Today's episode is a special recording of my live interview on September 6th in Austin with Jigar Shah, Director of the Department of Energy’s Loan Programs Office (LPO). Previous to LPO, Jigar founded SunEdison and served as president of Generate Capital. He also wrote a book called “Climate Wealth: Unlocking the Impact Economy,” and many of the book’s themes come up in this interview. Jigar also previously hosted the Energy Gang Podcast, which I learned a lot from, and recommend to folks to this day.

I loved this conversation with one of the leading thinkers and doers for the past several decades. We talked about the work of the LPO, the surge in manufacturing in the United States, the Inflation Reduction Act, load growth, virtual power plants, batteries, EVs, geothermal, nuclear, hydrogen, and even more. It was a packed hour.

This podcast was recorded live at the 2024 Texas Tribune Festival - Texas’ breakout politics and policy event held in downtown Austin. For recaps from this year's recently concluded event and to stay updated on next year's program, visit TribFest.org.

I hope you enjoy the episode. Timestamps, show notes, and the transcript are below. Please don’t forget to like, share, subscribe, and leave a five-star review wherever you get your podcasts.

Timestamps

1:49 About Jigar and Loan Programs Office (LPO)

5:27 - The Inflation Reduction Act as industrial policy; national security benefits of onshoring the energy industry

9:01 - Load growth

17:33 - Virtual Power Plants, batteries, and EVs

28:57 - State of nuclear energy

35:28 - State of geothermal energy

37:47 - Potential for LPO programs in Texas

45:16 - Exporting American energy technologies and the potential for further economic growth

46:43 - State of vehicle-to-grid and vehicle-to-home technologies

49:34 - State of hydrogen

51:40 - ERCOT interconnection queue

55:33 - What will happen to DOE and EPA programs under a new presidential administration?

58:45 - Deploy24

Show Notes

Department of Energy Loan Programs Office

Pathways to Commercial Liftoff Reports

Deploy24

Nuclear? Perhaps! - A conversation with Jigar Shah, head of DOE's Loan Programs Office - Volts Podcast

Creating Climate Wealth: Unlocking the Impact Economy by Jigar Shah

The Energy Gang Podcast

Transcript

Doug Lewin

Good to see you all. My name is Doug Lewin. I'm the host of the Energy Capital podcast. We are recording this for the Energy Capital podcast. The first time on the Energy Capital pod, we've done a live recording. So very excited for this and particularly thrilled that for the first time for a live recording, my guest is Jigar Shah.

I think probably everybody who's here knows who he is, but let me just give just a quick introduction as to who Jigar is. In case you don't know, he's the Director of the Loan Programs Office at the Department of Energy. He was the founder of SunEdison, president of Generate Capital. He also wrote a book called “Climate Wealth: Unlocking the Impact Economy”, and we'll talk a little bit about that theme. For years and years, Jigar hosted the Energy Gang, and I think those episodes actually hold up super well. I learned a lot, just listening to that podcast was kind of like an education for me, and I think many, many thousands of other people. So Jigar really is just a huge part of the clean energy economy, and in this role now, at the Loan Program Office (LPO), Jigar has a tremendous opportunity and has been using that opportunity over the last couple years to really accelerate the clean energy economy.

So Jigar, if you want to add anything to that by way of introduction, and then maybe let the folks both in the room and for the podcast know just briefly a little history of LPO, and I think most importantly why it matters.

Jigar Shah

Well, first of all, thank you for having me on, and thanks to the Texas Tribune for putting on this fantastic event. I always meet just fascinating people here, so thank you for that.

Look, I think that we in the United States have always been amazing at innovation, right? I mean, DOE is roughly 45 years old. We've got 10,000 engineers, scientists, and experts at work at the national laboratories around the country. And so whether it's solar panels or modern wind turbines or advanced nuclear designs, enhanced geothermal, hydraulic fracturing, all of that stuff really came out of the research mission of the US Department of Energy. And then it sort of happened that the capital markets of the United States just wasn't interested in commercializing much of that. And so a lot of those technologies went overseas to get commercialized, and now we're importing a lot of those technologies back into the country, having someone else make it.

So the Loan Programs Office was conceived of in 2005 in the 2005 Energy Act. And the goal of it initially was to help build nuclear plants in the United States. In 2007, we had an additional mandate around helping with fossil technologies and renewable energy technologies. And from 2009 to 2011, it was super busy and did about $35 billion worth of loans at that moment. I'd say it went dormant after that. And I think when the Secretary came into the Department of Energy, she and President Biden really wanted to bring back the Loan Programs Office. They asked me to join, and it was the right place at the right time. And today we've got almost $300 billion worth of loan applications into the Loan Programs Office. And it's roughly at 50% debt equity, so it's probably $600 billion worth of projects. And so people in America have never been so energized to do big things again in our country, and it's great to see.

Doug Lewin

It really is great to see, particularly because – and this is something I think, is not – sometimes is lost on the Inflation Reduction Act and the increase for a Loan Program Office, but also for a lot of other programs. You were on Dave Roberts' great podcast, Volts, talking about nuclear. Anybody interested in nuclear – I know a lot of people are interested in nuclear these days – should be listening to – you should listen to that podcast. What Dave Roberts said, I don't think he said it on that podcast, but he said it somewhere else and I really like it, is that the Inflation Reduction Act is really sort of industrial policy masquerading as climate policy. That the point of the Inflation Reduction Act. Yes, there's a lot in there about clean energy and about decarbonization, but it's also about reshoring manufacturing and actually bringing that back. And that has been one of the huge wins we've seen over the last couple years, right, is the increase in manufacturing. Can you talk about that piece, the competitiveness, actually building a stronger supply chain here, right? We saw after COVID, the weakness of the supply chain and all the problems that caused, and having a lot of sort of critical materials, manufacturing everything from chips, and obviously the CHIPS Act is really important too, to solar panels being manufactured somewhere else makes us vulnerable. The inverse is true. Having it manufactured here makes us stronger. Can you talk about that piece a little bit?

Jigar Shah

Yeah, I mean, I think you've covered a lot of the elements of it. I think, you know, in 2009, there was an attempt to pass climate legislation called Waxman and Markey. That climate legislation was really putting a price on carbon. I think that, you know, because of everyone's experience during COVID. But also I think there was a broader narrative that was started around America wanting to build things in our country. My sense is that it's actually industrial strategy that everyone knew they were voting for industrial strategy. And the climate thing is sort of like a branding exercise.

I mean, I think when you think about all the Senators that voted for that piece of legislation, there's a lot of them in there that are not necessarily climate focused, but are industrial strategy focused. I think, as you suggested on COVID and supply chains, I mean, when you think about what we're trying to do in the United States, where over 75% of everything we've added to the grid every year since roughly 2016 has been clean, right? Has been solar, wind, hydro, geothermal, nuclear. If all of those component parts were imported from China, you could imagine there being less interest from the American public to continue to invest in the energy transition, right?

I mean, you know, I think that, to me, I don't know that you have to, guess too far, to see what the intention of many of the legislature, of the House and Senate members were when they passed this. I think that when you're thinking about something as essential as energy and the energy transition, we want a lot of our batteries to be made here, our critical minerals to come from a diverse set of sources. And I don't think it means that we're not going to do business with China. I think China is still a very large trading partner of the United States. But I think that we're saying in the same way that we managed OPEC. And we didn't want a certain set of countries to have a stranglehold on oil production and oil prices. I think the same thing is true for solar panels and critical minerals and all the other pieces is we want to make sure that whether it's friendshoring or whether it's onshoring here in our country, we want to make sure we have a diversified supply chain, especially if we're going to continue to increase investment from roughly $100 billion a year to closer to $500, $600, $700 billion a year.

Doug Lewin

Yeah, exactly. And I like the way you put that. We'll continue to do business with China, but then it's from a position of strength. It's not from a position of dependence. It's like, no, we can do these things here.

I want to talk about another really hot topic. I mean, you can't have a conversation for more than nine minutes about energy without bringing up load growth. Obviously, a lot of headlines in the energy world about just really rapid load growth. And even just today at ERCOT, there's a meeting going on where they publish updates every month of load growth. I Tweeted this out earlier today. Just in the last month, there are another four and a half gigawatts worth of interconnection requests for large loads just in ERCOT. So just here. And to put that in perspective, we're recording this obviously in Austin, Austin Energy, the entire Austin Energy service territory is about 3,000 megawatts. So in Austin and a half, just in the last month, entering the queue, now not everything's gonna be built, that puts it at like 57,000 in the queue on a peak demand system of about 85, 86,000.

So massive load growth coming. We're seeing data centers. What we were just talking about with manufacturing, obviously that means a lot of load growth to support that manufacturing. You have this really fascinating and unique position where you see what's going on all around the country. You get to work with utilities, with manufacturers. What are you seeing related to load growth? Do you think that some of this is maybe a little overhyped and not all of it's actually coming? And can you just talk about sort of how that's playing out within your queue at the Loan Program Office?

Jigar Shah

Yeah, I mean, I started in this industry in the late 90s. And, I think from that period of time all the way to today, we've generally had no load growth, right? And that energy efficiency every single year basically offset load growth that came out of the grid. So you could imagine that all of the CEOs and CFOs in the electric utility industry their entire careers really were in a zero-load growth environment. And so as a result, there was a lot of hostility, right?

You know, when people wanted to put solar panels on their roof and wanted to do net metering, people were like, you're stealing money from my pocket that we could be using for other things. And you talked about cost shifting, talked about lots of things. Even energy efficiency in some ways was frowned upon. Because people were like, well, we don't want, you know, negative stuff. You had public service commissions who said, had entire dockets around, how do we get more load growth? We need the denominator to be larger so that we can keep electricity costs in check, right?

And so you can imagine that, now that we're in a place, where we're still doing a ton of energy efficiency, right? The Biden administration has really accelerated all of the updates of energy efficiency standards, etc. So I think you're going to see continued energy efficiency. But I think when you see data center load growth, but also electric vehicles, heat pumps, and as you suggested, the onshore and reshoring piece, it does look like we're going to have load growth that exceeds what energy efficiency can support.

I don't think we're going to be at 70% load growth. I think it's probably more like 2.5% to 3% across the country, just because I feel like there's a lot of noise in the data. I'll give you one example of what that means. So if you build a new house, and that house has 400 amp service with 240 volts, the utility interconnection application for that is 96 kilowatts, right? But in general, your house is going to use two kilowatts. So the numbers sometimes get skewed and people get confused. So I don't know that I love the interconnection queue and looking at that as the way in which you solve it. But I do think the dynamics of the marketplace has changed such that the electric utilities that I talked to today are no longer trying to figure out how to meet shareholder concerns and figure out how to rate base things that are the most expensive way to do things, et cetera.

I think they're realizing that raising rates by 10% a year every single year is not sustainable, right? That like governors are mad at them, the public service commission's mad at them, obviously residents who have to pay higher electricity bills are mad at them. And so they're starting to say, how do we use next generation technology, a lot of which we've been piloting for 20 plus years at DOE, to be able to manage this moment. And so you're starting to see a lot of folks look at grid enhancing technologies, right, reconductoring, where you replace old wire with wire that can handle two times the amount of electricity. You do dynamic line ratings, and so you change the capacity of what can be sent on that transmission line based on the weather outside, et cetera. And then I think you're seeing a huge amount of interest now in virtual power plants where there's a lot of folks who say, well, if 10 people on the block buy electric vehicles, we have to be able to make sure that we supply power if all 10 people want to plug in at the same time and their heat pumps are going and everything else is on. Well, that causes you to overspend on the distribution grid. And so people are realizing, well, maybe we should figure out a way for people to stagger their charging because most people charge their electric vehicles. They plug in at 5:30 or 6 when they get back. They unplug at 7 in the morning. And so it only charges for three and a half hours during that period of time. So most homeowners don't care which three and a half hours it's charging. Maybe we should stagger them, right?

And so I think you're starting to see all these new concepts being embraced. And part of this is there's some complexity in it, but it's not too bad. When you're building a data center that's 1,000 megawatts, which is what these new data centers might be, it's going to be disruptive to the grid. Let's just be clear. We're into a lot of planning to figure out how to accommodate these 1,000 megawatt data centers. If you're building a manufacturing facility that has 5 megawatts of load, we can figure out how to put it somewhere. If you're figuring out how to deal with electric vehicles and heat pumps, you can very straightforwardly accommodate that within the grid that we've already built.

So each of these things has a different level of complexity. And I think for a lot of people, what they were saying was, let's just use this old toolbox for all of these issues. And that old toolbox is coming in at 10% rate increases. And then when you look at the new toolbox, which the secretary has been quite visionary about, and so we did these liftoff reports. So we've published a lot of DOE's data and a lot of these solutions back in 2022, 2023, because we saw a lot of this coming. So we're ready for the moment and it turns out the rate increases can be right in line with inflation and still meet this moment, right?

And so I think the tools are there, the load growth is real. I don't think it's 7%. It's probably more like 2.5% to 3.5%.

Doug Lewin

But that's a lot more than it was in the 90s.

Jigar Shah

That's a lot more. We've averaged load growth of 0.4% a year. And so it's like almost 8x, right, what we're used to. So it's a lot. But if we do it right, it leads to lower bills for everybody over time, right, because we're using the system we've already paid for more efficiently. And if we do it the wrong way, well, then it'll increase rates by a lot.

Doug Lewin

Yeah, so Jigar just mentioned the liftoff reports. I do want to put a plug in, put a finer point on that. Those liftoff reports are fantastic. I'm a person that reads a lot of reports. They're really well done.

And so, I want to get into, and I should say also, we are going to leave time at the end for questions. So we're going to cover a lot of ground here, but if there's things that we don't cover and you want to ask about at the end, so be thinking of what your questions are.

Your mantra has kind of been deploy, right? People wear T-shirts around with your face on it with the word deploy. I know.

Jigar Shah

It's weird. We're in Austin, but still it's weird.

Doug Lewin

Weird in the best sort of way. I love it. So I don't have one yet. I probably should get one.

But speaking of deploy, this has really kind of been the emphasis of the Loan Programs Office. And so these reports you're putting out, they're foundational, they're important to increase people's understanding, but it really kind of comes down to the projects and what's getting done.

So let's, can we kind of, I want to kind of run through some of that, like what you guys are prioritizing. And then if you could maybe give an example or two of where these things are happening so people can kind of get a sense of where they're happening.

So let's start there with the Virtual Power Plants. So when we think about that load growth coming, we have to remember that, just as you put it, it's not going to be done the old way where you just take that maximum possible peak load, add 15% a generation, and if it happens that way we're going to really hurt consumers. The system's going to kind of break, but there's no reason it has to happen that way. So with Virtual Power Plants, we're talking about adding up lots of little tiny sources into a much bigger whole.

We are actually seeing this in Texas through a really exciting project, the Aggregated Distributed Energy Resource Pilot, A-D-E-R Pilot. Just recorded a podcast with Arushi Sharma Frank about what has gone on with that. Can you talk a little bit more about VPPs? And I think, Jigar, the most important thing is like, how does this impact somebody's life? Are they going to be able to get a bill credit for this? Do they get a payment for this? Does it allow them to increase the control they have over their homes? So one, to kind of make it more real for people, what does this actually mean? And then are there projects you guys are actually funding at DOE right now on VPPs?

Jigar Shah

Yeah, a lot there. Look, I'd start with saying that the underlying technology that we need to unlock these virtual power plants have been added to everything that you buy starting in 2016. So today, if you go out and buy something, whether it's a refrigerator or a water heater or an EV charger or whatever it is a thermostat. There's an app for all of it. I mean, I just bought two humidifiers. There was an app for the humidifiers. I'm not sure what I would do with it, but whatever it is, there's an app for it, right?

And so by definition, when you have an app, that means there's a way to communicate with the device without physically going and touching the device, right? And so that means that this layer by which you can control these devices exists already, right? So now the question becomes, who is that useful for, right? And so it depends on the business model that you're operating in. So in Texas, you have a deregulated market, a lot of people have retail electricity providers, and those providers have to go out into the wholesale market and buy power for you to supply you power. They have to hedge, they have to do all sorts of interesting things. That results in a certain cost, and then that cost is shared with you. There are some retail providers like Octopus Energy or others who've said, hey, if you let us control four of those apps for you, we'll give you a big discount on your bill.

And some folks are saying, great, I would like that discount. And other people are saying, keep your hands off my appliances. Totally fine too, right? But then you don't get the discount, right? And so I think as people start to become aware that these things are available, then they're starting to take advantage of it. Some of them are done via price signals. So when you look at like Duke Energy or Florida Power and Light's territory, they're saying, hey, you know, we want to put in an EV charger, but there are certain hours of the day where those EV chargers are going to generate a lot more complexity for us than other hours. And so if you agree not to charge during those hours, we'll give you a heavily discounted rate for your EV charging. And if you need to charge because it's an emergency, push this little red button and you're going to pay 45 cents a kilowatt hour for those periods of time, right? Which is what it sort of costs you at an EV go station or whatever. And so, again, you know, they're empowering consumers to get much lower costs to power their electric vehicles by showing some flexibility. And if you don't want to show flexibility, you just pay that top rate and you get to do whatever you want, right?

And so I think that all of these things are enabled by pilots that DOE funded for the last 20 years here at Pecan Street in Austin etc., which we started funding, I think, back in 2009. And a lot of that data has been coming forward, right? And so we have this now. Now you go to the next stage, right? The next stage is utilities have to physically make changes to their distribution circuit, right? So people are saying, hey, you know, the peak load that's theoretical might go up because everyone's putting in heat pumps or everyone's putting in a heat pump water heater or people are deciding to get off of natural gas or whatever it is that they're doing, and that load is going up.

And so what the utility is now saying is, like, look, if we have to make this investment, that's $150 million, and we're going to have to charge you that $150 million. Instead, if there's a reliable way for us to give you compensation for you to have enough load flexibility that we feel confident that enough people have opted in that we can actually manage the existing grid the way it is and just use it more productively, then we can avoid the $150 million. And we can put some of that money that we would have spent on the $150 million into your pocket. And that's really what this virtual power plant thing is. And it comes in all shapes and sizes. So clearly what most people think of when they think about it is Tesla Powerwalls and Tesla Electric is a retail provider and there's all these people who get on Twitter and show people their negative $500 bill because they sold power back into the grid when grid prices were $5 a kilowatt hour and whatever else, right? Fine. Kind of cool looking. I don't think that people should rely on that long term. But, you know…

So you've got batteries, right? Some people put solar with those batteries. Now you've got electric vehicles, right? Like F-150 Lightning has been advertising heavy in Texas and saying, hey, if you hire this provider, we can connect it to your house and we can take your entire house off grid, you know, running off of your F-150 Lightning. A lot of folks are like, this is amazing. I'd love to do that, right? So that's another thing that's happening. You've separately got folks who have thermostats, and they're saying, hey, let's aggregate all these thermostats. Now, the thermostats problem is that it works most of the time, but doesn't work some of the time. Because some of the time it's 110 degrees for an entire week and no one wants their thermostat turned off. And so you're going to override that every single time. So yes, it's less useful and therefore less valuable in certain programs.

And so each one of the technologies has its own benefits, rewards. And so each one of them has a different compensation profile. But when you think about what happened in Houston with CenterPoint, there's a huge backlog of middle class families now that are signing up for backup generators from Generac. Right? That's real money. Someone's got to spend $8,000 to put that thing in their backyard, and then they got to pay somebody every year to come out and test it to make sure it's still working, because otherwise, two years from now, when you need it, it doesn't work, right?

So that is never going to give you a return on investment, right? Like, that is something that you just spend out of your budget. It makes you feel safer for your family. Now, if you put in a battery… Right? Well, now it could cost you the same $8,000, but now you could actually bid into this virtual power plant market and make a return on it. You might not get a positive return. You might get, you know, like most of your money back over 10 years, but that's better than the Generac system where you would have no chance of getting any of your money back over 10 years, right?

But the question becomes, like, when this event happens in Houston, What are people going to do? Right now, the default position is to call Generac and get a diesel generator. The goal, I think, out of all of our education work and all the work we're doing with the utilities and the public service commissions is to say, hey, how come the default position is not a battery? And from the perspective of the utility company, starting from the beginning of what I was saying, they're not hostile to it anymore. And in fact, they want it because they realize that a battery is part of their system and can be viewed as a grid resource, whereas a diesel generator generally has a shutoff switch. You take your home off grid, you're running it off the diesel, so it's not really a functional part of the system that they're operating every day. And so they actually do want you to install a battery, but I was like, well, where does that say something on your website? Do you ever tell people that you'd rather them do a battery? Oh, no, we forgot to do that. Well, you know, people are not going to read your mind. Why don't you say it out loud?

And so I think that's where we are right now is folks are getting comfortable with each other. They're a little less hostile towards each other. And they're realizing that all these investments that people are making in appliances, vehicles, backup power can be part of the grid and can help your neighbor and everyone else get better resiliency.

Doug Lewin

No, it's really, really well put. And actually, it's not, I don't think, a coincidence or mistake that CenterPoint's VP, Jason Ryan, is the chair of that ADER task force I was talking about earlier. I recorded a podcast with him, and he talked about how in Houston, 60%, sometimes 70% of the power that they need, they've got to import. They don't have enough power anymore in their service territory. So to your point, getting that solar in storage on rooftops, the storage in people's garage, that can really make a difference. And on the electric vehicles, and you've been great at talking about this, just the aggregated amount of capacity going around in cars right now is phenomenal.

That F-150 you mentioned has standard 98 kWh battery. That'll power a home for, even a big home in Texas with a large air conditioning load, that's three or four days. I mean, it's a massive amount of power.

Jigar Shah

Yeah, I mean, I think that people have a really hard time processing what's happening. Like, when you think about a million electric vehicles with an average of, let's say, a 100 kilowatt hour battery, then you're talking about 100 million kilowatt hours, right? So that's 100 gigawatt hours worth of batteries that people are buying every year, and that number is going up from a million to 2 million to 3 million cars a year, right?

And so the president's goal of 50% electric vehicles or plug-in hybrids by 2030, right? And so when you think about where we're headed with all of this, the entire United States uses roughly 14,000 gigawatt hours a day we're going to have 14,000 gigawatt hours worth of batteries in people's garages or their homes or backup batteries, et cetera, probably by 2035. It's right around the corner that you're going to have that much capacity sitting around. Not all of it's plugged in, not all of it's accessible that day, but when you think about the sheer scale of how many batteries we're deploying, it's far larger than people are contemplating.

Doug Lewin

All right, I could talk about that topic all day, but I do want to cover a lot of other things. So some of the other fantastic liftoff reports you guys have done at Loan Program Office. Let's talk about nuclear a little bit. The podcast you were on with Dave Roberts, you went deep into it. We won't go that deep today. Talk a little about the prospects for nuclear. I know you were actually very excited about Vogtle, the plants that were completed in Georgia. Texas actually has two sites with nuclear, South Texas Project and Comanche Peak. They both have two units. They were both designed for four. Maybe there's an opportunity there. And then maybe just a little bit also on small modular reactors, which I think you have said are neither small nor modular, which… Isn't that kind of the issue we need to get to where we're modular on nuclear, that we can really just recreate these things much quicker than we're doing now, which isn't very quick at all?

Jigar Shah

Yeah, I think we start with what's the point, right? I mean, I think that there's a lot of folks who say, well, solar is so cheap. Look how much solar we're adding to the Texas grid every single day. And I obviously love solar, and so I think it's great. I think the batteries that are getting added to the Texas grid are also super important and amazing. But we also have a lot of coal, natural gas, other technologies on the grid today. A lot of those assets are getting old, right? So a lot of the coal plants are retiring, not because of regulation, but just because they're hitting the end of their life and you'd have to spend a billion dollars to just repair it and do all the work to get it back up to speed. And so a lot of folks are choosing to not build new ones. So when you run a grid that's on solar, wind, and battery storage, you can do it. Our friends in Australia have shown it. You can do it. There's other people who have shown you can do it. But it's expensive. Because you've got to build a lot more transmission capacity to move the electrons around than you would if you had a lot of clean, firm power generation sources.

So when you think about geothermal, nuclear, hydro, if we don't figure out a way to make those technologies cost effective and have those technologies provide 40% or so of the grid, then we're choosing a higher cost approach once we go beyond that. And just to put this in perspective, because I think everyone gets fairly hysterical about these things, the solar and wind industry are sort of in that 20% of the grid range and heading that way now, right? So if nuclear and geothermal and hydro and those things are 40% of the grid, then solar and wind can still go from where they are now to 60% of the grid. They have a lot of growth. Do as much solar, wind, and battery storage as you possibly can. No one's telling you to stop, right? But if we're going to be retiring a lot of these coal plants and then some of these natural gas plants over time, then we need clean, firm power generation resources. So that's why we're bothering, right?

Now the question is, if you're going to build new nuclear, where would you start? Nuclear power plants require a lot of security, safety, other things. And we have 54 campuses around the country, a few more where their plants have been retired. In those places, you have 90% plus approval ratings of the nuclear power plants. The people who live around nuclear power plants love nuclear power plants. People have worked there for 50 years. Their high schools always seem to have a brand new gymnasium. People love nuclear around there. As you suggested, for the Texas nuclear power plants and others, almost all of them were designed to build four reactors at the site. And many of our nuclear campuses only have one reactor. Some have two reactors. One or two have three reactors. And Vogtle's the only place we have four reactors, right?

And so just going back into our existing nuclear campuses and building lots of new nuclear plants, you could build somewhere in the neighborhood of 35 gigawatts of new nuclear power plants, right? So you can build a lot of nuclear power plants just at those sites where they're already designed to, and it's 30% cheaper to operate a nuclear power plant that has one nuclear power plant there if you added a second one, because you don't have to double the number of employees, you don't have to double the amount of equipment, you can service two of them with the same staff and the same equipment. So it becomes more efficient from that perspective.

The next piece is then, OK, so now what technology do you settle on? We clearly built AP1000s in Georgia with Vogtle Unit 3 and 4. So to the extent that you wanted to do something that we've already figured out how to do, do more AP1000s, right? Fine. But the problem with AP1000s is that they're 1,100 megawatts each. And so there's something on the order of around $11 billion per reactor. And a lot of people are like, that's a lot of money, right? And so when you go to states where there's only 500,000 meters, when you go to utility territories where there's only 1 million meters that they're servicing, It's a lot of nuclear, right? And so you can imagine that there's a lot of folks who are looking for 300 megawatts. And at 300 megawatts, the price tag is $6 billion now. It's probably going to $3 billion once you're building 10 of them. And so $3 billion feels like something where a lot of these utilities can afford $3 billion. Right? And so that's why you do these smaller reactor designs. It's going to be more expensive to operate a 300 megawatt power plant than a 1,000 megawatt power plant. All things considered, same safety, same everything else. You have 300 megawatts instead of 1,000. It's a little more costly, but from a capital markets perspective, like public service commissions feel better, everyone else feels better doing a 300 megawatt. So I think that we're starting to recognize that.

The last thing I would say is, when you think about these 1,000 megawatt data centers, where do you put them? It is very hard to go to a Greenfield site, put 1,000 megawatts in there, and then have a grid get modified to accommodate that. A lot of folks are looking at existing nuclear sites and building these 1,000 megawatt data centers nearby, not within the nuclear fence line, but let's call it five miles outside. You don't have to use a transmission grid. You can power it directly from the nuclear plant. But then you can tell the data center company you gotta build a new nuclear plant at that same site to get the additionality, right? And so you're starting to see a lot of the data center companies getting very interested in nuclear power, and that's how you're paying for a lot of that stuff.

Doug Lewin

Another one y'all have put some focus on is geothermal. This is one that I think has huge potential here in Texas. Pretty good geothermal resource, not as good, obviously, as the Western United States, but good. And it leverages the expertise of oil and gas companies. We've got a couple of great companies in Houston, Fervo and Sage, just to name a few. Are you guys doing some loans in geothermal? Do you think that that's an area of growth, potentially, for the LPO?

Jigar Shah

Yeah because of the leadership of Texas and many other states, we now have an entire supply chain around hydraulic fracturing and other modern technologies on subsurface. And so as a result, we think we can actually get to really cost-effective geothermal with about $25 billion of investment into the first three to five gigawatts worth of geothermal. Once you get past the first three to five gigawatts, we think the cost curves are going to come down and geothermal might be some of the lowest cost way of producing power in the West. And so we're excited.

And you start to see the contract that Google signed with Fervo and NV Energy in Nevada. You saw the announcement between Meta and Sage. And so we're excited to see a lot of the leadership that's coming from the private sector to help commercialize those technologies and then Devon Energy invested into Fervo, and so they're bringing some of their subsurface data and some of their risk management practices to the industry. Halliburton's been quite vocal about the fact that they think that drilling geothermal wells is way easier than drilling the other things that they do. And so I think you're starting to see a level of enthusiasm that frankly was probably more on paper before, but now is being made real and you're starting to see real dollars flow and people within these companies saying, hey, I'd like to work in the geothermal division. And so it's very exciting.

Doug Lewin

I mean, so much of this really is about learning curves, right? And we come down those cost curves. We've seen solar and storage really go down the learning curve. And in Texas, obviously massive deployment of those. And now we kind of get to that question of like, can nuclear get there? Can geothermal get there? What are those clean firm technologies that are going to get there?

I want you to talk a little bit about the energy infrastructure reinvestment. Did I get that right? EIR, which is, I believe, the biggest pot or category within the Loan Program Office. So can you talk a little bit about, just tell us what EIR is? And I'm trying to think, Jigar, like where does, it's the Energy Capital podcast, you're at the Texas Tribune Tribfest, like where's the overlap between LPO and Texas? Is EIR an area where there's big potential? And what other areas are there potential for Texas to leverage what's happening at LPO to create jobs, lower costs for consumers, all those good things?

Jigar Shah

Yeah, I think, you know, one of the things that I think Congress realized is that, you know, when you went from, you know, horses to cars, right? There are a lot of people who were put out of work in the horses business, right? And even though it's far better and, you know, you don't have all the downsides of horses, right? You still have a lot of folks who are dislocated, right? And so now that we're in that situation with the energy transition, whether it's around coal and natural gas and oil or whether it's around hydro facilities and, you know, other places around the country. For many of these communities, they got 50% of all of their property taxes paid for by these plants for the better part of 50 years. And so you can imagine them being fairly resistant to the change that's coming because of the huge hole that it puts in their budget.

But also, for many of these communities, these are the highest paying jobs in that community right and so when you think about who's sponsoring the baseball team and who's figuring out pizza night and all these other things. It's all the folks who are working at these facilities and so I think what Congress said was like look you know like there are benefits from environmental justice standpoint and labor standpoint of reusing these old sites, right? And not just putting all these new facilities in greenfield sites, but actually saying, hey, for this old coal mine, what can we do with it? With this old coal plant site, what can we do with it? And it turns out that there's a lot we can do because the interconnection point's there, right? So if you want to build a big solar farm and a big battery storage farm, actually the best place to put it is right there at the site of the coal plant.

So what Congress said was like, look, the Loan Programs Office, you normally do innovation in greenhouse gas emissions. You still have the greenhouse gas emissions mandate, but we're dropping the innovation mandate if people are willing to do creative cool things at existing sites, right? And so we have folks who have retiring coal plants that are putting solar plus battery storage there. We have folks who have old transmission lines that are 50 years old that they're now restringing with next generation conductors that hold twice as much power. We have folks who are trying to figure out how to take old hydro dams and actually put fish-friendly turbines in there that actually let fish flow through them without any injury and generates about 25% more power at those sites. We have folks who are looking at old tank farms and terminals that are out of use today. We have old refineries that people are converting into sustainable aviation fuel facilities. We have folks who are taking old nuclear plants and completely refurbishing and turning them back on. And so I think when you think about just how much old infrastructure we have in our country, and a lot of folks viewed them as blights. Places where they've been shut down, they no longer generate any property taxes, and now they're a source of economic growth for those communities. People actually are targeting those communities and saying, hey, how do we partner with you to figure out what you want to do with this old site because we get access to this low-cost loan.

Today, we have about $120 billion of loan requests in for this energy infrastructure reinvestment program, which has been super exciting. And we bought 250 billion dollars worth of loan authority in that program and so there's a lot more we can do and so it's super exciting

Doug Lewin

And Texas has I believe it's 11,000 megawatts of 30 plus year old gas plants that have that access to transmissions, SCADA systems all that stuff there so it's a great place to look for opportunities for clean, firm, solar, storage, all that kind of stuff. G great. One other area, transmission. You guys are funding transmission. You mentioned reconducting. New lines doesn't come into that? Like brand new transmission lines?

Jigar Shah

We definitely have brand new transmission lines too. So no bias here for a reconducting per se. It's more, we need, you know, right now our transmission system is whatever size it's at. I'd say, as the business as usual case, we'll probably, you know, over the next 20 years, get to like 1.6x our current transmission grid. Just folks building new stuff and doing whatever they do. I think with the Grid Deployment Office and some of the other folks who've done really remarkable work, I think we're probably going to get to like 1.8x our grid instead, which is great.

But I think we need to go farther. And so a lot of the reason why we're looking at reconductoring is, look, it's really hard, right? I mean… you know, when you want to build long lines, a lot of states don't want those lines going through their states. A lot of neighborhoods don't want those new lines going through their states. And so when you think about where Texas is at right now and the load growth that it's facing, taking the existing lines that you have and figuring out how to flow two times more power along those same right-of-ways can often be a lot easier and politically more practical than, you know, stringing new lines.

Now, you're gonna be stringing a lot of new lines, too, and Texas has led the world in, you know, speed at which you're building more capacity, which has been fantastic. But I think a lot of what DOE is saying is that these tools are pretty amazing, right? And so if we just unleash and deploy all of these tools that we've been researching for so long, you can get way more out of the grid that we've already paid for, right? And so why wouldn't you do that? Why wouldn't you do the thing that is the lowest cost way of meeting this moment? Why would you choose to do the highest cost thing every single time?

Doug Lewin

Yeah, and we're recording on September 6th, that is one year to the day, which to the energy emergency alert that ERCOT made, the only one post-Uri, and it was because there's a double circuit line, they have a single contingency. Long story short, there's constraints on a transmission line that could probably be reconducted to take a lot more power out of South Texas and bring it into the load centers. This is a huge opportunity. And by the way, ERCOT will be having workshops this month on extra high voltage transmission, there's a cost differential there, but there's probably a state federal partnership opportunity there for Texas to find. We don't have any extra high voltage. There's no 765 in the state of Texas. I'm going to open it up to questions in just a second. If you want to come to the mic, please do that. Jigar, before somebody asks their question, though, there's so many reports you guys have put out, so many projects. Anything else you want to highlight that I didn't ask about?

Jigar Shah

You know, I think that we are so used to thinking about these issues just from the perspective of the cost of our energy bills. So when we think about building a nuclear plant or a solar facility or a battery storage facility or whatever it is, I think what we sometimes have a hard time thinking about is just how awesome American technology is. It really is extraordinary. And we've never bothered to figure out how to make it here and then export it around the world. And people desperately want it. So when you think about the leadership that people show here around building a nuclear plant or building geothermal facilities or building battery storage, et cetera, the battery technologies that we're deploying right now are largely 10-year-old technology.

The new technologies that we have coming down the pipeline over the next 24 months are game changers compared to what we have now. If we deploy them at scale here, the next step is then to export them to allies around the world, right? And so I think when you think about the wealth creation of our country, us actually going first and us actually deploying stuff here then leads to, you know, America projecting its technology power around the world.

Doug Lewin

Yeah, and growing our economy far into the future. We're seeing, and every IEA report that comes out showing the investment globally in clean energy technologies just boggles my mind. It's a pretty steep curve. Yeah. All right. Why don't we start at the front, Luke, and then we'll go to the back.

Audience Member

Hi, Jigar. You talked about all the millions of batteries in people's garages. Most of those are not Ford F-150 Lightnings right now. What are you seeing in terms of automakers producing vehicle-to-grid-enabled EVs? And then what's happening to aggregate all of those a bit into the market, like we're seeing with ADER Pilot and home batteries, etc.?

Jigar Shah

Yeah, no, it's a good question. And it goes to the question that Doug asked before around deploying, right? I mean, one of my big challenges is that the automakers all started energy divisions within their companies back in like 2016, right? So this is not a new thing. All of the apps for your electric vehicles already let you program like when you would charge your car, right? So that's not a new thing either. You've got venture-backed companies like WeaveGrid and others that have actually done the aggregation work and can provide all that data to the utility companies. What's new is that they're open-minded enough now to actually pay WeaveCrit for that service to do this work, right?

One of the big challenges that we've had for years is that people want to back these companies. And they've received A round and B round investments. And then there were no customers. Nobody gave them a revenue model on either side. And so five years later, they ran out of cash and went out of business. So I think that when I talk to all the automakers, they're all in on this. The last thing they want is to be accused of raising people's electricity prices, et cetera. So all the functionality that they need to add to their cars are there. They'll keep improving them, I'm sure. And all of the players like Sunrun and others have already trained technicians to be able to do it.

My sense is there's some like architecture issues. So for instance, if you do vehicle-to-home, right, so that means you're really just taking your home off grid with your truck, that is a very safe thing for the utilities to do. If you're saying, no, we want to do vehicle to grid and we want to be able to put the power back into the distribution circuit, well then, the utilities want a lot more data, they want to understand whether this is going to go up the transformer blow their transformer and all those things. And then they're going to want to do an interconnection study probably at each individual home, right?

So that seems unwieldy. So right now, my sense is vehicle-to-home is probably the right way to go. And then we can think about vehicle-to-grid later when maybe we have a little more confidence. But, you know, I think vehicle-to-home is something we could do right now.

Doug Lewin

And that would make a huge difference, too, because a home on a hot summer day in Texas using five or six KW even just as the sun's going down, if you can take that four, five, six kilowatts offline and add that up times, I think there's 300,000 electric vehicles now. We'll be at a million in a few years. It's a big deal.

Audience Member

Hello. Thank you both. My name is Grayson Cliff. I'm a Ph.D. student in the Weber Energy Group here at UT Austin. I was hoping you could talk a little bit about the role of hydrogen in our clean energy economy and what are some of the barriers, major barriers, that hydrogen faces in becoming more, its widespread adoption, I guess. What are some of the barriers?

Doug Lewin

Thanks for asking that question. It was on my list and I ran out of time, so I appreciate you.

Jigar Shah

Planted. Look, I think, you know, I've never been a part of the hydrogen hype cycle. And so I think, you know, my own point of view on this is that we use a lot of hydrogen in this country.

Doug Lewin

In Texas.

Jigar Shah

In Texas and Louisiana for sure. So you have like three pipelines, hydrogen pipelines traversing Louisiana and Texas. And so you're at 10 million tons of hydrogen a year in the United States. All of that should be decarbonized, right? And DOE is generally very colorblind around it. So whether it's blue hydrogen or green hydrogen or pink hydrogen or whatever color it is, what we care about is that it gets decarbonized, right? And so I think we're very excited about the prospects and we agree that we have the best technology in the world and so we'd like to see it deployed at scale.

I think that there was a lot of feeling that hydrogen was going to grow in our country and basically be used for hydrogen buses and hydrogen transportation and hydrogen decarbonization of the industrial sector. A lot of that is in the demonstration phase at the Department of Energy. So we did the industrial decarb program out of the Office of Clean Energy Demonstrations. They provided a lot of grants to people to build clean steel or clean other processes.

But my sense is that that technology is still at a pretty significant premium to what it's competing against. And so we'll have to see how the costs come down and how that works before we can count on that to grow hydrogen. But right now, just decarbonizing the 10 million tons of hydrogen that we use every year in this country is a massive business opportunity that I do think you're going to see a huge amount of progress on by 2030.

Audience Member

Thank you both for being here. I was curious about all the load trying to interconnect in ERCOT. So really since April, we've been seeing all the really scary numbers that ERCOT’s been putting out, like could double peak load by 2030. Why isn't ERCOT more discerning on what the composition of that load is? Like they've looked into the Permian Basin, it's like a lot of oil and gas load, a lot of Bitcoin, electrolyzers, like if all the scary like ERCOT-wide numbers, like a lot of that's Bitcoin and electrolyzers, I'd be less inclined to think that it will actually come to fruition.

Doug Lewin

Do you mind if I take that one and then let you add in after? So on the ERCOT interconnection queue, and it's a great segue from the last question, because you're absolutely right, 20 gigawatts of what they're tracking in those big numbers I was citing earlier, 20 gigawatts there is hydrogen electrolyzers. And ERCOT is right now assuming that those are going to be 24-7, 365 loads. If you build a hydrogen electrolyzer and you are obviously going to, you know, with an electrolyzer, it's going to be wind and solar powering it. You're going to make hydrogen when power is really cheap and you're not going to be making hydrogen when power is really expensive. So there's like 20 gigawatts right there. You could look out and see that 150 number and like take 20 off it because they're not going to be producing power at peak when it's $5,000 a megawatt hour. It's kind of crazy.

But if you want to go further, you could actually say, well, what are they going to be doing with that hydrogen when it's $5,000 a megawatt hour? Some of them are going to be putting it into a power plant and sending that power back into the grid and actually helping to solve some of that problem. So, you know, and I think data centers we're going to see more and more co-locating with batteries and and you know one thing we didn't talk about also was just long duration energy storage. Hydrogen ends up being a form of long duration energy storage but there's a lot of others as well. Yeah I think the numbers that they're putting out are a little problematic because they're not considering the flexibility of those resources and how they'll actually act in the market.

Jigar Shah

Yeah, I think that's right. Look, I think that the way that the U.S. economy operates,

I don't know that we love saying that your load is more valuable to the economy than this load, right? So part of the way we do that is through permits, let's say, right? So you can imagine a town saying, I don't want a Bitcoin miner here that generates tons of noise pollution locally to

my house. And so they may not get a permit to be able to operate, right? I think… So I don't know that we discern what's good load and bad load.

I think as Doug was saying, I think on the electrolyzer side, look, for better or for worse, right now, you know, hydrogen that's made from natural gas with carbon sequestration and storage is looking a lot cheaper than hydrogen that comes from electrolyzers, right? So my sense is that, like, we'll see where this whole market ends up, and it might change again in a year, but, like, a lot of that may or may not show up. He's absolutely right though that there's no reason to run an electrolyzer if power is expensive on the grid. And we've already funded the Delta Asus project out in Utah, which has got the largest electrolyzer bank in the United States. And that is under construction and hopefully should be online next year. And so, you know, we'll see how that performs, but there's a ton of, you know, negatively priced power on the Western grid. And so I think, you know, I think it'll be quite a profitable project and Chevron's a part of that project and others. And so you're starting to see some of our nation's, you know, best and smartest, you know, developers get involved in these things.

Audience Member

Thank you again for y'all's thoughtful answers on that. It's also my understanding that how effective the EPA is is really down to who's the president. And so if Trump wins in November, how effective, like what does the Loan Programs Office look like for the next four years?

Doug Lewin

So when you said EPA, in this context, you mean DOE or do you mean just all federal agencies?

Audience Member

Oh, yeah, sorry. I guess I meant EPA specifically, but then I guess, yeah, what does the DOE and then specifically the Loan Program Office look like for the next four years of Trump’s elected?

Jigar Shah

Yeah. No, that's a good question. Look, I think there's a tremendous amount of programs that were passed in the Bipartisan Infrastructure Law and Inflation Reduction Act. I think the administration has been racing to get a lot of that stuff implemented, whether it's standards or tax credits or loan programs or other things. You know, we've got almost $300 billion worth of loan requests into the Loan Program Office. I'd say that I don't know, because I haven't, you know, like, asked. But I think a lot of them are probably Republicans and some of them are Democrats. And so, like, my sense is that the program doesn't shut down if, you know, we have a change in party. I think there could be a slight difference in focus in terms of which sectors are being worked on versus other sectors.

But look, I think that when you think about just how important this moment is to governors around the country, Georgia is one of the largest recipients of new battery manufacturing facilities, new solar manufacturing facilities. I think you just saw a letter come out of the House of Representatives where a lot of Republican members of Congress were like, please don't negatively impact the projects that are already under construction in my hometown. This town has not seen this kind of job growth in many, many years. Please keep that coming. So my sense is that while the rhetoric is quite fiery, that what average Americans want is for us to take these technologies that we invented at the Department of Energy and figure out how to commercialize it here. I think people are tired, in both political parties, of us taking all of our technologies, exporting it to other continents, having them commercialize it, and us importing it back into our country, right? And so I think those trend lines are generally bipartisan, and so I'm hopeful that all the tools that we've put into place are gonna continue to be aggressively used to meet what the American people want.

Doug Lewin

Yeah, just a couple other quick points on that. There's a lot of states that have benefited mightily, including Texas, including South Carolina. And these are like really real. I mean, these, to the point of the-

Jigar Saha

Well, Cell Link in Georgetown, Texas is building their big facility.

Doug Lewin

Yep, exactly. So there's examples all over the place. These investments are quite real. And I think you do get to a point where there's, from some of these programs, some kind of lock-in that starts to happen where the communities need it and want that investment. We're seeing growth of manufacturing like we haven't seen before.

So we're out of time. Before we run out of time, you have 30 seconds. Can you just plug Deploy 24, which will be in December? Regardless of what happens in the November election, it'll be a fascinating meeting. You just want to plug it real quick?

Jigar Shah

Yeah, I think probably actually as an extension of your last question. So what we're finding is that there's all these new tools, right? And the way in which the state government, the local government, the electric utilities, and the entrepreneurs, and the finance community all works together, of course, labor, environmental justice, organizations, et cetera, to really bring about this transformation that we all want is still kind of confusing. And so we have basically created this infrastructure event called Deploy. And it was Deploy 23 last year, it's Deploy 24 this year. The website’s DeployTogether.

And in general, what we're seeing is that there's a lot of parts of the U.S. government that has to work together. There's a lot of parts of state and local governments, utilities, et cetera, that have worked together. Everyone's excited, but they could still not be well coordinated. And so you're starting to see just huge amounts of CEOs, CFOs, changemakers, others wanting to get together to figure out how we actually work better together to really accelerate the pace of deploying all these tools from the Inflation Reduction Act, and really seizing this leadership opportunity that I think we all see that we're ready to do, and we frankly have already done it.

I think when you think about the example of Texas and the hydraulic fracturing revolution, where we're now the largest producer of oil and gas in the world, and exporter of LNG, I think you see that same potential within nuclear, geothermal, hydro, sustainable aviation fuels. I mean, all these great sectors where we've had technology for years, but now we're boldly deploying it at scale.

Doug Lewin

All comes down to energy leadership, and I think Texas will be at the center of it one way or another. Please join me in thanking Jigar Shah for being here. Thanks to the Texas Tribune and TribFest for having this important discussion, and thanks to you all for being here. Have a good day.

Jigar Shah

Thank you.

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Deploy! Unlocking America's Energy and Economic Potential with Jigar Shah

Energy Capital Podcast (private feed for maxwang1990@126.com)