Feb 13, 2025 · 45m · catalyst
The case for colocating data centers and generation
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Catalyst, host Shayle Kann interviews Sheldon Kimber, CEO of Intersect Power, exploring how co-locating multi-gigawatt clean energy and storage assets directly with AI data centers solves severe grid interconnect bottlenecks and satisfies the surging, inflexible power demands of artificial intelligence.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Shayle holds 29.3% of the talking time here. How this is scored →
Shayle as informed peer 5.0 Guest teaching 3.8 Guest disagreement 2.9 Shayle pushing back 2.4
speaking balance: gold is Shayle, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 27:47 Dismissal of flexible data center load
Sheldon forcefully rejects the premise of flexible compute loads, calling power the tail of the dog and insisting nobody would idle $30B of silicon for energy savings.
Hardest push from Shayle ▶ 39:07 Historical cloud efficiency counterargumentShayle pushes back against uninterrupted load growth assumptions by pointing to two decades of data center power demand remaining flat despite massive cloud computing expansion.
Biggest teaching moment ▶ 28:00 CapEx breakdown of modern gigawatt data centersSheldon educates the audience on the economic reality of data centers, contrasting $5B of generation assets against $30B in compute silicon to prove flexibility is uneconomic.
Shayle holds their own ▶ 39:20 Challenging Jevons paradox certaintyShayle demonstrates deep market knowledge by raising the historical decoupling of compute growth from energy consumption, forcing Sheldon to clarify how autonomous AI inference differs from past web traffic.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Shayle as informed peer | Guest teaching | Guest disagreement | Shayle pushing back | Why |
|---|---|---|---|---|---|---|
| Latitude Media Newsletter Promotion and Pre-Roll Announcement | 0 | 0 | 0 | 0 | Introductory teasers, newsletter promotion, and sponsor announcements for Bloom Energy, Engie, and EnergyHub. No interactive host-guest dialogue occurs. | |
| Introduction to the Data Center Power Bottleneck and Intersect Deal | 5 | 1 | 1 | 1 | Shayle opens with a structured overview of the data center bottleneck, contrasting excess capacity hunting, nuclear additions, and on-site generation before introducing Intersect's deal with Google and TPG. | |
| Macro Dynamics, Domestic Policies, and Supply Chain Tariff Pressures | 5 | 3 | 2 | 2 | Sheldon outlines the supply-side Biden manufacturing push against the AI demand boom, while Shayle adds nuance regarding complex pre-existing tariff structures beyond recent administration changes. | |
| PPA Market Evolution, Off-Taker Risk, and Pricing Divergence | 6 | 4 | 3 | 3 | Shayle and Sheldon dig into PPA tenor shifts and merchant tail risk. Sheldon corrects the perception around tenor trends, clarifying that developers moved away from 15-year terms due to uncompensated tail risk. | |
| Mid-Roll Sponsor Break: Fuel Cells, Energy Advisory, and Virtual Plants | 6 | 5 | 3 | 3 | After mid-roll sponsor reads, Shayle asks what fundamentally drives co-location. Sheldon lays out the triad of speed, scale, and the broken grid, explaining why load and generation interconnection rules differ. | |
| Grid Interconnection Architecture and Hybrid Baseload Generation | 5 | 5 | 4 | 2 | Sheldon dismisses the traditional holy war between gas and renewables, arguing that a hybrid 80% renewable plus 20% reciprocating engine setup beats expensive new combined cycle gas turbines on cost and speed. | |
| Capital Economics and the Impossibility of Flexible Compute Load | 6 | 6 | 5 | 3 | Shayle inquires whether flexible load has any operational traction. Sheldon forcefully dismantles the idea by breaking down capital expenditure: thirty billion dollars of chips will never be curtailed for cheap electricity. | |
| DeepSeek Efficiency Hype, Jevons' Paradox, and Autonomous AI Load | 7 | 6 | 5 | 5 | The conversation debates DeepSeek and Jevons paradox. Shayle offers a historical counterexample where cloud efficiency flattened power consumption for two decades, prompting Sheldon to challenge him to a source-off and describe recursive machine queries. |
Statements from this episode (14)
Kann: xAI Partially Powers Its Memphis Data Center with On-Site Natural Gas
“This, for example, is how XAI is partially powering its rapidly built data center in Memphis, but lots more similar announcements with new natural gas have arrived.”
Google and TPG inject $800M into Intersect Power for co-located generation
“Intersect partnered with TPG, which is a big investment firm, and Google on a partnership that initially will inject about eight hundred million dollars into Intersect to develop solar and storage and wind and some gas co-located with data centers in the Unite…”
Kimber: Federal crackdowns on Chinese clean energy equipment will not ease under Trump
“You've got the commerce and trade. You've got DOD and national defense you know, all kind of coming at, in particular, the Chinese sourced equipment for renewable energy. So that's been happening for a while. I don't anticipate it to get any better under Donal…”
Kimber: 15-year PPA prices are rising despite low spot electricity prices
“There's kind of an odd thing going on where spot prices remain quite low, but, you know, PPA prices for 15 year deals are kind of floating up.”
Kimber: Intersect pivoted clean power assets from hydrogen to AI
“We thought maybe hydrogen would be first because of the supply side supports under the IRA. The demand just didn't materialize, and now all of a sudden, AI has just swept up all of the assets that we developed for, you know, behind the meter And co-located loa…”
Kimber: Data centers are entering an era where grid connection is optional
“Generally speaking, I think we're moving into an era where grid connection is optional and should be optional. And that, you know, we should be able to, you know, operate these things fully off grid if necessary.”
Kimber: Intersect Power has two multi-gigawatt data center sites in Texas Panhandle
“We've got two multi gigawatt scale data center sites in the panhandle of Texas. One of them's three gigawatts, one of them's over a gigawatt single sites and they're capable of being fully off grid if you want them to. They're on gas, they have you know, multi…”
Kimber: Co-located renewables can power Texas data centers carbon-free 75%–80% of the year
“75 to 80% of the hours of the year, we can run fully carbon free with, you know, wind, solar, and batteries all on the same site. And then, you know, 20%, maybe a little over 20% of the time, we need to have some gas or we need to use the grid.”
Kimber: Hybrid renewables and gas engines beat new combined-cycle plants
“If you go build a CCGT right now for 2000 dollars KW and, you know, like you can't even find sort of like You know, labor unions and pipe fitters and whatnot that have ever even built these things in many cases, right? You know, it's going to take five, six ye…”
Kimber: AI data centers will never offer flexible power load
“Every second you aren't running that at a hundred percent capacity factor is enormous amortized cost, right? So that it's just, it's one of those things where it's like, you'd be a fool to turn it down. You have to at some points because operationally, you kno…”
Kimber: Reputable crypto players are among the smartest in the power market
“All of our interactions with the crypto folks almost universally, I'd say that the reputable players in the space are some of the smartest and most creative people I've found in the power market.”
Kimber: Edge LLMs trigger recursive queries, massively multiplying datacenter power demand
“Every smaller distilled LLM that is power efficient doing inference is going to launch thousands of queries to bigger, more capable models that can actually reason their way through buying something on Amazon and reason. So it's almost like increasing the worl…”