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Robinson Meyer:
[1:26] Hi, I’m Robinson Meyer, the founding executive editor of Heatmap News. It is Friday, March 20. Earlier this month, China released the draft outline of its next five-year plan, which sets out the country’s development pathway for 2026 to 2030. The plan is a big deal. China remains the world’s number one climate polluter, but its greenhouse gas emissions have been flat or declining for the past two years, depending on how you count. Its clean energy industry, and particularly its electric vehicle industry, is now the envy of the developed world. At the same time, as we’ve covered on this show, China has re-embraced coal in the past five years as part of an energy security push that has kept its emissions from falling as fast as they otherwise might have. In particular, the country has built these huge, new, and unbelievably carbon-intensive facilities that convert coal into petrochemicals. These are somewhat, frankly, duplicative factories within the country that were meant to protect China if the global oil trade were to ever shut down or suffer some kind of crisis. And while these factories might have been built to give the country some leverage over Taiwan and the United States, they’re coming in handy now given the current global energy crisis caused by the closure of the Strait of Hormuz.
Robinson Meyer:
[2:38] Given all of that context, I think the five-year plan doesn’t lean into clean energy as much as some might have hoped. In the new outline, China says it wants to keep expanding the massive clean energy bases in the country’s interior. These are huge rural areas that are connected to its coastal cities by huge long-distance transmission lines. China’s made it very easy to build wind and solar power there. The new plan also says China should build what it calls a quote, new type power system, unquote, which would incorporate variable wind and solar, smart grids, batteries, large-scale long-distance transmission.
Robinson Meyer:
[3:13] China wants to build 100 gigawatts of offshore wind capacity and another 100 gigawatts of pumped hydro storage. It thinks it will add 10 gigawatts per year of new nuclear capacity along the coast, which is actually a bit of a slowdown. The new five-year plan, though, doesn’t say a lot about coal. And while it calls for promoting the peaking of coal and oil consumption, that’s actually a bit of a walkback compared to what the country was saying in 2021. As you’ll hear, China’s also revised how it accounts for its carbon emissions in ways that are pretty politically convenient and may allow the country to hit Paris Agreement goals that it wasn’t on track to meet.
Robinson Meyer:
[3:50] So there’s a lot to talk about here. It’s a very important document. It helps us understand where the world’s biggest air polluter thinks it’s going in the next five years. It also helps us understand the direction of the global energy industry over the next five years, given that China is both the number one consumer of fossil fuels globally and also the number one producer of clean energy. And here to talk about it today, I am joined by one of the world’s greatest experts on Chinese emissions outside of China.
Robinson Meyer:
[4:17] Lauri Myllyvirta is the lead analyst and co-founder of the Centre for Research on Energy and Clean Air, which is an independent research organization headquartered in Finland. It produces some of the most respected and cited independent assessments of China’s greenhouse gas emissions. I’ll say ’s work and the center’s work is behind a lot of the headlines you’ll see about China’s falling emissions, about its carbon intensity, about its energy future. If you ever see like a news story at the New York Times or the BBC or heat map about the direction of China’s emissions, actually, the Centre for Research on Clean Air’s assessments are probably somewhere in there. We had a great conversation with Lauri last year on Shift Key, so I’m excited to welcome back to the podcast. This time, we get into the new five-year plan, what actually drives China’s energy policy, and whether China is keeping the climate promises that it’s made. We also talk about what the closure of the Strait of Hormuz and this new global energy crisis could mean for China. It is always good to talk to Lauri. I had a lot of fun with him. This time, let’s go to that conversation now. All of this and more. It’s all coming up today on Shift Key. Lauri Myllyvirta, welcome to Shift Key.
Lauri Myllyvirta:
[5:27] Thanks so much. Thanks for having me.
Robinson Meyer:
[5:29] So China recently released its new five-year plan. Looking at this plan through the point of view of global decarbonization, was the plan good or bad news?
Lauri Myllyvirta:
[5:40] I think it was very much expected with a few surprises, but overall, it’s really a continuation of the theme of pursuing an ambitious build-out of clean energy industries, manufacturing, technological development, and overall building the basis for a decarbonized power system. There was one quite specific bit of that news, which was that China had been falling quite badly behind on its carbon intensity targets, which are the key targets that China has set under the Paris Agreement for 2030. And so there was a question of how is the country going to get back on track? And the answer is that they did that by revising the numbers to date rather than by setting a stronger target for the next five years to make up for what had seemed like a shortfall before the new numbers came out.
Robinson Meyer:
[6:44] When we look at these goals, it seems like sometimes they’re linear extensions of trends that are already in place. They’re goals that would be very hard to miss because in some cases, the concrete’s already being poured for the scale of nuclear buildout, for instance, that the planet imagines or the production capacity already exists to make the scale of solar panels, for instance, that would need to be installed. But it also does seem that these goals do serve as useful targets for the Chinese economy, for Chinese local and provincial planners, how does the five-year plan kind of trickle down into actual economic outcomes and how does it shape them?
Lauri Myllyvirta:
[7:23] Right. That is a very good question. A lot of that is soft signals about priorities rather than hard numbers, especially when we’re talking about this top-level plan. So this is the draft of the outline of the five-year plan that we’re talking about right now. So this will inform five-year plans for the provinces. This will inform five-year plans for all the different sectors prepared by different ministries, prepared by state-owned enterprises, and so on. And during the five-year period, these priorities inform financing, lending decisions, and a whole host of other decisions around the country. And again, this is much more about the soft signals. Also, if a specific technology gets a mention that it’s to be vigorously promoted, then that just tells you, like tells every banker in the country that when there’s a loan application on your desk for this specific tech, then you should
Lauri Myllyvirta:
[8:29] view it more favorably, and so on. So in that sense, those signals do trickle down in a lot of ways. And so then if you think about some of the technologies that did get such a mention in the five-year plan, so that would be, for example, green fuels, synthetic fuels made with green electricity. And so that’s something that this five-year plan signals is going to start happening a lot faster than was previously anticipated so the standard way to think about the clean energy transition is that you first build as much clean power as the grid will take get the grid very clean and then only after that you start to think about how do you convert that clean electricity into fuels to replace those bits of fossil fuel use that can’t be electrified but this is starting to happen a lot faster and it reflects a couple of different things so one of them is concerns about how fast you can reform and overhaul the grid to be able to take as much clean power as is being built at the moment. And the other one is shifting priorities. So more focus on replacing imported oil and gas because of the energy security concerns. So for both of these reasons, it makes sense to start building up this industry.
Robinson Meyer:
[9:49] When you were last on the show, we were talking about the rise of the coal to chemicals industry in China. And in some ways, it seems quite prophetic because of what’s now happened with Hormuz. And we can talk about that in a second. But what does the plan suggest about China’s goals for the coal industry And does the plan suggest that Chinese leaders understand the coal industry to be in secular decline? Or do they see it as like a core part of the energy security package for the country?
Lauri Myllyvirta:
[10:18] There’s very little about coal in this five-year plan document. So obviously, there will be a coal industry five-year plan and a chemical industry five-year plan and so on. Later on, What is more notable is what isn’t there on coal. Xi Jinping had said earlier in 2021 that China would, during this five-year period that’s now starting, would gradually reduce coal consumption.
Lauri Myllyvirta:
[10:46] And that line is not there. It’s been replaced by promoting the peak of coal consumption. And there was also a bit of nuance on that because this line came out already in the autumn from the central committee of the communist party and the official news agency ran a Q&A piece on what that means before the conference where the five-year plan was to be adopted and they explained that what it actually means is that coal consumption should reach a plateau in 2027 and coal consumption in the power industry, so coal-fired power generation and coal consumption in the chemical industry, so coal-to-chemicals would continue to grow beyond this 2027 peak date. So the idea is that coal consumption would be reduced in the other sectors, other heavy industry sectors and so on. But the current downtrend in coal-fired power generation would turn into another period of growth and coal consumption in the coal to chemicals industry would continue to grow rapidly.
Robinson Meyer:
[11:59] So interesting. And also it kind of turns on the fact that my understanding, part of what’s happening here is that these phrases kind of circulate at the highest level and she may say them or another kind of national leader may say them and then they assume a kind of totemic quality, but sometimes their deeper Talmudic meaning needs to be spelled out by a lower entity that says exactly kind of what this totemic phrase is supposed to mean.
Lauri Myllyvirta:
[12:27] Yeah, absolutely. But one thing that has happened is that ministries seem to have a lot less leeway to interpret and take these things further. When something has been announced by President Xi personally as the timeline for carbon peaking and so on has been, then it’s very hard for lower level officials to make tweaks to that. And I think that the low ambition for clean energy in the plan signals this overall. So basically, if you take the clean energy targets in the plan at face value, they would mean significantly slowing down, significantly reducing the amount of clean energy that is added every year, which I don’t think the policymakers really want or anticipate. But the plans have to maintain this storyline that emissions have been growing but they haven’t for the past two years but so they will go back into growth and then only start peaking towards 2030 because that’s the official timeline.
Robinson Meyer:
[13:35] There’s a lot of excitement online, and I think in some parts of, let’s say, like the Western or international left, about China establishing a new kind of global energy regime, and that China’s claim to some kind of global leadership status or quasi-hegemony is premised on its clean energy industry, on its batteries, on its EVs. Do China’s leaders seem to embrace that vision as represented in this plan or other recent rhetoric from them?
Lauri Myllyvirta:
[14:05] They have increasingly started to do that. So China’s leaders have been very cautious of claiming any kind of leadership. There was, in fact, a major debate about this about five years back. Can China claim to be a leader and have been very conscious of the-
Robinson Meyer:
[14:23] In climate change or globally and politically?
Lauri Myllyvirta:
[14:26] Exactly. And so then the line that they landed on in 2020 was that China is a major contributor to the global effort on climate, but it’s a leader on building ecological civilization.
Lauri Myllyvirta:
[14:41] Which is a project that obviously China can own and define. But so the whole point here is that China’s leaders have been very aware of the expectations that they would set by claiming leadership and have been wary of doing that. But so in 2025, China’s diplomats and even Xi Jinping himself started to emphasize China’s role as a supplier of clean tech to the rest of the world and started to embrace that message. And that’s a significant reimagining of China’s role in the world. And I do think there is some truth to China creating a new paradigm. So So this approach that I called supply-side climate policy, so making clean energy, solar, energy storage, electric vehicles, so competitive, so affordable, that they become the preferred way for a lot of developing and emerging countries to pursue modernization, industrialization, growth, and an alternative to the fossil fuel-based path of pursuing those things. And this message of pro-growth, clean energy has obviously a lot of appeal in countries that want to develop and industrialize.
Robinson Meyer:
[16:07] I guess what I’m asking is, it sounds like China’s leaders are both talking about China as a global leader or global contributor to climate action, but also maybe not leaning into it in the same way in this five-year plan outline as much as they could have. And or they talk about scaling up clean energy but they also talk about scaling up lots of other technologies needed for this kind of primary goal of energy security such as the coal to chemicals industry or the coal industry or the green fuels industry can you just like walk through that tension a bit between energy security and climate change what do china’s leaders emphasize more And when China’s leaders kind of imagine, to the extent we can get into this, obviously, but like when China’s leaders imagine a future global security regime in which China plays a larger role, do they see these clean energy technologies as essential to that new order? Or do they see energy security kind of coming first and the clean energy technologies are a tool to achieve that energy security? But so is the coal to chemicals industry, this enormously carbon intensive and often duplicative industry that China seems to have spun up entirely for energy security reasons.
Lauri Myllyvirta:
[17:25] For sure, I think there are both synergies and tensions very clearly. So one thing is electrification very clearly hits both targets at the same time. So electrification enables the industrial sector, building sector, transport sector to become ... And much less carbon intensive because electricity keeps getting cleaner, the fuels don’t. But it’s also something that the coal industry likes because it enables coal-fired power plants to supply more to those sectors instead of oil and gas. So then the coal industry was very heavily promoting this line that coal-fired power generation can keep growing while emissions peak and start to decline. And electrification is also the enabler of that. And of course, clean energy is a part of China’s domestic energy portfolio. Very clearly, they have very strong domestic supply chains for solar, for wind, for nuclear, for batteries, for all the key technologies. So it’s very much something that is secure domestic energy in every sense. But then the tension is with coal-fired power generation, which also overall China imports about 10% of the coal that it uses.
Lauri Myllyvirta:
[18:48] But for some provinces, it’s a lot more, especially on the coast. And so there has been tension here. So the long-term plan has been to move the coal industry inland, where it can use domestic coal. It’s very hard for Chinese coal mines far inland to compete with imported coal on the coast. But so then during the previous five years, many of the coastal provinces built very large amounts of new coal-fired power plants because of concerns about another aspect of energy security, which is whether you have enough capacity to meet electricity demand during times of peak demand. And that increased the structural reliance on imported coal. So just as any other policymakers, they’re juggling multiple emergencies and perceived emergencies and priorities at the same time and making a lot of compromises, some of them short term and so on.
Robinson Meyer:
[21:17] So let’s get into this question about the Chinese emissions target. So China, I think, has a reputation internationally for always meeting its emission targets and for setting emissions targets that it can hit. And when it’s sometimes conservative in its targets, there’s a sense that, OK, well, it is being conservative, but that’s because it’s very focused on setting targets that it can hit. But it sounds like in the run up to this report, it became clear that China was not going to hit its 2030 target under the Paris Agreement. And so As you write, it basically revised its own accounting metric. Can you just describe what happened there and how it was able to change its accounting midstream, basically?
Lauri Myllyvirta:
[22:02] I’ll start with what is known. China has been reporting on reduction in carbon intensity. Carbon intensity is the amount of CO2 per unit of GDP. And so if emissions stay flat, GDP goes up by 5%, carbon intensity falls by a bit less than 5% in a year.
Robinson Meyer:
[22:21] My understanding, and maybe this is wrong, is that up until 2030, the bulk of its emissions targets under the Paris Agreement, its nationally determined contributions are phrased in the terms of carbon intensity, not in the terms of like, here’s what our national emissions target is going to be. They were primarily talking about our big target is reducing the carbon intensity of our economy, rather than hitting some kind of tons per year goal that the U.S. and Europe and a lot of other countries adopted.
Lauri Myllyvirta:
[22:50] For sure. So for 2020 and 2030, China has had a few different targets, but the one that is most closely related to emissions, and in that sense, the cornerstone target is carbon intensity. And so until 2020, China was overachieving that target. But then during the COVID and Zero COVID period, China went through very ...
Lauri Myllyvirta:
[23:18] energy-intensity, a period of very energy-intensive and carbon-intensive period of growth with the service industries and other less energy-intensive industries were obviously not doing great. So that meant that carbon intensity started falling much more slowly, CO2 emissions grew faster during that period, at least according to the numbers that China had reported. So they had been reporting carbon intensity reductions every year. And if you take the numbers from 2021 to 2025 they add up to a reduction of about 12% in China’s carbon intensity over that five-year period and the target was 18% and that’s what they needed to get on track to or stay on track to the 2030 carbon intensity target and so that means that if you have a shortfall of six percentage points during these five years then the target for the next five years becomes very demanding.
Lauri Myllyvirta:
[24:18] But so then along comes this new five year plan. And it says that we achieved a reduction of 17.7% instead of the 12-point-something percent. So that is a huge revision. If you rephrase that in emission terms, it means that earlier China had said that their emissions over this five year period had increased about 13% in absolute terms. And now they say the increase was only 6%. So half of the emission growth disappeared. So this is what we know for a fact. The less clear part is what is this revision based on?
Lauri Myllyvirta:
[24:59] The only indication of that is the latest annual report that discloses this carbon intensity reduction had a footnote saying that carbon intensity means carbon emissions per unit of GDP from energy activities and industrial processes. Whereas earlier, there had been no definition. But if you work with China’s numbers, the only way to make the earlier numbers add is that it’s only CO2 emissions from fossil fuels. So they included industrial processes and quite clearly excluded so-called non-energy use of energy, of fossil fuels, which means fossil fuels being used as a feedstock for producing things like plastics or fertilizer or whatnot. And so the big question here is non-energy use went up massively over the five-year period. We know that that’s all the culture chemicals and oil-based petrochemicals growth which has been massive but.
Lauri Myllyvirta:
[26:05] Did the amount of carbon that is stored in the products from this industry really increase so much that it justifies this massive revision to the numbers? And I’ve been trying to calculate that in a number of different ways, and I don’t think there’s a way to make this up. So especially with coal-based chemical production, much less than half of the carbon in the coal ends up in the products and the less ends up as process emissions from the coal to chemicals process. And so I think the most likely explanation here is that there are major gaps in the process emissions data from this industry and those process emissions are substantially underreported. But this is, again, this is just my best attempt at parsing the picture together from very partial information. So the really important thing is to push for and get clarification on this revision and what it means for the integrity of China’s carbon accounting for the future.
Robinson Meyer:
[27:16] How does this fit with other information that we have about Chinese emissions? Because my sense was that outside assessments of Chinese emissions, like yours, for instance, show that China’s greenhouse gas emissions have plateaued over the past two years. So how does that fit in with these carbon intensity data?
Lauri Myllyvirta:
[27:36] So my estimates and those by others such as global carbon projects have shown a plateauing of emissions starting from early 2024, but this is about the period from 2020 to 2025. And those other assessments, as well as China’s earlier annual reporting, showed a very sharp increase from 2020 to 2023. One thing that I want to just point out is that I think for most people, if you hear 2020 being used as the base year, you assume that was a massive dip because of COVID, but it was not the case in China. In China, CO2 emissions increased year on year in 2020.
Robinson Meyer:
[28:18] What it sounds like you’re describing very diplomatically is China misrepresenting or not fully reporting its emissions and air pollution data for politically convenient reasons. I remember there was some of this back during the days of, say, like, really bad Beijing air pollution. But have we seen China distort and or misrepresent or kind of edit its own carbon accounting in climate pollution data before?
Lauri Myllyvirta:
[28:48] Not in this way. So there was, in fact, there was a big revision to coal consumption data, a decade ago, but that was to correct earlier underreporting. And it was a massive increase in reported numbers back then. So there have been adjustments. And I try to be balanced about this because on one hand, we do want process emissions to be included. We do want accounting that is truthful and with the massive increase in non-energy use of fossil fuels you know i can see see that this change is something that you would want to make that just the earlier calculation of how much carbon is contained in all the fossil fuels that you used that was getting out of date because of the massive non-energy use but i’m working with very partial information parsing it together. So I just don’t want to say that I can say with 100% certainty that it’s wrong. But clearly, it was a very politically convenient revision. So yeah, that’s just one to lay out this full picture.
Robinson Meyer:
[29:56] I mean, I guess the kind of broader question is like, China has a reputation for setting these very conservative climate targets, and then meeting them.
Lauri Myllyvirta:
[30:04] Yeah, well, so one thing that’s important to point out is that they did not claim that they met it to the dot. So a very small, small shortfall, but still a shortfall compared with the target.
Robinson Meyer:
[30:16] Well, I guess my kind of question here is that they have this reputation for always meeting the fairly conservative climate targets they set. And I think to some degree, this allows China to play to a different standard than other countries, which are really encouraged to set very ambitious climate targets, and then maybe not judged as harshly when they don’t meet them. But it’s always kind of characterizes the run up to UN events is that there’s a lot of elicitations of lots of countries to set very, very ambitious targets. And then when China comes out with a not so ambitious target. To some degree, they have the world’s largest clean energy industry. And so people are inclined to be merciful anyway. But the sense is, well, China always sets these very conservative targets, but then it meets them. And that and it attaches a high level of international credibility to its ability to meet these targets. Is that … does this episode, which I realize is a singular episode, but does it suggest that like that is no longer a good way to understand China’s emissions targets or that that system could be breaking down and China’s leadership is willing to sacrifice emissions targets for the sake of energy security? Because it sounds like a lot of this emerges from the coal to chemicals industry, the kind of demand for domestic energy security and secure domestic production and feedstock inputs.
Lauri Myllyvirta:
[31:33] And one thing that’s very clear is that there was no last-minute push to make up for the shortfall.
Lauri Myllyvirta:
[31:43] So, well, of course, you could say that maybe the major clean energy build-out could be seen as that. But comparing with earlier, back in 2010, China, in fact, missed its energy intensity goal. And there was a very strong last minute push to reduce energy intensity and get as close to the target as possible and then in 2017 China was badly off track to the ambitious air quality targets that had been set for that year in the first national air pollution action plan and there was a very aggressive campaign especially on small-scale coal use that in fact succeeded in meeting those targets but that episode especially gave a very bad name to these what are known as campaign style efforts to meet targets because what happened was that a lot of small-scale coal stoves and boilers were eliminated and the infrastructure to replace them with gas fired heating was not there when the winter started so a lot of people were very very cold for some time and that really rightfully put those kinds of measures out of favor but so then back in.
Lauri Myllyvirta:
[33:06] 2022 or 2023, there was the midway review of the five-year plan. And it said that carbon intensity is badly off track. The state council issued an action plan to get back on track and it didn’t have a whole lot of traction. It didn’t even set annual targets that would have enabled the country to get back on track and so on. So yeah, certainly during this five-year period, Maybe there has been a sense that because of COVID and whatnot, it was a force majeure situation, but there hasn’t been an emphasis on meeting those targets, to be sure.
Robinson Meyer:
[33:44] So we’ll release this episode tomorrow. We don’t know exactly what’s going to happen in the next 24 hours in Iran. But when we’re recording this, the Strait of Hormuz remains closed and basically the world has lost 20% of global oil capacity and a fair amount of global liquefied natural gas capacity, as well as many, many chemical inputs and other chemical commodities, including fertilizer and aluminum. How has China, a lot of the oil that comes out of the Strait of Hormuz goes to Asia and specifically goes to China. And the price effects of the loss of that oil are global, but the actual supply constraints are going to first hit Asia. How has China responded to the Strait of Hormuz closure so far?
Lauri Myllyvirta:
[34:27] So the main thing that China has done is ban the exports of refined oil products. The country has massive reserves, massive inventories of oil and somewhat regulated fuel prices. They’re indexed to global prices with a bit of discretion. And so that at least delays the way that global prices filter to Chinese fuel prices and it gives the policymakers control over that. So in that sense, if this ends up being a relatively temporary situation, I think the Chinese market could be fairly sheltered from it. But of course, there’s the economic impact, for example, on those chemical industries.
Lauri Myllyvirta:
[35:15] Overall, I think this kind of a crisis is exactly what Chinese planners have had in their minds for a long time. And so there was a refocusing on energy security during Trump’s first term. There was a speech by Li Keqiang, the then premier in 2019, where he brought energy security very strongly back to the frame. And that was, far as anyone can tell, that was because of the perception of a much more hostile geopolitical environment. And because of that, the risk of the Straits of Malacca. So the other strait that much of the oil to China passes through being blocked. So everything that has happened in the past months is very much validating and reinforcing the energy security approach that Chinese planners have taken. The other event that I think is significant in that was the seizure of Russian flag tankers in high seas on the Atlantic by the U.S.
Robinson Meyer:
[36:18] This is what happened a few weeks after the Venezuela invasion, right? The U.S. Pursued these Russian-flagged tankers carrying, I think, Venezuelan oil. Out of the Gulf of Mexico into basically the open Atlantic Ocean and ultimately did board them. And there was some question about whether they were Russian-flagged at the beginning of the pursuit. At the beginning of the pursuit, but they were Russian-flagged by the end of the pursuit, but it represented kind of the U.S. Navy’s willingness to interdict, you know, seaborne fossil fuels.
Lauri Myllyvirta:
[36:47] Exactly. So all of this is going to reinforce the approach of reducing reliance on seaborne fossil fuels. And of course, things like seeing tankers hit by cheap drones, and so on.
Lauri Myllyvirta:
[37:01] I think anyone who buys seaborne fuels should be paying attention. And I’m sure Chinese planners are.
Robinson Meyer:
[37:07] It seems to me that when you look at the kind of whole picture, what emerges is that you can understand basically, a lot of Chinese energy policy, I’m not going to say all of it, but you You can understand a lot of Chinese energy policy at the absolute highest level out of anxiety about the seaborne fossil fuel trade and anxiety about domestic air pollution in big cities. Follow those trends. You get a big inland coal industry, you get a willingness to rely on coal, you get a willingness to electrify, you also get, of course, these huge clean energy industry. Am I kind of right to draw the lines from those two points? Absolutely.
Lauri Myllyvirta:
[37:47] So the third one that I would add is, I think there has been a very clear, longstanding determination that clean energy technologies are a key part of the technological and an economic and energy future. And so wanting to make sure that China has technological leadership, market leadership in those technologies has been one long-running thread in this as well. But I think most of the misunderstandings about China’s energy policy just comes from wanting to force it into a mold that fits some kind of an argument that people are making about things other than China. So you want China to be the clean energy champion, a global savior that you can put on a podium or want them to be the bad guys who always lie and always can be used as to say that it doesn’t matter what we do because China is always going to be doing something terrible. So if you try to approach things from one of those perspectives and try to make sense of it, then of course they don’t make sense. But if you make an effort exactly as you did to think about what are the actual motivations and aims, then surprisingly a lot of things start to make sense.
Robinson Meyer:
[38:58] It kind of all falls into place. I mean, what do you think that Western countries in Europe and North America can learn from the Chinese approach? Because it seems to me that the U.S., certainly the Biden administration’s approach to climate policy would have been very different if it followed a more Chinese-style approach. I think the same is true of the European Green Deal. But it also seems to me that goals that Western liberals in the kind of broadest sense attached to climate policy would not. Be as achievable if we adopted this same security-minded approach. It would be a much more paranoid world uh you are yourself a european so like how do you understand what we should learn as a west to the degree that that’s a useful category from China versus what do you think is kind of worth discarding or you hope that China eventually could move past.
Lauri Myllyvirta:
[39:54] That’s a great question. Of course the China system is special in a lot of ways but some of the policies that have been used to to roll out clean energy are very smart and could work just as well in many other systems. So if you think about this layout of the gigantic clean energy bases that China has in the western and northern
Lauri Myllyvirta:
[40:17] deserts, abandoned coal mines, offshore wind, all of these things designating large areas where, permitting is made easy, where land conflicts are less, and planning transmission and planning clean energy at an enormous scale around those make a lot of sense. And then on the other side, the rod of distributed solar, China used a model of whole county solar. So the idea is that you have a district or a county that sets a target of X% of rooftops covered by solar. And then you do centralized procurement, centralized contracting with the grid operator. And that drives down costs by quite a bit when you can just have a bunch of installers who are working their way from one building to the next and so on but it also creates this effect of we know that the most important predictor of whether people put on a solar panel is whether their neighbor has one EVs as well so the point is that i think people look too much at the differences between the Chinese system and other systems of government and dismiss those things where China has innovated and come up with ways to overcome obstacles that are exactly the same in other places in the world.
Robinson Meyer:
[41:42] When China does something like declare a clean energy base in a rural area or set a country, a province-wide target for solar, that’s also a domestic industrial policy. And China has a very big domestic solar industry, has a very big domestic manufacturing industry in basically all industries. And so when it sets a target or when it eases permitting, the domestic political economy is like very friendly to it. It strikes me because it has manufacturers who are always looking for a place to put their manufactured goods, to sell their manufactured goods. And I guess my question is like, how much of Chinese clean energy policy or how much of these beneficial policies, I’m fixating on the differences, as you said, I shouldn’t do, but I’m going to do it, is like how much of what it’s able to do in terms of deployment is downstream of its consumer market and manufacturing base. And is that something we should learn from too? I mean, should we, should Europe or North America be trying to encourage some, a much larger manufacturing sector than maybe we have now because while it could be kind of globally duplicative, it actually allows for a lot of implementation and infrastructure level policy and expertise to build up that then helps you when you’re kind of structuring the engineering of a society or the infrastructure in a society.
Lauri Myllyvirta:
[43:03] I’m all for policies that diversify the supply of clean energy technologies and that strengthen the political economy as well. I think that’s certainly a big factor. And that is a factor in China. So for example, provinces do have the motivation to deploy very clear in the EV industry that it’s been the provinces even more than the central government creating whole markets for their car manufacturers and so on but at the same time if you look at europe we have the biggest wind industry winter wind power manufacturing industry in the non-chinese market and that hasn’t meant that we’ve done very well in in deploying wind with with underperformed and that we have a big very significant auto industry but we’ve certainly failed to transform that for the age of electricity.
Lauri Myllyvirta:
[44:00] So it doesn’t always translate that way. Arguably, we’ve been a lot better at deploying solar where there’s less of a European manufacturing base. But so I do think that if we do get those policies in place, that will help. And also, I do want to remind people that there are significant manufacturers of cleantech outside of China, whether it’s Japanese and Korean battery makers or European producers of wind turbines, heat pumps, air frisers, so on. So the first step is making sure that those producers are able to stay in business and expand and have a strong market. And we are also a significant and a surplus producer of EVs and so on. And then the next step is thinking about the harder questions like solar where China does have a very significant role.
Robinson Meyer:
[44:54] When we talk about these massive clean industrial bases, or I was just thinking when we talk about those, because there’s this, we’ll stick it in the show notes, but there’s this amazing map in your post about the five-year plan, which shows the areas where China is trying to encourage clean energy in the country’s interior. And then these giant arrows kind of representing its high voltage grid, where it’s going to move this energy to the cities, generating cheap energy in the rural interior and sending it to cities is very GDP maximizing. It’s very pro-city. How much of the policies that we like or that are kind of praised internationally by an international audience arise from maybe a system that is much more willing to... Adopt, let’s say, policy that’s good for cities and urban areas, or that relies on a system that kind of is willing to uplift urban agglomerations and urbanization, as opposed to say, I think of the U.S. example here as the kind of classic counterexample where rural areas have far more power in our political system than cities do.
Lauri Myllyvirta:
[46:03] Now, right, I would actually say that that pull is the other way around. So there is a big regional economic policy component to moving all kinds of industries, often extractive industries, coal, wind, solar, into the west and into the north. So because the coastal urban areas are the ones that pulled ahead of the rest of the country economically. And even these long distance transmission lines, of course, they’re sold as it helps reduce air pollution in the east and so on but it’s really the coastal provinces don’t like these they have to be pushed into accepting this supply of electricity because they would rather generate within the province to grab that bit of gdp and tax revenue and everything else from that production so yeah the central government policy on this is more focused on spreading the economic gains towards the interior and the less well-off places.
Robinson Meyer:
[47:09] Wow, that’s so interesting. Okay, we have to leave it there. But Lauri Myllyvirta, thanks so much for joining us here on Schipski, and we’ll talk again soon.
Lauri Myllyvirta:
[47:17] Thank you so much.
Robinson Meyer:
[47:22] That will do it for us today. If you enjoyed this episode of Shift Key, please leave us a review on your favorite podcast app or just send this episode to a friend who you think might enjoy it. You can find me on BlueSky, LinkedIn, X, basically any social network. There’s only one of me so far, so you can find me there. We’ll be back next week with a new episode of Shift Key. Enjoy your weekend. 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. See you next week.
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The Pacific Northwest fire season is about to get even worse.
I turned on the heat this week for the first time since spring. Tuesday started out mild, damp, and overcast here in Seattle — the kind of weather the city still conjures in the popular imagination, even if about 50 days a year now are warmer than they used to be because of climate change. Summers here may be getting longer, but this morning felt truly like fall, and in the uninsulated shed where I do most of my writing, I briefly turned on the space heater to stave off the nip.
The same slow-moving low-pressure system responsible for the moody weather in the Puget Sound region will also go far in curbing the state’s wildfires, per Tuesday’s update to the National Wildland Significant Fire Potential Outlook. It’s almost obscenely good luck: September is historically one of the worst times of year for wildfire in the Pacific Northwest, after the summer’s high temperatures have dried out all the fuels but before the autumn rains arrive.
Worse still, though, is the tax on wildland firefighters. They call the month “Snaptember” because the physical and mental health effects of a long firefighting season begin to catch up with the more than 21,000 of them currently on assignment. That is especially true in a year like 2026, the worst fire season in the Pacific Northwest in 30 years. Nationwide, more than 8.2 million acres have burned, 164% of the 10-year average for this point in the year. The National Preparedness Level has sat at its highest level, 5, since mid-July, meaning that fire resources, personnel, and the seasonal hires who make up the bulk of the workforce are stretched to their absolute limit. There is no breathing room — 68 fires ignited yesterday alone, following 140 new ignitions on Monday. Some of the crews fighting the country’s biggest fires have come from as far away as New Zealand to help out.
The good news: The wet start to the month will drop the Pacific Northwest from above-average to normal fire potential for the first half of September, offering a much-needed break. But the brief weather pattern won’t undo August’s damage, including below-average rainfall across the region and the spread of “exceptional drought.” Temperatures ran as much as 8 degrees above average in parts of Oregon, and in southwest Idaho, an abundance of dried juniper, grasses, and shrubs has created, in fire-industry parlance, “an above-average fully cured fine fuel crop” — in normal terms, that means there’s a lot of tinder ready to burn. The entire state of Washington is under a precautionary burn ban until the end of the month.
What follows could be truly nasty. “Outlooks favor above-normal temperatures with no indication of a sustained wet pattern, meaning drying may quickly resume once the early September systems depart,” Tuesday’s report reads. Making matters worse, “Historical analogs and past transitions into El Niño,” such as the one we’re in now, “suggest an elevated likelihood of at least one moderately strong east‑wind day in September, further reinforcing opportunity for new significant fires to arise when lightning or human ignitions occur.” A similar situation — east, downslope winds and summer-cured dry fuels — compounded into the disastrous September fires of 2020, which burned over 11% of the entire Oregon Cascades ecoregion. (While El Niño historically produces above-average temperatures and lower rainfall in the Northwest in the fall, the greatest impacts will like come after the report’s outlook period.)
Drought now covers 57% of the country, and other regions could also pop off this month, further drawing on limited resources. The report highlighted northern California, the southern Plains, the Lower Mississippi Valley, and Florida as other regions with above-average fire potential heading into September. In the Southern Area in particular, which includes Texas, Oklahoma, Arkansas, Louisiana, Mississippi, and southwestern Alabama, the suppressed Atlantic hurricane season has resulted in extreme drought “second only to the last very strong El Niño of 2015,” the report found. Above-average significant fire potential could “very well continue” as late as November.
By then, at least, the Northwest will have “probabilities for more organized storm systems,” particularly beginning in the second half of October, when precipitation will hopefully pick back up. Imagine that: Looking forward to the winter drizzle, which was once the great drawback of living in the Northwest.
But by the time Snaptember is through with us, I worry that those cold, dark, wet days of December will feel far away yet.
Current conditions: Tropical Storm Edouard is making landfall over Texas and Louisiana, bringing flooding as it moves inland • Already facing a southwest monsoon, or habagat, the Philippines is now staring down Tropical Storm Pilandok • Intensifying flooding in South Sudan’s Sudd, the largest wetlands in Africa, is displacing families by the droves.
Oil prices surged north of $90 per barrel Tuesday as the United States exchanged fire with Iran amid the ongoing fight to control the Strait of Hormuz. West Texas Intermediate, the U.S. benchmark, rose nearly 2% to $91.74 per barrel. Europe’s Brent crude measure closed less than 2% higher at just below $97. Murban crude, the yardstick for oil out of Abu Dhabi, soared nearly 8% to over $106 per barrel. In a post on Truth Social, President Donald Trump said he was “not trying to force Iran to the bargaining table.” Rather, “I couldn’t care less if they sign a worthless, to them, agreement,” he continued. “I like our position now much better, with almost total control of the Hormuz Strait, and their economy totally collapsing.” Referring to the U.S. military as the “American terrorists,” the Tasnim News Agency, a semi-official outlet associated with Iran’s Islamic Revolutionary Guard Corps, reported that Tehran “had previously warned and promised” that “the Iranian armed forces will respond decisively and extensively to any aggression against our country’s territory and interests.”
Meanwhile, the Group of 20 — the club of 18 rich economies, plus the European Union and African Union — concluded its latest meeting with a joint statement that affirmed the necessity of central bank independence, called out energy affordability in the age of AI, and admonished “non-market economies” with “excessive and persistent external surpluses” that distort the global market. China didn't like that, U.S. Treasury Secretary Scott Bessent told CNBC, issuing a dissent.
If the sun were blasting onto all the solar panels in China all at once, the overall electricity output would top that of every one of the country’s coal plants firing at the same time. It’s a major milestone, Bloomberg reported, highlighting just how extensively Beijing has glazed its fields, foothills, and urban rooftops with photovoltaic panels in recent years. But the achievement comes with an asterisk. “No matter how you feel about solar or coal as an energy source, CAPACITY is not ENERGY,” energy analyst Nicholas Birkhead wrote in a post on X. “These solar capacity numbers way overstate the energy mix, which is what matters! I really wish we’d all just publish capacity numbers after they’re adjusted for capacity factor.” In other words: As significant as this seems, China is still burning a whole lot of coal more frequently than the midday sun is shining.
Last year, upward of $440 billion flowed into solar worldwide, while $540 billion went to upstream oil drilling. It’s a sign, according to a new report from McKinsey, that “markets are financing both fossil fuels and low-carbon energy simultaneously” and that “the system is not replacing one fuel type with another but rather building them in parallel.” Moving forward, the consultancy cautioned, policymakers and planners need to assess not just the cheapest available options for new generation but what best supports the performance of the entire energy system. Just look at what Ontario did when deciding to move forward with what’s expected to be North America’s first small modular reactors. Instead of looking at the upfront cost of the generating assets alone, the province-owned Ontario Power Generation considered the whole cost of transmission and backup generation that would have come in the fine print of choosing wind turbines over nuclear reactors. The example, as my colleague Matthew Zeitlin wrote, highlights the problems with levelized cost of energy, the widely used measure of the overnight costs of building new generation assets: “Everyone’s favorite energy metric is wrong.”
A long-awaited California bill covering state policy on wildfires, insurance, and utilities collapsed in the state legislature Tuesday. The proposal, called Senate Bill 492, had been the product of intense negotiations between legislative leaders and Governor Gavin Newsom. The deal was released on Saturday and included provisions to speed up payouts to victims of fires and nibbled around the edges of the vast payouts California utilities are forced to make to insurers when their equipment sparks a blaze. The legislators fractured because it failed to address the core issue of California’s strict rules around wildfire liability and insurance, where insurers can sue utilities to recover damages when, for example, a transformer or power line ignites dried brush. Instead, the deal would have tweaked the system, making it harder for insurers to sell claims to investors, pushing out payouts to victims faster, and limiting utility executive bonuses when their companies’ equipment causes a fire. These payouts can drag utilities into bankruptcy, as happened with Pacific Gas & Electric in 2019 following a series of wildfires, and end up elevating electricity rates. “The only solution is to return to fix the entire problem, not part of it,” Newsom said in a statement to Politico.
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Fervo Energy’s stock soared nearly 30% on Tuesday after the next-generation geothermal giant announced its biggest deal yet, to sell nearly 400 megawatts of electricity to Google. When Fervo starts up its Cape Station project in southwestern Utah sometime in 2028, the facility will become the world’s largest enhanced geothermal plant. In enhanced geothermal plants, the underground heat harnessed for power production comes from artificial wells drilled with fracking technology rather than naturally forming subterranean reservoirs of hot water. If Houston-based Fervo can bring down the cost of its drilling, the technology could enable construction of geothermal power stations in vastly more locations than the industry previously believed possible. “Even though right now we don’t have clarity yet on how this will serve a data center … we know that it will be a foundational building block of power generation for a data center presence in Utah,” Lucia Tian, Google’s director of advanced energy technologies, told The Wall Street Journal, which broke news of the deal.
Next-generation nuclear startups, meanwhile, are facing a looming challenge over plutonium. The material, which doesn’t occur naturally, was largely produced in the 20th century for weapons production. Now, however, developers of novel kinds of reactors are angling to use some of the world’s 571 metric tons of stockpiled plutonium for energy production. In a feature on the topic published this week, the Financial Times outlined the split between countries such as the U.S., which I told you in May was giving out plutonium to startups, and the United Kingdom, which opted to bury its material. “It’s like a car that runs on diamonds. Plutonium reserves are about the same size as diamonds around the world, which gives you an idea of how rare this precious element is,” a French official told the newspaper.

The Department of Energy is pumping $12 million into developing and manufacturing technology for solar panels that can be used in space. In keeping with the Trump administration’s skeptical position on the weather limits of wind and solar, the agency pointed out that, “unlike terrestrial solar energy systems, which are subject to regulate interruption by weather and the Earth’s rotation, space PV can deliver near-constant power.” The funding is aimed at projects that will enhance the durability and cost of solar cells for space and develop manufacturing methods that can provide “innovative, high-volume” processes for mass production. “The next frontier for solar PV power generation is in space,” Audrey Robertson, the assistant secretary of energy, said in a statement. “As demand for space-grade PV skyrockets, this investment will establish American leadership in next-generation, space-based PV, bolster our national security, and enhance our economic competitiveness.”
Investors are putting big G’s behind VPPs. Virtual power plants promise to ease stress on grids and direct power that might otherwise have been wasted toward all the new demand coming online. Amid the scramble to supply power to data centers, money is flowing into companies that can harness those distributed assets. On Tuesday, the VPP software maker Light announced a $46 million Series A. That same day, the British distributed energy giant Octopus Energy closed its deal to buy a majority stake in the VPP provider Uplight.
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Robinson Meyer:
Hello, it’s Wednesday, September 2. I cannot believe it is already September. Last month, it became clear we’re witnessing a new kind of natural gas build out in the United States. Just think of the announcements we got in a few days in the middle of August. First, around August 11, the market intelligence service Cleanview identified that Amazon was behind a 7.6-gigawatt natural gas plant in Texas called Gigawatt Ranch. So just for comparison, that is huge. That would be the country’s biggest natural gas power plant. In fact, it would be the country’s biggest power plant, period. It’s about half a gigawatt bigger than the Grand Coulee Dam in Washington State, the largest power plant in America for like half a century. Then, just a week later, we learned that OpenAI and Nvidia are working together on a 9.2-gigawatt gas plant in Ohio.
Robinson Meyer:
That plant would obviously dwarf the Grand Coulee Dam. It would be the biggest power plant in America by far. But it would also even rival the Jebel Ali Power and Desalination Facility in Dubai as the world’s largest natural gas power plant of any kind. It would be a truly gargantuan facility. My colleague Emily Pontecorvo recently tried to identify the scale of the ongoing gas buildout. And she found a number of power plants, of projects that I think weren’t on my radar, weren’t generally on people’s radar. It’s been interesting because we’ve been getting a sense of the scale of this buildout at the same time that it’s become clear that the data center buildout is enormously unpopular in itself. If you’ve been reading Heatmap News, you know that according to a Heatmap Pro and Embold research poll conducted also in early August, 75% of Americans are now opposed to a data center being built near where they live, including a majority of Democrats, Republicans, independents, rural voters, urban voters, suburban voters, basically any demographic you can think of. They don’t seem to want a data center near them right now.
Robinson Meyer:
I recently sat down with Emily, a Heatmap founding staff writer, to talk about her reporting on the gas buildout, how she identified the 10 largest gas power projects now under construction or being permitted or being proposed in the United States, and how to think about this messy period. Also, how to think about the fact that it’s tech companies, who often have some of the most ambitious climate policies in America, who are now behind, a natural gas buildout on the scale that could actually increase the country’s, greenhouse gas emissions from the power sector, or at least increase them compared to the baseline. How should we think about these net zero commitments from companies like Amazon, Microsoft, Google, when often it’s those same companies that are now building some of the biggest fossil fuel projects ever proposed in the United States? And what would a good net zero commitment or climate commitment look like from those companies? We get into all of it in this conversation. It was a really generative, really interesting conversation for me. I’m Robinson Meyer, the founding executive editor of Heatmap News, and it’s all coming up on this episode of Shift Key. Emily Pontecorvo is here. Welcome to Shift Key.
Emily Pontecorvo:
Thanks, Rob. Glad to be here.
Robinson Meyer:
So you recently wrote a piece for us about the scale of the natural gas buildout in the United States that’s happening to service data centers and to service AI. And I think it’s quite interesting because we will talk about this, but I don’t know if we understood just how large this buildout was going to be as recently as the beginning of this year.
Emily Pontecorvo:
Yeah, I think that’s right.
Robinson Meyer:
What I think back to is, we did our poll, our annual poll of climate insiders, which are kind of sources and experts and former officials and chief sustainability officers. And we asked them at the end of last year, do you think the AI build out is going to significantly slow down decarbonization? And most people said no. And at the time, I don’t know how I would have answered, but ... I feel like we’re much closer to a place where the AI buildout is slowing down decarbonization now than we were even eight months ago. And so just to start off, can you put the scale of this gas buildout in context for us? So how many plants have been proposed? How many of these plants are going to happen? What do we understand about the scale of this next generation of gas that is being planned across the United States right now?
Emily Pontecorvo:
Yeah, so I will say to start that a lot of this information is very slippery because there’s been so many announcements. The announcements are constantly kind of changing. And so we have some numbers, but they’re definitely estimates. So last week, the Global Energy Monitor, which is this group that tracks oil and gas projects all over the world, they put out a report saying that they counted 189 gigawatts of natural gas plants in the U.S. that have either been announced, that are in a pre-construction phase, like they have some permits, or that are under construction. And that is nearly double the amount that they found at the end of last year, which was about 97 gigawatts.
Robinson Meyer:
And is that entirely behind the meter plants, or are those any kind of natural gas plant being planned across the United States, kind of for any purpose on the grid or off the grid?
Emily Pontecorvo:
So these numbers, 189 gigawatts up from 97 six months ago, those are projects that are specifically being motivated by data centers. So some of them are being built on the grid that utilities are building to kind of meet new demand room data centers. And a lot of them are off-grid projects that are being directly tied to data centers.
Robinson Meyer:
And I guess you’ve kind of alluded to this already, but like, So it’s almost 200 gigawatts of gas plants coming online. Do we know, like, how large is the existing U.S. gas fleet?
Emily Pontecorvo:
Yeah, so I, you know, had to look this up for this story. But as of last year, the existing natural gas generation capacity in the U.S. was 512 gigawatts.
Robinson Meyer:
Wow. It’s like 40% of the gas fleet we’re going to add to our existing fleet. Like, this is not a small change to the size of the gas fleet. This is like a major expansion of U.S. generation capacity.
Emily Pontecorvo:
Yeah. And the thing is, the numbers I gave earlier, those are just projects that have some relationship to the data center build out. The report also gave an estimate of just total natural gas generation that’s being planned across the country. And that number is 378 gigawatts. So it’s almost, you know, nearly doubling what we have today. And what was really interesting was I went back and looked at when was a lot of the existing natural gas generation built? Was there a time in the past where we ... Natural gas plants this quickly. And there’s like a pretty clear kind of analogous time period in the early 2000s where we built, what was it, like nearly, it was like more than 150 gigawatts in just four years. I saw different estimates. It was like maybe closer to 200. But that was a very different build out where this time the plants are much, much bigger. And so many of them are being built off-grid.
Robinson Meyer:
It is actually crazy to me the scale of the build-out that is not being built to service AI, first of all, because I would have assumed that basically the number, that upfront number, was basically all the gas because all of it would be going to AI. So the fact that there’s another, what, 150, 140 gigawatts going to just general generation is pretty crazy.
Emily Pontecorvo:
Yeah, I will say it is possible that some of that is duplicative. Like I was talking to Brendan Pierpont from Energy Innovation. He is on their electricity team, and he was pointing out that they’re seeing that in a lot of cases, the developers will go to the utilities first and ask for a certain amount of capacity. And then when they see how long that’s going to take, then they’ll kind of turn to an off-grid project. And so it’s possible that both of those are getting included in this data, but it’s so hard to really pinpoint what the numbers are.
Robinson Meyer:
So how should we think about these 189 gigawatts? Because as you said at the top of this episode, like there’s a haziness to all of this because sometimes the same gigawatt, so to speak, of demand gets requested in multiple different venues, either in different grids or at different locations, or they ask for it on grid and then they try to build it off grid. At the same time, One through line of this AI story since the beginning has been the difficulty of getting any kind of bead on demand and on the scale of demand. And it seems entirely possible to me that these 189 gigawatts are not going to all get built, but that we are going to add 189 gigawatts because maybe there’s another 100 gigawatts of demand that’s waiting to be requested. And, you know, if we build 70% of these requested gigawatts and 30% of those requested gigawatts, we’re still hitting 190 gigawatts, we’re still hitting 200 gigawatts. And so how do you think about the likelihood that this demand becomes like real capacity in the economy?
Emily Pontecorvo:
I think that the demand is real. I don’t know that 189 gigawatts of natural gas fired power plants, and especially the particular list that this report comes up with, I don’t know that those are real. But I think between data centers and a lot of other kinds of demand that we’re putting on the grid, air conditioning, electric vehicles, manufacturing, like absolutely 189 gigawatts is real. I think that the really big question is how real are these natural gas projects and how quickly will they get built? What kinds of equipment, what kinds of technology they’ll use? So
Emily Pontecorvo:
I basically went through this exercise of trying to identify the 10 biggest projects. And my initial list and my final list are not the same because as I was like researching each individual one, everything felt like sand slipping through my fingers. Like I would see one press release and then one, you know, news article with rumors about XYZ. And then the company’s website said one thing and the permit said another thing. And it was really hard to get a good grasp of, here’s a developer with a project that they say can meet five gigawatts of demand someday. And yet, in the near term, they’re actually just going to build 150 megawatts.
Emily Pontecorvo:
And so, like, should we think about that? Right, exactly.
Robinson Meyer:
This is the case for the OpenAI facility. I wrote about this for Heatmap Daily, our daily afternoon newsletter that everyone should hopefully be subscribed to. But there is this big OpenAI Department of Energy data center that is being planned in Ohio. It’s being built on a kind of ex-nuclear site that the DOE owns. And I think one of the interesting things, I mean, there’s a lot of interesting things about this project. But first of all, it’s massive. It’s nearly 10 gigawatts. It would rival the largest natural gas power plants in the world. I think it’s going to be right now.
Robinson Meyer:
Neck and neck. If the whole thing gets built, it would be right around the same size as the Jabal Ali power and desalination gas plant in Dubai. And it’s all going to go to an open AI data center. It’s backstopped by Nvidia. We learned that last month, it’s really going to increase the likelihood that this facility gets built out. But what’s interesting is that the natural gas plant is going to be built on federal land, on Department of Energy land. It’s going to be owned by the DOE and financed by Japan as part of this Trump-Japan trade deal. Now, I think there’s still a lot of questions about how much this gets built. But to your point, what’s difficult about thinking about this plant is that they want to eventually build more than nine gigawatts of power. They plan to initially build 800 megawatts of gas, which is a lot of gas, but not like a Grand Coulee Dam’s worth of gas. That is a very large gas plant, but it is not a unprecedentedly large gas plant. And how do you assess the scale of that demand, right? Do you think of it as an 800 megawatt gas plant that could literally grow 10x over the next few years? Or do you think of it as a nine and a half gigawatt gas plant, and therefore the largest power generation project in American history?
Emily Pontecorvo:
Right. I mean, so there’s like so many projects that are in this data, that are in that 189 gigawatts, like Fermi America, the big project in Texas.
Robinson Meyer:
The Rick Perry associated project, yes.
Emily Pontecorvo:
Yes. And so they’re also aspiring to even bigger than the OpenAI project. I believe their stated total power generation for the site is like 17 gigawatts, 11 gigawatts of natural gas, plus a bunch of nuclear and some other stuff. Just completely pie in the sky numbers. they already have a permit for the 11 gigawatts of natural gas though or actually no i’m sorry they have a permit for the first six and submitted a permit for the next five but
Robinson Meyer:
Big plant that’s still a really big.
Emily Pontecorvo:
Plant it’s a really big plant and yeah there’s all these projects in the list that have these huge numbers but then what’s actually happening is they’re being built in phases and the first phase might just be a couple hundred megawatts or one gigawatt or between one and two is what I’ve mostly seen. And so whether that first phase is successfully built will determine whether the additional phases are built will determine how much of that 189 gigawatts.
Robinson Meyer:
Right. Well, and also like if the AI boom is still going strong in 2028 and 2029 and 2030, then they can keep building gas to service it. Who knows what the economy will be like by then? You and I will work for AI map or something.
Robinson Meyer:
Can we talk a little bit about like, why are companies building gas? Clean energy advocates talk a lot about how wind and solar, especially solar and batteries are the cheapest source of electricity. I would say when you talk to electricity traders, too, like when you talk to people in the market every day, they also talk about how cheap solar is. So why are companies building gas and not solar to service these facilities?
Emily Pontecorvo:
So there’s like, a lot of different reasons that are all kind of coming together. Maybe the biggest one of all are the bottlenecks to connecting to the grid, the transmission bottlenecks. And that’s really pushing a lot of these companies to look for off-grid solutions.
Robinson Meyer:
And specifically just to like play that out, because they cannot site enough acreage of solar on the site where they would put a data center to generate the power they need, which means they need a grid hookup. But if they need to generate their own power on their own acreage, then you need an extremely energy-dense form of generation, and that means you go to gas. Right, right.
Emily Pontecorvo:
And then I think that’s coming together with a bunch of political factors, like the Trump administration has a strong interest in pushing natural gas. They have gotten rid of the tax credits for clean energy. They’ve made renewable energy, wind and solar, really hard to build with all of these permitting freezes and permitting obstacles for renewables. I think another element is just like the extreme speed and kind of urgency that AI companies are expanding at and demanding power at, which I guess kind of circles back to the interconnection issue and just not wanting to wait to be connected to the grid. And then the last one that I think is important is this issue with affordability in data centers where people are really worried about the build out, increasing their energy bills. And a lot of data center developers are pushing this idea that by bringing their own generation, by building these gas power plants on site, not connecting to the grid, they’re kind of putting their project in a box and ensuring that it doesn’t have any impact on regular rate payers.
Robinson Meyer:
It’s interesting to me, the ratepayer protection pledge from Trump pledges that, data centers won’t make electricity rates go up. And the solution to this for a lot of these companies, as you were saying, when they look at the set of constraints that they’re working within that include acreage, cost, regulation, local grid interconnection capacity, speed to power, they solve this set of constraints by going with gas. And I mean, I think there’s a few interesting aspects about it. First of all, it’s not clear to me that it makes data centers any more popular. He recently did polling that made a lot of news that found that 75% of Americans at this point would oppose the data center being built near where they live. I’m not convinced that adding a fossil fuel power plant to a proposed data center project makes it any more popular because it’s taking a quasi-industrial site and turning it into a full-on industrial site. But that being said, one of the promises made by adding gas generation at the data center is that by generating your own electricity, you’re not increasing local demand for electricity and therefore not increasing anyone’s rates. Now...
Robinson Meyer:
There’s a whole separate conversation to have here about whether adding marginal large-scale loads to electricity grids outside of markets like the Mid-Atlantic, which are structured in a particular way where that jacks up everyone’s rates. There’s a whole separate question and discussion to have here about basically, if you add large customers to an electricity grid because of how electricity rates are designed, that may actually bring down everyone’s bills. But I don’t want to have that conversation now. But like, it’s not clear to me that they are actually like, companies build gas to protect everyone’s electricity rates from going up nearby. And whether or not that is a good idea, and whether or not that is true, what gets left out of that conversation is whether they’re protecting everyone else’s gas rates. And the natural gas system is also a fixed system. And unlike the electricity system where you’re moving electrons around, so to speak, and you can re-rate lines, you can up-rate existing transmission lines, like you are moving molecules around with natural gas. And one thing I have wondered is like, if we’re adding gigawatts and gigawatts of gas generation to an existing gas grid.
Robinson Meyer:
Are we about to see natural gas prices go up around the country, especially when you take into effect that LNG demand is also about to double over the next few years? And so there’s like we were already worried about LNG export driving up natural gas rates. Now we’re adding LNG and a nine gigawatt scale natural gas power plant is basically like a medium sized LNG plant’s worth of demand. You’re just exporting carbon dioxide into the sky and producing electricity right so like hyperscalers can protect electricity rates by building local gas generation it’s not clear to me they can protect gas rates.
Emily Pontecorvo:
Yeah I, I mean we’ve talked about this. I, I think it’s a ... I did talk a little bit about this with folks when i was reporting on this gas build out, and I think the natural gas international natural gas market is complicated, and it’s not like there’s like a one-to-one, you know, increased demand here prices go up here…
Robinson Meyer:
It’s also like when you talk about natural gas pricing like what drives natural gas pricing in the united states is like number one weather and then like ... dot dot dot ... like a gap as big as the grand canyon and then number two like, local supply constraints and then number three is like local demand you know like there’s the number one thing driving natural gas rates remains weather but I don’t know whether these.
Emily Pontecorvo:
Things wonder yeah like if any of these mega projects get built to this the scale that they are trying to and like will they be fighting with lng exports for capacity it’s hard to it’s hard to imagine
Robinson Meyer:
Of these 10 projects, like what surprised you most? Or what project kind of wound up on the list that you did not expect to see on the list at the beginning?
Emily Pontecorvo:
So, you know, going back to a few things that we’ve talked about, like, why is this happening? Why are why gas plants? There were two projects on the list that I was surprised to learn about that were, I think, have been sort of overshadowed by the OpenAI project. But there are two additional natural gas mega projects that are coming out of this U.S.-Japan trade deal that are going to be financed by Japan and owned by the U.S.
Robinson Meyer:
I think they’re financed by Japan, owned by SoftBank’s new energy subsidiary.
Emily Pontecorvo:
In this case, SoftBank is not involved. So NextEra is building a big project in Pennsylvania. They haven’t said where yet. And a big project in Texas, neither is like has a data center attached to it. It’s a little bit unclear whether there will be a data center attached to it. The Pennsylvania one might connect to the grid. But nonetheless, these deals have been advertised as being sort of motivated by increased data center demand. And so just going back to what we were talking about before, like, I do think that a significant amount of this buildup is the Trump administration wanting to build gas plants. Like, that’s nearly 20 between these three projects, the OpenAI one and the two NextEra projects. That’s nearly 20 gigawatts of natural gas fired capacity that the Trump administration is behind through this trade deal.
Robinson Meyer:
That’s crazy. Do we know for the 180 gigawatts built-to-service AI, for the hundreds of gigawatts that we think might be coming online for these 20 gigawatts, do we know what ... Kind of power plant they’re going to build. Because as we’ve discussed on previous episodes of Shift Key, there’s several different kinds of gas plants that are being built. The most efficient tend to be these combined cycle plants, which use the exhaust from generating electricity to then generate more electricity. And then that can kind of scale up through a peaker plant all the way to just basically now people are running jet engines to generate electricity. That matters a lot to the emissions profile of these plants because it matters a lot to their energy efficiency in just a very kind of classical sense. Do we have any sense of how efficient this nearly 190 gigawatts could be?
Emily Pontecorvo:
No, we don’t. In the case of these three projects that came out of the U.S.-Japan trade deal, it’s a little bit fuzzy still what technologies they’ll be using. I think in the case of the OpenAI plant, they said that they have the initial generation equipment secured, which maybe that just leads me to think that it’s combined cycle turbines since those are in shorter supply.
Robinson Meyer:
The hardest to get. Or maybe it means that they absolutely don’t have combined cycle turbines. Maybe, maybe.
Emily Pontecorvo:
But in going through this list, what I learned is that like, yeah, a lot of these projects are the ones that are permitted where, you know, you get really specific information about exactly what technology they’re using. A lot of them are using these combustion engines, just putting like dozens of them on site and,
Robinson Meyer:
Let’s ask the question that I think is nearest and dearest to both of our hearts. Like, what does this mean for U.S. emissions? Do we have any ability to estimate what a gas build out of the scale, what does this mean for U.S. emissions?
Emily Pontecorvo:
I tried to answer that question for this story, and I think it’s one that I’m going to continue to look into. It’s really hard to say at this point because so much of it is speculative. We don’t know, you know, is a third of this real? Is half of it real? Will it all eventually be real? What technologies will they end up using? How much of it will be on-grid versus off-grid? Like all of those questions will impact what it means in the long run. I think the best kind of estimate that I found was to look at the Rhodium Group’s taking stock report. They just put out their latest version of this last month. And this report they put out annually, it basically looks at, you know, if we take current policy, energy, technology trends, and we project them out into the future, what happens to emissions. So they found power sector emissions could decline 24 to 48% by 2040.
Emily Pontecorvo:
Compared to today, yeah. So, you know, that maybe it’s hard to tell, like, is that good? Is that bad? That is a significantly worse outcome than what they found two years ago when they did the same exercise and the Inflation Reduction Act was kind of in full swing. At that point, their estimate was power sector emissions would decline by at least 42%, so near the high end of the current estimate, by 2035, so five years earlier. Both of those reports did take into account lots of data center demand growth, but they did not, neither of them took into account the potential for a lot of that demand growth to be met with off-grid natural gas combustion engines. And so, you know, those are much worse from a mission standpoint. And the other thing, when I spoke to Ben King, one of the authors, and he was saying, you know, not only are these less efficient systems, these combustion engines and simple cycle turbines, but putting them off-grid also, they’ll be running around the clock. Whereas like if they were on the grid, you have this amazingly efficient system that’s, they’re being called upon when they’re needed, but they’re not necessarily...
Robinson Meyer:
Right, you have price-based dispatch.
Emily Pontecorvo:
Yeah, yeah.
Robinson Meyer:
What does this mean for corporate net zero goals? And to what extent is the AI high boom kind of turning corporate net zero goals into a dead letter?
Emily Pontecorvo:
So, you know, all of these companies, the biggest AI hyperscalers, Microsoft, Google, Meta, Amazon, those four specifically, they are still the biggest clean energy buyers in the world. Like Amazon has funded, you know, has more clean energy PPAs than any other company in the world. At the same time, Amazon is behind this natural gas power plant in Texas that’s going to be 7.65 gigawatts, depending on what else gets built, could be the biggest natural gas plant in the U.S. So it’s really hard.
Robinson Meyer:
For about a week, we thought it was the biggest natural gas plant in the U.S. And then this OpenAI project got announced.
Emily Pontecorvo:
Right, right. So yeah, it’s very hard to square these two sides of the coin where like these companies, on the one hand, seem to be totally throwing out their net zero goals and just trying to build as quickly as possible with whatever they can get. And on the other hand, they are still publicly stating their commitment to the net zero goal and still publicly signing power purchase agreements with clean energy. I don’t know that we have a good accounting yet of how much gas are they helping get built versus how much renewables. And I don’t know if that exercise is possible, but if you know, reach out to me. But there is something sort of absurd or like it just feels so implausible that these companies could still say we’re committed to go net zero and meanwhile be supporting these natural gas mega projects.
Robinson Meyer:
How many of these companies are still pledging to hit net zero by 2030?
Emily Pontecorvo:
Those four, the big, like Amazon, Microsoft, Meta, Google, the thing is
Robinson Meyer:
They all still have 2030 net zero goals.
Emily Pontecorvo:
They’re either 2030 or 2035. But I mean, on one hand, Google calls it a moonshot. And they have language like that, where they’re like, this is our guiding principle. This is our aspiration. But even that if this is your guiding principle how is it guiding you to support it
Robinson Meyer:
We did get to the moon, do you know what i mean a lot companies the government does this now too like public sector organizations they use moonshot to refer to something they want to do but are not probably going to do but in fact the whole thing about the moonshot was we did in fact get to the moon.
Emily Pontecorvo:
The thing is, like, is it still possible for a company like Microsoft or Google to hit net zero emissions by whatever date they choose on paper? Probably. That will maybe depend on the corporate standards that rise up in the next couple of years that determine what they are allowed to say on paper and how we account for certain things like carbon removal and clean energy purchases, those accounting rules can really change what these companies say they’ve accomplished. Will they have achieved net zero in the true spirit of trying to get the whole world to go net zero? I think that seems a lot less likely.
Robinson Meyer:
Well, this is, I mean, you’ve written about this too, but I guess what all this suggests to me is that corporate net zero goals and arguably even national net zero goals are not even the right thing to be training on because, and I’m not trying to make excuses for the tech companies here, because I completely agree with you that this gas build-out is not at all in line with their climate commitments. However if they were to basically give up on their climate commitments, and pull out their investments in all these other technologies that are crucial for global decarbonization and those technologies never got developed that would be a tragedy, like that would be really bad and to some degree if google, or microsoft with their investments that they’re making to meet their net zero goal, were to seed, a technology that is crucial to overall global decarbonization. To some degree, that is more important than whether Google is able to make a zero appear on its books in 2035 or 2040.
Robinson Meyer:
And I don’t mean to be too glib about this, but I do think we actually accept this logic in the case of other industries. I would argue, I think climate advocates would argue pretty forcefully that like the coal that was an input into the Chinese solar industry ultimately at this point has been overwhelmed by the emissions reductions from the Chinese solar industry, number one. But it was number two, it was like important because now we have the Chinese solar industry, which is able to produce solar panels at this unprecedented scale for global decarbonization. And setting aside the particular kind of security implications of that, it just seems to me that like, It is bad that these companies are doing this, but it would in some ways be worse for them to kind of stop.
Emily Pontecorvo:
I don’t know why one precludes the other.
Robinson Meyer:
I mean, well, just because I think that the charge here is not hypocrisy. I would rather they remain hypocritical, but doing something for net zero. I would like them to stop emitting. But if they are going to emit, I don’t mind that they’re hypocrites, I guess is maybe what I’m saying.
Emily Pontecorvo:
Sure. I mean, I do think that there is a potential problem with using net zero as the kind of defining goal.
Robinson Meyer:
Yes, yes. Right. In fact, the goal is a bad one.
Emily Pontecorvo:
Yeah, I mean, I would love for these companies to come up with a new set of commitments that continue to motivate them to make the kind of transformative investments that they’re making, but that don’t lead people to believe that achieving this balance of inputs and outputs is not only feasible, but is like for one company by itself to do that is important.
Emily Pontecorvo:
And it’s much more important to look at the kind of global picture.
Robinson Meyer:
How do you think about this whole build out in context of climate? I mean, at this point, Heatmap has written extensively about the unpopularity of data centers. It’s clear that some people hate data centers because of their emissions impact, but it doesn’t seem to be driving that trend. Though in some ways that trend is so big, so generalized, and so amorphous in some ways that like everything is kind of driving it. How has your recent reporting made you think about the AI build out broadly?
Emily Pontecorvo:
I mean, I’d come back to the fact that we really don’t know the scale of it yet, because there are so many unknowns. So much of this development is speculative. How much natural gas will actually get built? We don’t know. I think there are some other kind of exciting unknowns, like will we be able to speed up the development of geothermal and some nuclear and some other cleaner sources that could maybe displace some of this gas? And then I also started to think about some other questions, which are like, in a future administration that wanted to do something about climate or a future Congress that had more capacity to do something about emissions, what kind of new constituencies does this build? Like, I wonder if, you know, in the past, companies like Microsoft and Google have been supporters of emissions regulation and clean energy policy. But if they suddenly have all this natural gas on their books, are they going to still support regulating emissions? Like, they might have a vested interest in fighting natural gas power plant controls.
Robinson Meyer:
It’s been so fascinating watching the political backlash to data centers. And I think especially because data centers threaten to be this massive emissions bomb, right? But also because that doesn’t really seem to be what the backlash is about. And I am filled with a little bit of a sense of foreboding watching this because I know the scale of infrastructure change that is going to have to happen to decarbonize. And it is smaller than the data center build out. Now, I think we have a lot more to offer people in some ways than AI does. But I don’t know that, for instance, the faces of that decarbonization infrastructure change will be any more trusted than the faces of this infrastructure build out. And so, you know, Tom Perriello, former congressman, actually was in climate philanthropy for a long time.
Robinson Meyer:
Was a fairly important figure in climate philanthropy, is now running for Congress again. His odds aren’t great, but he’s running in this Republican district near Charlottesville, Virginia. And he just came out with an ad that was against transmission lines. It was against a transmission line. And it was also kind of against data centers because there’s an unpopular transmission line in his district. And listen, he’s a politician, right? He’s going to do what he needs to do to win that election. But like, if Tom Perriello, of all people, is willing to nod along to the threats of transmission lines, which are non-existent and, in fact, essential to the energy transition. I can’t look at the data center backlash and be entirely like, yes, only good can happen, to paraphrase our president.
Emily Pontecorvo:
Yeah. I mean, the one thing that I, when I think about comparing, if we didn’t have this crazy data center build out, and instead what we had was a huge surge of electric vehicles and heat pumps that created this energy crisis that, you know, where we needed to build a lot of power plants. I think the main difference in those two scenarios is the speed of it. Like, less the scale. I think the scale is somewhat equivalent, but it would at least have happened or it can still happen in the it might have been, people wouldn’t have been bombarded with a project in their backyard in every county in the country.
Robinson Meyer:
That’s not happening. And there’s an interesting angle here. We’ve talked about it on previous shows, but we always expected load growth to come back in the 2030s. In fact, we kind of need it to come back in the 2030s if we’re anywhere close to hitting climate goals. And if the economy not only decarbonizes, but modernizes in the way that we would like it to modernize, it will require load growth to go up. But I wonder if climate advocates are a little lucky that the people eating, the initial wave of load growth, the people who are kind of the clarions of load growth, as it were, are not decarbonization industries, but the big tech companies, which already had their own PR issues.
Emily Pontecorvo:
I don’t know. Well, a second ago, you were wondering if this doesn’t bode poorly for...
Robinson Meyer:
I think it ... I don’t know. I don’t know. I managed to feel bad about it either way. We’re going to have to leave it there. Emily Panacorvo, thanks so much for joining us on Shift Key.
Emily Pontecorvo:
Thanks, Rob.
Robinson Meyer:
And that will do it for us today. I hope you enjoy the dwindling days of your summer. Remember to stick around after the show for a conversation between Heatmap Labs and the sponsor of this episode, Verse. It should be really, really interesting. Until then, Shift Key is a production of Heatmap News. Our editors are Jillian Gibbon and Nico Loricello. Multimedia editing and audio production is by Jacob Lambert and by Nick Woodbury. Our music’s by Adam Cromelow. Thanks so much for listening. See you next time.
Mike Munsell:
My name is Mike Munsell, and I’m the Vice President of Partnerships with Heatmap News. In my last conversation with Seyed Madaeni, we talked about Versus’ business model helping data centers and large energy consumers connect to power. In today’s conversation, we chat about Versus’ recent Series B, and we go deep on speed to power. Let’s talk about speed to power. Why is everyone talking about this concept today, and how is Versus helping to accelerate that deployment? Very good question. And I think this is the billion dollar question, if not a trillion dollar question. So as we know, AI is compute, and compute needs power. So the first order of business, if you’re, I’m just going to use an example, if you’re developing 100-megawatt data center, the size of these data centers are measured in units of power. Let’s say for the sake of the argument when we talk about 100 megawatt data center if you apply for interconnection meaning that you want to power your facility so your chips start running and your AI models start training that takes a long time the reason that it takes a long time is utilities need to do planning studies they’re basically answering two questions one is there enough energy at the grid level to serve your consumption and your demand? Second, if there is, is there enough transmission and distribution wires to get the power to your location?
Seyed Madaeni:
Given this enormous amount of growth, the answer usually fails on both fronts. And as days go by and our grid becomes more and more saturated, the wait times are going to be even longer and longer because the world of power and energy doesn’t move at the speed of AI. It takes years to build transmission lines. It takes years to build power facilities. So how do we solve this problem? Is there a magic wand that we can use to accelerate the time for in a connection of these large loads the answer is yes in a nutshell is to bring your own generation to the mix and that is by deploying behind the meter assets behind the meter assets that are capable of
Seyed Madaeni:
Charging up energy giving it back to the grid like energy storage or solar or nimble gas plants. So really the solution is to pair your data center with these large physical assets such that when you are being studied by the local utility, you’re not no longer seen as a 100 megawatt fixed load that consumes electricity around the clock. You have the capability to shape and form your energy profile. But those physical assets, they’re not just going to drive themselves. They need software. Ironically, they need AI to solve the AI compute problem. And that’s where we come in. We control these assets on a second by second basis to, again, make sure the needs of the utilities are met, the needs of the data center is met. And then plus, we can give back to the grid and be grid grid citizens by participating electricity markets and really trying to offer that capacity to suppress electricity prices. That’s the solution that’s really being adopted. And we play a role in kind of controlling those assets on a 10, 15 year basis.
Mike Munsell:
And I saw you recently completed a Series B of which Nvidia and Google Ventures were big backers. Can you talk more about that and why Nvidia and Google are invested in versus success? And is it related to that speed to power equation?
Seyed Madaeni:
We just closed the Series B round. It was led by Bessemer Venture Partners. They’re an amazing group of folks, have more than a century of experience in investing. You’re absolutely right. Nvidia backed us. Also, Google Ventures, which led our Series A round. They also took part in our Series B round. Essentially, the value prop that we have in the investment thesis that these investors try to pursue is, can Verse be the entity to solve the grid problem so we can be good grid citizens and also simultaneously win the AI race? That was the fundamental investment thesis. and we managed to prove that we are the team, we are the platform. And as a result, they did participate. Now we’re working alongside Nvidia to integrate with their DSX platform and kind of be that part of the standard reference design, which we are working towards. Obviously, Google has a big need of data centers. Plus, we’re also serving a lot of hyperscalers and we have a deep backlog in the queue to kind of help contribute to bring these CapEx online.
Seyed Madaeni:
But we also have a very good angle that we can look back and not only we solve the problem, but we also help towards sustainability because believe it or not, solar and storage is the quickest and cheapest solution that you can deploy. We’re at the moment of time that CFOs like clean energy because it’s economic and clean, which gives us momentum to try to solve this problem.
Mike Munsell:
Let’s get into that. What is VERS deploying today? And what does the system look like when you integrate it with a data center?
Seyed Madaeni:
We as a company, we are AI software driven. So we are not really developing the physical projects. That requires financing, that requires a balance sheet, that requires expertise in EPC and construction. That’s why we have partners like Calibrand and And they’re top notch, not from the kind of physical development, but understanding how the systems work, holding the hands of these customers to understand what the value proposition is. Our work is mostly on the software side. Just think about it when you build an amazing car. That car needs a driver. And in this case, these assets need a driver, but it can’t be a human driver because you’re making decisions every millisecond, whether to fire up the battery, curtail the solar. Draw from the grid so we’re you need a autonomous self-driving car and this is like self-driving assets so ironically we’re using ai to train our models to control these assets but that’s the role that we play and in terms of the underlying assets that we’re seeing a lot of lithium-ion batteries systems from tesla influence and etc.
Seyed Madaeni:
A lot of solar and some nimble gas generators that can and be part of the mix and the solution. But we have integrations with a lot of these OEMs, SCADA systems, meters to be able to effectively control.
Mike Munsell:
And you mentioned Calibrand. Can you talk more about your partnership with them and how they’re helping you deploy today?
Seyed Madaeni:
Yeah. So basically, as we announced in our Series B, I would look at them, the OG of energy infrastructure development, and they’ve made significant progress in this field. So they’re deploying assets, they’re financing assets, they’re their owner and operator. And our partnership, our involvement is on the software side because this is not a software and AI problem. You can’t build amazing software like the one that we have and just use it up in the air. You need to deploy it on physical assets. And it takes a whole team to do that from people that understand hardware, understand financing, understanding project development, and people who understand AI models and software platforms, we fit in more of the latter camp.
Mike Munsell:
Can you talk more about your project pipeline right now and maybe how your Series B is helping to deploy technology faster, perhaps?
Seyed Madaeni:
Yeah, so basically our backlog is pretty deep. We are in the business of managing assets at the end of the day. So we have gigawatts on the management. We’ll soon come out with some press releases in terms of showcasing what those numbers are. And then our backlog, it’s on the kind of plain vanilla contract management, utility bill management, a lot of enterprises ranging from retail to hyperscalers to manufacturing, steel companies. But on the dispatch intelligence, which is part of ARIA, we have a deep backlog and commitment from a lot of blue chip hyperscalers that need speed to power tomorrow. So really, our mix of customer base is, I would say, enterprises that spend $100 million and above on electricity, which by frame of reference, some of them spend billions of dollars. So that’s really our target ICP. And so far, the traction has been amazing.
Mike Munsell:
That wraps up today’s conversation with Sayed Medini, CEO of Verse. Stay tuned after the next episode of Shift Key to learn more about Verse’s next five years and what Sayed believes is needed for U.S. energy policy.