The World Changing Podcast

[00:00:00] Greg: Welcome to the World Changing podcast. Was that too much? Yeah, that was probably too much, but let's keep it, we'll keep it anyway. How about this? If we do the podcast and the world doesn't change, Then we can take that out. Welcome to the World Changing podcast, where we deconstruct the projects and products that are moving us towards a decentralized and carbon-free future.
[00:00:29] Greg: We'll talk to the skeptics, supporters, and innovators in the fields that depend on electricity to run their industries, which is changing every single day. I'm your host, Greg Robinson, co-founder of Aston Labs, a decentralized infrastructure company, and on the other side of the camera here, we. [00:00:45] Flo Lumsden our producer, and she will make sure that the train stays on the tracks while we do this. I think, Okay, so season two, season two.
[00:01:08] Flo: Welcome to season two of the world changing podcast.
[00:01:15] Greg: Welcome to the world changing podcast. Welcome to the world changing podcast. Are we going to do that again? Yes.
[00:01:19] Flo: Okay. No, maybe not. No, we're not going to do that again. I just wanted
[00:01:22] Greg: to do it since you got to. be very melt. Yeah, that's right. I got to do it on the first season. And I
[00:01:26] Flo: just had two cups of coffee.
[00:01:27] Flo: So.
[00:01:29] Greg: Um, [00:01:30] so this season we're going to talk about, major challenges and some solutions. Last season we sort of set the scene for just a lot of topics.
[00:01:43] Flo: You recently wrote a blog with someone on the team about five challenges to modernizing the power grid
[00:01:50] Flo: So like the themes that we've talked about in this blog are reliability, geography, NIMBY.
[00:01:59] Flo: Incentives and finance slash risk
[00:02:02] Greg: Yeah, I kind of think of it as like the who, where, when, why, how of challenges.
[00:02:07]
[00:02:07] Greg: Last season we spent most of our time talking amongst ourselves or talking to other people about these big concepts, right? And [00:02:15] these key challenges to modernizing the grid and greening the grid just came up over and over, right?
[00:02:21] Greg: Like we, when we talked to Gary Ratcliffe or We talked to James Dalbora or we talked to, um,
[00:02:28] Greg: Well, we, you and I talked about community solar and the big one for sure was when we talked nuclear with Alan Hoffman, it was like, the NIMBY piece and all that was a big. Was a big part of it. So, this season, we're now going to focus on those challenges that came up.
[00:02:46] Flo: So I thought it'd be helpful to set up this season with a brief description of each of these challenges . Yep. As a reference for folks if they want to come back and listen to this, um, or if they haven't
[00:02:57] Greg: read the blog.
[00:02:59] Greg: Yep. [00:03:00] Or just go read the blog too. Or do both. And then come back and read, yeah. Go and come back for the longer version of this. Um. Yes. So going down the list, is like a core premise of just the physics of how electricity works. The dream of having everything run on 100 percent renewable energy.
[00:03:23] Greg: One of the biggest things that people push back on Reliability. Right. It's always been a favorite talking point of the fossil fuel industry is the reliability, the fact that the sun goes down, the fact that the wind sometimes doesn't blow. So the core tenant with reliability is that [00:03:45] generation, or when we make power, it always has to match when we consume power.
[00:03:52] Greg: It has
[00:03:53] Flo: to. Right. So challenge number one is reliability. reliability. Okay.
[00:03:58] Greg: Challenge number. That makes sense. Yeah. Well, I don't know if it's challenge number one. The
[00:04:03] Flo: first one of our five.
[00:04:06] Greg: Yes. That is one of the big challenges. It has to always equal each other. Number two, in no particular order, is geography.
[00:04:15] Greg: Where the power is made for renewable energy, where it's sunny, where it's windy, is not necessarily where it needs to be used. So we have to ship it somewhere. And shipping power is hard. Takes [00:04:30] transmission lines, wires. Number three, nimbyism. Not in my backyard. This is also a favorite. That I never really understood how fossil fuels didn't have this issue too.
[00:04:44] Greg: Right. Nobody really wants a gas plant in their backyard.
[00:04:47] Flo: No. I recently learned that A common theme in cities is that the east side of the city is a lower income part. And that's because typically the wind blows from west to east. So whatever pollution is being spewed out in the area will be flowing from west to east.
[00:05:07] Greg: Whoa. Yeah. Wow. So not in my backyard, definitely [00:05:15] the, Nuclear is where that's going to come up the most, but you would think it would only be something like nuclear, but it's not like people. Some people don't want actually where I grew up, there's a, there's a wind farm development that got shut down cause people didn't want to look it up off in the lake.
[00:05:34] Greg: And so it was going to be on an island. Uh, and then So you, so yeah. Wind, nuclear, even solar panels really, like you have homeowners associations that don't want the solar panels on the roof because they think it'll be an eyesore. Mm-Hmm. . So all of that, it's like even some of the people who love clean energy and the, you know, the most will be like, [00:06:00] but maybe not right here.
[00:06:02] Greg: Mm-Hmm. . Let's move it down the street a little ways. Number four, incentivization. Yes. You and I talked about this at length when we were talking about power utilities and just like, what, what is the incentive for a power utility to innovate? If it jeopardizes our lights staying on, there's no way they're going to do it.
[00:06:27] Flo: Yeah. And it's, it's basically a, a legally allowed monopoly because it's still a business.
[00:06:35] Greg: Right. Yeah. In a lot of cases, it's investor owned utilities for sure. Uh, and then number five, so we could go deep [00:06:45] into this incentivization, by the way. So going back to
[00:06:47] Flo: incentivization. I want to, I want to add one other example from, from our conversation with Mark.
[00:06:52] Flo: Our first full episode coming after this intro with Mark Jacobson, he talked about, if he could change one thing in terms of removing red tape, or, and, changing the way things work, to green the power grid. He would change the incentives so that we're not incentivizing the development of carbon capture through, uh, the inflation reduction act.
[00:07:18] Flo: So he, he definitely mentioned incentives, so Yeah.
[00:07:22] Greg: Yeah, that's a good point. So there's like the incentive to change, but there's also, what are you incentivizing going forward? Mm-Hmm. . [00:07:30] Which, in that case, obviously the Inflation Reduction Act incentivizes a lot of people to do a lot of things and direct air capture.
[00:07:41] Greg: Something we talked
[00:07:42] Flo: a lot about in the first episode. Yeah.
[00:07:45] Greg: Uh, and then my favorite one, challenge number five, financing. Is it really your favorite? It's my favorite. Well, it's my favorite because I think it's It's, at the end of the day, all of these esoteric things that we do to try to get clean energy, all these clean energy programs, incentives programs, community solar programs, uh, virtual power purchase agreements, corporate purchasing of [00:08:15] renewables, all of those things are to help underwrite the financing.
[00:08:19] Greg: It's just to make it bankable. Right. Right. And. Everything. If there was a big pile of money to just build stuff with, you wouldn't even have to think about this part, but all the hoops you have to jump through, the interconnection studies, the interconnection agreements, the power purchase agreements, everything is just de risking and it's de risking the financing.
[00:08:47] Greg: And
[00:08:47] Flo: I think a lot of what we're, a lot of what folks are dealing with in terms of Raising the money to build renewable power plants or install windmills offshore or create new transmission lines [00:09:00] to connect generation to load. Um, it's all very, like, theoretically very bankable, but a lot of the issue I've perceived is just a lack of momentum or, Just historical, foundation to prove that it's bankable, even if,
[00:09:17] Flo: There aren't as many, existing frameworks to make these new investments easy to fund. Right,
[00:09:26] Greg: like mortgages. Right. That's a pretty well worn path, right? You can now, you can't go online and just click a button and get yourself a
[00:09:35] Flo: An oil and gas has been making money for the banks for a long time, so they're very comfortable with that, even though it might be more expensive and risky.
[00:09:43] Flo: They're, they're just used to [00:09:45] those risks and those expenses. That's all.
[00:09:47] Greg: That's right. Yeah. Yeah. It's like that word bankability is, it's like the craziest moving target in this industry because depending on where you go, Bankable means something completely different. Like, you could have something that's not bankable because it's in the path of, Tornado Alley.
[00:10:09] Greg: You can have something that's not bankable because, You can have a project that's not bankable because, Just the credit worthiness of the person buying it. And it's like, well, that person that's buying it and can buy enough renewable energy has a big enough balance sheet. To underwrite a project, depending on them means we have to [00:10:30] build, typically, bigger, more centralized, more cookie cutter projects.
[00:10:35] Greg: And then the bigger that balance sheet is that's underwriting it, the lower the margins have to be, or the lower the profits have to be to the person actually selling it to them. Because the balance sheet or the person who's making it bankable is in control of the profits, which is sort of counter to.
[00:10:56] Greg: like if you're building housing, you're building, it's a little different now, but if you're building houses, or you're building commercial buildings or you're building any of those other types of real estate, uh, to your point about oil and gas, they're just the banks or the lenders feel more comfortable because they've been doing it for [00:11:15] decades,
[00:11:16] Flo: if not centuries.
[00:11:21] Greg: Um, yeah, so that's why it's my favorite because it's like, yeah, that's really the, the biggest unlock in this is if we can figure out how to overcome that particular challenge in a very simple way that, and I think most importantly that like gets the risk correctly priced and what I mean by that is it's, yes, it's a little bit risky, but it's not that risky.
[00:11:50] Greg: I actually saw a tweet the other day by Sam Altman, kind of about this, which is just like, what price should you be willing to borrow money at to [00:12:00] build AI infrastructure, like data centers? What price should you borrow? It's like, if you knew that this massive, massive, massive demand for data centers was coming with AI.
[00:12:13] Greg: Wouldn't you just take a little more risk? Like wouldn't you, I don't know if it's, I'm now I'm putting words in his, in his tweet, I'm expanding it, expanding his tweet. But my point is like, wouldn't you pay a higher price? And I think in the energy business for a long time, it's been either it gets built, either it's bankable or it's not rather than saying no, what's the risk and what is the rate on the money?
[00:12:37] Greg: And I think that's going to be our biggest. That's why it's my favorite, again, is because that's where I think there's the [00:12:45] most Potential. Potential for innovation. I think some of those other ones are tricky. Like, NIMBYism, that's a tricky one to innovate against. Like, Invisibility Cloak. I think that's the only option for those.
[00:13:01] Flo: Well. People are used to seeing oil rigs out on the ocean.
[00:13:04] Greg: That's what I mean. It's like,
[00:13:06] Flo: Why can't we put some windmills? Are they worse than the oil rigs?
[00:13:11] Greg: I think to your point, it's like, they're not worse, they're new. They're just different. They're just new, right. It's like, but those have been there my whole life.
[00:13:20] Greg: And when I showed, they're horrible,
[00:13:21] Flo: they're so scary looking, it's like a little alien landed out in the ocean. This is only on the West coast I'm talking about, or I don't, I've never seen them on [00:13:30] the East coast, but like, yeah,
[00:13:32] Greg: that's true. And very expensive places too, right? It's not like, yeah. Where did you see them?
[00:13:39] Greg: Santa Barbara. Yeah. Mostly. I think that's where I've seen them. Yeah.
[00:13:45] Flo: Well, I think that's good. I think that's good for the intro to season
[00:13:49] Greg: two.
[00:13:50] Thanks for tuning into this episode of the World Changing Podcast. Be sure to follow us wherever you get your podcasts, iTunes, YouTube, to hear the latest episodes.