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Energy Gang
A power producer’s view of keeping the lights on. What does rising electricity demand from data centers mean for the US grid?
01:10:50
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- [00:00]
Melissa Lott
And then when we go back to like the final prices that people are paying, I mean, you combine that, okay, natural gas, mine cycle, we look at those spot prices, what was it, 56% year on year increase, but then it still wasn't as high as in 2021. You know, we can remember talking about how prices went there. So there's a reason why this is being referred to as the age of electricity.
- [00:19]
Paul Siegel
Well, it is this moment that, that makes it incredibly exciting for somebody who's been in and around this business for over 25 years. I haven't seen an instance where so many different options require and really merit consideration.
- [00:34]
Melissa Lott
Like there's, there is a reason why. And behind that is a multifaceted, multidimensional, quick moving set of forces that are causing more pressure on this system. And we're at a critical moment where, yeah, we can step into the opportunity and we can make investments and make them in ways that work.
- [00:53]
Paul Siegel
I think there are certain things that are inevitable and I don't see a path forward where the broad set of households and the economy writ large is saddled with the bill for the one component of our demand picture that's driving it, and that's data centers.
- [01:23]
Ed Crookes
Hello and welcome to the Energy G a discussion show from Wood Mackenzie about the fast changing world of energy. I'm ID Crookes, and on this show today, we're going to be talking about the strain on the grid and what we can do about it. To talk about that, it's a pleasure as always to welcome back Melissa Lott. Melissa is a partner for Energy Technologies at Microsoft. Hi, Melissa, how are you?
- [01:41]
Melissa Lott
Hey, Ed. I'm doing great. Excited for this conversation. It's a great way to, I guess start our week is when we're recording it because it's early in the week.
- [01:48]
Ed Crookes
Absolutely, yeah. Great to talk to you, speaking, of course, as we always have to say, purely in a personal capacity. And it's also a pleasure to welcome for the first time Paul Siegel, who is the chief executive of LS Power. Hello, Paul. Welcome to the show.
- [02:01]
Paul Siegel
Hi, Ed. Hi, Melissa. Looking forward to the conversation.
- [02:04]
Ed Crookes
Yeah, thanks very much for joining us. So we'll come on to LS Power in a moment, talk a little bit about the company. But before we do that, Paul, I just wanted to get you to talk a bit about your personal story. As I'm sure you know, the first time we have anyone new on the show, we always like to ask them a bit about their careers in energy, how they got started, how they got to the roles they now hold. So what's your story? What first made you decide to pursue a career in energy?
- [02:26]
Paul Siegel
My path started as a chemical engineering student at Rutgers University. I transitioned from there to doing investment banking at what was then Smith Barney. And I always knew that there was one person that I could learn more from than just about anyone else, and that happened to be my dad, who had started a little company called LS Power. So after spending some time as an analyst, I was able to convince him to give me a shot. I joined LS Power in 1998 and have been working in the energy business ever since, doing a whole range of things here at LS Power and took about a 10 year hiatus, helped us form what became known as Luminous Energy Partners, a hedge fund that invested in power and utility businesses and then came back over to LS Power in 2012. And I've been CEO of the business since.
- [03:24]
Ed Crookes
So, as you say, it's the family business. Did you always think that was really what you wanted to do, or did you think maybe you'd go and do something completely different from energy?
- [03:32]
Paul Siegel
No, it definitely wasn't always my path. I thought again that there was a genuinely unique opportunity to learn from somebody who had done these amazing things, created something from nothing, built an organization with a DNA and a culture that really allows it to thrive to this day. And so that was a path that I followed unintentionally.
- [04:02]
Melissa Lott
I think. It's funny to think about. I was talking to a colleague the other day about as an engineer. So you're chemical? I did mechanical. And it's like, what do we learn in school? Really well, how to break apart problems. It's like, okay, what do I know? What don't I know? What do I have to solve this thing with and go figure it out from there. And I find it interesting, like my path was engineering to policy and your path was engineering to investment. And both, I mean, are really, really at the heart of energy and all the challenges we're going to talk about today. It's fascinating because you don't think about that when you're in your first, like, I don't know, basic 101 engineering classes, but it really does come in handy in everything that we're talking about.
- [04:43]
Paul Siegel
I relay that to a lot of young people who I talk to, including my own kids, that engineering is really just a way to think about problems and to your point, break them down. And we at LS Power ultimately crystallized that a handful of years ago into part of our mission, which is solving complex Energy problems to improve the world.
- [05:04]
Ed Crookes
Yeah, absolutely. So let's talk a little bit about the company. As we've been saying, it's a family business in the sense that you followed your father into it, but it's also pretty big company as these things go. It's a very significant player in US Energy. Could you describe it for us a little bit for the benefit of people who aren't familiar with ls?
- [05:22]
Paul Siegel
Sure. I think constitutionally we are a business that focuses on solving energy problems with the mindset of competition. And I think this underpins our DNA and is probably the reason why we continue to be active and successful. Up to this point in time, 30 plus years post founding, we had to start this business and survive through a range of different environments. And I don't think that that would be possible in the absence of having this underpinning of a competitive ethos looking to bring innovation and competitive forces to bear to solve problems. Always keeping in mind that the ultimate beneficiaries of our work are not just our shareholders, but are also the homeowners and consumers who pay the ultimate electric bill.
- [06:18]
Ed Crookes
Right. And you've been very active, haven't you, both in natural gas fired power and also in low carbon technologies, renewables.
- [06:24]
Paul Siegel
Yeah. We were founded in a moment when developing combined cycle, often co generation technology was the path to finding a long term contract with a utility. We haven't left that world from the moment that we were founded. We've also expanded our activities to your point. We've over the years we've developed everything from gas fire generation to coal to renewables battery storage. And a meaningful amount of our activity today on the development side of our business is developing competitive transmission infrastructure. So as an owner, operator and investor, we've touched most things in the electrical energy space in North America, right?
- [07:16]
Ed Crookes
Absolutely. And I definitely want to get on later on in the show to talk a bit about LS power and how you've been responding to changing market conditions. But first of all, as I was saying at the beginning, I want to talk about strains on the grid. Obviously it's an issue we've talked about a great deal on this show in terms of excitement over AI new data centers being built, US power demand having flatlined for a couple of decades now, starting to grow quite strongly and that's causing all kinds of strains that are cropping up across the country. The one I wanted to start with is what's happening in pjm because that's a power market where you're quite active as LS Power That's a market, one of the largest in the country. I think it's actually the largest in the country, isn't it stretches all the way from sort of Illinois in the north and west down to North Carolina in the south and east. And it's an area that also includes some of the hottest regions for data center development. It includes Northern Virginia, famously known as Data Center Alley, which I think was meant to have accounted for a one time about a fifth of all the large data centers in the world. And it's still a very, very hot spot for the development of new data centers. So a lot of strains happening there as electricity demand grows. And that's been reflected in concerns both about the rising cost of electricity in PJM and about threats to reliability and resilience and questions about whether the lights can be kept on. And that has led to political action. We saw last month very unusual agreement between the Trump administration and by bipartisan group of 12 governors, governors from all the states covered by PGM, basically getting together to say something needs to be done about this market. We have real concerns here about affordability, about reliability. They need to be fixed. So that's really what I want to talk about is what's causing these problems and what the potential solutions might be. I mean, perhaps Paul, just to start on the problems, what's your sense of what the issues are in pjm?
- [09:30]
Paul Siegel
I think it's important to take a quick step back and frame this in the context of the longer term. When I go back and I take a look at the trajectory of wholesale power prices in PJM over the course of roughly 20 years, there's been virtually no net inflation. Prices move around from year to year. But the compounded growth rate, even if you include some of the very, let's call them, high at the cap or even above the cap that was recently instituted levels, we still have very low single digit one to maybe 2% compounded growth over 20 years. When you also step back over that period of time where we've had de minimis wholesale power price growth, we've had a very steady 10% compounded annual growth rate in the cost of transmission in the customer bill, almost none of which was felt because wholesale prices were functioning as this shock absorber. But transmission prices went from 6% of the bill to 30% of the bill over 20 years. And now again, this is an area that we should talk about. We've moved from an environment where that wholesale market wasn't telling us that we needed a lot of new generation. The price signal wasn't there to a shift that happened very quickly as data center demand grew. And we've gone from an environment where we have little to no demand growth to meaningful demand growth and with the expectation of even greater demand growth as we move into the future.
- [11:25]
Ed Crookes
Right. And just setting that in context then as you say, that period of flat energy prices that was pretty common across the whole of the U.S. right. A couple of things going on there as you say. Partly it's just that demand isn't growing, therefore there's no need for new generation capacity. And also low cost natural gas unlocked by the shale revolution meant there was a lot of cheap fuel supply available which helped hold energy prices down. On the transmission side of it then, as you say, where that cost was rising and was rising significantly as a share of people's bills, what was driving that up?
- [12:02]
Paul Siegel
As we rewind the clock and think about what did happen in the early 2000s, we had a meaningful shift on the part of integrated utilities out of the competitive wholesale generation market. And the mark and the equity markets rewarded the shift where they moved capital from those investments into rate regulated investments with a consistent rate of return. And again with wholesale prices not increasing, there was meaningful headroom to make investment in transmission. And that investment in transmission has for the most part been unchecked by competitive forces. And that leaves us where we are today, where we have a, let's say deregulated wholesale generation market. We have a largely regulated with modest competition applied transmission market. And that creates different incentives.
- [13:05]
Melissa Lott
So did anyone else. I was about to make a joke about wasting part of my weekend, but it was a lot of fun spend any part of their weekend reading any IEA reports because I did. All right, so I was this weekend I was reading through the electricity report that came out, I mean came out a week and a half ago or so. I just did not have bandwidth to look at it the day it came out. Sorry all to all the great folks who worked on it over there in Paris, my old employer. So, so when I was going through the IA report finally, you know, got into, I think it was like 200 and something pages finally was, you know, going page to page looking at what they were highlighting. And when they talked about wholesale electricity prices in the United States year on year, Ed they were saying that it increased on average across the US by about 30% to $50amegawatt hour in 2025 compared to 2024. And they also flagged that natural gas pricess. So they were flagging. Henry Hub went up about 56%. And when they were talking about what was driving that, they were flagging things like a colder than average winter. And how when there's just not a lot of extra in the system and you have a colder than average winter or hotter than average summer, you see these spikes in prices, you start feeling the constraints that if you have milder weather, you might not feel as well as much. And I found this interesting. It's just to me, when I look at the different markets in the us, including pjm, but not limited to it, to me it's that, what's the phrase? The canary in a coal mine. It's an indicator. It's like, hey, hey, there's this thing going on and we're feeling it in this moment, like we're getting that signal of something's not working in the system. And I would really be interested in going into like what's not working and what is not getting invested in when it comes to transmission, when it comes to generation and where the constraints are and within that. Ed, I'm actually not in my mind after this weekend and just thinking through it, I'm not as focused as much. And we talk about permitting timelines and all of that and certainly that's part of it when it comes to transmission. But there's way more going on in this system than that. And I don't know when you all are looking at these prices, what you're thinking about. It's certainly what you're highlighting, Paul. But there's more. I feel like there's more to it.
- [15:13]
Paul Siegel
I think that's exactly right. I think let's back up 2022 through 2025. For the most part. We had very low capacity prices in PJM and we had modest to low spark spreads. Those two things are what a power plant gas fired looks for to drive its gross margin and to be clear,
- [15:40]
Ed Crookes
just a spark spread for the benefit of people who don't know what that is. That's kind of the profit margin. It's the spread between the price of gas and the price of electricity, basically.
- [15:49]
Paul Siegel
Right, that's exactly right. Exactly. So those are the two big components that drive revenue. We started to see an increase in capacity prices from levels that were as close to zero as you can get a little bit over a year ago. And there was a step change in those prices that I think reflected changes to market structure, but also reflected a tightening environment.
- [16:15]
Ed Crookes
Yeah, and again, sorry to just to jump in. I think it's worth explaining what the capacity price is and how that's different from the price of the energy. I know, Paul, if you want to do that, but that seems to be a really important part of this story.
- [16:26]
Paul Siegel
Happy to try. I think that the capacity price, in effect, the way I think about it, is it is a payment that power plants receive to ensure that when the market is undergoing its maximum level of need, that the lights continue to stay on. So it's almost like an insurance or a standby payment or can be thought of that way. So those two things were pretty low through 2024, and demand growth was modest for the preceding 15 years. As we went into 2025, we were hearing more and more about data center growth. We were beginning to see what looked like the underpinnings of actual growth come through and load. When you think about power load, there's always uncertainty because you need to normalize for actual weather conditions. So that was certainly validated during 2025. Melissa, to your point, we saw wider spark spreads, meaning more margin for power plants from the energy market, and we saw meaningfully higher capacity prices. That shift happened over the course of the last year, arguably two years, and today we're certainly in a place where there's a real signal that developers should be focused on finding ways to add new capacity. And certainly from my seat that that's true. These are things that we work on and are focused on today.
- [18:03]
Ed Crookes
Right. And then you've had this intervention, though, to cap capacity prices in pgm, and that's been the thing that I think a lot of people have pointed to as something that basically means the market doesn't work. And you were talking earlier about being engineers by training. I'm sadly an economist by training. So, you know, I feel that kind of inadequacy in these conversations, according to you. But one thing I did learn in my economics classes was, was that if you interfere with the market, cap a price, then you won't get sufficient supply in that market. And that seems to be exactly what's been happening in pgm, does it not? Which is that by putting a cap on the capacity price that's being offered, not enough resources get bid into the market. So there's a real risk there will not be enough capacity available. And as you say, Paul, that capacity is there in order to make sure that the lights can stay on even when the grid is under strain, when things get difficult. And so when we talk about people's concerns about reliability and resilience on the PGM grid, that seems like a very real concern, doesn't it? That is the thing that people are right to be worried about. And in particular, when people then think about that kind of trade off between affordability and reliability, by trying to improve affordability, by capping some of these prices, they're putting reliability at risk, aren't they?
- [19:33]
Paul Siegel
Market interventions from the perspective of an investor or developer are generally confidence weakening activities. When I step back and I understand the political rationale for them, I understand why they're being advocated. But when I step back and think about the fact that over the course of the last, again roughly 20 years, we've added over 40,000 megawatts, primarily new natural gas fire generation to the PJM market, there's no question that the market structure underpinning all of this works given time. I think we are dealing with a frustration that comes from the inability of the industry to respond with legacy solutions overnight. It would be one thing if we could respond to these needs with a lot of new demand response. It would be easier to respond to these needs with new battery storage. But building new dispatchable combined cycle generation today is a five year exercise, right?
- [20:42]
Ed Crookes
And to be clear, the reason we can't respond with some of these newer solutions with batteries with demand response is what?
- [20:48]
Paul Siegel
Well, we can and I think we are. I think the markets being capped ultimately weakens the signal to do that. But the signal is there and market participants are certainly preparing to provide solutions. When you look specifically at batteries, batteries probably require a higher than where the market is capped capacity price in PJM to support new battery construction. And that again, when you lead to market intervention and then decide you want more batteries, then you need to start thinking about outside of market solutions which further reduce confidence of investors in the fundamental market that you have.
- [21:34]
Melissa Lott
We had a couple of questions because I have you two here around this. So I was reading, I think it's from the Rocky Mountain Institute. They had their take on what's going on in PJM and they had a bunch of analysis in it. And one of the things that they talked about is how, yeah, you've got these signals for capacity, you've got these market structures that could work. But they said that effectively, what is it? PJM right now is taking around eight years to bring new generation online is what they were talking through. And part of what they were flagging is that the market was giving signals in such a way that new generation capacity, like there was a tension between the timeframes that both were working under. You know, so okay, we sent a signal, but it's not a signal that can be responded to as effectively. As one had hoped when they had designed that system. Do you agree with that premise? I mean I was reading through their analysis and I understood what they were breaking through in terms of logic engineer, policy person, not a markets investment person. So I have y'. All. So I want to ask over here, I mean, does that line up with the logic? Is that what you're seeing, Paul? Is that what you're seeing? Ed, when you're looking at these numbers,
- [22:39]
Paul Siegel
no one invests in a power plant on the basis of one singular price point. So whether we have a low capacity price clear and a subsequent high capacity price clear, that's not why people are investing. People are investing on the basis of fundamental analysis, applying a point of view around long term supply demand dynamics, knowing that capacity energy spark spreads will be the different mechanisms that you need to understand and take a view on that will allow you to get compensated for and drive a return on your investment. So I think in the very short term these are just, they're factors that one needs to build into their thinking around the investments that they're making, where they're spending their time. There are so many different things that we can do to bring new capacity to the market. We just need consistent rules to make decisions about which of those are going to yield an adequate investment.
- [23:52]
Melissa Lott
Yeah, to put a fine point on it, what they said in the RMI analysis was that it was taking eight years to bring new generation online. And then those auctions that PJM runs to secure future generation, it was securing it on these two and three year forward looking bases. And so there's a tension there. Going back to the IEA report, I saw the same kind of tension playing out globally. So it was this idea of what is that? The headline was grid connection queues are reaching record levels. And in that they flagged the following, which is that planning, permitting. Okay, I did have to talk about it, Ed. I couldn't skip talking about planning and permitting. But in completing new generation infrastructure taking between five and 15 years, if you want new supply to come online, it can be one to five years depending on what technology you're talking about, what that supply chain looks like. And then they said, well a data center comes online in one to three years, an EV charger. And they talked about broader electrification trends. And I will add on from my own personal note, electrification trends within heating, within homes, etc. That's a one to two year timeframe type deal to see those shifts. And so 5 to 15 versus 1 to 2 when you're talking about EV chargers and electrification, I mean those are very different things and there's a tension there and how, you know, okay, well then what does that mean for the tools that we can use to respond to it?
- [25:08]
Paul Siegel
Yeah, I agree. There are distinctly different time horizons. Right. To build a new power plant, a gas fired power plant. You are talking about that four to five year time frame to plan a large scale intra regional transmission project. You are talking about the longer end of those timelines, potentially 10 years plus acquiring a new demand response customer might be something that you can do in a matter of days. Putting in a battery at a location where you already have a generator is something that you can do. That's measured in probably one to two years. So there are a range of options. They all have different costs, they all have different characteristics. And that's the beauty of a competitive market is it allows again with a given set of rules, it allows capital to decide where it should go and what projects it should fund to solve these problems.
- [26:09]
Melissa Lott
I think that's highlighting to me, Ed. You know we've talked about it. I started my work in transmission in Texas Crez zones. I mean that was where I really cut my teeth. It was California energy markets first, but that's where I got deep Texas Crest zones. And when I looked at the toolbox, to your point Paul, the toolbox and my favorite tools that you know are in the top level, didn't have to dig in there. They're different than they are today because we're in a very different situation where we're looking at electricity growth in different regions of the US and globally, how fast it's moving, what we're trying to accomplish and then what our systems are set up to do in terms of how quickly we can build out different types of technologies. So Maya May, my go to tools are shifting is what I'm seeing and I think we're all seeing that.
- [26:51]
Paul Siegel
I think that's right. I think the more we can align long term planning with those tools, the better off we're going to be. And I think the difficulty of this moment is really that the visibility on demand growth, this question of whether or not the AI dynamics are a bubble, the intervention of political forces, all of those create uncertainty and make it harder to do the long term planning.
- [27:26]
Ed Crookes
Right. And so for you Paul, none of these questions are remotely theoretical. This is all absolutely practical in terms of the way you're directing the company, your deploying billions of dollars of capital to respond to these kind of changing market conditions. What does that mean for you in Terms of the decisions you make. I see for instance that you were bidding into that capacity market in PGM last year. I think, am I right in saying that you're converting gas plants to run longer and with higher efficiency? But as I say, just talk about it in general terms. What does that mean that you're deciding to do in terms of your capital allocation and your corporate strategy?
- [28:12]
Paul Siegel
Well, it is this moment that makes it incredibly exciting for somebody who's been in and around this business for over 25 years. I haven't seen an instance where so many different options require and really merit consideration. So yeah, we have been focused on understanding what's happening in demand response. We've been focused on are there things at some of our power plants that we could do to improve the availability of the asset when they're most needed. So an example there might be, we have a peaking natural gas plant that often can't get gas in the most extreme winter scenarios. If we can add fuel oil at those locations, we can triple its certification to deliver capacity. I think some of the lower cost things that we can do include adding or replacing equipment inside of combustion turbines to get more output out of an existing asset. We to your point, Ed, we're actively working on the ability to convert peaking plants to combined cycle operation where there's a pickup in not only the amount of capacity that's available, but the efficiency of that capacity. We're working on completely de novo battery storage projects, renewable projects and gas projects. So the spectrum of solutions that are required, I would characterize it in the way that we talk about it internally here is we really do need in this moment more of just about everything. And each one has their own particular characteristics and fit and need. And some are a better fit in certain markets, others are a better fit in other markets. And so you really are constrained by the resources that you have to focus on all of these opportunities internally.
- [30:17]
Ed Crookes
And just thinking about PGM specifically, as I was saying earlier, we had this agreement between the administration and these 12 governors essentially sounding the alarm and saying there's a real problem here. So what was the solution that they proposed? What do they actually want the industry to do in response to the concerns that they're raising?
- [30:38]
Paul Siegel
They proposed an emergency procurement of capacity under long term contract. And the concern that will need to be worked through in a stakeholder process that I would have is that you end up with this not being a one off procurement that brings you back to functioning competitive markets, but instead becomes a recurring mechanism that leads you to splintering the market in a way where you create real risk around the existing resource base at the time that you might be over investing in new resources. Now there was another element of that procurement or proposed procurement, which is that the data center community should be responsible for paying for it. And that's something that we can dig into further if you'd like.
- [31:34]
Ed Crookes
Yes, because that's clearly an important part of the debate. I think that's a great way to sort of open the debate out a bit. But just sticking on the specific plan for pgm then what's your concern? You said there's a risk of splintering the market or fragmenting it and causing problems for the longer term. What do you mean by that?
- [31:56]
Paul Siegel
As you begin to procure new resources under long term contract and there's an underlying market for the remaining 200,000 megawatts of resources, you could end up with a dynamic where you're paying, let's say $500amegawatt day for the new resources. Those resources then become available in an auction that's competitively cleared for the rest of the resources. But that subsequently cleared auction results in very low prices that lead to to demand response leaving the market because it can leave the market very quickly. Other older power generation assets that might require real maintenance to perform reliably either don't spend on the maintenance, take greater risk around performance or retire. So when we create that bifurcated split market splintered market, we create risk on the performance of the vast majority of the existing resource base.
- [33:04]
Ed Crookes
Oh, got it. That's really helpful I have to say, because I've heard this concern talked about in the past and I've never really felt like I understood it, but actually that's super clear. So thanks very much indeed for clarifying that because I'd sort of vaguely thought that oh well, it's kind of okay to pay more for the new generation because the new generation is going to need increase the investment and therefore it's sort of fair that you should pay more for new capacity. But of course, as you say, if you're actually then driving out old capacity, that's not fair and actually not efficient.
- [33:35]
Paul Siegel
And Ed, then we're going to need to answer the question of how much exactly are we procuring under long term contract. At the time that the capacity market didn't clear with sufficient resources, we were short about 6000 megawatts of capacity. Subsequent to that, every year PJM updates its long term projections. Based on the updates of the long term projections, we were then short not 6,000. We became short 3,000 megawatts of generation, which is the amount that we procure. How long do we procure it for? All of those questions will need to be addressed through a process that gets into enormous details and risk allocation questions between customers and investors.
- [34:22]
Ed Crookes
Like so many of these things, it's not simple. There's not a very obvious and straightforward answer to them, which seems to be.
- [34:31]
Paul Siegel
It's a big, complex system.
- [34:32]
Ed Crookes
It's a big, complex system. And as is so often the case across the power system, these things are very nuanced and the details really matter. Yeah, I mean, having said that, Melissa, do you have a view on this? When you think about the right ways to incentivize new generation to get more capacity on the system, what do you think are the right principles for doing that?
- [34:54]
Melissa Lott
I mean, step one, and this will surprise you in no ways, Ed. I think about who are the final consumers of it, and I think about households and household electricity prices first. So overall, the US the number is that essentially electricity bills are going up faster than our incomes are. Like that's, that's the high level takeaway. And I think the number was between 2019, 2024. Hold on, I've got it right here. Yeah, between 2019, 2024, electricity prices for households. And this is numbers from the EIA, the Energy Information Administration here in the U.S. which is what the IEA quotes, but they increased by 26%. So that's the price for households. So unless you are investing in tons of energy efficiency or have other opportunities, opportunities to lower your overall electricity demand, I mean, that meant your bills went up. And then at the same time, if you looked at annual net earnings, like for a two earner couple, you know, two kids, that kind of a household, if you looked at overall incomes, only went up 23%. And I know we can say, oh, it's just a few percent. And I'm like, no, no, no, no, no, y'. All, like these are averages. A. So there's going to be households where they feel this way more intensely and those households are increasingly the already energy insecure, already more energy vulnerable households in this country, which we've talked about at length on the show, Ed. But that's my first principle. That's where it comes from. First is like, all right, who's paying the bills? And I go to at risk vulnerable households. Like, how are we thinking about that? And so as much as I. You need to understand all these dynamics that Paul, you've laid out in terms of how the wholesale market works, how these different, you know, pieces influence each other. All that, to me, I'm like, what does that mean for the final bill? What does that mean for what people are paying and companies are paying for that, for that matter. So when I look at the right tools, it's tools that take that into account, that think about that.
- [36:45]
Ed Crookes
Right. And just as a footnote on this, again, as we talked about quite a bit on this show, that is becoming an increasingly salient political issue, the question of how much households are paying for their electricity. I think traditionally, I think Amy Myers Jaffe's made this point traditionally, everyone worried about gasoline prices and it was the price of the pump. And that was the thing that everybody looked at and that was the yardstick from a consumer perspective of was U.S. energy policy successful and effective or not? And now increasingly, it's becoming electricity prices. And as I say, when you see the administration and the governors of 12 states get together to address an issue, that's how, you know, it's really the alarms are flashing red in all of their offices. It really tells you that that is something they care about. And they care about it because the electorate really care about it as well.
- [37:37]
Melissa Lott
Sure. I mean, I started out in the boring part of the energy world in electricity and transmission and all that. And I'm laughing because Paul, I mean, that's the heart of where Ellis power and where you do your daily work.
- [37:49]
Ed Crookes
Right.
- [37:49]
Melissa Lott
So I around power generation and transmission and all the pieces there. And so now it's more exciting and exciting. Has some positives and some negatives. There's positives where there's tremendous opportunities associated with increasing demand, massive opportunities. Good night. The conversations I'd have with different political groups that were trying to figure out how can I upgrade my existing infrastructure that's aging and not doing great when I have flat or in some cases in some regions, negative of electricity demand because I've shifted and I've offshored some industries or something else. Like how do I manage that? This is a very different challenge which I think presents opportunities. But man, there are challenges too, because our systems aren't built right now to do what we're trying to do with our power system. And so we have to figure that out rather rapidly.
- [38:36]
Paul Siegel
I couldn't agree more. I think this, when you look at one of the things that we think a lot about here, is digesting all of these choices to what's going to work for the ultimate customer and bringing that back to what are the right incentives, policies, rules that can allow us to accomplish that this is a critical service. We always need to keep an eye on that fundamental fact. And the fact to your point that we are in a growth environment creates a real opportunity that the industry should not shy away from to bring down costs by using this incredible machine, the grid that we utilize on average half the time, by using it more, by amortizing it over more megawatt hours, by embracing the potential for new large loads and bringing them in in a way where households net benefit. I think there's a huge opportunity there.
- [39:42]
Ed Crookes
Right.
- [39:42]
Melissa Lott
I've been talking a lot about peak demand in my daily. A lot of it, you know, with people who don't normally think about that. And this idea of, you know, it's like the freeway, you know, those roads are empty sometimes unless you're in Houston. As a Texan, I can say that they're busy all the time, it feels like. But there's definitely highs and lows. There's rush hour and there's not. And so how do you manage that to. That you can better utilize your infrastructure that you've already invested in. And then to your point you made earlier, use the stuff we are building right now better as we move forward because we've learned a lot. Let's use it better.
- [40:14]
Ed Crookes
Yeah, 100% agree. I just wanted to. I always have to tell this story because it makes me laugh so much. But you talk, Melissa, about things being interesting in the electricity system. I have a Wood MacKenzie colleague, Ben Hurt Schagel, who is our head of Grid Edge Technology Technologies, which is usually a pretty kind of wonky, specialized area. He got interviewed on ABC News last year on Breakfast News and as he said himself, this is a really bad sign. When they get me on the morning show. This tells you there is something pretty badly wrong in the electricity system. It should be. No one should ask any questions. No one should want to know about it. It should just happen very smoothly, switch the light on, no problems. And the fact they want to talk to him does indicate that there is something very different in the system we're working with now.
- [41:03]
Melissa Lott
What's the thing we're used to your electricity bill. It comes, you see it once a month. Maybe you don't, if you're privileged enough to put it on autopay and let it do its thing. But you see it once a month versus a gas pump. I mean, depending on how much you drive, you might see it once a week or more frequently. Yeah, it's become more interesting. That's a good story.
- [41:25]
Ed Crookes
Yeah. So anyway, so let's Talk a little bit about potential solutions and as you say, making more use of existing grid infrastructure, definitely part of it. I think that's very important. A lot of people agree on that. Something you just mentioned, Paul, is this concept of data center operators in particular agreeing to pay for all the costs associated with that infrastructure. We've seen now a few commitments. Microsoft made one. OpenAI anthropic, I think, has made one. We had Brandon Oyer, who's the head of power and water at aws, on the show recently, and he was talking about an agreement that they had with Nipsco in northern Indiana, big development to install 3 gigawatts of new capacity to support new data centers they're building there. Again, that was all being done with a firm commitment not to increase bills for residential ratepayers at all. What's your sense of pull of those commitments? Do you think they are realistic? Is that going to work? Is that going to be the solution to this, to make sure that the cost allocation does fall on the companies? And I suppose ultimately, obviously it gets passed on to consumers. It'll get paid by the people who are using those services. But still, in the first instance, the idea is that the cost will be borne by the companies that are developing that data center capacity and need the power infrastructure. Is that going to work, do you think?
- [42:58]
Paul Siegel
I think there are certain things that are inevitable and I don't see a path forward where the broad set of households and the economy writ large is saddled with the bill for the one component of our demand picture that's driving it, and that's data centers. I think that there's a general to your point on the statements out of a variety of the leading companies in this area, I think there's recognition of the fact that for a durable social license to continue to do this, there needs to be a way where customers aren't picking up the bill for that incremental load. I think there is an inevitability to it. I don't know that it would be something that we would be talking about extensively were it not for the fact that we've seen abnormal rates of inflation hitting the sector over the course of the last couple of years. At the same moment when the hyperscalers want to grow data center capacity, the cost of building new combined cycle or even peaking power plants has more than doubled. The cost of transmission upgrades has increased. We're increasingly pushing the existing system, the existing grid, towards a level where meaningful new investments are going to be required to integrate new generation capacity to integrate new loads. So if we were in an ordinary, we're bubbling along at a couple percent inflation for what underpins the cost to supply, I'm not sure we'd be having this discussion. But when the cost to build a combined cycle has gone from $1,500 a kW to $3,000 a kW over the course of several years, I think that question is front and center. And I think it's inevitable that for us to continue to succeed in serving this new load, that we'll need that load to step up and take care of the cost associated with doing so. And again, I think a lot of the benefits of that can accrue to the rest of the customers.
- [45:21]
Ed Crookes
Right. And I think it's something which is always important to remember in this discussion is that when we look at the history of electricity bills and the increases that we've had over the past few years, that's probably not really anything to do with data centers. Actually, that's to do with, as you say, that cost inflation that we've had in the system. Costs have been rising for a while, really coming out of the pandemic. And so things like the cost of transformers, some types of transformer, our data would mackenzie show, have doubled in cost in the past five years or so. As you say, there has been a significant increase in the cost of transmission in recent years. So we've kind of already had those cost pressures building up. Now we're looking ahead, looking to the future, and thinking, okay, so over this period, that is when the costs of the investment needed to support data centers really going to start to kick in. And as you say, that price inflation is still continuing, the costs of all this equipment is going up, I guess partly fueled by increased demand because of all the new capacity needed to support data centers. But it is definitely something that we haven't really seen play out to the full degree. I think when people look forward, there's a lot more of it in the pipeline.
- [46:41]
Paul Siegel
That's exactly right. I, I look back the moment that I started in this industry, we were completing a combined cycle, which doesn't have particularly different technology or characteristics than the investments that we're making today. And we were building it for around 400 a kilowatts by the 2012 time frame, we were building a new combined cycle at 900 a kilowatt. And today, again, as we look forward to deliveries early next decade, we're talking about prices that are in the on the order of $3,000 a KW. So we did have that steady Growth. And then we had a step change and we're dealing with that coming through not just in combined cycle world, but also in other elements of the infrastructure and the grid system.
- [47:35]
Melissa Lott
And then when we go back to like the final prices that people are paying, I mean you combine that, okay, natural gas mine cycle, we look at those spot prices, what was it, 56% year on year increase. But then it still wasn't as high as in 2021. You know, we can remember talking about how prices went there. So there's a reason why this is being referred to as the age of electricity. Like there is a reason why. And behind that is a multifaceted, multidimensional, quick moving set of forecasts, forces that are causing more pressure on this system. And we're at a critical moment where, yeah, we can step into the opportunity and we can make investments and make them in ways that work. And I say we as in there are different, we's in that equation. And so, you know, different regions, different communities, different countries, when you take it global, et cetera, or we cannot. I think we're going to step into the opportunity. I hope we step into it more than we might have thought we needed to. Because the opportunities, to me, I don't know about you Paul, but they're just so tremendous. It's like, wow. I mean, when you think about what's behind each one of these demand sources, whether it's residential side, industrial side of the equation, what's behind it and what is it driving in terms of broader economic impacts. The list is long. When I start picking it out of the different things that this can enable, if we're able to invest in, in our electricity systems and take care of those opportunities and step into them.
- [48:58]
Paul Siegel
And from my seat, I'm really optimistic that we can. I think it really is a matter of getting.
- [49:04]
Melissa Lott
I'm glad to hear that. That is great. I'm so glad you're not like Melissa, this is not good. Like that makes me happy.
- [49:12]
Paul Siegel
I think competitive markets combined with the right set, the right framework and the right rules create tremendous opportunities to bring capital to bear, to bring innovation and new ideas to bear. I think if we get these incentives right, if we point people in the right direction, if we give them the right market signals, if we give them a durable set of rules, we're really good at responding.
- [49:39]
Ed Crookes
And so what about the role of policy and regulation here then? As we've been saying, big issue for the administration, big issue for state governments, politicians right across the country. What can energy policy and regulation do to get those kind of good outcomes to make the most of the opportunities in the way you're talking about, I
- [50:00]
Paul Siegel
think there's real opportunity in creating more competition in transmission. We talked briefly about the compounding increase in transmission costs. Melissa, you mentioned that 26% increase which was inflation plus between 2019 and I don't know if the more recent years 2024 or 2025. But over that same period of time it's entirely likely, and this is my guesstimating off of my 10% CAGR, but that transmission rates inside of the customer bill doubled. So that's a 100% increase. And oftentimes those are the result of a lack of planning and a lack of competition. They're the result of needing to solve the immediate problem. So instead of planning five, ten years out, thinking about what are your Crez zones, what will be your load zones? Where can you put large amounts of new load but also perhaps large amounts of new generation? How can you solve these problems by actively planning forward and make thoughtful investment rather than simply rebuilding what we already have in the ground.
- [51:16]
Ed Crookes
Scope here for another footnote. I think on Crez, which I'm now going to embarrass myself by revealing that I don't know what it stands for,
- [51:24]
Melissa Lott
is the C competitive renewable renewable energy zones. Oh man, we could have a whole story on this my world for so long. And the idea was, Kevin Costner, you build it, we will come kind of a deal like, hey, we're going to say these are great areas for wind. We want to bring that to load centers. We're going to build this and we believe that it will get filled up with lots of electrons.
- [51:46]
Paul Siegel
And that's what we wildly, wildly successful,
- [51:50]
Melissa Lott
wildly successful because what's the constraint on getting new loads, on having a highway to put that electricity on so it can get to where you want it to be? Like that's, that's a major constraint.
- [51:59]
Ed Crookes
And it was done in Texas and it would worked in Texas because Texas has got a competitive market with sort of liberalized generations. So it was easy to kind of just as you say, build it and then allow a whole load of different generators to use it at one end and a whole load of different consumers to use it at the other. Is that fair?
- [52:16]
Melissa Lott
Paul and I both want to talk. So Paul, you go first and then I will go second. We both have so many thoughts.
- [52:22]
Paul Siegel
Crez was actually the result of a political decision where the legislators in the state decided that there were these renewable energy zones that could be unlocked and made a determination and provided direction to the Public Utility Commission to go and plan an expansion of the system. We were lucky enough to be a non incumbent that the PUC invited to participate in that process. We built over 500 million worth of rate base in the panhandle of Texas as a result of that. And there are now many gigawatts of not only wind but solar and now data center that are coming to and around the panhandle. In large part because this resource was unlocked. Somebody made the proactive, forward looking decision in a moment where we might have had a couple thousand megawatts of wind in the state to unlock 18,000 megawatts of wind in the state. And it's gone well beyond that.
- [53:28]
Melissa Lott
Yeah, plus batteries, plus other. I mean when it comes to the overall system, it was really what's the big constraint? What do we want to unlock? And Texas did have an advantage. We've talked about ERCOT versus, you know, when you cross over state lines and the different, you know, restrictions that you have or just additional processes that you have that you have to go through, which can make things more complex and the different incentives. But it really was we're going to build the freeway to move the electricity around. We're going to tap into this domestic resources. And remember when this was happening? Oh my gosh, is it like 20 years ago at this point? Almost. I mean, I have gray in my hair, y'.
- [54:01]
Ed Crookes
All.
- [54:01]
Melissa Lott
That happened over that period. But this was when wind prices were way higher. They are. And they've unlocked batteries, have unlocked other generation resources at much higher prices. And the economics were just very clear. If we build this out, we see clear pathways to having the development that we want when it comes to generation and then also supporting the industries that need that generation and the households that need that generation.
- [54:23]
Ed Crookes
So is that a model that can be followed elsewhere in the country then or not really, as you say? Because some of the conditions in Texas were pretty specific to that state. I mean, Paul, just get your thoughts on this. When you think about ways of improving transmission infrastructure, getting more built, what could be done? Does it go back to all these issues about permitting reform and everything we've talked about in the past? Does it get back to planning? What does it really need?
- [54:50]
Paul Siegel
We're happy to wave in permitting reform all day long. Bring it on. It would be amazing to be able to get these things done more easily. But fundamentally it comes back to long range planning and policy decisions. And certain states in particular states are very proactive about figuring out problems that they Want to solve, unlocking resources that they want to unlock and taking actions that enable that. And I think that from my seat is one of the biggest opportunities to get this right.
- [55:31]
Ed Crookes
Melissa, you wanted to come in on this?
- [55:33]
Melissa Lott
Yeah, I mean, I think the fundamental principles of understanding the problem. So let's go back to that. It's top of the show, right? What is the actual problem? What is constricting or restraining or preventing us from moving forward into a space? And I don't know, don't shy away from the hard problems, like, step into them and say, what are we able to do? And when it comes to Crez and Texas, it was like, if we unlock this thing, everything else happens. It's like setting up that perfect run of dominoes. And if you can get a position just right, knock the first one down. And not that you sit back and don't worry about it, you're watching every domino, but it's. It's just. It unlocks the entire game. It unlocks the entire system. And so within that, I mean, there's certainly tons that could be modeled in other areas. And the exact. How it would play out, the process, the details, you know, would we be talking about, okay, we're going to identify these zones, build very long lines, figure out ways around it. In Texas, I mean, a lot of the areas, you had open space when you were going into West Texas, so, you know, the constraints were different. But that doesn't mean you can't take huge lessons learned from it and you can apply those in other areas. And the fundamental principle is, what's the actual root cause problem here? Like, what is the biggest lever that we can possibly pull that will have the biggest impact? And I would say that when it comes to the grid and investing in the grid, I mean, that is a tremendous leverage arm. It's massive. And we see that with the timeframes. Right? It was the longest timeframe. When you talk about the different timeframes bringing on more load, more demand, more generation. And then it was this outlier of how long is it going to take to build out the wires and invest in the capacity there? And one thing I'll flag is that the answers aren't so for me, policy Ed, we've talked about this technology agnostic. What are you trying to solve? And then let technologies come in and do their thing and come together to actually work together to do something more effectively and efficiently. So there's new lines. That's one conversation. There's new across state lines, big, you know, huge power lines there's also local distribution upgrades that need to be made. And even on existing transmission lines and thoroughfares, we can be using them better and we can be investing in technologies that can help us to better utilize those assets and resources. And how do you get more grid enhancing technology in the system? How do you actually upgrade those systems as well? And these are all part of the conversation, or at least they should be, in my humble opinion.
- [57:49]
Ed Crookes
Yeah, that is a great point. So I wanted to wrap up, Paul, just if we can, by talking a little bit about LS Power and the future of the company. You just closed a very big deal, sold a big package of natural gas assets. I think it's about 13 gigawatts of capacity there, which you sold to NRG Energy for about, I think $13 billion. Could you talk a little bit about that deal? Why did you do that and what does that say about the future of the company and where you go from here?
- [58:15]
Paul Siegel
We made a lot of the investments in those assets through a variety of private equity funds. And private equity funds have finite lives. There's an underlying covenant with your investors that over time you're going to give them their money back. And a transaction with NRG or other transactions like it for us are part of following through on that obligation. We firmly believe in the future of natural gas in this country. We're focused on adding to our portfolio of natural gas fired power plants. We believe in the value of demand response. I think it's one of the most underutilized tools that we have in our portfolio of solutions. We continue to be active in looking for ways to solve some of these energy demand questions through natural gas based solutions. So the transaction is really one that's driven by where we are or were with investment partnerships that happen to to own those particular assets.
- [59:28]
Ed Crookes
Got it. I mean, it's exciting times, hasn't it? We've been talking quite a bit about challenges. Also an enormous amount of opportunity out there right now.
- [59:36]
Paul Siegel
A huge amount to do. Certainly not enough time to cover it during this conversation.
- [59:42]
Ed Crookes
No, indeed.
- [59:43]
Paul Siegel
But yeah, we are out there actively looking for places where we can put new battery systems. Same with new transmission infrastructure. Looking for more opportunities to compete, to come up with competitive, innovative solutions that can keep costs for that business under control.
- [60:08]
Ed Crookes
Right. Well, I certainly hope you'll come back on again at some point in the future and talk some more about all the things that you're doing. We ought to wrap it up though for now, just before we go. Time for our free electrons. I think personal items, the that we brought in. Melissa, what's yours?
- [60:22]
Melissa Lott
Oh my goodness. I was logging in to record this morning and it's like, it's like somebody heard that I needed the perfect free electron because I had a different one. But the IEA right before I logged in. Not joking.
- [60:33]
Ed Crookes
Hang on, just to check. You sure you don't want to do two?
- [60:36]
Melissa Lott
Oh, can I, can I do three? It's a running joke, Paul. Like I always have two. But I'm trying to restrain. I was trying to be good Ed.
- [60:44]
Ed Crookes
Like, come on.
- [60:46]
Melissa Lott
No, but do you get their energy snapshot? It's just like a little short.
- [60:49]
Ed Crookes
Oh yeah, yeah, yeah.
- [60:50]
Melissa Lott
Okay, so guess what the one today is. It's about the mega batteries that are transforming power systems. So back to our previous conversation. Last time I was on and we were talking through it, it talks through essentially battery deployment, it's got the great cost curve and the global deployment, it breaks it down. But Paul, to just what you were talking about, it actually has an entire chart that shows about how much of peak demand is being met in a few different key regions, including the United States. And then they zoom in on Texas and California and it shows this like whoop in the curve here in the last year about how much more we're seeing these mega batteries actually take part of the load. So I just flag that with people, it's free. It's just their little, their little energy snapshot that they send out and it's. So that's, that's my free electron for today and I'm going to try to not talk about myself second one. So don't tempt me.
- [61:41]
Ed Crookes
Yeah, well, I know, I know Paul's got a great one. In fact, Paul's one is so good though that I think we should let him do that last. I'm going to very quickly do mine, which is power generation in China and coal fired generation in particular. I was just posting about this on LinkedIn just this morning. Obviously a lot of discussion about how much coal capacity China's got still adding to that capacity. It is undeniably the case though that coal fired generation in China went down last year. So despite everything everyone says about, oh, they're not transitioning, it's still an economy reliant on coal power and so on. A lot of that is true. China is absolutely still reliant on coal power. But last year, and this is some new Wood mackenzie data we just published. So that's why it was sort of front of mind for me last year, China's power demand grew by 5% but their coal fired generation went down by nearly 2.2%, 1.9% so that is pretty significant. And that's driven by of course there's been massive investment in renewables there, a lot of wind, a lot of solar, some nuclear, some hydro capacity being added as well. It's unclear whether this is the final peaking of coal demand in China and there could still be some growth to come, not least because of data centers. And of course they're building a lot more data centers in China as well, just as they are in the US and that's going to need more power and it's going to need more 24, 7 power as well. So we could see coal generation still pick up again. But even so I think it's pretty significant what happened last year and I think a useful corrective to the people who will sometimes say oh, there's nothing happening in China, it's all the same, no such thing as a transition. I mean you can argue about what a transition is and what it means and how fast it's going to, but I think you cannot argue about whether or not there has been change in China's energy system. I think that is unarguable. Something very big has happened there and I think it's important to note that.
- [63:42]
Melissa Lott
So interesting. I'll just as a follow on to that Ed, real quick. Paul, your free electron is great. So we got to get to this. But when it talks about how much peak demand is being supplied by batteries or is being met by batteries. In California it was 25% in terms of share of peak load. In Texas it was 10%. I am now going to dig in and see if I can find the China numbers. I'm really curious how they're actually investing in batteries and what that is looking like in terms of peak. So just as an aside, they didn't make the top chart that the IEA put out, but it's a great point.
- [64:15]
Ed Crookes
Yeah, that's fascinating. And of course actually coal and batteries could be pretty good complements. People think of them as sort of rivals but coal plants are the best if you run them as baseload 24 7. And then if you have demand which is flexible and goes up and down, pairing batteries with that coal could work well, not necessarily great for the climate. Right. I mean it's, it's still not a way to get to a net zero system. But in terms of curbing emissions and certainly curbing the growth of emissions could actually be very effective. Yeah, so that's really interesting. Yeah, as you say.
- [64:49]
Melissa Lott
There's so much I want to say right now about efficiency of operating power plants. You highlighted it well earlier. There's so much. But okay, another show. Another.
- [64:56]
Ed Crookes
Yeah, another show. But you're right, it is fascinating. And also just to throw in, as you say, the efficiency of coal in China, also the flexibility, because that's something they're pushing on as well, is making coal plants more flexible, although they're not naturally well suited to that. So that's a whole other debate. But anyway, as you say for another time. Anyway, Paul, we've been building you up on this.
- [65:19]
Melissa Lott
We've been building it up. It's such a good one.
- [65:20]
Ed Crookes
You should have your chance. Give us your free electron.
- [65:23]
Paul Siegel
So my free electron is, and I've been thinking about this and getting texts about it, is the need for us to, as an industry and I think as business leaders, to focus more on mentorship and providing internship opportunities for undergrads. I think as AI proliferates, one of the things that I'm hearing and seeing is that it's becoming more and more difficult for these young people, especially those that are technically oriented, to find good opportunities in undergraduate for mentorship growth and seeing what the real world looks like. And I don't think that industry should look at this as a immediate return opportunity. I think it's more of a social obligation and responsibility. We should be working on providing mentorship and growth opportunities for young people and expecting no immediate return.
- [66:21]
Ed Crookes
100%. Yeah, I think that's absolutely right. So important to be thinking about that for a variety of reasons. Sorry, Melissa, you were going to say.
- [66:28]
Melissa Lott
I was going to say I did two internships and I was also a co op student through my education. So I. I would spend a quarter at school and then a quarter working in a lab. I discovered that I shouldn't work in a clean room on silicon wafers. That was not my first call, but the amount of practical experience I got, discovery of where I needed to go and just overall practical learning. My education in the classroom was fantastic. I'm UC Davis for undergrad, UT Austin for grad. Fantastic education. But I was much better when I came out and also better able to position myself into a path I wanted to be, be on and could be great at because I had those internships and I had those opportunities. So just just nodding my own personal thing. And people who spent time with me, who were never going to hire me and never going to get, you know, directly anything out of it, they spent time mentoring me, talking to me, Talking me through, like, okay, here are your options. Like, what are you thinking for you? And so I couldn't agree more. Couldn't agree more.
- [67:22]
Ed Crookes
Yeah, absolutely. And as you say, Paul, it does seem like AI is sort of squeezing opportunities for people who are at the beginning of their careers, but people have to start somewhere, right?
- [67:33]
Paul Siegel
Yeah. My own personal opportunity on this, and I'm grateful to this day. I worked for Johnson Johnson for a couple of years while I was an undergrad, happened to be in Central Jersey and Rutgers was in Central Jersey. And certainly a lot of hours in front of the computer redoing P and ID drawings, but also an opportunity to spend almost two months working on commissioning a new pharmaceutical line in Puerto Rico, where they were sending me down there. And I almost felt like I might have been adding some value in the moment. Can't confirm, but what an opportunity as an undergrad for me.
- [68:16]
Melissa Lott
It was Sandia National Labs. And I mean, Ed, we've talked about my career path and where I went, the opportunities I saw to do public service for years, and. And now I'm, you know, after doing academia and research back in industry, and it's like, yeah, phenomenal, phenomenal. Also helped me to pay my bills, I will admit that, like, which was a hugely important thing to go through school, but it adds to the educational experience and it really does. I mean, tremendous, tremendous. So one thing I'll add, Ed, to your point is I actually think about how virtual engagement has affected internships and young career opportunities. I got so much out of having conversations, being in the same spaces, being just, hey, come into this meeting, come in and listen to this. Those types of things. And so the fact that my internship was in person, and I'll say with interns I work with now and folks that I mentor, those in person opportunities are really, really massive as well. And yeah, that can add to the cost if you've got to bring an intern in and get him a desk, you know, those types of things. But the value we're adding to the overall work workforce, which that's a whole other discussion we could have, is tremendous. So my own personal soapbox for a minute.
- [69:23]
Ed Crookes
Yes, I do absolutely agree with that. And as you say, it's partly about training the senior staff, the leaders of the future, the people who are going to do the things that can never be done by AI, but also it's about adding capability right now to do things which even though there are some, many, increasingly, I guess, a growing number of tasks that can be performed by AI, there's a lot of things still that you need a human for and that humans can add value to. And it's important that people recognize that and give people those opportunities. Yeah, I think that's absolutely right. And I think it's good to end on that important message. We do have to leave it there, though, for now. It's been great talking to you, Paul. Thanks very much for joining us.
- [70:10]
Paul Siegel
Enjoy chatting with both of you.
- [70:11]
Ed Crookes
Thank you. Absolutely. Melissa, I hope to see you again very soon.
- [70:14]
Melissa Lott
Absolutely. Look forward to it. And Paul, enjoyed the chat. We could all find time to sit and talk through these things today.
- [70:20]
Ed Crookes
Yeah. Thanks very much indeed, both of you. It's been great talking to you. Very glad we could get together and have this conversation. Thanks very much to our producers, Stuart Duffy, Toby Biggins, Gilchrist and Dan Cottrell. And above all, as ever, many thanks to all of you for listening. We really value your feedback, so please do keep that coming. And we'll be back soon with all the latest news and views on the future of energy. Until then, goodbye.