The Lesson Nuclear Companies Should Take From the Dot-Com Boom

Summary

Podcast Summary: "The Lesson Nuclear Companies Should Take From the Dot-Com Boom"

Podcast: Shift Key with Robinson Meyer and Jesse Jenkins
Host: Heatmap News
Date: October 29, 2025
Guests: Skanda Amarnath (Executive Director, Employ America)
Main Theme:
How the current AI and nuclear energy boom mirrors past technology booms, what’s driving high electricity prices—especially in New Jersey—and the risks, opportunities, and political realities shaping the US’s clean energy transition.

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Main Theme & Purpose

This episode explores the intersection of rising electricity prices, especially in New Jersey, the surging interest and investment in nuclear energy (spurred by the AI boom), and the cyclical nature of energy and technology markets. The discussion draws lessons from the 1990s dot-com boom and bust for energy companies—particularly nuclear—as the US wrestles with decarbonization, changing energy demands, and new political forces.

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Key Discussion Points

1. New Jersey’s Electricity Price Crisis & Politics

• Electricity prices are the major issue in the New Jersey governor’s race. This year, bills have jumped by 20% ([04:25], Skanda Amarnath).
• Both major candidates are centering their campaigns on controlling utility costs:
  • Democrat Mikie Sherrill pledges to freeze bill increases ([04:50]),
  • Republican Jack Cittarelli frames the price spike as a call for political change.
• The focus has dramatically shifted from offshore wind policy to affordability, reflecting mounting public pressure ([05:01]).
• The PJM Interconnection region’s supply constraints—not isolated to New Jersey but also hitting neighboring states—play a major role ([05:25]) as demand is now growing after years of stagnation, much of it driven by data center buildout ([07:31], [08:44]).

"It's the key economic issue that's on the table."
—Skanda Amarnath ([04:11])

2. What’s Driving Up New Jersey Power Prices?

• Retirement of coal plants and lack of replacement with new supply (mostly “gas and nuclear, and to a much lesser degree, renewables”) means New Jersey leans heavily on the PJM market ([07:22]).
• Data centers are a significant part of the new demand, differentiating New Jersey from other states ([09:00], [09:07]).
• Transmission and distribution costs remain the biggest long-term driver of price increases ([10:28]).
• Politically, this pressure has pushed even pro-renewables candidates toward supporting nuclear expansion and regulatory reforms.

"You haven’t really replaced it with anything. That's kind of the big deficiency that sort of New Jersey has to figure out."
—Skanda Amarnath ([07:41])

3. Campaign Promises: Feasibility and Tools

• The viability of a utility bill freeze is limited—regulatory “social benefit charges” like those from the Regional Greenhouse Gas Initiative (RGGI) or renewable portfolio standards are areas where governors have some leverage ([11:41]).
• Long-term solutions require fast-tracking permitting and expediting solar, battery, and nuclear upgrades.
• The panel questions the continued heavy subsidization of renewables now that the industry is maturing, suggesting those funds might better address affordability in the immediate term and resilience in the long run ([13:34], [16:10]).

"There's some pretty tough questions that people should start asking about how useful this is at this point of maturity in renewables."
—Skanda Amarnath ([13:34])

4. Nuclear’s Renaissance... or Bubble?

• Stock prices for nuclear firms are surging—Oklo up 530%, Nuscale up 118%, reflecting massive investor appetite ([22:19]).
• There are parallels to clean energy stock frenzies post-IRA, but many companies (particularly startups and SPACs) offer speculative or highly risky propositions ([23:42], [24:53]).
• Risks: A boom-bust cycle like prior nuclear waves—many first-of-a-kind projects stall, costs explode, and after failures, capital flees for a decade or more ([25:14], [27:33]).

"There's clearly a lot of hype and a lot of willingness to take risk. And it's not really backed up by fundamentals ... but that is something that people will look to in a bust and say, what were we doing here?"
—Skanda Amarnath ([25:35])

• Companies like Holtec are leveraging the moment (and plans for IPOs) to pitch restart projects (e.g., Indian Point in New York), but some of these are possible, some are more show ([26:52], [29:12]).

5. Lessons from the Dot-Com Era

• During the late-90s tech boom, power and gas markets were similarly turbulent and speculative ([33:11]).
• Much like now, expectations of massive demand growth didn’t always materialize, but energy infrastructure spending outlived the tech bust ([34:03]).
• The winners in that wave (e.g., Amazon) survived by securing long-term, patient capital, not by banking on short-term euphoria ([35:05]).
• Nuclear and long-term infrastructure projects should avoid short-term debt and seek private equity or other stable/institutional investors who won’t retreat at the first sign of trouble ([35:34], [36:14]).

"If you can use the moment to secure stickier capital, more patient capital, then it can work to your advantage."
—Skanda Amarnath ([35:14])

6. AI Demand & the Broader Energy Boom

• AI’s demand for power is giving energy projects predictable, deep-pocketed customers—which is great for scaling, but ties the fate of energy infrastructure to a single, volatile industry ([31:55]).
• There are risks of tying energy investment cycles too closely to AI’s boom-bust dynamics; infrastructure outlasts technology bubbles ([32:27]).
• Successful navigation will depend on matching investment horizons and ensuring infrastructure expansion isn’t unduly exposed to hype cycles.

"We're in a very frothy moment ... there's talk of this being a bubble, certainly an enormous outlay of capex and investment."
—Jesse Jenkins ([32:27])

7. Managing Current Inflation & Capacity Shortfalls

• In many regions (including New Jersey), true deficits in dispatchable, “clean firm” capacity drive inflation more than short-term shocks ([39:55]).
• Policy options for handling new demand (like data centers) include requiring them to self-supply power, regulate their impact on grids, or push them to less strained regions ([39:38]).
• Decarbonization in the Northeast depends heavily on nuclear, hydro, and (to a lesser degree) gas, all products of earlier infrastructure booms ([41:25]).

"For all the solar penetration we've seen ... the big workhorses of decarbonization ... were big infrastructure projects."
—Skanda Amarnath ([41:12])

8. Historical Parallels: The Long Arc of Energy Booms and Busts

• The 1970s (“economic dissatisfaction,” political volatility, investments not panning out as forecasted) offer echoes: huge plans for nuclear that were never realized, sometimes due to overestimating demand ([43:34]).
• Boom-and-bust dynamics in energy are long-term—multiple years or decades, not just quick cycles ([44:36]).
• The biggest challenge now is workforce and supply chain capacity: lost know-how makes new buildouts hard without international support ([45:56]).

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Notable Quotes and Memorable Moments

• On the risk of bubble mentality:
  "The more new stuff you're doing [in nuclear], the harder it is, the more likely it is that you will get heartburn."
  —Skanda Amarnath ([25:14])
• On the central issue in NJ’s election:
  “It's the key economic issue that's on the table.”
  —Skanda Amarnath ([04:11])
• On the dot-com aftermath for infrastructure:
  “Power infrastructure spending continued in 2001, 2002 and briefly 2003. And then it had another wave…”
  —Skanda Amarnath ([34:03])
• On capital strategy:
  “If you can use the moment to secure stickier capital, more patient capital, then it can work to your advantage.”
  —Skanda Amarnath ([35:14])
• On the limitations of federal data (during the government shutdown):
  “We're all flying blind on some level here, but from what we can tell, things seem not great, but also not necessarily like falling off a precipice either.”
  —Skanda Amarnath ([47:34])

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Timestamps for Important Segments

• [04:11] – Skanda Amarnath: The central role of power prices in NJ politics
• [07:41] – Discussion of capacity loss and failed supply replacement in New Jersey
• [09:00] – Data center demand as the new power price driver
• [13:34] – Questioning continued renewables subsidies in a “mature” market
• [22:19] – Nuclear stock price frenzy; “nuclear mania”
• [25:14] – Hype cycles, speculative risk, and the lessons of project failures
• [35:14] – Lessons from the dot-com bust: importance of long-term capital in energy infrastructure
• [39:55] – True regional dispatchable capacity shortfalls and decarbonization challenges
• [43:34] – 1970s nuclear boom, bust, and over-optimism on demand
• [45:56] – How workforce and supply chain knowledge have eroded since nuclear's heyday

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Takeaways and Guidance for the Energy Sector

• The AI boom is helping drive both real demand and risky exuberance in energy investment—presenting both historic opportunity and familiar pitfalls.
• Politicians are forced to prioritize affordability and grid reliability, nudging policy back toward nuclear and away from renewables dominated by “social benefit charges.”
• Lasting infrastructure success will depend on the energy sector avoiding past cycles’ mistakes: shunning short-term thinking, securing long-term capital, and deliberately rebuilding technical know-how.
• Energy policymakers and investors should look beyond hype, focus on durable investment and workforce strategies, and draw clear-eyed lessons from past booms and busts.

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Overall Tone & Style

The episode blends expert analysis with pragmatic skepticism and a lively, accessible tone. The hosts and guest are candid about the industry’s tendencies toward exuberance and disappointment, while stressing the need for nuanced, historically informed strategy in navigating the next phase of America’s energy transition.

Transcript

[Robert Zemeyer]

You are listening to Shift Key Heat Maps weekly podcast about decarbonization and the shift away from fossil fuels. This week we're talking to the economic analyst, market observer and New Jersey resident Skanda Amarnath about why New Jersey's power prices are so high and why electricity has become so key to the New Jersey Governor's race and what lessons all of us in the clean energy sector and decarbonization should take away from the 90s tech boom, given that we are now in an AI tech boom. All that and more on this episode.

[Jesse Jenkins]

Of Shift Key after this.

[Robert Zemeyer]

America's future depends on reliable power provided where and when it's needed. It depends, in other words, on long duration energy storage. Hydrostor's advanced compressed air energy storage technology is helping build the grid of tomorrow with secure, reliable power and thousands of American jobs. With bipartisan support and a flexible supply chain, long duration energy storage is the missing puzzle piece to scale energy independence. Learn about Hydrostor's Willow Rock project and the future of energy storage at Hydrostor ca. This episode of Shift Key is brought to you by Shocked. So I want to tell you about a new podcast called Shocked from my friends at the University of Chicago's Institute for Climate and Sustainable Growth. Each episode you'll hear journalist Amy Harder and economist Michael Greenstone share new ways of thinking about climate change and cutting edge solutions to do things like win the battery race, reduce the risks of greenhouse gases that have already been released, and use artificial intelligence to predict polluters and the weather. To listen to Shocked, search for Shocked in your podcast app. That's Shocked. Hi, I'm Robert Zemeyer, the founding executive editor of Heat Map News, and you are listening to Shift Key Heatmaps weekly podcast about decarbonization and they shift away from fossil fuels from on this week's show, we're talking about the AI boom, about state electricity politics, and about lessons that previous economic moments can teach us about this one. I'm talking today with Skanda Amarnath. He's the executive director of the think tank Employee America, and he's one of the most thoughtful observers and commentators on the Federal Reserve and the broader US Macroeconomy. He was also previously a vice president at MKP Capital Management, and he served as an analyst within the capital markets.

[Jesse Jenkins]

Function of the Federal Reserve bank of New York.

[Robert Zemeyer]

But he's also, crucially, a longtime New Jersey resident, and electricity prices, as you may have heard, have played a major role in the New Jersey governor's race. They are probably the number one economic issue, if not the number one issue in the governor's race. And so I wanted to talk to Skanda to get a sense of how he's thinking about this moment of red hot power prices within the context of New Jersey's economy, but also to get a sense of how he's thinking about the ongoing AI boom, generally, what it means for nuclear companies, what it means for the clean energy economy, and whether previous economic booms, Whether during the 90s or earlier, what they can teach us about the current US Economy, what might be happening now and where we're going. So, Scott Amarnath, welcome to Shiftkey.

[Skanda Amarnath]

Thanks for having me.

[Robert Zemeyer]

It's funny.

[Jesse Jenkins]

This is a podcast run by one New Jersey resident, Jesse, one former New Jersey resident, me. But you are a current New Jersey resident, longtime New Jersey resident. You both grew up there and live there now.

[Robert Zemeyer]

And this is the last show we're.

[Jesse Jenkins]

Going to do before the election, this kind of weird off year election that always happens that has these three big races of the New Jersey governor's race, the Virginia governor's race, and then the New York mayor's election.

[Robert Zemeyer]

In the New Jersey governor's race in.

[Jesse Jenkins]

Particular, electricity has become this huge issue.

[Robert Zemeyer]

Can you just start by giving us.

[Jesse Jenkins]

A sense as a New Jersey resident of like, what is the role that electricity prices have played in the race? Like, how significant have they been or even how ubiquitous have they been?

[Skanda Amarnath]

Yeah, I'd say it's the key economic issue that's on the table. And both the Republican candidate, Jack Cittarelli.

[Unidentified Expert/Analyst]

Has been trying to wield it as a reason for change.

[Jesse Jenkins]

Right.

[Unidentified Expert/Analyst]

For the reason for your utility bills.

[Skanda Amarnath]

Have gone up this year by 20%. And so he is trying to make this his key economic issue to run on. And at the same time, the Democratic candidate, who I'd say is the favorite still, at least by the betting markets, she has also tried to basically outflank.

[Unidentified Expert/Analyst]

Jeff Chitrelli in highlighting the importance of getting utility bills under control. Basically, she's called for an emergency to.

[Skanda Amarnath]

Freeze utility bill increases for a year.

[Unidentified Expert/Analyst]

Taking like a more dramatic step.

[Skanda Amarnath]

This is obviously a little bit of a shift from the big polarizing issue.

[Unidentified Expert/Analyst]

In New Jersey on energy policy over.

[Skanda Amarnath]

The prior three to four years, which.

[Unidentified Expert/Analyst]

Was offshore wind, instead of focusing on.

[Skanda Amarnath]

What kind of supply to build, it's.

[Unidentified Expert/Analyst]

Really just hang on. These price increases are very steep for New Jersey residents.

[Skanda Amarnath]

And that's in large part a function of New Jersey is increasingly dependent on.

[Unidentified Expert/Analyst]

The broader PJM interconnection region for meeting supply needs.

[Skanda Amarnath]

And in pjm, supply is Short.

[Unidentified Expert/Analyst]

So supply is short relative to demand. This region includes Data Center Alley.

[Skanda Amarnath]

It includes a variety of sources that are going to become more relevant on the demand side over the coming years. And supply itself has rolled off in.

[Unidentified Expert/Analyst]

A few different places, including in New Jersey.

[Skanda Amarnath]

And so you're seeing this sort of big increase in utility bills this year. There's likely going to be another big increase next year. And you kind of have to say something about it. And I think both candidates recognize this.

[Unidentified Expert/Analyst]

Is at least a salient issue on the economics of running the state.

[Jesse Jenkins]

You mentioned that electricity supply is short in pjm. But like, what is driving these big price increases in New Jersey specifically? You know, in the national story we talk about how distribution costs, the cost of the wires and the transformers is like driving this huge rise in electricity costs even as the cost of generation goes down.

[Robert Zemeyer]

Like, is that the dynamic in New.

[Jesse Jenkins]

Jersey or is there more specific effects happening?

[Skanda Amarnath]

There are other states within PJM which.

[Unidentified Expert/Analyst]

Have seen comparable price increases. Ohio and Pennsylvania, these are very recent, so this past summer. So that's the reason why you wouldn't have shown up in Maryland the year before.

[Skanda Amarnath]

If you don't depend on interstate sources of energy supply, it's less relevant. So Virginia, it's not as salient. And so if you can kind of meet your own state's needs, you don't. This doesn't matter as much in the case of New Jersey, especially the supply.

[Unidentified Expert/Analyst]

Of more dispatchable firm power those sources.

[Skanda Amarnath]

Have rolled off over the last several years. PJM capacity prices, the market that's supposed to clear to kind of price the.

[Unidentified Expert/Analyst]

Need for this type of capacity was.

[Skanda Amarnath]

Actually very low for a long time. So a lot of plants were basically it was a price signal for when.

[Unidentified Expert/Analyst]

Should we retire the next coal plant.

[Skanda Amarnath]

And so basically all of New Jersey's.

[Unidentified Expert/Analyst]

Coal plants were retired over last several years.

[Skanda Amarnath]

Not some combination of PJM pricing, probably some dose of regulation involved in that as well. But now New Jersey is just completely.

[Unidentified Expert/Analyst]

About mainly gas and nuclear and to a much lesser degree, renewables. And so that shift has meant you've.

[Skanda Amarnath]

Lost supply over time and you haven't really replaced it with anything.

[Unidentified Expert/Analyst]

That's kind of the big deficiency that sort of New Jersey has to figure out. But New Jersey's not alone in terms of seeing big price increases from these sort of like BJM capacity auctions that have shifted clearly from being very low price prices to now super high prices that governors are now come together to try and cap in various ways.

[Jesse Jenkins]

Right. This is like governorship here in Pennsylvania. Basically after last year's capacity auction in pjm like blew the gasket and blew through all previous records basically somewhat ordered a price cap in PJM on this year's capacity auction.

[Robert Zemeyer]

And this is something we, I know I've observed before but like when you.

[Jesse Jenkins]

Look at most of the electricity price increases across the US they are not largely driven by the data center build out and or the supply shortfall from just simply not having enough power to meet demand when you need the power.

[Robert Zemeyer]

That does not seem to be the.

[Jesse Jenkins]

Case in New Jersey.

[Robert Zemeyer]

Like it does actually seem like data.

[Jesse Jenkins]

Centers are driving the bulk of new demand in PJM or at least driving a significant amount of demand in new bjm.

[Robert Zemeyer]

And the anticipation of those data centers.

[Jesse Jenkins]

Through the capacity market is itself driving higher prices in New Jersey.

[Robert Zemeyer]

The story in New Jersey does seem.

[Jesse Jenkins]

To be a data center story to a degree that is not true. Like outside of the Mid Atlantic, is that right?

[Skanda Amarnath]

I think that you can probably get a healthy debate between various analysts about.

[Unidentified Expert/Analyst]

Just how much data center is really adding to utility bills right this second.

[Skanda Amarnath]

I think the safe answer is to say it has probably caused something of an inflection. So, so from seeing stagnant, stagnating demand and maybe eroding supply, the fact is.

[Unidentified Expert/Analyst]

Like demand is no longer stagnant and.

[Skanda Amarnath]

Utilities are kind of seeing that forecasted demand increase and obviously it's in their interest to see that forecasted demand increase. But like there's clearly some kind of.

[Unidentified Expert/Analyst]

Like inflection going on from stagnating slash declining demand to one of it's about to start increasing totally.

[Robert Zemeyer]

And it does. I mean we haven't even quite shifted.

[Jesse Jenkins]

Into the load growth scenario yet. We're watch like we're coming into the load growth story. But even right now what's so significant is that we're watching load no longer just plateauing or declining. Right?

[Unidentified Expert/Analyst]

Yeah, that's exactly it.

[Skanda Amarnath]

You can get a lot of people.

[Unidentified Expert/Analyst]

Coming in and saying oh like we.

[Skanda Amarnath]

Have this is all really about stuff that's nothing related to data centers yet, but it's kind of coming.

[Unidentified Expert/Analyst]

And that itself is something that in various ways markets can kind of price.

[Skanda Amarnath]

But obviously at the heart of it is like yeah, we have supply that is either atrophying in various ways because you're retiring plants, generation, it's also aging infrastructure means when you're updating it, that's.

[Unidentified Expert/Analyst]

Also D and D cost, transmission and distribution cost that has to be factored in and that when you do any kind of cost decomposition that is going to always be the main reason why prices are going up over time. Even if cost of generation can be more volatile in the short run, it's really about D and D cost, that kind of matters. And so that's clearly also at play in why people are seeing higher utility bills.

[Robert Zemeyer]

So Mikey Sherrill, the kind of front.

[Jesse Jenkins]

Runner, Democratic candidate, as you were saying, has pledged to freeze utility bills for some number of years.

[Robert Zemeyer]

Can she do that?

[Jesse Jenkins]

And like, how would you do that? Because unlike say in New York where, sorry, Mama Amdani has pledged to freeze the rent, he has like, administrative ways he could freeze the rent.

[Robert Zemeyer]

Does the governor have a similar way.

[Jesse Jenkins]

To freeze utility bills in New Jersey? And if not, how will she pull off this campaign promise that she has made pretty central to her campaign so far?

[Skanda Amarnath]

Yeah, it's a good question. And I think there are probably people.

[Unidentified Expert/Analyst]

Who are more steeped in New Jersey state law who can give a variety of answers here.

[Skanda Amarnath]

It's probably going to mean, like, there's obviously things in your utility bill in.

[Unidentified Expert/Analyst]

Terms of generation cost and transmission distribution costs. These are really hard things to figure out in the short run.

[Skanda Amarnath]

Where there is probably some room for.

[Unidentified Expert/Analyst]

Her to be able to maneuver is on what we call social benefit charges. Right. So there is like a kind of.

[Skanda Amarnath]

Carbon trading system across states.

[Unidentified Expert/Analyst]

In terms of the Regional Greenhouse Gas Initiative.

[Jesse Jenkins]

There is regi. This is like the kind of quasi carbon trading system that exists across like, what, the Northeast?

[Skanda Amarnath]

Yeah, we'll say hard emphasis on the quasi bit. There is like renewable portfolio standards that.

[Unidentified Expert/Analyst]

Are ways in which, let's say a lot of renewable sources of power are subsidized. There are various subsidies that are were made for New Jersey's largely failed build out of offshore wind.

[Skanda Amarnath]

So there are like sources of funding.

[Unidentified Expert/Analyst]

That may be available to be able.

[Skanda Amarnath]

To kind of cushion the cost for.

[Unidentified Expert/Analyst]

Consumers without necessarily strong arming utilities. And if you did strong arm utilities, then you would probably get into a much more litigious battle.

[Skanda Amarnath]

They'll have to think about how to navigate that. My impression is that they've talked a.

[Unidentified Expert/Analyst]

Lot about fast tracking, permitting and finding ways to expedite the deployment of solar and batteries as well as well as.

[Skanda Amarnath]

Like thinking about some of the upgrade.

[Unidentified Expert/Analyst]

Opportunities that may still exist with respect.

[Skanda Amarnath]

To the nuclear power plants in New Jersey, to some of the gas assets.

[Unidentified Expert/Analyst]

That are in New Jersey.

[Skanda Amarnath]

They're going to have to probably put all hands on deck and if they want to do anything over the longer term. Right.

[Unidentified Expert/Analyst]

She's talked about building another reactor at New Jersey has three nuclear reactors in the southern tip of New Jersey, basically. And so she's kind of suggested a path for being able to build a fourth one that'll probably have to involve working with other states, finding ways to pool funding.

[Skanda Amarnath]

But again, to find that funding, you're.

[Unidentified Expert/Analyst]

Probably going to have to require a lot of reforms to, again, all these social benefit charges that are basically ways.

[Skanda Amarnath]

In which there's been a lot of.

[Unidentified Expert/Analyst]

Subsidization of renewables, of decarbonization. But at this point, I think there's some pretty tough questions that people should.

[Skanda Amarnath]

Start asking about how useful this is.

[Unidentified Expert/Analyst]

At this point of maturity in renewables. And is it really useful to keep relying on renewable portfolio standards, the quasi carbon trading system that exist? Could you better devote those revenues and resources to, obviously, in the short run, affordability concerns, but ideally over the long run to something a little bit more robust and resilient for meeting the state needs?

[Robert Zemeyer]

Let's set the legal questions aside.

[Jesse Jenkins]

Like, is the way to do that through pulling back these social benefit charges? Or like, if utility costs are going up but you're freezing in consumer rates, what balances that equation?

[Skanda Amarnath]

Yeah, I mean, it has to be some source of funding, right? Like, if you're. This is kind of like, think about the German gas freeze that they did.

[Unidentified Expert/Analyst]

They basically subsidized the supply side directly through sort of fiscal policy for producers and distributors, while basically saying, we'll pay for it instead of the consumer paying for it.

[Skanda Amarnath]

So that's a version of it. You have to think about how you're going to, like, fund that in government. It's going to be, hey, there is, like, funding that is set aside for various types of. I think the most logical and intuitive.

[Unidentified Expert/Analyst]

Place to look is probably in, like, how various clean energy initiatives are put.

[Skanda Amarnath]

Together for what probably if you want.

[Unidentified Expert/Analyst]

To deploy more solar in New Jersey.

[Skanda Amarnath]

How much emphasis needs to be placed.

[Unidentified Expert/Analyst]

On the compliance market for renewable portfolio.

[Skanda Amarnath]

Standards, how much renewable power you need.

[Unidentified Expert/Analyst]

To buy for satisfying a certain renewable quota.

[Skanda Amarnath]

But that's not actually the same thing as deployment. And there's, like, probably a lot more.

[Unidentified Expert/Analyst]

To be done in terms of permitting reforms and lowering the cost of deployment.

[Skanda Amarnath]

Than there is in terms of subsidization. And so there's a lot of that kind of, like, rationalization that probably needs to happen. And identifying that obviously will involve some.

[Unidentified Expert/Analyst]

Level of breaking from a certain policy equilibrium in inertia that's dominated the last 15 years.

[Skanda Amarnath]

And for New Jersey, if Mikey Cheryl.

[Unidentified Expert/Analyst]

Wants to be able to achieve this, to me, the obvious place is like how do you find the cost savings and then devote them at least in the short run to rate pairs and cushing the bullet for them so that next summer they're not seeing a big spike in their utility bills again. Which I think it's going to be difficult.

[Skanda Amarnath]

And I think that this is going.

[Unidentified Expert/Analyst]

To require like tough choices that even.

[Skanda Amarnath]

Though it obviously sounds like a very.

[Unidentified Expert/Analyst]

Appealing message for campaign, it almost becomes like a very big forcing mechanism for.

[Skanda Amarnath]

Hey, let's have some uncomfortable conversations about.

[Unidentified Expert/Analyst]

How much should we really be subsidizing solar, how much should we really be subsidizing offshore wind? Obviously that's basically dead under the Trump administration. And if that's the case, how can we better allocate resources over the longer term? How do we make sure this, these like initiatives also carry like some long term stickiness across legislative and gubernatorial cycles and presidential cycles. Because I think that's been the biggest issue with the offshore wind build out is like obviously for all the failures, whatever.

[Skanda Amarnath]

Like, I think there was an assumption.

[Unidentified Expert/Analyst]

That if, let's say Harris had won.

[Skanda Amarnath]

Or if Trump hated offshore wind less.

[Unidentified Expert/Analyst]

They might still be going down this path. But as it stands now, there's probably going to have to be some level of pivoting that takes place. We've already seen that from the governor basically saying we're going to put this stuff on ice and maybe think about what else we can do. Because you kind of, you need a cooperative federal government to go ahead with anything on offshore.

[Jesse Jenkins]

Right. You kind of need a cooperative federal government to do anything on these large scale capital intensive power plant projects. And so to some degree, if they anticipate that they're going to build more nuclear, that's recognizing that the Trump administration is like way more pro nuclear at the moment than it is, say pro any other source of zero carbon electricity, except maybe geothermal.

[Skanda Amarnath]

Yeah, I mean, I think it's going to require like, and I don't know.

[Unidentified Expert/Analyst]

There'S no real geothermal resources in New Jersey.

[Skanda Amarnath]

So New Jersey is probably a place.

[Jesse Jenkins]

Where we're going to mine the Millville fault. Yes.

[Skanda Amarnath]

So there is like a need for both federal state alignment as well as bipartisan alignment. We've seen that in the campaign. Just to say something about obviously the.

[Unidentified Expert/Analyst]

Republican candidate who I think has a shot at winning.

[Skanda Amarnath]

I think Jack Cittarelli was formerly known to be a rhino moderate. But since that time he's run for governor three times and each time he's.

[Unidentified Expert/Analyst]

Kind of taken the lesson that he needs to be more aligned with Trump to have a chance of winning.

[Skanda Amarnath]

He has tried to say he's pro nuclear as well. The Republicans on the state legislature have.

[Unidentified Expert/Analyst]

Also tried to call out Democrats for being anti nuclear.

[Skanda Amarnath]

The truth of the matter is, like.

[Unidentified Expert/Analyst]

Nuclear itself will require support in various ways.

[Skanda Amarnath]

Chris Christie basically achieved what a lot.

[Unidentified Expert/Analyst]

Of previous Democratic governors failed, which was in closing Oyster Creek. And when Phil Murphy came into office, it was basically nearly ready to be decommissioned. So it kind of closed, I think, in January 2018, which is about the time when Phil Murphy came into office.

[Skanda Amarnath]

Phil Murphy subsequently kind of focused on.

[Unidentified Expert/Analyst]

Like, ultra wind, but did set up, like, the tax credits that were able to keep the other three reactors online.

[Skanda Amarnath]

Nuclear has not been a place where.

[Unidentified Expert/Analyst]

New Jersey's focused for a while.

[Jesse Jenkins]

Right.

[Unidentified Expert/Analyst]

There's been a real opportunity cost of, hey, like, we've devoted all this time and energy into understanding how to, like, deploy offshore wind and didn't really do that successfully.

[Skanda Amarnath]

It's first of a kind in the United States.

[Unidentified Expert/Analyst]

And that itself came with a lot more problems that you guys have discussed on this podcast at various points. Then offshore wind, the economics of it, while it may work in the North Sea a little harder in the US.

[Skanda Amarnath]

It'll probably be successful in a couple of places.

[Unidentified Expert/Analyst]

But for New Jersey proved to be too much to achieve.

[Jesse Jenkins]

Yeah, and the economics really deteriorated during the project, too. I mean, the inflationary episode, inflation, interest.

[Skanda Amarnath]

Rates, supply chains, it all kind of came together there. But New Jersey does have nuclear assets and, like, it has three, three large light water reactors, two pressurized water reactors.

[Unidentified Expert/Analyst]

One boiling water reactor. They are still alive and kicking and.

[Skanda Amarnath]

There is, like, space there for more.

[Unidentified Expert/Analyst]

So, like, especially in terms of siting.

[Skanda Amarnath]

It'S not really that hard to see.

[Unidentified Expert/Analyst]

That that's an attractive place to build another reactor if, like, you can get the resources together and you can start to get the project delivery details right.

[Skanda Amarnath]

That is actually the most important part of this. The risk is, especially when you deal with like, a legislature and probably a.

[Unidentified Expert/Analyst]

Lot of different parts of the executive branch of New Jersey is how informed are they on making these types of decisions, especially at a time when we're kind of in this nuclear mania moment, right? There's like, certainly a lot of hype.

[Skanda Amarnath]

Some of it seems promising or interesting. And that's good, especially because these are assets for decarbonization. They seem to carry a broader appeal beyond climate hawks. And yet at the same time, there's.

[Unidentified Expert/Analyst]

Also a lot of distractions, right? There's a lot of areas where you're dealing with, I Don't call it vaporware, but it is like either very speculative technology, a lot of first of a.

[Skanda Amarnath]

Kind technology and basically misdiagnosing why nuclear.

[Unidentified Expert/Analyst]

Has struggled to get off the ground in the United States. What were the main reasons why it's become proven to be very difficult and costly to build nuclear reactors and that.

[Skanda Amarnath]

Is not less to do with a.

[Unidentified Expert/Analyst]

Particular design choice or oh, we need to make them smaller, more modular and more to do with hey, like the actual knowledge of engineering, procurement and construction and nuclear is like very unsexy stuff, but it's like, like very hard. You got to have a prepared supply chain, you got to have a trained workforce. And that stuff is where a lot of these cost blowouts have been most prominent, especially the last set of plants that were built in Georgia, last set of reactors.

[Robert Zemeyer]

This episode of Shift Key is brought to you by Hydro Store. The US economy is growing fast and so is its demand for reliable energy. But generation alone isn't enough. Long duration energy storage is the key to building a resilient secure grid that can meet tomorrow's needs. Hydrostor's advanced compressed air energy storage technology stores clean energy for hours at a time and then delivers baseload power when it's needed most. Hydrostor's Willow Rock energy storage center in California will provide 500 megawatts of storage, enough to power a city of half a million million people for more than eight hours and employ over 6,500 people during construction. Backed by bipartisan support at all levels of government, Hydrostor is leading the charge in utility scale storage. With projects underway across America. We're helping communities unlock economic growth and achieve energy independence. Learn more about Hydrostor's unique technology and how it's powering America's future at Hydrostore. Cat Ca so let's talk about this.

[Jesse Jenkins]

Kind of nuclear mania. Looking nationally, there's been this huge explosion of interest in nuclear and what sticks out to me and something I think we talk about less on this show and less in Climate World, but is extremely salient to the actual individuals involved in this, is that any company that works with nuclear has seen its stock price explode. I think oklo is up 530% this year. Nuscale is up 118% this year. Fermi, which is this kind of dubious Rick Perry helmed company that's building a Trump themed data center and power plant complex somewhere in Texas, popped when it IPO'd like.

[Robert Zemeyer]

I feel like what's the question I'm.

[Jesse Jenkins]

Trying to ask here?

[Skanda Amarnath]

Like what is There a nuclear bubble?

[Robert Zemeyer]

Is there a nuclear bubble? Exactly.

[Jesse Jenkins]

Like as people who are interested in long term decarbonization. Number one, this is like quite reminiscent of the environment that hit clean energy companies right as Biden was taking office. And number two, like, is there a nuclear bubble?

[Robert Zemeyer]

And what does this mean for how.

[Jesse Jenkins]

We should think about nuclear going forward? Because at the end of this, I think the only way that any of this helps the climate is if we build a lot more plants.

[Skanda Amarnath]

Yeah, we are definitely in a moment.

[Unidentified Expert/Analyst]

When there's a lot of froth.

[Skanda Amarnath]

I don't want to say everything. It's always like it'll feel unfair and.

[Unidentified Expert/Analyst]

Not accurate to go after every single proposition that's in markets like, for example, Rick Perry's For Me America. They did an IPO and raised a.

[Skanda Amarnath]

Lot of capital pretty successfully. And they have a plan for how they want to build a lot of stuff out gas, solar batteries.

[Unidentified Expert/Analyst]

They want to build four AP1000s, the large light water reactors that are kind of seen as the most recent that we've built in the United States. And they want to do that and they think they could do them at the same speed that China does, builds those same reactors.

[Skanda Amarnath]

On the surface of it, there are parts of it that seem interesting and promising. On the other hand, there's also parts.

[Unidentified Expert/Analyst]

Of it that feel very much wrapped.

[Skanda Amarnath]

Up in the speculative frenzy. It gets more exaggerated when you get.

[Unidentified Expert/Analyst]

To examples like oklo, right, Where OKLO.

[Skanda Amarnath]

There seem to be very politically connected.

[Unidentified Expert/Analyst]

Specifically to Chris Wright.

[Skanda Amarnath]

And so that seems to that plus some very small milestone successes in the.

[Unidentified Expert/Analyst]

Fuel supply chain are now being sort of magnified into. They're going to be very successful in building out their first of a kind technology.

[Skanda Amarnath]

And even in the space of small.

[Unidentified Expert/Analyst]

Modular reactors, they, what they're offering seems at least substantially more risky than what may be outside of the space. So even compared to like GE's proposition for a small boiling water reactor, the technology that's involved with like OKLO is like kind of out there.

[Skanda Amarnath]

And one of the things, the lessons.

[Unidentified Expert/Analyst]

Of nuclear, if you kind of look at the history, is the more new stuff you're doing, the harder it is, the more likely it is that you will get heartburn. And in terms of cost of schedule and you never want to do this again, it'll involve a lot of bankruptcies, as it did with the case of the Georgia reactors that were built in the last decade.

[Skanda Amarnath]

And so this is something that's like a sign that there's clearly a lot.

[Unidentified Expert/Analyst]

Of hype and a Lot of willingness to take risk.

[Skanda Amarnath]

And it's not really backed up by like fundamentals that that can be sometimes overrated in a boom. But that is like something that people.

[Unidentified Expert/Analyst]

Will look to in a bust and say, what were we doing here? Why was the price of the stock so high?

[Skanda Amarnath]

What it is doing is probably encouraging more companies to either tap capital markets.

[Unidentified Expert/Analyst]

So for example, holtech, they're trying to start up the reactors in the Palisades site in Michigan. So they're trying to do a pal.

[Skanda Amarnath]

The Palisades restart.

[Unidentified Expert/Analyst]

They have a loan from the loan programs office.

[Skanda Amarnath]

And they're trying to pitch that they can do a lot of other things.

[Unidentified Expert/Analyst]

Too, like maybe restart Indian Point in New York.

[Skanda Amarnath]

And they have owned the site in New Jersey.

[Unidentified Expert/Analyst]

They were originally a New Jersey based company and still have pretty substantial operations in New Jersey.

[Skanda Amarnath]

But they own the site because they.

[Unidentified Expert/Analyst]

Made their money initially and just basically knowing how to close down nuclear plants very well.

[Skanda Amarnath]

And now they want to be involved.

[Unidentified Expert/Analyst]

In the business of starting them up.

[Skanda Amarnath]

And so they have their own small modular reactor they want to be able.

[Unidentified Expert/Analyst]

To build at various places, including in New Jersey. They're certainly better connected in terms of New Jersey legislature. So they're trying to pitch that small modular reactors are going to be the future and that they could build them at Oyster Creek where they helped to.

[Skanda Amarnath]

Close down the large boiling water reactor before.

[Unidentified Expert/Analyst]

So they're certainly a player and they want to do an IPO in early 2026.

[Skanda Amarnath]

So you're seeing like, hey, we could do this, we could do that.

[Unidentified Expert/Analyst]

We're also in a great position to capitalize on this moment of like nuclear optimism.

[Skanda Amarnath]

The thing is, this stuff is really long cycle. Even if you do this really well, if you look at China like they, for a lot of reactors they are building now, they actually struggle to build.

[Unidentified Expert/Analyst]

Them in a cost effective, timely manner originally. And they just kind of kept going and kept learning.

[Skanda Amarnath]

In the case of like the US like even if we do everything right, it's probably going to take us some time. What you worry about is everyone is really excited. They get too excited and then there's some dose of financial loss, someone's bearing.

[Unidentified Expert/Analyst]

And when that happens, like do they decide, I don't want to touch this again because that's the broader history of nuclear in the United States where just.

[Skanda Amarnath]

Like utility bankruptcies don't tend to happen.

[Unidentified Expert/Analyst]

In general because like it's a regulated industry that has a regulated rate of return you can earn. And yet the places where you see.

[Skanda Amarnath]

This happen typically involve investments in nuclear.

[Unidentified Expert/Analyst]

That have gone wrong. Long Island Lighting Co. These types of endeavors are very risky in the utility sector.

[Skanda Amarnath]

And it's when that happens and when.

[Unidentified Expert/Analyst]

You see loss that there's just loss aversion subsequently and then no one wants to touch this stuff ever again. The capital cycle to this stuff matters a lot. And it's not just a story about regulation and NIMBYs and the environment.

[Skanda Amarnath]

That's all.

[Unidentified Expert/Analyst]

It's really part of the story, a big part of the story. But it's also just like, hang on a sec. This stuff is really complicated to build, can be very risky, and in a moment when people are more risk seeking, everything can feel good. But that's not something you should bank on lasting in the absence of some really generous guarantees from the federal government, which we'll see like what that happens.

[Jesse Jenkins]

I want to pull out this whole tech news because I think it's really important to kind of understanding the whole picture here, which is that New York State recently, Governor Hochul said that she was hoping to get the New York Power Authority to contract and then successfully build a new roughly 1 gigawatt scale reactor somewhere upstate, to which Holtec, which was responsible for closing Indian Point, this kind of downstate, very close to New York, actually hooked into the New York local grid, which is a hard interconnection to get, said, hey, we could restart Indian Point for you and it would only take a couple billion dollars.

[Robert Zemeyer]

And it was a bit of a.

[Jesse Jenkins]

Shock first of all, because after Indian Point shut down, the message was like, this thing is completely shut down. We can never bring it back, it's over.

[Robert Zemeyer]

But also, I mean, the fact that.

[Jesse Jenkins]

Holtech is kind of preparing for an IPO seems not irrelevant to the overall kind of way they're beginning to cast themselves around some of these nuclear projects.

[Skanda Amarnath]

Yeah, I mean, it doesn't strike me as a coincidence that they are like.

[Unidentified Expert/Analyst]

Kind of unveiling that they have this.

[Skanda Amarnath]

Ability at a time when they probably.

[Unidentified Expert/Analyst]

Want to show that they have a lot of work they could be able to do.

[Skanda Amarnath]

And New York is another state that's.

[Unidentified Expert/Analyst]

Short on power and they're also going to have to, if they want to.

[Skanda Amarnath]

Meet any of the decarbonization goals, they're going to have to really take the.

[Unidentified Expert/Analyst]

Nuclear side of the equation seriously. Again, I don't think there's any geothermal sources that are available. And I think even in terms of solar and battery deployment, there are good reasons to be skeptical of how much you can penetration you can achieve from there alone.

[Skanda Amarnath]

It doesn't mean that what Holtak is saying is wrong.

[Unidentified Expert/Analyst]

Just to be clear, the Indian point.

[Skanda Amarnath]

From what I heard from third party observers, including Holtec skeptics, that this does seem like it's feasible.

[Unidentified Expert/Analyst]

Right.

[Skanda Amarnath]

And now you're getting more into Kathy Hochul probably feels worried about upsetting Westchester NIMBYs people who freaked out about like.

[Unidentified Expert/Analyst]

What could happen in a terrorist attack or what could happen if we have to evacuate a certain part of New York, we will be so exposed.

[Skanda Amarnath]

The politics seem to be evolving. Zoran Mamdani, who said in the debate it's worth exploring the restart, which is a diplomatic yes, even as I think.

[Unidentified Expert/Analyst]

His base may be less pro nuclear.

[Skanda Amarnath]

But Holtech is clearly trying to like hype up that they have a certain.

[Unidentified Expert/Analyst]

Portfolio of projects that they can do.

[Skanda Amarnath]

And I'm they seem to be a in this, in the landscape of nuclear companies.

[Unidentified Expert/Analyst]

Like they have certainly a reasonably high reputation, but they're all like, it's question.

[Skanda Amarnath]

Of like, can you cash in now?

[Unidentified Expert/Analyst]

Can you raise capital?

[Skanda Amarnath]

And if you can raise enough capital during the boom and not spend it poorly, maybe you can ride out what.

[Unidentified Expert/Analyst]

Will be at some point less hype, less mania, less froth.

[Skanda Amarnath]

And so that's kind of the moment.

[Unidentified Expert/Analyst]

For nuclear right now is like the capital markets are open for you.

[Skanda Amarnath]

Who knows how long that will last?

[Unidentified Expert/Analyst]

You might want to get in while the going is good.

[Robert Zemeyer]

One thing that really seems to characterize.

[Jesse Jenkins]

This moment is that like any industry that could be connected to AI is at this point incredibly tied up with AI. And I heard it during Climate Week from a number of different companies, which is the way that companies describe this basically is that like AI has been great for them because it's created a small number of highly informed consumers and.

[Robert Zemeyer]

They come in and they want the.

[Jesse Jenkins]

Same kind of thing no matter where they are in the country. And that is good for economies of scale, it's good for revenue because it means that companies can count on these big counterparties that are going to be able to have easy access to financing and are very predictable. But what it also means is that all these energy technologies are getting tied up with this one particular industry and one particular story in the economy and trend in the economy.

[Robert Zemeyer]

And so how should we in energy.

[Jesse Jenkins]

Or we in kind of decarbonization think about navigating this AI moment where there is a lot of demand. It means that companies that have been like starved for demand for so long are so happy to have a consumer, right? They're so happy to have a counterparty. There's Someone who wants new electrons and they can buy them from it. But at the same time, like we're in a very frothy moment. There's talk of this being a bubble, certainly a enormous, enormous outlay of capex and investment. Is there any kind of good way to navigate this moment?

[Skanda Amarnath]

It's a really good question.

[Unidentified Expert/Analyst]

And I think there's a couple of lessons to learn from the last time.

[Skanda Amarnath]

We had a tech boom slash tech.

[Unidentified Expert/Analyst]

Bubble and subsequent bust, which is the late 90s and early 2000s.

[Skanda Amarnath]

If you remember, at that time there was a lot of turbulence in power.

[Unidentified Expert/Analyst]

And specifically natural gas markets at that time.

[Skanda Amarnath]

So we had natural gas deregulation effects that were sort of slowly seeping in. It's how a number of people started making great fortunes with Enron. There's obviously parts of it that engaged in terrible behavior, but also a lot of smart power traders there. And they were clearly capitalizing on a.

[Unidentified Expert/Analyst]

Sort of new world where there was a need for more supply.

[Skanda Amarnath]

The theory that there was going to be all this demand growth because of.

[Unidentified Expert/Analyst]

The tech boom, even though that didn't actually pan out, the demand growth story that, oh my gosh, we have all computers and the Internet's going to require all this electricity. And that wasn't true.

[Skanda Amarnath]

And yet because of just aging infrastructure.

[Unidentified Expert/Analyst]

Issues, because there was still a need for more fuel. Right. We weren't like rich with natural gas at the time.

[Skanda Amarnath]

Power infrastructure still did well even during the tech bust. So power infrastructure spending continued in 2001, two and briefly 2003. And then it had another wave of.

[Unidentified Expert/Analyst]

Power infrastructure spending in 2005, 6, 7, 8.

[Skanda Amarnath]

That was like a story that started with like power and natural gas and.

[Unidentified Expert/Analyst]

Then became more about natural gas over time.

[Skanda Amarnath]

And so you could see how the tech boom and bust may ultimately be.

[Unidentified Expert/Analyst]

Decoupled from the power infrastructure spend.

[Skanda Amarnath]

What this means rally. There were a lot of companies that.

[Unidentified Expert/Analyst]

Went bankrupt from the tech boom to the tech bust. And I'm not just thinking about dot.

[Skanda Amarnath]

Com companies, but think about a lot.

[Unidentified Expert/Analyst]

Of the telecom providers, but the people who are building all the fiber and.

[Skanda Amarnath]

Cable, all that was built out by a lot of speculative companies. And they all kind of were racing.

[Unidentified Expert/Analyst]

To build basically to pay the bills.

[Skanda Amarnath]

You also had a lot of companies that were able to take advantage of the attractive financing of that time and.

[Unidentified Expert/Analyst]

Build some incredible businesses. Right.

[Skanda Amarnath]

The quintessential one is Amazon. Right. That Amazon Jeff Bezos basically raised as.

[Unidentified Expert/Analyst]

Much capital as he could and obviously.

[Skanda Amarnath]

He rode the.com boom and bust. But even through the bust what he did was able to secure a lot.

[Unidentified Expert/Analyst]

Of long term financing.

[Skanda Amarnath]

And so if you can use the.

[Unidentified Expert/Analyst]

Moment to secure stickier capital, more patient capital, then it can work to your advantage. That's not easy to do even in a boom. But that's probably the place where especially.

[Skanda Amarnath]

For stuff like you certainly shouldn't be.

[Unidentified Expert/Analyst]

Funding something like a nuclear reactor on short term debt. But if you can get sort of.

[Skanda Amarnath]

Like the long term capital, the investor.

[Unidentified Expert/Analyst]

Base that's patient, that's like where it's interesting that Brookfield, for example, is a private equity asset manager.

[Skanda Amarnath]

They are the private equity for all the things people complain about it. And there's a lot of things to legitimately complain about. They tend to be in a better.

[Unidentified Expert/Analyst]

Position to ride out the bust relative to public markets investors, those are ones who will, if the price collapses enough, they may be forced to sell.

[Skanda Amarnath]

In the case of private equity, like.

[Unidentified Expert/Analyst]

There are ways in which they basically demand that their investors lock up their money with them for a long period of time and so you're not forced to liquidate or forced to change behavior rapidly in the face of like market cycle dynamics.

[Skanda Amarnath]

It's going to be interesting with Brookfield is like involved right now with the.

[Unidentified Expert/Analyst]

Finishing, completing the construction of VC Summer.

[Skanda Amarnath]

Which was the other set of nuclear.

[Unidentified Expert/Analyst]

Reactors that we actually started building in the last nuclear renaissance, which was when late.

[Skanda Amarnath]

Which was in the late 2000s.

[Unidentified Expert/Analyst]

Right.

[Skanda Amarnath]

The LPO was created for financing nuclear reactors because natural gas prices are very high. And we created this whole entity and all of the utility companies showed a lot of interest at that time. And then what ended up happening was two projects broke ground.

[Unidentified Expert/Analyst]

One was in Georgia Vogel. The other was VC Summer in South Carolina.

[Skanda Amarnath]

Both of those involved a lot of bankruptcies. And what came out of that was Vogel was finally completed after many bankruptcies.

[Unidentified Expert/Analyst]

And VC Summer was not.

[Skanda Amarnath]

Now we're just seeing the announcement of.

[Unidentified Expert/Analyst]

Brookfield Asset Management, which is also where Mark Carney, Canadian Prime Minister, used to work.

[Skanda Amarnath]

They are financing the construction and they.

[Unidentified Expert/Analyst]

Also own the main reactor company in Westinghouse or major investor in Westinghouse. They are going to finance the completion of VC Semmer. And so we have like a lot of this type of capital entering, which is actually probably a relatively good sign, I would guess, in terms of like having more patient capital.

[Skanda Amarnath]

And that I think is a lesson.

[Unidentified Expert/Analyst]

For your original question of can you find those types of sticky investors who are not just going to flee when maybe, let's say some of the hype and mania around AI may ultimately wane.

[Robert Zemeyer]

Earlier in the show, I mentioned a new podcast I'm excited to listen to. It's called Shocked and it's from my friends at the University of Chicago's Institute for Climate and sust Sustainable Growth. Shocked is about facing the reality that a warmer world is here. So now what it's about questions like, is using less energy really the answer? What will it cost to adapt? Republicans invented cap and trade, so why is it controversial? The idea of Shocked is sometimes we just start by re examining things we thought we knew. Each episode you'll hear journalist Amy Harder and economist Michael Greenstone do just that. Shocked is fun and insightful for those of us who work in climate and energy. And it's the perfect primer for the climate curious. It's a podcast you could share with your boss and your mom. To listen to Shocked, search for Shocked in your podcast app. That's Shocked from the University of Chicago's.

[Jesse Jenkins]

Institute for Climate and Sustainable Growth. How much to you of the current inflation story is a supply shortfall story that's going to require and not just in electricity, but electricity is obviously now where the kind of bouncing ball of inflation has moved. How much of it is going to require these like long term investment deals to secure more capacity in whatever the part of the economy is that we're talking about versus it's a short term turbulence. Like how much of the underlying story here, as you see it, is about truly there's too little capacity across these core systems in the economy.

[Skanda Amarnath]

I think it's going to vary depending.

[Unidentified Expert/Analyst]

On the state, region you're in.

[Skanda Amarnath]

And it's also going to be a function of how to manage and accommodate data centers. So there are ways you can accommodate.

[Unidentified Expert/Analyst]

Them by encouraging them to bring their own power, finding ways to regulate their.

[Skanda Amarnath]

Role in adding demand on the grid.

[Unidentified Expert/Analyst]

That can be something that's done cooperatively.

[Skanda Amarnath]

With the data centers.

[Unidentified Expert/Analyst]

But obviously there are ways it can be more adversarial.

[Skanda Amarnath]

In key parts of the country there.

[Unidentified Expert/Analyst]

Is a shortfall of dispatchable capacity. I think that's not.

[Skanda Amarnath]

And that's not something that's very easy.

[Unidentified Expert/Analyst]

To get around with in terms of renewables. So that's going to require some like tougher questions and choices around.

[Skanda Amarnath]

Okay, we lost a lot of these coal plants.

[Unidentified Expert/Analyst]

No one wants to live by an aging, slash over, overdue to retire coal plants, right?

[Skanda Amarnath]

Some people love coal, but like no one really wants to build it necessarily.

[Unidentified Expert/Analyst]

Not build it in their backyard. So then the question is like, what do you do next?

[Jesse Jenkins]

Right?

[Unidentified Expert/Analyst]

Like what are your other alternatives? There's gas. Gas obviously has supply chain issues. We'll see how far long it takes to resolve those.

[Skanda Amarnath]

It depends on what kind of gas you're building.

[Unidentified Expert/Analyst]

If you want to be oriented around.

[Skanda Amarnath]

Decarbonization, then you have to really think.

[Unidentified Expert/Analyst]

About, like, nuclear as an option called the Northeast.

[Skanda Amarnath]

Or we have to have a totally different view about transmission build out in the United States, which I think people have banked on for a while.

[Unidentified Expert/Analyst]

And I think it's proven a lot more difficult than even a lot of people anticipated by this point.

[Skanda Amarnath]

Or maybe a lot of the parts of the country where there's favorable geology.

[Unidentified Expert/Analyst]

And maybe with a little bit more technological maturation, then geothermal becomes potentially more viable. I think that's at least it seems like it's very promising. But obviously we're in early days there, and so clean, firm power.

[Skanda Amarnath]

We built a lot of those assets in the 70s, basically, and they are.

[Unidentified Expert/Analyst]

Still like the big workhorses of decarbonization. For all the solar penetration we've seen, for all the renewables penetration, it's been.

[Skanda Amarnath]

Very real and very effective.

[Unidentified Expert/Analyst]

But, like, for a state like New Jersey or a state like New York.

[Skanda Amarnath]

Pennsylvania, like, who's doing, like, the real.

[Unidentified Expert/Analyst]

Hard work of like, decarbonizing those.

[Skanda Amarnath]

Like, to some extent, gas is definitely.

[Unidentified Expert/Analyst]

A part of it, from coal to gas, but like nuclear and in some places, hydro are like, really the things that mattered. And those were like, big infrastructure projects.

[Skanda Amarnath]

That were done ironically, at a time when there was a lot of inflation.

[Unidentified Expert/Analyst]

And high interest rates, too, which is.

[Jesse Jenkins]

Also at a time when nobody was thinking about decarbonization at all.

[Skanda Amarnath]

Exactly.

[Robert Zemeyer]

I mean, also pre 1980, before this.

[Jesse Jenkins]

Was a major issue, it was like coal, hydro and nuclear were the three things you could build. And we just got lucky in places where they built more hydro and nuclear than they built coal. In some ways. We've talked a lot about the late 90s moment. Is there another moment in the history of the American economy that kind of reminds you of where the economy stands right now?

[Skanda Amarnath]

There's clearly just a general parallel of.

[Unidentified Expert/Analyst]

Call it economic dissatisfaction and call it.

[Skanda Amarnath]

Political volatility that I'm sure has some.

[Unidentified Expert/Analyst]

Echoes of the 70s.

[Skanda Amarnath]

That was a period, too, when it felt like a lot of material needs.

[Unidentified Expert/Analyst]

Were not yet being fully met, certainly not in a stable manner.

[Skanda Amarnath]

There's a lot of excitement about investment. Like, if you look at the 70s, it was a period of obviously high prices. That's certainly more exaggerated, more substantial than.

[Unidentified Expert/Analyst]

What we're seeing today.

[Skanda Amarnath]

But for all of the downsides there.

[Unidentified Expert/Analyst]

Was a lot of investment that happened in the 70s.

[Skanda Amarnath]

There's a lot of investment in energy.

[Unidentified Expert/Analyst]

A lot of investment in like, I mean again this is a podcast part about New Jersey. So I was talking about like there's PSE and G is the main utility in New Jersey.

[Skanda Amarnath]

They now basically, they're basically not allowed.

[Unidentified Expert/Analyst]

To own any generation assets outside of the nuclear reactors, you know and, but.

[Skanda Amarnath]

That was not, not the case in the 70s. They were fully vertically integrated.

[Unidentified Expert/Analyst]

They had all these sites picked out across New Jersey, across, all along the.

[Skanda Amarnath]

Delaware river that we're going to build nuclear reactors.

[Unidentified Expert/Analyst]

They had this idea for offshore nuclear so you could put it basically right next to Atlantic City.

[Skanda Amarnath]

It's really cool, cool fun stuff that never got built.

[Unidentified Expert/Analyst]

And it was actually very painful for them when like the air came out.

[Skanda Amarnath]

Of the power demand story that they anticipated.

[Unidentified Expert/Analyst]

They anticipated all this demand for electricity and it turned out like that there wasn't that same need that they were sort of penciling in.

[Skanda Amarnath]

So there, that, that like there was a big power.

[Jesse Jenkins]

Was that because of de industrialization? Was that because they were penciling electrification and because of high oil?

[Skanda Amarnath]

I think yes, I think it's both. There's some level of industrial demand did not pan out. Population growth and demand didn't quite pan out the way they expected. But this was like PSNG wrote this.

[Unidentified Expert/Analyst]

Like the whole wave of this and.

[Skanda Amarnath]

Now they're still standing and they still own the three nuclear records.

[Unidentified Expert/Analyst]

So a lot of know how within that company, especially around nuclear, they ran.

[Skanda Amarnath]

A long lobbying campaign to save the.

[Unidentified Expert/Analyst]

Nuclear plants of New Jersey and it ultimately proved successful in 2018.

[Skanda Amarnath]

But it was like, for like the history of this is like wow, there is a bigger boom bust dynamic in this space than people appreciate. And it's just that the booms and.

[Unidentified Expert/Analyst]

Busts are actually longer.

[Jesse Jenkins]

Right.

[Unidentified Expert/Analyst]

So it's not just three years in, three years out. It can feel like a decade.

[Skanda Amarnath]

And that's like those echoes still I.

[Unidentified Expert/Analyst]

Think hopefully track to the current moment at least as far as I can remember.

[Robert Zemeyer]

It also seems like the 70s was.

[Jesse Jenkins]

Like the last gasp of the mid century high modern. You'd have these giant investment projects that were happening across the country. Companies seemed to still be planning those in the 70s and then they didn't pan out whether they were monorails and new public transit projects or a dozen new nuclear plants across New Jersey.

[Skanda Amarnath]

Yeah, I mean I think there clearly was an ethic of the 50s and.

[Unidentified Expert/Analyst]

60S that still lasted through the 70s around ambitious investment projects for development like.

[Skanda Amarnath]

You think about the Grand Coulee Dam, like all the dams they built in Washington.

[Unidentified Expert/Analyst]

That basically means like Washington has done the decarbonization already. They recently were born on like third base year at least.

[Skanda Amarnath]

And all those things were like done from the 30s, 40s, 50s.

[Unidentified Expert/Analyst]

Like these were big infrastructure projects we.

[Skanda Amarnath]

Did, we tried to do the same thing with nuclear and it turned out to become increasingly painful for a lot of different reasons.

[Unidentified Expert/Analyst]

There was a lot of fear around safety, there was a three Mile island blowback. Then we added all sorts of regulations.

[Skanda Amarnath]

That did over time increase cost. But a lot of them just became.

[Unidentified Expert/Analyst]

Like an atrophy of know how.

[Skanda Amarnath]

So like since the 70s, the biggest.

[Unidentified Expert/Analyst]

Challenge has probably been you can't keep a stable trained workforce and can't keep a stable warm supply chain that is ready to serve these needs.

[Skanda Amarnath]

And so like if you want to build any of this stuff right now, you probably do need to like rely.

[Unidentified Expert/Analyst]

On Korea and Japan for all the heavy industry needs because you don't have the domestic labor trained up in quite the same way.

[Skanda Amarnath]

We were hoping, especially after the completion.

[Unidentified Expert/Analyst]

Of the Georgia reactors, the fourth reactor was completed not that long ago. Hey, there would be some flywheel that kind of gets spun up.

[Skanda Amarnath]

I think that is kind of what is at stake right now with like all this momentum.

[Unidentified Expert/Analyst]

Can we build another large light water reactor? Can we keep that supply chain? Can we learn from the past mistakes on cost, on schedule? And that requires like consistently doing, porting over all the learnings from the past failures and past builds.

[Jesse Jenkins]

Obviously right now there's this total paucity of government economic data because of the government shutdown, which means that it's been at this point almost a month since we've gotten a look at the economy. What's your sense of what's currently happening? How much do we know about the state of the economy, the US Economy right now?

[Skanda Amarnath]

I think we have to rely on.

[Unidentified Expert/Analyst]

A lot of private sector or non governmental data sources, plus our financial markets.

[Jesse Jenkins]

Right.

[Unidentified Expert/Analyst]

So there is information in what corporates report, there's information in what maybe some.

[Skanda Amarnath]

Third party data sources, including the Federal Reserve uniquely has for us. We have some state government data as.

[Unidentified Expert/Analyst]

Well on sort of unemployment insurance.

[Skanda Amarnath]

We're all flying blind on some level here, but from what we can tell.

[Unidentified Expert/Analyst]

Things seem like not great, but also not necessarily like falling off a precipice either. And so we're kind of still stuck in this mode of. I mean we're getting new data all the time. We heard that obviously yesterday. Hyperscalers are engaging in corporate layoffs. Right. So you have reports from Meta, from Amazon, we'll see about some of the others.

[Skanda Amarnath]

But that's itself interesting like that they.

[Unidentified Expert/Analyst]

Feel compelled to sort of engage in some belt tightening. Maybe not on the AI expenditures but on the other everywhere else that probably is a tell that like these companies.

[Skanda Amarnath]

Also don't have unlimited money. That is like an important thing to take away right now. It may not stop the AI boom in its tracks right this moment, but it tells you like this is not.

[Unidentified Expert/Analyst]

An infinite loop of money that's going to kind of be available for funding this build out.

[Skanda Amarnath]

And so you have to take a lot of this type of like soft data, qualitative data, micro examples, anecdotes. You got to piece that together with whatever little historical data we still have, like being cranked out right now.

[Unidentified Expert/Analyst]

And again, that's not coming from the federal government. It's not great.

[Skanda Amarnath]

The federal government has a, provides a really valuable public good in terms of the information it provides to market observers, analysts, investors.

[Unidentified Expert/Analyst]

And we're just kind of like throwing it all away right now. And that's, that seems very unfortunate part of like a very dysfunctional bullet of the system we have right now.

[Jesse Jenkins]

Is there one data release that we do know is coming up that you're looking forward to? Like what's one indicator we should be.

[Skanda Amarnath]

Watching I think at this point for those who are observers of the clean.

[Unidentified Expert/Analyst]

Energy space and those who are focused on energy generally.

[Skanda Amarnath]

I know I'm for myself, I'm focused.

[Unidentified Expert/Analyst]

On what sort of we're hearing out of the major tech companies.

[Jesse Jenkins]

Right.

[Unidentified Expert/Analyst]

So that itself is now like a.

[Skanda Amarnath]

People say, oh, AI is not the.

[Unidentified Expert/Analyst]

Economy except growing into kind of being.

[Skanda Amarnath]

The marginal force in the economy.

[Unidentified Expert/Analyst]

If you think about the scale of spending on hardware and software and of data centers and like just all that Socied's industrial spending associated with it, you.

[Skanda Amarnath]

Quickly get to a scale of spending.

[Unidentified Expert/Analyst]

That matches, if not surpasses the 90s tech boom. You're talking about something, depending on how.

[Skanda Amarnath]

You want to slice it, six and.

[Unidentified Expert/Analyst]

A half to seven and a half percent of gdp. That's a lot actually, especially if that's growing at a really fast pace, like double digit growth. So you're dealing with a pretty powerful force within the US economy. That's the US economy is probably going to keep growing well as long as.

[Skanda Amarnath]

The AI boom's going well. And if it's not going well, it's going to be tough to find another.

[Unidentified Expert/Analyst]

Source of growth that offsets it. And so that's like the thing to.

[Skanda Amarnath]

Follow of like these tech companies. Are they going to keep spending on this stuff? Are they going to keep like wanting.

[Unidentified Expert/Analyst]

More data centers and the power infrastructure that goes with it, the turbines, the new generation capacity and all that funds.

[Skanda Amarnath]

Like is that flywheel going to keep going?

[Unidentified Expert/Analyst]

Will soon find out. We will soon see just how like robust like the balance sheets of a lot of these hyperscalers really are.

[Robert Zemeyer]

Scott Amarnath, thank you so much for joining us on Shift Key. We're going to have you back to.

[Jesse Jenkins]

Talk about how all these projects are going in the future once they break.

[Robert Zemeyer]

Ground on those dozen AP1000s that I'll.

[Unidentified Expert/Analyst]

See you in five years.

[Jesse Jenkins]

Yeah, exactly. See you then.

[Robert Zemeyer]

Well, that will do it for us on this week's episode of Shift Key. If you enjoyed this discussion, please leave us a review on your favorite podcast. Appreciate you can follow me on X obinzmeyer or on Bluesky or LinkedIn, which are frankly, better social networks, under my name. Jesse Jenkins, my co host, will return next week. Shift Key is a production of heatmap News. Our editors are Gillian Goodman and Nico Loricella. Multimedia editing and audio engineering is by.

[Jesse Jenkins]

Jacob Lambert and by Nick Woodbury.

[Robert Zemeyer]

Our music is by Edda Bakromolau. Thank you so much for listening and.

[Jesse Jenkins]

See you next week.