The Information's TITV
00:00:13 · Akash Pasricha, Charles Hua
[00:00:13] S0: Welcome everyone to The Information's TITV. My name is Akash Pasricha. It is Wednesday, November 4. It was a big evening with election results that will almost certainly have a meaningful impact on the tech sector. The Democrats have taken the Senate, they've taken the House, and they've also won governor races in Texas, Georgia, Ohio, and other key states. We're going to talk about what all these results mean for the data center build out, what it means for markets, what it means for AI regulation. We've got an analyst coming on who is deep in the utility sector. We've also got Bradley Tusk coming on the show. We also had AMD results last night that impressed investors. We'll take a look at some of the fundamentals. We're going to close out the show with one of our partners talking about a new Neo Cloud play from Brookfield. It's going to be a great show, so let's get right on into it. Texas elected Gina Hinojosa to be their next governor, marking the first time a Democrat has won that race since 1990. Data center moratoriums were a central part of her campaign. Several local ballots around the country also rejected data centers in Florida, Ohio, Kansas, Illinois, New Jersey. I want to bring on Charles Hua, founder and executive director of Powerlines, a nonprofit focused on energy regulation. Charles, welcome to the show. It's great to have you here. [00:01:32] S1: Thanks so much for having me.
00:01:32 · Charles Hua, Akash Pasricha
[00:01:32] S1: Thanks so much for having me. [00:01:34] S0: Okay. So we've seen the results. Okay. Everyone has probably woken up this morning, familiarized themself with it. What happens now, Charles, is my question to you. [00:01:44] S1: Well, look, think this is the million dollar question, the trillion dollar question, if you will. I think it's actually hard to say because in the buildup to the November midterms, there was all this chatter about, you know, are are folks just saying these campaign commitments just to get elected? And I think the real work now starts once they take off this. And and a lot of it will come down to just how much of a priority infrastructure related questions are for governors, you know, whether you're talking about data centers or energy. If we look back to last year in New Jersey and Virginia as two leading indicators, both governors dealt with utility and energy and data center issues quite prominently in their first hundred days. In fact, even the very first day during inauguration, governor Sherrill had signed executive orders on this. So I expect this to be a significant issue. We'll see exactly what plays out. [00:02:36] S0: And what exactly, you know, is on the table here? Do we see projects get shelved outright? Is it just a pause here? I mean, like, what are the menu of things that could happen?
00:02:36 · Akash Pasricha, Charles Hua
[00:02:36] S0: And what exactly, you know, is on the table here? Do we see projects get shelved outright? Is it just a pause here? I mean, like, what are the menu of things that could happen? [00:02:50] S1: Look, I think it's a very dynamic space. So it's hard to say, even for folks that have on the campaign trail said, I'm going to do this. I'm going to impose a temporary twelve month moratorium in terms of whether or not they actually follow through. But I think to your point, there is a full spectrum in range. For for some, it's a, let's, you know, pause. Let's get our ducks in in a row and figure out what are... What do we mean when we say data centers paying their fair share? How do we create the right electricity tariff structures and the rate structures to make that happen? For other folks, I think the skepticism runs a lot deeper than that, and and we might see some material market restrictions around new infrastructure development. I think the thing that makes this challenging to predict though is that it is a moving goalpost. There are folks even in as short of a... As as a one month period on the campaign trail leading up to the midterm elections where they suddenly needed to course correct and and and frankly put forth campaign commitments that they probably weren't that serious about putting forth. I think you talked about the Texas gubernatorial election where even governor Abbott essentially called for a moratorium. That's something that I think a lot of folks wouldn't have predicted six months ago, but it just shows how fast moving this issue space is.
00:04:00 · Akash Pasricha
[00:04:00] S0: Right. I mean, as it relates to Texas specifically, I'm thinking about all the big tech companies that have poured money into that state, and I can't remember exactly where it ranks now in terms of having the most data centers being built out, at least based on a gigawatts basis or a facility numbers basis. But as you look at all those projects, are there any particular projects that you think are particularly in flux right now? Any particular companies that you think we should be watching for announcements saying, Hey, we've paused on things?
00:04:38 · Charles Hua
[00:04:38] S1: Yeah. It's a good question. You know, I think when you laid out up top the markets that yesterday night saw pretty seismic results when you think Ohio, when you think Texas, when you think Georgia, just take those three states where you're seeing those are three of the fastest growing markets for data center development, for electricity demand growth. All three saw pretty dramatic outcomes that folks maybe weren't actually expecting. So I don't know that a singular project is at risk. In fact, I think that you could make an argument that the industry at a macro sense is facing some serious pressure. You know, Jefferies had had announced that in Texas, up to 13 gigawatts of data center projects might be at risk under a governor Hinojosa scenario. That's not just one project. That is an entire industry that has to deal with these potential headwinds coming in. Now the utility sector also is under serious pressure as a result of this. When you think about Southern Company representing the Southeast and Georgia, when you think about AEP representing Ohio, those stocks have taken a little bit of a hit this morning following last night's election results. But it's gonna be a real challenge where the grid is getting old. And even if there was not a single data center being built, the fact that our grid is aging very rapidly suggests that a lot of infrastructure spend will need to occur. But in this moment where a lot of folks are rightfully concerned about their utility bills going up and about spending on the grid going up, I do think it just creates this very constrained environment for new infrastructure development, and it's going to force a lot of policymakers to come to the drawing table with some practical solutions to get forth in the next few years.
00:06:19 · Akash Pasricha
[00:06:19] S0: And you talked about the aging grid. So, look, it remains to be seen what happens in terms of who continues their projects, what moratoriums continue, which ones go longer. Does this guarantee that the rising power cost issue is necessarily going to get better? Mean, what are the problems that this doesn't necessarily solve?