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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
Bryan Black -Energy Markets Specialist/ Deep Fission
Welcome back to the show, guys. We're so excited to be in the studio today. We got a special guest to share with you and can't wait to introduce this guy, Dave. How are you this morning?
Speaker 2:Doing great. I've been excited for this interview for well a few weeks, since we started talking to him about coming on the show.
Speaker 1:Yeah. So, guys, today Brian Black has been gracious enough to join us in the studio for an interview. He's a busy guy. He's got an incredible background in energy and infrastructure and spanning from kind of municipal sector and commodities and we'll get into it but even dealing in the startup space and nuclear. So we've got a lot of things to talk about with Brian. And, as you guys out there know, we don't typically give a curated biography of a guest here. What we're going to do is lead the questioning with Brian. Welcome to the show.
Speaker 3:Thanks Wayne and thanks Dave. Excited to be here to speak today, yeah.
Speaker 1:So, as I was just explaining, if we could just start this off for the listeners by you providing kind of what you'd like to brag about, tell us about Brian Black. What about your background? Tell us some of the cool things you've done. Let's touch on UAMP, let's talk about Tenaska and then let's get into some of the things you're into now.
Speaker 3:Yeah, thanks, wayne, certainly happy to give a little bit of background myself. First and foremost, I am a resident of Utah. I grew up in Heber City, a small town. At the time when I lived there gosh, 6,000 people and now it's turned into a destination where I think it's pretty unaffordable to live there now. But when I lived there it was kind of a kind of a hick town, but beautiful and.
Speaker 3:But yeah, resident here in Utah. I'm a father of five, married to a wonderful woman who supports all the crazy things that I do, so just wanted to start there. But but yeah, I actually started really with electricity as an electrician during college. So I went to two schools here in Utah and during that time to kind of put myself through school, I was introduced to an electrical contracting company and started out as an electrician, so wiring homes, wiring commercial buildings, industrial facilities, working with municipalities on hooking up homes and these buildings to their distribution systems. So that was kind of my first foray really into the electricity space. I honestly actually thought I was going to get into the oil and gas sector in the legal space. That was actually my goal. So I moved to DC after graduating from BYU here in Utah and was going to. My goal was to go to law school and get into oil and gas but actually met some interesting folks out in the DC area. It changed my mind, moving from oil and gas and legal into the power utility and also commercial side of the business. From there I decided to then go back and do a master's program kind of focused on all things energy, ended up going to Tulane University in New Orleans, spent a year there doing a master's and then after that master's really kind of kicked off my commercial career in the utility power market space.
Speaker 3:First job was at the investor-owned utility Black Hills Power. Black Hills Power is kind of a smaller utility but they're actually really interesting. They own three investor-owned utilities in the West, one in Colorado, one in Wyoming and one in South Dakota. But they also have a very large gas trading book in the Midwest as well. From Black Hills I went to Tenaska Power Services. So from Black Hills I went to Tenasca Power Services. Tenasca Power Services is also kind of a smaller, less well-known but also large group. I think. As of today Tenasca Power Services operates under energy management agreements over 100,000 megawatts across the US and all the markets.
Speaker 3:Very good group of people, very smart, had the opportunity to trade on their real-time desk and do some term trading in the Western Interconnect, was planning on staying at Tenasca Actually most of my career. I really liked it. It was a private company, small group of people, a lot of room for opportunities. But my home state came calling and an opportunity at UAMS. A friend of mine who had worked at Cargill in Minneapolis and then moved back to Salt Lake was working for UAMPS and him and I went to a lunch when I was in Salt Lake for kind of a Christmas visit when we were living in Dallas and he said hey, we're going to be opening up a position for this director job. I think you'd be a good fit. Come back to Salt Lake, enjoy your family, let's do it. So six months later found myself back in Salt Lake as the director of market operations at UAMS.
Speaker 3:A little bit of background on UAMS. Uams is a joint action agency, essentially the commercial or market representation for smaller municipal utilities. So at the time I think UAMS was representing 54 municipal electric utilities across seven Western states and UAMS was kind of their commercial arm to the rest of the broader market in trading and power plant operations. So my role there was really exciting. I got to do everything from real-time assisting the real-time desk to doing term trading, to doing structured long-term transactions on the power side. Also, on the transmission side, we worked on natural gas hedging deals with some of our partners and municipalities and also got really involved in the regulatory front on the muni side. So working with state agencies, working with the municipalities, mayors, city councils etc. And et cetera. And then COVID hit. And so I had been there for about three and a half years.
Speaker 3:Covid hit and my boss, who was the chief operations officer for UM's 30-year veteran, very well-known person in the Western Interconnect, decided to retire. Covid was not his cup of tea. He liked the in-person, he liked the traveling and after about six months to a year of COVID said I think I'm done with this, it's time to retire. And so I was able to take his job and so at a very young age and very early in my career was the COO at a small to medium-sized utility, which is something that I didn't expect at that time. But I seized the opportunity and ultimately the job as director really morphed into more of a management. I took on some more transmission responsibilities, so handling all things interconnection, transmission agreements with our regulated utilities that we were working with but ultimately still kind of kept on my Rolodex and working with other people that I'd worked with as director.
Speaker 3:You know, and funny enough as life treats you, exciting things happen when you've got momentum. And so you know, about a year into that job I had the opportunity to raise some capital to my really good friends and start a development company looking at similar to what Invictus is doing, but we were kind of doing this, maybe on a smaller scale and more decentralized, but taking this concept of teaming up data centers with power generation and specifically doing that at landfills. There's a big landfill gas to energy market here in the US and even bigger globally, and we felt like there was an opportunity to build these power plants at the landfills and then co-locate data centers with them. It was actually a pretty successful business. We were able to raise some good money. We developed two projects that were very I would call them first of kind in the world. We filed three patents with those that were kind of on the basis of operating an off-grid or behind the meter landfill gas energy project in conjunction with the data center load.
Speaker 3:So very successful experience there and then again, funny enough, about three and a half years into that, had a nuclear SMR small modular reactor company approach me and was able to kind of come on with them as the contractor consultant at first and now doing a little bit more full-time work with them. So I'm still doing kind of the landfill stuff on the site. It's a little bit more on cruise control it's cyclical, but doing a little bit more with the deep fission, which is a small modular reactor reactor putting pressurized water reactors a mile underground, kind of in a decentralized sense. So, gosh, that's a huge history.
Speaker 3:I'm sorry that probably took 10 minutes longer than what you're expecting, but you know, really I've always looked for opportunities. I see life as a journey to learn things and when you find something you love I love energy, I love the utility space, I love the people who work in the space. When an opportunity comes calling I always feel like I should seize that and obviously had a chance to work with Wayne and Dave on the Invictus team and talk to them about what they're doing. So yeah, that's it. I obviously could get into more details, but I'll stop there.
Speaker 2:Thank you, Brian. That's fantastic. As we said, you're busy. Yes.
Speaker 1:Well, you know, and before we really get into the line of questioning, as it were. Brian, you know, I just have to say for the listeners, we, dave and I, have gotten a chance to know you and consider you a friend, and you know when we first got introduced, you know the introduction was from a couple of advisors saying, hey, this Brian black guy is maybe the smartest guy in power that we've ever met. Like you should talk to him, and so I did. I reached out that day, and you know we went and had lunch, and I was. I was absolutely impressed.
Speaker 1:You know you're very articulate, you're very humble. You've been, you've You've accompanied our team in meetings at Capitol Hill, in the Senate rooms, and you're not driven by ego. We know, most of the time you're one of the smartest guys in the room, but you're not pounding on your chest and trying to tell everyone and make that known. You're very, very close to the vest. You only kind of let out that that genius when, when it's required, and then people are like, oh my gosh, this guy knows what he's talking about.
Speaker 1:One of my favorite things about you, though, is that you are absolutely a hybrid Like. You are an anomaly, because most of the time, you've got like you know, you talk about all the experience at UAMS and and and co-ops and utilities. They're kind of a different breed. They're all good, but it's a totally different breed of people. When you talk about the mavericking entrepreneur and you're both You've got this strong driving ambition in the entrepreneurial space and we've got to experience that on our own project here at Valley Forge and you contributing to that. And just so everyone out there knows, we've been so determined to raise the next capitalization round and bring Brian into a more integrative advisory membership into the team because he is so busy. He's got all this stuff going on and we recognize his value again. Thank you for being on the show today, brian dave.
Speaker 2:I've hogged it so far, so I'm going to let you take the first big question well, I mean, yeah, brian has a lot of suitors and we know that, and so, and we want to be, you know, we want to be one of them, just because we, we know the skill and the breadth. So I'll ask you something kind of that. It feels like and I'd love for you to kind of just give your take on this, given all of your experience in the past. It feels like we're at a kind of almost a renaissance time in energy or a major inflection point going on, and maybe this has started a while ago, but I think people are becoming more aware of it now because of AI and data centers are driving demand in ways that we haven't seen before. What's your take on all of that? I mean, you, you, you've seen it kind of how it was and how it is now. Give me, give us an overview.
Speaker 3:Yeah, I mean that's a that's a great question and certainly opened up a can of worms for me to talk about in a good way. I mean, when you think about the power markets as we kind of understand them today, in 2025, they're relatively new, right. I mean, for when energy delivery started in the olden days, I mean it was on a decentralized basis for city centers diesel fuel oil you know city centers, you know diesel fuel oil and so it was. It started on this decentralized basis and then grew into these. You know, eventually what we saw is these investor owned utilities or large public power utilities that kind of bought up these smaller groups or power plants and created these big service territories and then they started to transact with each other and then it kind of morphed into the decentralized. You know we've got FERC now, these FERC deregulated markets of PJM, ercot. I mean that's relatively new in how we think about that and so really there's only been kind of a few cycles that we can think of, and so we're kind of in I would call maybe a third cycle of that, the first one being kind of the California energy crisis, which is kind of the beginning of the decentralization of power markets and independent power producers and everybody getting excited about that. The second is kind of when we had the recession, where you saw a tank in load growth and then, coming out of the recession, you saw a lot of energy efficiency take place. So we we saw a lot of cash trading and kind of the banks getting involved in energy.
Speaker 3:And actually we're probably in the fourth, because the third one is really an oil and gas specific one, and that happened with kind of high oil prices and then a crash really with fracking. And really the cycle that I've probably participated in the most is really this, the fracking cycle, you know 2013, 2014,. When I was trading during those years, I mean the markets were terrible. The spreads were incredibly thin. There wasn't a lot of activity. The only people developing power plants were renewable developers. Because of the ITCs and whatnot. You weren't seeing new thermal generation. A lot of the legacy coal gas power plants were staying online because it was all they could do to keep things going in a kind of a low price environment. And so, yeah, I think we're moving to this fourth cycle in this new world and that is a cycle of insane load growth with data center development, onshore manufacturing, new industrials, and then also just a shifting in the US markets of people moving from different regions to other regions and how that changes the dynamics of power markets and where and what you build. So yeah, it's a huge renaissance.
Speaker 3:And then you tack on this nuclear side of things, which is really exciting. You know, nuclear was always done under the premise of large investor utilities or public utilities, building these and then putting them into their rate base. But now we're moving into this world where individual private capital wants to take on the risk of that and they're kind of taking a whether it's the data center groups or others they're taking on a more holistic role of owning and operating power generation. And so you're seeing the shift a little bit away from utilities where they're becoming a little bit more of a wires company and independent power producers or interesting groups like yourself are creating kind of pseudo-municipality utilities with onshore manufacturing, and so it's a total change in the dynamics.
Speaker 3:And on top of that, the legacy power plants, the cheaper energy that's been around for the last decade, has really kind of hit its useful life. And so not only do we have this parabolic growth in in load growth, but we're also finally at the end of the useful life for some of these big legacy assets. And guess what? They're going to get retired or they're going to be too expensive to run. And so we're going to be shifting from a kind of a low price environment into a higher price environment, probably for the next five to 10 years. And it's vital that if you want to be part of that story for this next cycle, you've got to get in as soon as possible. And so you're totally right, dave, we are in a new call it a renaissance another cycle in the power markets, but lots going on, lots going on Terrific answer, thank you.
Speaker 1:It's been fun for us being not only just podcast hosts but also having a project of our own that we're talking about. We're actively developing, raising capital, doing the things, building a team, and to watch the legislative adjustments and enhancements kind of pivot along the path to accommodate this renaissance. This renaissance We've talked about this a lot on the show how the traditional power markets have expanded and they've grown and they've met that demand that loosely correlates to population growth and that's been fine and that model's been, it's been workable, right. And then you talked about the. You know the parabolic growth the AI ushers in. You know, really in 2024 and the hockey stick of power demand occurred and you know our listeners are probably tired of hearing it because we're talking about it on almost every episode of how the traditional means of doing it just are not adequate at this point. And I think if anyone's reading the headlines they understand that.
Speaker 1:Yeah, and dovetailing into that, as we've been raising capital, we've had these conversations with equity folks and many have asked they've made this thing, this statement to us or the question to us like well, have you ever built a power plant before? Have you ever developed energy before? And it's a funny, we kind of laugh and we're like no, but do you think OpenAI has done this before? Do you think Google has ever done something like this before? Meta buying a nuclear power plant? I mean, nothing getting done today is what's been done before, and that's a big part of this opportunity. You see, that opportunity with Deep Vision and with us at Invictus, and it's stepping into the fray and having a willingness and that's where that mavericking entrepreneurial spirit comes in really strongly is the willingness to step into the void and create something that's never been done before. Right, and so that's exciting. In the broader infrastructure space, we're talking about generation a lot here. What opportunities do you see for businesses to drive growth, particularly in areas like manufacturing, foreign companies, on-shoring and all of that we're reading about?
Speaker 3:Yeah, I mean, obviously there's been a big push on generation. I would say, if you think of the industry in three different buckets, there's kind of the generation side of things, which we think the large power plants we see off the side of the road, the second being wholesale transmission, which is the large lines that we see, and then really there's a distribution aspect. We don't really talk a lot about the distribution. There's a whole kind of ecosystem activity in the distribution system. Right now there's a lot of startups trying to figure out ways. Obviously, energy efficiency has been around for a long time, but even AI and how we can do better maintenance on the distribution side. But I kind of live, I would say, more in the wholesale transmission, wholesale generation side. So, focusing on that, yeah, there's been a ton of focus on the generation, but really transmission always gets left out because, one, it's just not exciting and two, it takes forever. And I mean I had known people when I was at UAMS who were working on the TransWest project, a big Western interconnection line that was going to be built, you know, and it was like 10 to 15 years. Could you imagine working on one project for 10 or 15 years of your career and just having the patience and fortitude to work through that and finally seeing it. You know get built.
Speaker 3:Obviously it was a little sad to see the Grain Belt Express get canceled because of kind of the renewable side of that. But you know that's just reality. Sometimes these projects don't go through and you have to remember there's it's not a financial thing, it's also regulatory and it's also the sentiment of the kind of the government and the locals that you're working with. But you know really the onshoring of manufacturing and new industrials here in the US. It's kind of an all-the-above approach.
Speaker 3:I think the generation side will get sorted out because it's easy for folks to get into that, it's easy to raise capital for those, especially if you're established. But what will really make the bigger difference is kind of the transmission aspect is if you can deliver electrons, if you can build a system that can support larger load growth. And that's easier said than done in other parts of the country In the West it's more difficult because we're more spread out, but there's a lot of load growth going on in the Western US Phoenix area, salt Lake, idaho we're just seeing a ton of load growth. So I think transmission is playing a big role in the growth of our, of our states here in the West and even internationally.
Speaker 2:You, you touched on, I mean you touched on nuclear. You obviously you're with with deep vision. Talk I mean we talk a lot about nuclear for it's, you know, it's, it's viability for the future and all kinds of things, and that's that's something we should be looking at. Obviously, there are headlines all over the place on SMRs and announcements and the government trying to remove some of the regulatory obstacles. Tell us, tell our listeners, about nuclear. Where is everything right now in regards to nuclear?
Speaker 3:as far as you see it, yeah, as I mentioned earlier, it was always done under this framework of large utilities and we're shifting into a world where that's not the case anymore and also those were done under large facilities, very centralized. Now we're moving into the SMR, microreactor space. It's kind of a race, honestly, and the reason is is because there's, you know, there's only the market's only so big and at the end of the day, you can only sell so many different types of cereal on the shelves and you know, eventually you're going to have to cut back on which ones people are actually buying. Um, and so you've got to be one of those boxes or one of those options, and the way you've got to do that is you've got to do it in a way that's cost effective. That's always been the Achilles heel of nuclear is it's slow to market and it's incredibly expensive. So you've got to solve those two things first, and I think the newer designs that's their priority. How can we solve speed to market and how can we make it affordable?
Speaker 3:Now, the beauty of this renaissance that we're going through right now is that we are shifting from a low price environment to a higher price environment, and the nice thing about that it's not great for maybe consumers which we can talk about maybe retail rates and consumers later.
Speaker 3:But it drives innovation during that period of time with high prices and so it allows for newer technologies, like maybe advanced geothermal, different battery storage, other types of technologies, to really kind of get their footing in the marketplace before it shifts and kind of crashes to another low-priced environment, because then that technology can kind of mature and integrate itself into the marketplace.
Speaker 3:And so if you get too far along that curve you could really get hosed in your business or your technology. So right now we're in a good spot. So if you're building a new technology, specifically SMRs, it's a great time to be developing that, because the market can handle that higher price technology and then kind of slowly work its way out of it. And so SMRs have two things going for them that high price environment, but also this need for new energy and new capacity. In the US and it's happening I think there's over 95 companies that are developing new technologies. There's probably going to be a handful that will be successful in developing one, maybe two projects and then maybe even fewer of those companies will have staying power in the marketplace.
Speaker 1:That's an awesome answer, brian. Thank you for giving us and our listeners some insight into that. You know we've really keyed in on that with Valley Forge and keyed into the combination of pricing and the pricing changes. And you know we see SB 132 this year. That kind of is one of those first kind of cannonballs over the bow that marks, you know, a move toward a soft deregulation and maybe a spectrum of pricing right, because the traditional utilities, as everyone knows, have that fixed rate and if they've got to build new transmission, a new generation, the rate payers, they all bear that. And so the new model, the new model coming here. It's exciting because, to your point, building nuclear is four, five, six times more expensive than building gas or building coal or building some of these other modalities, and so historically it makes sense why the economics maybe have not been there for mainstream adoption of that. But with AI, go ahead.
Speaker 3:Well, and I was going to add to that you're bringing up such a critical point that's so important. If you think of utilities as a car dealership, back in the day they were able to sell Hondas and maybe a Mercedes and different types of products. When we kind of moved into this renewable development with solar and wind, we kind of became focused on operating legacy assets and then wind and solar, and so really all they did over time was say, hey, all we sell is actually Honda Civics, and they became really good at that. And then all of a sudden the data center show up and they say, hey, we want you to build us or sell us a Ferrari. And they're like, uh, do you understand that?
Speaker 1:we only do civics, we only do civics. Yeah, great analogy.
Speaker 3:I'm really sympathetic. I'm really sympathetic with utilities, because they are caught flat footed. They've lost a ton of their sympathetic with utilities because they are caught flat footed.
Speaker 3:They've lost a ton of their talent to either the data center or other groups, and a lot of their brain drains happen through retirements and you don't see a lot of people coming into the utility space, so they're caught with a lack of understanding. They've been doing the same thing over and over again for the last 10 years and load growth has been pretty flat, maybe one to 2%. So all of a sudden, these data centers over the last two or three years, or anybody else, are coming to them and say, hey, we want this. And then they go and fight them in the PCs and wherever else and it's like, hey, well, hold on, hold on Everybody, take a step back, let's work together. Let's help the utility get back on their feet so they can become more of a diversified partner instead of getting mad at them because the market told them to be a certain thing over the last 10 years. That's right.
Speaker 1:But we're covering these big markets like the PJM, that are forcing. They have no choice but to bring 30% rate hike, 50% rate hike, percent rate hike, 50 percent rate hike. We're seeing these, the just the spike of rates, and it's causing these communities to have a really foul taste in their mouth when it comes to the data centers. They they see the correlation like my gosh. These hyper loads are making all of our rates go up and so so to see the the energy shift.
Speaker 1:Part of the good news that we see is that the new load is like 5x, 6x larger than it has been historically and because of those economies of scale, you've got more margin. You've got more flexibility in that scale that can provide a more subsidized pricing regime. And then uncoupling the residential rate payer from the hyperload is a huge deal and now we can leverage that. The reason there's a 5x demand. We can leverage that into subsidizing a rate that actually makes more sense. It's actually better for our communities, and that's what we're working on with Valley Forge is to get those residential rates even lower than they currently are, and that's simply flexibility that the utilities don't have within the bylaws, and so it's a total reset on a legislative level, on a pricing level, on a scale the scale is unprecedented and they all kind of work together. So that's super exciting for us to see that all work together.
Speaker 3:Yeah, absolutely I agree. I think there's a. I think in the next five to 10 years we're going to see a change in how power markets work and how rate cases work and kind of how those get adjusted. Because, yeah, again the utility model of old, you know, building big power plants and then putting that across your rate base, building transmission, doing the same thing it's changing. And I think the regulators are seeing that, hey, we need to find a way or a mechanism to allow large loads to be kind of offshoots to the utility. Yes, they can work together, but they have to do it in a way that doesn't affect existing rate payers but also allows for growth in the states. And so, yeah, valley Forge's opportunity and what they're doing. Does that exactly you?
Speaker 2:mentioned transmission a few minutes ago. Talk to us from your vantage point, because you've had a lot of dealing with the grid. Is it fragile? Is it not fragile Parts of the country? Tell us, you know, what's your experience with the grid? What do we need to do? What's going on In addition to generation? There's a grid thing that we talk about a lot, but I'd love to hear it from your vantage point.
Speaker 3:Yeah, I'll do my best. I certainly I'll probably get criticized from some experts in this space, but I do have a general idea of what I think is the case going on in the transmission system, like I would say. I would say, generally speaking, the existing high voltage lines that we have, and I'm thinking anything that's, you know, 69 kV or above, you know those are well maintained. I think that's a high priority and that's deliverability from these large centralized power plants to substations that are located in city centers and those lines, I think, or even corridors through large areas, those are generally well taken care of. Now, obviously, we've had issues with fires. That's more of a wildlife management issue, not necessarily some of the line issues that we're seeing, it's a little bit of both. But really the distribution systems that we think about, I just think that's where it really gets overlooked. Obviously there's work to be done on the high voltage lines and the wholesale transmission grid. But gosh, if you look at your distribution systems, obviously newer neighborhoods, newer developments, everything's undergrounded, everything's new grounded, everything's new. But you look at other city areas, if you go to a Chicago or think of a New York, big cities that have these intricate distribution systems underneath those cities and around them. Think of the dollars and the components and everything that goes into that keeping that up and going. If you want to say, oh, a data center, we've got to build a new line out here and put a substation, that's pretty straightforward. It's capital, it's getting permits, whatnot, but it's the kind of the crappier work of keeping up a distribution system. Those are the things that I would say.
Speaker 3:If I were to say things that keep me up at night about our electrical system. It's probably like hey, is my power going to go out to my house because a pole broke? Um, I actually had an experience with that. I was living in new Orleans and that's a enter G service territory. They're a large investor in utility, publicly traded. Um, you know, in the middle of the night, new Orleans, we have major storms down there and a pole just broken half right in front of our house and the utility the next day comes. So we lost power the whole night. Uh, the next morning the utilities they are working. They cut the other pole in half and suspend it from the new pole that they just put in the ground and it sat that way for the whole time I was there. They never came and actually like redid all the rigging from the other pole.
Speaker 3:They basically just kept the part that was connected to the wires that was cut and suspended, suspended to this new pole that they put up, and I thought they probably just do not have the time to actually like make that look nice or in a way that's going to have longevity, and so it's those kinds of things you think about that happen across the country that you know I won't even get started on internationally, but across the country that needs to be kind of worked on.
Speaker 2:So that's interesting. Wow, you know that's funny, Brian. That's quite the band-aid.
Speaker 3:It was, and it was there for nine months. Oh my gosh, it was there the whole time we lived there.
Speaker 1:Well, you joke about other countries, but we were in Mexico, in Playa del Carmen, I think about a year and a half ago Playa del Carmen, a little, I think about a year and a half ago and we went off, you know, out into the kind of the, you know, the more rural areas, some of these towns out there in Mexico, and you would see these like a pole in the middle of the city with a big transformer on it and just a giant cobweb of wire going in all directions and you just wonder how is that not on fire right now? How is that actually conducting where it's supposed to go? And Dave and I have been pretty, it depends on the day.
Speaker 1:Some days we're really critical of the patchwork of the grid and other days we're like, well, if we didn't have this grid? It's been built over a hundred years and and we have come to be very comfortable being able to count on the lights coming on when you flip the switch Right. So you can't take all of the credit away. I kind of lean into this whole. Give credit where credits do that that. Look, the guys building this grid 70 years ago were doing the best they possibly could with the light and knowledge and the technology available. They could have never imagined in a million years where we would be 70 years from now and what these data centers and what the AI would do to this. You know what I'm saying.
Speaker 1:And so it's just a remarkable thing. Dave and I compare this energy transition as a once in a lifetime thing. That we kind of, dave and I, compare this energy transition as a once in a lifetime thing. That's bigger than the advent of the internet, like we feel, like we genuinely feel like the advent of AI has greater impact than the internet because of the demands of completely overhauling grids, transmission and distribution, completely overhauling the legislative landscape and regulation around energy and infrastructure and how things have always been done. And for the entrepreneurs who are okay stepping into that, it's never been done before. That's a great environment For the old school folks that have been depending on something for 100 years and that's always worked.
Speaker 1:That's a more problematic challenge. There's been a lot of talk and some action in the energy space about streamlining the permitting and the regulatory landscape and maybe, if you could give our listeners some opinion about that, there's talk and there's headlines and then what's actually getting done to streamline stuff? We could talk about power generation holistically or nuclear your choice, maybe both. Can you chime in on? What are your thoughts about talk versus action in the regulatory space?
Speaker 3:Yeah, absolutely All good points made there previously too. The thing about the grid right now is that we're kind of living on what was done. And you said you know people built this 70 years ago. That's really true. And the reason why I think rates actually are low and people can argue oh, electricity is expensive. No, it's incredibly cheap. We built something and we're still kind of riding the benefit of that, and we are moving into this era where rates may get more expensive as we build new things.
Speaker 3:And that goes into your permitting question is we've got a few questions to answer. Well, we can do it the old way, which is it's easy to permit a large power plant out in the middle of nowhere, so we can get air permitting because there's no airshed. We can get the land relatively cheap. There's resources out there. It's a big ugly ice source and nobody has to see it. But then we've got to transmit that to the load centers. Okay. Well, we've got to get rights of way. We've got to get all the permits to move the transmission. It's a little bit easier because people don't care about transmission lines as maybe as a big power plant. So we're happy to have wires instead of a big coal plant in the middle of Salt Lake City. But what's becoming more difficult is you can go out and build one of those centralized power plants. Well, guess what? Transmission and getting the permits and rights of way for that are becoming much more difficult because of rights of way, nimbyism Again, the shift in population centers across the US, and so you can say, OK, that's the old model.
Speaker 3:It's going to take us a long time, like I said, 10 to 15 years on some of these big projects, to move energy around from these big centralized projects. Or which has kind of been the topic for the last 5, 10 years is, hey, let's decentralize that. Let's put power plants in everybody's homes, let's put rooftop solar, let's do gas backup generation attached to people's houses. Energy efficiency, all these other things, tesla, battery packs let's decentralize that a little bit and help the transmission grid. The problem is that's expensive and there's only a percentage of the population that can really afford to really take on some of those decentralized projects.
Speaker 3:So I think there's kind of this meeting in the middle where populations and education is going to have to take place, where we're going to have to allow permitting closer to city centers or load centers.
Speaker 3:Maybe the power plants are going to be these big, huge, 2,000 megawatt projects, but they can be a couple hundred megawatts spread across multiple footprints. And then the transmission to get into those load centers is a little bit less. And the permitting process, and again that's kind of two things. First is the education, and I think that starts from the top down. You've got to have governors and state officials, other high-level folks in energy industry kind of talk to their communities about the change in the energy dynamics. And then, secondly, you do have to find a way to fast track permitting, because if it just takes too long, projects will die and we'll be stuck in the same environment that we are now, which is a ticking time bomb, and we've just got to get it fixed sooner than later. So I totally agree with fixing that, but I think it starts with education at a high level.
Speaker 1:Agreed, absolutely.
Speaker 2:Great answer. No, that was a great answer, do you think? Well, I want to ask one question on that. But actually I had another question that kind of popped in my mind, but it might be a bit wonky. But I'm curious because something I'm always asking and I've learned a lot about because of you, brian, and I think it would be interesting to hear, but understanding. So I heard the word marketing in energy space and I'm thinking traditional marketing and that's not it at all. About how energy right now, like what's going on right now? So I'm at home, I flip on my lights. How is say, here in Utah, how is Rocky Mountain Power buying power? I mean, what do they do? How does that work? I mean, that's what you know. Their story is probably the same story in all the other jurisdictions across the country. Like, do they grab extra power here, grab extra power there? I mean, what's actually occurring when you know you need to service a load or a state or a region?
Speaker 3:Yeah, yeah, you know, as I mentioned earlier, you know, in the times of old utilities just kind of built out as their load growth expanded or they bought other smaller utilities and then they would kind of build generation under their public utility commission's approval to meet that load growth. And so ultimately I mean utilities, investor-owned utilities will do kind of an integrated resource plan which talks about their load growth and they'll talk about the requirements to meet that load growth and they'll talk about retirements of plants and what they need to build. But every utility has a portion of their load that's maybe variable and they'll make an economic decision either to build generation that's a flexible load to meet that kind of peak demand which is usually the most expensive type of generation to build, and they'll also tack on kind of a market purchase to that large market purchases from other utilities who maybe have excess. And then what they'll do on that top frame of their you know, the energy or the generation stack is what we call it is they'll optimize and they'll say okay, well, I don't want to run this expensive generation. I have it, it's in the ground, it's still in the ground, but I'm going to go and transact with other close utilities to optimize that resource and so I can buy cheaper energy from the market. And that really took place over the last. That's taking place today.
Speaker 3:But what's happening is that those expensive resources are actually becoming vital to run on a daily basis. Before they were kind of sitting there. Then the utility said, hey, energy prices are actually getting so high we need to start running those. Well, guess what? They weren't built to run as much as they were supposed to, and now the utilities are going to other utilities and all the other utilities have the same problem, like, hey, we're running our expensive generation, we don't have anything else to share or sell to you. And so all the utilities are running to the same issue. It's like we need to build more power, but that's becoming difficult.
Speaker 3:And so Rocky Mountain Power will actually work with their commercial entity, pacificor, in procuring kind of that excess or optimization energy for their service area excess or optimization energy for their service area. So they'll actually work with their sister company, pacific Power in Oregon and they'll sometimes shift electrons between the two utility footprints to optimize resources, time of day, et cetera, and they'll do that with utilities across the Western interconnect. And so it's a very well-established market. It's been established over the last 25, 30 years. It's becoming less about trading and more about energy management optimization, and now it's shifting into a space where they're having to actually build new generation, but it's a very complex process. That kind of gives you some idea of kind of what we're dealing with right now, though.
Speaker 2:It was a great overview, thank you. I mean I and I appreciate that because I think and I think our listeners and watchers will appreciate that and understanding what's. What's, what's actually going on, what's the reality, what's? You know, you gotta you got a group here making power, but you got, you got, other groups and they're they're all facing those same issues and they're trying to trade electrons and and balance it out. And it's just something that most people don't understand. When we flip on lights or charge our phone or whatever, that there's a whole very complex system behind that, just getting you those electrons.
Speaker 3:Yeah, and again I'm very sympathetic with utilities in that well, a little sympathetic, but also like hey, you should have planned this, this, where they all got kind of caught at the same time because they were sharing these resources and it was kind of unforeseen that all of them at the same time would be in a position where they don't have the resources. So traditionally utilities had a chance to kind of recover by building new generation because they could lean on their neighbors. Well, if your neighbors are all in the same position, everybody then gets stuck with oh crap, we've got to start building new power interconnection wide to fulfill the demand. That's going on and that's happening everywhere and it happens better in some places than others.
Speaker 1:Brian, you're bringing up a really good point and I scratched on this point just a little bit when we were talking about the benefits of this extreme increase in demand and the scale of it and doing something that's never been done before, and now talking about efficiency and we get an opportunity to kind of learn from past mistakes. What could we have done better if we had a chance to hit the reset button and build this whole grid from scratch with today's knowledge and technology? And I think there's a huge focus and we're coming up on the hour here. But I want to kind of finalize our thoughts with you on storage, our thoughts with you on storage. Okay, because storage has not been something that we've been really great at historically, but it's boomed into the forefront of something that's now critical, considered critical.
Speaker 1:We've got lithium, so Bess. We've got Flywheel you know the Fess We've got. We're very excited about Westinghouse's solid state, long duration energy storage systems and, from our perspective, integrating powerful utility scale storage at generation, but also using some of the things you talked about the Tesla power walls and certain storage elements in homes and businesses and having a fully decentralized energy storage ecosystem. Okay, that's a very exciting thing If we were redoing it all over again and you're seeing that happening now. Could you give us your thoughts on storage and how that's so critical to kind of modernizing and hardening the grid?
Speaker 3:Absolutely. I mean, the beauty about storage is that it's not an eyesore so you can have it in small quantities. I mean, we do that every day with things, that some of our smaller devices. But on a more larger distribution scale, I do think that storage plays a huge part and really it's just about shifting electrons. The bummer about storage is it's expensive because you're paying for a source that doesn't produce its own energy. You've got to consume something else.
Speaker 3:Now you could argue that that's what coal plants and gas plants do, but at the end of the day you've got to have a battery, the storage device consumed from another energy producing thing or the grid, to then shift those electrons to another time of day.
Speaker 3:And that's really the value is the grid is strained a couple hours in the afternoon in most places and in the winter it's in the morning for cold areas. So if you can shift those peaks, you can alleviate new generation having to be built, which is usually expensive, and ultimately kind of flatten out the load curves. And that's really the benefit of storage. It's coming down in cost. It's shown a lot of viability on a commercial grid scale level, I do think as people become more educated on what they can do. The problem is on the distribution level is companies and utilities have started kind of this time of day rates so that consumers can kind of say, oh, if I charge now and shift it, I can get paid or save on my utility bill. The problem is, and even for me as an energy person, I don't like to think about my electricity, I don't like to add more risk to my life and think, oh honey, I need to go shift our energy demand really quick. Let me be on the track in 30 minutes.
Speaker 3:Most people don't think like that, so the more you can automate that. And that's where it gets. Tricky is like are you coming into people's homes and you're kind of taking over their energy demand At the distribution level? I think that's going to be the tipping point is when will we allow the utilities or the smarter, more on-premise folks take over kind of that energy management of our homes? Will that ever happen? I don't know, but that's probably the key to actually making a huge difference on costs. But for storage as a general practice it's fantastic. It shifts electrons to better use, better time of day use. It helps alleviate costs. Yes, it's a little bit more expensive, but it'll get cheaper as time goes on. But I do think the big kicker with storage is how we can integrate it at the distribution level where people actually care. And right now people just aren't thinking about that. Maybe some people do, but it's a very small percentage.
Speaker 1:Yeah, thank you. Thank you. One of our specialists, mike Zerlo, nuclear engineer, former Westinghouse guy, really really smart guy. He's introduced us to this Westinghouse solid state long duration and he gave me an analogy that really stuck, because you touched on a point there, brian. Like storage doesn't generate something, so to pay for all of that expensive storage can be problematic. But Mike gave me this analogy. Is it like Wayne? It's like like something on a gigawatt or a utility scale, like what Westinghouse is doing here is like putting a blower on a motor by increasing that capacity factor it models. And so you know, you, you have deep experience with, you know capacity factors on a gas plant. We all know a traditional gas plant has a roughly 65% capacity factor. So if the plant produces nameplate capacity of a gigawatt, it's going to only distribute 65% of that at any given time, right? Am I getting that right, that understanding of capacity versus capacity factor?
Speaker 3:Yeah, there's also availability, and so typically I mean in high price environments during the day, a gas plant wants to put out 100% of its capacity available. So if it's a 1,000 megawatt plant and 900 megawatts are available to generate, if it's a high price hour or day it'll put out 900 megawatts. But where you get a lower capacity factor is that over the course of the year there are times where it's just not financially viable to operate that plant and so they'll shut down for maintenance or they'll just be sitting there. And that's really the problem with integrating the renewables with some of the legacy gas and some of the new gas is the capacity factors have been getting less and less and less for some of these gas plants to just say, hey, we need you to be there, we need you to be spinning and ready to go in the event that there's a spike in demand or something happens on a curtailment, and so it's just a change of the system of old right, like there was always kind of this easy dispatch model that you could put together and it was very kind of like oh, this is a capacity factor of gas, this is the capacity factor of coal and nuke and solar and wind whatever.
Speaker 3:We're just shifting into a new world where, no pun intended, everybody has to be flexible to match different resource types at any given time. And it's also regional. In the Western US it's very solar driven, or at least in the Southwest, and in other parts of the country in the Midwest it's wind driven, or in Texas it's wind driven. If you've got 20,000 megawatts of wind blowing, well, guess what If at any given time there's an algorithm that says plus or minus 20% of that could drop offline or maybe increase? You have to have something that's flexible behind that, managing the change in that way. Now, you're probably not going to lose all of it at once that's very rare but you do have to have something that's flexible standing behind it. So yeah, a traditional gas plant may say, hey, we usually run at 65, 75% capacity factors, but that might be for parts of the year, and other parts of the year they're running at 20% capacity factor because they're just standing on standby. So it's very much shifting that.
Speaker 1:But that's another one. Go ahead, dave, I just want to leave this. The impact of AI changes that whole traditional dynamic of demand.
Speaker 3:Correct. If you can site your generation with loads that are much more stable and known, can site your generation with loads that are much more stable and known, you can purpose build the generation for that entity or that load. Now that could be expensive because if you think of that's like kind of a microgrid or whatever, but it's much easier to build from scratch than it is to kind of integrate systems of old. And so I think on a go forward basis where you can get these large load centers, you can build maybe purpose built generation and understand how you would operate that system to meet that load a little bit better, without integrating other legacy assets or utility assets to help, which again kind of shields the rate payers. But also I think it's just good practice with these new loads to kind of maybe purpose build for them.
Speaker 1:Interesting, Dave. I hogged that I'm going to let you have the last thought.
Speaker 2:It was more just to follow on and it's more in the details. That's where battery storage could play a critical role. Where it play a critical role because if you have a higher capacity battery storage and then, uh, it could be charging. Maybe you know when that would say wind, say our solar, it's charging and then it's offloading, you know it's it's discharging when maybe those, those rates I mean, so that can also that, that can help, I guess, even out those curves, right. I mean, that's where that could come in in an algorithmic way and actually you, you know, I guess AI, if you will, or you know, machine learning, could manage that, that load Correct. I mean is that?
Speaker 2:is that? Where is that? Where that, where storage could play a critical role? Yeah, yes, so you. So you have, so you get intermittency of renewables, which is one of the big Achilles heels, but then it helps, it helps diminish that. How Right.
Speaker 3:Yep, yeah, and you even have intermittency and frequency too, like there's changes on the grid in real time.
Speaker 3:And so, like, what you've seen in California is that battery has actually played more of an ancillary service.
Speaker 3:And so, instead of what people thought originally when they built batteries, oh, we're going to do arbitrage between solar hours and peak hours, we're going to buy solar stored in our battery and then dispatch when prices skyrocket in the afternoon but what we've actually seen is that they get paid more for an ancillary service. And ancillary services are like frequency response, demand response, ancillary products to the broader market, and essentially it's kind of a, if you were to look at it on a linear line, it's kind of just a squiggly line that follows that on a timeline. So it's always there kind of balancing the grid and kind of strengthening a little bit. And so when you think of, like AI, workloads which can be variable, or just even a general load which is variable, battery has a unique way of just following loads instantaneously and, just generally speaking, I think everything is a mixed bag. Like, I think we need all the above in a way that makes most economic sense, and I think battery plays a good role in there.
Speaker 2:But, so does gas, and so does nuclear, and so does hydro or other types of resources that work.
Speaker 1:Thank, you Brian.
Speaker 2:That's a great point to end on.
Speaker 1:Thank you, yeah, yeah, All of the above, and we're so grateful for the contributions that you've provided and continue to provide as an advisor to us at Valley Forge. You know on interconnection and transmission implications, and you know getting fuel capacity and all of the things that you're so specialized in, and you know we couldn't be getting this done without you and your expertise. So thank you for that. Thank you for joining us this afternoon. We hope you guys out there have enjoyed this interview with Brian Black and we hope you join us on the next episode.
Speaker 2:Thanks, Dave, Until next time on, of course, of course, until next time on the Frontier Line. Thanks,
