Open Circuit – "State of the Transition: The Biggest Fights in Energy"

Podcast: Open Circuit
Host: Latitude Media
Episode Date: March 20, 2026
Guests: Michael Sembalist (JP Morgan), Jigar Shah (clean energy investor)
Episode Theme: The loudest, most consequential fights now raging in the global energy transition—what’s fueling them, who’s winning, and what it all means for the future.

Episode Overview

This episode brings together three industry veterans to dissect the escalating fights at the center of the clean energy transition: from the speed of decarbonization to data centers’ grid impacts and the true pace of renewables adoption. Special guest Michael Sembalist, Chairman of Market and Investment Strategy at JP Morgan and author of the influential "Eye on the Market" energy report, joins host Stephen Lacy and co-host Jigar Shah to debate the biggest showdowns shaping markets and policy. The conversation leverages Sembalist’s data-rich 2026 review ("Fighting Words") to unpick the narratives, numbers, and messy realities defining the global shift toward cleaner energy.

Key Discussion Points & Insights

1. Why So Much Fighting? – Framing the Moment

• Sembalist’s thesis: Most people in energy “pick a corner”—renewables, fossil fuels, or nuclear—and rarely acknowledge the complexity or tradeoffs of others.
  • Quote: “The vast majority of the people that I meet and read are in one of three corners... I keep expecting the Venn diagrams... to start to converge, and they don't.” (05:12, A)
• Online and industry discourse is amplified by confirmation bias and selective storytelling—exacerbating divisions.
• Despite the noise, global progress is happening—but the pace is mainly linear, not exponential.
  • Quote: “The transitions are moving... at a linear pace in most countries. Something in the neighborhood of 0.7 to 1.5% [final energy] per year.” (07:20, A)
• Context: In the US the pace is slower (circa 0.5%/year); faster in China and Europe (~1.5%).

2. Tariffs, Bottlenecks, and U.S. Headwinds

• Major bottlenecks: transmission capacity, tariffs, and not enough focus on grid-enabling tech.
• New U.S. policy cuts to wind, solar, and EV subsidies are already slowing adoption (see EV sales stalling).
• Surprise: Tariffs largely spare the semiconductor/AI sector, but crucial grid components like transformers face the highest inflation.
  • Quote: “Things related to the grid have the highest rate of inflation of almost all [categories] in the PPI report.” (09:00, A)
• Jigar Shah downplays global supply chain constraints (for batteries, solar, transformers), but notes trust and regulatory inertia are big barriers. Gas infra, by contrast, is tightening.
• Religious, not rational fights: Turf battles and ideology dominate energy market reforms, especially in US regional grids (PJM, ERCOT, MISO) (11:45, C).

3. Data Centers and Grid Tensions

• Landmark fight: Academic Tyler Norris (now at Google) argues U.S. gas plants’ spare capacity could add lots of data center load—if these loads are flexible.
  • PJM’s market monitor (IMM) rejected the thesis, insisting on dedicated capacity and dismissing demand-side solutions.
  • Quote: “They really truly believed that this Google thesis is nonsense... To me that's one of the really critical issues as we sit here right now.” (13:00, A)
• Policy vacuum: DOE/White House have failed to arbitrate, leading to unproductive local fights and data center projects either drawing new gas or being forced into inflexible arrangements.
• Demand response: Google and others demonstrate contracts using batteries, demand management, and grid enhancements—but grid monitors (esp. in PJM) remain skeptical—largely on dogmatic rather than data grounds.
  • Quote (C): “The independent market monitor in PJM has just gone off the reservation... They are just anti demand response. That is their religious cross to bear...” (14:13, C)
• Technical limits: Some creative flexibility is possible for “frontier model training” loads, but core payment/24x7 workloads (inference) can’t flex and will likely need onsite generation (gas or battery).
  • Quote: “Most inference workloads... are very difficult to curtail. And so you would need... backup onsite generation.” (19:10, A)
  • Quote (C): “No one is flexing inference loads... They need to see certain ramps... I think software will be used to fix the illegal nature of how data centers are using power.” (19:42, C)

4. Data Centers: Rate Impacts and Who Pays

• Are data centers raising prices for households?
  • Nationally, retail electricity prices barely rose (2¢/kWh since 2022), and electricity remains just 1.4% of household spending.
• Where data centers have visible impact, it’s often local—on distribution, not generation.
• Who pays for grid upgrades?
  • Movement to ensure data centers foot a larger share of grid modernization “integration” costs underway. Sembalist sees positive momentum: “If they weren't really paying any of the integration costs, whether they're paying 70 or 80%, I'm kind of indifferent. That's a big move and will make things better.” (54:26, A)
  • Policy risk: Locals (mayors, county commissioners, governors) lack expertise; federal leadership (DOE) is missing, amplifying risk of inefficient, expensive solutions.
    • Quote: “We're allowing people to sort of figure it out at the local level where they have no expertise whatsoever... The DOE needs to come in and [arbitrate].” (52:00, C)

5. Broadening the Lens: Global Shocks, LNG, and the Security Layer

• The war in Iran and closure of the Strait of Hormuz is the largest oil shock ever by volume—yet global energy and financial markets are now less oil-dependent than in past crises.
  • Oil intensity of GDP has “fallen by two thirds” since the 1970s. (24:00, A)
• China is more insulated (big on coal, growing renewables/nuclear, new pipelines).
  • Quote: “China is actually way more insulated here than a lot of people think.” (25:39, A)
• Gas/LNG: US is at capacity for LNG export, so domestic gas prices remain low—but constraints on new project financing (need for long-term contracts) and physical risk are reshaping global appetite for LNG and for gas infrastructure investment.
  • Quote (C): “This is destroying the LNG thesis... People are looking at the supply chain and saying, I don't want to invest in a 50 year investment cycle for converting from coal to natural gas.” (29:28, C)
• Emerging markets may leapfrog straight to distributed renewables + batteries, bypassing massive, centralized gas investments.

6. The True Pace, Geography, and Nature of the Transition

• Energy addition or true transition?
  • Sembalist: In China, renewables are displacing fossil fuel shares, but in joules, global fossil fuel use not yet declining (“You get trapped in this kind of debate that I don't think is particularly useful...” 46:01, A).
• China’s dominance: China’s pace, technology, and overcapacity (esp. in solar, batteries, EVs) are bigger drivers than Western policy. Chinese state support (trade credit, cheap capital) now exceeds U.S. Marshall Plan in scale (38:33, A)!
• Emerging economies: Most global population growth is in Africa and Asia—Shah contends it’s now far easier to raise money for microgrids than vast, expensive gas pipelines. (35:16, C)

7. Tech Spotlight: Nuclear, SMRs, and “Learning Curves”

• Small Modular Reactors (SMRs): Can be built—but big unknown is capex; costs above $130/MWh questionable compared to gas at $80/MWh.
  • Quote: “[Anything] in the neighborhood of $130a MWh will be a home run. I strongly doubt that even the nth-of-a-kind SMRs can get there...” (60:25, A)
• U.S. nuclear build-out hobbled by gutting of federal scientific agencies—who will ensure operational and public safety?
  • Quote: “Is this administration capable... to oversee the build out of [nuclear] power technology... when they're gutting the science and public health agencies that you would assume would be part of that review process?” (62:58, A)
• The learning curve favored big plants last time; modularization is unproven—could the military lead the way for SMR deployment?
• Jigar: Maybe we need a “Manhattan Project” approach for factory-built nuclear.

8. Carbon Capture, Green Hydrogen, and Other Technologies: Reality Check

• CCS: “Wake me when we get there.” (66:55, A) Remains prohibitively expensive thermodynamically for dilute sources like coal/gas plants.
• Green Hydrogen: Market repeatedly cancels more projects than it builds; fine if it simply replaces “brown” hydrogen, but broader adoption is a “waste of people’s time and attention.”
• Sustainable Fuels for Transport: Not moving at scale for aviation/marine; feedstock and cost barriers high even with carbon taxes.
• Geothermal: Site-specific, useful, but can’t scale like wind/solar.

9. Pendulum Swings: Decarbonization vs. Security vs. Affordability

• World swings between decarbonization and security as priorities; recent US policy is yanking subsidies for wind, solar, EVs while oddly preserving support for carbon capture/hydrogen.
  • Quote: “Eventually, I think the pendulum will swing partially back...and we can have conversations about both [security and decarbonization], but we have to go through. It's not that different from... the immigration debate.” (74:00, A)
• The big lever for lasting change: out-compete, don’t restrict. “The way that you actually hurt the oil and gas industry is by getting people to use less... via superior solutions.” (76:47, C)

10. Looking Ahead: What Will “Winning” Look Like in 2036?

• Jigar Shah's predictions (72:12):
  • China will perfect and export nuclear to 50+ emerging markets.
  • Global oil demand will plateau.
  • Universal electrification (SDG7) achieved—700 million people lifted from energy poverty.
• Sembalist’s “most promising lever:” Large-scale electrification of industrial heat, which could take significant fossil demand offline—“Maybe we look back and somebody like me would say I underestimated the speed..." (69:58, A)

Standout Quotes & Moments

• “The number of academic citations on carbon capture divided by the actual metric tons is the highest in the history of science. Green hydrogen is number two.” (12:34, A)
• “No one is flexing inference loads... They need to see certain ramps... That is illegal. You cannot use power that way.” (19:42, C)
• “China is actually way more insulated here than a lot of people think.” (25:39, A)
• “If you add another $10 a kilowatt hour to the cost of the battery...it's still pencils.” (37:44, C)
• “Wake me when we get there.” (66:55, A, on carbon capture)
• “The DOE needs to come in and say, yes, what Google is suggesting... is a viable way to do this, as opposed to letting a thousand Twitter handles blue.” (52:00, C)
• “I'm hopeful... by 2028... we’ll kind of recognize there’s middle ground that we need on all of this stuff.” (75:25, A)
• “I think we will have universal electrification...within 10 years, and that gives me extraordinary hope.” (72:12, C)

Timestamps for Major Segments

• 05:12 – Sembalist on polarization in energy
• 09:00 – Tariffs, supply chains, and inflation in the grid supply chain
• 13:00 – Data center vs. grid market monitor battle (Tyler Norris, Google thesis)
• 19:10 – Flexing data center loads (limits of DR)
• 24:00 – Global energy intensity context post-Strait of Hormuz blockade
• 35:16 – Microgrids in emerging markets vs. 50-year gas investments
• 46:01 – Addition vs. transition, China as pacesetter
• 60:25 – Small Modular Reactor economics and government capacity
• 66:55 – Carbon capture: perpetual under-deliverer
• 72:12 – Jigar Shah’s hope for universal electrification
• 74:00 – Pendulum swing: security vs. decarbonization

Summary Table: Who’s Winning (and Why It Matters)

| Fight | Loudest Voice/Trend | Winners/Losers | Consequences | |--------------------------------------|-------------------------------|-------------------------------------|-------------------------------------| | Renewable vs fossil vs nuclear | Divided, little Venn overlap | China leads in all 3 directions | Slow and steady global linear gains | | US vs. world adoption in renewables | US slowing, world steady/faster | China, EU outpace US (subsidy cuts) | US risks getting left behind | | Grid flexibility (Data Centers) | Skepticism in grid operators | Tech companies (if DR accepted), or gas if not | Market design tension pivotal | | LNG/gas build-out | Security fears up | Distributed renewables win in EMs | 50-year gas investments look shaky | | Carbon capture/green hydrogen | Overhyped, underdelivered | Little progress | Diverts attention/resources | | Nuclear/SMR | High cost, uncertain execution | China, not US | Modularization unproven in West |

Tone & Takeaways

• The conversation is brisk, data-driven, and often skeptical of hype—favoring clear-eyed, hard-won insights over industry shibboleths.
• Sembalist stresses the importance of understanding tradeoffs and reading the actual data instead of being swayed by ideological camps.
• Shah injects optimism about technology’s potential for rapid change if deployment/financing shifts, but is scathing about regulatory inertia and lack of utility sector data sophistication.
• Contrary to deterministic or wishful narratives, the transition is iterative and lumpy—the physics, economics, and policy must align.

In sum:
This episode exemplifies the real conflicts, culture wars, and technical debates shaping the global energy transition—reminding listeners that progress is rarely smooth, never purely technological, and always colored by politics and vested interests. The path to net zero, energy security, and affordability may be slow, but the fights themselves are shaping the new contours of the energy world.