Live from Winterfest: Rich Powell and Travis Kavulla talk GOP energy priorities

Summary

Political Climate Episode Summary: Live from Winterfest – Rich Powell and Travis Kavulla Discuss GOP Energy Priorities

Release Date: March 3, 2025
Hosts: Brandon Hurlbut and Emily Dominic
Guests:

• Rich Powell: CEO of the Clean Energy Buyers Association (CEBA)
• Travis Kavulla: Vice President of Regulatory Affairs at NRG

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Introduction: Setting the Stage at Winterfest (00:00 – 01:51)

Brandon Hurlbut welcomes listeners to a special live episode of Political Climate from the Winterfest conference in Big Sky, Montana. Winterfest celebrates two decades of fostering dialogue among leaders in clean energy and finance. The episode focuses on navigating clean energy advancements amidst the current political landscape, particularly under the Trump administration. Brandon introduces co-host Emily Dominic and the guests, Rich Powell and Travis Kavulla, highlighting their expertise in clean energy and regulatory affairs.

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Navigating the Congressional Reconciliation Bill and Its Impact on Clean Energy (02:20 – 05:25)

Emily Dominic delves into the recent developments surrounding the Congressional Republicans' reconciliation bill, emphasizing the House's successful passage of a budget resolution despite skepticism. She explains the implications for clean energy, noting the potential paths the bill might take in the Senate and the challenges ahead in aligning House and Senate resolutions.

“If they evaluate this based on this current law versus current policy baseline... the IRA is certainly at more risk.”
- Emily Dominic (04:05)

Emily highlights the budget's $4.5 trillion spending limit, comparing it to the $4.7 trillion needed to make the Trump tax cuts permanent. This slim margin necessitates careful consideration of how the bill affects the Inflation Reduction Act (IRA) and other clean energy initiatives.

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GOP Energy Priorities Under the Trump Administration (05:25 – 14:36)

Brandon Hurlbut introduces Rich Powell and Travis Kavulla, who provide insights into the early days of the Trump administration's impact on clean energy. They discuss challenges such as funding freezes, energy emergencies, and agency layoffs.

Rich Powell responds to DOE Energy Secretary Chris Wright's controversial statement deeming the net-zero 2050 goal "sinister," arguing that transitioning to a low-carbon energy system is inherently challenging and requires a diverse mix of technologies.

“We still need a ways to go on a number of the technologies to actually get us again to low cost reliable carbon emissions free energy systems everywhere.”
- Rich Powell (07:30)

Travis Kavulla adds that energy transitions occur in phases, with natural gas consumption reaching record highs even without direct intervention from the administration.

Emily Dominic raises concerns about Republican strategies towards solar energy, particularly regarding tax credits and subsidies.

Rich Powell counters by highlighting the robust growth of solar energy, which continues to outperform many predictions despite political headwinds.

“The demand signal will stay extremely strong for clean electricity. And right now, the vast majority of the clean electricity coming into the system is solar and it's increasingly solar with battery storage.”
- Rich Powell (14:15)

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Balancing Tax Credits and Supply Chain Dependencies (14:36 – 22:11)

The discussion shifts to the sustainability of clean energy tax credits amidst supply chain challenges and geopolitical concerns, particularly regarding China.

Rich Powell explains the importance of technology-neutral tax credits, which support a diverse range of clean energy technologies without favoring one over another. He emphasizes the need to protect these credits from being undermined by entanglements with foreign entities.

“If you take away the credit for solar, you're effectively also taking away the credit for new advanced nuclear or geothermal or new run of the river hydro... they all now effectively rise and fall together.”
- Rich Powell (15:49)

Emily Dominic probes the feasibility of maintaining tax credits without severely restricting U.S. supply chains. Rich suggests alternative approaches, such as implementing domestic content standards or publishing lists of concern to streamline the process without creating significant bottlenecks.

Travis Kavulla shares a practical perspective, illustrating how disruptions in the supply chain can lead to increased costs for consumers if projects like solar installations are delayed or canceled.

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Managing Increasing Energy Demand and Avoiding Supply Shortages (24:22 – 33:24)

Brandon Hurlbut brings attention to the projected 16% increase in energy demand by 2030, raising concerns about potential shortages in both natural gas and solar energy.

Rich Powell warns of the real dangers posed by supply constraints, citing examples of manufacturers facing frequent power disruptions. He advocates for expanding energy generation, deploying grid-enhancing technologies, and streamlining the permitting process to meet rising demand reliably.

“We need to greatly expand generation across the country and nothing can be taken off the table.”
- Rich Powell (27:13)

Emily Dominic and Rich Powell discuss the risks associated with overestimating energy demand, referencing past instances where inflated projections led to financial crises within the energy sector.

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Permitting Reforms: The Key to Accelerating Clean Energy Projects (33:33 – 40:52)

Emily Dominic initiates a deep dive into the complexities of permitting reforms, a critical bottleneck for clean energy projects. She seeks insights from Rich Powell on practical steps needed to overhaul the current permitting system.

Rich Powell outlines the necessity for bipartisan legislative efforts to reform the permitting process, emphasizing:

1. Scope of NEPA (National Environmental Policy Act): Broadening or adjusting NEPA applications to streamline permits for clean energy projects.
2. Adjudication Reforms: Reducing litigation delays that inflate project costs and hinder progress.

He references past legislative attempts, such as the Manchin-Barrasso bill, which aimed to balance transmission policy reforms with permitting efficiencies but fell short due to partisan disagreements.

"We have to find a way to get to a bipartisan consensus on this sort of reform—the trade that’s been set up right now on something like this was in the Manchin-Barrasso bill..."
- Rich Powell (34:17)

The conversation highlights the importance of specificity in reform proposals to avoid conflating different types of energy infrastructure projects and their unique challenges.

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Strategies for Investors and Companies in the Current Political Landscape (40:52 – End)

In the final segment, Brandon Hurlbut and Rich Powell address strategies for investors and companies to navigate the politically charged environment. Drawing from the example of the Calumet Refinery project in Great Falls, Montana, they illustrate the significance of local political support and relationships with key congressional members.

Rich Powell encourages stakeholders to actively engage with their representatives, leveraging relationships to advocate for favorable policies and project approvals.

“Identify the people that would be the natural champions for advocating for these projects, you develop a relationship with those people and you talk to them about how very, very, very important this policy is for them.”
- Rich Powell (47:27)

Emily Dominic reinforces this by noting that many House Republicans are approaching the IRA's potential repeal incrementally, relying heavily on individual advocacy efforts.

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Conclusion

Brandon wraps up the episode by emphasizing the critical interplay between policy, politics, and clean energy progress. He invites listeners to engage with Political Climate through various channels and hints at future discussions addressing similar pressing topics.

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Key Takeaways:

• Permitting Reform: Essential for accelerating clean energy projects, requiring bipartisan legislative action and specificity in reform proposals.
• Tax Credits: Maintaining technology-neutral tax credits is crucial for supporting a diverse clean energy portfolio without favoritism.
• Energy Demand: Rising energy needs necessitate expanded generation capacity and innovative grid solutions to prevent shortages.
• Political Advocacy: Building and leveraging relationships with policymakers is vital for investors and companies to succeed in a polarized political environment.

Notable Quotes:

• “We still need a ways to go on a number of the technologies to actually get us again to low cost reliable carbon emissions free energy systems everywhere.”
  - Rich Powell (07:30)

• “If you take away the credit for solar, you're effectively also taking away the credit for new advanced nuclear or geothermal or new run of the river hydro...”
  - Rich Powell (15:49)

• “We need to greatly expand generation across the country and nothing can be taken off the table.”
  - Rich Powell (27:13)

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For more detailed discussions and insights, listen to the full episode of Political Climate here.

Transcript

[Unknown Speaker]

Foreign.

[Brandon Hurlbut]

Welcome to a special episode of Political Climate. I'm Brandon Hurlbut. I served as Chief of Staff in President Obama's Energy Department and went on to co found Boundary Stone Partners and Overture VC with Shomik. I'm also an operating partner at ngp. Today we are coming to you live from the Winterfest conference in Big Sky, Montana. For 20 years, Winterfest has brought together leaders in clean energy and finance for events focused on moving the global energy transition forward. Congrats. Bob and Tim Woodward. 20 years. That's amazing. We're thrilled to join Winterfest this year for a conversation focused on finding solutions in this challenging political moment. We'll be joined by two conservative minded insiders who will bring deep knowledge and decades of experience to help us unpack the obstacles that clean energy currently faces. Rich Powell is the CEO of the Clean Energy Buyers Association. Travis Kavula is the Vice President of Regulatory affairs at nrg. In today's episode, how can clean energy companies continue to make progress despite opposition from the Trump administration? How does the AI boom factor into the equation? And where does the political noise end and this signal begin? That's all coming up on Political Climate. I am joined today by my co host, Emily Dominic. Emily served as senior advisor to Speakers of The House Kevin McCarthy and Mike Johnson and is now a Senior Vice President here at Boundary Stone. Sadly, our third musketeer, Julia Piper, is currently in Puerto Rico at the SIA conference.

[Emily Dominic]

Oh no.

[Brandon Hurlbut]

Tough for Julia. We wish her well. Emily, a lot has happened since we recorded our last episode. Before our guests come on stage, I want to get your read on a couple of interesting items in the news Right now. Let's start with Congressional Republicans reconciliation bill and what it could mean for clean energy. There's been a lot of tug of war between the House and the Senate. Last night the House passed a budget resolution. What does that mean and how does it impact the reconciliation process?

[Emily Dominic]

So it's a great week for House Republicans. There was a lot of doubters downtown that felt like this was gonna be an impossible lift and that they'd be running around in circles with this budget resolution for weeks. And Mike Johnson frankly, surprised a lot of people. If you look back at the announcements from last night, we saw folks say, oh, the budget resolution got pulled. Oh, the budget resolution got passed. We turned things around in Washington in a really quick way. This is only the first step though, to getting us on the road to this reconciliation bill. So now the budget resolution goes to the Sen. Already had some input from Senate Majority Leader John Thune about some implications from the Senate side of things. They want to change how they want to discuss it. They've been having some discussions with Speaker Johnson. Actually, right before we came on stage, there was some reporting about Speaker Johnson and Leader Thune talking about the current law versus current policy baseline and whether or not they're going to incorporate that in their reconciliation bill. We can get into the weeds on that in a minute, but we still have a long way to go. The Senate has to pass this resolution. Both resolutions have to be the same in the House and the Senate. And then we get into the real, real dirty work of writing that reconciliation tax bill, which has to be able to do a lot of things. If you listen to President Trump, is.

[Brandon Hurlbut]

This trending towards one big beautiful bill or two separate bills where the IRA tax credits will be dealt with later this year?

[Emily Dominic]

I think right now we're looking at one big beautiful bill. Again, a lot of people thought that they couldn't pass that budget resolution through the House. That's a really big indicator that one, it was really difficult to do and two, Mike Johnson is probably right that they can't do it more than once. So that's really the issue here. It's not so much that you need to have these things combined, it's that the House has a two seat majority and frankly, we just don't have the juice to move things more than one time.

[Brandon Hurlbut]

And is that better or worse for protecting the ira?

[Emily Dominic]

Depends a little bit on how they evaluate that baseline. So let's take a look at the number in the House bill. It says the Ways and Means Committee can spend four and a half trillion dollars. Well, we know that if you want to make the tcja, the Trump tax cuts permanent, it's about it scores at around $4.7 trillion. So that means we've already got a $200 billion delta here between the amount they can spend and the amount that we need to do just that one thing. And that's without touching no tax on tips or any of the other, or the SALT deduction or any of the other things that they've said they want to address in this bill. If, if they evaluate this based on this current law versus current policy baseline. If they go with current policy baseline, where they basically say we think that if we extend current policy, that that doesn't actually cost anything new because we're just maintaining the status quo. That is not how we have traditionally scored bills in the House. And it's not how traditionally the parliamentarian has approved these sort of like budget metrics. But if they go with that route and they can get away with it, that's a really good indicator for the IRA because it means they don't need to go out and find hundreds of billions of dollars in offsets to achieve their other policy goals. If they have to go with the sort of current law baseline and they have to be operating in sort of standard procedure here, then we're going to see everybody at Ways and Means looking for every penny they can find. That means the IRA is certainly at more risk.

[Brandon Hurlbut]

My head's spinning. Let's bring Rich and Travis up here for more. Rich Powell is the CEO of the Clean Energy Buyers Association. The organization's 400 member companies represent more than $15 trillion in market cap value and have contracted for over 84 gigawatts of new clean energy. Rich formally served as the CEO of Clearpath and prior to that worked at McKinsey, where he focused on clean energy and low carbon initiatives. Travis Gavula is the vice president of Regulatory affairs at the multifaceted energy company Energy. He also teaches a seminar on utilities and electricity markets at the University of Chicago. Great City. Travis formerly served as a public service commissioner in his home state of Montana. We want to start with a big picture look at clean energy in the early days of the Trump administration. The big news has been overwhelming funding freezes, the energy emergency, widespread layoffs at the DOE and more coming. We just heard in the last couple hours each agency has to submit a plan for a massive reduction at their own agencies. They're talking about 65% reduction at the EPA and attempts to rescind IRA funds and more. On this podcast we try to separate the political signal from the noise. With that in mind, I want to start with a recent quote from the new DOE Energy Secretary Chris Wright and get your reaction to it. He said net zero 2050 is a sinister goal. It's both unachievable by any practical means and the aggressive pursuit of it has not delivered any benefits, but it's delivered tremendous costs. Rich, Travis, what do you make of that quote and how Wright's approach could play out in the renewable industry?

[Rich Powell]

Well, first I should just note, I don't think I've had one of these since I was at McKinsey. But this is called for in this late night recording.

[Unknown Speaker]

Let the record show he's drinking a Red Bull.

[Rich Powell]

Yes. Yeah, sorry, 8:30pm Is there any vodka? This is Travis's idea. Travis's idea. So first, let me just say a Huge thanks to Brandon and to Emily and to all of the organizers for having us at this incredible gathering. This is my first Winterfest. My amazing predecessor in this role, Miranda Ballantyne, was a longtime Winterfest attendee and spoke incredibly highly of this. And it's so great to see so many great friends here. So with that long filibuster to your question. So I think that Secretary Wright is pointing out a fundamental truth about getting to deeply decarbonized energy systems, which is that it is really quite difficult and sometimes our community has downplayed just how difficult that is. So our organization, the Clean Energy Buyers association, is focused on achieving low cost, reliable carbon emissions free electricity systems globally. And today I think it is true that in the vast majority of the world, we do not yet have proven all the technologies that we would need in every situation to achieve low cost, reliable carbon emissions free energy systems in all parts of the globe. Obviously, some parts of the globe are already there. If you're in Iceland or you're in Norway. Frankly, if you're in France, you're already there or you're most of the way there. We know a lot of the suites of technologies that can get us there. We've got a lot of things that are working really, really well for us. So we've made incredible gains on efficiency. We've radically brought down the price of wind and solar and battery technologies. Solar and wind are having some price rebound right now, so we all have to work on reversing that trend again. But batteries are still headed down. There is a whole suite of clean firm technologies though, that we would also need to get all the way there. Our members at CEBA have started really deeply investing in those technologies. And so last year was a really big year for geothermal and advanced nuclear amongst SEBA's large energy buyers. I suspect that this year I'm going to put out a prediction. I expect that this year will be the year of gas with carbon capture amongst major energy buyers. Then a number of folks will launch goals and projects around that as well. So I think there's something fundamental that the Secretary is pointing towards, which is that we still need a ways to go on a number of the technologies to actually get us again to low cost reliable carbon emissions free energy systems everywhere.

[Unknown Speaker]

And I'll just add, I mean, it didn't take the Trump administration coming into office to sort of solidify this point that the transition is happening in fits and starts. I mean, the largest ever consumption of natural gas daily record in the United States was January 20th. You know, happened to be Inauguration Day. And it's not like, it's not like President Trump had the consume gas button, you know, sitting there on his desk to make that happen. It's a fundamental occurrence of.

[Brandon Hurlbut]

Is that true of solar too?

[Unknown Speaker]

Well, I don't know about the solar consumption, but, but solar, to your point, also having some records. I mean, Texas, for example, which is not on a state politics basis, politically well aligned with renewable development. I would say one of the headlines of last year was solar in Texas overtaking California on a utility scale adoption basis. So it is genuinely an all of the above story. I know that's sort of a slogan at times, but energy growth is happening, demand growth is occurring, and you're seeing a lot of consumption of both gas and solar coming into the system. And you're seeing record peak demands pretty much everywhere on the electric grids. I mean, the last two years, the ERCOT system in Texas set 10 consecutive record peaks. California and PJM, which hadn't had a record peak demand for electricity, set a record peak, you know, in the last few years for the first time since 2006. The place you're sitting right now, the Northwestern Energy Service Territory in Montana, set a record peak for its winter peaking system just last month. So, you know, you're seeing increased electricity usage everywhere. You're seeing coal continuing to retire, which has been a long and slow retirement of coal. And you're seeing gas and solar, a little bit of wind and some batteries to replace that.

[Brandon Hurlbut]

Can we stay on solar for just one second? Republicans, there are some ambitious goals. You know, there's next ERA CEO said an earnings report, he felt like renewables and storage are going to meet a lot of this demand over the next five years. Does Trump have it out for solar? Is he going to try to punish solar or is it going to be all the above? What's going to happen?

[Emily Dominic]

I mean, I'll take this one because I think the real question is how do you define punish solar? Is punish solar, take away the subsidies that are coming from the federal government? Because I think that's something that a lot of Republicans tend to favor here. So I think when it comes to permitting and allowing for competitive markets and things like that, Republicans, I think solar can do quite well in those situations. But if the crux of the whole argument that solar's growth is coming is based on a really hefty tax credit structure, then I think you might be in trouble.

[Rich Powell]

I mean, I will just say solar is on, on a remarkable tear. Solar is outperforming most of the predictions for solar, some of the troubles wind has been having recently are actually because solar is doing so well and looks so attractive relative to wind projects in some parts of the country. I think you'd have to do a lot to actually slow down solar at this point. So I mean, we just attempted to size the corporate the remaining demand for corporate clean energy, for example, just Amongst the Fortune 1000. We worked with Wood MacKenzie to look at this today. I can't say these numbers exactly because they're not public yet. But let's say for the sake of argument that now corporate buyers have collectively procured a little bit more than you announced earlier. We'll announce our 2024 deal figures very soon. But so it's north of 84 gigawatts already. We think that there's more than 150 addition additional gigawatts of headroom just from corporate clean energy demand amongst the Fortune 1000 going forward. And that's before you get to renewable portfolio standards in so many parts of the country. And that's before you get to.

[Brandon Hurlbut]

That's assuming that the technology neutral tax credit stays in place.

[Rich Powell]

Well, some of those goals might slow down or get harder to achieve or might not happen by 2035 as we would expect them to happen if some of those things went away. But the demand signal will stay extremely strong for clean electricity. And right now, the vast majority of the clean electricity coming into the system is solar and it's increasingly solar with battery storage.

[Unknown Speaker]

I mean, obviously on an investment tax credit basis, solar is extremely attractive in places that are willing to cite it. And one of those places is Texas. You look at Texas and look at the report that it puts out biannually, the capacity, Demand and reserves report, and there's something like 30 gigawatts of solar in the queue to be interconnected into the Texas grid. You look at the same report, it's 17 or so gigawatts of storage, it's a few gigawatts of gas. I would actually expect gas to be more than that over the course of time. But solar is well in the lead. And even if you model the removal of the itc, it still shows a strong presence because the supply chain problems are everywhere and the presence of solar resources are extremely robust in a market like that.

[Brandon Hurlbut]

But you guys think some piece of it will stay, right? Some piece of that tax credit will not stay in its current form but will be adjusted maybe back to what it was.

[Rich Powell]

So just to level set the particular tax credits, we're talking about here for those of you that are not tax code nerds and that's okay if you're not are the 45Y production tax credit, it's a technology neutral tax credit for new clean electricity Generation and the 48E investment tax credit. So the old wind and solar tax credits died as of December 31, 2024 by design that was in the IRA and they were replaced by this new thing which many of us who have long thought we shouldn't be preferencing particular technologies have long advocated for, which is a level playing field for all zero emission technology. So everything can now qualify for this. Solar, geothermal, nuclear, wind, hydropower, all the things even potentially, although the administration didn't do a terrific job putting out the guidance on this in the final days. But there's potentially a pathway for gas with CCS to get it. If we really want to get in the weeds later, we can talk about that and the mistakes that were made at the end of the last administration. But so a benefit, a thing that will help preserve these credits is that they are now technology neutral credits. So if you take away the credit for solar, you're effectively also taking away the credit for new advanced nuclear or geothermal or new run of the river hydro or pick whichever technology is your choice technology. Those things all now effectively rise and fall together. That's thing one. Thing two is that a number of members and even members of the House where folks feel tend to feel more passionately about everything. Is that fair?

[Emily Dominic]

I think that's fair.

[Rich Powell]

That's on both sides. The average House member is more passionate. A number of them have expressed number of Republicans in the House have expressed strong support for keeping at least some of these tax credits in place. The term that's frequently used on the Hill is let's use a scalpel, not a sledgehammer to change these tax credits. I would expect that there is now sufficient support to preserve at least some of these, at least some of those credits, particularly the clean generation credits in at least some form. Now there are ways that the credits could be modified which would reduce their value, which we're still quite concerned about. And we're trying to educate members of Congress about exactly what the implications of that would be. We should talk about those things. But I think fundamentally there's now quite a bit of support for at least keeping the core structure in place.

[Emily Dominic]

So this is a good segue to my question, which is we've talked a little bit about what are the bipartisan things that have support on both Sides of the aisle. So, like geothermal and battery storage and gas. And we're looking at lots of options. Sometimes it's solar. But the real question here is what's the price to get to the table to be part of this energy dominance agenda, and does it require U.S. manufacturing and a U.S. supply chain? I think we've seen a real tilt towards putting more restrictions, particularly on China, but I think, frankly, more protectionists generally back here at home. So do you think that these tax credits, without a significant emphasis on US Supply chain, can survive?

[Rich Powell]

So I think there's strong support across both Republicans in both chambers to do more to make sure that the credits are not inadvertently enriching companies that are controlled by foreign entity of concern.

[Emily Dominic]

China.

[Rich Powell]

That's China. It's basically China. Maybe a couple of other ones, but there aren't like a lot of.

[Emily Dominic]

Mostly China. Right.

[Rich Powell]

Like a lot of North Korean solar companies. Right. So not sure we'd want a North. Well, yeah, so this is basically China. The devil is in the details, though, of how you do that. So, for example, there's one approach to doing that, which was actually written into the IRA by Senator Manchin for the EV credits. And so there was a standard in the EV credits that said OEMs who had entanglement with foreign entities of concern companies in their value chain couldn't get the credits or could get lesser versions of the credits for vehicles. So each major auto manufacturer had to go to the Treasury Department and work with them and go through their entire value chain in a very laborious process, which took about 18 months per company. And there were really only 10 big companies that tried to go through this process to get a couple of vehicles, I think 26 or 27 total vehicles certified. If that same approach were taken and put onto every entity who goes out and claims 45y and 48e and the thousands of companies that are developing clean energy projects all start to line up at treasury and attempt to go through a similar process that could inadvertently neuter the credits for several years as people work their way through that process. So I think the big question is, okay, we all understand we've got a problem. We don't want this China entanglement in our value chain. But what is the right way to actually structure that policy and implement it so that it doesn't effectively take away the value of the credit.

[Emily Dominic]

But just to follow up here, what is the right way? Because I think most Americans, most regular people look at this issue and they say, well, yeah, obviously we shouldn't be Subsidizing something that's made in China, that's a really obvious thing to most people. So how do we solve that problem without running into that bottleneck?

[Rich Powell]

This really gets into the weeds. But the two quick ways you could do it are right now there's an adder for domestic content, for things that are produced using domestic content. This is significantly simpler process and a simpler standard than the whole FIAC process. You could just take that domestic content standard and you could apply that to the whole of the tax credit that underlies it. Not perfect, but probably better. The other way you could do it as opposed to forcing every one of these companies to go and prove that they did. You don't have FIAC entanglement in your value chain. You can instead just publish a list of the companies you're concerned about. Right. So we're concerned about these five solar manufacturers and these 20 battery manufacturers. And there could be audits later to prove that.

[Emily Dominic]

As I say, that works until China just goes out and buys a bunch of other companies or moves their stuff to or changes the name or like I'm not to be, not to be too in weeds about it. But I think that's a, that's a tough one to sell because again we know China actively works against all of these policies.

[Rich Powell]

There are other ways you could do it. You could do long term phase ins of these policies to allow industries more time to adapt and adjust. And you know, there's lots of ways that you could skin this cat.

[Unknown Speaker]

I'll also just give sort of a practical consumer facing, you know, example of what will happen if you don't get solar panels into the United States in a timely way. I mean my company NRG has contracts with a lot of solar developers where we are the off taker of solar power purchase agreements in Texas and those have commercial operation dates in the coming few years. Those are under threat as a result of these supply chain challenges and the political economy environment that we've just been discussing. And if they don't get built, it's in a sense no skin off our teeth. Like the developers will pay us liquidated damages. We will find a new source of supply that is higher priced from the ERCOT market and then we will turn around and price our retail products in the ERCOT market to reflect that higher price so consumers will end up paying that tab. So we would much prefer for people to deliver on the commitments that they've made contractually. We'd prefer for stability to exist in the supply chain that has been set up we would in general prefer a, a more open and free market to persist throughout the value chain for supply equipment, regardless of the underlying energy type. And so there obviously needs to be coming to terms with the conflicting objectives at stake in the American government right now, be it dependency on foreign imports versus energy affordability versus onshoring. Some of those things are in open conflict with one another. So please, someone in a position of authority, reconcile those conflicting factors.

[Brandon Hurlbut]

So we all know that energy demand is increasing. It's supposed to go up by 16% by 2030. So we've talked about these supply chain issues. There's been shortage of natural gas turbines. That's been reported as well. So it's not just solar, but it's also natural gas that's feeling this pinch. Do you all think that we're at risk of having an energy shortage in.

[Unknown Speaker]

The sense that there is seemingly unmet demand that may never exist, but which is currently forecast mainly from large industrial users and particularly data centers? Yes, there could be, in the sense that legacy demand that in the future goes unmet? Hopefully not. Hopefully not. And I think the regulatory processes that are in place and candidly, some of the slow walking by utilities in terms of interconnecting new large loads are kind of a pace car for demand if it were to go off track. However, there certainly are some markets where new demand is currently by law entitled to be served. And when it does get interconnected, it could have consequent effects on the whole system. So we look closely to Texas, we look closely to the PJM market. Those, however, are large, very liquid markets for energy supply that should be able to accommodate demand increases into the future. But it's a tight market right now. I mean, to use a reference point for pjm, which if your listeners don't know, PJM is the market that covers New Jersey to Chicago. That's a market that has more than 100,000 megawatts of need and its last capacity auction cleared with just a few hundred megawatts to spare. So it's a tight market already and there needs to be a kind of monotonic increase of supply if there's going to be an increase in demand to keep things reliable.

[Rich Powell]

Strong use of monotonic.

[Unknown Speaker]

Thank you. Even with the. That's the Red Bull talking.

[Emily Dominic]

It's interesting to hear you talk about these tight markets when we all know that we expect our demand growth to skyrocket with AI. As you think about meeting those needs both as buyers and operating on the market, what steps do we need to take to meet that AI demand and the China Deep Sea breakthrough really changed the way you look at the market going forward.

[Rich Powell]

So I'll just say we, we are very concerned about absolute constraints, absolute supply constraints to meet all the demand that, that we are, our members are hoping to bring into, into all this. A number of our members have real issues that they've already started to observe with the reliability of the electricity system. We have large manufacturers, for example, that in this past year have seen more reliability issues than they've seen over the past decade that are actually thinking about starting to put. Typically they were grid takers, they just would shut down their auto manufacturing line, for example, when there was a blackout. But now these things are happening so frequently and this is a combination of increased stress on the grid, increased extreme weather events, obviously exacerbated by climate change, et cetera. They're now thinking about putting in place really expensive backup and energy storage systems on those manufacturing sites in a way that they never had before. We have, it's not just a data center problem. We have advanced manufacturers like semiconductor manufacturers who themselves bring loads on par with large data centers. So when Micron builds in upstate New York, that's a 1.6 gigawatt facility that goes toe to toe with the new massive data center complex that Meta is building in northeast Louisiana, which is about a 2 gigawatt data center. But at Micron, if they have even a several second disruption in their power supply, that can be hundreds of millions of dollars in cost to recalibrate literally the most expensive, fabulously complex machines that are in existence. Right? So it's a really big deal. It's a really big problem in our minds. We have to do everything to address this problem. So we need to greatly expand generation across the country and nothing can be taken off the table. Right? So we can't say that we don't like any one particular new power source right now because we've got a preference against it. We're going to stop its permitting or whatever. By the way, that happened in both of the previous administrations. They're in the current administration and the previous administration. So both administrations were. We're taking things off the table. We can't be doing that. We have to deploy grid enhancing technologies at scale to get a lot more out of the grid we have today. And then finally, we do need very significant policy changes which would unlock a actual feasible investable process for permitting and siting new transmission lines at at scale. We need to fundamentally improve the permitting process, improve the siting process and change the incentives so that we stop spending ever more money on transmission, that we really don't. Maybe we need it, but we need it a lot less than we need long haul high voltage transmission that thoroughly connects within regions and that thoroughly connects regions to one another.

[Unknown Speaker]

Yeah. And I will just say just to level set, we are seeing some, some amazing, one might say, fantastical load growth projections from certain people in the industry. I mean, looking at Texas, they're projecting an annual rate of growth more than 10% where a 2025 peak load of just higher than 85 gigawatts grows to 150 gigawatts in the2030s. And I just have to say that's not going to happen because it can't. So there are obvious constraints on the system and there is some risk about over forecasting load projections in a way that causes people to commit capital investments from a sort of centrally planned regulated infrastructure perspective that then end up getting visited upon all consumers generally. And there's also a risk on the supply side of people doing the same thing. Although at least in the restructured markets of the United States, the competitive markets of the United States, it is those suppliers who would bear the risk. And we've seen this movie before, candidly. I mean, the last time anything close to these demand projections were forecast several decades ago, they didn't end up being accurate. And that led to enormous bankruptcies throughout the sector. And it also ended up in the regulated environment in a bunch of securitized bonds being issued that were repaid by consumers over the following decades for regulated utilities that made these unwise investments and then expected their captive set of customers to pay for them. Literally customers just on the other side of the mountains here in western Montana, just finished paying off those bonds a few years ago from the Bonneville Power Administration based on a set of growth expectations from the early 1980s. And now we're seeing this cycle again. So I believe growth, big growth is coming. But let's be sure to allocate the risk of those growth expectations to the entities that are actually financially responsible for building out for it and managing, supplying it. Because otherwise we're going to get caught up in a popular delusion where regulated utilities end up serving this stuff, fighting out of the pocketbooks of a captive set of customers with a set of perverse incentives facing them. That puts that set of customers on the hook for this act of speculation.

[Brandon Hurlbut]

Let's move on to our final topic of the episode, how to get clean energy projects built and continue to lower emissions during the Trump administration.

[Emily Dominic]

I Love it. Okay, so I'm going to start with my favorite topic, even though it's supposed to be third on the list, permitting and talk about permitting. So obviously we've seen lots and lots of talk about permitting over the last several years. Rich, you and I have talked about this before where everyone agrees we need permitting reform and no one agrees what it means. We've seen a lot of activity from the incoming Trump administration looking to change the way CEQ operates, looking for opportunities to use national emergency designations to speed projects. What are the real nuts and bolts of what both the administration and Congress need to do to be able to get the federal government out of the way of building some of these projects that we've talked about here today?

[Rich Powell]

I'm so glad you brought this up.

[Emily Dominic]

You knew I would.

[Rich Powell]

This is the most important thing. So thing one, I'm very excited about this administration's drive to reform permitting. And every administration has said that they were really excited about reforming permitting for the last seven administrations. Some of them have gone to extraordinary lengths. And yet the pendulum swings back. They're weighed down by the bureaucracy of the existing system and the processes that we have built up. Despite the best intentions of people to change these systems, they just grind away and produce relatively modest results. And examples of the past Trump administration, Trump, 45, set up under the capable leadership of a guy named Alex Hergott, who was running this at the White House, set up a broad system, a broad dashboard, to track a number of major projects. Tracking Those projects required 18 months of phone calls to the relevant folks throughout the administration, because there's like no common identifier, there's no common basic code in the US Federal system for an energy project. So you can't actually easily track down every permit that's going and underway for any given project. There's no database, there's no operating system, anything like that. One of the very first things the Biden administration did was, and if you go to the website, at least you could see this in the previous it froze that effort and rescinded it and then spent three years rebuilding that effort because the last one had been run by the Trump administration. And so it couldn't possibly have been good. And so the Biden administration had to then rebuild it. And so, and this is about to happen and it still doesn't work. So this is a long preamble, long way of saying what we fundamentally need is to be grown ups and to do actual bipartisan legislation on permitting reform which deeply changes the system that we have. And so that needs to include a couple of big things. It needs to include the things that the existing laws are applied to. So there are a whole lot of projects. The canonical example I always use are geothermal projects. Do we have any geothermal fans in the room? Enhanced geothermal fans in the room, yes. So all of you know that unlike hydrocarbon extraction on public lands, which by statute enjoys a categorical exclusion from nepa, geothermal extraction on public lands has to go through an entire NEPA process, an entire environmental impact statement process. So just think about that. That extracting hydro kinetic energy from land has to go through a much bigger process than extracting hydrocarbons from that same land. And it's the same vendors, it's Schlumberger and Halliburton, and the same drills that are being used to drill for the geothermal. So we need to really change what NEPA is applied to in the first place. For most projects we should actually have a bias that they're going to comply. So we shouldn't make them do endless permitting to prove how they're going to comply in the future. We should just let them start to build and then we should come and shut them down and find them if they don't comply. No one's talking about removing compliance from bedrock environmental laws. We're just talking about removing the necessary four year process of proving how you're going to comply with those environmental laws in the future. So that's big thing one. Big thing two is we have to change the adjudication of these things. So it's often not the permitting that kills you, it's the litigation over the permitting that kills you. The vast majority of the suits that come into this fail. So the vast majority of the suits result in the government's decision to let a project go forward still being upheld by the courts. So they're totally value destroying all of these suits because they're not improving any environmental quality. We're not finding some projects that the government should have allowed to go forward that are later found to not go forward, you know, not be appropriate to go forward. But what we are doing is hugely adding costs to these projects. Every year of delay, especially with these capital costs can increase overall financing costs for the project by 20% or more. So we have to change the way that these are adjudicated. This is real energy policy. This is stuff that requires 60 votes in the United States Senate. We have to find a way to get to a bipartisan consensus on this sort of reform the trade that's been set up right now on something like this was in the Manchin Barrasso bill, or portions of this were in the Manchin Barrasso bill, which attempted to go through at the end of last year. Still insufficient, but it made a lot of improvements and it was a big proposed trade. So it was a lot of new transmission policy that Democrats were very excited about. It was modest NEPA and permitting reforms that many Republicans were very excited about. And it was more allowances for extraction on public lands, both for oil and gas and for wind. That was kind of the broad structure of that deal. And that deal was ultimately defeated by folks that on the left hand side didn't like any of the changes to the environmental laws and they slowed the whole process down. So kind of large environmental NGOs and on the other side, for a lot of folks that didn't like to see any of the transmission policies change, so a lot of folks in, often in regulated utility situations that didn't want to see that particular kind of process go forward, we've got to find a way to get some kind of a grand bargain like that back up and running again. And I hope, hope that we don't miss this whole Congress. Like I hope we get going on that in a bipartisan way alongside the large partisan exercise that is the reconciliation bill.

[Emily Dominic]

Can I ask one quick follow up here? Do you think we hurt ourselves in this permitting discussion by sort of conflating permitting reform to mean everything? Most of what we talk about in the transmission space is really market reform. Do you think we should just call a spade a spade and say, hey, look, we're trying to trade transmission market reform for permitting reform and all this other stuff, stuff, and it's still worth it.

[Rich Powell]

I totally agree. I'd love to know what you think. I totally agree that we need to be a lot more specific about these things because people throw out these terms. And I mean, the truth is we actually, again, because this is a stupid thing, but again, because like, we don't have the tag on the projects, we can't actually track all the projects going through the system. It's actually difficult to even say what the specific holdups are at every point through these things. So getting a lot more specific about what we're doing and what we're amending is really important.

[Unknown Speaker]

Yeah, Emily, to your point, I mean, the electric transmission piece of this did involve a lot of mission creep that had to do with cost allocation and who would fund the permitting in question. And that notably was not a feature of anything to do with say the gas pipelines or anything else involved in permitting. So permitting is permitting is permitting. And how you end up building electric transmission, which has, you know, stickiness associated with cost allocation and ratepayer impacts, is another thing entirely. So, you know, certainly I would prefer a simpler, cleaner bill, but at least let's be honest about what's, you know, permitting and what is, quote, unquote, permitting.

[Brandon Hurlbut]

All right, final question. So we heard at the top that Energy Thunderdome is here in D.C. i have been quoting Ann Richards and saying, if you're not at the table, you're on the menu. So we have many investors and companies here and listening Republicans, what are the best strategies that these investors and companies should be embracing to have success in D.C. right now?

[Unknown Speaker]

In discussing the run up to this panel, Max had mentioned a project in my hometown, the Calumet Refinery in Great Falls, Montana, which is the recipient of about a one and a half billion loan from the loan program's office at doe. And like pretty much everyone who is in line to receive one of those loans that was suspended and then it was unsuspended quickly afterwards due the intervention of a Montana US Senator, Steve Daines, who intervened on the company's behalf. And it's a good lesson. It would be a good case study for someone to write up because I certainly know myself the men and women of the refinery. They were my former constituents. And it's a refinery right there on the Missouri River. It would be an eyesore for nearly any other community, I feel, in the United States. Certainly Bozeman. Bozeman's a dirty word around here, or at least for many Montanans, given the cultural change and the bougieness that it bespeaks. But for the people of Great Falls, that refinery sort of talks about a heritage that for many of them involves a history of coal mining and smelting and railroads and heavy industry that has otherwise been hollowed out. And it naturally has a lot of supporters. My own family comes from that background. And so it had a huge base of local political support that would spend any amount of emotional, personal pocketbook resources to get it done. And in addition to that, it has a political dynamic in this state where there are just a few key industries to any given town, most of them small towns, towns of about 50,000 people like Great Falls, that sort of depend on a particular set of manufacturers or industries, like that refinery. So you've seen a political switch happen in a lot of the United States States. This particular facility has been no exception. I remember when I was running for office, that I was a Republican. I was not endorsed by labor. And then when I ran again for reelection, I got a call from the labor union that they were offering their endorsement to me. And they were like, hey, we don't want to endorse you if you're going to reject. And they were calling me to ask whether I would reject it or not. And in that moment, I was like, well, of course. Of course I'll accept your endorsement. Brilliant play by them. Because ever since, it's haunted my mind that I should be thinking about and looking out for the labor interests throughout my political and professional career. And I think, candidly, that's kind of what's happened in a lot of these states that have moved, like Montana has, from having blue places, purple places, to just ending up being solidly red if.

[Brandon Hurlbut]

You'Re solidly blue, if you're Massachusetts. Does that project get unfroze?

[Unknown Speaker]

That's a great question. And I think there's a huge amount of tribalism now, so. No, Rich, I'll let you answer that. But certainly this project got done because it had a. A strong base of local support. It had a Republican ally who was able to advocate to the administration in power. And, Brandon, I mean, I'll just. Candidly, that is one of the risks, inevitably, with everyone in the room here who is. And a company even like mine, who at some point in all of our corporate existences has developed for one project or another, a dependency on the government. Live by the government, die by the government.

[Brandon Hurlbut]

Rich, over to you.

[Rich Powell]

Ooh, I have to follow that up. I'm going to go in a slightly different direction. I didn't get permission to do this, but it's late in the night, so we're going to give it a try.

[Brandon Hurlbut]

You're two Red Bulls in.

[Rich Powell]

Yeah, this is what Red Bull does. Can everyone in the room who is engaged in a project somewhere in the country, in some means, you're advising it, you're funding it, it's your company that is in a red state or district. Please stand up. Yeah, yeah. Please. Yeah, yeah, I'll stand up. Okay. Remain standing if you know the name of the senator or member of Congress who represents that district.

[Unknown Speaker]

Part of my job.

[Rich Powell]

Pretty good. Remain standing if you have a relationship with that member of Congress or senator. I. Broadly defined relationship there. Really broadly. Remain standing if you have spoken and leveraged that relationship with that member of Congress or senator in the last two months in this most crucial period ever. For this would be the time. Time to reach out to the person. Great. So everyone just needs to go and talk to the five people that remain standing in the room to know how to approach this. It is actually very simple to think about how to do this, which is that you identify the people that would be the natural champions for advocating for these projects, you develop a relationship with those people and you talk to them about how very, very, very important this policy is for them. It's very straightforward.

[Emily Dominic]

My thoughts here are perfectly a good capstone for what you just did, because I've done this exercise before. House Republicans are starting from a position that the whole IRA is being repealed and then they are building it back piece by piece, based entirely on individual advocacy by individual members of Congress.

[Brandon Hurlbut]

On that happy note, that's it for today's show. Political Climate is a co production of Latitude Media and Boundary Stone Partners. Max Savage Levinson is our producer. Sean Marquand is our Technical director. Stephen Lacy is our Executive editor. You can get all our show notes and [e-mail] and if you want to talk to us about a specific topic, please email [e-mail] Please feel free to help spread the word about Political climate on on LinkedIn X and Blue Sky. If you're on that one, I'm Brandon Hurlbut. We'll see you soon.