We are in the middle of a radical political and economic realignment, with electricity infrastructure at the center of it. And this summer, the plot thickened.
Power sector reforms are coming in fast and furious, across states, regional markets, and federal regulators. Local resistance reached new heights around the country. And data centers are scrambling politics as we near the midterm elections.
Meanwhile, AI models are breaking containment in alarming ways. The leaders of AI labs are openly calling for a slowdown and warning of dire security impacts, even while the rush to release new models and IPO intensifies.
Poll after poll shows Americans are increasingly distrustful and cynical about AI. And tech companies are stepping away from their claims about AI being a climate panacea, while they invest in the biggest gas projects on the planet.
The future of power infrastructure is inextricably linked to all these forces. This week, we’re asking: How are they changing the trajectory of how power gets built? And what does responsible data center development actually look like?
Credits: Co-hosted by Stephen Lacey, Jigar Shah, and Caroline Golin. Produced and edited by Stephen Lacey, Sean Marquand, and Anne Bailey.
Join Latitude Media on October 14-15 in Austin for Flex Summit 2026, a two-day, in-person conference on distributed capacity, grid-edge flexibility, and the AI demand economy. Our podcast listeners get a 10% discount on this year’s conference using the code PODS10. Register today here!
Open Circuit is brought to you by FischTank PR, an award-winning climate and energy tech, renewables, and sustainability-focused PR firm dedicated to elevating the work of both early-stage and established companies. Learn more about their PR approach and how they can support your company’s messaging by visiting fischtankpr.com.
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Transcript
Stephen Lacey: Latitude Media, covering the new frontiers of the energy transition. I know it’s the end of summer because Jigar has put his fancy shirts away in the closet and now he’s got a more conservative shirt.
Caroline Golin: I’m just waiting a month before you bring out the thin puffer vest and then –
Jigar Shah: I have already retired all my puffer vests.
Caroline Golin: What?
Jigar Shah: Yeah, I’ve gotten rid of all of them. They’re all at the Deep Creek house. So I only wear them in private company without any videos around.
Caroline Golin: I see a future of a tweed cut vest for you with a pocket and a pocket watch and some good corduroy trousers. No. Yes.
Jigar Shah: I haven’t worn a watch of any sort since I got married in 1999. Analog. I stopped wearing wristwatches. I stopped wearing anything that told me the time.
Caroline Golin: That explains so much about our relationship.
Stephen Lacey: From Latitude Media, this is Open Circuit. We are in the middle of a radical political and economic realignment with electricity at the center of it. I have long said that this is the most dynamic, fraught, and exciting moment I have ever seen in my 20 years covering energy and power markets. And this summer, the plot thickened.
Power sector reforms are coming in fast and furious across states, regional markets, and federal regulators. Texas joined New York in freezing data center connections. Hundreds of bans are on the books in cities around the country. Conservative and progressive activists are joining together at town halls. Meanwhile, AI models are breaking containment in alarming ways. Employees at AI labs are openly calling for a slowdown and warning of dire security impacts. And meanwhile, the rush to release new models and go public intensifies. Poll after poll shows Americans are increasingly distrustful and cynical about AI and increasingly angry about data centers.
Tech companies are stepping away from their claims about AI being a climate panacea while they invest in the biggest gas projects on the planet. And there’s a complete lack of coherent messaging from the White House about any of it right as AI scrambles election year politics. So this week we’re taking stock. How is all of this changing the trajectory of how power gets built? And what does responsible data center development actually look like? That’s coming right up.
Hey everybody. Welcome to the show. I’m Stephen Lacey. I’m the executive editor at Latitude Media. Caroline Golin is the chief growth and policy officer at NRG. Hi there. It’s been so long. How you doing?
Caroline Golin: I’m great. I’m great. Thanks for letting me take a summer break and make sense of my children instead of the world of energy politics.
Stephen Lacey: It’s been so long since we talked, I had to research your title.
Caroline Golin: I know. Well, it’s still there. Still trying to make it work.
Stephen Lacey: Jigar Shah is the co-managing partner at Multiplier. Jigar, I actually searched to see if you had added any titles to your names. I do a traditional Google search, which now gives me the AI rundown. And in the people also searched for Box, it included Elon Musk, Bill McKibben, and Jane Goodall.
Jigar Shah: Well, I did get to meet her when I ran the Carbon War Room.
Stephen Lacey: She’s great.
Jigar Shah: Yeah.
Stephen Lacey: She was great.
Caroline Golin: My team got me a signed first edition of her book, Reason to Hope. It was very special to me. It sits on my mantle in my bedroom.
Stephen Lacey: You are in good company.
Jigar Shah: I mean, I let the algorithm control my life.
Stephen Lacey: Oh man, it’s been so long since the three of us were together. And so this episode is not really about one particular news story. It’s more about recalibrating where we are after a really wild summer of backlash and power sector reforms. And I want to start with AI itself and then move our way into data centers and power infrastructure. We’ve talked a lot over the months about the growing resistance to AI data centers, and it’s clear now that we’re in very new territory in the wake of a rogue swarm of OpenAI agents hacking Hugging Face. There are renewed fears about being on the precipice of cybersecurity nightmare, and it’s contributing to this really cynical view, increasingly cynical view that Americans have about AI. At the same time, we’re hearing far less talk about AI as this panacea for climate solutions and many of the companies building.
These data centers can’t hide behind the fact that they’re building an enormous amount of gas and backing away from their climate commitments and deploying AI to increase the productivity of the fossil fuel industry. So all this is to say that the narrative around AI is becoming more tenuous, I think more confused and more filled with tension. And we’re now in this moment where people are questioning the AI race more than ever. I’m just kind of curious about what you guys make of this moment. Have you changed your mind on the value of AI at all?
Jigar Shah: I called it.
Stephen Lacey: What did you call?
Jigar Shah: These guys do not have our best interests at heart. There are people who work at these hyperscalers and other places who are amazing people and we interact with them regularly. They do not make almost any decisions. It is the people four layers above them who are like, “Yeah, we can run these things off grid. Yeah, we should figure out how to use weird debt instruments so that we don’t understand because we’re tech companies.” And so okay, whatever. And then on top of that, all of us who are parents have been told that the tech companies screwed us over on social media and now we should keep all of our kids off of it. So when the Trump administration comes in and says, “I would like to be hands off and figure out how we win this race against China and we should let them do whatever the hell they want to do.” Yeah, I remain skeptical.
Caroline Golin: I will say where I think I have shifted in the past six months is trying to understand in the global geopolitical conversation, what is the value of AI to a country on the one end, integration of use of AI versus the infrastructure that powers it. But I no longer believe that owning all the infrastructure means you win at the AI economic transition. I think it’s the countries that figure out how to integrate it well, how to regulate it well, how to utilize it for benefit as opposed to just free for all that are going to win in this transition. And you don’t have to host all the infrastructure to win at that. You just have to have clarity around what you want out of this tool for your economy. And I think what we’ve been told is that the only clarity that we have is that we want to own the data centers here.
We want to keep the infrastructure here. And I don’t know that that’s holding anymore and I don’t know that it should. So that’s where I think that I’ve evolved in my thinking over the last six months.
Stephen Lacey: Interesting. Yeah. I mean, I don’t think people are really buying the we need to win the AI race argument because a lot of people are stepping back and saying, “Okay, what are we racing toward?”
Caroline Golin: And I think there might be a lot of countries that do this a lot better than our country does. Potentially the countries that win are the ones that aren’t going to wrestle with this infrastructure issue and they’re also not going to wrestle with the transition of a workforce because they never got a shot at that workforce. They never got a shot at getting marketing degrees and getting data analyst degrees. They never had that. They’re going to transition straight into whatever this new economy looks like, which is probably not our road in this country.
Stephen Lacey: Yeah. I mean, I think we’re just at the very beginning of the data center resistance in this country. If you think about how the narrative has shifted after OpenAI’s rogue agent revelation this summer, there’s just way more panic and doomerism right now. And we saw this effort from the AI labs to pivot away from this job loss narrative to a more positive story in the hopes that that would convince people of the benefits of AI. I’m not one of these people who believes that AI is going to bring about human extinction, but I am very worried about the misalignment between humans and AI agents, which now make up half of all internet traffic. And so I think what this is doing is contributing to this sense of loss of control that people feel it’s only going to get worse. And I think we are just seeing the beginnings of how much resistance people are going to put up to the infrastructure itself.
And it just makes everything harder. It makes everything harder in transmission, power plants, grid upgrades. I don’t see a world in which any of this gets any better.
Caroline Golin: This is the largest infusion of capital into our industry we’ll see in our careers. And what do we want to do with that? What is the future grid that we want to build if we can collectively have a vision for it that’s not whack-a-mole interconnection?
Jigar Shah: But we fully defined that already, Caroline.
Caroline Golin: Well, maybe you and I have.
Jigar Shah: Whether it’s the PCLR stuff that Arushi Sharma-Frank has done in Texas or whether it’s the work that Laura Swett’s doing in PJM, whether it’s the grid 2.0 task force that Chris Shelton and AES has put forward. There’s a lot of extraordinary work that’s been done that says we’ve invented 20 years of extraordinary technology here in the United States that can be deployed at scale that not only get more out of the grid that we’ve already paid for, but also democratizes this, puts batteries at people’s homes like base power is doing or batteries in other places, et cetera, such that people feel included. The reason why we’re in the first innings of the AI backlash is because yes, the first innings were like, you’re all going to lose your jobs. Yeah, I’m going to love that. But then the next piece of it is we’re going to raise all your costs because we’re just selfish, right?
Okay, well then people don’t love that either. And then the next inning after that is going to be, and oh, by the way, there’s only 97 owners of Anthropic and basically we’re going to keep all the spoils. So when we decide to go public next year, and then we’re going to make sure that you don’t get any of it and we’re going to make sure that the valuation of the company is already at a trillion dollars so that when you buy stock in it from your mutual funds or whatever, you’re not going to get any of the growth because you’re going to buy it at the peak. And so then everyone’s like, I’m not even going to get the financial benefits of this thing. What the hell? What exactly is it that I’m supposed to get? I just get an extra catering order for my business or over here, I get a few more hotel nights in the hotel that I own.
What exactly am I supposed to be getting out of the largest financial infrastructure investment in history outside of the top half percent of people that we interact with on a regular basis?
Caroline Golin: I wish that the powers that be would’ve been a little more thoughtful around how they released some of these tools, focused it on medical research, the grid improving interoperability, but we didn’t. And anyone who studied the profit margins of an app understands why they didn’t. But the real benefits I think of artificial intelligence and what the different tools can be used for in terms of productivity and more importantly, solving massive dense data problems is not the focus of this. And so in a country that cannot have a conversation outside of a tweet, I don’t know that it ever will. We have primed ourselves as a country to not be able to think in layers.
Jigar Shah: Let’s just talk about rural Americans. If you’re a rural American, are you suggesting that AI is going to get them better prices for their beef or corn or soybeans? Do they believe that they’re actually going to use productivity from AI to generate more family wealth? I don’t think they believe that.
Caroline Golin: I don’t think they believe that at all. And I think that this is where the leaders of this industry are wholly disconnected. I think that there is a sentiment out there that we just need to educate rural America better about how AI is going to improve their life. And they’re missing the fact that people who live in rural America live in rural America because they want a more analog life. And so now you’re bringing the steel and the trucks and the people and everything that represent what they wanted to get away from in this country and on hyper speed. And the narrative that I think the energy industry and the clean tech industry has given them is like, “Well, we’ll make the data centers flexible and we’ll reduce your rates through grid utilization.” And I’m like, “That’s nice, but that doesn’t do anything for the rural Americans who frankly just don’t want this stuff in their backyard.”
Stephen Lacey: Totally.
Caroline Golin: And that is our energy industry’s disconnect here is that we have focused, and I understand why we focused it because that’s our ring fence, but we have focused so heavily on the technofinancial solution to what is at the end of the day, a community tapestry problem, like what they want their communities to look like, what they want their skylines to look like, why they live in these places. And just telling them you don’t understand is not a way to include or to empower their agency in this transition. And frankly, I’m not sure that they should. If the community really doesn’t want a data center, and we have friends, friends of this podcast that are doing this right now that are like, okay, if the community really doesn’t want us there, we’re not going to be there. But if there is a way to make the community want us through community giving or setting up the infrastructure, in some cases building the daycares that the communities need or the jobs training, then you work that.
But if a community really doesn’t want a data center and they’ve chosen that life, I don’t think that it’s right to tell them they have to have it. I just don’t. And that’s with my Caroline Golin hat on and to some degree with my NRG hat on too. It’s not right.
Stephen Lacey: Totally. You can do everything right from an energy perspective and still see the same kind of resistance. And it’s so far beyond the checklist that we would want to see filled out and on the clean energy side. And I think that there is this disconnect. You’re getting to a point that this is the reason why I’m having this conversation. The New York Times had a glowing piece on Emerald AI recently and the headline was like, “Can this company help solve the data center backlash?” And it’s like you really think data center flexibility is going to be a solution? Absolutely not.
Caroline Golin: And it’s great, but it has nothing to do – and I’ve joked about this a few times, but it’s like fricking read the French Revolution. The issue is that these communities see, to Jigar’s point, this oligarch rise. And they’re like, “No, thank you. And no, thank you for ruining my sunset and my quiet, peaceful life in order to get there. And I don’t care if your data center is flexible. Good for you. I hope you get a better deal.” They don’t care. And I’m not sure that you’re going to. And the ironic thing about all of this is the Republicans gerrymandered their state so the rural vote would have a bigger influence in the midterms. And this rural vote is saying, “No, thank you.”
Stephen Lacey: Let’s go to the politics really quickly. We’ve had a few conversations about this over the summer, but how do you think that this is going to start to scramble the midterms? What are the political impacts you’re watching, Caroline?
Caroline Golin: Oh, I think that there’s going to be a lot of change. I think there’ll be a lot of turnover in key states. I think that Democrats will take a lot of seats. Here’s the truth of it.
Stephen Lacey: Even Texas?
Caroline Golin: Even Texas. Yeah, in Texas. I think so. Yeah. But here’s the rub on that. The Democrats don’t have clarity or vision of what responsible data center growth looks like either. They just know it can’t be this free for all, free market, whatever approach. The Democrats aren’t, nor should they, be binary in this. It is a gray space. We are going to build this infrastructure and what are we doing with a planned industrial economy approach to building this infrastructure? And I think that that’s where it can swing. They will be held accountable to the exact same issues. And I think if the Democrats could maybe pull together something eloquent and they have a shot, but I’m not positive that they have or they will.
Stephen Lacey: Absolutely not. Yeah.
Caroline Golin: Well – Jigar thinks that they will.
Jigar Shah: No, no. Well, I mean, I’ve criticized Democrats more than Republicans. So I think that in general, I think they do have a strategy for this. Governor Healy from Massachusetts just released hers, Shapiro released his. So I think we do have a bunch of templates by which to see what a strategy would look like, but I think they’re having a hard time going to the last mile because to your point, Caroline, I mean, this is a way of election.
And so right now what they’re saying is every single district should respond to what they think their district wants. So if it’s pro-coal, pro coal, if it’s pro-gas, it’s pro-gas. If it’s anti-data centers, it’s anti-data centers. They’re like, “Do what your constituents are telling you to do.” It’s populist. But I think what they’re saying through the moratorium, if you read between the lines, is that we are basically not going to allow data centers that are above 50 megawatts to get a free pass. And so what you’ve seen in the last eight weeks is that everybody is investing in sub 50 megawatt data centers. You saw eight big startup company announcements. You saw a lot of the grid AI tools starting to free up capacity in 25 megawatt chunks and five megawatt chunks. Major utility companies just announced that they’re going to start identifying which feeders can put five megawatt data centers on the feeders immediately.
You saw Crown Castle just announced that they’re going to do 10,000 telecom towers with 300 kilowatt data centers. And so I think that they’re not saying that they’re anti-large data centers, but they’re basically making it so that the rules only apply to 50 megawatt and up data centers.
Caroline Golin: Right. And so what I think you’re going to see happen, and that industry was already developing slowly because people were just like, “I have these chips and they’re depreciating and I need to train them. Can you put them somewhere?” So this sort of modular approach to putting it behind where you have headroom capacity was already emerging and will continue to emerge. And to many cases, a really efficient way to do this. But the other swing is that you are going to get massive private use network based campuses that are just out in the middle of nowhere where no one lives. And then you make the argument that is probably the best way to do this. But then the counter to that is it’s not going to get you all the capital into improving the grid and making those clean energy distributed solutions because you’re not going to power a 20 gigawatt data center on solar plus storage. It’s not going to happen.
Stephen Lacey: And like Amazon, you’re going to build the biggest gas project on the planet.
Caroline Golin: So herein lies the tension, right? If you want to give communities a rural America what they want and you want to build this infrastructure, you go where you’re not bothering anyone. If you go where you’re not bothering anyone, you’re building a new grid. And if you’re building a new grid, then you’re building it just for the reliability and the power of that data center. You’re not building it to transition the entire ecosystem towards a future grid. So then you cut that capital out. And if you cut that capital out, you can’t argue with the development companies that are like, “Well, if we’re going all the way to West Texas where no one lives, we’re going to build 20 gigawatts because that’s where we’re going to stay. So we no longer have to piss anybody off and deal with the community pushback.
But if we’re going to be out there, then we’re not investing in flexibility. We’re going to build the power plant that we need to stay out of everyone’s way.” And so then it’s like you can’t get angry at this and angry at this at the same time.
Stephen Lacey: But they are.
Caroline Golin: But they are.
Jigar Shah: I mean, it is very obvious with anybody with a basic engineering degree that you can’t build a 20 gigawatt off-grid data center. It’s literally not possible. And the notion that these natural gas plants are being run by people who actually know how to run them, I just think that it’s just dumb. And so they’ve decided to spend all this money to basically be libertarian and they’re still going to get the backlash. And then what ends up happening is that we’re starved of that capital into the grid that we all collectively use. Again, rural Americans. Remember, the way that rural Americans work is that they weren’t profitable to serve in 1925. And so we passed laws to create the rural utility service, and we created rural co-ops, and we did all of these things to get everybody onto a collective grid so that everybody could get electricity.
And now we’re saying to them, no, we’d like to starve you of resources and figure out a way to not invest in giving you the industrial capacity because a lot of those rural communities want a steel plant. They would love an aluminum facility. They would love to figure out how to get modern American manufacturing jobs, like the battery manufacturing plants that we funded out of the loan programs office in Stanton, Tennessee and rural Kentucky and other places. So it’s not like they don’t want any development at all, but they want development on their terms. They want their children not to leave the rural areas to go to the big city every time they graduate from high school. They want them to have meaningful employment closer to home. These are all things that we could have if people would coordinate better.
Caroline Golin: I think that is true of sort of rustbelt America and parts of the mid-Atlantic that lost industrial manufacturing jobs in the 80s and 90s. And so there is generational buy-in to that world again. I don’t know that that’s true for a lot of what’s going on in Texas. I think a lot of the communities in Texas don’t want anything. They want open skies. They want to be left alone. And so you have to, hence Jigar’s point, which is like, so the Democrats have just said, “All right, well figure out whatever you want in your own ring fence and it’s like choose your own adventure.”
Jigar Shah: As long as it’s less than 50 megawatts.
Caroline Golin: As long as it’s less than 50 megawatts. But again, and so these are the layers and the gray and we have an administration that really appreciates nuance. So there’s that.
Stephen Lacey: Yeah. I mean, look, Amazon is trying to build this massive eight gigawatt off-grid data center in Pecos County in Texas. And it’s seeing even though they are building their own grid theoretically and protecting rate payers, people still don’t want the project. They don’t want the trucks rolling through. There’s heavy local resistance to the project. And so it’s not as simple. I think this is complicating the off-grid data center narrative for the last few years. Proponents have said for a year and a half that ratepayer protections that giving people the ability to innovate with onsite energy and protect rate payers was going to be the key to unlock these facilities. And I think that that is proving not to be the case.
Caroline Golin: And I think what it’s doing to the supplier industry is really interesting because we haven’t built a ton of power, big power plants in this country. The solar industry and the offshore wind industry invested heavily, and I’m speaking particularly in the Southeast, invested heavily in what it meant to do community development and community buy-in and building power. I would say Constellation probably did too when it comes to nuclear, but the vast majority of this country and the supplier industry has always sort of gone in with the expectation that if you build a power plant, if you employ people in that community, they want those jobs, you maintain being a good citizen of that community, then that’s it. That’s it. You check the boxes. And what’s happening for the supplier community is now any power plant built in this country, solar, gas, wind, is representative of powering AI.
And so you are now part of the political AI narrative. And that is something that the supplier industry is not prepared for. And we collectively do not have the robust machinery to go in and solve these problems. And the hyperscalers aren’t. I’ve told my friends in the industry, and I think it’s very clear, until you’re willing to go have a community town hall and tell grandma and grandpa X, Y, and Z, you’re actually not doing community development work. And that is very different from what community development looked like in the power industry for the past several decades. Very, very different. And you could argue that putting a bunch of solar panels out on an agricultural plot of land where you’re not going to be trucking things in and out and it’s not changing the skyline is a very different process than building a massive several gigawatt data center.
It just functionally is different disruption. And Jigar, I mean, you and I worked on it together. You remember how hard that was with the solar industry to get that type of community buy-in. So if you exponentially increase what’s required here and no one has the machine built for it, and the suppliers are looking at the hyperscalers and the hyperscalers are looking like deer in the headlights and the third party powered land developers, some of them are doing it really well and are trying really hard and a lot of them just aren’t.
Jigar Shah: Well, why would they? I mean, they saw their friends make a big $500 million paycheck and they’re just rushing to try to get their own $500 million paycheck. They never cared at all about any of the people locally.
This is not a 30-year profession for them. They’re like, “I got stuck with this land. I think I could turn into a data center and make $500 million.” And now it’s biting them and everyone else. I mean, when Mr. Wonderful joins your industry, you should get out.
Caroline Golin: No one’s ever called me Mr. Wonderful or Ms. Wonderful for that matter.
Stephen Lacey: Well, okay. So this brings us to the main question of this segment, which is how is this impacting power development strategies? I mean, Caroline, what are you seeing? In your pipeline, how is this changing sequency or the types of projects you take on? What do you think the biggest impacts are?
Caroline Golin: Yeah, so again, it’s really complex, and we’ve talked about this before, but suppliers cannot, even if they wanted to, cannot build power merchant anymore. The investor base won’t allow it. The investor base is saying, “You kidding me? There’s billions of dollars of capital out there that’s saying they need power and you’re going to bet your revenue return on a forward price signal that hasn’t even updated for load growth? No, you have to go get a bilateral uptake, period.” And every supplier is dealing with this. And frankly, the durable cash flow is like, of course, why would you not take that bet on a market that is going schizophrenic? But the problem is, and we’ve talked about this before, is the fickleness of this industry does not align with the clear engineering processes that are required to build power. And to be a little too cute, most suppliers are tabs in a shopping cart for a hyperscaler or for a third party developer.
Click, click, click, click. Oh, I’m done shopping. I’m going to keep these three tabs and I’m not going to keep the other tabs. But behind those tabs are hundreds of people doing due diligence and creating supply chain and thinking through the engineering of it and pricing things. And then it’s like, whoop, the tab goes away. And that causes just as much disruption in building power as soft prices do in the market. So while I will say that this whole shift to the bilateral offtake makes sense, clearly on paper, I think that we as a community have underestimated, and now with the politics on top of it, underestimated the frantic, almost frenetic nature of what it means to do bilateral offtake at the gigawatt scale with a hyperscaler. And I’m speaking for the entire supplier community because I have friends everywhere, and I think they would all say this.
And ultimately everything’s going to get built, but the entire supplier community is feeling the strain and the pain of that disconnect. And when you layer on the political nature of, oh, well now our project may get pulled because of this and we’ve already sunk X amount of capital in and we don’t know where the next one’s coming, you have to make tough decisions and it’s not great. It’s not great.
Stephen Lacey: Jigar, what do you think the most acute strains in power development are right now?
Jigar Shah: I’ve been saying it for a while, but we have certain technologies that have basically an unlimited supply chain and have the ability to deploy at scale, but they need a price signal. And to Carolyn’s point, an offtake agreement.
And they’ve been waiting patiently while everyone has been going through all the tabs with all the masculine energy options who are failing to deliver, massively failing to deliver. Natural gas pipelines are not getting upgraded fast enough such that you can provide firm gas capacity. All these things are failing. And suddenly you start seeing whispers of all of the folks that we’ve been pushing to get contracts, whether it’s the base power folks or whether it’s the share program that PG&E just announced or whether it’s Google’s contracts with Voltus or whether it’s this or that or whatever, they’re starting to finally get contracts. And Laura Sweat at FERC, I don’t know that she thought she was going to be our best friend, but she’s turning out to be a fantastic friend and she’s going to mandate it on everybody. And then we’re going to have a chance to prove ourselves and we’ll see whether the thousands of companies in our supply chain actually deliver or whether they fall flat on their face.
I think they’re going to deliver. I’ve already talked to several of them. They’re going to be announcing $1.50 per watt solar offerings at RE+. They’re going to be offering 300, $350 per kilowatt hour batteries that are getting delivered. I think it’s a massive shift for our industry and we’ll see. I think that at those price points, you can supply a microgrid under an NEM 3.0 type structure to everybody in the country at sub 15 cents a kilowatt hour without all the subsidies, without all that stuff. They’re paying an average of 18 cents a kilowatt hour right now in our country with 7% rate increases every year. So my sense is that we’re going to have this out and the people who love distributed generation are the MAGA and MAHA people. And so we’ll see where this goes. I think a lot of the political valences that people have put onto our industries are going to be melting away because there’s only certain industries that have zero supply chain shortages.
The rest of the industries that they went to first are chock-full of supply chain problems that aren’t going to deliver until 2032.
Caroline Golin: And so here’s the interesting thing about how that, if you put the traditional supplier hat on, is that most of this space, most of this next gen, next technology space is a very different investment base than your traditional suppliers in this country. And they’re being assessed, and Jigar knows this better than anyone, they’re being assessed right now largely on a CAGR and everyone is expecting, and I think it’s the right bet, that within three to five years, the pinch is going to happen and market share is going to transition to durable profit margins for the next decade. That’s the bet you’re making Jigar with everyone you’re investing in and advising. If you’re a traditional supplier in this space, you don’t have that and you don’t have that luxury. And so that transition is going to be tough and it’s not what company I work for across the board.
Any large supplier and really any. Well, I will caveat and say it’s a little different for the investor-owned utilities because they sort of have a guarantee to be able to make that transition that the supplier community does. Well, until that goes away.
Well, right. And so that’s sort of the rub when you ask Stephen how is the supplier community doing? We’re sort of stuck between these two bookends. On the one hand, the markets haven’t updated and the forward curves on the markets mean that we can’t do anything merchant. On the other hand, where you see technology going and opportunity going is not being assessed by the same numbers that our investors expect us to be assessed. Constellation, Talen, Vista, NRG, the list goes on. So it’s the real pinch to transition the larger, more seasoned suppliers of power in this country to something that looks different. And it’s going to be very hard. I would also argue that most of the hyperscalers are not asking for this distributed solution. I think a lot of them are trying it.
Jigar Shah: They’re definitely not asking for it. They’re being forced into it and they’re providing breadcrumbs of contracts, but they’re still structurally 10 gigawatts short on their capacity for 27 and they don’t know how to fill it because every single person they send a contract with has failed them miserably and is pushing out their timelines by 18 to 36 months. And so they’re like, “Well, I guess we’re forced to do this and oh, by the way, these local communities hate me and so maybe giving them free batteries and solar panels isn’t such a bad idea.”
Caroline Golin: It’s not just a technology solution. And I think I’ve said this before on the podcast, but at some point, if you follow the money trail, it’s the investor base. And having an investor base that is interested in the transition is what is going to determine a pivot and a change in the grid. And I would argue that most investors look at IPBs or even IOUs for that matter and you’re like the safe thing. And so just do what you’re supposed to do, which is build the power plant and make money in the markets. Building the power plant’s really hard right now and making money in the market’s really hard right now.
Jigar Shah: Well, but I think the thing that I think everybody knows, and you’ve been saying with the forward price curves in Texas, but refuses to acknowledge from their investment patterns is that we are definitely going to 30 BCF of LNG export. So at the time at which all of this natural gas is going to be coming online, we’re going to need a lot more natural gas production in this country. And when that happens, because we’re not out of natural gas, we’re just out of natural gas that pencils at $3 a million BTU to pull out of the ground. We’re going to have to go to some of the other shale plays and they pencil at $4 a million BTU, which is a 33% increase in the cost of the fuel. And some of them pencil at $5 a million BTU to get out of the ground. And that is a 66% increase in the cost of the fuel right at the time where people are not diversifying and they’re going all in on gas, gas ends up getting all of the CEOs fired. And you’re like, okay, let’s double down on that strategy.
Caroline Golin: I’m glad we talked about the tension for the supplier community because we never appreciate that because we want all these big seasoned companies to transition.
Stephen Lacey: Well, let’s turn now to renewables and how renewables and storage are faring. There’s this dominant narrative now that gas is the only resource that’s fast and firm enough to meet AI’s appetite and renewables even paired with batteries are not equipped to keep up. The data in deployment tells a mixed story. Standalone solar financing has dipped globally and yet projects that pair solar with batteries just posted a record quarter, triple what they raised a year ago. Batteries alone had their single biggest quarter of installations ever in the US this summer, according to Bloomberg New Energy Finance. Wind is really the one struggling because dozens of gigawatts are caught in federal review thanks to the federal government’s war on the resource. So how are renewables doing? Are they treading water and just backfilling coal retirements or are they going to play a strong role in meeting new demand?
Jigar, how would you characterize the health of the market right now?
Jigar Shah: Well, I mean, I think most people would view 2026 from a pure animal forces perspective as a down year. Kind of sucked coming out of 2025 with just the sheer negativity. We weathered that and I think everyone’s using 2026 as a rebuilding year, but you’re still going to get 90% of everything added to the grid this year is going to be solar, wind, and battery storage. I mean, all things can be true, but I think that the sheer size of what we’re contributing is something that people are just not appreciating. It is very obviously the case that battery storage is saving the Texas grid every single day. It is very obvious that 20.2 gigawatt hours, which is what we added from April to June, is one 10th of all of the cumulative supply in the United States today. So we built one 10th of our cumulative amount just in three months.
So when I say that that’s the supply chain that could scale, well, that’s a supply chain that can scale. Now we separately have an administration that continues to put out nonsensical executive orders before a meeting between President Xi and President Trump. And so we’re all going to have to figure out which ones of those gets tacoed right after that meeting. And there’s lots of other headwinds and tailwinds around. But I think that it is objectively the case, as I think Caroline was referring to earlier, that the smartest, most dedicated people in the country that has the largest and deepest pipeline of projects where the community has already approved them is in the clean energy space. So if you want a crap load of stuff to get built over the next 24 months, they’re the ones who are the farthest along in the interconnection queue, in the permitting queue, in getting communities to accept them, to do all these things.
They already have capital already raised. They have all these things. They just need a federal government that needs to actually get out of the way because we need all this power.
Stephen Lacey: Caroline, where would you say the bright spots in the market are?
Caroline Golin: Well, I would say that there’s this really interesting thing shaping up in my mind about transitioning the role of renewables from the early 2020s, which was all about meeting a climate goal disconnected from nodal delivery and meeting a REC bank strategy into what is the role of renewables in meeting a speed to capacity? And I think what the renewable industry appreciated or didn’t appreciate, it depends on who you talk to, is that 2026 I think showed everyone what these hyperscalers actually care about. And right now what they care about is getting online as fast as possible and they will figure out the backend harmonics of their decisions when it blows up in their face. And we could have several podcasts on the decision making and I think Jigar would rant for 10 days straight on that. What I think is –
Jigar Shah: Let me clear my throat.
Caroline Golin: Yeah, exactly. But what I think is the art of the possible right now is the ability to look at renewables not as a one-off energy deal, but as a portfolio in a market to be balanced against storage and who can come in and actually do that and provide that level of deliverability risk and provide resource adequacy. And there are very few players in the country that can do that. And most of the big developers of renewable in the country don’t want to do that. They haven’t wanted to do that for years. They want to sign you an energy plus REC PPA. They wanted to print money in the market and they want to walk away. And now in 2026, everyone’s being forced to evolve from that. If they want to play, they have to evolve. And I think that is the good growing pain. And I think that it will create some very interesting business ventures in 2027, which I want to see happen because frankly, the way we were deploying renewables, in my opinion, was inefficient for the overall system.
It was inefficient because it was being deployed on a capital value stream that was disconnected for what the grid actually was going to need moving forward. That has to shift and I think it is shifting in some cases.
Stephen Lacey: Jigar, do you think this is a good shift and is utility scale solar paired with batteries basically the default option at this point?
Jigar Shah: Well, I mean, I think as we talked about earlier, I mean, they certainly have the largest queue position and the largest projects are ready to go. I mean, I think I’ve always agreed with Caroline in terms of, well, everything in life, but I mean on this point, I do think you need batteries and that’s what she means by the nodal delivery. And so if you overload a circuit, then you’ve got negative prices. I mean, that should be worn by the developers. And in the past, they put that risk onto the hyperscalers who are signing these virtual PPAs, which they’re no longer taking. And so you have to provide batteries in those spaces. But the other thing I was saying to you is that I do think that we write off the ability for residential solar and distributed solar through commercial rooftops too early. I mean, when you think about what the penetration is of
Rooftop solar in Germany or in Australia or the places, it’s not like we can’t match that. We just had this nonsensical tax credit regime, which I think you know I’ve been fighting against since 2012, that caused people to have an inefficient delivery mechanism. That is all changing now because the tax credits are gone for a lot of those folks. And they are magically finding a way to cut their costs by 50%, which we always knew they could do, but they never had a financial incentive to do it. And so I think you’re going to see a huge uptick in distributed solar and most importantly distributed batteries. And again, that supply chain is deep. There’s plenty of product, there’s plenty of people that can meet the Fiat requirements. There are plenty of people that can do all of those things. But what there isn’t is a respect for that asset class.
And so integrating it into integrated resource plans, figuring out how to convince the utilities to run their grids differently, all of that stuff is still in pilot mode. And I think a lot of what Laura Sweat and some of the other folks are going to do is to force the utilities to grow up. And I think it’ll be interesting to watch.
Stephen Lacey: You mentioned the White House executive orders. There’s this new wrinkle now in the bulk power system that could upend the battery market. It authorizes the Department of Energy to ban electric equipment from countries that present a national security concern, singling out battery storage. It’s obviously directed toward China, which overwhelmingly dominates the battery supply chain. How disruptive could this be?
Jigar Shah: I think it’s the wrong question because everything the president does can be quite disruptive, but the question is why is he doing this and why is Stephen Miller and Navarro and others being able to win this battle over cooler heads? And I think it’s all basically posturing before the summit between the president of China and the president of the United States. And then ultimately the real question for Secretary Wright, who basically has been delivered this flaming turd sandwich on his lap is like, do you want to own the dysfunction of the grid? The only thing saving your ass right now is batteries. Do you want to put in a set of rules that basically upend the battery industry and then you own whatever happens when you do that around rolling blackouts, around inability for data centers to hit speed to power, all of that stuff.
And my sense is that when you hear his love affair with demand flexibility and batteries, and then Alex Fitzsimmons has been talking about it at all of his speaking engagements, who’s a deputy secretary there, it feels like Department of Energy wants batteries and demand flexibility to be successful. And this is really just a few folks in the White House trying to posture before a summit.
Caroline Golin: I think the theme continues to be a misunderstanding or a lack of appreciation for how things get built in this country. So you can’t have on one side an administration saying, “I don’t care if they don’t like it, AI or bust.” And then on the other side say, “But all the pieces that you need to build those things that the community doesn’t like, I’m going to make it a lot harder to build it.” And I think that there is a sentiment that if we block out. And I will back up and say there are real threats to the bulk power system by having foreign ownership integrated in a way that we don’t have the security layered onto. That is not a nonsensical threat. At the same time, if a lot of the stuff that’s on this list slows down, you don’t even need to have a lot of these rural community issue conversations because it just won’t get built in time for the chip deployment.
Again, internal conflict on that. But yeah, so I disagree with Jigar. I don’t think it’s completely posturing. I mean, everything that a political party does now is posturing. There is some truth to it.
Is it being nuanced? No. No. And so what does it do?
Jigar Shah: I would’ve expected more from this White House.
Caroline Golin: All right, Jigar. Well, but again, it’s like you just throw one more wrench into the capital security on this and it goes, right?
Stephen Lacey: Well, we got to wrap it there to be continued. It has been quite a busy summer and I’m so glad that the two of you are back here with me and all of us to help people sort through it. Caroline, so good to see you.
Caroline Golin: Same. Same.
Stephen Lacey: Jigar, great to see you too.
Jigar Shah: Always a pleasure. And hopefully next time we speak, right, we’re not in a full-blown war in the Middle East.
Stephen Lacey: I doubt that.
Caroline Golin: I doubt that too. But you could get a tweed best and it would make it better.
Jigar Shah: Oh my God.
Stephen Lacey: Well, Open Circuit is produced by Latitude Media. Caroline Golin and Jigar Shah are my co-hosts. The show is edited by me, Sean Marquand, and Anne Bailey. You can find all of our episodes on Apple, Spotify, or wherever you get your podcasts. And of course, transcripts are at latitudemedia.com. While you’re there, check out our newsletters and all of our industry coverage. All the topics that we discuss on this show, we’re covering out of our news team there. And of course, subscribe to us on YouTube. We’ve got all our episodes there, and you can hang with us every week by video. So make sure to subscribe there on YouTube. Thank you so much for being here. I’m Stephen Lacey. We’ll catch you next week.
