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Robinson Meyer: Secretary Granholm, welcome to Shift Key.
Jennifer Granholm: Thank you. Glad to be on.
Meyer: So let’s start here. Can you just start by setting the scene for us for what the Department of Energy has done over the past few years, and what it has become? Because as I think about it, and as we think about Trump again, I remember back in 2017 when, I believe your direct predecessor, Secretary Perry, took over the office, and he was very excited to talk about energy and to talk about fossil fuels and to evangelize oil and gas. And then he had to learn that at the time, DOE was really more of a national-labs-and-nuclear-weapons type of agency. I feel like that’s less true today. So can you just set the scene for us on how far we’ve come?
Granholm: I mean, I can talk about the department, yeah. But I’d love to also, at some point, talk about the outcomes.
Meyer: Let’s talk about outcomes first, and then let’s talk about the department.
Granholm: Great, great. So just at a level, I hope — I know your listeners are savvy in this space, but just to put it in perspective: It is astonishing what the Inflation Reduction Act and the Bipartisan Infrastructure Law have been able to do to build out clean energy in the United States. It is mind-blowing. If you had told me — I’m a former governor of Michigan, and when I was governor, we saw all these jobs leave, all this manufacturing gone. It was just — and the federal government just sat on its hands and did nothing, although when the Obama-Biden administration came in, they saved the auto industry. But every supply chain, every — and they were all going to Mexico, or China, or whatever.
And so the hollowing out of much of the middle class and the manufacturing, and I think this is one of the things that Trump really picked up on. But across the nation, in industrial communities, small towns that had a factory that left … So the Inflation Reduction Act and the Bipartisan Infrastructure Law have caused now, as of today — and this is so far, since the Inflation Reduction Act was only passed a couple years ago — over 950 factories to come to America or expand in America, building these products for this clean energy transition. That is just mind-blowing to me. And those announcements are announcements. Then there’s the groundbreakings, and then there’s the ribbon cuttings. And so there’s been some groundbreakings and some ribbon cuttings, but all of those are going to bear fruit over the next few years.
Meyer: So during the Trump administration.
Granholm: Exactly. And that’s, I mean, regardless of who’s in the White House, this is really great for America, that we have, now, industrial strategy that has reversed that track, that tide. So that’s, in terms of outcomes, that is a huge outcome.
The second outcome that I think is really important is how much clean generation that has happened. So this year, we will add 60 gigawatts of clean electricity to the grid. That is more than double what we have ever done — 30 Hoover Dams’ worth, is what I like for everyday folks to understand the magnitude of what we are adding. And that trajectory is going to continue as long as those incentives are in place, and it’s going to be higher next year and next year. And so the goal that the President came in with, with 100% clean electricity on the grid by 2035, and to get to net zero by 2050, by 2030 we will have — just because of these two laws, the Bipartisan Infrastructure Law and the Inflation Reduction Act — we will have 80% clean electricity on the grid by 2030, and we will have reduced GHG emissions by 40%. Now that doesn’t speak to … the reduction in GHG doesn’t even speak to what the cities and states and private sector is doing. So we’re hopeful that we can get to the half, 50% reduction by 2030.
Meyer: Do you think those trends will continue through and despite Trump?
Granholm: Yeah, this is the question of the hour. Here’s —
Meyer: And we can get more into this later, I just wanted to stress test that.
Granholm: I’ll just say, I have hope that this will continue, and I don’t think it’s irrational exuberance because of the fact that those 950 factories, 85% are in red counties, red districts. And because, you know, governors and members of Congress and, you know, President-elect Trump will be able to oversee the fruition of people hiring, steel going in the ground in these factories, it really would be political malpractice to undo those incentives when it’s creating everything that both parties have asked for, which is to reshore supply chains, critical minerals for electric vehicles and other products. It’s just, it’s doing the thing that America should do.
And so I am, I’m hopeful because of that, and I’m hopeful because of the technologies that there’s bipartisan support for. So we know there’s bipartisan support for nuclear, for example. We know there’s bipartisan support for geothermal. We know there’s bipartisan support for hydroelectric power. We know there’s bipartisan support for getting critical minerals reshored, or at least the extraction and responsible extraction and processing of them. So there’s a lot of areas that I think there’s bipartisan support for, and therefore it will be difficult for Congress to overturn or yank back from the Inflation Reduction Act.
Meyer: Let’s talk about the office. In addition to accomplishing those things — I remember in 2021, looking at the changes that were being made the Department of Energy, some of the changes that were in the Bipartisan Infrastructure Law, and thinking, DOE is going to be a totally different agency by the end of this term, or even just in a few years, than it was a few years ago. Can you talk about how the office has changed under your leadership?
Granholm: This is one of the reasons we’ve been able to achieve those outcomes, is because we restructured the department. We still have our national security mission, of course, and that’s very important. And we still have the mission to clean up the legacy waste sites from the Manhattan Project, as well. But we have completely restructured to deploy, deploy, deploy.
We still have the labs, of course, doing all of the work that leads up to deploying on the technologies that really are significant, and those missions still occur. But we were given over $100 billion through these acts, 60 new programs to restructure and focus the Department of Energy on this clean energy transition, and that has utterly changed — we’ve hired almost 1,000 people to be able to do that. We’ve created a whole new vertical, a whole new Under Secretary for Infrastructure, which is all about the infrastructure of this clean energy economy. So that change, I think, has been significant.
We hired a bunch of people from the private sector to come in to understand how technology — we don’t want to take a risk. For example, through the Loan Programs Office, which I know you’re well familiar with. You know Jigar Shah, who runs that, he doesn’t take a risk, they don’t take a risk on the technology working. You know, the physics are going to work, the chemistry is going to work. The niche that they provide is great technology, do they have a business plan that is going to ensure that they’re successful in the market? So we’ve hired a number of people from the private sector to be the Sherpas on that and make it work. And the results have been really quite astounding.
Meyer: It’s really become more of an industrial policy department, in some ways, which is something that a lot of other countries have. In fact, it’s something that most developed countries have, or many of them have. Japan has one. Germany has one. But it’s something the U.S. has historically not necessarily pursued in a civilian agency. At least we have, we do DoD industrial policy forever.
Granholm: Yes, this is what’s so incredibly great about this. You know, again, I say this with my hat as former governor of Michigan: When we used to, you know, we were competing as states. States had their own economic development agencies, but we didn’t have a federal partner on any of it. It was like bringing a knife to a gunfight, and we would see, you know, we can’t compete with the industrial policy of China as a state, right? So the fact that we now have a federal strategy that enables states to enhance, but that there is a federal decision that we are going to get in the game. We’re not going to be passive and allow other countries to eat us for lunch.
Meyer: So how do we think that … how do you think that these programs will fare under the next president?
Granholm: Well, I do think because — I think they are durable, first of all, because one, we’re going to commit a huge amount of the money we were given — 98% of the programs we were given, 60 new programs under the Bipartisan Infrastructure Law and the Inflation Reduction Act. We will have at least on one round of funding, 98% of them, and we will have gotten commitments for all of these selections by January 20. So there may be a couple that we’re not able to do because they’re multi-year programs, etc., but we want that commitment. So that creates one layer of durability.
And of course, the second layer of durability is that they, these programs, are all going to stuff that Republicans have been calling for, too. So for example, there’s been a lot of curious complaints about the EV strategy of the administration because, it is said, all of the critical minerals, and China produces the batteries and the critical minerals. And that’s true. China has — but that’s why this strategy is reversing that trend. You know, China’s cornered the market on batteries, and now we’re make … I mean, of the 950 companies that I talked about, over 400 of them are batteries or electric vehicle companies that we’re building in the United States, you know, the anode, the cathode, the separator material, the electrolyte, the critical minerals, the processing of those minerals. That’s all coming back.
Meyer: Well, and there is something … So have you talked to Doug Burgum or Chris Wright? Yeah.
Granholm: Well, I hope I get a chance to talk to Chris Wright. I’ve definitely talked to Doug Burgum in my role, and in his role as governor. And he’s been an all-of-the-above guy.
Meyer: I think it’s interesting because one of the big questions I have going into the Trump administration — in addition, I should say, that there’s like, two buckets of questions, right? There’s the, as you were saying, there’s a lot of durability, if you were to look at conventional ways of assessing durability, in the department’s programs, right? A lot of these programs are bipartisan.
Something we saw during the Trump administration was that the Office of Management and Budget from the White House would publish these extremely drastic budget cuts when they proposed a budget to Congress, and there’d be all these news stories about how they wanted to cut the EPA budget by half, and they wanted to cut the DOE budget, and they wanted to cut NASA’s budget. And all these news stories would come out, and then six months later, the Republican majorities in Congress would pass a budget, and it would lightly top off all of the budgets, and all the funding would go up, because it turns out the government largely does things that Congress wants it to do, and there’s a lot of support in Congress.
That being said, it also seems like this administration is going to test the limits of impoundment and what the president might be able to stop. But once you put aside that bucket, when you hear Doug Burgum talk about what his complaints with the Biden administration’s policies are, many of them are not grounded in factual inaccuracy. I would say they’re … for instance, the big point he made during the Republican primary debate was about, if we switch to EVs, we’re going to make China more important. We’re switching from OPEC to Sinopec, is, I think, his line. That is exactly what the suite of policies that have been advanced in this bill are supposed to do.
And so one big question I have is like, are we going to learn in the next few years whether these are actual concerns to these folks and they want to preserve these programs? Because it turns out, this is how you would try to create an EV industry in the U.S. Or do they really just care about oil and gas and their concerns with supply chains, with mineral supply chains, are just kind of a tissue to cover up larger oil and gas concerns?
Granholm: I mean, obviously they’re very pro fossil fuels. We know that. But I will say all of the rhetoric has been about all of the above, an all of the above strategy. I mean everybody from Doug Burgum — I mean, all of these Republicans on the Energy Committee, they’ve all said that. So it just would be strange to turn your back on everything that you have said all of this time.
And I don’t even think, honestly, I can — This is what I would say: I think that the Trump administration, it seems, what do I know? I haven’t talked to them personally, but I, it seems from all I can, they want to reshore manufacturing. So if it’s not, if you eliminate the Inflation Reduction Act, you got to replace it with something that’s going to attract all of that investment. There has to be some industrial strategy. Otherwise you’re just ceding the territory to China, which is the thing you’re complaining about. So if you don’t like an incentive-based strategy, which is really what the Inflation Reduction Act is, I see he wants to put in a tariff-based strategy, if you just want to do all sticks. I’m not sure that’s good for the economy overall, but a blend of carrots and sticks, I’m sure most people would say are important. And so, you know, maybe you call it something else, but you got to get in a game, because otherwise our economic competitors are only too happy to see that happen. Can I tell you a quick story?
Meyer: Yes, we have a little bit of time. This is what this is for.
Granholm: So when I was finished being governor, I went to China to see what China was doing in this clean energy space, because they were cornering the market on a lot of these technologies, solar in particular. At the time, I went with Securing America’s Future Energy, an organization that is focused on competitiveness in this clean space. And we went to a presentation by a bunch of mayors in China, mayors of provinces. And as we were standing there watching the presentation, one of the mayors stands next to me, and he says, “So when do you think the United States is going to get a national clean energy strategy?” And I said, “Oh, I don’t know … Congress …” And he looks at me, and he gets a big grin on his face, and he says, “Take your time.”
Because of course, they see our passivity as their opportunity, right? So this is why what we’ve done, what these laws have done, what the president has done, is so amazing. So I get that you may have to put a different spin on whatever the new administration wants to do, but ultimately, you have to have policies like these if we’re going to be successful in reshoring manufacturing.
Meyer: What do you think is the trajectory — you mentioned 60 gigawatts of clean generation coming online. What do you think is the trajectory of clean energy under Trump?
Granholm: Well it, you know, if the Inflation Reduction Act holds, those incentives don’t go away. The developers are going to take advantage of it. I think it is inexorable that you will see continued climb of clean energy generation. I, you know, I know there’s a lot of talk about drill, baby, drill, etc. I mean, they have been drilling, baby, drilling. There hasn’t been limits on that. They may want to open up more auctions and more leases, but the private sector has to be willing to actually put the capital investment into going into those spaces. And the market is a global market, and they’re going to respond to what is happening globally. So I think clean energy … I believe strongly that if the Inflation Reduction Act stays, the clean energy investments will continue to go on that upward trajectory in a way that is astounding.
Meyer: Let’s talk about fossil fuels for a minute. As of when we’re recording this, the LNG study is not yet out. Can you give us a sense of what we might hear when that study comes out, and what the department has aimed to do with it.
Granholm: Well, I’ll just say this. I’m going to wait for the study to come out to speak to what its conclusions are, but know that for everybody listening, we were looking at what the greenhouse gas impacts are of all of the additional authorization that has been, and the current authorization that has already been approved for export. We have, we’re looking at what the impacts are from local communities who bear both the economic, the jobs, as well as the adverse impacts to that. We’re looking at what the global trajectory is of demand, and what our allies might be needing in terms of liquefied natural gas. And importantly, we’re looking at the impacts back home on the costs of natural gas. We, you know, if we are producing little over 100 bcf a day of natural gas, and you take a good chunk of that and export it, what does that do to the prices at home for those who use it? And so we’re looking at the costs at home.
So the study will come out soon. There will be a 60-day comment period, so it will run into the next administration, obviously, but I think it’s important to lay out what the study finds. Just the facts. These are, this is done by our labs. These are just facts. And I think it’s important for those commenters to comment on it so we have it for the record, and potentially a future administration could make policy based upon what the study reveals.
Meyer: LNG has been such a big hot-button issue in this administration, and to some degree it has dominated some of the discourse around these questions. Have you been surprised by the degree to which it’s dominated discourse, or surprised by the degree of the backlash?
Granholm: Yeah, a bit, because of the amount that we have already authorized for export. I mean, the pause on additional authorizations does not impact in any way, shape, or form the amount of exports we are doing. We have already built up and are exporting … we’re the largest exporter in the world, 13 bcf, you know, billion cubic feet per day. We are a powerhouse in exporting LNG, and we’ve authorized a whole bunch more that is either under construction or seeking final investment decisions, etc.
The amount we have approved is massive. And this is … this study was a pause on even more, you know. So we’ve approved an amount that is almost equivalent to what the U.S. the demand will be, you know. So it doesn’t affect any of that. We didn’t pause any exports at all. So have I been surprised? Yes, because of — But I understand politically that some things aren’t necessarily based on the actual facts. But people are afraid, maybe, that there will, that portends some callback in existing authorizations or something, which it does not.
Meyer: So often when you go back, and I’ve been going back in and looking at the climate policy and energy policy from the administration, and what the coverage of it has been at the time. And what’s been striking — and I remember observing this when I was covering these issues, but it has been really striking to go back and see it in retrospect — is that the Biden administration was doing a lot at the same time, right? It was trying to stabilize the fossil fuel industry coming out of the Ukraine energy crisis. It was trying to help clean energy. It was trying to reduce emissions. But there’d be this pattern of, the Biden administration would pass the IRA, and a lot of the coverage on the IRA focused on the fossil fuel leasing provisions in the IRA, to the degree that I was like, did they read the law? You know, are they aware of what the policies are in this law? And then Biden would approve the Willow Project, or there’d be the fight over the LNG, and that would dominate attention. That would get a lot of coverage, and it would drive a lot of attention from climate activists, too.
Did what Biden was trying to do during this administration break through? Did what this administration was trying to do, did it break through with the people who needed to hear it? Meaning on the renewable side, on both sides, on the climate side and the fossil fuel side.
Granholm: I would say no, it definitely didn’t break through. But that’s more of a comment about our media environment, right? I mean, for media, with all due respect …
Meyer: This is an interesting question. Yeah, I mean, it ties into, like, what can the government do in terms of policy? How much do people notice what’s happening in terms of policy?
Granholm: I mean, unless there’s a massive controversy, people are looking at, you know, TikTok and Instagram, and so the things that get the big, you know, generate the most clicks are the ones that have some backlash, right? So those are the things that people notice. Do they notice the good news? No. Do people know, they have any idea about the amount of factories that are coming to America, or expanding in America? No clue. No clue. So that’s a question about, how do you do that? How do you get the word out? I’ve been across the country and almost every state you know, trumpeting this, but it still doesn’t rise to the level of consciousness.
And maybe it’s because people aren’t so interested in it, but I think that people want to see — I mean, the economy was the number one issue, and if you’ve got a factory coming to your area, that should be a positive, positive thing. But people don’t attribute it necessarily to the Biden administration. Is that a failure on our part of not yelling loud enough, etc.? Or is it a failure of the atomized media that we have? It’s just it’s hard to know going forward.
Meyer: Well, I think if it is a failure of the atomized media, it is a rather ominous sign for politics that tries to build things in the future. You’re the governor — you were the governor of a state that had ties to the fossil fuel industry, not in that it was extracting fossil fuels, but in that the main export, it uses them, right? What do you think Democrats should understand about the fossil fuel industry? And like, not only Democrats in government, but rank and file Democrats?
Granholm: Well I think, first of all, I think it’s important to understand the word transition. You know that we are in a transition from a molecule-based fuel system to an electron-based fuel system, to electrify. And that electrification, obviously, is so much more healthy for the planet, and it creates huge job opportunities. But the transition period, you know, we have 26 years between now and 2050, when we need to get to net zero — and notice it says ‘net zero.’ The fossil fuel industry is going to continue to exist. The net means that we have to find the technologies that reduce, obviously, greenhouse gas emissions from that fossil fuel industry.
People, also Democrats, understand, if they live in one of these states, that the fossil fuel industry provides a huge number of jobs, good paying jobs, and so you can’t just come along and say, get rid of all of that, because you’re talking about people and people’s economies and communities and towns. So it, there has to be a vision of build, build, build on the clean, and that market will expand, so that you can have a reduction on the fossil side. But I don’t think that we’re going to be fully rid of all fossil because I, and I think the technology will allow for us to clean up the fossil fuel side of things.
Meyer: Do you think that the voters, that rank and file Democrats — even beyond Democrats, just the type of voters the Democrats want to talk to — do you think they see this link between fossil fuels and their livelihoods and their economies? A link that Republicans are very eager to point to, but that I think Democrats sometimes avoid. Do you think that people see fossil fuels and associate their economic well-being with it?
Granholm: No, I don’t think they ,,, unless they live in one of those communities, right? I don’t think they necessarily link … I think people are really interested in reliable power, yeah, and they’re interested in how much that reliable power costs. That’s, for most people, they’re not looking, when they flip on the light switch, is it something that’s coming from natural gas-powered? Or is it something that’s coming from solar? People like the idea — and I can say this as a former governor, communities love the idea of creating jobs that are future-facing, that their kids will stay for. And the next generation, the Gen Y, Gen Z, they’re, you know, they don’t want to work in an industry that is polluting the planet. Many of them, I mean, some of them — of course, I don’t want to generalize. But for the most part, communities embrace these industries of the future. And so I think that is something that people listen to, and they understand that this transition is happening, and it is not just like flipping a light switch, that there has to be a glide path so that the communities that have powered us for the past 100 years can be part of powering us for the next 100 years, but using clean. But that transition period has to be one where you are sensitive to the fact that these many rural places feel very threatened.
Meyer: Democrats did a lot to help the fossil fuel industry during this administration, to stabilize it — after the pandemic, to stabilize it, after Ukraine, there was a Defense Production Act in the beginning to help the fracking industry. There was the use of the Strategic Petroleum Reserve to stabilize gas prices and oil prices. After Ukraine, the response they got from the fossil fuel industry was nothing but vitriol, nothing but, Biden doesn’t want us to drill. We hate the tone coming out of this administration. We’re not happy with this at all. Did Democrats do too much for the industry? Should they not have done what they did?
Granholm: Well, I don’t think Democrats … I don’t think we did it for the industry. We did it for the people. So for example, on the Strategic Petroleum Reserve, you know, gas prices were bumping up to $5 a gallon because of the dearth of supply globally as a result of Russia’s fuel not being on the market. So we wanted to make sure that people in the United States and around the world, but people in the United States in particular, weren’t paying for Putin’s war, and so releasing more supply obviously brought that down. I mean, today we’re $2 under what it was during that height. So it worked. And we have replenished the Strategic Petroleum Reserve at a price that was much more favorable to taxpayers. So it wasn’t, that wasn’t about saving the industry. That was about saving people’s pocketbooks.
We did help our allies on liquified natural gas exports, and they were reeling as a result, a couple of years ago, as you know, as a result of the war and Putin weaponizing natural gas. So that had an impact on the industry. It helped the industry. But our the strategy really is what’s going to help people here in the United States.
Meyer: There’s two different attitudes toward the fossil fuel industry, as — I’m going to generalize a little bit, but when I look at climate folks, folks who work in this professionally, who think about these issues day to day, whether they’re activists or engineers, I think people’s attitudes break down into two camps. And one of those camps is that the fossil fuel industry is a big enemy. They’re a big enemy of the transition. They’re going to fight the transition at all costs. They’re going to do everything they can to preserve fossil fuels. And just look at their support of Donald Trump, right? What they want from the Trump administration is shoring up demand because they want to lock people into fossil fuels.
And there’s another point of view that says, Well, you know, it’s not great, but the obstacles to the transition are more along the lines of technology development and deployment. And the fossil fuel industry, in the meantime, actually does provide a lot of energy for people, and you can’t ignore that. Where do you come down between those two camps?
Granholm: Well, I definitely think that industries tend to preserve their self-interest, right? And so the fossil fuel industry is all about fossil fuels. And so if they view another type of energy, cleaner energy, as a challenge, then they’re going to do everything, which — I mean, that has proven throughout history to have been the case.
I will say there are a couple of actors, several of the majors, who maybe have a little more of the luxury of being able to do investments in technologies that allow for a clean energy transition. That’s encouraging. I mean, when I … there’s a big oil and gas conference in Houston every year. And the first year I went, I was like, you guys, you should transition to be diversified energy companies, not just oil and gas. You guys have all of the resources. You’re the richest companies around. Why don’t you being … why aren’t you investing more in geothermal, for example, because you have the skill set. You’ve got, you use rigs, you go, you understand about extracting energy from beneath the surface. You’re experts in the subsurface. You got skill set. This began the big blowback. How dare you come and tell us what we should be doing? But it’s just realistic, and to be fair, some have, a lot have not.
Meyer: Some that got into it have now backed off of it, too, is the other thing, too. Because they’re just, the business is so … like, even if some leaders in the company are like, well, electricity looks like the future, we should get into it, the profit pattern’s totally different. The margins are totally different. So they then wind up getting back out, because fossil fuels just can be very profitable.
Granholm: This is why, to me, this transition, we have to almost overbuild on the renewable side, so that it is, so that it were, we just have so much momentum there. And the cost, when you overbuild, you’re scaling, your costs come down, and it becomes a game of cost, right? Our natural gas is so cheap, and so that’s why it’s a difficult thing.
Meyer: Right. This is like, in some ways, the good and the bad, right? Is that we have all this cheap natural gas, which means we’ve had fairly cheap electricity, right? And that means we attract a lot of industry that is not going to Europe. For instance, China also has cheap electricity because they subsidize it. They burn a lot of coal at state subsidy. They do a lot of generation. I know it’s just a tricky … it is tricky.
Granholm: The whole thing. It’s complicated. It’s not binary. I mean, really, we have to think about it: Where do we want to be in 2050? We want to be at net zero. How do we get there? How do we back into that? And I think the electricity grid side of things will come along very, very quickly. You know, it’s going to be difficult to decarbonize heavy industry, and we’re working on strategies to do that. You know, the building sector — really, really important to be able to address that. So, bottom line is, it’s complicated.
Meyer: Clean energy and electricity, let’s move on. So I think, as recently as 18 months ago, the word on electricity demand, on electricity markets, and what was happening in electricity in the U.S. was, yes, these AI companies are going to come along. They’re building a lot of data centers, but they’re not going to slow down the transition. I think that might have changed a little bit, that consensus might have changed a little bit since then, or I think it’s a little less clear, let’s say. What’s your view?
Granholm: I think first of all, we know the demand is going up, and data centers are a part of that. So is electrification of transportation. So are all these 900 factories coming on. So there are a number of reasons —
Meyer: Right, AI remains a relatively small percentage …
Granholm: — at the moment. But it’s, but there is no doubt that it’s a growing part of it. We have managed increases in demand in the past, and we will continue to do that going forward by adding all of this additional power, which is why, you know, we just need to continue to build generation. But what our conversations with the hyperscalers on these data centers — first of all, we believe that it’s really important to have these data centers, the AI data centers, in the United States, for national security reasons. We need to hold on to that. And if that’s true, and they build out these data centers, and they need another, whatever, 20 gigawatts of power for the data centers — bring your own power. BYOP. So bring your own clean power. Your shareholders and your commitments to clean energy, all of them have commitments like that.
So this is why you’re seeing these really interesting announcements coming from Google and Meta and Amazon, etc., partnering with geothermal companies like Sage and Fervo, partnering with small modular reactor companies like Kairos, are turning on power. So it’s, to me, very exciting that, not only that there may be, there’s an additive component to this. And there’s a willingness on the part of the data centers to actually pay a green premium for those, that addition, those additional electrons.
Meyer: Do you hear that they are willing to … is the willingness to pay that green premium durable? Because I do hear concerns that basically, once Trump comes in, or in a year from now, these companies are going to want to keep building AI data centers. They’re going to be starved for power, and they’re just going to build natural gas because it’s not coal, and they need the energy.
Granholm: I think that there will be some temptation to do that. And I think that while nuclear reactors, for example, are being built, they may rely, there may be some reliance on natural gas to be able to power — natural gas combined, perhaps with CCS, for example, carbon capture …
Meyer: Yeah, Exxon just made this announcement. It’s going to try to get into that.
Granholm: Yes, exactly. But these companies themselves have made commitments. I mean, Amazon’s commitment to clean has been part of their ethos. So they can’t just rely upon that. They have got to bring their own.
And let me just say one other thing, is that bringing their own and paying a green premium for that, they recognize the backlash of adding demand on a grid that is socialized across the rate base. They recognize, they do not want to have protests because people’s rates are going up because of this data center. And data centers, of course, they are fantastic for construction jobs, but they don’t employ a huge number of people. There are ripple effects, of course, in an industrial cluster, but they’re worried about the backlash — as they should be, and therefore bringing their own power and paying for it is a part of the strategy.
Meyer: Thinking more broadly, the Biden administration came in, and you came in with an interest in fixing issues in the U.S. innovation and deployment chain, let’s say, and in the chain of innovations, or the chain of scientific research, as it goes from the lab and the national labs to eventually the marketplace. And one big criticism, including from one thing that Jigar talks about the Loan Programs Office is trying to do, is make sure that when we invent technologies here, they don’t get then exported abroad, sold abroad, and then made somewhere else and commercialized somewhere else. Today, in 2024, is that chain working? And what are the biggest problems with that chain as you see them?
Granholm: Well, there’s so many, there’s so many opportunities for solving the biggest problem. So for example, we launched eight Earthshots to be able to reduce the price for this next-generation technologies like enhanced geothermal or floating offshore wind platforms or clean hydrogen. If we can reduce the cost of those technologies by 90% — and that’s what a lot of the labs are working on — that makes them irresistible.
And that’s, making these advanced technologies irresistible is part of the strategy. And that includes, you know, nuclear reactors. So we have a whole office of technology transitions led by Vanessa Chan, who came in from outside, and she has overseen all these liftoff reports for these clean technologies that have, really, industry benchmarks about where we should be and when we should be there. We feel really good about the trajectory of these technologies as a result of that work, and the work that’s being done by the labs.
There are a number of knotty problems, though, that are beyond those particular technologies. One of the knottiest problems, honestly — and I mean knotty, K-N-O-T-T-Y — is the grid getting the connection through. And I think that that is a problem that we’re working on, using AI to solve. But there needs to be a much greater emphasis on how to get the RTOs and the ISOs to get more power online.
Meyer: What technology in the clean energy … actually, let me just ask one follow up, which is, do you think that those Earthshot programs will be sustained through the next administration?
Granholm: I do because, I mean, if there’s a big support for hydrogen, for example. So how do we get the cost of hydrogen down? I think you can cherry pick, I suppose. But you know, carbon management is one of the Earthshots. So how do you reduce the cost of that so a lot of the technologies have support?
Meyer: Thinking across the full spectrum, full portfolio of technologies that the DOE has supported or gotten engaged on in the past four years, what technology are you most excited about?
Granholm: Well, I’m certainly super excited about the deployment of solar that has just been, just a rocket ship, which is very, very cool. I personally love, and would love to see a greater investment by the next — we would have done this if we had the opportunity to serve — I think, a greater investment in geothermal, enhanced geothermal. I think that has huge promise, to be able to do that. And I would also want to see a greater investment, a consistent investment in the grid. So we got, there’s $70 billion that is focused on the grid through these laws. And we were able to do spot efforts, to do reconductoring and get more power across existing lines, to do grid-enhancing technologies, to do undergrounding, all of that. But a consistent investment in the grid, kind of like what we have for the Highway Trust Fund. If we had a, we have a national grid, it’s, you know, the transmission and distribution miles, 7 million miles, and 75% of the grid is over 25 years old. We need a consistent investment for both to deal with these extreme weather events, cyber, and make, just making sure that we are upgrading the poles on which this electricity is carried.
Meyer: It is so different, and it’s interesting compared to highways. Because highways, it is a form of transmit, right? I mean, yeah, we move energy around on the highways. Highways are this big national system. The highways are also publicly owned. The grid is not. Do you think that’s an issue?
Granholm: Well, some of the grid, I mean, you know, it depends, right? I think that we just need to think about it differently. Electricity is just a fundamental human need, like transportation on a road, or even more importantly. So I just think we have to think differently about how we support the grid and this scattershot … and I know it’s, obviously it’s a federalism issue, as well. But we have a system like that for the roads, and we should take a look at that. There’s state roads, and the money goes to the states and they do it, and then there’s federal roads, you know, federal highways. I think we can borrow lessons, I’ll just say that, from what we have done with other infrastructure to support the grid.
Meyer: Looking back, I think one of the big promises, one of the big claims that Biden made coming into office was that government was going to do big things again. It was going to intervene and help the economy in big, strategic, supply-and-demand-oriented ways, right? It was going to bring back factories. It was going to bring back jobs. It could, government could be a major force for good in people’s lives, and that this would not only be good for the country in a kind of broad way, but also help defeat Trumpism.
Obviously, Donald Trump is about to be president again. But I also think the Biden administration did go much further in its economic policy than maybe the Obama administration did outside of healthcare. What did you learn from this go around? What did you learn from this outing at trying to do economic and industrial policy at the federal level, and trying to do big things with the government’s power?
Granholm: You know, when I was done being governor, I wrote a book about this. It’s called The Governor’s Story, where I was lamenting the fact that we didn’t have national strategy to be able to create jobs in our states. And the fact that the troika of laws — I would include the CHIPS and Science Act, as well — but there are three basic laws that are the basis for this table of industrial strategy, and that it has worked so well.
I feel like, you know, all of the folks who have in the past been total free market, “free market” players, government shouldn’t be involved, we shouldn’t be picking, “winners or losers,” or all of that, and allowing all these other countries to take our jobs. I think people have now seen this play out, the fact that you don’t have any hands on and other countries are playing. And I have, I have learned, and I hope others see that had, the government can play an enabling role for actually creating jobs in this country and making us competitive. Who knew policy actually works?
Meyer: I hear that …
Granholm: I hear a “but” coming.
Meyer: Kamala Harris, still, though, did not win the presidential election. So I think, to some degree, the Biden administration has proved you can do these things, and that they elicit a response. I think, unfortunately, what it’s also demonstrated is that this might be somewhat disconnected from political outcomes. So what lesson do you learn from that?
Granholm: I mean, yeah. Lesson A: It works, yeah. Lesson B: How do you, how do you communicate that in a way that people understand that it’s working? How do we, yeah, how does that happen? It’s that. It’s back to the question we started to talk about at the front end. I wish I was a great communications guru and I could tell you how to do it. It’s one of those things that you almost have to, because it was so soon, in the results-bearing part of this strategy, meaning that you haven’t, people haven’t been hired for all those factories yet because they’re still under construction, or they’re still being contracts.
I still feel like it’s not over yet. The story’s not over yet. In the immediate, yes, there was a communications gap because people didn’t believe it. And I think people are angry, and they don’t trust government to begin with. And so if you’re coming in as a candidate saying that your government’s bad and they don’t believe you, and I’m going to fight for you, that’s a more compelling message than, yeah, we we have all these factories that are just starting. You need to wait a few years, but it’s gonna happen, I swear. So how do we communicate that? You’re in the communications business — tell me.
Meyer: Well, do you think it was a mistake to communicate so many of these changes, so many of these policies were communicated through manufacturing — I mean, it’s what we’re doing right now. Not many voters actually work in manufacturing. We have a largely services-dominated economy. Was that a mistake?
Granholm: I’m sort of manufacturing-centric.
Meyer: I was gonna say, in some ways, because of governor of Michigan, you have an anomalous …
Granholm: Totally. This, yeah, it’s not, it’s not how everybody else sees it, for sure. And I totally, I totally hear you on this. So here’s, you know, here’s another data point, is that — or factor: Part of the Inflation Reduction Act and the Bipartisan Infrastructure Law was to give people the ability to weatherize their homes, to have rebates for appliances that made them pay less on their bills. The cool thing about this was that, is that 49 out of the 50 states have said, yes, I want that program, and they’re applying for the funding to make that happen. But it’s just happening now.
Meyer: I was going to say, I remember looking at the timelines for this and being like, they’re not going to get that out by the election.
Granholm: Yeah, I mean, it’s just, the four-year period of time is just such a speck on the timeline that’s necessary to actually see it to fruition.
Meyer: What do Democrats need the government to do that it cannot do, or that it has not been able to do?
Granholm: Besides communicating these, the successes, and making sure that we can move more quickly on …
Meyer: Communicating, or, yeah, maybe it’s that these were great rebate programs, and also, the law passed in August 2022, and we’re just getting them out now, right? Like, it took two years to get through that whole process.
Granholm: Yeah, and that is a, that’s an issue, I think, that government has to deal with. In general, when you have a new program, you’ve got — rightfully so — all of the oversight, and making sure. And then the states have — if you push something through to the states, this is the same thing with the NEVI program, the vehicle program went to the states.
We have oversight on the federal level. States have oversight on the state level. It’s a new program. So, for example, for electric vehicle chargers, the NEVI program was to get these chargers to the hardest spaces, the spaces where no private sector entity would go, where there was no electricity. So the contracts took a while to figure out, and how to get them, and the states had to figure out their own processes. So they’re starting, we have 24,000 coming online from the NEVI program. But again, they will come online over the next couple of years — years. So the slowness of the systems, that is an inherent challenge.
If you move too fast, though, then you end up making mistakes. You don’t want to see some wrongful spending. So it is, I mean, government takes, the government, wheels of government, eventually they’ll get it right. There’s a lot of oversight. You want to make sure there’s no waste, fraud, and abuse, but it may not happen on the convenient timelines of a four-year term.
Meyer: I understand how, you go slow, and it avoids mistakes, and you get your one shot to do things, I will say, looking back, the times when the government has been able to pass policies that resulted in political wins — and specifically, when Democrats were able to expand the government’s powers in ways that result in political wins, to build things, do big things, they did them pretty fast. The 1930s, like, the New Deal was a program, right? Yeah, all the LBJ programs were relatively fast.
Granholm: Yes, I totally agree. And in history, there was less concern about a lot of the stuff that, yeah, that there have been embedded processes. I mean, it’s, I think, immediately, of the DOGE efforts to try to reduce bureaucracy. And honestly, there is truth to that. There should be some reduction of the steps it takes to get something accomplished. And there needs to be sort of a value-stream mapping of the bureaucratic systems. This is true.
We need to speed up permitting. We know we need to do that. And you know, the friction, the litigation, the NIMBY issues, in addition to the the government’s internal processes, it’s just too much. So can there be streamlining to make things move more quickly? There can be, and I think that should be a focus, as well, for Democrats, not just Republicans.
Meyer: After four years at the nerve center of decarbonization in the government, what do you think is the biggest obstacle to decarbonization, and to doing the energy transition?
Granholm: I think right now, I mean, I would say the most immediate big obstacle is that we have 3.7 terawatts of clean energy waiting to get into the queue, to be, build out that generation from the transmission point of view. If I could tackle one thing, one thing quickly, it would be the interconnection queues.
Meyer: Wow. And so you would be willing to pay, you would be willing to make other concessions to handle transmission?
Granholm: I would be. And then the, I would, there’s one other thing I would say, is, I would want to invest much more in baseload power, baseload clean power. So bigger investment in geothermal, bigger investment in hydroelectric — even distributed hydroelectric, you know, making dams where they don’t already exist, stuff like that that really are … you know, I believe nuclear is a really important part of the clean energy future. And those nuclear reactors, small modular reactors, I think are really important. I’d continue to invest in them. I would also continue to invest in fusion.
Meyer: There’s a big tradeoff that the administration has kept dealing with, I think, or that it has kept running up against during the past four years, and to some degree, is really inherent in the design of the Inflation Reduction Act, which is, when you decarbonize, when you seek to make this transition happen, do you optimize for deployment and commercialization, or do you optimize for reducing emissions?
I think the clearest version of this tradeoff is with the hydrogen tax credit, where there is a tradeoff between getting as many electrolyzers out there as possible, trying to build as much electrolyte electrolysis capacity on the grid as you can, versus making sure that those electrolyzers don’t indirectly increase emissions across the national economy. In that case, but even more broadly, how do you come down? If there’s a tradeoff between deployment and reducing emissions, where do you come down?
Granholm: I don’t like the binary choice. I will say this: I’m very big on actual deployment, knowing that there will be continuous improvement on the technologies that are being deployed, including GHG emissions. I just think that people need to get used to, I mean, you know, when you put out a product for the first time, there’s always going to be things that you want to improve on, and because the overall goal is to reduce emissions, that’s got to be a primary thing of the product that is being put to market. So I think both have to happen, but the deployment is is utterly priority for me. Get it out, and then improve.
Meyer: Do you think … are the technologies ready, at this point, to think about reducing emissions? Or do we just need to deploy a lot?
Granholm: Well, if you’re talking about electrolyzers, we still have to get these hubs up and running. And this is another thing, waiting for guidance on the tax credit associated with hydrogen is, is a whole ‘nother thing. But, but the bottom line is, once they’re, I mean, the whole point about doing hubs, for example, in hydrogen, and using fuels that are either renewable or natural gas with carbon capture or nuclear — the bottom line is, we’ve got to get these hubs, are the places where we’re going to experiment about what works and what doesn’t work. We’ve got to get the products in the hands of those who are going to be using them so that we can learn from them. New technology requires deployment in order to learn, in order to improve.
Meyer: Looking back on the IRA — and to some degree, this troika of laws, but really the IRA — what is your biggest regret about how they played out?
Granholm: My biggest regret is that there wasn’t, we weren’t able to get consistent investment in the grid through the IRA.
Meyer: From the, from the point of view of the law being designed …
Granholm: Yeah, from the design of it. That could be something that that is worked on in the years to come.
Meyer: What’s your biggest regret on implementation of the law? Speed, clearly,
Granholm: Speed, yeah. Trying to get through all of the hoops that you need to get through to do it, right? Why was it so slow? Again, because of all of — let me just say, I’m super proud of the work that our team has done, and the fact that we will have 98% of the funding out from these rounds of funding. That is amazing.
Meyer: I’m going to ask you what you’re proudest of.
Granholm: But it is, I regret we weren’t given the opportunity to serve in a second term to make sure that we were able to carry this forward, and that people can see that the benefits of these laws actually create an industrial strategy that reshores manufacturing, and it generates clean electricity and creates opportunity for communities all across the country.
Meyer: Ultimately, the IRA did a ton of industrial policy through the tax code, and then it did a ton of grants and loans through DOE. And I think there could be criticisms of the speed of DOE getting loans out, let’s say.
I mean, something I’ve heard from companies is like, look, LPO is — $400 billion of loan authority, they only got out $54 billion. That number might go up a little bit in the next few days. But I’ve also heard criticism that we tried to do all this stuff through the tax code, and it just took a long time to get that tax guidance out, and we were trying to jam a lot through a relatively small tax policy office. What would you change … if there were to be another attempt at industrial policy, be it on climate or anything else, right? Because we want to do … like, Democrats do want to have goals for other sectors of the economy. What would you change about that implementation, or that way of writing the law, to make sure that industrial policy is effective in the U.S. government as it exists?
Granholm: It’s hard for me to sa,y this is a process that I would remove from the system, because it, we have so many technologies, so many agencies involved, and I think that there needs to be a comprehensive look at it. I do think that in a next iteration, incentivizing or removing waste streams from permitting has got to be a priority to get this stuff deployed. As I say, incentivizing investment in the grid has got to be a priority. Incentivizing investment, specifically, in baseload clean technologies.
Meyer: How would you incentivize those things without just winding up in another slow process.
Granholm: So tax code’s a little more efficient, yeah. So the tax code, I think, gets the private sector to sit up and take notice, and move, yeah. And so doing it through the tax code, as opposed to grants or loans, that happens, assuming that folks are but the guidance —
Meyer: This time it did take long, a long time for the guidance to come.
Granholm: Yeah, for some. I mean, for like, solar stuff that we’ve, you were used to, instead of being incentivized in the tax code, that all obviously went very quickly and will continue to move. But it’s just, it’s the startup of these things where we haven’t written guidance before, where it’s a technology that has subsets of supply chains, what’s involved that, you know, and you have a small office. So I’d invest in the office to be able to expand the ability to get these through a little more quickly. But I think that ultimately, even though it takes a little bit of time, it works, and it will work, and we will see the benefits of this over the next few years, and I hope people recognize the incredible courage that it took for Joe Biden to act, create industrial policy in America where we had not done it before.
Meyer: What are you proudest of?
Granholm: I’m proud to work for this administration, for this president. And I’m really proud of our team, that we have been able to do so much in so short of amount of time, with all new programs. It is an amazing, amazing thing to have been in this position at this time. I feel so utterly lucky, and I hope the next guy sees it for the jewel that it is.
Meyer: I think you’re in this role for another 35, 36 days.
Granholm: I think it’s like 26 working days.
Meyer: After that, what sort of problems are you thinking of next?
Granholm: Oh, I’m still thinking of all of these problems. I’ll still be active in this space in some way, shape, or form.
Meyer: Is there a particular set of problems you’re eager to tackle?
Granholm: I don’t know what’s going to … I have no idea what I’m going to be doing next, but it’s got to be in this basic work. In the clean space is where I will be.
Meyer: So at the end of every episode, we ask — Jesse and I, my co-host, do an upshift or a downshift. You just pick one. And an upshift, you pick something from the news or something that you’ve encountered recently that either is making you feel more upbeat about the energy transition, or more downbeat about the energy transition, about our ability to make it happen, about its ability to, our ability to decarbonize the economy. And so to conclude, I wanted to ask you, do you have an upshift or a downshift to share with us?
Granholm: My upshift is that I am optimistic about the durability of these programs that I think, regardless of who’s in the White House, it is inexorable, this clean energy transition — because, because the Inflation Reduction Act has made investing in America irresistible, because there’s bipartisan support, and because of all of the mayors and the governors and the members of the, members of the private sector who have raised their hand and said, We got this. We’re taking the baton.
Meyer: Secretary Granholm, thank you so much for joining us today.
Granholm: I appreciate it. Thank you, Rob.
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Rob chats with Ember’s Nicholas Fulghum about the think tank’s newest report.
Here’s some good news: Clean power met all electricity demand growth last year for the first time since the COVID-19 pandemic. That’s according to a new report on global electricity trends from Ember, a U.K. think tank that tracks energy data from around the world. The new review suggests that solar and batteries are continuing to remake the global power system — and outcompeting gas and coal in some of the world’s fastest growing economies.
On this week’s episode of Shift Key, Rob is joined by Nicholas Fulghum, the lead author of Ember’s new report and an energy and climate data analyst at the think tank. They discuss why solar keeps breaking records, whether India’s energy development trajectory has changed, and how the Iran War could change this year’s numbers.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap News.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from their conversation:
Nicholas Fulghum: It’s not just the absolute growth there. It’s just also the speed of growth that we’re not really expecting from sources in the past. Usually when a source scales to this level, where you have a maturing technology that is dominating parts of the market, the growth rates come down. But with solar, what we’ve seen is that actually 2025 had the highest growth rate, with 30%, that we’ve seen in eight years. And that’s quite unusual for something that’s really reached scale.
Robinson Meyer: Why is it dominating now? Because you’re absolutely right, we’ve been talking about the story for so many years in a row. This is the one thing we’ve come to expect about the electricity system globally, is that we’re just going to add all this solar every year. So why did it accelerate last year?
Nicholas Fulghum: The solar story as a whole is essentially a story of technology, and the learning curve that solar has been on hasn’t really stopped. So we’re still seeing cost declines. And they are really accelerating the deployment further.
If you think about where the cost has come from, we have a decline of about 90% over the last decade. It really just completely changes the use cases and where solar is applicable. We now have seen rapid solar buildout in so many different contexts. We’ve seen it in big utility installations in the U.S. We’ve seen the sort of hybrid deployment that we see in Australia, where it’s both utility-scale and distributed. Same, very similar approach in Germany, as well, a mix between utility and distributed. But we’ve also seen the very grassroots, not very organized but equally rapid deployment in countries like Pakistan. And this versatility is not something that is applicable to any other electricity source — not just now, but in history.
You can find a complete transcript of the episode here.
Mentioned:
Ember’s Global Electricity Review 2026
Previously on Shift Key: Nobody in the West Knows How to Respond to the ‘Electrotech Revolution’
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This transcript has been automatically generated.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
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Robinson Meyer:
[1:53] Hello, it’s Friday, May 1st. Happy May Day. And we have some good news for you today. The global electricity system became slightly less fossil fuel intensive last year. In 2025, clean power met all global electricity demand growth for the first time since the COVID-19 pandemic. That’s according to the new report from the think tank Ember, which is headquartered in the UK and has become one of the most important and interesting organizations tracking the energy transition over the past few years. You might remember last year we had Kingsmill Bond, one of their energy strategists, on to talk about electrostates and the rise of electricity technology.
Robinson Meyer:
[2:29] Transforming global industry in China and around the world. Their data, though, beyond Kingsmill’s work, has been central to understanding the inexorable rise of solar energy, of batteries, and of how clean power is now driving fossil fuels out of the energy system. You know, our tagline here at Shift Key, which I say every episode, is that we look at the shift away from fossil fuels. But lately, there hasn’t been as much shifting in what we talk about.
Robinson Meyer:
[2:54] So today, I thought we would look at the shift for once, at least and have some good news for once too. Joining us today is Nicholas Fulghum. He’s the lead author of Ember’s new 2025 Electricity Review. He’s also a senior energy and climate data analyst to Ember. I wanted to talk to him about the biggest changes in global power systems last year, whether what’s happening in California and Western Europe is the same as what’s happening in Southeast Asia, why solar in particular keeps growing in such an unstoppable way, and how the Iran war might change the numbers for 2026. I’m Robinson Meyer, the founding executive editor of Heatmap News, and it’s all coming up on Shift Key. Nick Fulghum, welcome to Shift Key.
Nicholas Fulghum:
[3:36] Thanks so much for having me.
Robinson Meyer:
[3:38] So you recently published this report, Ember’s Big Annual Report on the Global Electricity System. It’s an amazing document, as always. And I feel like the story that comes out just hits you right on the face when you look at it this year is the absolute growth of solar, this total dominance of solar in the electricity system. So why did solar dominate last year? And what is the story of the electricity grid in 2025 as you understand it as the lead author?
Nicholas Fulghum:
[4:06] Yeah, for those of us that have been following this story for a while, solar breaking records is not really a new thing. But what keeps happening every year is that the scale and just the absolute amount of solar growth just keeps edging up more and more. And in 2025, we got to the point where solar growth alone met 75% of the increase in electricity demand. Now, that brings it from just a fast-growing source by historical standards to really the dominant driver of any change in the global power sector. And that increase that we had, the 636 terawatt hours of new solar generation that was added in 2025, that’s equivalent to twice the UK’s annual electricity demand. So we’re really talking about system-level change now.
Robinson Meyer:
[4:58] So we’re adding basically two UK size electricity systems entirely made of solar every year.
Nicholas Fulghum:
[5:04] Yeah, that’s right. And it’s not just the absolute growth there. It’s just also the speed of growth that we’re not really expecting from sources in the past. Usually when a source scales to this level where you have a maturing technology that is dominating parts of the market, the growth rates come down. But with solar, what we’ve seen is that actually 2025 had the highest growth rate with 30% that we’ve seen in eight years. And that’s quite unusual for something that’s really reached scale.
Robinson Meyer:
[5:36] Why is it dominating now? Because you’re absolutely right. We’ve been talking about the story for so many years in a row. This is the one thing we’ve come to expect about the electricity system globally, is that we’re just going to add all this solar every year. So why did it accelerate last year?
Nicholas Fulghum:
[5:54] The solar story as a whole is essentially a story of technology. And the learning curve that solar has been on hasn’t really stopped. So we’re still seeing cost declines. And they are really accelerating the deployment further. If you think about where the cost has come from, we have a decline of about 90% over the last decade. It really just completely changes the use cases and where solar is applicable. We now have seen rapid solar build out in so many different contexts. We’ve seen it in big utility installations in the U.S. We’ve seen the sort of hybrid deployment that we see in Australia, where it’s both utility scale and distributed. Same, very similar approach in Germany as well, a mix between utility and distributed. But we’ve also seen the very grassroots, not very organized, but equally rapid deployment in countries like Pakistan. And this versatility is not something that is applicable to any other electricity source, not just now, but in history.
Robinson Meyer:
[6:58] Basically, what this means is that you have a situation like what I understand to be happening in Pakistan, where there’s now a lot of electricity available during the day, or are we seeing, we haven’t talked about batteries, but does the concomitant rise of batteries mean that actually this generation is not as time-locked as solar by itself would be.
Nicholas Fulghum:
[7:20] Yeah, historically, at least over the last few years, while solar has seen its initial rise, it’s been used in varying ways. So in Europe, for example, it’s mostly used to displace fossil generation in the middle of the day. And that’s also the case in the U.S. where in California is displacing gas generation. In a country like Pakistan, solar was deployed in a response to a failing state electricity grid. So it was about the actual availability of solar power. And increasingly, as you say, batteries now make that not just a daytime solution, but a solution that works around the clock. And we’re seeing that increasingly both on that very distributed level, but also on a utility scale.
Robinson Meyer:
[8:06] Is that where the solar growth is coming from? What part of the solar equation here is growing more? Is this mostly a story about developing countries adding solar because it’s a modular energy technology that individuals can purchase and then have access to electricity? Or is this a story about places like Texas or California or Western Europe just continuing to hammer their midday fossil share?
Nicholas Fulghum:
[8:31] Yeah, well, the interesting thing there is that the story is that it’s all of those things at the same time. Yeah, it’s both. So in China, for example, it’s a relatively evenly distributed amount of distributed generation and utility scale solar. And China is by far the largest contributor to solar growth globally. So more than half of the increase in solar generation in 2025 was in China. So we have both geographically a lot of diversity, obviously dominated by one country in this case, but also in the use case, it’s very much you have distributed solar and utility solar scaling at the same time at similar rates as well.
Robinson Meyer:
[9:14] Speaking of China, one of the huge findings you have in this report is that fossil generation fell in both China and India. It sounds like solar was responsible for that trend in China, but can you talk a little bit about how we know that and whether you expect these trends to continue?
Nicholas Fulghum:
[9:33] Yeah. So over the last two decades, people have become very familiar to huge increases in fossil generation year after year in China and in India. And together, they were by far the largest contributors to that fossil generation growth that was also still happening at the global level. But actually, if we look at the aggregate, outside of China, since 2018, fossil generation had actually already been flat. So if you take China out of the equation, but we still had fossil generation growth, even globally. So the question was, when is China going to turn? And 2025 is kind of that moment where we see what that turning can look like. Now, China and the world are very mirrored stories. In China, the reason that we didn’t have an increase in fossil generation is because clean generation grew enough to meet and exceed the growth in electricity demand.
Nicholas Fulghum:
[10:27] And that’s what we saw on the global level as well. So China is leading that trend and on the global level, turning the tide on fossil generation growth as a whole.
Robinson Meyer:
[10:38] I think one of the biggest questions about China is fossil generation fell in 2025. Obviously, now there’s this energy crisis caused by the closure of the Strait of Hormuz and the war in Iran. Do you expect this trend to continue? Let’s just start with in China, because looking back in the clock, right, in 2021 and 2022, they think there were big coal increases in China as the country kind of redoubled down on coal. Do you expect to see it respond to the current energy crisis in the same way? Or is it wrong to even understand that change in 21 and 22, like in response to Ukraine and the post-Ukraine energy crisis? Or was it all about internal Chinese power market dynamics?
Nicholas Fulghum:
[11:22] Yeah, I think what can help us understand the situation is looking at Dissecting the structural drivers, so the longer term trends from those moments in energy history, so to speak. So 2020, obviously everyone remembers COVID pandemic, demand destruction on a large scale, globally electricity demand, you know, growth tanks compared to previous years and years after. The same happened in China as well. So 2020 is actually a really interesting case because we didn’t have fossil generation growth at the global level. But the reason wasn’t large scale adoption of clean power, even though it was already growing quite fast. It was that demand wasn’t growing. And the big difference in 2025 is that demand growth is really robust. So 5% was the increase in China. At the global level, it was 2.8%, which is basically in line with the 10 year average. So both globally and in China, we have robust demand growth. And that’s where 2025 is really different, because that’s not something we’ve seen before. Robuster mangrove and falls in fossil generation. So that’s the structural element where clean power is just now growing fast enough. And in response to the crisis in the Strait of Hormuz, what a lot of people were expecting is we’re going to get a big shift back to coal.
Nicholas Fulghum:
[12:44] But that’s not a shift away from clean power. That is, if anything, a short-term shift within fossil fuels. If gas is really expensive, so LNG in that case in Asia, then maybe coal becomes slightly more attractive relative to that in the market. But what it doesn’t do is become more attractive than solar and wind, which is what China has predominantly looked towards to meet its additional power demand. So we’re not going to see a turn towards coal over clean sources.
Robinson Meyer:
[13:17] Can you say a little bit more about that? Because I feel like that countries don’t, especially China, I think doesn’t make decisions between clean and dirty when it’s kind of planning its energy system. It makes decisions between secure and insecure. And so why does gas being really expensive? I understand that China has relatively low LNG share, but why maybe when we look at Southeast Asia or outside of China, would we expect to see gas lose out to coal rather than kind of coal step up?
Nicholas Fulghum:
[13:46] Yeah, so if we go back to the previous crisis, and I guess this is also a separate point, is that we’re talking about consecutive crises every few years in the fossil fuel sector. If we go back to the previous one in 2022, we actually had sort of a double whammy with prices going up for gas and prices going up for coal at the same time. So you had power markets that were really dependent on imports like South Korea and Japan really suffer the consequences.
Nicholas Fulghum:
[14:17] And this time around, gas is significantly more affected just because the trade route through the Strait of Hormuz just has more gas exports. And as we know, some of that infrastructure in countries that weren’t actively involved in the conflict, like in Qatar, were also affected where some of the production capabilities might be inhibited for more than just a few months. We’re talking about years that some of that infrastructure needs to be rebuilt for. So that means that the price for LNG is rising. Surprisingly, it’s actually not risen as much as many people expected. And that might just point to some panic and illiquidity in the market where people are afraid to even trade some of those longer term contracts, given that these prices currently change on the daily with, you know, tweets coming out of the White House affecting prices, basically. So we don’t know the full impact of this specific crisis yet. But what we can say is that historically, power markets have been relatively flexible, especially in countries that have both of these sources available, so both coal and gas. But the overwhelming trend and the voices that we’ve heard from governments in South Korea, Japan, Indonesia, is that they want to double down on reducing their import reliance through renewables and away from coal and gas altogether.
Robinson Meyer:
[15:42] We’ve kind of hinted at it a few times, but what was the story in India last year? Because from an emission standpoint, I think actually several years ago, we passed the point where, you know, the OECD countries plus China are most of the emissions that we expect to see going forward, kind of the big questions about where the climate system is going to wind up and how much temperature rise we’ll experience in the 21st century is actually primarily a question about about India and Indonesia and the Southeast Asian and Sub-Saharan African countries. So India is like the country at the front of that pack, right? It’s the furthest along its development pathway. And it kind of tells us the most about how countries are choosing to develop at this moment. What was the story of its electricity system last year?
Nicholas Fulghum:
[16:27] Yeah, so India is super interesting because we have with China, we have a country that many see just a few years further that ahead of India in the clean power deployment journey. And in China, we’ve seen that break even point where they can meet new demand. Now for India, the question was how far behind are they on that curve? And in 2025, they did also meet all of the increase in demand with clean power, largely led by solar power, which increased by more than 50 terawatt hours, which was also a massive new record growth in India as well.
Nicholas Fulghum:
[17:03] India wasn’t really meant to get to this point so early. So there’s two things that were going on in 2025. The first one is this record renewables growth, which was twice as high as the previous ELE record. So this year was 98 terabyte hours increase for clean power or for renewables. And in 2022, which was the previous record, it was 49 terabyte hours. So a huge boost in clean power growth. And at the same time, we’ve had relatively mild demand growth. And the reason for that was simply that temperatures were quite low during the monsoon period when usually you need a lot of electricity for cooling. And that just didn’t really happen to the same degree this year. So you get this temporary relaxation and demand growth. And as a result, it surpassed demand growth actually by quite a lot. And we had a significant decline in coal generation and fossil generation as a whole. And if we look a little bit further back, that increase in renewables would have come close to meeting the demand growth in the last four years where we had much more robust increases in demand of over 5% and over 6%. So we’re really now at a point where we do expect next year to be probably a small increase in fossil generation again. But we’re just not talking hundreds of terabyte hours per year. We’re talking more about maybe 20, 30, 50 terawatt hours.
Nicholas Fulghum:
[18:28] And as we get closer to 2030, 2035, India is also going to get to this place where it can structurally meet all of its increase in demand with clean power sources and not grow coal generation further. And now that’s a vast departure from the projections that many people had five to 10 years ago.
Robinson Meyer:
[18:48] Do we have a sense, maybe it’s from China, maybe it’s from European countries, maybe it’s from California, of what happens in power markets and what happens in electricity grids as the fossil share begins to tip over? Because there’s been discussion of this in liquid fuels and transportation for a long time, where the idea is, you know, yes, you’re going to get a point where EVs penetrate further enough into vehicles that oil demand will be flat. And then the question is, is oil demand flat for a long time? Does it plateau? What kind of things happen in that plateau. In some ways, the UAE’s announcement this week to leave OPEC is actually very indicative of what we might expect to see in a world of flat oil demand. But there is a question about kind of how fast things begin to fall off and how long that plateau lasts. Obviously, it will be a different story in the electricity system. But what does China or, I don’t know, Germany, California, What do countries that are further down the chain here, or jurisdictions, tell us about what the future of the grid might look like in a world where clean is just straight up out-competing fossil, at least for the marginal electron?
Nicholas Fulghum:
[19:53] Yeah, so in Europe, for example, fossil power has been falling for quite a long time. Even in the U.S., the peak for fossil generation was in 2007. So this is a while ago and over that course, demand didn’t drop significantly either. So this is just direct displacement of fossil generation in the power sector. What we see at a more granular level, particularly with the introduction of solar, is that power markets change pretty significantly. You have much bigger intraday swings between the middle of the day when there’s a lot of solar power on the system and the evening peak demand hours. Now, one of the most famous examples for how to overcome this is the deployment of utility-scale battery storage in California. And there we’re now seeing that this solar profile, if you think about it, this distribution, very, very smooth distribution, the middle of the day, most of the output smooths out towards the evening, disappears for the night. That profile is now being stretched in both directions. So batteries are deploying and they’re not going to be able
Nicholas Fulghum:
[21:01] In the morning, when the morning peak demand is happening, and in the evening, during evening peak demand. And it’s essentially stretching that profile out. And if you follow it over the years, that stretch is getting wider and wider. So it’s really penetrating the evening and night hours as well now. At peak demand, it can now meet more than 40% of California’s electricity demand. And that’s just batteries, where 90% of those were installed in the last five years. So we’re really talking about a surprisingly quick pickup in a technology that basically wasn’t on the market five years ago.
Robinson Meyer:
[21:37] One big question I feel like in electricity right now is how exactly to think about the utility of a marginal additional solar panel. And so I think there are some folks who would say, and to some degree the like advocacy line, right, is that solar is basically always the cheapest form of electricity anywhere in the world. And it’s always better to add solar. And if you are not adding solar, there’s some other reason, there’s some other dislocation in the system causing you not to add solar. I will say I’m a little skeptical of that line. I think if that were the case, we’d be adding more solar in a lot of places. Obviously, we’re adding an enormous amount of solar, but there’s still reasons why solar might be tricky. And maybe it has to do with land costs, maybe it has to do with permitting. But like looking at the global electricity system, What is the right way to think about … We know solar is cheap. We know it’s an absolute powerhouse. We know it’s absolutely transforming the global electricity system. But what is the most rigorous way to think about how cheap it is compared to other forms of power and how countries are adding it to their electricity mix right now?
Nicholas Fulghum:
[22:41] Yeah, so bottlenecks are real. And I think it’s totally fair to acknowledge that, especially for technology that has risen in the market so quickly. It would be shocking if it was smooth sailing on all fronts. But we have some really good examples of what the second and third stage of that solar growth can look like. We already mentioned California, where the bottleneck did appear a few years ago already, where you had larger curtailment in the middle of the day. It was really difficult for rooftop solar installations to actually be used economically within the distribution grids. So there were real bottlenecks. Those are being resolved actively. So it’s kind of As we’re coming up to these technological hurdles, technology is overcoming them relatively quickly. And if you thought the falling costs in solar panels was quick in the last few years, the fall in costs in battery prices is even faster. At the pack level, those pack prices have come down 45% in 2025. And that’s on top of 20% in the year before and another double-digit percentage decline before that. So we have this huge drop in battery prices. If you think about it in the context of other applications in your life, what does a 50% reduction in price for other consumer electronics, for example, look like? If cars were half the price or twice the price, the application in the world would be completely different.
Nicholas Fulghum:
[24:06] That’s how batteries work as well. So that bottleneck is being resolved. The second point is that actually for most of the world, the system integration of solar isn’t as big of a problem yet. So at a global level, the share of solar generation is now 8.7%. Now, there’s a really nice way to illustrate what that actually means on a daily basis. So 8.7% is about 25% in the middle of the day. So that’s just for the global average. Which is quite an important milestone. So in May, for example, the biggest solar month, that’s when solar is meeting a quarter of global electricity demand in the middle of the day. So a lot of headroom to grow without significant flexibility concerns. But then if you go into the specific markets, that number can scale up quite quickly. So in Hungary, for example, which is the country with the highest solar share globally of 27%, during the peak month in June, solar is meeting 90% of the demand at midday. So it scales relatively quickly. You can do about 3x in your sunniest month is your actual penetration relative to your average penetration throughout the year. So it does create a bottleneck at that point. So for those systems, the fact that battery prices are coming down now is unlocking that bottleneck that was really fast, fast approaching.
Robinson Meyer:
[25:31] But it sounds like part of the story here is that solar is able to dominate because in some ways the global system on an average basis is closer to where California was maybe 10 or 15 years ago where you can just keep adding solar to that thing and it’s going to reduce your marginal costs and you can add batteries too and that’s awesome. But you’re not hitting these questions about ramping or firm power that I think we’re beginning to encounter in California and I also think a little bit in Texas now.
Robinson Meyer:
[26:02] How do we know? I mean, this is a methodological question about Ember, but, one constraint we’ve begun to run into in the United States, I think especially from big tech firms that do a lot of renewable buying, is that the accounting techniques that, previously were good enough to lower emissions, like saying, okay, well, we used 500 megawatt hours of electricity last year. So we’re going to go buy 500 megawatts of solar and wind production. And we’re going to say that’s close enough. If you try to match on an annual basis the amount of energy you’re using and the amount of energy that renewables are producing and you just go buy that renewable power in the open market, you’re actually still going to be producing a lot of emissions. And so when Ember looks at... The global electricity system and says the fossil share is declining or solar’s you know eating into fossil in this way like how do we know that solar is actually eating into demand growth or that renewables are actually eating into demand growth and not just that say solar is generating all this electricity in the middle of the day but if demand’s a little higher it’s actually just boosting fossil a little bit overnight there.
Nicholas Fulghum:
[27:10] Are two things here so one is at the aggregate level we can see this very clearly. So if we imagine a world where solar and wind power hadn’t been deployed, that demand would have had to be met. Maybe demand growth would have been slightly lower because of the higher power prices that would have caused. But still, that demand would have most likely been met by fossil generation, given that we don’t really have other sources that can grow quickly. Nuclear power is growing by 1% per year. Hydropower is growing by 1% per year. Those are not the growth rates that can give you 2% to 3% global electricity demand growth. It just can’t meet that. So historically, we know exactly what happens when solar and wind don’t grow. Because if you go back 20 years, it means that fossil generation increases every single year by a pretty significant percentage. So we know what the counterfactual is. And then on the specific reporting side,
Nicholas Fulghum:
[28:08] Fossil generation reporting is actually the most accurate reporting. The tricky thing with solar often is that we do get some really excellent national level reporting that includes estimates for rooftop solar. There are some countries that are doing a really great job with that. U.S. reporting of both utility scale and estimated rooftop solar is excellent, for example. But then for Pakistan, you do not get excellent national level data. So you have to estimate it based on the amount of solar panels that were imported over the years, the expected deployment. Some people are doing satellite estimation of what’s actually on the ground. So the solar side is a little bit more difficult to do. But there’s two ways we can figure out what’s going on here. We can look at demand profiles on a daily basis. We know exactly how solar power looks in the market. We know exactly the shape of it. So when we see that demand destruction in the middle of the day,
Nicholas Fulghum:
[29:06] we know where that’s coming from. So that’s one way to estimate this difference in where solar is coming from. And then the other one is we already know what fossil generation is.
Nicholas Fulghum:
[29:19] So the big power plants are much easier to account for. These are big coal-fired power stations in China, and China reports their generation pretty accurately. So that means we know that the fossil growth isn’t happening this year. That’s certain. The slight uncertainty is more in the size of the solar growth, but it does give us a little bit more certainty because we know also what kind of electricity demand growth we should expect. And those are the levels that we see when we combine that solar with the growth in fossil generation.
Robinson Meyer:
[29:54] Last question. We are constantly talking about solar and batteries. We have spent very little of this interview talking about wind. Should we stop talking about renewables at this point and just talk about a solar and battery story being the primary driver of global electricity decarbonization and say,
Robinson Meyer:
[30:11] yeah, sure, wind can be an important addition to that in some especially developed settings. But this is primarily right now a story about solar and batteries just absolutely driving decarbonization globally. And we should kind of stop talking about the renewable category as a category.
Nicholas Fulghum:
[30:30] It’s a fair point to the renewable category as a whole, where we also include things like hydropower, for example, which, as I said, doesn’t really have fast growth rates. I do think that wind is quite different there. So wind was still the second fastest growing source globally, at the second highest increase with 205 terawatt hours, so a really substantial amount. And if we didn’t have that increase in wind generation year after year, we would be quite a few years behind on the curve of bending down that fossil generation curve in the short and medium term. So wind is still really competitive with solar as well. It’s one of the lowest cost sources of electricity globally. And solar and wind together as of 2024, so that’s already more than a year ago, were the cheapest source of new power. Where they were installed in 90% of installations, it was cheaper than the cheapest fossil fuel alternative. That’s in 2024. Costs have since come down a little bit as well. So we know that wind is a really important piece of the puzzle. And if you think about the global distribution where people are living, a lot of demand growth is going to happen in countries that are very sunny.
Nicholas Fulghum:
[31:43] We compared in the report the growth in fossil generation that we’re currently seeing from countries where it’s still increasing. So countries like Egypt, India to some degree structurally over the last few years has still seen an increase, Indonesia, these are the countries where fossil generation is still growing. Almost every country with fossil generation growth has above average solar potential. Very, very few are actually in areas where solar doesn’t have high potential. But there are quite a few with a large stock of fossil generation, like Europe, like the U.S., that really benefit from a more balanced approach. Europe, for example, has incredibly good complementarity between summer and winter. and trying to get to a more decarbonized power system in Europe without wind is virtually impossible, at least on a low cost basis. The overbuild for solar to go solar alone in Europe is just not feasible at all. So wind gives the additional clean power piece that fits in really nicely with solar. And in regions where solar is so much cheaper just because of its abundance and high solar potential, they might need slightly less wind generation. But overall, there’s nothing that speaks against driving up the deployment for wind as well.
Robinson Meyer:
[33:08] Such an interesting conversation. We’re going to have to leave it there. But Nick Fulghum, thank you so much for joining us.
Nicholas Fulghum:
[33:13] Thanks so much.
Robinson Meyer:
[33:19] And that will do it for us today. We’ll be back early next week with a new episode of Shift Key. Stick around after the credits, by the way, for a message and a conversation with our friends at Salesforce. Very excited about that. Until then, Shift Key is a production of Heatmap News. Our editors are Jillian Goodman and Nico Lauricella. Multimedia editing and audio engineering is by Jacob Lambert and by Nick Woodbury. Our music is by Adam Kromelow. Thanks so much for listening. We’ll see you next week.
Mike Munsell:
[33:49] Hi, my name is Mike Munsell, and I’m the Vice President of Partnerships with Heatmap. Last week, I spoke with Sunya Norman from Salesforce about how they’re approaching AI and sustainability. Today, we’re diving into a specific piece of that, AI and water. So in our last conversation, I know you talked a bit about Salesforce and its AI energy score and how it’s thinking about sustainability as it pertains to AI, but I’d like to really dive deeper into this conversation and looking at what is Salesforce’s relationship to data centers and in particular water, as I know that’s become something pressing of an issue.
Sunya Norman:
Sustainability has been a core value of Salesforce’s for a very long time. And we think at the highest level about how we make our entire operations more sustainable. And one of the things I love about sustainability is it’s a field where you always need to be evolving, adapting, and learning. And one of the things that we’re all collectively learning in the field is how important water is, especially for the technology sector.
Sunya Norman:
[34:53] Just looking at the data and grounding folks in where fresh water is used, it’s primarily dominated by agriculture and industrial use and the cities where we all mostly live. And so for a long time, the technology sector didn’t think that water was the most material issue for us. However, now with data centers and compute and the data showing us that there’s likely to be this hockey stick in AI demand in terms of energy and accompanying water, water has really risen in importance and prominence. And especially when you overlap maps that show water-stressed regions with AI infrastructure. So really important to understand how to mitigate the impacts on local watersheds and communities from AI infrastructure. Salesforce is not at all the first company to recognize the importance. I’ve really learned a lot from following our hyperscalers. Folks like AWS, Google Cloud, Microsoft, many of them have water positive strategies and are making strategic investments in the communities that surround their data infrastructure.
Mike Munsell:
[36:08] Can you talk more about some of those watershed initiatives that Salesforce is backing?
Sunya Norman:
So we see climate and nature as two interconnected crises. And when you look at our water program, it focuses on three things. It’s about resilient data centers, resilient power supply, and resilient watersheds. The initiatives that I wanted to share with you, our most recent investments, are in that resilient watershed bucket. And it’s about looking again at water stress regions and seeing how we can support communities in making sure that we can reverse or at least slow down the trajectory of water stress that’s really local. You know, it’s specific watersheds. In Brazil, we supported a project from Conservation International, and it’s focused on a river basin that’s actually a water source for 9 million people in Sao Paulo. So just think about how critical that water is and that water basin is. Everything from clean water for drinking to sanitation to industry, very, very important and also critical for the ecosystem.
Sunya Norman:
[37:22] Mexico is another area where we’ve made an investment. Similarly, around the watershed of Mexico City. I wasn’t aware of this before we made this investment, but that area around Mexico City and this wetland, it’s known for something called floating garden farming. This has been something that the community has been practicing since the Aztecs. Something that deserves to be preserved, an ecosystem that’s really critical, not only ecologically, but culturally.
Mike Munsell:
[37:53] Do you see a future where water usage becomes a reported or regulated metric for AI, similar to carbon disclosures?
Sunya Norman:
Yeah, I think the top line thing to know about water is it’s significantly undervalued. All experts and scientists agree, from the UN to World Wildlife Fund, the true cost of water is consistently much, much higher than what consumers pay in terms of utility pricing or what businesses pay when they purchase water. And it’s only in the last few years that even the sustainability space has really been paying attention to how critical an issue this is. Specific to AI, as I mentioned, this is really closely linked with compute. So I think the tech sector must remain laser focused on compute because when you address that compute, you’re actually addressing the energy impacts as well as the water impacts from cooling. In terms of the type of regulation we might see, I think it’ll start first with carbon and energy, because those are the most mature spaces. But I think it’s incredibly encouraging that companies like Salesforce, who traditionally haven’t felt like this is the core focus of their strategy, are waking up to understand how all these issues are interconnected.
Mike Munsell:
[39:01] On the impact side, how is Salesforce thinking about its investments in water generally?
Sunya Norman:
One of the things that I’ve really been excited to learn more about is an initiative we’ve been supporting for several years called the Mangrove Breakthrough Initiative. Mangroves are this incredible species of tree that sits at the intersection of water and land. They not only buffer coastlines from storms, flooding, and erosion, they filter out pollutants, they create safe space for all sorts of species to breed, and they store three to five times more carbon than your average terrestrial tree. So they’re just this incredible nature-based solution. And essentially, the initiative is reaching out to the main countries that have these mangrove ecosystems to get commitments of conservation. And then what Salesforce has been funding is best practices around that conservation or in areas of mangrove loss, how to actually reforest those mangroves and revitalize those ecosystems because so much of coastal economies is wrapped up in these ecosystems.
PJM is back open for business, but the new generation applying to interconnect is primarily natural gas.
America’s largest electricity market is looking at hooking up new power generation again, and a lot of it is natural gas.
PJM stopped evaluating new generation in 2022, when the backlog of projects awaiting interconnection studies stood at 2,664, of which 1,972 — representing 107 gigawatts, about two-thirds of the total — were renewables.
“They’ve been spending these past four years working through the backlog, studying everything that’s in there, and that process is up,” Jon Gordon, senior director at Advanced Energy United, told me.
The electricity market announced last August that applications for the first cycle of interconnection studies under a new, reformed process would be due this week. Some 811 projects with a combined capacity of 220 gigawatts made the Monday deadline, PJM said Wednesday. This time around, the mix looks a little different.
While solar, storage, and solar-and-storage projects make up more than half the queue by number (536 in total), by capacity, nearly half is natural gas, with 106 gigawatts out of around 220 gigawatts total.
For years, some of the strongest advocates of interconnection queue reform at PJM have been advocates for renewables. With the wait for interconnection stretching up to eight years, solar and wind projects in particular found themselves in trouble. Even as the cost of solar had been dropping dramatically, higher inflation and higher interest rates following the COVID pandemic and Russian invasion of Ukraine made developing renewables more expensive — and that was before Donald Trump regained the White House and declared war on clean energy.
Since 2020, PJM said in a March blog post, 103 gigawatts of interconnection agreements resulted in just 23 gigawatts of new generation being added to the grid. Three-quarters of projects that PJM studied withdrew from the process at some point before sending power to the grid.
PJM spent the past four years reviewing old projects and developing a process designed to get interconnection service agreements done in two years at most. The round of projects submitted up through this week will not be evaluated on the “first-come, first-served” model that had bedeviled the previous system. Instead, PJM has adopted a “first-ready, first-served approach,” which the organization says will mean “prioritizing projects that are more advanced and better positioned to move forward.”
The reformed queue couldn’t come soon enough. Over the past four years, PJM has become desperate for more power to serve exploding data center demand and help alleviate high prices.
Since 2020, electricity prices in PJM have risen almost 50%, from 12.6 cents per kilowatt-hour to 18.7 cents per kilowatt-hour, according to data from Heatmap and MIT’s Electricity Price Hub. Typical electricity bills have risen from around $128 a month to about $161.
“Current projections show a potential capacity shortfall of 50 GW to 60 GW in the next decade, primarily driven by large load growth,” PJM said last month. For reference, a gigawatt is enough to power a city of around 800,000 homes. PJM’s existing installed capacity is around 180 gigawatts.
When I asked Gordon about the large presence of natural gas in the new queue, he pointed to data centers, which “have become a massive sea change to the whole landscape of energy.” That goes especially for the scale of planned facilities, such as a planned 1.4-gigawatt data center campus on a 700-acre footprint in Cumberland County, Pennsylvania.
“Now they're talking gigawatt-size data centers that would require, potentially, an enormous natural gas plant — maybe more than one,” Gordon said. Getting the requisite financing and permitting for renewable and storage resources to power such a large-scale project would be “enormously challenging,” he added. Meanwhile, “natural gas has risen to the fore here, and it’s getting a lot of tailwind from the Trump administration.”
(Something else eagle-eyed readers may have spotted in the numbers on new planned projects: their average size is much bigger than those in the queue as of 2022. The new batch comes in at an average size of nearly 272 megawatts each, compared to around 60 megawatts for the old one. That holds especially for solar, storage, and solar-plus-storage projects, which clock in at nearly 198 megawatts on average, compared to just 54 in 2022.)
Earlier this year, governors of states in the PJM region, led by Pennsylvania’s Josh Shapiro, and the White House agreed on a $15 billion special auction for procuring new generation in PJM. That came after PJM’s most recent capacity auction — in which generators bid to be compensated for their ability to stay on the grid in times of need — failed to meet even PJM’s preferred reliability margin.
Pressure continued to mount on the electricity market following the capacity auction, as federal regulators took it to task for its failure to get more generation online. Two weeks ago, PJM put some meat on the bones of the White House agreement by proposing a two-stage process, whereby power customers would directly contract for new generation with power supplies starting in September and PJM would facilitate an auction for whatever was still necessary to meet its capacity increase goals by March of next year.
The plan met a cool reception in Washington, where Federal Energy Regulatory Commission Chair Laura Swett said she was “a bit perplexed” by the PJM proposal, adding it didn’t meet the timeline set out by the White House and the PJM governors to hold an auction this year
While PJM may be able to reform its own processes or come up with special procurements, there’s still the same old issues that have bedeviled energy buildouts everywhere.
Projects that have already been approved are facing “hurdles such as state permitting and supply chain backlogs,” PJM said Wednesday.
That being said, renewables and storage can still benefit from an improved interconnection process, Gordon told me. “Renewables would have always benefited, and still will benefit from improved interconnection,” Gordon told me. That’s largely because renewable projects tend to be smaller on a per-project basis than gas, let alone nuclear, and are more plentiful in number, and therefore stand to benefit disproportionately from faster reviews.
The real tragedy, Gordon said, is that more renewables couldn’t come online when the political and economic winds were blowing in their favor. Projects that were submitted to the queue before its closure in 2022 were “probably very economic back then,” he told me. “They died on the vine as they waited in the queue.”