The business world is facing a tsunami of uncertainty. Across nearly every industry, investment is seizing up amid unpredictable tariffs and contradictory domestic policies.
In this week’s episode of Open Circuit, we examine how this compounding uncertainty is impacting clean energy during a critical moment of spiking demand and rising costs.
We dissect the signals from the market, revealing that despite the chaos, certain sectors are finding unexpected advantages. While utility-scale projects face delays, distributed generation is experiencing renewed interest as companies seek certainty through on-site solutions. Virtual power plants and grid-enhancing technologies may emerge as clear winners in an environment where traditional infrastructure planning has become extremely difficult.
Plus, we play a round of “Transmission Lines,” testing our hosts’ knowledge of the news through provocative energy quotes, and take live audience questions about the volatile landscape.
Credits: Co-hosted by Stephen Lacey, Jigar Shah, and Katherine Hamilton. Produced and edited by Stephen Lacey. Original music and engineering by Sean Marquand.
Open Circuit is supported by Kraken, the only proven, AI-powered operating system for utilities. Learn how Kraken helps unlock excellent customer experiences, increased innovation and reduced operational costs at kraken.tech.
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Transcript
Stephen Lacey: How does it feel having hundreds of people look over your shoulder when we’re recording?
Katherine Hamilton: I feel like this is a huge bait and switch because when y’all first got me to do this podcast, I asked Jigar, I was like, “So do I have to look nice for any of these?” And Jigar was like, “No, no, no. It’s audio only. Don’t worry.” So normally, I’m sitting on my floor with paper all around me, not even looking at y’all, just looking at my paper. Now, it’s a whole other thing.
Stephen Lacey: And Jigar, hundreds of people are now going to know what I take out of your diatribes.
Jigar Shah: Oh my gosh. Honestly, I think that the production value that you bring to making sure that I am not on the wrong side of almost every single listener that we have, so valuable, so valuable.
Katherine Hamilton: That works sometimes.
Stephen Lacey: Yes. I strategically keep some of those in just to keep people on their toes.
Stephen Lacey: From Latitude Media, this is Open Circuit. The business world is facing a tsunami of uncertainty. Across nearly every industry, companies are pulling back investment. Faced with unpredictable tariffs, a seismic shift in global relations and deep contradictory domestic policies, pessimism is spiking and activity is seizing up. This is hitting the energy industry hard right now, right at this critical moment when clean energy is ascendant and we are facing historic demand. And of course, there’s still that little climate change problem that we can’t just stop by deleting it from government documents. So this week we’ll ask how this compounding uncertainty is impacting clean energy. Where are we still on track and where are the warning signs blinking red? And then, we’re going to play a little game called Transmission Lines where I’m going to test my co-host with some quotes from the week’s news, drawing some lines from newsmakers and see if they can identify what they’re talking about. And then we’re going to end with some real-time listener questions.
Katherine Hamilton and Jigar Shah are my regular co-hosts. Katherine is the co-founder and chair of 38 North Solutions. How are you?
Katherine Hamilton: I’m doing great, thank you. It’s an honor to be here, and it’s so exciting that so many folks wanted to watch us, watch the sausage being made.
Stephen Lacey: Jigar Shah is a clean energy investor and former director of the DOE’s loan programs office. Hello, Jigar.
Jigar Shah: Hello.
Stephen Lacey: So normally when we record, it’s just the three of us, but today, in the background lurking, are hundreds of listeners watching us over Zoom. So welcome to you all and later in the show we’re going to take some of your questions. Most of the time when we’re planning for this show, we’re thinking about a specific event or news item to discuss. But right now, there are just so many compounding stories that are impacting energy I wanted to take a step back and talk about the itself which is causing paralysis in every corner of the business world.
Over the last two decades, we’ve witnessed these periods of extreme change that have shaped the trajectory of clean energy. And we’ve talked about many of them. The 2008 financial crisis, the 2011 Cleantech venture capital collapse, COVID, Russia’s invasion of Ukraine. I would put Trump 2.0 in that category as it continues to bring extreme levels of chaos to everything it touches.
So under the first Trump term, we all know, we lived through it, clean energy thrived. Sure the administration tried to put some wonky rules in place. It unsuccessfully tried to save coal, it left the Paris Agreement, but Trump, of course, could not influence the market dynamics that made clean, modern energy ascendant. But I think it’s fair to say that the second Trump administration has been way more vindictive and unencumbered than many imagined. And beyond the creative and, probably illegal ways, the Trump team is trying to dismantle clean energy, their chaotic approach is just really, really, really bad for business all around. And so we come to this question, are we actually facing the scenario where the industry could underperform? So in March, EIA projected that 93% of all new capacity on the grid will come from wind, solar, and batteries. That’s up 81% from last year. FERC has a similar three-year bullish outlook, but we’re already starting to see analysts revisit their forecasts. For example, Wood-McKenzie downgraded its five-year wind forecast by 40%, and I suspect that everyone is going back to their spreadsheets right now and revisiting their assumptions for growth.
So let’s just kind of walk through how this uncertainty is impacting the industry. And I want to start with a vibe check right now because it’s hard to really, the specifics change day by day. So we’re all operating on vibes here right now. I can tell you from my conversations, people are totally freaked out. A lot of companies are not talking publicly, they’re afraid of repercussions by criticizing the administration or just they’re hunkering down. They don’t want to talk about projects that are getting crushed. But there’s a lot of projects that are on hold right now. So Katherine, when you’re out there talking to companies, working with companies, what is the mood right now?
The industry’s current mood
Katherine Hamilton: So there’s not freak out, there’s a lot of questions, there’s a lot of uncertainty, of course, but I would say there’s also a really strong determination. Nobody’s willing to give up the fight. Everybody’s like, look, we’re doing the right thing. We have all this investment out there. We don’t want it to go poof, and we don’t want to be standing on the sidelines in case it could. So everybody is in the fight. Everybody has rolled up their sleeves. Everybody is trying to make sure that all the policymakers understand what’s at stake and also trying to make sure that their bankers understand that they’re still fighting and that there’s still a really good chance. And I think there’s some really good rays of hope out there. So I think yes, there’s uncertainty and yes, there’s a feeling of… The companies that I work with are not freaking out so much as they’re saying, all right, what do we do next? They’re being very pragmatic about it and trying to find out, all right, who do we need to get to? What do we need to say and how do we keep everything going so that we can have a positive outcome?
Stephen Lacey: Jigar, what are you seeing? Are you seeing more pragmatism than freaking out?
Jigar Shah: Yeah, it’s a weird thing. I think we’re not quite yet at 100 days for this new administration. And so I think a lot of people are like, wow, they’re burning hot. How much more fuel do they have in that tank? And I think a lot of people recognize that they can wait them out. I do think that there’s some pretty big shifts happening in people’s feeling around what’s going to get deployed. And so I think it was pretty clear in January that everybody was thinking it was a lot of utility scale, solar, and battery storage. I think today a lot of people are shifting to DG and are believing that there’s just going to be a lot more certainty around doing distributed generation than there will be utility scale projects. And so that seemed like a pretty big change to me. But I agree with Katherine, folks are in for the fight and I think a lot of these folks recognize that they really are dominant and there really are not a lot of other options.
There’s a couple of options here and there just because you’ve got some natural gas plants that some hedge funds bought, and so they’re looking to bring some of that equipment online faster. But I think, by and large, I think a lot of folks recognize that all roads lead through clean energy.
Stephen Lacey: Tell me about what you’re seeing on the DG front versus utility scale projects. Why might we see an acceleration there relative to some of the bigger projects?
Jigar Shah: So there’s nine DG platforms for sale right now in the market. And so a lot of folks have been calling me and saying, “Hey Jigar, what do you think I should do on this stuff?” And I’m like, “What do you think you should do on this stuff?” because I’ve been working at the loan programs office for four years. And people feel very confident that they can make the numbers work on rooftop solar because the price to beat is the tariff from the utility. And so even if you get rid of net metering, a lot of commercial customers are using the power during the day, so they’re not really sending power back into the grid and they can put in batteries to prevent any power from going into the grid and use those batteries to offset their demand charges.
And so the volatility isn’t affecting utility rate tariffs, if anything, people are just assuming that the rates are going to go up by 10% every single year for the next four years. So now they’re seeing on-site generation as a real hedge against that level of volatility. And so I think you’re seeing a lot of people go, “Oh, actually this seems more certain than some of the utility scale stuff I’m chasing.”
Key risks facing the industry
Stephen Lacey: What are the biggest risks that companies are facing right now, Katherine? They are just so widespread. So what are the most acute right now? Are they related to tariffs or something else?
Katherine Hamilton: So it’s like the combination rate of the fear of the Inflation Reduction Act, tax credits going away and then the tariffs and what’s that going to do? What’s that going to do to safe harbor? What does that mean? And the tariffs have been just all over the map. So even though there was a pause, they haven’t stopped and the uncertainty is still there. So people who are capital intensive who want to deploy projects that pencil out very well with the tax credits, no issues, they need to still make sure that their bankers are okay and all their financiers are okay because they do have this, they have more capital intensity. And I would say other folks that are worried are the pre-revenue folks, so folks that depended on grants and programs coming out of the federal government to try to give them, to validate their technology, and to help them get over that first valley of death. So those are two ends of the spectrum.
One is on the deployment side and making sure that we manage the risk of the Inflation Reduction Act, anything that could happen there. The tariffs are just sort of an unknown quantity that’s still hovering. And then on the other end, just the need for federal support, which has been so important to getting startups going. Everything from the loan programs office, of course, which is not pre-revenue, but that’s after you’ve established yourself a bit, but still before you’re at the stage of a full-on bankable project. But the federal government is very important to people and I think those folks are at risk too.
Stephen Lacey: Jigar, what do you think are the most acute risks right now? Is it just the general uncertainty that’s causing people to stop building or delay plans?
Jigar Shah: Yeah. The problem, honestly, is that there’s just a lot of things that people took for granted. So transformers largely come from China, and so are we going to have enough transformers? Maybe we’ll be out of transformers in this country by June or July. And then what happens if a hurricane strikes or you have another natural disaster and a lot of transformers have to be fixed or replaced or repaired? Where are you going to get all those spare parts and how do you take the limited number of transformers that we have and figure out where they should go for the best and highest value? I just think that, in general, there’s an entire bill of materials for a project and people are focused on the cells or the panels or whatever, but lots of those pieces are actually on the tariff list.
And so people are like, well, yes, maybe it’s only 1% of my cost, but if it’s got 145% tariff on it, then that is another piece of it. And so I think there’s actually just a lot of uncertainty where people are like, how does this work? And so now that we’ve paused the tariffs, does that mean that the things I was going to get from China are going to go to Vietnam and they’re going to add a screw to it and then they’re just going to ship it from Vietnam and it’ll say originated from Vietnam, and then that only has a 10% tariff on it? I just think there’s a lot of questions that people have and they don’t have ready answers because, frankly, I would say, when you listen to Owen Cass, who’s like the MAGA economist whisperer on tariffs-
Stephen Lacey: Yeah, Orin Cass, yeah.
Jigar Shah: Orin Cass, he’s like, I’m dumbfounded. This is not what I wrote. They’re not implementing my plan correctly. So I think even the people that you would like say, oh yeah, here’s the plan. Here’s how it’s going to go. Don’t worry. By July you’re going to be able to do this thing. They can’t tell you what is going to happen. And so I think there’s a lot of folks saying, should I move forward with the timeline that I have in front of me now or should I pause three months? Am I going to have more certainty in three months? And what’s going to cause that certainty? For instance, the president’s approval ratings are down to 40%, and so when you’re down that low, that means a lot of people who voted for you don’t approve of what you’re doing.
Does that mean House members and Senate members become more bullish around standing up to the president and saying, these projects really matter in my districts. Maybe. It hasn’t happened in the first 90 days, but maybe it’ll happen now. So I just think there’s a lot of wait and see, is this going to get better, that’s going on right now.
Stephen Lacey: Do you guys have any thoughts on what you think the sectors and technologies are that’ll be best poised to ascend under a Trump presidency?
Katherine Hamilton: Yeah. There’s this whole national council on energy dominance that Doug Burgum, who’s also the Secretary of Interior, he and Stephen Miller, who does a lot of things for the president, but the two of them run this and they’ve said we’re not going to focus on wind and solar at all, but we are going to focus on geothermal, which is the first one listed. Hydrogen, hydropower, innovation, and nuclear power. I think there are a lot of sectors that could come up and innovation is pretty broad. So I think while they’ve definitely been saying being negative about wind and solar, wind and solar are cost-effective and they’re being deployed now. So I feel like as long as we don’t get rid of the tax credits, we’re going to be in good shape there. And if they want to fund projects and try to get a lot of these other sectors, get them up and going, I’m in for that. If it’s geothermal and hydro, those are things we work on and I think that would be good.
Stephen Lacey: Yeah, I think that the challenge here that I’m hearing, I’m picking up on in my conversations, is that nobody’s really in charge here. There’s one man and a few sycophants that are implementing this policy and we don’t know what’s going to happen day by day. And so the administration comes out and says, sure, we love geothermal and hydropower. We want to keep the tax credits for those technologies. We want to build more nuclear. You’ve got the Department of Energy’s social putting out these memes about building more nuclear and natural gas and coal. And so they say that that’s their policy, and a lot of people are sitting there trying to figure it out, okay, they say they want this, they say they want that, but when you look at the suite of policies that the administration is enacting, they’re all completely contradictory to getting any of these technologies built.
And so I’m just hearing nobody out in the industry knows what the administration actually wants them to do. And you’ve made that point numerous times, Jigar, and I’m just hearing that over and over again that, yes, you can try to sit there and figure out if critical minerals are going to win or if geothermal is going to win or if hydro is going to win, but everything feels extremely chaotic right now. How do you figure out a winning strategy in that?
Katherine Hamilton: Yeah. So another thing is some of that doesn’t matter, because corporates are going to buy what they need. The folks building AI data centers are going to buy what they need, that they can get quickly, to support their demand. And so in some ways, some of what the president likes or doesn’t like isn’t going to matter.
Jigar Shah: Well, I do think that the clear winners that I’m hearing about now are virtual power plants. That stuff is going to town. When you talk to utilities, they’re saying, we really don’t want to do this, but I feel like it’s the only thing that we can do right now. It’s the only thing within our control. And a lot of that equipment has already been on-shored into the United States. A lot of it’s software. It’s stuff that really is not as affected by the tariffs. And you saw Base Power get a $200 million raise last week down in Texas. And so what’s weird is they’re sort of just forced into the arms of grid-enhancing technologies, software solutions, all these other things.
Stephen Lacey: Well, it sounds like you both actually agree that clean-firm and DG via virtual power plants could be real winners here.
Jigar Shah: Oh, for sure. I think distributed batteries are going to be a clear winner, and then I think we’ll see whether the rooftop solar industry joins their friends in the battery space. And then I think when you look at a lot of the thermostat companies and the hot water heater companies and some of the other folks who are doing load shifting, I think they are also very interesting. But it’s one of those things where I just talked to my local utility, PEPCO, they still have not deployed a DERMS platform. So when they deploy VPPs, they do it by email or by phone call. And so some of the utilities are really far behind and are going to need to catch up. But for a lot of the utilities, they have actually picked a DERMS supplier. Some of them have picked some of the other requirements so that they can then layer in some of this innovation on top. But it’s going to be fascinating to watch how fast they do this because there’s just not a lot of affordable options left within this energy dominance framework.
Stephen Lacey: But are they actually affordable with tariffs? Are you really going to deploy batteries at scale with such high costs?
Jigar Shah: Oh, for sure. Yeah. The cost of battery cells are whatever it is, like $75 a kilowatt hour and so you double, it’s $150 a kilowatt hour, and then to power electronics, et cetera. Remember, a Tesla power wall right now is $1000 a kilowatt hour deployed, and a lot of these new batteries that are coming out of Base Power or Franklin or some of these other folks are at $400 a kilowatt hour deployed, and so they’re way cheaper than what people were deploying last year. And so even with the tariffs, these things are screaming good deals, and 15% of Americans now have backup power at their homes, mostly gas or diesel backup generators and way more than that want backup power. And so they’re saying, oh, if I can get basically a free battery and then the retail electricity provider can flex it so that they can give me cheaper power in a deregulated market, I’ll do that. People are desperate for affordable options.
Katherine Hamilton: And definitely more affordable than coal, which is what they’re pushing to build more of it or keep them open. Those are the most expensive, least efficient plants. And so those in and of themselves would cause rates to go up, but I don’t think DERs will at all. That helps you manage the entire system better.
Forecasting clean energy’s growth
Stephen Lacey: So are we still on track to meet 90% plus of new capacity with solar, wind, and batteries? These projections, obviously, came out before the height of the trade war. What do you think about whether we can stay on track to meet what everyone thought we would this year?
Jigar Shah: Maybe. So for 2025, the stuff that’s ready to deploy is all clean. I think the answer is probably yes for the 2025 estimates. For 2026, there certainly were a lot more natural gas generators than I anticipated that are sitting in hedge fund portfolios that are going to be deployed for 2026. So that’s what they announced at Homer City. That’s the announcement in Texas. There’s not very many of those. There’s, whatever it is, seven or 10 gigawatts worth of natural gas generators that are in these hedge funds, but there are some, and so those will start construction this year. They’ll be on board next year. So I think there will be a spike in natural gas deployment in 2026, but that would reduce clean energy deployment from 91% to 81%. It’s not going to reduce it to 10%. So I think this year the vast majority will still be clean, upwards of 91% or so. But next year, there’ll be a spike of natural gas deployments.
Katherine Hamilton: Yeah, I think we need to watch and see what Congress does. To me that’s a big piece of it is the Inflation Reduction Act. So far it seems like there’s enough pushback on repealing that things look more positive than they thought they did, but we’ll have to see because that will impact how many projects, maybe not for this year, but definitely for 2026, because a lot of folks have already put things in safe harbor, so they have what they need, but I think we’ll have to see what happens with that.
Stephen Lacey: Yeah, certainly policy will play a huge role in the trajectory. And what are the most important policy levers that you’re watching right now? How would you rank them? What’s top on your list?
Katherine Hamilton: Yes. Well, the ones that are getting the most, I guess, the most popular right now with Congress are 48E, so the tech neutral credit and then 45X, which is the advanced manufacturing credit. So those are the ones that are getting the most air time just because there are just so many folks that are benefiting from it and across sectors, too, especially for the manufacturing credit. And so that’s getting a lot of air time. I don’t know how the other ones, I mean, it feels like a lot of the other ones are also getting, I just don’t work on 25D very much, but I know there are a lot of other people working on it, so maybe that one’s in good shape too. So those are the things I’m watching for and we’re just looking to see who are the folks that have said that this is really important to them.
So there are 21 Republicans on a letter. There are four senators on a letter, these are all Republicans, of course, and saying we need to not get rid of all of this wholesale. These are really, really important to the economy of our states. And so that’s to watch out for, but there are also some folks that secretly support these that aren’t going to be out there saying they do, but could be helpful anyway in convincing leadership that they need to keep them.
Stephen Lacey: There was one positive piece of news that I wanted to draw in here. A judge ruled yesterday that the administration Illegally withheld the funding under the Inflation Reduction Act and then ordered the funds to be released. So the judge said that the White House’s claim of broad powers were overreaching. Katherine, there’s a lot of litigation ongoing. What does this ruling mean?
Katherine Hamilton: Yeah, this one was huge because it was also the infrastructure bill, so they basically didn’t do this by virtue of having that this being about contract law. This isn’t about you having executed contracts. This is about you not upholding the laws that Congress passed for these programs. So it was pretty interesting. It’s like Congress is not doing that job, but the court did that and it was a Trump-appointed judge that made that ruling last night. So we’ll see what ends up happening. I’m sure it’ll be appealed by the Trump administration, but we’ll see. I mean, Congress did pass these laws and these funds are obligated the way they should be and they should be continued to be impacted. Now, any new administration that comes in can absolutely change policy, can decide to focus on different areas, but they have then that’s forward thinking, not backwards looking, right? So that’s part of the issue, the Trump administration should have permission to do what they want to going forward because that was the result of the election, but going back and trying to claw back laws that Congress already passed is problematic. That’s what that judge said.
A game of ‘transmission lines’
Stephen Lacey: I want to turn now to a game. Let me break out my bell and my buzzer. We’re going to play a game called Transmission Lines. I am going to read a quote from the recent Energy News, and you’re going to have to guess who said it and then we’re just going to briefly discuss the story. Katherine, are you ready? You’re the first story.
Katherine Hamilton: Oh God. Okay.
Stephen Lacey: Here’s the quote. “This is going up against the entirety of our constitutional history and the ability of states to make responsible public policies. We are not going to capitulate.” That was Philip J. Weiser, the Democratic Attorney General of Colorado speaking about what?
Katherine Hamilton: Yeah, this is about the executive order that basically wants to roll back state initiatives on climate. Oh, I got it? Okay.
Stephen Lacey: Correct. Yeah. Do you want to explain what it is?
Katherine Hamilton: Yeah, so basically it was an executive order that named a couple of states, that named Vermont and New York and their climate programs. They have some taxes on the oil and gas industry that basically would help fund climate mitigation in the state, and that’s what the administration is really going after. States are really annoyed because states like to have their own jurisdiction. They like the state and federal compact the way it is, and they want to be able to do what they want to do. I’m not sure how this is going to end up rolling out. Of course, remember, executive orders are not statutes, they’re not laws, but they do signal a direction of an administration. So what Trump did was say the Attorney General can go after states. We’ll actually have to see what this would do because this sort of thing has not succeeded before in courts, but it remains to be seen.
Stephen Lacey: Jigar, do you think it’ll have any chilling effect?
Jigar Shah: Oh, I think it’s awesome. I mean, when you think about just how yellow-bellied all of the democratic states have been, and now that this executive order is out, they’re like, this is amazing. This is our law, this is state rights. They were not defending this stuff at all, and now they’re like, we’re defending it. This is great. We’re proud of it. We might even want to expand it. I’ve never seen such an extraordinary climate president, seriously.
Stephen Lacey: All right, second story, Jigar, this one’s for you. Here’s the quote. “He tries to be funny and he’s not funny, like, at all. He makes these jokes and little asides and smiles and then looks almost hurt if you don’t lap up his humor.” That was a senior Trump administration official. Speaking about who? There’s so many people.
Jigar Shah: I feel like this is a trap.
Katherine Hamilton: I know.
Jigar Shah: Oh my gosh. I don’t know. Like Zelensky.
Stephen Lacey: Elon Musk.
Jigar Shah: Oh gosh.
Katherine Hamilton: Oh, I was going to say Elon Musk, but my second close was J.D. Vance. Let me tell you.
Stephen Lacey: That was an official talking to Rolling Stone about tensions in the Trump administration between officials and Elon Musk. According to their reporting, white House officials are struggling to hide their disdain for Musk’s irritating behavior, with senior cabinet members said to be deeply annoyed by his sense of humor. This, of course, comes at a really challenging time for Tesla, which saw U.S. sales fall almost 9% in the first quarter while the overall EV market grew 11%. Jigar, what is going on with Elon Musk and what do you make of this historically dominant EV player suddenly really facing genuine struggles?
Jigar Shah: It really is an existential crisis and I don’t know what to do about it. Elon, himself, has always been a terrible manager, so it sort of is what it is and he now is showing the world how terrible a manager he is. But worse than that, Tesla is in second place on almost every single metric. So if you were to think about self-driving cars, Waymo is much better than Tesla’s Robo Taxi. If you were to think about the quality of the workmanship of a Tesla car versus the other EVs available today, they’re much better than the quality of a Tesla car. The software is extraordinary in a Tesla. I just drove one across New Mexico for spring break, and the self-driving car really self-drove us to every single national park. It was amazing. But the car itself had all this indoor noise because the window was off by a millimeter. And so when you’re going 75 miles an hour, it was loud in there.
I just think that we’re in this weird spot where being in the lead is not enough. You now have all these other companies who’ve come in behind them with quality offerings and they have not been-
Katherine Hamilton: The Mustang Mach E-
Jigar Shah: I know.
Katherine Hamilton: … is the best selling one. I see them everywhere now.
Jigar Shah: The Hyundai Ioniqs are everywhere. I just think that F150 Lightning… I just think we’re in this place right now where the competition is so brutal and he’s bet the entire company on their Robotaxi strategy or their robot strategy and not figuring out how to make the very best quality cars, and that’s catching up with him.
Stephen Lacey: And just remember, as ugly as his behavior is, it can’t get any uglier than a Cybertruck.
Jigar Shah: Oh, stop it. I love a Cybertruck. I have a Cybertruck that pulls up in front of me at school drop-off, and it’s painted camouflage. I like it.
Stephen Lacey: Third story, Katherine, over to you. “You just can’t pull the rug out from under these guys.” That’s Representative Don Bacon from Nebraska, Republican from Nebraska, talking about what?
Katherine Hamilton: Oh, yeah, he was talking about, well, I was thinking about the biofuels tax credit, but he was talking about tax credits generally, repealing them.
Stephen Lacey: Correct. Yeah. He told reporters that he raised concerns directly with Trump on two occasions, once in the Oval Office and again during a cabinet meeting. And he said that they were talking about pulling the whole IRA and I said, “It don’t work”, Bacon exclaimed.
Katherine Hamilton: It don’t work.
Stephen Lacey: Representing a district that relies on wind power for 40% of its electricity, and of course, he really supports the biofuel tax credit and the wind tax credit. Katherine, we touched on this a little bit earlier, but are Republicans still ready to take a stand in Congress on these tax credits?
Katherine Hamilton: Yeah, it’s interesting because I talked to a lot of them and some of them are in the position of like, yeah, let me know what else I can do, what else I can sign on to, especially when they find out, well, how much is at stake. So I was with a company that had a half a billion dollars in a certain state that they had on the line. There’s also the issue of the tax base. A lot of these projects provide schools and community centers and police stations with all the tax base to keep going, and this is going to be really hurtful. The issue is that there are a lot of other things out there that folks are concerned about, so what are they going to really draw the line on? A lot of folks represent districts that really rely, their people rely on Medicaid and any cuts to that are going to be really the line that they draw. But there are enough people that are impacted by the credits and by our industry, and some of them are talking and some of them aren’t, but they’re there.
Stephen Lacey: Jigar, here’s a quote from Tyson Slocum, director of the energy program at Public Citizen. “That means electricity is going to get expensive to bail out what’s probably, at this point, one of the most expensive forms of energy out there.” What was he referring to?
Jigar Shah: Trump’s coal policy.
Stephen Lacey: Yep.
Katherine Hamilton: Yay.
Stephen Lacey: Good job, Jigar.
Jigar Shah: Wow, I got one right. I am not good at this game.
Stephen Lacey: The policy is the Strengthening the Reliability and Security of the United States Electric Grid executive order, which could radically reshape the way the U.S. Regulates power plants. The order gives Chris Wright, Energy Secretary, the unprecedented authority to keep unprofitable coal plants open indefinitely, and it tasks DOE with creating a uniform methodology for analyzing current and anticipated reserve margins for all transmission grids and then identifying regions where margins are or could be below acceptable thresholds. And as Slocum put it, “It’s a unilateral arbitrary standard that would override the established reliability systems.” Jigar, what are the practical effects of this order on electricity markets?
This is something that was attempted in the first Trump administration, by the way.
Jigar Shah: Yeah. Did I say that distributed generation was going to really benefit out of this administration? Honestly-
Stephen Lacey: I think I might have heard that.
Jigar Shah: … I just have never met a better climate president than this one, just is throwing people into our arms. We really had a customer acquisition problem in our industry, not anymore. People are just searching, lowermyelectricitybill.com. Solar, battery storage, energy efficiency, like EVs. People are just being thrown into our industry’s arms by this president. Honestly, I couldn’t have asked for a better foil.
Stephen Lacey: Certainly, utilities are already starting to think about passing higher costs onto consumers with electricity prices rising at double the rate of inflation last year. Many utilities are already revisiting price hikes again.
Katherine, what would this functionally do in electricity markets? How could it play out?
Katherine Hamilton: Yeah, there is something out there that remains to be seen because I’ve heard there may be another executive order on RTOs. So the RTOs, they have to operate the grid. They have to make sure it’s reliable. They have to make sure it’s safe. They have to make sure that prices are not arbitrary and capricious. And talk about arbitrary and capricious, this whole coal thing, which is like, let’s keep 66 coal plants open because we don’t feel like closing them. It remains to be seen, but I think that the markets, I don’t know how you’re going to be able to change the electric markets and FERC. I honestly don’t. It’s governed by the Federal Power Act and I am sure they’re going to try. They are trying, but I don’t-
Jigar Shah: You remember our old friend, Joe Daniels?
Stephen Lacey: Yes, of course.
Katherine Hamilton: Yeah.
Jigar Shah: And his extraordinary report about how all these coal-
Stephen Lacey: Is he at RMI now?
Katherine Hamilton: He’s at UC.
Jigar Shah: He was at UCS.
Katherine Hamilton: He was at UCS when he wrote that report and now he’s at RMI.
Jigar Shah: And Southern Company and others are basically forcing their customers to pay above market prices to keep these things going. I feel like this is going to shine a spotlight on just how much subsidies go to those coal plants. And as the beginning of the Trump executive order says, he wants affordable energy-
Katherine Hamilton: Yeah.
Jigar Shah: … so the only way to make affordable energy is to shut down these coal plants. So it’s going to be amazing.
Stephen Lacey: A little hypocrisy never stopped this president. Katherine, here’s a quote from Gil Luria, an analyst at D.A. Davidson, who says, “Stargate was already unlikely to get to that scale even before these things happened. Given the shock to the economy that these tariffs represent, it is highly unlikely that such a risky endeavor will be able to raise anywhere near that number in terms of debt financing.” What do you think he’s referring to?
Katherine Hamilton: Yeah, they’re talking about data centers and how many they’ll be able to build.
Stephen Lacey: That’s right.
Katherine Hamilton: We’ll see. We’ll see.
Stephen Lacey: Yeah, certainly, tariffs could derail the tech industry’s tens of billions of dollars in spending on artificial intelligence infrastructure. Microsoft has already pulled back on data center projects around the world, halting talks or delaying developments in Indonesia, the UK, Australia, Illinois, North Dakota, and Wisconsin. T.D Cowen, an analyst, wrote that Microsoft has abandoned projects that would’ve amounted to about two gigawatts of capacity due to data center oversupply relative to its current demand forecast. And tariffs are just really causing havoc as well. Do you think this, we are seeing the data center infrastructure bubble deflates a little bit here.
Katherine Hamilton: Well, it remains to be seen how many they actually end up building. And then once they build them, what they power them with. The power them with, I think, the answer is clean energy. Although the XAI facility that Elon Musk has in Tennessee, in Memphis, is being run by 35 methane gas generators, which seems kind of ludicrous, but anyway.
Jigar Shah: At 40 cents a kilowatt hour.
Katherine Hamilton: Yeah, yeah, it’s whew, non-permitted too. They got no permits. But anyway, I think that it kind of remains to be seen. The tariff issue, we haven’t settled on that yet. So I think we don’t know, and I think the uncertainty is what’s causing the pause.
Stephen Lacey: It does feel like we’re entering a new moment now for a couple of reasons. One, I think the tariffs will slow data center development and I think that’s going to challenge some of the demand forecasts. And then at the same time, we’re definitely starting to see people question this idea that you just need bigger and bigger computing facilities to drive more powerful models. And Meta’s Llama IV model, which got completely panned, they threw so much computing power after that model and it just didn’t perform as well as they claimed it would. Of course, DeepSeek came out with their powerful model that everyone was talking about with a fraction of the computing.
And so I do think that we are going to continue to evaluate whether this idea that you just need to build bigger and bigger data centers to get more powerful models, people are questioning that. Of course, we’re going to be using a lot more AI, so we’re just going to need a ton more data centers. Certainly, this is a massive segment and it’s going to be a really big segment for the energy sector, but I do think that there are some fundamental things that are calling the boom into question.
Jigar, any thoughts on whether we’re seeing a deflation of the bubble a little bit?
Jigar Shah: No, I think this deflation was already predicted. So I think we all agreed that all of the craziness around 60,000, 80,000 megawatts of new load was always wrong, and we were talking about 25,000 megawatts by 2030, and I’m sticking to that number. I think I’ve been saying it since 2022, and I think we’re on track for that. One thing that I think you said and Katherine said, which I think is true, is that we might be going away from 1000 megawatt data centers to edge data centers that are ganged together to provide the same service.
So I have a couple of friends that I’ve talked to recently who are rolling out hundreds of hundred kilowatt data centers with a hundred kilowatt batteries tied to them to take advantage of Tyler Norris’s paper and do the demand response right there. And they’re suggesting that it’s only about 10% more expensive than the central data centers, but so much easier to permit and easier to integrate into different circuits in the grid. So I do think you’re going to see a lot more innovation in that area, but the amount of money that’s being spent on fiber and putting cables into New York City, it looks like Columbus, Ohio, by the end of the decade, will have a greater load than all of New York City.
Katherine Hamilton: And they’ve got some reliability issues there, too.
Jigar Shah: They do. So I wouldn’t say that the bubble is deflating. I do think that the hype cycle and all of the extraordinarily large numbers were always wrong, and I think Microsoft isn’t pulling back at all. I think they always expect it to have 30 potential sites, and now they’ve just said these 15 are not going to happen, and these 15 are the ones that we’re concentrating on. I don’t think that they’ve pulled back, even though that’s probably the narrative that they want to put out there. I think they were always planning on picking winners and losers between all the phase one projects.
Stephen Lacey: And they did say that they’re still committed to the $80 billion in infrastructure investments that they’re making this year. I do agree, it’s very challenging to plan in this environment, and probably some of those were already questions. Certainly, I think this market is going to be extremely hot, but definitely some revisiting of assumptions about where demand is headed.
Last story. Jigar, this is for you. This is from Edward Lees, the co-manager of BNP Paribas Energy Transition Fund. “There are a number of things that got listed that shouldn’t have been. Is there technology good enough?” That was Edward issuing a warning for investors who are considering what approach?
Jigar Shah: ESG?
Stephen Lacey: That was him talking about a wave of take-private deals.
Jigar Shah: I have no idea what is going on. I feel like that was my quote.
Stephen Lacey: That was a hard one.
Jigar Shah: I think that was my quote about SPACs.
Stephen Lacey: Private funds and lenders, they see publicly traded renewable energy and clean technology companies as prime targets for acquisition and delisting. And Bloomberg had a great story on this. We’re already seeing the trend accelerate. There’ve been a bunch of take-private deals including Brookfield Asset Management, acquisition of French developer, Neoen. Sorry if I pronounced that wrong.
Jigar, what do you think about these take-private deals? Is this a big trend that you’re going to see given the turmoil in the public markets?
Jigar Shah: I honestly don’t think about it at all.
Stephen Lacey: Why not?
Jigar Shah: Because I think that, in general, there is this mistaken notion that in the clean tech sector that the performance of the sort of publicly traded companies or the ones being taken private or whatever else actually matters, and it just doesn’t matter at all. The vast majority of the companies in our sector are small companies that are running in people’s neighborhoods, in people’s cities, in people’s towns. And I just think, in general, the fact that this company’s stock prices down and this company got taken private or whatever, doesn’t actually reflect where most of the work occurs, which is in thousands of companies and people’s communities around the country. It’s sort of like me saying, what do you think about this propane stock going down? I don’t think about it at all. There’s a bunch of local propane companies that serve people propane. I just think, in general, people make way too much of these big guys when it’s actually the workhorses of our industry at the local level that I’m the most proud of.
Listener questions
Stephen Lacey: All right, let’s turn to the 10 minutes or so we have left to some listener questions. We have a bunch of them in here. So let me work through. Let’s see, a question here from Nathan Kreider who asks, “What are your thoughts on whether abundance liberals will have an impact on energy policy this year and beyond? Is this shift in thinking among a subset of Democrats and Independents cause for hope for more bipartisan legislation getting passed, particularly an infrastructure permitting bill?”
So what Nathan is referring to here is the set of essays that led to a book from Derek Thompson and Ezra Klein that has been quite popular reframing this American industrial strategy and how America and Progressives, in particular, can think differently about regulation and the role of government in getting out of the way to build more; build more housing, build more energy, and think about a world of abundance. I read the book, I think it’s great, we are going to talk about it in an upcoming episode, but what do you guys think about how this is influencing the conversation and will it actually materialize into real policy? Katherine?
Katherine Hamilton: Yeah, so one thing I would say is I think you would have to have a change in leadership in Congress to really make that happen. So Chairman Lee of Senate Energy and Natural Resources is the one who is going to be managing any kind of permitting or any other kinds of energy policy issues. He’s not a spender. He does not want to spend a nickel. So everything is about the way to do things with the least amount of actual investment. So I think that you won’t see big things.
The other piece, which I think people need to understand is there is a huge disconnect between what policies Congress thinks they want to pass, even if they’re big ideas and how many people are left in the federal government to implement them because there’s nobody over there anymore to do what they want them to do. So appropriators are saying, yeah, we want to continue with X, Y, or Z programs at DOE. And you want to say, well, have you checked to see if there’s anybody over there who can actually do it for you? So there is a bit of a disconnect there. So we have to look at both sides. One is when are people in Congress, who are the leaders, want to do big things again? And then also, how do we rebuild the federal government? This is going to take some time to get people who can actually implement.
Stephen Lacey: Yeah, absolutely. And I think out of the ashes of this current administration where we are really dismantling government, depending on what happens next, I do think it gives us an opportunity to reimagine government within this abundance agenda and sort of thinking about how we revise rules, get government to move more efficiently. I think everybody agrees that we need government to work better. We don’t necessarily need to take a chainsaw to it in the way that Elon Musk is, but it is an opportunity for us to insert the abundance agenda for whatever comes next.
Jigar, what do you think, you’ve been talking about this as the climate technologies as the greatest wealth opportunity on the planet for a decade and a half. You have talked about the need to build big things in this country for a long time. What do you make of the way that they’re articulating this agenda?
Jigar Shah: Yeah, I think that, in general, I’d say to your last point, I actually don’t think we need a lot of new laws. I think that [inaudible 00:47:43], our good friend, had a screed recently on all the things that the Biden administration did wrong on Bluesky around the implementation of the Inflation Reduction Act as per the abundance agenda. I think a lot of this is really just own goals where there are a lot of ways for us to say yes, and we sort of say, well, if we don’t have legal precedent from 20 years of saying yes to this exact iteration, then we need to study the problem for a year before we actually say yes to something. That whole culture has to change. And we did that at the loan programs office or other parts of the Biden administration, I think, that did a good job of that.
But a lot of people basically said, how do I go in the slowest possible way to make sure that no one is offended ever by anything that we do? And that, I think, has led to a lot of unintended consequences, which is what Ezra and, I think, Derek were talking about in their book. And I think we need to figure out how to move a lot faster and really not get caught up in the precautionary principle all the time of saying, let’s figure out all the things that could go wrong and how to mitigate all those things before we do one positive step forward. And that just needs to go away. That’s where a lot of this stuff that we’re talking about, EVs, et cetera, are… These local governments, the state governors, et cetera, can really unlock an enormous amount of wealth creation if they just told their agencies to stand down and get out of the way.
Stephen Lacey: Yeah. Let me see if I can rip through a few more questions here before our time is up. We usually record for an hour and a half, folks, and then we cut it down. So you’re seeing us try to speed through an episode pretty quickly. Tim Tesh asks, he didn’t really like your Tesla comments, by the way, Jigar, but he asked, “Is there a movement toward a unified industry voice talking with the Art of the Deal administration?” So we think about how Tech Bros went together and got relief on the iPhone and relief in how Trump is policing social networks. We’ve got automakers going in together. Is there a consistent voice or are there consistent voices banding together for clean energy right now in Washington, and are they actually making an impact by talking to the right people in the administration? Quick thoughts on that.
Jigar Shah: Look, I think even the people who have been the intellectual engine behind the Trump movement are saying that their ideas are not being heard by this current administration and implementation is not going smoothly. And so I think we’re just going to have to wait to see how all of this stuff shakes out and who the permanent staff is going to be that wants to stay for the entire four years and figure out what they want to accomplish. Right now, we’ve just got a bunch of people who are coming in with chainsaws and stuff, and I don’t think reasoning with them is going to work.
Katherine Hamilton: I think people are trying to build relationships as they can, and certainly, the solar industry is very aligned. The clean energy industry is speaking in a lot of ways with one voice, but you’re dealing with a lot of people, a lot of egos, and a lot of fickle action. So you don’t really know when you go into meet with somebody, there’s not one person. Is this the person that’s going to make the difference or is Trump going to be able to tweet something and just completely reverse it? It’s a little bit all over the map.
Stephen Lacey: I just want to get one question in here because there are a bunch of people who are asking about the latest executive orders on having agencies revisit regulations, and certainly that could impact regulations that are slowing clean energy deployment. Are there any upside to the executive orders on revisiting regulations?
Jigar Shah: It requires competent people. That’s the problem. So one of the executive orders was to strip the Council on Environmental Quality from its responsibilities around implementing NEPA, the National Environmental Protection Act. And that doesn’t really mean anything. So fine, they stripped their requirement, but each agency actually has a body of work with a bunch of legal case law behind it, around how they implement NEPA. So DOE hasn’t made a single change to NEPA since that executive order passed. So now the question becomes who’s in charge of setting up the process of streamlining DOE’s approach to NEPA. I don’t know. I don’t even know if they’ve hired those people into the Office of General Counsel at the Department of Energy. And so my problem with all this stuff is I think that there are some industries that actually have a checklist.
I think Breakthrough Institute has done some checklists around how to make nuclear permitting more streamlined. I think some of the geothermal folks have talked about it, and I think Biden administration actually implemented a lot of those already. But I don’t know, first of all, who has a checklist and then when you have the checklist, who’s in charge within the White House of actually making sure that that checklist gets fully implemented? I don’t know the answer to that.
Katherine Hamilton: And I would just say, there may be legal scrutiny from the Attorney General’s office. We’ve seen, they’ve been a little bit clunky about how they’ve been using their authority, but they could raise major questions, doctrines around a bunch of things like say, if you care about for Quarter 22 22, this is going to cut both ways. So I honestly don’t think they’ll be able to do that much damage with that. And of course, that’s not to say that Earth Justice and all of the folks that are in Sierra Club and all the folks that are normally fighting for environmental regs shouldn’t keep doing that, but I just think the legal issues cut both ways. And so the Trump administration is not always going to win in court, for sure.
Stephen Lacey: I have to pull in one more question. This is a good one. This one comes from Nicholas Burkhead who says, “I’m a young professional who’s laid off due to a canceled federal grant by this administration. I’m deeply committed to a career at the intersection of climate and energy, but have struggled to find the right role.” Do you have any recommendations for companies or sectors that a young professional like him should be looking at right now? I’m sure you get this question a lot. What is the most powerful piece of career advice you would give to someone like this right now?
Jigar Shah: I feel like I’m channeling the Energy Gang Podcast. Move. Just move to a place that has the job that you want. There are so many people hiring right now across the country. There’s a national job fair-
Stephen Lacey: Well, actually Nicholas did say, should I move to West Virginia and work at the Form Energy Factory?
Katherine Hamilton: Oh, yeah, yeah.
Jigar Shah: There’s a national job fair at the DC Climate Week coming up at the end of the month, so you should go to the National Job Fair at the DC Clean Energy Week at our Climate week, I guess, at the end of the month. But there are people hiring. I know that Fervo Energy is hiring a bunch of people in the west. I think there’s a lot of folks hiring folks in South Dakota and North Dakota, and finding people with A-grade talent to be able to actually implement these really hard, audacious goals is really important.
Katherine Hamilton: Yeah, I agree. I do think I’m the anti-move person. I’m always like, but people are moving back to West Virginia, Jigar, so that’s a good thing. But I think you want to network. Network, talk to a lot of people, and also figure out what’s going to make you happy. Where do you want to be, where you can be happy, where you’re not just… Even if you go for a job where there are other things that are going to make you happy, don’t make your job be the only thing.
Jigar Shah: Move.
Katherine Hamilton: Well, that’s kind of moving. It’s like go somewhere you want to be happy. I’m okay with that.
Outro
Stephen Lacey: Well, we’ve got dozens and dozens of questions, and I’m sorry we couldn’t get to many of them, but these are going to help inform future shows, and we thank everybody so much for watching us record. That is going to do it for this week’s live episode of Open Circuit. Katherine, good to see you.
Katherine Hamilton: Oh, it’s so great to be here. Thanks for doing this. Thanks for everybody who came in and watched.
Stephen Lacey: Jigar, I will expect you to be moved by next week when we talk next.
Jigar Shah: I’m so moved by this entire conversation.
Stephen Lacey: Open Circuit is produced by Latitude Media. The show is edited and produced by me, Stephen Lacey. And Sean Marquand is our technical director. Ann Bailey is our senior podcast editor. Latitude Media is supported by Prelude Ventures. Prelude backs visionaries accelerating climate innovation that will reshape the global economy for the betterment of people and planet. Learn more at PreludeVentures.com. And of course, for more in-depth reporting on the topics that we cover on this show, sign up for Latitude Media’s newsletters. Just go to Latitude Media and hit subscribe. And we thank you so much for being here. We’ll see you next week. Bye, everyone.
