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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
PG&E’s $73B Bet, BlackRock’s $38B Utility Play, Data Centers Spiking Power Bills and Protecting the Citizenry
Welcome back to the show, friends of the Frontier Line. Hi, Dave. Hello, Wayne. Hello, everyone. Thanks for joining us. It's a bright, sunny fall day, and we've got headlines to talk about. Headlines of plenty.
SPEAKER_00:We always have more than we we ever get to. And uh, you know, it's just kind of it's kind of the uh kind of what's happened in this space. You know, we we've mentioned it before when we started this out. I think you know, you know, there are there were dozens, you know, maybe yeah, a couple hundred articles, you know, in a given week that we're you know, we're addressing energy and infrastructure, and now it's in the thousands, you know, uh literally a year and a half later. Um, and so it's just it's it's it's staggering to see how focus and attention on this space has exploded, as it should.
SPEAKER_01:Yes, absolutely. You know, uh in season one, Dave and I actually made uh a uh actually it might have been one of my predictions for the end of the year, last year in season one, when we were predicting what might happen in 2025. One of these predictions that I made was that all power generation in the US would become private. Two-thirds, two-thirds, it would shift from traditional utility companies to private operators. And I I predicted two-thirds of all power generation transmission would become privatized. And so there's a couple headlines I think we should lead with, Dave. One, you know, is a very familiar name to all the listeners, BlackRock getting involved. Uh, another one, PGE. Uh that we've reported on both of these juggernaut entities, but um, you know, so no surprise that they show up in a recurring way in the headlines. But two big ones with big numbers behind it. Dave, you want to pick one of those and roll into it?
SPEAKER_00:I'll I'll start on the PGE uh announcement because it underscores, I think, something we we know intimately well. Uh, we understand, we recognize, and this is all having to do with infrastructure, grid infrastructure. We talked about, we talked about the fragility of the grid, the need to to to build uh the grid out. Well, this the headline is, and I'll read I'll read some of this because it's uh it's it's uh a really nice article out of uh DCD uh by Zachary Skidmore. Uh PGE announces$73 billion in grid infrastructure upgrade plan to meet surging data center demand, will extend through 2030 and support 10 gigawatts of new data center load. Uh California's biggest utility uh company, uh PGE, Pacific Gas and Electric, for those of you who don't know, has revealed a new$73 billion spending program to upgrade its grid infrastructure to meet surging demand from artificial intelligence and cloud computing. The spending plan announced during an investor call will extend through 2030 and is expected to support up to 10 gigawatts of new data center load that is likely to come into operation over the next decade. The utility reported in August that its data center pipeline had grown from 8.7 gigawatts in May to 10 gigawatts only three months later. Of the 10 gigawatts, 17 data center projects with a combined capacity of 1.5 gigawatts are in the final engineering phases, with operations slated to begin between 2026 and 2030. The majority are located in San Jose, Silicon Valley, and the greater San Francisco Bay Area, as well as some in the Central Valley and Sacramento. Because of this, overall energy demand in California is projected to rise significantly over the remainder of the decade. California's grid operator, uh CAISO, at C-A-I-S-O, has forecast peak demand increasing from 46 gigawatts in 2025 to 52 gigawatts in 2030, a 15% increase without accounting for speculative AI loads. Regulators have said the state will require around 30 billion in transmission and distribution upgrades over the next two decades to meet the expected demand. In March filing uh outlining plans, PG ⁇ E stated that by 2025, 26, this year, next year, it intends to install close to 700 miles of underground power lines and finish another 500 miles of wildfire safety system improvements. Uh this and then it goes on to talk about what this is going to mean. Last month, the company signed a first of its kind, as a reminder, I don't know if we mentioned this or not, uh, implementation agreement with the city of San Jose to streamline and guarantee power delivery for data centers and other large low customers. And then the utilities also recently partnered with smart transmission firm SmartWires on a new project aiming to enhance grid road liability and support the growth of data center energy consumption in San Jose. Uh, so that's the story. Uh immediately I'm curious as to how the new legislation passed in California is going to impact this. Yeah. Yeah. Um that's where my mind goes.
SPEAKER_01:Yeah. Yeah. And first of all, for the listeners, CAISO is the California independent system operator. So that's grid related. It's a grid-related entity. We've got independent system operators all over the nation. Yeah. But but my knee-jerk to that, Dave, is exactly the road you were you were just stepping on to uh with okay. If if California has legislated all data centers located in the state of California be net zero emissions by 2030 in the same time frame, or operate 100% renewable, which is I think even not as the bar and it's even going, you're not gonna hit that. No, no, and so it does make a lot of sense that PGE is now gonna scramble and plan on spending$73 billion in the next four and a half years in order to have transmission to do what? To bring all that backup power from surrounding states in this in this fun new coalition they're trying to create. Not not building new generation in California, folks. That's not the plan.
SPEAKER_00:And I and I you know, and I would imagine PG and E probably has plans and would love to build some extra generation, but I imagine they've been they've been hamstrung by doing that. And I'm not confident. Um, I mean, I know that uh you know, PG and E wants to do this. Uh, you know, if maybe there's existing right-aways, I can't imagine new transmission is going to be easy in California in in any in in this time frame. Um that is the other part of this. If you even if they you want to build and connect to this grid so you can pull in all those renewables because you can't build at home. Uh how are you how are you gonna build new transmission in a state that has been notoriously difficult to build anything in?
SPEAKER_01:I just I think it just goes, yeah, I think it goes to show it it underscores the fact that money doesn't solve all the problems. I mean, okay, you've got nearly a hundred billion to spend, that's great. Is that gonna solve it? No guarantee of that. No guarantee that's actually gonna get spent or solved.
SPEAKER_00:Yeah, I think that's gonna uh and like like uh a couple of other things that pass, I think it's gonna be one of those artificial deadlines that comes and goes. Yeah. It was like it was neat to talk about, and uh, we're gonna demand it, but at the end of the day, reality, which we all know right now, today, dictates that there's no way that's happening. Not even not it, it's it's physically impossible for this to that for this to happen, given the circumstances. And so why don't you solve the most uh obvious problem, which is build generation at home in your state where you do have resources to build some new power? And again, bringing but again, bringing new load on right now, even if you hit go right now, bringing new load on what in five, seven years? Do you think from a I I don't even think that's possible? Maybe if you engage private operators, uh, you know, the you know, the private developers of power and said, you know, we're going to incentivize you and we're gonna we're gonna do these things. We're gonna maybe then it could happen. Uh but uh I just don't see it happening. So interesting. But nonetheless, there's the announcement, and and I guess overarchingly, what I what I kind of see is that they're recognizing like, oh, this is a problem. We like we actually have to, this is a big deal. The grid can't handle this, which is exactly what we've been saying since we came on the air doing this. The grid is fragile, the grid can't can't handle what uh what needs to what needs to happen and needs to occur occur. If we want to actually build and accommodate AI, which of course we at this show think should happen. Um, there are those who don't think that we should build out infrastructure for AI. I disagree with them, but we this is this is happening. And if we want to stay ahead in this race, we have to sub we have to support our infrastructure, we have to build out, and you know, kudos to PG and E for at least trying to make it happen.
SPEAKER_01:Uh, totally agreed, totally agreed.$73 billion is an extraordinary amount of money, and I could only imagine what you know groups like us could do with$73 billion for transmission and generation. I mean, I I'm already doing the math in my head. You could put a lot of new gigawatts on on the grid. And you know, I'm thinking about the Sentinel transmission project, and you know, talking to our engineers just this week about you know the thermal overloading even on 765, it's much, much more resilient than anything in the 345 or 500 kV categories. But you know, when you start going over four or five gigawatts of load, thermal thermal overload is a factor even on 765. You and I have kind of teased at this, you know, when are we gonna wake up and get to 1000 kV or 1100 kV like China? Okay, if there was any ever anything that's going to usher that in, this is gonna be it. I'm gonna make another prediction right now, and and nobody's talking could because there is no 1000 KV operational in the US. 765 is the highest standard we have, highest operational capacity we have. Um, but you know, we also made another interesting prediction when we started talking about this, and then that that when we made the decision that 765 KV was the best thing for Utah to pioneer for the West. What we said was I'll bet you, you know, X right now that if we lead out with 765 backbone in Utah, there will be a cascading effect, and other states will jump right right on it and they'll follow suit. And you're going to see 765 becoming the new standard in the West because of what PGE recognizes, what we've got is not adequate to handle these loads. Talk about hardening and modern modernizing the grid, that is a major solution. Getting getting cables and transmission that can actually do this.
SPEAKER_00:Absolutely. So good news. It's good news. And you know, and to the other thing you brought up to kick off the show, you know, uh just this morning. So by the time you're listening to this, it might be a little bit of old news. But BlackRock, BlackRock's GIP nears$38 billion takeover of utility group AES. The Financial Times of London is reporting. Uh, this is the Reuters story. So BlackRock owned uh uh Global Infrastructure Partners is nearing, well, I was gonna say BLK and uh Global Infrastructure Partners is nearing a$38 billion deal inclusive of debt to acquire utility group AES. The Financial Times reported yesterday, uh citing uh people briefed. Uh AES uh shares jumped more than 16% this morning, as of this morning we're doing this podcast. So we'll see what happens with this thing. Utilities are drawing investor interest as our artificial intelligence and data centers drive a surge in power demand, spurring a wave of deal making across the sector. Underscoring Wayne, what you just said, or actually not just said, but what you what you predicted a while ago. Uh talks between GIP and Virginia-based AES were at an advanced stage, although they could still fall through, according to the report. Reuters could not immediately confirm the report. Uh GIP didn't want to comment. AI AES declined to comment, obviously. Uh and then uh AES, you know, a little bit about them, which surpassed Wall Street estimates for a second quarter profit in July, has experienced significant growth in its renewables unit over the past year. This expansion has been fueled by a global push for cleaner resources power generation, coinciding with projections that U.S. power consumption will reach record levels. Shares of AAES surged uh nearly 13% in July after Bloomberg reported that the power provider was weighing strategic options, including a potential sale, following takeover interest from several major investment firms. So we'll see how this all shakes out. Uh, and then you know, maybe by the time this episode uh hits, uh we'll we'll have an answer as to as to how what what was actually what has actually occurred. So it does, but it does look like as of this morning, this is the direction it's going. Yeah, yeah. Awesome. Again, underscoring private groups are getting into this space.
SPEAKER_01:The privatization of power is inevitable in my mind.
SPEAKER_00:Yeah.
SPEAKER_01:And investor-owned utilities, or otherwise known as IOUs, that you know, that happens to be something now that it's interesting to just pause on this whole concept for a second because Pacific Corps and the its subsidiary here in Utah, Rocky Mountain Power, are an IOU. They are owned by Berkshire Hathaway. So the question is, how is Berkshire Hathaway? And I've seen you know Warren Buffett in the headlines saying, well, you know, it doesn't, I would not recommend, you know, investing in companies that are trying to solve hard problems right now. We're not doing it anymore. And you hear about Berkshire Hathaway divesting out of the energy sector. So you know, now now, you know, Warren Buffett's always been known to be kind of a uh the Oracle of Omaha. He well, the Oracle of Omaha, but he's also kind of a counterintuitive investor. He's always kind of doing, he's going against the grain of markets, right? Yes, yes, and and that's been really successful for him. But uh it really begs the question right now. And you know, there's so many levers, there's so many like like moving parts to all this. I mean, when you talk about Pacific, you know, Pacific core, you know, liability and lawsuits in the billions, tens of billions, that certainly has an impact on things. Uh there are you know acts of God like wildfires that are beyond their control as an investor-owned utility. And you know, maybe that's part of the reasoning here, but to see BlackRock stepping in with what was it,$32 billion acquisition. I mean, these are big numbers, guys. Um, I think that's just gonna continue. And uh what can I say? I think that's also good news. I think the private sector can do a better job when they decide to be aggressive about this. I mean, that's certainly the boat that we're in. We're in the same boat with them. We think we can do it better, we think we could do it faster, we think we could do it, you know, in in today's standards and engineered for the future. And that's something that the traditional utilities haven't seemed to get on board with just yet.
SPEAKER_00:Yeah, and I mean, and there is a nuance a little bit to that too, you know, where private equity uh coming in, you know, it's also, I mean, they're chasing profits over everything, right? Yeah. And so, yeah, and this is a this is a very interesting conversation. And you and I and the team, and you know, extended beyond the team, we talk about this a lot because of the implications. And that is, you know, you have behind the meter, you have you have what, you know, in servicing uh, you know, loads like a like for for up for a hyperscaler or for industrial manufacturing, uh, you know, premium pricing versus versus you know uh uh the customers or the the typical consumer, the home homeowner that's paying power rates, and you see a whole market that's shifting. And so what's in the what what we see in the headlines is that, and there are a couple of those stories out there today, too, and we can get into those in a minute, talking about how power rates or power prices around data center hubs have gone up significantly. But yeah, let's talk about that. That's well, that's profits. Those are profits for the private equity, because it's like, oh, but but there's there's lots of stuff happening with that, and there's pushback, and that it's far more complex than just than that. And and let's yeah, absolutely, let's talk about that. And so uh, you know, I that that's what's also kind of underlying this whole thing is as data centers have come online, there are very few instances where they are there's co-located power, if any. Yep, and this is all from you typically from traditional utilities. Yep.
SPEAKER_01:So that's being said that's that's that's electrons moving over existing transmission grids, right?
SPEAKER_00:And so, you know, the idea has been well, you have a client like you know, any hyperscale climate client that comes in, they have this huge load. Well, great, now we have consistent revenue if you're a utility, uh, and we're providing you this power, but you know, depending upon what you read, the line is oh, well, it's it's you know, it's not really going to affect uh prices to the typical consumer. At least that's some of the some of the a lot of the you know uh a lot of the uh I guess public relations stuff that has been going on the last couple years. Oh no, this isn't being passed through, or no, we're not gonna pass it through, or you know, we're gonna we're gonna make sure they're paying for their. But but you're looking at these sites, that's not actually what's occurring. I mean, in some cases, the power is up 267 percent. Wow, yeah. Uh, and so there is one reason for that is that it's it's driving costs, it's driving lots of things, data centers, and they are passing along to consumers. They're not giving consumers a break, which we believe they should. Um they are they are just passing along. So, you know, enter private equity, private equity is going, wow, this is a really profitable sector. People need power, they're gonna have to pay for it. Even if we make a little bit less, it's still incredibly profitable. So you see lots of different things going on in the sector, and this is this is you know, some of these headlines, you know, you've got so beyond BlackRock, you have other private investment firms, you know, are are flowing into places like New Mexico and Texas and Wisconsin and Minnesota. Yeah. Um, and it's simple. It's there's a lot of money to be made, right? Um, to and there's a lot of money to be made in this. Um, so that's kind of laying the land of what kind of all this, all this stuff, this nuance is going on. And I don't want to cut you off when I mean you kind of let you jump in here, but that's laying the groundwork of all the headlines we're seeing today. There's you you see you see big stories like this, infrastructure, private equity coming in, you see power prices going up. We see plenty of stories where communities are starting to push back and saying, nope, we're not, you know, we're not gonna have it, we don't want it. Uh you know, public service commissions doing the same thing. Thoughts? I mean, where what what are you seeing? Are you seeing the same kinds of things?
SPEAKER_01:Yeah, absolutely. I mean, my my mind goes to the ratios, right, right out of the gate, you know, and and the listeners be prudent to really, really be clear about the ratios. And, you know, there's an argument or debate here about that should the data center sector, it's its own sector now, should the data center sector be subsidizing and doing more to protect residential ratepayers? The answer in my mind is absolutely yes. Guys, think about this. If we just talk about the state of Utah for just a second, the entire state of Utah consumes around 3.8 gigawatts. Correct me if I'm wrong on the numbers, Dave, but let's call it four gigawatts annually. Okay, and you've got data centers wanting to be in Utah, one company, two companies want to consume double that, eight gigawatts, you know, and and ten gigawatts. So, you know, when when you have a consumer, a singular consumers that move the needle so dramatically, what comes with all of that? Well, we know something what what comes with that. We know it's it's tens of billions of dollars of infrastructure, power generation, and transmission and development to accommodate that. So why is it fair to be to be spending tens of billions of dollars to build that all out so that that one or two companies can make billions of dollars in their business model and and the residential rate payers, you know, working at Burger King or Walmart or whatever have to have to all of a sudden now have a 200% or 300% rate hike. That's unacceptable. It's it's it's immoral, it's grotesque, and it's unacceptable. Okay, call me an activist. I'm not. I'm a warrior, I am a warrior to protect the community. We talk about Valley Forge Sentinel One Power Complex being built in Utah for Utah, and that's the truth. And what I'm hoping to do with all of this mentality is to influence these companies, and many of them we're working with, to do the right thing. Start thinking about the problem and the solution as a moral conundrum to be solved. It's not this is not all about the bottom line, guys. Plenty of money for everyone to make, billions of dollars in margin, but let's please protect the single moms and the families and the to the double wage earners that have got you know three, four, five kids. You gotta you have to protect the citizenry at all costs. Like that's the number one thing. And so and it doesn't take much. It really doesn't take much, Dave. We've looked at, you know, what for for example, you know, Millard County. For example, the sixth county region in you in central Utah. If you take the entire six county region, they only consume about a hundred megawatts. So what what is a hundred megawatts by contrast with four or five gigawatts of consumption? It's this tiny little drop in the bucket, and with all of the margin being produced, there ought to be a way, and I know there is a way because we're creating it the way to be able to fully subsidize these folks so that they are not only not bearing those impacts of growth and expanding generation transmission as direct kind of um direct having a direct impact on their bottom line of living, but they're also benefactors of getting a lowered standardized benefit of having and of hosting all of this new generation and transmission. That's really the goal, is let's let the folks hosting it in their communities really get some some perks, if you might call it perks. Perks a break on the power bill.
SPEAKER_00:Perks and also, you know, the future of America, uh, of uh and probably, you know, not only uh not only our bigger and major cities and metropolitan areas, but rural America is is changing. And the the people that are going to be working to support this infrastructure at large are gonna be the people that are living in and around your community. And and I so it just it's a symbiotic kind of a relationship, and it's not something dissimilar that was seen from any of these company towns in the past, uh whether it was Hershey, Pennsylvania, or anywhere else, where I think, I think, I'd like to think that those bigger companies back then understood what it meant to support their workforce, because their workforce ultimately became their clients. And if they supported them better, it meant it meant just better for them in general. If if their workforce is struggling to make ends meet, that does not benefit them as a it doesn't benefit them as the employers, because that means that trickles all the way up and it impacts job performance, all kinds of things. And so it's better if the community that you are a huge part of is thriving. And when we talk about, you know, of a of a power profile, you know, coming down to one, two, three percent of the overall power profile, you know, call it a call, you know, call call it a community benefit of a different thing. Like this is this is our benefit back to the community for being here and allowing us to be here because it's not it's not the it's not the company that's driving, it's the community that is ultimately guiding and directing and supporting whatever that is, that infrastructure. And so whatever that is, whether it's uh, you know, you're saying, I don't know, so I activist is just saying that I think I think it's a better business, business model where where business and community can work hand in hand and then overseen by whatever political entity it is to make sure that there's fair dealings backward, you know, back and forth. That is the that's the vision. And and that's what we're seeing. And then I also think it's bad for business if you come into a community and you jack rates up. I mean, I don't think that bodes well for anybody because the bigger picture is we want to stay ahead on the AI race, we need to continue to build infrastructure and data centers. And so, you know, there needs to be a good argument or lots of arguments made to people saying this is why it's good for us. But if everything they're experiencing is bad for them, where it's hitting them in the pocketbook everywhere they look, they're not gonna want to support that, irrespective of what our you know, maybe a national goal is. They they won't care. They're like, okay, I don't, that's it's hurting me in my pocketbook. I don't, you know, great. It's you know, we're we're losing AI race. How does that affect me? I can't pay my power bill. Yeah, yeah. And I think that's where where there needs to be some cohesion around that, bringing everybody's interest into alignment. Um uh the the hyperscalers still can still can make profits and still do what they need to do to deliver their products to market. The the utilities, you know, done right, can still hit their margins. The municipalities or the counties can benefit from the tax base. The people can actually, and the people working in and around not only get a uh a reduced, you know, reduced power rates, but they also are going to find, especially in this growing sector, better, better paying jobs. And and then ultimately they're not gonna have to move out of their maybe areas where they really like, where they've grown up in, to go seek a higher paying job, the higher paying jobs come to them. Right. So this is this is that system working well, but you've got to have everybody kind of in alignment. And I hopefully that's you know, hopefully, you know what we're working on. We can make that happen, but also you you like to see that in general in these areas. And I so you get it. I mean, that and and we see it right now. We see that we see the pushback. We every day, Wayne Wayne and I open our headlines. It's this community voted down, this community voted down, and and they're running into this these forces, and and and it's not it's beyond politics, by the way. It's not red or blue, it's no it's bipartisan, it's bipartisan, it's survival of of of lower class and middle American families, is what it is, is what it is, yeah.
SPEAKER_01:And when you really model the cost of living of the average wage earner, your a power bill could be up to 30% of the cost of living.
SPEAKER_00:Yes.
SPEAKER_01:So go and increase that 30% of their cost of living three times, it's a serious problem. I mean, it's a serious problem, but in the ratios, it's not a serious problem. It's totally, totally resolved. And look, entrepreneurs, capitalists, you know, I I pride ourselves in being like entrepreneurial capitalists, good at solving problems, good at creating solutions, good at pioneering new things that have never been done before. This is precisely why I think Valley Forge has so much traction and so much bipartisan political support in the state of Utah, locally, on a state level, and federally now, is because we are pioneering this model of how do we really take care of the hosting communities. That's right. It's a power bill subsidy, it's a housing subsidy, it's it's real attention to water consumption. Yeah, making sure they have water for for the coming decades and that it's not just and you're not just sucking those aquifers dry with that business that makes billions of dollars. There are all of these levers that have to be addressed for an effective model and for a community to truly embrace this new era of AI and this new era of you know hundreds of billions of dollars being spent to build these these you know huge these huge operations out in their communities. And we're determined to just make a blueprint. You know, Valley Forge gets to be a blueprint, and I really do believe, look, we've had interactions with the Mettas of the World and others, and and I think for the most part I don't want to well, first of all, let me back up. I don't want to paint any of them in a negative light just as a blanket statement. I really feel like all of our interactions have been quite positive, and there's there's certainly been an openness to where can we help? How what can we do to ease some of the burdens of a community? And Meta's a good example in Eagle Mountain. We've had an opportunity to meet with Eagle Mountain City planners. I was so happy to hear Eagle Mountain City in Utah and the planners and their leaders talking about the things Meta's done. Now it's not on the scale we're talking about doing, but it's a step in the right direction. It's paying for some road improvements, paying for a little bit of information.
SPEAKER_00:Infrastructure, you know, um supporting schools, supporting social schools, yeah, all the programs in the community. I mean, then their name is on lots of different things, and they've been a very active participant and not not um pushed into it, like willing. Like this is something that they do as a part of who they are, represent them.
SPEAKER_01:So it was says a lot about them. And you know, QTS is another one, you know. As when we we did uh company spotlight on QTS early this season, very impressed uh with those guys as we've interacted with QTS, their commitments to veterans programs and social programs and hosting communities. So the I think what we're talking about is not something new, it's not something foreign to these big organizations. I'm sure it's on their minds because we've had these conversations, but I think what all we're suggesting here uh for you guys to consider is that there's a lot more that could be done, and we're determined to kind of to kind of build that program out and show everyone how it could be done, and I think that'll have a ripple effect. That's that's the hope and intent.
SPEAKER_00:Agreed. Well, and and to kind of tie in on a different story entirely, but not unrelated to uh when things are done right, you know, when when when things kind of uh coalesce and come together, it's a local story in Utah, but it's one it's we've talked about a bit on the show. And this is uh it was the announcement from UIPA, uh, Utah Island Port Authority incentive supporting Stadler rail expansion in Salt Lake City.
SPEAKER_01:Um is that up in the Northwest Quadrant, by the way?
SPEAKER_00:It is it is, yeah, it is. It is the north uh Stadler's launch uh welding operations for aluminum train car bodies at its expanded U.S. headquarters. Uh the milestone was made possible through support from uh you and that's UIPA. I've I've said UIPA, UPA, you pay so it's it's pronounced all kinds of different ways. So anybody listening who's part of that and says no, it's not pronounced that way, I'm aware. UIPA made authorities. UIPA port authorities, yeah. UIPA sounds good to me, but a port authority, which will uh uh which awarded a long-term incentive to strengthen Utah's manufacturing base and accelerate sustainable passenger rail solutions. Uh so this expansion represents more than$70 million investment and will double the size of Stadler's existing facility, adding 245,000 square feet to accommodate two new assembly halls, a welding facility and blasting building. Over the next three years, what this means in terms of employment, Stadler plans to grow its Utah workforce from 500 to as many as 800 employees while localizing more of its supply chain. Awesome. Uh, and and the quote from UIP was this is exactly the type of investment uh Port Authority is designed to support, uh said Stephen Smith, uh Associate Vice President of the Regional Project Area Development with uh Port Authority. By helping Stadler grow here in Utah, we're not only creating high-quality jobs, but also participing our state as a national leader in innovative and sustainable transportation manufacturing. This is, in my mind, a beautiful example of when all those things work together. Yeah. When you have an idea to say, look, we need to create this authority that has the ability to um support these these identified companies to come in, do what they need to do, get off the ground. Stadler's been a great success story. So now, you know, that's you know, ultimately, we're talking five to eight hundred good paying jobs. That's not none. That's that's impressive. And that that's that's tax base, that's support, that's that's again, that's a good paying job in an industry that isn't going anywhere. I mean, Stadler is growing and growing and growing, and the need for their product is you know, the demand hasn't diminished. And so when these things work right, they work right, and you see this. You see when when a government entity can come in, play their role, private industry can play its role, and then and then you know, ultimately the the benefit, you know, hopefully what you benefit is you not only benefit a tax base and you know you're you're you're standing up another business that's going to support Utah for a long time, but you're also providing uh you're providing uh good paying jobs and um and a place for people to grow and stay and and you know grow within a company. So, you know, it it's great to see.
SPEAKER_01:That's great news. We really appreciate all the work that Inland Port authorities here in Utah have done and all of our interactions, even with you know, Stephen Smith personally and and Ben and Scott and the whole team over there. Phenomenal team, and it's great to see all the movement.
SPEAKER_00:Yes, it is. Yes, it is. Um, so on on the news front, what else? What else want to talk about? Is there anything else uh that that that got your I mean another headline? I mean, you and I had mentioned earlier that I it's a news item today. Okay. Um meaning, and so again, whenever this hits, you might already know about this, but I thought it was intriguing, and that is this fire in Korea.
SPEAKER_01:Oh, yeah, oh yeah, definitely want to talk about that. And then let and let's let's cover this one and make this our final thought for this uh for this particular episode. This is a good this is a good story um hitting at some of the Achilles heels in storage. In storage. And and how that overflows into data center ops. So yeah, why don't you give us that headline and let's dive into that?
SPEAKER_00:Yeah, so uh and and this was uh it's just being reported today and a lot and yesterday. I mean, it it's kind of finally hitting, but it happened on the you know, uh on uh in the evening of uh the 26th of September. So uh it was a data center fire caused by the uh caused the shutdown of hundreds of online government services in South Korea. Uh the cause of the fire right now is being investigated as a battery explosion, uh, which led to an out-of-control thermal runaway situation, runaway situation in a room with almost 200 lithium-ion battery packs. Oh man. Uh the incident is particularly severe, but there have been many similar incidents. This is, by the way, this is uh an article out of uh ID Tech X by Daniel Parr. Uh this incident is particularly severe, but there have been many similar incidents throughout the battery energy storage system industry. BES, you'll hear us use the acronym BES a lot, but that's what that is. Although the rate of battery fires per gigawatt uh an hour deployed has decreased, the total number of remains significant when summed over all battery deployments due to the increasing number of deployments in data centers, electric vehicles, and other applications. Um, and then a little bit about what is lithium-ion thermal runaway. Yeah, thermal runaway describes a situation in which exothermic reactions within the battery pack cause further exothermic reactions, causing the temperature to rise until extreme degradation and combustion of volatile gases and liquids become likely. It can spread from battery cell to battery cell in seconds and from pack to pack in minutes. In large-scale deployments with hundreds of packs and thousands of cells, as in the Dajon uh city centered data center, the results of thermal runaway can be catastrophic, particularly from a safety perspective, but also from a financial perspective for the owner, not to mention the disruption to and security of services that data centers provide. Wow. This also under I mean, we've seen even in the US here in the last couple, three weeks, talk about lithium ion battery packs and being on planes and the possible risks that they pose. So again, this is this is one of those, as you say, Wayne, it's an Achilles heel um in this space. It's not to say that this isn't doable, but this is a risk. And we do see these things, and we have seen these things. And when it goes bad, you hope it doesn't go really bad. But you know, uh, you know, uh a fire or an ion, you know, a battery pack on a on a plane, in a cell phone, or in any of these things, which has happened, or in a laptop, that can be really catastrophic very quickly. Um, obviously, you know, when you're talking about you know uh having lithium ion and these massive, you know, massive, massive storage centers, which can just you know go, you know, go catastrophic quickly, obviously that way too. So I think it's we all just need to be aware of.
SPEAKER_01:Yeah, well, we've been talking about you know the nuances and the distinctions between utility scale applications and consumer scale applications. I think this really underscores that. Okay. I don't think anyone's gonna argue that a Tesla power wall in a home or a building with standard uses is a bad idea. I think that's a great technological advancement. It's a good case study for lithium-ion. You know, I I've got lots of you know, battery-powered drills and tools, and I love my lithium-ion battery tools, right? As do I. But on a utility scale, when you're talking about hundreds of megawatts or gigawatts, you're talking about heat and thermal loads that are extraordinary. There's no comparison. When you when you compound those factors onto data centers and compute capacity and heat profiles and all the things, it's a recipe for disaster. And I think it really underscores the good news that you've got companies like Westinghouse out there developing the long-duration energy storage solutions that are uh they're off-site, they're much safer, that are much less expensive, they're must much less impactful on mining sectors. You know, we've talked about the the the the ravages of lithium mining on the on uh you know countries and why that's not a sustainable good thing. Um so it's just finding the right tool for the right job in my mind. That's really what that is. And it and this to me is a clear indicator that you know lithium technologies that uh we've had for the last decade or so are not yet and maybe never a utility scale solution for this type of application. Could have something much better than this to accommodate the data center loads.
SPEAKER_00:Absolutely. And and I don't know if it played a factor in this, but you know, BESS is one of those areas where you know the regulations are not consistent, meaning like there are different regulations in different countries for different things. And so yeah, you wonder if if it was there are certain standards, there are certain kinds of things, you know, some have less, some have more. And so there's no universal right now. Don't know if a universal helps solve this or not. It just there is a there's a lot of unknown, and so that's another few point. It's where are these coming from? What were they built under? Yeah, you know, what kind of are were they built under certain standards, or you know, like here in the US, we have a UL standard. Um this this is all the stuff that has to be sorted through, right?
SPEAKER_01:And there's a lot of first of a kind things happening right now. There's a lot of bespoke things happening inside data in the data center sector right now. And you're talking about daisy chaining hundreds of thousands of GPUs together. You're talking about heat profiles in the racks that are now getting into triple-digit, you know, triple-digit profiles, like like all of the stuff. There's so many pieces of it that have never been done before. It it begs, you know, a focus on utility scale solutions and safety protocols within the U.S. so that we can avoid. And the other thing when you talk about this type of scale that's never been done before is you're talking about you're talking about buildings, data centers that are more expensive per square foot than anything else in the world. These are by far the most expensive buildings in the world. And so when you have a loss like this, the losses are orders of magnitude exponential. This is not like a warehouse fire. This is a, you know what I'm saying? This is a hundred billion dollars facilities now, is what you're talking about with many of these, all of the leaders, you know, when you start, and and we've had the the good fortune of of Big D, you know, our prime contractor, doing actual bidding on, okay, at Valley Forge, if we were to build our own uh, you know, stand up our own data center buildings or even stand up the powered shells, what does that cost? So we know something about how costly it is. It is extraordinarily costly. And you really have to question as a developer, like, do you take on the risk of building that type of a building with those types of solutions because the costs are like I was just saying, like 100x what you're dealing with in typical commercial development. It's not it's not the thing. And so, you know, we I really I definitely feel more comfortable having the professionals build their own buildings and take on their own liabilities and take on the financial liabilities because you know they're the benefactors ultimately here. But I think for developers like us, it's it's it's providing the solutions as the alternatives. Frankly, I don't love the lithium battery. The best and and best isn't even part of our design at Valley Forge. We've considered FES with Taurus. I still really like that a lot, but I like the Westinghouse solid state much more. And I think everyone would agree that if we could eliminate diesel generators, that would be amazing. Because right now, that seems to be the standard. You know, we've toured Meta's facility out in Eagle Mountain, we've looked at others, we've coordinated with Gensler, we know what's being designed. By and large, by and large, diesel generators are the backup that gets them up to that that standard of five nines of uh reliability on site. And of course, that has implications on the emissions profile, let alone safety profile. So there's better ways to get cost. That's right. So very interesting story in South Korea. Sorry to hear about those guys and out over and several hundred government entities being impacted. That's a national security situation, right?
SPEAKER_00:Which actually surprised me that they had so many uh things being run out of off of one data center, but maybe that shouldn't be a surprise. You would seem like you'd want to like spread that around to avoid that. But but you know, maybe you don't have a choice anyway. I yeah, it was it was I mean significant hit on all kinds on all kinds of fronts. That's awful.
SPEAKER_01:Um, so guys, thank you for joining us today. It's been fun. As always, we hope you'll join us for the next episode. Until next time on the Frontier Line.
