Hey, I'm Matt Buchel, comedian, writer, and floating head you may or may not have seen on your FYP, and I'm starting a brand new podcast. Wait, don't swipe away. It's called That Sounds Like a Lot. You know that feeling when you check your phone, read a few headlines, and think, that sounds like a lot. I can't do this. Well, I can, and I'm going to get into it every Friday. You can watch on YouTube or listen wherever you get your podcasts. I'm going to start by breaking down whatever insanity is happening in the world, and then I'll sit down with a comedian or actor or writer or, honestly, anyone who responds to my DMs. This is not the place to get the news, but it is a place to feel a little bit better about it. That sounds like a lot, coming May 1st, part of the Vox Media Podcast Network. More and more Americans are finding themselves taking care of their kids and their parents at the same time. Well, you know, I joke that there's a dark game, which I was playing, which family member will disappoint today. How to care for others without burning out in the process. That's this week on Explain It To Me. Find new episodes Sundays wherever you get your podcasts. Today's number? 400. That's how many meters long the world's largest ever tiramisu was, a record set last week by a consortium of 100 Italian chefs. Italy still faces severe economic challenges, such as crippling debt and a stagnant economy. but points for sticking with the whole food thing. Money market's mad. If money is evil, then that building is hell. The show goes on! The folks in there are questions. Show! Show! Welcome to Frothy Markets. I'm Ed Elson. Apologies to our Italian listeners. It is April 29th. Let's check in on yesterday's market vitals. The S&P and Nasdaq both fell due to a Wall Street Journal report that OpenAI missed its revenue and user growth targets. That news sparked a tech sell-off, with NVIDIA falling more than 1% and Oracle and CoreWeave dropping 4%. Notably, Microsoft actually rose 1% ahead of its earnings, which are due tonight. Meanwhile, oil prices rose as negotiations with Iran continued to stall and the Strait of Hormuz remained shut. And finally, the United Arab Emirates announced it is leaving OPEC, putting more pressure on the oil cartel's already strained supply. OK, what else is happening? Alphabet, Amazon, Meta and Microsoft are expected to spend more than $650 billion this year on data centers. And by 2030, data centers are expected to use twice as much electricity as they do today, enough to power France and Germany combined. The problem, though, is that the grid might not be able to handle it. Nearly 2,300 gigawatts of generation and storage capacity are currently stuck in the pipeline, more than the country's entire installed power capacity. Meanwhile, Americans are already seeing their power bills climb. In fact, residential prices could rise 15 to 40 percent over the next five years. As a result, 14 states are considering moratoriums on data centers. So this leaves us with a multi-trillion dollar question, and that is, can the AI build-out actually happen the way Wall Street hoped that it would? Well, to discuss this, we're joined by a panel of experts, Jigar Shah, former director of the Loan Programs Office at the U.S. Department of Energy, and also John Perella, CEO at TeraFlow Energy. Jigar and John, thank you so much for joining me. Jigar, I'll start with you. When you look at the AI build-out right now and sort of the obstacles that are in its way between compute, between people's feelings and political sentiment towards the technology, and then also energy, what do you consider to be the most important obstacle, the thing that's most in its way? Yeah, you know, it's such a crazy thing, right? You know, when you think about the five different bottlenecks you have to data centers, right? So there's the grid, right? Then there's transformers, then there's GPUs, then there's memory, and then there's CPUs now. It looks like they're short, right? Right. They can't build more than 50 gigawatts of data centers between now and 2030 because of limitations on GPUs, memory, and CPUs, right? But if you go to communities, they're creating havoc at the level of 500 gigawatts across the country. So they are making empty promises to people across the country to disrupt their communities when they don't have the GPUs to fill it, right? And so that's, I think, what's pissing everybody off. I think people are just saying, if you're going to be a trillion dollars in size and you're going to be booing the entire U.S. economy, how come not a single analyst actually seems to know anything about what's possible? And everyone else is basically like feeding the hype cycle all day, right? I'll give you an example. In the state of Texas, they are suggesting on official ERCOT letterhead, which is the transmission operator in Texas, that the load queue could be 300 gigawatts, right? Now, mind you, Texas is 70 gigawatts. That's a BS number, right? And of course, people in Texas are scared out of their minds around a BS number. But what's likely to happen in Texas? 30 gigawatts. Right. Yeah, John, I mean, this is coinciding, this conversation with some pretty significant news about OpenAI, which is that OpenAI missed its revenue targets last year, reportedly. Same with its user targets. And it reminds me of a lot of the promises that they have also been making. My understanding is that they were going to build 30 gigawatts worth of compute by the year 2030. I think they've built, I want to say, two gigawatts so far. I mean, the point being, it seems like that company specifically is probably guilty in particular of this over-promise under-delivered dynamic that Jigar is talking about. I wonder if you have any thoughts on that. So I don't know that I quite agree with Jigar on 30 gigawatts. I think it's going to be a little bit more than that. We're working on quite a few of those projects in Texas. And I don't know that I would put all the blame necessarily on OpenAI, right? I used to work for Lancium. That was the base land and power for the Stargate One project. I did a lot of work on that project before we knew it was going to be Stargate One. And in going back and looking at it, they've had a lot of issues because a lot of these companies, when they applied for their grid interconnect, they applied as if they were like Bitcoin mine or traditional data centers that were very flat, stable loads. If you actually start to look at the load profile of an AI data center, it's one of the most volatile loads you've ever seen. 12, 14 times a minute load swings that are 30, 80 percent the size of the data center. And that's wreaked havoc on these data centers moving quickly because it's tearing up gensets. They're literally breaking the crankshaft of the gensets. They're burning through batteries. And it's a lot of these data centers that are all about time to power and moving quickly. And they got ahead of the tips of their skis because they didn't architect the infrastructure correctly for it to succeed. And so I know that even the Stargate project has had a lot of problems where the utility turned them back off. And they've, you know, had to scramble to try and find equipment to be able to try and solve for these problems and get them stable loads. So I don't know that I would necessarily blame everything. It was definitely ambitious on their part to be able to say that they were going to scale that big that fast. I think in a lot of ways they had to do that in order to get capital to be able to start scaling but I think that they've also been hit by a lot of roadblocks where interconnection takes a lot longer than anticipated because these loads are big and complex and I think that when they actually started turning these things on what they expected and what actually happened were different and that they started breaking equipment and finding replacements for the broken equipment is not easy right now so it just it's a it's a whole cluster if you will of problems so I And while I do believe that they were a little overambitious, I do not believe that I would blame them 100%. It seems like a four-letter word that's after the word cluster. Yeah, well, I didn't want to quite go there, but you're welcome. Someone can do it. Someone can break the ice. Well, John, I guess— I was trying to be a little bit more family-friendly. Cluster fuck, I said it. Okay. Yeah, there you go. All right. So I guess, John, I mean, it sounds like what you and Jigar both agree that this is a lot more difficult than AI companies and investors had anticipated. It sounds like maybe where you may disagree is the extent to which they underestimated things or the extent to which they misjudged it. I guess my follow-up question to you, John, is, I mean, how bad is it really? When we look at what's happening from Wall Street's perspective, for example, I don't think Wall Street is as clued into what is happening on the ground when it comes to energy and compute capacity constraints as you are. So, I mean, how big of a problem is it really if it's not quite as big as Jigga might be suggesting? So, I mean, I definitely think that power is the number one issue. There's no question about it. The thing that everybody's talking about is how long it takes to interconnect. Nobody's talking about what happens when you actually turn them on. And I think that obviously, as you see, buying generators, there's a long lead time on getting gensets. And you're seeing some deals come and some deals go. What you're seeing, it was no different before data centers were here. It was the battery craze, right? Like interconnection queue for people that went and had land and they could get power on land to interconnect and put a battery in, you know, it was like half the projects would never see the light of day, but everybody was connecting because if they could get the power to it they could then flip it to a developer that would build it I think you seeing a very similar at least we seen this where lots of people that have you know rural lands and there also a big power line that comes through their land go, I can build a data center here. And, you know, they might have been able to get $5,000 or $10,000 an acre. But if they can get a large load interconnect, they can get $100,000, $200,000, $300,000 an acre for the same land. So you see a lot of people that came in and said, okay, if I can find the sweet spot of land where I can get gas and water and power and, you know, all these things, all of a sudden the value of that land goes through the roof and the data centers are willing to pay for it. What's funny, though, is when you start looking at what they submitted as their load profile for those interconnects versus what the data centers are actually doing. And so the problem is now the utilities are trying to do these feasibility studies off of, you know, a legacy flat, very stable data center. And then these things show up and it's far from that. And that's, I mean, to be a little bit selfish, that's what our battery technology solves for. But it is a major problem. And the reality is, you know, even if I stand up gigawatts of manufacturing capacity of batteries, I can't make enough. And that's the problem across the board with all of the infrastructure. Back when the Bitcoin mine days were here, and it was all the craze of building these monster Bitcoin mining data centers, you saw companies investing in, you know, PDU manufacturers and all the components because they wanted to prioritize their company over everybody else to be able to get the components. Same thing's happening with the data centers. The infrastructure funds, if you look at the Blackstones, are investing in TDSPs or utilities. They're investing in, you know, the land developers. They're investing in the infrastructure components. They're investing in all the different components to be able to try and prop up and accelerate the growth of all this to meet that demand. So, Jigar, I mean, when I kind of synthesize what's happening here, what we're basically saying is these data centers are a lot more volatile than we had originally expected. They're also consuming huge amounts of energy to a degree that people a few years ago would never have anticipated. And at the same time, I also know that the Strait of Hormuz is closed and blockaded as we speak. I know that gas prices have risen 30% over the past two months since we launched the war in Iran. I mean, all of these things together make me think we're basically headed towards a full-blown energy crisis. Am I getting this wrong? What do you make of the energy picture in America right now? No, you're not wrong. I mean, you know, the data centers have an approval rating that's lower than the Iran war amongst the American people, right? And all of it comes down to basic selfishness, right? Like when you look at our grid, if the data centers were willing to be flexible with their load for 100 hours, you could accommodate 100 gigawatts of data center load growth in our grid easily and reduce everyone's electricity bills by 10%. But that would require coordination between the data center and the utility and the governors. And, you know, folks would have to like each other. But instead, they're saying, screw you. We'd like to, like, be run off grid, right? Okay, that feels very selfish. I think when you look at where we are with the Straits of Hormuz, the U.S. is in an extraordinary spot, right? We have a lot of oil production. We have a lot of refining capacity, that kind of stuff. when president trump trumpets how many tankers are like heading towards texas to pick up product they're picking up product to take it to other continents right so they're picking up jet fuel they're picking up diesel they're picking up gasoline and you know because we got a lot of it now if we start shipping it all to other places our prices are going to go up right right and you already see that diesel is up to like you know six seven dollars a gallon gasoline is above four a gallon, right? That means that for a minivan, it's 85 bucks to fill up that minivan. That's a lot, right? And so when you think about four and a half million households in the Northeast are still using fuel oil to heat their homes, that fuel oil comes from the Straits of Hormuz. And so now they don't have fuel oil, right? And so there's going to be a disruption around the world. We're going to have a humanitarian crisis around the world. The U.S. is better situated than almost everybody else is. But make no mistake, right? We're not putting fertilizer down for a lot of our land, right? Or we're going to put only half as much down. That means yields will go down. That means food prices are going up, right? And so part of the challenge I see right now is there's a way to use the best technology in the world, invented here in the United States, deploy it at scale to give people relief. But when you have a president that's paying people off to shut down offshore wind farms, right, you're not using the best technology in the world. You're instead figuring out how to, like, make the crisis worse, right? And so we have got to scale up solar, scale up battery storage, scale up electric vehicles, scale up all of the things that takes the pressure off of fossil fuels. Stay tuned for more of this panel after the break. And by the way, we are heading out on tour at the end of May. So for more info and to get tickets to a show near you, head to ProfGMarketsTour.com. I'm Maria Sharapova, and I'm hosting a new podcast called Pretty Tough. Every week, I'm sitting down with trailblazing women at the top of their game to discuss ambition, work ethic, and the ups and downs that come on the path to achieving greatness. We'll dive into their stories and get valuable insights from top executives, actors, entrepreneurs, and other individuals who have inspired me so much in my own journey. Follow Pretty Tough wherever you get your podcasts. I'm Estet Herndon, and this is America Actually. We're all talking to each other to see what did we do wrong? What did we not see? I'm in Washington, D.C. this week to interview Ruben Gallego. He's a Democratic senator from Arizona, and he's been thinking openly about running for higher office. But he's recently run into some hot water because of his connection to Congressman Eric Swalwell. I have to learn from this, and I will learn from this. But, you know, for me, it's not a 2028 question. It's about what it means to be a better first boss in my office and also a better senator to my constituents. This week on America Actually, we asked Gallego about predatory behavior in Washington, his plans for immigration reform and more. Hi, everyone. Kara Swisher here. We just won the Webby Award for the best interview show in news, business and society. and I've had some great guests on my podcast on with Kara Swisher. Here are some you don't want to miss. Tristan Harris, the co-founder of the Center for Humane Technology. I talked to him about his biggest worry when it comes to development and deployment of AI, hint, hint. It has something to do with the CEOs and how they stand to profit. I interviewed documentarian Louis Theroux. His latest documentary, Into the Manosphere, focuses on the incredible and horrifying influence this group of individuals has, especially on young men and boys. And recently, I caught up with Katie Couric, Amy LaRocca, and my brother, Jeff Swisher, to debunk some of the fads and misinformation behind the billion-dollar wellness industry. And we talked about the important medical tests that are actually worth your while. All of these conversations are available now. You can find them on YouTube or wherever you get your podcasts. And we've got plenty more lined up for the summer, so be sure to subscribe to On With Kara Swisher to catch them all. We're back with Prof G Markets. I keep on hearing about how, you know, America is energy independent. We do it all on our own. And then it's like, well, why are prices rising as much as they are? And why are electricity prices rising as well? I mean, it's not just the gas bill, it's the electric bill, too. and it makes me think, okay, well, I mean, maybe we're more independent than other nations, but it seems like we're not that independent. We're not so independent such that we are actually insulated from things that happen abroad. And we're certainly not independent enough that we're able to keep up with the demand of these data centers at the same time. So I guess when you look at our energy picture, I mean, how independent are we really? And what would it take to get to a place where prices at least moderate or start to come down or where data centers don't cause a full-blown cost of living crisis among Americans today? So it's an interesting question, and I'll answer it in a number of different ways. One, I think if you look at the economy right now, data centers are absolutely starting to prop up the economy. If you look at the amount of jobs that they're creating, if you look at the amount of factories and made in America. I mean, my entire company right now is here and the jobs that I'm creating because of this data center boom that's going on. Look, the cost of power is all about supply and demand. It's a real-time commodity. It's a real-time supply and demand. So there's no question that supply and demand and data centers, you know, when they first started, they were all about, I want grid power because it's very stable power. Right now, most of the data centers that we're involved in, and we're working on over 100 gigawatts of projects across the United States and now going international. Right now, I would say probably 80 percent of them are planning to go behind the meter generation. Could you explain what that means for our audience? So behind the meter generation means that instead of grid connecting, at least for phase one, they're going to bring in natural gas and put up generators or turbines on their campus, and they're going to generate their own power. And that was part of like that Trump pledge that he was really pushing is that you're going to build more generation. Now, think about this challenge for a second. All of the generation assets are spoken for for the foreseeable future. You have companies like Microsoft and these big meta buying nukes right now so that they can power their data centers, which is the cheapest power out there, right? Coal, nuke, your baseload powers. And so they co their data centers with generation assets so that in some situations there grid constraint because the lines aren big enough to carry it But at the same time they buying the assets and almost removing them from the grid as part of the bid stack of what determines what the price of power would be Now, think forward a minute, and I know everybody's looking at it saying they're raising the price of power. Look, the SB 6 in Texas, Senate Bill 6 in Texas forces the data centers to pay for all their own interconnect and all their own equipment. So they're not passing that along to the rate payers every month. Well, and to be interruptible. And listen, that's where I was going. Now, if you look at architecting grids, and Jigar and I had this conversation literally two days ago. I personally believe that regulatory needs to come in and say, if you want to build big, you have to be a grid asset. and you have to be a responsive load rather than just a potentially controllable load. Let me explain the difference between the two. Controllable is something where the grid can come and say, with 30 minutes notice, I need you to turn off for up to 12 hours. That's Senate Bill 6 in Texas. And what that means is that during emergency periods, they would make the data center shut down. Well, there are 13 times in the last five years that might have happened, okay? A controllable load means that you can set up the grid to use the frequency of the grid to control the data center or like a demand response program, if you will. So when the grid really needs it, the data center can contain all the load. Now, in many situations, for those that built behind the meter generation, if their electrical power infrastructure is set up correctly, it can enable them to actually inject power back into the grid from the generation assets that they have. So now, all of a sudden, all these data centers are building out all this power and all the grids are building out all the infrastructure to connect them to the grid eventually. And now what you're going to do is you're going to see this huge revolution where there's more generation capacity available when needed that balances the grid. If you look at what Jigar said before about, you know, if you look at like 95% reliability from a utility, where you basically take the data centers off the grid during the five to seven peak hours of every day, in that situation, you could actually fit most, if not all the data centers that want to be built on the grid today. And reduce everybody's rates by 10%. Right. Like that's the thing that's so crazy. What John is suggesting is the unselfish way to participate in the system and achieve speed to power, right? Jensen Huang just said the same thing two weeks ago and said, we have all the technology to do exactly what John is suggesting. And now the data center companies are mad at him because they're like, that's not masculine enough for us. We'd rather run off grid and be selfish. I was like, what are you talking about? Like, we're giving you speed to power faster because the generators are sold out. And you'd reduce everybody's bills by 10% by using the grid we've already paid for more efficiently, right? But you'd rather be selfish than actually get connected faster and, you know, be a better neighbor. Of course people hate you. Yeah. Yep. So it's really a path to how do you get to that turning these data centers into grid assets instead of grid liabilities. And that's a big part of what our product line does. That's a big part of what we've been trying to tout from the mountaintop is there are ways to do it. Google's trying to lead the way by looking at all different things, everything from Emerald AI to be able to curtail load to shifting load to everything else. Now batteries are playing a huge role in enabling that. And that's part of what we're doing is building proper grid scale energy storage that's long duration that enables the data centers to curtail load. And then if they need to wield the generation assets, they have the ability to wield the generation assets. It starts with them building behind the meter because the grid can't get there fast enough. But if they apply as a either controllable load or responsive load or demand response programs, these huge liabilities become huge assets that will drive the price of power down. I don't agree that it's the data centers that are driving the price of power up. I think it's the economy as a whole, OK? Yes, the data centers are contributing to it. No, I do not believe that everything that you see in the queue will be built. You have a lot of people that don't have the financial wherewithal that are just trying to, you know, ride on the gravy train. I think that the things that, for instance, ERCOT's enacting with deposits and everything else helps to weed out the fake ones and enable the ones that are real to get there faster. I think those things need to be done. And you've seen the president try to get FERC involved to accelerate because a lot of these grids are absolute clusterfucks. I'm going to – I'll break it now. I'll say it. But like PJM can't get out of their own way. They can't get anything through the interconnection queue fast enough, right? And that's – there's no reason for that, especially not with AI now. Like you should be able to accelerate the speed of feasibility studies leveraging AI's capacity to look at the network of the grid and look at it and say is there room here or not and how do we do it? The other thing I'll mention that's interesting is if you look at what happened in Virginia recently, there's a misalignment or misunderstanding of certain key terms that the grids are reacting to. And it's scary because I think you're going to see a lot of like regulatory reaction and you're starting to see more terms because they're like, OK, we need to slow everything down a little bit and pump the brakes to make sure we fully understand what this means. In Virginia, they had a situation where it wasn't a fault of the data centers, but the grid faulted. and like nine data centers went offline or they went to backup power. And when the grid came back up, the grid was expecting the data centers to be there and they weren't, they were still running off backup power. It's called low voltage ride through. And what happened is the grid then had an over-frequency event because it's all real-time supply and demand. So you had generators online for the grid that were expecting a load and the load wasn't there when the grid came back. And so there was way more power available than needed be. And what can happen in situations like that and or if you connect one of these data centers directly to the grid, when you have that much volatility that quickly, you can shunt airbreakers or trip airbreakers at substations and cause a rolling blackout. Rolling blackouts is what you get. Right. And so when you start building data centers that are gigawatt scale, it scares the hell out of me if they don't have the right infrastructure in place because they're not designed. They were moving too fast. They got above the tips of their skis, and they built these data centers that are going to cause rolling blackouts. Then what do you think? Well, when the tech companies say they're moving fast and breaking things, normally they mean, you know, like little things. In this case, they're talking about people's lives, right? Like when you think about how many people live on CPAP machines or other machines at home, they can't have rolling blackouts because a data center didn't plan correctly, right? And so, like, I actually think data centers are going to reduce everyone's electricity bills by 10%. But they got to be done the right way. And you need like a U.S. Department of Energy that's forcing them to do it the right way, right? And so one of my big challenges is that we're allowing people to move fast and break things. And, you know, like this is not something that we can afford to break. If I could just, I mean, a lot of technical terms here. I want to just kind of like put it in layman's terms so that even I can understand it. It sounds as though the right way to do it, and let me know if I'm getting any of this wrong, is for the data centers to be connected to the overall grid and responsive to the demand that the grid observes, essentially. Excuse me if my language is wrong. But essentially, a data center that is in real time responsive to the capacity and the supply and demand dynamics of the grid at large for a given geography. Is that correct? It's basically two things, right? One is that exactly as you suggested, right, that the grid has plenty of capacity almost all of the time except for maybe 100 to 200 hours a year. Yeah. Right? During those 100 to 200 hours a year, the utility says to the data center, you got to reduce your demand from the grid by 50%, right? And either they can run natural gas generators behind the meter to ride through that, or they can run it off batteries, or they could use Emerald AI and others and just shift the compute packages to a different data center, right? Separately, the data centers have to actually have good quality load facing the grid, right? And we've set those standards in the 1960s and 70s, so this is not new. You can't flicker. You can't change how much power you're using from the grid 12 times a minute, right? You can't. So then you have to have technologies like John's in between you and the grid so that his technology is absorbing all of that flicker and the grid is only seeing a signal that it's used to seeing since the 1960s, right? And if you decide to send them something that's far more volatile than that, then the grid gets weird harmonics. It gets all sorts of things. And that's what John was saying before, that when the grid sees that, it tells a data center to shut down until it can run safely. Right? And so those are the two big things. Well, they're going to trip the airbreakers is what they're going to do. Well, that's right. That's – like what most people don't understand is when you have a power that's this volatile where you're seeing – like if you have a gigawatt data center and you see anywhere from a 30 to 80 percent swing, you're talking about 300 megawatts to 800 megawatts of swing multiple times a minute. When I mean swing, I mean immediately disappearing off for a couple seconds, immediately spiking back on for a couple seconds. It looks like an EKG up and down and up and down. And the problem is, think about this for a second. The fastest generators on the planet, you're probably talking diesel or resips, take 25 to 30 seconds to ramp up and ramp down. You start talking turbines, you're talking 10, 20, 30 minutes to ramp up and ramp down. Nukes are on all the time. They don't ramp. Solar is intermittent. It's on when it's on. It's off when it's off. Okay. So now how do you take a very volatile load and connect it to those things? If you connect directly to a generator, like Jigar mentioned where you're running off the generator behind the meter, and you don't have something between the generator and the data center, you're literally going to break the crankshafts on the gen sets. It's like driving a supercar down the highway at 80 miles an hour and shifting from fifth gear to first gear over and over and over again. How many times is a car going to let you do that before you drop your clutch you drop your your engine just falls up and blows up right That what they doing to the gensets And it literally breaking the grid if you will if they connect that Now, the question you have to ask is, how many of these data centers you've heard about are actually online right now? Right. Zero. Very few. Very few. There is not a single data center in the country that's running off grid. I just had Tim Haid on my podcast, Energy Empire, and like, yeah, zero. Zero that are like, even Stargate is grid connected right now. You know, they're hoping to be off grid in the future a little bit, but right now they're fully on grid. Which is why it seems to me that while maybe, I mean, John mentioned that maybe the energy, the increase in energy prices might not be directly because of data centers right now. My assumption is when everything comes online, they certainly will be in the future. and in addition if what you're kind of describing here is that these data centers aren't being really responsibly built as in they're not setting up their systems such that they won't run into issues later down the line and then i look at something like all birds deciding to rebrand themselves as data center providers or even i think jigger you mentioned the name fermi there which is a company that we were looking at which seems to be a total con, it seems to me. And then we saw that the CEO exited. I mean, I would like to hear your comments on those companies. Well, the other piece of this, just to make sure we're crystal clear, is that you've got the data, fine, but then you have the narrative. Every electric utility that's an investor-owned utility is publicly traded. When you listen to the conference calls of all of those CEOs the last three months, they are firmly blaming data centers for rate increases. They have added like 40% to their budgets since 2024, right? That means that they said before, we're raising rates 5%. Now they're raising rates 9%, right? And they're saying it's all because of load growth from data centers. Now, you could call them all liars, okay, But these are the electric utilities that actually serve you, right? They separately had a report last year that said they were going to spend a trillion dollars between 2025 and 2029 investing in the grid. This year, they just re-upped that from a trillion to $1.4 trillion from 2026 to 2030, right? If they successfully do that, then that means higher bills for everybody. Now, if they allowed the data centers to be more flexible for 100 hours a year, that number drops in half. It goes from $1.4 trillion to $700 billion, right? And you still get all that extra load from the data centers, which means people's bills go down by 10%. Like that's the thing that people don't understand. This is just math. The numerator is the spending from the utility. The denominator are the kilowatt hours that you're selling. You want that ratio to go into the direction of the consumers. What is the correct policy response here when we think about the data center buildout? And we think about the fact that they are becoming so unpopular and that, I mean, everyone knows what a data center is at this point. They probably didn't two years ago. We're now seeing proposals for data center moratoriums, just get rid of them altogether. And then on the other side, you have an administration which, in my view, has made a policy of having no policy, really. I mean, there was an executive order to eliminate all forms of state-level AI legislation, which to me is basically them saying, like, we don't want any regulation. We just want the markets to completely do their thing, no regulation whatsoever. To me, neither seems like the right move. But I'd be interested to hear both of your perspectives on what is the right move from a policy perspective. Jigar, I'll start with you, considering you recently worked in government. So there's two big things you have to do. And, you know, Texas has passed SB6, as John suggested, which basically says that if there is ever a shortage of power in the state of Texas, data centers go offline first, right? And so that should be the law of the land, right? That's called an interruptible tariff. It's been around for 50 years. It is not new. And all data centers should be required to sign one, right? Second is that the utilities have a bunch of data trapped in their databases between three different silos. There are companies like GridCare and Google, Tapestry and Camu Energy and others who can use that data to tell you exactly where there's space on the grid today. And there's 100,000 megawatts, by the way, of space on the grid. So GridCare just announced a deal with Portland General where Portland General didn't know, but they had 480 megawatts of spare capacity in this one location. and I mean those guys are ecstatic because they're unlocking 480 gigawatts or 480 megawatts sorry they're going to be able to lower everyone's bills by 10 percent in Portland General's territory right but because the left hand and the right hand don't talk to each other within the utility they didn't know that they had that 480 megawatts there right that's it those are the two things governors need to say everyone's on an interruptible tariff I don't care how powerful you are and how much money you have to throw around. And everyone at the utility has to share their data with these AI-enabled software packages that can tell us exactly where you can put more megawatts on the grid and lower everybody's bills. John, does that fix it? Well, I think there's a couple things. One, I would take it a little farther than SB6, like I stated before, which is make them more responsive to be more grid participants. So more than just during emergency periods, but almost on a daily basis. Second thing is when you look at the interconnection queue, again, if you look back to the battery craze, there's a lot of projects that have been approved for interconnection that are just sitting there because they're people with land trying to flip the deal. And I think that there needs to be more skin in the game, if you will, to a certain extent to prove that you've got the financial wherewithal to actually move forward the project within a timeframe where you lose your interconnection so that you can make room for other people that actually have projects that want to get done. I can't tell you how many substations. I mean, there's plenty of different applications, like Jigar was saying, where you can go, and we do this ourselves, where we can do feasibility studies to see what capacity is where. And especially with AI, you should be able to load that data in and get it to spit out and be like, there's megawatts everywhere. I think what you're going to see as far as data centers is going to shift. I think trying to get to gigawatt scale is a huge challenge and a huge lift to be able to get everybody on board and the regulatory. and they're very dangerous. We're seeing a lot of shifts very rapidly to edge AI. And a lot of people don't necessarily fully understand what that means. You're going to have AI corridors throughout the world, all right? And the AI corridors are going to be like major highways where you've got transmission lines and everything where they build 10 or 20 or 50 megawatt little smaller data centers to enable things like automated driving or automated flying or things where you need low latency to be able to get to response time. And so to me, distributed AI, I think, is going to be more the way we're going to see things move quickly. There's already companies we're working with, like Dell and these other big companies that are doing all these, like, containerized AI in a box, just like Bitcoin got to, right? Where you could find pockets of power and you could deploy smaller data centers to get the GPUs working faster. And a lot of those get underneath the hurdle of the regulatory where Texas at 75 megawatts and above is large load. So if you build 5, 10, 25, 50 megawatts, smaller data centers, you can build them much faster, you can get them online faster, and you create less of a liability to the grid. And that's where you find pockets where you can hyperlocate next to substations and use up the capacity of those. I think that's the way we're going to see. Yeah, you saw a big announcement between Strata Expanse and available infrastructure and Data Vault for a $5 billion rollout of distributed AI. So it's happening now. And so we see not, because here's the other problem. If you look at the Stargate 1 project, by the time they completed building the first few buildings, they were already like four GPU generations behind, right? And so the difficulty with building these massive structures and building a whole city around it is one, the staffing you need in a specific location, and then two, the capital, and then three, the lead time to everything. When you do modularize like AI in a box that you can just drop the container off, and when that container becomes out of date, you pick it up, take it back to the factory, and drop another one off, I think you're going to see kind of the AI factory change. And listen, I just got back from Data Center World Conference in Washington, D.C., and we saw just that. There were like where there was maybe one, now there's like seven or eight containerized AI companies now building that. So we're seeing a lot of that as well. Yes, many data centers, which may hopefully make us less reliant on a handful of companies to build all the data centers that we need. I mean, it seems as though literally four companies are going to build the giant robot boxes. They're going to power our AI. What if you could build smaller robots that other people and other companies could own and profit from? Jigar Shah, former director of the Loan Programs Office at the U.S. Department of Energy. John Perella, CEO at Terraflow Energy. John Jigga, I appreciate your time. Thank you. Thank you very much. Thanks, Ed. Okay, that's it for today. We appreciate you joining us for another ProfG Markets panel. If you have a guest you think we should speak to on this topic or any other, please drop us a line in the comments or email our producer, claire at markets at profgmedia.com. We hope to hear from you. Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss, edited by Joel Paterson and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Chalon, Isabella Kinsel, Kristen O'Donoghue and Mia Silverio. And our social producer is Jake McPherson. Thank you for listening to Prof G Markets from Prof G Media. If you liked what you heard, give us a follow. I'm Ed Elson. I will see you tomorrow. Thank you.
