW test reactor is set to go online by 2026-2027 — only the second advanced research reactor ever licensed by the Nuclear Regulatory Commission (NRC). This small-scale demonstration is designed to prove the technology and pave the way for full-scale commercial deployment around 2030.But nuclear isn’t just about electricity, it’s about heat. These reactors operate at twice the temperature of conventional nuclear plants, making them ideal for industrial applications. Texas is a perfect fit for this technology, not just because of its growing energy demand, but because it has the infrastructure, workforce, and industrial needs to scale it rapidly.One of the biggest takeaways from our conversation was how capital, not regulation, has become the biggest bottleneck. The NRC has already issued Natura a construction permit, and the policy landscape is shifting, with bipartisan support at both the federal and state levels for advanced nuclear. However, deploying reactors at scale requires massive investment and as Doug Robison points out, that shift is only just beginning.With demand projections skyrocketing, from AI data centers to large-scale industrial growth to cooling load in increasingly hotter summers, Texas will need every tool available to ensure affordable, reliable, and clean energy. The question isn’t whether nuclear will play a role, it’s how fast we can get there.This is one of the most exciting energy conversations I’ve had, and it’s a must-listen for anyone who wants to understand how nuclear could reshape Texas’ energy landscape.As always, please like, share, and leave a five-star review wherever you listen to podcasts. Your support helps bring these critical energy conversations to more people.Timestamps* 00:00 - Introduction* 02:30 - Natura’s technology, what’s different about a molten salt reactor from the typical high pressure reactors* 08:00 - Timeline to deployments, milestones met so far* 13:00 - Use cases and modularity, size of deployments * 18:30 - Policy in nuclear development & comparative advantages of Texas* 25:00 - Learning curves and cost reductions for nuclear* 31:00 - Exploring molten salt reactor technology with flexibility & scalability* 36:00 - Nuclear’s role in the future of energy demand in Texas* 38:30 - Policy support for nuclear energy * 43:00 - The role of utilities in nuclear energy, and the differences in competitive markets* 47:30 - The Role of subsidies for nuclear energy* 50:00 - The need for incentives and support from DOE’s Loan Program Office* 54:30 - Abilene: A new energy hub* 56:00 - Natura’s mission to improve quality of life, increase energy abundance* 58:30 - Transferability of skills from oil & gas to nuclear, why Landman gives the wrong impression* 1:00:00 - NEXT Lab and the first advanced reactor at a university, it’s in Abilene and it’s really happening. see below:ShownotesSpeakers, Key Projects, and Developments:* Doug Robison - LinkedIn, * Rusty Towell - Linkedin, ACU Website, NRC Website, * Natura Resources Official Website: Explore more about their projects and technological advancements. * Molten Salt Research Reactor (MSR-1) at Abilene Christian University (ACU): The first liquid salt-fueled reactor licensed by the U.S. Nuclear Regulatory Commission (NRC), marking a significant milestone in advanced nuclear research. * Natura Resources' Initiatives: There are two new initiatives, a MSR-100 energy production reactor on the RELLIS Campus at Texas A&M University and an MSR reactor for energy and desalination on the Texas Tech campus. * Texas A&M University Part of Groundbreaking Molten Salt Reactor Project* Texas Tech Partners with Natura, ACU to Advance Cutting-Edge Technology* Updated pathway to Advanced Nuclear Commercial Liftoff. US DOE Loan Programs Office.* Nuclear? Perhaps! David Roberts’ Volts Podcast.Licensing, Regulatory Framework, and Legislative Updates:* NRC Advanced Reactor Licensing: The NRC has issued new guidance to facilitate the licensing process for non-light water reactor designs, aiming to reduce regulatory uncertainty for advanced reactor concepts.* DOE's Support for Advanced Reactor Licensing: Initiatives to offset licensing costs and support the deployment of advanced reactors.* Proposed Rule for Advanced Reactors: The NRC plans to establish a risk-informed, performance-based, and technology-inclusive licensing process for advanced reactors, aiming for a more flexible regulatory framework. ​* House Bill 14 (HB 14): Establishes funding mechanisms within the Office of the Governor and the Texas Public Utility Commission to support the deployment of advanced nuclear reactors in Texas.* Senate Bill 1105 (SB 1105): Proposes the establishment of the Texas Advanced Nuclear Energy Authority and the appointment of a Texas nuclear permitting officer to streamline nuclear energy projects.* House Bill 2678 (HB 2678): Identical to SB 1105, this bill also aims to establish the Texas Advanced Nuclear Energy Authority and a nuclear permitting officerRecent News:* Companies are coming to Texas to develop a new generation of nuclear reactors. Texas Tribune.* CERAweek: Small nuclear power struggles at cusp of US electricity demand boom. Reuters.* Tech Industry Engagement: Companies like Google and Amazon are investing in SMRs, signaling a potential shift in energy infrastructure to support data centers and other high-demand sectors. ​* Google and Amazon make major inroads with SMRs to bring nuclear energy to data centers* Three Mile Island nuclear plant to reopen, sell power to MicrosoftTranscriptDoug Lewin (00:00.0)Welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. For decades, nuclear energy has been stuck in place with escalating costs and only two units added in the last 20 years. New nuclear technology, though, can be modular, smaller when you need it to be, bigger when you need it to be, and inherently safer too. In fact, a new kind of nuclear reactor is being developed right now in Texas that could revolutionize industrial power, reduce waste, and even use spent nuclear fuel as an energy source. Doug Lewin (00:30.722)The Advanced Nuclear Reactor Working Group convened by the governor and chaired by Commissioner Glotfelty recommended building up a small nuclear industry right here in Texas. At the center of that hope for Texas is Natura Resources, developing a liquid fueled molten salt reactor. Today on the Energy Capital Podcast, I'm joined by Dr. Rusty Towell and Doug Robinson to talk about the next generation of nuclear power and more specifically, molten salt reactors. Doug Lewin (00:57.39)Rusty and Doug have teamed up to develop a test reactor out of all places, Abilene Christian University. Rusty is a professor in the Department of Engineering and Physics at ACU. And Robinson is a longtime oil executive who loves to talk about how the oil and gas industry skill sets apply to nuclear. It's a fascinating topic and shows how energy transition and expansion overlap. Doug Lewin (01:20.056)The U.S. Nuclear Regulatory Commission issued a construction permit for the deployment of Natura Resources Molten Salt Reactor System at Abilene Christian. This is the first construction permit for a liquid-fueled advanced reactor and only the second for any advanced reactor ever issued by the NRC. In this episode, we talk about why Texas could become the hub for advanced nuclear innovation, the policy and regulatory hurdles that still need to be solved, and how private industry, along with government, can lead the nuclear renaissance. Doug Lewin (01:49.634)The day we recorded was the day that House Bill 14, the legislature's effort to put $2 billion toward advanced nuclear deployment in Texas was filed. It has since had a hearing. I'm excited about this one because nuclear isn't just making a comeback. It's evolving into something entirely new. And it's one of the biggest stories in energy today and will be for the next decade and beyond. Stick around because by the end of this episode, you'll have a clear picture of where nuclear is headed and why Texas, that plays its cards right, could be at the center of it all. Doug Lewin (02:19.028)As always, please give us a five star rating. It really does help people find the podcast. And leave me some comments if you like the episode. I need to know which episodes you like and what you want more of. So please do give us that rating and give us your comments. Hope you enjoy this episode. Thank you for listening. Doug Lewin (02:39.586)Rusty Towell and Doug Robinson, welcome to the Energy Capital Podcast. Rusty Towell (02:43.406)Thank you for having us. Doug Robison (02:44.462)Appreciate it, Doug. Doug Lewin (02:45.612)Hey, thanks so much for being on. I'm really excited about Natura and what's going on and Abilene. So much to talk about, so much excitement around what you guys are doing. Can we just start though with like, what is the technology? Explain it to me like I'm a smart fifth grader. I think my intelligence is probably below a smart fifth grader, but I'll, but I'll reach. Go ahead and explain it to me like I'm a smart fifth grader. The technology and how what you're doing is different than the sort of what people think of as the traditional, you know, large nuclear power plant. Rusty Towell (03:15.426)Yeah. So I like to think of it as we take everything that's really good and wonderful about nuclear energy and things that people have concern on, let's improve them. Let's make them better. And it turns out that there hasn't been a lot of innovation in commercial nuclear power for the last 50, 60 years. And so it's pretty easy to do that. There's ideas, there are old ideas that we can actually start implementing and make things better. the two big changes that we're making or the reactor that we're talking about here, which is a Rusty Towell (03:45.324)liquid-fueled molten salt cooled reactor, those are the two technology choices. Let's change the heat transfer fluid. So instead of moving the thermal energy for where it's made in the reactor core to a steam generator where it makes steam to turn a turbine, make electricity with water, let's use a different fluid. And so we step back and we say, well, what's, what are the properties of that fluid we really want? We would like something that can operate at really high temperatures because we're more efficient there and we're able to provide industrial processes. Rusty Towell (04:14.84)that high temperature heat that they need. And so we want high temperature, but wouldn't it be great if we operated at low pressure because at high pressure, that's a real danger and also a real expense to engineer strong systems that can withstand that. So we want a high temperature, low pressure fluid. And it turns out when you look at that, and we also would like the fluid to not be chemically reactive or, you know, have any sort of Rusty Towell (04:42.562)break apart at high temperature or et cetera, et cetera. So a salt in liquid form is a perfect fluid. So that's what we're going to use. Take salt, melt it, use that as your coolant. The number two thing, let's put the fuel inside that salt, dissolve it inside of it instead of having solid fuel elements. So instead of having a solid fuel rod with a metal cladding around it where we use some of the fuel and then the fuel element becomes unstable and is no longer suitable for use in a reactor and we throw it away, Rusty Towell (05:11.374)and throw away lot of the energy content and throw away a lot of useful isotopes and we add a lot of material to the waste stream. Let's just dissolve the fuel in the salt, much like dissolving sugar in your coffee. And so the fuel can be added to the core, but also can be drained out of the core to shut it down. And so it makes it safer, more efficient, et cetera. Doug Lewin (05:32.318)So less waste, safer because you don't really have the danger and tell me if I'm wrong about this. This is I'll put in the form of a question. Do you not have the danger then of some kind of a runaway reaction because the fuel is actually getting dissolved into the molten salt? Is that correct? Rusty Towell (05:48.408)So you design it so that it doesn't run away by using low enriched uranium, not high enriched uranium by making sure you have a configuration where it's impossible for it to run away. You have a system that we call walk away safe because you literally can drain the fuel out of the core. So you can guarantee you shut things down. No normal reactors you shut down by inserting the control rod. And so if you can't, if something breaks and you can't get the control rod inserted, well then how do you do it? Rusty Towell (06:17.238)And so the commercial systems, say, well, we have to have a backup method in case something breaks. We have a system where we drain the fuel out. And so we literally have a system that's walk away safe because if the reactor operator walks away, if power is lost, if the computer shut down, if, if, if, if as long as gravity works, it can shut itself down. Doug Lewin (06:39.246)Okay, I'm going to go to Doug in a minute to add anything to this, but then also you have less water use, higher heat, right? Rusty Towell (06:46.168)Yeah, I mean you can make systems where you don't need any sort of water in the coolant or you can depending on how you want to convert that thermal energy into electricity. You could have a variety of systems there where it could be used on that end of things. But certainly in the power production, you don't use any water. Doug Lewin (07:01.036)Doug, I'm going to go to you next. You can add anything to that answer, but I would also love for you to talk about sort of where you're at in the process right now. I believe there was a construction permit issued by the Nuclear Regulatory Commission, which is obviously no small thing, a major thing. Add anything to Dr. Tal's answer that you want to, but also just kind of talk to us about timeline. where are you in the timeline and how long before we actually have one of these advanced reactors running in state of Texas? Doug Robison (07:29.144)The only thing would add to what Dr. Tao had to say on the system is that just to reiterate the importance of a low pressure or zero pressure system, changes from a safety standpoint, that changes everything. And so the large, extremely large forgings that you require, we do not require that. The containment dome that you see on light water reactors, we don't require that because we don't have pressure. You remove pressure and everything changes. And so that one fact, Doug Robison (07:57.962)and not even begin to talk about waste. You know, we don't generate the waste that you see with current light water reactors. In fact, we can re-utilize that spent nuclear fuel as fuel for molten salt reactors. So we don't have to throw that fuel away. We can keep it and use it. But the low pressure aspect, the walk away safe aspect is directly beats into your second question on what is the timeline. So the timeline for the demonstration reactor, the reactor at ACU is for Doug Robison (08:26.03)For licensing purposes and for the purposes of the universities, it is a research reactor. It is the country's first advanced research reactor in the history of the nation. Very valuable for that. For Natura's purposes, it is also a demonstration reactor. It demonstrates licensure, so we have already demonstrated with the NRC that we can get a license. We got our license in September of last year. It's the first time the NRC has ever licensed a liquid-fueled reactor in the nation. So a huge accomplishment. Doug Robison (08:54.892)made by the researchers at the four universities on that. That demonstration or research reactor is scheduled to become critical or go online the end of 2026, early 2027. So very likely we'll be the first advanced reactor to be operating in the United States, I guess since the 1960s, Rusty, if we go back to the Oak Ridge days, but under the Nuclear Regulatory Commission's period of existence. Natura, one of our goals is how do we get the Doug Robison (09:23.512)production as quickly as possible. Production is deploying commercial reactors. So last year I started saying that we have a defensible pathway to deploy commercial reactors before 2030. Since that time, a lot has happened. The pace of change in this area is incredible. My certainty of deployment before 2030 is going up. And I believe at that time that is getting closer and in one large Doug Robison (09:50.324)aspect of that is the Nuclear Regulatory Commission that is often criticized for the stringent bar that they set to deploy reactors. Natura, we actually lean into that and say that that is a good thing. We are deploying nuclear reactors. We're not building stepladders. And stepladders require federal approval also, by the way. And so a very, very high safety standard should be the norm. If you can't reach that safety standard, then maybe you shouldn't be building a nuclear reactor. Doug Robison (10:18.766)So we think that is a strength of the NRC to be leaned into. And what the NRC is doing, there were hearings over the last two days as a matter of fact, and we've had three of the five commissioners come through Abilene and tour the facilities there, the Science Engineering Research Center. The NRC is leaning in into what does advanced nuclear provide in terms of new licensing regimens. There has been discussion recently about microreactors and those are very small reactors. Doug Robison (10:48.534)Are they somehow different than the large lab water reactors from a licensing and safety standpoint? All of the arguments that are being made for micro reactors can be made really in all caps for molten salt reactors because of the walk away safety aspect, because we don't deal with pressure. And so we were having in the tourists, having a series of conversations with potential industrial partners. had one just as this very afternoon, about an hour before this podcast. Doug Robison (11:18.376)with a very large industrial entity. And the conversation was we're presenting to the NRC technology that could open up new licensing pathways that are going to require the years and years that we've seen on light water reactors. I can't sit here today and say we're going to license a reactor, commercial reactor in the next four years. What I can say is that industry, Natura is leaning in. Doug Robison (11:47.33)The state of Texas is leaning in and saying, we need you to move faster if the NRC is leaning in. So if everybody's leaning in, then you feel like you're going to be finding a faster way to do things without compromising on the safety. I've got to emphasize that over and over. We're not seeking compromise on safety. What we're doing is because we have a passively safe system that never goes to pressure that the, the, the fuel goes because it's in the salt as Dr. Tao explained. Doug Robison (12:17.112)we go from a solid to a liquid to a solid, the ability to contain that is much different than it was for high pressure light water reactors. And so we still have a defensible pathway to deployment of commercial reactors before 2030. Again, I think that timeline could be getting shorter. And then the number of your reactors you deploy at that point is just simply a bunch of the capital. You're going to deploy one every... Doug Robison (12:42.978)Two years, are you going to play 20 in the first 24 months? That's just a function of capital and the long pole of the tent. I actually before a few weeks ago, before some of the meetings we've had in New York and Salt Lake city and some of the testimony going on at the NRC, I might've said the long pole in the tent, the long timeline continues to be the licensing timeline. I now think that the long pole in the tent is actually the capital. When is the capital available? Doug Lewin (13:09.24)So let's talk a little bit about how the use cases for this and the size of this. So you're doing a one megawatt test reactor, large nuclear plants, at least the four we have in Texas are all about 1200 megawatts. We have lot of obviously lot of listeners that are energy professionals, but we try to make this as accessible to a general audience as possible too. Doug Lewin (13:33.144)So to put that in perspective, know, a small city like Waco or Lubbock might be not small city, mid-sized city, sorry, Waco and Lubbock, you know, seven or 800 megawatts, a city like Austin, about 3000 megawatts, San Antonio, about five or 6,000 megawatts. These are smaller by design, right? So that they could be used at an industrial site or at a campus. Is it one size or is there kind of a range of size that Natura's reactors could be? Doug Robison (13:59.49)The reactor at Abilene Christian is a one megawatt thermal that is a limit set by the Nuclear Regulatory Commission for a liquid fuel research reactor. The Natura commercial reactor we're staying within, definition of a small modular reactor, one of those definitions being you can fit everything on the back of a semi. So that becomes our limitation is the reactor core can be no larger than what you can transport on the back of a semi trailer. Doug Robison (14:26.446)Dr. Tao, you'll know the measurements better than I, but the reactor vessel, not just the core, but the vessel itself is, I don't know, 14 feet wide or something like this. Rusty Towell (14:36.974)The reactor we're deploying here at ACU, it's about 10 feet diameter and 20 feet high cylinder is sort of everything that has fuel inside of it all lives inside of that one system. Doug Robison (14:42.072)Thank you the... Doug Robison (14:47.022)Yeah. So the commercial system, it's going to be 250 times more powerful is 14 feet wide and then maybe 35 to 40 feet tall. So if when you go up in power by 250 times, you don't go up in size by 250 times. And so while we end up within that limitation of size, within the limitation of the fuel that we're using, because we're for our commercial reactors, we're using LEU plus because of the shortage of HALU. So we're not planning on having HALU available when it's not commercially available. Doug Robison (15:16.942)is a 100 megawatt electric, 250 megawatt thermal. Doug Lewin (15:21.26)What you hold on, hold on, hold on one second. Okay. So 100 megawatt electric, 250 megawatt thermal. So for a lot of industrial applications, what you're doing is you're using like steam and waste heat. Is that what you're talking about here? Okay. Okay. And so 100 megawatt electric and then another 250 that can be used on site for that industrial process or for commercial use, whatever. Doug Robison (15:38.166)Exactly right. Yes. Doug Robison (15:48.43)Right? That's right. We have two commercial projects that have been announced. One is a primary heat project. It's desalinating produced water in the Permian basin. And so because the salinity of produced water is triple that of seawater, membrane technology really doesn't function at that. So they're looking at thermal energy. So that's where we would bring the high process heat. We have a second deployment that's been announced on the RELLIS campus at Texas A University that's providing power. Doug Robison (16:17.698)providing electricity. And so we actually, coincidentally, but fortunately, have two commercial projects that have been announced, and one focusing on the heat aspect that molten-salt reactors uniquely operated, very, very high temperatures, but again, very, very low pressures. We can take advantage of that high process heat, and then we have another on the RELLIS campus that's just a pure power reactor. Doug Lewin (16:39.618)But for the one at RELLIS, so that would be electric, but somebody's going to presumably use the thermal output as well, right? Because the thermal output is there by design, right? Doug Robison (16:49.228)Well, as with any reactor, you turn heat into electricity. You end up in a power block where you take that heat, ultimately transfer it to water that creates steam away. Now this is not near the reactor core, so we're not introducing water into the reactor core through a heat transfer through a non-fuel salt. And then that water you do use to create steam and turn a turbine and make electricity. So yeah, any reactor is going to generate heat that you turn into steam. Doug Lewin (17:04.781)Got it. Doug Robison (17:17.846)We just happen to generate heat at more than twice the temperature of a current light water reactor. So we operate up above 600 degrees Celsius. But again, we never leave the liquid state. Doug Lewin (17:28.652)Okay, great. Doctor, tell me anything you want to add to that. Rusty Towell (17:32.098)No, well, I just say that, you know, any sort of power plant, virtually starts with a heat source, right? Whether you're burning coal, natural gas, concentrated solar, et cetera, it's a heat source. And then converting that thermal energy into electricity is something that we've been doing for a long time and we're efficient at, but there's also laws of physics that say limits how efficient you are and at lower temperatures, you're not as efficient. so current nuclear power plants and current reactors that are water cooled. Rusty Towell (18:01.43)or where water is your heat transfer fluid, you throw away more of your energy into waste heat and produce less electricity. We'll produce almost 50 % more electricity from the same amount of thermal energy by being able to operate at high temperatures. So that's just a benefit of operating at high temperature. You actually throw away less energy and actually can use more in form of electricity. Doug Lewin (18:22.894)Okay, great. So I do want to talk some about policy. Obviously, this is Energy Capital Podcast. We always talk about policy. We are recording on March 6th, which is the day that House Bill 14 has been filed. And I was looking through it a little while ago and was struck by how they actually called out something that Governor Abbott's Advanced Nuclear Reactor Working Group called out as well, high wage manufacturing jobs being part of this. Can you speak a little bit to the economic development aspects of this? Doug Lewin (18:51.148)You know, there's obviously a global market for energy. There's competitiveness around the world. It seems to me like, and I want to make sure I'm viewing this the right way, but there's a, there's a competitiveness angle here too. Like nobody else is developing exactly what you're developing anywhere else in the world. Is that right? Doug Robison (19:06.99)Anywhere else in the world, rusty, I think China is pursuing this technology. When the department of energy asked us to take this project on in 2019, the reason was given that we need to beat China and we need to beat Russia. So I wouldn't say anywhere else in the world. Now we'll say anywhere else in the United States, certainly. Rusty Towell (19:26.414)Rumor coming out China, they have a reactor, they got it operational full power last year. Very, very limited information coming, but certainly this is a technology that's interested worldwide and there's people that are working on China. In the West, there's a variety of people that are interested in it, but if you step back and say, are you interested or do you actually have a construction permit to do this? That's a very, very different question. And so if you say, do you have permission to actually build a reactor? All of a sudden there's a very, very small field of Doug Robison (19:54.158)Doug Robison (19:55.138)So I was appointed by the advanced nuclear working group by governor Abbott and served in a leadership role in that. We submitted our recommendations to the governor's office in November of last year. And then what the governor's office rolled out, I believe in December, late November, the 13 recommendations that came out of the working group were comprised down into seven points that the governor issued. And then we have this house bill 14. Doug Lewin (19:55.544)Got it. Doug Robison (20:22.894)that is encompassing some of that. And we're going to see how that works to the legislative process. The two directives that Governor Abbott gave us in August of 2023 was one, we need more dispatchable power to reinforce the grid. And that was the overriding priority. Texas has a grid challenge. Doug Robison (20:45.418)as well as the water challenge. I don't know if you want to talk about water later, for sure. But those two infrastructure issues are before the legislature. We saw Texas put $5 billion in the Texas Energy Fund last session, trying to address dispatchable power, primarily through natural gas. We may see another $5 billion this session for another add-on to the Texas Energy Fund. We have $2.5 billion. Doug Robison (21:08.77)Currently in the House and the Senate, both addressing water, which one of the key components is the ability to desal water is where you're to get the power. So we kind of reintroduce our technology at that point. And then we have this House Bill 14. I haven't had a chance to read through it. Just got it this afternoon. And I know it lays out many of the things about what the governor or what the work group came up with. I don't know if it has a dollar amount in there. I don't know if that has been given to us yet. How much the governor's office. Doug Robison (21:38.056)Our chairman Harris, who's sponsoring that bill, is recommending to put into nuclear what the competitive edge. There's 20 other states that are kind of saying the same thing. is saying we want to be the center of advanced nuclear. The Texas miracle is built upon the fact that we have the Permian basin and we have the Barnett shell. We are fortunate enough on the Barnett that's natural gas. The Permian basin is crude oil. We're blessed to have that rock. Doug Robison (22:06.958)in those formations in the state of Texas. That's why we're able to provide all of that power, all of the economic growth, again, the foundation of the Texas miracle. Advanced nuclear is not based upon formations. It's based upon whichever state becomes the center for manufacturing. So the second point of the governor's letter in August of 2023 was capture this industry for Texas. Texas has a manufacturing history. We're comfortable with energy. Doug Robison (22:34.39)In the four plus years that this project has been ongoing in Abilene, Abilene Christian and Natura have sponsored more tours and town halls that we can remember. We've not had one single voice of dissent or concern. It's been nothing but unmitigated support and excitement about what this could mean. I think Texas A is experiencing the same thing on their RELLIS campus initiative there. We have the manufacturing capability. Again, because we're not high pressure, we don't have to go overseas for forgings. Doug Robison (23:03.872)heavy forgings, we can manufacture back the facilities we're using at Abilene Krish and the test facilities were manufactured outside of Abilene. And you go to, you go into Houston and of course we can build these things. Texas has all of the components. We have the need, we have the history, and we have the blessings of a huge surplus that allows the state to step into this much more than say a Tennessee who Tennessee has some natural advantages. have Oak Ridge National Lab. Doug Robison (23:33.678)Yeah. And they've got the Tennessee Valley authorities. So they kind of got two runners on base already, but Texas from what the governor has said, what he said in the state of the state address about leading the nuclear Renaissance, what the legislature, what the state leadership have said in the interim, we'll see what plays out in this session under house bill four and other different appropriations that are working through the state that are directed toward advanced nuclear. So time will tell. Doug Lewin (23:34.088)Right, right. Doug Robison (24:03.266)But we know what the governor asked us to do. We know what the opportunities and possibilities are. Now we'll see how the legislature chooses to address it. Doug Lewin (24:10.988)Yeah. And I think there's so much, I think you're right, Texas has a lot of natural advantages here. And I think with tapping in at Abilene, there's the kind of potential there for that, you know, even first mover advantage. And, you mentioned Oak Ridge, you know, I interviewed Governor Perry for this podcast and he talked about how he was going to, he said on the podcast, he was going to talk to Secretary Wright. At that point, he hadn't been confirmed yet, but of course it's been confirmed since that Texas needs a national lab. Doug Lewin (24:38.51)I'm just gonna put that out there. I'm gonna keep saying it on this podcast. I'm gonna try to drop it into every episode. I mean, there's something like 20 years, like why do we not have a national lab for energy in Texas? It's kind of wild, right? Doug Robison (24:50.466)I think we had the chance with the super collider maybe and we blew that. Doug Lewin (24:54.454)Right, Doug Lewin (24:54.935)right, right. That's a topic for another day, We'll let you know. If this were one of those like three hour podcasts, we could get into that. Rusty, I want to ask you, it seems to me like with nuclear, the thing that has kind of always been missing is a learning curve, right? That like, you you've seen huge reductions in the cost of solar, in the cost of batteries, in the cost of LED light bulbs. could, heat pumps, I could go on. Doug Lewin (25:20.934)But we really haven't seen it in nuclear. Do you think there's the potential there that we could actually see? Because obviously cost is going to be potentially a limiting factor for nuclear. Can we get to where we get some kind of a steep learning curve on nuclear? Rusty Towell (25:33.934)Oh, absolutely. We certainly can do that. And I'll just go back to where I started. The fact that we're working at low pressure means we don't need that huge, thick reactor vessel and the huge containment dome and those huge forgings that Doug was talking about. And so we have a great starting point. And then let's bring in this concept of small modular reactors that Doug was talking about. Let's build our components not on site where we have to move a workforce. Rusty Towell (26:02.84)from side to side every time. we see this, right? I I love the fact that Vogel was completed and we got a new pressurized water reactor on the grid producing clean, safe, reliable energy. But it took 15 years and something like a workforce of over 9,000 people to build that thing. And so it was way over budget and behind schedule. Ford, 100 plus years ago, right? I mean, let's build in a factory. Rusty Towell (26:30.264)where you get a trained worker to build one part really high quality, you know, knows what he's doing and let's get the efficiencies of mass producing. And so we mass produce the modules in a factory and we get a single design that we licensed once and then we build a bunch of, and then all we have to do is, it okay to put it in this side? Yes. Let's build a, you know, a building like the building I'm standing in that was built, you know, in a year and a half. Rusty Towell (26:59.15)you know, with no special dome over the top of it. And all of sudden we have a place where we can deploy a small modular reactor. And so this allows us by all means to get down to that economies of scale so that we can truly make the one budget and on schedule where it's a sustainable form of energy from a market analysis point of view. Doug Robison (27:12.877)Nuclear. Doug Lewin (27:20.802)Yup. Doug, anything you want to add to that? We're do- Yup. Doug Robison (27:23.022)Doug Robison (27:23.562)The demonstration reactor, when we met with the DOE in January of 2019, and they said, you need to build this reactor. And that led to the end of my retirement with that sentence. We laid out the pathway of utilizing, which had never been done before. And there's so much that we, we use that phrase so often, I think people quit believing us at some point. But one of the things we've never done before is we've never had a private company like Natura, fund a research reactor at the university. So that was a burst. Doug Robison (27:52.418)But the reason for that was that we were utilizing the research reactor program as a way to bring new technology to the marketplace. That had never been done before. Now the DOE's response was, that's a genius. This may be the future of research. We're seeing other universities now kind of holding their hands up and saying, Hey, we want to do the same thing. And we'll see if some of them are successful. Hopefully they are. But then in fact, the conversations we're having about how fast can we move is Doug Robison (28:19.542)We're not having to forecast or predict what it takes to do front end engineering design or detailed engineering design or preliminary engineering design. We don't have to predict what it's going to take to prepare a construction permit and to defend it and to get it permitted because we've done all of it. And the evaluation, the analysis that really began once we got the permit in September of last year, my question to the team was how Doug Robison (28:44.854)mature are we on our commercial reactors based on all the work we've just completed internally with the Nuclear Regulatory Commission? And the response coming back is we're way down the road. So when we talk about what does it take to do all the design work, all that R &D, all that licensing work, even the manufacturing, we're already establishing under EPC agreements exactly who's going to be providing components. So we have answered those questions. Doug Robison (29:12.302)So they're not new questions that we have to predict about. We can actually say with certainty, we know how to do it because we've done it. So when we build our first commercial reactor, our first of a kind, it is actually not our first of a kind. Our first of a kind is going to be sitting about 50 feet from where Dr. Tao is sitting right now. The demonstration reactor, the research reactors are being deployed at ACU. One of the primary purposes of that pathway is deploying that reactor at ACU so that Doug Robison (29:39.694)we can move again, how fast can we get to production? I come from the oil and gas industry. My company grew through the drill bit. What that means is you grow by drilling. If you don't drill, if you don't produce, then you die. How fast do we get to production? How fast do we deploy reactors on the grid? How fast can we get licenses from the NRC to do that? So our pathway has proved successful. And we were not in existence before the middle of 2020 and within two years. Doug Robison (30:09.516)We had accelerated to the lead just about everybody out there. And now four years later, we're only one of two that have a permit from the Nuclear Regulatory Commission. Doug Lewin (30:19.65)You know, it seems, so it seems to me like really the key here for so much for deploying this quickly, for building an industry here, for having a learning curve really is that modularity. You keep remembering, I bring this up in a lot of conversations and we'll put a link in the show notes. There was a great podcast that Jigar Shah at the time, the head of the loan program office at DOE. And I want to talk about DOE and the sort of bipartisan nature of this because it has support, it seems across administration. So we can go there in a minute, but Doug Lewin (30:48.334)He was on Dave Roberts, Volt's podcast, and he said, the problem with SMR so far is small modular reactors, they're neither small nor modular. that's, that seemed to be, and it seems like you guys, that's, that's not true with Natura. They are both small. We talked about the size a little while ago. They're, they're also modular and that allows for that replicability, which gives you a good shot to really come down that learning curve. I want to ask, and Rusty, think this, I'll ask this one to you first. Is there. Doug Lewin (31:17.07)flexibility in this technology. What I mean by that is, like you talked about, I mean, actually Doug was talking a minute ago about like this kind of base load dispatchable generation the governor wanted. We have obviously a large deployment of wind and solar, about 40 gigawatts of wind, about 30 gigawatts of solar. And so we have a system right now where there is an abundance of energy. And of course we have a lot of gas, right? There's like Doug Lewin (31:43.982)70, somebody, maybe 68, something like that, gigawatts of gas on the grid. So like, there's a lot of power for most of the hours. Is there an ability, I think maybe with the molten salt to actually like store up some of that power and then deploy it in a flexible kind of a way or does that not exist with this technology? Rusty Towell (32:04.462)No. So one of the beautiful things about this technology is you don't have to sort of go to economy of scale to try to make it economical, right? So pressurized water reactor where you need those big containment domes, et cetera. It doesn't make sense to invest in that sort of capital. If you only have a one megawatt, you know, electric plant or something like that, right? It just doesn't, you'll never get the return on the capital investment. So economy of scale is important to those and you have to go big. Rusty Towell (32:29.9)With molten salt reactors, you can make them a wide variety of sizes. So yes, we can make them a micro size, teeny tiny. We can make them big grid level size, just as big as the pressurized water reactors. But if we get them that big, at some point they're no longer smaller modular. And so from a business point of view, what Natura Resources is doing, they're saying, let's look at something that seems to be the sweet spot for most industry and still be truly small modular. And so we can build something that's 250 megawatts thermal. Rusty Towell (32:59.598)And so if you need 500 megawatts thermal, you build two of them. If you need electric and you need 300 megawatts electric, then build three of them, right? And so they don't take up a lot of space. They can still be dense and compact and you can put several on the same side. And so you can scale it to whatever you want. going back to your question of, go ahead. Doug Lewin (33:21.934)I was going to say, they're flexible in that sense, right? That you can deploy them in different, and obviously, and it may just be the answers, like what I'm asking is the answers. It could be no, because, that's okay, because with data centers or DSAL or some industrial processes, have chip manufacturing, you may just have 24-7 and you just want 24-7 power. What I'm asking is, is it rampable? Rusty Towell (33:43.01)Yeah. Yeah. So it, you know, does it have this ability to load follow a lot of times people talk about, so in the middle of the day, we need a lot of electricity. Can we ramp them up and at night turn them down? Yes, you can do that. like most, big industrial processor, you know, it doesn't appreciate the changes. It rather runs steady. And so one of the things that we've thought a lot about, and you actually heard it from Natura and their first two commercial deployment is that because it can produce electricity efficiently. Rusty Towell (34:11.776)And because it can produce high temperature process heat efficiently, you could easily pair it so that it does both. So one plant or one grouping of plants produces electricity and desalinates water. So you think about Corpus Crispi or someplace along the Texas coast where there's both a shortage of water and a shortage of electricity. Let's do both. And so in the middle of day, we're producing electricity. And at night, when we need less electricity, let's start desalinating water. Rusty Towell (34:40.898)Cause water goes in the tank really easy. And beyond that, could you build a thermal storage unit? Yes, you could, but that's a bigger capital investment also. You could do it. In my mind, it's not the most elegant solution. I think there's other options out there, but I think you're also right. As we go forward in time, we're going to need more and more and more stable energy. As we ramp up and we look at what's really driving the increased electricity demands of the future. It's going to be a lot more. Rusty Towell (35:09.262)24 seven and much less my air conditioner in the middle of hot day type of usage. Doug Lewin (35:14.958)Yeah, I think there's going to be, I think there's going to be both. I think like there's basically if we can, if we can produce clean and affordable power, like there's not going to be a shortage of uses for it. But I think that sort of flexibility ramp ability question is, kind of always there. But I think that, you know, we're having this conversation a year or two, frankly, I think I would have been, I would have been more skeptical of this because it just looked to me like everything was going to be rampable, flexible. think the AI data centers, but you can also get into again, industrial electrification desalination. Doug Lewin (35:44.974)there's more and more use cases coming that that 24 seven, just matches nicely. Not every electric use is that way, right? Air conditioners are going to be highly variable, but there are a lot of electric uses that are going to be 24 seven. Doug Robison (35:58.604)Well, you look at the grid in Texas and I'm sure you're familiar with our cod and the work that they've been doing. yes. know, Texas grid is about 90 gigawatts. That's the size of our grid. We're going to lose 12 to 14 gigawatts from coal coming offline. So now we're dropping down below. Texas has been struggling to maintain the 90 gigawatt. And because we have such a large percentage of renewable that contributes to, we have times when we don't have the power available. Doug Robison (36:26.318)And that's what the 5 billion last session was supposed to address. And I'm sure it's helping, but we're going to have another 5 billion this session, perhaps to get more dispatchable power on the grid. Urquhart came out and said, it's not going to go from 90. We're going to maintain 90. Now we're going to move from 90 to 110. are we going to, how are they, they came back and say, we're to go to 146. And last week they came out and said, yeah, it's going to be more than that. We're going to 150 plus. Doug Lewin (36:43.872)or higher in Doug Robison (36:55.894)In the next six years. So that's before you throw data centers and AI on top of everything. That's just electrification and growth. And now we have Stargate. If I remember the name right. The first deployment is in Abilene. So all things in Abilene, amazingly enough, if that's a 1.2, 1.4 gigawatt, and they're going to do 10 of those in Texas is the plan. There's another 15 gigawatt power on top of. Doug Lewin (37:08.93)That's it. Yeah. Doug Lewin (37:12.034)Yep. Yep. Doug Robison (37:25.322)Everything else on core has current requests for 80 gigawatt of new connection. Remember our current grid is 90 gigawatt. 60 of that 80 are data centers. So the power demands, and we're not unique in this, it's across the country. New York is now talking very seriously about nuclear. As Germany, Rusty and I, yeah, Rusty and Axie floated past, I think the last shuttered reactor in Germany. Doug Lewin (37:46.836)Absolutely. Yeah, everybody. Doug Robison (37:55.34)And now they're talking about bringing their reactors back online. Italy either today or yesterday revoked their stance against nuclear doubt. And they're now pro nuclear. The point is we need massive amounts of power as quickly as we can get it. was asked earlier is all a gas. How do they look at our project or do they consider us an enemy? say, no, they're actually, they're our greatest customer and we need all the oil, all the natural gas we need. Doug Robison (38:23.128)small modular reactors, still need the large light water reactors. So I am not worried about the demand. I'm worried about the ability to meet the demand. Doug Lewin (38:31.34)Yeah, the demand is off the charts right now. I do want to come back to policy. We touched on it a little while ago. What do you really need from policy? I I touched a minute ago on kind of the bipartisan nature of this. think it's fair to say the Biden administration was very supportive of nuclear. Jigar Shah was out there almost like cheerleading for the nuclear industry. And the NRC did issue a construction permit under Biden. And we've heard great things out of Secretary Wright. So it seems like... Doug Lewin (38:58.69)There aren't many things in the world these days that fall into this category, but nuclear seems like one of those that has support across both sides of the aisle and different parts of the ideological spectrum. And then we were talking about HB 14 as well. So that bill, know all of us are still kind of digesting because these came out today, but it looks like it's an up to $200 million incentive from the state of Texas for reactors. They've got these different tiers in there. So we'll figure that out as we go. I won't ask you to comment on a bill that was just dropped today. Doug Lewin (39:28.226)But I think the more general question, what do you need from the policy environment for this technology to really flourish and thrive? Doug Robison (39:36.024)So we did this 20 years ago with the hydraulic fracturing revolution and my company, EXL petroleum was at the forefront of that in the Permian Basin. And the way that played out, and I've given this speech a few times, I go back to King Hubbard's curve, if you're familiar with the peak oil and all that. When I started with Exxon in 1982, that was a real thing. And it was not just at Exxon, but in the state of Texas and across the nation, the production decline was a real thing. So when we, Doug Robison (40:05.644)revolutionize the oil and gas industry with new technology, new fracking techniques. The things that happened is one is that we quit drilling dry holes. And so in the nuclear world, that would mean every time you go to the NRC with a license, you're assured you're going to get a permit. If you're bringing them exactly the same reactor that they just permitted a few months ago, then your odds of getting permitted again are going to be pretty good. So we've kind of done away with dry holes, hopefully. Then what happens is the capital has to hit Doug Robison (40:35.17)table. When the private equity industry figured out what we were doing in the permanent, it took, think our third public transaction, everybody kind of all of sudden figured out what we were, we're doing because the results of those transactions were to public companies that released the data. And when the private equity world woke up, we had $90 billion trying to place in the Permian to get in on the rig, roulette wheel, if you will, you know, a game that has no risk anymore. That has been missing. Doug Robison (41:02.89)until the last several months, the capital component. Doug Lewin (41:06.092)Literally, Doug, literally the last couple of months, like not like a year or two ago, like literally in last couple Doug Robison (41:11.406)Doug Robison (41:13.388)A year ago when I spoke at us Nick, the financial industry, since then almost not that we're smart enough to plan it this way, but almost exactly what we got our permit is that Microsoft, Google and new core. If I remember the three companies that came out last fall and said, we're going to need a hundred gigawatt of power again, larger than the Texas grid. Those three companies are going to need a hundred gigawatt of power and we need it quickly and we don't want it to be carbon. Doug Robison (41:40.258)The only thing that fit that definition was nuclear. think that announcement was on a Friday. I believe there was a wall street journal article or. Advertisement the following Monday where we had a number of international banks say we're in to nuclear. So overnight you had a demand in data centers and AI saying we're going to need massive amounts of power. We're going to pay a lot of money for it. And you had the banks respond. Then what happened after that is I think the first definitive transaction. Doug Robison (42:09.858)We don't know all the details is when Microsoft and Constellation teamed up and said, we're going to reopen three mile Island. And so the data centers, the hyperscalers are grabbing excess power or dormant reactors wherever they can. I think that might be the only dormant reactor in the nation. There may be one other, but I've heard different opinions as to where the other one can be brought back online. Doug Lewin (42:33.176)There was one in Michigan, think DOE did a loan guarantee for and California had one or two. I think they brought them back though. But yeah, go on. Yeah, yeah, yeah. There's not many. Doug Robison (42:43.446)Now I'm spending much more time in New York than I'm spending in Austin. And the reason I'm going to New York is because I was just there two, three weeks ago. It's because the financial community in this nation, which is headquartered in New York is now saying, we want to learn what you're doing. We're interested. And so yes, in the last several months, the financial industry has shifted. Now the component that is still lagging are the utilities. Doug Robison (43:11.406)Utilities are not early adopters. And so we'll see how that, if you're going to try to address the grid, you have to have utilities engaged. And then you get down to, know, we saw the federal government put five billion into advanced nuclear in 2020 under the advanced reactor demonstration program. Natura, everything we've done has been privately funded. We did not exist when those dollars went out. Doug Robison (43:35.598)So we've seen a large infusion of capital there. We'll see if something results out of that. I hope it does. And now we have the states who for various reasons, one trying to capture an industry, think for a lot of states, it's just the economic opportunity, but also seeing the power need are now saying, we're looking at ways to make this happen. So in Texas, a good example is what the legislature did last session with semiconductors. We want to capture the semiconductor industry. Doug Robison (44:05.176)because of economic growth, it's a vital industry. So we're going to incentivize to make that happen. And so that's what we're going to see, what happens here in this session for Advanced Nuclear. Doug Lewin (44:15.362)And before I go to you for, want to get your thoughts on that too, Rusty, as far as what is needed from policy and what kind of government support is there. Doug, I want to just double click for a minute on that, on the piece about utilities, because isn't that what is different about Texas, right? Because there is a competitive market. So if you've got, whether it be Microsoft or OpenAI or Google or Meta or Newcore or, you know, or BASF or whatever, if you have a large user that says, Doug Lewin (44:44.974)I want to buy this power. Of course, there's like a utility hookup for the power plant, but it's not like in Georgia where, you know, it was Georgia power and the regulators had to approve it and it's all command and control central planning. Like it's a market here. If the capital is there to bring it now it's new. that's where I think some of these bills like Senate bill 1105 and house bill 2678, and some of that will be in HB 14. Doug Lewin (45:11.734)where there's a nuclear authority and a single point of contact to help with permitting and some of those utility issues. But as far as actually getting to market, that's where a dynamic competitive market is so different here than it is in a lot of other states. Doug Robison (45:29.166)Well, true. And our price is recalculated every five minutes under this gut system at ERCOT In the advanced nuclear working group, we were told, do not discuss the grid. That is not a topic that the governor wanted our opinion on. So we did not address that at all. That's within the purview of the legislature. So I don't think we'll see anything. I know you didn't see that coming out of the working group on that. We'll see what the legislature does. Now with hyperscalers. Doug Robison (45:56.896)and direct air capture and industrials. Those have, and we don't know all the details about Three Mile Island, the Microsoft and Constellation arrangement, but much of that could be defined as behind the meter, off the grid. Now, I think if you are supporting industries such as hyperscalers, data centers, that otherwise would try to draw from the grid, that that's considered supporting the grid. If that's the case, then that's fine. But we may see Doug Robison (46:26.368)much of the power coming from advanced nuclear going to hyperscalers and data centers and perhaps commercial operations. And we're still going to have to address the grid issues. So that's, that's a paradox. think the legislature is going to have to, it's going to have to wrestle with. don't, I don't have the answer other than I know that reliability is worth something and is figuring out what it's worth and then how to make that happen. think is going to be a big challenge. Doug Lewin (46:55.448)Well, Rusty, I want to go to you on policy too. I'll just say real quick. think there's, know, reliability obviously is paramount, but I think like riding right there sidecar with it, right, is affordability, right? And I think you do get a lot of affordability benefits from wind and from solar. And I think the other piece that is kind of interesting, it isn't talked about very much, but unless I'm mistaken, and I don't think I am, in the Inflation Reduction Act, there actually is now the production tax credit available for nuclear now too, including for Doug Lewin (47:24.782)Existing new so every existing nuclear plant is getting the same actually more because it runs 24 7 it's getting the same $23 a megawatt hour and you guys would be able to get that for the For the reactors that you deploy as well. Correct? It's gotta try change the X. Yeah Yeah, yeah, rusty you want to talk about policy? What do you think we need to grow a nuclear industry in Texas? What kind of policies where is important? Doug Robison (47:40.065)you're correct. Rusty Towell (47:47.894)Yeah, I think to start answering your question, no, I don't want to talk about policy. is a, that's a, a nice. Doug Lewin (47:53.975)You got that doctor in front of your name. You're not, yeah, no, come on, come on, get down in the mud with us. Talk about policy. Rusty Towell (47:59.918)Policy. mean, I, my opinion, if you have a level playing field, then the best technology will win. And so what do we, what do you need? Well, you get more of whatever you, you you incentivize. And so if you say, Hey, we care about things that don't have smoke stacks. We want to subsidize those. Well, then great then wind and solar get a subsidy. And so you say we benefit from cheap wind and solar. Well, that's because we put a lot of money there already. So if we said, what do we really want? I mean, Doug Robison (48:29.218)Sorry about ur clock. Rusty Towell (48:29.998)being Rusty Towell (48:30.238)a reliability for Texas. that I think is, especially go back to the winter story of Yuri and you ask people, what do you care about? I think they probably care lot more about reliability than they do about how much CO2 is being produced. And we can all agree we want a clean environment, but we can get there a variety of ways. And so I would love to see a policy that gives credit to reliability. And yes, I think it should be clean also. And that's the beauty of nuclear is we can be clean and reliable. Rusty Towell (48:59.126)And with small modules, I'm also very, confident that we'll be economical. so level playing field, I think in a couple of decades, no one will ever build a windmill again or a solar panel again versus less invest those resources in a nuclear power plant. And so I think we'll be all nuclear in a few decades. Doug Lewin (49:18.894)Doug Lewin (49:19.894)It's a system and I think that a diversity of resources in a system are generally a good thing. I think like with wind and solar, what you end up with is, and we're at a point now, I it'll be interesting to see what happens in the coming years, but you get these different studies that come out all the time from various academics and investment firms and all that of what is the subsidized cost, unsubsidized cost. Wind and solar have gotten pretty competitive. I do think though there is a need Doug Lewin (49:48.634)for baseload power for the kind of always on. I do think we're kind of, I feel like we're moving into an era where these arguments over affordable, reliable, clean, secure, you can actually have it all. You have to have a system where those things work together. You have variable demand, you have variable output, and you have some things kind of underneath that as like the foundation. I guess what I'm really getting at is, some of these concepts that are floating around in the bills, Doug Lewin (50:17.972)Is there a need for an incentive from the state? Is there a need for a central kind of nuclear authority that's kind of a single point of contact? Is there a need for the state to assist with some of the workforce issues? Like, where is the policy support for nuclear important and where is it not? Doug Robison (50:35.798)I think it's important in all those things. The Advanced Nuclear Working Group touched on every single point. Doug, that you just made, the governor's proposals, the seven points that came out of that also did that. I believe from what I've scanned is that Chairman Harris's House Bill 14 touches on those as well. If Texas sees a need for dispatchable power or if Texas wants to capture the advanced nuclear industry for economic growth, Doug Robison (51:03.146)support from the state of Texas, whether that's in the form of loans or grants or whatever it may be, appropriations, then yes, that will help. As a Texan, I'll say I want stewardship accompanying that. I've never in my career, 40 years in the oil and gas industry, no one ever gave me money without demanding I performed. And that's why you have board meetings every quarter. And so the state of Texas should. Doug Robison (51:29.066)If it goes down that pathway should demand performance. If you're not performing, if you're not moving forward, meeting your goals, then you shouldn't have that those funds available to you. Same thing on workforce permitting officer. I know the, you know, the one project that has been moving down that pathway for a while is Dow X energy. Dow has been a great resource. Obviously the X energy has not yet filed their application with the nuclear regulatory commission. So we'll see what that process looks like, but Doug Robison (51:55.852)There was a considerable amount of licensing required just at the state and local level. And I think that was an eye opener to everybody. And so I think the state is leaning into that, which is a good thing. So I think the state can do a lot, but they can't do everything. And in that, I come back to just throwing money out in the middle of the room and saying, everybody grab it, is not the smart way to do it. I think it's going to require responsible industries, responsible companies, and Doug Robison (52:24.856)technologies at work that's going to have to work in partnership with the state and the feds because the federal component at particularly at the nuclear regulatory commission is going to be a big, big part of this. And I look at it as a partnership. You have to have all the above to get to where you want to be. Doug Lewin (52:42.902)loan guarantees from the loan program office does that sort of factor into what you're looking at going forward or do you not need those? Doug Robison (52:49.55)Yeah, I know Jigar's not in that position anymore, but he and I had dinner together in New York a few weeks ago. And the challenge that Natura has, for example, you know, we are for close to five years approaching a hundred million dollars into a project on a demonstration reactor. And then of course we have the commercial work in front of us. At what point do you qualify for those loans? And does it come so late in the project? Doug Robison (53:18.136)to where you kind of made it or not made it already. And I don't think the state of Texas needs to recreate the DOE loans program. I think there's over $300 billion at the federal level. So if those funds are available, then it's just a matter of when do you qualify for those. I prefer a loan. I like the idea of a loan as opposed to the grant, although matching grants can be effective. Sure. Doug Robison (53:44.818)if they're structured in the right way. But we don't know what that's going to look like in Texas yet. You you're right about the dollar amount that I think it's 200 million. But we don't know what the pool is. don't is that a, is that a billion dollar pool? Is it a five? We don't know yet. We'll see what the legislature does. And perhaps some other concepts such as loan program. Another idea that's been thrown around quite a bit is one of the big concerns that financial community has is cost overruns. Doug Robison (54:13.748)Is there a way to get insurance at the state level against cost overruns it? It gets complicated. How do you do that? But industry is working for lots of different ideas on how to move forward. We just need to do it responsibly. Doug Lewin (54:26.85)Just a couple more questions before we end. Rusty, can you talk a minute about Abilene? I mean, don't want to leave Abilene out of this story, because I think it's a cool thing about this story that this is happening in Abilene. You mentioned earlier Stargate. there's a big build out of data centers going on out there. There's like every kind of energy resource out there, wind, solar, oil, gas, and now nuclear. What's going on in Abilene? How has Abilene become this big energy center? It's pretty exciting. Rusty Towell (54:55.99)No, it is. It's exciting place to be. It's a great place to be. I'm thankful for the community. I'll say, you know, especially for this project, Abilene Christian University has really stepped in and saw what could be and stepped up, build this facility, partnering with Natura. And Natura stepped up in a big way, given the community, the university, our students, an opportunity to really develop something that's going to up blessing all of Texas and really bless the world. so. Doug Robison (54:59.694)for Rusty Towell (55:23.15)It's an exciting place to be. We're thankful that other people have thought it's a neat thing and Stargate coming here. Absolutely. If we can get some nice solid demand need for energy and develop a reliable supply, then that's a great match. Abilene's great place. visit and see our facilities. Doug Lewin (55:41.678)Yeah, I think that you might have potentially a very large customer there, right? Right close to home too. And I think that would be an interesting example of how a lot of the wind and solar out there, like if you look at data centers, there's going to be a lot of things where you can batch the functions and do them whenever, and then there's going to be a lot of 24 seven, like inference. just, you got to have it. So that's where you, could see some really interesting mixes. Doug, I want you to answer the same question. I also just want to ask you before we end, I you've alluded to this a few times, but I just want to ask it directly. Doug Lewin (56:10.048)You obviously were involved in the oil and gas business for a long, time as an oil and gas executive. You said you're retired, came out of retirement for that. Your career was in oil and gas. What are some of the transferability from oil and gas to nuclear, both for you personally and for the industry? It's not, I don't think obvious or intuitive necessarily where the connections are, but I think it probably is obviously intuitive to you. So can you explain that connection and of course, anything you want to say about Abilene? Happy to hear it. Doug Robison (56:38.254)I want to talk one second. I don't think we've touched upon this is why we started on this project in the first place. And this technology, we're talking about policy and the needs in the state of Texas. But when Dr. Tao laid out what this technology could do back in 2017, when I first heard about it, it was we could meet some of the basic needs of the world. You know, we could lift people out of poverty with affordable electricity and a little bit electricity changes someone's standard of living incredibly. Doug Robison (57:07.404)You want a third of the world, Rusty help me if I get the numbers wrong, a third of the world doesn't have affordable electricity because we have high process heat. We can desalinate water. A third of the world doesn't have fresh water. 200 million man hours a day are spent by women and girls carrying water because we're liquid fuel. We haven't talked about the medical aspect of it at all because we're a liquid fueled reactor. can capture medical isotopes. can treat image, cure cancer. And so part of it is we want to meet. Doug Robison (57:36.686)incredible needs of the world. You know, if we can cure prostate cancer, for example, how long do we want to wait till we do that? How about we do that as fast as we possibly can? Amen. I think 39,000 men a year die in this country from prostate cancer of the three of us sitting here. Odds are we're going to deal with that. And so there's a missional part of this that can be overlooked. So I wanted to make sure that was out there because we don't talk about that a lot unless somebody asks us directly. Doug Lewin (58:04.716)Well, look, energy abundance is sort of like foundational to everything else, right? Doug Robison (58:08.92)That's exactly it. It's the, Robert Bryce says, it's the mother of all grids. And so what translates from oil and gas, hellbent for production. We're all about production in the oil and gas industry. We measure production, our daily production, our annual production, you know, our rate of production. It's all about production, production, production. What are you producing? So that translated into what we're doing. I think some other things, if you're watching the show, Landman, Doug Robison (58:36.11)That's not the right image to have for the oil and gas industry. You have to operate, believe it or not, ethically. Your reputation is everything. And you have to do what you say you're going to do. The oil and gas industry is pretty brutal in that if you don't perform, you're not going to last. And there's a tremendous amount of promises. As someone said that in Austin, there's pretenders and there's performers. We have a lot of pretenders out there right now. Doug Robison (59:03.692)dozens and dozens and dozens of reactor projects, quote unquote, that say they're going to do and fill in the blank and a lot of pretending. And it creates like we had a few days ago, a lot of dust in the air and you can't see very well because of that. So we, we at Natura and at ACU and our research partners at the other universities perform, perform, perform. It's why I think that drive toward performance as opposed to promotion has Doug Robison (59:31.914)over time has distinguished us in the industry. I think it will continue to do so. That's our responsibility. That's our burden. We have to perform. If we do that, I think we're going to attract the capital. I think we're going to attract the industrial partners. I think we're going to attract the customers that are going to begin to see that and then believe that they can rely upon that. Doug Lewin (59:53.122)Yeah, I'm excited about it. think there's huge potential for this. I'm thrilled you guys are doing this in Texas and really looking forward to following this. it in reporting on it as it develops? Gentlemen, I appreciate both of you doing this. Is there anything that I did not ask you that you wish that I would have anything else you'd like to add before we close? Doug Robison (01:00:10.252)Rusty, thought, think you threw out an invitation. I don't know if we've talked about the, sir. I think you need to highlight that. Rusty Towell (01:00:16.244)I'll just say thank you Doug for bringing up the purpose and the mission behind this. That's what's excited. That's why so many of us are working on it. That's why we've had so many students that are passionate about this. Yes, and we get to work here on the ASU campus and the Science Engineering Research Center, which is the nation's very first advanced reactor prototyping center. And so this is a facility that's already built and we're living in it, which is where the Turro Resources Moldensol Reactor 1 will be built as a small-module reactor brought here, deployed on site. Rusty Towell (01:00:45.962)and commissioned, licensed by NRC, advanced reactor, licensed by NRC to come to a university ever, and we're excited it's going to happen. The building and facilities here, this is not something that's just a paper. As Doug says, we're performing, we're performing the licensing in on the design side, on the facility side. It's an exciting project to be part of because we're making steps forward and we're going to make the world a better place. Doug Robison (01:00:48.846)be the first. Doug Lewin (01:01:10.662)I might just invite myself out there at some point to come look around. So if you guys will have me at some point, I'd love to come out and see what's going on out there. Keep me on your list if you're having any events or anything super exciting. Doug Robison (01:01:21.688)could host you for a live podcast there. Doug Lewin (01:01:23.99)Well, let's do it. The next time I have you on the Energy Capital podcast, we'll do it live from Abilene. I will take you up on that. Thank you so much, gentlemen. I really appreciate it. Good luck with everything, and thanks for being on. Rusty Towell (01:01:35.182)Thank you. Doug Robison (01:01:35.682)Our pleasure. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe

Every summer, we hear concerns about rolling blackouts. Every winter, we remember the failures of Winter Storm Uri. But how did we get here? What are the biggest risks, what has actually changed, and what still needs to happen?In this episode of the Energy Capital Podcast, I sat down with Mose Buchele, longtime energy and environment reporter at KUT and the host of The Disconnect, a podcast that has taken a deep dive into the history and politics behind the Texas grid.Mose’s reporting has helped shape how Texans understand energy, and in this conversation, we pull from his years of investigative work to connect past decisions to today’s challenges.One of the biggest takeaways from The Disconnect is that Texas’ grid problems didn’t start with Winter Storm Uri. In Season One, Mose and colleagues explored how a combination of regulatory neglect, an isolated grid, and a failure to coordinate gas and electricity markets set the stage for the catastrophe. In Season Two, a fundamental question was asked: Who really controls Texas energy? The deregulated system we have today didn’t happen by accident, it was built by political and economic decisions that benefited certain industries and players. In our conversation, Mose and I discuss who makes money when the grid fails and why Texas has been slow to adopt reforms that would prevent another crisis.But to really understand Texas energy, you have to go even further back. In Season Three, Mose has been unpacking the deep history of natural gas in Texas, starting with the wild stories of oil discoveries and the creation of the Railroad Commission—the agency that still oversees Texas’ oil and gas system today. The decisions that shaped oil and gas policy 100 years ago still influence energy outcomes today. Texas’ decision to keep gas separate from electricity regulation may have made sense in the 1970s, but today, it leaves the grid vulnerable during extreme weather.We also talked about ERCOT’s unique position as an independent grid, separate from the Eastern and Western Interconnections. This independence was originally designed to avoid federal oversight, but in today’s world of skyrocketing demand, extreme weather, and a shifting energy mix, is that strategy still serving Texas well? Should Texas interconnect with the national grid, or are there benefits to maintaining independence?The Texas Energy and Power Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a paid subscriber.So where does that leave us today? Mose and I break down what needs to happen next to ensure reliability as Texas faces skyrocketing demand from AI data centers, industrial growth, extreme heat, and population increases. The grid is changing, but is it changing fast enough?Mose’s deep reporting and historical perspective make this a particularly insightful episode. If you want to truly understand how we got here and what happens next, this is an episode you won’t want to miss.As always, please like, share, and leave a five-star review wherever you listen to podcasts. Your support helps bring these critical energy conversations to more people.Timestamps* 00:00 – Introduction* 02:30 – The Disconnect Podcast: the origin and why Texas' energy history* 04:30 – Season 3 focus and “Who is Dad Joiner?” aka The Max Bialystock of Oil* 09:00 – The genesis of the Railroad Commission's and its role in oil regulation* 12:04 – How OPEC learned from the Railroad Commission * 17:00 – Why Texas was the last state to create a public utility commission, the Energy Crisis, and why gas utilities weren’t included in PUC regulation* 28:00 – Historical causes of Winter Storm Uri, and why it was so severe* 32:00 – The difference between “deregulation” to increase competition and lack of regulation of basic public safety* 39:00 – The Midnight Connection and how Texas’ grid was almost connected to the rest of the country* 43:30 – Understanding Black Start: what happens if the entire grid fails* 47:30 – Post-winter storm improvements and ongoing need for improvement* 50:31 – The Disconnect between gas and electric systems, the idea for a “gas desk” * 54:30 - Who profited from Uri? Why is there little to no regulation of intrastate gas monopolies?ResourcesMose Buchele and the The Disconnect Podcast: * Mose Buchele on X and the KUT Website* The Disconnect: Power, Politics and the Texas Blackout (Apple Podcast, Spotify)* Season One: Explores Winter Storm Uri, deregulation, and the grid’s vulnerabilities.* Season Two: Investigates who profits from Texas’ energy system and how market forces shape ERCOT.* Bonus Episode in 2022 with yours truly: The Megawatt You Don’t Use* Season Three: Traces the history of natural gas regulation in Texas and its impact on today’s grid challenges.Winter Storm Uri & Market Failures* The Great Texas Blackout Was Caused by a Failure to Ensure Supplies of Natural Gas, Charles Blanchard, Texas Monthly* Why Gas Failed During Uri – An in-depth Texas Monthly feature explaining how gas supply failures triggered power outages.* A look at the Texas grid three years after Winter Storm Uri: Three Years Gone, Texas Energy & Power Newsletter* The Texas Grid Came Close to an Even Bigger Disaster During February Freeze, Rebecca Smith, WSJNatural Gas, The Railroad Commission, and OPEC* “Is This Texas Oil Icon a Price-Fixing Saudi Collaborator or a Political Scapegoat?” Scott Sheffield role in Price Fixing in Texas* Texas Railroad Commission (RRC) – The regulatory agency responsible for oil and gas, originally created to oversee railroads but later shaped energy markets.* The Extraction State: A History of Natural Gas in America by Charles Blanchard * For more, listen to Season 3 of The Disconnect!ERCOT’s Market Structure & Texas Grid Independence* The Midnight Connection Episode – The Disconnect podcast episode detailing Texas’ attempt to interconnect with the national grid and why it failed.* Disconnect Bonus Episode: The Black Start* The Energy Capital Podcast, Episode 1 with Former PUC Commissioner Will McAdamsMore on Texas History* Profile of Oscar Wyatt and Lovaca Gas during the energy crisis in Texas Monthly in May 1975 by Paul Burka: Power Politics: How one company’s wheeling and dealing brought the energy crisis into your life TranscriptMose Buchele (00:00.0)This system of control that began here in Austin and in Texas was adopted by other countries and eventually taken over by OPEC, which still uses the blueprint for it today in the way that those member nations will decide on allowables and supply in order to fix the global energy prices. Doug Lewin (00:22.402)Why does Texas have its own power grid? How did a Texas wildcatter, who wasn't even trying to find oil, spark a global energy revolution? How did a Texas agency originally set up to regulate railroads create the blueprint for OPEC's oil supply strategy that caused the 1970s energy crisis? If you want to understand why the Texas energy system works the way it does, you have to go deep into the history. Over the last four years, KUT senior reporter Moe's, Bouchelle and colleagues at KUT have created an awesome series that does exactly that. It's called The Disconnect, Power, Politics and the Texas Blackout. It unpacks the forces that have shaped and continue to shape Texas grid, gas markets and energy policy. Moe's created an award winning series telling the hidden stories behind Texas energy from the railroad commissions cartel like power over oil markets in the 1930s to the Midnight Connection, the secret power line that could have changed Texas grid history by connecting us to the rest of the country. The first season was a deep dive into winter storm Uri and the history of deregulation in the state, something we talked about in this podcast. The second season tracked the changes that had been made and those that hadn't. They had me on for a bonus episode called the Megawatt You Save focused on energy efficiency. This current season, which just launched in February 2025, focuses on one of the least regulated industries in America, natural gas within the state borders of Texas. And what that means for grid reliability in the Lone Star State. It's fantastic. I've loved all the seasons of The Disconnect, but honestly, this one might be the best. I love this conversation with Moe's. It's about energy, yes, but it's also about power, politics, money, and the decisions made decades ago that still shape our lives today. Stick around because by the end of this episode, you will look at Texas energy or Texas history the same way again. Make sure you like, share, and subscribe to the Energy Capital Podcast and to The Disconnect. It's one of my favorite podcasts on all topics, not just energy, and I'm confident you'll like it too. Thanks for listening. Hope you enjoyed this episode of the Energy Capital Podcast. Mose Buchele welcome to the Energy Capital Podcast. Hey man, this is great. Thanks for doing this. Obviously I'm a big fan of the disconnect. Let's just start, just share with the audience, what is the disconnect and how it got started. Mose Buchele (02:31.63)Thanks so much, Doug. All right, so this is a podcast project that started actually really kind of during the big blackout in 2021. We're talking here at KUT studios. We were all here trying to figure out what was going on. Bunch of reporters trying to understand the power grid, all the issues at play. And even as it was happening, it kind of became clear that this is something that was going to take more than just some kind of breaking news updates, right? You had to explain all these complicated things about the way electric infrastructure works, about the way Mose Buchele (03:11.086)the energy markets work about a million different things and there's this deep history to it. And so we think, well, that sounds like the kind of thing that could be tackled in a podcast. We do audio storytelling really well and we do explanatory journalism really well, which is I think a big part of this is just explaining to people how these things work. And that was kind of the impetus. yeah, we're now on our third season. It started in 2021 and we've been releasing them as we've kind of seen the need and had the capacity. Doug Lewin (03:42.498)Yeah, it's one of the things I love about podcasts and it's, think why they're like so well suited actually to our time is because we're so used to now like getting news in tiny little snippets, right? 140 or 280 characters and little 60 second videos. But usually you wanna, especially with a story like this, like you wanna know more and you guys have really, really done it well. This mix of human storytelling, like really understanding the human side of things. Doug Lewin (04:10.062)And explaining the regulatory and the history, is so complicated and so rich. You guys are doing a great job. Mose Buchele (04:16.942)Thanks, I appreciate that. it is, it's a real undertaking, but even like the, you know, it's a political story, it's a science story, it's a financial story. And obviously the reason we all care about it early is because it's a human story. And so yeah, all of that comes into play and it's been hard to tackle, but it's been also really, you know, incredibly interesting and rewarding. Yeah. Doug Lewin (04:39.094)Awesome. So we're gonna talk about all the seasons, but I wanna start with season three. When we release this episode, you'll sort of be like, sort of part of the way through of releasing the episodes in season three. And you're really now diving into natural gas, which talk about a complicated history with all sorts of characters. I think if it's all right, I actually want you to start with. Doug Lewin (05:03.64)Just to give folks a flavor of what they'll get if they do listen to these episodes. And again, I highly encourage folks to listen to them. They're so great. Who is dad joining? Mose Buchele (05:13.28)Okay, this is where, as a disclaimer, we start this with a lot of history. And it's history I love, and it is, I think, just endlessly engaging and fascinating. if you're tuning into here in the first episode, like what is happening right now in terms of new developments, you're going to have to wait for a while. Doug Lewin (05:34.862)We'll get into this as we go, but if, you know, for folks that are wondering about this also, you can go, if you want to start with season one, you kind of go back to how Winter Storm Urie happened. we're going to get there. I want to work backwards because this one is current and it is something that Mo's even as, and I think it's safe for me to call myself an energy nerd. I know a lot of this history. There are so many rich details in your podcast that I didn't know. Doug Lewin (06:03.534)But you don't, and this is what I hope comes through to the audience and people will tell friends and family, it's like, it doesn't feel like you're getting a history lesson. It's entertaining, it's engaging. Oh my gosh. Tell us about that, Mose Buchele (06:14.734)So Dad Joyner was the father of the East Texas oil field, which was up at that point, the biggest oil field ever discovered in the United States. And he was by most accounts, kind of a con man. guy, there were a lot of these kinds of operators that were moving around the oil patch at this time, who were finding ways to raise money for projects and then spend that money and not always find oil in the process. Doug Lewin (06:45.614)You know who he reminded me of? I had recently been visiting my my dad. And one of the things I do when I visit my dad is we watch silly movies and we were watching the producers. I knew that's right. Max Bialystok, like dad joiner is an oil patch version of Max Bialystok. Mose Buchele (07:01.014)The entire idea is that you raise money on a project and you get to keep that money as long as it fails. So there you go. That's the, that is the producers in a nutshell, right? And, and so his, you know, his whole thing was that he would, in partnership with a guy named Doc Lloyd, who has one of my, one of the people I spoke to said, practice medicine without, without the formality of a medical license, they would create geological surveys that would suggest that there might be oil to be found in one place or another. And on the basis of these surveys, which really didn't appear to have much, you know, actual geology, but underneath them, they would raise money to be paid back once the oil was discovered. Now, if the oil is never discovered, then you get to keep the money. And this is the way it worked for them for years and years. And it's a, it's a fascinating story because of the personalities involved and the people involved, also because it suggests that this oil field, which revolutionized the world of energy, and had ramifications that we still feel to this day, it was found because someone was intentionally not looking for oil. And so it took somebody not looking to actually uncover this vast reservoir of energy in East Texas. And then from there, you could argue the story even gets weirder. Doug Lewin (08:19.822)Yeah so folks can go and should go and listen to the, to the episode and get more of this. like basically you, you end up in a situation where a woman who is like, I guess an investor or her land, she's got land there. She starts to become suspicious. She thinks, no, there really is oil. They do end up discovering oil. is very bad for dad joiner. And it ends up being, like you said, historically significant, globally significant oil field. And it happens in 1930. So we're heading into a decade, obviously, where the second world war is gonna start. And like this oil field really plays a major role going forward. But you get into the railroad commission and how this is, think, a history folks don't understand and is highly, highly relevant to today because what you had was everybody drilling all over the place to the point where prices dropped to what, like a, it was like 10 cents a barrel or something like that at some point. And so you start to get into what is called prorationing, right? So the railroad commission, can you talk a little bit about how that actually made the railroad commission popular. You would think by telling people don't drill, you're gonna get a lot of companies mad at you, but it actually had kind of the opposite effect, right? Mose Buchele (09:47.81)Absolutely. And again, this is history that is helpful in understanding the role of the commission today. For example, what we had was an agency called the Railroad Commission that was founded to regulate railroads, as the name would suggest. Doug Lewin (10:03.662)Governor Hogg is that what she right? Yeah, yeah. Mose Buchele (10:06.092)Yeah. And it was a huge deal back then. There was a big populist movement, particularly farmers and ranchers were really, really upset with the monopoly power that railroads exercised over their commodities. And so they were going to their elected leaders and saying, you got to crack down on these guys. Railroad commission is born. But through a series of kind of historical circumstances, the Railroad Commission ended up gaining more authority over pipelines than railroads, over oil and gas pipelines. And so suddenly you had this agency called the Railroad Commission, which is still called today, beginning to exercise authority over oil and gas. If you fast forward to the 1930s, to the Depression era, when the East Texas field was uncovered, you have then this agency with this hot potato thrown in its lap. People are drilling for oil like crazy and it's cratering the price of oil. There's just an oversupply of oil on the market. This is very bad for, especially for the large integrated kind of big oil companies. A lot of them from the Northeast that think standard oil, right? That depend on a stable market and a kind of more consistent expectation of return because they're making huge upfront investments on what they're doing. And so then these, this part, this faction, Mose Buchele (11:33.006)of the oil industry goes to Austin and says, well, we've got to do something about this. This is how the, what you pro rationing or pro rationing people, I've heard it called different things is, is born. It is the concept that the government will, will regulate the supply set allowables for how much oil or gas can be produced in order to stabilize the market. And that will, that will allow for a, kind of oil or whatever commodities not get too too low, maybe not get too high too if that's gonna have bad effects on the market. Doug Lewin (12:10.862)It's effectively a cartel, right? It's exactly what it is. Because basically just like you would think of a drug cartel, not to say that the railroad commission was a drug cartel, but it's the same principle, right? If you control the supply, then you can actually keep those prices higher and presumably then all the suppliers are doing better. And so they actually do that successfully, right? Mose Buchele (12:33.999)It wasn't an easy sell, especially when you're dealing with more independent and especially during the depression era, you're dealing with Doug Lewin (12:39.566)Because demand is so low. So you can only do so much with supply. There's not demand because of the depression. Mose Buchele (12:43.842)You had independent and again, still to this day, these are schisms that you see within the industry. have independent operators, you have a small time landowners, have people who were farmers who are losing their mortgage because of the depression. Suddenly they can dig an oil well in their backyard and they're happy making a few cents. They'll take anything. They, in some cases, violently resisted this kind of regulation. But what was eventually arrived at? Mose Buchele (13:12.718)it appears is that most sectors of the industry came to realize there was a benefit to that type of essentially what was price fixing, you know, on the part of the state government, on the part of the commission. And this was done in cooperation with different factions of industry. And that is how this, what you correctly described as a cartel system of regulating supply was born. And it was born right here in Texas. Doug Lewin (13:40.214)Yep. And then OPEC learns from the railroad commission, like literally studies what the railroad commission has done and then uses that to sort of, you know, wield oil as a weapon in the 1970s, which causes the energy. Mose Buchele (13:56.172)We're getting again, and now we're getting into the second episode. And again, like I said, this lays the foundation for a lot of interesting kind of historical things that come up later. indeed, this system of control that began here in Austin and in Texas was adopted by other countries and eventually taken over by OPEC, which still uses the blueprint for it today in the way that those member nations Mose Buchele (14:22.444)Will decide on allowables and supply in order to fix the global energy prices. Doug Lewin (14:27.15)We're recording March 5th. Just this week, OPEC announced that they were going to release more barrels into the market. They have tried over the last few years through OPEC plus, which includes Russia and some others that weren't traditionally part of OPEC to pull back the supply to cause the price to go higher. Prices have sort of stubbornly been right around 70 and they have kind of decided, forget it, we're going to release a couple more million barrels. So all of this is to say, right, this history, there's a through line right to today. And if you want to understand what's going on in the energy world and you don't want to read great long textbooks, a podcast is a great way to learn about it. So, and actually just one other tidbit on this, Moe's, and I don't know if you are going to cover this later, but there's also a very recent example, right, of some of the companies coming to the railroad commission during COVID. You could quote unquote buy a barrel of oil for a negative price for a couple of weeks there, maybe not a couple of weeks, maybe one week, whatever it was during COVID. And some of the companies came to the railroad commission and said, we should do pro rationing again. This is only a couple of years ago. So like now they voted against that. The railroad commission did not do it. But again, like all of these issues still kind of circle around today. I think it shocked a lot of people to even learn that the commission still had that power. that they ever did. mean, if you're not paying attention, if it's not something that you study, like there was a really memorable public hearing, and you had, you people coming in and telling commissioners, need to do this. We need to this to, you know, to save the business basically. And then others opposing and rarely are those schisms and those tensions within industry on public display but in moments of crisis they get there. Doug Lewin (16:19.116)That's exactly right. And I will put in the show notes a link to Russell Gold with Texas Monthly wrote an article about Scott Sheffield that he was under investigation. I can't remember if there was actually an indictment or just an investigation from DOJ on that. Like sort of what was happening during that period and whether or not he was actually talking to allegedly leaders in other countries and other oil companies around the world trying to get the price of oil up and whether or not that was some kind of collusion or Mose Buchele (16:49.518)Price fixing or something like that. Doug Lewin (16:51.174)Yeah, yeah, totally. That is still like literally playing out in real time right now. So in the third episode, which just came out again, as we're recording just a few days ago, you do get into, and this, I really, I'm sorry to be like so gushing to my audience, but I just really do love this series. I have for a long time, like wondered, we, Texas was one of the very last states to have It was the last. The last to have a public utility commission. Wasn't, wasn't established till 1975. Doug Lewin (17:18.766)And I've often kind of wondered about that. And I actually taught a class at the LBJ school last semester. So I was doing some research. I found some journal articles that kind of got into it, but journal articles are pretty dry. You found the man who was still alive and not even particularly old. He was very, very young when he was elected in the 1970s. Tell us about Lyndon Olson and the beginnings of the Public Utility Commission. Mose Buchele (17:45.166)mean, an incredible storyteller too. It was just one of these things where I call this guy up and he's like, yeah, sure, I'll talk about it. So Lyndon is, I mean, he's had a very long career, but as you said, he's from Waco and he was elected a democratic state rep from Waco in the early seventies, right as the energy crisis kind of hits, especially as we understand it in popular consciousness. There were obviously kind of shortages and building up to the energy crisis before then, but- Doug Lewin (18:14.656)And I think most people listening will probably know this. And again, you describe it well in the podcast, but for those that don't know, right? mean, this was, it's not hyperbole to call it a crisis. Like you couldn't fill up your car. had long lines, half a mile long in some cases. People were freezing in their homes in the wintertime because there wasn't enough gas. It was a mess. Mose Buchele (18:32.014)Absolutely. yeah, and again, I think that some of that's lost. you know, if you're younger, you weren't alive for that time, you don't realize it, but it was such a huge thing. anyway, yeah, young man, not even in his thirties, elected from Waco to be a state rep. And he kind of enters into this debate over, how are we going to better regulate utilities? And this wasn't just energy utilities. wasn't just electric utilities. It wasn't just gas utilities. There was, but everyone is worried about the high cost of everything at that time. Obviously in the energy crisis, the cost of electricity and the cost of gas went way, way, way up. And that was really pinching people. There was also a massive scandal that I wasn't that aware of around telephone utilities, telecoms. Southwestern Bell was in a lot of trouble for its rates and some of its corporate behavior. All of this rolls together to collide with the fact that Texas is looking around and saying, every other state has a public utility commission and we don't have one. Basically, almost all these things were really mostly decided at the local level. And so in 1975, there is a growing kind of appetite in a chorus, consumer advocates, all sorts of different kind of factions that maybe it's time to have a public utility commission. This man, Lyndon Olson, comes in and as he describes it to me, he's actually kind of more in favor of maintaining local control over a lot of these questions. He was interested in strengthening the power of local oversight as he recounts it to me in the bill that he first introduced. One of the big questions about that was that small towns especially, but really almost any city didn't feel equipped to go up against some of these massive monopoly utilities when they're gonna do rate negotiations, right? And so. Doug Lewin (20:19.352)So they really didn't have watchdogs, right? It was like cities trying, it was a complete mismatch. Mose Buchele (20:25.326)So Olson gets in there and drops a bill that, as he said, would initially strengthen local control over some of these issues. As he recounted it to me, it was immediately substituted by the Public Utility Commission Bill, the Public Utilities Regulation Act that establishes the Public Utility Commission. And then from there, the story gets even stranger when you start to look at how they decided which utilities were going to then fall under the auspices of what became the Public Utility Commission. Because when the bill was first written, gas utilities were a part of that. And he tells the story of how it was explained to him in no uncertain terms that all of that regulation and oversight was to remain at the Railroad Commission. From the very inception of the PUC then, you see this tension. How are we going to have some say over what should be fair electric rates while we have no real regulatory control over the sector of energy that provides the fuel to create that electricity. And here I'm speaking mostly to natural gas. you know, so there's a quote that I don't, I don't even know if I included it in the podcast, but maybe I'll try to slip it in somewhere. After the public utility commission is established, regulation of natural gas is kept at the railroad commission, which has given utility cost of service kind of regulation authority over gas utilities. There is a guy who was a city attorney for the city of Austin and became a consultant later on for the city. And he was asked, is this going to help us with our electric rates? Because gas rates and electric rates in Austin had been going crazy because of another whole other scandal that we got into in the podcast in regards to a company called Coastal States or Lovaca Gathering that had different names. Doug Lewin (22:15.31)A notorious case. Mose Buchele (22:18.668)So this guy, Don Butler was his name. He's asked quite understandably, is the Public Utility Commission gonna help us lower our electric costs now that it exists? And he said, it's really not because it never got authority over natural gas. And he said, what the legislature did is that he allowed us to regulate the tail, but not the dog. Wow. Yeah, yeah, I don't have it on tape, but it's still, it's a killer quote. Doug Lewin (22:40.263)Wow. Which really kind of sums it You've got to get that correct. You need to go back and get him to record that and put it in there. Look, I think hopefully it isn't lost on anybody listening right now, right? The connection back to seasons one and two where you're dealing with Winter Storm Uri because part of the story of Winter Storm Uri is a lack of coordination between gas and electric. If people want to, you know, ask... Doug Lewin (23:08.878)Why did that happen? Why did 240 something people die? Why did a hundred billion dollars in damage happen because of freezing pipes? And why was I without power for three or four days? There's a long list of reasons, but on anybody's short list is there was terrible coordination, if any coordination at all, between the gas sector and the electric sector and the seeds of that were planted in 1975 when the PUC was established and not given any authority over gas. Mose Buchele (23:37.902)I remember actually way back in 2021, it was probably one of our earlier interviews on this subject. I called you for a story I was working on and you were one of the first people I spoke to about this. And this became, like you said, a huge and continues to be a huge question in Texas. Like how do we coordinate those two parts of energy, gas and electric? And it's something that a lot of the efforts, I guess I could just say that have been proposed, a lot of the proposals have not succeeded so far. So it's still an open debate, you know, in terms of how you do. Doug Lewin (24:11.086)So let's, is there anything more you want to say about season three? You want to give folks like kind of where it's going, what to look for, anything I should ask you about season three before I kind of go back to Uri and we talk about season one and two. Mose Buchele (24:21.09)You know, I just think, like I said, season three has been a really cool, a little bit of a different take on the podcast because we focus on history throughout every season. But this one, I really like telling this integrated story that is now, you know, if you start tuning in, know, it's difficult to do timing on podcasts, but we'll slowly bring you up to today. And it's been a fascinating challenge, like seeing how that works but everything does kind of connect. mean it all just comes together. You know if history doesn't repeat it at least it rhymes. Doug Lewin (24:55.854)Exactly correct. And I'll just say one more thing about that. I meant to say this earlier and forgot. there's, cause again, the connections between the past and the present are, they're obvious, but I think sometimes it's good to say them out loud. So we are right now, again, so we're recording on March 5th. By the time this comes out, who knows what will happen with tariffs. But one thing that folks associated advisors to the Trump administration, people within the administration are saying is, we're gonna, that may cause prices to go up, but we're gonna counteract that because this drill baby drill thing, we're gonna bring oil down to like 50 bucks. And so then your prices are gonna go down. So it'll all be okay. And I think what, you can go back to history and see what happens when you drill baby drill and prices crater. And a lot of people lose their shirts and then people stop drilling, right? Like the that isn't the way it works. You have market forces. You can't just as a government say, we're going to go drill because once you do that, now you're causing this other counter force where you're going to get less drilling. Yep. And we've already got this countervailing force of OPEC putting more barrels on. So, yep. Anyway, it really is great to like get into that history and see those parallels because there's just so many of them to, to today. Yeah. I really appreciate what you're doing with that. I, again, it is hard even as somebody who just loves this stuff and I'm pretty voracious reader on this stuff. I'll put a link. There's some good like books on the history of natural gas and stuff, like those, they're hard reads. Like, you know, like to get that in a 30 or 40 minute podcast and feel like, okay, I have a deeper understanding of this, this history. It's a real like public service. It's really. Mose Buchele (26:40.224)Well, thank you. Yeah. And I think I've read more for this, this particular season than I have for any others. I've checked out some great books, but also some of them, yeah, cause it can get pretty wonky. Doug Lewin (26:50.574)Shout out to Charles Blanchard. I will put a link to his books on natural gas that are actually like, I think is, I forget the title, I'll put it in there, but it's like. Yeah, yeah, yeah. It's a great read. He wrote a great piece for Texas Monthly two or three weeks after Uri that was something along the lines of like. Mose Buchele (26:59.886)Extraction state or extraction. You recommended that to me actually. Doug Lewin (27:14.572)Uri was a problem of natural gas supply. And his book, Extraction State, is a great one and very readable. But, you know, let's be honest, that, that many people, sorry, Charles, are gonna read your, like, 300 400 page book on the history of natural gas in America. I did. I loved it. And even though I read that book and have read many others, there are details you have in there that I have never heard before. So, okay, enough on that. So let's go back to season one. You, you're putting episodes out only months after Winter Storm Uri ended. I actually just kind of want to start with, we've already talked about one of the reasons why Uri happened was this connection between gas and electric or lack of communication, lack of coordination between gas and electric. If you're kind of a doctor diagnosing the problems, right? You're deep into this. You've talked to so many people about this, put together episodes on it. Why did Winter Storm Uri happen? come on, Yeah, yeah. So one is electric gas, but there's a list, right? Mose Buchele (28:11.046)Yeah, yeah. It's real easy question. my goodness. Well, so, you know, yeah, obviously the question of why, not just why did the blackout happen, but why it was so severe and so bad. You can answer it a million different ways. And in fact, there's, you know, there are still a lot of differences of opinion about it, right? I mean, and we can get into what some people are still litigating today later on in our conversation, but Doug Lewin (28:12.608)It's an easy question. Mose Buchele (28:40.546)What we do in the first season is that in the aftermath of the blackout, everybody was talking about deregulation. Texas existed as did the rest of the country under a system of with regulated regional monopoly utilities ever since basically the beginning of or the maturation of electricity as a thing that everybody. Doug Lewin (28:59.244)But as you were talking about before, right, and because we didn't have public utility commission, very lightly regulated monopoly. if regulated at all, kind of self-regulated, which means not really regulated at all. Mose Buchele (29:11.586)Yeah. So then there's this period where you have utilities that are regulated by, you know, with stricter price controls by the government. And there's a very close relationship between regulators and these monopoly utilities. They're allowed the, I don't, again, I feel like I'm kind of rehashing just utility 101 or something, but we had a large fleet of different kinds of power plants in Texas, many of them natural gas, because we had an abundance of gas here. Although also that became a whole thing after the energy crisis, some coal and other ways to generate electricity too. Deregulation hits, that breaks down the monopolies and these power generators are now forced to compete, to offer the lowest price. And critics of deregulation, of which you heard many, especially after this catastrophic power failure, pointed out that the capacity, the excess capacity that Texas had enjoyed through the 1990s under regulation had all but been kind of frittered away by the time we got to 2021. And so then when energy demand went through the roof and power plants, which at that time had been under invested in and were many of them reaching their kind of end of their natural lifespan, started breaking down, you had a crash in energy supply on one hand, right as you had a skyrocketing of energy demand on the other, all thanks to this extreme and cold weather. Mose Buchele (30:39.372)And what that leads to is an imbalance on the grid and forces the state grid operator to rebalance supply and demand by cutting the demand. They can't encourage more supply because there's no real extra supply out there. They had used every mechanism they possibly could to bring some including spiking the price to try to potentially get more on there. So that's one way of looking at this. that was one of the questions we tried to explore in the first season. And I think that we found it was a little more complicated than that, but I think that that is maybe a good place to start with your question. Doug Lewin (31:19.424)Yeah, yeah, yeah. So this is something I've obviously talked to a lot of people about. The very first episode of the Energy Capital podcast I did was with Will McAdams. Will was of course the first commissioner appointed after winter storm Uri. And one of the things, cause he's pretty strong defender of what I think he wouldn't, and frankly I would also call not the deregulated market, cause there's still a lot of regulation, right? There's an independent market monitor. There's all sorts of controls and penalties that many of which have been assessed over the last 20, 25 years for folks that withhold power from the market. Like there is regulation of that market, but it's a restructured market that then is competitive, right? We do have competition on both generation and retail. And he's a pretty big defender of that. And one of the things he said in that podcast, which has been said a lot since, since Winter Storm Uri said during the hearings after Uri heading into February of 2021, the various reports our cop puts out of how much capacity versus demand, we had a 40 % cushion. So like, even if you had had like a fully regulated system, you almost certainly would not have ordered your fully regulated utility to purchase more power because you have 40 % reserve margin. What do you need, a 50, 60 % reserve margin? Like 40 is a lot of slack in the system. And in fact, A year and a half later, right, December, 2022, almost two years later, winter storm Elliott, we did see blackouts in areas of the country that have fully regulated utilities. Tennessee Valley authority has a huge reserve margin. They had blackouts. They, by the way, also only have two to 3%, less than 3 % of their mix is renewables, 97 % thermal, huge capacity reserve margins, and they still had rolling outages. So the conclusion that McAdams reaches and we talked about a lot during that particular podcast. And I think I reached the same kind of conclusion is it wasn't actually like the restructured market, but a lack of regulation was a big part of it. Because we weren't winterizing power plants. We weren't winterizing the gas fields. We weren't requiring homes and buildings to reach a standard where that demand would not spike. So there's still a problem of quote unquote deregulation. But it's not necessarily the way the wholesale market is set up. you, how does, how does that? Mose Buchele (33:42.248)Yeah, no, I think there's a lot to that. think that the, first of all, to the question of like calling something, saying deregulation, it is just misleading to say that it's, you know, what you're really talking about is an arrangement between regulator, a very specific arrangement between regulators and monopolies. And again, this doesn't just happen in electricity. I mean, when deregulation became a thing in the late seventies, it went to numerous different industries. Doug Lewin (34:06.888)Airlines is one of the, right? Because like you literally could only fly from one city to another if you had the government, you know, license to do so. And if you want, if you saw somebody who was flying the New York to Chicago route and you're like, I could serve that for half as much, you could not. And it was Jimmy Carter and Alfred Kahn. Like it was really actually like liberals that really got, in concert with conservatives, there was actually sort of like, ideological agreement across the spectrum that like charging 500 bucks for a route that somebody else could serve for 200 isn't a good thing. Mose Buchele (34:42.252)One of the main continued critiques, even given what you've just articulated, is that people are nervous about a system which rewards scarcity. And when you create a deregulated, quote unquote, sorry, whatever you wanna call it, restructured market, you have a system where the price of what you're selling becomes more valuable as its scarcity. Rises which is scarcely rising you understand what I'm saying? I understand volatility when prices go up and and so to give one example. Talk to people who used to work for big utilities. In the 80s and 90s, it was very common for more power plants to have massive tanks for backup fuel, for fuel oil, right? That they could switch to to burn if their natural gas supply shut down. And in fact, they would sometimes coordinate with their gas supplies. I was talking to a guy just a few weeks ago who said that they would get calls and say, the pressure is going to drop in these pipes as a big storm or something. Something's happened. Switch to the fuel oil. And then they can keep generating power. The market incentive to have that type of backup did begin to evaporate after the restructuring. And I think that is a kind of thing, like a very specific example you can point to and say, that maybe was a problem because that could have come in handy, again, maybe in 2021. But your point is well taken. There are a hundred different things that came in to create this crisis. And we are seeing not crises of the same magnitude, but similar challenges with energy systems and grids and ISOs and whatever all around the country. And so it is not just one thing. I mean, we could talk about Texas's relative isolation in terms of its own grid is another thing people point to all the time. We've already kind of mentioned the whole question of natural gas and how it feeds into the system. I mean, if you want to talk about regulation versus deregulation, know, ERCOT looks like a very tightly run ship when you start looking at what rules may or may not exist when it comes to how natural gas is traded and moved around the state. That's one reason why we were interested in doing this new season. So, yeah, is just a question of degree in a lot of ways. Doug Lewin (37:04.398)No, I think that's right. And I actually think you hit the nail right on the head that I think what does get people very nervous about a competitive market is the question of scarcity and volatility and high prices. And it is hard for folks to kind of get used to that. And you see this happen all the time. There are days during the year we've seen them, we didn't see as much in 2024, though quite a few in 2023 where prices got really high. I was often on Twitter saying that is not necessarily a bad thing. If we get into an energy emergency, that's bad. But like high prices actually are a signal to investors that you want to come into the market. But that's a hard thing. I don't discount that. That is hard. It's a little scary, right? But people have to like, know, markets do require some uncertainty, some dynamism and some high prices. That's how markets work. Mose Buchele (38:00.352)And there's also just, mean, not to kind of take a different turn with this, but within the context of Texas, know, people love and hate the, and I'll use your term restructuring for various reasons, but one thing that it did do, and we get into this in the first season, it was the way that we kind of opened up to allow for so many more renewables and so many more other kinds of ways of generating electricity in this state. And so it's not just you find people defending or criticizing that historical decision for all sorts of reasons, but there are a lot of people who just in terms of the energy mix really celebrate what happened under deregulation for just that reason. Doug Lewin (38:41.824)Yeah, yeah, yeah. And it was one of the reasons why it passed with such wide margins, throughout the House and Senate in a very bipartisan way, partly because there was an energy efficiency resource standard, there was a renewable portfolio standard in there. You have great episodes throughout these first couple seasons on, you mentioned Urquhart's isolation, you had one on the Midnight Connection, I wanna ask you about that. You had a great episode on Black Start, which I feel like still is not understood by folks enough. You obviously had episodes rather that got deep into deregulation, Senate Bill 7. You talked a lot with Senator Sibley. Given it's an hour long podcast, I'm not gonna ask you about each and every one of those, but is there one in particular sort of like asking you which of your kids you love the most? Is there an episode though you wanna kind of highlight for the audience? It's like, I gotta imagine the Midnight Connection one is one. Again, that was like a history that as much of a nerd as I am, I did not really appreciate how that all came about. Mose Buchele (39:39.522)I love that episode and I love the experience of making that episode. was one that we've. Doug Lewin (39:43.352)You guys went to the other border to the Red River. Mose Buchele (39:47.15)I think that one of the things that people still like are most fascinated by and maybe concerned about when it comes to the Texas grid is our relative lack of connection with other grids in neighboring states. we had, I'd heard even before probably, as an energy reporter, I just always kind of been aware that there was an attempt in the seventies to connect, to create a stronger interconnection between a utility in Texas with a utility in neighboring state. And that this was in fact done almost as a test case to kind of push the issue because there were people on both sides of that argument in Texas at the time. were utilities that wanted to interconnect and those that didn't. And not to get too deeply into it, but the reason was federal regulation. If you start moving massive amounts of electricity through these big transmission lines and synchronize with a neighboring grid, then that invites regulation from the feds. And a lot of people in Texas didn't want that. Again, other utilities may have seen a benefit to that. And certainly others argue that there's just simply a benefit for reliability to that. But all that is kind of maybe getting ahead of myself. What we do. Doug Lewin (40:58.944)You found the guy who made the Midnight Connection. It's amazing. Mose Buchele (41:04.014)Yeah, and I'll credit to Audrey to my colleague who's a co-host in this most recent season. She looked through some old hearing documents and I don't know if they were hearings at the PUC or court documents and found this man who had worked for this utility. They made a connection to a place called, I think it's called Vernon, Texas, I'm not mistaken. yeah. Birthplace. We decided to drive up there and Ullman King was his name and we had not. Doug Lewin (41:07.873)A COAST! You did yeah Mose Buchele (41:33.41)I don't think that we had gotten a response from him. Maybe we had emailed him. We decided to drive to Vernon just to see where this happened. Maybe try to talk to some people there. We're thinking maybe there are some like old timers, right? Who just remember. And we showed up in the town and everyone's like, nah, man, we, know, this is, this happened. This is something that kind of happened in secret, you know, 50 years ago. people are like, there's no monument. There's a monument to Roy Orbison. There's not a monument to the Midnight Connection. But on the way there, we found an address. And Audrey went knocked on this guy's door and he was there and just happy, know, happy to have us in. We went and visited him the next day and he recounted the entire story, this entire... He wasn't there when they did it, but he was the guy who was going to present legal papers, the second the connections made to essentially kind of prompt what was going to be a big legal battle, a big regulatory battle. Doug Lewin (42:13.11)of actually stringing a wire. Mose Buchele (42:32.256)And in fact, it dovetails nicely with, we were talking about Lynn Olson earlier, the public utility commission in Texas was just a a baby state agency then, right? So this happens right around the time when the public utility commission comes out. Yeah, yeah. And this case falls in their lap. And the PUC was very hostile to the idea of interconnection. And indeed, eventually, Doug Lewin (42:48.193)that a year. Mose Buchele (42:59.142)you know, not to give the whole story away, but they, you know, they reach something of a negotiation, but really set the precedent for what we have today, which is a grid that is not tightly linked with any neighboring grids, unlike any other state in, you know, in the lower 48 states at least. Doug Lewin (43:15.404)Definitely everybody listened to that episode. It's amazing and and really again like you're right Audrey played a huge role in that one and like the as she hasn't so many of them but the the way you guys kind of tell the story and you're even like on the road going up there like the the way the process is kind of start it was part of it is a lot of fun briefly tell us a little about the black start one because I think that again like folks don't really understand how, we were actually quite close during winter storm. You're like, this is still the language even sort of like gets to how little folks understand this. Cause we all use the term like, you know, blackout. was actually technically rolling out. It it felt like it was a complete blackout. Cause people were without power for days. But actually that term means you've lost the whole grid. And it could be down for weeks or months. And then you have to try to bring it back. again, like you can read up on this stuff. You can find technical reports, but to listen to a 20 or 30 minute podcast, give us the short version of that. Then folks can listen to the longer version. Mose Buchele (44:16.622)Yeah, yeah. And I mean, this is like what they also refer to as a of a catastrophic grid failure. This is where, as bad as what we had in 2021 was, there is the possibility that a power grid completely crashes to the point where it almost breaks into its different constituent parts. Like when you think about electricity grid, it requires a constant balance of supply and demand on the transmission systems. And all the different things that go into that grid, from power generators to substations, even to the things in your house that run off that electricity, they're synchronized to that flow, to that beat of power as it moves. And if that beat stops working, stops being steady, everything breaks apart. And then you really don't have a grid system anymore. You don't have a system of transporting electricity. And in many cases, you don't have a way of generating it too, if it's damaged your power generators. So what a black start is, is the program that is in place to re, and I think about it in terms of light almost, like re illuminate the grid, re power, recharge the grid, re-energize the grid, right? You know, as you're trying to get, get the system running again. And what that requires you to do is, is, you know, begin in one place, you know, you start generating electricity in one place. And then start kind of charging the wires again, moving it along only in so far as it's balanced where it can reach the required demand again and starting in several different places at once, re-energizing the entire system, which can take weeks to do. depending on how much damage is caused by the grid failure, it can be, it is almost inconceivable how tragic a historical event that would be in Texas. Doug Lewin (46:10.488)I quoted Pat Wood, the former chair of the PUC and chair of the Federal Energy Regulatory Commission saying it would be like being in the stone age again. Yeah, yeah. I mean, just to give an example to folks, you can't fill up your car at the gas station. You think, well, gas, that's not the electric grid, but it's a pump. It needs electricity. You can't even drive out of the state unless you had filled up before and you have enough range in your gas car to get out of the state, right? I mean, it would have been an absolute... Doug Lewin (46:37.656)Catastrophe. is, the way though, one of the things I'm most excited about, well, there's so many reasons to be excited about battery storage, but batteries work really well for Black Start because they can be supply and demand. And when you're trying to balance them, they can go both ways, which generator can't and generally load can't, but batteries can do both. It's also a reason why like distributed energy resources having the backup power packages, which the legislature passed as a policy. If the grid goes down and you're able to island, right? You're a hospital, you're a water treatment facility, you're a police station. In that situation, you would still have power. like there's, I think the knowledge that we were so close to that for, what was it? Four minutes, 37 seconds, right? That away from that has spurred some positive change. And I think this is where I wanna go next, Doug Lewin (47:28.352)Again, you're as deep into this as anybody, as a reporter and journalist talking to people all the time, you know, putting these stories together, you know, separating wheat from chaff to be able to really tell the story in your estimation. Like what has changed for the better at this point? Are we better off than before winter storm Uri and, and related to that? Doug Lewin (47:49.718)What hasn't been done? This is the question I get asked all the time. It's so fun to ask this question instead of being asked it. like, yeah, what are we better at and where has there been improvement and where has there not been? Where do we still need to see some progress to get towards a grid where we wouldn't have to worry about it every time it gets super cold? Mose Buchele (48:07.15)Yeah, mean, yeah, it's such a tricky, tricky question to answer. I mean, I think obviously the first thing people point to is weatherization or winterization. There has finally and belatedly, probably most likely, definitely, well, I mean, in my opinion, definitely belatedly, been an effort after 2021 to really put teeth on and do inspections for things like power plants and energy infrastructure. Mose Buchele (48:32.248)that could simply break down in the cold. And that's low-hanging fruit, but it's exceptionally important. And it seems to have helped. There are things like backup power and I was talking about those big fuel storage tanks that were more common decades and decades ago. Well, some of the answers that we've come across have been to kind of re-explore some of those options, right? So now there is more incentive for having dual fuel capabilities at power plants. Doug Lewin (48:58.678)Yeah, there is a program that PUC started called Firm Fuel Supply Service, which is exactly that. So what's old is new again. Mose Buchele (49:05.55)Yeah, yeah, you know, which if it works, you know, it works. you know, things like that should supply a little extra insurance. The most complicated part of this for me and maybe for you two, although I think that you've done a great job explaining it to me before in some of our previous interviews, is just are the different market changes that have happened. mean, like this is you can look on paper and say, well, they've made these costly changes to the way that energy is kept in reserve. They've invested more. in all these different programs with kind of incomprehensible names to keep more energy in reserve in case things get tight. And so there's a huge debate over like the kind of cost benefit of all that. But, know, we've seen, I think a little less scarcity than maybe we would have otherwise if some of that hadn't been in place. I'm not exactly, you know, advocating for it, but it does seem that those things have changed the dynamics a bit. Places where we have not seen a lot of movement, you and I have talked a lot and you've, you have talked a lot about energy efficiency, you know, for years and years and years. And that's something that seems as, you know, I interviewed you in the podcast, we had a bonus episode about this very issue and, and it seems one of the least costly and obvious ways of trying to bolster our power system that has been really not sufficiently addressed. And, you know, maybe There's always this session or next session or whatever, but there just seems to be some kind of intrinsic part of the political equation that makes that a hard nut to crack. And then obviously there's this thing that we're focusing on this season, looking at the kind of disjuncture that I want to say disconnect, but that's a disconnect. You can say disconnect. That's right. Between the, if we are going to, this is one of the central kind of questions of this season. If we're going to try to continue to reinvest in natural gas generation, as indeed our political leadership really is keen to do, in part because it is dispatchable, right? You know, they say, well, these are generators, on-off switches, and you can deploy them when we need the electricity. It is perhaps advisable to take a closer look at what went wrong with the natural gas system. in this massive power failure. And so that's really kind of where we're heading with this season. There were a lot of proposals on the table in the wake of the 2021 blackout to even relatively modest suggestions to kind of create a little more transparency in what's going on with gas, create what they were calling a gas desk or some type of a monitor at ERCOT that would take a closer look. Doug Lewin (51:48.906)No, no, but nobody at ERCOT or the PUC mentions the, the, word gas desk is, is verboten at this point, or you get into trouble for speaking it. I can say it. They need a gas desk at ERCOT. I mean, literally this was just an effort to like have awareness of what is going on in the gas fields, because that is, to say it's not transparent. I mean, it's the opposite. It's opaque. You don't know in real time what is going on out there. And if you're a grid operator and you need gas, In the wintertime especially, gas is a predominant fuel on our system and they don't know what's going on in the gas fields. then somebody tries, know, Brad Jones, who you interviewed in some of the episodes, may he rest in peace, former CEO of ERCOT, talked about this a lot. Like we have to have visibility into that. And you would have thought you said, we are regulating every aspect of the industry, price controls, all of it. You would have thought it was the most heavy-handed. They literally just wanted a desk in their control room to monitor gas. And it was treated like it was the biggest insult in the history of human. Mose Buchele (52:56.468)I just had a flashback because I interviewed Brad Jones in this room. He might have been sitting at this part of the table. you know, one of the things we touched on was this very issue. Yeah. And he was very articulate and open about that. I just recently, as part of my work on this new season, went back and listened to some of those hearings that happened a couple of years ago now on proposals for things like a gas desk and then some other maybe a little bit more far reaching legislation that would have just taken a look at some of the Mose Buchele (53:25.218)the market power of pipelining companies and gas suppliers. as you said, the gas desk idea was, it really was treated like somebody had set off a bomb, you know, and it's the kind of thing that exists in other places and seems to not interfere with. Doug Lewin (53:40.44)So sorry, got, yeah, yeah, yeah, I got us off on a tangent, but the point is like, that is an area of the energy system. And this is kind of really what you're getting into in season three. And disconnect is the right word. There is a disconnect between gas and electric. It is better than it was during your year. I think that that is true. There is more coordination going on between the railroad commission and the PUC, more communication, more awareness, but there is still a very significant disconnect that is frankly dangerous. Mose Buchele (54:10.552)Yeah, yeah, and this is something that, like I said, this is where we are focused this season. And it's been a wild ride. Doug Lewin (54:17.43)Yeah, yeah, yeah. I'm also just curious whether you get into it this season or it could be, I hope there's many, many more seasons of The Disconnect. I think I am like your target market, Moze. I love, I am consuming these episodes as much as you could put them out. But you know, there's this question of like who profited as well, right? And like, then you get into this whole notion, which you've already got into some in the first few episodes of the intrastate pipelines that do not have regulation from FERC. Doug Lewin (54:46.562)So they're only regulated by the railroad commission. There were some famous hearings in 2022, famous to me anyway, where then chairman Wayne Christian said, well, we don't regulate those. And it's like, well, but if it's a monopoly and the feds don't regulate it and you don't regulate it, who regulates it? And of course the answer is nobody. Mose Buchele (55:07.718)Yeah, I mean, and this is to get back to kind of our wonky discussion of regulated utilities at the beginning of our conversation. You know, if you're going to restructure or deregulate, on one hand, you may give up some price control, you know, which is what they obviously didn't, you federal energy deregulation starting on a Carter. But you also are supposed to break up that monopoly, right? You know, like you need both parts of it, right? You can't have the monopoly hanging out there then without any kind of Mose Buchele (55:37.262)guardrails put on how they exercise that monopoly power. And what you hear over and over again from people through history. And again, this is, you know, this is most recently come up in the context of post 2021, but it seems like every decade, this, this kind of rises its head up in out of sometimes out of the oil field. Sometimes it's oil, it's, it's producers, it's gas and oil producers that are saying in Texas, we need to take a closer look at pipeline market power because they feel like they're getting taken advantage of. Mose Buchele (56:07.016)And sometimes it's on the other end of the pipeline. It's someone like a natural gas power plant operator saying, we are negotiating these contracts with zero position of power. And again, so you started hearing that again. You hear it, like I said, through the history of this regulation, you started hearing it again after the blackout. again, just is not something, there were efforts that were made last session and you hear people still talking about it, but it's Doug Lewin (56:34.222)Absolutely, yeah, but nothing's really changed from that. No, and I think it's a great point because a lot of times people will talk about the oil and gas industry and it's really important to look at its component parts. You're absolutely right. A lot of times, and again, this goes back to like 1930s and some of the original regulation from the railroad commission, the producers were upset with the pipelines. This stuff runs deep. And to understand like what's going on today, to understand what happened during winter storm Uri, to understand why your power bill might be more, your gas bill might be more. Doug Lewin (57:02.348)you gotta understand that, that history. it's just, you know, the word story is in history. And I think you guys have just done a great job with, with the storytelling. So big fan of what you do. I think this is probably a good place to, to leave it, but I, but I'll ask you as I, as I do every guest of the Energy Capital podcast, what should I have asked you that I didn't? Any, anything, any, is there, is there anything else? And it's okay to say. Doug Lewin (57:24.366)No, Doug, this was the greatest interview ever. No, I'm just kidding. But no, no, like if we've said everything you want to say, that's fine, but I always want to give you an opportunity. Is there anything else you want to leave the audience with? Mose Buchele (57:34.796)Man, I feel like this has been pretty far reaching, but I... Doug Lewin (57:38.83)Mo's, I'll ask you this just in closing. you guys are obviously, there's stories and it's human stories. Can you think back to over the seasons, a particular human story that like really kind of got you? Mose Buchele (57:54.158)I mean, there are so many of those that. Doug Lewin (57:56.17)I know there are but you gotta pick one. Mose Buchele (57:59.032)I mean, the story that sticks with me the most is probably the story of a family who lost their mother during the blackout. She was an elderly woman who, this is a family, the Shaw family, they live here in Austin, and the siblings were caretakers for their elderly parents and they lost power and maintained heat in their house because they had a gas fireplace, actually. So, one of those, you heard a lot of people talking about how much they appreciated having that option during those cold days. But it was not enough to, know, seemingly to heat their full house and they lost their mother during that crisis. they were so, and remain to this day, opened to, they shared their story so well and invited us into their home and told us all about their mom. And, you know, I think about her, you know, every time the anniversary comes up. And actually I just called one of the, daughter's just a few weeks ago, just to check in. yeah, there are thousands and thousands of stories of hardship and loss that we should keep with us, you know, because you never want to see something like that happen. Doug Lewin (59:15.978)Absolutely. I think that's a very important guiding light like North Star is to remember that 247 Texans, at least probably more like eight or 900 lost their lives. And it is critical we get this right, you know, as much as possible. And I think your reporting has gone a long way to do that. So thanks for everything you do. And thanks for being on the Energy Capital podcast. Thanks most. Mose Buchele (59:41.045)Thank you, Doug. Doug Lewin (59:43.074)Thank you for listening to the Energy Capital Podcast. I hope you enjoyed the episode. If you did, please like, rate, and review wherever you listen to your podcasts. Until next time, have a great day. This is a public episode. 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What if utilities could see infrastructure failures before they happen? What if grid operators, regulators, and energy companies could harness the power of artificial intelligence to prevent outages?Heat waves, droughts, wildfires, hurricanes, and winter cold snaps are getting more extreme. But as their intensity ramps up, so does computing power, and particularly the capabilities of artificial intelligence.In this episode of the Energy Capital Podcast, I spoke with Mary Cleary, VP, Marketing, Communications & Public Policy at Neara, a company pioneering AI-driven predictive modeling for utilities and grid planners and operators. Their technology is already helping major power providers anticipate and mitigate damage before storms, wildfires, and grid failures occur.We discussed how Neara’s platform builds hyper-detailed digital models of the grid, down to individual poles, wires, and even the exact species of trees near power lines. Using LIDAR scans and AI classification, utilities can create real-time risk maps that help prioritize maintenance, allowing them to proactively prevent outages before they happen rather than reacting after the fact.This technology is already delivering results. In Houston, Neara’s partnership with CenterPoint Energy has cut processes that once took a year and a half down to just a few hours. Rather than relying on slow, manual inspections, utilities can now simulate storm impacts and predict which infrastructure is most vulnerable before a storm makes landfall.AI is also changing the way utilities manage wildfire risk. By analyzing environmental conditions like wind speeds, temperatures, vegetation density, and the age and vulnerability of equipment, Neara’s models help utilities pinpoint the highest-risk areas, allowing for targeted prevention measures instead of costly, broad-stroke fixes.Beyond disaster response, we also explored the role of AI in grid modernization and demand forecasting. With Texas’ rapid energy demand growth, driven in part by AI data centers and industrial expansion, utilities need smarter ways to anticipate and manage electricity needs. Predictive modeling using artificial intelligence is giving them that capability.One of the most fascinating parts of our conversation was how AI can help utilities make more cost-effective investments. Instead of replacing entire sections of aging infrastructure, Neara’s software allows for surgical upgrades—determining exactly which poles need reinforcement, which lines need reconductoring, and where distributed energy resources could provide the most resilience.AI is often discussed as a massive new energy consumer, but as Mary pointed out, there’s far less conversation about how AI can be a critical tool for making the grid more efficient and reliable.This episode provides an exciting look at the future of grid resilience, extreme weather preparedness, and how AI is changing the way we think about energy infrastructure.As always, please like, share, and leave a five-star review wherever you listen to podcasts. Thank you for being part of the conversation!Timestamps00:00 – Introduction: AI, predictive modeling & the future of the grid01:58 – What is Neara? AI-driven modeling for utilities & extreme weather response04:33 – Case study: CenterPoint partnership (Houston’s 27,000 miles of lines)06:30 – How AI interprets LiDAR & optimizes storm recovery09:30 – Reliability vs. Resiliency: Measuring grid performance, customer expectations12:33 – AI disaster modeling: Hurricanes, floods & wildfire case studies15:45 – LiDAR & Dynamic Line Rating (DLR): Unlocking hidden grid capacity18:00 - Could AI help relieve the transmission constraints that contributed to energy emergency on September 6, 2023?20:1 6 – Winter storms & gas infrastructure: Predicting failures before they happen23:00 – Optimizing energy resource placement: AI’s role in siting generation resources24:22 – AI’s next areas of development and limitations & regulatory roadblocks28:00 – Flaws in reliability metrics (SAIDI & SAIFI) & need for predictive benchmarks33:34 – Balancing cost, reliability & AI-driven efficiency36:01 – Effective policy constructs for reliability and resiliency38:24 – AI, Senate Bill 6 & large load growth: The power of micro-solutions43:21 – House Bill 2555 & Texas grid investments: Balancing cost, data & outcomes46:45 – Regulatory innovation & final thoughts on AI-driven transformation48:18 – Conclusion & call to action ShownotesFurther Reading from the Texas Energy & Power Newsletter* You Get What You Pay For: Let’s Pay Utilities for Performance* Large Loads at the Lege: Grid Roundup #40* Texas’ Energy Future: A Conversation with Jimmy GlotfeltyAI-Powered Grid Resilience & Predictive Modeling* Neara’s Website – Explore Neara’s AI-driven platform for grid infrastructure modeling and predictive analytics.* How Neara Uses AI for Utility Infrastructure – Detailed breakdown of Neara’s AI capabilities, including digital twins and predictive risk assessment.* Neara Platform Overview* How Neara Works* Hurricane Preparedness Utilizing a 3D Digital Twin* LiDAR Utilization for Utilities* CenterPoint Energy & Neara Collaboration – Announcement of their partnership to enhance grid resilience in Greater Houston following Hurricane Beryl.* AI for Grid Optimization – The International Energy Agency's insights on AI’s growing role in modern energy systems.* Why AI and Energy Are the New Power Couple* Electricity Grids and Secure Energy TransitionsAI & Wildfire Risk Mitigation* Neara’s Wildfire Risk Modeling – How AI helps utilities predict and mitigate wildfire risks.* Neara’s Collaboration with Southern California Edison (SCE)* CenterPoint Energy & Technosylva Collaboration – Using predictive analytics for wildfire and extreme weather preparation.* How AI is Being Used to Fight Wildfires – A look at AI’s role in early detection and prevention.* AI-Powered Camera Networks for California Wildfires* Google’s Satellite Surveillance initiative (FireSat)* USC Scientists Use AI to Predict Wildfire’s Next MoveAI and Demand Forecasting for Energy Grids* Artificial Intelligence for Energy – U.S. Department of Energy’s take on how AI is shaping power grids.* How AI Can Help Clean Energy Meet Growing Electricity Demand* DOE Advancing Safe and Secure AI Research Infrastructure Through the National Artificial Intelligence Research Resource Pilot* DOE Announces New Actions to Enhance America’s Global Leadership in Artificial IntelligenceTranscriptMary Cleary (00:01.982)And what we're seeing so far already is that CenterPoint has been able to compress processes that once took them a year and a half down to just a few hours. Doug Lewin (00:13.134)How long do you think it takes a utility to figure out which power lines will fall in the next big storm? Days or weeks? You think maybe months? In many cases, it's actually years. And with extreme weather happening more frequently and customers expecting power back in hours, not days, the old ways just aren't cutting it anymore. But what if AI could predict grid failures before they happen? What if utilities had a digital model of every single power line, pole and tree so they could prepare for hurricanes, floods, wildfires, winter storms, whatever nature may throw at us before disaster strikes? This actually does exist. And that's actually what we're talking about in today's episode of the Energy Capital Podcast. I'm your host, Doug Loon, and my guest today is Mary Cleary, vice president at Nira, an AI-driven company revolutionizing grid reliability and resiliency. Today we'll break down AI's role in wildfire prevention, flood modeling, hurricanes and winter storms, why outdated reliability metrics are holding utilities and the industry back, how AI is changing the game for power markets and regulation as well. I'm excited about this one. It isn't just about technology. It's also about the future of the grid. Stick around because by the end, you'll know exactly why utilities that don't adapt will be left behind. As always, please like, rate, and review this podcast. Give us five stars wherever you listen, and please forward the episode on to friends and colleagues. It really does help people find us. Word of mouth is the most powerful, and we really appreciate your support of this podcast. Let's dive in. Hope you enjoy the show. Mary Cleary, welcome to the Energy Capital Podcast. Mary Cleary (02:00.056)Thank you so much, Doug. Really nice to see you. Great to meet you in person in Austin last week and really excited to be here. Doug Lewin (02:05.71)Yeah, it was great to see you in Austin. You guys pulled together a bunch of utilities to talk about what they're doing on resiliency and what you're doing on resiliency. This company, Nira, is really, really fascinating to me. Let's just start with a little explanation for the listeners as to what it is y'all do. Mary Cleary (02:23.95)Sure, yeah. So, Neera is a predictive modeling software platform that helps utilities take a more proactive approach to reliability and resiliency across the entire T &E system. So essentially what we do is we build a digital model of the whole network, including all the little details. you know, think things like the widths of the individual cables, the tree canopies, the fluctuations in ground slope, all those little nooks and crannies. Mary Cleary (02:49.888)And utilities then use that model to simulate scenarios they need to prepare for. So everything from ice storms to hurricanes, cetera. And that model then becomes a flexible environment for utilities to essentially test drive different types of remediation solutions. So once you have, for example, simulated what a category three could look like in your network, you might know which polls are going to fail. Mary Cleary (03:15.574)And what utilities might have once done is a simple rip and replace, right? Which as you can imagine can get quite expensive. But in our platform, what you're able to do is see that perhaps this, you know, force rank your risks and then match up solution by risk. So perhaps only a small percentage of those polls actually need to be replaced. And maybe of the, you the ones that don't, you know, maybe it's Mary Cleary (03:41.198)maybe you just need to add a stay and that's sufficient in the category three. And for the uninitiated, the stay is the thing that looks like hypotenus. Doug Lewin (03:48.142)Yeah. So we're going to get more into this as to different kinds of extreme weather events and what this works for. And I encourage folks to, we'll put a link in the show notes to a little video so people can actually see this. But so that people could get just kind of an understanding in their heads of what this is. This is, like you said, down to the individual wire, down to the actual, tell me if I'm wrong on this, but the species of tree and exactly how big it is. I mean, you're using LIDAR to get... Doug Lewin (04:18.218)extremely granular and take every single line in a utility service territory and the actual conditions on the ground so that then they can kind of rank order where they're going to go. Is that right? Yeah. So for Centerpoint, you guys announced a partnership with them. Centerpoint and Nira announced a partnership last fall. Mary Cleary (04:32.225)Exactly. Doug Lewin (04:42.83)And I was watching a news story about what y'all do with them. And I believe they said, I may be getting this wrong, but I think this is right. 27,000 miles worth of lines in their service territory. And Centerpoint actually has a fairly compact utility service territory. You start thinking about in Texas, Encore that has the entire Dallas, Fort Worth area, huge swaths of West Texas. Doug Lewin (05:07.48)To actually send people out and do visual inspections, which is what the utility industry has done forever, takes a long, long time and you just can't possibly get everywhere. So this is a use where AI can actually look at that whole system and figure out what the needs are. Can you talk a little bit about, and I know you're very early days, but there has been some press on this and some things you guys have said about it. Give a little glimpse for folks into what's going on in Houston. Mary Cleary (05:36.622)Yeah, absolutely. So while I can't comment on the specific things that Centerpoint is doing necessarily, what I can say is we're extremely excited about what we've seen so far. So, you know, in the broader scope of network governance processes, there are all these things that are very manual, as you alluded to. And what we're seeing so far already is that Centerpoint has been able to compress processes that once took them a year and a half down to just a few hours. Doug Lewin (06:06.68)So things that took a year and a half, basically getting people out to a site, recording what went on there, probably sending somebody back, having some kind of committee meeting. You're down to a couple hours because you are able to take this lidar and look at it. And then can you talk a little bit about, and this doesn't have to be specific to CenterPorter Houston, you're working globally, but how does AI figure into this? Because you guys are also an AI and machine learning company, correct? Mary Cleary (06:32.876)Yeah, yeah, great question. So the primary role of AI in our software is the classification of the lidar. So have you ever seen a raw lidar scan before? Have you ever seen a raw lidar scan? Doug Lewin (06:42.647)say it again. Doug Lewin (06:45.646)I'm not sure I have. Mary Cleary (06:47.374)It kind of looks like, you can Google image it, but depending on the quality of the LIDAR, it kind of looks like something between a Jackson Pollock painting or TV static, like kind of poltergeist-y. So it's not super intelligible. And the traditional processes for classifying LIDAR, which is what makes it actually usable, is manual, right? So someone actually sits and looks at the images and says, ah, this is a tree. Wait a minute, that tree looks about the same height as the distribution pole. It might be the same thing. Mary Cleary (07:15.47)It's very error prone, it's manual, and it takes a heck of a lot of time. So we're taking in LIDAR across an entire network. And what our AI does extremely well is classify that LIDAR automatically. So tree distribution poll and not just what's what, but like looking at the, you know, the sink depth of that tree and the fact that there might be multiple tree canopies layered over a line and be able to tell if there's a line under those tree canopies. Mary Cleary (07:43.394)So the primary role of the AI is in making sense of the actual network data. Doug Lewin (07:50.422)And then rank ordering, right? So it's really like a little bit of like a triage, right? Because you just, after Hurricane Barrel, right? There were so many problems and leaders all over the state, citizens all over their service territory saying, fix this, fix this, fix this. Well, you can't go to every single line and trim every single tree in the space of a few months. You have to know where the, what is the tree that is most likely to fall on a line? Can you talk about how you guys figure that out? Mary Cleary (08:19.63)Yeah, yeah, 100%. So I think you just raised a really, really important point, which is that when you're doing these processes manually, you're sending teams out into the field, you're only covering, you know, an inspector and a team can cover maybe like 80 to 100 polls in a visit, depending on the complexity and such. But, and then they're answering 100 questions per poll in some cases, right? So like, you see in that given field visit, you might come across a vegetation risk that is, you know, Mary Cleary (08:49.25)within, it's under two feet from a line, right? But then one circuit over or even 100, maybe it's one mile down the road, there's something that's six inch clearance risk. And you don't see that otherwise. the way you, it's all relative, right? Like it's whatever the biggest risk is that day is highly unlikely to be the thing that actually requires resources and attention. Doug Lewin (09:13.582)It's so fascinating. mean, it's just, it really is. You know, it's so interesting in the energy world, everybody these days is talking about AI and everybody's talking about AI in terms of the power demand that it has, right? my God, AI is going to crash the grid because it needs so much power. But I feel like there isn't nearly enough discussion. I brought this up on a couple of podcasts recently. I did on the one I recorded with a former commissioner, Jimmy Glodfelt as well. Doug Lewin (09:40.782)There's not nearly enough discussion on the use cases for AI to actually make the grid more reliable and more resilient. You and I have talked before, I know you have some thoughts about this. Could you talk a little bit about reliability and resiliency and even how you define those terms? I you are a company that is specifically devoted to those and I feel like sometimes we don't spend enough time defining terms. And when one person says reliability, Doug Lewin (10:08.386)They may be talking to somebody who thinks about it entirely differently. What do these terms mean to you and how are they the same? are they different, reliability and resiliency? Mary Cleary (10:16.79)Yeah, sure. So, you know, obviously, neither of them are new terms, right? But they're both increasingly becoming moving targets. And something that's been really encouraging to see, I think, is both utilities and policymakers actually think about how both of them need to be approached with a different or increased level of rigor, right? So on the resiliency side of things, the asset hardening capital allocation framework that maybe worked beautifully five to 10 years ago probably needs a rethink. Mary Cleary (10:45.41)And on the reliability side of things, you can no longer just look at safety and call it a day. Safety is, it doesn't actually include in many cases the severe weather impacts, right? So you're essentially excluding all the stuff that makes the biggest impact on the system and only looking at, excuse me, duration and frequency in quote, unquote, normal course operations. And so... Mary Cleary (11:10.008)You know, the other dynamic at play is loan growth, right? So objectively slash obviously that creates more demand that the system needs to service. But a vastly underappreciated dynamic there is what does that do to customer expectations? So customer expectations are, they're going up. They're not getting more forgiving. So we ran one of our recent consumer polls where a third of Americans Mary Cleary (11:37.366)said that they expect power to be restored after severe weather within one to two hours, and another third said they expected the same within three to five hours. Doug Lewin (11:46.518)Is that even possible? that a completely unrealistic expectation, or do think it's actually possible? Mary Cleary (11:51.33)I think it's, I mean, it's not gonna happen overnight, right? But I do think it's not impossible over the right time scale. Doug Lewin (11:59.522)It also depends what kind of extreme weather we're talking about, right? If it's a category five and you're on the quote unquote dirty side of it, right? The east side of a category five in the northern hemisphere. Are you in Australia? Mary Cleary (12:13.676)No, I'm in the Northeast. Doug Lewin (12:15.534)You're in the Northeast. Okay, okay. It's an Australian company, which is why asked that. But if you're the Southern Hemisphere, I guess it would work the other way. But anyway, the Northern Hemisphere, you're on the Eastern side and you get a category five, like one to two hours is probably completely unrealistic. But I think there are a lot of events where that could be possible. So are you guys actually like... So a hurricane is, for instance, forming in the Gulf of Mexico and you're a Texas coastal... Doug Lewin (12:44.75)city or utility that covers a Texas coast, if they were using you guys, could they actually put that storm with its features into AI and then into your AI engine and then actually see, if it goes this way at this level, this is the path it's going to take so they can pre-position crews and things like that? Is that a use? Mary Cleary (13:09.006)Exactly, exactly. So what you're describing is a use case we're really, really familiar with. we've got, so actually, did you, I don't know if you had a chance to speak with South Australia Power Networks at the event last week. Doug Lewin (13:20.718)heard his presentation. Yeah, was fascinating. So that was a flood situation, Yeah. Yeah. Yeah. Tell us about that. Mary Cleary (13:27.798)Yeah, so what you're describing is a very, very similar scenario where we had a flood model kind of pre-set up that the model actually existed and this flood was coming in and they were able to layer on in real time those conditions. So as if that storm in the Gulf is brewing. So you essentially bring that situation to life in real time in the model and you see exactly where the water levels are going to get dangerously high, where you need to... Mary Cleary (13:55.352)de-energize or it's safe to re-energize and to your point where you can send people where it's safe. Doug Lewin (14:01.23)amazing. So we've talked about a couple of use cases, floods, hurricanes. Wildfires is another one I think is probably an obvious use case for this too. Can you guys talk about how you're trying to mitigate wildfire damage? Mary Cleary (14:17.806)Yeah, for sure. know, wildfire is such a multifaceted challenge, right? It's not, it's not a, you know, it often gets pinned on veg and veg is certainly a part of it, right? But that's really just one part of it. There's asset failures, there's design flaws, there's a lot that can and does go wrong. So in terms of how we mitigate vegetation, it's typically vegetation, sorry, wildfire risk. It's that typically a combination of a utility using our model. Mary Cleary (14:46.092)to combat their risk on all relevant fronts. Doug Lewin (14:50.03)So with Wildfire, you're trying to... I'm trying to think of what you would input into that model when you're dealing with the hurricane. I think everybody can kind of picture it. You've seen the images of the eye and the clouds and the rain and all that around it. But with Wildfire, it's a little tougher. You're trying to deal with what are the wind speeds? What is the humidity? Are these all inputs that you can enter into the platform? Mary Cleary (15:18.112)Yeah, so some that come to mind off the bat are wind speeds for sure, but also conductor temperature, right? So when the conductors get hotter, you know, on hot days when wildfires more likely, they are more likely to sag and come into contact with things like vegetation or a structure, potentially worse and ignite. So we're doing all that very granular clearance modeling to figure out where that's actually a risk. Doug Lewin (15:45.614)So do you guys actually, I'm just gonna ask the stupid questions, because sometimes the stupid questions are the ones everybody's wondering and just is afraid to ask, but I won't be afraid. The stupid question here is, have you guys, with LIDAR, you just have the whole globe or do you have to go, like somebody hires you and then you do their section of the world, or is this model just has everything in it already? Mary Cleary (16:08.526)Yeah, no, so we don't actually capture LIDAR utilities. Sometimes they have it already. Sometimes they don't. Sometimes they'll capture LIDAR in advance of working with us because the model requires it. Doug Lewin (16:20.206)Describe exactly what LIDAR is. I think I understand what radar is, but explain to me exactly what LIDAR is. Mary Cleary (16:26.286)Yeah, sure. So starting with the acronym, the fun part, LIDAR stands for light detection and ranging. And essentially what it is, is imagine a bunch of lasers shooting off of, sometimes it can be, sometimes it's a helicopter, sometimes it's a fixed wing aircraft or drone even in some cases, or a handheld device. But picture laser shooting off of some device that hit whatever is in front of them, right? So that could be the ground, it could be a wire, it could be a pole. And they bounce back. Mary Cleary (16:54.664)onto the device that is doing the capture and takes measurements of that distance. And so because it's measuring distance, it's fundamentally really, really good at solving for 3D questions versus imagery, which definitely has its place and role in all of this, but is more 2D. Doug Lewin (17:18.743)Got it. When you were talking about line sag, and you said it can get very granular, that led me to think, I'm wondering if this actually has, and maybe you're already doing this, maybe it's just something that's on the roadmap or something you wouldn't do at all, but the dynamic line rating gets talked about a lot in Texas. I've written about it before. Folks that are regular readers of the newsletter will remember probably. Doug Lewin (17:46.04)depending on how long they've been regular readers, but it was one of the most read pieces I ever wrote was on September 7th, the day after the only energy emergency Texas has had since winter storm Uri. And on that day, there was a decision made by ERCOT to actually reduce the amount of power flowing over a line. And the thought was, well, we could Doug Lewin (18:10.914)we could overload that line. It was really hot. This was September 6th. It was still extremely hot. And they were worried that they were going to overload that line. But my understanding is that their sort of dynamic line rating for those just listening, I'm doing air quotes right now, is not super dynamic. They take a couple of different buckets. And like if it's over this temperature, we turn it down this much. But if you actually had measurements and AI modeling, you might find you could flow more power over those lines. You might. Doug Lewin (18:40.404)I you could flow less power over those lines, but you would have... Is that a use case for either what you do or other AI engines? Mary Cleary (18:49.184)Yes, absolutely. And we do do that. We do do that. yeah, I mean, what you're describing is, I think a common, one of the reasons this hasn't been done in the past, right, a common challenge with this is like, it's totally impractical, right, to send someone out in the field and manually measure the distance between the graph clearance of every wire, particularly at distribution, which is, I think, totally, totally underappreciated component to overall network capacity. Mary Cleary (19:16.096)And so when we talk about modeling those granular clearances, that's exactly what it is. So sometimes our customers will find that there are bottlenecks, e.g. clearance requirements where they can't run the line any harder without reaching clearance. But what those bottlenecks can then become is potentially a punch list of things that they can do, design modifications to their network, where they can then actually run more power. Doug Lewin (19:40.834)reconducting things like that. Mary Cleary (19:42.68)Exactly, Mary Cleary (19:43.121)exactly. Or maybe, maybe reconducting, but also, or maybe, you know, what if we made this poll a little bit taller? Would that work? Doug Lewin (19:51.17)Very interesting. And do you actually need physical sensors on the line for that or can AI sort of handle that knowing what the line is and what the temperature and humidity is? Mary Cleary (20:02.86)Yeah, so we don't rely on physical sensors for that. Doug Lewin (20:06.476)It can entirely be done with AI. It's so fascinating how quickly the world is changing. It's such a challenge just to even try to keep up. It's amazing. Yeah. OK, I want to ask about a couple other use cases. Winter storms, that's something people in Texas think about sometimes. Yeah, is there a use case there? Mary Cleary (20:30.05)Yeah, absolutely. So ice loading is something that comes up quite a bit. And it really comes down to the same variables, essentially, as the pull load, the tension on the line, and temperature. So freezing temperatures, what that looks like, what precipitation looks like, and wind. Doug Lewin (20:48.942)Yeah, so that would deal with what is obviously a very real problem. It's not talked about as much, but February, 2023. Obviously, February, 2021 was Winter Storm Uri. February, 2023 sometimes referred to as Winter Storm Mara or Mara. I've never actually heard which way it's supposed to be pronounced. But in Austin and other utilities around central Texas, they had a ton of ice really started to cause tree branches to fall. So again, that's sort of a... Doug Lewin (21:17.678)an obvious use case for this. I'm also just wondering about there's a winter storm coming, you're looking at temperatures in the Permian of a certain level. Can you get into modeling what might happen to gas infrastructure? Could you get into modeling what demand actually might look like, which is an area ERCOT has really struggled with? And I've been critical of them for that, but frankly, that's really hard to do. You have to really understand the building stock. Doug Lewin (21:47.182)Can you start to get into how much power will actually be needed and where are the areas where it's most likely that you would see problems with power infrastructure, gas infrastructure, et cetera? Mary Cleary (22:02.092)Yeah, absolutely. you know, one of the things that's great about our technology is it can be used to, it's very good at modeling physical assets. And so whatever the physical asset makeup is, it's very adept at identifying risks therein. And in terms of like system-wide modeling, one of the things that's also great about our technology is the ability to answer questions that go upstream and downstream across the, across the energy supply chain, right? So like coming back to your point on Mary Cleary (22:32.194)reliability earlier, I think something that is changing in how we talk about reliability is not just obviously looking beyond safety and including things like severe weather, but looking all the way downstream to things like generation mix and understanding how does that affect customer outage minutes from a resource availability perspective. Doug Lewin (22:51.906)Tell me more about that. Yeah, what is, I mean, I know what that means, but like, how does that factor into an AI engine that is mapping? I don't, I understand what you mean, I don't understand the connection. Mary Cleary (23:03.244)Yeah, sure. So what I'm saying is, you know, obviously the energy ecosystem is very complex, right? Lots of moving parts. And that's one of the reasons why it's so hard to make better, faster decisions. in helping utilities forecast resiliency, we're looking at all those moving parts and how they turn together. And it's almost like the AI plays this role of a programmatic dial that you can turn up or down to look at reliability and resilience risk. Mary Cleary (23:33.046)evaluate objectively how much of that risk is there and how much and what does it cost to buy it down. Doug Lewin (23:39.416)That's so interesting. So you could then conceivably, when you're talking about resource mix, you could look at, this would be an area where on a certain, say, a side of a transmission line, maybe there's a constraint. This would be a great place for battery storage to go. Or you have so much battery storage in this one particular place, but there's really no gas resources here. This would be a place to look to put a gas peaker. Doug Lewin (24:07.086)I'd assume there'd be a big relevance there for distributed energy resources too. We can't put any really large infrastructure in this particular place, but maybe some customer-sided stuff would be a particularly good solution. exactly. How far along... I think part of what I'm trying to understand, and I'm sure everybody listening is trying to understand, is how far along is AI on this at this point? Because I think Neera, it's safe to say, is... Doug Lewin (24:36.814)state of the art, you guys have been at this for what, seven, eight years, you're through a series C, you have a bunch of different deployments, but it still feels like this is early days. Like there's just like the advancements are probably going to like... So what are the next areas where you're excited, where you're like, I can't wait to see what AI will do with fill in the blank? Mary Cleary (25:00.974)So that's excellent question. Mary Cleary (25:05.474)You know, I think that there's a lot to be excited about, but I think there's also a lot to be cautious of, right? AI is, I'll use the hackney phrase because it's true, but it's not the silver bullet. And there's a change management journey that goes along with adopting AI, right? it's, can't, like, in other words, I guess an example of what I'm saying is you can't suddenly... Mary Cleary (25:31.054)cover much more ground in your network inspections, right? Or you can't suddenly discover 100 risks where you were only able to previously see one to 10 at a time and then not be able to do anything about it. So there need to be surrounding processes or infrastructure, not in the physical sense of the horse, but that actually support these processes. So that's one thing I would say about it. But I think the bigger opportunity is something I'm extremely excited about. Mary Cleary (26:00.622)is that AI can actually help between both utilities and policymakers help encourage and really drive this idea of a proactive approach to resiliency and reliability, which I don't think is controversial. don't think anyone thinks that's a ridiculous statement. But unfortunately, the reality says otherwise, where a lot of the processes and regulation that are in place today actually actively discourage taking a proactive approach. Mary Cleary (26:29.41)And think Eric, Brian. Doug Lewin (26:31.402)Yeah, what's an example of that? That makes sense. Mary Cleary (26:34.318)typical of that Mary Cleary (26:34.918)is California, there's something they not so affectionately call the 45-day rule, and I'm sure there are examples of this in other states as well. But it's essentially that if you discover a risk, you have 45 days to actually remediate it, which is fine. It sounds sensible, right? No one wants risks lingering out there unattended. Except that is essentially, how is that different from playing Whack-A-Mole? You find a risk, you fix it. You find a risk, you fix it. Doug Lewin (26:54.614)Festering, yeah. Mary Cleary (27:02.456)What if that risk that you're suddenly pouring all of your resources into at that moment isn't what you actually need to be paying attention to? Doug Lewin (27:09.11)It may not be the biggest risk at all. There could be a bigger risk somewhere else, but you found it 20 days into that 45-day period, and so you let it go. Mary Cleary (27:17.526)Exactly. And even worse, what if there are a hundred or a thousand versions of that same risk and in aggregate, there's a more cost-effective way to solve that risk. Mary Cleary (27:29.73)instead of just doing it one off. Doug Lewin (27:32.27)It brings me, you when you're a hammer, everything's a nail. But this brings me back to it. I wrote a piece on this like not quite a year ago. was right after Hurricane Barrel about you get what you pay for. And starting to think about performance-based models where we're really paying utilities a lot more if they do their jobs exceptionally and less if they're not. I won't ask you to weigh in on that, but I do think there is some merit in that because then you can get out of that sort of... Doug Lewin (27:57.454)hamster wheel of the way things have been done and it just has to be done this way as opposed to putting the focus on the outcome you actually want to drive towards. do, want to ask you about, you've mentioned a couple times, Sadie and Safie, and I think probably most of our listeners know what that is, but I actually want to take a minute and just kind of double click on that. So these are, I'll give my explanation, then you correct me and say it better than me. Doug Lewin (28:25.624)And then I want to get into a little bit like what might be a better metric. So, salient safety, whatever its system average, but the D and the F are the important... Go ahead. What is it? Mary Cleary (28:37.556)It's System Average Interruption Duration Index. Doug Lewin (28:40.872)So Doug Lewin (28:41.122)duration and frequency, right? So how often are outages happening and how long do they last? But as you mentioned, a lot of times the extreme weather events are removed from that metric because it's sort of viewed as like force majeure. It's like, well, this is what are you going to do? Sometimes the power just goes out. But as you said earlier, customers are not cool with that. Like that's not okay. expect... Doug Lewin (29:07.362)to have the power back on. Have you seen any... I was on a panel at a conference a couple of months ago with a guy from Con Ed, the utility in New York, and he said they are actively trying to come up with different metrics because the old ones are so flawed. You work on this stuff around the world. Have you seen better ways to actually measure the outcomes we're after? Mary Cleary (29:28.782)don't think there's something perfect just yet. think the perfect metric will be something that is forward-looking, that's more of a leading indicator instead of a lagging indicator. And I think using predictive modeling technology puts utilities in a place where they can actually do that reliably and then communicate that to policymakers so that there's a sheer understanding. Doug Lewin (29:31.298)That's for sure. Doug Lewin (29:53.39)So basically, that's really interesting. So you could basically run a predictive model and say, hey, if a category three hurricane hit Corpus Christi, if a wildfire with wind speeds of 55 miles per hour hit Amarillo, God forbid any of these things happen. But you could, if a flood of Hurricane Harvey in 2017, we got a repeat of that and... Doug Lewin (30:20.238)2028, you could plug those into the model and you would say, based on existing systems and processes and infrastructure, we would expect power to be out this long. And then basically say, here's the triage list, utilities fix as much as you can, and the better you do against that benchmark, there could actually be a performance incentive potentially. Could be an increase in rate of return, could just be a cash payment, could be any number of different things. Doug Lewin (30:48.226)which I think the vast majority of customers would support because then you would actually have lower outage times, which is what everybody's after. Is that what you mean or do you mean something different? Mary Cleary (30:56.588)I think that's, I don't think that angle is out of the realm of possibility. Doug Lewin (31:01.91)Is there a different way that you're thinking of that though? how, what, because that's the way I understood it when you said it. Am I understanding it wrong? Mary Cleary (31:09.804)Yeah, no, maybe another a little bit more color I would add to it is I guess it avoids this really unsavory situation, right? Where the pendulum's going back and forth between reliability and resiliency and affordability. And you got something bad happens, no one likes the outages and the impacts of them, but then the shop wears off and people go, my gosh, all this stuff is really expensive. Do we really need all this? Is this necessary? Mary Cleary (31:36.064)And then you end up in a situation where you're deliberating until the cows come home about your torturing cost line items and then nothing happens. And then something bad happens again and people wonder why nothing's changed. So that's really the situation I'm referring to, which is like, let's stop having this high temperature back and forth between utilities and policymakers where policymakers sees a really big price tag and utilities see the Mary Cleary (32:04.674)since the thing that needs to get done. And they're not speaking the same language. Doug Lewin (32:11.564)I think some of the reason why that happens in my view is there's this sort of information asymmetry where the utilities know their system better than anybody else and the regulator doesn't have nearly as much information. But I'm not sure how we get over that problem. Have you guys ever worked for utility commissions or grid operators or is it like utility side? Mary Cleary (32:39.884)No, we're defying the utility sign, but we are seeing our technology being used as the vehicle to objectively communicate what's needed. And so when policymakers bristle at, you know, eight, nine, 10 figure investment, utility can then use the technology to say, okay, you don't like that. Well, here's what happens if we don't do that. You're probably not going to like that situation either, right? But then it becomes this way to evaluate how much risk you can buy down and at what cost by saying, Mary Cleary (33:09.742)Okay, maybe we haircut that investment by 30 % or 15 % or whatever. Can we look at the outcome, the proposed forecast outcome on the other side of that? And is that enough to justify the investment? Do we feel comfortable with that? And that kind of thing, that kind of dynamic really takes that temperature down when utilities and policymakers are trying to make those really difficult decisions together. Doug Lewin (33:30.446)Yeah. mean, you say eight, nine, 10 figures. And in Texas, for the resiliency plans the utilities are doing, I think we're bumping up against 11 figures at this point, because, yeah, Houston's is 5.7. Center points is 5.75 over three years proposed, not approved. Encore was a little over 3 billion over three years. I think, though, there is... I don't think anybody... I'm certainly not arguing, and I don't think anybody could... Doug Lewin (33:57.194)there doesn't need to be investment made in the distribution grid. That seems obvious and axiomatic. The question is how much and how do you balance that affordability? And I think so much of it is about getting better data out there and letting everybody see it. Like you said, here's the predictive modeling, here's what happens if this happens. Here are the targeted things that can be done and rank order and what they cost so that policymakers and regulators Doug Lewin (34:25.014)and utilities together, stakeholders, et cetera, consumer advocates can kind of make decisions together about, you know, this is you do Can you, you can definitely respond to that. I'm also just interested in like, how does all of this play into the affordability side of things? Does this give us, does it do what I just described? Are there other ways I'm not thinking of where we're using AI for utility modeling and that sort of thing could actually significantly save money, reduce the cost of investment? Mary Cleary (34:54.252)Yeah, so I think on the affordability piece, the primary role that AI can contribute to that is by helping size with the remediation solution is, right? So we're getting away from this, these pulls are weak in a category three, they're not going to make it. Let's just replace, let's panic and replace them all. Instead, let's add accessories like stays were appropriate and maybe even the ones that you need to replace. Maybe some of them can be one for one, wood to wood. Mary Cleary (35:21.506)And maybe there's only a handful of select hyper-targeted scenarios where you need something stronger like a steel or composite. Doug Lewin (35:29.664)And in the model, we'll get that granular to say in this spot because of maybe the geography, this one sits a little higher, it's a little more exposed to a coastal wind or whatever. This is the one that needs to be replaced as opposed to 50 of them. It'll get that granular. That's really interesting. All right. Good stuff. let's, course, it's the Energy Capital podcast. Let's talk about... Doug Lewin (35:58.67)policies. And again, and it actually may be before we jump to policy or maybe just as part of the same answer, I am curious just kind of where in the world you guys are working right now. We've talked about Centerpoint, you've mentioned Australia. Where else are you guys doing work around the world? Mary Cleary (36:15.82)Yeah, so we're working with utilities in pretty much every major region of the US right now. We're also in Europe. We have several customers across Europe, Asia, UK, South America increasingly. So I think we've got the continents covered except the Arctic. Doug Lewin (36:33.826)Yeah, no Antarctica yet, but know, they're in dream one day. So you see policy constructs all over the place. And this is one of the things I just think is not done nearly enough. know, Nehruq and other organizations, International Energy Agency, those kinds of organizations do a good job trying to like cross-pollinate, help people see the way, you know, folks do it differently around the world. But you guys get to see that. Doug Lewin (36:59.136)Are there any particular policy constructs that you think are particularly effective around reliability and resiliency? Mary Cleary (37:05.836)I don't think there's something yet that I would point to and say that's the thing that everybody should be doing that. I think, to come back to this idea of taking a more proactive approach, I think there are baby steps being taken around the world that kind of smell like that, but I don't think we're there yet. Doug Lewin (37:25.826)Yeah, I think that's right. I think this is, I always like to say, think, you know, there's a lot of innovation happening, obviously, on the tech side. There's a lot of innovation happening in the markets. Policy innovation is important too. You have to be able to like think differently because the regulatory constructs pretty much everybody's operating in were developed and evolved over a hundred years ago. And they've evolved some, of course, since, but like not a ton. Doug Lewin (37:55.566)It's an area that for the technology to actually have as much impact as it could, you're going to need the regulatory side to catch up, I think. Mary Cleary (38:05.888)Agree? Agree. Doug Lewin (38:07.566)But is there anything I should have asked you that I didn't? Anything else you want to cover? Mary Cleary (38:14.414)Let's see. Doug Lewin (38:16.782)There's so much, right? I mean, it's such a fascinating space, but. Mary Cleary (38:21.1)Absolutely. So Doug, think maybe there's one last thought I'll leave you with, which is that when we talk about the grid, we're often talking very big terms, right? We talk about massive amounts of money, we talk about sweeping projects and massive time scales and things taking a very long time. But something I am confident we're going to see more of and very excited about is this idea that we could see grid transformation happen on a more micro scale. Mary Cleary (38:50.306)with more micro outcomes. this idea that the energy transition and the idea of resiliency doesn't need to be this massive nail biter, right? Like everyone is on the edge of their seats every time there's a bad weather report. There's the Senate Bill 6 action earlier this week, so everyone's wondering what's gonna happen with large loads and such. And so I think technology like ours can play a really critical role Mary Cleary (39:20.062)and allowing utilities to take better, faster, more thoughtful, smaller steps, but in faster succession. So it keeps everyone on the same page and working towards the outcomes that we all want in a way that's much more affordable for consumers on the other end of the energy bill. Doug Lewin (39:37.144)So I was going to end, but now I want to ask about that. So we're going to go to another couple of minutes if that's okay. So Senate Bill 6, obviously I wrote about it a little bit and we'll put it in the show notes where I wrote about it and I'm sure I'll be writing about it a lot more in the coming months. And we're recording on February 14th, so the bill was just filed a few days ago. By the time you're listening to this, there could have been hearings or what have you. Doug Lewin (40:01.368)But it's a bill that really does kind of change some of the ways that large loads interconnect to the grid, change potentially some of the requirements for the generation they need to bring, and then change how they pay for transmission. I think, and Mary, I'll just say this the way I perceive it, and then you can change it, say it however you want. I think, I'm not sure if this is what you're getting at, but I think there's a little bit of sort of a freak out happening right now, frankly, where a lot of folks are like, my God, they're seeing the numbers of we might need 50, 60, 70 more gigawatts in the space of five, six, seven years, and that looks really scary. And I get it. We have added 13 gigawatts last year, an average of 11 gigawatts the last four years. Is what you're saying that these... And obviously, this is... Doug Lewin (40:55.246)but there's a whole lot of companies working in this space that AI actually, while it is itself a big load, actually, as we were talking about earlier, help solve some of the problems too. Almost itself be energy aware of when it's using energy, when it's using the energy that's on site. Maybe even helping to deploy distributed energy resources, help folks that have batteries, either in their garage on the wall or just in the car, like actually deploying assets and resources in a smarter way that makes us more reliable. And I didn't give my own definition earlier, Mary, but my own definition is reliability is do you have enough supply to meet demand? Resiliency is can you deal with extreme weather in a way where you stay online as long as possible and then you're back up that restoration is a very short period of time and distributed energy resources help with both of those things, right? Because they're adding supply and they're giving you resiliency because it's close to where you're at. So maybe I'm completely twisting around what you meant when you brought up Senate Bill 6, but that's where my head goes. What did you mean when you said that? Mary Cleary (42:06.092)Yeah, so for me, it was just yet another example of all the anxiety about energy. But I think you make an interesting point about how much is AI contributing to the anxiety and how much anxiety can it potentially detract from the equation. I don't know exactly what the answer is. I can't speak to a self-aware, energy-consuming AI anytime soon, although that'll be very exciting to see. But I do think there is massive opportunity for it to be a net anxiety relief. Doug Lewin (42:39.692)Yeah. And when you talk about the micro solutions, can you talk more about what you mean? Is that just like what you were saying earlier, like getting down to the individual poll? Or does that also deal with like micro generation? Does that come into the picture too? Mary Cleary (42:52.046)It's more thinking at the asset level, asset resiliency. Doug Lewin (42:56.814)Yeah, yeah, yeah. No, it makes a lot of sense. And I think it's really important for all these different things, whether it's distribution infrastructure, generating resources. We have to think of the micro and the macro together and how they fit together, because the really small things can actually add up to a whole lot. All right, cool. I'm going to ask the same question again. Is there anything else you'd like to say, because then I just added a whole lot to what you said at the end? Anything else you want to say before we end, Mary? Mary Cleary (43:20.866)No, I just had a question for you and it just went right under my head. No, you know what? It was actually about House Bill 2555 been out in the wild for some time now, but how is your level of optimism changed, if at all, since then? Doug Lewin (43:40.366)Well, honestly, this conversation actually has made me more optimistic about 2555. What I worry about 2555 is it's a little bit of a blank check. Now, I don't want to be Dougie down or just be negative here because I do think that that overall is a good policy. I think that you need utilities to spend money on the distribution grid and on resiliency, and it's a regulatory framework that gives them some certainty emboldens them a little bit to actually invest in the distribution grid, which as we all saw after Hurricane Barrel and other events, that wasn't the only one. Again, the Austin ice storm in February, 2023, there's all kinds of examples of where the distribution grid needs investment. My worry about it is there isn't enough data that folks can really look at and together and agree on. And I think that what y'all are doing, Doug Lewin (44:38.078)And on this podcast, I'll interview a lot of different companies going forward that do this, because I think the competition in this space is pretty interesting. And I think that there's going to be a lot of competition in this space. I think you guys are an early mover, and I've seen examples of your technology. I'm pretty excited about it. But to me, that is one of the most exciting things that the regulator, the utility, the stakeholders can all kind of see. No, here's the predictive modeling. Here's what happens if a cat three, cat four, cat five hits this particular area with the infrastructure you have in place. It ain't pretty and here's the rank order of what you could do to make the most impact at the lowest cost to reduce the damage and the potential pain and suffering that would happen after that. So I have no doubt that we need to spend on resiliency and I understand why lawmakers wanted to pass 2555. The information asymmetry and there's sort of the general lack of data that's been out there is one of my biggest concerns about that balance between reliability, resiliency, and affordability. I think what you guys are bringing to the table is potentially transformative. So I'm pretty excited about the technology. What do you think of 2555? Mary Cleary (45:52.846)You know, I am really excited, obviously, based off our work with utilities in Texas, what I'm seeing so far there. But I think it sets Texas very well apart from other states in this country, as well as other folks globally in a lot of ways. Because a lot of utilities, I won't name names, but they're still thinking about things through very narrow lenses, right? They've got their pet problem and Texas is a bit unique, right, because it experiences a whole laundry list of things, whereas other areas of the world maybe experience two or three of them. But I think... Doug Lewin (46:30.811)We've got it all here in Texas. You name your climate risk. It's right here. Mary Cleary (46:36.226)But just zooming out and thinking about everything through that resiliency lens, think that's a really good example that others would move themselves to follow. Doug Lewin (46:45.548)Yeah, yeah. I it makes a lot of sense. Yeah, I just think the layer that hasn't been there yet is the regulators really insisting on seeing the data and not saying that they haven't done it yet. It's just like we haven't had these tools. Right? So again and the data wasn't necessarily available, you know? Exactly. I get my pen and paper and I scribble something down for you and it's like, as a regulator, are you going to put much stock in that or do you want to audit something and not take my word for it? Doug Lewin (47:19.886)Yeah, again, regulatory innovation, right? think regulators really insisting on we need the best possible data. They have a huge job. It's damn near an impossible job. I don't envy them for having that responsibility, but they've got to make sure they're looking out after ratepayers and making sure that, we always say keep the lights on. No, it's like making sure the heat and the air conditioning are on. That's so people can find a flashlight. It's the heat and the air conditioning. Keep that running. Mostly air conditioning in Texas, though. Anyway. Mary, I really appreciate you taking the time. I'm excited about Nira. I am excited about everything I've heard so far. I'm looking forward to following the growth and evolution of this company and all of these kinds of use cases to hopefully improve outcomes for customers. And yeah, thanks for taking the time. Mary Cleary (48:15.438)Pleasure speaking with you, Doug. Thanks so much for having me. Take care. Doug Lewin (48:18.04)Thanks, Mary. Thank you for listening to the Energy Capital Podcast. I hope you enjoyed the episode. If you did, please like, rate and review wherever you listen to your podcasts. Until next time, have a great day. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe

This is a free preview of a paid episode. To hear more, visit www.douglewin.comNote: We had some minor audio issues in this episode—thanks for bearing with us. The conversation is still clear and well worth the listen. Appreciate your patience!John Arnold is one of the most successful energy traders of all time. He built his career by understanding how systems work, where inefficiencies exist, and how markets respond. Today, as a …

Solar energy has the potential to revolutionize Texas’ power grid, lower costs, and provide resilience in extreme weather. But what happens when some companies selling solar systems aren’t playing fair? In this episode of the Energy Capital Podcast, I spoke with Sara DiNatale, an investigative reporter whose in-depth four-part series “In Broad Daylight” for the San Antonio Express-News uncovered disturbing scams from unethical and predatory companies. DiNatale was honored for her work on this series as one of only 15 out of 500 entries to win the George Polk Award for “intrepid, bold and influential” reporting.The series started with a few homeowners’ struggles but quickly exposed a larger pattern — solar systems that weren’t properly installed, homeowners left with massive loan payments for panels that didn’t work, and a lack of consumer protections to hold bad actors accountable. DiNatale detailed how some homeowners were aggressively targeted by door-to-door salespeople, pressured into signing contracts that promised energy savings but often resulted in tens of thousands of dollars in debt for non-working systems.In Austin and San Antonio alone, 18% to 24% of solar installations failed their first inspection, meaning homeowners were left with what one expert called “expensive roof decorations.” Some systems continued to fail on second and third inspections, leaving families with long-term loans for technology that wasn’t even functional.One of the most heartbreaking cases she covered was the Duncan family in Corpus Christi, a low-income, hearing-impaired couple sold a $100,000 system they never should have been sold. Their credit was destroyed and the installer vanished.We also explored how some solar companies operate like multi-level marketing (MLM) schemes, recruiting young salespeople with promises of making six figures, teaching them to target elderly homeowners, and encouraging deceptive sales tactics. Some of these companies even offer cash incentives upfront to make the deal seem more appealing, without disclosing that this money is really just wrapped into the loan.The good news? There are many great solar companies and ethical solar installers in Texas, and there are steps consumers can take to protect themselves. We talked about what consumers should look for. We also discussed legislative fixes, including a requirement that no company gets paid until an installation passes inspection, licensing standards for solar installers, and consumer protection laws to crack down on deceptive financing practices. A bill was filed by Senator Zaffirini at the Texas Legislature (SB 1036) to address many of the problems mentioned by DiNatale.Solar remains one of the most promising energy solutions for Texas, but without proper oversight, these scams could continue to spread — especially as the demand for distributed energy grows.This is an episode you don’t want to miss. If you or someone you know is considering solar, listen before you shop, much less sign any contracts.As always, please like, share, and leave a five-star review wherever you listen to podcasts. Thank you for being a part of this conversation!Time Stamps00:00 - Introduction to the Energy Capital Podcast05:14 - The Importance of Inspections and Approvals07:49 - Real Stories of Victims in the Solar Industry10:26 - Legislative Solutions and Consumer Awareness12:44 - Sales Tactics and Red Flags in Solar Companies18:09 - The Solar Sales Landscape21:47 - Understanding Financing and Dealer Fees29:43 - Consumer Complaints and Industry Accountability30:09 - Positive Actors in the Solar Industry35:09 - Advice for Potential Solar Buyers37:20 - Financial Considerations for Solar Energy Investment38:53 - The Importance of Battery Storage in Solar Systems39:47 - Challenges in the Solar Industry: Trust and Education42:10 - Consumer Protection in the Growing Solar Market44:01 - Regulatory Measures and Licensing in the Solar Industry46:48 - Tracking and Accountability for Solar Sales Practices49:31 - The Need for Consumer Guides and Resources51:52 - Engaging with the Solar Community and ResourcesShow NotesConsumer Protection and Solar Industry Scams* Sara DiNatale’s Four-Part Solar Investigation (San Antonio Express-News) – The full investigative series exposing deceptive solar sales tactics in Texas.* Sara on X (Twitter) * Texas Attorney General’s Consumer Complaints Division – Where Texas residents can report fraudulent solar companies.* US Department of the Treasury Solar Scams Resource – Guides on avoiding deceptive home energy sales tactics.* FTC Consumer Solar Awareness Articles - 1 & 2Grid Reliability and Interconnection Failures* Austin Energy Solar Program –* CPS Energy Solar Information * ERCOT Interconnection Process – How solar systems connect to the grid and what happens when they fail inspections.High-Pressure Sales Tactics and Deceptive Financing* Better Business Bureau (BBB) Solar Complaints – Reports on misleading solar sales practices in Texas.* Solar Energy Industries Association (SEIA) Consumer Guide – What homeowners should look for when considering solar.* NABCEP Solar Installer Certification – How to verify if a solar installer is certified.Legislative Fixes and Future Protections* Senate Bill 1036 - 89th session bill relating to the regulation of residential solar retail transactions. * Texas Legislature Bill Tracker – The Legislature’s site for monitoring bills and hearings.* Nevada’s Solar Consumer Protection Program – A model Texas could adopt for preventing predatory sales.* California Solar Licensing Requirements – A look at other states’ approaches to regulating solar contractors.Key Quotes from the Episode* "We found Texans paying for solar panels that don’t even work, systems that failed inspections multiple times, leaving homeowners with nothing but massive loan payments." – Sara DiNatale* "In Texas, you don’t need a license to install solar panels, which means the person drilling holes in your roof might have zero experience." – Sara DiNatale* "This is a problem that needs urgent legislative fixes, requiring an inspection before payment is one simple way to protect homeowners." – Doug Lewin This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.douglewin.com/subscribe