Latest / Energy Empire / The Case Against Off-Grid Data Centers with Tim Hade

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The Case Against Off-Grid Data Centers with Tim Hade · Energy Empire

0:00
What's actually happening is like you have developers
0:02
throughout the country right now that are buying used aircraft
0:07
engines from like, recycled military planes, and they're
0:12
putting those on trailers and they're bringing them to
0:15
locations where they're going to build data centers.
0:18
And they're trying to build power plants out of these
0:21
recycled aircraft engines. And people think that capacity
0:25
is going to come online. Empire Hello, my name is Sugar
0:33
Shah and I'm a clean energy entrepreneur.
0:36
And I'm Jamie Nolan, a clean energy communications
0:38
consultant. And this is Energy Empire.
0:41
Very exciting, Jamie. We've got our good friend Tim
0:45
Haid joining us and, and in perfect timing, right, we just
0:49
got a bunch of crazy, dumb bills that got, you know, released by
0:53
Congress. I think Bernie Sanders had a
0:56
video saying that we should ban all new data centers in the
0:59
country until we figure this stuff out.
1:01
I think Josh Hawley and Richard Blumenthal basically said that
1:04
all data centers should be expected to run off grid.
1:08
I think until, you know, we could justify that they weren't
1:11
going to add to people's electricity bills.
1:14
Like I don't know who's advising these people, but just crazy
1:18
town. I mean, obviously both of those
1:21
proposals are super unrealistic. I think very narrow chances of
1:25
passage. But that being said, I do think
1:28
it is reflective of the fact that there is rising and very
1:33
loud opposition to these data centers in communities across
1:36
the country. And while energy isn't all of
1:40
it, it's certainly a big part of it, just like at a dinner party
1:44
at my house a couple of weeks ago, someone was asking me about
1:48
rising electricity bills here in Virginia and saying, isn't it
1:51
the data centers? And of course I was like, well,
1:53
it's complicated. But you know, when these become
1:56
kitchen table issues, it's it's it's amazing for those of us who
2:00
work in the industry to see people that invested in in what
2:04
we're working on. And and yeah, I mean, there's
2:07
just a lot of nuance to it. And Tim, our favorite friend of
2:12
the pod, so happy to have him on.
2:14
I think there if our listeners are not familiar with him,
2:17
they're going to love him. He's, he's the best, but he has
2:20
a really a really interesting view as someone who has done a
2:25
lot of off grid, like micro grid projects development throughout
2:31
his career through his company scale Scale micro grids.
2:34
That being said, I think he mentions a couple of terms that
2:37
some people may be be familiar with, but others may not.
2:40
So I think we should just clarify.
2:42
So can you just really quickly explain what's the difference
2:45
between a like a battery for example, that's in front of the
2:49
meter versus behind the meter? Yeah, like it goes, it's it's so
2:54
hard to have these conversations without using some, you know,
2:57
like of these terms. So when you do behind the meter,
3:01
that means that that is hooked up after the meter that, you
3:05
know, records how you use power from the grid.
3:08
So that means that if you lose power, you can back up your
3:13
house with that that that battery or your business.
3:17
If you install the battery front of the meter, then it might be
3:21
using part of your land which you get rent for, but it's not
3:24
available to back up your house. And so it's a grid asset and
3:28
it's part of the grid. So like, like the batteries
3:30
right there, but like if you run out of power, you can't use it
3:34
to, you know, turn your power back on.
3:36
And so it's just controlled by the utility and you're getting
3:40
paid rent to have some of your land being used for it.
3:43
Yep, absolutely. So like for example, most
3:46
people's rooftop solar systems and battery backup systems would
3:50
typically be behind the meter on the customer side of the meter.
3:53
So they essentially own or lease and control those systems, but
3:58
in front of the meter is typically owned and controlled
4:01
by the utility. So that's a really important
4:03
distinction. The other thing that we didn't
4:05
talk to Tim about, but I just want to mention here, is that we
4:10
have so many veterans that serve in the clean energy sector,
4:13
right? Because many people served in
4:15
Iraq and Afghanistan and realized that those wars were
4:18
largely about oil and, you know, energy resources.
4:22
And we're like, screw this. Like, I want to work in clean
4:24
energy so that we don't have to have people die overseas for
4:29
something so dumb. And so, like, I think there's
4:31
just a lot of people who serve in the clean energy industry
4:35
that served in the military. I actually know for a fact
4:38
because I worked on this when I worked in the solar office at
4:41
DOE, that there is a higher percentage of veterans in the
4:44
solar energy industry than there is working in the overall
4:47
economy. The solar industry has done a
4:49
great job at recruiting and retaining veteran, a veteran
4:53
workforce. There are a lot of workforce
4:56
like transition programs out of the military into the solar
4:59
industry. So we're really proud of that
5:01
and proud to have Tim on the pod to talk about his journey from
5:04
the Air Force to our sector. So I hope everyone enjoys this
5:09
conversation with Tim Haig. We are joined by a friend of the
6:14
pod, probably the first friend of the pod, you know, Tim Haid.
6:18
Super excited to have you here and we are just going to dive
6:24
right in because you are already one of us.
6:28
Well, first of all, I'm putting that on my resume that I'm the
6:30
first friend of the pod. And secondly, I'm just here for
6:32
Jamie. So let's let's.
6:34
Let's do this thing. We're all just here for Jamie.
6:36
Let's be honest. I was telling Simon yesterday,
6:39
Tim, when I was describing you that I was like, he's like,
6:43
he's, he reminds me of Jigger. He's like a mini jigger Shaw,
6:46
like you very different personas, but just it's this,
6:50
it's your authenticity and you just like you're so uniquely you
6:54
and your, your enthusiasm is infectious and, and you and
6:57
Jigger and your optimism is just, it's, it's just lovely to
7:00
be around. So I've been really looking,
7:03
looking forward to you joining us so.
7:05
Wow, very kind, but the the difference is is that, you know,
7:09
like you can bench a lot more than I can.
7:12
Those those broad shoulders clearly like come in handy, but
7:16
I can buy off the rack where like you probably have to get
7:19
all your stuff tailored. There's well, look, I mean, I,
7:23
I, I've done, I've said many nice things about Jigger and how
7:27
much he's meant to me over the years and I, I have certainly
7:30
learned a ton from him. Well, look, I think, you know,
7:34
there's a lot of reasons to be optimistic right now, right, in
7:37
terms of where we're at as an industry and, and sort of what's
7:39
happening despite, you know, the chaos of the world, I think
7:42
we're in a really good spot from a distributed energy standpoint.
7:45
And, you know, look, more people need to be talking about that,
7:48
right? I think we should, you know,
7:49
this is kind of our moment and we got to capture it.
7:51
And so, you know, hopefully there are more people than
7:54
Jigger and I running around telling people this is a good
7:56
idea. And, you know, let let's make
8:00
that proliferate. It only takes two of us, Tim.
8:02
We don't need anybody else. There we go.
8:04
Kidding. All right, let's go back to the
8:05
beginning. So like, where were you born?
8:09
Paterson, NJ. Paterson with one I.
8:12
Mean, I feel like you've got that New Jersey boy look to you.
8:16
Yeah, yeah, it's, you know, I am, I am a California
8:19
transplant, but New Jersey born and bred and definitely
8:24
according to my wife, that is part of my personality.
8:28
But yeah, like I grew up in a pretty, I don't know, like lower
8:33
middle class, you know, sort of upbringing in, in New Jersey.
8:37
I loved it. I had a great education.
8:41
I lived in a great community. I was surrounded by great
8:43
people. My community was really, you
8:46
know, a huge part of me growing up and, and sort of having some
8:50
of the opportunities that I had. My father passed away when I was
8:52
young. And so, you know, it wasn't
8:54
really like the best nuclear family situation, but people in
8:59
my community really helped me out.
9:00
You know, coaches and teachers and neighbors and friends,
9:04
parents and things like that all kind of looked out for me.
9:08
And you know that that sort of set me up to be able to go to,
9:12
you know, the best undergrad College in the United States,
9:15
the United States Air Force Academy.
9:17
I mean. Is it the best?
9:19
I feel like you. Just went because it's in
9:21
Colorado. Like I mean like being from
9:24
Maryland now. Like I feel like everyone thinks
9:26
Annapolis is the best. I don't even think we need a
9:28
Navy, but the. Oh my goodness, you heard it
9:31
here. OK.
9:34
Yeah, I mean, look. Look, you know, it's, as we say
9:38
at the Air Force Academy. It's 7258 feet above sea level,
9:42
far, far above West Point Annapolis.
9:47
But yeah, you know, so so I, I was in the military for 10
9:50
years. Wait.
9:51
Did you have to go through all of that stuff?
9:53
Did you have to have like a congressman write a letter for
9:55
you? So who wrote your letter?
9:57
In fact, Bob Menendez, who's now I believe in jail was the
10:01
senator who wrote my recommended me to the Air Force Academy.
10:05
So if you're listening from prison, Bob, thank you.
10:08
And he this was pre, I think controversy.
10:14
And then, yeah, I was, I was in the military for 10 years and
10:17
did I was an Intel officer, but did sort of a variety of of
10:21
different things in in while while I was in military got to
10:26
see the world, but a lot of places in the world that not a
10:29
lot of people get to see. And I think that's had a pretty
10:35
a pretty impact, like big impact on sort of how I think about how
10:39
I want to spend my professional time and the type of stuff I
10:41
want to work on in my, you know, post military career.
10:45
And then when I got out, right, it was really at a time when the
10:49
Department of Defense was, you know, talking about climate
10:53
change as you know, the number one national security threat,
10:56
which is something that I believed.
10:58
And I don't know, I think it's like a Co champion with AI but
11:02
like. Well, I mean, getting, like fuel
11:04
to forward bases, yeah, was how we were losing the most, you
11:08
know, soldiers in Afghanistan. And so like so when did you
11:12
discover electricity? Yeah.
11:15
So I think, I think that was kind of it, right.
11:17
So I mean, I've told you this story before, but like my
11:19
initial, my initial, you know, sort of appetizer in the
11:23
distributed energy was, you know, one of the biggest
11:26
problems in Afghanistan was fuel logistics, right?
11:29
So we had all these forward operating bases kind of on the
11:31
border of Pakistan. And the main US base was Bagram
11:34
Air Force Base, which is kind of on the, you know, western side
11:37
of of Afghanistan. And so we had to get diesel fuel
11:41
from Bagram to the forward operating bases, which either
11:45
meant you were flying diesel fuel and then dropping it out of
11:48
planes with parachutes and trying to land it on the forward
11:50
operating bases, or you were driving fuel convoys across
11:54
Afghanistan. And it was the worst job in the
11:57
military, right? And the casualty rates were
11:59
preposterously high. And so there was sort of an
12:02
experimental program at the time where they were looking at, hey,
12:05
can we power forward operating bases with solar and batteries?
12:08
And so we don't have to do as many fuel convoy runs to the
12:11
forward operating bases. And we couldn't really figure it
12:14
out. I mean, this was like 2007,
12:16
2008. So technology wasn't where it is
12:19
today by any means. But even then, right, you could
12:22
start to see the writing on the wall, which is like, oh, like
12:25
battery technology is actually evolving really, really quickly.
12:28
And solar technology is evolving really, really quickly.
12:31
And so you could kind of see where this was going.
12:34
And then, you know, that's sort of what sparked my interest in
12:37
the commercialization of these technologies.
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And you know, I've been working on it ever since.
12:42
I love that. So you left the Air Force.
12:45
Did you immediately start your company, scale micro grids?
12:49
Like what was the what was your evolution out of the military
12:52
and into the private sector like?
12:54
Yeah, so I went to grad school for two years right after the
12:58
military, predominantly because I had no idea what I wanted to
13:01
do. I didn't even know anything
13:03
about the private sector. And so, you know, I think
13:06
mostly. Just because you wanted to be in
13:07
California, right? Yeah, I mean, it wasn't I, you
13:10
know, it wasn't a bad experience in, in, in grad school.
13:13
I had fun. But the but yeah, it was, it was
13:16
mostly like kind of trying to figure out like, OK, I have this
13:19
skill set that I've developed. How does that translate into the
13:22
private sector? And I didn't really figure that
13:26
out, right. So I, I was still kind of
13:29
working on that. And then fortuitously, my best
13:32
friend from growing up, who's currently the CEO of Scale Micro
13:35
Grids and is still my best friend in the world.
13:38
He was a Boston Consulting Group at the time and he decided he
13:41
was going to leave Boston Consulting Group and go back and
13:44
take over his family's diesel generator business.
13:47
They had this like little diesel generator business in Northern
13:50
New Jersey, you know, that provided service to events And
13:55
really their calling card was like they did resilience
13:58
projects for like big complicated projects in New York
14:02
and, and the surrounding area. So they did like Goldman Sachs's
14:05
data center and Verizon's 911 call center, like they did all
14:09
the backup power for that. And so my buddy decided he was
14:12
going to go back and take over that business and try to turn it
14:14
into a sustainable energy company.
14:17
And we started with cogeneration.
14:19
And so he kind of pitched me on that.
14:20
And I was like, yeah, I don't have anything better to do, so
14:22
let's go. And so we started a cogeneration
14:24
company and went through an acquisition there.
14:28
So that business was bought by Centrica in in the UK.
14:32
And so like sort of five years after that, I was really
14:37
convinced that the future of distributed energy was solar and
14:40
storage. And Sentrico just purchased a
14:43
cogeneration business and was very interested in me doing
14:46
cogeneration projects. And so I kind of decided to look
14:49
like, I think I'm going to go focus on solar and storage and,
14:52
and create this new thing. And so that was sort of the, the
14:55
precipice of scale. And then Ryan came with me.
14:59
And so Ryan and I started scale with Duncan Campbell and Pete
15:03
Krasco and Ryan's dad Howard in in 2015.
15:07
And you know, scale micro grids became my life for the next 10
15:10
years. And then I sold that in
15:12
February, as you guys know, and have been kind of a free agent
15:15
ever since. So when when I met you at scale,
15:20
we had already seen a bunch of these Cogen projects.
15:22
Like for those people who don't know what Cogen is, it's largely
15:25
natural gas powered generators that then, you know, you take
15:29
the heat off of the natural gas generator and you also use the
15:33
heat. So that's the Cogen part and you
15:35
use it for cooling, for heating, for lots of things, right.
15:38
And so one of the things that we realized very quickly at
15:43
Generate Capital after meeting you guys, is it like you could
15:46
look at any system design and basically in like 5 seconds go,
15:50
yeah, it's not going to work or yeah, it probably could work,
15:54
right? Why?
15:55
Why is it that you and Ryan and the team had that level of like
16:00
insight on like these types of projects where everyone else
16:05
basically couldn't figure it out, like without doing $50,000
16:09
worth of engineering work? Well, because he's brilliant,
16:12
but I'll let him answer. No, it like look, I think I like
16:20
maybe the answer is because I'm not brilliant, right?
16:24
Look, I think, I think ultimately, right.
16:27
Like what we figured about out about cogeneration really,
16:30
really quickly was you basically needed the perfect customer in
16:35
order to pull a project off, right?
16:37
And what we saw from a lot of our peers in the space was they
16:41
would spend so much time trying to jam round pegs in the square
16:46
holes, right? And so they would go and they
16:48
would look at these projects and, you know, maybe the, you
16:52
know, HVAC system wasn't perfect or maybe the incoming service
16:55
entrance wasn't perfect. But like, we can work around
16:58
that and we'll figure it out and we can engineer our way around.
17:01
This stuff and. You know, look, when you when
17:04
you talk about, you know, bigger projects and you know, we'll
17:06
talk about data centers in a little bit, right?
17:09
To some extent you can afford customization and you can afford
17:12
for those projects to be kind of snowflakes.
17:14
But when you're talking about the types of projects that we
17:16
are working on, which is sub five MW scale, like it either
17:21
works or it doesn't work right. And it basically requires sort
17:23
of this perfect set of circumstances in order to work.
17:27
And So what we started to do is we started to say, look, instead
17:29
of trying to, you know, model these projects based on 10,000
17:33
different parameters upfront, let's just come up with a
17:36
heuristic that we can use to kind of, you know, take all the
17:41
bad stuff, all the projects that aren't going to work and just
17:44
dismiss them very, very quickly. So we can spend our time working
17:47
on the stuff that, you know, has a higher probability of working.
17:52
And, and candidly, I don't even remember exactly how we got, you
17:56
know, we developed that strategy.
17:57
I think it was mostly trial and error, right?
17:59
So it was just kind of, you know, I spent a lot of time in
18:02
the early days working on projects that we would spend 6
18:05
months on and then we would find out like there's a $200,000
18:08
engineering upgrade that we don't have a budget for.
18:11
And so like now that project's dead.
18:13
So I think a lot of it was iterative and trial and error,
18:16
but ultimately we came up with this ability to kind of, you
18:20
know, source these projects really, really quickly.
18:23
And that allowed us to spend the bulk of our engineering time and
18:25
our money and our, you know, limited sales dollars and
18:28
marketing dollars and things like that on projects that had a
18:32
high probability of working. And that allowed us to have a
18:34
higher conversion rate than most other people in the space and
18:37
ultimately get more projects done.
18:40
And again, I think, you know that that's kind of the same
18:44
approach that I've taken throughout my, you know, career
18:47
as a developer, right? Which is ultimately what
18:50
matters, is delivering a really compelling value proposition.
18:53
Well, to fail fast and throw away that projects aren't going
18:56
to work. I mean, like what's interesting
18:58
is that Congressman cast in his father and his company recycled
19:03
energy Development sort of did something similar, right?
19:05
And they were very successful and sold.
19:07
And I think they're expertise was yeah, exactly the same,
19:10
which was they said no to like 99% of the opportunities that
19:13
came in because they weren't going to make money on it.
19:15
In your case though, I want to dig deeper in, in this a little
19:18
bit because like the biggest problem with Cogen, as you know
19:22
is electric utilities like had your number and really wanted
19:25
you to fail. And they had these standby
19:26
charges that were priced exactly where they needed to be to make
19:29
sure your economics didn't work. But like, but then the big
19:33
breakthrough that came through I think was with the cannabis
19:36
industry, right? Because they were sort of like
19:38
buying up 500 kilowatt interconnection warehouses and
19:42
then trying to stuff 2 megawatts worth of lighting in there.
19:45
And they couldn't get interconnected fast enough at 2
19:48
megawatts. So they were like, we need a
19:49
Cogen system. So like talk about like talk
19:53
about the like role of luck versus preparation, right?
19:57
Because you clearly like knew what you were doing, but that
19:59
was all like grinding it out business, right?
20:01
Like the first big, like, you know, group that was just
20:05
willing to pay you cash was really the cannabis industry,
20:07
right? Yeah.
20:09
I mean, look, I think the, you know, my my entire career in
20:14
distributed energy, right? I've been in search of product
20:16
market fit, right. And I think ultimately when we
20:22
looked at the cannabis industry in 2015, we saw a few things,
20:27
right. The first thing was we had a
20:30
theory that Hillary Clinton was going to be the president and
20:35
Hillary Clinton. And then she was, she was going
20:37
to like smoke cannabis all the. Way, yeah, she was going to, she
20:40
was going to kind of, you know, facilitate the legalization of
20:44
cannabis on a federal level. And obviously that was a great
20:47
hypothesis that worked out perfectly.
20:50
Perfectly, but you know, there there there's sort of that
20:53
movement was happening, right? This is post, you know,
20:55
legalization in Colorado and Massachusetts and California and
20:58
some of these bigger markets were, you know, coming up and at
21:02
the time it was like a $6 billion a year business, but it
21:05
was also uninsurable and unbankable, right.
21:07
And so if you think about, you know, how cannabis is still to
21:12
this day mostly cultivated, it has to be within state lines.
21:16
And so if you're going to grow cannabis in Massachusetts,
21:19
you're not going to do that outdoors, right?
21:20
You have to do that in sort of a controlled environment, which is
21:24
both legislatively and from a weather standpoint dictated that
21:29
that's how you have to do it. So now you have this warehouse
21:32
full of cannabis that's worth millions of dollars, but you
21:34
can't insure it. And so power resilience becomes
21:38
really, really big for you. You're also, you know, at the
21:41
time, and I haven't looked into this in a while, but at the time
21:44
energy costs were like 40% of total operating costs were
21:48
cannabis cultivators. So energy economics mattered a
21:51
lot to them. And so the idea was basically
21:53
like, we have this product in a micro grid that adds resilience
21:58
to your facility and can be done cheaper than, you know, the
22:02
utility rate can reduce your cost and you care a lot about
22:04
both of those things. And then, oh, by the way, right,
22:07
like there tends to be a big overlap between people who are
22:10
growing cannabis and people who care about the environment.
22:13
It wasn't like a one for one thing, but sustainability
22:16
definitely mattered. And so, you know, again, we
22:18
thought that that was really good product market fit.
22:21
And so we started to work in that industry and look like
22:25
there's I think a somewhat infinite infamous version of the
22:29
energy gang where I went on the energy gang in in 2015.
22:32
And I like told this whole story.
22:33
And then Jigger was like, you're fucking crazy.
22:35
This isn't bankable. And.
22:37
He was right. Right.
22:38
And so like we made some progress in the in the cannabis
22:41
industry. But all well.
22:41
Then I think we funded you at Generate.
22:43
Yeah, yeah, yeah, Like it wasn't, it wasn't a big.
22:47
Market just because, you know, a lot of these deals we just
22:50
couldn't get, you know, the creditworthiness wasn't there,
22:52
the collateral wasn't there, things like that.
22:55
But like in building those projects, we made a bunch of
22:58
huge technical breakthroughs, right?
23:00
And so right now scale is doing some of the most pioneering work
23:03
in the Co located data center space, right?
23:05
And they're doing that by combining solar and storage and
23:09
natural gas and power electronics to be able to
23:13
support the needs of data centers and AI compute clients.
23:18
And a lot of the reason they're able to do that is because of
23:21
stuff that we figured out when we were building these cannabis
23:23
projects 10 years ago. And so, you know, I think
23:26
that's, you know, part of, you know, my big lesson learned
23:29
from, you know, this whole experience I've had in the
23:32
distributed energy industry, right, is success isn't linear,
23:35
right? So one of the things that we
23:37
talked about in the first episode of Energy Empire was
23:41
around my journey at Sun Edison and that when we sold the
23:46
company in the end, right, because of the 1X preference,
23:49
you know, that we had ahead of us, like we didn't, you know,
23:51
all make a lot of money off of there.
23:53
I think that was a similar result for you guys.
23:59
I'm curious, like if you had to do it all over again, would you
24:03
have taken the money from Warburg Pincus or would you have
24:07
just sold the company then? I mean, look, it's, it's, it's a
24:12
good question, right? And so, you know, I think what
24:14
Jaeger's touching on, right, is something that a lot of
24:16
cleantech founders deal with, right, which is, you know,
24:20
historically the sticker price on these transactions is really,
24:25
really high. How that flows through to
24:28
founders and employees and the people that build the business
24:31
is in as big a proportion as one might think, right?
24:35
And so I don't know, right, it's created some social problems for
24:38
me, right, where if you like go on the Internet and you look up
24:41
like scale micro grids is sold for whatever number, you know,
24:44
they wrote in the press release, you know, people assume that
24:46
like, you know, I can buy Montecito or, you know,
24:49
whatever. And that's definitely.
24:51
Your Bitcoin wallet is getting hacked every day.
24:53
Yeah, exactly. You know, and and and so.
24:56
Look, like with, with, with that said, right, Like I've made more
24:59
money than I ever thought I was going to make.
25:01
And I can't really complain on that front.
25:04
But look, yeah, I think, I think, you know, thinking about
25:08
the the business model and the funding mechanisms for clean
25:14
energy is, yeah, something I wish I had known more about
25:19
right at the time that we did all this stuff.
25:21
I mean, look, I think part of this thinking, right, is it's
25:25
all contextual. And so, yeah, I mean, look, the
25:28
short answer is like, no, if I had to do it again, I would have
25:31
taken the Warburg Pincus deal again.
25:33
You would have. Yeah.
25:35
Like, look, the reason, the reason for that is that you
25:38
know, if you go back. To sort of 2019 when we closed
25:41
our big funding round with Warburg Pincus, it was
25:44
essentially a $500 million line of credit.
25:48
There weren't a lot of people that were willing to make that
25:51
kind of bet on scale microgrids, right, like Warburg Pincus was.
25:55
And, you know, we didn't have like, you know, 50 or 100
25:59
people, you know, running an auction process to try to fund
26:02
our company. We had a few people who were
26:05
interested in doing it. And then ultimately, you know,
26:08
we thought that, you know, Warwick Pincus and their skills
26:10
and their capabilities were sort of the best strategic fit for us
26:14
to, to take the business forward.
26:16
And, you know, look like overall that experience was really,
26:19
really good. And so, you know, again, I
26:21
think, you know, ultimately there are a lot of things I've
26:25
learned since then. And I think, you know, the work
26:27
that Jigger and Jonathan Silver are doing at Multiplier, like
26:30
This is why it's so important. Because if you're the founder of
26:33
a company or you're an early employee at a company, like you
26:36
should be thinking about how the funding for this business is
26:39
structured and what that's ultimately going to mean to you
26:42
when you have an exit opportunity, whether that's two
26:44
years or five years or 10 years down the road.
26:48
And I didn't know any of that. And I didn't really think about
26:50
that a lot when I was doing it. And, you know, hindsight being
26:54
5050, do I wish I knew more about it?
26:56
For sure. Do I wish Multiplier existed
26:59
when we were doing this? Like, yes, but you know, again,
27:03
I think, you know, part of this is, you know, now I know, right.
27:06
And so as we start looking at like the next things I'm trying
27:08
to take on or the next challenges in my career or, you
27:11
know, how I'm going to sort of, you know, build the cap table
27:14
for companies that I work in or advise moving forward.
27:17
You know, now I have that, you know, sort of experience to to
27:20
lean on and I, you know, know some things now that I didn't
27:23
know then. Well, I'm not.
27:24
Going to cry for you on the journey, Barbara So.
27:27
Yeah, and I live in Santa Barbara, so it's not the end of
27:29
the world. All right, let's let's
27:31
transition to your hot take. All right, so like, let's.
27:35
Go to the data center stuff. Yeah.
27:37
So you're now in a place where our friend Elon Musk, not, not
27:43
really our friend, but, you know, has, you know, turned on a
27:48
data center in record time. It was like 22 days or whatever
27:51
it was in Memphis, right? Using basically, you know,
27:56
natural gas generators and then connected it to the grid and
28:00
then put in a bunch of Tesla mega packs.
28:02
But it is somehow convinced the entire state of California and
28:08
all of the Silicon Valley Bros that you can run a data center
28:12
off grid. Like what the hell?
28:15
Like, like set it straight. They use all of this technical
28:19
knowledge that you've amassed to like help us understand this
28:24
behind the meter thing, off grid data centers, whatever.
28:29
All right, so all right. So the basic idea right is we
28:35
there are a lot of problems with the US electric grid supporting
28:40
the data center build out at the scale that Silicon Valley wants
28:43
to to build out. And so the idea that's become
28:46
very, very prominent is we don't need to connect data centers to
28:49
the grid. We're just going to build data
28:51
centers with Co located power generation.
28:54
And then they won't be on the grid and then we won't need to
28:56
use the grid for data centers, right?
28:58
And I think right now that you know, according to the report
29:00
Jager sent me last week, there's 56 gigawatts of these Co located
29:05
data centers in the key. People who have lost their God
29:07
damn mind. Yeah, so like my.
29:10
Let's credit the author of that report.
29:12
That's Michael Thomas at Clean View.
29:14
We love his stuff. I love his data visualizations.
29:17
Of note in that report he put out, there is a chart that shows
29:22
that data center power plants would use five times more
29:26
electricity than New York City. 46 data centers with a combined
29:31
capacity of 56 GW gigawatts plan to build their own power plants.
29:36
They would use five times more electricity than New York City.
29:40
Why? Yeah, so, so look.
29:42
I guess like my hot take right is that my best guess is 80% of
29:47
those projects won't get built right and so like because. 20%
29:51
of them are so dumb that they're just going to finish the
29:52
project. No, no, no, look, I like, I, I
29:55
think they're all right. So the way to think about this,
29:58
right is the thing people miss is putting a power plant next to
30:02
a data center is like 20% of the work, right?
30:05
The hard part is the power electronics.
30:07
So like the way to generally think about this is it's the
30:11
difference between building a power plant and building a
30:13
utility, right? That's the difference between
30:16
building like a natural gas power plant and a Co located
30:19
data center. A Co located data center is its
30:21
own utility, right? And and the hard part is in the
30:24
middle, right? And so when you think about
30:27
like, I guess the best way to like summarize this is like data
30:31
centers are essentially like power electronics Divas, right?
30:35
They have all these like weird quirks and weird characteristics
30:38
and they have inrush currents and harmonics and these fast
30:41
ramp rates and like nonlinear current, all these like crazy
30:46
electrical characteristics that make it really, really, really
30:49
difficult to load balance locally.
30:51
Right. I'm going to quote you in your
30:53
paper that you sent me, which I know has not been published, but
30:56
we might have to force you to publish it.
30:59
You say when people say we need more electrons, what they're
31:02
actually saying is we need more short circuit strength, more
31:07
reactive support, and more tolerance for fast ramps.
31:11
What does that mean? Yeah.
31:13
So essentially what what you're talking about here, right, is
31:18
you put like a data center is essentially a shell that hosts
31:22
these GPUs, right. And how GPUs that behave in a
31:27
training capacity is something that candidly everyone is still
31:30
learning about, right? But what the initial data shows
31:33
is that some of the power, power characteristics of these things
31:36
are crazy, right? So they'll go from like using 5
31:40
watts to 1 Watt in a millisecond and the system has to be able to
31:45
respond to that. So if you connect data centers
31:47
to the electric grid, which is how we've connected datacenters
31:50
to the electric grid forever, that's the only way we build
31:52
datacenters until recently, right?
31:54
You benefit from the inertia of the grid, which means you can
31:58
have these like momentary lapses in frequency or harmonics or
32:03
inrush. Kern or whatever.
32:04
The case might be and the grid will backstop.
32:07
You, and that's what you mean by short circuit strength.
32:10
So the short circuit strength is basically that if the data
32:14
center has a generator on site, right, and that gets out of
32:18
phase with the data center characteristics, it'll force
32:21
that generator to shut down, right?
32:23
It'll have a short circuit trip and it'll force that data center
32:26
to shut down. If you're connected to the grid
32:28
and you have that same system act, that same system
32:32
characteristic happen, then the grid create has the inertia to
32:36
be able to backstop that problem so you can keep the data center
32:38
online. So ultimately what you're,
32:40
you're talking about a system up time, which matters a lot to the
32:43
data center providers, right? And so like stepping back from
32:47
this, the high level way to think about it is building a Co
32:51
located data center is a massive power electronics challenge.
32:55
Now, the reason I think 20% of those 56 gigawatts of planned
32:59
projects are going to get built is because there are companies
33:03
that are good at doing this, right?
33:05
So like my former company scale Microgrids can build Co located
33:09
data centers and Sheldon Kimber at Intersect Power can build Co
33:12
located data centers and like the Crusoe guys can build Co
33:16
located data centers, right? There's like.
33:18
Maybe like I think that like I think scale microgrid could get
33:22
to 3 nines reliability which is not 5 nines reliability for
33:26
sure. And then like Sheldon is not
33:29
really building off grid data centers.
33:31
He filed for interconnection permits for his solar projects
33:34
five years ago in Texas. So those are going to be grid
33:36
connected systems with a hybrid like power plant behind it,
33:42
which like I think is the right way to go, right, is to have
33:46
behind the meter resources, whether it's natural gas or
33:48
solar, but to have a grid connection, right?
33:51
Like he's not forgoing the grid connection.
33:54
And I think Crusoe like God love Cully and company, but like I
33:59
think they've like, you know, created like 2 big like power
34:02
quality issues on the Eurcock grid already.
34:05
Yeah, I mean again, right, I think so.
34:07
So the question of like is it possible to build Co located
34:11
data centers is yes. Is it a good idea is a different
34:15
question. All right, so the next the next
34:17
thing I'm going to quote you on is you say, but colocation is
34:21
not a hack around the grid. It is the decision to become
34:25
your own utility, not just in ownership, but in technical
34:28
obligations. The grid interconnection point
34:31
is not merely a wire, it is access to an infinite bus, a
34:35
massive system that provides voltage, stiffness, frequency
34:39
stability, high fault current, and an ocean of inertia.
34:42
When you step behind the meter, you don't just change who owns
34:46
the electrons, you change the physics of the power system.
34:51
Correct. All right.
34:54
And then the next thing you say is none of this is to say
34:57
colocation is foolish. It will work in some places for
35:01
some projects, especially when executed by firms that know how
35:03
to build and operate power plants.
35:05
But the idea that colocation can meet can scale to meet the
35:09
entire wave of AI load growth assumes a labor market, a supply
35:13
chain, a permitting environment that does not exist.
35:17
Yeah, I mean look right like that that's so so again, right
35:21
like there are firms that can build Co located plants, right,
35:27
but it's not a lot of. Firms.
35:28
Right. There aren't a lot of people
35:29
that know how to do this. And then on top of this, like
35:33
the people that you talk to at those firms, like the guys who
35:36
run the engineering teams at those firms, like they are so
35:42
focused on every single piece of equipment that's part of that
35:45
ecosystem and making sure that that piece of equipment is like
35:49
a Tier 1, you know, product that's been tested and works
35:52
well within the context of the rest of the ecosystem and all
35:55
this kind of stuff. So there is a way to build them.
35:58
Now let's look at what's actually happening, right?
36:01
What's actually happening is like you have developers
36:03
throughout the country right now that are buying used aircraft
36:08
engines from like, recycled military planes, and they're
36:13
putting those on trailers and they're bringing them to
36:16
locations where they're going to build data centers.
36:19
And they're trying to build power plants out of these
36:22
recycled aircraft engines. And people think that capacity
36:26
is going to come online. So how much do you have to hate
36:28
your fellow neighbor to do that right?
36:31
So the next like the next like quote here, the core mistake in
36:35
the build a plant next to every data center world view is
36:38
treating the grid as a static obstacle.
36:40
The grid is not just where power comes from, it is the
36:43
reliability machine that makes modern electricity usable.
36:47
Even Co located projects lean on it for backup, for trading, for
36:51
reserve sharing, and often for the very fuel and maintenance
36:54
ecosystem that keeps generation online.
36:58
Yeah, right. It's just like the grid is the
37:00
answer for data centers, right? And so like we kind of have this
37:04
problem backwards. So the idea that basically like
37:07
data centers are the things that should come off the grid is the
37:10
exact opposite of what we want to have happen, right?
37:13
And so first of all, from a power quality standpoint, the
37:15
best way to build a data center is to hook it up to the grid.
37:18
And the only reason you should be messing around with Co
37:20
location or anything else is if you can't hook the data center
37:23
up to the grid, right? So then the question becomes
37:26
like, well, can we hook up more data centers to the grid?
37:30
And the answer is yes, yes. Yeah, right.
37:32
I mean, I feel like this is like, in part, like people who
37:36
move to Florida and then decide to live in a private gated
37:40
community with private security, sending their kids to private
37:43
school and then voting for like, you know, cutting taxes for
37:48
everybody who lives in Florida. It's like, well, just because
37:50
you have the money to build a private neighborhood with a
37:54
private security with a private school, doesn't mean that you
37:57
don't like want to be a part of an overall system that actually
38:01
has a robust like public safety network public school, like
38:06
public ecosystem. Like I just feel like like in
38:09
some ways, like it's not only will it not work, like I don't
38:13
think even scale micro grid or alpha structure Shiner electric
38:16
or whatever is going to do better than 99.9% reliability.
38:20
But like on top of that, it's so freaking selfish.
38:26
Yeah, I mean, I think it's even Dumber than like the private
38:28
school, private community example, right, Because
38:31
presumably those people in Florida are paying for a premium
38:34
service, right. But like what the hyper scalars
38:38
are paying for with these Co located data centers is
38:40
something that's not as good as the grid, right.
38:43
And so like it the, the, the fundamental way that people
38:47
should be thinking about this is there is a symbiotic
38:51
relationship between a good grid and building a lot of data
38:54
centers, right? And there is a way to connect a
38:57
lot of compute to the grid in a way that not only allows hyper
39:02
scalers to build all the data centers they want, but also
39:04
lowers retail rates for consumers by increasing grid
39:07
utilization, right? And that's what we should be
39:10
focused on, right? And, and the way you do that is
39:14
you make grid utilization a metric so we can talk about the
39:17
fact that the state of Virginia just did this, right?
39:20
And so. Yeah.
39:20
With like, with everyone voting for it. 99 to nothing in the
39:25
House, right? It's the, it's like something
39:27
that there's bipartisan agreement for, which is like,
39:29
you know, what we should measure is grid utilization.
39:32
And when you measure grid utilization, what you're likely
39:34
going to find is a lot of utilities are operating their
39:37
distribution systems at 40 to 50% capacity factors or 40 to
39:42
50% efficiency. And then the question is like,
39:45
well, is there a way to increase that efficiency?
39:48
Because if we can increase that efficiency, then we can move the
39:50
same number of kilowatt hours through the grid for the same
39:53
fix or more kilowatt hours through the grid for the same
39:56
fixed cost, which lowers rates. And the answer is like, yes, we
39:59
can do that, right? How do we do that?
40:01
Load flexibility generally. Right.
40:03
And that's generally batteries. It's taking the 2% of commercial
40:07
sites, which is like 150,000 locations across the country,
40:11
adding 250 kilowatts to five megawatts of batteries at each
40:15
site, right? And so the customer gets
40:18
resilience. It's like a community
40:19
lighthouse. If you put it in a school,
40:21
right? Or a church or whatever, they
40:24
get revenue for hosting it there.
40:26
And like people pay rent or whatever, or they have a free
40:28
battery there. At the data center, companies
40:31
pay for the capacity from the battery.
40:33
So in the end, the data center companies are actually paying
40:36
for the batteries, right? And so it's a win win, right?
40:38
And like, one of the quotes you have in here is like, if you're
40:41
a community starting at a data center, you're basically saying,
40:45
trust us, we'll bring you 0 permanent jobs.
40:47
That's not really always that compelling.
40:49
But if you say we're paying to harden local businesses and
40:53
public buildings with batteries and backup capability, that's
40:56
tangible. And it's a way to convert local
40:59
opposition into local benefit, and to convert a permitting
41:03
fight into a deal. Yeah.
41:05
And, and look, I think this is important, right?
41:07
Because you know, part of this argument is about energy
41:11
economics, right? And just on energy economics,
41:14
the answer is like, don't make the data center flexible.
41:17
Make the grid around the data center flexible, right?
41:19
And the plan to do that is like measured grid utilization and
41:22
then improve load flexibility via the deployment of batteries,
41:25
right? So that like if you just focused
41:28
on the energy economics issue, like that's the answer.
41:31
But like what's actually happening in the data center
41:34
world right now, right, is there's 2 problems.
41:36
There's speed to power, which is how long it takes you to get
41:40
interconnected to the grid and there's speed to permit, which
41:43
is can you get a permit from your local ACA to build the data
41:47
center? And increasingly the bat
41:49
bottleneck is becoming speed to permit, right?
41:52
And so like, I didn't know this until, you know, our knob and
41:55
the fine folks that deploy action gave me a PowerPoint
41:57
presentation, but they went out and they like collected all this
42:00
pull data and the pulling on data centers is awful, right?
42:04
Like I think they showed us that 80% of the people they talk to
42:09
are opposed to data centers being built in our local
42:11
community. Yeah, Microsoft is still waiting
42:14
for permission to start construction of their data
42:16
center in Wisconsin, which is like a state that, like,
42:20
features Ron Johnson as their senator And like, you know,
42:24
generally are like, yeah, do whatever the hell you want to
42:26
do. We don't care.
42:27
And like, and, like, the people in Wisconsin are just pissed.
42:30
They're like, you guys just try to railroad us.
42:33
What's going to make people really like data centers is
42:35
putting a bunch of old airplane engines right in their backyard
42:39
and pumping out a bunch of local air pollution.
42:41
That's going to be great for everybody.
42:44
Yeah. And like, you know, I think one
42:45
of the things that's like kind of bothered me in our
42:49
conversations with the hyper scalers, right, is like, you
42:54
know, their view on this is basically like, well, the local
42:56
people just don't understand, right?
42:58
Like they don't understand that actually data centers put
43:02
downward pressures on rates and they're misinterpreting the data
43:05
and all this kind of stuff. It's way more complicated than
43:08
that, right? When you talk to these people.
43:10
And I had this great conversation with Arnab about
43:13
this, but the feedback they were getting from local community
43:15
members wasn't like ignorant feedback, right?
43:18
It was like, we first of all, like, this isn't creating jobs
43:23
for us, right? It's creating a bunch of
43:24
construction jobs for the 18 months it takes to build the
43:27
data center. And then like, basically no
43:29
jobs, right? Also, like, we don't really know
43:33
how we feel about AI and how fast this shit's going, right?
43:37
And we have some concerns about that.
43:39
That goes to cost overbuild right?
43:42
Like, I mean, if you, if you say yes to like Duke Energy's $103
43:46
billion proposal to like build out their grid, right?
43:50
And then the data center load doesn't show up, then someone
43:52
still has to pay them back, right?
43:54
And so like, part of the reason why grid utilization and
43:57
batteries are so smart is that it's like 110th the cost.
44:00
And like if, if the data center load doesn't show up, which
44:04
that's the other point that I think we need to make, which is
44:06
that like the data center companies are combining training
44:10
with inference, right? Like and like it's very clear
44:13
that you need 1000 megawatts of chips in one place to do the
44:17
training. Like doing training in a
44:18
distributed fashion is like super complicated and hard,
44:21
right? I get that.
44:22
So the news. That's what people tell me.
44:23
I I still. I mean, I don't know that I get
44:25
it, but I I believe that when they say that, right?
44:27
Yeah. But like, that number, according
44:30
to Anthropic, is only 25,000 megawatts that they need for
44:33
training, right? But they're asking for like
44:36
100,000 megawatts of new data centers in these 1000 MW blocks.
44:40
Even NVIDIA came out with a format like a month ago saying
44:44
we could build a bunch of five MW data centers and fit them
44:47
nicely into the existing infrastructure for inference.
44:50
And inference is like when you pull up Jack GBT and you just
44:53
like use it, right? That's just inference, right?
44:56
That's not the training, That's just using it, right.
44:59
And so like, like, part of what pisses me off is that all of the
45:04
data companies are deliberately not answering the question of
45:08
like, how much, how many megawatts you need for training.
45:11
And I think the answer is 25,000 megawatts.
45:13
But like, they won't answer it. And so now we have this feeding
45:16
frenzy of developers who are going all over the country,
45:19
lying to people on a regular basis trying to get them to give
45:23
them permission to build a data Center for a data center they
45:26
probably aren't even going to have permission to build because
45:30
we don't need it for training. Yeah, I mean, look, I, I, I
45:33
think the like everything you said is right, although I would
45:36
I wouldn't say like, I don't think anyone at the tech
45:41
companies is lying per SE. I just think they don't know,
45:44
right. And so like one of the things
45:46
that was fascinating when I was like, right, writing this, this
45:49
little. Paper for you guys right is so
45:53
like LBNL did this their their most recent forecast right I
45:57
wrote this down so. That's our Lawrence Berkeley
45:59
National Laboratory. Yeah.
46:00
So their projection for electricity consumption in 2028,
46:06
right, which is 2 years away is between 325 and 580 terawatt
46:13
hours. So like most of the time when
46:16
you looked at this, like when, when I was growing up and you
46:18
would look at these spreads, that spread would be like, it'll
46:21
be between like 300 and 310 terawatt hours.
46:25
And you'd be like, ah, all right, like narrow band.
46:28
Like now it's 325 to 580, which basically means like no one
46:33
knows anything, right? Like people don't know how much
46:36
compute and how much electricity AI is going to use, right?
46:39
It's anyone's guess. And so when you think about
46:42
this, right, it's like part of the planning process needs to be
46:46
planning for uncertainty, right? And so if you build A1 GW power
46:51
plant in the middle of Louisiana and it turns out you were wrong
46:54
about your compute forecast, you have a one GW facility that's
46:58
fucking useless, right? But if you take that same one GW
47:03
and you deploy that in the form of, you know, 10,000 distributed
47:06
batteries around a distribution network, and it turns out you
47:10
don't need that GW now, you have a better network, right?
47:13
And so ultimately, right, like part of this is like
47:17
understanding that there's so much uncertainty around the load
47:21
forecast and building a flexible infrastructure so that we can
47:24
adapt as we need to, right? And that's one of the things
47:27
about distributed energy, right? You build it from the bottom up,
47:30
which means it's inherently more flexible than building it from
47:33
the top down, which means if we're off by 10 or 15 or 50%,
47:37
right, we can adapt in real time and either ramp up or ramp down
47:41
appropriately, which you just can't, can't do with bigger
47:44
stuff. And so again, I think like
47:46
people are just thinking about this the wrong way, right?
47:49
The idea is not like take data centers off the grid.
47:53
It's build a grid that's more accepting of data centers.
47:58
And if we do both of those things right, we're going to
48:00
have a better grid and lower rates and we're going to have
48:02
all the compute power we need. And again, right, I, I, I think
48:06
sort of spending time on it, alternative strategies at this
48:10
point is just kind of a waste of time.
48:12
Well, the batteries end up becoming like an emergency
48:15
reserve. Yeah, right.
48:17
Like, I mean like, who doesn't want an emergency reserve like
48:20
it's. Great, right?
48:21
If, if, if, if you do it like that, right?
48:24
And like the load doesn't manifest right now, all of the
48:27
sudden you have this load flexibility that you can use to
48:30
be really attractive to like A next generation robotics
48:33
company, right? Or a manufacturing facility that
48:36
wants to stand up, right? You can now offer people cheap
48:39
flexible power in spots where they want to build
48:42
infrastructure. And so again, right, like, it
48:44
should be a national mission, right, to upgrade the grid to
48:47
the 21st century. We've been talking about that
48:49
forever, right? That was a big part of your
48:51
industrial policy in the Biden administration.
48:54
Like, we should do that. And the load growth that data
48:58
centers are creating is providing the vehicle for us to
49:00
do that. And the fact that we're not
49:02
doing it is, I don't know, annoying, but we're getting we.
49:06
Are there's definitely bright spots, right?
49:09
But it still seems like, I mean, who, who does this message need
49:13
to reach? Like, is it the hyperscalers?
49:15
Is it the utilities? Is it like, you know who's
49:18
creating the the permission structure here that we need to
49:22
like, make this a reality? I think it's largely the
49:25
governor's. There's over 30 governors races
49:29
this fall. Every one of them is going to
49:32
lose their governor's race unless they have an answer to
49:36
how they're going to manage all this data center stuff, right?
49:40
Like, people do not want to be trampled by hyperscalers.
49:44
And so the governors are going to have to ensure that they're
49:48
going to protect their voters from being trampled by the
49:52
hyperscalers, right? And they're going to, like, have
49:54
to ensure that all of these best practices are followed, right?
49:57
And so, like, I hold our elected officials accountable to making
50:01
sure that they're not just chasing the $25 million a year
50:04
of property taxes that the hyperscalers are going to pay,
50:08
but they actually are making sure that it is a net positive
50:11
for the community in the way that Tim outlined, which we
50:14
passed as law in Virginia. But I think you know, lots of
50:18
places around the country are looking to do the same thing.
50:22
Well, they need to call up Tim Hayde.
50:24
He's their guy. He's got he's got the playbook.
50:27
No, look, I like Jamie, I think I think Jigger's right, like the
50:30
governors have a big responsibility.
50:32
But like, look, I think this is candidly why, like leadership
50:35
matters, right? And I think ultimately, like, I
50:40
don't know who's going to lead the charge on this.
50:42
It doesn't seem like it's going to be secretary, right, right.
50:46
And, and, you know, ultimately, I think, you know, what's
50:50
happening in DC right now is really, really fascinating
50:52
because look, I think candidly, right, like, and Jigger and I
50:57
have talked about this. I mean, you know, part of the
50:59
issue here is that, you know, for the hyperscalers and really
51:02
we're talking about 7 companies, right?
51:07
You know, those, those folks have always been big procurers
51:11
of energy, but energy has never been a core competency of those
51:14
businesses, right? So if you go talk to like the
51:16
C-Suite people in these, in these organizations, like
51:19
they're new to energy, right? They're thinking about this
51:22
stuff. For the first time.
51:24
And I think that's where you're seeing the most progress, right?
51:27
Like they're pretty quickly coming to the realization that
51:30
like load flexibility matters, right?
51:32
And we need to figure out how to increase load flexibility and
51:36
work with the community. Our friend Tyler Norris wrote
51:38
that paper and then got hired by Google.
51:40
For sure, right? Like every Google's hiring
51:43
everyone that we know, right? And and.
51:47
We got to get invited to the next Google Party.
51:49
Yeah, I know they're like packing the bench over there and
51:52
I'm like, I, I'm excited to see what they're going to do because
51:54
it looks exciting from the outside.
51:56
Well, look, Tim, it was such a pleasure to have you on.
52:01
You are most certainly going to be on again probably as like a
52:04
Co host when like I'm on vacation but like.
52:08
Just talk. Shit about Jaeger the whole
52:09
time. I mean, like that's the best,
52:12
but like I am just so happy that you agreed to come on.
52:17
Like I said, you know, friend of the pod number one, but thank
52:21
you so much for being here. No, I'm so proud of you guys.
52:24
This is awesome and I can't wait to subscribe and listen to every
52:28
episode. This is the best.
52:35
Wow, I love talking to Tim. He is truly a Tour de force.
52:40
It is so hard to like come out of a conversation with him
52:45
without learning so much. But we covered a lot, right?
52:49
We covered his background right, why he's such an expert, but
52:53
also the fact that he doesn't think most of these off grid
52:56
data centers are going to get built.
52:57
Yeah, I mean, Tim is the guy on this issue and I love that in
53:01
preparation for our recording, he just like shot over a very
53:06
heavily researched 8 page position paper for us on this
53:11
topic so that we could study up and prepare.
53:15
Clearly he has a perspective and I just wonder when the hyper
53:18
scalers are going to be knocking on his door because I feel like
53:22
he's got it all figured out. Well, I feel like they're
53:25
already knocking on his door. I mean, when you think about his
53:28
trajectory, and it's one that I think we heard a little bit from
53:31
Dean Solon about, but it's certainly my own trajectory at
53:34
Sun Edison and then at Generate Capital, which I started with
53:37
Scott Jacobs and Matan Friedman in, you know, 2014.
53:41
A lot of this is preparation, right?
53:43
And then you're waiting for luck, right?
53:45
So like in his case, you know, he was trying to do the right
53:48
thing for like farmers and Agri business and other types of
53:52
companies that wanted to build these sort of Cogen micro grids.
53:56
It was slow going. Like, I mean, I was there with
53:58
him like every step of the way. We were funding a couple of
54:00
those deals. So it was slow going, but then
54:02
the cannabis industry took off and there was a lot of good
54:05
business there. And then, you know, Warburg
54:07
Pincus came in with a lot of money and then, you know, EQT
54:11
finally came in and said, we're going to pay a lot of money
54:13
because we have several big investments in data centers and
54:17
we want you guys to build off grid data centers just for our
54:20
data centers. And so they paid a lot of money
54:22
for for scale. Like, I mean, it's unfortunate.
54:26
It sounds like he didn't become like filthy rich because he, if
54:30
anyone deserves to be filthy rich, it's Tim.
54:32
But it's actually a clear story of like what happens in this
54:37
industry is like, timing is a lot of it.
54:40
But also, you know, what your financial structure and
54:42
capitalization looks like is part of it too.
54:45
I mean, Warbur Pink has clearly negotiated a deal where they got
54:48
a lot of the spoils from the EQT, you know, payout and the
54:53
employees got less. He didn't seem bitter about it.
54:55
He seemed very at peace. I mean, if I lived in Santa
54:58
Barbara, I would probably be at peace, too.
55:01
What was it when you first met Tim more than 10 years ago that
55:05
LED you to like kind of take him under your wing as, you know
55:09
your mentee and like what did you see in him and kind of how
55:14
has that relationship evolved? Because I know that that's you
55:17
play that role for a lot of folks in the space.
55:21
Well, I think you know that I I really just can't tolerate
55:24
assholes. And there's just so many
55:26
extraordinary people in our industry that are assholes.
55:29
And so I just don't like, I just don't follow up and hang out
55:34
with those folks more than I have to.
55:37
But I think the other thing that we just talked about with his
55:39
exit, right, was people who are grateful, right?
55:42
And some of that's like, you know, growing up in a small town
55:45
like you and I did in, you know, Illinois for me and Maryland for
55:49
you. But like, you know, for him in
55:50
Paterson, NJ, I think there's there are folks who are actually
55:53
grateful for the position that they're in.
55:55
And I think that that comes through in ways that like, are,
56:00
you know, appreciative of the people around us who make our
56:02
lives easier and, you know, like, and all the, you know,
56:05
ecosystem that supports us and like, all that stuff.
56:07
And like, I just, I have very little tolerance for people who
56:11
just think that they're the center of the universe and that
56:13
everything revolves around them. And Tim is definitely not one of
56:16
those people, which is fantastic.
56:17
And, and it's very obvious that the guy's brilliant.
56:20
Like, just like, just like Gab smacking like, like how
56:26
brilliant he is. And enthusiastic and he makes
56:30
you feel like you you leave. I think after talking it's him
56:34
feeling empowered like you're like let's go build some shit
56:37
like yeah, we can get this done. I think that's that's his best
56:40
quality. I think Tim is evident of the
56:42
fact that this is this is the day for distributed power and.
56:47
And now we, as he mentioned, need to be thinking in billion
56:51
dollar scale instead of $1,000,000 scale.
56:53
And that's, that's the theme of the year.
56:57
That's that's what we're here to explore on Energy Empire.
56:59
So I'm excited to talk to more change makers like him that are
57:03
actually really building big shit.
57:05
Yeah, what do they say? If not now, when?
57:09
If not us, who? Absolutely.
57:13
As always, thanks for listening to Energy Empire.
57:16
We are produced by Simon Bergbahm.
57:19
Review us on Apple podcast and Spotify.
57:22
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57:25
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57:28
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57:38
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