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Alex Fitzsimmons on the DOE's 'Energy Dominance' Agenda · Columbia Energy Exchange

• 0:00
  Alex Fitzsimmons (00:04):
• 0:01
  American energy dominance is about building the most affordable, reliable, and secure energy system possible. And if you look at policies of the previous administration, we're focusing on replacing that energy subtraction agenda with an agenda focused on energy, but especially sources of energy that contribute the most to peak demand
• 0:02
  Jason Bordoff (00:25):
• 0:03
  Under the second Trump administration, the Department of Energy has undergone significant reorganization and shifts in its funding priorities. Many of these shifts are part of the administration's energy dominance agenda. But one significant point of continuity with the Biden years is a continued emphasis on energy security. Energy security, of course, means different things today than it did even a decade ago. It's about competing in the global race for artificial intelligence, reshoring manufacturing, supply chains, and keeping the lights on as extreme weather events become more frequent and more destructive. But the administration's efforts to bolster energy security and availability at a time of surging load growth has included emergency orders to keep coal-fired power plants operating, for example. It's pulled back funding for new energy transmission projects that it says will not quickly lower energy costs for American consumers. So when it comes to the administration's energy dominance agenda, what are the trade-offs between security and speed? What does the administration's waning support for renewables and low carbon industries mean for American clean energy innovation in the coming decades? And how will the US build out new power capacity including advanced nuclear quickly and safely?
• 0:04
  (01:43):
• 0:05
  This is Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I'm Jason Bordoff. Today on the show, Alex Fitzsimmons. Alex is the acting under secretary of the US Department of Energy. He also directs the Office of Cybersecurity Energy Security and Emergency Response known, as CESAR, which protects energy infrastructure against cyber and physical threats. Before this, Alex was chief of staff for energy secretary Chris Wright. He also worked in the Department of Energy's office of Energy Efficiency and Renewable Energy during President Trump's first term, after which he served as a senior director at ClearPath. And then as head of government affairs at Sila Nanotechnologies.
• 0:06
  (02:32):
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  Alex joined me to talk about protecting the nation's energy infrastructure and the evolving threats that the CESAR office confronts every day. We discussed grid resilience and how the energy department is adding energy capacity at a time of surging load growth. Alex shared what the administration means when it talks about American energy dominance and we talked about efforts to grow more energy infrastructure, including nuclear. more quickly and meet rising power demand. I hope you enjoy our conversation. Alex Fitzsimmons, welcome to Columbia Energy Exchange. Great to see you again and have you on for the first time in the many important roles and hats that you're wearing at the Energy Department. Good to see you.
• 0:08
  Alex Fitzsimmons (03:10):
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  Of course. Thanks Jason. It's great to be with you.
• 0:10
  Jason Bordoff (03:12):
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  In terms of what I was just referencing, you kind of have at least two quite important jobs overseeing a major part of the department, and maybe I'll start with the more focused and narrow but quite important role, which is the head of CESAR. And so let's talk about that a little bit and then come to some of the broader issues that as in the undersecretary role you are surely paying attention to. Just for people listening, explain what that CESAR office is, what its scope and focus is, and then have a couple of questions for you about it.
• 0:12
  Alex Fitzsimmons (03:43):
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  Yeah, I'd be happy to. So CESAR is an office that was created during the first Trump administration and its mission is quite simple. It is to strengthen the security and resilience of the energy sector. And CESAR is an office that one of the only offices within the entire federal government that is solely dedicated to strengthening security and resilience across the entire energy sector. So everything from oil, natural gas to the grid, all the sub-sectors involved in the broader energy system. And so it's a relatively new office, but it has an incredibly important mission, one that's only growing in importance as we understand an evolving threat landscape from nation-state threat actors that wish to do us harm as we are dealing with an energy system that has to accommodate much larger load growth and is building a lot of new generation transmission. All of these components and sub components are integrated together in a system that's becoming increasingly complex facing a threat landscape that is increasingly complex. So our fundamental responsibility within the CESAR office is to provide timely and actionable information to the energy sector that is then used to inform the development of world-class cyber and physical R&D. That information and that r and d is then used to secure and harden us critical energy infrastructure that hardening and security helps us prepare to respond and recover from cyber and physical incidents, the lessons learned from which help us provide timely and actionable information to the energy sector. So that is the life cycle of CESAR activities that we conduct every day.
• 0:14
  Jason Bordoff (05:26):
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  And is that mostly an electricity thing or is that really quite broad and extends way beyond to other parts of our hydrocarbon system, our pipeline system and all across the board.
• 0:16
  Alex Fitzsimmons (05:38):
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  It's broad. It includes everything that I mentioned. Obviously the security and resilience of the bulk power system is incredibly important, but we also have strong partnerships with the sub-sector of the industry that deals with oil, natural gas, that deals with pipeline safety and security. It's all incredibly important.
• 0:18
  Jason Bordoff (05:55):
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  Severe weather events, extreme heat, extreme cold, wildfires. A lot of people have seen high profile incidents where those affect the power system. I'm curious from your standpoint, you've said before that the threat landscape to the energy sector is evolving, intensifying, and I was just wondering if you could say a little bit more about what that looks like from what you're seeing. And obviously there's only so much you can say about cyber threats and other things, but what's not well understood, what's sort of the most significant threats that your office is dealing with that may not be broadly appreciated by the public?
• 0:20
  Alex Fitzsimmons (06:31):
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  Yeah, I think people on some level understand that the energy sector is foundational to modern life. As Secretary Wright says, the energy sector is not just a critical sector of the economy, it is the critical sector that makes every other sector possible. We know that and so do our foreign adversaries and so do nation state threat actors. So it's why within the 16 critical infrastructure sectors that the Homeland Security Department categorizes energy is the single most important one. It enables all of the other ones. We know that and so do our adversaries. And so I think one thing we've learned recently within the last couple of years looking at increasing threats from nation state threat actors through salt and volt typhoon, is that foreign adversaries are pre-positioning inside of our networks, both on the IT and the OT side. They're seeking to hold our critical infrastructure at risk for a time and place of their choosing, including potential future conflict scenarios.
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  (07:34):
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  They're also lying in wait, and they're quite patient. So there has not been a major disruption to the US bulk power system, for example, from a nation state threat actor. And one of the reasons is not necessarily because they couldn't pre-position today or aren't pre-positioning in some networks today, it's because they are potentially saving it. They're saving those access points, saving those intrusion points for a time and place of their choosing when we might be most at risk. And so I think that is something that's definitely not well understood and it's something that the CESAR office works very hard on each day to make sure that we try to make known. And one of the ways that we do that is, as I mentioned, our ability to provide timely and actionable information to the energy sector is incredibly important. We are cleared, we have clearances, we have access to threat information that the vast majority of the energy sector does not have, even though the energy sector, 80 plus percent of it is owned and operated by the private sector. And so we've developed capabilities like the energy threat analysis center and other tools that we have to try to where we'll have DOE staff alongside cleared industry partners where we can analyze threat information as it's coming in in real time, figure out what the vulnerabilities are, how to try to mitigate it, and then get that information back out to the private sector in a timely and actionable way.
• 0:24
  Jason Bordoff (09:06):
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  My sense from just reading what is publicly available is that our energy system and electricity system are probably a lot more vulnerable to attack than the American public generally realizes. Is that sort of a fair characterization?
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  Alex Fitzsimmons (09:22):
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  I think that's fair.
• 0:28
  Jason Bordoff (09:24):
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  And the primary way to, what are the set of tools to address that? I assume it's a lot of public private cooperation. What's the role of the government? As you said most of the assets are privately owned. How could you characterize the offensive and defensive capabilities to the extent you can talk about them? What's the strategy? What's the approach that you think about when trying to address these things?
• 0:30
  Alex Fitzsimmons (09:44):
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  Yeah, I think it starts as I mentioned, with our ability to provide information, threat information in an actionable way, and we have capabilities that do that. Then I think we also need to stay at the cutting edge of technology. So I mentioned another part of CESAR's mission, which is to develop a world-class cyber and physical security technologies. And so we have this one program that's called AI forts, AI for operationally resilient technologies and systems. And the goal there is a recognition that our adversaries are investing in AI enabled offensive cyber weapons. And so we need to be doing the same thing on the other side to secure and defend our networks. And so this program is designed to secure the energy system from AI, secure with AI and then secure the AI itself. And so we have to stay at the cutting edge of technology, especially for a lot of the energy industry that a lot of the larger companies have.
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  (10:45):
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  Well, well-staffed, sophisticated, well-resourced IT and cyber teams. And then you have a lot of rural municipalities and cooperatives that just don't, that may have one person that's working on it, let alone cybersecurity full-time, but yet they're expected to defend their networks against nation state threat actors. And so that creates a very challenging environment, but it's where tools that CESAR offers can really help them level up their game. And so we co-invest in a lot of technologies. We also do a lot of exercises, so that's where the public private partnership comes in, where the sector risk management agency for the energy sector, we have sub-sector coordinating councils with the electric power sector, with the oil and gas sector where we not only meet on a regular basis, but we also develop strategies. We do tabletop exercises, we do red team and blue team, and we're trying to understand where the weak points are, how to address them.
• 0:34
  (11:45):
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  We also have a robust cyber supply chain testing program. It's called Citrix something that do DOE/CESAR runs. It's a multinational lab effort where we can procure grid components, tear them apart, find the vulnerabilities, figure out how to mitigate them, and then get those solutions back out to the private sector. And that's incredibly important. Perhaps more important now than ever as we have these ambitious goals, we know load growth is exploding and we know we might have to build a hundred gigawatts of new capacity and supporting infrastructure by 2030. That is hundreds of thousands of new components and sub components that are being added to the energy system on a daily basis. Vast majority of those are not tested from a cyber standpoint. So we need to work with some of the key vendors that supply the vast majority of the grid components. A lot of them are already in the Citrix program, but we need to really double down and triple down on our supply chain testing efforts. That's where we can get some of the biggest bang for the buck on the security side.
• 0:36
  Jason Bordoff (12:52):
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  In the broader conversation about energy security, which has as kind of risen back to the top of the agenda for many reasons recently, along with issues of affordability that we'll talk about. Energy security traditionally people talk a lot about oil and gas markets, geopolitical risk, what might happen with a civil war or a conflict somewhere. And then we talk about particularly clean energy and electrification installing solar panels or wind turbines or batteries to store that energy or EVs. And the concern there is different. The concern often is dependence on China for a very large share of supply chains. And that raises the question where people start to say things like, well, stocks and flows are different. We're not buying electricity from China, we're installing a product like a solar panel. And once it's installed, what's the risk? And I think for people who are very quite close to this, their answer is, well, you might be concerned about if you're buying all your solar panels 90% from China anyway, for other reasons if those supply chains get cut off. But even leaving that aside, these are kind of quite digitally connected devices and there are security risks when we think about a broad ecosystem of products and technologies that might be exposed. I'm just wondering what you can share or say about that and how we should think about that.
• 0:38
  Alex Fitzsimmons (14:15):
• 0:39
  Yeah, I think it's an important point from a security and resilience standpoint, as I mentioned, apart from all of the traditional grid components that are being added to the system every day, you see the growth of DERs, I think from wind, solar and batteries. And that means the attack surface is expanding and there are just more points of entry for potential adversaries. And that creates challenges. And I think we were always concerned about not necessarily a single point of entry from an adversary, but how an adversary might be able to enter a network and move laterally across a network, especially if it's not secured, go from the IT to the OT and get to some larger system of systems and components and that can do some real damage. And so I think all of that is true, and it underscores why when we're talking about meeting load growth, we're talking about winning the AI race, onshoring manufacturing, all of the new things we need to build in a rapid amount of time. We cannot allow for security to come at the expense of speed. So we have to be able to prioritize both. And I think the energy sector understands that, especially the folks who are involved in keeping the lights on the grid operators, keeping the power plants running, keeping the pipelines flowing. The operators understand that. But I think that discussion, the importance of prioritizing speed and security can sometimes get lost among policymakers here in DC and we're trying to make sure that that doesn't happen.
• 0:40
  Jason Bordoff (16:02):
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  And in this moment where electricity is sort of front of the conversation in a way we haven't seen for two decades or so where we've had relatively cheap electricity prices, relatively flat growth in electricity demand and that's changing quite rapidly. And this huge AI driven build out of power generation capacity, huge amounts of capital being spent by the tech community. Is that a risk to more surface area vulnerability or is that an opportunity to make a lot of investments that harden the system? And do you see that happening? Is there a good private public cooperation there? What should be happening?
• 0:42
  Alex Fitzsimmons (16:39):
• 0:43
  I think it's both. I think it's definitely a risk but also a huge opportunity. And it's one that we have to get the United States has to be at the leading edge of innovation. When we need electricity, we need energy, we need more energy, not less. And we need, especially we need the right kinds of reliable dispatchable generation that can help contribute to peak demand and provide energy when it's needed and to run all these data centers and these manufacturing plants. And so yes, it's a risk, but it's a tremendous opportunity if we get it right. And I think there is a lot that we are doing on the supply chain front. Like I mentioned, we have this robust cyber supply chain testing program. I think there's significantly more that we need to do over the next few years to double down triple down on the resources for that. But what we want to try to avoid is a trade-off between speed and security. I think it was not as much of an issue when as you said, you have flat load growth and you're just going through the regular planning process of adding new generation as it's needed. But now we're talking about building new infrastructure so rapidly that we need to make sure that it's also being built securely.
• 0:44
  Jason Bordoff (18:02):
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  Yeah, I mean it seems to me there you want to minimize that trade off, but there may inevitably be some, there's a multi-year backlog for new gas turbines. The administration's doing a lot to shorten the timeline to new nuclear, but that still takes a long time. Solar, for example, is going to grow rapidly. I think even the EIA energy information administration projects that, and most of those solar panels are now manufactured in China. That's just the reality. It would take a long time to change that. So there sort of probably is inevitably some trade-off between security and speed that one has to figure out how to manage. Right.
• 0:46
  Alex Fitzsimmons (18:35):
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  I would certainly say so.
• 0:48
  Jason Bordoff (18:36):
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  And do you think when you look at the so-called Texas miracle and how the state has weathered three or four Uri equivalent style storms by hardening gas infrastructure, but also thanks to a lot of solar and batteries is sort of the lesson there that we really need all of that to be part of a resilient energy system?
• 0:50
  Alex Fitzsimmons (18:56):
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  Yeah, sure. But I also think it's important to recognize, and we can use winter storm fern as an example here of what actually kept the lights on what was doing the lion's share of the work. We did an analysis as Secretary Wright had a press conference recently where we were talking about all of this, 85% of the electricity that was delivered during winter storm fern among impacted regions came from three sources, came from natural gas, coal and nuclear in that order resources. And then as you know in New England, they were getting 30 to 40% of their electricity from oil from fuel because they won't build enough natural gas pipeline capacity there. Clearly a problem. But those are the resources that kept the lights on here. I think as you pointed out, EIA shows the vast majority of new capacity additions in the near term coming from solar and storage.
• 0:52
  (19:48):
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  I think there is a role for solar and storage, but I think the problem is you have to look at the seasonality of it. So solar does not contribute meaningfully to the energy system during wintertime. And we saw that during winter storm Fern. And so the energy system, the electric grid especially, is built to meet peak demand. When energy is needed most, it's built to meet peak demand and if we can't hit peak demand, people die. And so the grid operators, NERC and others have been warning for years that we have resource adequacy, shrinking reserve margins all across the country at risk of energy shortfalls within this year in some regions in the Midwest and within the next few years. It shouldn't be like that in the United States of America. And there's a main reason for that. It is because in some regions, and especially under the previous administration's policies, they were committed to trying to prematurely retire reliable dispatchable generation that gets its capacity accredited by the grid operators at peak demand in the summer and increasingly in the winter. So if you shut down those resources before the end of their useful life and you are replacing them with non dispatchable resources that only get between five to 25% of their capacity accredited by the grid operators and you're facing much higher load growth, that's a real problem. And so that's what we're trying to solve.
• 0:54
  Jason Bordoff (21:20):
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  Yeah, certainly the case that you need to meet peak demand, and I'll come back to that in a minute, but in the context of rising power demand, a lot of concerns about affordability. I guess a question would be whether is it fair to say the right approach there would really be an all of the above approach and that would include solar and wind and batteries. I mean the offshore wind projects that have gotten canceled recently have gotten a lot of attention, for example, and leaving aside debates about climate change or decarbonization, just the idea that we need kind of every electron we can get now, why is that not the right way to think about the need to bring more power generation capacity onto the grid?
• 0:56
  Alex Fitzsimmons (22:00):
• 0:57
  Well, I think we need to look at both cost and value, and ultimately we should be trying to optimize for both. We want the most reliability at the least cost because our fundamental responsibility is to keep the lights on and deliver energy and electricity where and when it's needed. And so that's where the distinction between different types of electricity come in. And it is important to recognize that there are trade-offs between dispatchable resources and non dispatchable resources. That's why just looking at something that may have a low fuel cost but doesn't account for the capacity factor or recognizing the hidden cost of transmission that it takes to carry that power from where it's generated to where it's needed, the load centers. So we have to try to optimize for both cost and value. You would put a lot more value on a resource that you could depend on when it's needed.
• 0:58
  (23:03):
• 0:59
  And so you will see a lot more capacity additions coming from solar and storage. And I think that there is certainly a role for that going forward, but we also have to remember what capacity we actually need when it's needed most. And this is where the nonpartisan grid operators who are responsible for maintaining the integrity of the bulk power system, when they tell us that they will only accredit a relatively low percentage of wind and solar capacity to help meet peak demand, that should tell you something that should tell you you that we need to be investing in affordable, reliable, dispatchable generation, new generation, but also preventing the premature retirement of that capacity. Especially when we're looking at the load growth numbers that we're looking at. I mean historically about 0.5% compound annual growth rate in power sector from a load growth perspective, now we're looking at 2% CAGR or more. In utility planning terms. That is incredibly fast. And so the idea that we could continue to shut down our most reliable dispatchable generation and only or predominantly replace it with non dispatchable generation, I just don't think that works. And more importantly than me saying that that doesn't work, that's what the grid operators say won't work.
• 1:00
  Jason Bordoff (24:36):
• 1:01
  Yeah, I mean we certainly see the market, as you said, pointing a lot toward an investment in solar and batteries, also natural gas generation and firm power as you said. When you say premature retirement, I guess, are you mostly talking about coal-fired power plants? Is that what you're referring to?
• 1:02
  Alex Fitzsimmons (24:52):
• 1:03
  Yeah, that's right.
• 1:04
  Jason Bordoff (24:53):
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  And that obviously has been one of the administration moves that at least in some areas has been controversial, kind of the continuation, requiring the continuation of certain of those coal-fired power plants that was scheduled to shut down. I think in several of those cases, even the utilities there have expressed concern that they were being asked to bear additional costs or keep some of those plants alive. Some stakeholders have criticized some of those emergency orders as being unnecessary or uneconomic. How would you respond to those concerns?
• 1:06
  Alex Fitzsimmons (25:29):
• 1:07
  I would say that under the leadership of President Trump and Secretary Wright, President Trump declared national energy emergency on day one because of all of the reasons we talked about. You saw power prices that skyrocketed 20 to 30% over the previous four years. You saw shrinking reserve margins all across the country. DOE did a study last year that found on the course that we were on prior to the Trump administration coming back, we were set to lose about a hundred gigawatts of reliable dispatchable generation, a lot of coal, but also natural gas and some other thermal generation by 2030 at the same time that we would have to build potentially a hundred gigawatts of new generation and supporting infrastructure to win the AI race and onshore manufacturing. If we allowed that to continue, it would've resulted in 100 times more power outages by 2030, not 100%, 100 times more loss of load hours, more power outages by 2030.
• 1:08
  (26:28):
• 1:09
  The most expensive thing that can happen to the energy system is a power outage, is a blackout both in terms of human lives and just cost to the system. And so President Trump and Secretary Wright have been working to rapidly stop the bleeding, stabilize the energy system that we have. Just last year, the 202-C orders that Secretary Wright issued in combination with the number of discussions we've had resulted in saving 17 gigawatts of reliable power that was set to shut down last year that would've otherwise left the bulk power system if it were not for our orders. And so you look back at winter storm fern just a couple weeks ago, several of those plants that were subject to 2 2-C orders were running, were running and we're providing electricity to help meet peak demand during the storm. And so PJM, for example, has supported a lot of the 202-C orders that we've issued. They're kind of in the center of all of this. I think it's a recognition that the status quo was not acceptable and that we need as much reliable dispatchable generation as we can get because that is some of the highest value electricity and capacity that we have in our system.
• 1:10
  Jason Bordoff (27:40):
• 1:11
  Ask you about transmission, both how much we need to build and also resilience and reliability. So what's now the energy dominance financing office formulate the loan program office, which has canceled some loans for some of those long distance transmission lines like grain belt express at a time when energy demand is rising, we need a lot of power coming onto the grid. Is the reason for that the same as what you said a moment ago about the administration's perspective on what's more or less economic? Is that how we should think about and understand pulling back financing for some of those transmission projects?
• 1:12
  Alex Fitzsimmons (28:18):
• 1:13
  Well, I'm glad you mentioned transmission because I think transmission is incredibly important and we need more of it, but we need more of the right kinds of it. And so think if you look at the last 20 years where capital expenditures on the generation side have actually declined, whereas capital expenditures on transmission distribution have tripled and some of that is necessary hardening at the local distribution level like for wildfires and things like that and some cyber hardening. But a lot of it was also driven by this belief in unconstrained new transmission build out to accommodate variable sources of generation, which as I mentioned is a hidden cost that's often not factored into the levelized cost of those resources. And so in the Trump administration, we support transmission, but we support transmission that will actually increase reliability and decrease cost. And so right now there are billions of dollars of system congestion costs all across the country that get passed along to rate payers every single year.
• 1:14
  (29:26):
• 1:15
  And that is because we have sufficient generation at each end, but we don't have enough transmission to push the electrons where they're generated to where they're needed, that should not happen. And so as you said, our reconstituted EDF office recently closed a 1.6 billion loan with AEP to upgrade their transmission system across a variety of states. You're going to see a lot more from us investing in upgrading our transmission system, reconductoring grid enhancing technologies. We're using existing rights away where you can dramatically expand the capacity of the line at much lower costs and much faster than it would take to build an entirely new line. We should be doing that, but we have to conduct the analysis of where it can make the biggest impact and impact in terms of strengthening the integrity, the stability of the bulk power system, but also reducing system congestion costs, which over time can actually put downward pressure on rates. So that's our goal.
• 1:16
  Jason Bordoff (30:28):
• 1:17
  Say a little more about where you see the economically viable opportunities for transmission investment right now. Again, there've been a large number of projects that I think have been pulled back. States and project developers may see the opportunity to build transmission connected to renewables, maybe states have decarbonization goals. It sounds like your intention is to shift some of the funding that's been pulled back. Where will it be going and how do you view, you've seen those statistics, right? China's added more generation to the grid than the entire US power grid just in the last four years, the amount of investment is so staggering right now. Where do you see it needing to go?
• 1:18
  Alex Fitzsimmons (31:07):
• 1:19
  Yeah, I think you'll see some more news on that soon. We're conducting a comprehensive analysis of where we think we can get the most bang for the buck from a transmission investment standpoint. And that is where those areas of congestion or highest, where you have high locational marginal pricing and it happens to coincide with a lot of areas that are experiencing high load growth and haven't been able to build a lot of new generation. And these also happen to be some of the areas that are at the highest risk of energy shortfalls in the next few years according to NERC. So there's a lot in PJM, a lot in miso, but not exclusively. And so I don't want to prejudge where that work will come out, but I think you will see a lot of investment on both the grant and the loan side, specifically targeting transmission system congestion.
• 1:20
  Jason Bordoff (31:59):
• 1:21
  Can you talk, let's just step back for a moment when obviously the administration and Secretary Wright talks often about energy dominance. I think I saw you at the meeting of the National Petroleum Council and he was talking about it there. How should we understand what that means, the goal of energy dominance for a country that is already the largest oil and gas producer in the world and a net exporter?
• 1:22
  Alex Fitzsimmons (32:19):
• 1:23
  It's a great question. I think American energy dominance is about building the most affordable, reliable, and secure energy system possible. I think if you look at policies of the previous administration were focused on energy, subtraction and resulted in dramatically higher power prices. As I mentioned, 20 to 30% or more in parts of the country think we're focusing on replacing that energy subtraction agenda with an agenda focused on energy edition, but especially reprioritizing sources of energy that contribute the most to peak demand that can optimize for both cost and value and that can put downward pressure on prices over time. So if you can overbuild as much intermittent variable generation as you want, and that is fine the vast majority of the time, but it does not obviate the need for reliable dispatchable capacity to meet peak demand. And so that is what we are trying to work towards and those are the sources of energy that we're going to prioritize.
• 1:24
  (33:26):
• 1:25
  And so for example, we have a three-pronged strategy around stabilizing, optimizing and growing the system. So we've done a lot of that stabilization work in the first year. As I mentioned, the secretary's 202-C orders saved around 17 gigawatts of reliable power that would've otherwise left the bulk power system. We're also leveraging, this is a really new tool that we have. We're leveraging around more than 35 gigawatts of backup power at data centers and other major industrial sites. This was a month's long effort that the DOE staff worked on. There was not one big list of all the backup power across the country, which we found kind of hard to believe, but there is tons of backup power. I know mostly diesel generators, but also batteries and other forms that are being added to support large load. And so we undertook a comprehensive analysis by region, by grid operator and we characterize that resource and we were able to empower all of the regional grid operators with their list of backup power that could be tapped, for example, during a major winter storm.
• 1:26
  (34:41):
• 1:27
  And so several regions including PJM and Duke and New England actually asked for a 202-C order on back of power. Fortunately they didn't have to use it. We see it as a last resort, as a last resort, right before you'd have to shed load. And so we didn't have to use it there. Although Florida right after winter storm fern, there was that prolonged cold snap that moved through much of the southeast Florida, got some of the worst of it, record low temperatures there. We issued a 202-C order for backup power in Florida, and they did leverage that backup power and that helped them actually keep the lights on. Their margins were so thin that in certain parts of the state that backup power made the difference between them keeping the lights on and not at a critical time. And so now this tool, this is a new tool that all of the grid operators will be able to leverage going forward to help keep the lights on and mitigate power outages.
• 1:28
  Jason Bordoff (35:39):
• 1:29
  That's really helpful. So I hear you defining energy dominance as addition, not subtraction, and a lot about reliability and affordability. By the way, tell me if this is unfair. I'm wondering if people listening might say, well, if Biden's goal was energy subtraction, he wasn't very effective at it. Like the growth rate in oil and gas production in the four years he was in office was pretty high and probably higher than we'll see this year. So is that a fair critique? I know there were high profile things like a pipeline project here or a pause on new permits, not existing, already permitted projects for LNG, but there was a lot of oil and gas growth in those four years. No?
• 1:30
  Alex Fitzsimmons (36:21):
• 1:31
  Yeah, and look, I wouldn't overlook those things that you just said trying to shut down the Keystone XL pipeline, pausing LNG export applications. These are policies that we reversed on day one on the LNG export side, and Secretary Wright says this, the oil and gas industry actually does a lot better when oil prices are higher, when the cost structure is higher and when they're trying to get driven out of business because it's ultimately not going to make a huge difference on whether the oil and gas gets produced. It just makes it more expensive, makes it more difficult to do it, and so prices go up and that's not what we want. I think someone would say, oh, you just did it for the oil and gas industry. Not true at all. We actually want lower prices, but fortunately, the supply and demand market forces, that's the beauty of capitalism. They set the price of oil. We're trying to make the cost structure such that it's more cost effective to produce oil and natural gas and energy in the United States. You have a lower break even point, and that's good for everyone in DOE and the federal government and the Trump administration, we have one customer and that's the American people.
• 1:32
  Jason Bordoff (37:35):
• 1:33
  Yeah, I saw those comments from Secretary Wright just the other day that I think he said something like what you just said, the oil and gas companies, that was his business. He said had record profitability under Biden and he had some comment that may be good for 1%, but we're looking out for the other 99%, which I sort of chuckled just because it seemed like the Biden administration had been criticized for being so anti-oil and gas. The criticism was now it was being too friendly toward oil and gas,
• 1:34
  Alex Fitzsimmons (37:59):
• 1:35
  And I'm sure that the Biden administration would look back on their record and they say, oh, I wish we could have done more. Why were we so unsuccessful at shutting down the oil and gas industry?
• 1:36
  Jason Bordoff (38:11):
• 1:37
  I mean, it is interesting you bring it up. Obviously people have kind of wondered about that or asked that question. The goal of energy dominance, the goal to increase production, and Secretary Wright said that at the NPC meeting, he also, in addition to energy dominance being abundant, affordable energy for America, was also the ability to supply our allies affordably and reliably, which means even more production. And the question is, okay, but is it inconsistent to want lower oil and gas prices and also want more production? Is there a tension there in the administration's way of thinking about it?
• 1:38
  Alex Fitzsimmons (38:43):
• 1:39
  No, I don't think so. I think because we're focused on delivering affordable, reliable, and secure energy for the American people, markets set the prices, supply and demand sets the prices, we control the regulatory landscape, and I think the previous administration made it structurally more expensive, made it more difficult to try to do business in the United States. Higher cost structure is harmful. We want to lower cost structure that can help, which is ultimately good both for the oil and gas industry and consumers.
• 1:40
  Jason Bordoff (39:17):
• 1:41
  Can you talk a little bit about what the administration is doing on something? I think there's a lot more bipartisan agreement on which is accelerating the pace of development of nuclear energy in this country. Talk a little bit about what you see DOE doing and what needs to be done there to. There's a lot of capital, a lot of interest. Again, so much money from the hyperscalers, but it still takes a really, really long time.
• 1:42
  Alex Fitzsimmons (39:39):
• 1:43
  Oh yeah. I mean huge opportunity, big challenges as you mentioned, but huge opportunity, one that we have to take advantage of. I think the major difference now is that the market signal is actually there to build large scale nuclear again, because we have all of this load growth and you have some folks who want a certain generation profile, certain customers and who are willing to pay more for new technology. If you look at both conventional nuclear and some of the new nuclear technology that we're certainly prioritizing, I think we are at potentially a golden age for nuclear in the United States. I think that you are seeing a tremendous amount of interest. You're seeing potential both at DOE and in other federal agencies. I think one of the major verticals in our new loan office is nuclear, and we have to try to address the permitting.
• 1:44
  (40:34):
• 1:45
  There are real permitting challenges there and progress there, and that's underway. We have to address the fuel supply issue and we have resources for that and we're working on that. And then we have to just get back to building again and building rapidly. I think it's too difficult. It's too easy to prevent things from getting built in the United States to prevent large scale infrastructure projects from getting built, and it's much too difficult to build. But now, I mean with all of the load growth, with all the demand on the hyperscaler side, now's the time and I think that we will see these companies rise to the occasion.
• 1:46
  Jason Bordoff (41:17):
• 1:47
  And in terms of how we do that, streamline the permitting, accelerate the ability for people to put steel on the ground and build these projects, which have a quite good safety track record. Actually, I want to ask you about a question. And just to be clear, my goal in all of these questions, and we've known each other a long time, even though working on opposite sides of the aisle is not to be critical, but I appreciate this conversation, to be able to ask, raise questions, concerns about some of what people see happening and just have a chance to talk about it and hear your perspective on it, that in trying to make it faster to build nuclear, the concern some observers might have that regulatory acceleration, streamlining curtailing the review process, the nuclear regulatory commission could in reality or perception undermine the safety of getting these new projects up and running. How would you respond to that?
• 1:48
  Alex Fitzsimmons (42:10):
• 1:49
  Safety is always a top priority. It has to be, and as you said, the industry has an incredible track record on safety and that will be maintained. But I think that there are a lot of duplicative effort and a lot of permitting and regulations that are overlapping that add unnecessary time and cost. I think what you'll see coming out of this administration, you've seen a series of EOs on nuclear. I think what you will see is an approach that preserves safety as the top priority, but one that also recognizes that we have to be sensible and that we have to be able to get to yes or no on reasonable timelines
• 1:50
  Jason Bordoff (43:00):
• 1:51
  And that view of what a resilient, reliable grid looks like. And sorry, coming back to what you said a moment ago, which was sort of defining energy dominance, I asked you about sort of the addition not subtraction part. The other part was reliability, affordability. As you know, there are numerous studies from all the phenomenal national labs that you're part of the team overseeing now that sort of show a system at scale, an energy system. I'm not talking about a hundred percent solar and wind, but an energy system that can be reliable, can be affordable and can build out really quickly, can have a larger share of renewable energy with a lot of battery storage. I'm wondering how you think about the role of storage in grid resilience and you still need firm dispatchable power as well. Absolutely. Is that the right way to think about it, or is there really a trade-off between these two things that intermittent energy is a problem, however one thinks about it or however much we're talking about?
• 1:52
  Alex Fitzsimmons (43:57):
• 1:53
  Well, I don't see it necessarily as a problem. I see it as just a reality that we have to confront. I do see a strong future for energy storage, both battery storage and long duration energy storage. I think that, but we also have to be clear-eyed about how the energy system operates. And the vast majority of the time, having higher penetrations of wind and solar in the system is fine, but we have to recognize what the trade-offs are as you get to higher and higher penetrations of wind and solar. If your policy is to simultaneously shut down reliable dispatchable thermal generation, then you're in trouble. You're in trouble if you haven't solved for that. So I think that's why when we talk about stabilize, optimize grow, we have to stop the bleeding. We have to prevent the premature retirement of that generation that gets its capacity accredited to meet peak demand.
• 1:54
  (45:01):
• 1:55
  You will see more capacity additions from solar and storage going forward. Absolutely. We also need to do a lot to optimize the existing system that we have. So there's a lot of natural gas, coal, nuclear hydro power resource that's installed, installed capacity today that could be upgraded to get more megawatts into the system rapidly. And so we need to do that in addition to optimizing the transmission system around system stability and system congestion. So all of that taken together, optimizing, as I said, for both cost and value is how we get the most affordable, reliable and secure energy system that we can.
• 1:56
  Jason Bordoff (45:46):
• 1:57
  Can you talk about how we're going to meet this rising power demand and who pays for it? One of the things that you, meaning DOE and Secretary Wright did recently was ask FERC to consider a proposed rule that would allow large loads to have to connect more quickly, even to prioritize large load that could be flexible with their demand, which can make a lot of sense. I was wondering if you could talk about what's happening on that score and also what else beyond that potential noper can be done to speed up connecting large loads? Yeah,
• 1:58
  Alex Fitzsimmons (46:19):
• 1:59
  I think there's growing recognition that we have to get this business model. And I think that we can and we will, and I think the secretary's 403 to FERC to develop the noper was one positive step in that direction. We view large loads from data centers as a solution to the problem, as a solution to the problem that can put downward pressure on rates over time. So you know how the utility business model works in many places. You have a larger rate base with which to recover your capital, and so you're selling more electricity. Yes, you have to build new infrastructure, but you can actually lower rates over time because you have a larger rate base for the investments that you're making. And so we see some jurisdictions where this is actually happening. So in Georgia, the state PSC approved rate freezes at the residential level for three years, and then they're going to start refunding customers after that.
• 2:00
  (47:22):
• 2:01
  Duke Energy Florida is actually refunding customers at the residential level this year. So we think that these are models to build on. You saw the post from President Trump recently about tech companies and data centers needing to pay their fair share. And then some. Fully agree. We think most of them are willing to do this. Most of them understand that they actually can be part of the solution. It's not only economic, it's necessary not only for them to be economically viable, but politically as well. And so I'd say we're pursuing a policy working with the hyperscalers, working with the power companies where they will be contributing more to the system than they're taking away from it. So if they're building a gigawatt data center, a lot of them are going to overbuild on the generation side. They're going to pay for the full network upgrade costs of all the associated transmission that they might need. They will hold residential rate payers harmless and over time actually lower prices. So that's a win-win for everybody.
• 2:02
  Jason Bordoff (48:29):
• 2:03
  And is the way the administration thinks about this, the data centers should pay and bring their own generation in capacity. The obligation is on the hyperscalers to foot the bill for all of this.
• 2:04
  Alex Fitzsimmons (48:39):
• 2:05
  And I think a lot of them have already said that they're willing to do this. I think that they recognize the perception. The perception. That's not always the reality. It's a challenging environment out there, but it works. And we know this model can work. It is working in certain places, and we want to make sure that that continues
• 2:06
  Jason Bordoff (48:57):
• 2:07
  In the spirit of sort of, again, just sharing with you, raising questions and concerns that one often hear isn't just really helpful to hear your perspective on how one thinks about them or responds to them. That definition of energy dominance that I heard Secretary Wright define in Washington, that it is also about reliable supply for allies. And what I hear when I travel overseas is some degree of concern about an administration that is perceived to sometimes use things like tariffs to extract a concession and say, well, we don't want to be dependent on Russia, but we want to hedge our bets. We want to be diversified. We don't want to, we're a little concerned about being too dependent on America now too. I'm curious if you feel like, how do you respond to people who share that concern? It's something one hears more often these days.
• 2:08
  Alex Fitzsimmons (49:44):
• 2:09
  I think President Trump has recognized we need to rebalance our trading partnerships around the world. There have been, the American people have suffered from unfair trade practices from certain countries for far too long. We've allowed many of our supply chains to leave the United States and put us in a compromising position. So the Trump administration is working to reverse that. I think we also understand that there are tremendous opportunities for trade and commerce and that trade and commerce can strengthen ties between countries and that they will. And so you've seen a lot of tariffs and you've seen a lot of trade deals from this president, and you're seeing record investment into the United States, trillions of dollars of investment on both the energy side and just across the economy and AI manufacturing critical infrastructure sectors. This is good. This is good. And this will lead to freer and fairer trade over time, and it was long overdue.
• 2:10
  Jason Bordoff (50:55):
• 2:11
  And we're just about out of time. But one last question, I'm sorry to leave it till the end because it is by no means an unimportant topic on the spectrum of energy policy goals that we've talked about the goal of reducing greenhouse gas emissions. And I was just wondering if you could tell me how this administration thinks about it. Is it a problem to solve an objective, something that sort of is nice to have on the margin if you can do everything else but not that important? How do you think about that?
• 2:12
  Alex Fitzsimmons (51:20):
• 2:13
  Yeah, I mean, I think it is a problem. I think climate change is real. It is caused by mankind. It is a serious challenge that we need to take seriously. And I think no country has done a better job reducing greenhouse gas emissions than the United States of America. And that is because it just so happens that as we optimize for an affordable, reliable, and secure energy system, we're also optimizing for a clean energy system. And I would just expect that to continue.
• 2:14
  Jason Bordoff (51:52):
• 2:15
  And is that intention with the sort of addition, not subtraction and the reliability of not of keeping the coal plants on the grid, or is that just a reality that you view as necessary and therefore, yes, we should focus on reducing emissions, but we just might need to be a little less ambitious about how we think about that goal?
• 2:16
  Alex Fitzsimmons (52:10):
• 2:17
  Well, I think we cannot have that goal come at the expense of keeping the lights on at the expense of maintaining an affordable, reliable, and secure energy system. I think we swung too far in the other direction under the previous administration. But by the way, as you know, this is a global problem. And China represents the majority of CO2 emissions today. They're building a lot of coal, and they will continue to do so as long as it suits them. And there's no treaty, there's no law that we could pass or the international community could pass that would stop them from doing what they want to do to try to provide the same opportunities for their people as we have here in the United States. And that's not just China, that's any country that wants to enjoy the type of freedom and commerce and quality of life that we have in the United States. They will use whatever sources of energy, help them achieve those goals the most. And so in the Trump administration, we're focused on unleashing all sources of abundant, reliable, affordable, and secure energy for the American people.
• 2:18
  Jason Bordoff (53:31):
• 2:19
  Under Secretary Alex Fitzsimmons. Thanks. I really enjoyed this conversation as I have all the conversations we've had over many years. Don't always have to agree on everything for sure. But I always learned a lot and it's really helpful to understand your perspective, Secretary Wright's and the administration's perspective. And thank you for your service. So really appreciate your time to be with us today.
• 2:20
  Alex Fitzsimmons (53:50):
• 2:21
  Of course. And thanks for having me, Jason.
• 2:22
  Jason Bordoff (53:58):
• 2:23
  Thank you again, Alex Fitzsimmons, and thanks to all of you for listening to this week's episode of Columbia Energy Exchange. The show is brought to you by the Center on Global Energy Policy at Columbia University. The show is hosted by me, Jason Bordoff and by Bill Loveless, Mary Catherine O'Connor, Caroline Pitman and Kyu Lee produced the show. Gregory Vilfranc engineered the show. For more information about the podcast or the Center on Global Energy policy, please visit us online@energypolicy.columbia.edu or follow us on social media @ColumbiaUEnergy. And please, if you feel inclined, give us a rating on Apple, Spotify, or wherever you get your podcasts. It really helps us out. Thanks again for listening. We'll see you next week.