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

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)

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)

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?”

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.

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.