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The U.S. Needs 230 GW of New Power. Where Will It Come From? #370 · Clean Power Hour

• 0:50
  Tim Montague: There's two and a half times more data center interconnection applications than there is expected buildout of grid energy, and so what does that tell us? Well, there's an opportunity for the distributed grid, so to speak, to come to the rescue.
• 1:05
  Sylvia Martinez: What I find it fascinating is that these renewable technologies remain relevant no matter the discourse, and finally, we're seeing this also on the policy side more and more acceptance of these energies beyond the clean factor. It's it's more about the the true relevance that they have and the impact that they have on the economic side, not only on the environmental side.
• 1:30
  Tim Montague: The battery is the appliance that most consumers and business owners don't realize today that they're going to own in five years. The
• 1:38
  intro: clean energy industry is moving fast. The deals are getting bigger. The technology is evolving, and the stakes have never been higher. Welcome to the Clean Power Hour, the podcast for solar storage and microgrid professionals who want to stay ahead of it all, each week your host Tim Montague, industry advisor and president of Clean Power Consulting Group, brings you unfiltered conversations with the leaders actually building the energy transition. Now, here's your host, Tim Montague.
• 2:13
  Tim Montague: Hey everybody, Tim here. Welcome to the Clean Power Hour. This one is different.
• 2:16
  Tim Montague: Sylvia Martinez had me on her show, Interchange Recharged, and this is a crossover post of that interview. And I wanted to bring you the full conversation.
• 2:28
  Tim Montague: Here's the setup. Sylvia lives on the utility side. I live on the C&I and community solar and microgrid side. So we put both worlds on the table and looked at where they agree and where they don't. We get into the number I keep coming back to.
• 2:44
  Tim Montague: There are 230 gigawatts of data center interconnection applications, and only about 93 gigawatts of new power plants expected to come onto the grid in the next five years. That gap is the opening for distributed generation. We also cover the safe harbor boom, how these projects actually get financed, climate restoration, and why I believe the future of the grid is a grid of microgrids. Let's dive in. The Clean Power Hour is brought to you by SDE Sinclair Designs and Engineering, FixTilt and Carport Racking, Design, Engineering, Permitting, and Manufacturing all under one roof in Michigan. No outside vendors, no waiting in someone else's queue, just fast turn around and steal that ships when you need it. Ask Ag Energy Co. in Illinois or Sunrise Solar in the Mid-Atlantic; they'll tell you what it's like to work with the Sinclair team. SDE, everything in-house. Visit Sinclair-designs.com.
• 3:52
  Tim Montague: Designs.com.
• 3:53
  Sylvia Martinez: Let's get started with just like setting the stage because I think over the past few episodes, I think practically since I started being host of of Interchange, we focus mainly on utility scale.
• 4:03
  Sylvia Martinez: So you know, like the large scale assets, but your side of the market is more like C&I, a bit more on the battery side, community solar. So, just for our audience, tell me more about your slice of the market. What do you cover, and what is the limit between utility scale and C&I?
• 4:22
  Tim Montague: Yeah, if you ask five different people, you know what is the difference. You'll get five slightly different answers, but but the big differentiator between utility and and DG, as we as we call it, is the scale and the interconnection. You know, utility really starts at 50 megawatts. Many developers will say 100 megawatts, and then and then up, right? And and DG is more in the 100 kW to five to 10 megawatts, you know. Community solar in the United States is one to 10 megawatt scale projects. Generally speaking, you can you do see a few smaller, you know, 500 kW projects in niche market segments. You know, like Solar for All, for example. But and I cut my teeth on C&I working for a contractor in the Chicagoland area called Continental Energy Solutions. So I, I learned the commercial industrial side of the business from the ground up.
• 5:22
  Tim Montague: We were three people in a big contractor electrical contracting company. They had 100 electricians, still do, and grew that group to 25 people. So I I was there really for the takeoff of DG Solar in Illinois, which was very exciting.
• 5:41
  Sylvia Martinez: Perfect. And can you tell me more on the dynamics that you're seeing in the C&I space? Because what we have been discussing in the show on the. Skullfront is that there has been this rush to procure equipment before the July four deadline, so that was the main the main focus for most developers, and is like more looking forward. So let's try to secure as much capacity as possible, and then we build through 2030. Are we seeing that same approach on the CI space, or what has been different so far?
• 6:16
  Tim Montague: Very much. We're in we're in a boom because of the phase out of the ITC. If you were able to safe harbor equipment for projects, that gives you some added runway to bring those projects to commercial operation. You have until the end of 2029. If you were able to safe harbor by July 4 this year, if you weren't, then you have to reach commercial operation by the end of next year, and so you can imagine if you weren't safe harboring this year, that means the project is relatively early stage, and getting a project, let's say 500 kW or a couple megawatt scale project across the finish line by the end of next year would be a small miracle. It can happen. You could see a project from start to finish in 12 months in the C&I space, but that would be very very fast. Most projects are going to take 18 months.
• 7:11
  Sylvia Martinez: Yeah, we we have been discussing something something similar, and one of the elements that has been the most, or that has been gaining more and more attention from developers from financiers, is the EPCs and the role that they play in achieving these placing service day. So there is more and more scrutiny about like which EPCs are able to reach that deadline, what experience do they have, and I don't know.
• 7:43
  Sylvia Martinez: It seems that some of these discussions already happened when at first there was this element of prevailing wage and apprenticeship. So which EPCs have you know the admin power, the diligence to comply with all the administrative burdens to say or administrative charge that was related to meeting these requirements? Now it seems that the scrutiny goes beyond that, and it's like, well, actually being able to to complete these projects. What's the size of the workforce? What has been the historical timeline, or or how close have they been in budget and in timeline to to achieve these projects? So it seems that at least on the utility scale front, it's like it's only a handful of EPCs that have you know the the capital backing that have the experience to achieve that. What are you seeing in the C&I space?
• 8:42
  Tim Montague: It's a complete mishmash, you know. C&I distributed generation solar is there's a full spectrum from very robust, established contractors like Continental.
• 8:56
  Tim Montague: You know, they're a fourth generation. They're 100 year old company, and and they have real chops. To mom and pops, you know, that are literally two guys in a truck, and they're bridging into commercial industrial because they see the opportunity. You know, C&I is kind of the redheaded stepchild of the solar industry. We've we have more residential solar happening happening in the U.S.
• 9:20
  Tim Montague: historically than commercial.
• 9:23
  Tim Montague: Even though when you fly into any major city in the U.S. you see all those big industrial rooftops, lots of warehouses, lots of factories, you know, lots of apartment buildings, et cetera, et cetera. All these facilities can be run with renewable energy if the car, if the stars align. And so, I would just say that this this brings to light the importance of legislation and programs. Like here in Illinois, where I live, we have a very robust legislative floor. Okay, now called the Climate Inequitable Jobs Act (CIJA) that requires contractors to, for example, if they want state incentives.
• 10:08
  Tim Montague: Okay, if they want to get high-value renewable energy credits for their projects. They have to abide by certain rules and regulations. They have to hire people from training programs. They have to have a certain percentage of their workforce that has a disadvantaged background, whether that's an ethnic group or formerly incarcerated or what what have you, right? And and these programs also what they do is they they take consumer dollars, centralize it, and then feed it into things like training programs. So our network of community colleges now across the state have training programs to train people to become so. Installers, which we need lots of, and that's it's not just solar; it's wind technicians, battery technicians, EV technicians, and and so this is fueling the energy transition and helping the whole economic ecosystem really grow in concert. If if it if it doesn't grow in concert, it's just very disjointed, and and you're just not going to achieve as much in in a short period of time. It's we're going to make the energy transition, right? It's just a question of how fast.
• 12:15
  Sylvia Martinez: Yeah, yeah, totally. And you mentioned two very interesting things. Like on one end, the role of state incentives, because it seems that on the smaller scale, smaller projects they rely a bit more on on state incentives, and I think that has become even more important with OB three. So it seems that in the utility scale side, at least what we have heard from from developers is mostly on the federal side.
• 12:44
  Sylvia Martinez: There are some initiatives on the state level, but the economics are not as reliant on on a state level, or at least from from what we have seen so far.
• 12:54
  Tim Montague: It does the the OB increases the value of state programs and those those state leavers. So we see states like New York, New Jersey, Massachusetts, Maryland, Illinois, Minnesota, Colorado, New Mexico. These places are the the hotbeds of C&I and community solar, and it's not that commercial industrial solar isn't no okay. I said community solar and C&I solar, and if you go to the Tennessee Valley, for example, I'm I'm a member of Tennessee and now I I have partnered with with them. I'm a firm believer in these smaller markets that are don't have strong incentives, but they have a very robust network of very experienced contractors. For example, and companies like Lightwave Solar, who is a 20-year-old contractor in the Nashville area, and they do residential and commercial.
• 13:57
  Tim Montague: Nashville, you know, has been in the news for having power outages in the winter, they have severe ice storms and snowstorms, and and then they have outages, and so that that area is waking up to the harms and the opportunity for resilience, and and solar and batteries are part of that, and so even in places where we don't have incentives, but we have environmental reasons why people and business owners need resiliency, we see the the growth of the C&I industry. But if you had to look at the volume volumetrically, the majority of C&I and community solar is happening in those places that have good legislative foundations.
• 14:47
  Sylvia Martinez: Yes, it is totally, and and I think something to to consider as well, or what what I see as some of the main differences between C&I and utility scale right now has been the approach towards safe harboring because what like when we see these announcements from very large developers that they have procured this multi gigawatt multi annual contracts with manufacturers, they have the pockets and they have the portfolio. Could you tell me a bit more about how the approach has been so far with C&I? Are we seeing something like similar, not necessarily in scale, but in the philosophy approach towards safe harboring and what we should be seeing in terms of deployment over the next few years.
• 15:30
  Tim Montague: Yeah, safe harboring is a tax strategy.
• 15:33
  Tim Montague: Okay, to to capture the ITC, the 30% tax credit, which could be as high as 50% right? If you're in an energy community and using made in America equipment, or if you can make your project qualify for that 10% adder, so safe harboring is absolutely a tactic that C&I and community solar developers use, and I would say it's a it's at the more sophisticated end of the spectrum. So these are contractors and developers that are doing at least 20 megawatts a year. You're not going to see mom and pops necessarily playing that game because they're just relying on their supply house.
• 16:13
  Tim Montague: You know, the green tech renewables of the world. They're buying on demand. You know, modules, racking inverters, and they're they don't have the financial wherewithal to say, okay, I'm going to safe harbor 20 megawatts of solar panels because I I know that I can fulfill that need in the next you know three years, but but there's plenty of companies that are definitely doing that,
• 16:40
  Sylvia Martinez: and then. What does it look like in terms of of financing? It seems like there there are different approaches, and I I would think that the like large large banks have been participating more and more on the DG side. Could you tell me more about this
• 16:59
  Tim Montague: financing C&I and community solar is a spectrum from a an installer working with a facility owner. Let's say it's a machine shop here in Champaign, Illinois. Right, the machine shop could install a 400 kW array. It's close to a million dollars of investment.
• 17:17
  Tim Montague: That company is used to buying equipment for their for their floor, and and so now they're going to go to their commercial lender and say, "Okay, John, mr.
• 17:31
  Tim Montague: Banker, I need to borrow a million dollars to install solar. It's going to benefit me economically. Here's the cash flow. Here's my you know here's my cash flow. You're you're familiar with my business, let's let's make this happen. That's the way the majority of these one-off projects are going to happen is just through existing lenders who now most regional lenders are familiar with solar enough to say yes, we understand this. It's tried and true technology. It's not smoke and mirrors, and it's going to save you money, and this is, and you're going to be able to pay the loan back. That's at the at the you know at the very small end of the spectrum, right? And then you have companies like Standard Solar, that is a C&I and community solar developer and asset owner, and they're developing on the scale of 50 megawatts of projects through self-development and acquisition on an annual basis, and they have big financial backers, you know, investment funds that are fueling the safe harboring of large quantities of expensive equipment like solar panels or inverters to optimize their tax strategy, right, and and and then everything in between. And there and there are specialty there are specialty lenders in in the C&I solar space. But I always recommend to my clients.
• 19:01
  Tim Montague: I work with C&I installers, and I help them grow into large commercial industrial solar. And I always recommend when you're talking with your customers, tell them to work with their commercial lender. That's the most obvious path of least resistance, and and you're going to get stuff done fastest. It's not. It's not. That's not the end all and be all necessarily.
• 19:24
  Tim Montague: I often get the question. Well, should we be selling power purchase agreements? You know, third-party ownership, and for sure that's a thing. And and we saw as the phase out of the residential ITC happened at the end of last year. Right, there was a shift towards third-party ownership in the residential space this year. There's much more third-party ownership. We call it TPO, and that same trend is is is likely happening in C&I as well. But I would just caution, and I and I do this with my my clients. I would caution you that a power purchase agreement is deep water. It is a big 100-page contract. You're going to have the host is going to have to hire an attorney to review that and redline that contract. And that negotiation, that back and forth, is going to take several months, perhaps six months. So, if you're a developer and you want to get stuff done and stuff built, I would say don't go the PPA route first off, right? It is it is you know people get stars in their eyes when they think well there's no capex on the front end right there's no out of pocket for the host and that is cool on some level but it is complicated
• 20:39
  Sylvia Martinez: yeah yeah I find that fascinating because in contrast with the utility scale side, it's it's all PPAs. Like most most of the projects, if not all of them, work on under this like PPA financing mechanism. And what you mention is is completely true. But also what we have been seeing is just PPAs becoming more and more complex. Before you had a fixed price EPA throughout the lifetime of the project, and that was it. Now there are more and more elements like indexation related to equipment.
• 21:09
  Sylvia Martinez: What more clauses with changes of law or any natural disasters?
• 21:14
  Sylvia Martinez: Curt Telman, how are you factoring in Curtelman? Negative pricing. So yeah, like the these mechanism is the one still prevailing in the utility scale front, but it has definitely changed over time, and it has become more complex, more time consuming. But thus far, it seems that it's the still the way to go in this market segment.
• 21:39
  Tim Montague: I know very little about utility scale. Power purchase agreements, except that yes, it's complicated, and that there. I mean, there's a reason why that's a niche, right? That is a specialty, whether you're a developer or an asset owner, right? You have a department, you have a group of people that specialize in these types of contracts, and and it's a thing, and it's it's it's basically a good thing, right? Electricity is a commodity, and the price fluctuates depending on the demand and availability of electricity. As we've witnessed in the last 24 months, that is somewhat of a double edge because demand is going through the roof as we build out electrification of transportation and HVAC, and now the AI data center boom is upon us, and now that's hurting consumers and business owners in their pocketbook, and we have to figure out ways to achieve both right equity. We have to achieve economic opportunity for consumers and and business owners, and not burden them just because data centers are going to soak up gobs and gobs of megawatts of solar. I mean, of electricity, and it's a double edge because AI is also an economic driver. And I am a certified AI consultant. I use AI in my daily workflow a lot, and you know I can't tell you how many times I talk to Claude during the day. Like she is one of my best friends now, and it just is what it is. And so I recognize that we do need data centers, and I think that DG can be part of the answer. So I would love to talk a little bit about that because some companies have have come onto my radar recently, like Lectra, and there's this exotic company that's making that's leveraging ocean wave energy. I have to look at my notes to find the name of it, but it's a very interesting company. Atlassa, I think, is the name of it? I'll find it here in my notes. But DG can be part of the answer. It's it's a both and, right? We need to we need to build more transmission and large scale power plants, utility scale, solar, wind, batteries, nuclear, new geothermal, next generation geothermal. You know, deep geo, I call it. That's definitely a thing. You know, if you drill a hole a mile down anywhere on Earth, it gets super hot, and that that heat can be used to drive a turbine and generate clean electricity. Right? It's super abundant.
• 24:16
  Sylvia Martinez: Yeah, I think let's touch more on this because I wanted to talk about what has changed over the past few, I want to say years, but even months, I think the the scale of change has been so quickly. And how is this influencing the view of the market? Both, like, what are your clients asking now, and the the view that you have on on the future, the plans for like for your own company, but also for the C&I space in general, particularly in the conversation around affordability, data centers, everything in between.
• 24:52
  Tim Montague: Yeah, it's it's crazy town, honestly, Sylvia.
• 24:57
  Tim Montague: There's there's so many more questions than answers right now, and yeah, the the good news, I, I, there is a silver lining here, and that is that energy is a kitchen table conversation for business owners and consumers today. In a way that it wasn't five years ago, they weren't feeling the pinch.
• 25:16
  Tim Montague: If you go to Europe, I was just in Norway, where I've been going for 40 years. I'm proud to say I went there as a 20-year-old college student, and I married a Norwegian, and I have two children who are Norwegian citizens. So I have very strong ties to Scandinavia. Gasoline in Norway is $8.50 a gallon.
• 25:36
  Tim Montague: Americans, when they hear that, just their minds are blown. They don't understand that. But when you're in Norway, you realize that you truly can get around without a gasoline engine car.
• 25:47
  Tim Montague: You have excellent regional trains. I mean, just amazing.
• 25:51
  Tim Montague: It's just mind-boggling how good the train and bus system is in Northern Europe, and and of course, then they also have electrified their vehicles. 80% of new car sales are pure EVs in Norway. There are Teslas everywhere, and a lot of Chinese EVs. They haven't kept, they haven't created a wall against the Chinese EV the way the U.S.
• 26:14
  Tim Montague: has. Most Americans have no idea that China has become the preeminent manufacturer of electric vehicles, and so so anyway, here in the U.S. we're sadly 10 years behind Northern Europe and China because we have cheap fossil fuels, and we have a political economy that is dominated by the fossil industry, and money talks right.
• 26:42
  Tim Montague: In politics, and that's one of the things that Jigger Shaw is now, you know, talking a lot about. That we have to put on our big boy pants as the clean energy industry. We are a big industry, right? We are 250,000 or so workers in the United States now, and we need to wield our economic power. We need to put our money to that shoulder, that financial shoulder to the wheel, and influence politics.
• 27:06
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• 27:23
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• 27:48
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• 28:00
  Sylvia Martinez: the The question was around like what what has changed in the market?
• 28:02
  Sylvia Martinez: What have you seen? Like the new questions from your clients, and how are you addressing these affordability data center conversation?
• 28:13
  Tim Montague: Yeah, yeah. So for C&I energy professionals or community solar energy professionals, this is absolutely an opportunity, right? We are helping consumers and business owners save money, long-term cost that we're levelizing their long-term cost of energy in a way that they can't do by doing nothing.
• 28:30
  Tim Montague: Right, the business as usual is is going to give you one guarantee, and that is inflation. And we've already seen in some places the doubling of the price of of energy per kilowatt hour, right? In the last 24 months in the United States, there's been severe inflation, and the war in Iran isn't helping. Gasoline prices are going up. There's a lot of inflation in our economy, and so this is a great opportunity. The more expensive electricity gets, the better solar pencils, the better batteries pencil, excuse me, and so we're we as energy professionals need to lean into this. It there's always an opportunity, right? Crisis is opportunity, truly, and and plain and simple. I mean, that's why I brought up Europe. Energy is very expensive in Europe, and that's why they leaned into renewables faster than we did here in the U.S. We invented the so the modern solar cell in New Jersey in 1954. We just didn't commercialize it at scale the way the Germans, the Japanese, and the Chinese did, and now we're playing catch up. And we are on you know we are onshoring manufacturing now, and that is one of the, you know, the good things about the both the Inflation Reduction Act and the OB. Those administrations are incentivizing onshoring of manufacturing, and it's a good thing. It's not without its hiccups, and it's it's far from a perfect scenario. I would say it's you know it's treacherous treacherous waters, and you see a lot of pivoting, you know. t1 energy is a good example. They pivoted from batteries to solar panels, but so this is an opportunity. Data centers are an opportunity because they're driving up the cost of energy, and then you have innovations like Lectra, which is a distributed computing platform where business owners and consumers can put a server, you know, with GPUs in it, a fancy computer that is going to provide AI compute to the cloud.
• 30:31
  Tim Montague: So they're a they're competing with AWS, Amazon Web Services, right? By building a distributed data center, just the way you can build a VPP, a distributed battery, you can build a distributed data center. And Lectra is doing this, and they're partnering with big companies like Sunrun, and EG4, and probably many others. As as time goes on, they're really just getting their start. But that is a very interesting phenomenon, and they're targeting opportunities where there's already solar or solar and batteries on premise, and and so they want to be part of the distributed generation revolution that is happening here in the U.S. and globally, and and that's a good thing because we all need compute. As I said, Claude is my best one of my best friends, and and we need compute, and is there a bubble?
• 31:24
  Tim Montague: For sure, I think you know the way the that economy is growing so fast is just-it is an economic bubble. When will it burst? I have no idea. It doesn't mean AI is going to go away, though, right? Like once you have that friend, it's like you you. It's like once you have electricity, you don't go back to living with candles and whale oil when you have electricity, right? You don't do
• 31:49
  Sylvia Martinez: it. Yeah, yeah, completely, completely agree. I guess right now the the discussion is okay. How much of these these announcements of all these new data centers are actually going to come online, because that triggers a lot of decisions for developers on every scale of of solar, right?
• 32:10
  Sylvia Martinez: Solar batteries. So many many players, many developers are hinging their own economic plans, financial plans on maybe some of them are going to be like good wishes or expectations of new new data centers and the boom in load, the question is okay. How much of this is real?
• 32:26
  Sylvia Martinez: How much is not? And how do we differentiate one one from the other? Right?
• 32:33
  Tim Montague: Yeah. Well, I would love to point your listeners to a great guy named Ramez Nam, R A M E Z N A A M, and he's a former Microsoft executive. He's a futurist. He's an investor. He's you know deep into the technology landscape, the startup landscape in the U.S. and globally. And he was recently on the Moonshots podcast that Peter Diamantis hosts, and he pointed out that there are 230 gigawatts of interconnection for data centers, interconnection applications for data centers.
• 33:11
  Tim Montague: That is, that's over like the next five years, and the the Bank of America estimates that we are only going to build about 93 gigawatts of power plants in the next five years, and that includes all resources: solar, wind, and and gas. Those are the primary sources. Eventually, we'll see some new nuclear coming on, but that's a longer-term prospect, generally speaking. And so, anyway, there's two and a half times more data center interconnection applications than there is expected build out of grid energy. And so, what does that tell us? Well, there's an opportunity for the distributed grid, so to speak, to come to the rescue. We can we can install distributed generation much faster than we can stall utility generation, just because of the the nature of at the utility scale you're in the ISOQ right PJM for example I think the latest I heard it's like it's a five year process to get interconnected if you have a large renewable power plant, right, and and so, yeah. You, if that's your business, fine. You need to have a lot of projects in a pipeline, and and it's it's going to happen, right? But meanwhile, we can sleeve in underneath, so to speak, come in with much smaller projects at both the residential and commercial scale, and community scale, like here in Illinois, we have new legislation called SERGA, the Clean Reliable Grid Affordability Act. SERGA, we call it, and that is incentivizing distributed batteries at both the residential and commercial scale. So, for example, 20 megawatt hour, five megawatt, 20 megawatt hour batteries are going to get sprinkled around mostly close to urban centers as a resource, right, for the grid operator. And a battery is an amazing sponge, right? It absorbs energy instantaneously and it releases energy instantaneously on demand. It is an amazing thing for a grid operator, truly. And but it's only happening because of Sergia, and it's only happening.
• 35:34
  Tim Montague: Things like this are only happening in a handful of places. It is also happening in the TVA, the Tennessee Valley Authority, because the TVA, and they're the they're the grid operator, okay. They just said to all their utilities, look, guys, we want you to be able to load shed up to 10% of your load because of natural disasters that are happening in our geography. And so, what those those are municipal and rural co-op utilities, what they're doing is installing big batteries at substations and comparing them with solar arrays, and the battery is happy to charge from the grid or from the solar. It's a both and, right? And bada beam, bada boom.
• 36:19
  Tim Montague: So, so this this data center explosion ultimately, I think is is going to be okay. Not as much of it is going to get built as gets applied for it. The same way as with any large scale thing, right? We saw this with the Internet One, right? The explosion of the.com ecosystem, and then it kind of shrank, and then it's going to grow over the long haul. We're going to have a great AI economy. If the robots don't take all of our jobs, and I have no, I have I have no clear signal on that. Obviously, many people think the robots are going to take our jobs, and some people think it's going to create a Shangri-La, and I'm just like, well, I'm hoping for Shangri-La because that sounds wonderful, but I'm, I yeah, I'm uncertain.
• 37:04
  Sylvia Martinez: That's why we need to tell Claude thank you and please whatever, whenever.
• 37:06
  Sylvia Martinez: Be nice to
• 37:09
  Tim Montague: Claude for sure.
• 37:11
  Sylvia Martinez: Well, Claude, you're listening. You know that Tim considered you his best friend. So I was just gonna mention that you don't need to go like that far in terms of thinking large infrastructure projects. We see this all the time in utility-scale solar. We have all these announcements. We have this enormous pipeline, and even when we work on the forecasts, we work usually with 90 to 100 gigawatts per year of projects that are in our own pipeline, and then we discount it to reach around 30 to 40, depending on the year, which is exactly that. We know that not everything is going to materialize because of everything that is going on in the market. But is discerning okay, which are the most credible or more experienced developers who already has equipment? How are they doing in interconnection queue? What's happening with permitting? So there is going to be a lot of diligence needed, and that's already happening in the data center front, in any large scale, large infrastructure projects out there. Definitely,
• 38:14
  Tim Montague: yeah. And we even saw the governor of Texas recently said we're going to analyze the AI data center queue. We're not sure if we want to permit all of these data centers, he has a constituency of libertarians. Right, Texas is a very red libertarian state. Do exactly what you want to do as a landowner or business owner, right? With as little regulation as possible, which is why people like Elon Musk have made that their their home now, right?
• 38:42
  Tim Montague: It's just faster and easier to get big stuff done. But even even there, Governor Abbott is saying, "Whoa, there's a lot of data centers coming to Texas. We better look at this. Ultimately, I think he's gonna he's gonna do something that's very business friendly. But he's just he's kind of keeping all of his constituents happy, there is a group of people I would just call them the environmental lobby that is pushing back on data centers because they're noisy. They potentially use a lot of water. They use a lot of electricity. They can be harmful to the environment in other ways. I don't want to live next to a big data center, but I do think we need data centers, and so why would you know? Sure, make some rules about citing them in places that aren't next to a neighborhood, for example.
• 39:34
  Tim Montague: And you know, I'm sensitive to what Elon has done with Colossus in Memphis, where he fired up a bunch of natural gas generators in a low-income community to power Colossus, this huge data center, and I'm like, dude, you know, I get it. It was a speed to power thing, and and it worked. But he also broke some laws doing it, and now you know the EPA said you're going to have to shut off some of those generators because you're contaminating the local environment, and I don't want to breathe air pollution because of the data centers. Yeah, and so we have to be careful. You know, the other the other sad but amazing thing that I've learned about data centers is there's a project in southern New Mexico.
• 40:21
  Tim Montague: I grew up in Albuquerque, New Mexico, so I pay attention to what's going on in New Mexico.
• 40:23
  Tim Montague: In southern New Mexico, there is a data center campus called Jupiter, and it is a 15 gigawatt facility. It's ginormous campus.
• 40:33
  Tim Montague: It's going to be powered by fuel cells that burn methane, and but the and we think of fuel cells as low carbon sources of energy, right? And they are relative to a combustion engine. They have less pollution, less harmful pollution. But guess what? The carbon footprint of that one campus is going to be greater than the city of Albuquerque, the largest city in New Mexico.
• 40:57
  Tim Montague: So I'm like, you know, climate change is real. We need to reduce our carbon footprint, and so those data center developers also need to be sensitive to the scale of the pollution footprint of their projects. And we need to figure out cleaner, safer ways. Like I'm a proponent for a cleaner, safer, healthier future, and that's why I love wind, solar, and batteries.
• 41:26
  Sylvia Martinez: So it seems this is a great segue on on what we discussed in our prep call about going beyond. I think we're reaching this point where just having clean energy is not enough. We need to think about how we can actively restore. And reduce the levels of of of carbon that are right now in the atmosphere. Tell me more about like climate restoration and the role that it plays in all the electrification, the large load discussion.
• 41:57
  Tim Montague: It was such a wake up call for me in 2022 when I read this book called Climate restoration by Peter Fukowski, and Peter has a hard to spell last name, but it's F-I-E-K-O-W-S-K-Y.
• 42:07
  Tim Montague: PeterFikowski.com. He has a great website. He's got a white paper there that explains all this. And I was feeling fairly glum about the energy transition and climate change because I wasn't seeing that we were stepping back from the brink, right? We're at 430 parts per million in the atmosphere today.
• 42:27
  Tim Montague: When I was a kid, we were at 350, and we need to go back to 300 for a safer, healthier future, for for a safer climate, right? So we're we're at 430.
• 42:40
  Tim Montague: We're making the energy transition. By the time we make the energy transition. We're going to be at 450. So you think the fires, floods, droughts, storms, and you know eventually like food system collapse is gnarly now? Well, fast forward 20 years, things are going to be even worse, right? And and as a recent guest on my show, Jim Mann pointed out, we have 20 years baked in. Like it takes 20 years for the the CO two.
• 43:08
  Tim Montague: There's a lag. The what's what's happening in the economy today doesn't really show up for 20 years in the atmosphere. So, anyway, Peter Fikowski pointed out in a lovely thing, which is a it's totally solvable, it's affordable, it's available, and it's permanent. And he analyzed 50 different technologies and arrived at four that he considered to be economical, available, permanent, etc. And they're esoteric for most of us, right? Like ocean iron fertilization. But it turns out the ocean is the answer, and it makes sense, right? Because it covers 70% of the Earth's surface. We don't we don't always think about this if we don't live in a coastal community like me. I'm landlocked. I don't I don't often realize you know even in my day to day go yeah it's a it's a it's a water planet, but anyway, Mount Pinatubo in 1993 exploded. It it blew a bunch of dust into the atmosphere, and that was a natural experiment that demonstrated that iron dust in the in the volcanic ash will fall on the ocean, and it'll cause a blossoming of microorganisms, algae, and those algae then suck up CO two. They are photosynthetic, right? They they absorb CO two from the atmosphere, and then they build shells, for example, and they sink to the bottom of the ocean, and so they sequester carbon at the bottom of the ocean, which is a fairly permanent way of sequestering carbon.
• 44:41
  Sylvia Martinez: I'm interested to see how the conversation around climate restoration evolved, because it seems that anything related to like climate in general has lost traction over the past few years. It's not that, for example, now we we have discussed this before about how clean energy now it's it's regaining traction or has not lost traction not because of the climate component or the clean component is more about the energy independence energy dominance and however other way you can find to rebrand it so at least right now from and taking it back to to the discussion we had previously on large loads, data centers, solar and batteries are still relevant because as of right now, it's the main way to go. It's the main way to achieve power soon compared to a new gas turbine that it's a five-year lead time, more novel, riskier technologies that may not be as attractive for investors. So, what I find it fascinating is that these renewable technologies remain relevant no matter the discourse. And finally, we're seeing this also on the policy side: more and more acceptance of these energies, like beyond the clean factor, it's it's more about the the true relevance that they have and the impact that they have on the economic side, not only on the environmental side.
• 46:14
  Tim Montague: Yeah, I love working in and supporting the solar and battery industry because they are the ticket to speed to power, levelizing the cost of energy for consumers and business owners, and creating a safer, healthier environment for future generations. Right, we can net zero our economy by 2050. We absolutely can do this, and this is vital. And solar batteries are a big part. Right, we've only achieved maybe 20% of our power coming from clean resources in the U.S. Now, solar and wind. We have a long way to go. We could easily use 80% Okay, so you can imagine we're going to at least 4x solar and wind, and then we're going to add a whole bunch of batteries because then we can store cheap solar in the middle of the day and cheap wind in the middle of the night, and then use that power to keep prices down.
• 47:08
  Tim Montague: Right? The battery is just another way to levelize or lower the cost of energy, and so that tripartite-solar, wind, and batteries-is going to be super universal. The battery is the appliance that most consumers and business owners don't realize today that they're going to own in five years? Like we have refrigerators everywhere we go now, and H and air conditioners. But there was a time, you know, 100 years ago when we didn't have those things in common in in everyday buildings, right, and homes, and now we're going to have those batteries, and probably also I'm now convinced distributed data centers, and that's a win.
• 47:53
  Tim Montague: That's a win for everybody involved, and it's going to help us achieve net zero faster. You know, I think Google did an analysis that 40% of rooftops, including commercial and residential are accessible to solar PV, right? We could install gobs and gobs and gobs of solar PV on 40% of of the built environment. The built environment is 6% of the landscape. It's a it's a big percentage of the landscape already. We only need greenfield solar on 1% of the landscape to completely green the grid, and and so we're not going to pave over the breadbasket. We can our farm communities can relax. We need to educate them. I under I appreciate why they feel the onslaught because sometimes projects get concentrated in corridors where there's good resources like power lines or substations, right? And so there's this swarm of development going on, and they're going. Wait a minute, I want my farming community. I don't want an industrial energy landscape, and they don't realize that only a fraction of those projects are going to see the light of day. But anyway, distributed generation is going to be a huge part of the energy transition. I'm a huge fan of utility scale solar and wind as well. It's a both and. We're going to see offshore, onshore.
• 49:08
  Tim Montague: It's very ironic that our our tax dollars are now paying wind developers like Orsted to not build wind farms. I'm just like this. This is lunacy. This is the country I live in, though, and I choose to live here. It's an amazing place. I love America. I am super patriotic. I could live anywhere. I could live in China. I could live in Norway, and those places are cool and interesting. But I choose America, and I'm I'm here to help us have a better future.
• 49:33
  Tim Montague: And I believe that solar and batteries is part of that.
• 49:38
  Sylvia Martinez: I completely agree with you.
• 49:41
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• 50:18
  Sylvia Martinez: To wrap it up, if you have our audience to live with one thing out of everything that we discuss throughout the episode, what would that be?
• 50:27
  Tim Montague: How about one thing we didn't discuss? Okay,
• 50:30
  Unknown: okay, love it. It's related. It's
• 50:33
  Tim Montague: related. I think I think there's a big future for community scale microgrids. For example, check out Craig Lewis's work. I've had him on the show a couple of times on the Clean Power Hour, and Craig runs the Clean Coalition. They're a nonprofit in California.
• 50:45
  Tim Montague: California has microgrid legislation now, so pay attention, people, because what happens in California happens everywhere. It just trickles down five to 10 years later, and I can't remember the name of the program, but it's something like the microgrid resource program or something like that, but they're incentivizing. These are you know microgrids that could that could power community centers, hospitals, schools, and you know significant resources for communities in the event of a catastrophe like an earthquake or a major windstorm or a fire, which California happens to have all of those. One of the reasons I don't live in California, I did live there for 10 years, but I live in a much safer place now here in Central Illinois. And so, the future of the grid is a a grid of microgrids, right? And think of think of those fractal images that we're all familiar.
• 51:41
  Tim Montague: With right these nested images and and that's kind of I think a very important phenomenon that Craig is a major thought leader and catalyst for I mean the guy is a genius and I don't think many installers and energy professionals today are working on microgrids maybe 2% of our projects are microgrids-a very small percentage. But if you think about all the transmission and distribution resources that we might build out versus microgrids, I just think that we need to shift our focus more towards microgrids, and avoid.
• 52:18
  Tim Montague: And what they help us avoid is the build out of transmission and distribution and substations, which are part of that ecosystem, right? So the future is microgrids, and I will stand by that.
• 52:30
  Sylvia Martinez: I love it.
• 52:30
  Sylvia Martinez: Perfect.
• 52:32
  Tim Montague: That's the show.
• 52:32
  Tim Montague: Big thanks to Sylvia Martinez and her team for having me on the interchange recharged. Go check out her show wherever you listen to podcasts, Apple, Spotify, etc. The utility scale view she brings is worth your while. If you take one thing from this episode, take this: the future of the grid is a grid of microgrids, smaller, closer to the load, faster to build, and more resilient when the storms hit. If that's the future you want to help build, I'm writing the playbook for you.
• 53:05
  Tim Montague: It's called Wired for
• 53:08
  Resilience: The Battery and Microgrid Playbook. Reach out to me because I'm actively looking for subject matter experts on microgrids. Connect with me on LinkedIn and let's keep the conversation going. See you in Vegas.