Energy Capital Podcast

We’re on the verge of one of the biggest energy shifts in decades: the increasing use of demand side resources.They’re often referred to as Virtual Power Plants, or VPPs. Add together thousands of rooftop solar installations and home batteries and you reach levels of power equal to medium sized power plants. They add power capacity, can provide key grid support in ancillary services, and give consumers uninterrupted power during outages of any kind.Unfortunately, the budget bill passed yesterday by the Senate would make this much harder. (We talked about the bill and its implications but we recorded on June 23 before we knew how bad it would actually be.)VPPs are already working in Texas, and started to gain momentum. This week on the Energy Capital podcast, I spoke with Blake Richetta, CEO of Sonnen USA, and one of the most forward-thinking leaders in the clean energy world. We broke down what’s happening in Texas, why the rest of the country isn’t paying attention, and what’s at stake if we get this wrong.The Big Idea: Solar Alone Isn’t Enough. Batteries Make It Work.Blake lays it out clearly: The economics of rooftop solar by itself don’t work very well. You need a battery to make the math work.At midday, solar power is often so abundant it’s not worth much on wholesale markets. But during the evening — when people are getting home, turning on ACs, cooking, watching TV and the sun is setting — prices rise.A battery allows you to store cheap solar and sell it when it matters most. As Blake put it, that allows you to shape load perfectly and inject energy optimally. It’s not only a savings strategy; it’s also a boon to grid reliability.And if thousands of homes do this together? You’ve got a power plant, one that’s already connected, decentralized and closest to load, and can scale to solve some really difficult locational problems on the grid.What’s a VPP, and Why Are Texas Homeowners Getting One for No Upfront Cost?This isn’t theoretical. This is live in Texas.Sonnen and their Texas partner, SOLRITE, have already deployed over 3,000 residential batteries into a fully operational Virtual Power Plant. Here’s what makes it different:* A zero-upfront-cost offer for homeowners* 40 kWh, 9.6kW battery storage system: bigger than what most homes get* A locked-in energy rate (~12¢/kWh with a small escalator), generally lower than market prices* The ability to participate in grid services without even noticingTexans get resilience and savings. The grid gets flexibility and stability. The model works.Key Takeaways* Batteries unlock the real value of solar: economically and operationally.* Texans want energy independence and resilience to extreme weather events, and this model delivers it.* Competitive markets enable this kind of innovation in Texas in a way other states can’t match.* The grid gets stronger when consumers get stronger.* The President and Congress are poised to significantly slow down what Texans are doing.What Comes NextSonnen and SOLRITE are betting big on a Texas-led VPP revolution. But there’s still work to do:* Unlocking distribution-level grid value (like locational value and deferred infrastructure costs)* Expanding ADER pilot (aggregated distributed resource) programs* Supporting U.S.-based battery manufacturing to reduce foreign dependency* Ensuring that federal policy doesn’t kill the momentum just as it starts to scale.Texans remember what it feels like when the power goes out. VPPs offer a smarter, cleaner, more resilient future, without needing to sacrifice freedom or reliability.We finally have the technology.We finally have the market model.Now we need the political will to help Texans strengthen themselves and strengthen the grid, too.Timestamps00:00 – Introduction03:00 – How Sonnen helped develop Virtual Power Plants and paired solar w/ storage06:00 – Using Texas’ competitive market to make VPPs available for $0 upfront cost12:00 – Consumers’ cost to get a VPP through a retailer and a “VPA”17:00 – How VPP economics work for Sonnen and its partners (hint: it’s the batteries)19:30 – The market is sending signals for “firming” right now22:00 – The resiliency benefits of solar & storage, advantages over generators26:00 – Grid following vs. grid forming batteries for backup power32:00 – ADER pilot in Texas, grid services from VPPs33:30 – Fundamental goal: shape load perfectly and inject energy optimally37:00 – The potential to monetize the distribution value of VPPs and ADERs41:00 – How Distribution System Planning using DERs could lower costs45:00 – Tapping into locational and temporal value of distributed energy51:00 – Why some utilities make the leap to VPPs and tap the value of DERs55:00 – How vertically integrated utilities in Texas could benefit from VPPs57:30 – Implications of federal budget bill on residential DERs (as of June 23)1:02:00 – How market value can, in time, replace tax credits1:03:30 – sonnen’s manufacturing in America to realize the tax credit adder sonnen’s manufacturing in America to realize the tax credit adder1:05:00 – Final thoughts on being a “disruptor” in the marketResources* Sonnen USA (home battery & VPP solutions)* SOLRITE Texas Virtual Power Plant* SOLRITE + sonnen VPA launch (January 2025)* Utility Dive: Texas grid-optimizing VPP details* Abundance + SOLRITE + sonnen VPP collaboration* 25D Residential Clean Energy Tax Credit (IRS)* SEIA: 25D Solar Tax Credit explainer* Senate’s “One Big Beautiful Bill” tax credit updates* Reuters: U.S. Senate adjusting rooftop solar line in budget bill* AP News: Senate GOP solar & wind incentive cuts* Reuters: Rooftop solar firms warn House bill would set back sector* We’re Not Relying on the Texas Grid This Summer. Michael Hardy, Texas Monthly.TranscriptDoug Lewin (00:07.928)Virtual power plants have massive potential to make the grid more reliable and resilient and lower costs for consumers. But all that hangs in the balance. Welcome to the Energy Capital Podcast. I'm your host, Doug Lue, and my guest this week is Sonen CEO, Blake Richetta. Sonnen is a German manufacturer doing a large business in the United States, particularly in Utah, California, Texas. Doug Lewin (00:36.114)among their leading states. We recorded this on the 23rd. So just about a week ago and just at the very point that the Senate language was starting to come out, we were actually recording in the morning, so that language wasn't out yet. We were not able, obviously, to talk about the very latest of what is going in the Senate as this podcast is dropping. That said, it is highly relevant. Doug Lewin (01:04.299)because we did talk about the threat to the tax credits that help people get solar in storage at their homes. So when the next hurricane or ice storm or whatever it is hits or just a general power outage, which happened all the time, 95 % of them are on the distribution grid. And it's just because the wind blows really hard. A storm comes through, lightning hits a transformer, whatever it might be that knocks the grid out. People want to have solar and storage at their home. Doug Lewin (01:32.91)It's good for them to have that resilience. It's also good for the grid when those distributed assets can participate to support the grid. This is something Blake and I got into in great detail. I learned a ton, as you'll hear. A lot of times, asked questions about things I didn't understand. Learned a lot from Blake and really excited about the promise for virtual power plants, distributed energy resources, particularly in the Texas construct. But before we get into this, I think it's really important to say, given the moment that this Doug Lewin (02:02.488)podcast is gonna be dropping. All of that is in serious, serious doubt. And if you are somebody that was hoping to have solar and storage in your home or hoping that distributed solar and storage could make the grid stronger, all of that is very much in peril. I will be covering that at the newsletter and further on the podcast.gluon.com. But for now, enjoy this great conversation with Blake Riketa, CEO of Sonin US. Thank you. Doug Lewin (02:32.814)I'm Clay Kraketta. Welcome to the Energy Capital Podcast. Blake Richetta (02:35.746)Thank you, Doug. It's such a pleasure to be here. Doug Lewin (02:38.786)Great to have you. We've been obviously trying to get this together for a while. Really excited about the things you guys are doing at Sonnen, particularly in the Texas market, but let's just start at a high level. What is Sonnen for folks that don't know? Brief with this answer if you can, because I want to get into all kinds of different policy things, but it's important that people know what Sonnen is. So let's start there. Blake Richetta (02:57.39)Sure. Sonnen is a pretty special company. I joined Sonnen in 2016 when I left Tesla because of the incredible advancements that Sonnen had made in the European market and specifically in the German market, which is still really a world leading position in the virtual power plant based energy system. And we looked towards Sonnen even at Tesla with inspiration of how do they do what they do? How they achieve so much as such a Blake Richetta (03:26.892)at that point, small company that was really fast moving sort of startup. This was back in 2016. Sonnen started in 2008 with the innovation process of the first battery, 2010 launched the first product to the German market. And a very short summarized answer is that Sonnen, which in the German language is the Sonnen, which is the plural of sun, sort of like suns. There's no real English translation. Sunny battery, I don't know, was inspired by this idea that Blake Richetta (03:56.854)solar needed to have a greater purpose and that the intermittency of solar was a dead end for the German energy system, which was already being seen economically and scientifically. And then we needed to harness and harmonize solar, help it produce real value for the grid and serve real authentic grid services and also help balance the grid. that led to the concept of the virtual power plant, which Sonnen was the Blake Richetta (04:25.528)first in the world for residential batteries to ever launch back in 2012, which is like ancient history. mean, at Tesla, were still trying to figure out the Model S and figure out the Roadster back then. And so you fast forward to now and this whole idea of networking batteries and swarm dispatching them and locational clusters to perform grid services that replace power plant energy or infrastructure to really help energy transition truly be affected. Blake Richetta (04:55.522)has been the central purpose of Sonnen. And we have the largest virtual power plant in the European Union, 180,000 houses. And then we have some very substantial virtual power plants here in America with the biggest utility managed directly controlled VPP in the country here in Utah. Now almost 6,000 houses. we have smaller VPPs in California and Puerto Rico and other states. And as you pointed out, we have a big... Blake Richetta (05:24.266)launch happening in Texas with our VPP. Let's Doug Lewin (05:27.19)Let's Doug Lewin (05:27.41)just jump right in and talk about that. There's a lot of different directions we could go, but let's, let's talk about Texas. It's the energy capital podcast. How many homes do you have here? What's your aspiration? And like, obviously it's not a sales pitch, but we do want customers to kind of understand like, what does this mean for them? How would they actually get a hold of these? So yeah, let's, let's jump right into Texas. What's going on. Blake Richetta (05:48.75)Absolutely. Well, the Texas VVV is led by our partners. They are just an incredible organization. highly recommend you maybe looking at having the CEO of this company on because he is such a pioneer company called Solright. S O L R I T E. Regan George is the founder and innovator in chief there. And what Regan basically set out to do is use the deregulated Texan market structure to create a Blake Richetta (06:17.624)framework for the virtual power plant that looks very much like what has been achieved in Europe, because Germany's a totally deregulated energy market. The most close thing to it in America is indeed Texas. But he wanted to do it in an American way. And he wanted to do it in a way that enabled people to get solar and battery in their home and join the virtual power plant without paying anything at all upfront. And having Blake Richetta (06:46.958)substantial backup power, is another thing that the German market's not very concerned about, is backup power. And so having really a American VPP in the deregulated Texan market was the mission. And that's being achieved. So to your question, I believe there are well over 3000 houses now and they just launched. What was it? Not even real. Doug Lewin (07:09.088)January. I think the announcement was in January. Yeah. Blake Richetta (07:13.288)And moving so fast, they're raising substantial capital and they've used fundamental principles to be able to do a true and scalable virtual power plant in Texas that are, I think, principles that might've been, well, I don't know, maybe lost on some other companies and other types of entities, but they're relatively risky. But at the same time, these fundamentals, if pursued, allow you to have a full VPP with a full value stack. Blake Richetta (07:42.882)And that's what's SoulRite has basically launched. That's their innovation is financially and then market wise and all this stuff making work. Doug Lewin (07:51.886)So this is going to be just a heads up for the listeners. We are going to get a lot more into this in future months and dare I say years because the Texas competitive market is such a fascinating thing. So just a level set for folks that may not know. So about 75 % of ERCOT is in competition. Austin Energy and CPS in San Antonio are as well as the co-ops are exceptions to that. Doug Lewin (08:16.694)and the sort of nomenclature of the market, they're often referred to as NOEs or non-opt-in entities because they didn't opt into competition. But the rest of the state, and that would cover most of the DFW area, there's couple, you know, Denton and a few other sort of carve-outs there, but basically most of the DFW area, almost all the Houston area, Corpus Christi, Laredo, Lubbock just opted in in the last year or two, are all competitive. And that means that consumers can choose Doug Lewin (08:43.617)their own energy providers. That is pretty unique in the United States. There is customer choice, obviously, in a dozen or 15 other states, but that's kind of more limited to commercial customers, whereas here residential can actually choose. So a lot of people still have never chosen, like 20 years after they could have chosen, a lot of people are still with their legacy provider, which turns out to be Reliant or TXU. Those are kind of the legacies, but there's all this possibility in the market out there. And for years, I've been working in this space for 20 years. remember Doug Lewin (09:13.396)literally 15, 20 years ago at the Capitol, people talking about this is how we're going to get these new technologies out to market. It's the competition, right? It's the competitive market that's going to deliver that. And I think just in the last couple of years, we're really starting to see that happen. So when you talk about market fundamentals, you're talking about a company in this case, Solright, working with you to provide the technology and then marketing that to customers and saying, Doug Lewin (09:39.626)what's important to you. And for customers, know, it's a choice, right? Nobody's in Texas required to do this. But if they decide that they don't want to have to pay upfront for solar and storage, but they're willing to enter into a longer term deal. And maybe this is where I should have a conversation with Mr. George. I think you said his name is, but as much as you're comfortable speaking about that, I'd love to, I think people are really curious about this and want to know. So maybe if you could talk about that a little bit more, like what does that look like from a customer side? Blake Richetta (10:06.86)Yeah, sure. Absolutely. And just to cap off on what you had said, caps on what you had said earlier, the market fundamentals, you're right. The competition, the free enterprise that is enabled in Texas has really inspired a lot of this. Ironically, you can look at Utah where we have this enormous VPP success as well. It's interesting. It's a vertically integrated old school energy market, Rocky Mountain power, exactly. And now all of Pacific corps, we're in four states now. Doug Lewin (10:29.292)Is it Rocky Mountain Power? Blake Richetta (10:36.844)And it's interesting that was a success that was based on certain fundamentals and also had, let's call it some conservative, ethos, color to it. And of course we also had the support of the quote unquote liberal because we always do when it comes to renewable energy, but we have this other side support that I think is really special. It's a growing story now, but the virtual PowerPoint being a technology and infrastructure that Blake Richetta (11:04.706)both sides of the aisle can get behind, which is kind cool. And now we're seeing that in Texas, but ironically, Utah sees themselves as very conservative and they arrived at this vertically integrated model is good and that's conservative to them. Texas also conservative, but sees that free market classical liberal conservatives, conservative view as the way the Texan system wanted to progress, of course, with free enterprise. Doug Lewin (11:31.906)More of a Milton Friedman kind of a conservatism. Blake Richetta (11:35.498)Yes, exactly. So I think there's a funny somewhat of a connection here. It's interesting is that once again, here's a market that's somewhat conservative, but the VPP ends up being something that seems to really resonate well. And I think will resonate with consumers and regulators and retail electric providers. And we get both sides of the aisle, if you will, excited about it. So that's just a foundational statement for me as it pertains to the consumer. Yeah. So in Texas, the consumer can choose. Blake Richetta (12:03.97)course, whatever retail electric provider they like, like you said, in the deregulated areas of the Texas energy system in ERCOT. And if they choose to go with Solright, Solright will give them options of retail electric providers that support the virtual power plant. So then they still have the power to choose a retail electric provider, but they have to choose a retail electric provider that actually supports the virtual power point concept. If they don't, then there's no way it Doug Lewin (12:31.756)So Solrite itself is not an REP. are not a retail electric provider. They're partnering with Blake Richetta (12:36.502)No, and that's a pretty good separation. think they are financing. They own the solar and the batteries. So look, it's Urquhart stuff that's maybe not great there for retail electric provider. And they are selling it. Well, they're not selling the equipment. They're selling these agreements, these power purchase agreements, which they call a virtual power plant power purchase agreement, which is way too many P's. So they shorten it to VPA, world's first VPA. And so Blake Richetta (13:04.306)They're providing the financing, they're doing the installation, they own the assets and they provide this agreement with the homeowner regarding these assets. And then as far as what the homeowner is paying for with Sol-Rite, they're paying a monthly fee for a fixed amount of solar production from the solar array on the roof, which is either coincidentally when it's produced, also consumed in the home, or it's time shifted and harnessed in my battery and then harmonized with the load later in the day or Blake Richetta (13:33.974)If it is above the solar production that the homeowner purchased, then that solar can actually be activated within the Ricat market after it's been harnessed in the battery. anyway, so to go back to your basic question. So what's happening here is the customer is signing up for an agreement with Solrite. Solrite is paying for the installation and the equipment of solar and battery in their home. Unprecedented amount of batteries, 40 kilowatt hours average of energy reservoir for Blake Richetta (14:02.082)backup power, is way, way, way higher than the Texan average and a decent size solar array. The customer pays monthly for the solar production and they get all the backup power effectively for free. And so this is really cool. It's a really neat option. And I'll finish with this. The rate that the customer is paying for the solar production from the Solar Right Solar Array is basically around Blake Richetta (14:30.67)retail market rate or even a little lower. And why that's substantial is that most of the solar PPAs in Texas today, the rate that you pay for solar production is actually quite a bit higher. So you're seeing 19 cents, 20 cents, 21 cents for PPAs. Doug Lewin (14:46.99)Are you talking about like for residential customer? It's 19 cents. Okay. Okay. Right. Cause as I saying, the commercial market, we're looking at like $40, $50 a megawatt hour would to be four or five cents, but for customers, it's much higher for, for residential customers. No, no, no. front of the meter, utility scale. Huge distinction. Just wanted to make sure we were clear on that. Blake Richetta (15:00.598)You mean in front of the no- Blake Richetta (15:03.753)Right. Blake Richetta (15:08.522)not correct to say four cents. Right. Not four cents for commercial behind the meter, brother. But yeah, for in front of the meter solar farm utility scale, you're obviously you would see a 45 cents for commercial behind the meter. I don't know the exact number quite a bit higher. Residential behind the meter would be the highest. Right. So 19 or 20 cents. mean, anyway, so if commercial residential Texans paying whatever 13, 14, 15 cents or something for their electricity. Doug Lewin (15:24.664)Yes. Blake Richetta (15:37.058)for sole right to charge 12 is really good. mean, it's just below the, and it's way, way, way below the other residential PPA competitors, if you will. So the customer is signing an agreement that they're going to allow all this stuff to be put in their house. They're going to pay this amount and they're going to use a retail electric provider that supports the virtual power plant. If they don't want to use a retail electric provider that supports the VPP sometime in the future, they can completely Blake Richetta (16:06.946)go away from it. But what happens then is there's a new fee that Solrite has to charge them because they're no longer able. Solrite's not able to monetize the battery anymore. Doug Lewin (16:16.194)So if they were to leave, there is like sort of like an exit fee or something like that. But as long as they stay with them, that 12 cents is guaranteed over the 25 years. Wow. Okay. So that's, mean, that's, Blake Richetta (16:26.99)Oh, Blake Richetta (16:27.25)by the way, there's a little tiny escalator, it's like, gosh, you have to ask for reading. It's like 2 % or 1.5%. Doug Lewin (16:33.804)No, no, that's fine. I will interview him at some point and we can find more. And even before we put this out, Blake, we can get to Regan and just say, give us the information. We'll post it on the show notes. So people have all the, know, obviously anything we say here, here's where like I'm the son of a lawyer. Read the terms and conditions that we'll post. But I want people to have as much specific information, but also kind of this general understanding of what's the size and shape of the offer. So that's what we're trying to do here for the particulars. can read the T's and C's. So. Doug Lewin (17:03.062)I would imagine the solar component is going to vary house to house and solar is very valuable, but really like the secret sauce here is the batteries. And I'm talking to you with Sonin, so like this is kind of teeing this up for you, but you talked a minute ago about like the shifting factor there, right? You can actually store up that solar. So that's where when you talk about like 19 cents, right? In the middle of the day in Texas, Doug Lewin (17:29.848)We're recording on a very hot summer day. Peak's going to be somewhere around 80 gigawatts. The price is going to be like two or three cents on the wholesale markets. It's very hard to make that work, but if you can shift, if you can store up that solar power and then deploy it back to the grid in a battery, sometimes even at the net peak when the sun is down and demand's still high, sometimes we're still in a four or five cents. But some days in Texas, know, cap is $5,000 a megawatt hour. There's ancillary service market. So there's lots of different ways. Doug Lewin (17:59.832)kind of monetize that. You said there's a 40 kWh battery. You're actually doing two batteries that are 4.8 kW, roughly 5 kW, 20 kWh each. So you're putting a 10 kW, 40 kWh system on every house, pretty much standard. Blake Richetta (18:16.81)And 9.6 kilowatts, 40 kilowatt hours. Yeah. And that's exactly right. And I think the fundamental here is that solar by itself, especially at the end of the distribution system adjacent to the customer's load behind the meter can be good, as you said, but it's also intermittent and relatively can be volatile, variable energy generation. And it depends on what market you look at to see the extent of that. But certainly in the German market and the California market, we've seen it pretty Blake Richetta (18:47.79)And, it's been very substantial what renewable energy has done, both positive but also negative to managing the energy system. So this idea of, yeah, if I'm just pumping solar into the grid at noon because it's sunny, the Texas energy system will punish me for that unless I have this solar buyback program with a retail electric provider that gives me this high rate. The problem with that is the retail electric provider is somehow Blake Richetta (19:16.034)subsidizing this whole thing because like you just said if the retail electric provider is buying electricity from you just because you're Pumping solar into the grid because it's sunny and they're buying it from you at 14 cents a kilowatt hour but the the market rate at that time is before sense Even if they're balancing their book it makes no sense to them But they do it anyway because they're trying to get a customer and that's all fine and good But eventually that hits a wall no different than that meter in Dinnie, California Doug Lewin (19:43.01)I Doug Lewin (19:43.1)mean, honestly, Blake, we've already hit that wall. Like really nobody's offering net metering because of what you just described. Like it just doesn't make sense financially. So we just don't see. And this is one of my like biggest critiques with like people that are pushing some of these like firming proposals and stuff like that. It's like what you just described, the market is sending the signal for firming. The signal from the market is quite clear. Like if you don't have batteries, the economics of solar just don't work that well. So put a battery with it. Blake Richetta (20:08.312)Perfectly said. So the idea exactly how you said is basically, look, what we want to do is harness that solar. We want to harmonize it with grid operation. And of course, what that means is we're going to stop it from flowing into the grid unfettered. That's step one. And by the way, that goes to a little bit more of a modern European look to the design, but Americanizing it. So in the European Union, we see way bigger batteries and smaller solar arrays now. And now we're seeing that in California as well. Doug Lewin (20:33.227)Interesting. Blake Richetta (20:36.334)And it's X is what you see with solar, it's the same thing. So instead of crazy 120 % offset kind of thing that you see for years and years in America. Instead, it's no, it's a 70 % offset and then a huge battery. And this is very logical because then I can definitely catch all the excess solar and drink it in the battery and hold it and then and bottle it up and then use it. And to your point, I might use it against a load later in the day or I might inject into the grid. And you know what? If there's not enough solar. Blake Richetta (21:06.52)to really perfect that load shape. Unlike old school solar where there was this kind of weird myth that, you just pump all the solar to the grid. Then later in the day, you pull the same solar back out. of course, it's a physics perspective. That's not how that works from an electrons perspective. at any rate, so what we're doing is saying, of course, no, you're either going to harness that solar and offset your load later. If it makes more sense, the Texas energy system based on price signals, you're going to inject it. You might withdraw from the grid later, but hey, Blake Richetta (21:36.128)If solar's not working that well for a day because it's cloudy, you might need to withdraw from the grid during a super off peak period and use those electrons against load. And this is a very, very smart thing for the Texas energy system, but something that people don't do generally in the United States for many reasons, but now we will be doing. yeah, that's the fundamental that just to compliment what you said. Doug Lewin (22:02.284)I want to talk about another component of this. So there's obviously the market value, which we could talk about for a lot longer, but I want to talk a little bit about the resilience value. think I heard you say that like that doesn't have as big a value maybe in Germany or Europe. Maybe it's just cause there's like not hurricanes there and stuff like that. But like, I'm curious what you're seeing in Texas in the market. And we'll put a link in the show notes. Texas monthly had an article from one of the writers, I it was Michael Hardy, who Doug Lewin (22:31.81)had bought a generator in his first home in Houston, and he described the experience of getting a generator. And I was sort of reading that and cringing a little bit because I'm like, really should have gotten solar storage because the generator, you're probably not going to use it day in, day out. Like you're going to use it only in an emergency. With solar and storage, you've got it for the emergency, but you're using it day in, day out to lower the cost of power and to... Doug Lewin (22:57.73)help the grid, if that's something you care about. And this is where I really think like, regardless of ideology, temperament, like there is something in this for everybody. If you care about the grid, it's great for the grid. You don't care about the grid, you only care about your house. It's great for that too. Like it really, you anyway, so let's talk a little bit about the resilience factor. And if you're seeing that in some of the discussions, them, the kitchen table discussions that you and your company are having with customers in Texas. Blake Richetta (23:28.108)Yeah, I two points because you brought up two great points. One resiliency and then real quick before, you're right. What the customer connects to. So the beautiful thing about the Solrite model is that you're not coming out of pocket $75,000 for an installation of solar and batteries. And so it's a very different mental process where you hear, Hey, we're not going to charge anything upfront. And it's just a monthly fee that is for the kilowatt hours produced from the solar and then you get the backup power for free. And you're right. People think, well, that's really nice financially. Blake Richetta (23:57.806)It's also good backup power wise. And then what you do is you, if you're a salesperson, you authentically lay around the other cool parts. say, look, this is actually solar. That's got a much bigger purpose than just regular solar. Can you believe you get a little power plant in your house? And it's actually doing the same kind of thing as a power plant. And if you do care about fighting climate change, this is a better way to do it. And you might say, homeowners are already going to check out at that point. Actually the research that we have shows that's not the case. Blake Richetta (24:24.814)Most people that we've interviewed a bunch of techs at Homework, which was fun. They kind of get into it when they know they're getting these other key benefits as a foundations. They know they're getting low cost solar and backup power. And when you add on what you're doing in a greater level, people think that's neat. Oh, that's cool. That's really neat. They had to brag into their customer. No, sorry, the customers, their friends, something like this. So anyway, we can go back to that stuff later. But as far as the resiliency thing, I Doug Lewin (24:51.736)love Doug Lewin (24:51.936)that, by the way, and we should dive further into that. But yeah, go on with resiliency. We'll come back to customers. It's really cool. Yeah. Blake Richetta (24:57.47)It's Blake Richetta (24:57.68)very different than spending 75,000 something. And you're like, I'm not spending 75,000 to save Texas's energy grid. What does that even mean? Right. But it's different when you don't pay it. So resiliency. Yeah. This is really interesting, Doug, because I came from Tesla over to Sonnen and we were in awe, of course, of this idea of swarm dispatching for locational value, substation value, non-bars alternative, all these cool things that we were doing at Sonnen was doing in Germany. And then I look closer to the products and like, ooh. Blake Richetta (25:28.494)Over 98 % of the batteries in Germany didn't even have backup power at all. There's not even a grid forming inverter. I'm like, No, batteries in Germany. Batteries in Germany. Doug Lewin (25:35.47)98 % of the solar Doug Lewin (25:40.814)98 % of the batteries in Germany didn't have backup. Blake Richetta (25:44.802)Yeah, can't do back up at all. Okay. Doug Lewin (25:47.37)they just can't provide it. they were literally just for the homeowner at their house and couldn't do anything for the grid. Blake Richetta (25:54.274)Nope, not at all. No backup power. If the power went out, the solar and the battery would just turn off, which is how most... No backup power. Doug Lewin (26:04.49)There wasn't like an IEEE 1547 or something like it wasn't configured to island. So it would just shut down when the grid went down. Blake Richetta (26:12.942)That's, well, that's part of it. 1547 would be interesting, but really the fundamentals are, let's start with the fundamental, which is, do you care about having backup power or not? If the answer is no, the way I design an inverter is as grid following only and not grid form. So when you go into nano grid mode, you have to grid form and 1547 aside, I can do nano grid without 1547, but I could just be a grid forming inverter. But if I'm a grid following inverter and I cannot change the grid forming, which by the way is a much cheaper way to build an inverter. So you save a lot of money. Doug Lewin (26:25.73)I see. Blake Richetta (26:42.23)a lot of money by building an inverter that doesn't grid form and doesn't form a nano grid. So first of all, there's this huge cost in all American energy storage systems and most Americans don't even know could be taken out completely if they were in Europe. And you might say, why does anybody want a battery if it doesn't do backup power? Well, because the virtual power plant was the whole reason. The self-consumption first, the harnessing the solar and using it properly because in Germany, basically, if you're injecting solar, say this Blake Richetta (27:10.23)legislation called the Anoyabata and the Ganges, which is like their version of net metering. And effectively by about 2015, if you're injecting solar into the grid, most of Germany, you're not getting anything. You can get far. So the battery market became an essential and very important part of the business, but it wasn't about backup power. was about, my gosh, I need a battery or my solar's useless. And it's going to be great. I'll get, you know, finance by monetization. Blake Richetta (27:40.334)And that only changed a little bit when the Russians invaded Ukraine. And then you saw some Germans wanted to have some backup power because they thought there could be a war. then that kind of went away now too. So it up to like 10 % of the market. Now it's stacked down to two or 3%. So why I tell you all this is that Sonin's this awesome leader in virtual power plant. We're so excited to Americanize that. But we had no experience in backup power, barely at all. Blake Richetta (28:07.466)American energy storage companies are the polar opposite. They're all backup power. That's the only thing they think they're supposed to do. And they have no idea how to do a genuine virtual power plant. And so we're very fortunate. There were years ahead still of even the closest American company on this VPP thing, but we definitely had to play catch up on the backup power thing. So to your point, do people care about backup power in America? And in Texas, the answer is, yeah. And we had to build Blake Richetta (28:37.506)grid forming inverters and backup power capable products. And also German loads are much smaller than American. So you had to make a more robust and beefy. So long story long, we have achieved that backup power need for Americans to feel good about having backup power and the VPP. And that is the Sonin USA unique solution. Doug Lewin (29:03.214)Okay, love this. All right, and thank you for indulging my dumb questions, but I feel like that sometimes the dumb questions are the best ones. So I needed to understand what you were saying there. It's actually incredibly important, right? Because this is a big issue at ERCOT right now. And I'm sure, I hope that what he requisited, Dan Woodford and the whole crew at ERCOT operations, Pablo Vegas, everybody over there listens to this because this is a big issue. There are NPRRs right now around grid following versus grid forming. Doug Lewin (29:31.724)You're you're saying is on the distributed side, at least through your model, and I'd imagine most of the companies that are working on distributed, for the reason you just said, because resilience is so important to customers, are going to be doing grid forming. That means we could be getting a whole lot of assets distributed all around the grid that they can potentially, they can potentially use. I'm putting that in air quotes for people just listening, because at the end of the day, and this is again, the beauty of the competitive market, Doug Lewin (29:59.358)Unlike in a place where you have a vertically integrated utility that's gonna control that, unlike in a place where it's going through the grid operator to do it, it's actually going through the retail electric provider and their partners, close to the customer, making sure it's a good customer experience. Because if it's not a good customer experience, you got nothing, right? Like your business is dead in the water. But still, these grid forming assets all over the grid to help deal with problems. Doug Lewin (30:25.76)like what happened in Spain in April. If you had a lot of grid forming inverter batteries on the grid, that would have made a big difference here. We're about to have them. Okay. Yeah. Yeah. Anything else you want to say about that or we can... Blake Richetta (30:38.936)No, Blake Richetta (30:39.176)I didn't mean to catch up. Look, our fleet in Spain, like almost all batteries in Spain don't do backup power, so that wasn't very helpful. But if you had backup power, then that would have been great. Anyway, I think the American solution of both VPP, smart battery that works with the grid and a battery that can actually provide backup power is a great optimization. Doug Lewin (30:59.896)So you get the best of both worlds. got that resiliency benefit for the home. Also, because it's grid forming, it's actually, its benefit to the grid is much, much greater as we were just describing. Blake Richetta (31:11.054)Yeah, I mean, it's the biggest benefit for the grid forming local device is that you're able to have backup power for a building. You're able to basically close off a little energy system and become your own little grid. And that's the biggest value that's different. But yeah, as far as the virtual PowerPoint grid services, it adds a little bit, but not a ton. It could in the future add more. But yeah, so anyway, the point is that Americans who are always benchmarking Generac and Blake Richetta (31:40.428)backup generators can get a battery that actually does this whole virtual power plant magic and also does the backup power. that's how to know. Doug Lewin (31:50.03)It's pretty incredible. It's pretty amazing. So let's talk. There's a couple different things I want to go into. I want to go to the sort of transmission system operator side in the ADR task force. And then I want to come back to the distribution side and do a little compare and contrast because Europe has DSOs, distribution system operators. We don't have those in America. I want to get into all that. let's... Someday maybe. We were just talking about grid forming and the potentials. So the biggest benefit you said is the... Doug Lewin (32:18.86)backup power on site and that's a huge benefit. But isn't that where the ADR pilot in Texas, the aggregated distributed energy resource pilot is heading that these distributed resources actually can provide benefit to the grid in the form of ancillary services? Blake Richetta (32:35.726)Yeah, and that has nothing to do with the grid forming inverter So it's just a little bit different on the nomenclature so you can do I mean in Germany we do nine grid services is the most advanced residential battery-based VPP on the planet by far and most of those batteries are not grid form, so that's now as it pertains to ADR and what Adder is doing and the opportunity it's providing I think it's a terrific program I think people like Arushi Sharma Frank are really Doug Lewin (32:47.51)Got it. Blake Richetta (33:04.534)were terrific in the way that they drove this and all the many people in Texas that drove this. But I I have a relationship with her and I know she's, I feel like she's just brilliant. And I think Adder is ADER is really a good overall program. And you're right. It's trying to drive towards a deeper value stack for batteries. And I think the way that Solrite has launched this, which is kind of neat, is it takes the fundamental first of shape load perfectly. And Blake Richetta (33:34.188)by doing so, and by the way, I'll add to that, also inject energy optimally. Just by doing that, you increase the profitability of the retail electric provider quite a bit. And if you have a fundamental concept that says, the profitability of the retail electric provider went from X to Y because of the battery, well, you don't need any, because Texas is so well-built in the deregulated structure, you actually don't, Blake Richetta (34:03.982)don't say this too passionately, but you don't need anything else. You don't even need ADR to be able to say, okay, well, what was the extraordinary profit created by this daily cycle? Well, that extraordinary profit basically needs to be split with the owner of the battery, in this case, Solrite. And what that does is it allows Solrite to spend money on all this stuff. They're taking a risk, a big risk. But if they believe in it and they really believe in the value, Blake Richetta (34:31.575)They can raise billions like they've already raised over a billion for the consumers of Texas to have all this equipment. And they're betting on the fact that the extraordinary value brought by the battery when they split the profit with the retail electric provider will make it make sense because what they're getting from the homeowner doesn't do it. So basically the capstone it the magic here is that without even having ADR, you have this powerful model that just lies on the foundation of our cot system. Blake Richetta (35:02.21)And then if you add on, if you're going to add on non-spinning reserves and frequency response, woo, that's just terrific. I'd be very excited at all the different grid services that we could add on. And a much more, let's call it, even if you take a look at locational value and you said, Hey, with 30,000 batteries in this area of west of the DFW area or whatever, making that up as far as a load pocket, that actually has X amount of value, both Blake Richetta (35:30.22)mitigating, peaking power plants and mitigating infrastructure. Wow. That would be a lot more monetization. I think that's the direction ADR would go and where Texas in general is going. So capstone is that the fundamental statement for me or overall statement is by using the basics, we make this work and it's very scalable. You do need a pioneering financier that bets on all this, which is very hard to find. Nobody wants to bet on this. Blake Richetta (35:59.564)And then the final piece is at a retail electric provider that wants to do it. And then the final piece is that on top of that, we can add all these other things to actually get the full value of the battery. Doug Lewin (36:11.65)Yeah, so that ends up being kind of gravy on the potatoes, ricing on the cake. The cake itself is the market fundamentals of sort of shifting that power around and injecting the power into the grid when it's needed. Then you can potentially monetize ancillary services for increased revenue and things like that. So there's still though, the question of the distribution grid. So this has got to still be a problem I'd imagine, right? Because so... Doug Lewin (36:40.226)distribution costs have gone up quite a bit all over the place, but including in Texas, we're up to like five or six cents KWH on the distribution grid, I think you correct me if I'm wrong, but it's like five, six, and at least an encore and center point, I'm not exactly sure what it is in AEP or some of the others, but probably right about there. And when you're charging that battery, well, I guess you're charging it from the solar. So I guess you can avoid that. Doug Lewin (37:02.722)five to six, but when were talking about earlier, maybe you're pulling from the grid at certain times, you're paying five. What I want to get to here, Blake, you can answer any part of this you want, but what I want to get to here is that's great that the main part of the revenue can be made back from the bulk market, from what's essentially the transmission system operator market, from the ERCOT market. But these are distributed resources that have massive value to the distribution grid, and we don't monetize that value yet. Doug Lewin (37:30.976)And my view of the world, that will hold back the scalability of these DERs unless they're able to bring that value. doesn't mean they won't scale though. They will scale. I do believe, especially with the dropping prices of batteries and we should talk about that too, that these technologies will scale and we'll start to see them all over the place, but it'll happen much faster. Customers will get that benefit quicker if we can get to some value given to these resources on the distribution grid too, right? Blake Richetta (38:01.75)You're exactly right. So to complement what you're saying and kind of tell you where we're at now and why it works, but where we should go is what you're saying. So where we're at now. Yeah. When you withdraw from the grid, you pay the distribution fee. Sure. But you would pay the same distribution fee at 6 PM versus two in the morning. So now let's say that I'm withdrawing from the grid at two in the morning and the total all in price of the kilowatt hours. I don't know. Pick the number. I'm not sure. Let's call it. Doug Lewin (38:27.288)Well, at two in the morning or at noon, frankly, it's probably eight cents because you're paying like two cents in wholesale power and six cents in the distribution cost. But that distribution cost, as you said, is the same whether there's scarcity or not. And that's kind of screwed up. Blake Richetta (38:41.474)No, Blake Richetta (38:41.654)you're right. It's not cool, but at least what it does today, which is not ideal, but it creates. right. Fine. Is it. Aventages for the retail electric provider to withdraw energy from the grid at two in the morning and time shifted potentially against six PM. So the retail electric provider is not delivering that same kilowatt hour at six PM, which of course, including the distribution charges, you also have higher ERCOT energy charges at that point, potentially. So when you think about that spread, okay. Blake Richetta (39:11.49)That's still an interesting monetization mechanism, especially when what you're saying is as long as I can increase the profitability of the retail electric provider and they split it with the owner of the battery, then any of these spreads are a win. Now to support your point, is it nearly as much as there should be? And then I say spread, but let's just say compensation for the battery and the value of the battery. No, not at all. And you're right. Blake Richetta (39:39.426)biggest value we've seen, at least scientifically and economically in Europe for the battery swarms and battery networks that are at the end of the distribution system and adjacent to load is really more on distribution system flexibility and on infrastructure and on infrastructure investments being deferred and on just the balancing of that system. There's a lot of value to that and there's a lot of real monetization that should be seen for that. And you're right. Blake Richetta (40:09.28)in Texas that's still a work in progress. But I think the reason why the right is a great first step is instead of saying, we need all this figured out by Euricot now before anybody invests a billion dollars. Instead, sole right said, no, we're going to raise a billion dollars and invest it in Texas's consumers based on these basic principles. Blake Richetta (40:38.326)of the daily cycle and of a load shape and to inject wind versus not to inject. And even if we're not getting paid nearly and all we're doing splitting the extraordinary profit with the retail electric provider. And even if that's not nearly the real energy system value of the battery, we're still going to do it. Why? Because, well, it works for the first several years. The IRR is okay. And then we bet on the future of what you're talking about, all the things you're talking about. Blake Richetta (41:07.566)And that should in theory, to your point, increase the value stack of the battery and further increase the monetization to be more fair. But fundamentally, we can't wait for all that to have investors. that's the problem. In my opinion, my friend, is that most investors and most competitors and most players in the industry are basically like, well, it does a pencil. Doug Lewin (41:29.67)Their attitude is we'll wait till it's perfect and it's obvious, but when it's perfect and it's obvious, then all the money flows into that space and you lose the advantage of being a first mover. So I just want to give an example of this for the listener. So let's think about a home that's built in the DFW area. It's a new home. So it's got, it's pretty energy efficient. We've got a decent building code in Texas, but you know, on a hot summer day, it's probably going to use what? 5kW give or take. Is that a decent number? that? Doug Lewin (41:58.99)Two I, two L. Peak power on a hot day, 105 degrees in Dallas. Blake Richetta (41:59.596)Power perspective for peak power. Blake Richetta (42:04.586)How big's the house? Doug Lewin (42:06.735)I mean, in Dallas, Fort Worth, 3,000 square feet would be small in Dallas, Fort Worth, right? Blake Richetta (42:11.18)No, Blake Richetta (42:12.012)the same big houses. I would go more towards six kilowatts or seven, but that's that's just off the of my head. Doug Lewin (42:18.744)So six or seven. So let's say then they just bought a F-150 Lightning or whatever. They got an EV, right? And they got a level two charger. So now what are you looking at? Another five or six on top of that? Blake Richetta (42:34.25)Yeah, Blake Richetta (42:34.7)of course. You have, if you're doing a level two charger of the electric car, then you're doubling that pretty easily. Maybe a little more like my level two charger at home is it's pushing up towards nine kilowatts. Doug Lewin (42:45.72)Okay. Doug Lewin (42:46.0)So now if you're a distribution utility, you could make the case to your regulator, I have to build enough distribution infrastructure to have 15 KW instantaneous demand for every house in that new subdivision. Blake Richetta (43:00.808)or or Doug Lewin (43:02.446)Or, Doug Lewin (43:02.726)would you like to finish this statement? Looks like you want to finish the... I if it's a market. don't if it's an incentive. It's something I'm trying to figure out. One of the things I love about this space is not all the answers are ready-made off the shelf, but we have a competitive market in Texas. We have a competitive and conservative, in the classic sense, ethos of competitive forces. Is there some way to say... Blake Richetta (43:06.264)thought. Feel free. No, please. Doug Lewin (43:31.832)Hey, load shape really matters and building a system that is 15 kW for every single house would cost maybe not three times as much as a five kW for every house, but like at least 50 % more, twice as much, something like that. So let's have some kind of market signal that these new homes are all built with solar and storage. So you get, as you described it earlier, like a perfect load shape. That doesn't mean you have to put a 15 kW solar. Doug Lewin (43:59.542)array on it. might be a small five or six with the battery, but now you're keeping it at four or five, maybe even two or three KW at its peak because you're just smoothing that out using the batteries. again, that distribution value, which I would argue is extreme. There's some studies on this in Texas, Texas, and the Energy Business Alliance a few years ago before the cost of power was on the distribution side was going up as much as it has the last five years. Doug Lewin (44:26.84)quantified it as like a half a billion or so benefit every year for what they call non-wires alternatives. I think it's in the many, many billions of dollars a year at this point. But at this point, that's all on the company. It's all investor risk. It's all on the customer to fund. is no market signal on the distribution side to say that that smoothing and bringing from 15 KW down to five is valuable. Blake Richetta (44:53.33)That's very true. The locational value specifically added on to what you're saying exponentially increases this argument. So if there is a very congested circuit or node or substation load pocket that we're able to effectively smooth and balance, well, the value could be enormous. And we, of course, we see some of this quite a bit in European Union. So in Germany, we balance solar plus electric vehicle plus load plus grid signals and they're Blake Richetta (45:23.278)They have, it's a law in Germany that everybody that wants to can opt into a price structure that changes every 15 minutes. So it's very much like a very real, real time kind of, it's not really real time, but you know, it's, ish, very intense time of use. call it. Doug Lewin (45:39.371)Is there a cap on that? What is the highest it can go? Do you know? Blake Richetta (45:44.008)no, I don't know what's going on right now as far as the pricing. But yeah, the pricing is generally pretty high. It used to be really, really high when everything was super unbalanced. And now it's come down a bit. Then the war made it go back up again and now it's back down again. as they figured out a good alternate sources for gas, but maybe another topic for sure. But as far as the distribution system value goes, yeah, just being able to say Blake Richetta (46:11.64)Do not charge your electric car at peak period. Here's a really nice incentive for that. Number two, here's a really nice monetization incentive to make sure you time shift excess solar to offset load during peak period, at least a reasonable amount. These are two pretty basic functions. They're not the most difficult to me. We're doing... Doug Lewin (46:16.428)NetPeak Blake Richetta (46:36.92)Fast frequency response, regulation up, two second response time, which is required in Germany, it's bananas, and really aggressive reactive power, grid services, voltage support. This stuff I'm talking about is like the meat and potatoes, a simple VPP. And to your point, none of that's really valuable in America yet. Super valuable. In other words, what you're saying is entirely true in the sense that the real value of that Blake Richetta (47:05.098)load pocket being decongested and being balanced properly in the distribution system. It doesn't really have any mechanism to show the value. I guess the only thing is, like I said, at least the energy prices can be different at different times. And so we can try to use that, but distribution incentives are not there. So hopefully this is what happens in the future. We actually have a code name to the project. We call it Dragonfly, which is kind of like Dragonfly is like this new beginning symbolizes new beginning in some Blake Richetta (47:34.552)cultures and whatnot and this new level. And so we're trying to do whatever we can at Sonin to influence this full grid services value stack happening in America, which would really be beautiful. Yeah. Doug Lewin (47:48.426)So when you say, I just want to clarify something when you say that you're doing all this like reactive power, voltage support, all that kind of stuff in Germany and you say that's not valuable in the U.S. Like you can't do that as a distributed resource in Texas right now. Blake Richetta (48:01.033)It's hard to figure out how to actually get in and get paid for that. It's really rough. don't know. Frequency response, I don't even think is allowed at all still. You could verify this, for a behind the meter battery, residential behind the meter battery, and some of the other ones maybe. But man, it is really, really hard. And ADR, I think, is the vehicle to try. Doug Lewin (48:25.91)Right. I was just going to say, I think that's where this is all happening. But yeah, like fast frequency response in Texas, I know, because I looked into this after Spain, is 15 cycles, 250 milliseconds. So that, I could imagine, could be very hard on the distribution side just because of the communications and all that. But there's other parts of responsive reserve that are not milliseconds. They might be two seconds or four seconds or something like that. those might be possible. Blake Richetta (48:52.148)Two seconds is very possible for VPP. Doug Lewin (48:54.21)The other thing I wanted to ask, I'm not clear on, and if you're not clear on it, it's fine. We could always do this in a future episode. I maybe need to get Mr. George on of Solright and ask him some of these questions, but you were talking about the ability to monetize in different locations or different times, but is there not, for locations we have this, we do have a nodal market in Urquhart, but load is settled zonally. Doug Lewin (49:20.312)So are you actually able to achieve those nodal prices or no, because you're considered low? I'm confused by that. Do you know? Blake Richetta (49:26.75)Yeah, I don't know exactly either because this is pretty new. That being said, put it this way, whether we can or not, it's still not to your point, the value stack of taking a locational value of a really tough part of the grid, which is where we shine, know, it's where to find the mirror and the distribution to your point. It's really where we shine in the European Union, for instance. my gosh. This part of this area is in trouble. Doug Lewin (49:29.176)Okay, that's fine. Blake Richetta (49:56.514)Well, we can flex that thing all day long and really provide a ton of value. And that's the stuff that is really not, well, at least that I know of is really not being compensated for. There's no mechanism for it. But yeah, if the nodal price and zone price, yeah, I'm sure. Hopefully we can do all that stuff. We'll be doing a lot of it soon. I'm Doug Lewin (50:17.76)Yeah, so basically what Doug Lewin (50:19.111)you're saying is like on the front end, like in the early days here, the time value, very clearly that signal is there. But when you talk about a grid and where the real values are, it's time and location. And so like that's the kind of the next frontier is like, how do you deal with the locational value? Blake Richetta (50:35.554)Yeah, because what we would do is say, let's go deploy 5,000 batteries exactly here. In Utah. Yeah. Yeah, we did it here Utah. Here I'm in Utah. We have this enormous battery cluster because of the substation there. And there's great research that shows how much value we brought. Doug Lewin (50:40.8)in this place where it's needed here. Doug Lewin (50:51.874)So two things I want to say on that. Number one, this is a conversation that is very actively going on in the state of Texas is what kind of, it needs to be more active, but it's at least begun. What kind of distribution system planning do we have? Right? The distribution system planning happens, but it generally happens in a black box at the utility. Everybody kind of learns about it a little bit in the rate case, but it's kind of like done at that point. And like there's, there's very little. Doug Lewin (51:19.874)sort of interaction with different market participants that may have solutions that cost less. For a long time, I think utilities really resisted that sort of thing because if it led to less spending on the distribution grid, that of course has less profits to them. In today's world, with all the data centers coming, the industrial electrification, oil and gas electrification, process electrification, transportation electrification, like their opportunities for investment are so many. Doug Lewin (51:48.002)that if you reduce the opportunity for investment on one strained part of the grid, they're going to be just fine. Thank you very much. So I think we're in a new context where maybe that distribution system planning involving DER providers, that might be a conversation that is ripe at this point. Blake Richetta (52:06.222)I agree with you. And I think this is an interesting example to pull in the vertically integrated market, even though it's such a different model. So again, a vertical integrated market could either be really, really bad, really, good or in the middle. Who knows? It's based on the vertically integrated utility. But in the case of Rocky Mountain Power, because they're so, so, so pioneering in this space, they've shown just how much you can do quickly in this area. So as it pertains to Blake Richetta (52:33.578)Okay, let's look at locational value. Let's look at load pockets. Let's look at different grid services. Let's look at what the different grid services actually provide to the grid in this area. Let's make sure we're trying to get projects done in those areas. And as far as planning goes, yeah, there's no reason why there couldn't be a ton of support from behind the meter assets to Blake Richetta (53:03.49)help with a very long-term strategic plan on these different areas of the grid. And my gosh, here's the thing. It's a Rocky Mountain Power and I can get a Rocky Mountain Power executive on here and tell you about it. That's better for them. So the whole idea that they have to, you know, rate base everything, it's all based on their investments and their capital investments, that's how I make my, you're right, that's true, but it's much more complex than that. You know, if you're a utility executive and I'll use vertical linear utilities for a minute, just because it's a good example, it's easier. Blake Richetta (53:30.414)If you're a Rocky Mountain Park executive who came on your show and explained this as well, yeah, can't just make a bunch of silly investments. If we make good investments that really take away a bunch of silly investments and we show that and the commission sees it and the people see it and rates stay really reasonable, but we also have our profits still what it's supposed to be. This is better for the energy system long term. So it takes a much bigger, how do I say this? Blake Richetta (53:59.266)much bigger perspective from a utility to see this way. But I believe, cause I've seen it at Rocky Mountain Power, that that exists for some utilities. And so if they see this as, this is going to save a lot of money for the utility. We're still making investments, but all by lower cost, getting a lot more out of it. This is better. Let's do this. And that's what I think means. It means a lot for utilities to make that leap. Blake Richetta (54:26.67)But once they do, all of a sudden, virtual power plant becomes very attractive. Doug Lewin (54:30.944)And look, they have a lot of motivations, like clearly, depending on who you're talking to at the company, right? The higher level you go, the higher that priority is going to be. And that's not, I don't say that to be damning. It's like, that's their job. They're supposed to make money for their shareholders. get it. They also like live in their communities and want to see like real resiliency outcomes. Cause guess who gets yelled at when the power isn't flowing, right? It's they, they go to their kids soccer games and people don't like them very much. So there are these like social pressures. There's it is more complicated that we give it credit for. Doug Lewin (55:00.682)I do think there's huge opportunity. hope my friends at Centerpoint and Oncord AEP listen to this because distribution system planning, the DR providers can provide a whole lot of resiliency benefit and just distribution system benefit. other thing though, Blake, I think it's really important. Number one, we have vertically integrated utilities that are outside of, caught, right? So there's four of them in Texas, including Southwest Power, Excel, Swepco, AEP. Doug Lewin (55:28.938)Entergy in east of Houston. And then we also vertically integrated within ERCOT as well. And the value proposition there. I'm talking of Austin Energy, Virdnallis Electric Co-op, Bandera Co-op has actually really gone down this road of DERs and VPPs. Waterloo Bay Valley Electric Co-op has made a big move into that. San Antonio, CPS, these are all vertically integrated utilities. So they already have that same kind of- Doug Lewin (55:56.992)incentive that you're describing, blocking amount of power to look at their whole system. But there's actually even a bigger incentive because the way transmission costs are allocated, they basically appear as one big customer. So if they get that perfect load shape, as you described it, for the residential customers, they use a utility benefit and every customer in their service, Terry benefits from every house that has this. So I would love to see those munis and co-ops do a whole lot more in this space. Blake Richetta (56:21.998)Well, yeah, and what you exactly what you saw from a reputational perspective, even then, hopefully that's what they see. Rocky Mountain Power has these really, you look it up, really, really, really positive overall reputation in Utah with consumers. I can't say that's the same even where I live in San Diego with the utilities. So first of all, the reputational value makes a lot of sense to try to have a positive reputation. And then to your point, wait a minute. Am I also getting other financial value from a system level? And by the way. Blake Richetta (56:51.85)is giving, empowering people that individual home backup power also creating system level resiliency and all these different failure points as opposed to one big failure point in the unidirectional grid that actually creates backup power for everyone in society in some ways, you know, because we were stopping the grid from going down in the first place if I have enough batteries and all of these things end up being values that can be considered by any forward thinking utility executive. And so, yeah, I think it's a great. Blake Richetta (57:21.624)thing and I hope these Texas utilities go for Doug Lewin (57:25.09)Last question before I ask you, the general question of if there's anything I should have asked you that I didn't. I do though want to ask you about the federal situation. We're recording on June 23rd, so by the time you hear this, dear listener, things might have changed drastically, but Blake, I would be malpractice. If I didn't ask you, how is the federal situation impacting business? Obviously, I think in both the House and the Senate, it's a cliff, not any kind of a ramp for 25D, which is the home. Doug Lewin (57:54.612)residential solar credit. think batteries fared better, but I don't know if they did on the residential side or if they're treated differently. Tell me a little bit about the things you're thinking through and what you're worried about, what you're maybe hopeful. Blake Richetta (58:06.798)Yeah, good question. And I'm happy to say that we're actually meeting with staff from a certain senator today, which is great. And this is a GOP senator that's very much trying, I think, let's say, balance things out a bit. very forward thinking gentleman. And I guess I'll go back to my earlier statement of, regardless of your politics, the VPP tends to do well on, quote unquote, both sides of the aisle. And again, we have no... Blake Richetta (58:36.354)problems with the quote unquote left. They're always pretty pro VPP, but also on the conservative side, we do really well as soon as we're able to speak to people and explain what solar with a greater purpose, thoughtful solar, directed and managed solar versus unfettered, what it means. my dad, I was using my dad as an example, he's a really old school conservative. And he, until I told him about everything and then on the VPP side, he didn't have any interest in renewable energy. then his Blake Richetta (59:05.39)I could get behind that son. And I was like, he's a very old school conservative. And I'm like, good, if my dad likes this, then I know anybody can get behind it. So I say that because I think old school solar just being on the roof and pumping solar into the grid is not going to do well likely in either the House or the Senate's version of one big beautiful bill. Speculation, of course. What do I know? I'm just a guy in Blake Richetta (59:35.342)CEO of a battery company. think batteries will do better. And whether you think the whole thing is bad and should all go away, regardless of your politics and whether you think that investment tax credit was 25B or 48 doesn't matter. You think it's the greatest thing in the world or not, matter. What I can at least say is I think batteries are going to do better than solar by itself. I think this is going to push change even faster and harder. Blake Richetta (01:00:05.326)In some ways, like a parallel world to what we saw in California, which I'm sure you're very familiar with, but the California change followed the German change by about five to seven years. You know, in the German market today, if you buy a solar array by itself, it's completely ridiculous. Nobody would do that. I guess some people would do that, but very, few. So I'm hopeful that there is a path forward for batteries. think that is likely. And I don't say it just because I'm a Sonen guy. I cause I think it is really the right thing. Blake Richetta (01:00:35.242)And with that foundation, we hopefully as the battery industry can carry renewable energy along with us. Solar by itself, a solar array might not have any tax credits, but batteries might. And can you make an argument with that? And again, it probably sounds, man, he's a battery guy. He's too centered on this. No, this is really the truth. This is exactly what's happening right now. So just look at the Senate's version or batteries. Blake Richetta (01:01:05.398)are immune to a lot of what solar is being thrashed on. I think ultimately my perception is that you'll see, like we saw in the German market, when all of their incentives went away, there will be probably a massive transition in the industry. There'll be a lot of companies that are hurt by it, but then there'll be those who rise above and make it work. And I guess the last piece is the whole domestic content piece. Doug Lewin (01:01:34.028)Yes. Blake Richetta (01:01:34.894)You know, we've been pushing on that pretty hard since the Inflation Reduction Act was passed under the Biden administration. We've been very focused on it. done very, we feel we've done very well. We're going to continue to do better. So if you're talking about American jobs, American energy dominance, American batteries, which is really good for national security, I think, and resiliency and hardening of the grid. You know, I think we have a lot of good arguments and with us, we can bring solar. Doug Lewin (01:01:56.04)Absolutely. Blake Richetta (01:02:04.334)I think so I guess in conclusion, it's not going to be easy. might be really painful. I think batteries will be in a pretty good position, but I capstone with this. whole idea you've spent several minutes of the interview on, which we call Project Dragonfly, which is to actually get in the United States, the full value stack of the battery somehow in a market mechanism or to buy a lateral contract with a utility one or the other. That's really the ultimate because if we could do that, Blake Richetta (01:02:35.416)I don't know we need any tax credits at all. Solar War Batteries. Doug Lewin (01:02:38.818)But Doug Lewin (01:02:39.068)to be clear, to be clear, you don't have that full value stack yet. That tax credit matters a lot to like bridge that gap to a full market. I mean, that is the dream, right? That eventually you're really getting market values for market performance and that is driving everything. But you have to acknowledge you don't jump to the absolute. Like there's a period there while we're figuring out how to value these things. And that tax credit is very valuable to bridge that. Blake Richetta (01:03:06.434)You're exactly right. And it makes it so companies like Soilright can go get, can go raise these billions we need them to raise. It's harder when they can't have any tax investors involved at all. It's just raw investors that have nothing to do with tax appetite. It's much easier when they have tax. Doug Lewin (01:03:26.306)Got it. And just very briefly, you guys are manufacturing mostly in Germany, but you have some American manufacturing. Blake Richetta (01:03:31.96)Yeah, we have our headquarters in stone mountain, Georgia. We're doing some very nice final assembly and finishing there. We're trying to do more and more there. We're actually looking at all kinds of options for building our inverter, our power electronics, our central processor, our battery module, all of it. But right now what we're doing is a lot of system enclosure, thermal management system, BMS, all these things, system level BMS. We're getting a lot of things for the domestic content. Blake Richetta (01:03:59.912)adder in the investment tax credit. And then the next thing that we can do is likely inverter and then actual battery cells. And some of that right now is being built in the European Union and then especially on the inverter side. then we have cells are still built in China, but we would like to change that. Doug Lewin (01:04:26.176)And this is where the bipartisan agreement needs to happen is that domestic content to bring that cell manufacturing to the United States. Like you said, I like to remind people, batteries aren't just about the grid. What are you powering drones with? Modern warfare, as we've seen in Ukraine, it's drones. You don't want to be in a position where you're dependent upon China for batteries. We need to make them in the United States. Blake Richetta (01:04:51.33)very well said, we would agree with you deeply as a national security level and just the let's call it stability in our energy system. Even if we were in a position of being under attack, the energy storage technology, energy storage in general offers a lot of value. And we did see the Chinese system effectively. I guess kudos to them create a world dominating position in both solar and in batteries. We certainly can change that in batteries. 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

Anti-energy crusaders have a lot of facts wrong. I’ll break that down in this video. They’re also personally insulting the hard-working men and women in the renewable energy industry, calling solar jobs “fentanyl jobs.” They should apologize to the hard-working Americans helping to make our grid stronger every day.The ERCOT CEO told the Board earlier this week that solar and storage has strengthened our grid. Our risk of an energy emergency went from 16% one year to ago to 0.5% this year “because of the contributions of new resources on the grid.” Those resources are solar & storage. I show all of this in the video, which you can also watch on YouTube. I also covered a couple of the biggest problems haters of renewable energy and storage have: (1) They can’t credibly deny the benefits of renewables and storage, and (2) Where’s the alternative power going to come from if you limit renewables and storage?We have rising demand. If Congress lessens supply, what happens to prices?I wrote recently about how abruptly ending the clean energy tax credits will hurt our efforts to win the AI race and is actually Energy Submission to China. I also wrote about how short-sighted energy policy will raise costs, causing Energy Inflation for consumers of all kinds. The best way to handle the clean energy tax credits is a predictable ramp down of the tax credits — not a cliff.What You’ll Learn in This Episode:* How Texas slashed outage risk by 95% thanks to solar and battery storage* Why gas is not the fastest way to add power even though some people continue to falsely insist it is* How fossil fuel companies are using renewables to cut costs* The simple math of supply, demand, and rising prices without a credible backup plan📺 Watch on YouTube:Why It Matters:* Demand is up 25% since 2021: rapid growth not seen since the ’60s* Without tax credits, supply tightens, prices go up, and grid reliability suffers* Gas turbines aren’t coming fast enough, nuclear is years awaySeriously, over the next 4-5 years, where is the power going to come from if not from wind, solar, and storage? It’s not a rhetorical question and they can’t answer it. They’ve said LNG power plants, but those don’t exist. They’ve said nuclear but that’s 2030’s at best. They’ve said gas plants, but good luck getting a turbine.Final ThoughtIf policymakers want to kill clean energy incentives, they need a plan to replace the power. Because without one, consumers will pay more, grid reliability will suffer, and elected officials will face a backlash. 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 the read-aloud version of my June 26 article, now on YouTube & the Energy Capital PodcastI don’t usually record readings of my articles, but I made an exception for this one.If Congress passes the budget bill as is, it would spike energy costs for families and businesses and cause serious economic harm.So I sat down and read the piece aloud with a few added thoughts and commentary as I went.Watch on YouTubeRead the original article hereWhat you’ll get in the episode:* Why “leveling the playing field” leaves out 100+ year old coal, oil, and gas subsidies (aren’t they mature industries at this point?)* How a $300 increase per household could be heading for your utility bills* What the real consequences of a 60-day cliff would be (I explain it in plain English)* Why this is really about consumers and voters, more than renewables, which will get built anyway, but they’ll cost more… which is probably why so many people oppose ending the clean energy tax credits.This is more than just a policy argument, it’s a warning. And a reminder that what Congress chooses in the next few days and weeks will show up on bills, ballots, and balance sheets.If you want to understand what’s at stake, and how we got here. Give it a listen.Thanks for being part of this. 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

The U.S. was finally catching up.After decades of watching solar manufacturing develop overseas, mostly in China, the Inflation Reduction Act gave domestic producers a fighting chance. Texas responded in a big way. New factories broke ground. OCI and its sister company, Mission Solar, prepared to launch a full supply chain operation in San Antonio, including the rare addition of cell manufacturing, one of the most critical (and missing) links in our solar economy.Now? All of it hangs in the balance.I sat down with Sabah Bayatli, President of OCI Energy, for one of the most urgent and clarifying conversations we’ve had on this podcast. If Congress moves forward with budget as it passed the House, it could wipe out hard-won progress in U.S. energy independence and kill manufacturing momentum.This is not only an energy and economic issue, but also a national security issue. We covered:What the IRA Actually Did for Solar ManufacturingBefore the Inflation Reduction Act (IRA), manufacturers in the U.S. were forced to make short-term bets, never knowing if tax credits would last. That’s a terrible way to plan billion-dollar infrastructure investments. The IRA changed that. By giving developers and manufacturers a 10-year time horizon, it triggered a surge in U.S. supply chain planning.Sabah put it simply: You can’t invest in manufacturing without a longer time horizon.* The 45X tax credit provided per-unit production incentives.* Developers got extra credit for using U.S. made solar panels, creating demand.* Factories started popping up, especially in Texas, where low power prices make large-scale manufacturing viable.Now, that long-term signal is under threat.What’s in the “Big Beautiful Bill” That Could Undo It AllSabah broke it down for us: the current House version of the bill would eliminate developer tax credits by 2028, with an abrupt cliff 60 days after enactment. And while the latest Senate version is slightly better, it’s still a cliff:* Full credit in 2025* Drops to 60% in 2026* 20% in 2027* Zero by 2028The manufacturing credit technically stays, but if developers lose the adders for domestic content, American manufacturers lose their market. DC’s Math Doesn’t Add UpEveryone agrees: the deficit matters. But what’s often missing in DC is that you can’t shrink your way out of the deficit, you have to grow out of it.Growth means:* Domestic manufacturing jobs* Local tax bases* Energy independence* Lower-cost powerI covered that in much greater depth here:Timestamps* 00:00 – Introduction & opening context* 01:45 – What is OCI Energy?* 03:30 – OCI’s origin story in San Antonio* 5:00 – The elephant in the room: the impact of the not-so-beautiful bill* 10:00 – Investment signals leading to solar module and solar cell manufacturing* 13:00 – Manufacturing tax credits (45X)* 15:00 – The need for low cost power to spur economic growth to lower the debt* 20:00 – Lost cost power in ERCOT is attracting manufacturing of all kinds* 23:00 – Supply chain issues across the power sector* 25:30 – The need for moderate, durable policymaking, gradual ramp of incentives* 31:00 – The retention of the manufacturing tax credit won’t necessarily help* 34:00 – Where panels used in America are manufactured (hint: not China)* 38:00 – The need to communicate national security implications* 41:00 – To grow our economy, and reduce our debt, we need a lot more power (see chart discussed in this segment in Resources section below)* 44:45 – How to design Foreign Entities of Concern (FEOC) provisions well* 52:00 – Texas policy and the recently concluded legislative session* 54:45 – Is there a future for solar and battery manufacturing in America?* 58:30 – What could the Senate do to grow American manufacturing* 1:00:30 – Final thoughts, closing remarksResourcesInformation about Sabah and OCI* OCI Energy* Mission Solar* The chart Sabah sent me after he read Energy Submission:Discussed in the Episode:‘City of San Antonio Solar Development Plan. April 2012. H.R. 1, One Big Beautiful Bill Act (Dynamic Estimate). Congressional Budget Office (CBO).TranscriptDoug Lewin (00:05.426)The solar manufacturing renaissance in America, and particularly in Texas, is very much at risk as Congress considers a budget bill that would end solar incentives and clean energy manufacturing incentives. Welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. My guest this week was Sabah Bayatli. He's the president of OCI Energy. OCI Energy is both an IP and a project developer throughout the U.S. installing solar and storage, but also a manufacturer through their sister company, Mission Solar. And Sabah told me that that manufacturing plant, which currently produces modules and was getting ready to expand to cell production with 800 Texas jobs, is at risk and will not proceed if the bill in Washington passes in its current form.We talked about that and a whole lot of other things both related to the bill, but also talked about Texas policy, solar in general, what it means for the economy and growth. This was a great discussion and extremely timely. And I thank you for listening and we'll ask one more thing of you: if you can give us a review wherever you listen or particularly leave a five-star review, that is super helpful for our small but fast-growing podcast so that other people can find it. And I greatly appreciate it. You can find all the episodes of the Energy Capital podcast, become a subscriber to the podcast and to the Texas Energy and Power newsletter at douglewin.com. With that, please enjoy the show. Thanks for listening.Sabah, Bayatli, welcome to the Energy Capital Podcast. Great to have you.Sabah Bayatli (01:41.426)Thank you, Doug. It's wonderful to be here.Doug Lewin (01:43.896)So can we just start with a very brief little background? Folks may not have heard of OCI Energy. Tell us a little bit about OCI and Mission Solar.Sabah Bayatli (01:52.536) Quick background: OCI Energy is a developer and IPP for utility scale solar and battery energy storage systems in the U.S. We have been operating since 2012. We are headquartered in San Antonio, Texas. OCI Energy is a subsidiary of OCI Holding, a South Korean conglomerate based in Seoul. They have multiple businesses worldwide. I would say one of their core businesses is polysilicon manufacturing.For the audience, people who are not familiar with polysilicon, you can think about it as the raw material basically to the solar panel. It sits very, very upstream. In fact, I think they are the second largest polysilicon provider in the world if you take the Chinese manufacturers out of the list. That's a fact about OCI Holdings' operation on the polysilicon business.In the U.S., they have OCI Enterprises. You can think about it as a sub-holding company basically to the U.S. market. Under OCI Enterprises, there are multiple operating companies. One of them is OCI Energy, the developer and IPP for utility-scale solar and battery energy storage. We also have a sister company here in San Antonio as well called Mission Solar Energy. They are a manufacturer for solar panels. They also started business in 2012, 2013. In fact, when they started, they were producing cells in the early days as well. Today, they are producing solar panels. And we can talk more about them in the next few minutes.Doug Lewin (03:20.268) Yeah, it's interesting. A long, long time ago, I was involved in a lot of discussions in San Antonio in that kind of 2009, 10, 11 period when they were looking at how to develop a clean energy economy in San Antonio. I have not super sharp memories of that period, but some, and it's really gratifying and neat to see you guys there as such a big part of San Antonio and of that ecosystem.Sabah Bayatli (03:46.862) It brought us actually to town in 2012. What brought OCI Company to San Antonio and brought all these manufacturing jobs and basically development jobs to San Antonio. Today we are headquartered in San Antonio. We basically service all the U.S. on the development side as well as on the manufacturing side. But if you go to the story, actually the way OCI Energy, the OCI Company actually penetrated the energy market in the U.S., it was through an economic development agreement with the city of San Antonio. Yes, through CPS Energy, the utility.This is our public information. So in 2012, there was an economic development agreement entered into. With that, we had a commitment basically to develop up to 500 megawatts of solar projects. In 2012, it was a huge deal, right? So, and we did develop them, and in exchange, we got offtake agreements basically with CPS. And what we gave was we gave an overhead commitment to the city of San Antonio.So we had to bring manufacturing, we had to assemble the factories here. OCI Energy was assembled at that time. It was called OCI Solar Power. We actually brought inverter manufacturing to San Antonio as well. We brought a big EPC from Minnesota called Northern Central to open a branch in San Antonio too. That was a huge commitment actually by OCI Company to the city. It ended in 2020-22. But to your point, I think you can see the fruit today. The company's still operating in San Antonio. We are creating a lot of jobs basically for San Antonio and Texas, and this is a new technology and this is a new industry.Doug Lewin (05:17.868) Yeah. So I think we need to jump into kind of addressing the elephant in the room here, Sabah, which is right, you guys are a manufacturer in the United States, right there in San Antonio, here in Texas. And that had a first mover from some city initiatives, but over the last couple years at the federal level, congressional bills, particularly the Inflation Reduction Act, but also the Bipartisan Infrastructure Law put in place a lot of incentives for manufacturers.Can you talk a little bit about what is going on right now with the officially named "big, beautiful bill" that would reduce some of those and how those impact you as a solar manufacturer? And I'm hoping Sabah, in that answer, you can kind of get into also some of the components of the different parts of solar that are being produced in America and how this bill affects those. Because it's not all the same. There's the different parts of the supply chain and you guys get into several of those.Sabah Bayatli (06:15.262)It is truly the elephant in the room these days and has been for the last few weeks now. Everybody's trying to understand how this will play out for the energy industry. I mean, I guess for the audience to understand, the "beautiful bill" we are talking about is more than 1,000 pages, right? So what we could cover here in this podcast is more related to certain sections inside the beautiful bill, which is related to tax credits within an act called the Inflation Reduction Act, people call it the IRA, that was passed in 2022.So now, big picture is, look, we acknowledge at the U.S. level today, at the federal level, there is a budget issue, there's a deficit. We acknowledge it. We are business leaders. We understand that this has to end. We have to balance this budget. No question. I think what we want also the Congress to consider is designing for the system: while we're trying to balance the budget, how we can also incentivize to bring more investment to the U.S. and we bring more manufacturing to the U.S. That's really the big picture, right? So we understand it.If you look into the solar industry, I mean, it has been probably more than 10 years. We always have this cliff of tax credit ending at some point. We had it in 2016, later I think we had it in 2022. I don't remember exactly, but you always had this cliff of like ITC is going away.Big picture is what's really the whole purpose of giving credit to a certain technology: you're trying to give that technology to your country, you get the supply chain, you diversify your power market, you have more resources in the power market, and this way you are more diversified, more secure, more affordable. So that's really the big picture. So this cliff, it was no news for the market until 2022 and the Inflation Reduction Act passed. When it passed, basically it gave more certainty to the market.The challenge before 2022 is we did not have a long view basically on what the credit would look like to be enough to bring manufacturing investment to the state. We had enough to develop projects and we did develop a lot of projects basically in Texas and across the U.S. But before 2022, it was not enough to convince investors to come and invest in those manufacturing facilities. Right. Because bringing manufacturing investment to the U.S. is challenging. And here is why: because you have to get approval from your own board as a business leader. Later, you need to get financing, basically approvals. Later, you need to set up the factory. And all this takes time. And after that, you start covering your investment. And we're talking about billions and billions of investments here. Those are not only $100, $200 million investment. So you really need to have a horizon. You need to see how this will look. And you want to have confidence in this market to convince everyone to come here and build the manufacturing, right?So that happened in 2022. It was wonderful for the entire market for really the new industry to bring this industry back to the U.S. So I can probably give you the view from a development perspective, but I have good knowledge on the manufacturing side. I can share that as well. So since 2022, it passed and basically people started really thinking to bring the supply chain back to the U.S. From the development perspective, it also gave a good horizon. So we started developing more solar projects, more battery energy storage projects. From the manufacturing side, we saw more manufacturing coming to the U.S., opening module factories.Now you have to examine the supply chain for the module factories. It's not only the module. To the audience, if you have seen the solar modules, inside the solar modules you have those small squares. We call them in our industry "cells." So basically that's another technology that we want to bring to the U.S. as well. And now people start thinking about it. As an example, our sister company Mission Solar is actually thinking about bringing cell manufacturing as well. They are producing modules and now they are thinking to bring cells as well, and that will bring 800 more jobs, right?Doug Lewin (10:07.732)And real quick, just want to drill down on that a little bit more because I want to make sure it's not lost on anybody in the audience what a big deal that is. We have had, correct me if I'm wrong, but very, very little cell manufacturing in the United States. We've had some module manufacturing, not a ton of that either relative to other places in the world, but cell manufacturing pre-2022, we've had very little. And now you're starting to, to your point of getting that longer term investment signal, we're starting to get a significant, I think as much as in the tens, maybe as high as like 40 or 50 gigawatts of announcements where we had in just single digits, one or two gigawatts of production before the IRA. Is that about right?Sabah Bayatli (10:46.734)That's actually a wonderful question. The answer is yes. Fun fact, actually, when Mission Solar, our sister company, was established in 2012, they actually had cell production as well. So cell production and module production. What happened after a couple of years, because other countries subsidized their solar manufacturing too much, U.S. manufacturers were not able actually to be sustaining in terms of manufacturing cell products.So actually they had to close the cell manufacturing. Again, this is all public information. We are not shy about sharing. They had to close the cell manufacturing. So we were really early movers. We are talking about 2012, 2013 investment in the U.S. in San Antonio, Texas. So that cell manufacturing portion had to close actually because of that. And since that day, you really did not have a lot of module manufacturing in the United States. It was limited. I mean, size-wise, we were not able to compete.People were shrinking, shrinking with time instead of growing, we were shrinking because there was too much subsidies going on outside the U.S. that made our manufacturers here in the U.S. not able to compete. So I'm glad you brought it. It's a really good point to highlight. So beyond module supply, beyond module manufacturing, which by the way, we did not have full manufacturing to even cover our own consumption here in the U.S., we actually did not have anything on the supply chain for the modules.Doug Lewin (12:09.67)Let's talk about these cycles, right? In the past, what you're talking about with the tax credits, they were usually called like "extenders," right? The tax extenders at the end of the year, typically would be December. Congress would extend the investment tax credit, the production tax credit for development, for actually putting projects on the ground. And that happened like, I think it was like 2011, 2013, 2015. Like every two years, it would be a one or two year extender.And in 2022, it changes and you get this 10 year, right? It's either like, I think it was like a 75% reduction in emissions or 10 years. Nobody really expects 75% reduction in emissions. So it's basically a 10 year and it was whichever goes longer. So it basically gives a guarantee of 10 years of runway. And there's the 45X, right? Which I assume was very big to your company. Can you talk a little bit about the manufacturing tax credits particularly?Sabah Bayatli (13:00.494)Again, just to clarify also to the audience, 45X is so under the IRA, there are multiple credits for different stages of the supply chain. You have credits for the project level. So if you are a developer, you are developing solar projects, you have certain credits. If you are a manufacturer for solar panels, as an example, you have certain credits. So 45X is more related to the manufacturing tax credit that was passed by the IRA. So 45X basically gave more as well as the credit that the developer is able to use.So it basically incentivized manufacturing to come back to the state and people to start investing back to the state. And here is why, because exactly what you mentioned, it gave 10 years of horizon. You can see there is 10 years of certainty here. Now you can bring investment. And the way it worked basically, it helped manufacturers to claim credits when they produce solar panels. It gave them certain credits. And it also helped the developer who will buy those solar panels.If they are able to achieve domestic content, this is a definition, right? If you are able to meet the domestic content requirement with this purchase of your domestic solar panel and many other equipment, then basically it helps the developer to claim additional tax credit. So for a developer, base case was like 30%. And if you are able to use domestic content, then you can get an extra 10% of tax credit on your project. So that basically incentivized manufacturing to come back to the U.S. on two different levels, at project level, as well as at manufacturing level. So I think that's what we had inside the 2022 act, the Inflation Reduction Act. Now things are changing, basically, as we see with the beautiful bill in D.C.Doug Lewin (14:44.206)So I want to come back to what's in the bill and some of the discussions you've been having around that. I actually, I want to come back to something you said earlier, because I think it's really important, Sabah, is that you acknowledged, and I think this is important, that deficits do matter, that we do actually need deficit reduction. And I think what is often missing from these discussions, I've tried to inject some of this. I wrote this article called "Energy Submission" the other day that really sort of dives deep into this topic.That in order to reduce the deficit, you have to have economic growth, right? So you need manufacturing in the United States. You need to actually make things, but you also need low cost power in order to have manufacturing, not just of solar cells and modules, though that low cost power is important for that too, but for anything else you're making, right? Whether it be steel or you're refining oil or you're having a data center or like semiconductors and chips, like whatever it is that you're manufacturing, you need that low cost power. And I think this is part of what's missing from the conversations in D.C. And I'm wondering what you're hearing as you're having conversations in D.C., how could you possibly get out of the deficit unless you have really robust economic growth? And how could you have really robust economic growth if you don't have low cost power? So it feels like we're caught in this little trap that I'm not sure how to get out of.Sabah Bayatli (16:07.598)We truly are. I mean, I was in D.C. yesterday. My feeling is people are really under a lot of pressure on both sides of the aisle, House and Senate, to make things work. I think to your point, Doug, is you have to consider what this investment will bring. And I will give you an example from that additional cell factory that our sister company, Mission Solar, was trying to bring. So that will create 800 jobs. So basically, you are immediately creating 800 jobs for your community.And think about the ancillary jobs that you will be creating for that community, right? We're talking about restaurants, hospitality, hotels, residential, property taxes, everything, right? So, and the question is now how are you able to index this. I think what's happening in this, now I take you back to D.C., you have the finance committee on the Senate side, you have the Ways and Means on the House side, people are trying to put numbers on these investments, right? So the question is like how are we indexing this, how are we putting a good forecast for what this could bring, right? Is it purely just the capital investment, what are we missing, or are we exactly including all this consideration, what type of economic value this will bring over the long term, which will create obviously more revenue for the U.S. government. And therefore, it basically goes to a point that probably will help us to reduce deficit down the road. So the question is like how is the math working today, how are the assumptions made. That's really a big part of the formula today in what's happening in D.C. It's an amazing point. It's an amazing point.Doug Lewin (17:37.924)We're recording on June 18th. Yesterday, June 17th, there was a new analysis out from CBO. They did some dynamic scoring, right? Dynamic scoring, right? I think most of our listeners will know this, but in case you don't, it basically is like, okay, you have one amount of money that you're reducing the deficit by, but then there's these other things, like you said, there's sort of knock-on effects of new jobs created and all that kind of thing. So dynamic scoring takes all that into account. The bill, as it passed the House, actually worsens the debt when dynamic scoring is taken into place. And again, I think this is what people are missing. Like if we can really have this longer term signal for manufacturing, you will not only get that manufacturing base, which in and of itself would be good, but you have all these second order effects of a domestic supply chain for low cost sources of power, which then can enable us to do things like AI and robotics and all of these kinds of things. So we've talked about this a lot. If you want to say more about that, I've got other questions I could move to. But if you want to say anything more, I'll let you.Sabah Bayatli (18:40.55)Yeah, no, I mean, maybe just for the audience to understand the beautiful bill, I would say in my own mind has three revisions so far and who knows what's next. But there was the original revision or the original version of the beautiful bill that was introduced by the Ways and Means by the House. And later there was the revision that was passed the House. And finally, we have the revision that was just shared through the finance committee in the Senate on June 16th. So there are too many things changing actually from revision to revision as we speak now and things are getting baked in D.C. as we speak.Doug Lewin (19:15.274)And so talking today with the latest version that has come out, the Senate bill, and it sounds like you were just in D.C., so you're probably pretty familiar with this. You could speak to the Senate version or frankly, you could speak to the House version if you want. And I know you can't get into too much specifics, but this has to majorly hurt the economics of manufacturing. I know you probably can't say specifically like we would or would not continue with our stuff, but can you just talk a little bit about what that would actually mean for the prospects of manufacturing in San Antonio and broader throughout the state of Texas.Sabah Bayatli (19:48.27)I think for the manufacturing, frankly speaking, I mean, I'm speaking on behalf of my sister company, and we are not shy about saying it. We said it yesterday. I was there with the president of Mission Solar, my colleague, Sam Martin. If this basically passes as is, then basically this disincentivizes manufacturing to come to the state. That's super simple. Because the way basically it's written today, we don't see the horizon. We don't see basically a good long term that will help manufacturing investment back to the state.And there is a lot of manufacturing today actually selected Texas to come. If you look into where is the module manufacturing coming back today, almost everything is coming back to Texas. And here is simply why, because the energy pricing is affordable in Texas. And now it's like, if we ask ourselves why the energy pricing is affordable in Texas today, it's actually because of a simple reason. We have a good penetration of solar and wind in the state of Texas.That's actually helping the pricing to be affordable in Texas. And that's actually triggering, it goes back to your earlier point, that's basically attracting more investment to come. I mean, there's a fact today, if you zoom out to the U.S. market, and if you try to find out what is the lowest pricing of the energy power market, it's basically ERCOT, it's the state of Texas. Specifically ERCOT has the lowest energy pricing in the U.S. In fact, I think globally ERCOT is the lowest energy pricing.So if you are a foreign company and you want to open manufacturing back in the state, even if you are really inside the state and you want to bring manufacturing back, what's your choice? Simply is Texas. And again, this is driven by the fact we are not an over-regulated state, which is really helping, right? And also our energy pricing is very, very affordable.Doug Lewin (21:37.814)Yeah, and then if this passes, we're going to see prices go up because, and look, I mean, this is an assertion a lot of people make, but it just sort of follows logic, right? You would be taking away the tax credits that's adding a 30% cost. And then a lot of people say, well, we'll just build more gas. But as has been well documented, it is very, very hard to get a gas turbine. Even if you can get a gas turbine, the cost of gas longer term is going up because of increased LNG exports.So it's very interesting, Sabah, and later in this conversation, I do want to talk about the Texas legislature, but one of the things we saw during this session and even the previous session in 2023 was folks that in the past have been, I wouldn't say necessarily oppositional, but sometimes oppositional, certainly less supportive of renewable energy, like the Manufacturers Association really supporting renewables. And it's for exactly what you say. Like they want more manufacturing in Texas and low cost power is absolutely a key part of that equation. Not the only part. You've got to have other things working for sure. But low cost power is fundamental. Without it, you don't get a lot of manufacturing. It's basic, right?Sabah Bayatli (22:43.854)That's very true. And Doug, I would like to highlight your point on the gas. I should clarify we are an energy company. We are not shy about exploring any technology to develop that could make sense for our country and our state. But people tend to think that gas can come online in the next year or two. I think it's important for the audience to know gas has as complicated, probably more complicated supply chain than the solar or the wind industry today.Second, it has limited supply chain as well. And that's why we are seeing the lead time. I mean, if you are a company and you want to buy a turbine today from the main suppliers, then basically you are talking about five, six years delivery lead time. You're talking about 2031, 2032 at your best case, right? And people also tend to think that they will scale manufacturing. Well, actually it's not easy. It's really not easy to scale manufacturing. We have seen it in the high voltage equipment.So one of the big issues in the interconnection today, where you have everything set, you signed your interconnection agreement, it's actually how long it takes you to get high voltage equipment, transformer, breakers, things of that nature. Those are not a new technology. Those are very old technology. And we are still like really before COVID, just to give the context to the audience, we used to get transformer, main power transformer. Those are for high voltage lines, 138 thousand volt, 345 thousand volt, we used to get those in eight, nine months. Today you are talking about three to four years delivery. You would think that the supply chain will respond immediately and they will grow to help this market. The answer is no. And here's why: because if you are a manufacturer for high voltage equipment, you actually think about the horizon as well. How does this look over the next five to ten years? And if you think okay, the decision today based on what could pass today by the bill, but the next session probably will have a Democratic Congress with a blue Congress. They will change the dynamics and now the things will switch back. And therefore that investment that I thought about today, it's probably not necessary to be true in two years, three years down the road. So that's actually creating a problem for the supply chain. So people are not able to scale up their manufacturing.And again, I just give you the example on the gas side, similar really concern here. Because if you think about it in 2022, when you passed a major act that gave you a direction for the 10 years, you basically what you did after 2022 as a business leader, you went back to your board and you told them, look, we can do more investment here. We can bring more manufacturing here, right? Because we have this time horizon. It will take you at least a year, six months to get your own board approval. Later you get the financing to the table that will take you another year. Later you will get the contractor to put the buildings for you, I give the machines. It's year 2025, Doug. And now you hear the Senate and the House basically are discussing the fundamental of your thesis in 2022, which could pull the rug from under you, right? So that just happened to the solar industry today, but the same is true on the LNG and the gas as well. So it's big picture. This is, I mean, I'm saying this in every single podcast now. Guys, I think we should stay away from polarized decisions. I think we should make it as centric as possible because we just cannot undo each other. We just cannot make a decision today and undo it in two years from today, three years from today. Super harmful to the investment world. Super harmful. Yeah.Doug Lewin (26:25.27)I wonder, and this is probably way too optimistic or Pollyanna or whatever, but if there's not some ability in the Senate to pull some group of Republicans and Democrats together and to say, could we make some deal that if and when Democrats had control, you wouldn't undo what's done right now? And maybe, I'm curious, this is controversial. I have no idea what you think about this, obviously, but like phasing them out, but having a very gradual, I know there's some phase out in the Senate version, but it goes from like 60 to 20 to zero. So like, what about like a 90, 80, 70, like just 10% reduction every year, phasing it out 10 years? And maybe there's some ability, at least for those provisions, Democrats aren't gonna vote for the whole thing, because of the Medicare and the questions about, you know, tax rates on the rich and all that kind of stuff. But at least on those provisions, maybe if there was more of a tapered, smooth reduction, there might be some agreement from Democrats that we won't undo this. We would vote against undoing it as long as it is a very slow and predictable reduction. How would you feel about something like that as a manufacturer and developer?Sabah Bayatli (27:39.214)I'd like to believe we have really reasonable lawmakers in DC will make reasonable decisions in the end of the day. Yes, we have to end of this far left, far right, but I like to believe people will come to agreement. This is not about party. This is really about our country. Like what is the best decision that we can make today that we will not undo a few years down the road. I love to believe this will happen. Now things are evolving as we speak. We are really monitoring it.But exactly what you mentioned, look from the developer perspective, even the manufacturer perspective, people are not looking to subsidize this business forever. We are not looking for those incentive to stay forever. We're just making sure to your point, when we phase out, we really understand from the industry how we are phasing out. And this way we are not harming the industry because we're trying, if we truly trying to bring manufacturing, then we need to hear from the industry what's needed, how much time is needed. And therefore, like phases down systematically and this way we are not harming. In fact, we are bringing more jobs to the US. We are bringing the manufacturing. Those are like high tech jobs in the solar as well as on the battery side, by the way.So I like to believe people will reach out to that conclusion. The first draft from the Ways and Means Committee in the house, I think that was probably more reasonable than the version that passed the house. So I can tell, yes, there was certain House representatives dug their heel and they wanted to see their language. Very last minute. I mean, it passed by a narrow majority. We are talking about a single vote. Right. And now it's moved back to the Senate. I can tell you from Monday revision and we are digesting it as we speak. I love that they have my whiteboard, have a lot of numbers on it. We're trying to understand what's the implication, but I can tell you it's improvement. I can tell you there is a reasonable people on the finance side who trying to understand.Like how should we really allow this industry not to kill it, but to allow it to come to the US and integrate basically to the US without harming to the manufacturing jobs, without harming the all this capital investments we are trying to bring to the US. I think there is improvement. I feel there could be a better moment as to your point is like, can we phase it out slowly more? Like now the latest revision that passed from the Senate, it says basically if you start your construction 2025, then you have 100% of the credit. If you start in 2026, then you have 60% of the credit. And if you basically do 2027, then you are down to 20%, 2028 is zero. And I'm talking about solar and wind, right? So the good news, battery and a lot of other technologies they did not touch. I think kind of like stays as is from my rough reading here to the Senate bill.I think if we can smooth it out a bit more, probably if we can suggest, keep it 100%, 2025, maybe 75%, maybe 50%, maybe 25% and go to zero. Again, I'm really not in favor. We understand the big picture, guys. We have deficit, we have to balance. We have to balance. But also we want to bring manufacturing jobs so we can create economy basically to support extra revenue for the US government, right? So we have to find that balance. And that's really the big picture. So I think if we can probably more systematically phased out. I think that could work for the industry because right now what the Senate and that's what we tried to clarify in DC yesterday again like they released while I was flying to DC all the early next morning 6 a.m. We're trying to figure out how this plays out because we are meeting a lot of people but I think what they're trying to do to a project level they are phasing out from 160 to 20, but they are keeping the manufacturing credit, which is good. It sounds good on the surface. What is really missing is the manufacturing credit is only good if you are able to sell them to a developer. Right. So if the developer lose the value of their ITC and PTC and they are not incentivized to use it anymore, then basically what value the credit will give even if you are keeping it on the papers. Right. So.Doug Lewin (31:49.272)So Sabah, I want to dive into that because that's really, really important, right? Because if the tax credit is gone, the whole reason to use the domestic manufacturing was to get the additional tax credit. If that goes away, why not buy Chinese goods? Yes, there's tariffs, so there would be some consideration there. Or Vietnamese or wherever else it might be made, there's no incentive to use that American-made solar panel or cell, right?Sabah Bayatli (32:15.054)That is correct. So as project developer, if we start the construction this year, we'll get the full credit according to the latest Senate. Again, this is Wednesday, June 18th, right? And we are referring to the Senate bill that was shared and introduced to the Senate on June 16th night. So according to that, as a developer, if I start 2025, I get the full credit. If I start in 2026, I get only 60%. If I start in 2027, I get only 20% of the base credit and 2028 forward zero credit. I'm not allowed to get any credit if I start construction, right? So which means basically as a developer, I'm also because the developer is the customer for the manufacturing. So if you are a manufacturer in this state and if you are manufacturing solar panels, you have to sell them somewhere. And the somewhere is basically the US market, right? So, and if the developer is not able to purchase them from you because the value of the credit is going so low, it's not meaningful enough.I mean, this is a fact as well. If you produce in the US as a manufacturer, you have higher costs. Technically, your solar panel costs more than if you bring the panels from the outside of the US. So putting all these formulas and putting all these numbers inside the financial model as a developer from a developer's perspective now, at that time, you will make a decision. You will say, do I even need to buy domestic content? Yes, they have the credit as a manufacturer. But actually, that's not helping me as a developer because now the value I'm getting for this credit is very low. Therefore, developers down the road, probably just, again, this is a free market, this capitalism. You're trying to get the best, more efficient way. You want to improve your numbers, right? So you will just try to find the most affordable product available at that market today. And to your point, in the US, we are not, I mean, as a fact, we barely import anything from China today. I don't think we have anything as made in China's solar panel. It's probably very small percentage is imported from China. I'm talking about one to 2% roughly.Because what happened in 2011, this goes back all the way to 2011, they put 301 tariffs against solar panels at that time, create the huge deal. So after 2011, we're not able to import the panels from China anymore. So what happened, solar panels manufacturing actually jumped to another countries. And now we're talking about Vietnam, Malaysia, Thailand, Cambodia, Laos, Indonesia, all these countries become a solar panel manufacturers, they actually feed only the United States because we are not able to bring it from China. So we started bringing it from other countries. So now there is available manufacturing like outside China. And the question is like how we can bring it to the US and we make sure it's sustainable. So in this way we can bring manufacturing jobs to the US.Doug Lewin (34:59.138)That is so fascinating. Those other countries that you just said, first of all, I didn't realize that we're like, that's really interesting. So you're talking the entire American market is only one to 2% Chinese. And yeah, yeah, but it's small. It's small would be the point, whether it's one. In those other countries, you were just mentioning Malaysia, Vietnam, et cetera. Is that module manufacturing? Are they also doing cells and ingots and all that kind of stuff in those countries as well?Sabah Bayatli (35:26.996)Over time, they evolved to bring more supply. So maybe to give you an idea, so solar panel, you see those small squares inside it we call themselves. That's the one step before. Before the cell, you have another product called wafer. Before the wafer, you have another product called ingot. Before the ingot, you have the polysilicon. So kind of like a rough idea on the supply chain quickly. So yes.Now today, I think we see in a lot of these countries more basically manufacturing for the supply chain, upstream supply chain as well moving. And what's triggering it, Doug, was triggering the move to those countries is actually the US policy over the last 10 years, probably over the last 15 years, right? So 2011, you put 301 tariffs during Obama administration that kind of like technically took out China from the supply chain. And now you have to push your module to other countries.And later what happened during the last 15 years, you have other policies coming like the tariffs, the Uyghur act, right? And there is ADCBD against certain countries, right? Anti-dumping and countervailing duties because there's certain companies from China that start like basically circumventing by going to those countries and just like assembling it and sending it to the US. But the supply chain was built in the US. So the policy got evolved over the years and become very specific actually and say, if you are importing from Vietnam today, I'm just giving example, then X percent of your product has to be manufactured outside China, as example. The devil in the details, it's complicated, it's per product, but policy became very sophisticated as well. And if you zoom out to understand what's the purpose of such policy, it's actually to help the supply chain to move from China to other countries, to diversify the supply chain, if that makes sense.Doug Lewin (37:14.816)It does, and I just think it's so vitally important. The reason I want to talk about this here, and this podcast, I'm going to talk about it on a lot of others, is what we're looking at in the world right now, Sabah, right? Something like 80% of everything installed at this point on power grids globally is solar in storage. So in some ways, solar in storage potentially could become as big a strategic imperative and lever as oil was in the 70s.And if China were to be, and it's interesting to hear you say this, because that's a great historical perspective that this actually goes back to Obama through the first Trump administration. Biden kept many of those protectionist policies in place. Now in Trump too, there's this kind of continuation of we cannot let China control what is a very strategic lever.And what I worry about is that in a very short sighted way with this budget reconciliation bill, we could end up undoing a lot of that and actually like playing right into China's hands and actually strengthening their hand on what becomes one of the most, I won't equivocate, not one of, the most important, if you put solar and storage together, the most important power source for at least the next 10 years. Maybe at some point nuclear geothermal or hydrogen or fusion or who knows what in the late 2030s. But for this foreseeable future, it's solar in storage and we're about to like, not to shoot ourselves in the foot, but like shoot ourselves in the kneecap at this point.Sabah Bayatli (38:59.18)I share the same concern, Doug, as well. And that's why my advice, probably to the audience of this, to the listeners, to people who operates in the solar market and battery market today, please raise your voice. Speak to your House representative. Speak to your senator. Because I think people really need to understand their perspective as well on DC. Those finance committees, ways and means, under a lot of pressure. And you are probably not in your main radar, by the way. Like, they have a bigger problems to solve. First of all, deficit, right? That's the thing, right? Right. But you have the Medicaid, you have salt, like it's becoming huge problems. You are like one of the things inside this list of one-handed, right? So, I mean, factually, people probably don't understand exactly how they will impact you.So I think our job as industry leaders, go and communicate, really speak to them. I think people are reasonable. People try to understand. It's business perspective. This is really not about clean and renewable versus this is about energy affordability. This is more about energy security. That's truly it. So I think as a business leader, if you can indicate that your senators, your house represented, people will listen and they did. We spoke to a lot of Republicans in Texas, right? About the both senators thankful, thankful to them. They hosted us in DC yesterday. They listened to formalized, they took notes and people are responding.So it's our job really to clarify how this will hit the industry, right? So that's our recommendation. I share the exact concern with you, you have to understand the finance committee under a lot of pressure. They have a lot of things to solve and you are like few items on their list.Doug Lewin (40:35.18) Well, and this is where I think we need to help connect dots because whatever your concern is, as the senator or representative, obviously a lot of senators were on the Democratic side, though there's certainly some Republicans too, think about climate change a lot, but I think more so they're going to think about national security. They're going to think about American competitiveness, these would be China. They're going to think about the national debt. And whatever of those things is your concern, having a robust solar and storage manufacturing supply chain in the United States is a solution to that problem. On the debt piece, right? Stimulating that economic growth. Because really, I mean, at 38 trillion and counting with the interest rates going up on every bond deal that we're doing at this point, because countries are worried about our ability to actually pay back that debt, like without growth, we're screwed. And again, no growth without low cost power. So.Sabah Bayatli (41:29.966) One hundred percent, and I don't know if you had a chance—I shared with you over the email a couple days ago that energy consumption growth rate in certain countries, so it compares between China, yes, us, Europe, Japan and I think there was one more country there. So if you look at the curves for the US and European and Japanese, it's literally flat and probably shrinking toward the end, especially in Europe, slightly in the US. Just for the sake of the audience, I'm talking about how much energy we are consuming as a country in a calendar year, right? And this graph basically compares, like it goes back to the 1990s all the way to 2024. I want to paint a good picture for the audience. So all the curves for Europe, US, Japan is basically flat and shrinking. So we are shrinking even in our energy consumption. Yes, efficiency plays a role, obviously, and we are being more efficient and we have better lights today.Once you look into China's curve, you will see this exponential growth in the energy consumption happening since 1990s. My takeaway from that graph, Doug, was if we truly want to grow to your point and bring manufacturing back to the United States, we really need that curve. It's not an option. It's not an option. I mean, it goes beyond that. I mean, manufacturing on one hand, if you want to ensure them back to the state, you really need that curve. You need to grow it on the energy market. Otherwise the energy pricing will inflate and inflate very, very quickly in the U.S. And I can see it easily. But the second story here on the data center, everybody talks about the AI. For you to have an AI, you have to have large, humongous data centers, consume a lot of power, consume a lot of energy. If we reach out to the point that we are worried about not having data centers in our community because we don't have enough energy for them, this is a national security. Basically that means that we will force ourselves to send our data centers to other countries overseas to them. Like this is a national security. Like people need to understand the concern there. So it's like, honestly, people in DC need to understand we don't have an option. We need to bring every single resource online as soon as possible.Bring the solar, bring the wind, bring the gas, bring more batteries, guys. We need it. Because to your point, we want to grow and we need to grow.Doug Lewin (43:56.206) That chart that you sent me, and thanks for sending it, I will try to just put that in the show notes so people can go see it there. But it basically shows the US at like 4,000 terawatt hours. Texas is roughly at like a half a terawatt hour. We're at 460 gigawatt hours, so just shy. Though this year we're tracking to be right at about a half a terawatt hour. And that's roughly, like you said, flat over 20, 25 years, really going back to the turn of the century. China at that time was at like a thousand or 2,000 terawatt hours and now is at 10,000 terawatt hours. Twenty-five years ago, they consumed half as much power as the United States. Now they consume two and a half times the amount. And that means that they are positioned to serve that data center load in a way that we are not. And again, if this bill passes, we're cutting that off.I got two or three more things I want to ask you about before we run out of time. One, which is very confusing to me, I'm still trying to understand FEOC, foreign entities of concern. How has that changed in the Senate bill? So my understanding, let me lay my understanding out and then you set me straight, tell me where I got this wrong. That at least out of the House side, and I don't think the Senate necessarily improved this, but it was basically like you couldn't get a tax credit for a solar or wind or battery or any other project, I think. If there's even like one component, if you've got like bolts that are made in a foreign entity of concern, whether that be China or something else, you can't get the tax credit. Now—the whole discussion we've been having, clearly we need a domestic supply chain. There's also a process to do that. You don't jump to the absolute, you don't snap your fingers and now everything you need is made here. These things have built up over time. They're going to have to be solved over time. Have the FEOC provisions changed at all? And how much do those worry you? Where does that rank of all the concerns in this bill?Sabah Bayatli (45:47.212) Yes, for the version that passed the House, there was two concerns. One of them is the phase out or the cliff from project development perspective, the cliff by the end of the 2028. So if you complete your project, not start construction, if you complete, this is very important for the audience to know. And the version that passed the House, if you completed your project before 2028, then you could qualify for the full credit. If you complete your project after 2028, then you qualify for zero. We had a cliff.That was a big deal for the industry. That was one issue. And they had, in addition to this one issue, a subset of one. They had a 60-day of construction. So once the act passes, within 60 days, you have to stop construction and you have to finish your project by then, 2028. Otherwise there is no credit for you. That was issue number one. Issue number two was the FEOC, basically. And for the audience to know, FEOC stands for Foreign Entity of Concern, right? So to clarify, we are not against FEOC. In fact, we are in favor and we are supporting it. But again, systematically you have to design it properly because the way in the version that passed the House, the way they were expecting basically FEOC to work is simply not workable from the industry perspective.I will simplify this to the audience. What they were looking basically, and I give you this as just an example and you can take it to the solar industry and battery industry too. What they were asking for is like, think about your TV. And they were asking like, for you to get credit for that TV as an example, right, which is the solar farm, then you need to make sure that the entire supply chain that helps you to create that TV is completely decoupled from China overnight. The reason I'm giving China specifically because we are just listing four countries: Iran, Russia, North Korea, and China on the supply chain. Honestly, the only important one here on the solar and battery is China.So they expect you to be completely decoupled from China overnight, like switch like this. This is in our world today. Forget this all—in this city, for everything else in our life, it's probably semi-impossible. So think about the TV. You have components that make your TV. You have sub-components that make the component. You have sub-sub-components that make the component. You have the raw material to make those sub-sub-sub-sub-components. And you get the idea. And now I'm telling you, take China out from this entire supply chain. And you're like, wow, this is complicated. This is not going to work, guys.That's basically what passed through the House and until Monday, June 16. And again, today's Wednesday, June 18, until Monday when there's a finance committee and the Senate introduced a new bill. I think now we see improvement, Doug. Now we see improvement. Now, now I can't tell you there's reasonable people. They're trying to listen and trying to. So on that second problem for you again, to clarify, we're not against, we want it. So that will incentivize to bring manufacturing back to the state. We just want to make sure it's systematically implemented.I think they are using percentages now. And that's really what I have on the whiteboard now. We are digesting it. But what happened is at project level, again, it works differently when you are at project and it works differently when you are a manufacturer for a product, a manufacturer for solar panel or manufacturer for a battery storage or battery product. So for project level, it basically asks you if you are developing solar and from 2026 forward, if you start construction, then you have to comply with FEOC requirement. And the FEOC requirement has two legs. One of them is first, it basically prevents you, if you are an owner of that project, you cannot really claim credit if you are controlled or if you are one of the FEOC countries, which is like, makes sense. We understand we don't want to give the credit. The second leg is where the industry is concerned about. It's called material assistance. And that's what the Senate, we think they are fixing.So they are introducing percentages there. They are saying they introduced threshold and they say technology neutral across the board 2026 forward. If you start construction for your project, the Senate bill is expecting you now basically to have at least 40% is manufactured in the state or outside FEOC. I should take that back. So let's take solar farm to paint the picture clearly.So all the equipment costs for your solar farm, not the capex of the solar farm, only the sum of the component that you sum the cost for modules, trackers, transformers, inverters and a lot of other ancillaries, right? You sum. And now you have to also ask every supplier of those components, go to the module, go to the inverter, go to every single device and ask them at your project, how much percentage of this is coming from FEOC country, technically how much percentage of this coming from China. And now you need to put this in a mathematical formula when you say total cost minus cost that's come from FEOC countries over total cost that no less than 40%. So that's how the Senate is introducing frankly improvement. I think we are digesting it as we speak, Doug. I think it will create some complexity as well because now you have to go back to every single supplier, ask him sure, give me what's the percentage of your product basically has Chinese percentage in it, and you have to put all these basically in a formula and you have to make sure that you are meeting this formula requirement. I think it's much better obviously than what passed the House, definitely improvement. Plus the Senate bill that passed on June 16 also kind of like allow you to, if you start construction in 2025, then you don't need to worry about this formula. I think that's also helping the market to take some time until they build the system.Frankly, again, I probably will change my mind tomorrow because we are digesting it. Everything is evolving. I think it's workable. I really think it's workable. It's better. It's definitely improvement. And again, we're trying to improve things as well and people are looking for feedback. We met multiple people in Senate side and House side yesterday and people are saying, look, digest it and let us know what's the recommendation. What do you think? What do you guys think? And frankly, we want to be reasonable as well because we're not seeking for those incentives to stay forever.Doug Lewin (52:11.862)That makes a lot of sense. Okay, so some improvement, a lot to watch in that space. I also, before we run out of time, obviously the attention appropriately for this conversation and for the sort of entire energy and economic development world has been on the budget bill in DC, but this is the Energy Capital Podcast. We focus on Texas. I'd be derelict if I didn't ask you about the Texas legislative session that just ended and your sort of takeaways from that. Obviously we saw some proposals advanced pretty far, particularly in the Senate, but some of them a little farther than in the past in the House. But at the end of the day, at least in my view, cooler heads prevailed and none of these bills that would have really restricted the market passed. What are your takeaways from that? And what does that mean for you as somebody trying to create jobs and manufacture solar in the state of Texas?Sabah Bayatli (53:06.99)In 2023, we were expecting 2025 session to be heated session. And in fact, it was, I think it was even more than what I was expecting. There was, and I think you followed them very, very closely and probably your audience read your articles. There were like multiple bills, right? Like very, very bad bills. It's simply like indirectly just simply killed the solar development and battery storage development. We're talking about the siting bill. The other one that was dispatchable generation is basically incentivizing certain things, but forgetting that actually there is no gas supply over the next five, six years that we'll have energy crisis, guys. So I think eventually, cooler heads will prevail and reasonable people will make good decision and I think we saw it in what happened in this legislation. Yes, I think it was very noisy. We were concerned about it. Our people, our team, we're in the capital. Again, same thing. You educate your own drive, you educate this and your senators and Texas and you basically allow them to understand what the concern is and people listened thanks to multiple associations thanks to you and multiple other basically people who delivered this message to the community right so i think eventually people reasonable people will understand the big picture quickly will correlate with what is the benefit what is the risk of certain bill if it passes and i do like to believe i think we have reasonable lawmakers and texas as well who eventually decided not to pass any of those bad bills. So I think that's my conclusion about Texas legislation.Doug Lewin (54:38.926)All right, well, we are pretty much at time. Before we end, I want to make sure I heard you right and just sort of maybe give you a chance just to kind of summarize. Obviously, most of this discussion was about the federal bill. What do you want to see? How could this land in a way? I think it's clear the clean energy incentives are going to be reduced and eventually eliminated in this bill. But what are you looking for that could happen that would make it workable. And I also just want to ask, cause I think I heard you say, but I just want to make sure I understand this. Like if the House version passed, are you guys actually able to continue manufacturing?Sabah Bayatli (55:21.166)If the House bill passes, then probably that will be into the investment I would say for any manufacturing. If the House version passes, right? Because it basically doesn't allow you to get credit after a certain year because it tells you if you finish your project by 2028, you get the credit. If you finish your project after 2028, then you don't have the credit. That simply means there is no incentive even for manufacturing to count because by the time the manufacturing come, it will take us a couple of years. By the time they will start producing, it will take them a few years. They need at least four, five, six years to cover their investment. So it's just like a simple put. I think that will be the end of investment for any manufacturing in the state related to those technologies.Doug Lewin (56:05.664)And Sabah, just want to, you said earlier, what, 800 jobs? How much, how much investment has OCI made in the state of Texas or going to make?Sabah Bayatli (56:14.232)So again, to clarify Mission Solar, our sister company, the manufacturer for solar panel, they actually announced plan to add cell manufacturing as well. This is south of San Antonio in the Brooks. Roughly, they are expecting 800 more jobs directly to be hired by the manufacturer themselves by this addition, by the cell. And you can imagine how much additional basically ancillary jobs this will take for community, how much economy will bring. And this is really a simple example.A single factory. If you look into Texas today and how many module factories we have in Texas, actually we have a lot. Like we have a lot around Houston, we have a lot around Dallas, we have some are coming around Austin. So it's actually benefiting. I mean, we are bringing new technology back to this state of Texas. We are developing it right here and we're trying, and not only solar panel, we're trying to bring more supply chain, right? So, I mean, we're talking about thousands and thousands of jobs, like thousands, thousands, really.I mean, more than 10,000, probably close to 20,000 only manufacturing. Honestly, if I just scale it up to the state of Texas, and what's nice about it, we are in like this manufacturing facilities are located in the state of Texas, but they are not only serving Texas, they are serving the entire US. They are selling panel to the entire US operation, right? So that's on the solar side. I like to emphasize, Doug, as well on the battery, we need to do the same thing on the battery. I mean, forget about the energy market.I think battery technology is something we cannot let go. We have to understand, we have to grow. It is about national security. We have, it's not about EVs, it's not about energy market only. It's about EVs, it's about energy market. But it's about national security as well. I mean, and I think we are seeing it in Ukraine today. We'll see it in Iran-Israel conflict today. People are using those for drones, for robots. Like we cannot let that technology go.Doug Lewin (58:07.052)We cannot be reliant on China to get batteries that are just powered drones. Like that is just not okay. Yeah.Sabah Bayatli (58:13.378)You just can't. You have to have good technical people. You have to have good skills in this country who's able to not only manufacture this for you, but do research and development and produce more and produce more and evolve. You need this capacity in this country. Otherwise, it's a truly national security deal down there.Doug Lewin (58:32.184)So Sabah in closing, and we do need to end. So just in like a minute or two, like what are the main things that the Senate could do that would allow these 800 jobs at your manufacturing plant, all the other manufacturing plants that stay open, but would also meet their goal of phasing out the incentives?Sabah Bayatli (58:49.586)Wonderful question. We are trying to resolve it today. Doug, I probably will have more clarity over the next few days, but now I think we do. Again, it's two elements, right? It is the phase out and the second is the FEOC. Those are the two things, super high level if you want to think about what's going on. So I think I would ask from the Senate based on the bill that was passed on June 16th, if we can just slowly phase out instead of like a dramatic drop from 100% to 60 to 20 to zero, if we can ask the Senate for more gradual. I think phase out, I think that will help. Frankly, not only to me as a developer and owner for storage projects and solar projects, it's only good for manufacturers because they need a customer, they need developer to buy their product eventually. So they need more like leeway. So that's first ask if we can be like a bit more gradual on the phase out. That's first ask.I think second ask about the FEOC, I think what they're presenting is workable. I can see how they are thinking. They're trying basically to bring manufacturing back to the state. I think it's question of percentages. I think the super high level in the approach is workable. I think it will create a lot of administration burden. I think people in the industry will probably hate me to hear this. It's workable. I think it will create some burden, but I think it's down to percentages. Can we really without breaking the supply chain? Can we comply with those percentages over the next few years? Because percentages start at X percent and increase by 5% or 10%, right? And it is project level different when you are manufacturing, producing the solar panel is different when you are producing batteries different. So everything is different. So I think as in this study, we have to look closely and we need to understand, is this implementable? Do we have any issues? If it's challenging, it's okay. We like challenge and we'll make it. That will motivate us to bring manufacturing back, but we just don't want to break it. That's really the big picture.Doug Lewin (01:00:47.918)Now that makes a lot of sense and dare to dream that maybe as we said earlier, if those things can be done, as you said, maybe there's some potential that there could be some bipartisan agreement to that so that we don't end up in this whiplash situation of like on again, off again, which is kind of the worst of all worlds. Sabah, thank you for this. Is there anything I didn't ask you that I should have or anything else you want to say in closing?Sabah Bayatli (01:01:11.606)Wonderful. Really, Doug, I wanted to give you really the credit. I love your podcast. I love the articles. I read them thoroughly. I think there's a lot of great people in our industry today who are communicating. I think what I appreciate, Doug, I love how you dive into the topic and simplify the topic to audience, probably not necessarily from our market or from our market, but they are not probably up to speed on certain terms. And so really thank you. Thanks for doing that.Doug Lewin (01:01:38.562)That means a lot. Thanks Sabah and thank you for taking time. Appreciate it.Sabah Bayatli (01:01:41.4)Thank you. Thanks so much.Doug Lewin (01:01:43.8)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 is adding solar at a faster pace than any other state. Solar and storage are powering Texas’ manufacturing renaissance, creating jobs, and lowering customers’ bills; even the state’s oil and gas sector is an eager consumer of solar power.And renewables are also pumping tens of billions of dollars into local — mostly rural — economies in the form of landowner payments and tax payments. We’re on track to add another 8-10 gigawatts in 2025, after adding about that much in 2024.In this week’s episode, I sat down with Sean Gallagher, Senior Vice President of Policy at the Solar Energy Industries Association (SEIA), and Daniel Giese, SEIA’s Director of State Affairs for Texas. We unpack the forces behind this record-breaking growth and what could help keep it going — as well as what could stop it in its tracks.The federal budget bill would cripple the boom. Texas is seeing historic levels of investment, in large part because of the 10-year certainty provided by the IRA. These tax credits are bringing down capital costs, reducing risk, enabling longer-term project planning, and driving investments in solar manufacturing.As Sean points out, this policy clarity has helped drive a wave of new solar and battery projects. And Texas is leading the pack, thanks to our land availability, pro-development bent, and robust demand growth.But the same projects that are thriving today could be lost tomorrow if federal tax policy changes too abruptly.Policy risk is rising. And it’s already hurting deployment.Federal tariffs. Delays in domestic manufacturing. A growing push in some counties to ban solar outright. It’s all adding up. SEIA recently reported that more than 5 GW of solar capacity in Texas was delayed or canceled just this spring due to trade policy and market uncertainty.Add in the threat of repealing or rolling back the IRA, and the fragility of this moment becomes clear. Developers aren’t panicking, but they are cautious. And that’s enough to slow the pace of deployment at exactly the wrong time.Storage is the backbone of reliability and we’re just getting started.Storage is no longer a “nice-to-have.” It’s essential. It’s one of the main reasons ERCOT’s summer grid outlook improved from a 12% chance of outages in 2023 to less than 1% this year.Daniel and Sean both emphasized how solar + storage is becoming the new standard and how distributed storage, especially, can help strengthen resilience while reducing strain on transmission.If Texas wants to keep growing solar and maintain reliability, batteries aren’t optional. They’re the glue that binds the new grid together.Final thoughtsThe clean energy transition is already underway, but the friction between policy and politics on the one hand and markets and technology on the other, is starting to slow it down.Texas has the fundamentals to lead the next chapter of America’s energy story: land, load, labor, and sun. But the national and state-level decisions we make in the next two years about policy, infrastructure, and transparency will determine whether we keep that lead or fall behind.This conversation with SEIA was timely given all the activity in Austin and Washington DC. Timestamps and relevent links are below.This was a free episode but your contributions support this podcast and the newsletter. If you’re already a subscriber, thank you! If you’re not yet a subscriber, please become one today and please recommend the pod to friends, family, and colleagues. The Texas Energy and Power Newsletter is a reader-supported publication. To receive new posts and support my work, consider becoming a paid subscriber.Timestamps* 00:00 – Introduction* 02:00 – Breaking down the recent Texas legislative session* 03:30 – Rural benefits of renewables, why some legislators vote against their districts* 07:00 – How Texas rates nationally on solar & storage* 8:30 – Solar’s meteoric rise in Texas* 11:00 – Good bills that passed in the recent legislative session* 13:30 – How industry supported bills addressing recycling, consumer protection* 15:45 – The federal budget bill and its potential impact on manufacturing* 18:00 – Data center and AI companies’ support for renewable energy* 20:00 – Without solar & storage, the economy will slow* 23:00 – Winning the competition w/ China for electricity supply chain dominance* 27:30 – The three incentives that support domestic manufacturing* 29:30 – The impacts of the budget bill on Texas* 34:00 – Grid operators and regulators say we need continued solar development* 37:00 – Where will tax credits go from here* 39:00 – Problems with the budget bill: abrupt end of tax credits instead of ramp and Foreign Entities of Concern (FEOC)* 44:00 – Prospects for residential solar / distributed generation in Texas* 46:00 – Initiatives SEIA will be engaged with at the PUC* 48:00 – Support for solar power and SEIA’s call to action & how to get involved ResourcesGet Involved: Solar Powers AmericaSEIA Resources* Solar and Storage Industry Statement on Proposed U.S. Senate Finance Committee Reconciliation Text* Hundreds of American Solar Workers and Advocates Rally on Capitol Hill With a Message to Congress: “Don’t Kill Our Jobs”* REPORT: U.S. Adds 8.6 GW of New Solar Module Manufacturing Capacity, One of its Strongest Quarters of Growth in U.S. History* Solar Market Insight Report Q2 2025Other Podcasts, Articles, Websites Mentioned* Pakistan’s Solar Boom. Volts.* Energy Submission. Texas Energy & Power Newsletter* Impact of Limiting Solar and Wind Development in the ERCOT Market. Aurora Energy Research* CPS boss says taking away renewable tax breaks will just shift the costs. San Antonio Express News.* Gridstatus.ioTranscriptDoug Lewin (00:05.816)Solar was under attack in the Texas legislative session that recently ended. Now it's under attack in Congress. Why is this happening for resource that has delivered so much benefit? We dive into that in this episode of the Energy Capital Podcast. I'm your host, Doug Lewin, and this week I was joined by not one but two guests, Sean Gallagher, Senior Vice President of Policy for the Solar Energy Industries Association, and Daniel Giese, Texas State Director for SIA. A quick note, we recorded this pod last Doug Lewin (00:35.436)week before the Senate version of the reconciliation bill, the budget bill was released. So we got into what happened in the House bill. We talked a whole lot about what happened during the Texas legislative session. We talked about the meteoric rise of solar and what that has meant for the state of Texas. We got into all kinds of things, but not the Senate version of the bill. We will put in the show notes. You will be able to find there, a statement on the Senate bill, but we will not discuss it in this episode. Doug Lewin (01:04.728)This was a great episode. Really enjoyed talking with Sean and Daniel. think you're going to learn a lot from this. As always, please become a subscriber to the Energy Capital podcast and the Texas Energy and Power newsletter at douglouen.com. Please leave a five star review wherever you listen and please enjoy the show. Thanks for listening. Doug Lewin (01:27.608)Sean Gallagher and Daniel Giese. Welcome to the Energy Capital Podcast. Daniel Giese (01:31.256)Thank you Doug. Good to be here. Sean Gallagher (01:32.76)here. Sean Gallagher (01:33.175)Thanks for having us. Doug Lewin (01:34.872)You guys are doing great work at SIA on behalf of the solar industry. And obviously it is a fascinating time, too fascinating in my view, what's going on in the solar industry. Let us start with Texas. We are definitely going to jump to talking about federal and what's going on in Washington, DC, but it's energy capital podcast and I cover Texas. So Daniel, we'll probably start with you and maybe just kind of introduce yourself very briefly, but talk to us. You're obviously, Doug Lewin (02:04.62)leading things in Texas. Why in a state where solar is delivering so much value in the state are we still seeing these legislative attacks? I get asked this all the time and I feel like I'm really struggling to explain it. So maybe you could help me, Daniel. Daniel Giese (02:19.032)Sure. Daniel Giese (02:19.352)Yeah. So we had a, you know, session just ended this month. And, know, like you said, there's obviously going to be challenges in a legislative session. There's no limit on, you know, what types of bills, how many bills legislators can file. You know, this year we saw over 8,000 filed. At end of the day, only about 1,200 of those actually passed, but you have to keep them all serious. And so there was probably over 200 bills that, you know, I was personally tracking people in the industry tracking that dealt with, touched on our issue. Daniel Giese (02:47.252)Unfortunately, a lot of those were negative, but we made it out okay. It was actually a pretty good session for clean energy, for energy in general. Nothing bad happened to us. Other like past legislative sessions, there's been some more challenging legislation passed. This time around though, think cooler heads prevailed and legislators just looked at, they just did simple mathematics that you cannot meet the demand that this state is seeing. That's through population growth of people, growth of businesses moving in, the types of businesses moving in that are using incredible amounts of energy. Daniel Giese (03:17.038)They're going to need energy when they get here. They can't sit around and wait. So the simple supply and demand won out at the end of the day. And legislators, the cooler head prevailed and they just saw that the only way to meet the demand that's coming is through clean energy growth, energy growth in general, and all of the above. Doug Lewin (03:32.226)think that's right. And I just continue to wonder because, you know, and I put together a podcast and video that's on YouTube with some of the testimony during Senate Bill 819, right? You just see so many folks, particularly from rural, deep red districts, talking about what solar and wind, but we heard a lot of testimony very specific to solar, what it means for them thinking to the gentleman from Nacogdoches County, who's like, I'm paying for my kids' college with lease payments out of solar. Like, these benefits are... Doug Lewin (04:01.742)very, very real. mean, we're seeing landowners get millions and tens of millions of dollars in payments. We're seeing school districts getting huge amounts of tax base. But then you have some, and I appreciate the way you're putting this, and like, cooler ads prevailed and most people realized it's good. But there is this vocal minority that even when their districts are benefiting so much, seem to be very stridently anti-solar. Like, how do you explain where that's coming from? Doug Lewin (04:29.58)The answer I've been giving lately is algorithms. think people are spending too much time on Twitter and their feeds are giving them a bunch of misinformation. like, is that your answer or where do think that's coming from? Daniel Giese (04:39.938)You've kind Daniel Giese (04:40.328)of seen the issue wrapped up in, historically, you know, Texas has been in all the above state, gone all in on all types of energy. And that's just simply because it's good for the economy. Lower bills for constituents is popular with their elected officials. And, know, we've kind of been wrapped up maybe in some of the culture wars of to be this type of legislator, you need to be against this type of energy. You know, I think a wide majority of people don't see that, but obviously it's challenging when you're wrapped up in that. So we did a study. Daniel Giese (05:07.948)along with some other stakeholders at the beginning of session on the economic impact of renewables in Texas and found that nearly $30 billion in landowner payments coming from clean energy, $20 billion in local taxes paid. And these are taxes not going to the state. These are taxes staying within local counties, the county commissioner's court, the county hospital districts, local schools going to roads, and just infrastructure that's needed. Doug Lewin (05:32.756)is, Doug Lewin (05:33.347)I'm sorry to cut you off, I just want to emphasize that that is billion with a B. Tens of billions of dollars of benefit to the state and it still just baffles me that there's like opposition. Daniel Giese (05:37.934)That's with a B, Daniel Giese (05:47.662)And that's a lot of the clips that you put together on the hearing you mentioned on SB 819, which is really an amazing hearing and sort of not the traditional type of hearing you see in a Senate business and commerce hearing for people that follow the legislature. Just a vast diverse coalition of people, people who call themselves environmentalists, people who call themselves conservationists, people who don't care about that issue at all, but host these projects on their property. So it's just important that you private property rights. Daniel Giese (06:15.246)played out, and that the legislators heard from the constituents who that would affect, you know, that type of... Doug Lewin (06:20.814)I just want to read really quickly a quote you guys had put out as was on a press release you guys had put out, but it was a gentleman who I featured in that very video, Michael Looney, VP of Economic Development at the San Angelo Chamber. San Angelo is in Tom Green County and he says, this is a quote from Mr. Looney, the Western part of the county is challenging even for grazing, given the lack of water, trees and how rocky the terrain is. However, we have three massive solar farms that have been able to make it work. Doug Lewin (06:47.722)And there was a fellow from Armstrong County talked about we're dry land farmers. We don't have oil and gas. Like we really need this. Well, I guess we'll continue to puzzle over why it's actually happening. But I think the point you made is the right point, which is cooler heads did prevail. There were more legislators that understood this is actually a really good thing for our state. Sean, I want to go to you. You obviously are with CIA at the national level. Doug Lewin (07:15.212)You look around the country and see all the different states and what's happening in solar. I've talked about it on this podcast a bit, but it'd interesting to hear from your perspective. Like how does Texas actually rate nationally for what's going on with solar in this country? Sean Gallagher (07:30.574)Well, Texas has become hugely important to us. And one of ways we demonstrate that is we hired Daniel a year or so ago so that we've got someone on the ground there. Texas has been the fastest growing solar state in the country the last several years. Texas has installed more utility-scale solar than any other state, including California, which was a longtime leader. And I think Texas now has the most utility-scale solar capacity of any state. think if you add rooftop in California, may still be slightly ahead. Sean Gallagher (07:57.71)Texas has also been the fastest growing energy storage state in the country over the last several years and has among the most energy storage capacity in the nation. And that's been super important in meeting energy demand. mean, the peak demands you had even a couple of weeks ago. And I think what's also relevant is that the discussion nationally is very similar to the discussion in Texas, right? If you want to achieve energy dominance, if we want to meet Sean Gallagher (08:23.192)growing energy demand, if we want to do it reliability, we've got to do it with resources that are available, the resources that are affordable, the resources that can be brought in line in a timely fashion. So those are some of the points that we're trying to make to the Congress as we have that discussion. Doug Lewin (08:37.453)Yeah, you guys had actually put out some information that we are seeing a huge uptick in solar that is paired with batteries. And I think it's always important to point out that they don't actually have to be paired, right? They can be, you could have batteries on the system somewhere soaking up that solar power when prices are low and putting it back. It doesn't have to be co-located, but we are seeing, this is actually about residential, but I think the numbers, I've got a slide on the- Doug Lewin (09:07.342)screen for those that are listening that in 2019 it was what a couple of percent and now it's looks like it's somewhere around 30 % on the residential side. I think we've seen pretty similar on the utility scale side too. That's right. So that solar and storage pairing is pretty perfect. Sean Gallagher (09:23.254)Yeah, and you're right on both counts, right? Co-located solar and storage, very useful, particularly to the project developer who can sort of take advantage of putting out that power on the grid when it's needed the most. Storage, whether it's co-located with solar or elsewhere on the grid, super useful to the system and to its reliability because, as you say, it can soak up power either from the co-located solar or from elsewhere on the grid and deliver it when it's needed most. Doug Lewin (09:49.366)Yep. You guys also put out some information. Texas installed the most solar capacity first quarter 2025, 2.7 gigawatts. To put that in perspective, the entire Austin Energy Service Territory is about three gigawatts. So basically an entire Austin worth of solar in one quarter. That was 92 % more than the second rate state. We will have all sorts of links to these different reports in the show notes. Doug Lewin (10:16.056)Highly encourage folks to check out, see his materials. They're really great. I'm putting up on the screen for those that are on YouTube that we had a total consumption in Texas from solar reached just about 13 % in the first five months. That's compared to 9 % the same time period last year. So in the first five months of this year, basically one out of every eight units of power consumed on the Texas grid were Doug Lewin (10:43.424)Solar, that's 50 % more than one year ago. I mean, this is just like meteoric rise. And it's just continues to sort of, it confounds me that anybody wouldn't be just like celebrating this fantastic thing that is going on. Daniel, I want to come back to you, because I definitely like, there's all kinds of attention. And I obviously have talked about it a lot here about the bad bills. Doug Lewin (11:08.974)humans, have this thing, right, of negativity bias. I'm not immune to it. But there were actually some really good bills passed in the legislature too, and that, you know, it's like if it bleeds, it leads, right? So you just don't see as many news stories about the good stuff. Can you talk about some of the good stuff that just happened in the Texas legislative session? Daniel Giese (11:26.752)Right. And you know this, but sometimes you're judged on, you know, what doesn't pass, like sort of the most popular thing and people don't focus on the good stuff that did pass. But like really one of the bright spots of this past session was the popularity of DG rooftop solar. There was some good legislation to streamline solar permitting for backup power systems, know, batteries and solar on your house. We've seen, you know, a lot of red tape around different areas of the state, which puts up barriers to. Daniel Giese (11:52.814)allowing people to put their own energy independence into their own hands and do what they can to lower their electricity costs by putting backup power systems on their house. So Senate Bill 1202 will streamline the local permitting and gets rid of lot of that local red tape. I think that goes hand in hand as well with legislation SB 1697 to direct the PUC to create a consumer guide for homeowners that are going solar. Sort of similar to how the DOE has a guide to going solar pamphlet on their website. Daniel Giese (12:21.792)Unfortunately, we saw over the past couple of years some bad actors in the rooftop solar industry, but know, sort of what's different about our industry is we took that into our own hands and tried to get out bad actors and showed that the industry is really doing things to make things right. we SB 1036, which will strengthen consumer protection in the state requiring solar cells people to register with TDLR. Cause you know, these are products that people in Texas really want. So they need to be able to one, they need to be able to get it on their house. Daniel Giese (12:50.478)in a reasonable timeline. And they also need to be able to get into relationships with businesses, you know, that are reputable at the end of the day. Kind of going on that a lot of good decommissioning and recycling legislation, HB3228 and 3229, which will require recyclers to keep a database on what components they have and what plan they have to recycle these components. That's to ensure that there's not a lot of graveyards of devices that we've seen around. Additionally, HB3809 will create Daniel Giese (13:19.95)decommissioning standards for battery energy storage systems, and then HB3824, which will require battery systems to have fire safety plans. So it's just a lot of proactive steps, which, you know, a mature industry takes, responsible industry takes. So some people could see that and say, well, why are you doing these things, which make you do something, but that's what, you know, good actors do. And that's really what you saw this session was problem solving. Doug Lewin (13:43.17)Yeah, you know, it's interesting, Daniel, there's some folks out there, some legislators that say industry will come in and meet with them and try to work through things. But we really see on issues where legislators do reach out to industry and say, Hey, there's a real problem here and I want to solve that problem. think the evidence and the data suggests that regardless of anybody's opinion, you can look at the track record because all those things you mentioned were just this session, but there was wind decommissioning. Doug Lewin (14:10.094)2021, I think, and then solar decommissioning passed in 2023, battery decommissioning in 2025. The added recycling bills you just mentioned by representative Lambert, like those were all bills that I don't know the details. You guys probably didn't get everything exactly the way you wanted it, but you engage. That's what the process is about. And you reach some kind of conclusion that makes the bad actors come up. I mean, that's what I kind of look at on the residential side, but clearly there's some bad actors out there and nobody denied that. So let's, let's address that. Doug Lewin (14:39.65)but you do it in a way that addresses the problem and doesn't hurt the businesses out there, which is the vast majority of them that are doing things the right way. Most wind and solar companies are recycling their stuff where you have ones that don't, that's where you pass a bill, but make sure that you don't cause all kinds of collateral damage while you're doing it, Daniel Giese (14:59.15)Right, and I mentioned, you know, only 1,200 bills passed, 8,000 filed. So obviously it's easier to kill a bill than pass a bill. So a lot of bandwidth. And I'd mentioned a good amount of bills. That's a lot of bandwidth. That was a long list. Yep. Yep. A lot of bandwidth spent by the industry to get stuff done. Doug Lewin (15:13.538)Yeah. Sean, I want to switch back and talk about national stuff, but anything you want to add on Texas as far as what passed or what didn't pass? Sean Gallagher (15:20.75)Well, aside from the fact that Denny did a great job, I think what was clear in Texas this year was it was a real team effort. We've worked with a lot of organizations down there. I think we've done a nice job of aligning interest. And it was that kind of work that led to the hearing you mentioned earlier where we had landowners from West Texas coming in and telling their stories. And that was meaningful. So I'm really proud of the work that we've done and with the coalition that we built in Texas to try to educate lawmakers on the realities of these projects. Doug Lewin (15:48.866)Yeah. And I think that's actually a good segue to talking about the federal, cause I'm curious, Sean, like how is that playing out at the federal level? Like we did see in Texas, a very, very broad coalition that was inclusive of, like you said, lot of farmers and ranchers, but a lot of economic development, right? We saw a lot of economic development corporations, the statewide chamber of commerce, Texas association of business through to like manufacturers and oil and gas, like all kinds of different folks involved because everybody benefits from Doug Lewin (16:17.046)low cost power, think a lot of times in the sort of some of the way, not always, certainly, maybe not even a majority of the time, some of the time in the media it's presented as oil and gas versus renewables, but in the real world, it's not really, I don't think the way it's playing out. I'm not following what's going on in DC nearly as much as I follow what's going on in Texas. What's that dynamic like in DC right now, particularly in the context of the one big, beautiful bill act, as I believe is officially called? Daniel Giese (16:31.502)Yeah. Sean Gallagher (16:44.642)That is the official name of it. And yeah, we're working with a wide array of stakeholders at the national level as well. Of course, we're working with our member companies, with other clean energy trade associations. We're also working with, and I'd say very prominently, the tech companies and other large businesses that have shown over the last decade that they're real big customers of clean energy. So the Clean Energy Business Association we're working very closely with. Sean Gallagher (17:11.874)You might have seen the other day the data center coalition put out a letter to the Congress saying, you know, these clean energy tax rates are important to us. We need power. We need it soon. And we want to be able to procure this power. We're working with some manufacturing groups and others. And so I do think there's a similar breadth in the kinds of voices that the Congress is hearing from because it is an economic development issue. It's an economic security, it's an energy security, it's a national security issue. This isn't just about Sean Gallagher (17:39.2)our industry, although it is about our industry, it's about jobs. Doug, as you know, we've successfully ensured solar and storage manufacturing over the last three years, kind of in an incredible way. had over the prior decade lost a lot of that manufacturing capacity, primarily to Southeast Asia. In the last three years, we've seen tens of billions of dollars invested across the US, mainly in the Southeast, a lot of it also in Texas. Sean Gallagher (18:05.614)to build solar modules, to build solar cells, wafers, the racking equipment, steel, inverters, sort of you name it, all that manufacturing has come back to the US as a result of this sort tax credit ecosystem that we have. And that's been good for communities, it's been good for jobs, it's been good for the economy, and it's been good for energy. Doug Lewin (18:26.67)It's so fascinating because just here all the time for people that really don't like renewable energy, they'll say, you can't power the modern economy with renewables. You can't power data centers with renewables. They're 24-7 loads. But then when you actually listen to the folks that are developing the data centers and operating the data centers, they say, no, no, we really want renewables. Now, they won't say we're going to operate on 100 % renewables, but they want to operate with renewables as much as they possibly can. Doug Lewin (18:54.808)for the obvious reasons, it's a zero marginal fuel cost and you're insulated from the price shocks that happen with gas from time to time, right? And for other reasons too. like there's certainly sustainability reasons, but in my mind, I think with the data center folks, it's like cost is right up there near the top. It continues to confound me that people say you can't operate a data center on it. And then I talked to data center folks and they say, well, sure we can and we're doing it. Sean Gallagher (19:17.762)Well, Sean Gallagher (19:17.962)Daniel and I, in fact, were down at a ribbon cutting for a large solar facility north of Austin. It's a 900 megawatt solar project that's powering a Google facility outside of Dallas. So the proof's in the pudding. These kinds of projects are powering data centers, and these are the kinds of projects that those companies want. Daniel Giese (19:38.412)Yeah, just read the news. There's a story on PPAs being signed between these companies every day, a lot here in Texas as well. Doug Lewin (19:46.22)Absolutely. Especially in Texas, we're seeing this. And this is like, again, just sort of astounding because I hear all the time, and this is, think, cross-partisan, but you hear it a lot, particularly in Republican circles, that we really want to dominate AI race. And I just don't see how that's possible, particularly over the next three to five years. I could squint and say maybe in the mid 2030s, like maybe nuclear and geothermal and some of these things start. Doug Lewin (20:14.966)even gas carbon capture and some things like that start to pan out. like in the next five years with a turbine crisis and the other technologies I just mentioned not quite there yet, getting there rapidly, but not there yet and not going to be there in the next three to five years. This is what folks are building, solar and storage. Sean Gallagher (20:30.87)I think it's important for us to say and for your audience to hear like we're for all forms of energy sources. You know, we're advocating for solar and energy storage, but we're not against anything. But you're absolutely right. I mean, if we want to win the data center race, that we want to win the artificial intelligence race, we want to win the manufacturing race like the time is now. Data centers and artificial intelligence companies don't want power five years from now. They want power tomorrow. They want power next year. And as you've noted in some of the things that you've written, Sean Gallagher (20:58.382)80 some percent of all the new energy resources that came online last year nationally were solar and energy storage. 80ish percent of all the new resources in the queue that are most advanced, that are most ready to get built are solar energy storage resources. And you know, yes, you're right. There are challenges with gas turbines, high chain. If you don't have it on order, you're not going to get it for four or five years. And that's not the same thing against gas power plants. It's just that they can't scale at the pace that the economy wants. Sean Gallagher (21:28.108)power. So why would you do something to suppress or depress or repress the installation of energy resources when the economy is clearly demanding more power and more power quickly? Daniel Giese (21:39.424)That's what I would hope that Congress emulates what Texas did this past session is, know, we knowing what I know about our state leaders, our state legislature, it's they want growth and they want it now. And you're not going to sit around and wait and put economic development on hold to wait five, 10, 30 years. You're going to use what you can now to power and keep the Texas miracle going. Doug Lewin (22:00.846)And that is what the house budget bill would do. wouldn't, you know, I do think we would continue to see solar and storage built, but it would be less of it. It would be at a higher cost and that would slow down the economy. would set us back in the race to develop these AI data centers and all kinds of other things we need for the economy. It really would, if not put on hold, at least significantly not tap the brakes, but kind of slam the brakes on economic development. Sean Gallagher (22:27.362)You know, the implications of that tapping the brakes or slamming on the brakes is that, as you said, energy costs are going to go up. So customers are going to spend up to $50 billion more on energy costs as a result of the bill that's in the Congress right now, if it passes as it's currently written. Tens, or if not hundreds of thousands of people are going to get thrown out of work, and that's all avoidable. Doug Lewin (22:48.334)So I think where I want to go next is to something you were just talking about a couple minutes ago, Sean, is the manufacturing piece and see as an institution not being against other forms of energy production. It's something I've been thinking a lot about lately and just wrote an article called Energy Submission about that China as the Financial Times, I think they created this term. Nobody's told me I'm wrong yet. If somebody else created it, find me in the comments and let me know and I'll give whoever deserves credit credit. Doug Lewin (23:15.256)But they called China the world's first electrostate, right? Obviously we're familiar with the term petrostate, right? A Saudi Arabia or an Iran or a Russia, like, you know, deriving their wealth from oil and gas resources. China made a very conscious decision a little over 10 years ago, like we are going to dominate the electricity supply chain. So you were talking a minute ago, Sean, about over the last three years, a significant uptick in manufacturing of lots of different components in the solar and storage supply chain. Doug Lewin (23:45.42)What kind of baffles me is that people, know, so we've got some in the administration that say, well, we're just going to dominate oil, gas and coal. Well, fine. We're already dominating oil and gas, particularly in Texas. The Permian now is the largest producer of oil on the planet. Why not dominate both? Why have only one half of the equation? Like we're on this trajectory. I just, it seems to me, and I'm wondering if you're hearing this in conversations in DC. Doug Lewin (24:13.762)particularly if any Republicans are thinking this way, right? Like this can be their success too, right? I think there's too much of a perception that like, well, if any of this stays in place, it's all Biden's thing. Biden's gonna get all the credit. Like they have all the levers of government now. Everybody realizes that. If we continue to get an increase in manufacturing, they're going to be able to claim a whole lot of the credit for that too. It would be their success too. And maybe this is just old fashioned and hopelessly naive. Doug Lewin (24:41.602)But like, I would hope it would be like an American thing, right? Like truly America first, Republican and Democrats, this is something we should all agree on is like, we want to win these economic competitions. The 21st century is good for all of us. Sean Gallagher (24:56.238)Yeah, well, I think it's clear that the president and the leadership in the Congress do want to win this race against China, particularly around data centers and artificial intelligence. And look, we want to work with the Congress to give them a win that will enable them to say, yeah, this is our success, right? So we're not advocating to keep the Affiliation Reduction Act, every word, every comma. We want to work with Republicans to give them a bill that allows the industry to meet the needs of the economy, to meet the needs of national security. Sean Gallagher (25:25.422)And also allow them claim some credit because there is credit to be claimed. You're right. And what we want to see is these factories. We've got tens of billions of dollars of factories that are right now sitting and saying, do I build this thing or not? Right? Because one of the things that we were aiming for with tax credits a couple of years ago is let's bring solar module manufacturing to the U.S. first. Module manufacturing gets established. Then we got solar cell manufacturing. Cell manufacturing gets established. Wafers next. Palli's next. Sean Gallagher (25:53.696)Everybody's waiting in line to make sure that their customers are there so they can build the factory to sell those customers. And we can keep that going if we make some modifications to the bill that came out of the house. Doug Lewin (26:04.686)I just want to like double click on that a little bit more as to why that is so critical, right? Because regardless of what you think this country is going to do in terms of its energy policy going forward, it'd be hard to overstate like the rest of the world is moving to solar too, right? I mean, like the stories in 2024, Dave Roberts at Volts did a whole podcast on this. If I'm not mistaken, if I am mistaken, we'll edit this out. But I think, but I think I'm not mistaken. I think it was his podcast. Doug Lewin (26:31.104)It was Pakistan, right? It was like the fifth largest in the world for solar and they're getting like cheap Chinese panels. The world is going to demand this stuff. And if they're the only ones producing it, think of the power that gives China that we don't have an answer to. It's kind of terrifying. Sean Gallagher (26:52.046)That's why keep saying it's a national security issue as well as an energy security issue. You don't want the ability to produce electricity or energy to come from China any more than you want it all to come from the Middle East when it was oil, right? So we need to diversify the manufacturing base. We need to have at least a portion of it here in the US domestically. We've got the policies in place that have demonstrated over the past couple of years that we can do that. We don't want to shut that off. And it's important to note, Doug, Sean Gallagher (27:18.926)It's not just the 45X manufacturing tax credit that sustains those factories. It's the 48E, 45Y, and 25D installation credits that sustain those factories also because that's what creates the market for those factories to sell into. It's not enough just to have the manufacturing tax policy. You got to have the whole ecosystem. Doug Lewin (27:37.154)So Sean, to be clear, those different provisions you just said, those require domestic content in order to get, so it's not specifically a manufacturing provision, but to get the tax credit, you have to show you have the domestic content. Is that right? Sean Gallagher (27:52.59)Well, let me just put a slight modification of the way you said it. Sure, please. It's sort of a three-legged stool, all right? And what we did in 2022 is we created industrial policy for the first time in decades in the United States to sustain manufacturing. Three parts of it are there's the 45X production tax credit. So if you produce a solar panel, you get a specific tax credit for each solar panel or inverter or whatever you produce. There's the domestic content bonus credit, which means if you're a solar powered developer, Sean Gallagher (28:22.606)get an extra tax credit on your project if you buy domestically produced content. So that's the incentive for the installer to buy the domestic product. 45X is the incentive to the manufacturer to make the product. Domestic content bonus credit is the incentive to the installer to buy the product. And 48E and 45Y and 25D are the installation credits that help support the whole market so there's a market to sell those products into. Doug Lewin (28:48.482)Got it. So that's kind of the whole kind of wrap around it. You guys put out some stats recently. Daniel, I won't ask you to this from memory, but I'll say the stats and then you can add in other stats if you have some top of mind or put some context around this. So nationally, you guys did a study and said, if the, believe this was specifically based on the house passed bill, if the Senate were to pass it in that form. And I think I want to talk about this more. we'll come back to this after Daniel speaks here in a minute, but like, Doug Lewin (29:18.156)It's not going to pass in its current form. How exactly it's going to change, we don't know, but it seems highly likely, almost certain the Senate's going to change in some ways. But if it were to pass in its current form, $286 billion in lost investment. So that's a quarter trillion dollars in investment, over 300,000 American jobs, 330 factories shuttered, 51 of those factories in Texas. So that is like, what, 15, 20 %? Daniel Giese (29:41.153)in Texas. Doug Lewin (29:44.942)of the factories that would be closed are in Texas. That would include 34,000 Texas jobs. And then an additional $50 billion in consumer electricity costs. You could put any additional context or add any additional stats you want in there. I'm also just interested, Daniel, like, what are you hearing around the state from members, non-members, know, big consumers? Like, are we starting to see some of this activity already? Doug Lewin (30:13.08)go away because of the uncertainty? Are folks kind of hoping that cooler heads will prevail in DC and they're still moving forward with investment? Like, what are you seeing out there? Daniel Giese (30:22.454)You know, whatever happens, this is still a state that is going to have to meet demand by something. So I think you're still going to see energy growth happening. You just saw an announcement here. It's kind of near the solar facility that Sean mentioned, but T1 Solar Cell Factory manufacturing just announced $850 million investment in Milam County, know, a rural county, which is a big deal. And, you know, right now there's over 12,000 people in Texas that work in the solar. Daniel Giese (30:49.55)storage industry, like you said, by the end of the decade, if this bill passed as written, 34,000 jobs by the end of the decade would be lost, 51 factories closed. So it's a big deal. I mean, like I said, this is still going to be a growing state. And so we have to meet that energy demand somehow. Doug Lewin (31:07.158)Yeah. And I want to, for the folks that are watching on YouTube, pull up another, this is a chart that comes from Aurora Energy Research that shows the growth in solar. And we are seeing already, as a point I like to make a lot, Daniel, and I know you know this, but I want to make sure our listeners know it too, that we are already experiencing this demand growth. A lot of times the load growth stuff is talked about as a futuristic thing. In a lot of states it is futuristic. In Texas, it's not. Doug Lewin (31:34.734)Our load growth is over 5 % per year over the last three years, and it's 7.5 % so far this year. If it stays at 7.5 % this year, that'll be a 6 % growth rate over the last four years, which is territory we haven't been in since the 1960s. And I still just think one of the main questions that just has to be asked and answered by folks who are defending this bill is where is the power going to come from? Doug Lewin (32:04.074)not going to be building solar in Texas, and you've got hotter summers and AI data centers coming and got industrial electrification happening. You've got oil and gas wanting to hook up to the grid. Where are you going to get it from if not from solar and storage? I still haven't heard an answer to that. I don't expect you to answer it, but you can if you want. Daniel Giese (32:24.78)Yeah, we're waiting here too. Doug Lewin (32:26.998)Yeah, yeah. Sean, anything you want to add to that? Otherwise, I'm going to shift gears a little bit, but definitely don't want to cut this short if you have anything else to add. Sean Gallagher (32:28.043)Exactly. Sean Gallagher (32:34.914)I'd just say you're exactly right. look, 6 % low growth annually. Think about it. The last 20 years, we've been in 1 % low growth territory. this is unprecedented. It's the worst possible time to slow down deployment of new energy resources. Doug Lewin (32:49.122)Yeah, exactly. And by the way, less than people listening are like, well, this is just people that like solar talking. We have had a number of different times, and he continues to say this. fact, so ERCOT CEO Pablo Vegas was in San Antonio, I think it was this week, Serra di Natale, San Antonio Express News had some good reporting on this, that he's saying, look, we have to have more renewables on our system. The load is rising too fast to not have it. Chairman of the PUC in Texas, Thomas Gleason said, Doug Lewin (33:17.612)Solar and storage are key for reliability in this state. We need them to be successful. There's enough sort of validation out there. If the folks who are running your grid are telling you you need it, you probably need it. Daniel Giese (33:29.506)Yeah, they're the people tasked with balancing the demand and the load and everything. And they don't have the luxury here in Texas to, you know, I like these electrons, but I don't like these electrons. They need every electron that they can get on the grid to do their job. So, you know, that makes sense that they would say that. Doug Lewin (33:45.482)Exactly, and I don't want to misrepresent their position because they are also saying we need more gas, right? But you guys are saying that too. You're not saying we're opposing any gas plant. You're just saying solar's growing. Let it grow. Daniel Giese (33:56.078)Yeah, especially in the shoulder months where there's a lot of planned, unplanned outages of thermal generation. can see, you know, in the past there would have been conservation calls, like in 2022, people that lived here remember that. And nowadays summer's boring. And that's really because of the growth of. Sean Gallagher (34:10.158)Boring is good. Doug Lewin (34:12.792)Boring is so good. I love boring. It's great. Like I would love to not have conservation alerts and it's good for my newsletter subscriptions, but I will be the first to say I'd rather not have the energy emergencies and rolling outages. I'll take the lower subscriptions and the lack of drama any day of the week, twice on Sunday. Sean, you were trying to say something, go ahead. Sean Gallagher (34:33.111)Well, I was going to add that you've seen some similar comments from Jim Robb, is the CEO of NERC is the National Electric Reliability Regulator. And he's observed that the growth of wind and solar and solar and storage in particular are going to be absolutely necessary to meeting demand growth over the next several years and have been already critical in meeting heat waves and cold snaps, whatnot. It's not just Texas regulators, it's national. Doug Lewin (34:57.068)Yeah, yeah. And it's interesting, Daniel, that you mentioned the shoulder months because we are recording on, what is it, June 13th. And today I was looking at gridstatus.io, which is a great website, by the way, great for tracking grid conditions all over the country. I use it almost daily, probably daily. Who am I kidding? I think I have a problem. But thermal outages are up today significantly compared to what they were earlier in the week. And so what we're starting to see happen is... Doug Lewin (35:24.824)They're able to take longer maintenance because there is so much solar. So they're getting themselves ready for those periods on the grid where there is scarcity and we really do need them. And they're able to earn higher revenues, right? So like in some sense, the shoulder months are contracting because we're getting hotter springs and falls. But as you are able to add more renewables and then you get into these weeks where it's like, okay, demand's a little lower. We know we got all the renewables. They can take them back offline, do some more work on them. Doug Lewin (35:54.016)and get them ready to go. Really kind of a fascinating thing that's happening is showing how solar actually supports the grid. Daniel Giese (35:59.852)Yeah, that's what I want a lot of our congressional friends and people in other states to see that the resources in ERCOT complement each other. And you don't want to go all in on one type of resource. You want a diversified portfolio the same way. You're not going to throw your 401k into one stock. You're not going to throw your credit into one type of resource as well. So like you said, our resources just complement each other in ERCOT. that's really a good example of that. Doug Lewin (36:25.934)Sean, I want to actually come back and just ask you as well. Like, you've been at SIA a decade. You guys have a lot of history with these tax credits. Can you give us a little bit of historical perspective? mean, I know they used to sort of come in and come out a lot, but you guys played an early role in shaping them. And I'm sure through this period, this very tumultuous period we're in, you're going to continue to shape those. So I'm interested in a little bit of historical perspective on them and also kind of like Doug Lewin (36:54.466)future looking, not just in the context. I am certainly hopeful cooler heads will prevail. But what is kind of the long-term trajectory for these tax credits if we get through this period? They're probably not, I don't know. Are they around forever? Like oil and gas tax credits, the intangible drilling costs were established in 1913. We still have them today. I think we ought to be having conversations about oil and gas tax credits too. I'm not asking you that question, but I'm curious sort of. Doug Lewin (37:20.564)you know, the historical perspective on these tax credits and where you think they're going longer term. Sean Gallagher (37:25.102)Yeah. So the solar energy investment tax credit, which is the, you know, the one that most installers and developers use was actually enacted when president Bush was president, that's Yubi Bush, right in 2005. Those tax credits have been extended by every president since, in fact. So a lot of people think of these as, you know, the Biden tax credits, but fact, this tax credit has been around for 20 years. It was extended by president Trump in his first term. You know, and it has Sean Gallagher (37:52.268)really fueled the dramatic growth that we've seen in this industry over the last decade in particular. Where it goes from here, I think it's a really good question. mean, we talked about the bill as much detail as you want. I think what we're looking for from the Congress right now is something, let me back up a second. What came out of the House very abrupt, Turns the tax credits off effectively at the end of this year. That's going to strand a lot of investment. People have made plans. They spent billions of dollars. Sean Gallagher (38:20.878)and they're going to see that investment sort of wiped away. So what we're looking for is a reasonable business-friendly glide path or phase out or, you know, we need some more time so people can plan and make their adaptations so that people aren't thrown out of work immediately, so that factories don't close down suddenly, and that we can keep supplying the energy that the country needs. Doug Lewin (38:43.5)Yeah, let's do drill just a little bit deeper into what if the house bill passed, because I think my understanding is the two biggest problems with it. And you correct me if I'm getting this wrong or missing other elements of it. The 60 days after enactment, right? That you have to start construction 60 days after, which is like no runway at all. And then the foreign entities of concern that is really just, in my understanding, written extremely broadly to be like any component of a solar Doug Lewin (39:12.49)installation that had any part from a foreign entity concerned wouldn't qualify, which is extremely bureaucratic, a ton of red tape, and would effectively, I think some, I don't know if you guys called it this, I've heard some people refer to it as unworkable, right? It's not something that would actually allow any projects to go forward. So correct me on anything I got wrong and add anything else in that's concerning to you. Sean Gallagher (39:34.378)No, you're absolutely right. Those are two of the key concerns. And you're absolutely right that the VIAAC provisions, we refer to them, foreign initiative concern provisions, are unworkably broad and vague. And part of the reason is you just can't. It will be impossible for a developer who's the taxpayer and who's going to have to demonstrate compliance with the standard to go two, three, four, six, eight levels back up the supply chain and Sean Gallagher (40:01.248)have any certainty as to where a particular part may have come from. Again, I want to come back to the idea that we're trying to work with the Congress here on these issues. We understand their concern with the Chinese Communist Party taking advantage of American tax credits. We want to find a way to place some limits on that, some limits on the ability of projects with components from foreign cities of concern to claim American tax credits, but in ways that don't shut down the industry altogether, which is effectively Sean Gallagher (40:30.67)what the bill that came out of the House would do. So we're trying to find ways to do just that, to make it workable, to align the actual language with the sort of regional goals of the Congress. And then in terms of the 60-day place in service, again, just unreasonable restrictions, too fast, it's too abrupt, it doesn't allow for any business certainty, and that's the case we've been making to folks in the Senate, is that businesses need a little bit of certainty. Sean Gallagher (40:59.382)in order to make plans and the way that the Bill of Cuba House doesn't do that. And I think both of those points have been resonating. senators understand where the industry is coming from. I'm hopeful that we'll see some improvements when we see language from the Senate. Doug Lewin (41:14.284)It's really just kind of the dissonance here, right? Like you can't have anything from a foreign entity, but we're also going to take away the domestic manufacturing incentives. So like you can't manufacture here, but you can't buy stuff from other places either. Like it makes my head hurt. Sean Gallagher (41:32.59)Well, I think this is part of what happens when you do energy policy through a tax bill is, know, it's the energy policy is complicated, tax policy is complicated, putting the two together makes it really complicated. you get some kind of weird sort of crossover effects. So we're really just trying to work with folks to make sure that they understand what the implications are of the things that they're writing and that those things can be workable for the industries again, so that we can keep putting energy on the system and powering those data centers. Doug Lewin (42:04.558)And maybe we can dare to dream, get to some like real bipartisan policy making, has, you know, like it sounds, almost sounds like silly to be saying that in 2025, but I'm, holding onto that because we've done it throughout our history. Right. I mean, the various energy policy acts, Daniel, you look young. You may not have been around, but Sean, not that you don't look young. look very young, Sean. Sorry. Everybody on YouTube could see it, but I know you've been around a while. Like you've been around in some of these discussions, right? I mean, the various energy policy acts of the past. Doug Lewin (42:33.57)where we have had, there should be wide agreement around so much of this. And I really think there is, if we could somehow figure out a way to get people out of their sort of polarized echo chambers and actually dare to dream, have some rational policy making and decision making, I think that we could get to a place where we would see more gas peekers and nuclear and more solar and storage, permitting reform, all that kind of stuff. Doug Lewin (43:02.328)Probably energy efficiency, probably a lot of things have bipartisan support, but we just seem mired in these kinds of budget battles right now. Anything you want to say on that? I got a couple of things I want to ask about before we run out of time. Sean Gallagher (43:14.922)I think all I'll add on that is that I read something that a wise man recently said, there's no red electrons and blue electrons. There's just electrons and we need all of them. So let's put his bending on the Doug Lewin (43:24.942)I Doug Lewin (43:25.082)was not a wise man, but thank you. Yeah. Thank you for saying it. Yeah. Yeah. That's exactly right. And honestly, like the solar and wind electrons tend to be more red at this point, right? I mean, you guys have done a lot of research on that there. Daniel, maybe that's a good place to bring you back in too. Like in Texas and a ton of other states, right? We're seeing all kinds of development around this stuff. Well, here's what I want to ask you. can add, Daniel, Sean and I were just talking for a while. You can add anything to that you'd like. Doug Lewin (43:53.902)I do want to ask you though, before we run out of time too, you guys represent not only the large utility scale, but you know, developers, but also on the smaller, on the residential side, this is a place where Texas is kind of lagged. We've not seen as much residential development. It's happening of course, but not at the kind of pace and scale that some other states have experienced. What do you think as far as the prospects for residential? Doug Lewin (44:17.942)solar and do think that some of the things maybe the legislature passed might change that or some of the resiliency concerns around hurricanes? do see as the prospects for residential solar in Texas? Daniel Giese (44:27.264)Yeah, well, you saw, you live in Texas, so you know that we face basically every type of natural disaster known to man and probably some that we don't even know about that happened out in West Texas that nobody's paying attention to. So we have fires, tornadoes, hail storms, hurricanes. And you saw the, there was a lot of good positive stories about rooftop solar and hurricane barrel last year where the only houses that had power were that had solar and batteries on them. And, know, they were sharing power with their neighbors. You know, a very popular product and, know, actually during session, Daniel Giese (44:57.366)I was tracking a lot of bills that were filed or a lot of good positive bills regarding DG and rooftop that came from some very wide range of the political spectrum. So that just shows you that it is a very popular product with a lot of different types of people and different types of legislators with different types of ideas. So I'd hope that going forward, we will not focus on any of the market design stuff of the past or other sorts of permitting issues using the police power of the state to tell. Daniel Giese (45:26.508)people what they can do on their property. hopefully, you know, in the future, we will be able to see that there's a lot of more legislation done that will, you know, encourage rooftop solar, encourage demand response. Cause it's something that just is popular with everyone. gives people their own power to do at their house what they want and to lower their own electricity bills. Doug Lewin (45:46.082)I mean, you talk about there being no red electrons or blue electrons, like having solar storage at your house to be able to keep power on after a hurricane, or if we start getting to the place where there's power shutoffs ahead of wildfires or during ice storms or whatever it might be. can't think of anything that is less red or blue than that. To that point, there is a PUC docket right now. The PUC has asked for questions. Doug Lewin (46:13.282)podcast comes out will still be within that comment period to make it easier for distributed energy resources to interconnect. I don't know if you guys are involved in that one. What are you guys looking at? What is CIA in Texas looking at as far as PUC and ERCOT issues, whether that one or other ones during the interim where you guys will... Daniel Giese (46:30.264)why to engage. so we'll be involved in that DR interconnection rulemaking. know, now the session's over, that's when more work starts at the PUC. So there's going to be the 4CP cost allocation study under SB6. There's going to be, you know, the way that ERCOT looks at its load forecast. The firming rulemaking, which will be coming up as well, will take up a lot of time at the PUC, I'm sure. I mean, the rulemaking is from the different legislation that was passed this session. So it's going to be a Daniel Giese (46:59.79)a busy, regulatory world for everyone. Doug Lewin (47:03.054)And to make sure, cause listeners might be a little confused by what Daniel just said about firming, but for those that have been listening to podcasts and reading the newsletter, maybe really keying into some of the details, there was a firming provision in, I guess it was House Bill 1500, right? In 2023, there was a prospective firming. So obviously during the session, I wrote about a about 3356 and 715 that would have made it retroactive and would have moved up the deadline or rather the sort of implementation period, I should say. Doug Lewin (47:33.07)for firming. But again, there was a lot of negotiation, deal making around firming in 2023, and that is on the books. It's just prospective to 2027, 2028, but that's right around the corner. Daniel Giese (47:47.094)Yep, right around the corner. And that's for what the 715 and 3356 is where you saw sort of even bigger coalition of people against that legislation, probably more so than SB 819. Doug Lewin (47:59.234)Yeah, basically because if you have any sort of a contract in the ERCOT market, you are going to be affected by that. It was really a wild piece of legislation. All right, great. So we are almost the time. I have a bunch more questions, but I think I'm going to just ask you guys kind of just in closing, is there anything that I did not ask you that you wish I would have anything you want to make sure we share with the audience before we Daniel Giese (48:21.72)We'll talk. Sean Gallagher (48:22.154)If I can, I just want to make a couple of quick points. We talked earlier about provisions of the House bill, the Act Bill, the place in service. It's important for your listeners and viewers to know also that C has been active around the 25D residential credit as well. So residential solar really requires that 25D credit. It was pretty clear soon after the IRA was passed in 22, and as soon as the Republicans took the House in 23, Sean Gallagher (48:49.102)that the tax credits were gonna be on their sort of list, right? So we've been working really for two plus years to shore up support from Republicans both in the House and the Senate to preserve these tax credits. That's why you saw things like 21 House Republicans sign a letter saying, don't kill these tax credits. It's why you saw things like four senators sign a letter that said, don't kill these tax credits. We've been working around the clock on all of these issues for the... Sean Gallagher (49:17.538)the entire solar power sector, whether it's manufacturing or big solar projects out in the field or rooftop solar projects. We've had, I think, five different lobby days on Capitol Hill before this week. Actually, yesterday and another one next week. So that gets us up to seven. A lot of work being done here to try to protect the whole industry. And we can still use the help of local companies, of customers and others. Sean Gallagher (49:45.494)You can go to solarpowersamerica.org. That's where we are, sort of put our campaign to work on this bill. And it will tell your listeners or your viewers how they can get involved. They can write a letter to their congressperson. They can make a phone call. can hold the meeting if you're a solar company in Texas, hold a meeting with Senator Cornyn's district staff, for example. Those things are still important. We've still got some time to make some improvements to the bill and we want to leave it all in the field. So the time's now. Sean Gallagher (50:14.488)to do all those kinds of actions so we can help your viewers and your listeners do so. Doug Lewin (50:19.31)Yeah. And Daniel, before I go to you for the same question, I just want to say to, obviously the 21 House Republicans that sent the letter didn't sort of stick with that. We don't know what will happen in the Senate, but I would just make the point for 435 members of Congress and 100 senators for, know, 435 representatives, 100 senators. If we want to have any chance of getting out of the debt crisis we're in, you have to have economic growth. This is a point I tried to make in that article. Doug Lewin (50:48.846)I will probably be diving much more into this in the next few weeks because I think it's just a critical point that is often missing was that if you're going to get out of the debt crisis, if you want to maintain tax cuts, frankly, you fill the blank, whatever your goal is for this country, you've got to have low cost power. A lot of times the administration talks about we need a 3 % growth rate. Doug Lewin (51:14.766)want to get negative growth or maybe you can eke out 1 % growth, increase power prices by 10%, 15%, 20%. It's a great way to slow down the economy. So if the idea is to extend tax cuts while still paying down a deficit, you better have robust economic growth. Robust economic growth requires low cost power. Solar is the lowest cost power. Doug Lewin (51:38.05)The cost, may still be the lowest cost prior. They take the tax credits away. It's just going to be a lot more expensive than it was before. And that's going to be a drag on the economy. I appreciate you making the point. And say the name of the website again. We'll put a link in there because it is important people get involved. Like you said, all hands on deck, leave it all in the field. The website is again. Sean Gallagher (51:58.658)The overall website is CIA.org, but the campaign website is solarpowersamerica.org. Doug Lewin (52:04.942)We'll put a link in the show notes. Daniel, what would you like to say in closing? What else do want folks to know? Or if I did not ask you a question that you were wishing I would have asked, you can answer that now. Daniel Giese (52:16.492)No, Daniel Giese (52:17.122)I need to reiterate to go to solarpowersamerica.org, know, get that information about the reconciliation bill and how to get involved. But really to keep it, since I'm based in Texas, it's during this interim, if you're a company listening, if you're involved in a solar company whatsoever, you really need to get involved where you have projects, talk to the local officials all the way from state to municipality level. Cause it's so important that they need to hear about what you're doing in their districts. Cause I've talked to legislators who Daniel Giese (52:45.824)a lot of renewable activity in their district and they had no idea that that was happening. So we need to do better at telling our story about what we're doing and the economic impact in the communities around this state. Doug Lewin (52:57.738)At the end of the day, that personal connection, we're human beings, we're social animals, that human connection is really as important as anything else, if not more. Thanks, Daniel. Thanks, Sean. Appreciate you guys. We'll have lots of links in the show notes so that people can find more resources about SIA. Yeah, appreciate you guys being on the show. Thank you. Daniel Giese (53:17.07)Thanks, Deb. Sean Gallagher (53:17.794)Thank you so much. Great to be here. Thanks for having us. Doug Lewin (53:22.008)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

On Wednesday, I published Energy Submission, a piece on how the U.S. is at risk of abandoning the battle for 21st economic supremacy as China accelerates its energy dominance. I recorded this podcast episode to go a little deeper into the consequences of the House-passed reconciliation bill and what we risk losing if we dismantle the tools driving the energy future. It’s available on YouTube with full charts and visualsEnergy isn’t just one issue among many, it’s a foundational issue. In what the IEA has dubbed the Age of Electricity, if we don’t have enough of it, we enter the economic race to power the future with one arm tied behind our backs. That’s what makes the House-passed budget reconciliation bill so dangerous: it guts the clean energy incentives that are powering our present and could power our future. It dismantles the Inflation Reduction Act’s momentum just as the world is moving into a new industrial era, one that will be defined by who has enough affordable electricity to fuel growth.Let’s zoom out.Globally, energy investment is booming. In 2024, $3 trillion was invested in energy. Two-thirds of that ($2 trillion) is going into clean power: wind, solar, nuclear, storage, and efficiency. Only $1 trillion is going into coal, oil, and gas. China, in particular, is accelerating at breakneck speed, building 277 gigawatts of solar in 2024 alone. To put that into perspective, that’s more clean energy in one year than the entire installed capacity of Texas’s grid (~180GW).Meanwhile, the U.S. is considering a bill that would eviscerate the progress we’ve made. It would slash the tax credits that have driven private investment into renewables, energy storage, and domestic manufacturing, just as that investment is beginning to deliver. More than 270 clean energy factories have been announced since the IRA passed. If this bill becomes law, many of them will be canceled outright.This isn’t theoretical. Projects are already being canceled in Texas due to market uncertainty. This bill pours cold water on an area where the U.S. has been gaining ground in manufacturing, jobs, and grid reliability.And it’s happening just as we’re entering a new age of electricity demand. AI data centers, robotics, industrial electrification, and electric vehicles are pushing power use higher than it’s been in decades. Even Elon Musk is warning that we could see electricity shortfalls by next year.You cannot meet 21st-century energy demand with 20th-century thinking. And yet, that's exactly what some policymakers are trying to do by doubling down on fossil fuel exports, suggesting "LNG power plants" (which aren’t a thing) are going to power our grids, and pretending we can drill our way to abundance while dismantling the tools that are actually scaling our grid.In fact, LNG export facilities consume massive amounts of power, up to 700 megawatts each. If you want to power exports and data centers, and still have enough for people to use in their homes, you need a vastly more flexible, modern grid.That means a diversified portfolio: wind, solar, storage, gas, geothermal, advanced nuclear, and demand-side solutions. It means better transmission planning, smarter markets, and policies that attract investment rather than repel it.This isn’t just about clean energy anymore. Clean energy is now simply energy. It’s about competitiveness, reliability, affordability and national security.While we debate whether clean energy tax credits are “too generous,” China is becoming the world’s first electrostate, a nation that doesn’t just consume energy, but manufactures and exports the infrastructure to produce it. China isn’t waiting for the market to figure it out. They’re building fast, and they’re controlling and locking up global supply chains along the way.The U.S. still has the innovation advantage. We lead in software, in AI, in energy entrepreneurship. But without enough power to run it all, that advantage becomes a bottleneck. As David Friedberg put it recently, energy abundance is necessary for every other kind of abundance. Without it, AI, biotech, and automation all stagnate.This reconciliation bill would deepen that bottleneck and cut off any hope of growing our way out of our deficit.We cannot cut our way to energy dominance. We have to build.If you care about growth, if you care about leadership, if you care about national security, you should care about energy policy. And if you care about energy policy, this bill should concern you.We need the Senate to fix what the House broke. The tools are there. The economics are clear. The stakes couldn’t be higher.Timestamps* 00:00 – Introduction* 01:30 – China’s energy dominance by the numbers* 03:00 – What is an Electrostate? China's strategy to be the first* 04:30 – Some Republicans’ preference to surrender clean energy dominance to China* 06:00 – Doug Burgum on the All-In Podcast* 09:00 – Debunking the “LNG Power Plant” Myth* 14:00 – All-In Podcast: If the Senate fix the House bill, we’re in trouble* 16:25 – All In Podcast: The gating factor for abundance* 18:26 – What's Next: Senate’s role and the urgency and importance of this momentResources & ReferencesPodcast Episodes Referenced* All-In Podcast with Doug Burgum (May 3, 2024)* All-In Podcast (May 10, 2024)Graphs & Articles Referenced:* How Xi sparked China’s electricity revolution - Financial Times* China’s head start on clean energy is shaping the debate on the Republicans’ megabill - PoliticoU.S. & China Energy Stats* China adds 277 GW of solar in 2024 – BloombergNEF* U.S. Electricity Annual Capacity Data – EIALNG & Grid Power* Freeport LNG Facility Overview* Experts React: DOE LNG Study Highlights and Implications - CSIS* DOE Report on US LNG Exports: Implausible Scenarios and Flawed AssumptionsEnergy Demand, AI, and Growth* Elon Musk on AI & Power Grid Strain – WSJ* AI Energy Demand Projections – IEA* Robots are infiltrating the growth statistics - BrookingsLegislation & Policy* U.S. House Reconciliation Bill Text aka “The Big Beautiful Bill” * The Federal Budget in Fiscal Year 2024* Inflation Reduction Act Clean Energy Provisions – CEA* Energy Dominance Executive Order – Trump ArchiveGrid Reliability & Energy Mix* ERCOT Grid & Market Conditions Dashboard* Winter Storm Uri, Elliott, & 2025 Arctic Grid Outages – FERC/NERC Joint ReportFinancial Implications & Deficit* CBO Interest Rate Scenarios on U.S. Debt* David Friedberg on Energy as the Key to Growth – Twitter 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.comThe Texas legislative session just wrapped. As always, energy was front and center. And once again, there were sweeping efforts to pass bills that would limit energy development in Texas.🎧 Listen to the first 25+ minutes for free, and if you’re a paid subscriber and want to listen in Apple Podcasts or Spotify, just connect your private Substack feed. H…

With just ten days left in the legislative session, a lot of attention is (rightfully) focused on bad bills. But some lawmakers are pushing forward thoughtful, future-focused energy policy and Chairman Drew Darby is at the forefront.For this episode, I sat down with Chairman Darby, a West Texas Republican and Chairman of the House Energy Resources Committee, to talk about what an energy-secure Texas really looks like and how we get there.We covered a wide range of topics: from his 50-year career in oil and gas law, including getting started during the oil crisis of the 1970s, to the centrality of energy not just to his district but for the whole state, to what it’ll take to build a grid that keeps up with the state’s growth.Chairman Darby makes a strong case for all-of-the-above energy policy. Solar, wind, and batteries? Absolutely. Oil and gas? Also yes. Nuclear, geothermal, demand flexibility, transmission upgrades? Yes, yes, yes, and yes. As Darby, a former UT football player under legendary Coach Darrell Royal, put it: if you want to win, you need a full team, not just one kind of player on the field.We talked about:* Why solar + storage projects are already transforming his district, including one project near his hometown that charges and discharges batteries up to six times a day* How renewable projects support school districts, landowners, and local governments in rural Texas* The dangers of the many anti-energy development bills this session* How House Bill 3069 would help fix the transmission approval process and reduce costly congestion across the ERCOT grid* Why House Bill 3970 and Senate Bill 6 offer complementary approaches to large flexible loads and why Texas needs a clear path forward now* How abundant energy, including small modular nuclear reactors, can help solve our water challenges* And what it means to be a pragmatic conservative working across geographies and many other divides to put solutions above ideologyWe also discussed the danger of overregulation and the need for regulatory certainty: Do we really believe in market forces or don’t we?”If you care about grid reliability, economic development, or the future of rural Texas, this conversation is worth your time. Chairman Darby brings experience, insight, and a level-headed approach that’s too often missing from the energy debate.If you enjoyed this episode, please share it and consider becoming a paid subscriber to get access to full archives, Grid Roundups, paid-only podcast episodes, and more. Timestamps0:00 Intro3:00 Chairman Darby’s background, West Texas roots6:00 The boom-bust of the oil industry during his career8:00 The fracking revolution making the Permian the center of the oil-producing world10:00 The rise of renewables in Texas, particularly in West Texas, and12:00 Using the best of each resource, integrating diverse resources and getting the most out of each14:00 Creating a good investment environment for Texas15:30 Texas’ water problems and how abundant energy can help solve them18:00 Treating “produced water” and the symbiotic relationship with oil and renewables23:00 Examples of renewable and storage projects in Chairman Darby’s district, benefits to landowners27:00 Fixing Texas’ transmission planning and construction to avoid reliability problems30:00 Reducing congestion charges, currently $2 billion annually, “generic transmission constraints”31:30 Geothermal in Texas using techniques from the oil and gas industry34:45 Large load flexibility and blending SB 6 and HB 3970 together38:00 Saying “yes, if” to large loads, reducing energy peaks, filling in energy valleys41:00 Do we believe in markets or not?43:00 Finding common ground and solutions47:30 Pragmatism over ideologyResourcesEnergy Capital Podcast Episodes* Texas' Load Growth Challenges – And Opportunities, with Arushi Sharma Frank* How Load Flexibility Could Unlock Energy Abundance with Tyler Norris* Geothermal’s Moment with Jamie Beard* Drilling for Geothermal Power and Storage with Cindy Taff * New Nuclear in Texas, with Doug Robison and Dr. Rusty Towell* Rural Texans Speak Against Senate Bill 819The Texas Energy and Power Newsletter Grid Round Ups* Large Loads at the Lege – Grid Roundup #40* Peak Performance – Grid Roundup #58* ERCOT CEO: “We Need All Resources” – Grid Roundup #56Related Technologies* Texas Geothermal Energy Alliance* Texas Nuclear Alliance* ERCOT Transmission Planning Reports* ERCOT Load Forecast Dashboard* DOE Office of Geothermal TechnologiesReports and Analysis* Aurora Energy Research – Renewables Restriction Study* Aurora Energy Research – Demand Flexibility StudyLegislation Mentioned* House Bill 3069 (Transmission Planning)* House Bill 3970 (Large Load Interconnection)* Senate Bill 6 (Large Load Reliability)* Senate Bill 2627 (Texas Energy Fund)* House Bill 3240 (Geothermal Policy Council)* Senate Bill 1656 (Permitting Reform)TranscriptDoug Lewin (00:05.484) Welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. Humans have a very common problem, often called negativity bias. We tend to focus on the negative things. It's the negative things that drive headlines. But there's a lot of good things happening at the legislature too. And while I spend a lot of time also shooting videos or writing articles about the negative things, I wanted to take a minute to talk about, and we will in this conversation talk about some of the negative to be sure, but also some of the positive things happening and some of the leadership that is happening in the legislature on the positive side of energy. Because while there are a few that are trying to tear down, there are some members that are trying to build up. So here today to share his energy vision for Texas is Chairman Drew Darby of San Angelo. Chairman Darby was first elected in 2006. He is one of the most respected members in the Capitol, not just on energy, but across a wide range of issues.He represents San Angelo. His district includes the Permian Basin, has both a lot of oil and gas production and a lot of renewable energy. It's one of the windiest and sunniest areas in the whole country. For projects already installed in his district, there are billions of dollars of investment going to local schools, hospital districts, landowners, all throughout his district. This session, he is chair of House Energy Resources, a member of the House Committee on State Affairs. He's vice chair of the Climate and Energy Caucus, and he's chairman of the Energy Council, which spans a dozen states and a few Canadian provinces. It's a nonpartisan organization that facilitates dialogue among legislative policymakers on critical energy issues affecting their states. And that piece right there, Mr. Chairman, that dialogue is something I think you have really brought to the Texas legislature and has kind of defined your 20 years. So first of all, thank you for being on the show and welcome.Chairman Darby (02:05.41) Well, Doug, thank you for those very kind comments. Sometimes we hear a lot of negativity and I liked your intro. There is a lot of negativity, certainly around this building this time when we meet every other year for 140 days. We cram a seventh or eighth largest state economy into trying to figure out what we need to do in 140 days. And it gets hectic at times, but certainly there's a fair amount of negativity that swirls around the building from time to time.Doug Lewin (02:37.39) And of course we are recording on May 22nd, so we're like 11 or 12 days from the end of the session. So I really appreciate you taking time in this particularly hectic moment, but there are people all around, like you said, eighth largest economy in the world. There's people not just around Texas, but around the country and the world wondering what's going on. So I really appreciate you taking time to share what's going on here. But before we jump into the legislative session and what's going on in the moment, let's start at a little bit of a higher level. You were born and raised in San Angelo, a real sort of energy hub and energy center. You've worked on energy issues throughout your career, not just in the legislature, but before that. Tell us a little about yourself, your energy background, and what energy means to your district.Chairman Darby (03:20.738) Of course, energy is important to everybody's district wherever you live. I've been fortunate. I was born and reared in San Angelo and West Texas. It was a small, smaller community back then. After, we had an air force base, Goodfellow Air Force Base. And my father was stationed there during the war and met my mother and they married and I came along shortly thereafter. And so I enjoyed an upbringing of sports and outdoors, enjoying hunting, fishing, all the things young men tend to do. And I was fortunate to have been blessed with a little bit of athletic ability and I was able to come to the University of Texas on a football scholarship.Doug Lewin (04:05.0) I did not know that.Chairman Darby (04:10.06) My freshman year was 1965. Amazing. I've had some good coaches. Emery Ballard was my high school coach. Spike Dykes was my linebacker coach.Doug Lewin (04:20.0) Legend. He went to Tech then, right?Chairman Darby (04:23.0) Thanks. Spike went on to Tech. Yeah. But he was a linebacker coach there for San Angelo Central. All right. All right. Back in the early '60s. And then I went on to Austin where Darrell Royal was coach.Doug Lewin (04:38.094) We're going to have to do a separate podcast of just Darrell Royal stories. That'll be the follow-up.Chairman Darby (04:42.414) That'll be fine. That'll be fine. But I had some knee injuries that kind of limited my playing ability, but I went on to stay at the University of Texas. After I got my degree in finance, I was able to get into the University of Texas Law School and was able to complete a juris doctorate degree there in the early seventies. And it's amazing Doug, how life throws you lemons from time to time. They're trying to make lemonade as the story goes, but I was going to take a job with the Securities and Exchange Commission in Washington after I graduated. But the day I finished my last law school exam, my father was killed in a plane crash.Doug Lewin (05:32.0) Oh my God.Chairman Darby (05:37.294) And left my mom who was, and you'll know this term, she was a June Cleaver mom who didn't hardly drive. She managed myself and my sister and so when my father was killed, she needed some help. And so I took a job with a small law firm there in San Angelo. And quite frankly, you know, that changed the direction of my life. And I don't regret any of that. So living there in West Texas, I was able to appreciate kind of the changing economic landscape that is a rural lawyer. When I first got out of law school, we had the Arab oil embargo back in '74. And so the area responded by trying to find and produce oil back then. And so I did a lot of oil and gas work. I represented a lot of operators who were getting into the business. We drilled a lot of wells. Some were successful, some were not. But as the peaks and valleys go, there's a boom bust every oil cycle.So our world ended in October of 1983 when the First National Bank of Midland failed and most every operator I know had to file bankruptcy. So I did a lot of bankruptcy work during that period of time. And along that same time, I got into digitizing, if you will, all the deed records in Tom Green County and I created a title plant in order to have a computer that would produce those records in expedited form and spent a lot of money and bought a lot of very expensive equipment that turned out five years later to be worthless.Doug Lewin (07:18.37) You have seen kind of the expanse of the energy industry in Texas. I mean, from the oil embargo through that bust in the eighties and obviously a lot in between, all the way through to the shale revolution. I mean, you, you, you've been there.Chairman Darby (07:31.806) I've been there and done that, as they say, and I did a lot of bankruptcy work. I've done a lot of real estate work, a lot of real estate, what they call land men, you know, the new series Landman. Well, that's what a rural lawyer does.Doug Lewin (07:47.914) Maybe not exactly what's depicted on the TV series.Chairman Darby (07:51.198) Some of it might be a little exaggerated, but yes, I have been associated with that. I've been an oil and gas lawyer for all of my legal career, 50 plus years. And so we've seen it, we've watched it develop, we have watched it mature and then disintegrate and reemerge in a reconstituted form. And that's what's happened in the fracking boom, as they say. And so that has revolutionized and taken producing zones that we knew were there, but were too tight, quote, did not have the porosity necessary to produce in paying quantities. And so the new completion techniques opened up those new horizons.Doug Lewin (08:39.789) It was just unthinkable. It was unthinkable. Not even in the early days, just like 15 years ago.Chairman Darby (08:45.824) Absolutely. And so areas of this state, and I remember reading projections that said the Permian Basin would be played out by a certain date. I can't remember what that date is right now.Doug Lewin (08:59.34) Yeah, there was all those discussions around peak oil and yeah.Chairman Darby (09:02.828) But we all realize that in most producing zones, under current completion techniques and production techniques, you can only recover about 50% of what's in the horizon. And so these new completion techniques have allowed us to seek and improve production and increase dramatically that production to make the United States and certainly the Permian Basin, the center of the oil and gas production world if you will with regard to our economic and strategic security here in this country.Doug Lewin (09:37.474) You know, it's interesting cause you're talking about the oil embargo and the seventies with some of the stuff going on in the world right now. I think a lot of the oil producing world in the Middle East, they would love to be able to have a similar dynamic and they can't because fracking really did kind of change that game. Of course, also in your district and I don't know if it's part of your business or not, but just so it is part of the district and it's part of what you've seen out there. This rise of wind really kind of in the, about 20 years ago really kind of taken off through the early 2010s and even mid 2010s and kind of leveling off. And then the solar boom happened in the last five years. The most recent podcast I did was with Glenn Hamer, the president CEO, Texas Association of Business. And one of the things we talked about was, I think there's a lot of folks, particularly those that are pushing the various negative proposals that a lot of times are viewing this as like oil and gas versus renewables. Like it's a football game and we've got different jerseys on and we're lining up across the ball. I remember on one of those bills, Senate Bill 819, I believe the gentleman was from the San Angelo chamber, if I'm not getting that mixed up, and said, like, look, we got a lot of oil and gas, we got a lot of renewables, they work together on projects, oil and gas buys power from renewables. It's not a us versus them thing out in San Angelo.Chairman Darby (10:56.59) No, it's not. And we are a very diverse region. Clearly we have a lot of land and that has a lot of radiant heat associated with large swaths of land. We have a lot of wind and certainly we have oil and gas production.And to use your football analogy, I look at it as if we're going to score, then it takes a whole team to score and it takes somebody to snap the ball, but it takes somebody to block and tackle and to run the ball. And so I look at all of the portfolio of energy production as part of that team. look at oil and gas is certainly have a critical importance, certainly in my region, but also equally as important is solar and wind. And what we're seeing today is a co-location of those type of generative capacity with battery backup that helps with dispatchability and other issues, reliability issues that we faced in delivering affordable, reliable power to people who need that power. So San Angelo in our area is particularly well suited for that. And so I'm an all the above guy. And I tell people that it takes all of us working together to deliver this diverse portfolio that we have. Doug Lewin (12:20.052) I really do love the sports analogies because they really do kind of work. You don't want just one type of player on the field. You need the fast guys, but you also need the big guys to block and tackle. Like you said, and you know, I hear people talking about, well, you know, we're just going to build out a ton of gas and we'll just run our grid on gas. And I hear some people say it's going to be a hundred percent renewable. And I kind of hear both of those things and I'm like, why would you do that? Why wouldn't you use the strength of the different resources that are out there and put them together in a smart way?Chairman Darby (12:50.675) Some are very nimble. Yeah, some are quick, some are speedier. They get really cheap, some are cheaper.Doug Lewin (12:58.384) And not exposed to the ups and downs of that boom and bust cycle because when it booms, prices go high and that's good for the state, you're exporting a lot, but if you got a whole grid based on gas, consumers are going to hurt under that scenario.Chairman Darby (13:10.552) Exactly right. And so I think if we're going to be smart about this, then it takes all these players to have a perfect team. And that's what we're trying to achieve with a perfect team is this integration, if you will, of the energy portfolio into a fully functioning, efficient team.Doug Lewin (13:30.574) So let's talk about that from a policy perspective. Maybe first of all, kind of, if you want to flesh that out a little bit more, like what's your vision? I like to ask this question, sort of a common question I ask the guests on the pod is like, what is your vision of where energy's headed in five to 10 years? And just kind of related to that, like what kind of policies do you actually need to get to that place?Chairman Darby (13:50.21)Well, of course, my role as a policymaker is to try to provide this pathway, if you will, for private industry and people who want to invest in this state to have an ability to do that in a cost efficient and a timely fashion. With all the population growth that the state is seeing, these needs are ever pressing forward and needing to respond quickly and efficiently. This combined with the revolution in technology with AI development and the need to make sure the state is prepared for that and takes advantage of that. We have to have policies that encourage and enhance and incentivize that.So where I see is energy. I see oil and gas has an important role to play. Certainly natural gas and generation is always going to be critical. But there are other aspects of that too. I mean, we've got a wonderful opportunity in nuclear. Yeah. There is a small modular reactor currently being developed in Abilene. We currently have large load generators here and they continue to play a role. I don't know that we're going to see another one of those type of facilities built, but certainly… the small ones, absolutely.Doug Lewin (15:17.322) And specifically, you're a supporter of HB4?Chairman Darby (15:19.856) Absolutely. And, you know, the effort to expand our nuclear capability and understanding is critically important. It's critically important because it ties into the other ever pressing need in this state. And what we talk about a lot in the legislature is water. Yeah. And without water, then all of this really doesn't matter. Because if you don't have water in this state, then you don't have people. If you don't have people, then you can't develop these resources. I tell people that the last time I checked, they don't raise beef cattle in the back of the H-E-B in San Antonio, nor do they grow cotton in the back of the Men's Wearhouse in Dallas, Texas. But they have people that want to live in cities and they want to eat and they want to wear clothes and they want to have electricity. But these resources are developed and managed in rural Texas so that they can be delivered to people who want to live in urban Texas. So if you want to live in cities, then you have to allow people who live in rural Texas the ability to have basically four or five things. You need to have a good education system. Mama's not gonna want to have their kids in a poor performing school, so you got to have good education. You have to have good roads to get your goods and services, food and fiber, hide and hair to market. You have to have good healthcare. Mama's not gonna wanna live in an area where her kiddos don't have access to quality healthcare. You have to have water. And we are water challenged, certainly in West Texas. And then you have to have good jobs, okay?Part of those jobs are what we've been talking about this morning is energy jobs. That's an important component of that. So with those pillars, if you will, of what it takes for people to live in rural Texas, then we can deliver those resources to urban Texas. And so that's the challenge. So energy, again, plays an important part of that, not only for jobs, but for support for schools and other institutions that it takes us to live in rural Texas, but I see a proliferation. So I think nuclear from the standpoint of certainly the small modular units, I think it helps solve another problem. And that is the water need that I've spoken of. Oil and gas production with fracking have developed enormous amounts of produced water that comes back from the formation not only do you inject it down in the fracturing process but you produce back much more than you put down and you produce back oil and gas mixed therein you separate that out and you have a residual product.Doug Lewin (18:22.912) And it's water that at this point can't really be used for anything, but could be if you had power to actually clean the water.Chairman Darby (18:30.799) Absolutely. We know what this water consists of, what sort of chemicals, what sort of solids. We know how to treat that water, to clean it up, to make it reusable. The big challenge is energy. What is the energy source to do that? Where is it located and what does it cost? Provided it's located where we need it and it has an affordable cost, then operators should be incentivized to treat that water to a level of reuse so that we can utilize that water source as opposed to throwing it back down a hole at deep depths where we have seismicity issues.Doug Lewin (19:15.274) It's actually like a double win because you, cause you're, you don't have then the seismicity issues, which are a problem right now. Cause you're some even like five points something. So you deal with that problem, but then you also have water to grow things.Chairman Darby (19:22.51) I think a 5.2.Doug Lewin (19:28.392) Where we're running out of places to put the water. Quite frankly, East Texas, they have been receiving Louisiana water for a number of decades. Produced water. Produced water from Louisiana coming to Texas to dispose of it. And so we're seeing some of that happen in West Texas when you have New Mexico water being brought to Texas for disposition. And certainly we have oil and gas production here in this state that needs to do something with the water. So from a policymaking standpoint, we need to see how we can incentivize operators to spend the extra dollar to treat that water so that they can reintroduce that water into the hydrological stream of the state, both literally and figuratively. And so we have to create liability protections, say if you're doing it right according to the permits, absent gross negligence, you're covered in that process. We have to figure out again the energy, where it's gonna come from. So these small modular nuclear units, I think are particularly well adapted to simply locate them where we have large amounts of produced water. Let's accumulate that water in a centralized processing location and then let's treat it. People out there may be thinking, I won't drink that water. Well, I can assure you, I have had a glass of that water and it has no taste. It's like drinking distilled water. They can make it so clean and pure that it has no taste to it.Doug Lewin (21:05.268) So I think nuclear potentially could be very important for that. Obviously, it's going to take a little while to develop nuclear. You could also potentially use renewables for that as well, particularly because like you don't necessarily care when you're cleaning that water, right? You don't need to do it necessarily. There might be some processes that need to be 24/7, so maybe some nuclear, some storage, some gas, whatever in the mix. But generally, that's kind of a variable process. So sunshine and wind rather than just waste in the energy because the lines are congested. You could actually use that to clean the water. And you get the water savings from the renewables too, because a lot of other forms of generation use a lot of water.Chairman Darby (21:45.23) But renewables don't. Right. The symbiotic relationship between cleaning up produced water and renewables is clearly there. Yes. They're locatable to where you need to use that electricity for that cleaning process. And that is very encouraging. And we saw a fight on the floor of the house this past week about the surface reservoir, the Marvin Nichols Reservoir in East Texas, but you've got 10 million people that live in the Dallas-Fort Worth area that need to drink.Doug Lewin (22:17.102) This has been an issue. I used to be a staffer in this building 20 years ago. They were talking about all that back then. And way before that too.Chairman Darby (22:23.779) When I first got here, we were talking about the Marvin Nichols Reservoir. Yeah, it continues to remain a problem, but I see a bright future for energy development of all sorts. And we haven't talked about geothermal, which I think is particularly compelling. We have brine mining. We have certainly we have the ability to develop these resources and co-locate them where they're most efficient.Doug Lewin (22:49.582) So these are all things I want to talk about, but before we move on to those things, I just want to drill down just a little bit more on something we were talking about related to your district. Could you just give some examples of where, because I was talking about the gentleman from the San Angelo Chamber, I think his name is Michael Looney.Chairman Darby (23:12.0) Michael Looney, yes.Doug Lewin (23:14.7) So he's talking about how energy development of all kinds, like you're talking about rural Texas needing healthcare and schools and roads. Can you give some examples from your district of where renewable projects have brought benefit to local school districts or local governments?Chairman Darby (23:27.406) Absolutely, I can tell you that we have been blessed. We have seen very large projects come to this region. One is located just adjacent to the city of San Angelo. It's a little bit north, a little bit west of San Angelo. It's a solar project, but it has a wonderful component of battery storage. And literally this project, a thousand plus acres, is located right next to a residential subdivision in close harmony with it. I toured the facility about a month before the session began and this whole facility is being operated by two people. Two people are able to manage that. And I had never understood this and I'm sure a lot of your listeners do understand. I thought the battery component was simply there in an emergency situation to help dispatch ability. That's too simple a view of it.When I asked the operators, how often do you discharge? And I expected once a week or something like that. They said, we charge and discharge four or five, six times a day. And we do it, and it's all price motivated where we see opportunities to discharge at a favorable rate and then charge back up at a lower rate. I had no idea about that capacity, but those are the type of innovative working techniques that make these projects viable and important. We had hundreds of people were used in the construction of the facility. The project generates millions of dollars for our tax base there in our county and the ETJ for the city of San Angelo. It also generates royalties for the family that owns that land and they have a 30 plus year relationship with that farm.And you know, here's the beautiful thing. I tell some of these farmers or ranchers that are considering this. I said, they're basically renting your surface. They're renting your surface for a period of time. They're paying you a bunch of money to do that. But at the end, they're going to be obligated by contract to remove every bit of that. And you're going to get your land back. You're going to be able to achieve whatever economic value at that point your land can produce.Doug Lewin (25:49.046): You can repower with new solar panels, or you could decide, "Well, there's something in the market that's really making more money than that. I'm going to do this."Chairman Darby (25:56.274): They're not taking your land. They're just renting your land for a period of time. And so I think at every level you want to look at this. This is a project that doesn't take a lot of water—doesn't take any water that I could tell, or very little water—but it generates revenue. It generates employment. It generates tax base, and it benefits our grid and the people who live and work in our region.Doug Lewin (26:23.084): And can support a lot of these large loads where you've talked about desalination. I want to talk about some of the things you're working on this session. You've got some bills related to transmission. You've got some bills related to large load. You mentioned geothermal a minute ago. I was going to ask you about each one, but in the interest of time, like, what do you want to talk about? What are you excited about? Can talk about all of them or one of them, whatever you—Chairman Darby (26:45.664): I'm excited about all of them, tell you the truth. Now, some of them, as this process shows you, and you know this, some are destined for success. Some are destined for review, but lined up short of the goal line, and some never had a chance. That's just kind of how the process works. But I feel good that we've had a very strong relationship with trying to fix our transmission process. I have found it to be inefficient.I was around my first session in 2007. We had just approved as a legislature—they had approved the CREZ project, which invested six-plus billion dollars in transmission to rural West Texas and North Texas, but yet there was no generation. We've seen a proliferation of generation that came.Doug Lewin (27:34.734): Private investment, right? A lot of people, I think, don't understand that. I think, "Oh, the state's paying all this money for wind and solar." No, no, that's private investment. And there's actually a study by some UT researchers that that CREZ investment saved $20-30 billion because, depending on what year you're in and what—we were talking about earlier—what the price of gas is. 2022, we saved a whole lot of money because Putin decided to invade Ukraine and the price of gas skyrocketed. And thank goodness we had all those renewables to keep prices somewhat reasonable.Chairman Darby (28:05.102): That's a great point. That's a great point. And we made the infrastructure investment, and in my travels representing the state of Texas, either through the energy council or other forums, when I talk about transmission in this state compared to transmission processes in other states, they are—their jaws drop down. They haven't built some transmission projects in 20, 30 years. Some of their states have a workable transmission approval process. It is not as efficient as I'd like it to be. I've worked on trying to make it more efficient. I've tried to put in goals where we study other things other than cost. I mean, there's got to be some economic benefits associated with it.Doug Lewin (28:49.902): Yeah, because what I think—so you have House Bill 3069, and one of the things that does is, as I understand it, we have these tests that are basically the only transmission projects that really get through. There's an exception or two in the last decade, but really not more than that, are the quote-unquote reliability projects. But as they talk about it, the Public Utility Commission—former Commissioner Cobos used to talk about this a lot—what is today's sort of economic problem? Like, we're not building lines because there's an economic case. We wait until there's a reliability case, but what's today's economic problem becomes the reliability problem tomorrow. It takes a long time to build transmission. If you don't build it because of the economic case, then you end up running into a reliability problem. And guess what? Now you've got to wait six years for the transmission line that you've got to run. So we're literally dealing with this in South Texas right now where they're building lines, but they can't build them fast enough. And we're in a state where we really could have energy emergencies because of the congestion on a line that has a lot of wind going through it, a lot of gas going through it, but not enough capacity on the line.Chairman Darby (29:54.69): You just mentioned the key word: congestion cost. And that is a real cost to consumers by the failure of this process to deliver enough transmission to accommodate the generation to where we need it. Somewhere around $2 billion a year is what it costs. There are 16 to 17 generic transmission constraints currently in this state. And think of that as a road monitor or bridge monitor, ERCOT being a monitor saying there's only so much traffic that can go over this bridge at a certain time. And so when they restrict the traffic, two things happen. Number one, it makes the number of cars on the other side of that constraint less efficient. They have to sit idle and burn gas and/or not get paid for their gas. And then on the other side of the constraint, the cost to get the energy needs that people need is expanded—it's increased. To me, that's inefficient. We need to incentivize it, and going back to what we're trying to do is to make sure that that cost horizon is extended beyond the current three years.Doug Lewin (31:10.516): It is crazy, like what—you can't build anything on a three-year horizon. We know about a house. We'd never build a commercial building. We'd never build a road. We—yeah.Chairman Darby (31:17.518): We don't build big projects based on a three-year return on money. I mean, you've got to look—industry looks 25, 30 years out on how they can cost-recover investment and assets. And so that is the current situation. And so we're trying to change that dynamic and look at different things.Doug Lewin (31:37.942): Yeah. So I want to ask you about a couple other things too. You mentioned geothermal before. Definitely want to ask you about that because we've talked about a lot of the different—like nuclear and solar and storage—but geo's one I'm pretty excited about. You indicated a minute ago you were too, and I know you've carried bills on this. So this is like one of the innovations that's really come from shale, right? From drilling. It's the same technology being applied. Do you see any—the legislature last time, I think at least one or two of them were your bills, passing bills to... There's not necessarily incentives or anything like that. It's just kind of removing regulatory barriers, right? Is that kind of where we're at with geo?Chairman Darby (32:15.662): That's right, and we have—again, Texas is well-suited for geothermal development. It's early along the Gulf Coast, and particularly the valley has wonderful geothermal opportunities—all that chalk region in South Texas and, interestingly enough, the Big Bend area.Doug Lewin (32:35.327): And East Texas.Chairman Darby (32:37.788): Yes, it's true. I think geologically we're well-suited for that, and we're deploying techniques that the oil and gas industry already deploys in finding hydrocarbons. They can now use that technology to drill just a little bit deeper and to install equipment that allows us to have, you know, closed-loop geothermal equipment that will certainly be reliable. It's always going to be there and baseload, and it's able to respond as the need develops. My job as a policymaker is to make sure that the regulatory playing field, if you will, is level—that there aren't any penalties associated with the orderly development of that, as long as you're doing it in a safe and efficient manner—and that we have appropriate regulatory oversight where we're not patting the baby to death. We have a gentle touch, if you will, to make sure they're doing it right and protecting the environment and certainly our population. So that's the challenge. And so we want to make sure that for my last couple of sessions have been to try to level that playing field and set the table, if you will, for people to invest. Now there are some wonderful projects in South Texas right now, the McAllen Ranch. There are projects there on the ground right now that they're developing data for to demonstrate the practical applicability of that.Doug Lewin (34:19.046): I think we're really going to see this boom. And when I said we're the best for it, I didn't mean geologically because obviously there are places in the West that have better geology. But we have good geology here for it, but we have the expertise, right? I think a lot of these companies are already headquartered here. We're going to see a lot more headquartered here. I'm really excited about what geothermal will mean for the state.Chairman Darby (34:38.218): Geothermal is located where the people are. So there's not a whole lot of transmission requirements associated with that, and maybe out west you may have a wonderful geologic opportunity, but there's no people there—you'll have to build transmission to where people need it.Doug Lewin (34:53.313): Let me ask you about large loads. You had a bill that's trying to get large load flexibilities, House Bill 3970. I've done a couple of podcasts on large load flexibility. This seems like a really important issue, and whether or not that specific bill passes, this is an important—I mean, we talked about it already with desalination, but I think you're going to see it with all kinds of different loads, whether it be data centers—some of them have to be 24/7, 365, but some of them have a lot of flexibility—all kinds of different loads that'll have flexibility. Can you talk a little bit about what you're trying to do with that bill and why you think that's important?Chairman Darby (35:29.114): Well, first of all, let me thank you, Doug. You did a podcast recently with Arushi—I think I pronounced it wrong. It's wonderful. I listened to it. Recently printed out the scorecard, if you will, between 3970 and Senate Bill 6—the two bills that are focused on large load and how we get that large load to market. I'm particularly pleased with how she scored my bill, and I do think it provides the flexibility that this policy needs. So that bill—I know we're tabling this today, but from my perspective, Senate Bill 6 will be on the floor of the House Friday of this week. And so we'll be watching that and hoping to shepherd that with the chairman, King, on that. And it passed out of the state affairs, which I was happy to lay out and vote for. I hope that we support that on the floor and then we support that as it moves over to the Senate. And we have a robust discussion about the relative advantages of the concepts laid out in Senate Bill 6, which I think there's some great things in that. I think our bill is good. I would like to blend that together and take the strong points out of both and come up with a policy. We need the policy now. I mean, this is not a hypothetical problem that we're experiencing. This is a very real problem. We have very real investors that want to spend billions of dollars in this state, and they require electricity for their operations. They want to come. They are willing to bring their generation with them. So how do we blend that with a fully functioning grid that we all depend upon? How do we blend that and allow them to come on, and what do they bring with them? Yes, they bring generation with them. Do they bring flexibility with them? Do they bring technology that allows them to reduce their load demand and contribute to the reliability of the grid? And what effect does that have on the grid? That, coupled with the process to figure out what their attributes are and what they can add to the grid, is critically important. And how do we incentivize that? How do we have this demand and integrate it into a fully functioning grid system efficiently and timely? Because they won't wait. They have other opportunities. They can be anywhere in this country. And other states are bidding on their projects to come to their state.Doug Lewin (38:22.664): Texas has advantages, right? We have this abundance of renewables and gas, storage. Like, I think they want to come here, but we've got to meet them part of the way. And I really do think it's really kind of this "yes, under these conditions," right? It's not a "yes under any conditions," but that's really what they're like—bringing to power, having the flexibility. And just like you were talking about with that solar and storage where storage is being deployed four or five, six times a day. These loads can—especially if that battery's on-site—but even if they don't, some of the loads can actually just move up and down to help with grid reliability and cost and all of that. So it's kind of that "yes, if" approach.Chairman Darby (39:01.58): Yeah. And I think certainly your podcast with Arushi—I pulled this factoid out that y'all kind of analyzed it with an eight-lane highway. And, you know, you don't need all eight lanes from time to time. You might need it occasionally, but you need to operate more than just in the first two or three lanes. You have to operate in lanes four or five, six, maybe seven in that regard. And so I like that analogy. I think clearly we've built a grid to have reliability in two or three instances in the whole year where we have really hot weather or we have really cold weather. But how do we make that margin, if you will, that remains underutilized? How do we utilize that?Doug Lewin (39:49.666): That is the thing for the grid, right? It's like, how do you get those peaks where you're really in trouble down? And how do you use more during the times when you've got all this extra capacity and we're just wasting energy because we don't have good uses to put it towards, which is at this point, like, most days of the year? And if you can manage that peak, you could do a lot of productive things with that energy. Data centers, desalination, oil and gas operations, manufacturing—you know, there's a lot we could do with that.Chairman Darby (40:17.834): A lot we can do with it—make it all efficient, more efficient and less costly to consumers. And my job and hopefully these bills, whichever form they take, sends messages to the investment community that we want you. Here's the pathway. It's going to be timely. Allow you to plan on that and allow you to access your project sooner rather than later and send market signals that encourage private investment to do that.Doug Lewin (40:48.578): Yeah, that regulatory certainty is so important for investors. And I think that's why it's good to have bills like that that send a signal. It's also the danger of some of these other bills that are floating out there where investors are kind of going, "What does Texas want at this point?"Chairman Darby (41:04.522): I think deregulation—we tried that experiment and we're currently involved in that experiment, but it seems like we don't want to leave the baby alone. We keep trying to tinker with it. And so, yeah, I don't know. Sometimes I think, "Well, we might as well just re-regulate," you know?Doug Lewin (41:17.806): Do we really believe in market forces or...?It's interesting, you know, the New York Times article on what was going on in Texas, and there was a quote there from Governor Stitt of Oklahoma, and he said—because I think he had vetoed some anti-wind bill, and he's like, "Look, if I'm trying to like push down wind, how am I any better than somebody in California trying to push down oil and gas?" And I think I'm paraphrasing, obviously, but like the final quote was something like, "Do we believe in markets or don't we?"Chairman Darby (41:48.948): Exactly. And I believe in the free market, and I believe in kind of these objectives, but then I want the market to work. Let's keep our hands off a little bit to let the market work. And are we sending the right signals at the right time?Doug Lewin (42:06.318): So what I want to ask you about here is kind of in closing, as we're winding down—I did a podcast with David Spence who wrote this book called Climate of Contempt. And it was how as a nation, we're kind of moving further and further apart toward the polls. You're obviously a conservative Republican.Chairman Darby (42:24.288): And I don't know what that means anymore.Doug Lewin (42:27.05): So, can we talk about that? First of all, let's talk about that. What does it mean to you to be conservative and where maybe has what it commonly means to be conservative diverged? And what I also wanted to ask was like, how do we get to a point where people are talking to each other and actually trying to find productive solutions where I may not agree with you on everything, but anybody out there, there's going to be some things you agree on. How do you find that common ground? And this is—I just feel like you're one of those legislators that really makes that a point. Sure, there's disagreements. We can disagree without being disagreeable, and we can find areas. It seems to me from the outside, like you're doing a lot of that, trying to find the common ground, even with people you may not agree with on much, and then work with them to kind of build that. I'm just kind of struggling with it this moment in our history. Like, it seems like we need a lot more of that. Why isn't there more? How do we get more?Chairman Darby (43:21.134): That's a lot to unpack. But I will tell you this: I haven't changed. I was raised in a very modest home in rural West Texas. And I have a lot of values of family, faith. I believe in low taxation, low regulation. I believe in kind of staying out of people's personal lives. I helped organize the first Republican primary in Tom Green County in 1978. I've been a Republican for a long time. I don't think I've changed in that view, but somehow, some way, the perception of what a good Republican is is sometimes thrown up in my face. I believe that rural values mean something, and the challenges are not always between Republicans and Democrats. They're between ruralists and folks who live in cities, urbanists. Some of my closest colleagues on the floor of the house are rural Democrats who have the same family values, the same needs, the same five needs that I just quoted you. They all have those needs also. So we have some commonality, and I've always been a part of getting to know the members and find out about their families, what makes them tick, spend some time with them on the floor and in private settings where we can find those common grounds.Usually everybody has children, everybody has job, has nuances on what they do and how we can relate on what I have a background in. And so interestingly enough, in my 10 sessions—and 14 sessions—I've never called a point of order. And that may sound kind of nuanced, but it doesn't mean I disagree with everything. It just means that if I have a problem with the member's bill, then I'll go to that member and say, "Look, will you work with me and try to make your bill better?" And almost always during all this time, members have agreed to do that. And we've worked together and we found a common ground and we've got the project done. Whatever they were trying to do and I was trying to help with, it's worked. And so I think that's important. I try not to get on the front mic and the back mic too much. I think when I have something to say, because I'm out there often, people will stop and say, "I wonder what Representative Darby's saying." So I think that's important, and I believe in good policy. I'm not there for theatrics. I'm not a social media guy, as you might suspect. I'm technologically challenged from time to time. I don't do Facebook or any of those other things, but I think it's important that we have relationships. And to your point about how do we move on from here, we have drifted apart. Our families are not as connected. When I go to a restaurant and I see a family sitting around a table, everybody's on their phone. They're not conversing with one another. I often ask a group of teenagers, "Are y'all actually texting each other at the table here? You could just look up and say something to them as opposed to texting them." But it's a societal issue, and my children, my grandchildren are guilty of it. And so I think we just need to get back to connectivity, get back to communicating, being with one another, finding out the wants, needs, and desires of who you're communicating with.Doug Lewin (47:05.912):Human connection.Chairman Darby (47:08.118): That's critically important. And I would hope that political parties would reflect that, that we would be more in tune with our constituents, not just the loud folks who like to create a scene. They're not interested in solutions. I'm a solutions guy. I want to try to find solutions to problems and not just throw the problems in somebody's face.Doug Lewin (47:30.488): So let's kind of end with this because I think that really summarizes it well. Like, what you're describing is really like pragmatism. How do we work together to find solutions? So pragmatism over ideology. And I think that that is kind of this key question in these waning days of the session, particularly when you look at some of these anti-renewable bills that would, you know, even as the ERCOT CEO says, "We need all these resources. If we don't have them all, then we're going to have less grid reliability. Prices are going to be higher." So it really comes down to: can we choose to work out the solutions, embrace pragmatism, people coming together to find these solutions over ideology? Is that kind of like...?Chairman Darby (48:11.374): Exactly. And I think we've pretty much—we've done that in this session from a standpoint of kind of addressing our energy needs. We've still got work to do. Yeah, a lot of work to do. These large load issues remain a problem till we find a solution. I will continue to resist simply an attack on a form of generation just because they may object to it. Again, I'm an "all of the above" guy, and I think that's where we need to go. So we're going to continue to work to find that common ground, continue to work to explain the problem, and hopefully, working together, we can find an appropriate solution.Doug Lewin (48:50.062): Chairman, appreciate you very much. Thanks for taking the time. Thanks for all...Chairman Darby (48:52.82): Absolutely. Thank you. Have a pleasure being with you. Thanks, Doug.Doug Lewin (48:57.198): 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

AI data centers. Semiconductor fabs. Oil and gas electrification. Desalination. Rising population. Texas is booming and it needs massive amounts of electricity to fuel that growth.We’re already using more power than ever. ERCOT projects demand will grow by 60,000 megawatts in just five years. That would be like adding the current peak demand of California on top of Texas. But instead of clearing the path for new energy development, some would slow it down — and slow down the economy with it.This week, I spoke with Glenn Hamer, President and CEO of the Texas Association of Business, about why that’s such a dangerous idea and what we should be doing instead.We covered a lot: AI, nuclear, oil and gas, battery storage, export economics, and why Texas must build all forms of energy faster, not slower. But at the center of our conversation was this core truth: You can’t grow an economy if you’re starving it of power.Glenn made the case that Texas has always led on energy of all kinds. Republican leaders including George W. Bush and Rick Perry helped launch Texas’s wind and solar boom. Now we need to keep going with an all-of-the above strategy that includes solar, wind, gas, nuclear, geothermal, and batteries all playing a role.He also talked about the economic impact renewables have had in rural Texas, particularly in areas with no oil or gas, which now has another source of income: wind and solar leases. TAB’s study with Aurora Energy Research shows what’s at risk. Blocking new renewable projects would raise electricity prices and increase the chances of rolling outages.And it’s not just about supply. Texas is also leaving money on the table by underinvesting in demand-side innovation. In a second TAB study, Aurora found:* $87/year in savings per household, even for non-participants in demand response* Over $400/year in savings for households that switch from resistance heating to heat pumps* Significant peak reduction potential from data centers and other large energy usersThere’s a reason the oil and gas industry, manufacturers, chemical producers, and data centers are all calling for more supply and smarter policy. Texas doesn’t have a red-versus-blue energy divide, we have a build-versus-block problem.We also talked about the growing energy demands of artificial intelligence. Glenn made a powerful point: AI is a national security issue. If we want to win the AI race, and we must, we need to power that innovation here in the U.S., and especially in Texas. There are already grids in other states telling data centers “don’t come here.” If we pass restrictive energy bills, Texas could be next.AI data centers require massive, stable energy supplies. The only way to deliver that is through scale and speed. That means yes to an all-of-the-above energy strategy. Texas is one of the few states that can handle this level of growth. But only if we keep saying yes.Texas became the energy capital of the world by being the best place to build. Let’s not become the place that starts saying no.📩 If you liked the episode, share it and consider becoming a paid subscriber. You’ll get access to all full episodes, Grid Roundups, and more.Timestamps00:00 – Introduction02:45 – Start of interview: Glenn joins, overview of TAB03:30 – Texas energy leadership: oil, gas, wind, solar, batteries05:30 – Bipartisan legacy of renewables in Texas07:00 – Economic benefits of renewables for rural Texas09:00 – Energy for AI, semiconductors, and oil & gas electrification12:00 – Gas turbine shortage, and how batteries are changing the grid15:00 – Energy growth vs. Texas’ resistance to regulatory overreach17:00 – AI, national security & innovation as core drivers19:00 – Balanced advocacy: renewables, nuclear, batteries, geothermal20:00– Data center growth in Texas & energy infrastructure22:30– LNG exports & cost premiums for low-emission gas26:00 – Desalination & energy, innovation & leadership27:30 – Aurora studies on renewables and demand side management29:30 – Demand-side innovation & response31:30 – House Bill 14 & SMRs: nuclear development as opportunity33:00 – Geothermal innovation & bipartisan support34:00 – Demand-side efficiency and reducing energy waste36:00 – Tariffs, and economic ripple effects, need to lower energy costs37:30 – Support from industrial, tech & business groups38:30 – National security & AI race with China41:00 – Regulatory overreach risks & broad support for energy development 43:00 – Final thoughts: energy export & coalition buildingResourcesGlenn Hamer & TAB* Texas Association of Business* Glenn Hamer on LinkedIn* Glenn’s newsletter on Linkedin: Ham[m]er TimeReports & Studies* Aurora Energy Research – Impact of Restricting Renewables in Texas* Aurora Energy Research – Demand Flexibility and Energy Efficiency Study* Federal Reserve Energy Survey – First Quarter, 2025Related Energy Capital Podcasts* How Load Flexibility Could Unlock Energy Abundance (Tyler Norris Pod) * A Conservative Case for Clean Energy* Geothermal’s Moment with Jamie Beard* New Nuclear in Texas, with Doug Robison and Dr. Rusty Towell* Texas’ Energy Future: A Conversation with Jimmy GlotfeltyRelated Texas Energy & Power Newsletter Articles* A Time for Choosing (SB 819)* The Texas Senate Is a Threat to U.S. Energy Security (Senate Bill 388)* Another Anti-Energy, Anti-Growth Bill Looms (on Senate Bill 715)Media Coverage* Houston Chronicle – Texas Bills Could Shut Down Existing Wind, Solar* Utility Dive – Aurora Modeling on Renewables BanOther References from the Podcast* Remarks by the Vice President at the Artificial Intelligence Action Summit in Paris, France* EarthX Announces Winners of the 2025 EarthX Climate Tech PrizeTranscriptDoug Lewin (00:05.26) Welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. Real treat this week, I got to talk to the president and CEO of the Texas Association of Business. That is a statewide chamber of commerce representing thousands of businesses all across the state of Texas. This was a conversation with just a lot of fun. We started all the way back with Texas Energy Legacy. And why there's really not a competition in Texas between oil and gas and renewables, how it really is an all of the above state because the economy is growing so fast. So many businesses are wanting to locate here, but we are seeing Texas become a hub for AI data centers and advanced manufacturing of all kinds. So Glenn makes a very clear case for adding energy resources, not subtracting. As you probably know, Texas Association of Business did a couple of very important studies with Aurora Energy Research. We just interviewed Olivier Beaufils for the podcast just last week from Aurora, talking about both of those studies. One of them looked at the impacts of limiting renewable development on Texas and showed we would have a higher likelihood of outages, higher costs for consumers if bills like Senate Bill 715, 819, Senate Bill 388, et cetera, if any of those bills were to pass. But Texas Association of Businesses also put an emphasis on demand side strategies and how those can help with reliability. Again, talk with that one about Olivier last week, but we got into all of that in this conversation. One of the things I liked most about this conversation with Glenn, there was a lot to like, but one of the things I really enjoyed was the discussion around the national security implications of winning the AI race. Whether you like it or not, we are in an AI race with China and we desperately need to win it. There are not that many places in the United States where you can develop enough energy to power AI data centers, but Texas is one of those. So long as we don't choke off the energy development that can actually power AI data centers. One final note, if you're listening to this, please also know you can watch it on our YouTube channel. We're starting to grow that channel. So we filmed this in high definition with multiple cameras. If you want to go check it out there, we'd be very grateful, but particularly be grateful if you would like the videos over there. But wherever you listen, please like and share, please leave a five star review. And this is a free episode of the Energy Capital Podcast. We do have paid only episodes for our paid subscribers. If you're already a paid subscriber, thank you, thank you, thank you. If you're not, please become one today at douglewin.com. You can access those paid episodes, but also all the archives of the Texas Energy and Power Newsletter, grid roundups, special presentations and chats, and much, much more. Thank you very much for listening. Let's dive into this episode with Glenn Hamer.Glenn Hamer, welcome to the Energy Capital Podcast. So glad we could make this happen. Been looking forward to doing this for a while. You are the CEO, President and CEO of Texas Association of Business, the statewide chamber. Tell us about TAB. And of course, this is the Energy Capital Podcast. Folks want to know about energy. Talk about Texas and energy. We're going to talk about a lot today, but let's start from a high level with Texas energy legacy and what energy means to this great state.Glenn Hamer (02:55.148) Great to be on the show.Glenn Hamer (03:18.808) Well, Doug, first, I want to thank you for everything you do. You get really important information out there to lawmakers, to the public, to the business community, and it's super helpful. And if I pick up the New York Times and there's a story on Texas and energy, you're going to be in it, or CBS News, or you name it. So at the state chamber, you know, we're very proud that Texas is the energy capital of the world. Doug, we lead in oil, we lead in natural gas, but a lot of people don't know we're number one by far in wind. We're probably now number one in deployed utility scale solar photovoltaic. We're climbing up the charts quickly in terms of battery storage. There's some great things we think being planned in nuclear. We're excited about what geothermal could bring. And Doug, you know, our bottom line is because the Texas economy is performing so well and we have so many businesses and people moving here and we'll I know we'll talk about AI later and Doug I just wanted the listeners to know my comments were not prepared by grok3 or chatgpt this is all human but we know that AI is going to require a tremendous amount of more energy new energy and ERCOT would back that up so Doug where we land is all the above and below whatever we think we need in terms of energy development and also say energy efficiency plays an important role here. We need to do it. And our members feel very strongly that we need to take that message to the state Capitol and retain Texas's place as the energy capital.Doug Lewin (04:56.918) Yeah, and the only way we do that, is by continuing to develop all the energy sources we have. Texas is blessed with resources and, like you said, oil and gas, but it's also very windy and sunny. Why not use all of it, right?Glenn Hamer (05:12.61) Well, I'll get in trouble to say this and obviously I'm kidding, but when I lived in really West Texas and I'm talking Arizona, far West Texas, I'll be careful there. But when I was in Arizona for many years, Arizona played a leading role in developing solar and it was bipartisan. But the state during that period of time was basically controlled by Republican governor and Republican legislature. At Texas at that same point, you had a very similar situation. You had governor George Bush and a Republican legislature that really developed the wind resource in Texas.Doug Lewin (05:48.322) Governor Perry as well. It went all the way through across deck.Glenn Hamer (05:51.378) Yeah, yeah, I mean, so, you know, wasn't considered, there was nothing partisan about it. It was simply develop the resources that make sense in your respective state. You know, Arizona, it's always sunny. Texas, a lot of sun, but also obviously a lot of wind. And so develop those resources.Doug Lewin (06:09.068) Yeah. And look, there's no red electrons, blue electrons, right? We need all of this, but we do see, interestingly, you know, I know you have made a real point with Texas Association of Business, obviously the statewide chamber, to visit a lot of local chambers. You've made that a real point of emphasis during your tenure. You know, in rural Texas, the renewable energy boom has really delivered a lot of value. There's a study you guys were involved with, right? What is it? Something like $20 billion over the life of the projects that are already in the ground, mostly in rural Texas.Glenn Hamer (06:45.694) It has been economically a boon to rural Texas. There's no doubt about it. We're not just talking about providing necessary electrons to keep the lights on, but there's been a huge financial impact across the state and particularly in the rural parts of Texas.Doug Lewin (07:01.016) Yeah, I posted a video on YouTube a while ago where I took some clips out of the hearing from Senate Bill 819. And one of them that really sticks with me is gentleman from Armstrong County, Armstrong County, just southeast of Amarillo, two or 3000 population. He's like, look, we're dry land farmers. We don't have oil and gas in our district. We got a lot of wind and sun. Why would you take this from us?Glenn Hamer (07:23.17) Well, we need it. I mean, again, you take a look at the state's forecast and our ambitions to be the AI capital of the United States. We're going to need a tremendous amount of new energy. And the energy that's already being produced is making our state more prosperous, particularly in rural Texas. We want to see more of that prosperity. I mean, when you're a chamber, you want to see more growth. Population, technologically, advanced manufacturing, AI, you name it, Doug. And we want to take advantage of the fact that we're the energy capital of world. And there's another point I just want to make. A big part of the Texas miracle is that this state has traditionally been about the easiest place to permit and build a business. I love when I talk about energy because everyone knows we're number one in oil and natural gas. But not everyone knows that we're number one overall in renewables. So we don't have the same number of people yet. I use yet as California, but we're producing more renewables. And why has that been the case? Because historically it's been a lot easier to permit and build energy facilities in Texas than other states. And again, we want to keep it that way. And it's a great talking point for other industries as well. I mean, I don't care what if you're manufacturing an automobile or any widget, when you're able to say that it's much easier to build and permit in Texas, it makes our state more competitive.Doug Lewin (08:56.77) Yeah. And look, I mean, it is AI. I always like to just point out to folks that like it's also semiconductors. It's also oil and gas itself is starting to electrify and use more and more, again, electrons. I don't think they'd necessarily really care whether they're green or brown or whatever, but like a lot of them are green. A lot of them are the wind and solar electrons and they're cheaper and they just like having access to that cheap power.Glenn Hamer (09:20.204) Well, those are two really important points. I mean, right now we export more semiconductors than any other state. And we're a huge semiconductor state with global wafers, Texas Instruments, Samsung and others, the birthplace. It requires a lot of juice. You know, so that's another industry where it's vitally important. And even you're talking about it's, yeah, the oil and gas industry. You think about the Permian Basin that is looking to electrify. Well, that's gonna require a lot of juice. So all of these things, in our opinion, work together. And I'm a big sports guy. This is the time you wanna add points. You don't wanna take points off the board.Doug Lewin (10:01.038) Well, I think even to go further with the sports analogy, I've been thinking about this lately, Glenn, the basketball playoffs are going on right now. You don't want to put five centers on the court. You don't want to put five point guards on the court. Wind, solar, gas, nuclear, they have different attributes. Wind is particularly great at helping to drive costs lower. Of course, you can't call on it when you need it. That's what you got your batteries or your gas peakers for. So just like a basketball team, you need five different guys with different skill sets complementing each other. A grid kinda needs that as well, right?Glenn Hamer (10:32.098) Well, absolutely. And you just even think of the investments. You want to diversify your investment portfolios. Texas is extremely lucky that for really all the major sources we're producing at top of the country levels, or we have the potential to really do a lot more. And I'm talking a lot more in battery technology. I'm talking a lot more in nuclear and a lot more in geothermal.Doug Lewin (10:59.596) Yeah. So another thing going on right now, I know you're, you're aware of is there is this gas turbine availability crisis, right? There's a, there's a supply chain crisis for gas turbine. So, so we're in a situation right now where Texas, because of the Texas energy fund, we are probably going to have some gas built here. It might be as much as 10,000 megawatts, but it's probably not going to be more than it might be a little bit less. Meanwhile, we have ERCOT giving us these demand projections all the way up to 150,000 megawatts, which would be 60,000 more than we use now. And that's within five years. I mean, it kind of scares me as a Texan. I would think it kind of terrifies you as the head of the chamber, the statewide chamber that like if some of these legislative proposals passed that would have the result, whatever the intention is, if the outcome is to limit the amount of energy supply that comes online, that then becomes a real just choke point for the Texas economy.Glenn Hamer (11:57.806) Right? I'm confident, and it's a little bit dangerous to do this before June 2nd, when the dust settles, we will still be a state where we will be encouraging all sorts of different energy resources and possibly, I would say, very likely juicing, so to speak, some different sources, including nuclear. But when you take a look at what ERCOT is forecasting, we absolutely need all of this new energy. And I think one of the things we need to do a better job in Chamberville is explaining what's going on. And part of what's going on is the battery storage issue is extremely exciting. And I'm talking about companies like Base Power. I'm talking about some of the things that are going on with Tesla. By the way, Texas companies too. And those certainly aren't the only ones, but what's going on in batteries is a game changer. And the fact that the grid is becoming more sophisticated and more resilient in terms of being able to handle and benefit resources that are more intermittent. So I think that there sometimes is a little bit of a lag in terms of just because some of these advances I think have been pretty sudden. They're really exciting. And in terms of, you know, Texas's pole position and energy production, really good for us and absolutely a prerequisite for us to be the AI capital of the United States. We need this energy. And Doug, that's why a lot of our tech members pay a lot of attention and want us at the Texas Association of Business to be very engaged to make sure that our energy policy is about all the above and below, is about addition and that we're very careful about any sort of proposals that could slow down the tremendous amount of energy we're going to need to economically function.Doug Lewin (13:59.47) Yeah, exactly. So, I mean, you mentioned permitting earlier, right? There's some deregulatory things happening at the Capitol trying to make it easier. You mentioned base. There's a bill that would make it easier. I know you've been supportive of this bill, make it easier for folks to get storage at their homes and businesses. You also mentioned, I just want to double click on this point just a little bit around batteries and how quick it's happened. The governor in his state of the state address right at the beginning of session said over the last four years, we have 35% more supply. That's a huge growth. That's over 40,000 megawatts. Of that 40,000, 10,000 is battery storage. The most dispatchable resource, I mean, like literally millisecond kind of response time. So this is a great story, but then at the same time we have these proposals. Senate Bill 819 is one of those. You got Senate Bill 715, Senate Bill 388. All of these would in different ways add all sorts of additional regulatory burden to energy developers that are trying to bring that resource to bear. So can you just talk a little bit about, I mean, it's almost like our dissonance, right? Because you have the legislature on the one hand, like trying to stand up a nuclear industry, helping geothermal, removing regulatory barriers for distributed batteries. And then on the other hand, you have these proposals that are just, at least in my view, just very heavy handed, that kind of big government approaches that don't really seem to fit with the Texas ethos, at least in my view.Glenn Hamer (15:25.688)Well, you know, whether it's energy or other areas, we almost always, if not always prefer the light regulatory touch. I mean, that is clearly part of the Texas miracle. Low tax environment, low regulatory regimes, as well as just ease of permitting so you can build stuff. Now we have spent, I mean, on my...Doug Lewin (15:38.254) Part of the recipe, right? It's the absolute formula.Glenn Hamer (15:51.106) ...going to divulge private conversations. But we have been making the rounds, talking to legislators that have sponsored or support these bills to explain where we're coming from and to also explain the awesome amount of new energy that is needed to power our economy. I mean, you take a look at, for example, how fast China is able to build certain things. I would argue, Doug, for national security, we have to, and I mean, Texas has to get energy policy right. And sometimes, look, I'm not saying everything that I say or do is 100% consistent. I always try to make sure it's consistent, but we're trying to respectfully point out that to achieve, you know, I think the greatest address in the history of vice presidents in our country's history was delivered by JD Vance on artificial intelligence in Paris.Doug Lewin (16:46.254) This was the Paris...Glenn Hamer (16:48.556) And the reason why Doug, he focused on three things, acceleration, innovation, and energy supplies.Doug Lewin (16:55.69) ...acceleration and innovation and adding energy.Glenn Hamer (16:58.794)Yeah. All three of those are the recipe for Texas to lead in that area. And so if we're stopping energy generation that will contribute to a more stable, a more resilient, a more affordable energy to homeowners and to businesses, we are going to respectfully say that's not the direction we want to go down. Now, I understand the issues. I mean, I used to in a past life, and Doug, anyone could Google my background. I've worked for conservative members of Congress, so like former US Senator John Kyle and Arizona Congressman Matt Salmon. Also ran the Solar Energy Industries Association. At a period of time where I joked, but I was sort of serious, I was more likely to see a UFO landing in Phoenix than a photovoltaic panel on a building. That's changed. And with that change, there have been some issues that are fair to be raised in terms of intermittency with solar and wind. The point we're making is that look at what's changed. You have batteries coming up, you have a more sophisticated grid, you have grid operators saying that this is good. I mean, I think, you know, we have very good leadership in my opinion at ERCOT. And it's very important to listen to what the experts are saying there. And as far as I can tell, our advocacy agenda is consistent with what the state needs to meet our dramatically increased energy needs in a very short period of time.Doug Lewin (18:30.41) Yeah, no, I mean, everything you're saying is consistent with what Pablo Vegas has been saying. The ERCOT CEO, he was in Houston Chronicle, Austin Statesman, Dallas Morning News at ERCOT Innovation Summit, of all things, just a week ago, talking about how we really do need every megawatt that we can possibly get. And of course, he'd be the first to tell you, there's challenges with intermittency. Nobody would deny it's challenging. Because it's challenging doesn't mean you just choke it out, right? Like that means you meet the challenge.Glenn Hamer (18:58.454) Yeah, because as you mentioned, there's challenges with every resource, every generating resource. It's not like I'm going to put up as much as I'd love to put up a small modular nuclear reactor at the chamber. It's not, you know, snap your fingers and it happens. So there's challenges with every energy resource. But what we try to do is just soberly say, okay, this is where things stand. And if we pursue these policies and we'll always listen, you know, there's, we want the grid to run effectively. And I also understand that sometimes there could be conservation issues, all can be addressed. We can balance all of those issues out. And we'd like to see to maintain and increase our supremacy and renewables. I'd love to see the state be number one in batteries. And Doug, I would love for us to lead in small modular reactors. I think that that's an area that the state is moving down the right road very quickly. My colleague and friend Reed Clay I think is doing a great job on nuclear advocacy. You know we really...Doug Lewin (20:03.266) He's the leader of the Texas Nuclear Alliance, right? Exactly. You need to get him on the podcast. Reed if you're listening.Glenn Hamer (20:06.476) He's a good guy.Glenn Hamer (20:08.333) Yeah, we'll read.Doug Lewin (20:11.116) I did add Doug Robinson and Rusty Towell from Abilene Christian and the tour resources talking about small modular. I've got another small modular one coming up. I think, so like this is really, I think kind of the rub here, Glenn, right? It's like we have some policies floating around that would really hurt some kinds of generation. And I don't want to attribute bad motives there. I think people are freaked out. Winter Storm Uri got people freaked out. There's a lot of fear out there, but I think when people act out of fear, they might end up enacting policies that have unintended consequences and really hurt the economy are positive things we could do. Right? Nuclear would be one of those, but there's a long list, right?Glenn Hamer (20:51.054) Well, absolutely. And I don't question the motive. I've met with a number of the members on these different bills. They're sincere in their beliefs. And again, we'll see in a few weeks really how it all plays out. I do think that the conversations and the coalition that's been building is helping to land this in the right place, meaning that we continue to be a state where we can more effectively and easier than any other state deploy energy resources. That is a big selling point if we're zooming out a little bit, when you take a look at all these data centers and AI. So there's been three, $500 billion announcements in the last six or seven months. So say during the first part of the Trump presidency that have involved data centers and AI. I think the first one was Stargate with OpenAI and Oracle, Abilene. I think the second one was in...Doug Lewin (21:43.831) ...in Abilene.Glenn Hamer (21:48.854) ...announcement with a big new manufacturing plant, think through Foxconn perhaps in the Houston area. The last one was connected to NVIDIA and maybe that's also Foxconn. I may be messing up some of the companies, but what do all three of those projects have in common? A couple of things. One is Texas is the center of a lot of the activity. And two, they all require a tremendous amount of energy.Doug Lewin (22:16.524) Yeah. And it's going to be a mix. It's going to be a mix. There will be gas that some of these data centers bring with them. We will have gas developed in the state, and they're going to want solar and wind and storage. It's going to be a mix.Glenn Hamer (22:29.25) And I'll just say, I'm getting, I'm no Daniel Yergin, I wanna be careful here. But to me, the more...Doug Lewin (22:34.574) No one is Daniel Yergin. No one except for Daniel Yergin. No, not even close.Glenn Hamer (22:37.026) Well, you're, you're, you're in his league. And well, when you think about the more we're doing wind, solar, battery, geothermal, the more opportunities we also have to export LNG. When you talk about the president wants to balance trade, one of the best goods we can trade is our natural gas, is LNG. So to me, this all really works together and plays into a strong United States economy and a strong Texas economy.Doug Lewin (23:11.566) Yeah, this is one of the things that is most fascinating to me about some of these bills, the 715 and 388 as examples where the authors mean it, I think, as a way to buttress the oil and gas industry, but the oil and gas industry itself doesn't want these bills. They don't like them because they actually see a higher value in exporting the gas. They get a higher price when they're selling it overseas than if they're burning it in power plants here in Texas.Glenn Hamer (23:37.038) Well, I think that those are the economics. Energy companies, they want to have the most profitable course. And absolutely, you know, these exports, there is a premium there. And to me, it's such a big win-win because it's also to me a big win, environmentally speaking. I mean, we're exporting our LNG. A lot of times it's displacing stuff that would...Doug Lewin (23:59.318) ...coal...Glenn Hamer (24:06.808) Texas LNG.Doug Lewin (24:08.28) One of the most fascinating things about that too, because a lot of the overseas buyers, whatever anybody thinks about it here, whether they like it or not, a lot of the overseas buyers want lower emission gas. So if you are actually powering your fracking operations with renewables, and then you can tell the Japanese, the Koreans, whoever you're selling it to, like, hey, this is low emission gas, now you're actually able to charge even a higher premium. Like this is why I sometimes, Glenn, want to hit my head against the wall. Some of these, what I just think are wrongheaded attacks against renewables, because people think they're doing it for the oil and gas industry. They're not actually helping the oil and gas industry with it at all.Glenn Hamer (24:44.098) Well, Doug, one of our top energy issues is to achieve Class 6 primacy from the EPA. Has that not happened yet? It's in process. So Administrator Reagan actually came out. We had a meeting with him. It was one of the top issues that I personally brought up with him. Nuclear being another, and I did of course say we're an all the above and below state. I mean, we just want to make it as easy to produce electrons. But the point there is carbon capture and sequestration obviously is to produce a lower carbon product for the reasons that you've said, a lot of the customers overseas, that is an important factor. It could be a deciding factor. So again, for all these pieces to work together, and Doug, this is also important, so I appreciate you bringing this up. Texas, of course, we're number one in terms of exporting. 23 straight years. We export twice as much stuff as California. So when we're getting energy policy right and the things that we've been talking about at TAB, we're running up the score for Texas being the country's top export state. So we're going to do that unapologetically and proudly.Doug Lewin (25:51.968) And by the way, all of these things, liquefaction of natural gas, carbon capture, even some things we haven't talked about, desalinating water, which is probably going to be increasingly important in our state, also take a lot of energy, right? Like a lot of energy for all of those things.Glenn Hamer (26:06.574) Well, that's a great point. I mean, we're going to have something pass and Senator Perry has been a great leader on this to have allocated dollars for water augmentation, new water. Desalination is absolutely going to be a part of that. And you're right. Put desalination in the data center category in the sense of it's going to require a lot of energy. So again, everything that we're talking about here, the common thread, more people, more industries that are energy intensive. We need more juice and we need it now.Doug Lewin (26:39.382) And... let's meet those challenges of intermittency and of integrating renewables with innovation. Because Texas, I would argue, and I know you agree with this, it's not just energy state, it's an energy innovation state. So a lot of the things you were talking about earlier with batteries and base power, like store it up when you got a lot of it, deploy it when you don't have a lot of it. Like we can solve these problems with innovation. We're Texas, damn.Glenn Hamer (27:00.29) Well...I mean, and you look at, you know, fracking was innovation. Innovation and energy is very important for the states and the national economy. But Doug, you're absolutely right. And we're blessed in this state with a terrific university system. You take a look at what's going on, UT Austin and Texas A&M and our other great universities. There's a lot of brain power that's being put into energy innovation. So let's take advantage of it.Doug Lewin (27:25.454) So I would be remiss if I didn't mention you guys put a couple of studies out there from Aurora, just recently put out a podcast with Olivier Beaufils where we talked through a lot of those slides. So people can check that out. We won't get into the great sort of gritty detail because Olivier and I have already done that. But on the restricting renewables one, what it finds, and I think again, where a lot of people come into this is like, hey, if we restrict renewables, we're automatically to get more gas, we'll have more reliable grid. A, there's the gas supply problem. We've talked about the turbine supply problem we've talked about. But B, when you start restricting renewable development and you also get retirements, you actually then increase the likelihood of rolling outages. The study you all put out there showed that. Happy for you to talk about that. I also want to talk also though about the study you guys did on demand side management, because this is an area, Glenn, that I think particularly with energy innovation. We are not yet a leader on the demand side. We're just not, just like objectively, it doesn't matter. There's a lot of down scorecards out there and none of them are we even in the top 10. This is an area where I would love for the legislature, for conservatives, liberals, moderates, whatever your way of thinking is, like think creatively about how to get the demand side more active. Is this something you're thinking about?Glenn Hamer (28:40.674) Well, absolutely. I'm going to touch that point and I just can't recall the company, but it's Waco based, I believe it's a Texas company. So I just was a judge at an EarthX event. Cool. And on the innovation, it's very interesting. I was invited as a judge. So was CS Freeland who runs the Texas Venture Alliance. So it was an innovation, which I chair, you're in that group. So it was innovation focused and it was a Texas company. It was actually a national or international competition. And this is a company I'm going to put you in touch with because it was very interesting. It was a demand side response company to more effectively and efficiently use renewable energy for the grid. They won. It helped that two out of the four judges perhaps were from Texas, but it was unanimous. There was no funny business. But so the demand side, I think is really super important. But when you talk about the other study, what we found, and I know you went into the details...Doug Lewin (29:22.495) Okay.Glenn Hamer (29:36.746) It was an energy reliability thing. Like literally, we don't want to have a situation where Texans during hot or cold times are going to have a tough time getting the energy they need to live. And the other piece of that was the cost. Renewables bring down the cost for homeowners, small businesses, and businesses. So, it's a reliability, it's a stability. And, you know, I also think it's sort of interesting that even on I'm not invested in Bitcoin or anything like that. But some of the Bitcoin mining stuff also presents an opportunity in terms of being able to quickly flip a switch and to provide extra electrons when it's most needed. You have some different things working in the right direction. Again, our point is let's make sure we're taking advantage and we're not doing anything that might have some unintended consequences that we would regret as a state.Doug Lewin (30:32.834) Yeah, no, I think that's super, super well said. A lot of potential on the demand side for innovation. Let's talk about a couple other areas of innovation. A couple times you've mentioned nuclear. I know you guys have supported House Bill 14. Do want to talk a little bit about that? And not just SMRs. Again, I've done a podcast on SMRs. You can talk about it all you want, of course. But I think what is really interesting about House Bill 14 and what came out of the Advanced Nuclear Working Group that Governor Abbott appointed and Commissioner Gladfelty so ably led, was this focus on building up an industry for it here. And this is again, where I just like, man, I wish people at the Capitol could spend less time punching down at renewables, because there is so much right there for us for the taking in Texas. And this is one of those areas, isn't it?Glenn Hamer (31:16.844) Well, it's an area that some state is going to take advantage. It's very clear. I mean, does a day go by where you don't read, you know, Three Mile Island's going to be reopened or, you know, it's every major tech company supports the development of SMRs. So, Doug, that's exactly right. That's where our energy, so to speak, should be put. Let's advance solar, renewables, batteries, SMRs, small modular reactors, geothermal. Let's do all those things. And ideally we do all these things right. We also, yeah, we do want to see more natural gas, but right now it's not as simple as snapping your fingers and those come up. And then we've talked about the export opportunities. But yeah, when you talk about SMRs, that to me is the type of thing that we should be focused on as a state. And it would be tens of billions of dollars of economic development over a period of years, not to mention to have great clean energy for the next 40, 50, 60, 70 years.Doug Lewin (32:18.35) And we've got a bunch of these nuclear startups located in Texas. I've already interviewed one. I'm going to interview more over the summer. I'm really looking forward to that. We could be not only powering our economy with that base load, clean firm power, but then exporting that all over the place too. It's pretty exciting. And you really start to see kind of the outlines of what the grid's going to look like. You've got these sort of clean firm sources like nuclear. I want to ask you about geothermal in a second. You got renewables that you're using to power industry and power up the batteries when you have an abundance of it. And then you've got gas peekers and batteries filling in those gaps. It's complicated for sure, but it's also like, it's not rocket science. Like the formula is there for us.Glenn Hamer (33:03.756) Well, and when you mentioned geothermal, that is one of the areas. You know, the federal administration has been, you know, more positive, it's fair to say, on certain sources than others, you know, to where they've been pretty darn positive, nuclear and geothermal. And geothermal, it seems that there's quite a bit that can be developed here in Texas. And that's part of our energy background makes us a natural leader. I listen to a pretty interesting podcast. I'm a pretty religious listener of the All In podcast. And the energy dominance, I can't recall exactly what they call it, but Doug Burgum was on. And he was talking about geothermal and nuclear.Doug Lewin (33:44.364) Secretary of Interior, right? Secretary of Interior. Head of the Energy Dominance Council, yeah.Glenn Hamer (33:48.79) Yeah. And he has a record as a governor of developing all sorts of different resources.Doug Lewin (33:53.614) North Dakota, right? So it's another kind of oil, a lot of oil.Glenn Hamer (33:56.334) Production there. But I think also pretty windy. And he was connecting dots to AI and the... it's a good one. Okay. I'm not going to say that you would love everything.Doug Lewin (33:58.83) Absolutely, they have a ton of wind absolutely.Doug Lewin (34:04.022) Ooh I need to listen to this one.Doug Lewin (34:09.485) Everything that he says, that's fair.Glenn Hamer (34:21.409) We're excited about geothermal as well, Doug. And again, I think if you're a Texan, you want to lead in all these different areas. It is in our DNA to be number one.Doug Lewin (34:31.853) Yeah, especially when it comes to energy. I'll just say, as far as like, you know, I gave a sports analogy earlier of like all these different resources working together as a team. One place where I think sports doesn't work well for this, I think what happens a lot of times, particularly at the Capitol, is people think, I'm wearing this jersey, somebody else is wearing it. I mean, that's of course what you get with like Republicans and Democrats, but on the energy side, like it should not be that way. And geothermal is one of those great examples because the oil and gas industry itself, Chris Wright, the Secretary of Energy, has invested in Fervo, a Houston-based company that is headed by a former oil and gas person using drilling technology, right? I mean, it effectively is all of the innovation that came from the shale revolution, helping us get to clean, firm power. If we can stop viewing the world as like renewables versus oil and gas and start to see how it all works together, we'll be so much.Glenn Hamer (35:25.056) Well, I love how you framed it. We're all on the same team. We all have a role. And if you look at all these different energy sources, it's the more the merrier. And again, it's a great thing that we're now at a point in time with, particularly what's going on with storage and batteries, that it makes it much easier for the whole team to play well together and contribute. And I'm glad you also mentioned the demand side, because I think that there's a lot that could be done there. And, you know, I think I remember a year or so ago where it got super hot and there was strong recommendations to businesses and homeowners, you know, lower the thermostat. That's positive. I mean, we should, everyone likes paying less and, we should do everything on the demand response side that we can do as well. In fact, in the olden days when I was running the Solar Energy Industries Association and I'd work with the Energy Efficiency Group, the point was, you have a solar panel, but you're leaving your refrigerator open. You're not accomplishing what you want. So all these different.Doug Lewin (36:29.838) Energy waste is never a good thing, right? You want to use whatever energy you're producing most product...Glenn Hamer (36:34.606) And Doug, for companies, that's so important as well. That's good for their bottom lines. And I'll also just say not to get too deep in the weeds on the tariff side, but some costs could and probably almost certainly will increase because of what's going on there. So it just, to me, makes it even more important to get our energy policy right on the state level to make it as easy and as cheap as possible while doing it safely to continue our drive towards energy abundance.Doug Lewin (37:05.496) Totally. And I think that's why you've seen so many folks like the manufacturers and industrial consumers and oil and gas association, chemical council, tech association of business, right? Like because you are in a situation where costs in different areas are going up, we've had inflation for several years. Now you've got tariffs on top of that. You look at like just the oil and gas producers, the cost of drilling a new well according to the federal reserve and the survey they do of energy executives, oil and gas executives, is somewhere in the low 60s, right? And the price right now is in the high 50s as costs of drilling are going up because of tariffs. If you start raising the cost of electricity too, that's just another layer on top of it that makes it harder for Texas oil and gas to be profitable. Again, this is just where we've got to see this more holistically and not see it as oil and gas versus... Right? It's time to get out of that.Glenn Hamer (37:55.638) Yeah, as I'll just say, at the Texas Association of Business, we look at all these different resources as complementing each other in some way and useful towards our goal of remaining the highest performing economy in the country.Doug Lewin (38:15.136) And before I want to ask you if there's anything else I should have asked you that I didn't, but before I do that, I just want to, we talked about this briefly, but I think it is just so critically important. I just want to go a little bit deeper on it, is the whole national security implications of AI. Again, you touched on it, but we are in a race. I don't know how much people understand this. I only barely understand it, but I understand it enough to know there's a race going on. And it is critical that we have AI data centers here in the United States of America. And there are only certain places around the country you can really do that. You have grids all over the country just telling AI data centers flat, do not come here. We cannot take you on our grid. I don't want to see that happen in Texas. And I'm really worried if some of these proposals pass, that is what's going to happen.Glenn Hamer (39:05.838) That is a real legitimate concern and you're right that it's not everywhere in the country in the United States where this is feasible. Virginia is one area that's a leader. Texas is another. And I do believe that the race for AI supremacy is for all the marbles. This is far more transformational than even the internet. And to me, it's critical that Texas paves the way. And that means getting the policy rights that we're not over-regulating and we're allowing for innovation. And I'm just going to quickly say the model was, and I'm going to give them tremendous credit, was President Bill Clinton got that with the internet. And you will hear US Senator Ted Cruz talk about the US got that right, Europe screwed it up, and take a look at the size of our economy compared to Europe's since that one decision by President Clinton. And if you want to give, you know, let's be bipartisan, Republican Congress made a huge difference. That same approach overall, in my opinion, from this administration, on getting the regulatory side right on AI, which I believe they have, if we get the energy side right, and we encourage all energy sources, the US will retain AI supremacy, and the 21st century will be ours. But if we get any of those levers wrong, there's incredible risk to our economic and national security.Doug Lewin (40:35.818) I completely agree. And I would say also on that sort of like getting the regulatory right. When I interviewed Rick Perry for this podcast, that was one of the things he said about his 14 years as governor that really he looked at as defining Texas's growth during that period. Yes, there's low taxes. There's also that lighter regulatory touch. It doesn't mean no regulation. When I talk about where energy system people call deregulation, it's restructuring, it's still highly regulated to protect the public. And sometimes we have to dial up that regulation, sometimes we dial it down. But I think there's a real danger right now, particularly because of some of the animus towards renewables, that there's this overreaction to overregulate, which really cuts against a quarter century of Republican leadership in Texas. And to your point, Bill Clinton, what really is kind of like Jimmy Carter deregulated the airlines, there's been kind of a broad bipartisan consensus in the country that we don't want to overregulate in a way that chokes out innovation. And I am really worried with some of the stuff I see under the dome that like there's kind of a movement away from that that is, I don't know, a little terrifying.Glenn Hamer (41:42.924) There's also a growing coalition to make the case that it's all the above and below. I mean, I think you see a lot of economic development groups and chambers and different business groups say, we are the energy capital. We need to develop all of these resources and we don't want roadblocks being put up that would endanger the need for additional energy.Doug Lewin (42:06.542) I appreciate you saying that. And I think actually, like, it is important to note that like out of 181 over there, there probably still is a very large majority that still favors that. Some of the louder ones don't, but I still think there's probably a pretty durable bipartisan consensus that like, who wants to strangle the life out of the economy? Nobody's for that.Glenn Hamer (42:25.262) And Doug, and I like how you frame certain things like the nuclear opportunities, huge economic development, some of the things going on in batteries with some of these great companies in Texas, huge economic development. It's not just energy, but it's developing these resources that you can export, whether it's around the country or around the globe. Texas is poised to lead. You know, there's some policies that I enjoy talking about a lot more are those such as the ones we were sort of talking about on nuclear that advance. Yeah. Don't enjoy talking as much about defense, but getting back to sports, look, the fact is there's offense and defense. We'll just continue to make the case and do everything we can to build a coalition of groups and companies that see the world our way.Doug Lewin (43:17.24) Glenn, appreciate everything you're doing. Always enjoy talking with you. We covered a lot of ground. I kept you longer than I said I would. And I know you're very busy, but I want to give you the opportunity to do anything I didn't ask you wish I would have, anything else you want to share with the audience.Glenn Hamer (43:29.848) Well, without getting into too many details, I'm pretty excited about what happened with the NBA draft.Doug Lewin (43:36.206) HaGlenn Hamer (43:38.626) Texas is going to have three really strong NBA clubs next year.Doug Lewin (43:42.798) All right, there you go. You heard it here first. So when we're talking about the team that is all the energy resources, and we talk about the basketball analogy, the actual basketball in Texas is also heading, trending in the right direction. So love to see it.Glenn Hamer (43:56.28) Thank you Doug. This was fun.Doug Lewin (43:57.863) Really appreciate you taking the time.Doug Lewin (44:01.56) 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

Note: The Podcast Recording with Graphs is Here.What would happen if Texas started turning away new wind and solar projects or even retiring some of the capacity we already have?That’s not merely a hypothetical. It’s what several bills that have passed the Texas Senate aim to do. And according to new modeling from Aurora Energy Research, the consequences could be severe: higher prices, increased risk of rolling outages, and weaker reliability at the very moment we need the grid to do more.I sat down with Olivier Beaufils, Head of US Central at Aurora, and a returning guest on the podcast, to walk through the results of their latest two studies. We discussed what it means for Texans: whether you’re a policymaker, utility, industrial operator, or just trying to keep your power bill manageable.In the first study, Aurora modeled scenarios where Texas slows or blocks the addition of new solar and wind. The findings are stark:* By 2035, power prices rise 14% compared to a business-as-usual scenario* By 2050, prices jump 38%* A conservative forecast still shows 400,000–600,000 homes losing power in summer peak conditions due to 2–3 gigawatts of load shed* Delays in thermal generation supply chains mean replacement capacity can’t come online fast enough to close the gapThese results don’t even account for the possible retirement of existing renewables, which SB 715 would accelerate. The second study focused on demand-side solutions like residential demand response, data center flexibility, and energy efficiency upgrades (especially replacing resistance heating with heat pumps). These are often overlooked, but for those looking to strengthen the grid they can dramatically reduce stress on the grid, while saving Texans money.Key findings:* Demand response could save every Texan household $87 per year in conservative estimates, even if they don’t participate* Industrial customers could save $2 million annually under a moderate demand response program* Replacing resistance heat with heat pumps could save households over $400/year * In a Winter Storm Elliott-style event, widespread heat pump adoption could eliminate up to 6 GW of potential load shed; the impact would be bigger in a Winter Storm Uri-like eventTaken together, these studies paint a clear picture: A more diverse, more flexible, and more efficient grid is also a more affordable and more reliable one. We need more of everything, but especially the resources that are fast and scalable.I’m grateful to Olivier and the Aurora team for bringing rigorous analysis to a debate too often shaped by ideology or misinformation. These are exactly the kinds of conversations we need to be having as Texas faces record-breaking load growth and increasingly extreme weather.If you enjoy the podcast, consider subscribing and sharing with a friend or colleague. It helps more people find these conversations and stay informed on what’s really happening with Texas energy.Timestamps00:00 – Introduction & guest reintroduction (Olivier Brochu, Aurora)02:04 – Start of Study 1: Limiting solar and wind in ERCOT06:00 – Supply chain risk & reliability impact of throttling renewables11:00 – Load shedding during heatwaves13:30 – Wholesale power prices and affordability under constraint scenarios16:30 – Impact on customer bills and total system costs20:30 – Clarification: this is not a bill analysis, but a scenario study21:30 – Start of Study 2: Demand-side flexibility & efficiency24:30 – Demand response from residential vs. commercial/industrial users29:00 – Data centers, system peaks & the synergy with residential flexibility32:00 – Price suppression benefits of demand response34:30 – Indirect savings: how even non-participants benefit37:00 – Addressing resistance heating and the efficiency potential41:00 – Heat pumps as a system reliability solution44:30 – System-wide benefits & mitigating winter risk46:30 – Efficiency = cost savings + resilience50:00 – Final thoughts: all-of-the-above strategy & public/private collaboration52:00 – Outro & where to find Aurora’s workResourcesAurora & Team* Aurora Website* Olivier Beaufils - Linkedin * Previous Podcast with Energy CapitalReports & Modeling* Aurora Energy Research: Restricting Renewables Study* Aurora Energy Research: Demand Flexibility Study* ERCOT’s Load Growth ForecastYouTube Channel for DougLewinEnergyMedia Coverage* Houston Chronicle on Anti-Renewables Legislation* Utility Dive on Aurora Modeling - Texas Renewables RestrictionRelated Posts on DougLewin.com* A Time for Choosing (on Senate Bill 819)* The Texas Senate Is a Threat to U.S. Energy Security (Senate Bill 388)* Another Anti-Energy, Anti-Growth Bill Looms (on Senate Bill 715 and House Bill 3356)* A Conservative Case for Clean Energy* How Load Flexibility Could Unlock Energy Abundance* Peak Performance: Grid Roundup #58* Record May Peak Demand Coming Wednesday: Grid Roundup #57* ERCOT CEO says "we need all resources": Grid Roundup #56TranscriptDoug Lewin (00:04.45)Welcome to the Energy Capital Podcast. I'm your host, Doug Lewin. This week I have with me Olivier Beaufils from Aurora Energy Research. Y'all have heard Olivier before on the podcast. I interviewed him last year when Aurora had done a fantastic study on battery energy storage in the ERCOT Market and some of the energy savings that battery storage brings during a winter storm. That was a great study. We'll put a link to that show and the study in the show notes.But today we're going to talk about two additional studies Aurora has come out with that are very, very relevant to what is going on in Texas right now. One looked at the impact of renewable energy development, if it were to be throttled by some of the proposals that are out there, what that would mean for prices and reliability in the market. And another one looks at demand side management, energy efficiency and demand response and its impacts. Doug Lewin (00:59.02)I'm thrilled, Olivier, you could make time to be with us. Thanks so much for being on the Energy Capital Podcast once again. Olivier Beaufils (01:05.4)Doug, it's a pleasure to be back. Thanks for having me. Doug Lewin (01:08.588)All right, great. Well, let's dive right in. As I said, just a second ago, Aurora Energy Research is doing great work. You guys are global. Folks are interested in anything going on in the energy space. I encourage them to go look at your website. But you guys have a presence here in Texas with a big office here and just been doing great work, really helping people understand some of these market dynamics that are going on. Doug Lewin (01:32.364)Let me also just say on the outset for those that are listening on the podcast, we are at a few points in this conversation going to reference some slides from these reports that Aurora has done. This podcast will also be posted on our YouTube channel, @DougLewinEnergy, so you can go there and if you can watch, you'll be able to see the slides, but we will make sure to describe, Olivier, you check me on this and make sure I'm doing it, that we are describing it so somebody that isn't. Doug Lewin (01:59.052)watching the podcast, but listening only will be able to follow along. Let's go ahead and start with the one that is called impact of limiting solar and wind development in the ERCOT market. So this is getting a lot of attention. Obviously it's being talked about a whole lot. News articles in one of those articles, or actually a couple of those articles, ERCOT CEO Pablo Vegas talked about how some of these bills that particularly those that would remove current generation or restrict Doug Lewin (02:28.174)future renewable energy development, throttle sort of the future development, particularly Senate Bill 819, Senate Bill 388, Senate Bill 715, and 3356. We'll talk about all of those as we go through. And you can find more of this at the Texas Energy and Power Newsletter and on previous podcasts. Any of those bills, the outcome would be less reliability and higher costs. Can you just, from the highest level, Olivier, Doug Lewin (02:54.99)Let's talk about why that is because it's counterintuitive to some people. They think that if you restricted renewables, you would automatically have some kind of increase in reliability. Just from the highest level, why would these different, why would the outcome of these proposals be lower reliability and higher costs? Olivier Beaufils (03:13.13)Absolutely. Yeah. I can talk about that. Maybe just a quick disclaimer before I dive into it. so, Aura is a power market analytics firm. and we don't have any specific agenda, right? Our job is to run power models and do analysis. we work with everyone. We worked with a lot of the larger thermal generators and air cot and other markets. we work with batteries. We worked with renewables. We work a lot with banks and investors. And so Olivier Beaufils (03:40.03)So our job is to do the analysis and figure out what it tells us and offer it to policymakers to, you know, to the public so that they can make more informed decisions. Right. So I think that's important to say before we dive in here, but on your question more specifically, why is this counterintuitive? Well, there's two aspects to it. I think there's one very simple aspect of, you know, we're seeing a lot of demand. And if we're about to remove some of the supply. Olivier Beaufils (04:08.61)that could come through either through solar generation, so wind generation, we're going to be in a position where there's just gonna be less supply on the supply curve and generally higher pricing because basic supply demand economics for anyone that's taken an Econ 101 class, you're gonna be higher on the supply curve that is going to result in more expensive generation. So that's the sort of very overarching point. Right now we need the megawatts we can get because of all this demand growth. And so when you remove that, Olivier Beaufils (04:38.55)It makes things more expensive. But the second piece that I think is maybe less well understood of renewables is that, you know, the cost of renewables is mostly in building the infrastructure. Once you've built it and in Texas, we do this with private capital, right? Ratepayers do not have to pay for any of this infrastructure being built. It's private capital taking risk. So once it's built, the wind is free. The sun is free, right? We know this. So operating it is virtually nothing. Olivier Beaufils (05:08.384)And so what happens is all these renewables, they sit at the very bottom of the supply curve. And so that means they're the one they're dispatched first, they're the least costly for the system. And then after those are dispatched, we then turn on or keep on more expensive generation, nuclear, coal, gas, and then increasing by order of more and more expensive. If you remove a big chunk of those less expensive renewables, Olivier Beaufils (05:35.608)then the system is going to become more costly because you will have to turn on older, less efficient plants more often. And so on average, we'll have higher costs for your system. Doug Lewin (05:47.266)Yeah. And then add to that and you guys reading directly from the report, restricting renewables while thermal supply chains are constrained leads to load shedding under summer heat wave conditions. So the other key piece of this is you're not restricting renewables or in the case of 715 and 3356 actually retiring existing renewables. You're doing it in a context of it's very hard to build Doug Lewin (06:15.95)replacement capacity right now because of supply chains. Can you talk about that? And then the second part of that leads to load shedding under summer heat wave conditions. You know, we're, recording on the afternoon of May 13th. It's 97 degrees right now. We don't know what the summer is going to be like, but it's Texas. know it's going to be hot. You guys calculated two or three gigawatts of potential rolling outages just based on restricting future growth. So maybe talk about those. Doug Lewin (06:44.898)those two aspects, the difficulties in the supply chain and what your modeling found that would mean for summer heat waves. Olivier Beaufils (06:50.946)Right, no, I think that's a key point. So we're not in a world where you can just decide that you're not going to build those solar or wind projects that are in the queue and suddenly you want to build gas generation and that's just going to show up tomorrow. Those projects take years to develop. We have some slides we put out. Typically a thermal project is three, three and a half years. A wind or solar project can be four or five years. And so if... Olivier Beaufils (07:17.454)Today, you decide that you suddenly want five gigawatts or so of more capacity, you're not necessarily going to be able to put that online until 2029, 2030, probably even later. Because also, the other part for people to understand is, five years ago, gas was in a really tough spot. You had gas turbine manufacturers, GE Mitsubishi scaling down capacity because demand for gas turbine was way down. Olivier Beaufils (07:45.654)And so they reduce their production capacity like any sensible, rational manufacturer. And so today suddenly we're asking them to double, triple their production and they can't do it instantaneously. Obviously they will adjust some of that production, but it will take time. And they're also wary of an oversupply situation. So you have limitations of how much you can build, how fast. Doug Lewin (08:05.153)Exactly. Olivier Beaufils (08:10.732)And so that means every gigawatt or megawatt you take out of the market between now and the moment where you can build that new generation effectively is a megawatt that you will not have in the summer when temperatures are really high. Because majority of those projects have been in development for years already. So they are getting close to ready to build. And so if you prevent them from building or if you make it more expensive, more difficult so that people have to make a different decisions, decide not to proceed. Olivier Beaufils (08:39.404)then effectively you will have less capacity to generate. And as much as renewables are intermittent, think something that's also really important to understand is the sun doesn't always shine, but it shines pretty predictably. It generally rises at known time and sets at known time as well. And there's a pretty predictable curve. And even if we have a set of clouds that go over the project at some point, generally we sort of know when they're to generate. Olivier Beaufils (09:08.294)And the same with wind. You you will have weather events where wind drops, but you also have a lot of weather events where wind production is high. And so those projects do help the system. They generate power, except obviously solar at night. And so they help the system during those hours. Particularly solar in the middle of the day, which is when the demand is highest in aircott, is extremely helpful to the system. And combined that with batteries, we're able to shift a lot of the energy when we need it. Doug Lewin (09:37.516)Yeah. I mean, all, all resources contribute to reliability. Some contribute more than others. Obviously batteries or gas peakers have certain flexible attributes. Demand response has that as well, but all resources contribute to reliability and they all have other things they contribute to, including some cost impacts. let's do go ahead for those that are watching on YouTube, I'm going to go ahead and pull up part of this presentation. Doug Lewin (10:06.594)that you guys put out. is the one that's the impact of renewables. And I did want to make one more point about that, Olivier. It's interesting because you mentioned like, it does take a while for the manufacturers, the OEMs to ramp up production. On GE Vernova's earnings call, it may not have been the most recent one, it may have been two ago, but they talked about, they were talking like a lot of the oil and gas producers talk about capital discipline, right? About like, they don't necessarily want to just ramp up production because like you said a minute ago, oversupply is then a risk. They actually kind of like these high prices, right? So anybody that thinks that like, hey, well, this is just a temporary thing and in two, three, four years, we're gonna have plenty of gas turbines. A, that next two to three to four years is really important and we have to be careful. And two, that probably isn't gonna happen. We're probably still gonna be in a constrained environment. So you guys referred to that in this slide. Doug Lewin (11:00.972)When accounting for thermal supply chain constraints, restricting renewables causes load shed between 1.8 and 3.1 gigawatts across cases. So anything you want to say about this slide in particular, or it just kind of speaks for itself. Olivier Beaufils (11:14.03)Well, I think it's a reflection of a point you just made and having less megawatt coming from solar and wind. So essentially at the times when you need more energy because demand is increasing and just for our listeners, our demand forecast is conservative. So we are not taking the ERCOT forecast at face value. We think there's obviously a lot that can be discussed on how much of it is real and how much of it will come through. We put together our own forecast that's a lot less aggressive. Olivier Beaufils (11:42.05)I think we're right above a hundred gigawatts of forecast by 2030 and then climbing from there. But even in this sort of more conservative forecast, if you take away a significant amount of wind and solar generation, you will see periods in the middle of the summer during those tightest hours, generally when the sun sets before the wind generation has picked up and you have effectively less solar, less wind generation. Olivier Beaufils (12:11.278)do see essentially two to three gigawatts and even a little bit more so if you look at extreme weather events, but even in sort of a standard weather year, two to three gigawatts of load shed, which represents about 400 to 600,000 homes that would lose power. obviously, know, aircraft would try to do rotating outages and for those volumes they could, but would lose power over the summer when, you know, it's 105. Olivier Beaufils (12:40.91)plus outside. Yep. Doug Lewin (12:42.134)And Doug Lewin (12:42.294)I appreciate the point you're making about the load forecast, because obviously if your load forecast is higher, and ERCOT thinks by 2030 we're going to be in a 135 gigawatt or so scenario, you guys were right around 100. If you're at 135 or even you're somewhere in between, then obviously these load shed numbers would be much higher. And I think you guys, correct me if I'm wrong, for this study, you guys looked at throttling future development, but didn't look at Olivier Beaufils (13:01.644)The problem is even bigger. Right. Doug Lewin (13:10.926)the impact that how some of the bills, particularly 715 and 3356 could cause retirement of existing assets, right? This is just looking, this is just forward looking, correct? Yeah. So again, Olivier Beaufils (13:20.792)That's right. That's Olivier Beaufils (13:22.295)right. So we didn't even include that at that impact of potential retirements, which would make the problem even worse. Doug Lewin (13:27.628)So yeah, as extreme as this is, 400,000- 600,000 homes losing power in a heat wave, that sounds really bad and it is really bad. It actually could be much worse depending on some of the assumptions. Okay. So the next slide I want to pull up, and again, we'll talk through this, is the slide that shows some of the cost savings. Cause that is while renewables contribute to reliability, they contribute even in a more kind of a fulsome, mighty way to Doug Lewin (13:56.654)cost reductions. So the title of this slide, limiting renewables cause power prices to rise. Prices in the fully restrictable renewable scenario increased by 38 % by 2050. So you've got kind of a midline here, a midline projection, and then a higher scenario, and you're looking out over 20, 25 years. Can you kind of talk through the findings of the cost impact of restricting renewables? Olivier Beaufils (14:22.414)Yes, definitely. as you restrict more and more renewables development, and so as you mentioned, we have these two scenarios, one that essentially is sort of a 50 % is a halfway and one that is more fully restricting development past the next few years. So we're still accounting that some of the developments that's very advanced late stage would go through, but then after that, a very severe slowdown in the amount of wind and solar that would come into the system. so, you know, comparatively, cause you still need to meet load, we do model. Olivier Beaufils (14:52.078)additional thermal generation coming online to support the system. And so as you see over time, as you have to add more and more thermal generation to support the system, but already you can see the effect pretty significantly by 2035, you see a divergence between our central case, which is sort of view of the future that we think is most realistic based on load growth, based on market economics, right? Under the current set of rule. So you could Olivier Beaufils (15:21.326)call this a business as usual scenario, if you will, maybe a little bit conservative on the load side, but business as usual. And then those restricted scenarios, by the time you hit 2035, which is very important timing in terms of planning horizon for a lot of investments, you're 14 % higher. Your power prices are 14 % higher, which is very significant for residential and industrial consumers as I think we'll dive into in a second. And that is primarily Olivier Beaufils (15:51.05)a function of that very cheap part of the supply curve that renewables would fulfill having shrunk or not having grown as much as it would have under a business as your scenario, which means more expensive units have to be turned on more often. And so on average, you see just higher power prices. Doug Lewin (16:11.374)Yeah, mean, we're, this is a pretty dramatic, mean, 14%, uh, it, it's hard to, it'd be hard to overstate like what that would actually mean to the business environment of Texas. I mean, that mean, that is the difference between a whole lot of businesses choosing to locate here or deciding to go somewhere else. So that is, that's a pretty dramatic. again, depending on how all of this actually plays out and how much load growth there actually is. Doug Lewin (16:38.092)with the actual price of gases, a whole lot of other variables like that, we could see an even more dramatic increase. So I want to talk next about what that actually means. You started to allude to this to industrial and to residential customers. Can you talk through the impact on households and on large manufacturers and the like in the state of Texas? Olivier Beaufils (17:00.93)That's right. So we wanted to translate that into more, I would say, tangible terms for people, right? Like, why do I care? And so we looked at what I would call a large or medium sized industrial consumers with a load of about hundred megawatts, sort of base load consumption in aircotts, and looked at how its retail rates would evolve based on the relationship between wholesale prices and retail rates. Obviously there's some assumptions around how that evolves over time. Olivier Beaufils (17:30.606)but there's a very strong correlation between the two. And so we found that their bill would increase by about $6 million, over $6 million actually, with that power price increase. And then for an average Texas household, and we took really the average consumption of two bedroom or three bedroom family home, that represents about $225 a year in terms of their power bill. So a very significant increase that's really just linked to this decision to not Olivier Beaufils (18:00.626)add or discourage additional investment in wind and solar generation, which is obviously indirectly what those bills are going to do. Maybe one thing to add to that, right? So you could look at the bills and say, well, the modeling that Aurora did is not really reflective of what the bills are doing. And in a way you would be right. We decided to not model the language of the bills specifically. One, because there is a number of those. And so you need, you would need to do things very differently from each. Olivier Beaufils (18:29.71)because they're still very much in flux, right? They're being discussed and it's very hard to pinpoint a specific version. And they're all at the end of the day going to do a similar thing, which is discourage investment, make it costlier to invest in wind and solar. And so we wanted to already look at the impact of this lower investment in wind and solar rather than spend too much time discussing the specific language of the bill in this case. Doug Lewin (18:32.661)over time. Olivier Beaufils (18:57.154)And obviously we can go back to the language of the bill and discuss more of that. But in a way, if you want to think about 388 to comply with 388, you would have to be in that fully restricted renewable scenario. That is the only scenario by 2035 that has more than 50 % dispatchable capacity. So you're already in that sort of more extreme scenario to comply with that SB 388. Doug Lewin (19:20.782)And if I remember from your footnotes and details on this study, cause I did get in the weeds on this one, obviously, I think you guys modeled like an 1800 square foot house if memory serves. So like if you had a bigger house, which a lot of people in Texas do, there's a lot of 2,500 and 3000 square foot houses. Frankly, like I don't think there's too many people that are only paying $2,200 a year, which is what the slide shows right now for their electric bills. Doug Lewin (19:45.782)If I could pay that, I'd take it in a heartbeat. So I would just make the point that, it's not to obviously, Olivier, you I think the world of what Aurora does, I read your studies about what's going on around the world. It's not to dog the study. It's just to say that like, I think you guys have done something very responsible here, but very measured and very conservative in the way you're analyzing it. I think there's a strong argument to be made $225 would be on the low end of the range of what households would see, but still it's a pretty eye popping number. There's not a lot of. Doug Lewin (20:14.702)folks that would love to pay $225 more for electricity every year. Olivier Beaufils (20:18.968)I mean, particularly if you have a home that's not very well insulated, maybe with an older AC that's consuming a lot of power, you could easily see much higher than that. Doug Lewin (20:27.554)Which is probably a great segue because you guys did a second study and I do not want to give short shrift to that study. Renewables are phenomenal in Texas. We've obviously seen tremendous growth, you know, up to 70 gigawatts of wind and solar and over 10 gigawatts of storage. Texas is still lagging on the demand side. And so you guys did a great study there too. There's, there's a whole lot more I want to say about the renewable study, but I, but I want to make sure we leap. Doug Lewin (20:55.982)plenty of time to talk about this too, because I think a lot of times Olivier, know, folks are like, look, you can't possibly say, Hey, the grid is the most reliable. It could possibly be like we've done everything we needed to fix after winter storm, Yuri. have minimized the risk to the system. There's a lot more to be done. And I think one of those areas is on the demand side. So before we get into some of the charts and the figures and all that, can you just from a high level talk about. Doug Lewin (21:24.268)demand side strategies, the difference between efficiency and demand response. and again, Aurora does work all over the world. know you're, mainly focused on the U S but you have background experience working other places, just a little bit of kind of where Texas is on the spectrum of different states or regions around the world in terms of our demand side achievements. Olivier Beaufils (21:48.854)Definitely. And maybe I'll start with the last part of your question first. You know, let's recognize this. I mean, I've lived in Texas for probably 12 years now. Texas is a supply state, right? We like to produce energy and focused on that more so than anything else. There's a lot of good historical reasons for it. And that's sort of, that's where we are on the spectrum of demand side views is we're sort of the extreme on the supply side. I'm sure you could find examples are even more extreme, right? So I'm not. Olivier Beaufils (22:18.158)I'm not claiming we're the most extreme, but we're definitely on one end. And then you have countries, historically, that haven't been energy producers, right? A lot of countries that have to import a lot of energy. Think about island nations in particular, but other countries in Europe that don't have a lot of oil and gas productions, for example, that are very much demand oriented and are trying to make sure they're not consuming more than they need because they have to pay for every single. Olivier Beaufils (22:45.73)gallon of oil or megawatt hour of electricity they consume. I think that's the overall spectrum. So what that means is there's a lot we could do that's already been done elsewhere that obviously we haven't really put in place in Texas. Now, why haven't we done it? Why should we do it? Well, energy has been cheap in Texas. And so it's obviously less of an incentive to consume less of it. But we're now facing a situation where demand's growing pretty rapidly from industrial load, right? Olivier Beaufils (23:15.098)We're building LNG on the coast. The oil and gas activities in the Permian Basin are electrifying. It's not just data centers, but it is also data centers. And so we need to bring a lot of supply on the grid. And right now we have a concern that we've had since Yuri that clearly highlighted that concerns that maybe we don't have enough, especially when the system is tight. And so think it's a great time to start looking at how much progress we can do on the demand side in a way to unlock some of the supply and Olivier Beaufils (23:42.892)that is going to be challenging to build when all this demand is going to show up. So now what can you do on the demand side? There's sort of two main approaches. One is what if we have more efficient appliances, more efficient homes, so we don't need as much energy to cool them or as much energy to heat them up, depending on which season you're in. And so the demand doesn't grow as much with population. Every time someone moves to Texas, maybe it doesn't add as much electricity demand. Olivier Beaufils (24:12.716)And so in this specific study, we analyze heat pumps in the winter and replacing resistance heat with heat pumps that are much more efficient. And we can dive into this in a second. The other side is demand response. So that's totally different. It's not about efficiency. It's about when the system is really tight or some, you know, demand some customers able to turn off, save on energy to reduce the demand of the overall system. And especially when you have large demands, you Olivier Beaufils (24:42.638)For example, data centers is obviously a big part of the discussion, but industrial has been doing that for decades in Texas, right? This is not new. have industrials that are able to disconnect from the grid when the prices are really high. But also why not residential customers, right? That would be able to turn up their thermostat or turn down their thermostat depending on the season again, when demand is high and so reduce their consumption. And so those are really the two mechanism. And so we've explored both on the study. Doug Lewin (25:10.126)Yeah, something I've been talking about for a long time is like the large customers in the state have the ability to save on their bills from demand response. We need to make those opportunities available to customers. And this is an area where ERCOT is really taking some strides. They're really, they've made in their own words, residential demand response, a corporate priority for 2025, which is good to see. So this is getting talked about a lot more and Olivia, think this is a really, really important point. Doug Lewin (25:38.126)I recorded a podcast a couple of weeks ago with Tyler Norris from Duke University. He and his colleagues at Duke had done a study that looked at data center flexibility. If 1 % of the energy use of data centers were to be flexible, then 15 gigawatts of data center capacity could come online, or demand rather, without adding additional supply capacity. And that's just looking at the data center flexibility. Doug Lewin (26:04.216)Then you start looking at if you could bring in residential flexibility as well, because for those that didn't listen to that Tyler Norris podcast, and you should go listen to it, it was a really, really good one. But 90 % of the hours of the year, we've got a 30 % buffer before you get to the ancillary services and the various backups that are there. So there's a lot of extra room in the system to increase the megawatt hours, the gigawatt hours, the actual energy consumption. Doug Lewin (26:33.524)If we can control that peak, that's really where like the cost of the system start to spiral is when you drive that peak number up. We could get into talking about the slides, but if you want to add anything or correct anything or whatever I just said, feel free. Olivier Beaufils (26:49.056)No, that study was very timely. I'd say it's the heart of the debate now of how we can accommodate all of these data centers' demand growth, right? And I think what we're hearing is data center developers, operators don't necessarily want to get in the business of having all this backup generation firing it on or the disruption that it would take to turn off the data centers so they generally don't want that. And so it's a complicated problem, but it is a big part of the... Olivier Beaufils (27:17.262)equation here, because if you cannot have any sort of response on that data center load, then the amount of capacity you have to build to serve that is really large and is probably not something we can do quickly. Right? That's the issue. Timing is of the essence here. And there is a big uncertainty about our ability to serve that much demand that quickly. So I say very timely conversation and so very, very helpful study to be part of the debate. Doug Lewin (27:45.75)Yeah. And so for those that are watching on YouTube, you're seeing a slide. Well, again, we'll describe it for the listeners, but what we're looking at is the growth rate. And the first thing I want to point out on this slide, Texas peak demand grew at about 1 % from 2010 through a little beyond 2020. think Olivia, that goes like 2021 maybe. And then the last three or four years, we've seen 5.2 % growth rate. Now, if that were to be sustained over a decade, Doug Lewin (28:15.33)That would make the 2020s the largest growth we have had since the 1960s. That's based on national. I should probably go back and look at the Texas, but nationally there hasn't been growth on the electric system of 5 % or higher since the 1960s. And again, that 5.2 % is historical. That is the last three or four years. So there's a lot of discussion around, my goodness, this load growth is coming or is it coming? There's a lot of debate about how much is coming and how much isn't. Doug Lewin (28:44.334)But we've already seen load growth within Texas, as you said, driven by economic development, increasing population, data centers, heat, a lot of different factors. You guys put a map on here that shows the top five areas in the country for data center load. And Texas is what, fourth of those. But as far as actual energy consumption. Doug Lewin (29:11.822)We're second in the country. And if I'm doing my math right, and I think I am, that's roughly 5 % of our energy consumption in the state already. Because we used in 2024, I think it was 460 terawatt hours. This is 2023 data you have on here. But whatever, call it something like 440, 450, and 22 terawatt hours used by data centers already. So Texas already has a lot of data center load. We know there is the potential of a lot more Doug Lewin (29:41.23)coming. This is kind of a context slide and discussion we're having right now to kind of set the stage for why this demand side management on the residential side is so important. Anything else you want to say as far as that contextual scene setting here as we get into talking about the demand side? Olivier Beaufils (29:57.804)No, no, I think maybe just a note, right? Like I don't want to repeat myself too much, but the Aura Central I would qualify maybe a bit conservative, but probably closer to reality than the blue line, which is the very bullish aircraft forecast. Reality is probably in between the two, but if I had to guess, I'll probably be closer to the orange line. Doug Lewin (30:16.066)I think I agree with that. I think part of that is because, and this is why it's like we get into these, it's a certain point, becomes a little bit angels dancing on it ahead of a pin discussion, you know, debate, but it's not because you have to make planning decisions. I understand the importance of it, but I think so much of this is it's impossible to answer because it depends on the decisions we make, right? Right. It depends on the decisions the policy makers make. It depends on program design of demand response and energy efficiency. If we actually Olivier Beaufils (30:36.579)That's Doug Lewin (30:44.888)do the things that you're talking about in this study and implement, and what Tyler Norris was talking about, if we have demand flexibility for data centers and we really go big on residential demand response, we might actually see a line much closer to the Aurora, but we will also see a lot more energy sales, which is kind of interesting because a lot of the folks in the Senate and a lot of other places that are so worried about thermal generation, the best thing you could probably do would be to increase Doug Lewin (31:14.798)energy sales from data centers and reduce the peaks. So they're actually selling more power throughout the year. And I think that which of these lines are we going to go all the way up to 150 gigawatts, we're going to stay around 100, really kind of depends on some of the policy decisions that are made from here, right? Olivier Beaufils (31:33.27)That's right. I think that's a really important component of this equation is all the decisions we make, all the decisions the legislature makes are going to impact the demand forecast, the supply, the economics of those projects. so, all of these are moving targets. Doug Lewin (31:48.876)All right, I want to look at the impact of demand response on prices. So similarly to the way renewables put downward pressure on prices, demand response can too. Do you want to just talk through the slide I've got on the screen right now about the downward pressure demand response can put on prices? Olivier Beaufils (32:08.568)So we ran the model similar to what we've done on the solar and wind side, but instead this time we focused on demand responding to high prices. And we made, again, we made conservative assumptions on how much residential response we would get, how much data center sort of large industrial load response we would get. And all the assumptions are in previous slides in the study. And so look that when those assets would decide to Olivier Beaufils (32:38.166)essentially turn off, which is not really what happens, right? People don't just turn off facilities. They're generally firing up their backup generation. Or in the case of residential consumers, they might be not running their dishwasher or increasing their thermostat by a few degrees. So we looked at these responses and then we rerun the model with those price responsive demand and looked at how prices would settle according to me. And what happens is because you are saving Olivier Beaufils (33:08.014)hundreds of dollars by demand being lower during the tightest hours of the year, mostly over the summer. You are in effect saving a significant amount of money on average. And you can see on the slide, you know, two to $3 per megawatt hour, which is significant, right? And in a market that's clearing at 30, $40 per megawatt hour on average. most of the savings happen when prices are four or $5,000 per megawatt hour. So you're. Olivier Beaufils (33:37.898)essentially hedging against those most expensive hours. Doug Lewin (33:41.12)And then again, just like you did on the renewables, when you looked at what does this actually mean for individual customers? And one of my favorite things about this, I know you're going to talk about it, but I'm just going to call it out because I really, think this result is kind of amazing. And I talk about this all the time, but I think it's hard for people to understand. It's just like adding any resource to the market. Demand response is a resource. And even if you as a consumer are like, don't touch my thermostat, I'm not volunteering for any of this, I'm out. I don't want to. Doug Lewin (34:10.19)deal with this in the summertime, even if you're one of those customers and that's okay, I don't judge you, right? It's fine. It's okay. If even a subset of customers participates and you don't, your bills go down too. Now, the person that participates is gonna get more bill savings because they're participating, but you found based on the level of demand response you modeled that even if you don't participate, you would get $87 a year in savings on your electric bill Doug Lewin (34:39.853)from increased levels of demand response. That's kind of amazing. So speak to that, but talk about some of the broader results that you found as well from demand response. Olivier Beaufils (34:48.237)That's exactly right. And maybe we're not very used to collective, you know, sort of impact in this state sometimes. Right. Right. But yeah, exactly. Is the fact that other people are doing it is a benefit to the system. And so it saves on, on your bill, even if you like your house to stay at 68 throughout the summer and not increase your term with that at all. Right. But if you do, if you do increase it, maybe from 68 to, to 74 or 76, then you're going to save even more money. Olivier Beaufils (35:15.654)So there's still very much a component of individual choice. Some people just don't want to do it. But if enough people do it, the overall system benefits. Doug Lewin (35:24.96)And you found the cost for industrial customers reduce $2 million, roughly 5%. That's again using that example of kind of 100 megabyte industrial customers. So savings across all kinds of different classes of consumers as well. Olivier Beaufils (35:40.372)Exactly. And that would be true for a small business as well that's running their AC in a shopping mall. Doug Lewin (35:46.36)So let's shift and talk about energy efficiency, something near and dear to my heart. I talk about it all the time. I have, for those that might be confused of what resistance heating is, I'll give the most basic definition right now. But the very first article I ever wrote on Substack, was during or maybe just after, I think it was actually during Winter Storm Elliot, was about resistance heat. I've done a couple of different podcasts on it as well. We'll link to all those in the show notes. Doug Lewin (36:11.726)But resistance heat is literally the same technology as what is in a hairdryer or a toaster oven. It's a coil that heats up and it is sized for a home or an apartment. And so you guys looked at this heat pumps require 64 % less energy to heat a home during the winter relative to traditional resistance heat. So heat pumps are technology that can replace resistance heat and have really large impacts for grid reliability and for savings for customers. Doug Lewin (36:40.984)So before we get into the reliability and savings, do you want to just talk through this slide of what the actual impact in demand and load are when you shift from resistance heat to heat pumps? Olivier Beaufils (36:53.484)Yeah, absolutely. essentially you are requiring less electricity to heat up your home at different temperatures and the curves sort of the results are not exactly the same depending on what is the outside temperature, right? And I think maybe this is a good opportunity to dispel a sort of a myth that people have about heat pumps. think a lot of people will tell you, yeah, heat pumps are great, but you know, but when it's too cold outside, it doesn't really work really well and, and resistance heat is better. Olivier Beaufils (37:23.32)I think that might've been true at some point in time. This is definitely not true anymore. We've done a lot of research on it. These heat pumps are being installed in New England where it definitely gets cold for an extended period of time. Colder than in Texas for sure. And so those heat pumps do perform well, including when it's cold outside, including when it's 10 degrees outside and they perform better than resistance heat. There's a little bit of a curve, but essentially what we're showing on the slide here is that Olivier Beaufils (37:52.462)heat pump are about 64 % more efficient than resistance heat when it's 30 degrees outside, which is most of the time in Texas, and the gap's even bigger when the temperature is lower. Doug Lewin (38:05.518)That is the key here, right? Because at 30 degrees, like our system probably, we're not going to have big problems on the system. At 11 degrees, you might. And of course, during winter storm Uri in the Dallas-Fort Worth area, the temperature was like negative 2. And so what you start to see is this really, really big gap as the temperature decreases. The percent might not be as much, but the gross amount is still extremely large. And so at a 50 building apartment, you guys were looking at something like an Doug Lewin (38:33.998)80 kW reduction. And I can't emphasize this enough. I didn't realize this when I wrote that first column in late 2022. I was mostly talking about homes and you've got on your slide a home that has resistance heat will see a reduction of four or five kW. So I wasn't wrong to talk about homes, but I had a few different folks that work in the energy efficiency industry sort of like literally physically stopped me at a conference and say, you're missing this. Doug Lewin (39:03.018)It's the apartments and we're still building apartments with resistance heat. Basically 80 % as my understanding of new apartments that are going in are built with resistance heat as the only heat as the primary heat. they are, they are just using a massive amount of power and the winter is the biggest risk to our system. Doug Lewin (39:27.436)So I really appreciate that you guys did this and that you've got this. encourage folks again, if you're watching on YouTube, you're seeing it. If you're listening to the podcast, do go to Aurora's website, download this research and look at it because it really does tell a story. Like we are not going to get out of our winter problems. This is my view until we address the demand side. There's just, you're not going to build your way out of the winter problems. Efficiency is not a nice to have. It's, it is essential. It is a prerequisite for reliability. Doug Lewin (39:57.846)Anything you want to add to that or disagree with me, you can. Olivier Beaufils (40:00.782)No, I think, I think that was, that was well said. mean, particularly in a system that's growing. think if you were in a situation where you have an oversupply and you have plenty of energy and everything is cheap, maybe you wouldn't be as hard pressed to do it. But in a system that's looking to add gigawatts of data center load, that is growing, where the population is growing quite rapidly and is, is having challenges, maintaining reliability. mean, we've seen under winter storm, Yuri, obviously aircocks. Olivier Beaufils (40:30.914)been a lot better since Yuri, we haven't had another episode of Load Shed, but the risk is there. And so I think you should use all of the resources at your disposal. You should build more generation of all the different technologies, but you should also explore what you can do on the demand side to reduce the risk for those tightest system hours. Doug Lewin (40:48.59)Yep. And you guys did find some significant cost savings. We're running out of time. We could talk about that briefly, but I do just want to just keeping with that point about winter and what we might see in winter. What you guys found was that if we got to 50 % heat pump adoption and to be clear, that is a big goal. That would take some time to achieve, but you've got this in 2030. So if we really got started in earnest four or five years to rep... Doug Lewin (41:16.6)place 50 % of these heat pumps, of the resistance heat with heat pumps, and to really stop digging ourselves deeper into a hole, to stop having apartments that have resistance heat. If we were to get to that 50 % where we might end up in a load shed situation, even in a winter storm Elliott type event, not even winter storm Uri, but in 2030, we could find ourselves if we had an Elliott style event, that was December, 2022. Doug Lewin (41:44.386)We could find ourselves in load shed and you found that you could actually reduce that load shed by what about about six gigawatts. Talk through the findings about heat pumps and what they would mean during a winter storm Elliott type of event in 2030. Olivier Beaufils (42:02.008)That's right. So it's very important for reliability for a couple of reasons. One is it gives you more flexibility on the demand side. And so this is what you show in what we show in the graph here where you have a situation and this is very much what happened during Elliott's the first day. There was a lot of wind on the system. mean, think about it. You you had a cold front coming in tons of wind works really well and helps the system a lot during the day. Now that we've built all this solar, you also have a lot of solar. Olivier Beaufils (42:31.554)You have the batteries, they're able to shift quite a large amount of the solar into the early evening hours. But at some point, you know, the sun sets, the battery capacity is exhausted, right? You've discharged everything you had. And then now the depression is set. So the wind is actually quite low. And so you're in a situation where you have to rely primarily on your thermal generation. And that's also why thermal generation is a key component, a key part of a reliability, right? Olivier Beaufils (43:01.58)Certainly I don't want people to take away from this conversation that this is all about renewables. Thermal generation is important and there's a whole conversation on how to make sure we get enough thermal generation on the system that we're having. Doug Lewin (43:14.004)It's a system, right? And all the different resources bring different attributes and they all, they all have their place for sure. Olivier Beaufils (43:20.654)Exactly. And that thermal generation needs to be there. But this additional lever you can use, right, is if the system is more efficient, if you've looked at more efficient heating appliances, right, so in this case, heat pumps, you can lower your demand to the point where you would avoid Lodgehead even in this really tight system situation. So here it would be overnight when solar generation is not present and wind generation is very low. Olivier Beaufils (43:50.05)in that specific event. And so you would really be able to avoid low chat. Doug Lewin (43:55.052)Yeah. Doug Lewin (43:55.322)And look, I think the other key piece of this is, depending on how cold those temperatures get, you also end up with freeze-offs in the gas fields, right? So gas supply can be a big problem, like during winter storm Uri. So with this scenario, looks like you guys are assuming you do have that thermal generation there. And definitely there have been improvements made on power plant weatherization. So we've seen improvements over the years as the PUC and ERCOT have implemented that. Doug Lewin (44:24.622)power plant weatherization, but still there's some level of power plants that drop off of all kinds. Some wind freezes up, gas supply freezes up. And then again, you have the problems in the Permian with freezing. This ends up acting as a kind of a hedge against that, right? It could be low wind. It could be thermal plants going offline. It could be gas supply freezing up. It could be a combination of all those things, but every increment of energy efficiency you have, Doug Lewin (44:52.27)either gets you closer to avoiding load shed altogether, or if God forbid, there is load shed minimizing the impact of how long that lasts and how many people it impacts. And this slide really does kind of tell that story. again, pictures worth a thousand words. I encourage folks to go check this one out. Anything else you want to say about this one, Olivier? Olivier Beaufils (45:14.528)I think the only thing I would add is just basically every technology has a role to play here and they all play, they all have different attributes and bring something different to the system. And I think something that's probably important to even from just an economic theory standpoint, right? Is that it is better to incentivize and reward the attributes we that are desirable in the system rather than try to punish certain technologies for having attributes that we don't like. Olivier Beaufils (45:44.236)Right. So it's, think this is how we create the incentives for a new generation to come in. so for example, if we want more demand response, we should find a way to reward industrial for having that demand response. Historically, it was for CP, right? What was rewarding demand from, from not showing up in the title system hours. You know, that program might need to be modified now to encourage the right kind of behavior. But again, you need to find a way to reward. Olivier Beaufils (46:11.608)the behavior you want in the market and then let the market decide what is the best solution, what is the best way to respond to that. I think it's the same story for energy efficiency. And there's a personal incentive of you see of saving money, but right now, sometimes it's difficult to justify the investment. So there's additional levers that could be pulled, but it's also the same story for thermal generation. If we want to have thermal generation with certain characteristics, we should Olivier Beaufils (46:37.09)find a mechanism to reward that to the point where we have the system we want. Doug Lewin (46:41.942)Yep. Okay. Very last one, because I know we're over time here, but I just want to make the point that like one of the beautiful things about energy efficiency is that it is a way to increase system reliability and resiliency and all those things. There aren't many ways you can do that that also save consumers money. So we talked about how demand response does that. And again, if folks go to Aurora's website, get the study, you can see there's a very similar graph for the demand response impacts on reliability. Doug Lewin (47:11.064)check that out for sure. On the energy efficiency side, you found that heat pumps actually can save the average household just about what, 50 % on their heating costs over $400 a year. So not only, I mean, it's just, it's still just baffles me Olivier that we have not as a state four years after Yuri really leaned into this. again, it's a short list of things that you can implement that. Doug Lewin (47:38.794)increase reliability by this much and put money back into consumers' pockets. Just give us the takeaway on the dollar savings to consumers from energy efficiency, and then I'll give you a chance to share any final thoughts, and we'll end there. Olivier Beaufils (47:52.974)Yeah. I mean, it's the same logic as, what we've seen before, but I think the number here is pretty striking, right? It's $400 a year you're saving. Right. Before we were talking about $200 increase in the case of wind and solar or $200 decrease in the case of demand response. But here you were at double the impact. So this is very impactful. If you're switching from resistance heating to heat pumps. Olivier Beaufils (48:19.0)for an average house, your energy consumption will decrease significantly and you'll save a lot of money, especially during those winter storm conditions. And so I think it's something that it will pay off pretty quickly, especially if you can get some tax credits on installing the equipment. But even if we can't, there's really an economic proposition there. But then on top of that, you do generate indirect savings for everyone else and for other customers. So people will benefit from these. Olivier Beaufils (48:46.872)programs from higher adoption of these technologies in general. Doug Lewin (48:50.702)The 424 is for somebody that takes resistance heat out of their house and replaces it with a heat pump, right? This is for the family. That's not the indirect, right? Okay, okay. Yeah, yeah. So look, if you've got resistance heat in your house, particularly if your central AC, gas furnace, whatever kind of system you have is nearing the end of its life and you're looking at a replacement, look at these heat pumps because there are significant energy savings associated with that. And... Doug Lewin (49:18.016)If this is the kind of thing that makes you feel good, you'll also be doing a really good thing for the grid. Olivier, again, can't thank you enough for the research you guys have done. Like you said at the beginning, it's not about an agenda. It's making sure that people have the information so they can make good decisions. You've made a great contribution here. Is there anything else you want to add? Anything I didn't ask that I should have asked you? Olivier Beaufils (49:40.558)No, I mean, obviously there's a broader context with the number of bills that are being discussed in the legislature. And I think we could probably spend another entire podcast session discussing the merits and the pros and cons of each of these proposals. But I would say in general, what we tend to see in the modeling is that a solution with more of everything tends to be both cheaper and more reliable. Olivier Beaufils (50:07.426)than trying to favor certain technologies over others or impose costs on existing technologies to make them pay for certain attributes that we think are not desirable in general. And so, so I think it may be, it's a bit cliche, but like when we run the modeling, we tend to see that an all of the above approach is a beneficial for reliability and it is also a benefit to consumers. So there's a lot of work that still needs to be done around the Texas power market, particularly around Olivier Beaufils (50:36.2)Texas Energy Fund, some of the dispositions are already in DRRS is another one that needs to come in and ERCOT needs to design. I think thinking about it in that way is definitely yielding better outcomes when we run the modeling and the analysis than some of these bills are trying to impose more costs on certain technologies. Doug Lewin (50:57.218)Yeah, I think thinking about it from a frame of like, want to have abundant and reliable and affordable power. Texas is the economic engine of the United States and in many cases of the world, we have to have more power to fuel our economy. So I think that's well said, like more of everything. And I think for folks, there's some folks that don't want to see more gas peekers, we're going to get more gas peekers. There's some folks that don't want to see solar and storage. We need that solar and storage. Doug Lewin (51:26.818)wind as well. These are all resources that contribute to reliability. They keep costs lower than they otherwise would be. And I certainly hope that's the direction policymakers and stakeholders and regulators and grid operators and everybody wants to go. I agree. Sort of more of everything is I think we're hopefully where we're headed, including more energy efficiency and more demand response. It's a, you know, kind of an irony or something, more of less. Doug Lewin (51:56.398)If that makes any sense. All right, Olivia. Olivier Beaufils (51:58.574)Right, exactly. Olivier Beaufils (52:01.174)really appreciate you. for taking the time. I encourage everybody to check out. Doug Lewin (52:03.246)time, do encourage you to check out the Doug Lewin (52:05.366)studies. We'll have links to them in the show notes. And Aurora also has, by the way, a great podcast, which I've learned a lot from over the years. It's called, is it Aurora Unplugged or something? Olivier Beaufils (52:15.064)like that I think is the name. Energy and plagues almost. Yeah. Aura energy and plagues and thanks for mentioning it. Doug Lewin (52:21.55)put a Doug Lewin (52:21.71)link to that as well. I mean, you guys, again, you guys kind of cover the world. it's fascinating to compare and contrast. My head's always kind of in ERCOT, but to listen to some of the stuff you've done in Europe and Australia, different markets around the world has been a great learning experience for me. Thanks, Olivier. Appreciate you. Olivier Beaufils (52:38.136)For sure. Well, thank you, Doug, for having me and for being able to discuss these topics with you. And we're all big fan of your work in AirCut as well. And always great to read your posts and follow exactly what's happening and live in the market. Thank you. Doug Lewin (52:51.47)Appreciate it. Thanks, Olivier. Doug Lewin (52:55.298)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