Transcript
INTRO
Jigar Shah: My name is Jigar Shah, and I'm a clean energy entrepreneur.
Jamie Nolan: And I'm Jamie Nolan, a clean energy communications executive, and this is Energy Empire. Hi, Jigar. How are you? What's new?
Jigar Shah: I'm good. I got a pair of shoes in the mail, and I had forgotten.
Jamie Nolan: I get a lot of shoes in the mail, so you're going to need to specify why we're excited about this pair of shoes.
Jigar Shah: Simon had gotten some sort of back channel from, I think, the guys at Florsheim. I don't know if you've heard the story, but Trump has been giving free shoes to all of his cabinet secretaries that are the wrong size. And so I get this pair of shoes, and the CEO of Florsheim has signed it. And it says if it's the wrong size, you can send it back. So now I'm thinking, why did Marco Rubio never send them back and just get the right size? Anyway, I'm part of the cabal of people who are getting free shoes from Florsheim.
Jamie Nolan: It's hilarious. Does this make you an honorary cabinet member?
Jigar Shah: No, I'm pretty sure it does not.
Jamie Nolan: Marco Rubio would have to actually stand up for himself if he told someone that the shoes didn't fit, so I don't know about that these days. But I'm glad that you're wearing the official blessed shoes. When we got this outreach, I did go check out their website, because I was like, I want free shoes. I need new shoes for Climate Week. I did get some, actually, but sadly they do not make them small enough for my narrow feet. So maybe next sneaker sponsorship. I think this counts. I think we've achieved sneaker sponsorship if you got a free pair of shoes. But the next sneaker company that reaches out, please make women's shoes too, so I can have a pair and we can be matching on the stage when we do our live recordings.
Jigar Shah: We also had that great collaboration with our friend of the pod, Paul. His friend makes custom shoes, so he has made me a pair of custom shoes using the Energy Empire color scheme. And so I will be rolling that out at New York Climate Week. We'll see how those turned out. I'm supposed to get them in the mail here any day now.
Jamie Nolan: Really excited about Climate Week. This will be our first time doing a live recording in front of an audience. I know that you're a pro at this, but this is new to me, so I hope that people are kind.
Jigar Shah: Well, if they're not kind, then I will throw my size 12 men's shoe at them. So I think we'll be okay.
Our guest this week is amazing. I've known Lee Taylor at Resurety for a long time. Lee and I have conspired on a lot of projects together to figure out how to keep clean energy carbon accounting sane. I don't know if you remember, but there was this whole thing about how we wanted everything to be 24/7 matched and make it impossible for people to buy clean energy and get credit for their carbon accounting. And I always thought that was Looney Tunes. So he and I worked really hard on that together. But that's not what his company does. So I'm excited to hear about what his company does, and his journey, and how he got to where he is.
Jamie Nolan: Well, first of all, everyone and anyone who has worked closely with you knows that you have this shtick at this point where you'll be like, Jamie, you know Lee Taylor, right? And I'll be like, no, why would I know him? Because you know everyone, and so you assume that everyone knows everyone. We get to have these amazing conversations where I learn about these incredible entrepreneurs and the way that they're changing the world. And so I'm really excited to hear about Resurety and what they're doing and their part in the energy transition.
Jigar Shah: The thing that makes him so interesting is that I think there's just a lot of underlying assumptions that people make. If someone signs a 20-year contract with Google or Meta or Microsoft, or Nucor Steel, or I think Kaiser Permanente signed a virtual power purchase agreement, a lot of those are people who are members of CEBA, the Clean Energy Buyers Association that our good friend Rich Powell runs. You're sort of like, okay, that sounds good. They bought a bunch of power. But no one ever asks, well, what happens if that particular facility shuts down and Kaiser Permanente no longer needs the power in that place? What happens with that power?
Well, it turns out they just pay for the power and then they trade it. They sell it to someone else. And all of that stuff sounds like it's esoteric and doesn't happen that often. But it turns out when you've got 100,000 megawatts of solar and wind operating that are almost at the end of their contract life, a lot of people need this power trading, contract-swapping service.
Jamie Nolan: I think it's a great idea. And it just goes to show you that sometimes it seems like an obvious idea, and sometimes the most genius ideas are just right there in front of us. So let's get into it.
SELLING SHARES IN YOURSELF
Jigar Shah: Lee, so good to see you. Thanks for joining us.
Lee Taylor: Likewise. Thanks very much for having me on. Great to see you as well.
Jigar Shah: You've been at this a long time, Lee. You started Resurety at the end of 2012, right after Solyndra went bankrupt, because you had a death wish. Every venture investor was running away from clean energy, and obviously you had a hard time raising money. And then you found a company called Upstart. What do they do?
Lee Taylor: Well, they've changed their business since that time. But I was, I think, in the first or second class of Upstart investees. This was a bit of a non-traditional fundraising strategy, because I realized pretty quickly that the venture space in 2012 was not that welcoming to clean tech, but I was pretty determined to move forward with what we were trying to build at Resurety.
Upstart was a program where you could, for lack of a better word, securitize yourself. You would apply, and they'd ask for everything from your SAT scores and grades and past job details. And they would say every 1% of your personal income for the next decade is worth X dollars today. And so I sold off some shares of my future in order to get the first capital in the business to build the first technology. They ended up pivoting the business model after they got written up in The New Yorker as being modern indentured servitude, but not until I got my loan. So that was the first money in.
Jamie Nolan: At least it wasn't a kidney. This is an absolutely wild story. I have never heard of such a thing. And honestly, this was in our run of show, and I was like, I do not understand where this question is going to lead. But you've impressed me. It's even weirder than I expected.
So my understanding is that the only way out of that Upstart contract that you signed was death or a buyout. And I hear that there was a wedding involved in your exit. So how did you get out of it?
Lee Taylor: So you're right. You could buy out early, and there was an IRR hurdle you had to hit if you bought out early. We'd started to get our first customer at Resurety, and revenue. And importantly, my then girlfriend, now wife, who I'd proposed to, we met in business school. She was an investment banker, and she wanted me to clean up my balance sheet before the wedding. So I bought out, and happily, we've raised a Series A, B, and C since then. So we got a little bit more back on the traditional path. But it was an interesting time to be raising money for clean energy, for sure.
Jigar Shah: I think I remember that was around the time that there were Peter Thiel fellows, and he was trying to get people to skip college. And then I think there were even contracts where you could invest in college students and pay their tuition and get a percentage of their earnings in the future. Those were wild and heady days.
Lee Taylor: Well, it worked for us. And so I appreciate it, Upstart. And we'll see if it comes back in a future iteration.
Jamie Nolan: I love it. I love it.
FREE FUEL, UNPREDICTABLE FUEL
Jigar Shah: All right, let's pivot to your actual business. So wind and solar have free fuel, but you never know how much you're going to get. Your grad school insight was that every bank and trading desk in the power business was built for fuel that costs money. This was sort of post-Enron, and the natural gas power plants and all that stuff. But most power trading desks weren't really structured for fuel that's free but unpredictable. So explain that in plain terms, because it's the biggest source of tension right now, I think, between all of the political arguments in Texas and other places.
Lee Taylor: Yeah. So we're talking about intermittency here. When you think about clean energy, people often talk about the environmental benefits of carbon-free fuel, but it also has a pretty significant economic benefit, which is, as you said, the fuel is free. And so once you've built the project, the chance that coal or gas becomes too expensive in the future and you can't operate or you can't make your return isn't an issue for clean energy. It costs a lot to build it, but it's extremely cheap to run it once it's built because of that free fuel and relatively low operating cost. And so that was a great advantage.
But that advantage wasn't, from our perspective, really being realized, because you didn't control when and how much of that fuel shows up. And so intermittency was mostly talked about at the time, and still today, I think, as a physical issue. Do we need batteries? Do we need transmission? Do we need demand response? What is it that we do to keep the lights on? And not to dismiss that. We do need to keep the lights on. That's the grid's first job, reliability.
But it also has these big financial implications. Are you trying to use a contracted renewable project as a hedge? How well does the timing of its generation match up with your consumption of power? If you're trying to trade that power, buy it so you can sell it to somebody else at a different price, that gets harder with intermittent power. And so that resource intermittency basically made clean energy untradeable, significantly less liquid, less transparent. And so we saw this ecosystem, both on the information that was needed to underwrite risk and value, as well as tools to trade and hedge the value of that power, that basically didn't exist.
And that was fine in 2012, when it was a relatively niche industry still and most of the contracts were still being signed by utilities. But we were starting the rapid change to it standing on its own two feet economically and being something that Goldman Sachs and Google would buy. And it really needed an ecosystem of tools that didn't exist. And that's what we set out at Resurety to solve.
THE THREE BUCKETS ON YOUR BILL
Jamie Nolan: So the average American household paid $217 for electricity in July. And of course, this has been rising very quickly. My neighbor a couple of blocks down, her Dominion bill in Virginia keeps going up. And every explanation that I hear is different. She has already landed on the fact that she thinks that AI data centers are to blame. But where does the money actually go with these rising power bills? And what is your thesis on what's causing the price increases?
Lee Taylor: So we can talk about what someone's paying for electricity at their house, retail electricity. There's basically three buckets that drive that cost. One is the actual cost of the energy. That's the wholesale market. That's where we spend almost all of our time. So what does it cost to produce electricity that is going to be injected into the grid? The second bucket is the delivery. So all the wires that are required to get it from a power plant, whether that's a coal plant or a solar project, to your house. And then there's sort of the third catch-all bucket, which is everything else, policy, et cetera. I can cover what's in that. The part that people talk about, the generation piece, wind, solar, et cetera, is the smallest and is shrinking as a piece of that.
And so when you talk about what's driving your retail rate, it's typically, and it depends very much on where you are in the country, it's the wires that need to get it to your home. So California has very high power prices in part because of damage from wildfires, the cost of trying to bury wires to be more resilient against storms and wildfires. That has nothing to do with how much it costs to produce electricity. That's how much it costs to get it to your home. And that's wildly different location by location. It has a lot to do with the labor costs of the people who are building and maintaining those wires.
And then there's the third bucket, which we can get into, because it dramatically changes location by location. That could be a result of a legacy contract with a solar project. Wind and solar are pretty cheap today. They weren't 15 years ago. Or it could be today that we're forcing a coal plant to stay online when its owner wants to retire it, and we're basically subsidizing it. All of those things go into that third bucket that aren't what it costs to produce electricity competitively and get it to your home. I would say those last two buckets are really what's driving the increases, delivery and policy. And it's wildly different location by location as to what's driving those costs.
$25 IN 2015, $25 IN 2025
Jigar Shah: What makes it cheap in one place and expensive in another?
Lee Taylor: So if we're talking wholesale power specifically, there are exceptions. Virginia is higher today. I know that's where you both live, so sorry. But in most places, power prices haven't increased very much at all.
Ten years ago, so 2015, natural gas prices were $2.50. Wholesale power in Oklahoma was $25 a megawatt-hour, two and a half cents a kilowatt-hour. 2025, the price of gas was $3.50. So you had your main input fuel go up by 40%. The wholesale price of electricity in Oklahoma in 2025 was $25. So literally a decade, no inflation, no change. California, it was in the low 30s a decade ago. It's in the mid 30s today. Texas, it was in the upper 20s. It's in the mid 30s today. So wholesale in most places has not gone up very much.
Again, I'm coming back to those second two buckets of distribution and, we'll call it, policy or uneconomic dispatch, whether that's traditional thermal or a legacy renewable contract from renewable portfolio standards days. And so there are plenty of reasons, climate change, wildfires, labor costs, resiliency, that electricity is becoming more expensive, and it is. And I think there's a question we could have about what's the cost of capacity as opposed to energy, which are often confused with each other, and their role in this system, certainly as it relates to AI. But wholesale power prices have actually been exceptionally good at staying low in the US for the last 10 or 15 years, including even recently.
DOES WIND MAKE POWER CHEAPER?
Jigar Shah: So let me just beat this horse one more time, because I want to try to understand it. You just talked about Oklahoma. And part of the reason why Oklahoma has cheap rates of, say, $25 is because they built a lot of wind. An enormous amount of wind. And so Trump and the energy secretary keep talking about how wind and solar states are seeing the worst price spikes, but actually seven out of the 10 cheapest electricity states have above-average wind and solar penetration. So it does feel like, done correctly, and even in California, the wholesale market prices are actually pretty cheap. So you have the data. Who's right? And if wind is really cheap, why doesn't it show up on the customer bill?
Lee Taylor: So in terms of the wholesale, again, renewables are driving down costs. Oklahoma has almost 45% of its power coming from renewables, most of that wind. They've basically gone 10 years with no increase in wholesale power. West Virginia has very little renewable penetration. Its power prices at the wholesale level have gone up 50% over that same 10-year period. So you're going from $30 to $45 a megawatt-hour in West Virginia.
And so in general, again, renewables can be expensive to build up front, but they're incredibly cheap to operate after the fact. And so they tend to push wholesale prices low. If we're talking wholesale, renewables push power prices low. Where the question comes up is, is there investment in storage that's needed, demand response, to support that intermittency? So it is not a gas plant versus a renewable project. The renewable plant might cost half of what it costs to build the gas plant. The gas plant is also firm. So how much storage do you need to add before those are fully apples to apples? To say that renewables in the wholesale market are driving up costs isn't true. But we're not going to exclusively build solar anywhere, or exclusively build wind. Wind, solar, storage, some element of gas to keep the grid firm certainly makes a lot of sense. It's not one size fits all. It's not the renewables projects' fault, for sure.
CHEAP ENERGY, EXPENSIVE GRID
Jamie Nolan: So California has some of the cheapest wholesale power in the country, around four cents a kilowatt-hour, but some of the most expensive retail power, around 35 cents. What's actually going on there?
Lee Taylor: So California has incredibly cheap energy but a very expensive grid. Both are true. California is an expensive place to consume electricity in your home. It's also a pretty cheap place to consume electricity in the wholesale market. And a lot of that, to your point, comes down to wildfire, population growth, all the investment that's needed to get power from the places it's being generated to where it needs to go.
The other piece of it, from a solar perspective, from legacy agreements: rooftop solar produces power that is almost free in the middle of the day. When it's sunny, it's a very low price. The original feed-in tariffs balance that out over the day. So you are basically taking power when it's incredibly cheap to sort of subsidize power when it is less cheap, when it's not sunny. So certainly California's wholesale market has dramatically benefited from solar driving down those costs. It's not the reason retail rates are high. Those come down to those other two buckets we covered at the beginning of the episode.
So I'd say in that case, both are right. Are there legacy contracts? In the same way there's legacy RPS contracts, the first wind projects, the first solar projects getting built were nowhere near as inexpensive as they are today. Those contracts, utilities are still paying. So if you're talking about, was solar cheap 10 years ago? No. Is solar cheap to build today? By far.
GRIDDY AND THE $5,000 BILL
Jigar Shah: So I think people have been talking about providing free solar in the middle of the day, whether it's the current Democratic nominee for governor of California, or Australia has been talking about free solar during the middle of the day. But it's still not free, as you suggest, because you've got the wires cost that you have to pay for, and some of the other costs.
And so when you think about how that works in places like Texas. In Texas, during Winter Storm Uri, nearly half of Texas's power plants went down and left millions without electricity for days. Wholesale market prices, which were normally three cents a kilowatt-hour, or $30 a megawatt-hour, were pinned at the legal cap of $9,000 a megawatt-hour for four days. Customers of a startup called Griddy had signed up for the raw wholesale price plus a small monthly fee. So they got screwed when they got the real bill. Some of them paid over $5,000 in five days, and Griddy went bankrupt a month later.
But today, there's a lot of people doing things completely differently. There's a lot of high-profile companies that are putting a battery in people's homes. Can you explain how that model works and what could go wrong?
Lee Taylor: So as we've talked about, in the wholesale market, electricity prices change dramatically hour by hour. Some hours, Texas produces power that is worth negative $50 a megawatt-hour. Sometimes, during Uri, as you mentioned, it's $9,000 a megawatt-hour. Most of the time, it's sort of bouncing around $30. So there are two different models for how you make that useful to the end customer.
One is the utility or some intermediary wears all that risk. They say, I'm going to charge you 15 cents a kilowatt-hour. And in the hours that I can buy it from the wholesale market for two cents, and the hours I have to buy it for 30 cents, I'm making a gain or a loss during that period, if I'm having to buy it for more or less than I'm delivering it to you for. And so you tend to pay a premium as the consumer for lower risk. At the end of the day, that risk is paid for one way or the other.
So Griddy customers saved a lot of money relative to their peers in general prior to Uri. It was much lower cost to get that passed through. But they were effectively offering the insurance. They weren't paying the insurance premium to a utility to basically absorb all the volatility. And so in that scenario, that got fully passed through. A, Winter Storm Uri was an extreme weather event. B, the grid region changed the rules halfway through the storm to leave a $9,000 administrative adder on after its own rules said it should be taken off. So there was a lot of controversy around that specific scenario.
But ultimately, there's a choice to be made. Do you want the lowest possible cost, or do you want the highest possible resiliency, or do you want somewhere in the middle? Griddy was lowest cost. That came with the highest risk. It was discovered how much risk during Winter Storm Uri.
Jamie Nolan: Can you imagine getting a $5,000 power bill out of the blue? I feel bad for those folks.
THE FREE HOME BATTERY
Jigar Shah: Oh, I would just faint. I think I would just faint. I'd look at it and be like, this is incorrect. But go back to the companies like Base Power or Rhythm Energy or all these other folks who now are giving you a free battery. What goes wrong if you sign a contract with them?
Lee Taylor: I don't know the specifics of their contracts, but I'm assuming they're committing to fixed-price power. And so as a buyer of power, as long as that price is at or below what you're already paying, it's purely beneficial to you. The question is, what risks are those retailers taking? They're saying, if you switch to me, I'll sell you power at 12 cents or 11 cents or 13 cents a kilowatt-hour, because you're currently paying something above that. That party, in most hours, we just said Texas wholesale power is usually worth about three cents. So in most hours, those companies, if they're selling power for 11 cents, let's ignore the distribution charge, are making money on every one of those kilowatt-hours sold.
In the event that power prices go up, and part of the reason a lot of those groups are installing batteries, is because that gives them a physical ability to manage that volatility. So power prices spike dramatically for an hour. They can just turn on the battery that's in your home and serve your load with that, as opposed to having to go buy it on the wholesale market, which is what has driven most retailers in Texas that have gone bankrupt. And Griddy is part of a long line of Texas retailers. That competition has driven power prices low, but there are a lot of retailers that have gone bankrupt because they said, hey, buying it at three cents and selling at 11 is great, until power prices skyrocket.
And so I think that the energy storage addition there is a physical solution to some of that volatility. And blending, I'm sure, a trading strategy or hedging strategy with that. No one will know how resilient they are until we're on the other side of a price spike. But that's ultimately what's happening there.
PJM AND THE DATA CENTER PRICE SPIKE
Jamie Nolan: Okay, now we want to leave Texas and go up to the Northeast, where PJM runs the grid for 65 million people from Chicago to Virginia. The price it pays power plants just to promise that they'll be there on the hottest day went from $29 to $325 in four years, 11 times higher. Absolutely mind-blowing. And the market monitor says that data centers are responsible for 46% of $63 billion in those charges. So first, can you explain that to our listeners in plain terms so they understand what we're talking about here? And then, do you think that that risk is landing on the right people?
Lee Taylor: So in terms of what we're talking about, we were just talking about Texas, which is, famously in energy markets, an energy-only market. You only get paid for the power you inject into the grid in that hour. Most other markets, PJM in particular, have an energy market and a capacity market. So as you said, a capacity market pays you just to be there, to be ready to produce power even if you're not producing. And that's how you generally try to incentivize development of new generation, such that you don't get to a point where you have more demand than you have supply.
And so to your point, PJM has been hitting the cap recently, which is about $325 a megawatt-day. Importantly, that's a cap. They've hit it the last three times and been oversubscribed. So if that price was allowed to just float for supply and demand, it would be higher. So 11 times higher is actually lower. It's just that's where we're hitting the cap.
There are two forms of demand that are increasing. One is just realized demand. There's actually just more data centers being turned on. But arguably more importantly, there's an enormous amount of forecasted demand. People saying there's more data centers coming. That's what the capacity market is trying to get ahead of, but it's paid for today. And so you are effectively sharing in the cost of preparing to serve huge amounts of load in the future. And one could argue that that's not being borne fully by the folks that are bringing it in, in the capacity markets.
That said, it's important to recognize there is also the energy market. So when a new data center is told, you can't join the grid unless you also turn on a new solar project, a new wind project, this is bring your own capacity, bring your own new generation. More often than not today, if you're signing a PPA in PJM, you're probably signing it at $75, $80 a megawatt-hour. That's what it costs to get a new project built there in renewables. If it's gas, way higher than that. But if you're building that new project at $75, $80 a megawatt-hour, the power in those regions today is worth $35 to $50, depending on where you are in the grid. So that PPA is effectively subsidizing getting a new project built that's bringing new capacity on.
So yes, the additions of data center loads are driving up capacity costs. That's having an impact. They're also funding new generation coming on. Whether that will impact retail rates, I think, depends on each of the tariffs that they're in and how fast that demand really shows up. So yes, data centers are driving up those capacity costs. I think it's very much not clean that that's overall driving up energy, all in, capacity and energy together.
A CONTRACT WITH ONE BUYER ISN'T A MARKET
Jigar Shah: So now let's get into what you do. There was certainly a lot of foundation building to do, just because these concepts are complicated. But as you know, there's been a lot of renewable energy that's been built with a 20-year offtake agreement from hyperscalers and large retailers and others. But that's not really a market, right? A contract with one buyer isn't really a market. So part of what I'm trying to understand is how all of this works. Because one of the reasons why the 20-year contract with a wind or solar farm worked was because of merit order dispatch, which says that technologies with the lowest variable costs get to run more than the ones with higher variable costs. So walk us through how those deals actually get done today and what you're building to change it.
Lee Taylor: So I would separate, you mentioned merit order dispatch and the PPA, because a PPA is, what's the contract you need? And you need a PPA today to build a gas plant too. This is not a wind or solar-specific item. If you're going to build a new power plant, you need to have 10, 12, 15, 20 years, depending on your structure and your technology, of contracted revenue. Some expectation that you're going to be able to pay back the loan, the investment that it took to get that project built. And so those are still happening in that market.
But I would say what was somewhat unique about renewables: if you think about the world, you want to buy, sell, or trade base power or natural gas, you can log into the Intercontinental Exchange or the Chicago Mercantile Exchange and see where people are buying or selling those contracts and transact pretty quickly. If you wanted to buy power from a solar project, you would hire a broker who would run an RFP. Three months later, they would have all the answers and have analyzed them. Six months later, you might have a contract. And then you would generally sit on that contract for the next 15 years. It was primarily a set-it-and-forget-it contracting structure. That, again, worked in the infancy of the industry, but really, renewables have dramatically outgrown that.
And that's what we've been building at Resurety with our recent CleanTrade exchange: to try to bring the liquidity and transparency that you benefit from in traditional power and oil and gas into clean energy, so that you can have that same level of transactability and visibility on where prices are and what it takes to get these transactions done.
Jigar Shah: So we've had this kind of transparency in other commodities like oil and gas, or regular power plants. So what have you now launched here in 2025?
Lee Taylor: So CleanTrade is the first regulated exchange for intermittent power. Previously, if you said, I'm going to sell on-peak power in PJM West, you could log in at Nodal Exchange and offer that immediately. So you have a regulated exchange where the buyers and the sellers are there posting what they would bid and offer, and everyone can see full access to the entire market. Renewables never had that. It was an entirely bilateral market. You can think about this as the real estate industry before, when who your broker knew was the entirety of who you could sell your house to.
And so that sort of on-screen transaction requires CFTC approval. So we're regulated as a swap execution facility, which is basically the regulatory infrastructure that lets people buy and sell these sorts of contract-for-difference transactions, or swaps, or what are also called virtual power purchase agreements, at scale, with that sort of regulatory backing of the CFTC and the liquidity that goes along with it.
A THOUSAND PAGES AND NINE MONTHS LATE
Jamie Nolan: So I thought this story was really interesting. Your approval at the Commodity Futures Trading Commission was supposed to wrap up the day after the inauguration. And then four out of the five commissioners quit while you were waiting. So give us the tea. What was it like getting a first-of-its-kind market through Washington last year?
Lee Taylor: Probably wasn't the best timing. We started this process in 2021, in partnership with Citibank, and had applied long before the election had happened. What I would say is, talking with the staff or the commissioners, it was a pretty apolitical process. They were there to make sure that the exchange lived up to all the requirements. I think our final application was just shy of a thousand pages. It took us several years to get, whereas we got a broker license in a couple of weeks. So the bar they set for an exchange is just incredibly high.
And I would say that on top of that, to your point, it was a first of its kind. We weren't the 10th exchange applying to do interest rate swaps. We were the first exchange talking about trading intermittent power from individual projects, which is how wind and solar really need to transact. So the CFTC had to go up a learning curve on this portion of the power industry. They obviously regulate traditional power already.
And then, yeah, there was the chaos in Washington, when there always is a changeover. But then members of the team we were working with were affected by DOGE, and obviously commissioners departing added some complexity. So it took us about nine months longer than we had originally planned. But we still worked closely with CFTC staff. And that chaos has settled down, and it's sort of back to normal working with them as a regulator.
Jamie Nolan: That is wild.
60 PARTICIPANTS, $50 BILLION IN BIDS
Jigar Shah: Take us through now that you're up and running. It sounds like your first trade was Cargill and Mercuria, about a year ago. Your site says $30 billion of clean power contracts are now up for bid. S&P Global started publishing daily prices off your data in March. And more than 100 gigawatts of wind and solar projects are now over a decade old and coming off their original contracts, with nowhere to resell them until now. So who's actually showing up to trade, and what changes for the person paying $217 a month if this works?
Lee Taylor: So in terms of who's on the platform, we onboarded our 60th market participant today. And that's everybody from bulge bracket banks and proprietary commodity traders to commercial and industrial buyers, who are either trying to buy new contracts to bring more power onto the grid, or they're trying to actively manage contracts they already have. So let's say they signed a PPA in one location, but then they moved their facility somewhere else. And so it's no longer as good a hedge on their energy costs. So they want to sell their contract there and buy a contract in the new place.
Obviously, developers who are trying to get new projects financed, back to that 15-year PPA. As well as, to your point, on the 100 gigs rolling off. You have a lot of independent power producers that are ending the first PPA of their life, let's say a 10 or 12 or 15-year PPA, but they still have 10 or 15 years left on their project, and they don't want to be exposed to wholesale merchant rates. So they're looking to sign a one-year, a three-year, a five-year PPA. So we've been really delighted by the uptake.
So as I mentioned, 60 market participants. We apparently need to update that stat on our website, because I think as of today, we're a little over $50 billion of notional bids and offers. A transaction closed on the platform last week that's an example of a greenfield buyer. They haven't announced it yet, but this is a corporate buyer who's focused on additionality. So they signed a long-term contract to get a new project brought online. The contract that closed today was for an operating asset that was looking to hedge power that was already up and running, but still looking for certainty of revenue. So whether it's that operating fleet or the greenfield, it applies to both. And we welcome anybody who's interested in joining.
Jigar Shah: And are all the players that are on your platform active market participants, or do you actually have speculative financial traders on your platform too? Like someone who says, I want to play a weird bank shot on the Strait of Hormuz by participating in this contract. Do you have speculation, or is it generally people who are physically buying and selling power?
Lee Taylor: So you can physically buy power, but most of the CFTC-regulated part are technically swaps. So there's a virtual power purchase agreement where you're entering into a contract for difference, mostly for hedging purposes. I think if you were going to speculate on Hormuz, a PPA with a solar project in Iowa would probably be a pretty odd way to do that.
Jigar Shah: It's a bank shot. It's a bank shot.
Lee Taylor: You could do that. There's definitely a connection to natural gas prices, but that's probably the closest I can connect there. But we certainly have financial players on there. I would say it's less around betting that the prices are going to go up, and more that market-making service. Saying, okay, there's a lot of municipalities or smaller corporate buyers that want 20-megawatt tranches of power, not 200. But the project only wants to sign a 200-megawatt contract. So I, as a bank, as a commodity trader, could buy that and then break it up into smaller pieces and facilitate that. Or everybody who's buying only wants three years of term, but everybody who's selling wants to sell it for eight years or 12, whatever the case is. So we definitely have that sort of financial market-making activity, as opposed to just betting that prices are going up or down in some location.
WINNING ON ECONOMICS
Jigar Shah: Well, let's go back now 13 years, or 14 years, I guess, to the founding of Resurety and your unconventional way of funding your business. Today, the OBBBA has phased out solar and wind tax credits. I think part of your bet was that economics alone could spur this market, and the climate benefit would come as a side effect of people chasing profit. How close are we to your original vision?
Lee Taylor: So we're, I would say, very close in that clean energy is winning on its economics, but far from where we need to be. The politics around wind and solar aren't great right now. At the same time, over 90% of what we've built in the US this year is wind, solar, and storage. And that's not because we're forcing people to. It's because that's the thing that is most cost-effective and fastest to build. And so in terms of clean energy winning on economics, it's doing that.
I think on the One Big Beautiful Bill, the expiry of the tax credits: tax credits to me were always a really blunt-force way to get around the fact that we don't actually charge for carbon. Because if you charge $70 a ton of carbon, and everybody has a wide range around what people think that is, but a coal plant is half a ton per megawatt-hour, that would add $35 a megawatt-hour to what a coal plant has to produce. That's not too far away from where the tax incentives were from a production tax credit. We aren't able to price carbon.
So I would say that even unsubsidized, absent PTC, ITC, wind and solar and storage are winning today in most places. Obviously, your last episode talked a lot about the obsession with gas. People are building gas mostly not for economics, but for speed, and speed to capacity as opposed to energy. So I would say, yes, it's great that clean power is winning on its merits, but it's going to still need a lot of help to perform at the level we need it to, to get the grid to a level of decarbonization that's going to work.
Jamie Nolan: Amazing. I love what you're doing. I don't think I knew the path that you took to get here, and I found the CFTC story to be bonkers. And it does feel like battery storage in all of its glory is going to change your marketplace even more in the future. So I look forward to revisiting how ubiquitous battery storage is going to change the way people trade. But exciting times.
Lee Taylor: Yeah, it is. And we'll talk again in three months, because we agree on energy storage. It's coming fast and furiously, and it impacts wind and solar even if you're not energy storage, but on a standalone basis as well. So yeah, appreciate you giving me the chance to chat about it.
DEBRIEF
Jigar Shah: Well, Jamie, I don't think I predicted all the twists and turns in that story.
Jamie Nolan: I think it's hilarious that he mortgaged his physical self in order to start his company. I did not know that was a thing. So that was hilarious to me. And then the other thing is that at the end of the interview, he had a little bit of a hot take about externalities and carbon taxes, and how we wouldn't need subsidies for wind and solar if we were properly accounting for the externalities of coal. Which, yes, yes, yes, yes. But also, at this day and age, when people are so scared to talk about that, nobody's talking about carbon taxes right now, or climate in general. It was refreshing. I loved hearing it.
Jigar Shah: Oh, I do too. I was worried in the first part of the conversation that he'd had to mortgage a kidney. I was like, wait, what?
But on the coal. I'm not a big carbon pricing fan, just because I feel like it's politically fraught, and everybody who's ever passed a carbon price, I think, loses the next election. But I don't know if you remember, during the Obama administration, they did this National Academy of Sciences report that accurately calculated how much Medicare and VA spending we had that was directly attributable to burning coal. And it was basically the same price.
Jamie Nolan: Only you remember reports from a decade ago. But do tell me. You probably have the numbers right there.
Jigar Shah: It was roughly the same price. It was like $70 a ton of CO2 equivalent. That's how much we pay in actual costs, where they can say this particulate matter of this size got stuck in someone's lungs, and they got lung cancer, and then we had to pay for it through our health care. And so even if you don't believe in the social cost of carbon, or whatever it is that people talk about, these are real costs that everybody has to bear because of fossil fuel burning.
Jamie Nolan: Absolutely. I think right now, with the affordability crisis that we are facing in this country, it's hard because it's intangible. You can't see it. And so it's not real.
Jigar Shah: Well, it's pretty tangible to me. I don't know if you opened up your health care bill recently, but it's way up from last year. Crazy up from last year. And I don't think that that's fair, when on this side we have invented all of these awesome technologies that could actually provide our electricity without all the side effects.
Jamie Nolan: Listen, you're preaching to the choir. I have asthma. The closed coal plant that is about to actually be taken apart, and the site remediated, very close to my house: when I first started, my very first week at the Chesapeake Climate Action Network, the very first thing that we did was a candlelight vigil celebrating the closure of that coal plant. Thank God, because I literally wouldn't be able to live here. I would not be able to live this close to a coal plant, because that has real health impacts for me. I actually feel kind of under the weather. I had to get a COVID shot today. I have to continue to get vaccinated. I have to be really careful. This is very real for me.
And I will say, I was very gratified this week when I saw that the MAHA movement is now coming out to campaign against coal, because the Trump administration, very coal friendly, of course, is trying to prop it up and inject as much life into it as they can. And so it's nice to see, since they got this dude elected and they've done all these things that have hurt all of us, that at least they're going to try and wield that power for some good. I don't know how effective it's going to be in this administration. They seem to really like their massive fossil fuel-fired plants. But look how they've come around to all of the things that are hurting them.
Jigar Shah: Well, there's the health impacts, but also just the cost impacts, as Lee suggested in the podcast. That's uneconomic dispatch. If you were just working on market forces, you would never let it run. But the administration has signed these letters, which the Department of Energy has the ability to do, to force people to run things that don't make any damn financial sense to run. And so people's bills are higher as a result.
Jamie Nolan: As Lee discussed. It's crazy times, between that and paying billions of dollars to try and get offshore wind farms canceled. We're living in crazy, crazy times, Jigar. Thank God there are people like Lee that are doing great work and introducing common-sense solutions into the market that are enabling corporate buyers that are trying to do the right thing to access more wind and solar power.
Jigar Shah: Well, as usual, we never lack things to talk about. Thank you so much, Jamie.