Transcript
INTRO
Jamie Nolan: I know that today's guest is someone who, when we were initially brainstorming this podcast in early 2025, was in your top five list of most-wanted guests. And here we are.
Jigar Shah: Sheldon Kimber is amazing. I started SunEdison in 2003, and he joined the industry soon after that with our good friend Arnaud Harris. Then he went off and started Intersect on his own, and he's been right all along. I had the good fortune of being able to invest in Intersect early on when I was at Generate Capital, because we realized he was right: signing these long-term contracts for very little money made no sense. The power was worth way more, and Sheldon had the ability to take more risk. He agreed to not get paid any development fee on the front end and instead take his fees on the back end, so everybody else could get paid first. That's how he took more risk, and that structure is really important. The reason I'm so obsessed with it right now is that when you think about how we're going to deploy a ton of battery storage, it's the same merchant-risk approach. It's not a fixed 20-year power purchase agreement where everyone gets their guaranteed rate of return. It changes based on how congested the market is. And Sheldon has been putting in the time to figure that out in a way that can scale.
Jamie Nolan: So do you really think that merchant risk was the key differentiator for Intersect, which of course was recently acquired by Google in a massive deal?
Jigar Shah: Absolutely. In the end, Google isn't going to view it as merchant, because they need the power and they were willing to lock it in. But because he developed everything merchant, the offtake agreement was empty, and it was available for Google to fill that gap. Most developers sign long-term power purchase agreements years before construction starts, and then it's not that attractive to someone like Google.
Jamie Nolan: What else is it about Sheldon that makes him such a transformational leader, and so important to our movement in this industry?
Jigar Shah: He's a real entrepreneur. Not dissimilar to Dan Shugar over at NextPower. When you look at the board of ACP, these are all wonderful people, but a lot of them are CEOs of European utilities, or they run a division of NextEra or Berkshire Hathaway. They're not going to break the rules and figure out how to do things differently and bring the energy and passion you need in this moment to meet data center load growth. Sheldon does. And along the way, I've known him for years, he's had mental health challenges that he's talked very openly about, and stuff with his marriage and family that he's had to deal with. When you're operating at that level, traveling all the time, it's important for us to recognize who the people are who are actually putting it all on the line, everything, their family, their mental health, to bring the revolution that everybody seeks.
Jamie Nolan: Just as a reminder, ACP is American Clean Power, the big trade association for the largest clean energy companies here in the United States and abroad, as Jigar was mentioning. I definitely want to ask Sheldon about his transparency around his mental health challenges, because it's really rare. We know from the statistics that a large percentage of the American public has experienced mental health challenges at one point or another, but it's uncommon to hear from someone operating at the highest levels of business who can talk about it publicly and confidently. So I'm really looking forward to digging into that with him.
Jigar Shah: I'm excited. Let's get in there.
INTERVIEW
RAISED AROUND THE KITCHEN TABLE
Jamie Nolan: Sheldon, I have to tell you, Jigar has been very excited about this episode since before our first episode of Energy Empire. He has been talking about having you on.
Sheldon Kimber: I think the world needs me and Jigar in front of microphones more often.
Jigar Shah: There's a lot going on right now, and nobody has a better front-row seat to what's happening. But before we jump into your big $4.75 billion acquisition, I wanted to start a long way from Silicon Valley, where your father was a pastor in South Africa who stood up to apartheid, and your mother was a public school teacher. They raised you to believe in a life of impact. So when did you figure out energy was the area where you were going to focus your impact?
Sheldon Kimber: Around my kitchen table, it was always, "What are you going to do to have a positive impact on the world?" It was strange growing up in a household where my parents dragged us halfway around the world with nothing but the clothes on their back. I've never had to sacrifice like that, I've never had the opportunity to. But what I did have was where I commit my time. So it was always, what is your vocation, and how are you going to make that difference? I got into energy because I came to San Francisco to be in tech and wound up at a consulting firm, then a resources partner, and I just followed them into power. I did some coding and dispatch modeling to value scrubbers in the Ohio River Valley for utilities, and I got the bug of microeconomics and the purity of commodity markets. But one critical thing: I've always been more pragmatic about my activism than activist. Make an impact, but be the person with the degree in economics and math who goes and tries to make it. That's a pretty different thing from where my parents came from.
CLEAN ENERGY NEEDED LAWYERS AND BANKERS
Jamie Nolan: There's a version of impact that's marching and preaching, which is more like your dad's version, and then there's a version that's substations and tax equity and all these exciting things we get to work on in energy. You went to Goldman Sachs, then spent five years at Calpine financing gas-fired power plants. Did that feel like impact at the time, or were those the years you were learning the tools that set you up for the impact you later had?
Sheldon Kimber: At the time, the tagline when I joined Calpine was "Repowering America with clean natural gas." Coming out of the IPP revolution of the '80s and '90s, the laws that launched the independent power movement came from the energy crisis, Jimmy Carter putting on a sweater. Those were the environmental laws that got us to clean gas power. But I was pretty quickly set straight by Dan Shugar, who my wife went to work for around 2000. I got exposure while at Calpine to big structured financings for the solar industry, the Powerlight days, the true believers of that era. As things began to scale, I realized clean energy needed the lawyers and bankers now. When I started at Recurrent right after business school, I outlawed earth-tone suits. Dark suits only, because you can't show up in New York City, it's bad enough they think you're some hippie there to finance solar, so you better show up in a nice navy.
Jigar Shah: You led the charge against Obama's tan suit.
Sheldon Kimber: I outlawed them. You've got to be taken seriously. And once you've already won, you can wear whatever you want.
Jamie Nolan: Does that rule still stand? The norms around workwear have changed dramatically in the last 20 years.
Sheldon Kimber: I had a bunch of health issues at the end of Recurrent and took some time off. When I came back to do Intersect, one of the things I did, over a year before I wrote the actual business plan, was write down exactly what a company would look like that I'd actually want to work at, from a lifestyle and culture point of view. One thing I decided was, why does tech get to have all the fun? We take ourselves too seriously, and it stymies a culture of innovation. So Intersect was almost the opposite. I go to the American Clean Power Association and everybody thinks I'm a weirdo, because I'm the only person in the room wearing bright blue Air Jordans with my suit jacket.
Jamie Nolan: They're totally just jealous. When Jigar was Joe Biden's "$400 billion man," which was the headline in The Wall Street Journal, he was wearing sneakers on big stages. So it can be done.
Sheldon Kimber: I haven't yet had the guts to wear the LeBron Monopoly editions, with Monopoly money all over them, at a conference. When you're doing the fireside with your legs crossed and your foot up, that might be a little too audacious.
HIRING FOR THE CHIP ON THE SHOULDER
Jamie Nolan: You were COO at Recurrent Energy and helped build it from an early-stage startup into one of the biggest solar developers in North America, over two gigawatts across the US and Canada, and then you did it again at Intersect. You've said the projects are downstream of the people, get the hires and relationships right and the gigawatts follow. What do you actually look for in the people you bet on, and how early can you tell whether you got it right?
Sheldon Kimber: My team laughed, because when we were talking through these questions I gave the answer "deep insecurity and deep self-doubt," and they said, "No, that's just you." I come at everything from a deeply self-conscious, insecure place. I'm never going to feel safe, and that's what drives a lot of entrepreneurs. But you can't have that in everybody, that would be horrifically unhealthy. What I do look for is a very big chip on your shoulder. If you're going to lead alongside me, you'd better have a big chip about something. It doesn't mean you came from the streets or from nothing, but it means you always want to prove something. Intersect is a group of people who've always wanted to prove something. I got a couple of backhanded compliments when we sold, people saying, "Some people doubted it, but we always thought it might work." Those are the people I like. The second thing is I hire people as a ratio. Some people just hire the greatest person they can find. I care less about how good you are and more about how good you are versus how good you think you are. That ratio is what makes for a stellar contribution to a team. We have a healthy confidence in how good we are at our jobs, but we're always willing to question ourselves and defend our answers. There's no true arrogance.
Jamie Nolan: I love the vulnerability. All entrepreneurs feel that insecurity, but you know what they don't do? They don't usually come on podcasts and talk about it. It's important for people to hear that you can feel insecure and do it anyway.
Sheldon Kimber: Everybody wants to take the stage at big conferences, and most people don't really have anything worth saying. I try to focus on having things worth saying, and frankly, the stage at big conferences scares the heck out of me. I have real nerves about public speaking, hence the writing and podcasting.
THE LAW OF CONSERVATION OF RISK
Jigar Shah: The one thing most people don't know about you is that you've been teaching project finance at Berkeley Haas for 10 years. Most developers learn the business by losing money. What's the one thing you taught in the classroom that you think the industry still gets wrong?
Sheldon Kimber: I taught at Berkeley for about 10 years and had to stop in the Intersect days, there's just too much to do. And once you teach the same content for a decade, it gets stale. The thing a lot of people miss is what I call the law of conservation of risk. Project finance is about managing risk. There's a big ball of risk, and you can go at it a bunch of ways: you can bound it, mitigate it, allocate it, usually toward creditworthy parties or parties who can best absorb it. But you can hardly ever eliminate it. That has massive policy implications. The one that pops up for me right now is when I hear people making arguments for simple-cycle or more flexible gas, lower CapEx, higher heat rate, because I think renewables and batteries are going to eat the gas we're putting in the market over the next decade no matter what.
Jamie Nolan: Your mouth to God's ears.
Sheldon Kimber: The economic argument people make on combined-cycle gas is, "It's okay because I've got a hyperscaler offtaker for 20 years," or the utility is rate-basing it. What they don't understand is there's a conservation of risk. Somebody's taking that risk. You're not getting rid of it, you're just allocating it, whether to investors, ratepayers, or a hyperscaler.
THE MERCHANT BET IN TEXAS
Jigar Shah: And these days it's a lot of voters, who are getting pretty pissed off right now. But let's double down on that. To get the kind of outcomes you've gotten, you've got to bet the company. So let's talk about the decision that made Intersect different. Around 2018, when everyone else was addicted to 25-year contracts with CEBA members, the Clean Energy Buyers Alliance, you decided to build almost a gigawatt of solar in Texas that was substantially merchant, selling into the wholesale market with no offtake agreements. I had a front-row seat to that decision at Generate Capital, and it wasn't an obvious call. Walk us through the moment you decided to take price risk when everyone else was running from it.
Sheldon Kimber: The company was founded on two principles. One became the hydrogen and data center co-located power play, the idea that there's so much power, renewables and even gas, in the wrong place at the wrong time. The other was that everybody kept telling us, "You don't even have a pipeline, how are you going to get back in the market? You're just pulling together a bunch of old Recurrent folks." So I felt we had to take a differentiated position. And when we did the math, the prices people were signing were basically zero-margin contracts. They were working for their buyers. There was no way to reliably make money on a $21 PPA, and you were taking a massive bet on continued record-low interest rates and unbridled institutional desire for green income investments. It was an absolute peak for unloading low-priced PPAs.
Jigar Shah: At the time, going merchant was giving you three times the revenue.
Sheldon Kimber: Exactly right. You could do better going merchant even in the worst cases. We ran the most horrendous downsides we could and held them for the life of the asset, and you were still better off than signing it all up front, which just locks in the worst possible market outcome.
Jamie Nolan: Let me double-click on one thing for listeners who don't live in this world. Going merchant means building a power plant without a guaranteed buyer. In Texas, where prices can go from literally nothing to thousands of dollars an hour, that's what we're talking about. Your investors had to underwrite that. So how did you sell that story when the industry consensus said you were wrong?
Sheldon Kimber: The consensus didn't necessarily say we were wrong. There are plenty of folks on the gas-fired side who've done this for ages. The renewables industry had just gotten too calcified, people viewed these projects as bonds, "I'll sign up for this set of tax credits and this high-priced PPA and clip coupons." The equity that came into the market had no taste for real operational power companies. So when you tried to convince people that PPAs aren't as safe as they think, because you're already giving away all the margin and there are embedded risks in curtailment, you start unpacking the thing they think is safe and it's not, and then you run the absolute worst cases on the thing they think is dangerous and you're still doing better. I joked that I walked around New York with the same slide, and I can send it to you for the podcast, it's literally just a sensitivity, stacked bar charts showing what happens if you cut the merchant curve by 50%, then 75%. Your returns have to go so low just to match the PPA prices being signed then. To be clear, that was back then, prices have recovered tremendously. People say, "Oh, Sheldon's a merchant guy." I'm not a merchant guy. I'm a risk-adjusted return guy.
Jigar Shah: I don't think that sells on a T-shirt. You've got to come up with something else.
Sheldon Kimber: "I'm the risk-adjusted return guy." I'll get that one from my wife.
EAT WHEN YOU'RE SERVED
Jigar Shah: One of the things I've heard you say, which I've always lived by, is about raising money: "Eat when you're served." Take the capital when it's offered, not when you need it. You've raised billions in equity, debt, and tax equity, that $800 million round, and you've often raised before you strictly had to because someone was proactively offering. Tell me about your thinking there.
Sheldon Kimber: I can't claim responsibility for "eat when you're served." That's one of my longtime investors, Bill Green, who made his first investment about 10 years ago and who I've known even longer. He's at Climate Adaptive Infrastructure now, and was at Macquarie before. Those are his words, but I've lived by them. I'll give you one other person who informed this deeply, my former partner and boss at Recurrent, our CEO Arnaud Harris, who used to use the phrase "vine divine." Being an entrepreneur is vine divine: you grab that vine and swing, and physics says you'll never swing any higher than the first time, so you'd better be ready and let go at the top, because you're never coming back any closer. That's always driven me to overcapitalize and bet on myself, bet that you can create the growth to make it worth the dilution. A lot of people don't want to take dilution, but this is a capital-intensive business, and "just don't blow up" is a good way to make money in it. The other piece about remaining liquid and well-capitalized is that you're rarely cornered, which lets you prioritize governance in who you take money from. As an entrepreneur, it's really hard to hang onto governance control, but that control is the key to maintaining your culture, your people, and your strategy, and to truly innovating instead of just being another platform a PE shop wants. The two are inextricably linked: stay liquid enough that you don't get pushed into someone taking control of your business.
FROM GREEN HYDROGEN TO A GOOGLE DATA CENTER
Jigar Shah: Well said. One of the things you and I interacted on a lot while I was serving in the Biden administration was that you'd gone merchant on a lot of those Texas solar projects, and then you made a big bet on green hydrogen. Project Meitner in Gray County, Texas: 340 megawatts of solar, 460 megawatts of wind, a 400-megawatt electrolyzer. Then Treasury spent two years fighting over the 45V tax credit rules, and the hydrogen economy stalled. Talk about that journey, the hydrogen bubble from the beginning of the Biden administration to the end, the $3-a-kilogram clean hydrogen tax credit, the offtake agreements with Germany. What did all that planning end up being worth to you?
Sheldon Kimber: A couple of things. I still believe we're going to need some energy-dense carrier, chemical fuels are useful, that's why fossil fuels are needed. Hydrogen is something I'm still fascinated by. The lack of buyers was primarily about the political wave that was ridden to get to these subsidies, and the fact that there was no pull-through. The US had the subsidy and Europe or Asia had the demand, so we could have built the power plants and made the hydrogen, but then you had to build this enormous international supply chain and transport network to get it places. That locational mismatch of supply and demand made it a much longer game than people were ready to play. But we started working on data centers years ago. It's not like we fell over backwards into this. It was about four years ago that we really started playing with all the different ways we could use that power.
Jigar Shah: It was really about options. You just announced that project is going to serve a gigawatt of wind, solar, and storage in the Texas Panhandle dedicated to powering a Google data center. Same site, different customer. Isn't that the real lesson, that it's about option value?
Sheldon Kimber: Exactly right. If you're an entrepreneur writing a business plan, it doesn't start with the plan, it starts with a vision of the future. I say this to the point where people are sick of hearing it, but if you don't have a vision of what the future holds, it's impossible to write a plan for how you'll make money in it. Our vision was: there's all this energy at the wrong time and the wrong place. As we dug into it, we learned a huge amount from hydrogen, how to engineer these things so we had relatively dependable around-the-clock power. And the durability of that thesis, that load would come to generation, held up. All these industrial loads with decarbonization, clean steel, clean hydrogen, and digitalization driving data center demand with around-the-clock green energy needs, all of that demand had to come to supply. That was the durable thesis, and it continues to be. People keep doubting it, and we keep going. There's a lot of running room left.
INFRASTRUCTURE IS GROWTH AGAIN
Jamie Nolan: A hundred years ago, infrastructure companies, railroads, utilities, oil companies, were the growth stocks. Then for 50 years infrastructure became the boring asset class pension funds bought. You've argued AI has flipped that and infrastructure is growth again. Make that case for our audience.
Sheldon Kimber: If you look at the CAGR on Intersect's EBITDA, the trajectory we were on and that carried well into the future before we were purchased, we were on a 30, 35, 40% CAGR, with big step functions up beyond that as we moved into data centers and other large-scale projects. It's hard to look at that and say it isn't a growth sector. When you do the comparables across data centers and real estate, it's hard to imagine why power assets are still frankly disrespected by the capital markets in a pretty significant way.
Jigar Shah: Have you seen the Fervo stock?
Sheldon Kimber: That's a different story, you don't want me to get into that one. What's disrespected is the development and ownership of energy infrastructure. It's come up a little, but even now, relative to data centers, a lot of pure data centers are real estate companies, and I view us as one of the most sophisticated forms of real estate plus market interactions plus regulatory interactions. The growth coming out of this massive convergence of digitalization, decarbonization, and electrification, combined with the already massive underinvestment by American society in almost all infrastructure, foretells many decades of growth, even if AI isn't what everybody thinks.
GOOGLE'S OPTION ON POWER
Jigar Shah: We're going to have to 3X the grid regardless, whether it's electric vehicles or manufacturing. We played a big role there the last four years, seeding hundreds of new factories. But circling up to December 2024: you announced the partnership between Google and asset manager TPG Rise Climate, an $800 million round, Google as anchor tenant for the co-located energy parks. Twelve months later, almost to the day, Alphabet buys the whole company for $4.75 billion. Take us inside that progression. What did Google learn in year one that made them decide owning you was better than renting you?
Sheldon Kimber: A couple of things, and obviously I can't speak for the inside baseball of Google.
Jigar Shah: No, I'll play that part in the play. I'm happy to put words in their mouth all day.
Sheldon Kimber: Fundamentally it came down to this: we had some crown-jewel assets, Meitner, Roman, and others, developed under this durable thesis of load coming to generation. They were ideal for the multi-gigawatt data center sites that had very high renewable content, which Google is still very committed to. They wanted a very scarce resource. Even as a minority shareholder, I can't just push aside the rest of the shareholder base and give Google the deal. So they realized that while there's a partnership with a lot of flexibility, they might actually lose these assets even though we're deep partners, and there was a premium they'd have to pay for what they needed. They also realized there's a technical integration element. And the most obvious thing: the debate shouldn't be who can own these things cheap enough, there's plenty of ownership capital. The real debate is who's paying to develop them. These hyperscalers are paying PE funds to develop 100 assets so they can winnow it to 10 and maybe contract on one. All the high-risk development capital is ultimately paid for by the one. So they looked at that and said, "There's this engine of development creating a lot of value for private equity. Why don't we use our money to own that?"
Jigar Shah: And it's also your development capability, the team, the pipeline, the land, the interconnection positions. Our good friend Caroline Golin, who ran energy at Google, put it this way: "There is no way to procure the option on power in this country unless you own it." Is that what you are now, Google's option on power?
Sheldon Kimber: We are definitely an option on power. It's the recognition that the ability to take dirt and turn it into a power plant is, in fact, all of the value. Say owning a power plant earns you a 10% return, but developers underwrite to about 14%. There's 400 basis points in there on every dollar you deploy, and that's basically the value of my company. If I'm not associated with Google, it's limited by the volume I can put through that pipe and earn 400 basis points on. But if I'm Google, putting enormous volume through that pipe, why would I let someone else charge me 400 basis points on everything? It just makes sense.
Jamie Nolan: Your peers took different paths to the same problem. Amazon is buying shovel-ready projects out of bankruptcy. Microsoft signed a $16 billion deal to restart Three Mile Island. But nobody has copied the Google-Intersect model yet. Why not, and do you think they will?
Sheldon Kimber: There are really only a few buyers in this space, which is something people should take a harder look at given the hype right now. There are maybe four, and one or two are already quasi-vertically integrated. This boom of many gigawatts of "two guys in a truck" sites is way overvalued. And there's really only one Intersect. I don't mean we're so special, though I wouldn't be here if I didn't think we were great, I mean we were built from the ground up to be a small team with very big projects, and not many of them.
Jigar Shah: And to be merchant. Some of your competitors sold off the right to be merchant in order to raise capital.
Sheldon Kimber: That's right. And we brought in investors who were very growth-oriented, backing the team, not just the assets, so they let us get pretty deep on these assets without contracts. When you put it all together, there's almost nothing like it in the business. When people say, "It's an IPP, there are 10 other IPPs, go buy those guys," we don't have a portfolio of carports in Upstate New York hiding in the back of our closet. Most other people come with an enormous amount of complexity and a business model dislocated from what's actually useful to have vertically integrated.
MOVING INTO THE COMMUNITY
Jamie Nolan: You knew this question was coming. We're seeing communities across the country pushing back hard on data centers. What's your honest pitch to a community of a few thousand people about what happens when you move in next door?
Sheldon Kimber: First and foremost, we're moving in, which means we're hoping to become part of your community. Too many of these conversations treat it as us evaluating them. The hope is that we join your community and there's no us and them. Like anyone moving in, we hopefully have friends in common, we hire people everybody knows, maybe we go to the same church and the same schools. That's what Intersect has done for years: go in, open a small storefront downtown, hire folks who understand us and the community, and don't dictate to people. We need to redefine who the "we" is. Communities build assets, communities build power plants, communities build data centers. We come in to help them build something they can all benefit from. The benefits are threefold. There's economic investment and tax base, a lot of these are rural communities that now have some of the best schools, hospitals, and fire stations they've ever had. There's job creation for community members. And there are community benefits. People say, "These guys are just pouring money into the school." But I grew up in a very small town, and this has happened in small communities forever, just writ large. In the small town in Ohio where I went to high school, the local accountant, my friend's dad, would sponsor a sports team, the high school, the band boosters. That's what being a business in a community is. That's all we're doing.
Jamie Nolan: This is something Jigar and I were personally involved in advocating for at DOE, community benefits and deep listening, because one playbook that works in one community won't work in another. I love that you have a storefront and hire local people, I assume it embeds you deeper and helps you understand what actually makes people accepting of what you're trying to do.
Sheldon Kimber: I'll give you two more tactical examples. One: I've been to a lot of open houses. There are moments where you have to convey information, but in most of ours we don't have someone stand up and give a speech. We use a big open format with developers and operators in the room and poster sessions, so small groups can mill around and ask questions. That's meeting people where they are. Second: if you're a developer going in to construct something and you think you know everything about the site, I'd challenge you to tell me where the school bus routes are.
Jamie Nolan: Great question. I love it. That's exactly the thinking we need from developers going into rural communities. I'm also from a rural community, and they're naturally distrustful of outsiders, so you need to come in authentically.
THE OFF-GRID ARGUMENT
Jamie Nolan: Okay, I'm so excited to talk about the tea. We have some tea to serve. You two recently had it out on LinkedIn. Jigar posted that the hyperscalers are all converging on staying connected to the public grid, and that the smart move is to fix the grid we already have, since there's something like 100 gigawatts we could unlock with better utility practices. Sheldon, you came back at him and said, "No, large-scale off-grid is going to be a huge part of what's coming." And here's the part I want you to explain: you argued that building off-grid is what will finally break the regulatory stalemate, rather than waiting for everyone to agree on grid reform. So to our listeners who think off-grid just means giving up on the grid, cutting the cord forever, make the case. Why is steel in the ground a faster path to fixing the grid than fixing the grid directly?
Sheldon Kimber: The grid needs a lot of help. And I'll be honest: I say the most absolutist things because as an entrepreneur you have to define it in the absolute and then go get it. That doesn't mean it all comes out exactly that way. I'm not a big fan of clean baseload, that just means I'm not investing in it, not that none of it will work, just that I don't think it's the next 100 gigawatts. So caveat that. I don't believe in the public policy process, and that's probably where Jigar and I disagree. For me, I'm a guy who just builds things, and I'm going to go build something big that provides value to the grid, and the grid will want to interconnect to it because ultimately it's a resource on the load side. Picture a large data center with wind, solar, battery storage, and some firming gas that can provide firm, flexible power. It's the energy Disneyland. The data centers are getting increasingly flexible, the renewables are getting cheaper. If I build that, multiple gigawatts of generation and flexible load, it creates an enormous incentive for the grid to come and get those resources. And I'm building them in places with cheap gas and cheap renewables, so it sends a market signal, dictated by these big hyperscalers, to bring me a 765 kV line in Texas. That's what we all need. That plant is probably one of the most valuable power assets ever built for the grid. It's probably more stabilizing than a nuclear power plant.
Jamie Nolan: Okay, Jigar, 30 seconds to respond.
Jigar Shah: I don't know that I need to respond. We agree that if we're going to two or three X electricity sales in 20 or 30 years, you need a very strong grid to do it, EV charging, manufacturing, all of it. What Sheldon and folks like him are doing is really valuable, because it's the reason the FERC ruling came down as hard and as bipartisan as it did. Google actually submitted some fantastic comments that FERC took in whole.
Jamie Nolan: Which FERC ruling are you referencing?
Jigar Shah: FERC just ruled that the ISOs, the independent system operators, and the regional transmission operators have to figure out how to let Sheldon and others get onto the grid faster, prioritize demand flexibility, and get more out of the grid we've already paid for, including figuring out how to get batteries online. Right now people view batteries as loads and value them as charging at exactly the wrong time and discharging at exactly the wrong time, which makes them hard to site. These are nonsensical things the existing utility infrastructure does, and FERC slapped them down and said, "Fix it, do it the right way so we can bring these data centers online faster." The fact that Sheldon and others have done this on the outside successfully means we're more likely to two or three X the grid over the next 30 years.
Sheldon Kimber: Let me follow on. The FERC order also said you've got to find ways to encourage bring-your-own-generation, including in some cases off the grid, behind-the-meter gen. Creating that regulatory construct encourages people to do what we're doing, and then these very valuable assets get brought onto the grid, because the grid has a market-based incentive to come get the power. And all the technology we're developing on these gigawatt-scale microgrids will be some of the best power electronics and controls for integrating renewables, batteries, and fast-ramping gas that anyone's ever built. We'll have all of that available to the broader grid too. There's an innovation ecosystem there.
THE MOST DOMESTIC SUPPLY CHAIN IN THE BUSINESS
Jamie Nolan: Part of the answer has to be domestic supply chains. You've been candid that learning about forced labor in the Chinese polysilicon supply chain made you uncomfortable in a way that changed how Intersect buys equipment. Where is the industry honestly at on getting free of that, and what did it cost you to be a first mover?
Sheldon Kimber: The industry has made leaps and bounds. Even the portions still relying on a Chinese supply chain have more options for where they get poly and some upstream components. When we first looked at it, we were a very small company, a band of brothers and sisters, maybe 23 of us, and when we did our first solar contract I kept digging in, asking consultants, "Can you actually guarantee me this isn't where we're getting our stuff?" And no one could. So we made that decision as a group, it was very visible and transparent, and the team pushed me on it. It turned out to be a really good business decision. It went from a values-based decision to a pragmatic one, because there were a lot of tariffs and a trade war coming. What that means is we've had probably the most domestic supply chain since before the IRA. We're the largest buyer of US modules and one of the largest buyers of American-made batteries. And this all comes back to growth. Jamie, the issue is that we're an industry of tweaking, tuning optimizers, tax equity geeks and finance geeks. What we don't know how to do is build big growth businesses that just grow, without policy, without all the machinations of saving the world. When you create a sustainable, predictable growth curve, your supply chain can be sustainable and predictable too. The merchant revenue model lets us not wait on the next contract. It all works together, the merchant power revenue and the domestic supply chain we pay a little more for, to enable growth. And that growth gives you a premium on your valuation, which makes your capital cheaper. It's a unified business model. That's what people miss about Intersect. It was done very intentionally.
FRENEMIES: SOLAR AND GAS
Jamie Nolan: I love what that says about your company, your ethics and morals. That's the type of business I want to patronize, and it's hard to go first and stick your neck out and say, "These are our values." So the Meitner site includes on-site natural gas for firming, a clean energy company owned by Google burning some gas to keep the lights on, and some of our listeners hate that. I'm a 100% renewables gal if we can get there. You've essentially decided the energy culture war is a distraction, and I think we're all in agreement there. So how do we disengage from it, and what does working with the gas industry actually look like?
Sheldon Kimber: We're a group of people who a long time ago decided we're the lawyers and bankers here to save the planet, not the people in the streets with the signs. There are times when social pressure on governments and companies has been absolutely necessary. But right now there are plenty of ways to get lower-carbon solutions and deploy more renewables, and one is to use a small amount of gas to firm those renewables. Battery storage unfortunately isn't there yet, not by scale or economics, though it's getting there much quicker. Look at our history: I wrote a blog in 2012 called "Frenemies," about why solar and gas are going to have to work together in US energy policy. That's 2012. I've never been a zealot. It's always been about maximizing renewable integration. The debate we should be having, all the NGOs and everyone who cares about this, shouldn't be about keeping it in the ground. It should be about no 40-year baseload, no $3,500-a-kilowatt gas plants, because that's a locked-in carbon trajectory we shouldn't be on. We should be building low-CapEx, high-heat-rate, fast-ramping, modular, maybe even movable gas generators, so that once batteries come in over the next 10 years we can squeeze them out and put more renewables in behind the batteries. We need a flexible, evolving grid, and instead we're going to go back and build the same rigid, high-carbon solutions we've always built. That has to change.
Jigar Shah: Say it one more time, Sheldon. The Duke Energy executives in the back row couldn't hear you.
Jamie Nolan: I like it. And even better if in this vision you're using renewable natural gas, because I'm a big stan for RNG. I got arrested in front of the White House protesting the Keystone Pipeline. I've put myself out there for the keep-it-in-the-ground folks. But I try to keep an open mind, so I like the vision you're laying out.
Sheldon Kimber: It's all about the flexibility to get rid of the gas over time. We are not building anything that isn't in a place where there are enough renewables around it, which we control, that we can decarbonize it as batteries get better. We're building flexible gas that's modular, can be taken out, can run at a lower capacity factor, with enough renewables on the site that we can keep building until it's 100% clean firm. The problem is people siting a big combined-cycle gas plant behind the meter in a tight, landlocked area that can never be decarbonized. That's a recipe for stranded costs. And Jigar, to your point about Duke Energy, I do think there are avenues for larger utilities to put in combined-cycle gas here and there, because they can diversify it over the whole grid.
Jigar Shah: While they've refused to add 7,200 megawatts of batteries at existing solar sites?
Sheldon Kimber: I hear you. There's a lot else going on there. I just want to clarify that there are applications for combined-cycle gas in the broader grid because they can be diversified. It's not the hill I'm going to die on.
Jigar Shah: I hear you, but when they're asking for a 15% rate increase, I've got to draw the line.
Sheldon Kimber: I'm not getting into that one.
A ONE-WAY BET AGAINST BATTERIES
Jigar Shah: One thing I wanted to ask at the end: you've got an investment in Elemental, who just announced a big nuclear site in Ohio. It feels like a lot of the expertise we incubated within our companies has gone over to geothermal, nuclear, and power trading. We're getting a lot more best-in-class developers in those spaces.
Sheldon Kimber: To be clear, Google has the investment in Elemental, and I'm not involved in managing that anymore. But I've been on the board of Elemental since you introduced me three and a half years ago, so I've known those guys since they were bootstrapping. I love them because they're great developers, and they're bringing the ethos of development that came from gas to wind to solar to batteries into these new technologies. I think they'll be very successful. Nuclear, if we can get through some of the permitting, and in some communities it is possible to permit and build a nuke in a more densely populated area. But I've said it before and I'll say it again: if I were betting on the macro, if I were starting my own company, I see clean firm and next-gen geothermal where it becomes really hard to imagine putting large amounts of that in the load pocket, and those technologies are going to have to compete head-to-head with renewables for transmission. I wouldn't bet against solar and batteries. I just wouldn't. And if you're betting on those clean firm technologies with that profile, you're literally making a one-way bet against batteries. I don't know anybody on the planet who'd argue that's a great strategy. It's weird that people don't see that when they hype these things. I'm sure Tim will come for me when he hears this.
Jigar Shah: We all love Tim.
Sheldon Kimber: They're a great business.
Jigar Shah: Tim Latimer, the CEO of Fervo.
Jamie Nolan: We know some people who are big nuclear stans who would absolutely disagree with you on that.
Sheldon Kimber: Just to be clear, I'm an entrepreneur, so I look at megatrends so I can hitch my wagon to the trend I want to be on. There'll be some businesses that do well in this, and projects that get done. I just think that when you ask, "Can I put a clean baseload asset that's power-dense in a load pocket?", that's what you should really be looking at, because the problem of a clean firm asset at a really low price almost everywhere else, out in the boonies, is almost checked off the list now with renewables and batteries.
SAD, AND SAYING SO
Jigar Shah: We're going to have to have you back to talk about all of this, there's a lot more to unpack. But one final question. You've talked a lot about mental health and the need for CEOs and others to be more vocal about it. Why do you talk about that, and why does it matter so much to you?
Sheldon Kimber: I've been pretty open about my own experiences with mental health. Long family history of anxiety and bipolar, a lot of experiences there personally and in my family, and then watching how all of that flows through your professional life. When you're not authentic about it, people are left to wonder, they infer things about what it means for the business or how you're behaving, whether they're doing a bad job. It's always better to be completely open, "This is where I'm coming from," so people understand that today this is how you feel and it's impacting how you're treating them. As a leader, it's incumbent on me to be open about my own mental state and how I'm thinking about the world. I've been telling my team lately that we just had this huge exit, this industry-defining transaction, and I'm sad. I'm going through the stages of grief, because it's my company and things are changing. It'll be good, there are plenty of exciting things, it's Google, the scale and breadth of what we can do. But being honest about your feelings and emotions at work is pivotal. Where it got acute for me, at the end of Recurrent, I faced a health crisis and there was really no option but to be open about it. Those are the moments that make the value of it clear, because people are supportive. We don't have community in our lives anymore, and work really is that community, and the only way to support one another is to share more. It's very Mr. Rogers, but the world could use a little more Mr. Rogers.
Jamie Nolan: Thank you so much for being here, Sheldon. Thank you for your vulnerability and authenticity. It's not something we typically hear, and I find it really refreshing. We're so excited for what your company is doing and your new partnership with Google. We've got to have you back on, I feel like we could have kept going for another hour.
Sheldon Kimber: I want to give one more plug: Intersect is still Intersect. Our culture is still here, we're not going anywhere. I'm sad to be beyond the last phase, but the next phase is bigger, better, just as authentic, and at least as exciting. So we're hiring. Please come and join us.
Jigar Shah: Amazing. Thanks for the friendship, Sheldon.
Sheldon Kimber: Likewise.
DEBRIEF
Jamie Nolan: Well, Jigar, was it everything you hoped it would be?
Jigar Shah: I felt like you were trying to goad me into having a public spat with Sheldon on the podcast.
Jamie Nolan: First of all, I love the tea, you know that about me. But I kind of wanted to see if you two would get spicy, because I know you're both very opinionated. He got super passionate there at the end. I loved it.
Jigar Shah: He got spicy, but it was a medium level of spice, it didn't go over the top. The part we didn't really get into, but that I was excited about, was that he was explicitly saying he didn't think clean baseload was needed. All this clean firm power, nuclear and geothermal, he's saying they have their own challenges accommodating into the grid. I've been a big proponent of clean firm, and we worked a lot on nuclear and geothermal at the Department of Energy in the Loan Programs Office, we did the Liftoff reports. So we're going to have to get him back on and have him talk more about why he doesn't think we need clean baseload.
Jamie Nolan: Maybe we need him for a little debate with one of our nuclear advocates, because I'm with you. I was actually a skeptic about nuclear until I worked at the Loan Programs Office, and you and Julie Kozeracki, who's still there working tirelessly on nuclear with a lot of success, converted me. I'm the converted on nuclear, so I was surprised to hear that perspective from him.
Jigar Shah: When you operate at the level Sheldon does, building 1,000-megawatt projects completely merchant, that's a lot of risk. Then he went down the path of green hydrogen, tried to ship that hydrogen to Europe, and transformed that site into a data center site, which is why Google bought him. He's putting his money where his mouth is. This isn't just him opining. He's fighting every day in the marketplace against other people's arguments. There are investors saying, "I'm not going to invest in you because we think we need more clean firm," and he has to convince them, "No, I can provide the same level of service to these data centers." It's different when you're arguing about these things theoretically versus when you have to actually convince an investor to put money in. I respect Sheldon a lot for that.
Jamie Nolan: Clearly he's been wildly successful, Intersect was purchased by Google for $4.75 billion, which is wild. I'll say, Sheldon and I were previously acquaintances, I don't know him that well, but what makes me trust him is that one of the smartest communicators I've ever worked with, Kate Powers, has been with him for years, and I trust her implicitly. We worked together more than a decade ago at the Solar Energy Industries Association, on the PR committee of all the big solar companies, and to this day she's one of the most trusted voices in the space. Someone who can inspire that level of loyalty has earned my trust. And I found him very genuine, his authenticity came through in a powerful way. It was really nice getting to know him better.
Jigar Shah: He's amazing. He can come on any time.
Jamie Nolan: He should come back and we'll do some kind of debate on nuclear or geothermal. And of course we'll be following along to see how things go for Intersect now that it's working with Google.
ASK JIGAR
Jamie Nolan: Welcome to Ask Jigar, our weekly segment where Jigar answers your questions about energy and honestly anything else you're wondering about. Huge thanks to our sponsor, Octopus Energy, for making this segment possible. And a quick reminder: anyone who sends in a question that Jigar answers on the show gets an Energy Empire hat from our merch shop. So send them in. Our first question is from Anna Papito, who asks, "Jigar, if solar and batteries are so cheap now, why are data centers still turning to gas turbines?"
Jigar Shah: Great question, and it goes to the fact that in general we want to add these data center loads to the grid. But right now a lot of the data center companies are saying, "We want to run off-grid for six, seven, eight months, and then connect to the grid." When you have that configuration, you don't want to use your brain, you just put in a natural gas generator, some batteries, some supercapacitors. The folks spending real time thinking about this are people like Sheldon Kimber and Intersect, now part of Google, who did solar plus battery storage plus a little natural gas to run a data center off-grid while waiting for their grid connection in Texas. I do think that's where most people are going to get their raw electrons, all this added solar we keep putting on the grid. But for now, we're going to have to wait for this craziness to die down.
Jamie Nolan: So you think it's mostly the interconnection queues preventing them from just using solar and batteries?
Jigar Shah: And the need to move people to interruptible tariffs, to say, "We'll connect you, we have power for you 97.8% of the time, and the rest of the time, instead of a backup natural gas generator, use batteries and other things that are cheaper."
Jamie Nolan: Our next question is from Robert Brewer, who asks, "Jigar, you've mentioned investing in solar projects on churches and schools. How does that actually work? Did you finance them directly?"
Jigar Shah: I financed them directly, but there are platforms coming online to do this. One we talked about was Energea, though they do stuff internationally. There's another platform doing crowdfunding for individual projects here in the United States whose name I won't remember. Our good friend Billy Parish started Solar Mosaic with Dan Rosen that way, crowdfunding, and I think his first big investor was Prince. It didn't quite work, so he became more of an institutional residential solar financing company. But I think this is coming back. Part of the problem with financing here in the US is that on a regular basis you make much higher returns with overseas projects. For domestic projects you get like 6% returns. You saw that with Greenbacker, another platform that raised I think $5 billion in crowdfunding, but the best they could do was 5, 6% interest rates.
Jamie Nolan: Our next question is from Hannah Tekowski, who says, "Jigar, I'm an energy wonk and a big fan, but I work in climate-smart agriculture, where I get to go after methane, not just carbon. So I have to ask about dairy digesters. Much like distributed energy resources, a web of digesters at scale could power local fleets of trucks, help dairies clean up their emissions, and pay farmers for their methane waste stream. What do you make of that agriculture-to-energy play?"
Jigar Shah: I was the largest investor in the agriculture-to-energy play. At Generate Capital we funded those huge dairy digesters in Indiana and got them all running and doing great. We also funded food waste digesters in New York State and elsewhere, that's Generate Upcycle. So I'm a huge fan of what you're suggesting, and it's a very dignified way of dealing with this issue. The notion that farmers want big pools of manure wafting stuff into the air, they don't want that, but it's not cost-effective for them to meet all the complicated EPA requirements, so they're just out of compliance. With a dairy digester they can be in compliance and get a new revenue stream, because that methane can be sold to corporations paying a premium for renewable natural gas, or into the low-carbon fuel standard program in California, which is what we did. I think it's a huge problem that some folks believe building a dairy digester means you're pro large-scale raising of cows and pigs, and therefore a bad person. People are eating beef and pork, and we should be using environmentally friendly ways of solving that problem.
Jamie Nolan: Absolutely. We're both big stans of renewable natural gas. We've got to schedule our RNG episode. Okay, our next question comes from Justin Brodie Crommett, and for people who don't know, Multiplier is the advisory firm Jigar started to help climate tech companies scale. Justin asks, "Jigar, what's the latest update on Multiplier, and are there any wins you can share?"
Jigar Shah: Great question. When I left DOE, I partnered with a good friend, Jonathan Silver, who used to run the Loan Programs Office under Obama, and we decided to go out and see what the top 200 or 300 CEOs closest to exiting needed. It turns out there's a lot of advisory they need to successfully take their company public, sell it, or bring in a private equity firm. Sometimes they have unruly investors at the end of fund life making their life difficult. They have customers who've been piloting them to death, and maybe Jonathan and I know that customer's CEO and can call and say, "Stop piloting these people to death." Others need to hire the right people, or make a big change in marketing and sales because even though they're successful, no one's heard of them. Multiplier's taken on nine clients to date, we've got five more who want to join, and we haven't had big wins yet, but it's only been a year. We say we'll help these companies go public or exit within two to three years, so stay tuned, we'll probably have a lot of big wins this year and next.
Jamie Nolan: You're playing the long game. Look forward to hearing more. That's all for Ask Jigar this week. Remember, you can send in your own questions, and if yours gets picked, you get that Energy Empire hat. The link is in the show notes, or go to energyempire.fm to find where to submit your question and our merch store.