← Catalyst with Shayle Kann
Catalyst with Shayle Kann
When to colocate data centers with generation
00:36:32
Cloverleaf Infrastructure’s chief commercial officer discusses when colocating data centers with on-site generation makes sense — and when it doesn’t.
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- [00:03]
Latitude Media Announcer
Latitude Media covering the new frontiers of the energy transition.
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Shel Khan
I'm Shel Khan and this is Catalyst.
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Brian Janis
I don't think there's a credible argument for behind the meter nuclear at a data center in the near future. And by near future I mean the next couple of decades.
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Shel Khan
We're just saying not on site. I mean that's the distinction I want to make here is like we are going to and I think we should build a lot of new nuclear in the us. I just don't know why it needs to be co located with data centers.
- [00:32]
Brian Janis
I don't think it does because it doesn't solve all those problems that you're.
- [00:35]
Shel Khan
Talking about coming up near, far wherever you are, you'll be powering my data center.
- [00:50]
Sponsor Announcer
Catalyst is brought to you by Antenna Group, the communications and marketing partner for mission driven organizations developing and adopting climate solutions. Their team of experts help businesses like yours identify, refine and amplify your authentic climate story. With over three decades of experience as a growth partner to the most consequential brands in the industry, their team is ready to make an impact on day one. Get started today@antennagroup.com need to accelerate procurement.
- [01:16]
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- [01:48]
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- [02:22]
Shel Khan
I'm Shel Khan. I invest in early stage companies at Energy Impact Partners. Welcome. All right, so here's the thing that often happens. A cycle that plays out again and again and again. Here are the conditions precedent to this cycle. There has to be a hot market with lots of activity, lots of investment and plenty of hype. And then a trend begins. A few players start to do something new. It catches on, it gains steam and at some point it kind of jumps the shark and then everyone starts talking about doing that thing or just doing it, but the original rationale for it has kind of been lost and people stop questioning exactly why it makes sense. I've been wondering whether that's starting to happen lately in a particular part of data center world, specifically the idea of pairing on site power generation with data centers behind the meter. There are so many announcements about this right now, ranging from it actually happening, for example, the XAI data center that is actually running on generators, or there's a big meta project in Louisiana that's going to build a bunch of new natural gas to very speculative things, which is where I would put a bunch of the announcements around new nuclear getting co located with data centers in various locations we have talked about this a little bit before in a different context with Sheldon Kimber, who's the CEO of Intersect Power, which is adopting a strategy, at least in part, of co locating wind, solar storage and some natural gas with data centers they're building, especially in Texas. But I was having this conversation conversation about when it does and doesn't make sense to put generation on site a couple weeks ago with my friend Brian Janis. You have heard Brian on the show before. He's the co founder of Cloverleaf Infrastructure, he's the former head of energy at Microsoft and he thinks about this stuff day in and day out. Anyway, it was a good conversation so I thought we would do it again in front of mics. So with no further ado, here's Brian. Brian, welcome back.
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Brian Janis
Thank you. Appreciate you having me again.
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Shel Khan
Okay, first thing, when you're developing a new data center, campus land, whatever, when you're developing a new data center, what are the basic requirements from a power perspective? And there are a bunch of other requirements. What are the basic requirements that you have from a power perspective? What has to be true?
- [04:35]
Brian Janis
What has to be true is you still have to have a very high level of availability of power. I mean outside of crypto operations, any sort of modern, whether it's an AI data center or a cloud data center still necessitates a significantly high availability of power, in part because the CAPEX costs associated with the infrastructure you're putting in there are so high, you want to have high utilization. Plus the services that you're serving out of that, whether it's AI inferencing or some sort of traditional cloud application, still requires a high level of availability. The one area that comes up a lot in this discussion is training and say does this training, can that act a little bit more as a batch workload. And it's true, by definition it can. And at the same time, nobody wants to build a $20 billion training model and just turn it on and off every time the electricity starts to cut out.
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Shel Khan
Well, isn't it true that my understanding from having now seen a few actual load profiles from these data centers is that actually it is kind of operated in batch, like independently. It is. There's spiky load profiles, actually. Right. But it's sort of a different question as to whether there can be peaks and valleys in the load profile versus whether there are forced peaks and valleys as a function of the electricity availability.
- [05:55]
Brian Janis
Right, exactly. Yes, exactly. And I was talking to a big AI operator about this the other day, and their response to this was, we don't want any surprises if we need to go down. And it was more of like, if we need to go down, we'd rather go down for a week than go down for a few hours every afternoon. We'd rather just know that it's coming and plan for it. But to be completely dispatchable on an unplanned basis would likely be more problematic.
- [06:27]
Shel Khan
Okay, and so then the basic paradigm is connect the data center to the grid. The grid provides, generally speaking, high reliability, not quite high enough reliability to what you want. So you also put a UPS on site, which just bridges seconds to minutes of power outages, basically. And then you generally put backup generators on site as well, which are supposed to, you know, fill in the blanks where you have longer outages. So that architecture, grid connection, UPS backup gen set, that's the kind of basic, like, dominant paradigm, right?
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Brian Janis
Correct. Yeah. Particularly for your traditional cloud data centers, you'll see that I think with some of the AI training sites we've seen, it's more of a move away from backup generators. Some of that is in part because of that batch. Like they could handle an outage if it ever happened. And keep in mind, the outages we're talking about that the generator is there to protect are pretty rare because we're talking about these sites being connected at very high voltages on the transmission system. So we're talking about Winter Storm Yuri sort of events that you're really concerned about. So in that case, both for that reason and I think out of necessity, because especially if you're talking about these gigawatt scale sites, we're seeing, you're not getting diesel generators permitted at that sort of scale.
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Shel Khan
Anyway, though, didn't Xai the Colossus site, they just kind of did it right.
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Brian Janis
Anyway, they just kind of did it. It still wasn't at the scale of even recently the sites that OpenAI has been talking about that was recently announced or with Oracle just today really, or the last week we've seen those were 1.3 gigawatts in Port Washington, Wisconsin that I'm quite familiar with. Another 1.4 gigawatts I believe in Abilene. I think for those kind of sites it would be very difficult to permit that scale of diesel generators in most markets.
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Shel Khan
Right, okay. But I guess the first point I wanted to make here is that because what we're going to talk about here is this concept of co locating generation with data centers that seems to be fairly hypey at the moment. But I wanted to first clarify by saying actually a lot of data centers, most data centers, certainly all cloud data centers, do have on site generation already. It's just backup generation. And so when we talk about the things like demand response and making data centers flexible and so on, you know, there is existing generation on site that could theoretically serve that in a lot of data centers. I think the limitation to that tends to be an Air Permit 1. Right. You have limits to how much you can operate those generators if they're diesel anyway.
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Brian Janis
That's right, yeah. And we were always having to look at as we would build campuses larger and larger, we're sort of eating into those emissions allocations and so you end up with less runtime, less ability to test those generators, to keep them operational for emergency purposes.
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Shel Khan
Okay, so that's the first clarification. There is generation on site, but it's kind of limited, it's expensive, it's dirty, generally speaking. But the thing that people are talking about a lot more now, and you see these announcements coming, I think from left, right and center, is this concept of co locating generation that's not intended to be backup generation. It's intended to either be. It's intended to be prime power, either to entirely serve the load of the data center, though I think that might be. You tell me what you think. I think that's more of a mirage than anything else. More likely sitting there operating 247 or as close to 247 as it can alongside a grid connection ultimately. So can you strawman for me the argument for like when you might actually want to do that?
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Brian Janis
Yeah, I mean the argument is that if I go to utility and they tell me it's going to be five to seven years to get the connection at the scale I want, then maybe it's faster for me to just build my own generation. So that, that's the argument and it's sort of further bolstered by the idea that, which I actually think is a false idea, but an idea that because I'm putting a 24, 7 load on the grid, I need to match it with a 24, 7 generation source. And you hear that a lot out of the current administration about, well, wind and solar can't help us do what we need to do because they're intermittent. So we need to have lots of baseload generators because we need to connect these data centers and we need to keep the lights on. So that's the other part of the argument that I need to match the output of this resource with what I need to input into my data center.
- [10:58]
Shel Khan
Okay, so two part argument there that you made. The first part is time to power, speed to power, which is the term that has overtaken the industry that I think intuitively makes sense. And you do hear about these extraordinarily long interconnection times. The interconnection queues are remarkably clogged. There are hundreds of gigawatts of theoretical data centers sitting in the load interconnection queue of some utilities. And so of course it makes intuitive sense that if you have the capacity to come online earlier via bringing your own generation, some of these data center operators would certainly do that. Why do you think that that is at least to some degree a mirage?
- [11:39]
Brian Janis
Well, I think there's a number of reasons why. One, it assumes that while there's congestion on the electricity grid, there's not on the gas grid. And that's just not true. Like everything, there are certainly places I can go to get abundance amount of gas to supply a data center. But it's not true universally. It's not true that I can just always stick a pipe in the ground and get unlimited amount of gas to build a data center.
- [12:03]
Shel Khan
And we should clarify that these generators folks are building at least today it's all gas. Basically it's not all gas. We should talk about some of the other things people are talking about too. But most of it is gas.
- [12:12]
Brian Janis
Most of it is gas, yes. So assuming what they're talking about in any sort of off grid consideration today, at least you want to do it in the 2000 and 30s or 2000 and 2020s, it's going to be gas. So there are lots of congested, sparse parts of the gas grid. So that's problem number one. Obviously we have lead time issues with the generators themselves, which has been much discussed. You also have to deal with the integration issues into the data center itself. So data centers, really, anyone who's designing a data center has always designed for two sources of power. You have the grid source and then you had your backup generator source. You could island people talk about data centers becoming micro grids. Data centers have always been microgrids. They've always been designed to do that. And so getting to the level of redundancy that you would want in that system would require a significant overbuild of that system to meet the standard specification of any typical data center engineer. And then when you think about that overbuild, then you get into the cost element. Because actually one of the arguments was made for off grid is that, well, I don't have to pay all this T and D, so it's going to be cheaper for me to just have my own islanded system. In almost no case would that ever be true because you would overbuild that system to meet the level of reliability. And we're not even getting into the level of reliability related to the intermittency sometimes of gas and the idea that you could actually get a firm gas connection. But we'll put that aside. But let's say you have a Data center that's 100 megawatts of it. You've got a PUE of, let's say, 1.2. So now I'm at 120 megawatts of generation. And now I'm also thinking about having some sort of N plus redundancy. So I'm going to put in another unit. Depending on the size of the units, maybe I'm putting in another 20 megawatts or 30 megawatts of generation on top of that. So Now I'm at 150megawatts and now I start to operate the data center. Well, most data centers significantly underutilize their theoretical peak capacity. So you might only be running that thing at 90 megawatts on average or less.
- [14:24]
Shel Khan
Right. I mean, on a 247 basis. Right. Like, I just, I just was talking to a, a data center operator who said that their average actual utilization relative to nameplate capacity is like 40 to 50% over the course of a year.
- [14:37]
Brian Janis
And so you can quickly do the math on if I'm paying $2700 a kw just roughly for that generation and I'm having to overbuild it by maybe even 2x, the per kilowatt hour cost of that system is extraordinarily high. I mean, extraordinarily high. And if you look at it in a place like Texas, for instance, where the average price for electricity on any given day is actually pretty low, like the real time price may be sitting around $20amegawatt hour. So you go off grid in Texas and you're paying somewhere between $150 to $200amegawatt hour, 24. 7. And your neighboring data center connected to the grid is paying $20 for that same power. Now, I'm leaving out the T and D. You know, I mean, there's stuff on top of that. But, you know, the average cost of electricity in the market in Texas is pretty cheap most of the time. And the only argument you ever had for building something like a baseload generator in Texas is that sometimes the price would go to 5,000 or $9,000 megawatt hour. But with the massive amounts of solar and storage coming on the grid, which you've probably talked about in another show, we're not seeing those spikes anymore. We're not seeing the scarcity pricing.
- [15:46]
Shel Khan
Yeah, we haven't talked about it. That much volatility in ERCOT is down, which is interesting.
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Brian Janis
It's way down. Yeah, it's way down. So you don't have the scarcity pricing anymore, which is effectively sort of the proxy for a capacity market. There is that you don't have a capacity payment. But every once in a while, if you're dispatchable or 24, seven running, you get these really high rent payments. But if those don't exist anymore, which is not to say they couldn't come back, but they've certainly been decimated the last couple years with solar and storage. It makes that economic argument even harder.
- [16:15]
Shel Khan
Okay, so now I'm going to bring your term back to you. Though of course you coined the term the bit watt spread. And the core principle of the bit watt spread is you have to understand that actually the cost of electricity is sort of not important in the context of the revenue and earnings you're going to get off of operating a data center. So assuming that that remains true here, yes, maybe it is not actually cheaper to build your own generation, but if it does get you faster time to power, that probably is a trade you would make. Right. Just on a pure economic basis, it probably is.
- [16:48]
Brian Janis
In a lot of cases you would. Yeah. So it's not a deal killer that you're paying that much for power. It's just something you have to take into consideration that you're not getting necessarily an economic benefit for doing that and you're still competing with others that might be able to get good access elsewhere and they're going to obviously end up with much better margins than you. Still, it may not stop you from doing it because you'd rather have the revenue versus not have it. And that's generally the argument that's made in the off grid scenario is, well, I can't get the power anyway, so I might as well do it this way. Now. I tend to. And we can kind of get into sort of what are some of the strategies that would actually get you that power. And I tend to be maybe more optimistic about the availability of grid power than others. It's like almost like a lot of the industries just throw up their hands and like, well, this is hard with the utilities. So I'm just going to go kind of take my ball and go home.
- [17:42]
Shel Khan
I think that's the key difference between at least how I've heard you articulate your thinking here and others, which is that I think the assumption otherwise is that necessity is the mother of invention. And there is necessity in the sense that we can't find sites where you can get connected with a large enough data center fast enough. And so even if it is suboptimal, even if you're going to sacrifice a little bit of reliability or you need to overbuild and you need to pay more, even if all those things are true, we're still going to have to do it if we're going to build out the data center capacity that everybody wants and maybe needs. I think your view is a little different in that you actually don't think, you think there is more headroom in interconnection capacity on a reasonable timeframe on the grid, Is that right? Have I characterized your view right?
- [18:31]
Brian Janis
Yes, that is my view.
- [18:33]
Shel Khan
And why do you think people are missing that?
- [18:37]
Brian Janis
A couple of things. First of all, and it only took us, what, 20 minutes maybe into this to mention Tyler Norris's name. So Tyler's paper about flexibility, which everyone's talking about, rightfully so. I was actually just with Tyler this week talking about this. Tyler's paper does a great job articulating my perspective, which is the problem we're trying to solve here is not that I need 24.7generation to match a 24.7 load, it's that I need to solve for the summer peaks and the winter system peaks in order to connect a load. That's what a utility does. And I think it's a. I think there's a misunderstanding that when you go to utility and say, okay, where's the power going to come from? The utility goes and solves for 8,760 hours. Where's your power going to come from? That's not what they do. They look at would the incremental addition of this load on the system cause me to exceed what I can supply on the hottest summer day and the coldest winter morning? So first of all, it's a capacity problem, not an energy problem. And so flexibility, being able to identify sources where we can, whether it's on the customer side of the meter or the utility side of the meter, unlock more flexibility and unlock more capacity on that system is really the goal. The second part is in addition to the time element, there's also this space element. I mean, the way to think about the electric grid is it's about moving power through space and time, right? You generate it at a particular time, you move it through space. With transmission lines, you can move it through time with storage and with other types of flexibility. And so when you think about the orchestration of that system, the argument that you're hearing somewhat from the current administration is that, well, we can't possibly do it without lots more baseload generation, all the while while they're canceling transmission lines like the Grain Belt project. But the transmission line itself is a substitution for baseload power because if you can move more power over more space, you are reducing the need to have to generate that power on the other end of that congestion. So in that sense, transmission and generation are sort of substitutionary. And storage is the same way. If a company like Form Energy is really successful at scaling up 120 plus hour batteries, you actually need less transmission because you can put batteries on those sides of those congested lines and store it for time. So this whole notion that we need X fill in the blank tech, I need combined cycle plants running very high utilization to supply data centers just isn't true because you have to look at that in the context of what are all the other things that we have on the system that are able to meet that same need, but just in some different combination of space and time? And so for that reason, I just, I think there are ways that we can solve this problem in terms of getting more out of the existing grid. And that includes things like grid enhancing technologies. It includes using varying durations of storage to help alleviate transmission connection. It includes advanced conductors. There's a lot of tools that we have virtual power plants. You know, I mean, I could keep going on and on about there's all these different things we have. The problem is, I think for most people, they boil it down to this simplistic 24. 7 needs 24. 7 versus I can orchestrate all these things and in essence replicate that 24.7 output. I just did it with a dozen different things rather than one thing, which my view is not only is that going to be faster because a lot of these things already exist or are relatively easy to deploy, it's also going to be cheaper because there's less overall infrastructure I have to build, and it's going to end up being more sustainable.
- [22:18]
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- [22:40]
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- [23:25]
Sponsor Announcer
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- [24:04]
Shel Khan
We've talked about this a little bit before, but I'm curious because it's evolving fast. What's your view of how the how the model for that evolves? I mean, I think the other thing that is appealing about the I'm just going to put a generator on site at the at the data center is that you have a Single agent. Right. Whoever's developing the data center says, okay, I'm going to, I'm going to go buy a bunch of gas turbines and I'm going to put them on site and that's going to reduce my load to the grid and it's all in my control. Whereas some of the things that you're talking about, it's a multi party problem. Right. Like grid enhancing technologies have to be deployed by the utility. There's nobody else to do it. So it involves more coordination. We're starting to see some of these sort of interesting novel programs emerge where utilities say if you're a large load and you want to get interconnected, you can bring your own generation, bring your own capacity, I guess, and they can include batteries in that or things like that. But what are you seeing happen? Is there a programmatic, scalable way to use the mixture of resources that you're talking about as opposed to it all being these unique snowflakey bilateral type of deals?
- [25:12]
Brian Janis
Yeah, look, to be honest, this is where my argument maybe falls apart because the orchestration of this is the real challenge. In theory, what I'm describing is faster, cheaper and more sustainable. And I do believe we can add a lot of capacity to the existing grid. And yet I have to orchestrate this behind 3000 different utilities in the United States and multiple different RTOs with different rules about how they accredit capacity. And so this orchestration opportunity really is, I think, the huge opportunity to end up in a world where we actually do connect a lot more of this stuff to the grid, rather than end up in a world where everything is bifurcated behind the meter, which I think is a worse outcome. And so it does require a lot of innovation. And some of that is just sort of boots on the ground work. And that's sort of what Cloverleaf does. We go work with utilities to try to figure out on a case by case basis how do we implement these things and how do we get these load connected faster. But then there's other pieces like doing the actual grid analytics, which there's numerous companies we could talk about that are doing that sort of thing, like Arrhenia or folks that are trying to come up with new business models like gridcare around how you implement these things and many others. So I'm encouraged by a lot of folks are sort of honing in on this problem and trying to figure out how do we reduce the friction here, how do we help utilities to understand, hey, here's a better way to do this, that would enable more rapid load growth on your system where you're not losing out to these sort of off grid competitors, if you will.
- [26:51]
Shel Khan
The other version of an on site generation thesis that I've seen that I don't know on its face seems somewhat logical to me is it's not about off grid. It's not about like, okay, my grid connection's coming in five years, I'm going to put generation on site and go off grid until the grid connection arrives necessarily. It's about reducing the what you look like to the grid from an interconnect capacity. So like, if you want to site a 500 megawatt data center and the utility says, I've got 300 megawatts for you at this site, throw probably more than 200 megawatts on site again for redundancy purposes, but throw some amount of generation on site and operate it such that you never pull more than your maximum interconnect capacity on the grid and then you unlock a site that is at a scale smaller than what you otherwise would have been able to do. Does that have legs to you?
- [27:46]
Brian Janis
That does, yes. Because what you're there doing in that case is you're already starting to work on that orchestration with the utility. Now the question in that scenario, is putting that generation behind your meter the fastest, most efficient way to do that orchestration? Or is putting a long duration battery on the utility side of the meter solve the same thing?
- [28:09]
Shel Khan
Or does it's sort of, again, it's a question of like what is optimal to which I'm pretty sure I know the answer. Versus like what is fastest and easiest to do.
- [28:16]
Brian Janis
Yeah, and in some ways, you know, the less infrastructure you have to build, the faster it's going to be. Right. So the argument you would make is, well, the fastest way to do it is through a virtual demand response sort of program. Like take a bunch of loads that would agree to get off during certain hours in exchange for some price, like you're not building anything there, you're just orchestrating a vpp.
- [28:40]
Shel Khan
We should just pause on that for one second because it's an interesting concept and I've started to hear people talking about it a little bit. As far as I know, nobody has actually implemented this, wherein you say, the concept here is, let's keep with my example. I want to put a 500 megawatt data center in a given location. The utility says, I've got 300 megawatts of capacity that is deliverable to that location. But if you can get 200 megawatts of demand response or whatever the number is you can get, you can aggregate enough load that can shed itself within that deliverable zone. So there's like a geographic constraint to it. Then we'll count that as capacity. It'll be counted the same as if you had put a generator that's going to just shave your peak on site at the data center, which I think is a. I think it's a good idea. There's a lot of nuance to it, like getting capacity accreditation for demand response at that level is nuanced and it's geographically constrained and all that.
- [29:32]
Brian Janis
But yeah, but you have to understand the rules. And we are pretty close to doing that on a couple of projects. So we've been working really closely with Voltes and some others on this concept and working to convince utilities and grid operators of this approach. The first pushback you get from especially vertically integrated utilities is, well, if I do a vpp, then I'm not building anything right? Like I want rate base. Our counterargument to that is that if you can utilize that VPP as the bridging solution, you end up getting to connect that load sooner, you get that load for life and you do get to ultimately build against that load long term. And if you really help the utility see, this isn't about like, you know, not getting to build and get any rate base. It's about meeting the customer need as quickly as possible with the least amount of friction. So that's what I like about that approach. So it does take some work to get it. And you're right, no one's done it at any real scale yet, but I think we're going to see it pretty soon.
- [30:32]
Shel Khan
Okay, so I took us on a little bit of a tangent there, but you were talking about the sort of various ways in which you can do the something reduces the interconnect limit that you require for the data center. A virtual power plant being one instantiation of that, a long duration battery and the transmission system being another instantiation of that. On site generation being a third or on site storage I suppose, for that matter.
- [30:57]
Brian Janis
Right, yeah, any of those could work. And so really that goes back to that orchestration question of like what is the right type of resource that could be orchestrated together to meet the resource adequacy requirements for the interconnection? And that could be any number of different things. And so ideally you would want to have a tool where you could take any point of interconnection on the grid and any amount of Load you wanted to pull off that grid and it would spit out. Here's a stack of capacity, least cost to most cost that would meet that time duration that you're aiming for. Right. That's the answer you want every time you go to do a point of interconnect. Yeah.
- [31:36]
Shel Khan
And in the ideal world, that piece of magic software that does that thing is used and trusted by both the utility and the.
- [31:43]
Brian Janis
That's right. Because it's gotta be used to actually say yes by the utility, by the grid operator. That stack is all accredited capacity. Check the box you can connect at that load level.
- [31:55]
Shel Khan
Right, right. I look forward to that day when that is possible.
- [31:58]
Brian Janis
Me too. Me too. When you find that company that has nailed that perfectly, please let me know because we will be their first customer.
- [32:04]
Shel Khan
Yeah, I think before we go, I mean, we talked about most of the different types of resources people are talking about putting behind the meter. We obviously talked a lot about natural gas. We talked about batteries to some extent. What do you think about the sort of like on site wind, solar combo stuff? You see some of this happening in like West Texas because there's space and good wind and solar resources.
- [32:25]
Brian Janis
Yeah, I think you can do it to a certain degree and you definitely need a lot of space. So you take it like what, what Intersect is doing. I suppose maybe the best example. I've talked to Sheldon about this and I think it does require certain parameters of space and you're not going to be able to do that everywhere. So I do think that is going to meet part of the demand of the market. And you're seeing some of these plans through these massive campuses. There's the one in Amarillo now that's being talked about. It's like 11 gigawatts and all these things.
- [32:57]
Shel Khan
Is that the Fermi?
- [32:58]
Brian Janis
Yeah, I think that's the Fermi one.
- [32:59]
Shel Khan
So that one's interesting because it also includes the next technology I was going to talk about, which is in theory it includes a bunch of.
- [33:05]
Brian Janis
Yeah, exactly. So I mean, that's, that's great. And I, I mean clearly there's demand for that, but just like everything we're talking about, there's no like silver bullet. There's no like, that's, that's still going to be a relatively small percentage of the overall market because we can't put everything in West Texas. Right. We still are going to have the, the tendency to want to be closer to major metros where that sort of land availability is going to be really challenging, especially when we start talking about Gigawatt and multi gigawatt scale. There just aren't that many sites that can do that.
- [33:39]
Shel Khan
Yeah, okay, so just talking about nuclear for a second because there have been. Fermi is a good example. That's the company that was founded by Rick Perry, former Secretary of State, or sorry, Secretary of Energy and Governor of Texas. They went public in a, or they're going public in a weird transaction right now. But yeah, they're trying to build this like mega, mega data center campus that, that includes natural gas, but in the future will include nuclear. But it's not the only one. There have been a few other announcements. You know, I saw one of the nuclear micro reactor companies announced like a framework deal with a, with a data center operator, with a colo company. I know oklo's got some kind of partnership with Switch. Here's the thing. Let me, I'll just jump ahead of this one. As we've explained, the logic of putting on site generation, I don't know that any of it holds for new nuclear because you don't get the faster time to power. You're obviously not building that generation before you can get the interconnect. Right. Like unless your interconnect is, I mean you've talked about like a, what was it, London or somewhere where. Yes, it is like a 2038 interconnect timeline.
- [34:44]
Brian Janis
Yes, exactly.
- [34:45]
Shel Khan
All right, so maybe in London, but most places you can get interconnected faster than you can build the new nuclear reactor. I should say I'm bullish on nuclear in the U.S. i just, I'm realistic about the timeline. So it's not a time to power thing. It's almost definitely not cheaper power, especially in the early days. And you presumably are already going to have your full grid interconnection for the full capacity of the data center by the time you get there. So I kind of don't understand the logic. It is power dense. Like you can do it in theory where you don't have land, but I just kind of don't understand how it makes sense.
- [35:20]
Brian Janis
I don't think there's a credible argument for behind the meter nuclear at a data center in the near future. And by near future, I mean the next couple of decades. Part of the problem you're going to have too is if you're talking about a brand new unit, like a new type of generator unit, like the availability questions are going to be enormous. Right. So you're going to want to see that thing operate for 10 years before you say I've got enough data to say I'm going to plug in my $20 billion, $50 billion data center into that machine. So it's just hard to imagine that that is going to have any type of uptake even in the2030s. Like, I just don't see, like, and I'm with you, like I am bullish. Some form of new nuclear, you know, coming to market.
- [36:05]
Shel Khan
We're just saying not on site. I mean, that's the distinction I want to make here is like we are going to and I think we should build a lot of new nuclear in the US I just don't know why it needs to be co located. No data.
- [36:15]
Brian Janis
I don't think it does because it doesn't solve all those problems that you're talking about. Like it's not meeting that sort of felt need of data centers today. And maybe we're still in the same predicament in the mid-2030s. I don't think we will be. But I agree. I don't see that you're going to have a huge uptake of that.
- [36:31]
Shel Khan
All right, Brian, fun as always to talk to you about this stuff. I appreciate you doing it in front of a mic and I'm sure we will have an excuse to do it again pretty soon.
- [36:39]
Brian Janis
I hope so. It's always fun. Shel. Thanks a lot.
- [36:43]
Shel Khan
Brian Janis is the co founder of Cloverleaf Infrastructure. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Daniel Waldorf. Mixing in theme song by Sean Marquan. Stephen Lacy is our executive editor. I'm Shayl Khan and this is Catalyst.