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A
Latitude Media covering the new frontiers of the energy transition.
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B
Jigger, what time is it there in Copenhagen?
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C
Like 10pm 10pm the witching hour.
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A
Still light out? No.
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B
How do you do? How? How? You know, I admire the fact that you're doing this show at 10pm while you're traveling. It's like 4pm here on the east coast and I'm already really tired.
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C
Yeah, you know, that's how we do. You know, the show must go on.
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A
That's how you do. I would be in bed.
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B
I thought you would be here stateside for the Rap payer protection pledge ceremony.
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C
Jigger, I mean, I wouldn't miss it for the world, but for the fact
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A
you weren't invited, you weren't invited to give special remarks at the beginning.
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C
I mean, I should have been
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B
from Latitude Media. This is open circuit. There's a well known playbook in Trump's Washington. Take something you're already doing, package it up in a neat, simplistic way, let the President take credit, and then hope that gives you political cover until his next fixation. That is what is happening with data centers and energy right now. This week, the top tech firms building the biggest AI data centers were at the White House pledging to buy their own power. Americans are increasingly pessimistic about data centers, AI and rising electricity prices. And this is the White House's version of damage control. But if you look beneath the pledges, is there actually anything new here or is it just a clever rebranding of what's already happening? This week we're going to look at the political theater playing out around data centers and energy. But while that theater plays out on stage, the more interesting action is happening in the wings, with or without the White House. In Minnesota, Google's pulling together a package of renewables, long duration storage and distributed batteries for a planned data center. In Mississippi, XAI continues to build unpermitted gas engines in a Mississippi neighborhood explicitly flouting air quality regulations. And the Energy Department is backing a grid modernization project that includes gas, nuclear batteries, hydropower and transmission upgrades. Three models, three very different bets on what the future of AI power looks like. Which one wins out? That is what we're digging into today, right after this. OpenCircuit is brought to you by the Yale center for Business and the Environment. They offer Yale's Financing and Deploying Clean Energy certificate. This certificate is a fully online 10 month program built for working professionals who want to shape the clean energy future. The program focuses on building real world skills in clean energy policy, technology Project Finance and innovation all in just five hours a week. Learn more and apply at cbey yale. Edu or just follow the link in the show Notes and good news. You can use the discount code OpenCircuit26 to save $500 on tuition applications. Close April 20, 2026 the AI revolution
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A
is intersecting with a critical moment in the energy sector. I'm Stephanie Huang, host of where the Internet Lives, a podcast from Google and Latitude Studios about the unseen world of data centers. This season, explore the new era of AI innovation. Hear from Google leaders on Energy for AI and AI for Energy and how to build data centers that are good grid citizen. Find where the Internet lives wherever you get your podcasts.
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After four sold out shows, Latitude Media is bringing Transition AI to San Francisco. The two day conference on April 13th and 14th will bring together the people and companies who are successfully getting digital and energy projects cited, financed and built in the AI era. The solutions are getting more sophisticated, but there's still no uniform blueprint for building at gigawatt scale. Join attendees from Google, pge, edf, Energy Impact Partners and AES to align on what's real, what's possible and what can get built. Head on over to latitudemedia.com events or just click the link in the show notes and there you'll see a full agenda and you can Register for Transition AI 2026. And as a bonus for our listeners, use the code pods10 that's P O D S10 pods10 for a 10% discount. Welcome to the show. I'm Stephen Lacy. I am the Executive Editor at Latitude Media. I am joined as always by Jigar Shah and Caroline Golan. Jigar is the co Managing Director of Multiplier. He's also the host of the Energy Empire podcast. You are coming to us from the most livable city in the world, Copenhagen. How are you sir?
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C
I'm amazing and this mood lighting is doing wonders for my skin.
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B
We got the weird flicker and something about the Danish fluorescent lights. Caroline Golan is in Atlanta, Georgia. Caroline, let's just cut to the chase here. You've got some big news to share. This is a career changing week. What is it?
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A
Yes, it is. I got a new cat and I'm adding adding to my hobby farm. No, that feels life changing to me. This week I started as the new Chief Growth and Policy Officer for NRG and I'm really excited about it and it's been sort of in the works for a little while and it's a new adventure and it's one that I'M taking with a lot of enthusiasm. Yeah.
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C
And it couldn't have happened to a classier lady.
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A
Oh, thank you, sir. Thank you, thank you, thank you.
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B
Well, you are still going to be doing the podcast, but you will be showing up on the podcast a little less frequently and we'll still save the seat for you. But you can expect Caroline not to be here every week, which makes us very sad. But we're super excited about your role. I'm kind of curious about what you think it will entail. What's your mission like? NRG has gone through a lot of different evolutions. You know, it went bankrupt in 2003 after the market fallout of the Enron scandal. It went headfirst into renewables and Rooftop Solar in the 2010s. Today it's focused a lot more on retail consumers and VPPs and thinking about a cautious gas build out to data centers. What kind of company is energy today and what's your mandate?
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A
Yeah, I think that energy of today will not be the energy of the future. Right. And there's new leadership. There's been excellent leadership. But, you know, Rob Gaudette has taken over and will start as CEO sort of at the end of April. And his vision is really to take energy to be the supplier, to be the partner, to be the provider of where the grid needs to go, you know, over the next 20 years. And I've spent the last 10 years on the side of thinking that the customer needed to be setting the tone. And I don't think there was a single person in the industry who grabbed the platform that the tech companies provided and ran with it and demanded what I thought the market should look like and what I thought products should look like. And really pushed to say this is where our industry needs to end up, did that somewhat unapologetically. But I do believe it's time for the supplier community to take that back. I believe it's time for the entities that are building the steel, putting the workers to work, making the investments that are going to last the next 20, 30, 50 years, to really be dictating the innovation and to take that mantle. And so that's what I hope to do at nrg. I hope to be a voice for innovation like I always hope to be. But more importantly, I hope to really drive an agenda that meets the market where it is right now in terms of affordability, customer savings, the ability to bring power to the table and do so in a way that leaves the community and everyone better off and then start building for the future. Of where we need to go. And I believe in where Rob wants to take the company. The people there are the nicest I've ever met. And, you know, other than the fact that I'm having to learn how to work off a PC for the first time in my life, I'm doing okay. Day three.
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C
Just remember, batteries today, batteries tomorrow, batteries forever.
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A
Yes, I know we need the sweatshirt forever. But no, in all seriousness, there is not. We all know the opportunity, and I think the customer segment has set the demand signal and it's time now for the suppliers to rise with the creativity. And that's what I hope to do.
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B
Yeah, we're incredibly happy for you. We're bummed that you won't be here every week, but we'll continue to rely on your insights, particularly from this new perch. But you will be with US at Transition AI on April 13th and 14th in San Francisco. So if you want to come see Caroline and Jigger and me, come to Transition AI. It's shaping up to be a great show. We're going to have a live episode of Open Circuit, a live episode of Catalyst with Shail Khan, a bunch of presentations and panels and workshops. So check out the agenda@latitudemedia.com events and you can get a discount pods p o d s pods 10 at checkout. That's a little bonus for our listeners and viewers. Okay, onto the rest of the show. You know, I said a while ago that we're not going to be a data center podcast, but here we are talking about data centers again. And the reason, I think, is because they have become obviously the center of the US Energy economy. But they've become like a battleground ground where we see renewables and batteries going head to head or pairing with fossils. They're a proving ground where we're seeing new contract structures and portfolios of clean energy that are getting built and tested. We're going to talk about some of those today. And they're a Rorschach test for how you think we should build the energy economy. And so they are really driving US Federal energy policy right now. And that was on full display this week at the White House, where just a few minutes before we hit record, execs from Amazon, Google, Meta, Microsoft, OpenAI and Oracle were at the White House on Wednesday signing what is called a ratepayer protection pledge. And they're basically saying their data centers are going to cover their own power costs and grid upgrades. And it's, you know, it's a direct reaction to the anxiety people are feeling right Now, a new poll found that more than half of Americans oppose data center construction near their communities and rising utility costs are their number one concern. Two governors won landslide election last November running on a platform to reduce electricity prices. And you know, the White House might have a hard time getting Trump to talk about the economy sometimes, but he's really latched onto this issue and he used his State of the Union address to declare that he's going to put together this pledge. So I just want to talk about the politics of this. And like, is there anything new here? Caroline, what is your understanding of what the White House and the tech companies are trying to do here?
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A
Well, I think that it's important for the audience to understand that a lot of these tech companies have been doing good in their communities for a very long time, either because of a desire not not to look self serving or honestly because of a failure to invest in their storytelling. It's gotten lost over the last several years. And so what I see happening is the administration saying we are going to be respondent to the populace, we're going to be respondent to a major political threat and a legitimate issue around cost when the entire economy is increasing in costs, whether it be health care or consumer goods. And one way about going about that Is to corral 40% of our economy and these tech company investments and say you're going to promise to do good, you're going to promise to do good by our communities. As far as I can see, 90% of that do good is what these companies have been doing for a very, very long time. Most of them at least. There are a few bad actors in there. But most of these companies have been doing this good for a while. The novel piece of this is the administration's decision that a bring your own power solution is going to be the fix for all ailments on the grid. And I think we can debate whether or not that is the fix. But that is the only thing that's really novel here. Because if you think about the energy strategy for most of these companies, it was really an energy only strategy. It was taking a market tariff and then offsetting it through a renewables portfolio or in some cases an investment in other types of clean energy. And so the idea that you are now in charge of power procurement and power development and bringing power plants to the table, that is a new feat and a new challenge for these companies to rise to. And some are doing it very poorly and some are muddling through as best they can. But 90% of this do good in the community are one, things that every company has already been doing and two, already exist within the regulatory structures of most of our states. They just haven't been exercised because the volume wasn't scary enough before.
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B
Yeah, I think that's a somewhat, that's an accurate but somewhat positive way to frame it. I think there's also a cynical way to frame it.
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A
I'm always a positive framer, Steven.
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B
I mean, I think there's also a cynical way to frame it, which is like the administration's desperate to do something on this and like the tech companies are, are looking to repackage this because it's a great PR move even though they're already doing this stuff. Jigar, where do you fall in the spectrum?
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C
I guess what I would say is I think this is another example of the administration having no idea what they're doing. I think when you think about the fact that Caroline is going to NRG because we need to figure out how to bring in demand flexibility and VPPs and all this other stuff, it is very obvious that the vast majority of tariffs in the United States like do not include the best technologies that the utilities can deploy to minimize the rate increases on customers. Like it can be on the one hand accurate to say that the data centers are paying their way and on the other hand saying that the utilities are deliberately doing things in the most ham handed way possible to not actually achieve the lowest possible costs. Like, you know, Google like has announced that they want to pay for advanced conductors for utilities. Right. And the utilities are like hails, no, we're not letting you do that. Right. People have said we want you to do grid enhancing technologies. They're like, how about no freaking way?
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B
Is that true that Google has gone and asked?
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C
Yes, they had a big press release, of course.
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A
Yeah, we did, we did. We tried very hard to push that all throughout pjam.
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C
Right. And then on top of that you've got people who basically are like, well, we're going to put a 300 megawatt battery right next to our data center. That is not the best way to do it. The best way to do it is to put 250 kilowatt batteries at like schools, hospitals, at like, you know, community centers, churches. Then people are like, hey, maybe I actually want this stuff in my town as opposed to just having 18 months worth of construction jobs and then no real resiliency in my community. Right. I just think that like it could be on the one hand true that they are doing what they are being told to do. To try to not shift costs. And on the other hand, going, we have 12 great ideas that are way better than what they're doing. And the White House is not coordinating that in any way, shape or form because they really desperately want everyone to build natural gas plants behind the meter, and there's not enough turbines to do that. And so they can't see past the fact that those turbines aren't there. And they forgot to read the liftoff reports of VPPS and Grandhansing Technologies.
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B
I mean, predictably, the president did explicitly talk about clean, beautiful coal, natural gas and nuclear. So those are the technology sets that they are hoping this promotes. Caroline, when we say data centers are going to pay their own way, what do you think the administration is trying to say here? And like, do they pay their own way when they're integrating into the grid? And what more could they do?
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A
Yeah. So I think what the administration is dangerously, potentially saying is data centers are going to build their own mini grids or micro grids. Right. They're going to island. And in fact, I think they did say that at one point. Right. And I think the danger in that, of course, and anyone who's studied the grid before in Power Dynamics is building a bunch of little micro grid loops is dangerous for overall reliability.
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B
Yeah, we talked extensively about that a few weeks ago.
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A
It's dangerous for that. Yeah. And so I think that what the administration is backing themselves into is a view, a very scattered view of how the grid gets planned. I think what they want is, I think they want to show that they have an answer. I think that their answer needs to involve improving the market value of the technologies that they want to see utilized. And I think that they're not going to bother themselves with thinking through strike prices and speed to capacity and market signals that should probably be thought through in order of fixing these problems. And I think the fear is, I
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C
wonder, it would be great if they had 10,000 engineers, scientists and experts that work somewhere in the system, maybe at the national laboratories that could model this for them and like, actually tell them how to do this. But oh my God.
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A
At the same time, though, I do think there are a number of folks on the AI data center side that are also telling them that this is the way they need to go. So I. And I'm not surprised that it's being reinforced in the way it's being reinforced. Where I get frustrated is to see, you know, PJM not push back for clarity on certain things, not say, well, what do we actually really, really mean by bringing Your own power and what power counts and what power doesn't count? And, you know, is it. Is it really only going to be behind the meter turbines and nuclear? That counts for this? And I think the sheepishness. Sheepishness on that side is frustrating for me to see.
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B
I just want to take a step back and ask, like, the simplest version of this question possible for people who are maybe seeing clips of the Trump administration talking about how they're going to save ratepayers money or not pass on costs. Like, will this do anything?
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C
I mean, no. Have you met this administration? No. Like, literally, I'm just saying that, like, after this big polar vortex that just went through the country, everyone is going to open their electricity bill or gas bill and see a doubling of their bill. Right? And then you've got this, like, showman on stage basically saying the data centers are going to pay their own way. They said they're going to pay their own way. I trust them. Don't you trust them? No. The polling says that no one trusts them. Right. So the question becomes, how do you build that trust? Right. It's not by just dictating that clean coal is gonna solve the problem. It's by having the U.S. department of Energy do a study, figure this out. How do we get more stuff out of the stuff that we've already paid for? Like, Governor Spamberger just passed this week in the Virginia, like, House and Senate, where now they're demanding grid utilization data being submitted by Dominion to the regulator. And now, like, they're going to have to, like, increase grid utilization using the data centers. I just think that you can both be accurate and say that data centers are paying their own way and end up with 9% rate increases for everybody if you don't do it the right way. Right. And so, like, like, I don't think Americans are stupid when they get rate increases that are $31 billion. Right. Is that what Power Line said? Like, the utilities filed for over the last 12 months, like, and the president says, don't worry, I've got these. I've wrangled up all these data center companies and I've, you know, fought them to submission. I mean, sorry, I don't believe you. When there's $31 billion worth of rate increases, like, in my bill.
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B
Caroline, it looked like you were winding up for a more nuanced answer.
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A
So here's, here's. It's a both and answer. I think that this will create the political pressure for utilities and regulators to both ring fence costs that are directly attributed to data centers. It will also, if unchecked, do nothing for a continued poor investment model in the overall build out of the grid. And that has been a runaway train for quite some time and will continue. And if you actually look at what's driving up customer costs, that's 50% of it. So yes, Jigger's right, you can pay your own way and the grid costs can still go up. I think this will minimize the top end of what that could do, because now utilities and now special auctions will force a ring fence. But does this it is completely disingenuous anywhere to say that rates are not going to go up over the next couple years, irrespective of this or anything.
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B
Are you ready to accelerate your career in clean energy? Of course you are. Yale's Financing and Deploying Clean energy certificate, a 10 month online program, is designed for working professionals ready to become the next leaders of the clean energy economy. You'll dive into real world frameworks in clean energy policy, project finance, technology and innovation all in just five hours a week. If you're passionate about clean energy and ready to level up your career, the Yale center for Business and the Environment is the place to start. Join this year's cohort by visiting cbey yale.edu to learn more and enroll today. And be sure to use the code OpenCircuit26 to save $500 on tuition. Applications are open through April 20, 2026.
- [24:25]
A
AI is pushing economic and technological progress into a full out sprint and the energy sector is at the center of it all. Explore the new era of AI innovation in the fifth season of where the Internet Lives, an award winning podcast from Google and Latitude Studios. What does it take for a data center to be a good grid citizen? How is AI revolutionizing agriculture, medicine, art and manufacturing? And what does that mean for the future of demand and digital infrastructure? Find where the Internet lives wherever you listen to podcasts or click the link
- [24:59]
B
in the show notes on April 13th and 14th, Latitude Media is offering the chance to hear from the experts on the front lines of the AI energy infrastructure buildout transition. AI 2026 is a two day in person conference in San Francisco addressing the challenges of building at gigawatt scale in the face of AI load growth and the programming includes two live recordings of our two original podcasts. That's Catalyst with Shayl Khan and Open Circuit with me, Caroline Golan and Jigar Shah. Shale's going to be interviewing Google's new Chief of AI infrastructure, Amin Vadat. And you're not going to want to miss that. So our podcast listeners get a 10% discount. Use the code PODS10P O D S PODS10. When you check out, you can follow the link in the show notes or go to latitudemedia.com events to see the full agenda and register. We will see you April 13th and 14th in San Francisco. For transition AI. Let's actually just turn to what is happening on the ground and work through a few examples in this context. I had to chuckle when the President used the signing ceremony to talk about how he invented the idea of on site power plants for data centers. But so there's a lot of activity going on in this space and there's a lot of different types of projects. Let's talk about this big project announced by Google first. This week Google announced that it's building its first data center in Minnesota in a small town called Pine Island. There's been a bit of local resistance to the data center, but Google is moving ahead with the clean energy very ambitious clean energy strategy in partnership with Excel that includes a couple of gigawatts of clean power which also includes 300 megawatts of long duration storage from Form Energy. And it's investing $50 million into a new distributed energy, distributed battery and connected device program with Spark Fund. Google also says it will pay 100% of the grid infrastructure costs through a financial structure that was. It wasn't. Was it invented by you Caroline, or just worked on?
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A
I. I would say I was the inventor but not the full time engineer. That role belongs to Brianna Cober.
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B
Well, it is.
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C
And the President of the United States.
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A
Yes, exactly, yes.
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B
Make sure you give credit. They're using this financial structure called the clean energy accelerator charge, which is based off of this rate that Caroline helped build in Nevada when she was at Google called the clean transition tariff. So let's just dig into the details of this announcement. Like how unique is this Pine island procurement relative to Google's other procurement?
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A
Well, it is almost exactly what Google did in Nevada with the ctt. I think we just like new nomenclature. You know, every utility wants to have their own special sauce nomenclature. But you know, from what I know and what I can see, it's the exact same structure which is a very different version of bring your own power where instead of Google going off and building something behind the meter and ring fencing it, Google worked directly with the utility and the grid planners worked with the resource planners to say what actually is the transformative technology that's going to drive decarbonization across your system. Let US invest in that. In the same way we identified Fervo and Geothermal in Nevada, the Google team this time identified long duration energy storage and said, well, we will invest in that, we'll be the catalytic investor in that. And in return we get to accelerate capacity being brought on the grid to service our system. And it's really a win win. And if you think about it in terms of a financial product or contract, the CTT is really just a contract for differences on capacity within a traditional utilities resource plan. And while the actual tariff hasn't been filed, and for all the regulatory and sort of contract nerds out there, I'm sure once that's filed, dig into the docket and you'll see sort of the math and how it's structured. But it's a very different perspective. And I know it's the perspective that I had and Brianna continued to carry on after I left Google, which was that ultimately the win win situation, when Google's capital and ambition was working hand in hand with the needs of what that overall system, really what they really needed. And this is a great showing of that and my hats off to the team. And I think what it also shows is that we can do innovative contracting in this industry. I mean, for such a long time, 90% of the volume of anything that was purchased was the exact same contract structure. And this is a proof point that Google can create something, pilot it and then have it scale. And I think what isn't really in the news too much is that they're expanding the CTT in Nevada as well. So I think it's catching on and I think it's a great structure. And Brianna and the rest of the team that worked with her on this, you know, deserves so much praise.
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B
Jigger, what stands out to you about this deal?
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C
Well, first, Brianna's amazing. So shout out to her. I think the world of her. I think, look, I think that, you know, like, I've had a good chance to talk to Google Tapestry to Grid Care, which Amit Narayan has started with, you know, Arun Majumdar over at Stanford. Like, you know, when you look at the data that's out there right now, you can structure tariffs like this to accommodate 100,000 megawatts of new data centers at a fraction of the cost of what they're doing now. Right. That is what this deal shows. It's like, basically, here are the two choke points. If we pay for these choke points, can you let us interconnect faster? Yes, fantastic. Like, how about we just get that done and like that's what Amit just like, you know, helped negotiate with Portland General. Right. With Maria, like out in Oregon. And so you have all this capacity where it's like available 99.7% of the time, like Tyler Norris was suggesting. And now is it Google because like they have a sucking sound of like hiring the best people in the country. And then you know, and then basically you can negotiate these clean transition tariffs. And it is very obvious that they wouldn't have done this but for the clean transition tariff.
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B
Right.
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C
That like, as much as I love Excel Minnesota and I love all these folks like Nevada Power, et cetera, like they would have gone into old bad habits if it wasn't for Google saying how about this and we'll pay for it. And they're gonna like, they're like, okay, I guess you're right. We could build long duration energy storage at this substation and actually like, you know, like power through the 200 hours where it's like congested without upgrad and all these other things. And so I love that they're using this. I love the fact that like Google took the time and effort to actually push this solution through. I hate the fact that it has to be this level of effort every single time. It's not clear to me that it's like now a snowball going downhill that's
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A
actually paving the way for everyone else
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C
to do it easier.
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A
A very good point. And that I think the CTT in Nevada took 18 months and I think this one took about nine. That's too slow. And so the struggle that you have here is that every regulatory structure, every utility wants to be a snowflake. And to some degree they are because they've got 5% tweaks here and there about how they do resource planning or rate forecasts and all that stuff. And so, so the problem that Chigurh is pointing to is that just the regulatory calendar does not move fast enough in order to capitalize on the innovation that's flooding into the market right now. On contracting and as we've said before, and I've said several times, it is actually the contracting for power and the regulatory process which slows deals down.
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C
Yeah, and I'm not sure who the person is at Oracle that's supposed to replicate this. Like, I mean this is.
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A
Maybe they'll hire you, you know.
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C
Well, they clearly are like hiring Star plus to do weird ass stuff like in places around the country, like with backup natural gas generators. I just like, it irks me to no end because like it's tied to the White House event, right? Where it's like, like you could do it this way, which is amazing, or you could do it this way. That is not amazing. And the not amazing way is what the White House is suggesting everyone do well.
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A
And I think that there's opportunity to grow there, you know, and my hope is that, I mean you can do a CTT and pjm, the structure works. And actually this CTT is part of miso, right? So I mean it works. My hope is that, and this, I kind of go back to my previous comment, is that like the wholesale markets, the RTOs, they need to push back with solutions that are even bigger win wins because ultimately it's their neck on the line if the administration plans don't work. And the real threat there, and I think we have to call it, is the real threat to PJM and everyone else, is that these governors are just gonna rewreg and say, oh fine, if the rate increase isn't happening in Excel or it isn't happening in Nevada because the tech companies have figured out a way to bring capacity there and ring fence it well and actually it's doing better for the grid. Okay, well then let's just re reg. And so there's an existential threat there for these RTOs if they don't figure out how to thread this needle correctly and they're going to need to.
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B
Let's talk a little bit about the distributed capacity procurement through SparkFund and Xcel. This is essentially utility owned and operated batteries, distributed devices to open up grid capacity. I know that there's been some criticism to this approach. Jigger, you've been really supportive of it. Can you just talk through like what has been the debate around the DCP and how important is it that Google invested $50 million into it?
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C
Well, let's start by what it represents, which is that we have been saying for the better part of my entire career that putting distributed ders on the distribution circuit can defer, you know, upgrades and, or help free up capacity to bring more capacity online faster.
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B
Right.
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C
And everyone is like, no, it can't, like stop talking about it.
- [36:36]
B
Right.
- [36:37]
C
And so now for the first time ever, we have a utility that says, yes, you're right, we can do that with strategically placed batteries front of the meter, right? So it's not like behind the meter providing backup power to these folks. It's like, you know, on land that's near, you know, a building and like they're getting paid rent. Right. And part of the Reason why XL Minnesota was so eager to do this is because Tim Walls was pissed and the governor was like, I brought all these new manufacturing facilities and all these other people to Minnesota and you're giving them four year interconnection timelines. Like, what the hell? You're of one job. I give you a monopoly. You're supposed to promote economic development. Get it done. And so Excel was like, well, the only way to get it done is to put these batteries front of the meter. So that's why Ryan Long led the charge. And he and I and Pierre Lafarge did a big panel over at SP and it was great, right? And now they're trying to get to the finish line on that stuff. And so I think it's great. The pushback comes from a lot of solar developers and others who just don't want to see utilities own infrastructure. And they're like, why can't you just send a signal and pay us to do it? Like community solar, now we do community batteries, right? And I think that, like, you know, ultimately that may be where this goes, right? This is only a phase one and phase two approval. And then, you know, phase three, four and five still have to be done. And so in phase three, four and five, the regulator might say, hey, you know, like, I don't think this came in as cheap as we wanted it to. Let's have some more competition from the private sector. So I don't think that we've closed off the ability for the private sector to own these batteries and respond to a signal. But right now, what the utility feels comfortable with is them owning it, them dispatching it, and then they are fully willing to admit that DERS play this role. I'm taking the win. Like, lord almighty, it's been 20 years. I'm taking the win.
- [38:31]
B
Caroline, how much of a win is this for the idea of strategically placed distributed batteries? Is this a scalable approach? Was it unique to Minnesota?
- [38:39]
A
I think it's scalable. I think it is a win. I think it's something that has been in the works at Excel for a while. I don't believe that Google did not have to do the conversion on that side. I think the concept that the DERs and customer interoperability was going to be a solution set in the future was there. Where Google came in was as an anchor customer, which is the role that they should be playing. And then they get to count the savings and show a tangible response to. We are working to keep customer rates low, and the affordability question is paramount. Right now and it shows that Google's taking it seriously. I think that the concept in general is incredibly scalable. It's part of the reason why I'm going to NRG is because I think the smart home and storage is part of the solution here. I hope, and I think it goes back to the previous statement, is that it doesn't take three years to build that internal championship everywhere we go. And what that is going to take is the Spark Fund model becoming really standardized in a bilateral market and to be able to do that and rinse and repeat. And so far that's had some fits and starts and is a bit bumpier and changes in market rules, you know, aren't helping. But that's really what it's going to take. But absolutely, it's a big deal and hats off.
- [40:23]
B
So if this is the way it should be done, let's look at the other end of the spectrum. I mean, at this event, this ratepayer protection event, Trump was talking extensively about gas and scaling gas as quickly as possible. And so you look at Xai, which has been placing unpermitted gas turbines in Memphis and in South Haven, Mississippi, you know, dozens of gas turbines with no permits, no warnings to neighbors, running around the clock with higher than average air pollution levels. Schools nearby, you know, there. Recently there have been thermal drone images showing the turbines still burning after the EPA said these machines do actually require the Clean Air Act. These are just turbines sitting on tractor trailers. And the argument was that they are temporary and that they don't. They're not bound to the Clean Air Act. But I guess, like, the worry is that this is kind of the vision that the White House imagines. Like this is what data centers paying their own way could unlock. How worried are you that like, like this could be a model that starts to dominate?
- [41:42]
A
I don't think it's going to be a model that dominates anything.
- [41:44]
B
Is it just exclusive to Elon?
- [41:47]
A
I mean, I don't know when he has held reverence for precedent in the past. So, you know, for better or worse, I don't think it's going to be a model. I know the leadership at, well, not at Oracle, as we've clearly identified, but at most of these other companies. And I just don't see, I don't see that. And I think it is a rogue, risky, outlying model. I think the bigger potential is, we've talked about this before, but is more like the 5 gigawatt, middle of nowhere training sites that just look like their own municipality. Right. And maybe have One tie in back to the grid that I think is going to happen. But this Frankenstein approach, there's too much risk in it on the supply side and there's too much political damage. I don't see it being a model. In fact, I think it's something that will be used sort of as a whipping post moving forward.
- [42:58]
B
Yeah. Jaker, do you agree with that? I love the description of it being the Frankenstein approach. Is it sort of exclusive to xai, do you think? Do you worry about it being a more common development model?
- [43:12]
C
So I think this level of egregiousness is xai, but there's a lot of other people doing something just as dumb, right? I mean, the Joule project in Utah is building 2.9 gigawatts of small solar turbine natural gas projects that are just lined up. I just think that like it wasn't but like, like three years ago that we were talking about how natural gas like, you know, like, doesn't burn cleanly and like puts pollution in your kitchen. Right. Like, I just like all these people who live around it. It's not like it's not victimless. Right. There's all these people that have to breathe the air around where these like piled up natural gas turbines are. Meta put 31 different types of turbines next to each other in Ohio. So it's not just an xai. I just think that in general, when people do things and have blatant disregard for the people who live in those communities, believe them and actually believe that that's who they are inside, then those are the values that they hold that like winning that AI race is more important than that community's health. Right. And I just think that like people just gloss over this like it's not like it's not a problem. It is a problem. Right? There's a reason why we have an epa, that's a reason why these power plants are cited where people don't live. Like, I just, I don't understand the callousness by which people just get away with this stuff.
- [44:51]
B
Caroline, we just described the Google method, which is like really taking seriously the health of the grid and the local impact and, and procuring lots of different kinds of clean resources. You know, recent polling shows that people are theoretically more accepting of data centers when there's clean energy attached to it. Do you think that like in this environment where people really distrust data centers and they're concerned about prices, like, can you move the needle? Can a company like Google move the needle when it is doing something the
- [45:25]
A
right way, I think Google is moving the needle. I think the question you're beating around is like, will Google have to or want to invest in turbines and will those be co located and will it go down that path? I think the answer is yes. I think they will do it with a greater attention to a larger vision on a product that they want to develop. And I think they will do it in a way with the utmost attentiveness to the community. I think we can't dance around the fact that, and we shouldn't, that there's going to be turbines and there should be turbines built to meet this load growth. That's just a fact. And there is a cap on that market, but it's one that is going to grow. How you do that, Frankenstein versus purposeful and part of a larger product. Those are sort of the two ends of the spectrum. And I think Google will be on the more purposeful side. And I think those that are on the Frankenstein side risk a moratorium being run. And that's Google's biggest risk. So the reality of this marketplace is that you don't pass legislation that says all data centers except for Google. That's very rare. Right. You pass a moratorium, it's going to apply to everyone. Especially when 50% of market development is by third party initiation. We are only as secure as our worst actor.
- [47:05]
B
So let's bring this back to one more example and tie it closer to the Trump administration. Last week, the Department of Energy's loan programs office closed a very large loan guarantee, 26 $0.5 billion for Georgia Power and Alabama Power, two utilities owned by Southern Company. The money is going toward new gas plants, battery storage, grid enhancing technologies, transmission lines, expansions of existing nuclear and hydropower sites. Jigger. This is something that you worked on and the administration decided to carry the torch. They changed it a little bit or Southern company changed it a little bit. Does this what just explain the project itself and does it say anything about the administration's priorities?
- [47:52]
C
Yeah, so it was something that we had put together before we left office. I think that in general, the way that the loan program works is it's guaranteed by the utility. So it's a pretty easy loan to get done.
- [48:03]
A
Right.
- [48:03]
C
Because the utilities are credit worthy. In general, the purpose of the loan is to basically be at 80% loan to value. So then that helps change the dynamics around the overall overall equity to debt ratio for the utility. So it'll save $7 billion of ratepayer costs over the life of the loan. So it's a big deal in this loan. They added natural gas. Like, I want to make sure people understand that they're not actually funding natural gas. This is just a $26 billion loan that's being taken out by Southern. And so it's not actually for anything. The statute says it has to be for new states stuff. So they figured out like, what new stuff are we building? And natural gas plants were one thing, and they just basically are borrowing the money, but it's just guaranteed by Southern and they're paying it back. Right. And so, like, had we been in office, we would have also given them $26 billion. We would have just named a different list. Weirdly, the press release that the administration put out did not mention batteries in the press release, even though it is a prominent part of the overall mix. And, and my understanding was the loan was delayed by over five months because the administration wasn't sure that it wanted to include batteries in the loan. And Southern company, to their credit, said, we're not closing unless you include batteries in the loan. The last thing I'd say is that I think that to Carolyn's point, Southern company does this stuff very thoughtfully. Like these, these like gas plants are going to be placed in the right locations. They paid GE Vernova for these turbines like two and a half years ago. And so they got them for a pretty decent price. Right. They're installing them in the right places. Right. Where you minimize any emissions or pollution for local communities. Like, I just think that in general this is like how you want this to happen is through a structured planning process that is going through the regulated utility that's like evaluated by the regulator. All of the things that we like, did not like see in the XAI and Meta examples.
- [50:13]
A
But can I ask you a question?
- [50:16]
C
Of course.
- [50:16]
A
What does this say when the third, third largest balance sheet, second largest balance sheet in the country is using this type of program to invest in things that arguably there's very little risk, what do you think that means for where we think capital costs are going to go moving forward or supply is going to go? I mean, if I'm looking at that and going, okay, if Southern doesn't think they have the balance sheet to incrementally do this, what does that say?
- [50:49]
C
So I don't think that's what Southern is saying. I don't think Southern is saying that they, they couldn't get the money out of Wall Street. They're saying the money out of Wall street would have been 75 basis points more expensive. Right. So that would cost ratepayers more because whatever interest costs they pay has to be passed on to ratepayers. And like, if they were going to raise money from their normal sources, they would have had to stick to their 50% equity, 50% debt ratio. Whereas with this loan they could say, well, because the federal government's mandating we do 20% equity, 80% debt, we're doing it that way. And just so, so no one is confused. The law itself says that 100% of all of the ratepayer of the Southern company interest savings has to be passed on to ratepayers.
- [51:35]
A
Has to be passed on. That's right.
- [51:36]
C
And so like, I think this is Chris Womack saying I want to do my ratepayers to solid.
- [51:42]
A
Yeah, I agree and I think it was important that you point that out because I think that you can look at this in a lot of different ways from a cursory perspective. But you know, I agree with you that this is Southern being thoughtful and they, they plan to be around for a very long time, you know, and they, they care about their communities. So. But thank you for clarifying that for everyone.
- [52:08]
B
So where do you guys think this is all headed politically in terms of structuring policy? Like, I think this is a big moment that the administration put together this signing ceremony because it says that like they're really reacting to something that is happening out in the world. The real concern about data centers, you know, they see it as a lever for their energy dominance strategy. But like, I don't know if you're a ratepayer out there and you're not sure how to think about this, like, how's this going to play out?
- [52:42]
A
Well, you know, what I think is interesting is like, like all the other areas of the economy where costs are going up, we're not seeing the same type of signing. So this has been singled out because the administration thinks it will be able to place its thumb. And in truth, if it works, I'm not going to say it's a rounding error because it's definitely not a rounding error in the total cost of meeting this AI goal. But it's not worth the political blowback because there is a difference between the increased cost to build and the deletion or the removal of the opportunity to build through political, just moratoriums and blowback. And I think that is ultimately what the administration is trying to avoid. Is it artful or surgical in the ways we hoped it would be? I think probably not. But ultimately what it's trying to avoid is getting in a fight with state legislature and county commissioners, forcing them to build data centers on farmland and in communities where his voter base is. And that's what he doesn't want to deal with. And I think he could avoid some of that with this. But I think this is only one piece of an overall puzzle and it will get a lot of fanfare and I think the administration will like that as well.
- [54:24]
B
Yeah. Chigurh, what do you think it says about the path ahead, the likely scenarios ahead?
- [54:29]
C
I think this administration is dumber than doornails. I think when you think about 81 million people that were affected by the polar vortex in the last 30 days and are going to see a bill any day now, that's double what they expected it to be like. I don't think this issue is going away. And the fact that the Google approach in Minnesota is 1/10 the cost of everyone basically over buying and bidding up like natural gas behind the meter, mini micro grids, as Carolyn will call them. And like, like, the only way to reduce costs, anybody with like a bachelor's degree knows this, like, is you have to limit the amount of expense in the numerator and greatly expand the number of kilowatt hour sales. That's the formula. They are not doing that. We have the best companies in the world who know how to do that, right? Tapestry can do that. Like, Grid Care can do that. Like, there's a lot of people who've mapped out the entire grid. We know exactly where to put all these data centers and like, minimize the cost for rate payers, right? But now, like, you've got an administration who like, literally can't figure out that these people are employed at the national laboratories, right? And so like, we are in a place where they're doing things deliberately in the most expensive way possible because it actually makes them feel more like a man. It's like the Mark Zuckerberg masculine energy meme from like the inauguration. And I'm tired of it. Like, one in five households are now behind on at least one energy bill. It is getting worse, not better. And like, I don't think people believe that this, you know, charade at the White House, like, means that they're looking after those people. I think they're gonna look at their bill and go like, I don't know, the president said this thing. My bill says this thing. It's like nuts. Completely and utterly nuts.
- [56:29]
B
One final question on this. This, I guess that, you know, the tech companies are playing the administration's game right now. The Administration has a very specific goal in mind, which is build lots and lots of gas and nuclear. Is there an opportunity for a Google to show the administration the sort of the Minnesota approach that we're talking about? And do you think the administration over the course of the next few years will be more receptive to these solutions? You know, Jigger talked about that they wanted to delete battery storage from this Southern company loan guarantee. But like, will there be a point where they realize like, oh shit, yeah, we shouldn't delete that, like this approach is actually working?
- [57:14]
A
Yeah, I think there's an opportunity. I don't think it's, that's their job. I mean, I think it's Excel's job. I think it's Berkshire's job. You know, I think it's a supplier
- [57:24]
C
community and the PJM's job. Right, right.
- [57:27]
A
And the PJM, the PJM special auction
- [57:29]
C
is saying that they're not going to allow like behind the meter batteries to qualify in the special auction because they think the White House doesn't want them to qualify. Right. And that is the fastest way to deploy batteries. Building batteries on the transmission grid is a multi year interconnection process. Like I think Eolian took them five years to put their big, you know, battery facility in Cleveland. And so like if you want the special auction to deliver gigawatt hours and gigawatt hours of batteries by 2028, you do them behind the meter. Right. Like, I don't know what's happening here, but the PJM doesn't want to stand up to the White House.
- [58:07]
A
No. And also I think that if you look at the supplier community in pgm, it's incredibly fractured right now. So there isn't a unified view on how to meet this, this threat or this opportunity and that's slowing it down. But I don't think it's Google's job, and I didn't think it was our job when I was running it, to say we're not only going to create the solutions and finance those solutions, then we're going to go market the solutions and do the political cover solutions. I mean, come on, the rest of the ecosystem has to step up.
- [58:44]
B
Well, I find this whole scenario endlessly fascinating and I think it is the thing that is getting people to pay attention to where they're getting their energy, energy costs in a way that they haven't before. And so hopefully there is a window of opportunity to talk about the real clean set of solutions that are cheaper and faster. And that's what we're here to do so. Caroline Golan is the Chief Growth Officer at nrg. Got to get used to saying that one. Congrats on the job. Really good to see you. And I guess we'll see you in a couple weeks
- [59:22]
C
where drinks are on Carolyn.
- [59:24]
B
Right?
- [59:25]
A
With my cat that. I totally made that up. I didn't get a new cat. I just thought it was a funny line to say.
- [59:31]
B
We're psyched for you and Jigar Shah is the co managing partner of Multiplayer. Check out his other podcast, Energy Empire. Jigar, thank you so much for recording Late at Night in Copenhagen. Really appreciate it.
- [59:46]
C
Not a problem. Always a pleasure.
- [59:52]
B
Open Circuit is produced by Latitude Media. Jigar Shah and Caroline Golan are my co hosts. I am Stephen Lacy, your co host and Executive editor. The show is edited by me, Sean Marquand and Anne Bailey and you can of course find all of our episodes on YouTube. At Latitude Media's YouTube page you'll see Sean shorts like Cut Downs of the Episodes and full episodes and of course find the audio version anywhere you get your podcasts. For more in depth stories on what we cover, go to latitudemedia.com and subscribe to our newsletters. And we are really hitting the AI Energy nexus hard. We've got a great newsletter over there that digs into all the stuff that we talk often talk about on this show. So thank you all for listening and watching again. We will catch you next week.