Inside America's Only Bank for Nuclear Energy — ft. Jigar Shah

Summary

Prof G Markets Podcast Summary Episode: Inside America's Only Bank for Nuclear Energy — ft. Jigar Shah
Release Date: November 21, 2024
Host: Scott Galloway & Ed Mylett

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Introduction

In this episode of Prof G Markets, hosts Scott Galloway and Ed Mylett delve into the latest developments shaping the capital markets. The episode features a deep conversation with Jigar Shah, Director of the Loans Programs Office at the Department of Energy, exploring the pivotal role of government financing in the clean energy transition, with a particular focus on nuclear energy.

News Highlights

Before the main interview, Scott and Ed discuss significant market-moving news:

1. Jake Paul vs. Mike Tyson Fight on Netflix

• Viewership Impact: A record 60 million households tuned in to watch the boxing match, positioning it as the 10th most-watched sporting event in history.

• Technical Glitches: Despite technical issues during the livestream, the event's popularity led Netflix's stock to rise by 3%.

  Scott Galloway humorously remarked, “[...] It's like when Jimmy Fallon made fun of me when I was on CNN. This has happened to me before.” (03:00)

2. Trump’s Autonomous Vehicle Regulations

• Stock Reaction: The news of President-elect Trump seeking to ease restrictions on autonomous vehicles caused Tesla's stock to surge by over 6%, while Uber and Lyft experienced a drop of more than 5%.

• Discussion Point: Scott expressed concerns about the potential influence of monetary contributions on regulatory decisions, questioning the balance between innovation and oversight.

  Scott Galloway: “I don't like the fact that this is becoming. Whoever gives the President 150 million bucks gets to dictate regulation...” (12:03)

3. RFK Jr.’s Nomination as Secretary of Health and Human Services

• Market Impact: Pharmaceutical and vaccine-related stocks plummeted following RFK Jr.'s nomination.

• Controversy: RFK Jr.'s stance on vaccine transparency versus skepticism stirred significant debate.

  Scott Galloway: “RFK as head of Health and Human Services has me just fucking freaked out...” (14:57)

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Main Interview: Jigar Shah

Guest: Jigar Shah, Director of the Loans Programs Office at the Department of Energy

Background and Role

Scott introduces Jigar Shah as a pivotal figure in steering America's clean energy initiatives through his management of over $400 billion in loans for clean energy projects. Shah's extensive background includes founding successful solar energy companies and authoring a book on climate technology.

Current State of Clean Energy Transition

• Progress Overview: Shah asserts that the U.S. is "pretty far along" in the clean energy transition, with significant investments surpassing global oil and gas expenditures.

  Jigar Shah: “When you think about the amount of money that's being driven towards climate solutions... we're going way past it.” (30:42)

Balancing Climate Change and Energy Demand

• Primary Drivers: Shah emphasizes that the primary motivator for adopting clean energy is the rapid load growth driven by sectors like AI and manufacturing, rather than solely climate concerns.

  Jigar Shah: “...the reason people are choosing clean energy is not because it's clean, it's because it's fast.” (31:40)

Power Generation Capacity and Future Needs

• Current Capacity: The U.S. currently generates about 1,000 gigawatts of power, with plans to double by 2040 and potentially triple by 2050 to meet escalating demands.

• Load Growth Explained: Load growth refers to the increasing energy requirements from various sectors, including manufacturing and electric vehicles.

  Jigar Shah: “We generally have about 1,000 gigawatts of power generation around the country... we are going to need to double that probably by the 2040 timeframe.” (32:25)

Comparing Wind, Solar, and Nuclear Energy

• Diversification is Key: Shah discusses the complementary roles of solar, wind, and nuclear energy, highlighting the strengths and limitations of each.

  • Solar: Best for summer peaks with a 25% capacity factor.
  • Wind: Offers a 40% capacity factor, providing more consistent generation than solar.
  • Nuclear: Highly reliable with a 92% capacity factor, but often produces excess power when demand is low.

  Jigar Shah: “That produces power 92% of the time in the United States... so that's why we built all the pumped hydro facilities in the United States.” (35:41)

  Scott Galloway: “Do you think 90% of the incremental energy capacity add over the next several years will be from wind and solar?” (36:20)

Challenges Facing Nuclear Energy

• Investment Barriers: Shah identifies the reluctance of constructors to engage in fixed-price contracts as a major hurdle for scaling nuclear energy projects.

• Cost Concerns: Building nuclear reactors requires immense capital, with estimates exceeding $100 billion for large reactor projects.

  Jigar Shah: “...it's hard because people are like, well, what if it goes double the budget that you projected.” (36:56)

Public Perception and Media Influence

• Nuclear Accidents Misconstrued: Contrary to popular belief, Shah argues that past nuclear disasters like Three Mile Island did not solely drive the decline in nuclear energy investments. Instead, economic factors like inflation and decreased load growth played more significant roles.

  Jigar Shah: “The data doesn't support it... we were already starting to pull back from nuclear before Three Mile island occurred.” (39:05)

Government vs. Private Sector in Clean Energy Financing

• Essential Role of Government Loans: Shah emphasizes that private banks are often unwilling to finance first-of-its-kind clean energy projects due to high risks, making government intervention via loan programs crucial.

  Jigar Shah: “If you have a billion dollar platform for climate, name one loan that the programs office did that you would rather do instead.” (44:27)

• Economic and Community Impact: Shah highlights the direct and indirect economic benefits of government-funded projects, including job creation and fostering private sector adoption of new technologies.

  Jigar Shah: “...more importantly, we're setting up a flywheel that then will lead six, seven, eight, nine years later to the private sector being fully embracing of those technologies.” (47:24)

Advice for Young Entrepreneurs

• Opportunities in Clean Energy: Shah encourages young entrepreneurs to engage in sectors like clean cement, next-generation conductors, and modular housing, emphasizing the vast potential for innovation and growth.

  Jigar Shah: “The list of deals where American innovation is ready to serve is very long. But we gotta commercialize those technologies.” (53:13)

Public Service and Entrepreneurship

• Public-Private Partnerships: Shah advocates for increased collaboration between government and the private sector to effectively commercialize American innovations, citing his experience in the Loan Programs Office as transformative.

  Jigar Shah: “I think that unless you bring people in that have scar tissue like I do, who know how, like, we get hurt when you don't have a good partner in the federal government...” (56:46)

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Notable Quotes with Timestamps

• Scott Galloway (03:00): “Social justice issues take a backseat when your son is in the basement vaping and playing video games and can't find a job.”

• Ed Mylett (02:48): “I'm very well, Scott. How's Mexico?”

• Jigar Shah (31:40): “...the reason people are choosing clean energy is not because it's clean, it's because it's fast.”

• Jigar Shah (44:27): “If you have a billion dollar platform for climate, name one loan that the programs office did that you would rather do instead.”

• Scott Galloway (36:20): “Do you think 90% of the incremental energy capacity add over the next several years will be from wind and solar?”

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Conclusion

This episode of Prof G Markets provides an insightful exploration into the intersection of government policy, private sector innovation, and the clean energy transition. Through the expertise of Jigar Shah, listeners gain a comprehensive understanding of the challenges and opportunities in scaling nuclear energy and other clean technologies, underscoring the critical role of strategic financing in driving sustainable growth.

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If you enjoyed this summary, be sure to listen to the full episode of Prof G Markets for an in-depth discussion on the forces shaping today's capital markets.

Transcript

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[AT&T Representative]

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[Scott Galloway]

Today's number 0.13%. That's Chick Fil? A's acceptance rate for new franchise each year. In other words, Chick Fil? A has a lower acceptance rate than Stanford, Google and the Secret Service. Speaking of school, Ed, I got the best blowjob of my life in junior high school. I love being a teacher. That has almost nothing to do with Chick Fil? A. I couldn't find a Chick Fil? A joke. Ad Ed, how are you? Now it's time for banter between me and you. What's going on?

[Ed Mylett]

I'm very well, Scott. How's Mexico?

[Scott Galloway]

Oh, it's wonderful. The light's beautiful. I love the food here. I think I could live in Mexico. I'm not sure. Everything is like a six star resort in Cabo in Mexico. But uh, I. I love Mexico. I think it's the best. I think Mexico's the. The best place to vacation in the world.

[Ed Mylett]

It looks. Looks very beautiful. Your background. I'm. I'm jealous. One thing I would love to get Your reaction to. Because we've been getting all these questions from our listeners. Did you see your shout out on Jon Stewart?

[Scott Galloway]

Oh. Where he mocked me?

[Ed Mylett]

Yeah.

[Scott Galloway]

Social justice issues take a backseat when your son is in the basement vaping and playing video games and can't find a job.

[IBM Representative]

I feel like that last guy was.

[Scott Galloway]

Really venting more about his son.

[Ed Mylett]

Let's get your. Yeah. What's your reaction?

[Scott Galloway]

First, I was a little rattled because it's like when Jimmy Fallon made fun of me when I was on cnn. This has happened to me before.

[Ed Mylett]

Yeah.

[Scott Galloway]

Jimmy Fallon in his opening dialogue took the clip of me on CNN saying, I'd rather give my 15 year old a pound of weed and a bottle of Jack than social media. He just played it and stared at the audience and they all laughed.

[Ed Mylett]

That's not good commentary. People loved that clip. I thought it was a great clip.

[Scott Galloway]

Yeah.

[Ed Mylett]

What was the joke? Just that it sounded ridiculous.

[Scott Galloway]

How ridiculous it sounded. Anyways, this is a couple years ago. I think I was right at first. I was a little rattled because I have a big ego, but I was thinking about it one, you got to cut comedians a really wide berth. I say a lot of indignant, provocative things. So I'm, you know, I'm sticking my chin out there. I deserve to be mocked, quite frankly. What was interesting is a couple of my friends who were in media said you need to record a response and that was bullshit. And you have sons. And I said, I think this is a sign of that we're having an impact. We. It's hard to read the label from inside of the bottle. Freed Zakaria was mocked. I mean, they mocked a bunch of people more impressive than me. So I was in good company.

[Ed Mylett]

Yeah, I thought it was hilarious and I don't think it was insulting at all. I think he made a cogent point, which is that your analogies are hilariously specific. Always.

[Scott Galloway]

Yeah.

[Ed Mylett]

And that was what. He was making fun of you. Which is true and not insulting. It's hilarious. I thought it was great. I'm glad to see you feel better. Took it. Took it. Similarly, feel better.

[Scott Galloway]

I've got the approval of a 25 year old who I pay. Great.

[Ed Mylett]

You're the best. You're the best.

[Scott Galloway]

Enough of that. Today we're speaking with Jigar Shah, director of the Loans Programs office at the Department of Energy. I'm almost positive this is going to be more exciting than that title. I think there's. Oh, it will be nowhere to go but up here. Whenever we have someone from a very anyone with a really boring title is usually pretty interesting. It's like asset classes. The most the best returns are in the boring shit. But anyways, here with the news first is profg analyst Ed Elson. Ed, give us the headlines, you saucy mains. Now is the time to buy. I hope you have plenty of the wherewithal.

[Ed Mylett]

A record 60 million households tuned in to watch the Jake Paul versus Mike Tyson fight on Netflix. And despite some technical glitches on the live Stream, the stock rose 3% on Monday following the match. President elect Trump is seeking to ease restrictions on autonomous vehicles. That news sent Tesla's stock up by more than 6%. Meanwhile, shares of Uber and Lyft dropped more than 5%. And finally, drug maker stocks fell after Trump nominated RFK Jr. As Secretary of Health and Human Services. While RFK Jr. Is widely known as a vaccine skeptic, he clarified that he does not intend to eliminate vaccines, but aims to enhance transparency around their safety data. Sc your thoughts starting with Netflix rising after this boxing match between Jake Paul and Mike Tyson.

[Scott Galloway]

Well, first, I think it's important and we have some breaking news here. Hulu has will be announcing this afternoon that they're live streaming a fight between me and Jimmy Carter.

[Ed Mylett]

I mean, I'd pay to see that. I would pay to see that.

[Scott Galloway]

100%. There's a bro code here and that is if you take 20 million bucks to get into a ring with somebody, you have an obligation to the universe to either kick the shit out of a person or have the shit kicked out of you. This was ridiculous. This wasn't even a fight. My 14 year old summed it up perfectly. It's like, dad, you could have done better. Just, I was very disappointed in the fight, but distinct to the fight itself. All right, let's move on, let's move on. It's like Mark Twain said, how did he go bankrupt? And it was like slowly. Then suddenly the death of linear TV is, was, was, you know, is happening slowly and suddenly. And we're in the suddenly phase. And the kind of the moats around linear ad supported TV were essentially news and sports. And when you see Amazon doing live coverage of the election and I thought they did a pretty good job and had fantastic guests, I'd like to point out. And you see now the last kind of bastion or the last wall to be breached was live sports. And what do you know, the guys with the cheapest capital started buying Thursday Night Football, right? Amazon started buying NBA games. And now the biggest. I think this was arguably the biggest Sporting event of the year.

[Ed Mylett]

Yeah, I think it was behind the Super Bowl.

[Scott Galloway]

Right.

[Ed Mylett]

But other than that, number one.

[Scott Galloway]

Yeah, I thought this was the most viewed worst program in history. Had some bandwidth issues. To me that's sort of unforgivable. How the fuck they know how many people are going to show up. But anyways, and they're a tech company and if they can't get this shit right, who can? It's almost like the only thing I can imagine would be worse is if you were a micro blogging platform and you couldn't pull off a presidential announcement and the site crashed.

[Ed Mylett]

That was a problem that a lot of people focused on was the fact that they had these technical glitches. And I heard about it from many people, including people who work at this company, that it was buffering half the time and you know, they couldn't navigate the live function. So that was a problem. Netflix's response to that has been actually they didn't expect this many people to watch 60 million households. They said they were sort of blown away by how popular it was. And so that's their excuse. I don't know if that's a decent excuse, but honestly, I'm sort of with the market on this because the stock dropped a little bit on that glitch and then it ripped back up. And I think the market is saying, okay, it's not great that they had that glitch, but let's not forget the fact that 60 million people tuned in and this was, get this stat, Scott, the 10th most watched sporting event in history. So this was in the same league as I mentioned. It's not as big as the super bowl, but it's certainly in the same league as the super bowl, as the Champions League, as the NBA Finals. This was definitely a blockbuster event and I'm not sure management expected that.

[Scott Galloway]

Well, that's it. I'm going to do a mixed martial arts match against Clint Eastwood. It's time.

[Ed Mylett]

Yeah, exactly.

[Scott Galloway]

It's time.

[Ed Mylett]

It does say something pretty incredible about whoever's in charge of programming at Netflix. Because when I heard about this, a 27 year old YouTuber versus a 58 year old retired boxer, my reaction was this is stupid and everyone is above this. No, but what Netflix knows better than us, that's totally wrong. They have their finger on the pulse. People want to see this.

[Scott Galloway]

I think you'd have to give it to Reed Hastings and the other co CEO whose name I always forget, but is also very bright. This is arguably for the last 10 years, it's the most underestimated management team. Not that people don't respect them, but they are right up there with the Nadella's, the Pichais, the Zuckerbergs in terms of shareholder growth and making just incredibly bold, smart decisions. These guys are right there and this was one of them. I thought it was ridiculous. And here at Summit, well, you know, in between the programming on vertical farming and how to get better sleep and if you should be poly or not, everybody stopped and went to the bar and watched and they watched it. Oh, everybody watched it.

[Ed Mylett]

It's also a good point about the bars and restaurants, which I forgot to mention, which is like 60 million households tuned in, but that doesn't count the. I think it was 6,000 bars and restaurants that also got access to this, I think for like a one off event. So think about all the other thousands, hundreds of thousands, perhaps millions of people who are watching it at bars and restaurants such as yourself. This was just a gigantic mega event. It's really incredible. Let's move on to Tesla and this new self driving regulation that's come out from the Trump administration. This is a report that Trump is working or his team is working on a new plan for regulation. This is something we actually predicted a couple weeks ago in our Winners and Losers episode. Musk might be able to advise on autonomous driving regulations. That's one of the biggest hurdles for Tesla and the robo taxi mission. So if Elon Musk has one foot in the White House and the other at Tesla, it could be that he'll be able to fast track his vision of the robo taxi fleet. And that is certainly what investors are pricing in right now. So that's what's happened. And Tesla's now up 6 or 7% on that news. Scott, your reaction?

[Scott Galloway]

You know, my view is one of the great things, one of the things that America has done really well is we opt for the maverick over the bureaucrat. And that is we tend to be a little bit more like let our horses run. Let it be the wild West. Now when the wild west turns into west world and the robots start killing everybody. Meta. We're all social media, all big tech we have under regulation, but we tend to err on the side of too little regulation versus too much and I would argue versus Europe. That is a big part of the reason that our GDP is exponentially greater than Europe. Europe's focused on a little bit on the bureaucratic state and what are the risks, what are the dangers, what are the downsides as opposed to the upside so, in favor? I don't like the fact that this is becoming. Whoever gives the President 150 million bucks gets to dictate regulation, or lack thereof, around a specific sector. But in general, it feels like autonomous. It feels like some of the regulation around autonomous might be overly constrictive. I know that Waymo and the guys from Google think they really fucked up starting in San Francisco. And I also wonder, Ed, and I'm curious to get your thoughts here. How much of this is pure? Traditional auto manufacturers who are way behind on autonomous are calling their congressperson and saying, we really don't like this. We like the way things are right now.

[Ed Mylett]

I'll. I'll bet that's true. I mean, the part I don't like is the same thing that you don't like, which is that we're now in a place where you can just buy regulation in your favor. But to your point, and this is another piece I agree with you on, we do need federal regulation on autonomous driving, because at the moment we don't have any. And all we have right now is this very patchwork state by state system where every state has very different rules. In some cases, those rules are vague. The question for investors, I think they should ask, though, is how likely is it really that this regulation is going to come to fruition, because it needs to get through Congress. So that's one thing. You've probably got all these traditional car companies who are going to be calling up their congressmen saying, don't let this pass. And two, as we know about Trump, he promises a lot of fucking things all the time, and a lot of them do not pan out. So I think Wall street might be a little too optimistic, as it often is with Tesla, that this is all going to go to plan. If it does, though, if we do have federal regulation on autonomous driving, I think it would ultimately be a pretty good thing for our country. So I'm not against this. Should we move on to rfk? His appointment as Health Secretary, and this decline in market values among all the drug stocks, the pharma stocks, AKA the vaccine stocks. Your reaction, Scott?

[Scott Galloway]

RFK as head of Health and Human Services has me just fucking freaked out, Ed, and I'm trying to process it. On the one hand, RFK Jr. Is outstanding on certain issues. He's, he talks about, he summarizes, the food industrial complex and the unholy alliance between the food industrial complex, General Foods, McDonald's that want to get you PepsiCo, they want to get you addicted to this sugary, shitty food that is terrible for you, such that they can then wink, wink, hand you over to the other part of the mendacious fuckery duopoly, and that is the industrial diabetes complex where there are hospital systems, kidney dialysis, statins, diabetes medication, knee and hip replacement that is literally worth trillions of dollars. No exaggeration, this is the biggest industry in the United States. $13,000 in healthcare per individual, but we live less long. But you know what, a lot of people are making a shit ton of money. I'm not even going to talk about the insurance industry. And this guy gets it. This guy's unafraid and he goes after it. And then he says if you see a new mother, the best thing you can do is walk up to her and whisper to her, don't get her vaccinated. What the actual fuck. This person shouldn't be allowed in the fucking building, much less being considered for this job. So I find this incredibly upsetting. And RFK is literally the definition of duality or contradiction or opposing forces colliding into each other because I think he's so good on so many things. But this, his view on vaccines is totally disqualifying. Just some real quick information. A 2021 study found that exposure to COVID 19 vaccine misinformation lowered one's intent to get vaxxed even for those who previously said they would definitely do so. Vaccines have saved 154 million lives over the past 50 years. That's six lives per minute. So look now as we go full kleptocrat, everyone assumes that these individuals will carry more power than they have in the past as they start to replace every thoughtful executive in the federal government with just a fucking lackey and they claim to have no respect for the law or due process and will just start issuing mandates from dc. So these stocks are flying up and down the food stocks, the processed food stocks again see above. He gets a lot right are down. And the vaccine stocks, did you see these things? They crashed. They were off double digits.

[Ed Mylett]

The thing that I think people aren't talking about enough is the fact that he actually has openly said that he is not an anti vaxxer. And he also openly said this year that he wasn't going to take anyone's vaccines away. And what he has really asked for or what he is pushing for is to force the drug companies to just share more information about the vaccines. And you know, I don't see a real reason for that. Personally I trust the experts on the vaccines, but given the level of skepticism around vaccines in America today. And I understand he may have contributed to that. But this is something that's been around for years and years and years. I don't think that more information and more transparency is a bad thing. I think that's. Honestly, I think that's probably a good thing. I want to give you, because you talked about the food stocks and the idea that he is pushing for getting rid of the food industrial complex, which I agree with, is something that I really like. I just want to give you a really crazy example I saw this weekend of how the media takes these very loose generalized narratives about the people that they don't like and then they run away with them in a way that is just very strange and distorted. So this was in the New York Times this weekend and they were reporting on his appointment to Secretary of Health and specifically talking about his stance on food. So just listen to this. I couldn't believe this when I read this quote. Mr. Kennedy singled out Froot Loops as an example of a product with too many artificial ingredients, questioning why the Canada version has fewer than the US version. But he was wrong. The ingredient list is roughly the same, although Canada's has natural colorings made from blueberries and carrots, while the US product contains red dye 40, yellow 5 and blue 1, as well as butylated hydroxy toluene or BHT, a lab made chemical that is used for freshness according to the ingredient label. End quote. And this just made me so angry because as you said, what RFK Jr. Is criticizing about processed food in America is completely correct. I mean, this stuff is categorically unhealthy, it's making us obese and it's killing us by the millions. And so why are you, the New York Times, defending Fruit Loops for using chemicals in their food? And why are you telling me as the reader with this very weird authoritative language, he was wrong that RFK Jr is wrong for bringing it up. Like it's just this wild misunderstanding of what we should actually be talking about. And ultimately, I don't think they really realize this. It plays further into his hand because by defending Froot Loops and saying, no, no, no, it's okay, they're just using a couple of these chemicals and they're actually for freshness. By saying that it makes the New York Times look like the liar trying to defend their friends at Kellogg's and it makes him look like the freedom fighter. And that to me is exactly why people like him. And what the media outlets were a lot more focused on was the decline in the vaccine stocks and not the decline in the food stocks. The shares in PepsiCo and Coca Cola and General Mills and Lamb Weston, which supplies food to McDonald's and Chick Fil A, they all fell because the markets are predicting that this guy's going to crack down on the food industrial complex. And that I think is something that we can all get behind. So I just find him very fascinating the way the media is dealing with him, because they're deciding to basically portray everything he says as totally whack job crazy. When in reality some of the things he's saying are pretty plainly fair.

[Scott Galloway]

One of the first things I registered when I moved to the UK was that, I mean, right away everything goes bad. It's like, what the fuck's going on here? The fruit is rotten. In two days the orange juice goes bad. And then I realized, oh, it's actual food. It's not because it's food. And despite, you know, despite the massive advances in treating cancer, you know, the environmental factors which are clearly there's something up here. You know, people are getting. I met a woman last night who has started a company called Ass Play or something. And it's not what you think it is.

[Ed Mylett]

Excuse me?

[Scott Galloway]

Ass something. It's not what you think it is. I doubt it's called ass something like hot ass or ass something anyways. But she was diagnosed with colorectal cancer in her 30s and she got. And she's in full remission recovery. But she got fascinated. And the number of people being diagnosed with colon cancer under the age of 50 has gone up dramatically. It used to be you didn't need to get a colonoscopy until you were 50. Now they're saying start getting them much earlier. That has, I mean, logically, and I'm speculating here, logically that's probably something environmental. So again, it's like, well, if we can make money selling you shit, even if it gives you colon cancer, and then we can make money off the colon cancer, let's not address it, let's let it run. And there's a lot of good people on the other side at universities and medical professionals trying to figure out a way and also pharmaceutical companies to fix it. But it really is, it's not healthcare, it's sick care. And if you were to try and give kids great food from an early stage and help them develop a taste for good food. Did you eat good food growing up? What was your diet like growing up?

[Ed Mylett]

Yeah, I ate pretty good food. I mean, I ate a fair amount of junk. But, you know, what are you going to do? But I think now we know we all agree we should be eating organic food at a lower price and making it affordable for people.

[Jigar Shah]

Yeah.

[Scott Galloway]

So let me describe my childhood. We had in the morning. I had Lucky Charms and Tang because the astronauts drank it. So it must be good for you.

[Ed Mylett]

What is Tang?

[Scott Galloway]

You don't remember Tang?

[Ed Mylett]

I don't know what it is.

[Scott Galloway]

Oh, Jesus Christ. That's it. I'm throwing myself out of the window into the Baja Peninsula. You don't know Tang? I feel 100 years old. It was this drink, it was this powder and you know, it's gotta be just awful for you. And they sent, they would give it to the astronauts and the astronauts and they'd be like, the astronauts? So I'm like, I want to be an astronaut. I'm going to drink Tang.

[AT&T Representative]

With the success of the recent Apollo space flights, man has been brought, brought another step closer to the moon. Aboard these manned Apollo flights, three astronauts, and with them, Tang Tang, the energy breakfast drink.

[Scott Galloway]

So Tang Lucky Charms. And then if it was really desperate, my mom didn't have any time. My mom was out of the house before I even got up. I would take a Pop Tart. And Pop Tarts, no joke, have a shelf life of like 70 years and can survive a nuclear holocaust. I mean, I'm not going to talk about the fact that my mom smoked and drank while she was pregnant, but my childhood was basically Lucky Charms, Pop Tarts and two hours a day of I Dream of Genie. The fact that I am not that healthy and a sexist is entirely, can be blamed on American culture in the 70s. Anyways, I ate like such shit. And now the only reason I eat well, to be blunt, is because I'm rich. To eat well is so expensive, people assume, oh, it's less expensive to eat at home. No, it's not. If you're going to eat well at home. Oh my gosh, it's crazy. It's crazy expensive. So like everything else in our country, our food supply and our medical industrial complex is the best in the world. You can get amazing food if you're in the top 10%. You can get amazing healthcare if you're in the top 10%. The whole, our whole economy, the most prosperous economy in the world, is being optimized for the top decile and the bottom 90% are there just to optimize for the top 10%. Whether it's keeping minimum wage low, whether it's cutting services, it's just all and the thing is that's unhealthy about it is we don't move against this, even the bottom 90%, because Americans are so optimistic. People are like, wow, when I get rich, I'll show guys like me. You know, it's this weird phenomena where everyone assumes their kid and their future is in the top 10%. And I can prove to every one of us that 90% of us will not be in the top 10%.

[Ed Mylett]

We'll be right back after the break for our clean energy conversation with Jigga Shah. If you're enjoying the show so far and you haven't subscribed, be sure to give Profg Markets a follow wherever you get your podcasts.

[Scott Galloway]

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[Ed Mylett]

Welcome back. Here's our conversation with Jigga Shah, Director of the Loan Program's Office at the Department of Energy. Jigga, thank you very much for joining us.

[Jigar Shah]

Thanks for having me.

[Ed Mylett]

So I just want to start out with a quick summary of who you are. So just for our listeners. So Jigger is first and foremost an entrepreneur. He founded this successful solar energy company which he eventually sold. He later wrote a book about climate tech. He started this nonprofit on business solutions to climate change, and now he has this position as Director of the Loans Program Office at the Department of Energy, which sounds pretty bureaucratic and a little bit unsexy until you realize that Jigger is in charge of allocating more than $400 billion in loans to clean energy projects in America. So the way that I think of Jigsaw is that he's kind of the most influential climate VC that you don't know about. He's not buying stakes in startups, but he is definitely steering the direction of this clean energy transition that has been building up in America for decades. So we're very happy to have you here. I'm going to start with this question to you, Jigger. Where are we in the clean energy transition? Are we sort of in the middle? Are we getting to the end or are we just getting started?

[Jigar Shah]

I mean, we're pretty far along, right? When you think about the amount of money that's being driven towards climate solutions, the oil and gas sector globally does about a billion dollars a day. The solar industry alone now does $2 billion a day globally. Right. And so then when you add wind and clean hydrogen and all the other sectors, we're going way past it. So I think we're close to liftoff.

[Ed Mylett]

So when I think about how clean energy is funded at the moment, it feels like there are two main incentives. The first is just climate change. We need to bring down the temperature of the planet. And the second that I've been seeing a lot more of is that we need just more energy. And I feel like AI has been a big part of that because of the amount of energy that AI requires. I'd just like to get your perspective. How do you balance those two incentives? Which do you think is more pressing, more important? What would you say is driving strategy at the doe?

[Jigar Shah]

So I'd say the question slightly differently. Right. I mean, to me, when you're a developer, the way you make money is by meeting load growth and AI. Right. You don't make money by solving climate change. And so you're generally making money by solving a problem for somebody. And the reason people are choosing clean energy is not because it's clean, it's because it's fast. So you have the ability to. To install solar and battery storage in Texas way faster than building new natural gas facilities. And that's why they're all going in batteries and solar. Right. And the natural gas facilities are probably.

[Ed Mylett]

Two years behind just on the energy needs themselves. How much power are we creating right now? And how much more power do you think we're going to need?

[Jigar Shah]

Yeah, so we generally have about 1,000 gigawatts of power generation around the country. Right. A little bit more today than we had before because there's more solar and wind. And we're going to need to double that probably by the 2040 timeframe and maybe triple it by 2050. It really depends on how much AI and some of those other things we need. But also just to put Things in perspective, the President's goals around the bipartisan infrastructure, law, chips and science, et cetera, are really dwarfing AI load growth. And in terms of new loads in the United States, whether it's electric vehicles, heat pumps, new manufacturing facilities, we have 900 new manufacturing facilities under construction here in the United States right now. And so the load growth is actually quite broad based.

[Ed Mylett]

Could you explain what load growth is quickly?

[Jigar Shah]

So when you think about manufacturing wire harnesses in Georgetown, Texas, through cellink, or manufacturing thermal blankets with aspirin aerogels in Georgia, these facilities, facilities need 1 megawatt, 3 megawatts, 5 megawatts of power to power robots or automation lines or other things to be able to manufacture things. Same thing's true with electric vehicles. Your average house probably uses 2kW of load on a regular basis. Your hair dryer is 2 kilowatts alone, and your electric vehicle is 7 to 9 kilowatts. It's a lot more than what your average home is using right now, and that's load growth.

[Scott Galloway]

Jigger, thanks for your time. Can you stack rank the pluses and minuses, wind, solar and nuclear?

[Jigar Shah]

Well, let me start by saying when the grid has gone down in the last four years, it's because natural gas power plants failed to supply power when we needed them. Right. They froze up during winter storm Yuri. They had real challenges during the crisis, during the Christmas of 2022. And nobody wants a 70% natural gas grid, and nobody wants a 70% solar plus battery storage grid. And so the real key is diversification. Right. When you think about solar, it was perfect for summer peaking loads that are air conditioning driven, because a lot of that is when solar is very easy to get a hold of. I think as you get more and more solar, you only have 25% production in terms of capacity factor. So 25% of the hours of the year it's producing solar power, and the rest of the time it's not. With wind power, you're probably closer to 40% of the year you're getting wind power production, and it goes up and down depending on when it's windy, where solar power is probably more predictable. With nuclear power, you have the opposite problem. It produces power 92% of the time in the United States. So you often get power that you don't need in the spring and the fall. It's still producing power when no one's using air conditioning. So that's why we built all the pumped hydro facilities in the United States, was to take all that extra Nuclear power. So I would suggest that it's really more of a balance that we need than more nuclear or more solar.

[Scott Galloway]

My sense is all of a sudden is nuclear has come back in vogue, that I don't know if it's the macho feel of it or what people see as the most reliable, best bang for your buck kind of power supply. Is your sense that nuclear is making a pretty strong comeback. I realize I'm putting words in your mouth, but feel free to disagree with me.

[Jigar Shah]

I would say that the amount of competence in the solar and wind industry is so high that they are likely to dominate and add 90% of everything that gets added to the grid over the next five years.

[Scott Galloway]

Whoa, let's press pause there. You think 90% of the incremental energy capacity add over the next several years will be from wind and solar?

[Jigar Shah]

For the last five years, it's been wind and solar, and it will likely be for the next five years. And so the nuclear energy industry has such a hard time getting off of the launchpad that they need the most help. And so I have spent the better part of the last four years figuring out exactly what was holding nuclear back, figuring out exactly who has the solutions to those problems, and figuring out exactly how we can accelerate those folks to actually getting $100 billion worth of new projects announced. And we're not quite there yet, but the president announced a pretty bold goal last week.

[Ed Mylett]

What was holding nuclear back?

[Jigar Shah]

There's nobody to develop nuclear plants, right? So the nuclear industry right now is set up with a bunch of people who own nuclear power plants, but none of them want to construct new nuclear power plants. And then when you talk to the people who design nuclear power plants, they're sort of like architects. You buy their designs for your new home, but you don't actually hire them to build the new home. So then you go to the constructors, you have Bechtel, you've got a couple of other folks, but they're not willing to give you a fixed price. They're saying, we're going to charge you cost plus. I hope that that works for you. And so it's hard because people are like, well, what if it goes double the budget that you projected? Well, you're going to have to pay it. Well, who actually pays it? And so figuring out exactly how we build 10 reactors, because one reactor clearly doesn't solve the problem. And with 10 reactors, you can spread the risk across 10 reactors, build the supply chain, do all those things is hard because it's at least $35 billion to build 10 small reactors, and it's over $100 billion to build 10 large reactors. So we've been circling the problem between the existing owners, the hyperscale data centers that want to pay a premium for 24 by 7 power that they've listed on their website, which they still haven't walked away from. The utility companies who want to finish nuclear power plant, but don't want to actually sign up to the cost overrun risk on behalf of their rate. And then all of the supply chain folks. And so getting all of them in the room having a productive conversation has taken us the better part of three and a half years.

[Ed Mylett]

One thing I didn't hear you mention were previous nuclear disasters like Chernobyl and Three Mile island and stuff like that. And our hypothesis, or our theory has been that, but those events and sort of the Hollywood fear of nuclear has been a large part of why we've seen a big pullback from nuclear as a power source. I'd just like to get your take on that. Is that right, do you think?

[Jigar Shah]

Yeah, the data doesn't support it. So when you look at the 1970s, we had a lot of inflation, and as a result, nuclear power, which is a lot of capital, got expensive. And so people were already starting to pull back from nuclear before Three Mile island occurred. And then when you think about what happened with The Renaissance in 2008, the Vogel nuclear plant got started, but everyone else pulled back, not because of Fukushima, but just because there was no load growth. I mean, we had passed these regulations to switch to LED lights. And so we were actually getting a reduction in sales every single year. And people were saying, well, without load growth, why would we build new nuclear? Right. And so today, the reason you're seeing a renaissance is because. Because data centers are uniquely disruptive to the grid. You cannot add 1,000 megawatts of load in one location without pairing it with something like nuclear power. And so that's why you've got a renaissance today.

[Scott Galloway]

Your department seems pretty thoughtful in trying to find sources of energy that are economically viable, but also recognize the emissions and externalities. That sounds to me like something the Trump administration would hate.

[Jigar Shah]

So the rhetoric of the Trump administration from 2016 and then of course, the success of the Biden administration in 2020 has been to do what we've all been talking about, right? Which is that we need to onshore and reshore back in this country. And now we are succeeding. More than that, I'd say, as somebody who's been an entrepreneur for decades, American innovators and entrepreneurs always thought that when they were ready to commercialize their technology, they had to go to Asia or had to go to Europe. Today they are now believing and their invest, more importantly are believing they can do it here. The loan programs office functioning is essential for them to actually take that step. And so my sense is that this program has more support than any other program for no other reason. Then it doesn't really matter where you're innovating, whether it's nuclear power, blue ammonia, using carbon sequestration and storage, sustainable aviation fuels, it doesn't really matter what sector you care about. Without having access to bank debt, you really can't build these billion dollar projects and the banks don't want to provide money for first of kind deployments. And so that you're left with a loan programs office. And so while there might be a pause when the new administration comes in for a few months, my sense is that there are so many entrepreneurs and innovators who want access to being able to do big things in this country that it's just something that you're not going to be able to stop.

[Ed Mylett]

I was surprised to hear you say that you don't think you're going to be affected permanently by this new administration specifically because one, I think Trump has just a sort of anti clean energy bent to him. But two, he said he wants to repeal the Inflation Reduction act and from my understanding you were a huge beneficiary of the Inflation Reduction Act. So I'd like to hear more from you on why you are feeling so optimistic going into this next four years.

[Jigar Shah]

I think it goes to your first question, right? Which is what is your driver? If your driver is climate, I totally understand, right. But if your driver is figuring out how to commercialize American innovations, right. We're tired of inventing everything here in the United States and then shipping all those patents over to Asia or Europe to be commercialized. We want to now take the technologies that we invent here, many of which happen to save carbon emissions, but they're actually truly superior products and we want to commercialize them here. Those people are not often driven by climate. They're really driven by the fact that they've got kick ass technology that they want to commercialize here and employ people here, right? And you've got a lot of folks who are tired of saying that like their best job if they don't graduate from college is working at the local Panera, which I love. I love Panera, but I'm just saying they want to actually work with their hands. They want to manufacture things, they want to construct things. Right. And so I think when you look at what President Biden has put in place, we're probably 500,000 people down right now in the national building trades. Right. If you like, go get trained in the national building trades. At 16 years old, you could be making six digit salaries within six years. I mean, it's a pretty amazing thing right now. If you don't want to go to college, you can get six figures just by wanting to be good at your craft. That is something that we lost for 40 years and a lot of people want that back whether or not they voted for the D's or the R's.

[Ed Mylett]

Yeah. I feel like one pushback that you might receive from Republicans or from this administration is that it's a lot of power that you have in that department. I mean, from my understanding, your loan authority after the IRA went from $40 billion to $400 billion. And I could imagine that a criticism or a concern is that someone would say, well, why aren't we just letting the private markets fund these innovation projects? Why are we leaving it to government to step in and accelerate clean energy? What would your response be to that?

[Jigar Shah]

There are no criticisms that are like that. If you go to Apollo right now and say to them, you have $100 billion platform for climate, name one loan that the programs office did that you would rather do instead. They're like, none. We could never take those risks. If you go to tpg, if you go to kkr, if you go to the private credit markets, every one of these banks is saying, we would love to get an investment banking fee to help raise the equity to match your loan, but we would never in a million years want to do that first of a kind project that you did. I don't think I've ever heard of somebody saying jigger. We would have done that loan but for the fact that you competed with us. I don't think that ever happens.

[Ed Mylett]

Because these are such risky investments that may or may not pay off.

[Jigar Shah]

Well, they're not risky from our perspective because we have 10,000 engineers, scientists and experts who work on the DOE platform. But they're certainly risky from JP Morgan's perspective because they don't have those experts on their platform. Right. And generally speaking, Those banks with Basel 3, they securitize their debt. They don't want to hold it long term on their balance sheet. Could you imagine how much tier one capital they'd have to put against it if they had a 20 year loan on their balance sheet. So they don't want to do that.

[Ed Mylett]

Can you speak to some of the economic impacts of some of these projects in terms of sort of the Main street economy, like what this will do to communities and to workforces when you've gone in there and funded some of these projects?

[Jigar Shah]

Yeah, I think when you think about what we've done, there's direct impacts, right? So think about the $465 million loan that we gave to Tesla and then there's indirect impacts, right? I mean, who would have thought that the electric vehicle industry would be anything had we not given the LO loan to Tesla at the time at which they needed it? The same thing's true with the first 500 megawatt solar farms that we funded in 2010, 2011. At the time at which those were completed, the only buyer of those loans were Mid American, which is a Berkshire Hathaway company. Everyone knows that they make a lot of money. They didn't overpay for those assets. By 2015, the solar industry was so frustrated by the banks that they created their own yield cos, which are like real estate investment trusts, in 2015. And it wasn't until 2019 that bank of America said, yeah, you're right, these assets are acceptable. So when we provide these loans, yes, we have hundreds of thousands of direct jobs from construction and from operations into these plants. But more importantly, we're setting up a flywheel that then will lead six, seven, eight, nine years later to the private sector being fully embracing of those technologies, many of which they are highly skeptical on today. But the Science from the 10,000 engineer scientists and experts on the DOE platform have already validated that it's worked, that there is no will it work or won't it work risk. It's more that 15 of the bankers friends at the country club haven't done a deal yet.

[Ed Mylett]

Do you have sort of a code or a personal philosophy on which situations demand government intervention in terms of funding? Like you mentioned subsidies to Tesla? I feel like we're now at a point, or at least there are questions over whether Tesla really needs subsidies because it's so successful and now it appears that some of those tax credits are going to be repealed. Do you have a personal philosophy on when should government provide subsidies, when should it provide tax incentives and when should it not?

[Jigar Shah]

When you think about infrastructure, the frame that most people have, it's a dot com bubble of the late 90s, so they think venture capital, they think people taking advantage of an IPO in infrastructure, you never get 100x return, right? Like every once in a while with a consumer product like Tesla, you might. But in infrastructure, that's not how the game gets played, right? So what you want is every time there is new technology, better technology, you want it to be commercialized. Why? Because it keeps the folks who are doing the old stuff on their toes, right? And saying, like, you don't get a monopoly just because you're already in business and these new folks aren't in business, right? But more importantly, you get. Get more efficiency out of the resources that we have, right? All of this stuff takes critical minerals, it takes copper, it takes steel, it takes other things. These new technologies use those resources way more efficiently than the old folks. For me, if somebody actually meets a threshold of innovation, and more importantly, I'm only providing them debt, they still have to raise equity. If they can't successfully raise equity, they don't get my debt, right? And so if they can meet the formula, who am I to pick winners and losers? As far as I'm concerned, if you're innovative and you meet the standards that we've set, I want to give all of them loans, right? Because whether it's carbon sequestration or whether it's like, you know, solar and wind, or whether it's nuclear, to me, steel in the ground is red, white and blue.

[Ed Mylett]

Stay with us.

[Jigar Shah]

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[Ed Mylett]

We'Re back with Profg Markets.

[Scott Galloway]

I hear you use the word entrepreneurship a lot. You're an entrepreneur, you understand. I wasn't even aware of this program, but if you were a 25 year old super interested in energy, recognize that there's an economic opportunity here. What are some examples of some great businesses you would be thinking about getting involved in an early stage or even starting yourself right now?

[Jigar Shah]

Yeah, there are so many. So when you think about the clean cement and clean steel industry, a lot of Those folks are PhD students coming out of MIT that are saying we have figured out a way to dramatically reduce the carbon footprint of cement and they're 28 years old, right, with a newly minted PhD. And then they go through four, five, six rounds of capital raising right, to be able to prove their thesis and do something at small scale. And then when they decide that they actually need to make cement at the scale that the state of California wants to buy it or Microsoft wants to buy it, right? Where they've recently made a commitment to Sublime, it's a billion dollars. It's always a billion dollars at the time. At which Boston Metals or Aspen Aerogels in Georgia or Cellink in Georgetown, Texas, who makes wire harnesses that makes wiring for electric vehicles 90% lighter than normal wire, right? These are all a billion dollars. And so it's one of those things where it's four rounds of capital. But then at some point, when you actually want to be at relevant scale, you need a lot of money. And then the question becomes, do you want to raise that money as 100% equity from the private markets, or do you need debt to reduce your weighted average cost of capital? In almost every case, whether it's, for instance, next generation conductors for transmission lines, we have materials now that can carry the two to three times as much power along the same exact right of way of which 30% of all of our transmission lines are approaching the end of life and need to be rewired anyway. So we could get two to three times as much power through those wires if we do next generation conductors. The list of deals where American innovation is ready to serve is very long. But we gotta commercialize those technologies.

[Ed Mylett]

Are there any other industries that you think could benefit from a department like this? Like a loans program, office, for anything else?

[Jigar Shah]

Yeah. Look at housing, right? Everybody talks about housing today. Our biggest problem with housing is that we still make housing like our grandparents did. If you go to Germany or Sweden or other places, all of those houses are modular construction, right? You make them in a factory and you build them in three days on site. We have that industry now in the United States because of the ADU market, the auxiliary dwelling unit market in California. There's 12 startup companies who do that, and many of them are now building their first of a kind factories where they can pump out 100,000 units a year, just like Sears Roebuck did with the Sears Craftsman home after World War II. We are at a point right now where you could make homes consistently and reliably with much higher quality for $200,000 a unit out of these factories. My sense is we could do it if it's a net zero home, but there should be Some other part of the federal system that should help those guys produce those modular homes at scale.

[Scott Galloway]

Just as we wrap up here, Jigger, you're obviously a very successful guy, had a lot of options, and you decided to go to work in government. Give us your best pitch for why someone, a young, talented person with a lot of options, should serve or go to work in D.C. or for a government agency.

[Jigar Shah]

I think one of the biggest challenges of my career has been that the United States has been terrible at public private partnerships. Right? I mean, just terrible. We're amazing at innovation. But then when it comes to manufacturing solar panels, all Chinese solar panels, to be clear, all of that technology was invented here in the United states, right? CATL's LFP technology was invented by John Goodenough at UT Austin. All of this technology that we say that other people are good at was all invented here. And I'm tired of the fact that that happens because the US Government doesn't know how to do a public private partnership. I think President Biden decided to double down on figuring that out, and he attracted people like me and obviously the Secretary of Energy and others to say, I want you to do the hard thing. Right? And when you look at the liftoff reports that we put out, that's 2,000 companies that gave us their best ideas and proprietary secrets to create a fact base across 10 different sectors where we're saying, what do you have to believe to believe that it's actually profitable to do things here? And as a result, we've crowded in hundreds of billions of dollars. Right? And so I will go back to the private sector, I'm sure, after I'm done serving here. But I think that what we leave behind now is a group of people who actually now not only believe in the public private partnership, because we've talked about it for years, but they now have been taught on how to do it right. And I think that unless you bring people in that have scar tissue like I do, who know how, like, we get hurt when you don't have a good partner in the federal government, you don't really know how to empathize with the folks that you're working with to figure out how to. To best be a good partner. And I'm really proud of the fact that the federal government's a better partner today than it ever has been.

[Ed Mylett]

Having worked in the private sector your entire career before it, what surprised you about working in the government and especially in holding such an important job in.

[Jigar Shah]

The government, that there is no government inefficiency? Right. Not in the work that we're doing. Right. You would have thought that there was all this government inefficiency. The problem with the government is not inefficiency. The problem with the government is risk taking. For a long time they were told, if you do amazing things, we'll give you a $500 bonus and if you do bad things, then you're going to get fired. If that's the bid, ask, spread you don't want to do anything. Having come in and given all these people air cover and said, hey, you are some of the most talented people I've ever worked with. And truly the people I work with, the loan programs office, many of whom came from the private sector, but also many that were already here, are truly the most gifted people I've ever worked with in my entire career. They just needed permission to do the work. 90 plus percent of them want to stay until the next administration. Right? They love the work they're doing. And so I think demonizing government is something we need to do less of and figuring out how we best support entrepreneurs and innovators in our great country is something we have to do a.

[Scott Galloway]

Lot more of of Jager Shaw is the Director of the Loan Program Office at the Department of Energy. He was previously the co founder and President of Generate Capital, where he focused on helping entrepreneurs accelerate decarbonization solutions through low cost infrastructures or service financing. He also founded Sun Edison, a company that pioneered pay as you save solar financing and served as the founding CEO of the Carbon War Room, a global nonprofit helping entrepreneurs address climate change. Jigger was also featured in Time's list of the hundred most influential people in 2024. Jigar really enjoy this conversation and very much appreciate your service and good work.

[Ed Mylett]

Thank you very much. Sugar.

[Jigar Shah]

Thank you.

[Ed Mylett]

This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our Associate producer is Alison Weiss. Mia Silverio is our research lead, Jessica Lang is our research associate, Drew Burrows is our Technical Director, and Catherine Dillon is our Executive producer. Thank you for listening to Prof. G Markets from the Vox Media Podcast Network. If you liked what you heard, give, give us a follow and join us for a fresh take on markets on Monday.

[AT&T Representative]

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[Scott Galloway]

And the.