Transcript
INTRO
Jamie Nolan: Hello, Jigar, in Deep Creek Lake, where I will be joining you in real life next week. I am very excited about this.
Jigar Shah: Oh my gosh, it's been amazing. I changed my primary care doctor to Deep Creek Lake. She's amazing. She has now set up blood work for me, and a bunch of other tests I should take. I just called the hospital, and they said they could get me in tomorrow. That's what I love about Garrett County. I'm going to be super tuned up, a paragon of healthiness, by the time I get back to DC.
Jamie Nolan: Well, I'm going to be there with my in-laws, and my husband has five older brothers. So it's all of his brothers and their spouses and all of our children staying in a single house. It's like 22, 23 people. And I love them, I actually really like all of my in-laws. But that being said, it's very people-y. It's a lot of children and a lot of noise. So I am very selfishly excited that you are going to be there the same week, so I can pop on over to yours occasionally if I need some peace and quiet.
Jigar Shah: My wife always has the wine fridge stocked, so you'll be all set.
Jamie Nolan: It's going to be so fun. We're going to get it all set up for our recording. It's going to be on location from Deep Creek Lake, Maryland.
Jigar Shah: My sense is we're going to record and you're going to have to be in one room and I'll have to be in another room.
Jamie Nolan: We'll figure it out. Check back next week and see if we have, without our executive producer Simon, figured out how to set up the tech in one room. That would be a miracle. Okay, so for today's episode, we are doing a joint episode with the Volts podcast. I'm super excited that Dave Roberts is the guest. I actually am not co-hosting this episode, but I listened to the whole recording, and it was really fun.
Jigar Shah: Yeah. We have Arnab Pal, our friend of the pod and the head of Deploy Action, where I am board chair. And Jamie, you're also an extraordinary part of that team. It's going to be a great episode. You know, I love Dave, but he is such a glass-half-empty person. He's one of the most knowledgeable people in our space, but every time I talk to him, I need to drink heavy liquor.
Jamie Nolan: I feel he's very gruff, and it's kind of part of his personal brand, right? And I have to say, he was joking about how he does not have a face for video, and I disagree. He's super handsome and he should do every episode on video. I thought he looked great. His face and his voice don't necessarily match, because he is a little bit ho-hum sometimes.
Jigar Shah: I think his take on these things is super insightful. He's been a real sociologist-type person when he thinks about the electorate and voters and how they think about this. And right now we are heading into an election season where data centers, utilities, they're all on the block, in a way that's really weird. I've been in this industry for a long time, and everyone was always very articulate about how powerful politically the electric utility industry is. But they've got a new head of the Edison Electric Institute in DC, and I think they haven't been a powerful trade association in some time. I think a lot of the electric utilities have literally let themselves go a little bit. They used to say, we can raise rates a little bit more than people expected, but not that much more. And now it's: 9% a year. You get 9% rate increases, and you get 9% rate increases. And it's always someone else's fault. I feel like there's a real reckoning coming, and I think it's going to be fun to talk about it with Dave.
Jamie Nolan: Absolutely. No other podcaster, certainly in our space, gets more in depth on these issues. Dave will pull off a two-hour episode, and somehow it's the most compelling conversation. The depth of knowledge he has on so many issues is really extraordinary. He really does dig in. Regarding utilities, the solar industry has been raising the alarm about the broken utility model in this country for decades. Now that we're in this period of load growth and the utility industry is scrambling, and obviously failing to meet the moment, people are suddenly listening. I really do hope that we can start to reconsider how these business models work and how these entities earn profit, because otherwise we're in for a world of hurt. Not everybody can afford to just pop a solar array on their roof, like some of us, to opt out of their utility bills. They're facing these very extraordinary utility rate increases, and it will affect the most vulnerable people among us the most. So, personally, I'm ready to hear Dave rail about it. Let's get into it.
Jigar Shah: Well, without further ado, Dave Roberts.
INTERVIEW
THE AI RACE MEETS THE ENERGY REVOLUTION
Jigar Shah: Dave, how are you?
Dave Roberts: Good, Jigar. Good to talk to you.
Jigar Shah: Good to talk with you. I feel like the episode that we did together on doing data centers the dumb way has set off a fire chain of comments, and now we're back.
Dave Roberts: I got a lot of feedback about that episode. A lot of people really liked it.
Jigar Shah: Oh, that's good. You didn't get a lot of negative feedback?
Dave Roberts: No, no. People are so desperate just to hear someone who knows something about this. People are in a fog, so I think it was very helpful.
Jigar Shah: Well, I wanted to bring Arnab Pal into this conversation. He runs Deploy Action and was really the energy behind getting the grid utilization stuff passed in Virginia and getting some of the other things done in California. He's on the ground working with politicians, but also working with legislators who are trying to pass some of this stuff. Because I feel like some of this is just 101 stuff, which we covered last time, but now we're moving into polling data and governors who are inundated with hate mail.
Dave Roberts: Public opinion, which involves a large measure of animal spirits, let's say.
Jigar Shah: Well, let's start with where your head is at on how essential it is that we win the AI race, and that AI is going to change our lives forever. Because ultimately, all of this comes down to the fact that I think people believe this is a technology of the future that we need to own, right?
Dave Roberts: Yes, but I, like much of the public, have not really been persuaded of that, mostly because there don't seem to have been many attempts to persuade, as opposed to banging me over the head with a mallet about it. If you ask me, the proximity of cheap, boundless energy says much more about humanity's bright future than AI. That's the revolution that's exciting. That's the revolution I'm excited about. It's bizarre to me that it's been shunted to some sort of asterisk after AI. I'm much more interested in the energy revolution. And about AI, I just don't know. I think like most people, I just don't know. I know that it looks ridiculous to me that every corporate CEO, every university president, every sort of wealthy elite is trying to force this down people's throats beneath them. I'm as irritated at that as anybody else. But as to the long-term effects, I have no idea, and I don't really think anybody else does either. Whereas I know boundless cheap energy is going to be a very good thing.
Arnab Pal: So Dave, I think the two are very related, in that people's unknown of AI is causing their inability to wonder at this energy future that you're talking about. And we're seeing that play out with all these data center moratoriums. There are 120 of them across 38 states. There are 75 projects worth $130 billion. You're seeing national legislation from Senator Bernie Sanders and Congresswoman Alexandria Ocasio-Cortez with the federal moratorium. And you've covered this energy transition for almost 20 years, and I think we all agree that the data center revolution could be a part of the next big energy transition. So has any build-out in that time generated this kind of organized opposition this fast? Because two years ago, no one was really talking about this.
Dave Roberts: I think you can't understate the spectacular incompetence of the communications and the way this has been rolled out. If hyperscalers had said from the beginning, the AI revolution and decarbonization go together, they are part of the same revolution, and we're willing to pay the extra money and take the extra time to ensure that building out these giant data centers is going to strengthen the grid and fund a lot of clean energy, I think they could have harnessed a lot of goodwill. But instead, they're in the paper saying, you have to do our thing, and to do it, you have to abandon your climate goals. I read that explicitly in a UK paper the other day. The data center industry is saying to the UK government: you have to abandon your climate goals, because we have to do our thing fast, and we're not patient enough, and we don't care enough, and we're not going to spend enough to do it in a clean way. I think it could have been, and still could be, if done right, part of the same broad push for an abundant, clean future. But they have just completely botched the PR aspects of this. And it doesn't help that Elon Musk is out there buying turbines on truck beds and saying screw you to the locals, and polluting the air, et cetera, out of just this unbelievable arrogance about AI that the public has not bought into. They have no one to blame but themselves for this backlash.
Jigar Shah: I think that is obvious, and it has been a pattern that has repeated itself since Bill Gates stepped in it in the late '90s. They wait, they do it all wrong, and then they say, oh, what's all this backlash? We should pay people to help us with this. There was one Nevada hearing which I thought encapsulated it really well, where they basically compared the AI data centers to the 19th century gold rush, standing at the precipice of the new Wild West. And it does feel like that. That is what you're talking about with Elon Musk in Memphis, with unregulated gas turbines. But it's also the folks in Loudoun County in Virginia. The vast majority of diesel generators are only permitted for 100 hours a year of runtime. The diesel generators for Loudoun County are permitted for 800 hours a year of runtime. And they run the entire month of August, such that anybody with any sort of underlying asthma condition can't breathe in northern Virginia. It does feel like at some point they are coming at this saying, we are going to make so much money that we really just don't care about your well-being at all.
ANIMAL SPIRITS AND THE TRUST COLLAPSE
Dave Roberts: And I would add, and this is what I think is the central problem for our side, which is full of technocrats: there is a large element of just animal spirit to this. People feel like rich, powerful people are running rampant. They don't have to follow any rules. They don't face any accountability. This feels like they're betting our future. It might work out, it might not, but none of them will be hurt by it if it doesn't work out. Just another classic example of, they're not going to pick up the pieces if this all falls apart, or if the demand doesn't show up, or if a bunch of empty warehouses get built. They're not going to be hurt. There's a huge element of this that is just people feeling like the wealthy and the powerful are out of control, accountability is dead, and this is something they can grab onto and control. This is the only piece of it that they have any control over, so they're grabbing onto it and blocking it. I think a lot of it is not any sort of rational calculation or empirical calculation of the effects, or calculations about decarbonization or anything else. It's just: this is a place where I can throw myself in the gears and stop the wealthy elite from rolling over us. And again, it's their fault that people feel that way.
Arnab Pal: I 100% agree with that, and I think right now people feel like they can't control the political system. Their vote may not matter as much as it did in the past, so their ability to block projects at the local level is their version of a vote. But you were talking about this being a communications issue. Probably, but I really think it's just a trust issue. No matter what the tech industry said, even if they came out and said, we're going to help everyone, we're going to build schools, we're going to build this 100% clean, and we're going to bring down your bills, which is what I think we all would want to advocate for, I think the vast majority of the public would say, yeah, I'll believe it when I see it.
Dave Roberts: Yeah. Anybody who has followed me for any time online knows I trace everything back to low social trust. You talk to social scientists, they say if you want to do anything good collectively, you have to have social trust. The less you have, the less you can do. And it is coupled with our diseased and degraded information environment, so nobody feels like they can get a straight story. Everybody feels like everybody is talking their own game. Nobody knows what's really going on. So this is just something concrete, something they can grab onto and not feel like the world is this impenetrable chaos controlled by forces beyond them.
Arnab Pal: And the trust issue, I think, is backed up by the numbers. Only 8% of data center opponents actually live near one. 70% of Americans are opposed to a data center near them, which is what Gallup shows, and the Searchlight Institute found that 54% would oppose one within five miles. I guess what we're trying to figure out here is, our technocratic industry says, well, here's how we figure out a way to do this without emissions, and here's how we bring people in. Are we solving for the right problem, or should we be solving for something else?
Dave Roberts: Maybe Jigar has a different perspective, but I think they're trying to solve those problems because those are the kinds of problems they know how to solve. And this goes beyond data centers. This is a larger social and political problem. How do you solve the degraded information environment? How do you solve low social trust? How do you get your hands around these animal spirits, this vague, free-floating miasma of discontent and anger? I don't know how to solve that. The tech guys don't know how to solve that. It seems like solving that requires many, many years, many fundamental reforms that don't seem anywhere in evidence. This is not a technocratic problem that you can just solve with a few switches, or paying a little extra for this or that. This is a bigger problem in our politics. So they kind of are trying to solve what they know how to solve.
Jigar Shah: I do think that part of the problem, as you know, is that we sit here today in 2026 and we don't have universal health care. We were promised that Obamacare was going to work. As somebody who was on the exchanges for a while, it sucks. It sucks even more now. What did you call it in your podcast? The enshittification of everything.
Dave Roberts: Yes. And so anybody who loses their job risks ruin. And here comes an industry along saying, hey, we're going to destroy all your jobs. Let us build these data centers so we can do it. What did they expect to happen from that?
WHAT A ROUNDING ERROR COULD BUY
Jigar Shah: Exactly what happened. But when you're a governor, I mean, every governor I've ever met believes that they are the person in charge of economic development for their state. So they want these data centers. They can say whatever they want to say. Governor Abbott is up there talking tough to data centers now, et cetera. But in general, they're the economic development person for their state, so they want it in the state. And my sense is this is not dissimilar to fracking, where everyone is going to hate this stuff, but we're still going to get whatever it is, 15 gigawatts of new data centers that get built every year. It just won't be in that neighborhood that killed it. It'll be in some other neighborhood that didn't kill it. So part of what I'm concerned about in this moment is that the data shows that because we have low social trust, people will just take free stuff. They say, we'll support your project if we get a battery in our basement. The battery that I can touch and feel and have the title to, that you can't take away when you go bankrupt. So part of what I'm trying to understand is, how do we take this moment and actually create a third way? Because there is going to be a group of people who are always going to believe that data centers are causing cancer and that they should wear tinfoil. Then there's a group of people who legitimately think, the electric utility really is setting this up to screw me. They're getting an economic development rate, I have a much higher price, et cetera. And oh, by the way, they've banned my ability to get data out of my smart meter. I can't seem to do net metering anymore. I can't even take advantage of the solutions that might save me money, that we've all worked so hard to get the cost down 97% on. So is there a moment in here where you take this and leverage it to get all this other stuff unstuck? Permitting reform. Not federal permitting reform, state and local permitting reform, so we can match Australia in terms of solar installations.
Dave Roberts: The only way forward I see for the data center industry particularly is very concretely at the local level. The wild thing is the amount of money involved in these big data centers. You can plant bioswales around them. You can help the environment. You can dump money into the community. You can build schools. You can put batteries in people's basements and solar panels on their roofs. You can concretely reduce their energy bills. You can make their community richer. You can make their environment cleaner. And it amounts to a rounding error on the amount of money involved in these things. You can do all that stuff for trivial amounts of money. It's insane to me that they're not already doing this. They should have people lining up begging for data centers. Because I want schools, I want cheaper electricity rates, I want batteries, I want microgrids. They could do all that with so little money. The amount of money they're losing by having these things blocked dwarfs what it would take to just do it the right way. It's just that these tech guys are so arrogant, and so high on their own supply, that they won't do it the right way. So there is a moment, but they have to be willing to do it. And utilities have to be willing to work with them and do it the right way. One of the things I'm worried about, Jigar, and I'm of mixed feelings about this, I'd love to hear your thoughts. On one hand, I'm all for milking these jerks for all the public money we can get out of them. They have money coming out of their wazoo. Let's get as much of it as we can for public benefit. But I'm a little leery about establishing a precedent where every large industrial customer has a bespoke rate, everyone is paying super high rates, et cetera. Because there are a lot of other large industrial customers coming along behind. We want to electrify industry. We don't want to establish a precedent where every large industrial customer on the grid faces this cripplingly high bill that not all of them are going to be able to pay. So there's a fine line there: getting public benefit without establishing poor precedents.
Arnab Pal: But Dave, there are precedents for this in other industries. I'll take the real estate industry as a good example, because I think there's some overlap. When a big housing developer wants to build a 1,000-home project or a 5,000-home project or expand a city, they often build schools as part of the process. They often pick up the tab on some of the roads, and that's sort of how they get it approved. Is there a pathway for these data center companies to still do that? Or do you think the opposition is so strong that it doesn't matter anymore?
Dave Roberts: I think they can do that if they go in early, and they're patient, and they're earnest and serious about community engagement, and they're willing to spend the time. But there's another side to that precedent. Just in Seattle right now, there's this fight about fees that are charged to developers, where the money is used for affordable housing. And that sounds great on paper. You've got these rich developers coming in, we're going to milk them for a little money for affordable development. But the practical effect is that it's slowing down building, and we desperately need to build more housing. And just building more housing, period, full stop, is better for people who need housing, even on the low end of the scale, than bespoke one-off affordable housing projects. So this is exactly my point. I don't want to establish a precedent which inadvertently slows the electrification of industry. That's my worry.
THE WIN-WIN-WIN NOBODY BELIEVES IN
Jigar Shah: Well, on your tariff issue, I don't know that I have a problem with 30 and 40-megawatt data centers. I really have a problem with 1,000-megawatt data centers. So creating a set of rules for things that are above 100 megawatts, I'm fine with. Everything else that you're talking about is sub-100 megawatts, so I'm not overly worried about industrial manufacturing and lithium processing and all the other stuff we're talking about there. What I'm more concerned about is that you've got all these governors in the crosshairs right now. They're all basically forced to be anti-data center and anti-utility to run for governor and win this fall. Is that your sense too?
Dave Roberts: Yes. There's just nothing easier than identifying a big corporate villain and bashing on them. That is politics at the easiest setting. So under pressure, people are going to default to that. And this gets back to something you and I have been talking about for years now, Jigar, which is that there is a win-win-win here. The utilities can say to their customers, we let this data center come attach to our grid, but we got a bunch of money out of them to pay for you to have solar panels on your roof and batteries in your basement, and we got them to help fund a transmission line. We milked them. And then the data centers can say, hey, we made your community better. And then the politicians can say, hey, we forced the utilities to milk the data centers. Everybody can say they won.
Jigar Shah: But Dave, what they'd rather say instead is that they got the data centers to pay for all of the upgrades to transmission systems, which will reduce your bill by 0.1 cents per kilowatt hour. And here's a bunch of fancy math showing that the 10% rate increase I'm charging you was for someone else's mistake, not the data center. And oh, by the way, I still hate the fact that you're putting a battery in your garage and a solar panel on your roof. In that world, where they still hate the fact that you're taking advantage of your power independence in any way, shape, or form, is it not good practice to hate the utility company?
Dave Roberts: You're not going to get any resistance from me on hating on utility companies, Jigar. I'm about to record a whole podcast in a week or two about why they won't do this stuff. But they are between a rock and a hard place now. They need an out somehow. They need some way out of this. And even if they don't believe in the broad promise of distributed energy like we do, even if they don't believe the scale of distributed capacity could make a difference like we do, even if they think it's just little trinkets on a Christmas tree, they need a PR win. How do they not get that by now? They need something concrete to show people.
Arnab Pal: I think you're right on the PR win. But the reason I brought up the housing example is because I think that's a place where public sentiment shifted over time, and I think the underlying cause was just pricing. If you look at the old guard left, and California is the best example, the NIMBY environmentalist movement, which has sort of stood guard to make sure there isn't development across the coastline in California, that there isn't development even in the suburbs, they've lost those battles to a new movement of folks saying, hey, we need to build more housing to bring down costs.
Dave Roberts: I don't know if I'm calling that fight over yet. They're still fighting.
Arnab Pal: Compared to where it was 20 years ago, it's a completely different ballgame. And there is a parallel here. If you can actually convince people of the actual real math, not the math that Jigar's describing, that this new load growth will actually reduce costs if we hold utilities accountable in that process, there is a real hunger for costs coming down across the board. If you can actually bring down someone's utility costs by 20 or 30%, which is what I think some of this demand-side work can actually do, I don't think people are going to care. They're going to say, my bills went down, that's the most important thing.
Dave Roberts: But to Jigar's point, you can't do that unless utilities cooperate. You can in theory do that, but they have to cooperate. They have to be involved. You can't do it over them or past them or through them. They are the gatekeepers. They have to be enthusiastic participants in that, and we're having to drag them every step. Most of them, not all utilities, et cetera.
THE MORE THEY SPEND, THE MORE THEY MAKE
Jigar Shah: I would say the vast majority. Municipal utilities, rural electric co-ops, they seem okay with the bargain. They say, we report to the city council, we report to the Kiwanis Club, so we'll sort of do that. Whereas the investor-owned utilities always have a private jet that they're taking to the thing, by the way. And then they take the private jet in, and then they cry about the fact that their stuff is so old. You wouldn't imagine how old our stuff is, we need to upgrade it all. And I say, but you were investing 20 billion a year in 2003. You're now investing 200 billion this year. At what point do I not believe that you're spending money on repairing old stuff, and instead I just think I'm paying for your corporate jet?
Dave Roberts: Well, as you know, the biggest line item of rising costs right now is distribution spending. I just recorded a pod about how distribution spending is done and determined. I don't know if a lot of people know this, but if you're a vertically integrated utility and you want to spend on generation or transmission, you have to do a bunch of modeling, a bunch of projections. You come under intense regulatory scrutiny about whether you're optimizing that spending. And distribution spending is just a black box. They call it all mandatory. They just say, we have to do this. And if you open that black box and look inside, lots of times they're not even tracking the age of their stuff. They're just replacing it on a schedule. That is where they can do all the gold-plated spending, and they're not even getting the regulatory scrutiny on it. So I'm all for exposing them to the light and putting them under tons more discipline, but to do that you need legislatures, and you need regulators on board too. Anything you blame utilities for, there's some refracted blame for the regulators for letting them get away with it, and legislators too.
Arnab Pal: So I agree with all that, but there's a bias even amongst the people that want to hold utilities accountable, and I've seen this with energy efficiency from decades ago, where everyone thinks every solution is supply side. Oh, we have to build geothermal. The answer is nuclear. The answer is solar. Nobody wants the answer to be efficiency. And all the states that put in energy efficiency measures over the last 40 years, even if their kilowatt-hour rates are higher, their overall bills are lower. It has worked. And there is a similar thing we can do with the distribution system. Why is that bias still there? Why are there people who don't believe that utilizing more of the distribution system, putting batteries in, is actually a real solution?
Dave Roberts: This is something I started pounding the table about when I wrote for Grist in like 2012. Once you look into utility regulation, you find this very basic incentive, which is the more they spend, the more they make. The way they make money is by spending money. And energy efficiency, if you do it right, means they need to spend less money. And that is true of virtually every bit of distribution system spending. All these batteries and solar panels and microgrids are substitutes for a bunch of gold-plated spending on infrastructure. So that very basic perverse incentive is at the core of investor-owned utility regulation in this country, and we just keep talking around it. Efficiency programs are a great example. A utility will do the amount of efficiency that they are required to do by law and by regulation, and not one micron more, because every bit they do means they get to spend less money. So you're not going to get utilities enthusiastic about efficiency, pursuing it earnestly and in good faith and with some passion, unless it's a municipal utility, unless it's a utility that is incentivized to reduce costs for its customers. Every investor-owned utility is going to fight that. They're going to fight distribution-side spending. They're going to fight all of it. And I've banged my head on this a million times. I don't know what to do about it. There are ways around it. You can do performance-based regulation. You can nibble around the edges of it. You can do kludges to get around it. You can do mandates to force them to do it. But ultimately, if we're going to electrify everything, and the whole economy is going to be on the grid, we desperately need to optimize not just for utility costs but for macroeconomic reasons. If the whole economy is on the grid, we're talking about the macro economy now. I don't know how we get there with that incentive in place. That's just the elephant in the room that I feel like we have to deal with sooner or later.
GENDERED ELECTRONS
Jigar Shah: But I think there's another answer to that question. Part of the thing that bothers me, and I wrote about this with Raj Panju back in 2015, is that there is a distinct desire, particularly by the right, but it could be by other people as well, to believe that what we're pushing is feminine in nature. Have you heard about this? You know how there's this masculine energy and feminine energy?
Dave Roberts: Hetero-masculinity, yes. I'm very familiar. Everything is gendered.
Jigar Shah: As if solar panels are like sunflowers blowing in the wind. They're not hard, real, manly.
Dave Roberts: You're telling me I have to wait on the weather? I can't just force it to do what I want, when I want? Yes, that is a huge piece of it.
Jigar Shah: Right. But the latest version of that is that the Energy Information Administration has now come out with data showing that we have triple the amount of natural gas getting installed than they were predicting a year and a half ago. And when you talk to people like Duke Energy, they will say the only way to run a grid is building combined cycle gas turbines, which happen to be three times more expensive today than they were two years ago.
Dave Roberts: It's firm. It's firm like a muscle.
Jigar Shah: I guess what I'm trying to understand is, I get that the governors were checked out for 40 years. They said, we have a public service commission, we have this, we have that, I don't need to know anything about this. Now it's a number two political issue. They have to know something about it. Hell, even Abigail Spanberger was on an entire episode of Politico's energy podcast talking about her energy agenda for 26 minutes. No governor ever did that before. So it does feel like in this moment they have to actually make some big decisions. If you're currently in a place where you're spending all of your available energy just being anti-data center, what else could you use that passion and energy for in this moment, to help these governors get a handle on this?
Dave Roberts: I wish I knew. I have listened to people explain to me why capacity that you get out of your already existing grid is somehow inferior, or less firm, or less manly, than new capacity you build with a power plant. Or people explain to me why solar plus batteries plus a big interconnected grid is not firm in the right way, not quite as tumescent as a big nuclear power plant. And I don't know why they think that way. And that attitude is sifting up into the political class. They are all being convinced all over again that renewable energy is weak and inconstant and unreliable. I don't know how you get around that other than just showing them. At the very basic level, and I did a podcast with Steve McBee about this, it's the clean electrification industry's inability to speak up on its own behalf, to articulate its own case, and to get good information to lawmakers. A lot of legislators, even senators who are in charge of energy committees, don't really understand the revolution that is underway across the world in clean electrification. They think it is a nice little extra. So part of it is just the industry getting a little swagger, getting a little confidence, and not having its main vehicle for lobbying and communication be half composed of gas. That might help too. If it had its own voice.
Jigar Shah: I think that's exactly right. I certainly think that Chip Roy saw a little swagger.
Dave Roberts: Yeah. Finally somebody got whacked on the nose. You can debate the pragmatic outcome of that, whether it really mattered.
Jigar Shah: I don't think you can debate it at all. I think when you promote stupid-ass shit, you should lose your job. I think that's pretty clear.
Dave Roberts: We need two or three of those, I think, to really get the full effect. They need to see that it's a real steady thing.
Jigar Shah: I think we'll get two or three of those this cycle alone. In general, one of the things that's happening right now, at least on the ground where I'm operating, is that almost everybody in a decision-making role in Texas understands how powerful solar and battery storage are, and that their grid has been saved by solar and battery storage. And I would suggest to you that almost nobody understands it outside of talking points in PJM. Every governor is using the right talking points, but if you ask them what's being said in a closed-door room, I think they'd rather have more natural gas plants built than 10,000 megawatts of battery storage. We're at roughly 19% of the peak in Texas being battery storage. It's 0.2% of the peak in PJM.
Dave Roberts: Yes. And in politics, the higher you are, the more risk-averse you tend to be. Because this is the information environment they're surrounded by, to really commit to solar and batteries, to really commit to distributed capacity, would be a huge gamble for them. I think they feel that way. They would be going out on a limb. Whereas gas plants they understand, and they are surrounded by gas lobbyists. And now you have clean energy industry groups telling them that gas is firm, that you need firm gas, and that if you build renewables, you have to build gas backup anyway. That's what they're hearing all around them. I don't think you can ever look to politicians for bravery. We need to surround them with better information, and the industry has got to do that for itself.
Jigar Shah: What's your take, Arnab?
Arnab Pal: I've got to jump in on this energy efficiency and solar is feminine piece. Because I have a bunch of friends that drive Rivian R2s and Ford F-150 Lightnings, and I know some farmers in Pennsylvania that lease their land for solar panels, that would disagree. I would say renewables are gender fluid, Jigar.
Dave Roberts: Pardon me for bringing the woke perspective here, but there's nothing wrong with feminine energy. Look around at what masculine energy is doing in the world and in the country right now. Don't you think we could use a little bit more feminine energy? I don't want to try to claim that EVs are tough too, and they can tow just as much. I don't want to compete on that ground. It's a dumb, regressive, dipshitty way to approach this whole subject anyway. Tell me it's feminine, that's fine. Oh, so it's more practical and more results-focused? Great.
Arnab Pal: I agree with that. I just think it can be different things to different people. I don't want to box us into one stereotype here.
Dave Roberts: Yes, I'll take gender fluid.
EVERYTHING IS BATTERIES
Jigar Shah: Oh my God. All right, let's move on to the next phase. On May 4th, NERC, the North American Electric Reliability Corporation, issued a level three essential actions alert, its highest severity and one it rarely uses, after multiple incidents where more than a gigawatt of data center load dropped off the grid in seconds. Fast enough to threaten frequency stability across whole interconnections. So at some point, I guess what I'm trying to understand is, are they trying to move fast and break things?
Dave Roberts: This is yet another example of a problem that is 100% foreseeable and 100% solvable with a trivial amount of money. They all could have just put more batteries in. As the Volts slogan goes, everything is batteries. They could have had more buffer. They could have avoided this ever happening. But they are arrogant, and they don't care, and they think that because they can wave AI around, everybody has to defer, everybody has to get out of their way, everybody has to accommodate them. That is such a solvable problem. I did a whole podcast on it, and I can summarize the whole podcast in one word: just do more batteries. But they didn't. It's wild.
Arnab Pal: I think we talked about this a little bit, but there's a consensus forming around groups like the Searchlight Institute and the Breakthrough Institute, and we saw a paper published in March proposing an American Grid Infrastructure Fund, where hyperscalers pay into a dedicated fund in exchange for faster connections, and then that money would flow through utilities for large-scale transmission and generation. Now, you've said this crowd treats distributed capacity as a marginal efficiency play, and this is what we've been talking about, how it's really undervalued. So make the affirmative case for distributed capacity as serious supply.
Dave Roberts: I almost don't know how else to put it: capacity is capacity. You flip the switch and something comes on, or it doesn't. You don't know if that capacity is coming from distributed energy or a virtual power plant or a new power plant. It's either there or it's not. And this is very frustrating, because this is just yet another example in the energy world where the obvious answer is both/and. I think if you got any of these people in a room and could talk to them, you could get everybody to that page very quickly. Yes, obviously we need to maximize distributed capacity, because we're under an incredible time crunch and we've got gigawatts and gigawatts of spare capacity laying around, so of course you want to exploit it. What is the argument against exploiting it? It's mind-boggling to me. And then of course it is also true that behind data centers are coming the electrification of transportation and industry and heating and cooling and the rest of the economy, so of course we're going to have to 2x or 3x our grid. How big it will have to get, I think we can disagree on. I have a lot more faith in distributed capacity than they do. I think these projections for how much more heavy infrastructure we'll need are overblown. But I know we're going to need a lot, so of course we want to do both. It's hard for me not to see this as a species of those people's fanatical obsession with lecturing the left, with lecturing hippies, with somehow saying that the existing movement is doing it wrong. For some reason, that is the only way they know how to frame anything. And I get it, because that framing gets you attention in DC. Then you get a bunch of conservatives who say, oh, you're bashing the left? I'll come amplify you. I don't know why these people don't notice that the right comes along and amplifies their criticisms of the left, but when it comes to their solutions, the right vanishes. They get used over and over again to bash the left. I don't know why we can't all just have a little solidarity. We need it all.
Jigar Shah: The nuanced problem that I have with this entire line of thinking is that you have to assume that the current structure of electric utilities and the regulators is competent. You basically have to assume that this money will go into a common pool and be competently spent by the people we've just been bashing. I would much prefer that money go into a battery in my garage than to these people. One of the big challenges in this moment is that we clearly have the technology today that we didn't have 15 years ago, when RMI put out that report about unplugging from the grid, or whatever it was called. We have the technology today for me to meet 92% of my electricity needs under a NEM 3.0 structure, where I don't get paid anything to export into the grid. I just put solar panels on my roof and battery storage, I make sure my battery is empty at 10:00 AM every day, I fill it up with cheap solar power, and I run my house on the battery. That whole construct is 12, 13 cents a kilowatt hour. And so you say: you're charging me 19, and I could do 92% of what I do for 12 to 13 cents a kilowatt hour. It is shocking to me that having worked for 20 years to get the cost of solar down by 97%, and to get Wall Street to love doing securitizations and bonds and all this other stuff for solar power, we're still trying to figure out how these solutions are marginal.
Arnab Pal: But Jigar, I think it's easy to throw around the term competence. There are plenty of competent people at the utilities. There are plenty of competent regulators. Their job is to do what the laws tell them to do, and if the laws allow them to rent-seek, they'll rent-seek. That's what they're supposed to do. Let me give you a good example of this, going back to California. You know how the rate structure is in California. Generation rates have not gone up. They've been flat for at least the last decade or so. That's because it's decoupled, and they can't make money off of it. It's our job to change the rules. So if we do this and we work together with the data centers, the hyperscalers, we have to change the rules so that the utilities are either incentivized or required to use more of their grid and to do what we're talking about. That is on us. And not just the three of us here. On all of us.
Jigar Shah: Well, it's kind of on you. It's kind of on Deploy Action.
WHO PAYS FOR COMPETENT GOVERNMENT
Dave Roberts: I'll say amen to that. And I wanted to add one other thing to this discussion. There is a ton of focus now from these same people about permitting reform, about making it easier to build, about removing barriers to building. And in principle, I agree. All that stuff is true. But it's interesting to me that the solutions on that score that get amplified, that get taken up, that are quote-unquote bipartisan, are all about cutting this and cutting that, deregulating this, deregulating that. The other side of that, even if you read the original Abundance book, is fully staffing the relevant agencies, the regulatory agencies, the overseeing agencies, all these governing bodies. Fully staffing them and funding them. That's another way to speed things up: spending money on state capacity, on creating fully funded, robust, competent government. And for some reason, that side of things, even though it's half the Abundance pitch, constantly falls out of this discussion, and we're always left with the slash this and slash that. To Jigar's point about wanting competent people in charge of this, you can create competent federal agencies, but they need funding and they need staff. So if you're making common cause with people whose mission in life is to slash government, to slash money for government, and to funnel tax cuts to rich people, then maybe you should look in the mirror and think about whether it's in your best long-term interest to form common cause with these people. Maybe you should couple your calls for greater speed with calls for greater state capacity. I just wanted to make that point.
Arnab Pal: I think that's the most under-talked-about point in this whole process. Let's just do some simple math. A utility executive makes between half a million and a million dollars a year. The regulator at the Public Utilities Commission is making $150,000.
Jigar Shah: I don't know which utility executive you're talking about.
Arnab Pal: A utility CEO is making over $10 million, I understand that. But a director-to-VP-level executive starts out at between half a million and a million dollars a year. That's still five times as much as the regulator is making. So we're creating a system where the folks doing the regulating aren't going to be able to stick around long term.
Dave Roberts: And think about NEPA reviews too, the reviews under the National Environmental Policy Act. Everybody wants to put these restrictions on NEPA, or say NEPA review must be done in a year. But if you don't fully fund and staff the agencies that are responsible for those reviews, all you're doing is saying, we're not going to do those reviews. So why is fully funding and staffing the people involved in those reviews not as big a part of this discussion?
THE MIDTERM PLAYBOOK: HOPE VS. FEAR
Jigar Shah: All right. As we get towards the end of this conversation, I want to make sure we talk a little bit about the midterms, because you've got 36 governors running for re-election or election this fall. This is clearly going to be an issue. You've got major Republican governors from Texas to Wyoming that have put out pretty harsh press releases saying they are going to stand tough against those data centers. So what I'm trying to understand is, if you're actually running a campaign this fall: we sort of know what Mikie Sherrill did last year. She really was talking about the rate freeze, which I've got my quibbles with, but that's fine, I think it worked. I think Spanberger was just, I'm going to be more competent, and she passed a pretty comprehensive set of bills in Virginia that now she has to actually try to implement, which Dominion is going to try to thwart her on at every move, I'm sure. So I'm trying to understand where you channel all of this enthusiasm, anger, conversation. We generally operate in this niche. You don't find it boring and I don't find it boring, but other people find it boring. And it's broken through, to the point where a lot of our friends who generally find us boring are now interested in these topics when they call us up.
Dave Roberts: I always joke, I spent the first 15 years of my career going, I wish more people would talk about this stuff. And now I'm like, oh God, what was I thinking?
Jigar Shah: So what's your sense of what the pundits should be talking about? What angles should they be pushing when they've got the governors who are running for office in an interview? When we're talking about data centers, how should all of this be handled this fall?
Dave Roberts: I stopped understanding politics at all about 10 years ago, and I haven't understood it since, so I'm probably the wrong person to ask. I'd like to think that a comprehensive package of competent, good policies would do it. You can take a whack at utilities. I think cutting back on utility return on equity is a perfectly legitimate populist policy that also has merit. And requiring data centers to pay into a fund that's used for community benefit, or used for building out the grid, or used for distributed capacity, or all three, is a populist policy that has merit. You want governors with staffing and good information who can navigate this. Who can make the populist gestures, who can respond to the populist energy, who can demonstrate that they get it, that they understand the anger and they're responding to it, without being pushed into dumb shit that's going to have long-term detriment. That's the trick here. That's the line to walk. And I don't know that there's a formula for that, state to state. You have to think, what are ways I can signal: I hear you, I understand the anger, I'm responding to the anger. But let's not do anything that's going to hobble us later. I don't even mind necessarily if you pass a one-year moratorium or a six-month moratorium, something like that.
Jigar Shah: Bite your tongue, Dave Roberts.
Dave Roberts: Just get through the election. Do a moratorium that lasts through the election, then everybody will tune back out, and you can do competent policy. But as long as you know what you're doing, and you have some eye on the long-term needs here and the long-term direction of things. This is always the trick in US government. The public is ill-informed. Most of the people yelling at you are ill-informed. You need in some way to respond to them in a way that shows you hear them, but you need to respond in a way that doesn't inadvertently cripple your state, or cripple the future grid, or cripple the growth of the things we want to see grow. And I don't know that there's a formula for that. Just be careful. That's my answer.
Jigar Shah: Well, Arnab, we had Granholm on, and she gave us a little bit of a playbook. What's your playbook?
Arnab Pal: I think my playbook is much simpler. From what I've learned, and I'm with Dave, I don't know how to predict things anymore, I don't think anyone does. But all of politics really comes down to two emotions, hope and fear, and in the absence of hope, fear always wins. This is true all across the board. Donald Trump is president for a lot of reasons, but when there's no one else that's hopeful, the fearful candidate will win. And in our situation, where candidates aren't at play, fear is winning. It's the fear of AI, the fear of data centers, the fear of the tech companies. The only way to beat that is to offer real hope. If I'm Governor Pritzker, if I'm Governor Shapiro, if I'm Governor Sherrill, if I'm incoming Governor Becerra, and yeah, I'm calling that one right now, Jigar, just so you know.
Jigar Shah: You heard it here first.
Dave Roberts: California is going to elect a Democrat? What?
Arnab Pal: I want to go to the public and say: this is our opportunity to cut you in on the next industrial revolution. This is our opportunity to bring you in, and here's how it's going to help you. And not only say that, but: I will make sure that we are not taken for a ride by these technology companies, because I am competent at what I do. That's what I would say if I were a governor.
Dave Roberts: And let me just render myself a cliché by saying, well, look at this Mamdani guy. He struck an incredible balance of personal happiness and joyful warrior energy and hopeful energy. And he had a few headline policies that responded to that populist energy. Not necessarily policies that technocrats loved, like a rent freeze, or government grocery stores. All the technocrats are lecturing him, but ultimately those are pretty small-ball policies, and they send the right signal. And then behind that, he's just governing competently. He's governing as a competent technocrat. So that's the mix. Get the right energy, a few high-profile policies that make people happy and think you're fighting for them, and then behind the scenes, just do government well.
Jigar Shah: It doesn't hurt that he figured out a way to get the Knicks to win the championship.
Dave Roberts: That was a real coup.
Arnab Pal: But Dave, on the Mamdani point, you're right. And Jigar, I know we're getting to the end here. They always ask him about Donald Trump, about anything, and his answer is simple: if it will help bring down costs for New Yorkers, I will work with him. That is the politics of hope. And everyone leans on the fact that, oh, he's a Democratic socialist. That's not his draw. I know so many people in New York City that are not socialists at all that voted for him.
Dave Roberts: No one knows what those words mean outside of political obsessive circles.
Arnab Pal: That's the type of frame we have to take to this. It's not finding a different bad guy. It's saying, if it will help you, we will do it. You ask Jigar, are we pro data center or anti data center? We're neither. If the data centers can help the public around them, we'll support it. If not, I don't know why we would support it.
Jigar Shah: That's right.
Dave Roberts: And I've said this a million times, and I'll just say it one more time. All of us who want hope and competence are fighting against an information environment filled with fear and lies and misinformation and terrible dynamics at every level. Sooner or later, somebody has got to think about how to address that problem. We can't just work around it. We can't tiptoe around the results of it forever. Sooner or later, somebody has got to engage with improving the information environment. I don't know who that is. Everybody can play their part, but that has got to be on the table.
Arnab Pal: I think that's you and Jigar. You've got a job to do, Dave.
Jigar Shah: Exactly. Niche podcasts are the future. With that, Dave, I feel like every time we talk, I'm driven to drink. We'll need a whiskey at the end of this thing.
Dave Roberts: It's five o'clock somewhere.
Jigar Shah: Thanks for joining us and doing this with us. I do think this is a super important topic, and I do think we have the right people around the table. A lot of the investment that you've made in informing people over the last few years has unearthed a lot of solutions that are ready for primetime. I think we actually have data centers that are willing to pay for people's trust, and solutions providers that can provide it.
Dave Roberts: Here's hoping.
DEBRIEF
Jigar Shah: Well, I'm not going to lie, Jamie, I'm a little drunk. No, kidding. But he does drive you to drink. He's just like, just throw in the towel.
Jamie Nolan: I was listening to every word, and I will admit it was a little pessimistic at times. Between the pessimism, you guys were laying it on so thick at some points that I was like, ooh, let's elevate the bright side here a little bit. Between that and the feminine energy associated with solar power, I couldn't have been rolling my eyes further back in my head. I was like, man, if there was ever a moment that I wanted to be co-hosting, it was right now. Arnab represented my position well. He did end up saying something, but I wasn't going to let that stand.
Jigar Shah: What bothers me about it is not that feminine energy is bad and masculine energy is good, or whatever it is. What bothers me is that these are just electrons. For the love of God, why are we assigning genders to electrons? I just feel like the people putting solar panels on your roof are also getting sweaty and needing a shower at the end of the day. It's not like they're not putting steel in the ground. It's all hard work. Everyone's doing hard work. Everyone's rising to the moment. It bothers me when people degrade, and I think they mean it in a derogatory way, energy efficiency or solar or whatever, as something that's less than a combined cycle gas turbine.
Jamie Nolan: It's so ridiculous. The concept of energy independence and producing your own power, breaking free from the monopolistic utility industry in order to take charge of your own land and create what you need for your family: I can't think of anything that is more American as an idea, first of all. But I just don't get it, and I just don't want to elevate that as a concept even in our discussion. Giving oxygen to it at all bugs me, and so I am happy for this outro so that I can express that opinion.
Jigar Shah: Well, we missed you during the interview, but I thought Arnab did a fantastic job, and I do think his instincts are really good on the political side. It's going to be an interesting several months, because I do think that the natural gas industry is going to fail miserably at meeting the speed-to-power challenges until probably 2031, 2032. And that opens the door for all of these other solutions to show that they can actually rise to the occasion much faster.
Jamie Nolan: Absolutely. That is what is happening. They have no mechanism with which to meet the speed-to-power requirements of this moment, and the only technologies that can fill in the gap are solar and batteries. That's the only thing that can be deployed in 18 months. There's no way around it. Even if they're scaling up the manufacturing capacity for these combined cycle gas turbines, they're not going to appear out of thin air. But the solar and storage industry is ready, and that's why you're seeing these big deals, like with Intersect Power and Voltus, for these technologies with these big hyperscalers. Because that's what's ready to go.
Jigar Shah: Love it. Love me some Dave Roberts.
Jamie Nolan: Love some Dave Roberts. Loved seeing his face and convincing him to get on video for us. Also, just really fun to do a crossover with Volts. We love Volts. It's been a long-term stalwart in the energy podcasting space, so it's really a pleasure to have this partnership with them.