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- [00:02]
Jigar Shah
Latitude Media podcast at the frontier of climate technology.
- [00:08]
Stephen Lacy
Jigar, what are you doing June 12th?
- [00:10]
Jigar Shah
Oh my gosh, is that a special day?
- [00:13]
Stephen Lacy
You don't know?
- [00:14]
Jigar Shah
We're in Boston at the AI conference.
- [00:18]
Kathryn Hamilton
I thought it was like a day, the day the conclave would be over or something.
- [00:22]
Stephen Lacy
I'm so impressed that you got it. Jigger. We're going to be at Transition AI in Boston June 12th and we are going to be live there. We're going to have Caroline Golan from Google there with us. What hard questions are you going to bring? Jigger?
- [00:39]
Jigar Shah
I used to follow when they would make the word Google different things for different days. Why don't we do that anymore?
- [00:46]
Stephen Lacy
I think they still do it. That's your hardest.
- [00:48]
Jigar Shah
But I don't follow it anymore.
- [00:50]
Stephen Lacy
That's your problem, not theirs. Well, we will certainly be talking about more than Google Doodles with Caroline Golan. And we were going to have investors, developers, researchers, tech companies there to talk about all the creative ways to meet data center demand. And you, our listeners, get 10% off your ticket. We like you so much you just have to use latitudepods 10. At checkout, click the link in the show notes or go to latitudemedia.com events and we will see you June 12th from Latitude Media. This is Open Circuit this week, 100 Days of Chaos at the Department of Energy. Since January, thousands of scientists, engineers and policy experts have left the agency. Key offices are running on skeleton crews. Programs responsible for building critical infrastructure sit in limbo. This is not just a typical transition between administrations. Many are worried it's a systematic dismantling. So will it bring DOE back to its core mission, as the Energy Secretary claims, or will it damage our ability to build all kinds of energy infrastructure? This week we'll walk through how the sweeping changes have unfolded and look at what this means for America's energy competitiveness.
- [02:08]
Maeve Alsip
OpenCircuit is supported by Kraken, the only proven AI powered operating system for utilities. Kraken's tech is helping utilities create happier teams and happier customers while reducing operating costs. And with over 40 large scale migrations delivered on time and on budget, Kraken is designed to help utilities leave legacy tech behind. Join leading utilities across the globe in upgrading to Kraken. Visit Kraken Tech or click the link in the show Notes to learn more. OpenCircuit is brought to you by On Energy. Some industries simply can't afford power failures. Data centers, airports, manufacturers. When the power goes out, operations grind to a halt. That's where onenergy comes in. They Design, build, own and operate megawatt scale battery storage to keep businesses running and grids stable. With proprietary energy management software and in house expertise, they make energy more reliable, efficient and resilient. Need backup, peak shaving, faster interconnections. One energy has the solutions because when reliability matters, their track record speaks for itself. Learn more at On Energy.
- [03:16]
Stephen Lacy
I'm Stephen Lacy. I am the Executive editor at Latitude Media.
- [03:20]
Maeve Alsip
Welcome.
- [03:20]
Stephen Lacy
I'm joined by my co hosts Kathryn Hamilton and Jigar Shah. Katherine is the co founder and chair of 38 North Solutions. How are you?
- [03:28]
Kathryn Hamilton
I'm doing great. I've relocated for the summer to the Shenandoah. I still will be commuting back to D.C. for when I need to, but at least I have a good view for a bit.
- [03:39]
Stephen Lacy
And you were fretting about the fact that you have hammering noises behind you. So if our listeners hear that, it's not Catherine banging her head against the wall when Jigger and I make points.
- [03:47]
Kathryn Hamilton
Well, it could be. It's not limited to that.
- [03:51]
Jigar Shah
I was going to say it often is.
- [03:54]
Stephen Lacy
Jigar Shah is a clean energy investor. He's the former director of the DOE's Loan Programs Office. Jigar, the loan programs office, is getting back into the coal business. Do you have fomo?
- [04:04]
Jigar Shah
So much fomo. I just feel like bringing back coal was just a lifelong dream.
- [04:12]
Stephen Lacy
We're joined today by Latitude Media founding reporter Maeve Alsip. Maeve covers a wide range of stories for Latitude and she's been breaking tons of news on the transformation underway at doe. Hey, Maeve, welcome.
- [04:24]
Maeve Alsip
Hey, Steven. Thanks for having me. Long time listener, first time caller, as they say.
- [04:31]
Stephen Lacy
So I made a promise when we launched this show that this was not gonna be a Trump show. But we recently reached the 100 day mark and Maeve has been writing some really great stuff on just how tumultuous things have been inside the Energy Department. And we thought it was a really good time to grapple with what those changes mean. So I wanna start with a little history. Actually, it's been almost 15 years since the Republican presidential primary debate when Rick Perry forgot the third agency he was planning to abolish. And I've got a little tape here some listeners might remember.
- [05:02]
Rick Perry
It's three agencies of government when I get there, that are gone. Commerce, Education and the. What's the third one there? Let's see. Oh, five. Okay, so Commerce, Education and the epa. Epa, There you go. No, I can't.
- [05:24]
Stephen Lacy
Seriously.
- [05:26]
Jigar Shah
Is EPA the one you were talking about it?
- [05:28]
Rick Perry
No, sir. No, sir. We were talking about the agencies of government. EPA needs to be rebuilt. But you can't.
- [05:35]
Jigar Shah
But you can't name the third one.
- [05:37]
Rick Perry
The third agency of government. I would, I would do away with the education, the Commerce. Commerce and let's see. I can't. The third. Sorry. Oops.
- [05:52]
Stephen Lacy
Catherine, what agency was that? Can you help Rick out?
- [05:55]
Kathryn Hamilton
I believe it was Department of Energy.
- [05:57]
Stephen Lacy
Indeed, yes. I did not play this clip to pick on Rick Perry. He later became Energy Secretary in Trump's first term and went on to explicitly walk back those comments after learning what the Energy Department actually does. The doe, of course, is responsible for everything from guarding our nuclear arsenal to advanced research to making sure the lights stay on for millions of Americans through power marketing administrations. And it has grown substantially over the decades, particularly since the 1970s.
- [06:24]
Maeve Alsip
And Republicans have long wanted to see.
- [06:26]
Stephen Lacy
It cut back, back to focus mostly on basic science and security. Under the Biden administration, it built up a lot more deployment capacity with our very own Jigar Shah playing a big role in that shift. And so today, over 100 days on, we're going to dig into many of the radical, abrupt shifts underway at the agency. Is America losing critical energy development capacity? What we're going to do is start with an account of how the chaos has unfolded and then we're going to look at how it's going to potentially impact the Trump policy agenda, and then we'll look at some long term consequences. So, Katherine Jigger, let's start with you, Catherine. Describe the state of DOE when Biden left office.
- [07:08]
Kathryn Hamilton
DOE is funded by Congress. So DOE doesn't decide on its own. You know, a president might say, these are the priorities I have, but Congress is the one that gives it the money and the direction on what it needs to do. And DOE had been given like a huge amount of money to the tune of $97 billion during the Biden administration for the Infrastructure Investment and Jobs act, which got 62 billion sent to DOE and then the rest for the Inflation Reduction Act. So it had been busy since those pieces of legislation had passed and been signed into law, trying to stand up the programs needed to implement them, trying to get them spent. And by the time Trump came into office, I believe it was 94% of the funds from those bills had been committed. So it was in very good shape for what it had been told to do by Congress and what it had executed on.
- [07:57]
Stephen Lacy
Yeah, Jigar, give us the take from the inside. How did DOE evolve over the Biden administration? What was it like when you left office? What was it good at? Where did it need reform?
- [08:09]
Jigar Shah
Yeah. I feel like you should all sit back with coffee and tea. This is gonna be a long answer, I think. Look, I think that for many of you, you may remember the ERA stimulus bill during the Obama years, and a lot of that was really just giving money to the states, right? For weatherization, lots of other things. And then there were some strategic programs around, like a $2 billion battery grant program, et cetera. When a lot of those companies and those grants failed, almost all of that technology went to China, right? So when you think about where that those patents came from for Catl or for BYD or whatever, all of that came from them buying bankrupt assets from the United States. And the first Trump administration had approved the transfer of A123 assets to China, right? And so we had basically gone through Cleantech 1.0 and 2.0, invented all this cool stuff, and then given the technology to China to. To scale up, right? And now we were faced with China having really dominant market share with critical minerals or scaling up nuclear power, which we gave to them, right? We gave them the AP1000 design, which is their first nuclear plant, and now they've modified it for their subsequent nuclear plants. Same with solar panel technology. It wasn't just the 12% efficiency technology we had in 2008. It's also the same 16% efficiency, 18% efficiency, and now 23% efficiency stuff, all of which was invented here in the United States or with Martin Green at University of New South Wales. So there was a movement that was started during the first Trump administration to say we needed to figure out how to do big things here in the United States. So that's where the Office of Clean Energy demonstrations came in, which was passed under the Bipartisan Infrastructure Law, not the Inflation Reduction act, where they said the DOE didn't have enough project management expertise to be able to do these big, hairy, audacious things, right? So that office started Thanksgiving of 2021 and grew to almost 400 people during the Biden administration, right? And that was backbreaking work to convince people who are experts in project management in other parts of the private sector to take a salary cut and move into the Department of Energy to do DAC hubs and the advanced reactor demonstration programs in nuclear and the hydrogen hubs and all of these other things, right? The loan programs office, which I ran had $40 billion worth of loan authority when I came into office, and a skeleton crew of extraordinary people, 84 or so people doing the work, clearly not enough to put $44 billion out the door. And then when the Inflation Reduction act came in in the summer of 2022, we went up to $400 billion of loan authority. So clearly enough, not enough to do that. So we were able to get to over 400 people by the time I left office, about 255 federal employees and then another 200 and so people on the contractor vehicle.
- [11:15]
Unknown
Right.
- [11:16]
Jigar Shah
And with that, we finally got to three deals a month where we were allocating between 5 and 10 billion dollars of loan authority every month out of that office. Right. And that was everything from the automotive sector, which was a lot of the critical minerals and batteries, to the, the virtual power plant stuff and the restarting of a nuclear plant and Palisades nuclear plant, the repurposing of a refinery in Montana. When you think about what kind of specialty knowledge we needed, the loan programs office was doing things in 2009 under Jonathan Silver. They were doing 20 year power purchase agreements signed by PG&E for large solar farms. Those are far less risky deals than what we had to do with critical minerals. Where people say, we'll buy your critical minerals, but we're going to pay whatever price the market price is that year. Right. And sustainable aviation fields are the same. So figuring out how to do that was technically hard. Right. Are we going to get paid back or not? But then we had to get the Office of Management and Budget to agree to the way we were underwriting it. We had to get sometimes a belligerent Senate to agree to the way we were doing it. And we had to get Treasury Department and everybody else to agree.
- [12:28]
Unknown
Right.
- [12:29]
Jigar Shah
And so the trust building exercise was real. And all along the way, every one of these programs required a cost match from the private sector. So we separately had to raise $100 billion a year from the private sector in 2023 and 2024 to match all the grants or to provide the equity for the loans.
- [12:49]
Unknown
Right.
- [12:49]
Jigar Shah
And so that was also no small feat. So we wrote the liftoff reports, we had the deploy 23 and 24 conference. So when you think about where we were during the Obama administration, where people were like, we can't do any big things here in the United States to where we were under the Biden administration, which was, we really want to try to do big things here.
- [13:10]
Unknown
Right.
- [13:10]
Jigar Shah
There are all these companies that were funded by Breakthrough and all these companies funded by venture capitalists and others that wanted to do big things here. And there was a suite of tools that were passed by Congress to help do that. And DOE did not have Almost any of the expertise it needed outside of the technical expertise to actually do the project management, to do the underwriting, et cetera. So all of that had to be brought in, and people got paid the government salary. And so a lot of those folks were making more in the private sector. That whole experience took the entire four years.
- [13:43]
Stephen Lacy
You were right. I almost finished my whole cup of tea. Catherine, that picture that Jigar just outlined meant bringing in a lot of people to the Department of Energy. So there was this real hiring push. Describe what the administration needed to do to actually bring those talented people in to do what Jigger just described.
- [14:06]
Kathryn Hamilton
Yeah, I mean, Jigger alluded to the fact that you needed people who had done things out in the world who had actually managed projects or run programs, some of them had run, like sustainability programs for cities or states. And you brought all those people in who knew how to make. Knew how things worked because you had to go beyond what is traditionally a DOE employee, which might be a scientist, a researcher, and then you're getting into somebody who's doing implementation. And that was the entire goal of the infrastructure bill. Remember, it didn't just go to DOE for infrastructure, but it went to roads, bridges, transportation, all kinds of transit programs throughout the federal government. So it was meant to be funding that would provide the infrastructure needed to then build the next economy on and to support all of those innovations that DOE for years had been helping to nurture and grow through ARPA E, Office of Electricity, et cetera. These were people who are now able to. All right, we gotta get out there and we've gotta scale, and we have to create the infrastructure to do that. So that was their entire mission from that bill.
- [15:14]
Jigar Shah
And one anecdote I would add is that many people who are wonks here know of the American Society of Civil Engineers infrastructure report that's been put out since 1998. The United States of America always gets a D minus, unlike lots of categories. And there's 18 different sectors from ports, airports, et cetera. This year was the first year in history that we got zero D minuses, that they had eight upgrades and that like, that it worked, right, that our infrastructure is actually way better today and life sucks a little bit less.
- [15:52]
Stephen Lacy
All right, Maeve, let's bring you in here and talk about what is happening inside DOE now. So this is an agency that is under siege like a lot of other agencies right now. Your sources have called it a hostile takeover. What does that mean? Characterize the mood right now.
- [16:10]
Maeve Alsip
Before I do that, I want to give a quick Caveat, which is that everyone expected a significant ideological shift. And in many cases, people expected that their work and some programs would initially be paused as the new administration came to pick up speed. That said, I do think there are two main things that have made this transition, this period particularly unprecedented, and Catherine and Jigger have set the scene for this really well. The first is the complete chaos when it came to communication and coordination both across the agency and with external stakeholders. So people in various offices are still to this week telling me that hour to hour, the instructions that they're getting from around the agency are different on what to say to applicants and awardees, when to say it, who they should be communicating with, and what's happening to these projects moving forward. And that confusion and chaos goes beyond just folks working in these offices to the companies that were seeking funding, had been promised funding, had signed contracts, conditional awards, who in most cases were sort of left in the dark. I talked to companies who said, we're calling every week. We've been sending emails every week. We're not hearing back. And I get texts occasionally from sources at companies asking, hey, have you heard anything about what's happening with our award? And so that, I think, speaks to just the confusion and chaos around the industry and not just inside the agency itself.
- [17:46]
Stephen Lacy
And this is sort of classic Trump. Catherine Jager, how should these transitions normally go?
- [17:54]
Kathryn Hamilton
Yeah, I've been through a few of.
- [17:55]
Maeve Alsip
These.
- [17:57]
Kathryn Hamilton
Because I started working at the Department of Energy through NREL during the Clinton administration. And there is a policy change, just as Maeve set up. There are policy changes when a new administration comes in and everybody kind of has to adjust. When George W. Bush came in, they reverted back to more of a basic R and D approach and less on the deployment side. That was expected. And those things happen. But there are two things that I think that are different. One is just the Elon Musk Doge approach that Maeve can talk more about. And the other is that usually Congress is pushing back on the president to say, wait a second, we put these programs in place, we believe in these programs. And so far, that has not happened. Now we're getting to a point in the appropriation cycle that might start happening, but that has not been the case up to now.
- [18:49]
Maeve Alsip
The second thing I would note that makes this particularly unusual is the sense among career staff that their technical expertise is being devalued. So I've talked to people who said they were completely shut out of the projects that they had designed and built and worked on, and that the appointees who stepped in to take them over in many cases were doing so without the traditional handover meetings, without a background in the area. For example, one person this week told me that they briefed their replacements on a massive project for the very first time last week as they were preparing to leave doe. So for a lot of folks who had decades of experience, in many cases of technical expertise, suddenly they found themselves reporting to people who they felt really didn't have the qualifications to be working in a particular office, let alone leading some of these very technical projects.
- [19:44]
Jigar Shah
And to be clear, this is in nuclear, geothermal, critical minerals, transmission. The Secretary Wright has just testified today on being essential to the department. So when you think about the nuclear energy industry, and I talk to them almost every week, which I would like to stop talking to all of you people, just to be clear, but Lord almighty, I cannot escape nuclear power. But they're like, we have no idea who's in charge. We have no idea who is actually helping us figure out cost overrun, insurance, what's going to happen with the $800 million that's within an RFP. How are we actually figuring out how to work with our Canadian allies? Because they're building 4G Hitachi BW X3 hundreds. Are we going to match that at Clinch River? Like, how are we working with the AP1000s? What did we negotiate with the Koreans on, like, figuring out the. The status of the IP dispute?
- [20:38]
Unknown
Right.
- [20:38]
Jigar Shah
With the Koreans. This is very technical stuff. And if you don't have good answers to this, you can't provide a loan to a new project.
- [20:49]
Unknown
Right.
- [20:49]
Jigar Shah
And so I just think that even in the places where people are saying this is a priority for us, it is just maddening how many experts are being not just allowed to leave, but, but pushed out the door. Like, there are many people coming to them saying, we want you to leave. And if you don't leave, you're going to be riffed through a reduction in force in two weeks. So if you leave now, you might get paid through September. If you don't leave now, you're going to be in some sort of layoff period where you don't get this thing. What signal are you taking from that? And then later someone will say, this is a very important sector for the Secretary of Energy, please don't leave. You're like, what. What signal are you sending to me?
- [21:36]
Stephen Lacy
Yeah, and that's definitely a bigger conversation that I want to have. Like, what are the actual policy implications for some of these changes? I want to go to the next phase of change, Maeve. So there was this period where there was a lot of confusion around the immediate pause of IRA and infrastructure funds. As you said, people didn't know what to say to grant awardees and so forth. And then in February, then there was a bit of a choir period. And then in February, DOGE staffers came into the building and there was this aura of an office raid. Tell me what happened when DOGE entered the building.
- [22:18]
Maeve Alsip
Yeah, So I actually think when I say, as Jigger just outlined, we're talking about folks without expertise coming into an agency and making critical decisions. DOGE is a great example of that. At DOE in particular, not only, you know, is what they're doing, as you mentioned, Stephen, sort of shrouded in mystery. People didn't know exactly when they were going to pop up where, which caused alarm, distrust, chaos, but also the decisions that they ultimately made as far as staffing did not reflect the needs of the agency or, you know, more broadly, did not reflect the country's energy system.
- [22:55]
Right.
- [22:55]
Stephen Lacy
Because DOGE at that point in the DOE's office was led by a former SpaceX intern who was in his early 20s.
- [23:02]
Maeve Alsip
Right. And, you know, that's an anecdote that I heard across a lot of my conversations in the last 100 days was people with incredible expertise who in many cases were heavily recruited from the private sector to come to DOE and stand up a particular project saying, all of my emails are now being vetted by a 21 year old who's never worked in energy. That keeps coming up in the conversations. And of course it's frustrating, but it also speaks to that broader irony that Jigar outlined, which is the administration has outlined these key priorities and in many cases, not all cases, in many cases, they're bringing in folks who don't have any kind of background in those key areas.
- [23:43]
Stephen Lacy
Yeah. And this played out when you saw the initial staff reductions. So there was this really chaotic moment in February when power dispatchers, transmission schedulers, field workers at the power marketing administrations were laid off, only to be quickly rehired when reliability concerns emerged. Tell me about, like how the layoffs have unfolded. That was a really alarming period. And then now there's this reduction in force plan that's underway with thousands of people leaving the agency, having already left or leaving the agency. Describe that period of how the the workforce started actually getting fired and leaving doe.
- [24:25]
Maeve Alsip
Yeah, I mean, this is sort of peak chaos as far as folks at DOE have told me. And I think the anecdote with the power marketing administrations kind of perfectly illustrates this point that Doge was in such a hurry to get started on this restructuring that they didn't bother to get up to speed with any of the agency's work. And if they had, it would have been exceedingly clear that the layoffs at the power marketing administrations in particular were categories of skilled grid workers that utilities all around the country are saying every day we don't have enough of.
- [25:00]
Jigar Shah
Well, I mean, but just to add to that, you know, like, as I like to refer to them, doggy, you know, like, I think, like, had their own challenges. But. But the Trump administration itself also didn't have a transition team.
- [25:14]
Unknown
Right.
- [25:15]
Jigar Shah
So they didn't name the transition team for energy for weeks after the election. Once they named the transition team, they actually had a fight around, like, NDAs and whether people would sign the documents, remember, and the White House negotiate a custom document. So there was, I think, one presentation that was made by the loan programs office to three people, none of whom, none of whom, I think works at DOE now. And there were no notes passed to the people who ended up coming into doe, like Chris Wright or others.
- [25:50]
Unknown
Right.
- [25:50]
Jigar Shah
So it is not surprising to me that they have no idea how any of these offices actually run and how to use them to meet their own priorities.
- [26:00]
Unknown
Right.
- [26:00]
Jigar Shah
And at the same time, as Maeve laid out Doge came in, I think for the loan programs office, their first number was, we think we could run the entire thing with 50 people. And this was 255 people at the time. And then they were like, okay, maybe it's 75. And now they're begging people to stay so that they can stay at 150. But I think we're already down to 90 people. The loan programs office or lower. And so we're in this weird spot where even now it's not clear to me that anyone has mapped out within the Department of Energy how many people it would take to accomplish the goals that they've set out for themselves.
- [26:38]
Stephen Lacy
And Maeve, in your reporting, you've said that people are telling you that office directors are worried about not having enough staff. Right?
- [26:45]
Maeve Alsip
Right. In some cases, yeah. Because the way that this played out at many offices was over the course of the last few months, the pressure to step aside that Jigger has outlined, the threats of return to office reduction in force, the repeated offers to take the deferred resignation program, which allows folks to stay on the federal payroll until September if they agree to resign. Throughout the course of that, many of the career leadership in offices were leaving and so the levels of folks below them, mid career, early career professionals were telling me there is no one left to steer this ship at this particular office. Not only do I have no confidence that any of the projects we've been working on will move forward, there's really no one left to run them and I might get fired tomorrow anyway. And so it, it led to this mass exodus that we saw at the end of April. And I think it was sort of a compounding effect of people looking around and seeing, oh, everybody else is retiring or has decided to take the deferred resignation. I don't want to be the only one left on a sinking ship.
- [27:54]
Kathryn Hamilton
Yeah, and I would say, Maeve, that talking to some folks, they wanted to make sure they adjusted to whatever the new goals were going to be, whatever the new impetus was. So, for example, going to all the grant recipients and saying, all right, remove your community benefits plan, remove anything about dei, resubmit it, like, let's make it say what this new administration wants it to say. And then that would go into a black hole and that person who was running the program would then no longer have any control over whether that project went forward or not. Didn't know if it was on your hit list or not. Hit list would have somebody above them who, whose experience was in running a funeral home rather than doing anything on energy. I mean, there was just so much lack of transparency which then leads to a lack of trust. So, you know, then you have people that are like, you know, I wanted to do this, I was in, I was going to try to make it work, I was going to try to line up and I can't do it now.
- [28:52]
Maeve Alsip
People plan to stay. I think that, that, you know, to speak generally across the folks that I've talked to, people planned to stay, they intended to stay and they ultimately felt that they were forced out and that they had no choice but to leave.
- [29:12]
OpenCircuit is supported by Kraken, the only proven AI powered operating system for utilities. Fears around messy, drawn out migrations have long stopped utilities from upgrading to tech that can improve innovation and customer service while lowering operating costs. With over 40 large scale migrations completed on time and on budget, Kraken has been designed to help utilities leave legacy tech behind. In fact, utilities regularly improve their customer scores and increase innovation while migrating to Kraken. Visit Kraken Tech or click the link in the show notes to learn more. OpenCircuit is brought to you by OnEnergy1. Energy is one of the fastest growing battery storage, IPPS delivering storage solutions for utilities, enterprises and critical infrastructure. With 300 megawatt hours deployed across 65 projects, their proprietary battery solutions are helping bridge the gap to a future where energy is abundant, clean and resilient. With a vertically integrated approach covering design, financing, software and operations on Energy seeks to make storage simple. Building on this expertise on Energy is now expanding its focus on the data center market as energy demands grow in an AI driven world On Energy is redefining energy infrastructure because downtime just isn't an option. Click the link in the show notes to learn more or visit on Energy.
- [30:34]
Stephen Lacy
Secretary Wright, as Jigger said, was on Capitol Hill testifying today. He has these nine pillars for American energy dominance, which include expanding nuclear power, strengthening the grid, expanding critical minerals development, taking an additive approach to energy, not a subtractive one. And he also outlined a $45 billion budget request which is not a dramatic decrease from current levels, if I understand correctly. And so as we've discussed on this show, so many of these policy priorities on paper are highly sensible and not controversial at all. But the the question is whether DOE is losing the morale and the talent to execute on those policies, and clearly they are. Catherine the Office of Grid Deployment is really getting decimated. The administration is promoting transmission development data centers on government lands to support AI. How do you square the administration's priorities with the cuts to offices that would actually implement grid expansion?
- [31:37]
Kathryn Hamilton
Well, they don't match up at all. So it's like ready, fire, aim, I believe is what it is. So they've got rid of all the people or scared them off and said like you don't matter anymore. And then they're trying to figure out what their priorities are. And actually the Grid Deployment Office contains a lot of priorities and has been helping to seed and implement projects that are very much aligned with the Secretary's priorities, such as grid enhancing technologies or other types of projects, micro grids, projects that allow for more resilience on the grid. And so I think there's going to have to be some kind of realignment and I don't know if that means anybody who's left would move under Office of Electricity. So Office of Electricity seems like it's doing okay. Katie Jeriza is the nominee for Assistant Secretary. She had worked there before and I believe she was even working in part on the original Puerto Rico project after Hurricane Maria. And so she knows all about these issues. She is the nominee and she's going through her hearing this week in the Senate. And I think the folks in Office of Electricity are Doing okay. So maybe some of the people, some of the projects from go to point in office will be absorbed by that office. Because that does seem like no matter how much you say you want AI and you want to be AI dominance, you need electrons for the AI and you need electricity. And I think you're going to need an office that rides herd on that. I think office of electricity would be that jigger.
- [33:15]
Stephen Lacy
The loan program's office has been hit pretty hard now too, with half the staff reportedly leaving in a single day. So what's the expertise that's walking out the door now and what does it mean for the complex financial deals that were in the pipeline?
- [33:29]
Jigar Shah
Yeah, I mean, I don't. Honestly, I don't know. Like, even if you wanted to build a coal plant, right. I mean, the program that they want to use is the 1706 Energy Infrastructure Reinvestment Program. The technology that saves greenhouse gas emissions would come from China. So I'm not quite sure how that would work because we haven't built coal plants in forever. And so the tariffs are still on Chinese equipment. Then you decide you want to fund, fund it, and then the question really becomes like, you know, which staff would actually underwrite the loan and under what rule set would they. Would they underwrite the loan? I mean, one of the big challenges you have here is that, is that you have a bunch of people who don't really understand, I think, what they want to do with the loan programs.
- [34:22]
Unknown
Office.
- [34:22]
Jigar Shah
On one hand, they're saying, let's do. I think the president's executive order talked about using loan programs office to rebuild coal plants. Great. But to what end? What purpose? As you know, rebuilding those coal plants would be $95amegawatt hour, $120amegawatt hours. So it's not cheap. And so then what's the purpose of it?
- [34:45]
Unknown
Right.
- [34:45]
Jigar Shah
I mean, I'm assuming affordability is at the key to this thing, but then I'm not sure about that either.
- [34:50]
Unknown
Right.
- [34:50]
Jigar Shah
And then the question then becomes like, what about the other priorities? Grain Belt has a conditional commitment, but I've heard a lot of negative conversations around whether they want to close Grain Belt. Grain Belt is probably the only transmission line ready to go right now that can actually help MISO and spp, both of which who have a National Electricity Reliability Council warning around having very low reserve margins and threat of blackouts.
- [35:16]
Unknown
Right.
- [35:16]
Jigar Shah
And so part of the concern I have is that I get the vibe piece. Like, I get the fact that this whole thing is about which announcements are going to go viral on Twitter. But at some point, rolling blackouts also go viral on Twitter.
- [35:31]
Unknown
Right.
- [35:32]
Jigar Shah
And I don't understand why the rolling blackouts piece doesn't scare them. But the like, you know, being muscular about how awesome we are and you know, having like horses like, you know, running in an open field, being tweeted out from the energy Twitter feed is like how you're going to solve electricity reliability. And so I think the people at the loan programs office continue to be very proud of their work and want to process those loans, but they don't actually have clear guidance. I'll give you one other example. We've got, I think over $30 billion worth of loans to utility companies, right. So Southern Company testified in front of the House Science Committee about how important the loan programs office was for the Vogel nuclear plant. But you've got, you know, the announcements with APS and AEP and WAC in Wisconsin, et cetera, that have all gotten conditional commitments. They still haven't gotten a full green light to get all those loans processed to closing. And the ones that did get a green light were like, please remove the wind part of your application.
- [36:34]
Unknown
Right.
- [36:34]
Jigar Shah
And so like, part of the challenge I see is that I don't exactly know what they're solving for, right? Because like, because unless you know what they're solving for, as Maeve suggested, you as an applicant, we have 200 active applications sitting in some queue there, right. You don't know whether you're in or whether you're out. Right. Who's in, who's out? And it feels like that changes on a day to day basis and the staff have no idea who's out. One last point I'd make is they're already on their second director of the loan programs office with John Sneed leaving and Lane coming in. And what I'm hearing is a third one is actually being put in place by the end of this week. And so I don't know, what are you going to do with like a new loan office director that you have to bring up to speed?
- [37:24]
Kathryn Hamilton
Not to throw in the wonky piece, but the Energy Policy act of 2005, Section 1703 that authorizes the LPO to do good loan guarantees, say they have to focus on projects that avoid, reduce, utilize or sequester air pollutants or greenhouse gas emissions. I mean, I don't know how you build a coal plant off of that.
- [37:44]
Stephen Lacy
Are there any other long term consequences that you're following, Katherine, that people might not be paying attention to?
- [37:50]
Kathryn Hamilton
Yeah, I think we almost have to step back and look at what has DOE historically done and what have we been able to put DOE to work doing that actually helps us close the technology gaps. So you have offices that do different things along the way. So ARPA E is early stage, and that kind of helps those folks really get off the ground with their new technology. And then you have energy efficiency, renewable energy and office of electricity that then try to help them test out those, maybe do projects with national labs, test out those technologies. And then you had grid deployment office and office of clean energy demonstrations. That would really be like first of the kind, really. Let's get your first project built, an LPO to help you scale. I mean, these all are there to stitch together the ability for America to actually have energy dominance and to be able to have the energy brain power to take something from a university or a lab table all the way up to getting that first project done where it becomes commercial and then it's going, yeah.
- [38:56]
Jigar Shah
I mean, one of the things that I'm increasingly seeing is that I actually think there's a lot of companies that we took across that bridge to bankability in the last four years. And so I think the US has got a lot of stuff in the hopper that's moving forward. But for a lot of the new technologies that people are looking at, whether it's in wildfire mitigation or whether it's in insurance, or whether it's in things like rain cloud seeding and figuring out solar radiation management and others, I think that things are becoming increasingly cloudy. If you're doing geothermal right now, it is very hard to raise money because people don't know whether the loan program's office is open for you to be able to get the senior debt necessary to build $5 billion worth of projects. The same thing is true with new nuclear. When you think about, oh, should I fund that new nuclear plant? There's a lot of great things being said about nuclear by the Secretary of Energy. Well, who's actually helping to get a lot of these utility companies together to use the 1706 loan program or to use the 1703 loan program to actually get these projects moving. People are like, I don't know who is doing that? Who's taking these ideas to President Trump so that he can negotiate a big, beautiful deal with the government of Korea to help them take the cost over on risk by having Hyundai or Samsung or others actually help build those reactors here in the United States because they have a lot of the risk appetite or who's working with, you know, Mike, Mark Carney.
- [40:30]
Unknown
Right.
- [40:30]
Jigar Shah
In Canada, because they're building a bunch of nuclear, nuclear in Canada. How do we share workforce between the two sides? That level of coordination does not happen at the private sector level. It happens between folks at the Office of Nuclear Energy and the Department of Energy. It happens at the International Affairs Office within the U.S. department of Energy and under the first Trump administration. That's how the nuclear plant that was sold to Poland got started, was a program that they added during that administration within the International Affairs Office. Part of my challenge here is that not only are they decimating the organization such that a lot of that technical expertise doesn't even exist anymore, but you also don't really have a clear understanding as the private sector as to when the president says, we want to manufacture more stuff here using what tools? Because The Chinese provide $100 billion worth of free loans to every single province to actually, like, scale up manufacturing. What programs are people who decide to do the hard thing to manufacture here supposed to use? And when you say, well, it's tariffs, you're like, yeah, but those are here today, gone tomorrow. Like, are they actually, like a real strategy for four years? I mean, who's articulated that strategy? Because when I hear Scott Bessant on TV or I hear Lutnick on tv, it's not clear to me what the actual strategy is and how I should plan to build new manufacturing facilities here in this country.
- [41:59]
Stephen Lacy
Maeve, I'm sure there's a lot of people you talk to who are sad to not have jobs, but what are they telling you about the long term lack of strategy? The long term consequences?
- [42:10]
Maeve Alsip
Yeah. I mean, I think one key issue that people are identifying and that Jigar started to touch on is that what has happened in the last 100 days is creating a fundamental lack of trust in the government, not just as an employer, but as a financing partner and a building partner. And people are not sure whether and how that trust can be rebuilt. And anecdotally, to Jigger's point, I talk to companies who are manufacturing grid hardware and who are manufacturing a variety of other technologies that on their face should be perfectly aligned with what the Trump administration has been touting. They're holding off on planned factory expansions. They are holding off on buying the equipment that they need to manufacture their product in the US they are essentially in a limbo, just like all of the workers left in the DOE offices who aren't sure whether they can reply to their awardees. These companies are also sitting in limbo. And this isn't just manufacturers. We had a story a few weeks ago about PG&E saying they aren't sure what's going to happen with their promised DOE funding. So it is really just creating this landscape that is completely antithetical to the overnight domestic manufacturing boom that the administration was talking about. Because nobody, especially companies that had been planning to build here because they thought they were aligned with the administration's priorities, can make any decisions.
- [43:42]
Yeah.
- [43:43]
Stephen Lacy
And some of those companies you're talking to are going elsewhere. Right. Particularly China. And the Chinese are watching with glee.
- [43:48]
Jigar Shah
Yeah. I mean, one of the things I'd say is that we're seeing a huge influx of folks from the uk, Canada, Australia, eu, et cetera, coming over to not only take some of those companies to their geographies, but also to pick off all of our smartest scientists and get them to work in their institutions.
- [44:10]
Unknown
Right.
- [44:10]
Jigar Shah
And so, you know, once those people leave, I think it's going to be super hard to get them to move back.
- [44:16]
Kathryn Hamilton
So just for fun, I went back and reread the DOE section of Project 2025. And essentially everything that Chris Wright says, and he testified to the Appropriations Committee today is directly from that. So it was written by Project 2025. And their mission statement for the Department of Energy is it should be renamed to the Department of Energy Security in Advance Science. So the irony here, of course, is that they're decimating science. They're running scientists out of the country. So they just announced a RIF at the National Renewable Energy Lab, where I used to work, of 114 people. These are mostly younger, early stage scientists, early in their careers. Where are they going to go? The $3.5 billion that DOE sends to universities, in colleges all over the country is at risk. A bunch of them are suing doe. I mean, all these scientists. So we're talking about investment, but just the basics. What you have to have the fundamentals to even begin to start technologies that people can invest in. They're fleeing. And I think that is a much longer term danger. And I would just say we cannot forget about EPA too. They just laid off. I think 1000 people have left. They've closed, essentially closed the Office of Research and Development. Those are huge. These are scientists that are gonna go elsewhere. It is very hard to get them back. We had to try to recruit a lot of them back after the first Trump administration and it took a long time. As Jigger knows, it was hard to convince people to come back after so many people had been laid off before, but now it's that people are being laid off and scientists are being scared away without really a very compelling end goal or a strategy.
- [46:02]
Jigar Shah
One, one last thing I'd say on my side is that I think the future is bright for clean energy. I still think we're going to be 90 plus percent of everything that gets added to the grid.
- [46:12]
Unknown
Right.
- [46:12]
Jigar Shah
But I think part of what you learn from the experience in Spain is that the work that the national laboratories were doing around modeling how our grid operates, how we actually add these tools together and synchronize everything together to actually work to create reliable, dependable electricity, is something that only the government labs can do. There are no private sector players who provide that service to regulators. So when Chris Wright and everybody else says, we're going to prioritize natural gas plants within the PJM interconnection queue like they just did, or we're going to prioritize keeping these coal plants on, et cetera, and then we still add a ton of solar and battery storage and that kind of stuff, just because that's where all the competent people work and that's where they're deploying a lot of stuff.
- [47:04]
Kathryn Hamilton
It's cheaper and quicker.
- [47:06]
Jigar Shah
Right. Then someone still has to model all this stuff and figure out how do you operate the grid in the most efficient way possible.
- [47:14]
Unknown
Right.
- [47:15]
Jigar Shah
And so, like, I just think that that is the part that I don't understand is that even if you thought that we were moving too quickly in the energy transition, you would still want all of those people who do that modeling work, because what the hell are you going to train your AI agent on?
- [47:33]
Unknown
Right?
- [47:33]
Jigar Shah
It's all that data that you need.
- [47:36]
Unknown
Right.
- [47:36]
Jigar Shah
And even the EIA is getting cut, which collects a lot of the data.
- [47:40]
Stephen Lacy
Hmm. So, Maeve, when Secretary Wright gets up in front of Congress and says, we're going to be a leader in AI, we're going to build out all this transmission, we're going to be a leader in critical minerals, we're going to be energy dominant. Do people that you're talking to inside DOE believe him?
- [47:56]
Maeve Alsip
Look, first of all, as we discussed, I don't think people believe that Chris Wright is steering the ship here. Regardless of what he might want to do with the agency and its funding and its projects, there is no sense that he has the final say on pretty much anything. And I think that is very problematic to speak to the chaos and the distrust that we've discussed. People want to be hopeful. People really, really people that I've spoken with who are still at doe. And those who have left really, really believe in the projects that they were working on and the impact that they could have. They believe in the mission of their offices. But I think there is some really heavy skepticism that any of that can happen in the next four years. I would just add that when we started to see draft come out of doe, the first phase of how they planned to downsize and they were categorizing certain offices as essential, nothing in those leaked drafts was a surprise to anyone who has read that DOE chapter of Project 2025, because that document explicitly calls for cutting offices like ARPA, E OSED, GDO, EERE, you know, and at least in the early drafts that I saw, not a single one of the offices that Project 2025 recommends eliminating were named as essential offices under the new regime at doe.
- [49:18]
Jigar Shah
And this extends to GE Vernova, right? I mean, in their last conference call they said there's no way in hell they're building a new manufacturing facility for gas turbines because no one in the administration has given them any clarity as to what the future of gas turbines are in the United States. And so they're just going to debottleneck the gas turbine plant they have in South Carolina and they're going to run that, but they're just going to leave the market short because they don't really understand what the plan is and they don't see how gas turbines figure into any plan that they've read. Because if you want affordable electricity, you need to use next generation technologies, not the last generation's technologies. And so it's really weird because these people should really be smart enough to understand that they're doing the exact opposite of promoting affordable energy.
- [50:09]
Kathryn Hamilton
I'll be watching Congress because since George Washington submitted his first budget proposal, no president's budget has ever been approved by Congress. So I expect that Congress will say no. And they've already started to say, what? Why is this office closed? Why are we doing this or that? And so I imagine that the appropriations bills will reflect the priorities of Congress and of the states and districts that they represent. And yet the issue is when the funding gets to doe, who will be there to execute on it?
- [50:40]
Stephen Lacy
Maeve Alsop, founding reporter at Latitude Media, thanks for joining us.
- [50:44]
Maeve Alsip
Thanks so much for having me. My most intimidating media appearance to date.
- [50:50]
Stephen Lacy
Well, Maeve has an amazing catalog of reporting, so we'll link to some of those stories in the show notes. And of course you can go to Latitude Media to read her continued coverage. Jigger. Catherine, good to see you guys.
- [51:03]
Kathryn Hamilton
Great to see you too. So happy to have Maeve on me too.
- [51:06]
Jigar Shah
I actually learned more from her than from any of the conversations I have with the loan program's office.
- [51:20]
Stephen Lacy
Open Circuit is produced by Latitude Media. Jigar Shah and Kathryn Hamilton are my wonderful co hosts. The show is edited by me, Stephen Lacy. Sean Marquand is our technical director. Ian Bailey is our senior podcast editor. Latitude Media supported by Prelude Ventures. And you can go to Latitude Media to sign up for our Daily weekly or AI Energy Nexus newsletter and spread the word for the podcast. Please and thank you. Go to Apple Podcasts right now and give us a review. We'd really appreciate it. And you can do it at Spotify as well. Find transcripts at Latitude Media as well. So if you want to share out some quotes from this podcast you can go ahead and do that and we'll see you all next week. Thanks for being here.