The Exchanges

Q maybe particularly solar, where historically, you Whenever the tax credits would be about to expire, you'd see a boom. And then if the tax credits seemed like they were going to expire, there'd be a bust right afterwards, and then the market would kind of cycle, and it would come back. Here, there's so many mini boom and bust possibilities that I actually don't know how to Frame it, right?

A Yes, yes. I mean, I, I started really, like, my career, uh, uh, focused on renewables and cleantech looking, uh, as, as an analyst covering the wind energy industry, and I remember, like, the first boom-bust cycle I lived through was 2012 to 20 13, where we went from, like, 12 gigawatts of wind build, because in 2012, when everyone was expecting the tax credits to expire, And then nothing, basically, in 2013. Uh, it was, it was the steepest drop really possible. Um, I don't think we're gonna see that again. Um, but this is probably the biggest area of uncertainty, and it's not really because of the bill, it's because of this executive order, um, and, and associated reporting around that executive order, which suggests that, you know, Treasury's gonna be pretty aggressive, uh, in terms of redefining, uh, Um, start of construction and, and safe harbor rules. And so I think for the 45 days until we have clarity there, and hopefully it is only 45 days, um, I don't think that much happens. I think people kind of sit on their hands. And then after that, if the, if the rules are anywhere close to what we've seen in the past for safe harbor, where you can spend five percent of a project cost and, and kind of continuously make progress, then I think we see A lot of like the biggest developers who have balance sheets to, to buy, to, to, to safe harbor those components like inverters or m…

AI assessment note: “I don't think we're gonna see that again. Um, but this is probably”

Q in the sectors we're going to be talking about. So I want to start with a why now. I think there's kind of an obvious trite answer of like, oh, AI showed up, and so you could do more with robotics. Some capabilities are getting unlocked. I do think we should talk about that too, but, but beyond just like AI arrived, why do you suddenly find robotics so interesting?

A AI is definitely one of the reasons that I'm interested in it, but that's partially just because I'm a little bit of a contrarian, and so when people started getting excited about large language models and other generative AI stuff a couple years ago, I sort of started thinking, first of all, I'm a little bit I'm, I'm not as excited. I'm, I'm personally, um, only very recently have started to see applications where I think there's some real, I won't go ahead and say transformational value, but, but, uh, next level value in LLMs. Um, so I, you know, sort of started casting about looking for where in the wide world of AI do I think there actually are transformational opportunities for, um, Energy and climate technology specifically, and, and robotics increasingly started to stand out to me. I think that's both because empirically we're seeing interesting companies and opportunities that are related to robotics and energy and climate tech, but also because of, you know, some big, I think big secular macro tailwinds that are really blowing in, in the favor of robotics. And that's both on the The demand side and the supply side. So on the demand side, I think it, it's largely related to how difficult it is to get people, to get labor, to do the kind of really hard physical work in manufacturing and construction to, to build all of the stuff we're going to need to, to build and insta…

AI assessment note: “big secular macro tailwinds that are really blowing in, in the favor of robotics”

Q a service. Um, but that's not really the only category of, like, Novel robotics companies, and so I'm interested how you've been thinking about where the opportunities lie in, in the application of robotics into, into energy and climate. Is it in these, like, find use case, build robotic system, deploy system for that use case types of businesses, or are there others that you think are interesting as well?

A I, I do really like the vertical robots, the find use case, build a robot to solve that use case, or, or a collection of related use cases. World. And, you know, I think what we need to see from companies in, in that, you know, that, that are taking that strategy, that they can get off. I think, I think for companies that are adopting that strategy, they, they need to be betting on, um, A significant first to market or one of the first to market advantage. Uh, and what I mean by that is, you know, they need to be able to get their units, their robots out in the field early and start to learn about those kind of strange exceptions that they're going to be encountering in the field. Start to collect more and more data so that they can train their robotics model to do things more and more efficiently. Um, so that Two to three years in, when another company comes along and thinks to themselves, hey, you know, robotic components are, have gotten a lot cheaper, and I think I could build some sort of robotic system to solve, solve the same problem or a similar set of problems. You know, that company A who entered first will have enough of an advantage, um, and, and come down the, the performance and cost curve fast enough, um, That they'll be able to maintain that lead and that they'll be sort of the obvious choice for, um, for potential customers. And I think we are at this kind of i…

AI assessment note: “I, I do really like the vertical robots, the find use case, build a robot”

Q a service. Um, but that's not really the only category of, like, Novel robotics companies, and so I'm interested how you've been thinking about where the opportunities lie in, in the application of robotics into, into energy and climate. Is it in these, like, find use case, build robotic system, deploy system for that use case types of businesses, or are there others that you think are interesting as well?

A I, I do really like the vertical robots, the find use case, build a robot to solve that use case, or, or a collection of related use cases. World. And, you know, I think what we need to see from companies in, in that, you know, that, that are taking that strategy, that they can get off. I think, I think for companies that are adopting that strategy, they, they need to be betting on, um, A significant first to market or one of the first to market advantage. Uh, and what I mean by that is, you know, they need to be able to get their units, their robots out in the field early and start to learn about those kind of strange exceptions that they're going to be encountering in the field. Start to collect more and more data so that they can train their robotics model to do things more and more efficiently. Um, so that Two to three years in, when another company comes along and thinks to themselves, hey, you know, robotic components are, have gotten a lot cheaper, and I think I could build some sort of robotic system to solve, solve the same problem or a similar set of problems. You know, that company A who entered first will have enough of an advantage, um, and, and come down the, the performance and cost curve fast enough, um, That they'll be able to maintain that lead and that they'll be sort of the obvious choice for, um, for potential customers. And I think we are at this kind of i…

AI assessment note: “I do really like the vertical robots, the find use case, build a robot”

Q on that. Um, on the energy density one, you know, I think people know they suck more or less lithium ion batteries relative to, to fossil fuels. I think we should Quantify it a little bit more, because the degree to which they suck is probably worth reiterating. So, you know, from a volumetric energy density basis, a lithium ion battery is like a couple of megajoules per liter, right?

A That's right. A couple megajoules per liter compared with, let's say, thirty-five-ish megajoules per liter for gasoline and diesel, right? So, Way, way less energy in any given amount of space. And it's actually, it's worse even for gravimetric energy density because batteries are, are heavy, even though lithium is the lightest metal, the third lightest element on the periodic table. They just still weigh a lot, uh, on an energy basis relative to, to, uh, fossil fuel. So it's like, in terms of megajoules per kilogram, don't make me do that math in my head, but it's tiny. Uh, whereas we're, you know, up in the, you know, Gravimetric energy density for fossil fuel. So it's just, they're not even in the same league, really.

AI assessment note: “A couple megajoules per liter compared with, let's say, thirty-five-ish megajoules per liter”

Q I think the place that we see that happening the most now is clearly in aviation, like all the sustainable aviation fuel today is biomass derived. Um, and to a lesser extent, we're starting to see some biomethanol in shipping, but Is your view that, like, that next step should be bio-based feedstocks for all these categories, like, including, for example, heavy-duty ground transport?

A Yeah, I mean, to some degree, I think, you know, let the market decide, and right now it's the aviation, it's the, the airlines that are willing to pay the most for, for sustainable fuel derived from biomass, and I think because of a bunch of different factors, that's probably going to be the case for quite a while going forward. Um, and, you know, the, You know, the, the challenge though, is even if you assume we unlock, um, new methods of producing second generation biofuels. So, you know, we recently announced an investment at energy impact partners and a company called Terra Geo, which can use cellulosic, uh, woody biomass feedstock to produce ethanol. We think much more cost effectively than kind of any approach that's come before, you know, that's great. And that could, That could make a real difference over time for the sustainable aviation fuel market. It's a great way to get started. Um, but you know, even kind of optimistically, if you were to max out that resource globally, And all of it were to go into the aviation fuel market, especially given the growth we're expecting to see in demand for aviation fuel. Um, we're still talking about probably solving about half the problem of, of the, of the aviation industry. And that's not really touching any of the other big heavy duty vehicles out there. So, you know, biofuels are a great start if we can, uh, unlock these seco…

AI assessment note: “And that's not really touching any of the other big heavy duty vehicles out there.”

Q I think the place that we see that happening the most now is clearly in aviation, like all the sustainable aviation fuel today is biomass derived. Um, and to a lesser extent, we're starting to see some biomethanol in shipping, but Is your view that, like, that next step should be bio-based feedstocks for all these categories, like, including, for example, heavy-duty ground transport?

A Yeah, I mean, to some degree, I think, you know, let the market decide, and right now it's the aviation, it's the, the airlines that are willing to pay the most for, for sustainable fuel derived from biomass, and I think because of a bunch of different factors, that's probably going to be the case for quite a while going forward. Um, and, you know, the, You know, the, the challenge though, is even if you assume we unlock, um, new methods of producing second generation biofuels. So, you know, we recently announced an investment at energy impact partners and a company called Terra Geo, which can use cellulosic, uh, woody biomass feedstock to produce ethanol. We think much more cost effectively than kind of any approach that's come before, you know, that's great. And that could, That could make a real difference over time for the sustainable aviation fuel market. It's a great way to get started. Um, but you know, even kind of optimistically, if you were to max out that resource globally, And all of it were to go into the aviation fuel market, especially given the growth we're expecting to see in demand for aviation fuel. Um, we're still talking about probably solving about half the problem of, of the, of the aviation industry. And that's not really touching any of the other big heavy duty vehicles out there. So, you know, biofuels are a great start if we can, uh, unlock these seco…

AI assessment note: “And that's not really touching any of the other big heavy duty vehicles out there.”

Q think when we first talked about it, it was like a cool novel way to think about a thing that, you know, people had started to think about a little bit. Some people had been thinking about a lot, but certainly was not a mainstream concept. Let's bring ourselves up to speed then in the, I don't know, Number of months since we had this conversation initially, what has happened?

A So, you know, I, I started talking about this concept of the gauntlet with, you know, lots of folks within the utility sector who, you know, we work with regularly in our, in our roles at Energy Impact Partners, and I feel like a year ago I was getting some nods and some agreement that this is a concern that is certainly on the horizon. I think In the past three to six months, the nods have gotten more and more vigorous to the point where, you know, now pretty much everyone in the industry recognizes that we're in the gauntlet, um, and that this is becoming a major challenge. And there are some parts of the country, some parts of the world where it's more acute than others, right? Um, as we'll talk about, I'm sure the places where we're seeing the biggest demand growth, especially at this point from data centers and from new manufacturing facilities, Those are the places that I think are feeling it the most acutely. The other thing that's happened is that the world has woken up to this, so it's made it.

AI assessment note: “now pretty much everyone in the industry recognizes that we're in the gauntlet”

Q company that is doing any one of these things, this is like the best thing that possibly could have happened to you, clearly. I want to address two other Components of the gauntlet thing before we go. The first is electricity prices. Do you have a view at this point on what impact we might see on the cost of electricity because of the gauntlet over the next few years?

A I should preface by saying I'm not in the electricity price forecasting business, so, uh, you know, don't, don't go and, uh, place bets based on my commentary here, but, you know, Basic economics, right? We're seeing demand rise really quickly. We're seeing constraints on supply. All else equal, I think that means we're going to see increases in wholesale electricity prices in general. Um, I think if you had to make a bet one way or the other, that's the safe bet to make. That, in addition to continued investment and decarbonization, and the fact that, you know, in general, at least in the early days, some of the lower carbon options we're talking about are going to be More expensive than continuing to dump carbon into the atmosphere. So the combination of, you know, continuing pressure on carbon, which should exist, and just the pressure from these market dynamics of, of the gauntlet that we've been talking about overall to me mean, you know, we should anticipate electricity prices going up.

AI assessment note: “we're going to see increases in wholesale electricity prices in general.”

Q gauntlet, and there's, there are a lot of things that clearly need to happen, right? Like interconnection reform, and figuring out how to build, and transmission permitting, and like all these things, they all need to happen. This is a yes and, but like, paint me a picture. What do you think, what do you think is our most likely path through the, the narrow window that we've got here?

A Like, like you said, there's a bunch of macro level changes that I'd like to see, a lot of which really do require some kind of policy intervention at this point. It doesn't have to be federal policy necessarily, but like the biggest one, I think, and you know, I'll, I'll beat this drum over and over is transmission permitting reform, right? We need to be able to build new high voltage, long distance, long distance transmission assets to interconnect more renewables and To interconnect more regions and deliver clean power all over the country, uh, no matter what country you're in. Um, but kind of, like you said, setting aside some of the big picture things, um, which are hard to change and, you know, could be the, the topic of multiple podcasts themselves. Um, there's a couple of small opportunities or maybe not small opportunities, but, but specific opportunities that I think come from this near term Pinch that we're facing, the near-term gauntlet. Um, the one is distributed generation and storage, um, and the concept of a microgrid, which I consider basically any amount of distributed generation and storage that is connected to the distribution system, um, but can also provide, uh, prime power, can, can fully island a customer, whether that's an individual household, Or a neighborhood or a large campus or a manufacturing facility for a really extended period of time, potentia…

AI assessment note: “specific opportunities that I think come from this near term Pinch... distributed generation and storage”

Q messy process of getting an accurate quote. You can't do it remotely yet. You know, people, the consumer awareness is low. So it feels to me like there's, there's a need sort of across the value chain from, you Building a better heat pump to figuring out how to get it in customers hands faster, easier, and with a lower acquisition cost. Do you, do you agree with that thesis?

A I agree. As you know, I've been, I've been trying to understand how much of this is a, a product problem, and technology problem, and how much of it is a kind of go-to-market sales, financing, packaging for the consumer problem, and I guess what I've come to is those problems are actually more interrelated than I initially understood, um, and that's because these Uh, getting to a, a more efficient, higher performance heat pump would reduce some of the sales friction and would reduce some of the objections that installers and, and customers ultimately have to them. I mean, to begin with, if you could increase heat pump efficiency, uh, particularly, you know, in relatively cold temperatures, um, without dramatically adding to the cost. So if you could find a way of, you know, Of improving performance and driving the, the capex down for that additional performance, then heat pumps are just going to look on a total cost of ownership basis, more attractive, more competitive relative to continuing to burn natural gas or oil. Um, and then also if you can make heat pumps more efficient, uh, at colder temperatures and you avoid the, the winter night problem That you mentioned earlier, where there are periods in the winter, and especially in the middle of the night where it gets very, very cold, that, uh, heat pump efficiency plummets, then maybe for a higher percentage of households, Yo…

AI assessment note: “I agree. As you know, I've been, I've been trying to understand”

Q we globally, or at least in North America, take deep decarbonization pretty seriously over the next decade. Um, and the things that can be electrified start to get electrified. The things where there is some alternative pathway, those pathways emerge relatively quickly. What then is the role of natural gas? Like where, Where are we still using it, and how is it shipped around in, I don't know, 1520 years?

A Yeah, I mean, I think, um, there's a, there's a scenario in which, in a very rapidly decarbonizing world, probably the, the best preservation of use for, for natural gas and gas infrastructure, which are, you know, abundant, low cost resources that already touch, you know, most end users in the country. Um, I think one of them is through Probably, like, I'm, I'm actually very excited about this turquoise hydrogen pathway or a blue hydrogen pathway that, um, decarbonizes gas, natural gas, um, at the end of, you know, or at the point of consumption from large, large-scale pipelines for industrial facilities. Um, and I think we could certainly see that being a significant pathway for, Industrial decarbonization alongside also a significant amount of electrification and, and potentially a significant amount of green electricity, I'm sorry, green hydrogen pumped, piped in from elsewhere. And then where I'm pretty confident we'll, we'll see the longest tail of natural gas for the foreseeable future is in all of the end uses that are currently served by natural gas at the distribution level. So again, That's, that's predominantly building heating. Interestingly enough, well, while it seems innocuous, we don't think about it all that much in the scheme of, of kind of big energy end uses. I'm kind of convinced that building heat ends up turning out to be one of the toughest to just sort…

AI assessment note: “longest tail of natural gas for the foreseeable future is in... building heating”

Q same hole here. So what you're saying is that there, there are places where major technology innovation are required. We talk about what some of those are. What you're worried about, if I understand it right, is that there are some other places where major technological innovation is not necessarily required, but, but we seem to see a lot of people who think that it is. Is that about right?

A Yeah. I mean, this is obviously, uh, a bull fanned scenario that the scenario meaning, uh, that, you know, the battle against climate change, but, um, there are absolutely places where we need better mouse traps. And, and actually I would say, you know, plenty of areas in which we still need completely new types of traps to, to trap different types of rodents, right? Gopher traps and squirrel traps. Cause there's a lot of, a lot of problems, uh, along the path to net zero that we just don't Anywhere close to have the right technology to solving today. Um, and there are some areas, though, where I do think that the mousetraps we have are, are good enough, and actually are likely to get better incrementally on their own, such that funneling a lot of capital into trying to build a differently better mousetrap is probably a bad use of capital at this point. And in fact, I think is a little bit distracting, not just for investors, because I'm not so worried about venture capitalists and investors who are Putting capital into new tech. Um, you know, what I'm more worried about is that the proliferation of options in certain areas can almost be paralyzing and lead to the inability to deploy at the pace we need or to focus on, to focus on deployment in certain instances. So it's, it's not that we don't need new mousetraps and also not that obviously we don't need to, uh, deploy those m…

AI assessment note: “there are some areas, though, where I do think that the mousetraps we have are, are good enough”

Q other benefits Theoretically, in terms of safety, not, not being reliant on the lithium volatility in supply chain. Do you think of stuff like sodium? Like, I understand why a flow battery, for example, runs a heavy risk of being a better mousetrap. Do you think a sodium ion is a better mousetrap, or do you think of it differently because it's like a continuation on a spectrum of innovation?

A Uh, is, it feels like a continuation. I mean, that's another, uh, Lithium ion chemistry that, you know, that the existence of LFP as, as a, as an idea, and as something that had been sort of lab proven, well predated any kind of the, the scale up that we've seen in the past 10 to 15 years, and certainly deployment in the field. Sodium ion is, is probably more of a real, uh, deviation, although it's still, I think, you know, a technically fairly Close cousin of lithium ion, especially, uh, you know, the way that it's manufactured today, um, and some of the core principles at play. Um, you could see, you could very much see LFP as an, an incremental advancement of the technology. Sodium ion probably, you know, of a different kind, obviously, literally, you know, using, uh, a different atom. Um, But I think the fact that it's been largely, um, developed by and is already being scaled up by the exact same large industrial players, battery manufacturers that make existing lithium ion, uh, you know, means that it's, You know, I guess it's, I guess it is a better mousetrap, but it's a better mousetrap that's certainly not, not the kind that, um, startup companies are, are, uh, well set up to, to develop and manufacture.

AI assessment note: “it feels like a continuation... I guess it is a better mousetrap, but”

Q Let's not get ahead of ourselves. I don't want to, I don't want to get straight there. We're going to ease our way into this topic. The broader topic that we're going to talk about today is how we're going to move, as you said, how will we move the big heavy things? So let's start with what are the big heavy things? That you're talking about here.

A Most things that we move around are big, heavy things, right? Um, so we're talking about everything beyond what I would call like light and medium duty ground transport. Um, and the reason we're talking about everything beyond light and medium duty ground transport is because we don't really have much of a question of how we're going to move those things in the future anymore, which is a great place to start, right? Like for. Passenger vehicles for, you know, medium duty trucks and delivery vans and that sort of thing. Maybe even all the way up to, like, large buses. We sort of have the presumption of electrification at this point, right? Like, that's, it's not maybe 100% settled how we'll decarbonize all of that stuff, but it's, it's about as settled as, settled as you get in the realm of, you know, pathways to decarbonization.

AI assessment note: “we're talking about everything beyond what I would call like light and medium duty”

Q Let's not get ahead of ourselves. I don't want to, I don't want to get straight there. We're going to ease our way into this topic. The broader topic that we're going to talk about today is how we're going to move, as you said, how will we move the big heavy things? So let's start with what are the big heavy things? That you're talking about here.

A Most things that we move around are big, heavy things, right? Um, so we're talking about everything beyond what I would call like light and medium duty ground transport. Um, and the reason we're talking about everything beyond light and medium duty ground transport is because we don't really have much of a question of how we're going to move those things in the future anymore, which is a great place to start, right? Like for. Passenger vehicles for, you know, medium duty trucks and delivery vans and that sort of thing. Maybe even all the way up to, like, large buses. We sort of have the presumption of electrification at this point, right? Like, that's, it's not maybe 100% settled how we'll decarbonize all of that stuff, but it's, it's about as settled as, settled as you get in the realm of, you know, pathways to decarbonization.

AI assessment note: “we're talking about everything beyond what I would call like light and medium duty ground transport.”

Q everything that we're talking about with the exception of nuclear, which has totally different Um, geothermal, hydrogen for power if you need storage, and carbon capture if you need to sequester it, those all have their own geographic constraints, right? And so none of them are sort of ubiquitous solutions geographically, but depending on the economics and the policy environment, you know, may each have a role to play here.

A Yeah, and I think they are worth talking about a little bit further, you know, CCS and hydrogen in particular, because As we mentioned earlier, one of the solutions, the easiest solution to this imminent pinch point we face in the gauntlet is building more natural gas generation. And, you know, carbon capture is one of those solutions that could help to, uh, to future-proof whatever natural gas generation we do build for a future in which we do need to continue to push down on carbon pretty dramatically in the coming decades. And so, um, You know, the, the potential to add CCS to a new natural gas power plant that you build today is a way to make that gas power plant something that could operate at relatively high capacity factor and with low carbon emissions in a very carbon constrained future two to three decades from now. And so, you know, it kind of brings up this question of for all of the gas that we are going to be building in the next five years, What is the best path for, for future-proofing it? And I, I kind of see two categories of, of pathway there. One is prepare for CCS, and there's probably a bunch of different things that prepare for CCS today means, from the bare minimum of, like, site your plant somewhere that's kind of near where you might be able to put carbon in the ground, to starting to do some studies, to actually designing the plant in such a way that w…

AI assessment note: “carbon capture is one of those solutions that could help to, uh, to future-proof”

Q You mean when will nuclear have its time again?

A Yes, it's, it's Renaissance. It's second time. Um, and, and there's, you know, uh, I think actually kind of a shocking level of consensus within the community of power system planners and utilities and grid operators that at least that You know, circles that I'm familiar with, that believe that at some point, a nuclear renaissance will be necessary. That if we're going to electrify at the rate we want to electrify things, if we're gonna, in addition, add all these, these other kinds of new loads, that nuclear needs to be a part of the solution. And I think this, this gauntlet that we're facing now might finally be the sort of straw that, that breaks that camel's back. It's a Really weird metaphor in this case, but for changing public attitudes about nuclear, for moving the needle on regulatory measures that need to be taken to make nuclear more possible. So while I've been a proponent of and sort of a believer in this, this brewing nuclear renaissance, probably in the 20 thirties for some time, and there's been a lot of, a lot of people that have hoped that it's coming, I think that The gauntlet makes it all but certain that that's one pathway we will turn towards. Now, that doesn't solve your imminent capacity problem, though.

AI assessment note: “this brewing nuclear renaissance, probably in the 20 thirties for some time”

Q that we've, over the past decade plus, done much, much, much more of it, but it's become much, much, much more efficient. So the actual load associated with compute has been flat-ish, and And the question is, will that continue to be true in today's environment, particularly with the advent of these large learning models and, uh, and generative AI? So what do we know about that at this point?

A I think the, uh, at a high level, the, the power sector is going to start having to reckon with a, be careful what you wish for moment. And data centers are one element. A couple others we should talk about are Uh, industrial facilities and industrial electrification. I think hydrogen production is one. I think EV charging is another, but, you know, beginning with data centers, uh, which you mentioned, like you said, you know, computing, demand for computing has grown, as everyone knows, it's obvious, tremendously in the past 10 years. I think it's grown by about 10 X over that period. Um, but over that same period, data center energy consumption Grew by just about 10%, which is actually crazy to me. Um, and that's, that's for a lot of different reasons. I mean, uh, computing has just become more efficient basically at every level of the, of the computing stack. And the question is whether that is going to hold, uh, in this period of, you know, the next generation of software, which includes, uh, generative AI, large language models, et cetera. And I, I, I have to say, this is an area I still have a lot of uncertainty about myself. I think everyone pretty much does. But, you know, as, as business people like to say, directionally, directionally, I think it's very unlikely that AI is going to, um, reduce energy consumption. All of the signposts suggest that, um, AI-related compu…

AI assessment note: “directionally, I think it's very unlikely that AI is going to, um, reduce energy consumption.”

Q Now there are lots of Spikes. In the meantime, we've seen this over the past couple of years because lithium prices spiked and global supply chain was all gummed up, but generally we can expect costs to continue to decline. We could probably expect continued improvements in, in cycle life and degradation. It's mature. It works. It's on the grid now. Uh, am I missing any of the, the benefits?

A That's a pretty good list of benefits. I, I wouldn't, um, I think the one to emphasize is basically the supply chain and the fact that the vast, vast majority of innovation and scaling in the lithium ion industry is being driven by the electric vehicle market, um, where we're already seeing essentially we're, we're past the inflection point for EVs. And, um, Uh, we're seeing the majority of big auto OEMs basically going all in on electric vehicles. They are, they are pot committed, and so I, I think if we're at risk of anything, uh, as the electric power sector, and certainly as, as, you know, people who are, who are looking for new solutions for grid storage, I think the bigger risk is still underestimating the potential For cost declines and performance improvements in lithium ion. It's really, really hard to bet against the weight of the global supply chain today. Now there are big vulnerabilities in that supply chain, everything from critical minerals to basically all of the middle layers of the supply chain, all of the, the processing of lithium and nickel and cobalt, et cetera, that's mostly done in China today. And there's obviously geopolitical concerns about, um, The state of the lithium ion supply chain, but I, I am still relatively optimistic about it, and I see potential for next generation chemistries to continue to make a difference. Um, so I, I guess that's the o…

AI assessment note: “That's a pretty good list of benefits. I, I wouldn't, um, I think the one to emphasize”

Q long and the costs are so high. So one other thing that we can do at least to solve that part of the problem is the category of things that people call grid enhancing technologies, which are basically A number of different ways to get more power out of the existing lines. Do you want to talk just quickly through what are the, what are the different categories within Getz?

A Yeah, there's, there's a bunch of different technology categories. Um, but I think probably the one that gets the most attention deservedly so, uh, is, you know, in the category of what we call dynamic line rating solutions. So the basic idea here is that transmission lines historically have been Rated very conservatively. So when you build a line, you sort of pick the, the most adverse conditions that that transmission line could operate under, you know, very hot and windy, the line, the conditions that would be most prone to cause like a wildfire or damage to, you know, nearby something, right? Uh, or damage to the lines themselves if you were to run the most power possible through that line. And so you rate the line for that most conservative line. Of scenarios. But those conservative scenarios don't show up very often, right? They're, um, they may only be holding true and really constraining the amount of power that you can safely move through the line, say, 10% of the time. Most of the time, you could move more power through the line. And so, if you have more data on the real-time status of the line, whether that's temperature, wind conditions, the amount that the line is sagging, the way that it's moving given the wind, that sort of thing, Then you can make real-time decisions about moving more power through the line. And, you know, this is a really, really compelling, el…

AI assessment note: “one that gets the most attention deservedly so, uh, is, you know, in the category”

Q back the other way, and if it happened, what would cause it? In other words, what, when could we enter a state where, oh, wait a second, there was a lot of overbuild, and suddenly there are a bunch of empty shells of data centers and or, you know, electricity load growth underperforms relative to expectations, etc. Do you have a view on Like, when that might happen, and why?

A It is so difficult for me to try to answer this question. It's, it's, it's very difficult to imagine that balance flipping the other way. It's, it's, it's possible for me to imagine the supply-demand mismatch becoming alleviated over the next five years, or that, you know, uh, the supply does not grow as much as we currently anticipate, and so demand is able to keep up better Than we've been expecting in the next five years. For it to flip back the other way is practically impossible. I feel like my past, you know, 18 months, every conversation I've had is, has been talking about all the reasons why we are in the scenario we're in, which is that, uh, supply is falling short of demand by, by such a wide margin, or appears to be falling short of demand by such a wide margin. But Stretching my imagination, I think, I guess there's two ways that could happen. It's two ways that we could alleviate this imbalance and maybe flip back. One would be that on the demand side, we're very wrong, or the, the, the variables causing demand to grow so rapidly change, uh, substantially. And the other would be that the variables on the supply side change substantially. I think demand is more likely, because there's, there's a lot more uncertainty on the demand side of the equation, and that uncertainty is largely coming from how much energy Data centers are going to be consuming. Um, and there's,…

AI assessment note: “Stretching my imagination, I think, I guess there's two ways that could happen.”

Q back the other way, and if it happened, what would cause it? In other words, what, when could we enter a state where, oh, wait a second, there was a lot of overbuild, and suddenly there are a bunch of empty shells of data centers and or, you know, electricity load growth underperforms relative to expectations, etc. Do you have a view on Like, when that might happen, and why?

A It is so difficult for me to try to answer this question. It's, it's, it's very difficult to imagine that balance flipping the other way. It's, it's, it's possible for me to imagine the supply-demand mismatch becoming alleviated over the next five years, or that, you know, uh, the supply does not grow as much as we currently anticipate, and so demand is able to keep up better Than we've been expecting in the next five years. For it to flip back the other way is practically impossible. I feel like my past, you know, 18 months, every conversation I've had is, has been talking about all the reasons why we are in the scenario we're in, which is that, uh, supply is falling short of demand by, by such a wide margin, or appears to be falling short of demand by such a wide margin. But Stretching my imagination, I think, I guess there's two ways that could happen. It's two ways that we could alleviate this imbalance and maybe flip back. One would be that on the demand side, we're very wrong, or the, the, the variables causing demand to grow so rapidly change, uh, substantially. And the other would be that the variables on the supply side change substantially. I think demand is more likely, because there's, there's a lot more uncertainty on the demand side of the equation, and that uncertainty is largely coming from how much energy Data centers are going to be consuming. Um, and there's,…

AI assessment note: “Stretching my imagination, I think, I guess there's two ways that could happen.”

Q to install more distributed energy like rooftop solar. And that would make Energy more expensive for everybody else and so on and so forth until utilities fell apart or didn't exist anymore. And that, that didn't happen. But you've pointed out to me that there is a potential future in which there is a version of a death spiral for natural gas. What is that? What would that look like?

A That's, that's exactly right. So, you know, a decade ago, there was this conception that the electric utility business model was fundamentally existentially threatened by the prospect of a death spiral, uh, prompted by the falling costs, primarily of rooftop solar, and then eventually batteries. And, you know, I think careful observers at the time, um, did not expect that to come to fruition. But what's interesting is that, um, The prospect of cheap solar and continuously falling solar costs has had the opposite effect on the electric utility business and electric infrastructure overall, I think. And in fact, cheap solar, not rooftop solar, but cheap solar at very large scale, um, is, is one of the factors that is initiating this possibility of an actual much more threatening Uh, death spiral for, for natural gas infrastructure. And, you know, the basic story is that, um, cheap solar has made rooftop solar systems cheaper, but those systems have actually kind of stalled out at, you know, significantly higher than the cost of large scale ground mounted solar. And that's everywhere in the world, but, but especially in, in, uh, North America and, you know, rooftop solar has lots of issues. It can still be a headache for utilities and for grid integration. Um, requires some changes in rate design in order to be sort of economically sustainable for the business and equitable for, fo…

AI assessment note: “initiating this possibility of an actual much more threatening Uh, death spiral for, for natural gas”