00:34:25 · Chris Wright
[00:34:25] S1: And time forth, it's not just on social media, it's reflected in the polls. Mean the opposition to AI and data centers is pretty tremendous and I think President Trump right at the start of his administration I think he knew AI was going to be a big deal. He knew we could not let it go to China, which was the trajectory we were on. We've got to lean in in The United States. And he immediately and our whole administration engaged with the hyperscalers. Scott talked about it in a market way, not in a mandatory way, not in a law way, about what they can do to bring immediate benefits, first on energy costs, but on economic development to communities. Hence Trump's rate payer protection pledge. All of the large hyperscalers have signed on to this. Many others have said, Hey, we'll follow those same rules. And it's back to the point Scott made, which is that the cost all in for a data center, like energy is a big consumption thing, but it's not a giant cost driver. And all of the developers have said, Yes, we'll pay above market price for power. We'll bring money to the table before we even get any power to help build upgrades to transmission lines. If we're going to consume a gigawatt of power, we'll build or fund 1.2 gigawatts of power generation. So we put additional capacity onto the local grid that allow other businesses to grow and will keep prices down. Almost all the big deals that have been signed have had multi year rate freezes. Rate freezes in nominal dollars, so in real terms it means they're declining every year. In Indiana, we've already seen applications for rate reductions. We're going to see more of those. That fear that data centers drive up electricity prices, the reality is actually the opposite. If you look at the states with the fastest growing electricity prices, California, New York, Massachusetts, Maryland, they all shine in the fast growing electricity prices, they all produce less electricity today than they did five or ten years ago. The states with fast demand growth, Texas for example or Nebraska or North Dakota, are the states that have had declining in real terms and some of them even declining in nominal terms price of electricity. Here we are sitting here in Utah, very low electricity rates in Utah, and as the grid has expanded for industrialization here, we'll likely see electricity prices go down even more.
00:36:47 · Chris Wright
So new demand loads are actually your friend to fix rising electricity prices. Electricity prices were driven up because the Obama and Biden administrations wanted to shut down as much existing power plants as they could and they wanted to subsidize the construction of intermittent sources, politically favored sources that ended out distorting electricity markets. This production tax credit, if you pay people three or four cents to produce a kilowatt hour, whether it's needed or not, guess what? They'll produce a lot and they drive these wholesale prices at low demand times negative. That killed the economics of nuclear. It killed the economics of firm power. Just government subsidies distorting a marketplace. The Trump administration came in with just a common sense, pro business, pro America, pro innovation attitude. So a lot of damage, a lot of things to be reversed. And the biggest one, which I'm dancing around, is this public opinion. You're absolutely right. For it to win in the long run we have to win in that space. That is a very active dialogue with hyperscalers. We have to lean in. My last thing is philosophically it's very much like the campaign against fracking when it started. It's very much about the climate change campaign. COVID, we've got to lock down and stop everything. It's very easy to scare people and we have a whole industry in The United States who collect money and they scare people to make them oppose it. They oppose fracking. They oppose any industrial development for climate change reasons. They oppose businesses and kids going to school during climate change. They were successful at selling this fear. Those same people, those same organizations are opposing data centers. It's not that they're fundamentally opposed to fracking or fundamentally opposed. We have a very large fear mongering industry that fits like human psychology. We have to be careful and so fear is a strong reflex in humans and it's very powerful politically. And our side, the data we think is compellingly on the side that the advantages are going to be much bigger than the disadvantages. But that's a more in-depth, that's a harder argument to sell. We're going to have to sell it. We're going to have to lean in. We're going to have to be honest and credible. Are negative things going to come from AI and data centers? Absolutely. There will be.
00:39:09 · Chris Wright, Scott Nolan
There will be negatives. People are going to abuse this power. It is going to displace people out of some jobs, but it's going to create other jobs. I think net net net it will create way more jobs, way more economic opportunities, but it will be disruptive. But we need to lean in honestly, candidly, and sincerely in contrast to fearmongers. Right now, the fearmongers are winning hands down. [00:39:33] S2: Yeah. As go back to some of the numbers we were talking about earlier, I'm just thinking about the scale of the investment, trillions of dollars into these data centers at these 100 gigawatt plus at these scales. If those companies want to invest in the grid, if they want to push energy back, whether it's 1.1, 1.2, maybe 1.21 gigawatts back onto the grid for every gigawatt that they consume, how do they do that? Is that a utility thing? Is that a FERC issue? How do we set them up to be able to drive it back on? I'm wondering if there's any incentives that could be set up to make that easier, because that's how you get the rapid benefit to the local community. And then the jobs benefit versus jobs loss, that's a much harder one to predict. But I think if you know that you're driving electricity prices down, that's good for people. [00:40:21] S1: Scott, here's a simple high value idea. I was saying, electricity at different times of the day has very different values. Really matters why does California have crazy high electricity prices? Because at crunch times, they're short of electricity and they have to ration demand and prices skyrocket.
00:40:21 · Chris Wright, Scott Nolan
[00:40:21] S1: Scott, here's a simple high value idea. I was saying, electricity at different times of the day has very different values. Really matters why does California have crazy high electricity prices? Because at crunch times, they're short of electricity and they have to ration demand and prices skyrocket. [00:40:37] S2: Yep, it goes back to baseload basically. Yeah,
00:40:39 · Chris Wright
[00:40:39] S1: or dispatchable even more so. Like if you operated a day, which is why I also believe I don't think there'll be a lot of data centers or large generation that's isolated from the grid. There may be some, but I think the economics and logic are much stronger to have a connection. Even if most of your capacity goes to run your own facilities, if you're on the grid and at times of these peak demand, these are hours a year, hours a year, You're running a training model, you turn it down a little bit and you push a few 100 megawatts to relieve grid stress. That's very valuable in driving down rates. Having some capacity needed, we did a short term version of that in Florida where we had all the grocery stores in Florida turn on their backup generators. This generated an enormous amount, gigawatts of additional power so we could keep the classrooms open in Florida on a Monday morning where there wasn't enough electricity to heat the homes and the schools. So I think there's it's just using electricity when it's the highest value and diverting it into communities to keep down rates, building some infrastructure for those communities and communicating the amount of tax dollars and training, high paying jobs, not just during construction, then maybe you don't have massive staffs operating data centers, but when they're there, it builds sister industries around them that are going to bring a lot of jobs and opportunity. I was in Cedar Rapids, Iowa. It is amazing the economic stimulus that's coming from a data center that's about two thirds done. It is amazing.
00:42:11 · Scott Nolan, Ty Morse
[00:42:11] S2: Yeah, I was talking with someone earlier and they were referencing some of the stats and job creation of one of the big projects coming and it was tens thousands of construction jobs, thousands of permanent jobs. So it's it's very real. And and, yeah, great point on interconnect. Even if you can produce behind the meter, if you're doing if you're doing, like, a nuclear power plant next to your data center, maybe you don't need to be connected. If you're doing turbines, if you if you want those, you know, five nines of reliability without a huge infrastructure build out, then being connected to the grid lets you call on that when necessary and then in other times do curtailment and not just help but make a lot of money by doing curtailment with the utility. [00:42:50] S0: I think right now, like, we've done a pretty good job of flipping the first domino to kind of make it so 2030, things are much better than they're at right now. But past that, like, how do we basically structure things so that with the long term in mind, can keep on scaling through, you know, 2040 and two and fifty to get to hundreds of gigawatts of new generation?