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Robinson Meyer:
[1:26] It is Friday, February 27th. I’m Robinson Meyer, the founding executive editor of Heatmap News. Since Zohran Mamdani’s campaign in New York City last year, the watchword of progressive campaigns everywhere has been affordability. And now lots of climate groups are getting in on the act too and talking about affordability, inflation, particularly electricity affordability. And this question of, are power bills too expensive and what can be done to bring them down? And I get it. Listen, there were moments last year where electricity prices were increasing twice as fast as inflation, and that was before the tidal wave of new data centers came online. But is it a mistake to anchor climate politics, this big global issue, so tightly to these questions of domestic electricity affordability? Well, joining us today to talk about it is Jane Flagle. She’s done everything. She’s been everywhere, and she’s someone I always like to talk to about the wide world of climate and energy policy. In 2021 and 2022, she was Senior Director for Industrial Emissions at the White House Office of Domestic Climate Policy. She’s since then worked in climate policy at Stripe. She was recently executive director at the Blue Horizons Foundation, and she’s now a senior fellow at the Searchlight Institute and the States Forum. Jane and I have a big fun conversation on this show about two different philosophies of how to run the power grid, what we can learn from Texas and France, at least in the rest of the United States, and whether affordability is the wrong way to talk about climate politics. All that and more. It’s all coming up on Shift Key, a podcast about decarbonization and the shift away from fossil fuels.
Robinson Meyer:
[2:54] Jane, welcome to Shift Key.
Jane Flegal:
[2:56] Thanks so much for having me, Robinson. Great to be here again.
Robinson Meyer:
[2:59] Jane, you’re always someone who I like to talk to who’s thinking about different topics in climate advocacy. We always check in. Now we’re doing it for Shift Key. I’m going to just start off by asking, over the past six months, in some ways since the Mamdani campaign in New York, there has been this massive stampede of advocacy dollars, of progressive communications, of climate communications to talking about affordability. And that’s had some interesting secondhand byproducts. We can talk about how that happened. But do you think it’s a mistake to focus on electricity affordability as much as everyone is now focusing on electricity affordability?
Jane Flegal:
[3:37] Yeah, it’s a good question. I mean, in a way, it’s like it’s about time that the climate community focus more squarely on electricity affordability, not least because, all of our visions for decarbonization depend on rapid electrification of the entire economy, which means that every other sector of the economy then becomes a consumer of electricity. And quite obviously, that won’t happen if the prices of electricity are too high. So A, I think some people have been claiming to be advancing affordability in the climate domain for a long time, but now everyone’s doing affordability.
Robinson Meyer:
[4:17] Everything is an affordability policy.
Jane Flegal:
[4:19] Even if the policy is exactly the same as it was before, before the articulation of affordability as the rationale. And so because I do think that like it is an imperative for like a politically sustainable transition to an electrified economy, and not just an electrified economy, one where electricity is powering significant economic growth and new industries, leaving aside AI, right? This would be a huge challenge for our country.
Robinson Meyer:
[4:48] Right. At the same time, we’re talking about electricity affordability. There’s all this attention devoted to load growth and the fact that electricity demand is increasing. And that would have been happening now anyway, even if artificial intelligence remained a glimmer in Dario’s eye or Sam Altman’s eye, we would still be beginning to grapple with electricity demand growth again, because the reason we haven’t had growth since 2005 is because everyone was transferring from incandescent lights to compact fluorescent lights. Then we had a recession and then everyone transferred from compact fluorescents to LEDs. And now LEDs are, they’re probably in more than half of fixtures across the country. And so we kind of got all the juice we could out of that particular efficiency squeeze. And so we’d be seeing load growth anyway.
Jane Flegal:
[5:36] Totally. And if we are lucky, we will see electricity load growth, right? Both for our climate objectives and for like the functioning of our economy. Like load growth is good. Like it is good. Now, one can litigate the social value of particular industries or the behavior of particular industries, whatever. But as a matter of energy policy, That is just true. So for that reason, I’m sort of like, it is an imperative for all of us who care about climate to make sure that electricity is affordable so that we can electrify everything else. It is also critical that we have a lot of affordable electricity to electrify everything else. And I guess where I feel a little tied up in knots myself right now is like the conversation about what affordability looks like is highly focused, and narrowly focused, I would argue, on this like very short-term acute concern about meeting data center demand and like making more efficient use of the resources we already have to meet that demand. If we weren’t imagining a world with load growth at the scale we want to imagine that might be fine but like.
Jane Flegal:
[6:47] No amount of efficiency, of demand response, of getting more out of the grid.
Jane Flegal:
[6:52] We cannot like VPP our way to 2x-ing the grid in a decade and a half. You know what I mean? So like we are going to have to find a way to thread the needle here between cost constraining measures in the near term, including getting more of what we’ve already built, with the like actual very real imperative to build a lot more stuff very quickly.
Robinson Meyer:
[7:14] Let me go back and just gloss some of what you said, because you said initialisms that I think are familiar to you and me that I would imagine are familiar to many of our listeners, but perhaps not all of them. I believe the big one was VPPs, which are virtual power plants. A virtual power plant, as you could read on Heatmap, we’ll stick in the show notes, and my colleague Katie Brigham’s recent story, is a set of residential rooftop solar panels, residential batteries, residential HVAC systems, residential appliances, maybe EV charging, all strung together in a big software organized system that can respond to either demand fluctuations in the grid or price action in the grid to make sure that all those things are either sucking up power from the grid when it’s cheap or when clean energy is abundant or putting it back in the grid or at least reducing the amount of energy that homes are pulling from the grid during moments of peak stress. And I think what you’re implying is that
Robinson Meyer:
[8:16] We are watching a moment in the electricity sector where gigawatt scale facilities are beginning to come online, where we are going to need gigawatts of new demand to meet growth. And the playbook that is being deployed is one focused perhaps on making sure that we get the most out of all the generating assets, the power plants, the poles and wires, the transformers that are already out there to basically shave those moments of peak demand so that they don’t stress the existing system. And you’re saying, yeah, that’s important. But for the amount of growth that we’re seeing and for the amount of growth that we need to see, we actually need to be ready not just to shave those moments of peak demand, but to grow the grid at an infrastructural level and prepare for serious, serious load growth, which may be the tools that we’re using, such as and Trying to get homes in these virtual power plants, trying to get people to time their EV charging, either through incentives or through software, so that it doesn’t stress the grid at its most congested moments is like not enough to meet the challenge that we’re seeing.
Jane Flegal:
[9:29] Yeah, I think that that’s right. And that’s not to be dismissive of that set of interventions. I just think it is potentially necessary. Although, to be honest, I think there are real questions about the barriers to scale for some of these things. Like VPPs do not exist at the scale that we are imagining them to exist at in the same way that like small modular reactors don’t, right? Like these are all kind of imagined future states. And so like I just get anxiety about betting the climate on like one of those things.
Robinson Meyer:
[9:59] By the time we release this episode, we’ll put out this conversation I just had with Peter Freed, his former head of energy policy at Meta. And one thing he was saying is that all these data centers are basically not preparing to receive power from the grid until 2030. And so they’re all building giant on-site gas generation, basically with batteries to prepare just to be able to operate until they can get a grid hookup. Which number one suggests that a moratorium on data center grid connections would not be a very useful policy because that just means they’re going to burn 100 gas rather than whatever you can public policy your way into making the local grid but number two actually does to me, though, suggest that this set of tools that might be coming on online in 2030, maybe large scale VPPs, but also next generation nuclear, or at least a new fleet of current generation nuclear reactors.
Jane Flegal:
[10:55] Or geothermal.
Robinson Meyer:
[10:56] Or geothermal. Suddenly those tools become things we should be thinking about, because it sounds like 2030 is actually kind of when we will begin to need these tools since data centers
Jane Flegal:
[11:06] Have evidently decided. That really bums me out. That really bums me out. And like, it also goes to the affordability question, right? Like the notion that we wouldn’t take advantage of near-term demand and near-term demand that seems quite willing to pay for energy, that we can’t find some way to like leverage that to do the kind of supply side investments we need to have without having it all be on the backs of rate payers. It actually could be an opportunity, but instead it’s all viewed as downside risk. We could be not just expanding the denominator, but redistributing who actually is paying for this stuff outside of just the rate payers if we were creative here, instead of just being moratorium on great connections or whatever. That’s part of the problem that I’m frustrated by right now.
Jane Flegal:
[11:55] I just think we need much more creative thinking on this set of issues.
Robinson Meyer:
[11:59] So stipulated that this conversation is not so you can announce your big policy playbook of tools and policies that will actually solve these problems, but what kind of policies are you thinking about that would solve these problems and that you would contrast to the demand-shaving, efficiency-focused policies that are maybe already out there?
Jane Flegal:
[12:19] I am really trying to think about this more seriously right now, and people smarter than me should actually be in charge of figuring this out. But I think one thing is like a.
Robinson Meyer:
[12:29] Call for papers. This is a call for papers.
Jane Flegal:
[12:31] Someone please, someone please write these papers. I think one thing is like, We need to lower the cost of capital for grid scale projects, right? And so like, I think this question of how do you better use public financing, like you don’t necessarily have to go to like full throated public ownership of grid and grid assets, but like some kind of like, how do we better leverage the public to try to get whoever, utilities or developers or whatever, to use more cheap debt and less equity. To finance energy projects, I think is like a really underexplored set of ideas. And I would love to see more creative thinking on that set of issues, like whether it’s bonding or I don’t know, I think there’s like a bunch of things that you could do there. And then another thing is just like much more effective grid planning. And the Federal Energy Regulatory Commission has this like order 1920.
Jane Flegal:
[13:31] Which is meant to force entities to not just plan for like the lowest possible load growth scenario in the next two years, but to plan over much longer time horizons and to plan for a range of scenarios, including like a high electrification scenario. I think improvements to grid planning, whether that FERC 1920 stuff can actually have teeth, whether it actually matters, I think is an open question, but it could be really powerful. And like tools in that category of grid planning for growth, not just grid planning for flat demand, which is what we’ve been doing for more than a decade, I think is really important. The other category of things is what a lot of people talk about, which is.
Jane Flegal:
[14:17] Citing and permitting challenges like we do actually genuinely have to do have to do permitting reform i continue to perhaps foolishly be bullish on federal permitting reform i think if you could get a federal deal that dealt with sort of what people are now calling permitting certainty you know the ability for the executive to like muck around and permits willy-nilly basically and something on transmission, like changes to the Federal Power Act that might help with this transmission planning and financing issue, and changes to NEPA and potentially the Clean Water Act. That, to me, would be very helpful.
Robinson Meyer:
[14:56] There’s something in there, too, that I want to just call out because I’ve been thinking about it as well, which is I think we made a mistake when we called the current House and Senate energy bill permitting reform and then grouped transmission under permitting reform, because permitting reform is primarily about things like the National Environmental Policy Act, about the kind of procedures you have to step through in order to build a kind of large-scale infrastructure project, who has the ability to approve those large-scale infrastructure projects. And for long-distance, large-scale transmission, there are key permitting barriers. However, there’s another part of the transmission package in front of the House and Senate, which is really not about permitting at all, and is usually called cost allocation. And I just want to emphasize that cost allocation is so important. Right now, if there are two utilities, even if they want to build a power line between their territories, they will have to figure out how to divide up the costs on a completely ad hoc basis, which is not how we fund other kinds of infrastructure.
Robinson Meyer:
[15:59] In a grid region. And what that means is that we actually don’t know the amount of transmission that would instantly finance itself in the country, were these rules to exist. Because with the lack of rules, nobody can go out and do a study on what transmission would be economical that we don’t have right now. Because we don’t know how the cost would be divided up. There’s no playbook on how that should work. And so I just want to emphasize that.
Jane Flegal:
[16:28] I think that’s totally right because the transmission section is really much more about like Federal Power Act reform than it is about NEPA, right? Then there’s like a separate set of issues around NEPA. And then like the last thing that I’ll mention on some of these like cost mitigation strategies is supply chain dynamics, which continue to be in a way that I always find surprising because I forget that we live in a physical world even after COVID. I’m like, oh, right, like, no one can get transformers. And like, I still am confused about whether anyone can or cannot get a gas turbine. And then certainly the tariffs and the foreign entity of concern requirements, there are all these ways in which we’re mucking around in like, the costs of our infrastructure for energy and other things like the tariffs are bad for energy infrastructure of all kinds, whether it’s oil and gas or clean energy. So I mean, those are all things that I think are worthy of further exploration for sure.
Robinson Meyer:
[19:04] I feel like there are two big schools of thought on utility matters right now. And I’ve been grouping them as ERCOT or EDF. So ERCOT is the Texas grid. It has an extremely competitive market-driven approach. Famously, its biggest market is this energy market. It allows prices to get extremely high in that market, thousands of dollars per megawatt, in order to make that market clear. It has an interesting structure where it has both a spot market for electricity on the moment-to-moment basis and also a robust set of rules governing two-party arrangements in ERCOT. It’s a very competition-based form of structuring a grid. Then you have EDF, which is a French utility that built a lot of nuclear power plants at the same time in the 1970s and 1980s and did so eventually very cheaply and now supplies extremely cheap and carbon-free electricity to the nation of France.
Robinson Meyer:
[20:11] I feel like people tend to go one or the other way when they are thinking about where the grid should go. There’s a set of ideas that say, actually, utilities should only control the distribution grid. And then you should be able to choose a retailer of electricity to sell you electricity, like you can choose a retailer of electricity in Texas. And some people say, no, no, no, actually, we want utilities to be big, to be full monopolies. We need to regulate them differently perhaps, but we want them to be able to embark on these big capital projects that where they outlay huge amounts of money on a forward going basis to make sure that a service area can meet its electricity demand for a decade or two decades to come, much like France did in the 1970s with its giant nuclear power plant buildout. And I would say there’s some evidence on the latter side in that the only There were a number of different offshore wind projects that were undertaken
Robinson Meyer:
[21:10] during the Biden administration. And the one that got to completion relatively early was this Dominion offshore wind project in Virginia, which is overseen not by a state entity, but by a monopoly utility, a regulated monopoly utility. Where do you come out on this debate?
Jane Flegal:
[21:27] Like any thoughtful policy analyst, I refuse to choose a side. I think there are lessons from both that are worth taking. Right. So I do sometimes wonder if I could rewind the clock. Do I really believe that restructuring was a good thing to do? I don’t actually know that I have an answer to that. For me, it feels quite complicated. There are for sure, and I’m sure this is true in the literature, efficiency gains associated with market competition on the generation side. But all of this has happened again in a time of flat demand growth, right? So like, fine, maybe that’s what you care most about when you’re not tripling the grid, right? You’re like, okay, cool. Like what’s most important is having the generators compete. One thing you give up is that you don’t have the same level of kind of like centralized planning and oversight that you have in a vertically integrated market with a public utility commission and a state setting policy objectives in overseeing these things. Now, Texas, I think there’s lots to be said about kind of the market logic there. But I think one of the things that I think is most important about the Texas model is the way that they’ve approached transmission.
Jane Flegal:
[22:43] So there are a couple of things about Texas. One, they have incredible natural resources. So they don’t have to mandate anything about renewables deployment in that state, right? And like, it’s just a very good latitudinal environment to build.
Robinson Meyer:
[22:59] And they have incredible natural resources, no matter what resource you count. So they have abundant oil and gas if you don’t care about carbon, and they have abundant wind and solar if you do care about carbon.
Jane Flegal:
[23:09] Exactly. And they have... Faster interconnection and siting than almost anywhere else, in part because they have streamlined their transmission siting process. And they did these, what is CREZ, competitive renewable energy zones.
Robinson Meyer:
[23:23] They basically centrally planned transmission.
Jane Flegal:
[23:26] Yeah, they like basically did the thing that I’m saying we should do at a national scale, which is like build it and they will come in terms of demand and customers and plan proactively.
Robinson Meyer:
[23:36] Back in the 2000s, Texas built out this giant transmission line out to West Texas, where at the time there was very little generation because it anticipated that people would eventually build wind turbines there. And then the cities in eastern Texas would benefit from cheap electricity from West Texas. What’s interesting, if you go back and read the press accounts of this decision, is that it was all about this gap in timing where people said it takes two to three years to build a wind farm, but it takes six to 10 years. Now it’s longer than that to build a transmission line. And so people will never build wind farms unless we start building a transmission line. So we should front run a transmission line and then people will invest in wind farms once they know that there’s going to be a transmission line between West Texas and East Texas. It’s an interesting case because it’s a, it is a centrally planned transmission line. And I think the Texas example speaks well of centrally planned transmission, but it’s done so with a kind of market failure logic to it where nobody’s going to invest in wind unless we build a transmission line first.
Jane Flegal:
[24:34] Which is fine. Like that’s fine. That’s fine as far as I’m concerned. Like that’s why I’m unwilling to pick one of your two paradigms. I’m kind of like some blend of these two things feels both like potentially politically plausible to me. And like you might be able to kind of navigate this such that you sort of get the best of both worlds. The other like crazy idea I’ve been toying with on this issue is like, In Texas, the thing that is supposed to make sure that you have reliability is that you have like scarcity pricing, basically, right? Like prices are supposed to go very high when you have a need for more supply and that’s supposed to bring more supply online. In other markets like PJM or whatever, you have capacity markets, which are a different way of trying to address this issue of getting like more supply online such that we have reliable systems. I think both of those are like not great like they’re both they’re both kind of like struggling in their own ways you saw with like winter storm uri in texas some of the frailties of their model and then obviously I genuinely don’t want to talk about PJM anymore but there’s what’s happening there if we really were to get away out of this like scarcity mindset on the energy supply side you could imagine a world where like I don’t know the federal government had a basically like.
Jane Flegal:
[25:51] Like strategic reliability reserve or something where like they were the government was actually like backstopping or financing this issue of like peak demand for reliability purposes.
Robinson Meyer:
[26:04] What’s interesting is the scarcity model is driven by the fact that ultimately rate payers that is utility customers are where the buck stops and so state regulators don’t want utilities to overbuild for a given moment, because ultimately it is utility customers. It’s people who pay their power bills who will bear the burden of a utility overbuilding. In some ways, the entire restructured electricity market system, the entire shift to electricity markets in the 90s and aughts was because of this belief that utilities were overbuilding. And what’s been funny is that, what, we started restructuring markets around the year 2000 for about five or six or seven years. Wall Street was willing to finance new electricity I mean I hear two stories here basically it’s another place where I hear two stories and I think where there’s a lot of disagreement about the path forward on electricity policy and that I’ve heard a story that basically electricity restructuring starts in the late 90s you know year 2000 and for five years Wall Street is willing to finance new power investment based entirely on price risk based entirely on the idea that market prices for electricity will go up. Then three things happen. The Great Recession, number one, wipes out investment,
Robinson Meyer:
[27:19] Wipes out some future demand. Number two, fracking. Power prices tumble, and a bunch of plays that people had invested in, including then advanced nuclear, are totally out of the money suddenly. Number three, we get electricity demand growth plateaus, right? So for 15 years, electricity demand plateaus. We don’t need to finance investments into the power grid anymore. This whole question of can you do it on the back of price risk goes away because it’s electricity demand is basically flat and different kinds of generation are competing over shares and gas is so cheap that it’s just whittling away.
Jane Flegal:
[27:56] But this is why that paradigm needs to change yet again. Like we need to pivot to like a growth model where, and I’m not, again.
Robinson Meyer:
[28:06] I think what’s interesting though, is that Texas is the other counterexample here because Texas has had robust load growth for years and a lot of investment in power production in Texas is financed off price risk, is financed off the assumption that prices will go up. Now, it’s also financed off the back of the fact that in Texas, there are a lot of rules and it’s a very clear structure around finding firm offtake for your powers. You can find a customer who’s going to buy 50% of your power. And that means that you feel confident in your investment. And then the other 50% of your generation capacity feeds into ERCOT. But in some ways, what the transit, the transition that feels disruptive right now is not only a transition like market structure, but also like the assumptions of market participants about what electricity prices will be in the future.
Jane Flegal:
[28:51] Yeah, and we may need some like backstop. I hear the concerns about the risks of laying early capital risks basically on rate payers in the frame of like growth rather than scarcity. But I guess my argument is just there’s ways to deal with that. Like we could come up with creative ways to think about dealing with that. And I’m not seeing enough ideation in that space, which I would like,
Jane Flegal:
[29:15] again, a call for papers, I guess. That I would really like to get a better handle on. The other thing that we haven’t talked about, but that I do think, you know, the States Forum, where I’m now a senior fellow, I wrote a piece for them on electricity affordability several months ago now. But one of the things that doesn’t get that much attention is just like getting BS off of bills, basically. So there’s like the rate question, but then there’s the like, what’s in a bill? And like, what, what should or should not be in a bill? And in truth.
Jane Flegal:
[29:49] You know, we’ve got a lot of social programs basically that are being funded by the rate base and not the tax base. And I think there are just like open questions about this, whether it’s, you know, wildfire in California, which I think everyone recognizes is a big challenge, or it’s efficiency or electrification or renewable mandates in blue states. There are a bunch of these things and it’s sort of like there are so few things you can do in the very near term to constrain rate increases for the reasons we’ve discussed. And also, by the way, just because we have an aging grit, like we just happen to be at like a year 60 in the investment cycle in the grid. And like we don’t really have a choice. Like we do have to invest in the grid, even if there wasn’t demand growth, you know.
Robinson Meyer:
[30:34] Warren Buffett says you can’t see who’s swimming naked till the tide goes out. And I feel like there’s a bit of an inverse problem that has happened here where a number of blue states paid for a lot of social programs off fees placed on the electricity bill. Some of those social programs, I think we could say are essential, like the retrofits that are happening in California. But in the Northeast, there’s a lot of other charges that appear on the bill that finance social programs that I think made sense in an era of declining electricity prices. And the issue now is that because electricity demand is going up and electricity prices are going up for reasons that don’t only have to do with data centers, for reasons that have to do with the natural gas got more expensive in 2022 after Russia invaded Ukraine and that pushed up prices particularly in new england which relies on more seaborne natural gas suddenly those charges which were not really noticeable and not really salient in a world where underlying electricity prices are falling suddenly become quite politically salient um last question do you think the path forward on these policies is to talk about climate. Or should Democrats, I don’t know whether it’s Democrats, I don’t know whether it’s think tanks, I don’t know whether it’s advocacy groups, should talk less about climate and indeed kind of sublimate their concern over climate into concern over things like, well, we need cheap electricity because that will ultimately help the cause of electrification.
Jane Flegal:
[32:00] Look, I think it is pretty obvious at this stage that climate does not have the cultural or political significance it had in 2020. That seems very obvious to me. I do not foresee that changing anytime in the immediate future. That doesn’t mean that no one should talk about climate change and we shouldn’t acknowledge the physics of the world in which we live. Fine. it’s pretty obvious to me that leading with climate is not going to be a winning strategy, my bigger concern is okay so then what do you lead with and how does what you lead with affect our ability to actually decarbonize and again that’s where it’s sort of like affordability is great if it actually is incentivizing the right things we need to incentivize not only to decarbonize, but I would argue to like power the economic growth of our country and deal with some of our biggest geopolitical anxieties right now. And like, that’s why I get so anxious about like, oh my God, if affordability becomes the only frame, what are we losing?
Jane Flegal:
[33:10] How do we find the right way to both like inject a consideration of affordability that is not so short term that we are like losing sight of the structural drivers of affordability in our economy, especially in the electricity sector. And, you know, another thing about the affordability piece is it’s sort of affordable to whom? So there’s lots of conversations about, for instance, rooftop solar in certain situations, being a cost effective strategy for an individual homeowner, right? That is not the same thing.
Robinson Meyer:
[33:45] It’s insane. It’s insane that we can talk about rooftop solar as an affordability strategy.
Jane Flegal:
[33:49] Yes, yes. And then I just think as a political matter, like, There’s a question for me of whether we’re overlearning the lessons of the end of the Biden administration where we very obviously did not take inflation seriously enough. But now it’s sort of like, are we becoming so inflation pilled that we’re not actually like substantively or politically leading with the most compelling strategies? If you actually looked at like the list of things that could potentially constrain electricity prices in the next two years, it’s not a particularly sexy or compelling agenda. In my view, it feels it’s giving it’s a little bit giving like Jimmy Carter put a sweater on. It’s a little bit or it’s at least an easy target for Republicans in that way. Right. It’s a little like efficiency, demand response. Don’t let utilities make money. And like all of these things may be good in their own right. So I’m not I’m not dismissing them as as tactics. But I think like having that be the kind of structure of the argument for Democrats on climate is like, I think we would make us very vulnerable.
Robinson Meyer:
[34:53] Anyway, Jane, we’re going to have you back on. Thank you so much for joining us on Shift Key.
Jane Flegal:
[34:57] Thanks, Robinson.
Robinson Meyer:
[35:01] If you enjoyed this episode of Shift Key, please leave us a review on your favorite podcast app. You can reach me as always at shiftkey at heatmap.news. This will do it for us this week. We’ll be back next week with a new episode of Shift Key. Until then, enjoy your weekend. Shift key, as always, is a production of Heatmap News. Our editors are Jillian Goodman and Nico Loricella. Multimedia editing and audio engineering is by Jacob Lambert and by Nick Woodbury. Our music is by Adam Kramelow. Thanks so much for listening. I’ll see you next week.
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Plus a startup harvesting energy from roadways nabs a new funding round and more of the week’s big money moves.
Uncertainty may have dried up venture funding for early stage climate, but that doesn’t mean there aren’t still deals getting done — or past commitments now coming to light as funding rounds close. This week, for example, brings early-stage backing for a European startup working to convert wasted kinetic energy from braking vehicles into power at ports, as well as a software company helping utilities visualize and manage the increasingly complex electrical grid. Meanwhile, nuclear company Deep Fission proved that the private markets aren’t the only game in town — after going public via SPAC, it’s now planning to list its shares on the Nasdaq stock exchange.
There’s also some promising news for companies looking to scale up, with thermal battery company Antora turning on its first commercial plant in South Dakota this week. That project was made possible in large part by backing from one Australian billionaire. But there’s also S2G Investments, which last week closed a $1 billion fund focused on growth-stage companies and will perhaps help more climate technologies reach that critical commercial milestone.
Every day, hundreds of millions of vehicles travel the world’s roads, converting fuel into motion and exerting mechanical force on the roads’ surface. Much of that kinetic energy is shed as heat when a vehicle throws on the brakes to navigate curves, intersections, ramps, and traffic signals. Austria-based startup REPS plans to capture some of that wasted energy, raising $23.6 million to “turn roads into power plants” by embedding hydraulic plates into road surfaces in braking zones, converting a vehicle’s momentum into clean electricity.
The mechanism is straightforward: As cars and trucks drive over the plates, they compress hydraulic cylinders built into the system, generating pressure that drives an onsite generator. The resulting electricity is routed to on-site battery storage systems, where it’s put to use powering on-site operations or feeding directly back into the local grid, turning high-traffic roads, ports, industrial sites, and other logistics hubs into their own small power sources. The company claims that capturing the energy lost through traffic could account for about 5% of global electricity demand, at least in theory.
REPS isn’t the first to attempt this form of so-called "energy harvesting,” but it says past efforts have failed due to the inferior efficiency and durability of existing mechanical energy converters. The company says its proprietary system, however, can operate for over 20 years. It’s already got one commercial system up and running in the Port of Hamburg, and says that if it were to install hundreds of such systems around the port, costs could be recovered in under four years. Now the startup is engaging with ports around the world and looking to build installations in other logistics hubs and cities.
At the end of last year, I identified Deep Fission, a startup looking to build small nuclear reactors inside underground, water-filled boreholes, as one of the wackiest recent bets in climate tech. Now the company has announced plans to go public at a target valuation of roughly $1.7 billion, seeking to raise $156 million in the process. Its thesis is that placing car-sized, 15-megawatt reactors about a mile underground could dramatically reduce both costs and safety risks. The surrounding rock would effectively serve as a natural barrier and containment vessel, negating the need for many of the bulky structures typically required to house reactors and prevent radioactive leaks.
The planned Nasdaq listing comes less than a year after the company’s somewhat unusual SPAC merger, which listed Deep Fission on the lesser-known and lightly traded OTCQB stock exchange and netted just $30 million. According to an SEC filing, the stock never actually traded, and at the time of the offering, it read as a quick attempt to secure cash. The startup had been attempting to raise a $15 million seed round earlier in the year that never panned out, and to date has raised only a modest $4 million in venture funding.
Deep Fission’s fortunes might be shifting, however, given that it’s transferring its listing to a major national exchange. The company’s public markets strategy does appear to be working as of late — In February, the startup raised $80 million by selling over 5 million restricted shares directly to investors. Whether this will all be enough to achieve its goal of beginning commercial operations in 2027 or 2028 remains to be seen, however. As a part of the Department of Energy’s Reactor Pilot Program, Deep Fission initially aimed to reach criticality — the point at which a nuclear chain reaction becomes self-sustaining — by this July, a target that now looks highly unlikely.
As utilities scramble to keep pace with surging electricity demand, expanding grid-scale renewables, increasingly extreme weather while also coordinating new, distributed resources coming online, modern grid management is getting too complex for traditional software to keep up. Texture, the startup billing itself “the operating system for the energy grid,” wants to simplify the ecosystem by giving utilities, virtual power plant operators, and grid service companies a unified view of every device and associated data sources across their network — and it just raised a $12.5 million Series A to scale this solution further.
Texture’s software aggregates data from various sources — everything from smart meters to battery storage systems, electric vehicles, and smart thermostats — and consolidates it into a single layer for grid operators, flagging problems such as voltage irregularities or outage risks in real time. The platform sits atop an operator’s legacy software infrastructure, thus avoiding the need for utilities to overhaul their existing systems or implement customized and expensive enterprise solutions that require dedicated engineering teams to maintain.
The tech has gained traction among utility cooperatives — customer-owned nonprofits that often serve rural communities and maintain smaller staffs and tighter budgets than investor-owned utilities. With this latest raise, the startup is looking to access greater scale in the co-op market through a partnership with the National Rural Telecommunications Cooperative, a network of 850 utility cooperatives across the country which will now gain access to some of Texture’s software. As Texture’s CEO Sanjiv Sanghavi said about its co-op customers in the company’s press release, "They wanted to run modern grid programs but didn't have software built for their scale or budget. A co-op serving 15,000 members shouldn't have to build custom technology to launch a battery program or manage transformer load. We built Texture so they don't have to."
I was off last week, which means I missed the chance to bring you a piece of news that I’m particularly excited about: The sustainability-focused firm S2G Investments closed a $1 billion fund in what managing partner Aaron Rudberg described in a post on the firm’s website as “one of the most difficult fundraising environments in over a decade.” What’s more, this fund is specifically designed to help growth-stage companies bridge the persistent capital gap that emerges for climate tech companies after early-stage venture rounds but before institutional investors deem them bankable. This void often prevents startups from building first-of-a-kind facilities or deploying their solutions broadly enough to prove out their tech and drive down costs.
This fund is also a milestone for S2G itself, marking the firm’s first close after spinning off two years ago from Builder’s Vision, a family office managing investments for Walmart heir Lukas Walton. According to Rudberg, the fund is writing checks in the $25 million to $100 million range, and has already invested $300 million across 10 companies, largely in food and agriculture, energy, and ocean systems. The various recipients include the agricultural input startup Exacto, maritime battery supplier Echandia, and the industrial power optimization company ANA, Inc.
So-called missing middle financing is difficult precisely because it often involves technologies that, at least initially, carry a green premium or depend on policy support. But S2G is adamant that there are plenty of competitive startups, even in a political environment where climate policy is on the outs and affordability is a top concern.
“We believe some of the most attractive investment opportunities are in growth-stage businesses that deliver economic superiority through improved efficiency, margins, and resilience in industries fundamental to the global economy,” Rudberg wrote, as companies with unfavorable economics are being weeded out. “What remains are businesses with genuine commercial advantage, and those are the companies this Fund is built to back.”
Bonus: Antora Turns On Colossal 5 Gigawatt-Hour Thermal Battery in South Dakota
Over two years ago, I wrote about how super hot rocks — that is, thermal batteries — were one of the coolest things in climate tech. Since then, the companies I profiled, Rondo Energy and Antora Energy, have both brought their first commercial plants online, with the latter reaching that milestone this week. On Tuesday, as we covered in Heatmap AM, Antora turned on its 5 gigawatt-hour project in South Dakota, which stores excess wind power as heat for a bioethanol plant operated by POET, the world’s largest biofuel producer. Once the facility ramps to full capacity later this year, it will rank among the world’s largest energy storage projects, relying on over 200 of Antora’s thermal batteries.
Antora’s tech works by absorbing surplus wind power that would otherwise go to waste in windy South Dakota, where generation often outpaces what the region’s congested transmission lines can handle. The startup converts that renewable electricity to heat using resistive heating, essentially the same technology as a toaster. That’s then stored in insulated carbon blocks for later use, where it can be delivered as direct heat to power high-temperature industrial processes, or converted back into electricity. In this case, the heat is transferred to a circulating fluid that carries it to the POET plant, where it’s then delivered as steam to power boilers, distillers, and other machinery used in ethanol production.
Neither POET nor Antora have disclosed the value of this long-term offtake agreement. The sole external investor providing project-level financing was Australian firm Grok Ventures, a climate-focused investment company bankrolled by Mike Cannon-Brookes, co-founder and CEO of enterprise software company Atlassian. One of Australia’s richest people, Cannon-Brookes has emerged as one of world’s foremost climate investors, pledging $1.5 billion of his wealth to climate projects by 2030. Perhaps its telling of the investment environment at large that an Australian billionaire — rather than the U.S. government or institutional investors — had to push this first-of-a-kind project over the finish line.
On Exxon’s Venezuela flipflop, SpaceX’s fears, and a nuclear deal spree
Current conditions: U.S. government forecasters project just one to three major storms in the Atlantic this hurricane season • The Meade Lake Complex, a wildfire that scorched 92,000 acres in southwest Kansas, is now largely contained • Temperatures in Vientiane, the sprawling capital of Laos, are nearing 100 degrees Fahrenheit amid a week of lightning storms.
A years-long megadrought. Reduced snowpack in the northern mountains. Rising water demand from southwestern farms and cities whose groundwater is depleting. It is no wonder the water levels in Lake Mead are getting low. Now the Trump administration is giving the Hoover Dam money for a makeover to make do in the increasingly parched new normal. The Great Depression-era megaproject in the Colorado River’s Black Canyon boasts the largest reservoir capacity among hydroelectric dams. But the facility’s actual output of electricity — already outpaced by six other dams in the U.S. — is set to plunge to a new low if drought-parched Lake Meade’s elevation drops below 1,035 feet, the level at which bubbles start to form damage the turbines. At that point, the dam’s output could drop from its lowest standard generating capacity of 1,302 megawatts to a meager 382 megawatts. Last night, federal data showed the water level perilously close to that boundary, at 1,052 feet. The Bureau of Reclamation’s $52 million injection will pay for the replacement of as many as three older turbines with new, so-called wide-head turbines, which are designed to operate efficiently at levels below 1,035 feet. Once installed, the agency expects to restore at least 160 megawatts of hydropower capacity. “This action ensures Hoover Dam remains a cornerstone of American energy production for decades to come,” Andrea Travnicek, the Interior Department’s assistant secretary for water and science, said in a statement.
Like geothermal, hydropower is a form of renewable energy that President Donald Trump appreciates, given its 24/7 output. Last month, the Department of Energy’s recently reorganized Hydropower and Hydrokinetic Office announced that it would allow nearly $430 million in payments to American hydropower facilities to move forward after stalling the funding for 293 projects at 212 facilities. Last year, the Federal Energy Regulatory Commission proposed streamlining the process for relicensing existing dams and giving the facilities a categorical exclusion from the National Environmental Policy Act. The Energy Department also withdrew from a Biden-era agreement to breach dams in the Pacific Northwest in a bid to restore the movement of salmon through the Columbia River.
Shortly after the U.S. capture of Venezuelan leader Nicolas Máduro in January, Exxon Mobil CEO Darren Woods told CNBC the South American nation would need to embark on a serious transition to democracy before the largest U.S. energy company could invest in production in a country the firm exited two decades ago amid the socialist government’s crackdown. Five months later, he may be changing his tune. On Thursday, The New York Times reported that Exxon Mobil was in talks to acquire rights to start drilling for oil in Venezuela. If finalized, such a deal would mark what the newspaper called “a victory for President Trump, who has declared the country’s vast natural wealth open to American businesses.”
It’s not just Elon Musk’s xAI data centers that brace for the data center backlash that Heatmap’s Jael Holzman clocked last fall as the thing “swallowing American politics.” In its S-1 filing to the Securities and Exchange Commission ahead of one of the country’s most anticipated stock market debuts this year, SpaceX warned that mounting public skepticism over AI could harm the growth of America’s leading private space firm. “If AI technologies are perceived to be significantly disruptive to society, it could lead to governmental or regulatory restrictions or prohibitions on their use, societal concerns or unrest, or both, any of which could materially and adversely affect our ability to develop, deploy, or commercialize AI technologies and execute our business strategy,” the company disclosed in the filing, a detail highlighted in a post on X by Transformer editor Shakeel Hashim. “Our implementation of AI technologies, including through our AI segment’s systems, could result in legal liability, regulatory action, operational disruption, brand, reputational or competitive harm, or other adverse impacts.”
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Yesterday, I told you that corporate energy buyers last year inked deals for more nuclear power than wind energy. But if you needed more proof that, as Heatmap’s Katie Brigham called last summer, “the nuclear dealmaking boom is real,” just look at this week:
Separately, this week saw two projects take big steps forward:
It’s been the year of Chinese automotives. Ford’s chief executive admits he can’t get enough of his Xiaomi SU7. Chinese auto exports are booming. And now Beijing’s ultimate automotive champion, BYD, is accelerating talks to enter Formula 1. On Thursday, the Financial Times reported that the company had met with former Red Bull Racing chief Christian Horner in Cannes. “Following talks between Stella Li, executive vice-president at BYD, and Horner last week, BYD intends to hold further meetings with senior figures involved in F1 and at the FIA, the governing body,” the newspaper reported.
China’s hydrogen boom continues. The country’s electrolyzers are quickly going the way of batteries and solar panels by securing global export deals that reflect their efficiency and competitive prices. On Thursday, Hydrogen Insight reported that Chinese manufacturer Sungrow Hydrogen inked a deal to supply a 2-megawatt alkaline electrolyzer to a Spanish cement facility. That same day, another Chinese manufacturer, Hygreen Energy, announced an agreement to supply a 1.3-megawatt system to a green hydrogen project in Nova Scotia.
With both temperatures and electricity prices rising, many who are using less energy are still paying more, according to data from the Electricity Price Hub.
In 135 years of record-keeping, Tampa, Florida, has never been hotter than it was last July.
Though often humid, the city on the bay is typically breezy, even in summer. But on July 27, it broke 100 degrees Fahrenheit on the thermometer for the first time ever; two days later, it hit its highest-ever heat index, 119 degrees. The family of Hezekiah Walters, the 14-year-old who died of heat stroke during football practice in Tampa in 2019, urged neighbors at a local CPR certification event to take the heat warnings seriously. Local HVAC companies complained about the volume of calls. Area hospitals struggled to keep their rooms and clinics comfortable. Experts later said the record temperatures were made five times more likely by climate change.
But according to data from Heatmap and MIT’s Electricity Price Hub, Tampa Electric customers used 14% less electricity in July 2025 than they did in the same month of 2020, which was Tampa’s previous hottest July on record — about 216 kilowatt-hours per household less, roughly the equivalent of running a central AC a couple hours fewer per day for an entire month. Tellingly, Tampa Electric raised rates over that period by 84%, with the average bill growing from $111 to $190 per month.
Though there are many instances in many places around the country where usage has dropped as rates rose, the correlation doesn’t necessarily mean people were rationing their electricity. Climate-related factors like anomalously cool summers can lower summer bills, while energy efficiency upgrades can also result in changes to residential consumption. Southern California Edison customers, for example, used 24% less electricity in 2025 than they did in 2020, at least in part due to the widespread adoption of rooftop solar.
Thanks to recent efforts by the Energy Information Agency to track energy insecurity and utility disconnections, however, we can start to tease out deficiency from efficiency. By cross-referencing that data with rate and usage statistics from the Electricity Price Hub, we find a handful of places like Tampa, where people have seemingly reduced their electricity usage because they couldn’t afford the added cost, even during a deadly heatwave. (Tampa Electric did not return our request for comment.)
The EIA’s tracking program, known as the Residential Energy Consumption Survey, tells a clear story: Across the country, people are struggling to absorb the rising costs of electricity. In 2020, nearly one in four Americans reported some form of energy insecurity, meaning they were either unable to afford to use heating or cooling equipment, pay their energy bills, or pay for other necessities due to energy costs. By 2024, the most recent data available, that number had risen to a third — and two-thirds of households with incomes under $10,000. In 2024 alone, utilities sent 94.9 million final shutoff notices to residential electricity customers.
Since 2020, 98% of the more than 400 utilities in the Heatmap-MIT dataset have raised their rates — more than half of them by greater than 20%; about one in 10 utilities have raised their rates by 50% or more. And 219 of those utilities raised rates even as usage in their service area fell, meaning that as customers used less, they still paid more.
“I don’t feel like [the rates have] ever been all that affordable, but they have steadily increased more and more and more,” Janelle Ghiorso, a PG&E customer in California who recently filed for bankruptcy due to the debt she incurred from her electricity bills, told me. She added: “When do I get relief? When I’m dead?”
The people hit hardest by rate increases tend to be those already struggling the most. For example, about 30% of Kentucky residents reported going without heat or AC, leaving their homes at unsafe temperatures, or cutting back on food or medicine to pay energy bills, per the EIA’s 2020 RECS report. Since then, Kentucky Power has raised rates in the eastern part of the state by 45%, adding about $64 to the average monthly bill in a service area where the median monthly household income can be less than $4,000.
The Department of Energy’s Low-income Energy Affordability Data, which measures energy affordability patterns, actually obscures some of this burden. It reports that for all of Kentucky, annual electricity costs account for about 2% of the state’s median household income, which is about average for the nation. But in Kentucky Power’s Appalachian service area specifically, many households live under 200% of the poverty level, and $15 of every $100 someone earns might go toward their energy costs, Chris Woolery, the residential energy coordinator at Mountain Association, a nonprofit economic development group that serves the region, told me. “The situation is just dire for many folks,” he said.
Kentucky Power is aware of this; its low-income assistance charge has grown by 110% since 2020, the Heatmap-MIT data shows. Woolery also noted that the utility agreed to voluntary protections against disconnections, such as a 24-hour moratorium during extreme weather, in a rate case settlement with the Kentucky Public Service Commission. The commission rejected the proposal, but the utility kept the protections anyway, Woolery told me.
Customers in other areas are not so lucky.
In states like Oklahoma, where one in three households reported energy insecurity in 2020, rates rose about 30% from 2020 to 2025, according to our data. Per the EIA survey, Oklahoma’s monthly disconnection rate is more than three times the national average. Oklahoma doesn’t have the highest electricity rates in the country — far from it. But median incomes there are low enough that even moderate rate increases leave some with hard choices.
Interestingly, in bottom-income-quartile states, where median household incomes are below $81,337, only about 30% of utilities show a pattern of rising bills and falling electricity usage, which would suggest energy rationing. The other 70% of utilities show the opposite effect: usage is rising despite electricity rates becoming a bigger burden of customers’ incomes. In Kentucky Power’s service area, for example, bills may be up $64 a month, but usage remained essentially flat.
“Think of it this way: The electric company goes to the front of the line,” Mark Wolfe, the executive director of the National Energy Assistance Directors Association, a policy group for administrators of the Low-Income Home Energy Assistance Program, told me of how households triage their bills. If you need to buy something from the grocery store, the drug store, or pay your electricity bill, then “the utility goes to the front of the line because they can shut off your power, which causes lots of other problems.”
Wolfe added, “Plus, if you’re really in dire straits, you can go to the food bank. You can’t go to the ‘other’ utility company.”
Even as resource-strapped households put a higher share of their income toward electricity, they’re also least able to afford energy efficiency upgrades like newer appliances, smart thermostats, or solar panels. The pattern is prevalent in places with extreme climates, such as Louisiana, Mississippi, and Alabama, where turning off the AC in the middle of summer could mean death. It shows up most starkly among the most extreme rate examples in our data set, like the utilities serving remote Alaska villages — despite astronomical electricity prices, usage hasn’t fluctuated much because its customers are already using it as little as they can afford. The elderly and other individuals living on fixed incomes are also often unable to cut their electricity usage beyond what little they’re already using.
In middle-income states like Florida, roughly 60% of the utilities in our dataset show rising bills and falling electricity use — more than twice the rate we see in the lowest-income states. While the poorest Americans have already reduced their electricity use to the bare minimum and are cutting groceries and medicine in order to keep the heat and AC on, in places like Tampa, where the median income is $96,480, the electricity rate shocks have caused even middle- and even high-earning households to start worrying about their bills. According to a new survey released Tuesday by Ipsos and the energy policy nonprofit PowerLines, 74% of respondents with household incomes over $100,000 said they are worried about their utility bills increasing.
“People are seeing their utility bill as one of the few things that changes so much month to month, that is so unpredictable, and that they don’t have any control over,” Charles Hua, the founder and executive director of PowerLines, told me.
Wolfe, the executive director at NEADA, agreed, saying that for the first time, the association has begun hearing from families with incomes above the threshold who need assistance. “An extra $100 a month for a family, but they’re middle class — that shouldn’t push them over the edge,” at least in theory, Wolfe said. But for those with no flexibility in their budgets, anything additional or unpredictable “pushes them close to the edge — from going from middle class to lower middle class — and I think that’s why this affordability crisis is becoming such an issue.”
We can also see this phenomenon in the explosion of line items on utility bills going toward funding assistance programs. Appalachian Power Co.’s low-income surcharge, for instance, is up 3,200% for customers in Virginia; Puget Sound Energy’s low-income program is up 970% for customers in Washington; and PacifiCorp Oregon’s low-income cost-recovery charge, up 879%.
The EIA data, too, bears this out: Florida had one of the highest rates of people reporting they were “unable to use air conditioning equipment” due to costs in the RECS data, and in 2024, there were 186,202 disconnections in the state in July alone — every one of which would have meant people no longer had the power to run their ACs. (FPL and Duke Energy Florida also show usage declines as rates rose, although neither raised rates as much as Tampa.)
The data also shows places where higher-income earners have aggressively pursued efficiency upgrades to lower their usage. In the LA Department of Water and Power service area in California, usage is down more than 11% overall between 2020 and 2025, one of the biggest drops in our dataset. But the lower usage is more evenly distributed month to month, indicating that things like solar adoption and efficiency programs are likely behind the drop, rather than cost pressures. (Rates there still rose more than 28%, or about $15 per month.)
Even doing everything right wasn’t enough to save customers in the end — households that cut their electricity use still saw their bills rise by an average of $20 a month, our data shows.
Perhaps most concerning, though, is the relentless upward trajectory. PowerLines reports that utilities have submitted $9.4 billion in new requests in the first quarter of 2026 alone. Heatmap and MIT’s numbers show that 79% of utilities raised rates in 2025, and 55% have raised them again already this year.
But the advocates I talked to stressed that utilities have more agency than they get credit for. Take Kentucky Power, for example, with its voluntary disconnection protections. “It just shows that you don’t necessarily have to make disconnections to be financially solvent,” Woolery of the Mountain Association pointed out. Or take Ouachita Electric in Arkansas, which passed a 4.5% rate decrease after investing in efficiency upgrades in consumers’ homes through a pay-as-you-save model.
But that’s the rare exception. For most customers, relief is not obviously on the way. Signs increasingly point to the imminent onset of a super El Niño, which could bring punishing, climate-change-intensified heat waves across the United States. The July 2025 record in Tampa will almost certainly not stand; someday, it’ll be the second-hottest summer, or the third. In a few decades, it might even look cool.
And still there will be bills to pay.