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THE FRONTIER LINE
Hosts Wayne Aston and David Murray explore the critical global pillars of infrastructure development and energy production, from traditional methods to future-forward advancements. The Frontier Line covers the latest industry news, energy innovations, and sustainability trends that are shaping the future. Through expert interviews with industry leaders in renewable energy, utility-scale battery storage, and waste-to-energy technologies, the podcast provides insights into the evolving landscape of energy efficiency and sustainable infrastructure. By focusing on the intersection of innovation and the politics of energy, The Frontier Line highlights transformative ideas and technologies poised to deliver cost-efficient, resilient, and sustainable solutions for global industries.
THE FRONTIER LINE
Ares, Brookfield Raise Capital for Energy Transition Headlines in September 2024
Could California’s green energy ambitions be stalled by legal battles and political maneuvers? Join us as we unravel the ongoing legal tussles in California that could reshape the state's solar industry, exploring the fallout from SunPower's bankruptcy and a controversial lawsuit that aims to restrict solar installations. We question whether utility companies are manipulating the rules to their advantage, threatening consumer choice and stifling the expertise of experienced solar contractors. The conversation gets heated as we probe the tension between California's sustainable goals and the political roadblocks that stand in the way.
Witness a surprising twist in the tech industry's quest to meet skyrocketing energy needs: the embrace of nuclear power. As AI and cloud computing push our grids to their limits, tech behemoths like Microsoft are turning back to nuclear energy as a solution. Discover how the recommissioning of reactors at places like Three Mile Island is being supported by financial giants like Bank of America, signaling a significant pivot. While nuclear power offers a promising path forward, we don’t shy away from discussing the public's concerns and the complexities of integrating nuclear into a balanced energy strategy.
From the staggering investments pouring into renewables to the paradoxical challenges facing solar and wind energy, the energy transition is anything but straightforward. Despite financial struggles and setbacks like turbine failures, there’s a massive push from major investors akin to the fervor in AI development. We delve into the economic side-effects, such as negative electricity prices during peak renewable production, and the vital role of public-private partnerships in fortifying our future energy infrastructure. Tune in to understand how data centers and evolving power demands are reshaping our energy landscape and spur strategic investments for a sustainable future.
Hey Dave. Hello, I hope it's not too echoey. We've got kind of a new room here today.
Speaker 2:Yeah, for another one of our things. We're going to have a guest and so we had to accommodate. Maybe we'll let give us some feedback. Is this better or worse?
Speaker 1:How about some headlines for the day? We're going to do some headlines. I feel like that's going to be a. There's a lot going on in the world.
Speaker 2:Well, there's a lot going on all the time. It seems like in the energy space, there is more activity than even normal. Yeah, agreed, so we'll keep you up to one of our things. We talked about it last week. We're going to keep you up to speed with, uh, the energy headlines of the week, as we are, you know, the weekend, you know last, since we've last real, when we record, when we push these, we, you know, we're watching, seeing what's going on in those periods of periods of times, and we just want to be able to give the information to you because we it's what we're talking about, it's this is why this is an exciting space. So you want to go first, sure, sure, you know, because you have a very interesting, you, a really interesting one, and it's going to have a lot of reverberation and it's in the industry.
Speaker 1:Yeah, we touched recently on the show when we did the headlines last we were talking about SunPower going bankrupt and the implications that that has on the solar industry, you know, nationally. Um, I read another article just this morning and it's kind of a continuation of the aftershock. Okay, uh, this is an interesting headline too, because this really underscores the dissonance in california between clean energy, renewables and legislators, so the political kind of powers, and you would all just assume that California is so committed to this green initiative that you would think the legislators would be on board with supporting all of the means necessary, and that's not necessarily what's happening.
Speaker 2:They seem to be putting up more obstacles than are necessary. That's right. That's right, yeah, to say the least.
Speaker 1:This is a big one, yeah. So let me just drop a few nuggets on the listeners here. So this comes from KPBS News. So this comes from KPBS News. The headline lawsuit limits on who can install energy storage systems as a blow to rooftop solar. So this is again referencing Californians specifically. There's a lawsuit that is going down in a San Diego court and essentially what they're attempting to do here is determine who can install best systems. For the listeners, if you're not familiar, a best system is a backup energy storage system. So this is like solar with battery. Backup is considered a best system A Tesla.
Speaker 2:Powerwall, yeah, hooked into your solar, for example. Right, right.
Speaker 1:So the California's contractor state license board plans to prohibit workers classified as solar contractors from installing solar panels on rooftops. Because why?
Speaker 2:would you have the people who are experiencing doing this? Do that so to?
Speaker 1:me, it's a what the fuck I talk to people.
Speaker 2:I talk to a CEO I'm not going to name his name a company here in Utah. A few years ago and he's in that space they developed it. He will tell you and this is what he was trying to solve what a. I'm going to say what a. Uh, I'm gonna say what a shit show. Yeah, um, when you, when you try to have people who are, you know, decent and there they should know this, but there are so many nuances to specifically like batteries and solar, that if you don't know what you're doing, you make all kinds of mistakes. So that was kind of his thing and he was. He was constantly teaching. These people were probably going to get licensed, like because they just didn't know what to do. Yeah, versus the people who may have been doing it for a long time, who understand some of the issues. Anyway, I'm sure there's probably some reasoning, but armchair, it just doesn't seem like that's not maybe the best solution.
Speaker 1:It's incredible. There's a quote here from Dave Rosenfield, the Solar Rights Alliance, and he says we should be giving consumers as many choices as possible to shop around for the types of worker they want to hire to do the work on their houses. And this regulation goes backwards. It restricts consumer choice. So mandating we've talked about mandating. We've talked about government overreach. We've talked about the myopic legislators who think they know best, who don't always know best and continue to prove they don't know what's best. I'm opposed to this. I think it's ridiculousness. On rooftop solar and residential space, you need to let the professionals who have built their businesses on those installations operate and not try and mandate this licensing loophole and then now require all of the up-training for these electrical companies to go get certified to do the same things the professionals are already doing.
Speaker 2:Why does that make sense? Sounds like some money for somebody. That's what it feels like Licensing money, but also I would imagine they would probably say something like, well, we have fielded all these concerns about this point. Yeah, we're running all these problems, but is it really the solar? I'm really curious, why would you do that? Is it, is it? Has it really been that big of a problem you know, in California let's go and and is or is this just a case of, well, we're going to fix something that's not broken?
Speaker 1:Well, here's an interesting tag along to Rosenfield's quote. He says Rosenfield said he believes that the licensing board passed the regulations due to pressure from utility interest groups. We've covered the lobby guys. I mean, we've mentioned the lobby. It's a big scary monster out there and the lobby is, you know, the paid. It's the paid marketing arm for legislators. They dictate what's being legislated. So if you have big utility companies, big coal-fired plants, of course that's not probably the issue, but maybe a gas Gas who knows what major utility we're referring to providing this who has the capital to hire the lobby, to hire the attorneys, to make the lawsuit happen and then persuade the utilities union?
Speaker 2:It's interesting Almost to maybe slow up solar inspiration, for example. That's what it feels like. It certainly seems like it. Yet this is in a state where they've been very aggressive on saying we're going to lead the charge on renewables, and so solar is one of those big renewables and so it's a very interesting move. Yeah, um, yeah, I just it surprises me, but then again it doesn't surprise me. How about that?
Speaker 1:I think it's important to understand that there are just so many constituents, so many stakeholders in the macro conversation of energy and energy transition. It's not black and white, it's not just well, let's, let's make renewables and let's transition. That's, that's very much the dissonance between, like I just said, the dissonance between that um, altruistic intention and what's actually happening, the money-driven transactional powers behind the scenes. It's a big deal. It's a big deal. It's a big deal.
Speaker 2:Interesting. Well, another one. I'll go with another one, yeah, okay. So we're seeing a lot of this. We've brought up nuclear a couple of times. So far, we see it as an absolute, something to consider, put on the table, try to solve it From a regulatory point of view. It's a giant hurdle for all kinds of reasons, probably for legitimate reasons, but there's a lot of pressure right now, and so just this last week.
Speaker 2:Some big moves have happened, and so article right now. This is from BizNow, written by Dan Rabb. Hello, dan, major technology firms embrace nuclear energy as the answer to the data center industry's power. Woes may have reached an inflection point, so they're now calling what has happened in the last couple of weeks. We've now hit that point where everything is going to start changing, and if you haven't read this yet and haven't heard it, hear more of the story.
Speaker 2:Friday's announcement that a reactor at the Three Mile Island nuclear power station would be recommissioned to provide power for Microsoft's AI data centers capped a month in which the tech industry's enthusiasm for nuclear energy has shifted from talk to action. Companies like Microsoft, google, amazon and the data center providers they lease from have long touted nuclear power as a key piece of the solution to one of the industry's most pressing problems how to access massive blocks of electricity to power the data centers needed for artificial intelligence and in cloud computing, while meeting ambitious carbon reduction goals. And in cloud computing, while meeting ambitious carbon reduction goals, data centers added the equivalent of a second New York City to US power grids last year alone, while the industry's carbon footprint is expected to triple by 2030 due to AI, which also we've talked about a lot. Ai is pushing so much of this and the demand for it.
Speaker 2:The financial sector this is a very interesting point. Right, the financial sector is joining the tech industry and pushing for nuclear as an energy solution. That's huge, huge on Monday, uh, so Monday reference to our you know, whatever you're listening to, this it's going to be, you know, probably within the last few weeks, um, a group of 14 major financial institutions. So the big ones, aries. So the big ones Ares Management, bank of America, brookfield City, goldman Sachs, morgan Stanley expressed support for the effort launched to triple global nuclear energy capacity by 2050. And then the big one is Microsoft's three mile on power agreement. That just happened. It comes on the heels of other such behind the meter.
Speaker 1:I don't know if we've talked about behind the meter power, but it's a thing in this space that is often talked about. I think it goes hand in hand with the concept of decentralization or distributed energy Right.
Speaker 2:So deal between tech firms and nuclear. So a good article just goes on to talk more and more about that, and they're talking about how AI is really driving this demand. For, well, we, we know we need a lot of power and we want a lot of clean power and, and really, nuclear is the, is really the is is is one of the most, um, uh, I guess one of the best options. Uh, that everybody sees right now looking across the energy sector, saying of all the energies and all the things we're doing, it checks a lot of boxes, but there's public concern, there's all these things, and for good reason.
Speaker 2:Yeah, we've seen it in our lifetime. We've seen some things go really bad, three Mile Island being, you know, when I was a kid, being one of those things, one of the first major ones that we've had obviously some sense, and so there are some what we're reading, what we're seeing, what I'm seeing is that there has, you know, scientists have been working on this now for the last two decades, trying to come up with new, better, safer, and they really made some big advancements in nuclear.
Speaker 1:Yeah Well, I think one of the exciting things about this headline is that you know, we've been saying all along that we feel strongly that this is an and and proposition. This is this is not a let's continue to do fossil fuels alone and scrap the renewable. It's not a let's transition to renewable next week. It's's somewhere in the middle. It's all of the things it's like. We recognize, and it's really good validation that all these big financial institutions also recognize that the speed in which AI is advancing is going to rapidly outpace what's available.
Speaker 1:And that's when the crisis starts to happen. That's when rolling brownouts in Texas and California start to become blackouts, multiple, statewide every other day. That's right. That's when the headlines and I'm predicting it that's when the headlines start talking about energy crisis that's looming because of AI. Energy crisis that's looming because of AI, if we don't get out in front of this or at least come up with solutions to try and pace with it. And that's why throwing every possible solution into this equation makes sense Absolutely, and I think nuclear represents maybe the biggest solution of the future.
Speaker 2:If you can do it, it really does. It's going to solve a big chunk of the problem. Yeah, and and this goes to you know, and we're going to talk about it We'll continue to talk about the, the fragility of the grid and and some of these and and, as these issues and I I was thinking about this as, like you know, and has these issues, and I was thinking about this as, like you know, you've, you know, if you're probably listening, you're probably, you may be in the industry where you're aware of these problems. I'll be honest, I wasn't. A few years ago, I was not aware of the, the, the level of some of these issues, and I think most of us go about our days going that's fine. We turn on our lights, we do our thing, we plug in. Power's always going to be there. It's just always going to be there.
Speaker 2:If somebody stayed here, somebody's solving this, somebody somewhere, and you're realizing that that is getting ahead, we, they can't solve it like they're. They're. It's actually growing so fast and it's exposing so many issues with our grid that, to your point of a rolling brown outs, this will become effect, you will become a standard. Yeah, and that's. I don't think that's a scare. Woo, it's coming. It's the reality that we're going to be facing, and then you're going to see the population going wait, why did this happen? When did this happen? Well, this has been a slow march forward and just not enough people solving the issues and essentially kicking it down the road.
Speaker 1:Yeah, yeah, we're only seeing the germinal effects of it today, as this over the coming year two years, just considering what some professionals we've been talking to are are suggesting about the advancement of AI. I like the analogy that that one of our peers used that said you know, ai is like an elementary school today, but within a year or so it's going to graduate college and within, you know, say, two to five years, it's going to have multiple PhDs. It's going to be that advanced. So that was an interesting prediction of timeline, that advanced. So that was an interesting prediction of timeline. But I like the analogy of just the level of sophistication and how much it's not just more AI being used. It's the advancement and the deepening of the tech that make it more applicable in all of these different ways that are driving this power situation.
Speaker 2:Yeah, and it's a. You're right, and it is not by any indication. It's not going away. Yeah, I've been saying it for a while. I mean, you know me, I've been talking about AI for a while, spoke on it this week again to a group of 50, 60 college students and saying, wondering what it's going to look like, and saying my monitor's better. What I've told them is it won't be AI that replaces you. It's going to be somebody who knows how to use and utilize AI. It's also shifting the job market considerably and it's going to change everything and it's not going back in the box, it's just going to get bigger and bigger and bigger.
Speaker 2:I mean, another headline I know I saw is just this week, sam Altman, ceo of OpenAI, and a bunch of other tech executives met with the White House and they're saying you need to help us solve this. You need to help us build some massive data centers. We need help in order to facilitate what we know is coming, the demand we're going to need to address, and they're realizing that, even on a local level or even on a national level, it's going to take a cohesive effort to get some of these things done. And and their their big tagline if you don't do this, china beats us. Yeah, and that and that was. That was the plea of like we're, we're in, we're we're competing. Now understand of all the data centers in the world, we have most of them, I think there was, like I saw. I saw a graph this week. It was actually, I didn't realize, the, the, I didn't realize the the difference in numbers.
Speaker 1:We're like almost 5 000 data centers, 400 data centers in the us alone.
Speaker 2:Yeah, there's only like 9 000 globally right and then the closest to us, like from a country, had like 400, yeah, so that shows the chasm. We are driving the AI revolution in the US and I think there's a lot of interest in keeping that competition going and really driving that forward. But we also recognize all people recognize now that if you, this will continue on. But we have to solve power, which comes back to nuclear and all these other things.
Speaker 1:Well, I appreciate you bringing that up. I mean, I'm seeing data centers in the headlines daily, one of the ones that I was going to bring to the table today. Headline Blackstone to invest $13.3 billion in AI data center in the UK, projecting 4,000 new jobs because of all the ancillary housing and other businesses and construction and all of the effort and so the article is talking about the fact that this is actually this will be the largest data center in the UK, backed by Blackstone. Ceo John Gray says the firm is making significant commitments to building all of these ancillaries to fuel the digital economy. So I love seeing data centers in the news every day. Yes, it is, it is the thing, uh, and it's great really that it's. It's not just data centers, it's data centers and power. Yes, it's the.
Speaker 2:It's the unique combination of the two without the other, and, and, and you can't just set up a data center anywhere. Right, as we know and a lot of others know, and even when you think you might have power, you might not have power, because then it becomes a well, how do I get power in? And distribution and lines, and these are multi-year solved problems and it needs to be solved faster than that. Yeah, so that's why we're seeing a lot of like okay, we got to do it ourselves. Yeah, um, it's, it's the byop, bring your own power. Yeah, which is actually, I guess, with canada, there's some some they've said look, we want data centers, but we're going to need you to bring a power solution. We can't, we can't solve it. Yeah, we need to bring, you're going to have to bring it, and there's a lot of that going on. We've understood that of like, we've got to build our own power. Probably, you know, mostly in order to do what we need to do, because most infrastructure, wherever we're going to want to be, is probably not going to be able to handle it on any quick time frame. Yeah, or quicker time frame, you know, if we're good with five to ten years out. Yeah, sure, right, we got to. You know, these things have got to get done. Company we're big fans of is in the news.
Speaker 2:Yeah, schneider Electric. They had a press release they put out I found this. I thought it was interesting because it's different. It's data center. I might get this wrong. It's called the Peerbrite Institute Transforms Viral Research and so viral being, biologic, medical research, comput computing with new data center from Schneider Electric. What was interesting about this is that the project delivered ahead of its 12-week schedule. They built the data center and stood this up in 12 weeks Wow. That was the whole idea is to get this thing done in a very short period of time to add compute power for this institute Wow and to solve it. So it's modular data centers. This is so.
Speaker 2:Here's the thing innovative modular data centers from schneider electric and advanced power technology. Apt. Future proofs computing capacity and enables new levels of scientific research and collaboration. Meets the institute's requirement for a scalable, resilient and energy efficient critical infrastructure system to support its operations. Project delivered ahead of its 12-week schedule, allowing the Institute to accelerate groundbreaking scientific collaboration and complete for new projects and compete for new projects. So very interesting.
Speaker 2:I mean this whole modular data center. I mean that's new to me, very cool to see what they're doing Again, very interesting use, and then on a time frame that is impressive. Yeah, I mean to be able to pull this together in four months, that's incredible, really. Yeah, three months is something so um, uh they they go on to say so, um so shi electric, with its uh eco expert partners, advanced power technology, developed a new containerized data center to meet the institute's requirement for a scalable, resilient, flexible and energy efficient infrastructure that would ensure the highest levels of availability and continuity. Interesting, very interesting. I mean, it's just one of those like, wow, okay, so now you take that and then I think, on the modular front and what they're doing on the modular front makes that all that more interesting, because maybe you're going to see not only large-scale solutions, you're going to see micro-solutions.
Speaker 1:Well, Schneider is certainly one of the pioneers in the industry. Yes, they are One of the largest authorities, one of the largest companies by revenue, by workforce, by geographical location on earth in this electrical space. So it's really exciting to see Schneider's unique contributions to these solutions. It is contributions to these solutions, it is. You know, we have been aware of three very interesting and unique contributions that we are intending to bring into the Valley Forge Impact Parks. One of those is data center design. The other is microgrid design and implementation. And then the third big one is that Schneider's developed a unique AI platform for power management. So when we say, hey, wouldn't it be cool if we had a natural gas fired power plant and a geothermal cogen and with a solar array and some battery backups, we want to push all that into one solution and optimize how that power gets distributed. That's what we're talking about, and Schneider has developed that. So, in addition to all of those things, it's really cool to see this niche thing in the news. Yeah, we didn't know. I mean that's pretty small scale.
Speaker 2:It was small scale, it was like kilowatts, but obviously for this institute it was huge for them because it allows them to probably then, I would imagine probably then they could probably stack on and they could add as they need. But that doesn't mean they don't have to then stop down operations or figure out how to go get that compute in the cloud and solve that problem. So for them it allows them to continue to run fast.
Speaker 1:Right, it is fast. It's a really unique arrangement. That I imagine is a low entry cost, low barrier to entry cost to put something that small together. Very fast timeframe to hit the market and if you're doing thousands or tens of thousands of those that could, that could move the needle. You know you get enough companies buying into those solutions. That's fully decentralized. Now you're talking about little micro power plants everywhere, right, and and that I think is a great solution when we're so concerned about the grid and having centralized power trying to push all that distribution through a grid.
Speaker 2:I don't know how much the utility companies the largest scale are going to like that.
Speaker 1:Of course not.
Speaker 2:And this goes and we brought this up, this goes to the behind the meter, which is for anybody that doesn't know. So anything behind a meter would be you're not paying a utility provider for a tax. If you will extra money to go across their lines, you're not paying their rates because they're going to take their power and they're going to upsell it and then they're going to give it to you. So it's that extra fee. You're getting it directly at you know. So whoever's manufacturing is giving you the wholesale price and it's not going across somebody else who's then upcharging it and then selling it to you, and so call that a tax, call it whatever you will call it, the cost of doing business infrastructure.
Speaker 2:So when they talk about behind the meter, it's about you're paying for or you're buying energy directly from the provider, usually going across your own lines or lines that are not theirs, or it might be. Maybe there's a power plant that's some miles away and you've run lines between there that are your own lines, or maybe it's on-site, and it's on-site, which would be behind the meter because it's your own power, and that's kind of what they talk about behind the meter. And so in this case they're behind the meter. They're like we're going to power it on-site and it's less cost to us and that's good. That's awesome Pencils out.
Speaker 1:I'm sure. Yeah, yeah, absolutely. I mean, when you think about centralized power plants, big coal-fired and other types of fossil fuel power plants that use the grid, the traditional historical power plant, you've got a lot of infrastructure cost that's got to be distributed across all of your users, which is why those rates and taxes apply, because you've got not only the transmission lines and all that equipment but you've got substations conditioning power up and down to meet the needs of certain consumers. That all costs a lot of money.
Speaker 2:It does A lot of money, and there's been a lot of pressure from public commissions or whatever the group is, to keep rates as low as possible. Consumers with low rates and they'll say, well, okay, we can give you low rates, but then and that their argument would be well, we don't have enough money to really update the infrastructure. And so does the infrastructure language, all of these things come into play. And then, when rates scale because they've got to put in some major infrastructure, people say, well, that's too much, or you're making too much money. But the reality is, is he going to pay for it somewhere?
Speaker 2:Yeah, and it's not cheap. Yeah, it's not inexpensive to go do major infrastructure projects. It just isn't. And so that's always going to be a thing and it's always going to be a tug of war. But I also think you also also have to recognize the public has to recognize that if you don't fix it, um, or you don't upgrade it you know those poles that maybe have been in your yard for 50 years and they're starting to bend at some point they need to be replaced or a solution needs to come to bear. Well, how do you do that on a, on a major city-wide scale. That's expensive, right, uh, and it's long and it's not something that you know. You could say, well, our rates are covering it, they're not. Maybe they're able to do some things, but not some of this massive upgrade that's probably going to need to take place. Yeah, yeah.
Speaker 1:A term that we continually use is the energy transition. Okay, talking about moving from traditional means to renewables. Um, there's two, two big headlines I wanted to bring to the table here. Uh, and they kind of go in opposite directions on the equation. Okay, weird. Uh, this is, this is more on you know, the big capital, the private equity, kind of getting in the ring, so to speak.
Speaker 1:This article came out from this is actually published from Brookfield Asset Management, so this is a press release that they put out. That's interesting. Yeah, brookfield announces $10 billion first closing for the second Brookfield Global Transition Fund. Wow, you know Brookfield has been around for a while. Yes, they have, and they're publicly traded. They're a juggernaut in the sector. What's interesting about this is Brook. I'll just read it here the fund continues to see significant support from both existing and new investors, cementing Brookfield's position as the world's largest transition investor among private fund managers.
Speaker 1:I didn't realize Brookfield was the largest leading this whole energy transition, so I don't need to share much of the details here. I think it speaks for itself. Another 10 billion. What's the takeaway? We talked a week or two ago about BlackRock and Mubadala. Abu Dhabi Sovereign Wealth Fund, 30 billion billion, $70 billion. We've seen headlines Bain throwing out a trillion. I mean, we are talking about unprecedented amounts of capital and for me, the takeaway is everyone's in. All of the major players are in on this, yes, which I think is a great thing, I assume, what's in the AI space.
Speaker 2:The AI space has garnered some of the biggest investment dollars I think to date we've seen, and the amount of money needed to scale these have been unprecedented in the private equity VC space. Yeah, so almost so much so that where you didn't have I mean there wasn't even enough money I have I mean there wasn't even enough money. I mean some of these firms who are in giant, they almost have to partner up with somebody because the capital needs were so great. Yeah, and that's on the AI side. This is not energy infrastructure. That was just on building out the AI side of it. So that's. You know, when you're looking at just how much money across the whole space is going to be needed, it's so, so big, and so you're right, everyone's getting in Yep, and they're all going in, and they're going in why? Despite?
Speaker 2:I think there's some skepticism out there. This is where it's all going and they know that, yeah, this is going to change. I mean I've said it and I'll say it here. I I mean I've said it and I'll say it here. I mean I've said it when I've been speaking I think AI ends up being one of the biggest. It's going to be bigger than the Industrial Revolution and that's a bold statement because it changed the Industrial Revolution, changed humanity completely. But I think AI is going to have a bigger of an impact and I think it could even have have just could be bad or good, I mean. I think it could go both ways. It's just the possibilities with AI are so significant and I don't think anything we do in life doesn't get touched by AI.
Speaker 1:I agree, dave, and you know, when I think about my limited perspective and understanding of how far-reaching the Industrial Revolution really was, it feels like what I learned in college about it was US led, that you had other European bloc nations that were in on that. Most of that, much of that was driven by major world war, the industrialization right, but in my awareness it wasn't touching Africa, india, other continents like. Ai is so, that's so pervasive that it will impact every single continent on the globe deeply from an infrastructure perspective. I mean it will change the way everyone does everything. It won't Right. So I think you're absolutely right about that. And it's again good and bad, and it's again good and bad.
Speaker 2:I mean, there are going to be some side effects of this that you know there's going to be a lot of. There's going to be transition in the workplace from you know, certain kinds of jobs to other kinds of jobs and embracing different kinds of skill sets. There's going to be a lot of that. That there's already a transition in their way and they felt in tech and everything else, that by 2030, 800 million jobs in the world are going to be disrupted. Wow, and it wasn't necessarily. I mean 800 million jobs are going to be lost. It was 800 million jobs were going to change fundamentally. So what might have worked before won't work, and so you're going to have 800 million workers essentially have to pivot into different kinds of modalities in the workplace and upskill and do all these things, and so that's a significant, significant shock on the workforce Absolutely, and I think it's the numbers have probably gone up since then, because I think this again, this was like 2020, 2021, kind of you know, before we had kind of the AI boom in the last couple of years and I think those numbers probably need to be revised. I think you will probably well, over a billion people that are going to they're going to have, there's going to be a shift and I mean you just think of that and that's just. That's the work sector. So how does that then, how does that spider out and affect everything else? And that's why I start to say that it's like it. Just you can't escape it.
Speaker 2:Yeah, whether it's infrastructure or your or your daily work or whatever it is, there are obviously plenty of people going, oh, ai, whatever it is, it is. Yeah, I heard the same thing about these things, yeah, back in the nineties. Oh, it's not going to be a. You know, I saw it. I obviously I thought it was laughing, this is a big deal, right, and then saw that just sort of take over. Yeah, and it's now part of our lives. I mean, it's on our wrists, it's everywhere. Again, good and bad, it's caused its own problems. Yeah, we've had some issues, but it advanced humanity, yeah yeah, absolutely yeah.
Speaker 1:Just this week I was visiting with with my daughter and she she was wearing a new ring and I'm just learning about the aura ring. The aura ring, yeah, which is an apple product, which is super cool. It's super cool all this technology built into this ring that's reading her readiness for the day, it's giving her reports on her phone of how much sleep and, you know, oxygen and all kinds of things. Yeah, like holy cow, that's. That's cool.
Speaker 2:I yeah, I, I have. I've learned a lot about my health because of this watch this last year. Um, you know it has enough features now where it really is, and I finally embraced going oh, I'm gonna learn from this thing and I'll sure enough, it's totally it's. You know, it's been really interesting to watch, like a lot of my thing, and you're, you start to realize that and you're realizing, you know, if you utilize it and you know, uh, the right way you can actually, you can actually help turn out who knew, who knew you're supposed to pay to pay attention to, like, blood oxygen levels at night. That's right when you're an older male.
Speaker 1:Well, it seems like it was episode maybe three or four. I'm impressed you can remember that it was either episode three or four. We brought up this concept. The title of the episode was Innovation Versus Cost Efficiency, or something like that. And that was just you and I and our opinions about what that looks like. And so I catch this amazing article. This is published from oilpricecom and the headline here is Energy transition stumbles under cost weight.
Speaker 2:Okay, now this is really interesting folks, I haven't heard this yet, so I'm as curious as anyone.
Speaker 1:I'm just going to read some segments of it, because it's fascinating. This week the International Energy Agency said that the COP28 targets for expanding wind and solar capacity were quote unquote within reach. Yet there was a but. That had to do with the fast expansion and upgrade of grids and the equally fast build out of energy storage capacity. That but can doom the whole transition, if it's not already doomed. Take you these, for example we've heard somewhere isn't this interesting?
Speaker 1:the latest sales data shows that only china recorded a substantial increase in EV sales, with those jumping by as much as 42%, driving a global 20% increase increase, while sales of electric cars in Europe dropped by more than Chinese sales rose at 44%. Ev sales in North America increased modestly and nowhere near enough for what transition architects might see as a desirable level of transport electrification. Or how about solar? In the United States, solar capacity additions are breaking record after record, yet companies are starting to struggle to survive and some are folding. The biggest sector player to do that was SunPower. We've been talking about SunPower, which filed for bankruptcy last month.
Speaker 1:Wind power is not doing so well either, despite the generous government support it receives in both Europe and North America. Things took a bleaker turn after a turbine blade broke off, spilled debris into the ocean and drifted ashore, raising questions about the much-touted green credentials of wind energy and resulting in the shutdown of the whole installation while the incident's being investigated. Then there was the issue of the negative electricity prices. We haven't really talked about this one yet. No, we haven't. I know, offline we've discussed this, this potential, but this one's really interesting for the listeners to understand that this is even possible Negative energy prices caused by the surge in wind and solar capacity.
Speaker 1:Europe has been on a building spree in wind and solar energy, which has had one unforeseen impact on prices. During peak output hours, when wind and or solar generation is abundant, it increasingly often exceeds demand, plunging wholesale market price prices below zero. This year has seen a record amount of hours with negative prices, especially meaning that generators have to pay grid operators to take their electricity. That's interesting, that is so. It goes on to talk about you know, how do these producers of solar and wind stay profitable? It talks about market volatility. It talks about market volatility. Um, to me again, it just underscores that there's not one solution to this. It's just there's an abundance of solutions. All the solutions have their their place, I think, in the, the, the ecosystem of energy production and distribution, and I think it's up to private-public partnership kind of collective mastermind to how to optimize what we're doing about all of this. You just don't go spend billions of dollars putting petawatts of solar up without fully understanding the possibility.
Speaker 2:You mean the problem that we have right now, which is it doesn't have a connection point, for example? Yes, that's why I was wondering if they talk about that. That's what you're about. It builds it, great, fantastic. But if you can't connect it and there are challenges with connecting it, or it's maybe cost, even though I don't know how it would be cost-effective if you dump all this money in and you're not making any money. But okay, long-term, I guess they're hoping that this is going to start producing, they'll start getting paid for this. But we know and we've said this before there's I think it's a little bit over two petawatts that are sitting unconnected on our grid right now in america yeah, um 90 of it from renewable sources.
Speaker 2:That, yeah, that it doesn't have a home right now, yeah yeah, which underscores the negative energy prices, and so, what same time, why we need all of this infrastructure. Uh, yeah, that's it. That's you know that it's just fascinating the economics of this and the, the two sides, anyway, that's, I don't know enough about the economics. I was going to say something like you think, you know, there you've got one one side, you've got all this demand to build out this infrastructure. On the other side, they can't actually, they can't actually collect from some of these things because they are in the negative power prices. Yeah, so yeah, it's this, it's this weird problem. I'm sure somebody, not me can explain, maybe that how that all works.
Speaker 1:But well, it's a liminal situation. It's it it because we're in between, it's a temporary circumstance, right, and and the transition is what's changing everything, and it's almost changing on a daily basis. You look at europe and you look at what's changing everything, and it's almost changing on a daily basis. Yeah, you look at europe and you look at what they're referencing and you look at wind and solar and negative prices because they're producing. Well, that's today or a week ago, but but then look at the other headline, when black sun puts, you know, the largest data center in the uk up.
Speaker 2:That changes everything overnight changes everything because now, all of a sudden, you have, you have a, you have a, you have a group that can actually pay for it, take it and need it yeah, and pay, and we'll pay consistently and say well, you're going to switch into the.
Speaker 1:You're going to, you're going to switch out of the negative. You know pricing conversation quick yeah, that's a good point and it's going to go back to oh man, we got to produce more, we got to have more production, we don't have enough. You know, what I'm saying is so, as again, as as ai transitions with us, yeah and the big consumers come online.
Speaker 2:Yes, these big, these big, all the data centers and everything else. As soon as they're there, then that's when that that that pencils it's tough to kind of forecast.
Speaker 1:As land developers we always want to try and forecast out 10 years. It's a lot easier in my mind to look at feasibility studies and project saturation, like if we're talking about where to you know, build the next residential and commercial assets that you know you can. You can look at census data and you can look at job growth and you can look at all these patterns and trends and you can predict 10 years out where we should be developing. It's a much different landscape to try and project how much power consumption we might need. We have come from in just months internally, from talking about needing to produce 300 megawatt capacity to no golly, it's got to be 500 minimum. Now we're saying it's got to be two gigawatts if we're really going to go, and so then when we think we're thinking too big, yeah.
Speaker 2:Somebody says, oh no, we're doing double that.
Speaker 1:Someone else is doing five gigawatts. It's like, and you know, we know people, we're doing double that. Someone else is doing five gigawatts. It's like and you know, we know people. We've mentioned folks here in Utah with plans of developing tens of millions of square feet of data center space and again challenging our commitments to do million square foot data centers Like maybe we're not thinking big enough Right and say maybe I, you're right, that's what's come up.
Speaker 2:I'm in time and time again. We see this, it's so quick, I mean it. It's just the, it, the, the speed at which this is happening is stunning and I mean and again, this is almost type problem, yeah, because you know, I, it was the, again I, I it's the I forget what law it is where the you're doubling in technology and it's it's speeding up and it's exponential growth. We've seen in like storage capacity and it goes, goes and then it finally just goes like this and I mean we're getting that in a high right now where it's just starting to, it's just hurting the hockey stick and it's moving so fast.
Speaker 2:Um, I was telling somebody this week, you know, when you used to develop like a SaaS product, you know you do your iteration, your designs, you'd raise money, you do an MVP, you probably had 18 months to two years right To do all the things, get it to market. You know that was kind of a standard of like you could expect that. You would expect that you wouldn't really have a lot of necessarily competition in the space starting up. Really, you know, you know right then and there, especially if you were in something like hey, we've, we're solving something that really no one saw. You could expect some competitors, but you felt like that was a, that was kind of the. That was the kind of time frame you're working in.
Speaker 2:Well, that's completely changed. Yeah, it's changed within this last year, yeah, where it's like we're seeing the alley. Well, okay, if you haven't solved something, there's a group out there that's gonna solve it in a month or two. Yeah, yeah, and it's not just oh, we're gonna I, we're gonna ideate about this one. No, no, they're just going and they're just doing and they're getting it done. And that's how fast this stuff is changing. Yeah, I mean, that's what I'm saying Like, oh, you, you want to bring a solution into the AI space. You better get on it, like yesterday. Yeah, because someone's going to come up and it's not going to be 18 months, it's going to be, if you're going to be lucky to maybe have six months before another group is going to catch up, and when they do, it's different.
Speaker 1:Yeah, yeah Well, it's funny. The final takeaway from this article at oilpricecom underscores nicely what we're saying. So the writer says here in addition to rising transition costs, ending subsidy money and a growing discontent from consumers who were promised cheaper energy and instead got doubling bills, there's the issue of growing energy demand. The growing demand comes mostly from the big tech industry, which is on a quest to make the most of artificial intelligence. That quest needs electricity a lot of it. Big tech has had to admit that this electricity will not come from wind and solar, because they need it around the clock. So now analysts are expecting a surge in gas demand, while nuclear returns to the low emission energy debate as a reliable source of power. It seems that no matter what amount of words the IEA spends on convincing its audience that the transition is right around the corner, as long as we double down on pushing EVs, heat pumps and more solar, ultimately it's the market that has the last word, and for now that word is a no.
Speaker 1:Well written Well written. Arena, Thank you for your article. That is a really good article.
Speaker 2:Really, really, really good article and touches on everything we're talking about it's on point, it's on point. It is on point and yeah, got to everything. I don't know how are we doing on time. We're there. We're there, folks. We'll talk about more later. Thanks for joining guys. Yeah, thanks, Thanks, everyone.
