<![CDATA[The Texas Energy and Power Newsletter]]>https://www.texasenergyandpower.comhttps://substackcdn.com/image/fetch/$s_!m8nI!,w_256,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fd87f1f67-6348-42a6-884d-2d8afab25ddc_1280x1280.pngThe Texas Energy and Power Newsletterhttps://www.texasenergyandpower.comSubstackWed, 20 May 2026 04:26:58 GMT<![CDATA[Energy policymakers grapple with reliability, fairness, and flexibility: Texas Grid Roundup #92]]>https://www.texasenergyandpower.com/p/energy-policymakers-grapple-withhttps://www.texasenergyandpower.com/p/energy-policymakers-grapple-withTue, 19 May 2026 17:15:27 GMTThis Grid Roundup includes ERCOT’s reliability standard process, the Texas Backup Power Package rule, and ongoing debates over transmission cost allocation. While each proceeding is different, the policy question is similar: can Texas protect customers from reliability and cost risks without discouraging the flexible resources that could help solve them?

These Grid Roundups, along with the full archives, select episodes of the Energy Capital Podcast (including this one on how batteries are reshaping the grid with Fluence VP Suzanne Leta), Reading and Podcast Picks, and more – are for paid subscribers.

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Reliability standard takes shape

The Texas Public Utility Commission’s reliability standard is intended to serve as a benchmark of the likelihood of a power outage caused by demand exceeding available generation. If ERCOT’s analysis shows the system is unlikely to meet the standard, the result could be market design changes to send stronger signals for new resources.

The assumptions, especially the load assumption, used to forecast reliability of the system are critically important to provide an accurate reading. ERCOT is expected to model both 2026 and 2029, but there has been discussion about which forecast should be used. The original expectation was that the reliability standard would rely on the 2026 Regional Transmission Plan (RTP) forecast, but ERCOT has raised concerns that the RTP forecast may overstate how much load is actually likely to materialize. Information from transmission service providers suggests a 2026 peak of approximately 112 gigawatts, while ERCOT appears to expect the system is more likely on track for 90 to 98 GW. For reference, the peak in 2025 never exceeded 84 gigawatts.

Based on the latest discussion at the commission open meeting, ERCOT and the PUCT appear to be moving toward using the batch zero forecast instead, reflecting ERCOT’s new batch framework for interconnecting large loads. That may produce a more realistic picture of near-term load growth because batch zero is intended to sort large load projects based on readiness and likelihood of interconnection, but it also pushes the timeline out. The batch zero forecast is expected to be completed in mid-August, the reliability standard report is expected in December, and any decisions by the PUCT on market changes would likely occur in the first half of 2027. A revised timeline is expected to be presented at the June 18 open meeting.

This revised timeline may be helpful. The additional time gives ERCOT

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]]><![CDATA[Texas no longer manages an electricity market. It manages a compute system]]>https://www.texasenergyandpower.com/p/texas-no-longer-manages-an-electricityhttps://www.texasenergyandpower.com/p/texas-no-longer-manages-an-electricityThu, 14 May 2026 17:15:14 GMT

To most observers, the situation before us is that AI will increase electricity demand at a pace we have never seen before. I see it slightly differently; Artificial intelligence demand will change the fundamental behavioral physics of the grid itself. And Texas, ever at the forefront, is a bellwether for the challenges most grids will face in the future: managing software-driven, high-frequency loads whose behavior can change faster than the traditional power market mechanisms were designed to handle.

I’ve spent the last 24 years in various roles within the power ecosystem working in the UK, Africa and the U.S. I’ve spent time as a systems engineer in a 1,000-megawatt combined cycle gas plant, as a product manager building power trading software products for said power station, as a founder selling customer acquisition and management software to retail electric providers, as a clean tech investor providing seed stage funding to early stage battery technology startups, and, most recently, as an innovation director at a 10 gigawatt independent power developer. At no point in my career have I seen changes in the physics of the grid as a result of the demand side.

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]]><![CDATA[Austin Energy Enters the Next Phase of Decarbonization]]>https://www.texasenergyandpower.com/p/austin-energy-enters-the-next-phasehttps://www.texasenergyandpower.com/p/austin-energy-enters-the-next-phaseWed, 13 May 2026 10:09:44 GMTAustin Energy’s power generation hit the 65 percent carbon-free level in 2024, and the municipal utility is targeting 100 percent carbon-free load by 2035, one of the most aggressive clean energy targets of any utility in Texas.

Austin Energy is one of the largest municipally owned utilities in the country and one of the few vertically integrated utilities operating inside ERCOT’s deregulated market. As the utility plans for load growth and rising ERCOT market exposure, it is also preparing the community to weigh the trade-offs that entails.

In this episode, Joshua Rhodes speaks with Stuart Reilly, general manager of Austin Energy, and Lisa Martin, the utility’s chief operating officer. Reilly and Martin walk through how the muni model shapes new load evaluation, renewable contract structure, and community engagement. They describe a resource plan that combines local generation with utility-scale batteries, distributed energy deals, transmission upgrades, and demand response.

Joshua, Stuart, and Lisa discuss topics including:

  • What it means to operate as a vertically integrated muni inside ERCOT’s competitive market.

  • The 500 megawatts of plausible new load Austin Energy is planning for, and why most of it is not data centers.

  • How load zone price separation has changed the hedging value of distant renewable power purchase agreements.

  • Why the resource plan calls for new local generation alongside more clean energy procurement.

  • A new 100 MW battery deal with Jupiter Power and a 40 MW distributed deal with Base Power.

  • How the utility returned over $100 million to customers from Winter Storm Uri.

  • How Austin Energy communicates reliability, affordability, and clean energy trade-offs with its community.

Energy Capital Podcast is produced by ClarityForge Studios.

Timestamps

  • 00:00 - Intro, Stuart Reilly and Lisa Martin

  • 01:11 - Austin Energy as a Non-Opt-In Utility

  • 05:47 - Planning for Load Growth, Why Gas Peakers

  • 09:25 - Sizing Real Load vs the ERCOT Forecast

  • 10:49 - New Loads, New Costs, Who Pays

  • 12:13 - Load Zone Separation, Explained

  • 14:02 - Decker Retirements and Local Generation

  • 16:51 - PPAs, Hedges, and the $850 Problem

  • 18:26 - How a Gas Peaker Fits a Carbon-Free Goal

  • 23:53 - Why Local Power Enables More Renewables

  • 26:43 - Communicating Complexity to Customers

  • 31:19 - Jupiter Power, Base Power, and Local Storage

  • 36:08 - Distributed Batteries and Distribution Costs

  • 40:25 - Closing Thanks and Outro

Resources

People & Organizations

Company & Industry News

Books, Articles & Reports Discussed

Related Podcasts by Energy Capital

Related Posts by Texas Energy & Power

Transcript

Joshua Rhodes (00:04.27)

Hey everyone, welcome to another edition of the Energy Capital Podcast. I’ve got not one but two guests for you today, both from the C-suite of Austin Energy, one of the largest municipal utilities in the country. It actually ranks as the eighth largest publicly owned electric utility in the U.S. and it serves about a million folks in the greater city of Austin. So today we’re going to be talking to Stuart Riley, who’s a current general manager of Austin Energy. Stuart has spent about 20 years in service of the city of Austin, starting as assistant city attorney.

Joshua Rhodes (00:33.4)

before moving up to various roles at Austin Energy. Lisa Martin is currently the Chief Operating Officer at Austin Energy, but she’s also spent times before at SoCal Edison, going through energy supplies and contracts and other types of things. And also from her LinkedIn, found out that she had something to do with subsea surveillance at Shell, which I actually want to just throw out all of the questions I have for you guys and focus just in on that. So sorry, Stuart, if we don’t talk about anything that we were going to talk about, but having found this out today.

Joshua Rhodes (01:02.19)

I’m really excited to have both of you all here to talk about Austin Energy. So Stuart and Lisa, welcome to Energy Capital Podcast.

Stuart Reilly (01:09.666)

Thanks Josh.

Lisa Martin (01:10.52)

Thank you, glad to be here.

Joshua Rhodes (01:11.944)

So in this podcast, we talk a lot about energy. We talk a lot about Texas energy. And a lot of times when we’re talking about ERCOT, we’re talking about the competitive regions of the system. And most electricity meters in the state of Texas are in kind of the power to choose region. But there are some parts of the states that are different, one being Austin Energy, the other being the City Public Service of San Antonio. And a lot of the co-ops are actually these things called non-optin entities. Stuart, can you explain kind of what

Joshua Rhodes (01:40.472)

those are and kind of how Austin Energy fits in the energy mix in Ircata and in Texas.

Stuart Reilly (01:45.582)

Yeah, absolutely. And Austin Energy has been around since 1895. Like you mentioned, we serve about a million residents, 580,000 customer accounts, homes and businesses. Not just in the city of Austin, but kind of in the Travis County region, we serve 11 other cities in our area and unincorporated areas of Travis County. Currently the third largest municipally owned utility, but

Stuart Reilly (02:09.128)

Operating in the Urquhart market as a non-optin entity. So because our history kind of goes back to this 1895 period when investor owned utilities didn’t want to come to Austin, our city decided to start this journey on its own, build a dam, build a powerhouse that served as the first street lighting system, the moonlight towers that we still have here in Austin. Even as the market evolved and even after the competitive market in Texas and Urquhart came to be.

Stuart Reilly (02:38.158)

We still operate as vertically integrated utilities. So we still have generation, transmission, distribution, and retail customers. And we do all of the customer service functions for the city of Austin. And so while we’re a vertically integrated utility in Texas, we still have to compete in the ERCOT market. our generation, we still sell all of our generation into the ERCOT market and we buy all the load to serve our customers.

Stuart Reilly (03:04.746)

out of the ERCOT market at the Austin Energy Load Zone. So even though our generation used to directly serve our customers, now it’s operating and bid into the market just like anybody else is operating in that ERCOT market. So really when you look at us as a vertically integrated utility in Texas operating everything from end to end, I think we have the ability to do more of what’s in our community’s best interest. Because if you’re

Stuart Reilly (03:32.59)

just operating in the ERCOP market as a generator, your interest is in generating more and that’s where your income is going to come from. For us, it’s really looking at the whole picture of what is the best outcome for the customer leading with our values. We’ve been trying to sell less of the thing that we sell. So if we’re a generator, we’d be generating more. If we were a rep, we’d be trying to sell more. So that’s really enabled us to be ahead of the game when it comes to

Stuart Reilly (03:59.658)

energy efficiency programs, rebate programs, solar programs, getting our customers to do things on the customer side that get to better environmental outcomes. Because we’ve been talking for years of decades, even in Austin, about how a kilowatt reduced is cheaper than a kilowatt produced. So if you’re looking at getting to cost effective environmentally friendly outcomes, we think we have that kind of advantage by looking at the whole picture by serving customers and operating.

Stuart Reilly (04:27.968)

as a generator in the market.

Lisa Martin (04:29.998)

And I’ll just add in that I think being municipally owned has really helped us get where we are in terms of being a leader in the energy transition because our public and our city council are so engaged. And so, you know, for right now we’re implementing our resource generation and climate protection plan to 2035. And a lot of it involves going out into the community and talking to them and saying, Hey, what is being a good utility partner look like to you? What do you expect out of your utility? And so we get lots of feedback from the community and our city council, and that all ties into what we’re working on.

Joshua Rhodes (05:00.494)

That makes sense and I want to dig into quite a bit of that, but Stuart, you actually brought up a really good point about some of the first uses of electricity in Austin being our famous moon towers. I just want to verify these are the same moon towers where the dazed and confused party at the moon tower be there comes from, right?

Stuart Reilly (05:17.282)

Yeah, and we have a little history center here in Austin Energy that shows some of that. And I think Matthew McConaughey is playing there around the clock telling people that there’s a party at the Moon Tower. I think that that really sparked a new level of understanding and appreciation for our iconic Moonlight Towers, which we still operate after all these years and they’re designated as Texas Historic Places.

Stuart Reilly (05:40.994)

We’ve been out in front of the energy transition, but we also hold on to our past in some ways. And that’s just kind of a fun example.

Joshua Rhodes (05:47.682)

That’s great. So we’ve talked a little bit about energy transition. There’s an expansion going on because load is really looking to grow. can you explain, like you touched a little bit on how Austin Energy sees things a little bit different than like a traditional generator. How would a place like Austin Energy be planning for like continued load growth? I’m thinking from like data centers and other types of these new loads.

Joshua Rhodes (06:11.608)

that are coming to the state. know Austin’s kind of the tech hub of the region. And so we’ve had data centers before, we have data centers, but what are you seeing out there that’s different?

Stuart Reilly (06:20.91)

Yeah,

Stuart Reilly (06:21.2)

I mean, right now as we’re implementing our resource generation plan and we’re implementing our electric system reliability resiliency plan, we’re making upgrades to pretty much everything. It feels like there’s never been a time at Austin Energy where so many things have been all happening at one time and all the challenges are kind of stacking on top of one another. And as you say, the load growth and what the projections that we’re seeing.

Stuart Reilly (06:45.652)

just jump off of the page when you look at that and there’s a significant amount of uncertainty around that and that poses a challenge of its own. But whether it’s looking at customer side resources, transmission import capacity, adding generation, we think we need all of it. Our resource plan is an all in plan. Right now we’re looking to add gas peakers. Frankly, we wish we didn’t have to, but there’s really no other solution that could meet that need from a reliability and a market protection standpoint.

Stuart Reilly (07:13.708)

But we know probably better than a lot of places that load growth is real. This growth is happening. The Austin economy, know, the Texas miracle, all of this has been happening in the background. think for years, it seems like the energy transition has been in progress. We’ve been moving along. We’ve been making great progress and it’s been happening in the background. People really haven’t had to think about it a whole lot.

Stuart Reilly (07:37.932)

But if Winter Storm Yuri didn’t change some of that, where a lot of people who never heard of ERCOT before now worry about it. So if that didn’t do it now, it’s AI data centers and the worries around that and where our power is going to come from. And so we know that it’s something we need to get ahead of. We’re probably behind the curve on this a lot. We expect that it’s going to continue. have team, our key accounts team, as they field calls from new customers all the time.

Stuart Reilly (08:04.942)

some larger than others. And it used to be that they were interested in larger and larger and these large load customers might’ve asked about 200 or 300 or even more. Now it’s how much power can I get and how fast can I get it? Many of them are looking outside of the Austin area because we have a pretty compact service territory. Even if they’re

Stuart Reilly (08:27.064)

going to be outside of the service territory. The Austin Business Journal recently showed a map of all the planned data centers, for example, outside of circling Austin. Even if they aren’t within our service territory, they still pose a challenge for us in terms of how we’re operating in the market, what is going to happen in terms of scarcity and pricing and us needing to have the resources to protect our customers from that market volatility that that can bring.

Stuart Reilly (08:53.442)

But as our team fields those calls from these potential large customers, we put these into categories of how likely those are going to come to fruition. Not just a study or not somebody who’s just kind of kicking the tires, but things that are really likely to occur here in Austin. And in that category, you know, roughly we’ve got about 500 megawatts worth over the next few years. And that’s on a 3000 megawatt peaking system. it’s.

Stuart Reilly (09:20.138)

Not what some other utilities are up against, but it’s not insignificant either.

Joshua Rhodes (09:25.358)

Would you be able to say like 500 megawatts? mean, would you be able to say you talked about sifting out kind of the things that probably aren’t real. Can you say what the other side of that would be? Like how much is that 500 megawatts of 50,000 megawatts or what is it? I mean, we’re all trying to grapple with like how much of this stuff is real, right?

Stuart Reilly (09:42.562)

Yeah, absolutely. And with the report that ERCOT grid quadrupling by 2032, I mean, we all know that’s not going to happen. It physically can’t happen, but even if it’s only a third of that, that’s still the ERCOT grid doubling. So it’s that uncertainty does pose a challenge of its own. And one of the things that I’ll say about that is, you know, we have a really diverse customer mix in Austin. We’ve got obviously a lot of government.

Stuart Reilly (10:10.938)

and universities, we’ve got the high tech. Some of that large load is large infrastructure projects that are coming to fruition or a project connect, you know, is going to be a large customer for us. So a lot of what we’re seeing in terms of load growth that we’re preparing for is beneficial electrification that’s going to also have a very good environmental outcome that comes with it.

Stuart Reilly (10:35.436)

I think people, when we talk about load growth at Austin Energy, people jump to the conclusion that it must be data centers and it’s really not. That’s not what we’re seeing here. It’s more of a healthy mix of the types of projects you would like to see.

Joshua Rhodes (10:49.302)

And Lisa, when looking at some of these new large loads, is it changing how a place like Austin Energy has to make infrastructure investments? mean, we’re a compact utility. are any of these new large loads changing how the planning studies are going for y’all?

Lisa Martin (11:03.982)

We

Lisa Martin (11:04.082)

certainly have a lot more of the planning studies because lots of people are asking the question to say, can you serve me? And we can’t just answer that question without doing some sort of analysis. But the fact is that we have an obligation to serve our customers, but we’re very honest with them to say, it’s not a matter of whether we can serve you, it’s can we serve you now and what kind of upgrades are necessary for that. And so a lot of times it’s let’s do the analysis and then they decide if they want to move forward knowing what the ultimate timeline is and what the cost is.

Lisa Martin (11:33.922)

I think this is an important part about the infrastructure planning is that additional infrastructure is going to ultimately cost more. And so we have policies in place to protect all of our existing customers from the added cost of that new infrastructure by making the new loads responsible for the cost it takes to serve them. And as Stuart said, in terms of our planning, it’s not just about what load is coming here to Austin. It’s also about making sure that we’re taking into account what loads are growing outside of Austin. We know.

Lisa Martin (12:01.614)

for a fact that it’s going to change the way power flows across Texas. And so it’s one of the reasons that makes local resources so important to our particular service area.

Joshua Rhodes (12:13.166)

I want to get to the resource manage or the plan and other types of things. You’ve both mentioned how loads that are not even inside of Austin Energy but around Austin Energy can impact the system. Can you break down why is Austin Energy impacted as a load zone? Well, how is it impacted by these large loads around it? And where are the ramifications for the load zone? And what does that mean for customers?

Lisa Martin (12:38.22)

Yeah, you when Stuart started, talked about how diverse our portfolio is from an energy perspective. And that’s not only in technology and fuel type, but it’s also in geographic diversity across the state of Texas. And that’s one of the benefits of being part of the ERCOT market. But what happens is if we end up saying that all these resources act as a hedge, if you will, in the market to offset what our costs are to serve our customer’s load. And if we have a bunch of resources that are

Lisa Martin (13:06.634)

across the state of Texas and there’s not the power flows, the transmission capacity to bring that power here to serve our customers. And I don’t exactly mean how the physics are exactly flowing or the electrons are exactly flowing, but we run into a problem where we aren’t able to serve our load here locally. So if we can’t bring it in from the outside and or generate it here locally, then we run into a supply demand problem that really becomes very hyper localized. And so

Lisa Martin (13:34.24)

When we talk about large load growth across the state of Texas, we know that’s going to change the way power is flowing. There’s also a lot of transmission upgrades that are happening across the state, but the fact is the grid is highly, highly dynamic, and all of that’s going to play a part in determining how our customers are served in the future. So we have to care just as much about what load growth is happening outside of our area to make sure that we can reliably and affordably serve our customers within our service area while also still advancing our clean energy goals.

Stuart Reilly (14:02.222)

And Josh, one thing that I will just add to that, we had the Decker Creek power station in East Austin, and there were two gas powered steam units at that power plant. And we retired the first one, 300 megawatts, I think, in 2020. And the second one in 2022, that was 425 megawatts. So 725 megawatts of local generation retired.

Stuart Reilly (14:26.91)

And so once that happened, we started to see our load zone price separate from the rest of the market, because then it becomes a question of how much the transmission lines, how much import capacity we have to bring the power in once we can’t make up any kind of difference with local power generation. And so we have a lot of projects underway to increase our transmission import capacity, about a hundred million dollars worth of projects per year.

Stuart Reilly (14:56.846)

for the next five years on our CIP plan to increase our transmission import capacity. But some of that is not going to be inside our control because we could move the bottleneck somewhere else. The pinch point moves somewhere further upstream, and then we still have that constraint of the amount of power that we can bring in. And so that’s why we’ve been talking a lot with our community about local resources.

Joshua Rhodes (15:19.01)

Maybe I can get y’all to correct me if I’m wrong, but just to kind of like level set for like, a lot of folks don’t realize that like generation and load pay different prices in ERCOT, right? A generator gets paid at the node at which it’s injecting power in the system. And there’s like 10,000 nodes across the whole system. There’s thousands of generator nodes. Theoretically, each of those could be a different price, but load pays like a load weighted average of the load zone, right? So there’s certain number of like nodes that kind of are grouped. There’s a couple of big ones.

Joshua Rhodes (15:48.578)

couple big load zones, north and south and west, but then there’s like Austin Energy has its own load zone. And so like the price paid for electricity by Austin Energy is like a load weighted average of the nodes within the Austin Energy load zone, right? And so if those nodes happen to be higher than other places, then prices would be higher in the Austin Energy area, right? And so I know we have a lot, I know Austin Energy, I’m saying we because I should probably...

Joshua Rhodes (16:15.926)

remind everyone that I’m a commissioner on the Electric Utility Commission for Austin Energy.

Stuart Reilly (16:20.758)

And thank you for your service on that. We appreciate you.

Joshua Rhodes (16:24.172)

Yeah, I appreciate it. But like a lot of the power plants that like Austin Energy has contracts with wind, solar, all these stuff, like, you know, the wind’s not super great here in Austin and we have a lot of other projects elsewhere. Can you talk about the difference in kind of like what you’re getting paid for that electricity versus what we’re paying here? tried to lay it out a little bit, but you do this every day. I just pretend to do this.

Stuart Reilly (16:51.246)

So yeah, we end up talking to our customers and our stakeholders a lot about this issue where we’re receiving a different price at the generator from what we’re paying to serve our load. So for example, if we have a wind farm or actually let me say a solar farm out in West Texas, if we’re paying under a PPA for that solar farm $50 a megawatt hour and we’re receiving $50 in the ERCOT market at that node, then we’re even. That’s been a good hedge except

Stuart Reilly (17:20.622)

that we then need to buy at our load zone to be able to serve our customers. And the whole reason we own generation is to act as a physical hedge against ERCOT market volatility. So if our load zone separates from the rest of the market, let’s say in the solar ramp down period of time in the summer, 9 PM and prices are at $850, that distant renewable that’s earning $50 versus what we’re paying at our load zone, it’s not acting as a hedge anymore.

Stuart Reilly (17:49.974)

We can’t use those types of resources to offset our customer load anymore. And the challenge there is if, unless we have something that can collapse our local load zone price, it’s very hard for us to add more and more and more renewables because then you just end up adding more and more of a cost, but you can’t use those renewables as an effective hedge. So if we can collapse our local load zone price with local resources, that actually enables us to add more renewables throughout.

Stuart Reilly (18:19.212)

the state throughout ERCOT that could effectively hedge what our market exposure is and protect our customer bills.

Joshua Rhodes (18:26.606)

Boston Energy has set some really strong clean energy and climate targets and along with the city and other pieces. But as we’ve mentioned, one of the things about the latest generation plan is that it calls for a gas peaker and it’s related to this issue of this load pocket price separation and other types of things. So can you just lay out how you see it working in the system given the clean energy goals in the climates? We’ve touched on it, but how does it fit here?

Lisa Martin (18:53.4)

How do natural gas peaker units fit into the system? Is that what you asked?

Joshua Rhodes (18:57.014)

Right, yeah. So in particularly like the one that’s being proposed in the resource management plan, how does it fit in terms of like Austin Energy’s goals?

Lisa Martin (19:05.934)

Yeah, so Austin Energy does have very advanced clean energy goals. We are industry leading on that front. And one of our goals is to be 100 % carbon-free generation as a percentage of load by 2035. And that’s a lot of words that sometimes gets confusing. And so how I like to explain to people is that our objective, our goal, is to be able to serve 100 % of Austin Energy customer usage with carbon-free generation in 2035 and beyond.

Lisa Martin (19:35.446)

And so that doesn’t necessarily preclude other resources from being part of the portfolio. We definitely look forward to the day when we don’t need any emitting resources in the portfolio, but we recognize that technology has to be an enabling factor to get us to a place where that’s the case. And so right now, natural gas peaker units remain a very key part of the energy mix, especially as the energy landscape continues to evolve. Stuart just talked about the load zone price separation.

Lisa Martin (20:04.152)

That’s literally the ERCOT market telling us that we have a reliability issue. It’s an economic market that is suited to create a reliable grid for Texas. They use price signals to say, you don’t have enough supply to meet your customers’ needs. And that becomes a physics problem for us. If we can’t get the power to serve our customers, then we run the risk of having local controlled outages. And that’s the situation where we have to turn off people’s power here.

Lisa Martin (20:32.152)

because there’s no other way for us to serve them. And the rest of customers across ERCOT would be fine. It’s because we have a local reliability issue. And the story really goes back way further than this. But even if I just go back to the beginning of this decade, Stuart also mentioned that since 2020, we shut down two of our largest local resources. That’s 725 megawatts of local generation that’s no longer available. We absolutely needed to do that because of age and wear and tear. And in support of our clean energy goals,

Lisa Martin (21:01.24)

taking those units offline removed our highest emitting local sources from the area. But the trade-off is that now we’re basically operating at a deficit. And so that’s at a time when now we’re seeing year-over-year new demand peaks, both in winter and summer. And then there’s also other changes in the air-cut market. We talked about the load growth, the large loads, and things like that. Also, extreme weather happening. So the natural gas peaker units

Lisa Martin (21:27.094)

are one of the various tools that we think we need in our portfolio. We sometimes call this all the tools in the toolbox to mitigate various risks. so natural gas peaker units, when it comes down to it, they provide the grid reliability when the demand threatens to exceed the supply. That’s really what’s signaled by load zone price separation. They provide for your long duration energy needs, especially for extended time periods and extreme weather. And then most importantly, they provide black start capability. And that means that if

Lisa Martin (21:57.004)

The worst case scenario happens and the entire Burkitt grid goes dark. You have to have certain units that can start up from nothing. And we have some, but they’re aging. And I wouldn’t want to rely on them for too long if the worst case happens. So we need natural gas peak in use as that resource.

Stuart Reilly (22:13.966)

Stuart Reilly (22:14.286)

Austin Energy, think if we can solve the reliability piece, we can get back to what we do best, which is clean energy. That’s sort of in our DNA. And so what we’re looking to do is solve the reliability equation and get cleaner and cleaner and cleaner and keep executing. We’ve been setting records in recent years with local solar demand response records, know, adding batteries. We’re bringing more batteries for, we’re already about to exceed our brand new battery storage goal and we’re going to even add more.

Stuart Reilly (22:44.014)

And so that’s kind of been the history of Austin Energy is setting targets and then exceeding them. But in terms of how gas fits into our goals, I think they can actually enable us to more effectively meet our goals. And part of the reason why I say that is I think it’s been 2016, 2017 is about the last time when we did a large renewable energy PPA for Austin Energy. And I used to work on those contracts.

Stuart Reilly (23:13.77)

In that market for new clean energy resources, it was easy. There were a ton of bids, the prices were very good. They acted as an effective hedge for us. And now what we’re seeing is the pricing isn’t as favorable. There aren’t as many projects coming to fruition looking for off-takers and they don’t act as a good hedge for us because our load zone is separating from the rest of the market. So that signal of that supply and demand equation.

Stuart Reilly (23:42.274)

where if you can do something that solves for that reliability piece, then we can get back to executing on more clean energy projects, which is just what we’d love to be able to get back to.

Joshua Rhodes (23:53.004)

One of the key things I think you said in terms of, you if we’ve got this load pocket price separation between Austin Energy and the rest of Burkott, having more renewable energy contracts, more PPAs isn’t really helping out. Did I hear you say that having the plant lets you get more renewable energy? Can we pull on that thread just a little bit more? Because I think, I don’t know, that’s a bit counterintuitive perhaps.

Stuart Reilly (24:14.55)

Right. And it’s counterintuitive that it wouldn’t actually do anything negative towards our carbon free as a percent of load goal, because the goal isn’t whether or not you have peakers available or not as that reliability backstop that you might need. The goal is, do you have enough renewable energy, carbon free energy to cover your load, to serve your customers? And so pulling on that thread a little bit.

Stuart Reilly (24:39.394)

Having a resource that can turn on at the time when our load zone has separated from the rest of the market can immediately collapse that market price and those critical times. And then those contracts for those renewables that we have cited elsewhere can actually function the way that they’re supposed to in terms of being a good market hedge and providing a market resource for our customers that doesn’t merely add more costs on top of.

Stuart Reilly (25:07.968)

other costs. It’s almost like think about how we can pay a premium once. In my example in West Texas, if we’re paying that PPA price, but maybe the market’s not giving us that full PPA price back, we’re paying a premium for that renewable energy. But then we’re also paying a premium again in our load zone. And at some point you just butt up against your affordability goals and we’re trying to balance everything.

Stuart Reilly (25:31.732)

Our goal at Austin Energy is to safely deliver clean, affordable, reliable energy and excellent customer service. I mention that because in our mission statement, we have clean, affordable, reliable, and we’ve spent a lot of time talking to our community about there’s no perfect resources. There’s resources that all have their pluses and minuses. There’s no silver bullet. So figuring out the trade-offs between affordability, environmental sustainability, and reliability, what trade-offs can we live with? It’s finding the right mix.

Stuart Reilly (26:00.8)

And gets us back to our really diverse portfolio. And once we get that mix right, we can execute best. I mean, we spend a lot of time talking about the challenges of the clean energy transition. And I hate that because it can sound to some people like it’s negative, but really we’re not going to win this race in the clean energy transition. If we’re not honest about the challenges that we have ahead of us in executing on it. And so we have to kind of hold.

Stuart Reilly (26:26.7)

Simultaneously, the understanding of where we are on reliability while we also believe in the direction that we’re going. And that direction is the right long-term direction. It’s compelling for so many reasons. And we’re still on that path, regardless of what kind of local resources you need to help out with that.

Joshua Rhodes (26:43.31)

Yeah, it’s one of the questions I’m often asked when I’m talking to media or other things about Texas in general is like, Austin Energy, notwithstanding, like people ask, why do have so many renewables? And it’s like, well, because of the cost, they’re cheap. I mean, they produce a lot of low cost energy. It’s also clean. They produce a lot of low cost energy, which in our market structure is valued. One of the things you talked to a little bit about was like communicating these issues with customers, with stakeholders and other types. How are you trying to communicate that? Like we’ve talked about some like very complex things from

Joshua Rhodes (27:13.142)

load-weighted average prices to the ability of local generation to offset premiums across the state. How do you communicate this to the public? I guess I’m asking you to communicate this to the public right now.

Stuart Reilly (27:25.76)

Yeah, yeah. I’ll start and then Lisa can jump in because she does a lot of this. It feels like being the chief operating officer at Austin Energy is probably a chief communications officer most of the time because we end up having so many of these conversations. But I think we have to start with a common set of facts because if there’s not a shared baseline understanding about why we have energy resources to protect our customers, we don’t make money off of energy resources. We merely use them to reduce our customers’ bills.

Stuart Reilly (27:55.916)

We need to start there at those kinds of things because if we don’t start with that common understanding of some of the basics, it’s just going to be a very frustrating conversation for everyone. But we end up having to show our work a lot. mean, like I said before, energy isn’t as much in the background as it used to be. It’s not as invisible supporting Austin as it used to be. People have to think about it more.

Stuart Reilly (28:20.21)

Even though we still probably all wake up, unfortunately, the first thing I do is I grab my phone that’s been on the charger, know, make some coffee, all these things that nobody’s thinking about unless your power is out and it’s all you can think about. And so now people know a little bit more about some of the challenges. It can be a little bit frustrating and trying to help them understand what some of those challenges are with the added nuance and complexities of the ERCOT market because

Stuart Reilly (28:48.11)

When you’re a public power utility like Austin, you have to show your work and you have to bring the community along in that conversation.

Lisa Martin (28:55.982)

Yeah, I think that for the community and our customers, especially when it comes to complex topics, we definitely have to take them on the journey with us. have to, as Stuart said, show our work and help explain to them what we see in our daily work lives. for example, Winter Storm Uri back in 2021, we had resources that ultimately, because they were running during that time, the net, Stuart’s been talking a lot about costs, it ended up being net revenues.

Lisa Martin (29:24.366)

of over $100 million that we ended up passing back to our customers. And since then, we’ve retired a lot of our older gas generation that ultimately contributed a significant portion to that savings. And so people don’t really understand that. They think, oh, well, it was a statewide grid emergency. There’s not anything locally that really has an impact to that.

Lisa Martin (29:46.328)

We have to take the time to help people understand the complexities of those kinds of situations to help them understand where we’re coming from as we’re making expert staff recommendations. It’s the days of saying, you go take care of that situation. I just want to make sure that the lights come on when I flip the switch. For a large portion of the population or some portion of the population, that’s not the case. And so we have to really help them understand the trade-offs of every decision that we make. And then we take their feedback and we bake it into the work after we’ve educated them on the challenges.

Lisa Martin (30:16.6)

But I also have learned that there’s another portion of the population that doesn’t really understand everything we’re doing. despite how many times we talk to them and we try to help them understand through, it’s really important to still talk to those folks, but just to listen to their values. Because you don’t really have to be a technical expert to have an opinion on what you want out of your electric service provider, out of your electric utility. And so we’ve spent a lot of time building up to the Resource Generation and Climate Protection Plan adoption and even here recently.

Lisa Martin (30:45.528)

to talking to the community. And we recognize they want reliability, affordability, environmental sustainability. They want all three of those, but there are definitely trade-offs between those values. And so when we ask them to kind of help us prioritize, help us understand, because each resource has advantages and limitations, we’ve heard time and time again from our community that they want us to prioritize reliability, and they want us to make sure we’re taking care of the most vulnerable on all fronts. So.

Lisa Martin (31:13.026)

There’s a lot to it. A lot of our job is communication, but it’s also really understanding the complexities of everything that we’ve been talking about here today.

Joshua Rhodes (31:19.79)

Another thing about like local resources, there’s been a couple announcements around local energy, local energy storage resources. We’re going to talk about some of the big batteries and some of the small batteries that are coming to the area that might help with some of this.

Stuart Reilly (31:32.376)

Yeah, first of all, we had a contract that we executed with Jupiter Power for 100 megawatt, four hour battery. We also have approval and we’re still in negotiations for 40 megawatts of battery storage with Base Power Company. And so we’re excited about that kind of on the home stretch of getting that contract done. So we had only a little bit of storage here locally in Austin, some really important work that had been done years ago, learned some really important lessons.

Stuart Reilly (32:01.446)

And obviously batteries are improving and we’re investing quite heavily in batteries. We also have another contract that we’re bringing forward for authorization to negotiate on another 100 megawatt two hour battery system. So that’s coming soon. So a lot of people are excited about the base power company, 40 megawatts of battery storage that we’re in the process of working on. Hopeful that we’ll be able to announce more on that soon, but essentially

Stuart Reilly (32:29.762)

For us, it’s simple. We have 40 megawatts of battery storage that we can deploy just like it’s a large utility scale battery system. And we can charge it and discharge it when power prices and demand decrease and increase. And we’ll manage that resource in a way that helps us with our wholesale energy prices, peak load reduction. They can quickly put energy across our system.

Stuart Reilly (32:54.446)

The difference of using the distributed model has another benefit for our community, obviously, and these residentially sited backup batteries that Base Power offers will be a resiliency solution for those customers as well. So there’s a lot of different attributes that different batteries have. We’re also doing a distributed battery demand response program with $500 rebate and then $300 a year based on the performance of that battery when called upon.

Stuart Reilly (33:24.182)

And so if I remember correctly, I think we have 17 megawatts of batteries here installed in the Austin Energy Service Territory. And we really want to capture those batteries and make them part of our system. So offering customers an incentive to join our program so that we can use those batteries. It’s like a Ferrari parked in their garage that they’re never driving. And so we want to basically be able to leverage those battery systems and also provide a benefit to our customers.

Stuart Reilly (33:50.744)

So a lot of different stuff going on in terms of battery storage, both at utility scale and distributed residential scale.

Joshua Rhodes (33:58.092)

Yeah, can you speak a little bit? So one of the things around like getting to a point of interconnection or being able to site like infrastructure is becoming harder. We’ve talked a little bit about Austin Energy being a pretty compact area. I love the idea of distributed batteries in terms of just being able to deploy things quickly if we can communicate with them in a timely manner. Do think that’s going to be like the way forward for places like Austin Energy because of just how may presumably easier it will be to like deploy them everywhere? Those are my words, not your words, but I’ll let you say.

Stuart Reilly (34:26.7)

Yeah, it’s easier from a siting perspective, but from a customer outreach perspective, it’s a lot of different customer relationships and a lot of sites to execute on. You let’s say over 2000 sites to get to that 40 megawatts, something like that. And so there are challenges and that’s why it was attractive for us to try to link up with somebody like Base Power who has that model already to do the customer outreach. They can.

Stuart Reilly (34:55.883)

develop their own customer base and then those customers are buying into a base power concept. Their bill with Austin Energy doesn’t change. And so there’s that kind of arrangement. So I think it is harder to find the space for, let’s say, a hundred megawatt battery. It’s harder to do the interconnection. There’s a lot more to that, but the flip side, there’s just a lot of legwork on that side as well. Something else I’ll point out is

Stuart Reilly (35:21.762)

depending on the battery sizes, we could see some impacts to our distribution equipment, you know, in terms of transformer sizes and things like that. If I were an investor owned utility making a rate of return on my capital investments, I might like that a battery was sized such that I need to change out a transformer. But as a cost recovery utility here in Austin Energy, we’re just trying to protect our customers. So we’re trying to do it in a way that minimizes the need to make a lot of

Stuart Reilly (35:50.806)

infrastructure change outs that could increase costs, thinking about how we do it smart, how we locate it well. But I agree with you that it’s very attractive because even if we have areas where we might need additional voltage support or something like that, batteries can really help out in those types of areas.

Joshua Rhodes (36:08.258)

Yeah, there’s long been like this conversation around like deferment of distribution infrastructure for properly siding energy storage and things like that. it’s the incentives haven’t always been aligned with every utility. Would you say that they’re more aligned with Austin Energy than with other types of utilities like in Texas and around the country?

Stuart Reilly (36:27.064)

Can you ask the question again?

Joshua Rhodes (36:28.866)

Yeah,

Joshua Rhodes (36:29.226)

so one of the concepts that’s often talked about is distributed storage being able to defer distribution level upgrades. But a lot of times, utilities that are just making a regulated rate of return on capex may not want to defer distribution infrastructure investments because then they make a lower rate of return. But it sounds like the incentives may be different in Austin Energy than in other types of utilities. Is that the case?

Stuart Reilly (36:55.456)

Yeah, I think so because like I said, we’re cost of service utility. So we’re going to set rates at cost. We’re not looking to invest more to make a rate of return. We’re looking at doing what the smart moves are to be the most cost effective for our customers. And so there do happen to be times that come around where distribution transformer sizes end up being

Stuart Reilly (37:18.89)

undersized as development keeps coming and density is added and a lot that used to have one house has multiple houses or something like that. And we have to keep up with that. But I do think there are other attributes for the distribution system that batteries can help with just in terms of the amount of stress on the grid. It’s not just how much deferred maintenance are we avoiding through those. I think we can find some benefits to the distribution system as well.

Stuart Reilly (37:47.822)

you know, pairing them with solar, pairing them with electric vehicles, you know, once you plug everything together and we’re smarter about things and we have the programs that deploy those resources at the appropriate time, our hope is that there isn’t a great amount of impact to the distribution infrastructure.

Joshua Rhodes (38:06.126)

Yeah, I remember way back one of the things around like the Con Street project and is located in Austin and Austin Energy’s service territory. When we were looking at in the Miller development in terms of, you know, a lot of these homes had solar, there were some very early scale batteries out there. A lot of them had like electric vehicles. And I remember one of the big papers and or findings that kind of came out of there was like when you’re adding all of this stuff to the distribution network, like the transformers were running hotter. You’d have

Joshua Rhodes (38:33.976)

highly electrified homes consuming electricity all day, maybe they’re charging batteries, but then at night they’re charging electric vehicles. And so like the transport never had a chance to like cool down. I think one of the things was like, you batteries could potentially help like with this, with shifting some of this stuff around. At that point, they were quite expensive, but it seems like we’re finally getting to that point where they’re going to be more easily justified in terms of putting on the system.

Stuart Reilly (38:57.804)

And I remember some of those days kind of at the early days of some of our electric vehicle programs. And we had a program where we were having people register where they had EVs so that we could keep up with where they were all going so that we knew what we needed to do with transformers and other equipment. Well, EVs in Austin have taken off and we really haven’t seen those types of impacts here. There aren’t a of transformers bubbling out there.

Stuart Reilly (39:23.202)

So I think 13 % of all new vehicle registrations in Austin are EVs and we’re not seeing those impacts. And honestly, it isn’t a list that we could have kept up with anymore anyway. But yeah, I remember when that was the concern, that concern hasn’t quite materialized. And I think part of that is if we have the behaviors right, it’s charging at the right time and those kinds of things helps a lot.

Joshua Rhodes (39:46.892)

Yeah, I seem to remember this concept of Prius maps. People were looking like, okay, who has Toyota Priuses and where are they? Because those are going to be the people that are probably going to adopt electric vehicles first. I don’t know if Austin ever had any of those. I vaguely remember hearing them of them at somewhere.

Stuart Reilly (40:02.19)

With batteries now, there’s kind of that you see your neighbor gets one and you ask them about it. It’s like solar and EVs and batteries are in the same category where maybe your neighbor does it and you ask them and then you start to see clusters of them. And so that is something that we just have to be mindful of. It can have impacts, but we haven’t really seen a great amount of impact on that so far, luckily.

Joshua Rhodes (40:25.358)

Sounds good. Well, Lisa and Stuart, thank you for coming on the Energy Capital Podcast. I really appreciate it.

Stuart Reilly (40:30.232)

Thank you. Happy to be here.

Lisa Martin (40:31.8)

Thank you so much for having us.

Joshua Rhodes (40:34.264)

Thanks for listening to the Energy Capital Podcast. If today’s conversation helped you make better sense of how the energy system actually works, share the episode with a colleague and hit follow on your podcast app. You can find us on Apple Podcasts, Spotify, and all the usual platforms. For deeper analysis and context each week, subscribe to the Texas Energy and Power at texasenergyempower.com. That’s where you’ll find every episode, every article, and our latest updates. We’re also on LinkedIn, X, and YouTube.

Joshua Rhodes (41:03.64)

where we share clips, insights, and ongoing commentary on energy policy, markets, and the grid. Before we go, a quick note. The views expressed on this podcast are my own and do not represent the official positions of the University of Texas, Ideasmiss, Austin Energy, or Columbia University. A big thanks to Nate PD, our producer. I’m Joshua Rhodes. Thanks for listening, and we’ll see you next time.

]]><![CDATA[Process is Killing Texas Data Center Projects]]>https://www.texasenergyandpower.com/p/process-is-killing-texas-data-centerhttps://www.texasenergyandpower.com/p/process-is-killing-texas-data-centerWed, 06 May 2026 10:07:55 GMTAs the data center buildout in Texas accelerates, the public conversation has fixated on generation, interconnection queues, and gigawatts. But the firms actually structuring these deals see a different problem entirely: process.

In this episode, Joshua Rhodes speaks with Maura Yates, chief executive of Mothership Energy. Mothership is one of the most active retail electricity providers in ERCOT’s large-load market, managing more than three gigawatts of large load and writing more than 39 distinct data center contract templates to handle the variation across deals.

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Yates says the technology to power data centers exists. The bottleneck for data center completion is the time it takes to sign contracts for electricity service and the time it takes to connect them to the grid. As Texas debates SB6 implementation, co-location rules, and demand-side management, that distinction is shaping which projects get built and when.

Joshua and Maura discuss topics including:

  • Why Mothership has written more than 39 distinct data center contract templates.

  • The difference between behind-the-meter, front-of-meter, and co-location deals.

  • What the Crusoe Goodnight data center PUC ruling means for future co-location projects.

  • Why most data centers are data center companies, not power companies.

  • HowYates expects ERCOT to integrate large load without pushing costs onto residential customers.

Energy Capital Podcast is produced by ClarityForge Studios.

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Timestamps

  • 00:00 - Introduction & Maura Yates

  • 01:26 - Building Mothership from Both Sides of the Market

  • 03:27 - The Problem Mothership Was Created to Solve

  • 05:51 - White Label REP Model and Getting DERs into ERCOT

  • 08:37 - Option One vs. Option Two Retail Licenses

  • 10:42 - Selling the Residential Book and Pivoting to Large Loads

  • 13:27 - Entering the Data Center and Bitcoin Mining Space

  • 16:24 - How Mothership Structures Data Center Deals

  • 19:13 - What the Market Needs: Process Over Technology

  • 21:24 - Co-location, Net Metering, and BYOG in ERCOT

  • 26:13 - Do Data Centers Actually Want to Be Power Companies

  • 28:12 - Eclipse: Mothership’s Market Access Platform

  • 32:01 - Forward Curves and Empowering Price Takers

  • 38:07 - The Grid’s Future: Distributed Supply and Data Center Growth

  • 41:03 - Closing

Resources

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Company & Industry News

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Transcript

Joshua Rhodes (00:04.366)

Hi, everyone, and welcome to the Energy Capital podcast. I’m really excited to have Mara Yates here to talk about mothership energy in ERCOT. Mara Yates has over 20 years of experience in the power industry, starting in distributed energy resources at Arizona Public Service before moving to governmental affairs at Sun Edison and then becoming VP of sustainability at NP2 Energy, which was bought by Shell in 2017. In 2021, Mara co-founded and is the CEO of Mothership Energy Innovations with her business partner, Caitlin Brammer.

Mothership is the 18th largest retail electricity provider in the nation and is contracted and manages over three gigawatts of large loads in ERCOT. In addition to being a rep, Mothership provides risk management, technology and consulting services to electric cooperatives in Texas and specializes in data center and wholesale procurement. Yates, welcome to the Energy Capital Podcast.

Maura Yates (00:54.712)

Thanks for having me. Super excited to be here chatting with you all.

Joshua Rhodes (00:58.05)

Yeah, and we’re again, super excited to have you. Before we dig into mothership and your current role, like looking back kind of where you’ve come from, your LinkedIn started in a regulated electricity space at Arizona Public Service before kind of going into more corporate with Sun Edison and MP2 and Slush Shell. And now you’re CEO of like a company in the really competitive space. How were those different, those roles that you have in the different spaces where they

Maura Yates (01:26.35)

That’s a really good question and it’s one I enjoy answering because ultimately it’s that background that has allowed us to create incubator mothership innovations to be the shock that it is. So when you look at the places that have spent time, I’ve spent time at the utilities, I spent time at the development side, both a DER and large scale solar development shop, all the way then to a deregulated pseudo rep slash utility in ERCOT. And really just bounce back and forth from utility side.

to developer or industry side, back to a version of the utility, back to the industry side. And now I’m back on quote unquote the utility side or the delivery side and supply side. And where we’ve landed with Mothership is really taking the learnings of participating and being a part of a company on both sides of the transactions, right? So you typically have the utility on one side and the developer on the other side.

And so by jockeying back and forth between these spaces, between our regulated utility all the way into the deregulated market, it’s given us a really well-rounded understanding of how these different parties participate in the market, but also really what they find important and what they find valuable and like, what is it that the utility is trying to get out of transactions? What is it the developer is trying to get out of transaction? And when you better understand both sides of a transaction, you’re able to come up with a better solution for the transaction.

which is why, again, we’ve developed mothership in its latest stage to really be this deal shop and this service provider for both developers and other load serving entities and utility providers. And I should clarify, I’m using utility and like not the traditional ERCOT sense of TND, but really the one providing and servicing power to the end user.

Joshua Rhodes (03:10.094)

Yeah, no, that makes sense. like, can you kind of tease out a little bit like of that? I seeing both sides of kind of how things operate is super valuable. So as you were seeing both sides, can you kind of tease out what was the problem that mothership was originally created to solve? Talked about both sides, but what was that problem there?

Maura Yates (03:27.596)

Yep. So the more time that we spent on both sides of these deals. So for example, I go back all the way to Arizona Public Service when we structured some of the first utility incentive programs and we were very aggressive, like in a very solar friendly way in terms of the incentives we were offering. So we worked really closely with the industry and the solar and battery developers. And our goal there was to better understand what is it that gets you to transact, right?

Like if our goal as the utility was to get solar adopted by homeowners, what is it that the solar homeowners need to adopt? And what is it we as the utility then need to provide to enable this transaction? And we did a good job. Typically the utility or the load serving entities role is to provide some form of incentives and compensation. And we did that and we had success. We deployed a lot of projects, but incentives aren’t the most sustainable mechanism for growing an industry. So you have to continue to find value and way to

extract value as you move away from incentives as the technologies become more competitive. When you start moving down the advancement and the maturity continuum, you start to realize that the challenge in getting these technologies deployed from both sides is really the customer experience. Something has to change in the customer experience. Everybody talks about it, both utility talked about the customer experience and the developer talked about the customer experience.

But they talked about it differently and it’s the same customer. So our point was this customer is facing a very bifurcated customer experience. They would get a bill from their solar developer. They’d get a bill from their retailer. They said that solar developers sold them on one thing, but then when they got this bill, they can’t make sense of it. They’re speaking two different languages. And then all of sudden you have a bad customer experience and the customer’s not happy with their solar. Their expectations weren’t met because they were set the incorrect way.

And so when Winter Storm URI happened in 2021, this thesis really became a more apparent need. We observed that if more distributed energy resources had been in the market, they would have had a massive impact on what happened during URI. And when you take that step back and say, why weren’t more DERs in the market? For us, the answer was the value proposition is too complicated. It’s still too much of a bifurcated experience.

Maura Yates (05:51.566)

for the customer. So our original thesis at Mothership was and is to be a white label retail electricity provider. However, in the beginning, we were focusing on these DERs. Since then, we’ve now migrated to the other end of the spectrum and do very large load. Yeah, kind of getting further from the beginning. But the idea with the original launch of Mothership and our first clients that we launched with were, hey, we need to get more customer-cited, residential-cited assets in the market.

Joshua Rhodes (06:07.202)

We’ll get that.

Maura Yates (06:21.582)

because that’s where we’re going to see reliability. In a market, we’re going to continue to grow to have challenges because that residential load shape is the one that creates that fall. And so as such, how do you do that? How do you get customers more comfortable with adopting? And our thought was we got to turn it into one. The solar company, it all has to be the same customer, the same economics that are all being balanced between one transacting party rather than a solar company and a retailer that both have their own.

value props in their own metrics. And so if you put it together, it starts to become a more seamless customer experience. Now, the challenge is when you’re asking these solar companies and these distributed energy providers who I’d spent my career working with to become a retailer and a market participant, that’s a really different risk profile than what they’re used to. You go from talking kilowatt hours to megawatt hours. You go from talking about, I need to deposit on your PPA.

to I’m getting a margin call from the market, I got to post collateral. It’s a very, very different transaction world. And so when you think about it, if you’re trying to blend these two worlds together, you’ve got a DER company and you’ve got a traditional retailer, who’s going to embrace the other, right? Is it the retailer that becomes the solar company or is it the solar company that becomes the retailer? And it is our thesis that really these solar companies are best suited to become the retailer.

because it’s these solar companies and DER providers that have that long-term touch, that long-term anchor agreement. And more importantly, that’s what’s leading the conversation with the customers. So we need to figure out how to get them enabled. They’re not quite really prepared to be a rep. so, mothership, the origin of mothership is we would white label this to help them get into the market. We’d show them how to be a rep. We’d teach them.

We’d help them understand where risk is, how to mitigate it, how to use their assets for it, and really understand what a P &L looks like, all with the anticipation that once we show you, get it set up for you, we want to send you on your way, you’ve grown up, and go do it on your own. So the original was really designed around a customer experience to figure out how to get more DERs in the market.

Joshua Rhodes (08:37.048)

This actually brought me to something when I was researching a little bit on moral mothership, the concept of an option two rep, which I’ll be honest, I had to look up. I didn’t really know. Like when I think of reps in the Texas space, I guess I’m thinking of option one, that your general like retail electric providers that most people probably are signed up with or using. So can you explain what an option two rep is and kind of how it operates in the space and how it’s different?

Maura Yates (09:00.984)

So Josh, the question around option two is really interesting because at Mothership, we actually operate a bunch of different retail electricity providers, a combination of option ones and option twos. historically, majority of retailers in the market had been option one. Option one is what allows you to serve Rezzy, small com, and everything that’s essentially sub one megawatt or even greater than one megawatt. But it’s really the universal type of license.

And at Mothership, we operate several of those. And I should clarify, under each license, you’re also able to do these things called sub-LSEs and even further segregate and divide. And it’s a key thing that we do at Mothership for risk isolation, but also data. It gets way more clear and pristine data that’s not co-mingled when you do this type of segregation. So that’s the option one piece, but then we also operate some option twos, as you’ve noted. And with an option two,

Historically, it’s been used for really large, more sophisticated industrial loads that have come into the state and didn’t necessarily need to go through a retailer. They had enough load, or a traditional retailer in option one. They had enough load themselves. They perhaps had enough sophistication. You can become your own, with an attestation, a retailer designed for just one megawatt and above loads. So a load will attest that they will be serving and employing power themselves under this setup. And as a result,

it’s less regulatory requirements because you’re just really focusing on that load that has attested that this is their option rep. So from a regulatory standpoint, a lot lighter, but again, really geared towards these larger facilities. So we anticipate seeing a growth of option two retailers in the future.

Joshua Rhodes (10:42.894)

That makes good sense and I think it’s actually a pretty good transition point into kind of where Mothership is. So it looks like in 2025, like Mothership actually sold a large book of retail customers to Atlantic Energy. And can you explain that pivot and kind of like where you were looking to go like with that?

Maura Yates (11:00.268)

Yeah. Great question. I hope this doesn’t offend everybody in the resi space, but those in the resi space know exactly what I’m talking about. Resi is just a different beast to serve. The risk profile is different. In ERCOT, historically, when you serve resi load, you are short the market. You’re always short the market. And the reason you’re always short the market is because it’s what resi load that was driving this volatility. The load shape, the elasticity, resi is super volatile. And it’s really hard.

to reliably serve that and also do it in a cost effective manner for both the retailer and the load. I mean, I can create a retail rate for a Rezzy customer that has me de-risked, but that’s not a rate a Rezzy customer is gonna pay. And so it’s really the question of for the rate the market will bear, how much can you de-risk it? And it’s hard to de-risk it given where the market pricing is. So we chose to exit the Rezzy market for the general challenges of Rezzy as a result of us

receiving a very large influx of requests from very large loads. So as you can imagine, the book that we sold to Atlantic was a rather large book of RCEs and it seems like 100,000 meters. We can serve that same capacity with maybe one or two large meters customers. So for us, it just became an efficiency standpoint. However, I will also say super grateful and appreciative of our time of doing Rezi because

They’re a huge piece of the market. And unless you understand how Rezzy behaves in the market, what that load does to real-time SPPs, what it does to the load forecast, until you understand how Rezzy behaves, you don’t fully understand the market. So we understood it. It’s innate. We felt it. We’ve hedged it. We’ve worn that risk. And it gives us a good idea of how the ERCOT market behaves as a result.

Joshua Rhodes (12:50.21)

Yeah, that’s one of the things I’ve always said and like in a lot of my research and stuff at the University of Texas and other places, like the residential consumer was a swing consumer and it was the one that increased the most whenever the temperatures either got really cold or really hot. I hear you, got to understand kind of residential in Texas just because of our air conditioning load, electrification of heat, all these other types of things. So you sold a large book of retail customers and you mentioned it just a second ago where you can serve the same amount of load with just one or two large meters.

versus hundreds of thousands, potentially, of smaller meters. So can you talk about where that pivot went to in terms of what are you all up to now?

Maura Yates (13:27.532)

Yep, great question. So a lot of the same thesis that caused us to start the business of changing the customer experience, bringing more nimbleness and innovation into the resi space was what allowed us to gain a reputation outside of the resi space at the same time. a lot of really complex conversations started coming to us. Folks knew us from our past lives when we spent time at MP2.

And they were looking for a lot of really complex deals and feedback on how to do something boutique. And they knew that we did that in our past life. So they asked, hey, can you guys start doing it again? And it was a really important time in the market. So post 2021, that’s when you started seeing a lot of the Bitcoin mining and the data or the crypto market moving to town. And at first, I think my initial response when someone said, do you guys want to serve Bitcoin? was like,

We’ll it on the second round, you know? We don’t want to do it right away, but we’ll catch it on the second round. We were still a small shop and money, like that’s a big position to put on. And so we passed on the first couple and we started to educate ourselves just through more dialogue. And through education, we learned about how to de-risk these and the appropriate ways to de-risk these. And we became really disciplined and okay, these are our risk parameters for doing a deal. And if a deal will do it under these parameters, we’ll take it. But we’re not willing to go beyond our risk parameters because

This is a big project and one thing going wrong could be chaos. And so we got really disciplined and being disciplined and also really good at the boutique structures allowed us to get into some deals that were so nuanced that we were the only ones who could possibly structure and put it together. And so as a result, our risk conditions could be met in this complex structure. And we started papering transactions that required, you know, seven, eight different documents to be transacted at the same time.

in order to make the power flow. And so after we did a couple of those, people knew that we had this reputation for being the shop that will kill a lot of brain cells, spend a lot of time, and think really creatively about how to get a solution. Because this all goes back to, OK, the goal is to get our customer a really good customer experience, but not expose ourselves to risk. And so we migrated into this large load space by way of these Bitcoin mining data centers, which arguably felt the riskiest. And on top of that,

Maura Yates (15:49.71)

the market conditions at the time. This is back in 2023 when we had summer 23 pricing and summer 22 gas. And so the risk was just a multiple. And so the tools that we used to come at these creatively to manage risk and meet the needs of the market, which were they didn’t have much cash, right? Like they were cash constrained. So how do we manage risk on a low cash portfolio and not make any compromises that we need from a risk portfolio? And that’s what led us to really

start forging into the space and really get a reputation in the data center space.

Joshua Rhodes (16:24.77)

Right now, if you look at the aircott space, I mean, you get two people like us in the same room or on a panel or a podcast for that matter. We can’t talk about energy without talking about data centers, right? And that’s just like how everything is. Like, can you speak to what the structure of a deal means for a data center? Like, I don’t know if someone came to you now. I mean, they’re probably late in the game now, but like the data center comes to you now. Like, what does a deal look like to them?

Maura Yates (16:50.008)

Good question. Where my head starts going is pick your flavor, right? So as much as we want these data center deals to be standardized, because you’re like, everybody’s just building a data center, right? They’re all just like, it should be really simple. They’re all just, you know, trying to compute. It becomes really nuanced and it becomes really different because who sits behind that developer, not only as tenant for the data center and whose machines will be in there, who sits behind them as a lender comes into play.

So you have a of parties with really nuanced needs. So certain lenders like to see something a certain way in a contract. Sometimes the relationship between the developer and the tenant and the actual occupant of it are really different. And so traditionally what will happen is they’ll come to us, they’ll give us an understanding of who their tenant is. And more importantly, they tell us how they’d like to provide power to that tenant. That’s where we start. What do you guys want to do? We don’t start by telling them this is what we’re going to do.

we want back to the customer experience. Tell us what you guys want to do. Let us figure out how to do what you want to do because that’s going to make you happiest and that’s important to us. So tell us what you want to do. We’ll figure out how to do it within the means that we have and deliver on that. That’s what we’ve really been focusing on. When I think about the number of contract templates we have, so this will blow your mind. The last time I calculated, we had over 39 templates of data center contracts. Because one, there’s an evolution and as you keep learning, you learn little things.

it would do better. But more importantly, some are co-located behind the meter, some are in front of the meter, some share part of the behind the meter. Some are behind a POI and have two data halls. Some have two tents behind a single POI. Some want to curtail, some don’t want to curtail. You know, so everybody’s got these different requests and all these different requests impact different parts of risk. And so the elements that we have to put in to control those are very different across our contract. So when we think about one of the areas that

really distinguish mothership and our retail side of the business, we absolutely call out our data center contracting services as one of the things that distinguish us. We’re fast, we have really good templates, and we have really good templates that work for customers, because we’ve worked with most of y’all. We know what you like to see. We know if your lender wants certain step-in rights, etc. So a really solid set of templates to work from, though none of them are totally the same.

Joshua Rhodes (19:13.986)

When you look at the market structure as it is and your 39 templates and all the things you need to do, how could the system be doing it better? What would make your job easier or make you only need, I don’t know, say 17 templates instead of 39?

Maura Yates (19:26.924)

That’s a fun question to answer because if you ask that they’d say, Mara doesn’t want to simplify this. She loves the chaos. There’s a part of us that loves the chaos, right? There’s ways to figure out how to do things better and constantly doing things better. Now there are things that can be done that don’t need to add to the chaos. When I think about like where innovation needs to happen in the market, we frequently look to technology for innovation.

I think I get asked this question a lot and I think my answer is always the same. I don’t think it’s technology. We have wonderful technology. We have a lot of people working on promoting really good news. You guys had the hardware software side covered. What we need to evolve and innovate on is process. What’s killing these projects is the time to contract and the time to power. If you ask any of these large load developers, what’s killing them is that they’re just waiting to interconnect. There’s no technology that you can put out there that necessarily changes it.

What needs to change is how we process things, how we move through things. It’s very inefficient. Now, I say that, but at the same time, I don’t necessarily have a great solution because we’re in this place where our market’s undergoing a massive shift and they don’t want to knock Urquhart because Urquhart’s working really hard amongst a bunch of moving pieces and it’s really hard to keep organized. So I certainly don’t envy them and I think they’re doing the best that they can with a really large project. But that’s it.

key piece of this is it’s creating, it’s innovating in the space of process, because process is time, and that’s what’s keeping us from deploying these data centers more rapidly.

Joshua Rhodes (20:59.394)

Yeah, as we’re recording this podcast, just released a podcast talking to Pablo Vegas, CEO of Arqat, where he talked about different types of tools and he was making a case. We really need tools, even if they’re not perfect. We’ve got to get some stuff out there and just learn from them. Even if it’s not the greatest tool, you can hit a nail with a wrench. It’s not going to work great. And you can figure out how to make that wrench better and turn it into a hammer to actually hit the nail. He didn’t say that. I just said that. But anyways.

Maura Yates (21:23.534)

Yeah.

Joshua Rhodes (21:24.462)

Yeah, iterate and such. So one of the things like last week I was at a grid lab event in California and one of the things that I learned about ERCOT that I didn’t really understand and you’ve mentioned this kind of before in terms of what you mentioned, similar to something like this. with large loads that want to bring generation as well, whether that’s batteries or various types of behind the meter generation, it’s my understanding that the current way things are structured is you can’t net on your point of interconnection.

And so like if you’re like a 500 megawatt data center, but you have a 300 megawatt battery or 300 generation, you can’t net and say, want just 200 necessarily from the grid, or you can’t operate that away. Is that the case? Am I getting that wrong? Did I misunderstand that? Or like, how does that work with large loads kind of bringing their own generation? Cause a lot of, a lot of folks are talking about that these days.

Maura Yates (22:15.478)

Yep. So a question if you got something wrong, amidst the constantly changing updates, comments, depends on the point in time. Yeah, it’s very hard to keep straight. And by the time that this podcast airs, everything we’re about to say will already be updated because they’re having a workshop tomorrow. So whatever we say now might have changed. The bring your own generation, the net metering, the co-location.

Joshua Rhodes (22:24.462)

That makes me feel better, thank you.

Maura Yates (22:41.908)

This is a really, in my eyes, this is the next big topic that’s being discussed as part of the SB6 proceedings. The conversation that’s sucking the air out of the room right now is the BAT0 process, which is the PRR 145 to change the interconnection process. That’s kind of getting into a spot where we see that the end of the road or a light at the end of the tunnel. Okay. The next thing that the commission and PUC and ERCOT are starting to take up are projects

58, I’m gonna maybe get this wrong, 482. The demand side management. In the last couple of meetings and workshops, they’ve already started signaling, hey, we need to have this conversation. It’s where the curtailable load, the CLR conversations coming in. It’s where we expect conversations around voluntary early curtailment loads to come in. It’s the demand management piece of Senate Bill 6.

That’s just getting kicked off. So we would fully anticipate more conversation around net metering of these resources going forward. Now, that said, there’s a couple pretty important kind of rulings, or I should say one important milestone really just was promulgated and that’s specifically around the Good Night Project with CRUSO out in West Texas. And that’s a co-located facility with thermal and renewables. And.

It’s interesting because it’s perhaps setting a precedent for the conversations in that 5842. And as a result, what came out of that CRUSO filing were some pretty interesting comments. One, it stated that that load, that data center, needs to be able to fully shed and come off. And all of the native generation, the wind and the thermal, need to be available to push to the grid in their full capacity. Now that’s...

a little bit contested because the spirit of SB6 was really, think the understanding is maybe it was more designed towards dispatchable generation, not necessarily renewables. So I think there’s still conversation going on about that and that will likely be picked up in that demand management conversation as well. But that was one of the first things that came out of that net metering docket. And the second most important piece is that they told the loads, you’ve got to be available to curtail in an emergency.

Maura Yates (25:00.232)

and you can’t participate in any demand response or answer service programs. So it seems like it is setting the precedent for the things that will be decided around what the large load requirements are, agnostic of whether or not you’re co-located. But I think at the end of the day, we are going to continue to see a huge drive and push for co-location and behind the meter, simply because the perceived bottlenecks there are less.

Joshua Rhodes (25:26.488)

Got it. think the thing I was trying to say earlier is one of the things I brought up when I was at that meeting was there was a couple of hyperscalers in the room and we were talking about like, well, it’s like, can’t it just be a CLR, a controllable load resource? That’s where it was coming in. It’s like, well, they won’t let us net at the point of interjection, which you’re talking about. But of course that may change, I don’t know, tomorrow. Like as you pointed out.

Maura Yates (25:49.068)

And it gets tricky too, because some of the ways that loads apply in these co-located applications are they apply to be like a load only resource so that they aren’t netted, some want to be netted, some can’t be netted, some are looking for exclusion. So it’s a tricky space, but a pathway to netting, there will still be pathways to netting in several of these interconnections, but there’s also pathways for non-netted resources.

Joshua Rhodes (26:13.912)

The deals you’re looking at in the various contracts, like, do these data centers actually want to be power companies? I get the feeling that they don’t necessarily want to. They’re kind of being forced to just given like maybe how slow the rest of the system is running.

Maura Yates (26:29.23)

So I think the answer would differ based on the hyperscaler you’re talking to. There are some hyperscalers that currently have incredibly built out power desks and power teams. However, I will flag not super heavy in the wholesale market transaction. They’ll sign a lot of bilateral VPPAs per se, but not necessarily papering a lot of the short-term hedges or cash positions and not as active as a true power marketer would be.

they’re set up and I think those intend to take a more aggressive role as kind of like a power marketing participant. However, there are others and sometimes it kind of blows our mind because it’s your number one expense outside of your hardware is electricity. So you guys should have this really dialed and do you guys understand everything that’s going on here? And I think several data center companies are data center people, not power people. And so they kind of take what is given and

take what they hear everybody else has and that’s acceptable, rather than really pressing for ways to refine terms.

Joshua Rhodes (27:34.338)

Yes, one of the conversations I’ve had is, you know, these data center companies, do seem wanting to move so fast and maybe have buckets of money that they’re willing to throw at this. But I do think eventually, where you bring some real value in this, they’re going to get to the point where they’re going to have to be smart about electricity. I mean, right now, speed to power, right, just got to build data centers. But at some point, there’s going to be a competition for how cheap can I make a token for the next word in

when my students are cheating on their homework or whatever it is, know, or like, you know, writing code, they’re going to have to bring those unit costs down. So they’re eventually going to have to get smart on electricity and how they structure these deals, right?

Maura Yates (28:12.942)

They are. And what happens is sometimes it’s something bad that prompts them to get smart. I remember back in summer of 23, there was a really large publicly traded data center company that just got raked across the coals by their shareholders for their price of power. And when the market, they had done a poor hedging strategy. I don’t think they were well informed on what they should have done or what they advocated for in their contract. And as a result, they were not

position to take advantage of the economics in the market. And so in a market where, let’s say, real time was clearing 70 blocks, they put on $120 hedge and that showed up to the street. And so they need to get more sophisticated and the challenge is sometimes they try to get more sophisticated, but not with the right tools. And so what we really focus on, I’ll keep saying it, but back to our original mission, which is customer experience.

We focused originally on Resy, now we focus on our large loads customer experience. And getting them data and teaching them how to use the data is one of our biggest drivers. So as a result of serving these large loads who are sophisticated, we have some that are very sophisticated and some that are very hands off. We treat them all the same. We treat them all at the same level of sophistication. And so for these large loads that are super sophisticated that need to provide very precise sub billing allocation, cost allocation down to

different tenants, getting them data is huge. We launched a new platform internally at Mothership called Eclipse. We’ve now taken externally because it was our market access platform. We wanted to make sure that our data centers saw the market the same way we see it. Because if we see something that they need to take action on, we want them to see it too. For the example you noted, a lot of data centers right now want to run on index. And I get it, you see me roll my eyes on that because it’s

Works until it doesn’t work, right? Index is good until it blows up. There’s always a right price to hedge and there’s always a right way to liquidate hedges. Some get that. Right now, most of them are writing index. But as we’ve experienced before, the market changes. When the market changes, all those guys want to hedge. We give them the visibility to understand when that market is changing every day. Every hour we give them this visibility by logging in. And they’re able to see, okay, now is the time I should take action to hedge because

Maura Yates (30:35.596)

I’m seeing this forward curve just crawl up, which is giving me an indication that real time and my cash position is probably going to have the same increase. And so it gives them the idea of like, now’s a good time to hedge. And more importantly, maybe I’ll just hedge these hours. Maybe I’ll hedge the nighttime. Maybe I’ll hedge the daytime off peak. it gives them the ability to make educated decisions to improve their company economics. beyond that though, this again, all goes back to the customer experience.

If you give them a bunch of data, but they don’t know what to do with it, then that doesn’t matter. And digesting this data is super important. So we’ve taken Eclipse one step further to digest this data and actually make the recommendations and say, hey, hedge now, hedge this price, or hey, wait, this is what this would synthetically look like in your portfolio. And more importantly, let me pull all of your historics, give you all this detailed level clearing information on your historics to say, maybe we should, maybe we shouldn’t.

big thing there is data to give them the sophistication that they lack because they’re not power people, they’re data center people. But they need to be power people, so we need to give them that access. And if you think about that same conversation, that same conversation we had with the DER player saying, you need to be in this space, but you’re really not equipped to be in this space, so let us enable you and let us teach you how to be in this space. And that’s what we do now for our data centers and large loads.

Joshua Rhodes (32:01.516)

Yeah, I’m glad you went there. That’s exactly where I was going to go next is you’ve talked about, you know, delivering data and delivering tools. You built a tool and I believe you told me that like, so you built Eclipse originally for in-house use, right? It was just going to be mothership was going to be using it. But then you were using it so much or sending screenshots to people or something like that. like, we want this. So I just went to the website just a little bit before. It looks like anyone can sign up for free right now if they want to check it out. So there’s like a trial period going on. And so we’ll put a link to it in the show notes.

But yeah, so you talked a little bit about kind of what it does, but can you give me any specific use case? How would someone come to the conclusion that I need to hedge? Like what would they be seen on your tool right now if they looked that would give them an indication of that.

Maura Yates (32:47.096)

Yep, so to level set our tool, like if you picture in your head, there’s a sidebar and on this sidebar, there’s a bunch of different modules and these modules are different ways that mothership operates. So as you mentioned, Josh, we built this not for anybody else. We built it for ourselves. We built it because this is how we needed to see the market, how we needed to ingest data, how we needed to interpret it. And we kept screen sharing it with all of our data center clients saying like, hey, look how your load settled or hey, like look at this.

and showing them what we saw. Showing them, this is the read we got from the TDSP. This doesn’t align with your telemetry. Let’s go see if there was a meter read error. So we start showing them and all of a sudden they’re like, you spend most of our time now showing, we should just get you a login because it’s going to be way more efficient. Let’s teach you to fish rather than keep feeding you. So we decided to turn it into an external facing platform where we started by just putting our data center customers in there. It’s where they could retrieve invoices.

retrieve their interval level report. So we give all of our customers interval level billing data with a massive spreadsheet behind it. Knock on wood, I’m going to get challenged by some other rep when I say this, but we’re pretty sure it’s the most in-depth interval report because it’s really complex math to pull together. But that all sits in this platform and they’re able to take that interval level report and push it up against our other unit, which is our forward curves unit and our settlements unit. And one,

They can shadow settle themselves and say, did they get built everything correctly? Hey, where did I incur this charge? Hey, does this look like what my telemetry looked like? They can do a bunch of validation themselves, which typically that data for validation is totally gate-kept by an REP. That’s REP data. That’s not data that the load typically gets because that’s part of a transaction statement that we get from a TND. But we push it all out there because, okay, you can see your load data. You should know what you consumed. So we put it all out there.

They go look at their historic position. They can shadow settle it. Or more importantly, the question you immediately asked. We’re talking about your open position and we’re trying to figure out should you hedge? And a lot of these large new data centers are coming with this demand for a physical tie to power. So that’s why they’re going to behind the meter. But for those that can’t go behind the meter, they’re wanting asset specific physical hedges to say, I’m buying, I know you exist. You’re selling that to me for 15 years. If I can’t locate next to you.

Maura Yates (35:14.754)

I at least want to make sure that I have somebody whose blades are going to turn. And so as part of that transaction, we will tell them to like, we’ll go in and say, okay, if this is the hedge that we want to do, let’s go price it on the forward curves. So we’ll go into our Eclipse platform. One of the free units that you mentioned right now is our forward curves unit. These are the forward curves we use every day. This is our exact pricing platform for forward curves. It has ancillary services. It has every ancillary. It has basis hub for all the load zones.

It’s got more pricing curves than you would get through any other kind of publicly available curve tool because it’s our curves. It’s literally what we price all of our deals on. So we say, hey, come in here and let’s go price up what this hedge should be. I check my curves every day in market. I know our curves are good. So this is what the curves are showing as the hedge price. Then let’s go shop this and let’s go see if we get this as the hedge price because if somebody comes back two, three, four, $5 higher than this, they’re out of market. Don’t hit that. But it gives you the ability to gauge.

when you should hit, whether you’re getting close to your price target, and if the numbers that you’re getting are good. Because if you think about it historically, this is a really big piece of why we made this public. You guys have, by saying you guys, the data centers and the generator, like the renewable generators, you guys have been price takers. You’ve been price takers because you haven’t had the visibility into the wholesale market to know how to price your asset on these wholesale desks. So I remember back in the day when I was at Sun Edison and we were going into one of

It doesn’t exist anymore, but one of the very large utilities and going into the generation arm and saying, hey, we want to sell you our PPA down in Southwest Texas. And we didn’t say we’re going to sell it to you for this price. We said, what would you pay us? And like how weak to have to go in and say, well, what would you pay us? Right? Like I want to go in and at least know my value and say, I know that I’m worth at least this much. And so that’s rampant across the industry is.

Solar developers, even it’s improved today, but I’d still argue solar dev shops do not have price on real time pricing. Pricing moves a seven by 24 and even an on peak product for a five year term that can move two to $3 overnight. And if you’re a solar developer, you’re not capturing that two to $3 price movement unless you know what’s happened. So our forward curves tool gives developers the ability to have power and some control in these.

Maura Yates (37:40.334)

pricing scenarios and not just be price takers. So it’s a really good way for them to optimize that procurement as well.

Joshua Rhodes (37:46.756)

Sounds like it unless you come to the table with a much stronger bargaining position than you had before,

Maura Yates (37:51.438)

Yeah, and all the tables you’re probably going to are tables that we talk and trade with. So it’s very easy for us to call BS if they show a number that’s out of the market. We’re like, that’s not right. We know you just hit something at this price point. So definitely empower.

Joshua Rhodes (38:07.0)

Totally. I know combined we’re probably at the 40 minute time for the three chunks or whatever, but I do want to ask a final question. You’ve seen this market move and right now it’s in a, we’ll say turmoil, but it’s like, it’s bubbly right now. There’s a whole bunch of things going on. You’ve built a tool that allows you to make a little bit more sense of kind of maybe what’s going on. But as you look into the future, like what technology excites you right now? Like, what do you think when we get beyond this kind of place where we’re at now?

What are you dreaming about for version two of this?

Maura Yates (38:37.452)

Man, it’s so funny. I was telling somebody, it’s hard to turn on my creative brain outside of the creative immediate world that we’re in. When I think about the grid in the future, I absolutely still am of the hard belief that we repeat history and we are moving away from centralized grid to a decentralized grid. And I think when we originally thought and expected this to be happening in higher volume, this was five years ago, what we described as distributed energy were these like tiny 10 megawatt or less like DER projects.

I think we’re talking about it now like distributed at the transmission level too, where it’s bring your own generation. We’re back to a different era of power plants and supply, right? We are a place where we’re have to have way more localized supply. There are parts where it’s probably gonna get more expensive for that need to bring it into more local areas. I think we’re gonna be in a world where I do think ERCOT’s gonna figure out the large load issue and they’re gonna do it in a way that doesn’t add liability concerns. That’s their number one concern.

They’re going to figure that out. They’re not going to put all the other rate payers at risk. So I think we’ll figure that out. I think a lot of vols going to exit the market. So we’re going to get a lot of batteries that are deployed, batteries that are going to come. And when they have to curtail, it’s going to allow them to shift over to this four gigawatt hour battery and not impact the curtailment. Because ERCOT’s going to say you have to curtail. And so data centers are going to be left with no other option than go install your battery. Go install your on-site gen.

So we’ll see a lot more battery. I think it’ll be more strategic. I think the services might still be called ancillary services of some sort, but I think they’ll look a little bit different. I think some of those will be mandatory. And I think maybe we’ll start getting some more back to like smaller data centers, like localized data centers. But here’s the reality. We are a society that uses data and compute everything. So whether the AI bubble busts or not, data, we just keep.

driving more data. So a data center, I don’t care if it’s AI, it’s going to have some occupancy as long as we continue to consume data. So I see the data center world growing as well, perhaps more efficiently, but still growing too. So I don’t know if I avoided your question or if I gave enough of a look at like the imagination. It’s a little more of the same, probably moving more in that distributed, more distributed pathway, especially as we bring the BYOG becomes more of a prominent requirement. So.

Joshua Rhodes (41:03.084)

No, absolutely. mean, I’ve heard people say all kinds of like things like peak oil, maybe even peak gas, but I’ve never heard anyone say peak electricity. Like you said, I think we’re going to continue to use more data. It’s going to be electrified. It’s a great place to stop. Yeah. Mari Yates, thanks for coming on the Energy Capital Podcast.

Maura Yates (41:17.752)

Thanks for having me. Appreciate it. Thank you.

Joshua Rhodes (41:20.269)

Absolutely.

Thanks for listening to the Energy Capital Podcast. If today’s conversation helped you make better sense of how the energy system actually works, share the episode with a colleague and hit follow on your podcast app. You can find us on Apple Podcasts, Spotify, and all the usual platforms. For deeper analysis and context each week, subscribe to the Texas Energy and Power at texasenergyempower.com. That’s where you’ll find every episode, every article, and our latest updates. We’re also on LinkedIn, X, and YouTube.

where we share clips, insights, and ongoing commentary on energy policy, markets, and the grid. Before we go, a quick note. The views expressed on this podcast are my own and do not represent the official positions of the University of Texas, Ideasmiss, Austin Energy, or Columbia University. A big thanks to Nate Peevee, our producer. I’m Joshua Rhodes. Thanks for listening, and we’ll see you next time.

]]><![CDATA[Texas Bets on Speed, with Gin Kinney]]>https://www.texasenergyandpower.com/p/ceraweekhttps://www.texasenergyandpower.com/p/ceraweekWed, 29 Apr 2026 10:05:03 GMTTexas generators and grid operators used to spend a decade or two planning for new power plants.

But as Gin Kinney, chief administrative officer at NRG Energy, told Energy Capital Podcast hosts Matt Boms and Josh Rhodes at CERAweek in Houston this year, the company’s planning horizon has collapsed to 12-18 months.

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The company’s activity reflects the dynamic growth of the ERCOT grid. Kinney said NRG has sourced 5.4 gigawatts of natural gas turbines, secured a labor arrangement with the construction company Kiewit, and begun construction on three gas plants funded in part through the Texas Energy Fund.

ERCOT’s demand forecasts, which should inform the plans of developers such as NRG, have been hard to pin down at best.

Yet while no one can say for sure how much of the new load is actually coming to Texas, it’s clear that demand is going to rise substantially and very quickly. That’s why, as Gin explained, NRG is focused on the assets, not the timeline of the load they’ll serve.

This rapid growth means grid connection — speed to power — has never been more important. In this episode, Josh describes a 350-megawatt data center going up near El Paso, outside of ERCOT, that’s being powered by roughly 800 small generators — because larger generation units weren’t available on the data center’s construction timeline.

Such behind-the-meter, bring-your-own-power projects are what happens when speed-to-power is a grid’s binding constraint.

They also show the vital importance of load flexibility. Every megawatt of flexible load is a megawatt of generation that does not have to be built, financed, or fought over. In this episode, Gin discusses NRG’s work on virtual power plants and new hyperscaler contracts as steps toward a more flexible grid.

The question is how to scale such efforts. This episode points to ways that grid participants are working to answer it.

Energy Capital Podcast is produced by ClarityForge Studios.

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Timestamps

  • 00:00 - Introduction & Gin Kinney

  • 04:42 - NRG’s One-Gigawatt Virtual Power Plant

  • 06:07 - Affordability, T&D Costs, and the Smart Home Strategy

  • 09:09 - How NRG Uses AI in Operations and the Home

  • 12:49 - Texas Market Outlook and Speed of Development

  • 20:07 - Texas Energy Fund and NRG’s Construction Progress

  • 21:06 - Hyperscalers, Bring Your Own Power, and Community Investment

  • 27:41 - Post-Conversation: VPP Mechanics and the Gentailer Difference

  • 34:13 - Load Growth Numbers and What Is Actually Real

  • 38:57 - Data Centers, Bridge Power, and Speed to Grid

  • 42:39 - SB6, Legislative Hearings, and Who Should Set the Rules

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Guest, Host, and Organizations

Organizations & Individuals Mentioned

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Transcript

Matt Boms (00:05.166)

So we are here live at CERAweek in Houston, Texas, and we have a very special guest with us today. Gin Kinney is Executive Vice President and Chief Administrative Officer at NRG Energy, where she leads marketing, communications, and customer experience. She brings more than 20 years of experience, including over a decade in the energy sector, and has played a key role in building NRG’s brand and shaping a more customer-focused

digitally driven organization. She’s also active in industry and community leadership with a focus on sustainability and advancing women and energy. Gin, thanks so much for joining us today.

Gin Kinney (00:42.306)

Hey, thank you. It’s great to be here.

Joshua Rhodes (00:44.258)

Yeah, so one of the things from your background is you really came from renewable energy development before joining NRG. How is that path shaped like your role or what you see your role is at NRG?

Gin Kinney (00:55.682)

Coming from a startup environment to a comparative behemoth, right? You definitely learn a lot on the fly in the entrepreneurial world. You definitely learn how to be scrappy, have a lot of grit, say yes a lot to challenges. You also learn how to manage things at a different scale, be really close to the customer. And I think also coming from that entrepreneurial world where you’re working on project finance or you’re working on project development, well, this is how we’ve always done it before.

And so I try to bring that mindset to NRG where we’re much larger, but the excuse of we’re not going to change or we’re going to, instead of innovate or sort of take chances, we’re going to protect the status quo. I think the other piece of that too is this competitive nature. When you’re a startup or you’re entrepreneurial, you’re competing every day for dollars. You’re competing for space, you’re competing for customers. And when you have this highly competitive spirit, you’re always playing to win.

And that’s what we try to bring to NRG too, is that play to win, not protect the status quo.

Joshua Rhodes (01:59.244)

You think that fits better in Texas with other places given like the competitive nature of like the generation market in the retail space you operate in?

Gin Kinney (02:07.416)

Texas certainly provides us the opportunity to move fast. Policy and regulators clear the pathway to get things done, get things built. And in Texas, in the competitive markets we serve, every day we have to earn the trust. We have to fight for those customers and we have to show up for them. We’re not just about rate basing a solution. We have to figure out how to put that on our balance sheet and also satisfy the demands and the expectations of our shareholders.

Matt Boms (02:36.206)

They’re also very savvy customers in Texas. find that compared to either parts of the country, Texans really know more about their energy bills than the average American. Can you speak to that? And where do you think that comes from? Is that like a winter storm, Yuri consequence, or is that just the fact that we have this really competitive retail market?

Gin Kinney (02:53.236)

It is, and you have to choose. When I first moved to Texas a few years ago, I had to choose my energy provider. So I had to get smart on what I was looking for, the type of services, the type of value I wanted. And certainly after winter storm, Yuri, there’s a heightened sense of ERCOT. My 80 something year old mother who lives in Georgia knows what ERCOT is. I mean, I don’t think we ever would have thought about that five years ago or 10 years ago. Right. And so.

that heightened sense and heightened awareness just by having to elect your energy provider. And again, in Texas, I think things are just different. Like we demand more, we expect more. Back to that competitive nature, sitting here with a UT grad, know, football is big, bright lights, you know, I think that competitive nature comes through in kind of everything and how we operate in Texas.

Joshua Rhodes (03:47.15)

Yeah, absolutely. In that space, mean, energy just doubled its generation fleet with a 12 billion LS power acquisition. You know, at the same time, you’re managing a CEO transition and navigating a global energy crisis. Given all of these things happening in a hyper competitive space, like how do you prioritize, you know, what gets your attention?

Gin Kinney (04:04.664)

Well, first and foremost, we do everything in service of our customers. And if we keep that in mind, all of these other issues that we see around, we always think about it from, how is a CEO transition going to shape how we serve our customers? How are the changing dynamics in economic environments going to change how we provide services to our customers? If you look at it through that lens, it’s easier to focus and drive towards those business outcomes.

then let all of the myriad of issues kind of dilute the value that we can drive across all of our stakeholders.

Matt Boms (04:42.39)

And I also wonder, keeping on this topic of the savvy Texas customer, we talk about things like virtual power plants and flexible demand and people’s eyes gloss over because they don’t quite know what we’re talking about. But NRG actually is building a one gigawatt virtual power plant here in Texas. Can you talk more about that and give us the details?

Gin Kinney (05:03.448)

Well, that’s enabled through the trust we built with our customers and even customers in general. So it’s kind of taken a step back. I customers today are still accustomed to automation. They’re accustomed to letting machines decide. This is just a natural segue because we’ve done the hard work to build the relationships with the customers. We’ve talked about the value we can deliver to them. And then when we talk about savings, particularly in a time where affordability is top of mind, customers are willing to trust us with their energy usage.

They’re willing to enroll in VPP. We set a pretty high bar, I think, in Texas for the amount of VPP we wanted to achieve. And we more than what, 5x that last year? Gonna have to check that stat. But because that just shows that customers want what we have to offer and they value it and they trust us. And who wouldn’t want to ease congestion on the grid? Who wouldn’t want to be a good steward of their community environment?

And then bottom line, who doesn’t want to save on their energy bill as other costs of the household are increasing?

Joshua Rhodes (06:07.842)

Yeah, it’s an interesting point you kind of bring up in terms of paying for the grid, because I mean, energy sits, like other gin tailors, like sits in an interesting space, right? You’ve got the generation and you’ve got the retail, but not really the pieces that connect the two in between. Like those are fully regulated monopolies, transmission service providers, distribution providers. And in the topic of affordability, a lot of focus is being put on electricity prices.

affordability of electricity, but the large part of that that’s increasing is that fixed cost system, is that transmission, the distribution costs. And so like, how are y’all handling that with your customers who may not fully understand that you may have two out of three of the pieces, but you’re not handling like the part that’s actually increasing the cost the most.

Gin Kinney (06:50.03)

at the end of the day, customers don’t care. They don’t care. So I think it’s our responsibility to partner, like partner with Centerpoint, partner with the grid, the T &D companies so that we can find comprehensive solutions to ease that pain for consumers. And if we can demonstrate savings, or we can demonstrate value in other ways, you you mentioned like getting closer to the customer and that dynamic, you we bought a smart home company a few years ago.

We did that because we knew that the closer we can get to the customer, the more we can automate and help them understand usage and look at things like, the home occupied at this hour of the day when maybe power prices are the highest and can we turn it down half a degree? Those are the things I think we took an extra step to think through. How can we create a very seamless, easy digital experience for the customer?

so that we can provide value, even though we know we don’t control that one, we’re only one line item on the bill, right? We’re just that supply line item, both in Texas and outside of Texas. So what are the other things we can do with our whole home to help them ease that cost at the end of the day?

Matt Boms (08:06.016)

And is there pushback from customers? Cause one thing we hear a lot is Texans don’t want anyone messing with their thermostats. What have been kind of the findings from NRG as far as customer behavior and where is that price point where customers are willing to provide some flexibility?

Gin Kinney (08:20.63)

If we can make it so you don’t feel it, that’s the important part. If we’re all out at dinner and we can dial down the thermostat just a little bit or dial it up depending on the season. And by the time we get home, we’ve pre-cooled your home or preheated your home. You didn’t feel a thing, but we’ve managed to save you money and we’ve managed to ease the grid and that peak time, that it’s a win-win. But we have to have the intelligent tools to do that.

And I think that’s where our focus on equipping homes with smart thermostat, motion sensors, things of that nature, things that you can put on hole pumps and AC units and understand and predict. That’s the other key piece of this is utilizing AI and analytics to predict times when you’re going to be away from your home when that coincides with super high energy prices.

Joshua Rhodes (09:09.26)

Yeah, that brings up an interesting, there’s something we talked to Pablo Vegas at ERKON about this past year or so, whenever you get energy people in the room talking about AI, it’s all about how do we build more power? How are we going to connect these data centers? Like how are we going to grow that? But I do want to talk about like, to the extent you can, like how is NRG utilizing AI or learning from AI? And you’ve already kind of gotten there, but is any of the way you’re using it and you can talk about it in either operations or in these kind of smart home applications.

Gin Kinney (09:37.794)

Okay, well that’s a very layered and complicated question. mean, part of it is just using one of our areas of secret sauce is our market operations team. We really understand, we look at everything from weather to day ahead pricing to how things are going to be looking in the markets a year from now. So we use AI to do a lot of that predictive analytics for us and help shape like how we can

actually control our cost of goods, like how we control our cogs and how we can put some of that, extend some of that benefit to our customers. And then, you again, from the technology that we’re continuously improving of all of the technology that we have in customers’ homes, how do we make that smarter? How do we make it faster? How do we get data points that really going to drive a difference when it comes to cost and that monthly bill?

Matt Boms (10:26.742)

Yeah. And I think if you draw a straight line from the Vivint acquisition to where we are today, there was criticism back then, right? And now I think that energy is making the case that flexibility is really where the value will be moving forward with all the low growth that’s coming. Because that happened at a time where we really didn’t have the low growth in place that we have now with data centers and AI. So can you speak to people poo poo, VPPs and flexibility, but we’re talking about a one gigawatt virtual power plant. So how much of a role moving forward do you think?

flexibility we’ll have in meeting the demand.

Gin Kinney (10:58.062)

It’s going to have to continue to play a huge role, right? And we think about bringing on load, which is all the load that’s coming into Texas, all the load that’s coming into the U.S., whether it’s hyperscalers, on-shoring, other types of development. Having a solution at every point of the value chain is going to be increasingly important. That’s why we’re building power, we’re building three power plants in Texas right now.

We’re looking to partner with hyperscalers and our point of view is like, we’re going to bring our own power to those deals, right? So we’re going to solve for the load piece of it. And then the end use customer, what are those new technologies we can bring to them that are going to be easy, seamless, help control their usage or whatever is valuable to them. But I do think it’s going to be this all of the above approach. And because we have a point of entry at scale and every single part of the value chain,

our customers are going to be the winners.

Joshua Rhodes (11:53.646)

So around the virtual power plant that allows for flexible or turning downloads at homes and businesses and things like that, it seems like that could be paired with if a data center that wants to run more or less at a flat load, if you just need a little bit of flexibility, maybe the flexibility doesn’t have to come from the data center, it can come from somewhere else. So I was just wondering if that’s part of the conversations that y’all are having.

Gin Kinney (12:16.334)

I think certainly, mean, our approach is very bespoke to the end-use customer and where our end-use customers will be willing to provide some additional flexibility in terms of either load reduction or putting some of that power back onto the grid. I think we’ll be up to those individual contracts, end-use power purchase agreements we sign with our customers. I had a back to making things very personalized to the customer need, even if it’s a

residential customer, mom and pop shop, or a hyperscaler.

Matt Boms (12:49.87)

So if we step back and think about this moment in time, we’re five years out from winter storm Uri, certainly politically energy had its moment in Texas. And now we’re in this load growth moment. Where do you see the market heading here in Texas moving forward? Do you think that our state is open for business? Are we going to be able to meet the moment? I think a lot of folks are asking questions over at ERCA and the public utility commission, trying to figure out.

if we’re going to have enough generation to meet the load because the transmission takes time, right? It’s not going to get built overnight. It’s going to get built over the next five to 10 years. So what’s NRG’s perspective on this and where do see the market’s heading?

Gin Kinney (13:26.658)

Well, we used to think about power generation or power plant development in spans of 10, 15, 20 years. And now we’re having to think about it in terms of 12 to 18 months. Our residential customers are thinking about it in 30 day increments, right? And so in Texas, the markets have worked, right? We did have a lot of issues during winter storm Uri, but they weren’t market design issues per se, right? So these markets are designed.

to benefit, I think, all areas of the energy value chain. And so when we think about how we can scale up or scale down or meet the needs, because Texas is open for business, because permitting, interconnection, all of these things that really matter and can be some of those long lead times, we’re gonna be able to meet the needs of our customers and we’ll do that either through bringing on new generation.

Utilizing battery technology and other forms of storage, we still have what are the largest renewable state in the country, right? So we have all of these elements. And then when we bring solutions like one gig of VPP, that’s one gig of electricity that’s not needing to be put onto the poles and wires across the state.

Joshua Rhodes (14:45.646)

So one of the things about looking at the horizons that different customers look at or different market participants look at, I one of the things right now with the current events in the Middle East is, you know, gasoline prices are high and, you know, there’s a lot of talk about, well, if you want to be insulated from, you know, gasoline prices, maybe just switch to an electric vehicle. I know it’s probably a little too soon to see very much movement in that space, but like, how do you see the electrification of transportation with your customers moving forward?

Gin Kinney (15:13.4)

Well, you know, it’s going to impact us twofold. One, more electrification is going to require more generation. It’s going to require more electrons created, but we are also going to be able to use those batteries in those electric vehicles to ease during times, maybe flow energy back, store energy. So I think it’s going to be a compliment to how we think about serving customers. In addition to smart home, EVs are part of a smart home.

And so part of our strategy is to partner more with the EV companies, partner more with those third parties to figure out how we can continue to leverage those as a load resource.

Matt Boms (15:54.102)

Yeah. And the generation mix like Josh just alluded to has changed so much in the last five years. Like it’s pretty mind blowing that you mentioned the role of renewables in Texas. think it’s about 90 % of new generation since winter storm, Yuri has been wind, solar and batteries. How do you see the grid here in Texas? I mean, when we hear from reporters, they look at Texas as like the blueprint for how you build out a really diversified grid. Would you agree with that? Do you think that it needs any tweaks or changes moving forward, making sure that we’re reliable and affordable grid?

Gin Kinney (16:23.66)

Yeah, reliable and affordable and reliable is a key piece of that as well because we’re going to have to have thermal load because thermal load is going to be there when the wind or the solar is not performing as it can be on the highest peak days. so having this great energy mix, think one is what keeps prices pretty low in Texas compared to other parts of the country and certainly helps us with the diversity of how we think about

providing solutions to customers that meet their needs, adhere to their values.

Joshua Rhodes (16:56.6)

So one of the things that’s been talked about with some other folks from NRG is that like, you know, if oil stays high, then the chip supply for things like Vivint could be affected. It’s part of your portfolios. How are y’all game planning that?

Gin Kinney (17:07.95)

Well, using AI and thinking through our supply chain, and then also if our costs are going up to put these components in people’s homes, what are other ways where we can increase value? What are other ways where we can lower our costs? And so just being really thoughtful about how we balance across the entire value chain and portfolio of NRG. And one of the things that we want to figure out if we’re going to have to increase costs for a product or a service,

How do we mitigate that with one of our other products or services? And I think the notion of saving money on your energy bill through enrolling in a VPP program is one of the ways that we can help mitigate some of those cost increase that we may need to adjust for a variety of reasons, whether it’s inflation, whether it’s not getting the chips through or other increased costs in the value chain.

Matt Boms (18:01.678)

That’s something that we talk about all the time on this podcast is how important flexibility is and how undervalued it is sometimes in the market. Because of the transmission and really mostly distribution infrastructure that gets deferred because you have all this new flexibility, can you speak to where the real value is and how we maybe unlock some of the value stack that maybe isn’t quite available, at least in ERCOT, maybe in other markets where the utilities are more vertically integrated?

But here the fact that we have our utilities on one side, generators on the other, gen tailors like NRG. Can you speak to maybe where some of the obstacles might lie and how we can unlock some of those parts of the Valley Stack?

Gin Kinney (18:43.19)

One way is just to increase the partnerships that we have across the energy stack. Let’s partner more with the battery providers. Let’s partner more with the solar providers. We announced a partnership with Sunrun a few months ago. So how do we get renewables into individual homes, right? So I think the value of partnerships is really one way to unlock some of the additional value for customers.

Joshua Rhodes (19:08.014)

So one the things I did a lot of my research on was around for like Smart Grid 1.0. I there was a back in the early 2000s or whatever. And I remember there were a bunch of pilots and a bunch of things that went well and a bunch of things that didn’t go so well. I was curious if you’re able to speak to and it’s fine if not, y’all are trying a lot of things. Is there anything you’ve tried in the last couple of years that hasn’t worked out as you would have expected it to?

Gin Kinney (19:30.744)

think scaling, you you start with a pilot, like this is a great idea. And then perhaps whatever pilot you’ve tried didn’t scale. And I think that’s one of our biggest lessons learned is how do we start things in a pilot phase, test them out, see what works, take a lot of learnings from that, and then either pivot or trash the idea, which I think that’s also, you know, in a bigger company that maintaining that ability to be agile and flexible.

That’s one of the ways. Test the product service, see if it works. If it doesn’t work, if customers don’t love it, then we’re not gonna do it.

Matt Boms (20:07.372)

Yeah. Texas energy fund were a few years removed from that would have been 2023 session that the Texas energy fund passed officially governor Abbott signed it into law. And the idea initially was try to get more dispatchable power out there on the grid. So from NRG’s perspective, how are we doing on the TEF, any progress being made or anything that folks should be aware of?

Gin Kinney (20:29.742)

All right, well, we’re actively in construction on three projects and one at TH Wharton is pretty far along and we’re bringing power to the grid in a very short order of time. And we did that by just making a bet. We placed our bets that we are going to be able to construct generation in the state of Texas in the near term. And so we had turbines available, we had labor available, we had all the necessary permits.

everything that we needed to start construction immediately. And so for us, we’re on track, on budget, and we’ll be ready to put power on the grid.

Joshua Rhodes (21:06.638)

One of the things that the hyperscalers, those that are building some of these large data centers, are kind of garnering some criticism for are around some of their environmental goals that seem to maybe be taking kind of a backseat to a growth. Can you speak to NRG’s kind of like sustainability goals and how those have needed to change, if anything, to kind of meet the challenge that we have today?

Gin Kinney (21:28.674)

First and foremost is our commitment to providing affordable energy to our customers, whether they’re households or hyperscalers. And then also hyperscalers need to pay their part, right? So if we’re gonna build generation, we’re not gonna pass that cost on to small businesses, existing businesses, consumers. So the hyperscalers are gonna have to come ready to pay their part in constructing that new generation. When you think about the natural resources,

We’re going to take that into account every time we construct anything. Even in our TEF projects, we’re going to think about water, we’re going to think about lands, we’re going to think about the community, we’re going to think about emissions. And it’s no different when we’re thinking about partnering with the hyperscalers. And what I’ll commit to today is every deal we do, there’s going to be a community investment associated with it. I don’t know what it’s going to look like. Again, it’ll be the smoke for where the plant is sited.

what the conditions are and what the community needs are. But community investment will be a really important part of every data center deal we do.

Matt Boms (22:35.158)

Yeah, that’s great to hear and is so hard to build in general, Like transmission is hard to build, data centers are hard to build, community involvement is so important, I think more than ever. And what we’re hearing here at CERAweek has been a lot of BYO generation. That seems to be the buzz.

Gin Kinney (22:50.867)

BYOP. Bring your own power.

Matt Boms (22:53.942)

Is that kind of where NRG sees the market headed as far as data centers bringing their own power?

Gin Kinney (22:58.318)

Absolutely. And that is our key strategy is bring your own power. Again, we want to make sure hyperscalers own their part in this and then those costs and the unintended consequences are passed down to our consumers.

Joshua Rhodes (23:12.578)

Do we still need better messaging around that? Because there is a lot of angst around the cost of the infrastructure passing on to electricity. And I know like there’s a lot of the hyperscalers have come out with these pledges and things and we’re talking about bring your own power and the infrastructure and the community benefits. Is that getting through?

Gin Kinney (23:28.846)

I don’t know. I’d like to say that we’re going to be able to change the narrative around it. But until we put one in the ground, until we prove ourselves, then I think we need to be held accountable. And if the media or consumers or consumer protection agencies want to challenge us, they should. And it’ll be up to us to deliver on our commitments and promises.

Matt Boms (23:52.748)

Yeah, because at the end of the day, folks see their bills going up and they may not know where all the chargers are coming from, even as savvy as our Texas customers are. And I think that messaging is so important because moving forward, it’s, this is the new boogie man in town, you know, for a while it was renewables. seems like now data centers and who knows who the next boogie man will be. But I think you’re right. The underlying message here is how do we help folks pay for their energy bills? How do we make things more affordable, right? At the same time, more reliable.

It’s a hard message to sell, but it’s going to be really important, I think, over the next few years.

Gin Kinney (24:23.916)

Yep, you’re absolutely right. And again, we’ve got to show up. You know, when we think about how we show up for our customers, how we build trust with our customers, they need to see it in their bills. We need to come through on the commitments we’re making to them.

Joshua Rhodes (24:36.896)

And I can’t help but asking since you talked about, we got to put one of these things in the ground and kind of see how it goes. And if you don’t want to answer this question, that’s fine. But if you look at like ERCOT’s top level numbers for how much data centers and large loads, it’s like triple, quadruple. I think there’s bigger numbers coming out. I’m shooting for 500 gigawatts because just why not? But companies like NRG have to build the PowerPoint, like have to build the power to be able to support that. And so, mean, are you able to shed any light on like what’s reasonable? How fast can we actually grow?

Gin Kinney (25:06.53)

That’s a great question. On the timeline, I don’t know. I think we need these in the ground, you know, 2030s, right? If not before. We have the benefit of being uniquely positioned that we have 5.4 gigawatts of turbines. Like, so we’re not going to wait on a turbine. We have an arrangement with Kiowet for labor. We’re not going to wait on labor. So we have those commitments. We have a great regulatory team. We have a great environmental team.

I feel confident that we’re going to be able to move as quickly as we can, but we have all the right pieces in the right places.

Matt Boms (25:39.574)

Yeah. And at the end of the day in Texas, the rate payer is not on the hook. Ultimately, it’s the investor that’s on the hook for generation, which is really different in other parts of the country, right? That’s what we have in Texas that’s very unique. And I think the three of us are all champions for this great market that we have.

Gin Kinney (25:54.062)

That’s right. That’s back to that competition. Competition creates that innovation. creates, gosh, I’m going to say this, the need for speed. Anyone old enough to remember that movie? And I think that competitive nature of the way that we do things here in Texas are going to help us get solutions on the ground faster.

Joshua Rhodes (26:13.87)

Yeah, it was part of a roundtable with Columbia University the other day. And it was the third roundtable that they had kind of had. It was in Texas and they had had the other ones were in New York and Washington, DC. And one of the immediate takeaways was like, how much more positive the Texas people were about electricity growth and data centers and incorporating this. wasn’t a bad thing this was coming. We might not know exactly how it’s going to work out, how it will work out, but we’ll figure it out.

Gin Kinney (26:40.782)

Yeah, I think in partnership with all of our stakeholders, we’ve created an environment that invites this type of development that understands the needs for power, that understands the needs of our customers and wants to really be that center of growth in the country, that center of innovation. And that’s where I see a lot of the positivity coming through. And in Texas, it just seems like there’s a little less uncertainty about how we’re going to get it done.

I think that should provide a lot of confidence not just our customers, but also to our shareholders.

Matt Boms (27:11.97)

Yeah, and the track record is there as far as how we built a robust grid over the past few decades, I think. You know, no state better than Texas as far as... That’s right. ...who’s built out a grid that could actually handle all this load growth.

Gin Kinney (27:22.392)

And there have been a lot of lessons learned too. We’ve hardened infrastructure. We’ve learned to winterize, which really wasn’t a Texas thing several years ago. And then we’ve evolved our thinking too. And we also move, I think, at a faster pace.

Joshua Rhodes (27:37.154)

Thanks for coming on the Energy Capital Podcast.

Matt Boms (27:38.638)

Thanks so much, Jim. Thanks for spending time with us today.

Gin Kinney (27:40.526)

I appreciate it.

Joshua Rhodes (27:41.742)

Absolutely. Hey everyone. That was our discussion with Jen Kenney from NRG filmed at CERAweek. And this is kind of a discussion after that. It’s been a couple of weeks since CERAweek. And so Matt and I are here to kind of talk a little bit about that conversation as well as some other things that have happened that were talked about at CERAweek and things that have happened since then. Hey Matt, how’s it going?

Matt Boms (28:02.754)

Hey Josh, I’m doing well. How are you doing?

Joshua Rhodes (28:04.536)

Doing good, doing good. I actually just got back from London, so I’m a little jet lagged right now. So if I say anything that doesn’t make sense, I’m just going to blame it on that.

Matt Boms (28:12.548)

Okay, so for you, it’s what like two o’clock in the morning right now

Joshua Rhodes (28:15.926)

Yeah, I don’t know what time zone I’m in. Whatever. So one of the things we talked about with Jen was about their VPP, about their virtual power plant. Remind me like how NRG is structuring that.

Matt Boms (28:27.042)

Yeah, sure. So for folks who may not know what a VPP is, it’s a virtual power plant. Some folks are calling it a distributed power plant, a DPP. So the acronym kind of depends on who you talk to. But NRG announced this years ago and essentially what it is, is an aggregation of smart thermostats for all of its retail customers in Reliant that sign up for this program. They’re essentially opting into this new virtual power plant program. So they’ll be seeing

discounts on their bills for participating and NRG has projected about a gigawatt as far as the growth potential of the virtual power plan. think the target year was about 2035, if I’m not mistaken.

Joshua Rhodes (29:09.678)

Okay, so we got a bit of runway before we get there. Do you know how this like differs from like other smart thermostat programs? Like I remember I’m in Austin Energy and I know Austin Energy has had multiple iterations of smart thermostat programs. Like even before you had the smart Nest and Honeywell thermostats, like Austin Energy had, it was like a thermostat controlled by radio frequency. And so they would just like send out like a high frequency AM, I don’t know if it was AM or FM or even either one of those.

But they would send out some kind of signal somehow and all these thermostats would just drop off. And so it’s like one way communication. They didn’t know exactly what, I mean, they could see reductions. Anyways, do know how this one differs in terms of like how it’s interacting with the aircraft market?

Matt Boms (29:53.026)

Yeah. Well, the idea obviously is to aggregate and bid into the market, right? Like so similar to what we’re seeing in the ADER program. And I thought that when we interviewed Pablo a few weeks ago, that was a really interesting part of the conversation, right? Because there’s a lot of potential out there. He referred to it as almost like an Airbnb or an Uber platform for virtual power, which I thought was interesting, right? Yeah. I think the biggest difference Josh is that this is a Gentailer that’s running the VPP.

Right. Which is really unique if you compare it to like an Austin energy, which is vertically integrated or some other States that are running these programs, right? Like the example that comes to mind right now, because so newsworthy is this new special contract in Michigan that Google is currently negotiating with DTE with the utility up there and mostly renewable build out with some demand response included in the proposal. So.

It’s really interesting to see moving forward with all this load growth, what role demand response and virtual power plants are going to play. Right? Of like, you can put some numbers to it. Like in this case, we’re talking about a gigawatt potentially of demand response. that once you get into the gigawatt numbers, think ERCOT takes that seriously and starts thinking about how big of a role it could play in, in grid reliability.

Joshua Rhodes (31:05.41)

One of the things about turning something like these types of aggregations, to get those, like something has to be on before you can turn it off, right? The thing that’s different between like an aggregation of smarter distributed appliances and things is an appliance has to be consuming energy, say an air conditioner consuming five kilowatts, turn it off for a little bit of time to get that five kilowatts versus like a battery that’s sitting there that you’re able to turn something on. In my head, I’ve always put them in kind of different buckets. You know, we’ve seen like the ADER program, the ones that have actually

move forward or that have been more successful early on have been more kind of the battery side of things because maybe utilities or maybe the aggregators see them as more better sense of the capacity that they’ll have.

Matt Boms (31:46.156)

I think you’re right. think that to really break this down, like VPPs are the orchestrators of distributed energy versus a traditional demand response program, which is just about changing consumption behavior, right? Like just getting into the way that we consume energy and trying to reduce that peak load. I do think that VPPs are exciting moving forward because they’re so local, like the ADER program in Texas being a great example.

If they’re able to target specific substations and actively work to lower peak load at that substation, then it will make a significant difference, right? And like in those specific, we call them nodes, but in those nodal areas where we know that the substations are being overloaded. So I think there is a lot of potential there as far as not necessarily a traditional demand response model, but virtual power plant that has the effect of, you know, flicking a switch and turning on a virtual power plant.

Joshua Rhodes (32:40.012)

Yeah, okay, that makes sense. One of the other things we talked a little bit about with Jim, but we also like heard a lot talked about at other panels in CERAweek is, you know, all the stuff still going on in Iran, right? There were people who were talking about like how long it was going to last, you know, as we’re recording this a couple of weeks later, it’s, you know, still going on. To me, it’s unclear how much is moving through or if anything is kind of moving through, although oil prices are still high. They’re talking about, you know, rationing jet fuel and things like that in Europe.

it’s still a pretty big issue and the price of gasoline is high. When you were there and listening to other panels and other things like that, do you think people had a feel for what was happening or do think that they figured it was gonna lasting this long?

Matt Boms (33:19.63)

I don’t think anybody did, right? At least you and I and most normal people who may not be in the weeds on this stuff, but I thought it was interesting at CERAweek to hear, obviously the shareholders are paying attention, right? So when companies go to CERAweek and they speak about load growth and data centers and the Warren Iran and gas prices and all the above, it tends to lean towards like overstatements and it’s hard to distill really like what’s true and what will.

take shape in the markets versus how much of this is hyperbole. So like, would actually flip that question back onto you, Josh, because I feel like you’re more qualified to answer it than I am. Like you’re coming at this from a much more academic and scientific point of view. And we’ve had a lot of conversations on this podcast about the load growth numbers and how inflated or not inflated they are. But what’s your latest feeling on this? You think that we’re in for a bit of a cooling period as far as the numbers are concerned?

Joshua Rhodes (34:13.038)

I think I learned pretty early on not to really opine on federal policy when it comes to some of these things. Sometimes it’s hard to see what is going on. mean, if we zoom back down into Texas, like looking at the numbers around electricity and load growth and other types of things like that, I wouldn’t say they make any more sense, but it may mean at least we might have a better handle on that. mean, I some of the latest numbers coming out of ERCOT in terms of large loads are now even larger. I think some of the latest numbers I saw was like 410 gigawatts.

of large loads come into the system. so that, again, we’re in 85 and a half gigawatt load. And so you’re talking about, you know, a 5X of the grid in the next few years. I mean, it’s not going to happen. There’s no way that the system can grow that fast. Even 20 % of that is still a significant chunk. Even like 20 % if I’m doing the math right in my head of the expected large load is like doubling the grid, right? It’s pretty insane. You know, it’s easy to look at the numbers and think like there’s no way, you know, that that kind of thing could happen.

I was driving through the Hutto, like kind of Taylor area a few weeks ago and you know, there are some of these things being built. I mean, there’s some massive data centers and things like that being built out that way. I thought I was actually coming up on the Samsung plant, but then I realized I wasn’t even in Taylor yet. And I was in Hutto, you know, driving past a huge data center and a whole bunch of NatGastGen, you know, that’s coming along with it.

Matt Boms (35:34.284)

Yeah. And like, not to mention the impact of Austin being surrounded by data centers and what that will bring in the future. But to your point, Josh, this is also happening across the country. Like the Michigan example that I mentioned, that’s a 2.7 gigawatt contract in a state that has like 20 gigawatts of summer peak load. So sometimes the numbers aren’t as eye popping in other states, but proportionately it’s the same effect, right? It’s like, how do you grow your grid exponentially that quickly?

The thing about the numbers that you just mentioned from the ERCOT, like the most recent numbers, is that we had that bill HB 5066 a couple years ago on the Permian Basin. So, you know, people forget that that changed the way that we do regional transmission planning forecasts. Correct me if I’m wrong, but I think that’s where the numbers are coming from as far as utilities providing those numbers and then ERCOT being forced to adjust them based on their own projections.

Joshua Rhodes (36:27.118)

Yeah, no, it did. mean, it basically, ERCAD had to consider all unsigned load, like in planning processes. But then we had SB6, it also said, you you’ve got to say whether or not you’re shopping this around, and things like that. But yet the numbers keep getting bigger and bigger and bigger and bigger. And so I don’t know about you, it was like 410, like I was shooting for 500, like I was really hoping it’s going to be 500. I am still kind of confused, right? I mean, you know, how much of it to believe or what else because

I thought that was going to have a little bit more clarity into the system, but the numbers just keep jumping up higher and higher and higher. I ERCOT has their adjusted load forecast, which is lower, but I mean, it’s still a pretty significant increase.

Matt Boms (37:08.482)

Right. Yeah, absolutely. And you feel for some of the decision makers, like when we came away from the interview with Pablo, they’re putting a really tough spot, right? Because if you’re ultimately the grid operator and you have to plan for all of this loading, you know, some of it isn’t going to materialize, then you’re putting a really hard spot. And I think the same could be said about the public utility commission, right? Because they’re trying to map, like they want economic development, they want economic growth, but at the same time, you can’t build out for load that may not materialize. So.

The numbers somewhere in the middle, at this point, think it’s anyone’s guess how much we actually end up with.

Joshua Rhodes (37:40.078)

I actually ran these numbers the other day just using RCOT’s long-term load forecast and other types of things. And I compared it to what we used to do, particularly for our own grid modeling purposes. If you took historical data and then projected forward based on that, just looking at peak demand, if you take the past few years of growth and you look at, say, 2030, you’re at about 100 gigawatts in terms of RCOT in the grid. So between the next four five years, we gain another 15 gigawatts.

which is in line with kind of how traditionally we would have thought the system to grow. you look at, so ERCOT’s adjusted load forecast is about 140, know, about 40 gigs more of that. And then if you take the additional TSP, like, you know, all the unsigned load, it’s like 210 or something like that, which is a pretty big difference. It’s like historically what we would have seen to be about 100 and then the high line number being double of that.

One interesting thing is this time period between like now and 2031 ish or so, where you just see this massive change in load growth and then it kind of flattens back out again. It grows, but then it grows at a more reasonable path. it means the next few years are going to be pretty darn interesting and the answer is probably somewhere in the middle.

Matt Boms (38:57.132)

Yeah. Well, what do you think about this topic that we kept hearing at CERAweek, which is don’t worry, we’ll bring our own generation, right? Cause we heard a lot of that in Houston. Yeah. And I know some of it is true. Like absolutely some of these data centers are doing that, but what I hear most from experts is the cheapest electron typically comes from the grid, right? That’s not going to come from bringing your own generation. like, where do you see that landing as far as these data centers coming with their own generation?

Joshua Rhodes (39:24.91)

I don’t believe that these data center companies, these hyperscalers want to be in the power business. And I’ve listened to a few other podcasts with some other folks from some of the big ones like Meta and Microsoft and other places. They’ve even said that, right? That they don’t really want to be in the power gen business. One, because the margins are much lower than they’re used to expecting, right? It’s not like they’re getting into this like they’re trying to make money. I the margins are single digit margins versus the double digit margins or triple digit margins, depending on who you are.

that you’re used to. So this is not an attractive business for them to be in. It’s out of necessity that they’re trying to. And even some of the conversations that I’ve heard, it’s like they’re not even trying to do this in the long run. It’s just like, if you’re measuring every megawatt of data center that’s not operational in the billions of dollars lost every year, that’s a pretty big incentive to try to get your data center going as fast as possible. So you’re hearing a lot of things like bridge power and other types of stuff. Like we want to be on the grid, but we want to start generating tokens.

tokens being like the answer that the AI models give you, like every word or letter or piece of code being a token. We want to be generating these tokens based on the models that we’ve trained. We need to, because that’s how we make money, right? But it’s hard, right? Because, well, you’re competing for the same assets.

Supply chains can grow and we can have other companies that build these power plants can increase and grow, but they can only grow so fast. And like I was just looking at the ERCOT data, it’s like the next five years are key, right? In terms of how many data centers and how they want to connect these supply chains, they can’t grow that fast. And so you’re seeing some really wild things out there when it comes to like how these data centers are going to be powered. There’s a big data center, roughly a 350 megawatt data center going up outside of El Paso.

that’s going to be powered by something like 800 small units that are like 450 ish kilowatts each. But that’s like the only way that they’re able to get power to that region. And then there’s something going on at the Public Utility Commission about how those assets will eventually transfer over to El Paso Electric, like Ray Base or something like that. I don’t fully understand how it’s all set up. But in general, stringing together a whole bunch of really small things.

Joshua Rhodes (41:38.146)

to power a big thing. It’s like a symptom of like the thing that they actually want, which would be to connect to the grid is not available. The secondary thing that they want, which would be, you know, a multi hundred megawatt power plant is not available. And like there’s no other option, right? You’re going to go with 800 really small things with a whole bunch of moving parts. To me, that sounds like a logistics nightmare when it comes to maintaining these things and keeping things operational.

Matt Boms (41:59.416)

Yeah, absolutely. I mean, there will be a wave of co-located solar and batteries. I think we’re already seeing it for a lot of these data centers. But I think you’re right. For the most part, this is like plan B for them, right? You know, if they had another option, they would just connect to the grid as soon as possible, but it’s all about speed to power, right? They’re all just trying to get connected as quickly as possible. And we’ve had a couple of legislative hearings since we were at CERAweek in Houston. So I wanted to get your thoughts on that. My takeaway really was like,

I think SP6 is just the beginning of legislation around data centers and transmission cost allocation and all this stuff. It sounds like there’s going to be more coming from the capital next year, but what was your primary takeaway from those hearings?

Joshua Rhodes (42:39.16)

I mean, yeah, this is a problem we’ve like never really had before, right? It’s hard to plan for what you don’t know or have processes in place for what you don’t know. Just an example, I was talking to one TSP a couple of months ago. I know everything in this space feels like a couple of years ago. I was talking to one TSP a couple of months ago and they said that in the previous years, they might’ve had like one large load study going on per year, but at that point they had like a hundred going on at the same time.

Matt Boms (42:51.202)

That feels like a couple of years.

Joshua Rhodes (43:08.174)

The system was not designed to handle that. And this is why ERCOT’s doing this batch zero process that Pablo talked about. It’s because we have a generator interconnection queue and there’s like a very well understood process upon which a generator moves from a dream to making electricity. When we talk about this large load interconnection queue like we actually had a process, there wasn’t really a process in place. This plane took off and then we’re trying to build it.

as it’s going in the air. It had taken off and it was already over the Atlantic Ocean by the time we figured out like we needed to build it, right? I think there’s going to be a lot of policies and protocols and like things that we’re going to have to figure out. And we’re not going to get it perfect. I mean, I think we’ll do it better in Texas than they do in other regions. Other regions are just, think Maine recently just put in just a straight up moratorium on things and saying, no, we’re not going to build anything here. I think Texas is going to try.

to build as much as we can because that’s what we do. But yeah, we’re going to have to figure this out and we’re going to figure out who pays for it, right? It’s one thing for that load to grow at like a steady clip that supply chains are used to handling. But if it grows many, many, many, many times faster, classic supply and demand means prices go up. We’re going to have to figure out how do we make sure that those that are putting the new stress on the system are the ones that are bearing the cost of that.

Matt Boms (44:26.446)

Absolutely. Yeah. And I think some of that, the PUC is working out right now through these rule makings around SB6. It’s not perfect, but like you said, we’re kind of out front and center on this issue in a way that other states are not. Like other states are just starting to ask those questions and we were already implementing legislation. So I do see that we’re at least a year and a half ahead of most other states. The question is just like, how does the PUC implement those rules? And then what’s missing heading into the next legislative session? We’re like in this big kind of uncertain territory right now.

Joshua Rhodes (44:55.266)

Yeah, mean, even companies will tell you like they prefer policy certainty, even if the policy is bad, because then you can just work around that policy uncertainty is like something that is the worst.

Matt Boms (45:04.942)

I hear that all the time. Our companies are like, just tell us where the goal posts are and stop moving them. That’s all that they want. They’re just looking for a certainty, for sure.

Joshua Rhodes (45:11.874)

Yeah, that’s what Pablo said when we talked to him the other day, right? He was just like, we’re going to implement. He was talking about something else, but he’s like, we just got to get going and then we’ll make it better as we do, which I think is smart.

Matt Boms (45:21.804)

And also Josh, there’s always a reason to go past more bills because Winter Storm, Yuri was the perfect reason, right? But then there’s always something happening. So now we’ve got the data center boom, we’ve got more legislation coming out of Austin, which just begs the question of like, when is enough legislation and maybe just time to let the market do its thing.

Joshua Rhodes (45:39.022)

No, I totally. mean, bless their hearts, but the Texas legislators, they’re not electricity experts. It’s a citizen legislature, right? I think it’s best done when they set high level goals and trajectories and let the Public Utility Commission has electricity experts sitting on the dais or as in the staff and all the other folks, let them do the job of taking that broad policy direction and converting that into workable statutes.

and things like that and then let ERCOT convert those into protocols that actually govern how the market is structured. I think the ledge got a little too prescriptive after winter storm URI because they wanted to feel like that they were doing something. I mean, I feel that but it’s like you get too prescriptive, it becomes harder to work in the system, right? The more prescriptive you are starting like higher up the chain, like the less flexibility that the Public Utility Commission has to maneuver and then the less that ERCOT does and like...

because we probably need the maximum amount of flexibility and maneuverability, I would hope we don’t legislate as strict or as granular as we did after Yuri.

Matt Boms (46:46.784)

Yeah, I think you’re totally right. think like, you know, we don’t want the legislature creating new ancillary services, for example, that should be Urquhart’s job. And to your point, Josh, I think that this is the best version of the PUC and Urquhart that I’ve seen since I started in this role. They’re extremely competent and very smart and just have a ton on their plates right now. Right? So like the best thing that the legislature could do would be just let them do their jobs and give them some time to work out all these different rule makings, you know, cause right now they’re just trying to catch up.

get up to speed with all the statutory deadlines. They don’t have time to take on additional work that maybe ideally they’d like to be working on other things, but they just got to get through all these different deadlines that are on their plates right now.

Joshua Rhodes (47:25.87)

Yeah, totally. All right. Thanks everyone. That wraps up the post conversation with Matt. Big thanks to NRG and Jen for being available and chatting during CERAweek. It was great and looking forward to seeing y’all next time.

Joshua Rhodes (47:41.304)

Today’s conversation helped you make better sense of how the energy system actually works. Share the episode with a colleague and hit follow on your podcast app. You can find us on Apple Podcasts, Spotify, and all the usual platforms. For deeper analysis and context each week, subscribe to the Texas Energy and Power at texasenergyempower.com. That’s where you’ll find every episode, every article, and our latest updates. We’re also on LinkedIn, X, and YouTube.

where we share clips, insights, and ongoing commentary on energy policy, markets, and the grid. Before we go, a quick note. The views expressed on this podcast are my own and do not represent the official positions of the University of Texas, Ideasmiss, Austin Energy, or Columbia University. A big thanks to Nate Peevee, our producer. I’m Joshua Rhodes. Thanks for listening, and we’ll see you next time.

]]><![CDATA[Load Growth Challenges: Texas Grid Roundup #91]]>https://www.texasenergyandpower.com/p/load-growth-challenges-texas-gridhttps://www.texasenergyandpower.com/p/load-growth-challenges-texas-gridFri, 24 Apr 2026 14:50:04 GMTTexas is one of the fastest-growing data center markets in the world, and the state’s grid planners, lawmakers, and ratepayers are all starting to feel it.

This spring, a series of ERCOT reports, legislative hearings, and new policy initiatives have put three questions on the table: How much new electricity demand is actually coming? Who foots the bill for the infrastructure to serve it? And is the Texas electricity market built to handle what comes next for Texans and developers?

These Grid Roundups, along with the full archives, select episodes of the Energy Capital Podcast (including this one on how batteries are reshaping the grid with Fluence VP Suzanne Leta), Reading and Podcast Picks, and more – are for paid subscribers.

Subscribe now

Load forecast variability is hard to ignore

ERCOT’s preliminary 2026 Long-Term Load Forecast got big headlines this month, showing load reaching an impossible level of 368 gigawatts, more than four times the grid’s current all-time demand record, by 2032. Energy analyst Travis Kavulla rightly told Bloomberg that the forecast “can’t actually happen.”

This week, ERCOT CEO Pablo Vegas offered a more realistic forecast in his presentation to the grid manager’s board: 111 gigawatts by 2032.

That’s still an enormous amount of load growth, and the driver behind it is no mystery.

Read more

]]><![CDATA[Transmission Takes a Decade, Load Doesn't — with Raina Hornaday]]>https://www.texasenergyandpower.com/p/transmission-takes-a-decade-loadhttps://www.texasenergyandpower.com/p/transmission-takes-a-decade-loadWed, 22 Apr 2026 10:09:54 GMTERCOT’s all-time demand record is 85.5 gigawatts. Yet by the end of last year, the grid manager’s interconnection queue included 432 gigawatts of generation requests. ERCOT also received 225 gigawatts-worth of new large load requests last year.

The critical factor connecting the two: transmission lines. But the transmission improvements that would accommodate such dramatic grid growth aren’t growing nearly as fast. In a conversation with Energy Capital Podcast host Micalah Spenrath, renewable energy veteran Raina Hornaday describes transmission as a planning and construction constraint that load growth is no longer willing to wait for.

Raina has developed more than a gigawatt of renewable energy across Texas over the past 20 years. She founded Caprock Renewables and Fortress Microgrid, overseeing the creation of both utility-scale and distributed generation resources.

In this episode, she describes a shift in how generation and load projects are being created: she calls it, “the energization of land.”

She and Micalah also discuss how transmission lead times are prompting distributed generation resources to grow quickly, even as utility-scale solar continues to boom, and how institutional knowledge is moving from utilities to private developers, reshaping project delivery.

Raina also credits battery storage resources added in the past five years for easing the price volatility that used to define ERCOT’s energy market. She says market adjustments made in the past five months have created a tailwind for storage projects.

And she and Micalah discuss Senate Bill 819, a measure filed in the last legislative session that would have imposed strict siting requirements on renewables projects and likely hobbled Texas’s nation-leading renewables industry. While the bill drew widespread opposition and ultimately died, Raina expects a similar proposal to be filed again in next year’s legislative session.

She says education — about the tax base that renewables create for rural communities, the revenue that renewable energy projects offer landowners, and the workforce they create across the state — is key, both for blocking anti-energy proposals and propelling the state’s economic and energy future.

Timestamps

  • 00:00 - Introduction & Raina Hornaday

  • 00:54 - Caprock Origins: Family, Wind, and the Met Tower

  • 03:52 - Why South Texas for Utility-Scale Solar

  • 05:36 - The Landowner Pitch and Family Legacy

  • 09:06 - Boutique Developer in a Shifting Policy Landscape

  • 13:00 - Education, Powerhouse Texas, and American Farmland Trust

  • 16:14 - Agrivoltaics and Solar Sheep as a Growing Industry

  • 17:29 - ERCOT Interconnection Bottlenecks

  • 20:57 - SB 819, Tariffs, and Real-Time Co-Optimization

  • 23:21 - Testimony, Schools, and the Workforce Pipeline

  • 28:55 - Distributed Batteries and Storage Economics After Uri

  • 32:18 - Why Battery Projects Get Canceled

  • 34:22 - What Texas Needs Next: Flexibility and Distributed Generation

  • 36:50 - Closing Thoughts

Resources

Guest & Org

Organizations Discussed

Company & Industry News

Books & Articles Discussed

Related Posts by Texas Energy & Power

Transcript

Micalah Spenrath (00:05.614)

Hi everybody and welcome back to the Energy Capital Podcast. I’m your host, Michaela. And today I have with me Reina Hornaday, who is a veteran renewable energy developer with over 20 years of experience advancing the energy transition across Texas, bringing more than one gigawatt of renewable energy projects into commercial operation. As the founder and co-owner of Caprock Renewables and Fortress Microgrid and Caprock DLE, a direct lithium extraction venture developed in partnership with Texas Tech University,

Micalah Spenrath (00:35.702)

Rayna leads the development of distributed solar generation storage and microgrid infrastructure across the state. Super excited to have you on the podcast, Rayna, and we’ll hop right in. So in case I missed anything in your intro, give us a quick introduction to your work and Caprock Renewables in general.

Raina Hornaday (00:54.402)

Thank you so much for having me. This is one of my favorite podcasts of all time. So I’m really thankful to be a guest today. Keprock Renewables came from very kind of homegrown roots. My family homesteaded in Eastern New Mexico, 1906. And my dad started Keprock Farms in the seventies. His dad and his grandfather farmed dryland wheat farm, milo, things like that on the high plains of Eastern New Mexico.

Raina Hornaday (01:23.434)

starting in 1906 and then until my dad passed away a couple years ago, but he farmed his whole life and was a diehard farmer and loved the land. And he also was the executive director of Eastern Plains Council of Governments. And that gave him the opportunity to put up a small Met Tower on our edge of our farm, which is where the Caprock name comes from. It is the Caprock. There’s lots of Caprocks. It’s not the only Caprock. There’s a town in Texas called Caprock.

Raina Hornaday (01:52.59)

But we had Caprock Farms and ranches. He put up the Met Tower. He and I would go get the chip, mail it to California, and we retained that data. And I took it to the Renewable Energy Roundup, which is a precursor of Clean Text, a TRIA. It was a TRIA event that was held in Fredericksburg, which I loved so much. And I think it was 2001. And met with lots of folks there.

Raina Hornaday (02:20.65)

Rainwater catchment, but renewable developers. And that’s how the Caprock Wind project that is right there between our farm and ranch in Eastern New Mexico was born. So that project lived its life 20 years. It was decommissioned by Leeward Energy and repowered next door with the same substation. So that’s where Caprock Renewables got its name. I founded it 10 years ago and the goal was to do utility skills solar.

Raina Hornaday (02:50.734)

We did 150, 200, and 300 megawatt projects in Texas. And during that time, that was really when the utility scale solar assets were being built out in Texas. And I had done this with wind, so it was really interesting to see how similar it was. But these, as you know, people from all over the world, the biggest companies come to

Raina Hornaday (03:16.332)

do business in renewables in Texas. It’s just the best market. It’s kind of the easiest market, energy only. And so I’m a small developer, boutique shop. Then I started Fortress Microgrid to kind of see how the microgrid industry needs could be met and ended up doing small agriboltake projects in the Valley. And so I have one of the biggest projects and then I think one of the smallest projects.

Raina Hornaday (03:44.088)

So that’s fun and just got into more meaningful, smaller projects. So doing a lot of things now, but that’s kind of how we got here.

Micalah Spenrath (03:52.31)

Yeah, thank you so much for that history. So when I investigated, that might be too formal, when I researched Caprock Renewables, it seems like y’all did a lot of work in the South Texas area. So just curious what initially drew you to focus in that region, the South Texas region, but also utility scale projects in general. So you mentioned that the ERCOT market was particularly attractive. I imagine the business case was really persuasive at the time.

Micalah Spenrath (04:19.053)

So taken all together, what really spoke to you about South Texas utility scale solar projects?

Raina Hornaday (04:25.826)

Well, the cost of solar just went down enough to make it feasible. And that’s one of the main drivers for this boom in solar we’ve seen. And our site selection for our projects is fully based on nodal data of where the best prices are for projects and substations and then where land is available. And that’s just such a big part of the development.

Raina Hornaday (04:54.392)

process is working with landowners. And as a landowner myself, I always advocate for landowners and just have some of the best landowners that I’ve been able to get to know. And it really is such a big process. The 300 megawatt project, we had to build a new substation. So it took two full years of construction on that. And we had the ribbon cutting and had a big tour and everything of that facility with everyone involved. And it was so rewarding to see it done. And the landowners just

Raina Hornaday (05:23.958)

So appreciative because it’s such a great thing for the family and the community and he’s gonna have sheep out there. So that’s always if we can do dual use in these situations with land, we always try to do that.

Micalah Spenrath (05:36.874)

Yeah, that’s amazing. So I’m a bit curious, as a follow up to that, can you walk me through your approach to a landowner when you’re thinking of partnering with them to develop a site for utility scale solar? What’s the value proposition there? What does the conversation look like?

Raina Hornaday (05:53.208)

So we send a lot of inquiries out and so a lot of conversations. But this particular project, the landowner responded and many times they’ll have multiple bids because or multiple, we call them LOIs or offers on their desk. And this landowner came to our office and said, I have term sheets in front of me for these big companies. I went with you because I know that

Raina Hornaday (06:23.116)

Even though you’re small company, with the bigger companies, they have a lot of different projects to pick from. And with you, I think you’ll really care for my project and get it over the finish line, which was really nice. And this landowner is in the energy industry as well, which is always interesting and helpful. But he just explained many times, but at the ribbon cutting that he loves the fact that it helps him keep the land and his family for generations to come. And his family had been there since the early.

Raina Hornaday (06:52.822)

I think even late 1800s. so many of these landowners are finding this as a way to continue the family legacy when children and grandchildren aren’t able to come and live remotely and farm and ranch like our parents and grandparents did. So it’s really just become an option for farmers and ranchers. so that’s one of the things, and then it’s making the land pretty much farming energy.

Raina Hornaday (07:22.23)

on your land, which is a funny way to put it, but it’s productive. And in this case, again, there was a coal plant retiring. So we took the place of the capacity that the coal plant was providing. And we went to a school board meeting and they were giving the coal plant award for being a good steward of, it was just so ironic at the time, but that’s how we’ve seen it happen. know, coal plants we knew were retiring. so.

Raina Hornaday (07:51.936)

In New Mexico, same thing, lots of renewables have been added as coal plants have been decommissioned. So it uses no water, which is really great. And again, if you take care of the soil and the vegetation management correctly, you can grow crops. I’ve seen lots of balers baling big round bales in between solar panels, which makes me so happy because it’s really productive. And then of course there’s the sheep and then cattle bull ticks is the...

Raina Hornaday (08:20.128)

next thing that’s coming. So I’m really excited about that. It’s happening a lot over the country, but we’ve seen a lot of interest here in Texas.

Micalah Spenrath (08:28.108)

Absolutely. mean, whenever I drive to the coast and you pass through the rural areas, there’s so many like cattle companies, just acres of cattle. I’m actually very interested to see if Texas will be an enthusiastic adopter of cattle photo-ics. We certainly have a lot of cattle.

Raina Hornaday (08:45.198)

and

Raina Hornaday (08:45.798)

a lot of land and that’s really one of the drivers for utility scale solar here is just there’s 97 % of the land is privately held so landowners can do what they want to do with their land and everyone needs additional revenue and this is often a great option for large operations.

Micalah Spenrath (09:06.006)

Absolutely. So something you mentioned, you are a boutique developer, if you will, so a small scale developer. So my question for you is, given the policy changes that we’ve seen with tax credits, federal policy adjustments, but also state changes as well, how does a small developer navigate those changes as compared to some of these larger developers with larger portfolios and presumably more resources?

Raina Hornaday (09:33.942)

Well, for sure more resources. It works for us because we don’t have the commitments that the larger companies have. So I think it’s just a give and take, but I love how small and flexible we are because we can respond to a project at a local school. And we’re working on a couple of larger projects, but a lot of our projects are custom for a producer.

Raina Hornaday (10:02.572)

I like those projects because they’re meaningful. The tax credits going away was obviously a change, but everyone kind of, you know, I was at the Capitol talking to educating and talking to the decision makers when all these bills were on the line. And it was really a high stress time, as you know, in the industry, but everyone, we got through it and we’re just continuing to do projects and we just have to make those economics work.

Raina Hornaday (10:31.496)

And we’ve always known that same thing with wind and tax credits with wind. so it’s just continuing to do what the cycle has always been, which we had to get there. And now we’re there and we have this huge need for energy. And so there’s a lot of energization of land and people coming in and saying, hey, how can I get the most amount of energy out of this land? Which is just an interesting

Raina Hornaday (10:59.07)

way to look at development that I don’t know, I just hadn’t really ever looked at it the way it’s being looked at now, which everyone’s trying to maximize their land for a data center or batteries or solar. So it’s just creating an analogy I really like that was more for the wind industry because all this is based on our grid and how our grid can handle this, which it really can’t. We need a lot more flexibility and we need a better roadmap, but

Raina Hornaday (11:27.948)

When my family homesteaded out, you know, they had a dugout, it’s still out there on our ranch. All the ranches out there had, there wasn’t transmission and they had wind chargers. And so they had distributed energy. They made their own energy. After that, they had every little ranch and farm has solar, I have solar panels that my grandparents had at Wells and they’re so old and

Raina Hornaday (11:56.994)

You can still get some juice out of them. And in the wind business, I was managing the development of seal of wind power at that time after the Caprock project was built. And we put up, I think, 1100 wind turbines between Amarillo and the New Mexico state line on I-40. So we always made the analogy. There was 1100 wind turbines out there before, and now we’re just getting it back to where it was. I think we just need more. And Texans want, landowners want energy.

Raina Hornaday (12:26.68)

security and independence. So if you’re able to produce your own power, people really like that.

Micalah Spenrath (12:32.078)

Absolutely. We hear a lot of the homegrown energy terminology and it sounds like that’s exactly what you’re doing. And you put it very succinctly, but also poetically, energization of land. And I think that that is really a huge opportunity. And like you said, a lot of landowners are looking to get the most out of their assets and partnerships with smaller developers like yourself that also value sustainability and stewardship. Match made in heaven, right?

Raina Hornaday (13:00.662)

Yeah, it’s rewarding and it just needs to be done thoughtfully. And I always come back, whether I’m in a room with big policymakers or community folks, education is really what is needed across the board, even between me and partners I work with in the oil and gas industry. I don’t know what they know, they don’t know what I know. So education kind of going back and forth that way, but

Raina Hornaday (13:26.924)

That’s one of the things I appreciate so much about Powerhouse Texas. And I’m so looking forward to being a part of this legislative session and just putting so much out there, which you and I might take for granted because we have the resources in front of us, but it’s hard to filter everything out and get to what’s helpful and what’s factual. And there’s lots of misinformation out there. So, Powerhouse, I love, of course, Clean Text.

Raina Hornaday (13:53.55)

I’m the biggest fan of, and then American Farmland Trust is one of my favorite things that I help with for their SARE project. I don’t know if you read about it or not, but we’re training 25 agricultural and conservative professionals. So we’re helping and we’re training like local ag folks and people on the water side of things, farm bureaus, agri-life extensions.

Raina Hornaday (14:23.156)

NRCS staff, things like that. And so it’s good for us to get a consistent sharing of information and dialogue because that’s who the farmers go to, to ask. They go to their ag extension agent, say, Hey, should I do solar? Should I do batteries? So that is a really important thing that, that American Farmland Trust is doing. And they do extensive research. They do a lot of.

Raina Hornaday (14:51.374)

questionnaires to farmers. So they really are getting a lot of data on this energizing land and how landowners can take advantage of hosting energy projects and dual use. And one of their farmers and ranchers has a large utility scale solar project on her family’s land and her son went to Texas Tech and then they got the contract to manage the vegetation.

Raina Hornaday (15:17.442)

which is part of the operation and maintenance contract and their son graduated from Texas Tech and moved home. And he has a job because he helps manage the sheep under the solar. So we have this group of industry folks that care a lot are helping put together these best practices across the board for development, which is needed. And, you know, I’m doing battery energy storage projects as well now also, and I go to these

Raina Hornaday (15:46.936)

co-ops and small communities and there’s not a standard operating procedure for these. There’s no real policy across all these different potential locations for these storage. So every time it’s like Groundhog Day, but I think eventually and I think it will see it a lot in the next session is just we’ll have some standardized policy for projects. So anyway, it’s an exciting time to develop in Texas and ERCOT for sure.

Micalah Spenrath (16:14.986)

Yeah, and I think you mentioned agrivoltaics as not only being energy jobs and bringing energy jobs to rural communities, but also agricultural jobs. So I think that’s an angle that isn’t talked about very much. We do acknowledge that agrivoltaics and utility-scale solar can bring energy jobs, but it also creates opportunities for agricultural professionals as well.

Raina Hornaday (16:37.954)

Yes, and that’s why like UTRGB and A and there’s lots of educational facilities like that that are doing real research on agrovoltaics for high producing crops. And vineyards, our first project was on a tiny vineyard in the Rio Grande Valley. But what probably has been one of the biggest industries that have come out of this dual use agrovoltaic, well, we call it agrovoltaic, is the solar sheep.

Raina Hornaday (17:07.15)

You know, I have a good friend that has solar sheep and it’s just a really big business to run these sheep and move them from site to site. And then you have the dogs that protect the sheep. I mean, it’s just work and it’s an industry and it’s growing and there’s a lot of companies involved. And so it’s really cool. Like you said, it’s potential jobs for locals really.

Micalah Spenrath (17:29.55)

Absolutely. So you’ve mentioned several different projects. So I do want to ask, from a development standpoint, what are the most persistent bottlenecks in getting some of these projects from early stage development into interconnection and operation in the ERCOT market today? An easy one for you.

Raina Hornaday (17:46.509)

Well...

Raina Hornaday (17:49.326)

Yeah, well, it’s just so interesting because the interconnection queue, I’m sure you know, at end of 2025, there was 432 gigawatts of generation request. And then the large load, think they, ERCOT had 225 new large load requests in 2025. So it’s pretty much, I think one of the ERCOT folks said it’s outgrown the process. Like that’s too much. So interconnection.

Raina Hornaday (18:18.006)

obviously is a big one. I mean, that’s why I got into doing smaller projects. So, you know, we do sub 10 megawatt projects for battery storage and a couple solar, but the reason we did that is just because you don’t have to do all the interconnection, the full studies for interconnection. You don’t have to go through that interconnection process. And it’s really been such a learning experience for the distributed

Raina Hornaday (18:47.788)

energy, like I said, it goes back to kind of the original, it’s energy projects that are on site. And now with data centers, data centers want that. So they want behind the meter, they want as fast as possible. They want every electron. So that’s really interesting. It’s been not the fastest process because a lot of places that we go to do projects, it’ll be the first project for this municipality or co-ops. And then we’ve been delayed.

Raina Hornaday (19:17.046)

because we’ve worked with folks that say, I’m waiting for rulemaking to come out, for policy to be clear for us on what’s going to happen. And I’m like, wow, it’s hard to hear that because we have deadlines and we have project schedules. And then when something like that happens, the other thing that’s happened is a lot of the leaders of the utilities and munis and co-ops are the talents getting picked off and hired off.

Raina Hornaday (19:46.542)

for other projects and big companies. And so then the people that know all the information about forever of their system and their needs and their really smart electrical engineers that have run the cities and municipalities, they’re all of a sudden gone. So it’s an opportunity for other people, but at the same time, it slowed processes down a little bit for us.

Micalah Spenrath (20:13.312)

Yeah, so to summarize, some bottlenecks that you’re experiencing are first, if it’s kind and specific geographies. So you’re having to lay the foundation for some of those areas that haven’t had or hosted projects before. So there’s a learning curve with that policy and changes there, especially in the regulatory space. Those can also pose delays for you. And as a developer, time is money. So that can also be a challenge as well.

Micalah Spenrath (20:40.866)

and then loss of institutional knowledge. So like you said, some of the best talent is transferred from the public sector to the private sector, and that can also present challenges to developers as well. So do you think that sums up your thoughts?

Raina Hornaday (20:55.778)

I think so.

Micalah Spenrath (20:57.175)

Awesome. All right. So the policy environment for renewables in Texas has become more dynamic in recent years. How are regulatory and legislative proposals

Micalah Spenrath (21:08.758)

affecting your project pipeline and your investment decisions.

Raina Hornaday (21:13.07)

We went through the SB, the 819 obviously was the biggest one, 388 and then SB 715 last year. So they didn’t make it, but we kind of know that they’re not buried. They’re probably coming back. So I think the fear of what could happen in the future and really the tariffs have been a big kind of jolt to the system, just direct kind of gas.

Raina Hornaday (21:42.262)

when you have orders coming and then all of a sudden the price is completely different. And some of the orders might be in transition and some might be, it’s new problems and new challenges that we’ve never seen before. So storage, the real time co-optimization plus batteries that launched in December 2025, that really has given storage a lot of, you know, it’s a tailwind for storage. So it’s big upgrade.

Raina Hornaday (22:10.84)

for that. And I think there’s a lot of opposition about storage out there in different areas. But it really is a great thing for the grid. And it’s a great thing for local communities. And it just provides flexibility and resiliency. And we go places and they think they’re anti-storage and we walk them through what it does because lots of people think, you’re taking my energy and are you paying me for it? And it’s just

Raina Hornaday (22:40.214)

an understanding or misunderstanding of how battery energy storage functions and how they can potentially make money, know, ancillary services and how it benefits them and the local environment. So yeah, I think going into this next session, just seeing, being prepared for what’s going to come at these renewable energy and then battery energy storage. But I think with the AI infrastructure that’s being built, batteries are just

Raina Hornaday (23:10.174)

they’re being added to many, many, of these big projects. it’s just going, everything that can get built is being built right now and it’s exciting.

Micalah Spenrath (23:21.742)

Yeah. So you had mentioned some of the legislation looking to regulate the renewable energy industry. And some of that legislation, specifically Senate Bill 819, could actually dampen investment in that industry in Texas, which, as you mentioned, might be counterproductive given the demand that we’re seeing from large loads and data centers. So I recall during session, I think you personally testified on Senate Bill 819.

Micalah Spenrath (23:50.776)

but there were also, I think, over 100 other stakeholders that showed up as well, many of them landowners, some of them veterans, this really diverse group of folks. So my question is, with such a show of support for the renewable energy industry, what’s it going to take for lawmakers to get the message and for them to maybe pivot some of these renewable energy legislative proposals?

Raina Hornaday (24:15.852)

Well, I really think it’s education and it’s also proof. mean, so many of these large renewable developments have provided so much revenue for conservative rural communities. So it’s hard to ignore that after we have like Joshua Rhodes does the data gathering and has these papers on how big that figure is of the economic boom.

Raina Hornaday (24:45.004)

to rural developments because of renewable energy. And a lot of these decision makers and policy leaders and legislators are landowners. So as I said, Powerhouse, which obviously very, very well, I just love that they’re getting together energy policy directors, staff, chiefs of staff, and bringing experts in, not at the fire drill that we did, which I loved because it was such a kumbaya, like it was just amazing.

Raina Hornaday (25:14.616)

But this is preemptive. I mean, we’re starting this 12 week cohort for education. And I think that’s just so important because we have to get the facts and we got to get the facts to the policymakers, to the voters. I mean, in general. And so I really just think it does come down to education and then having really good, smart. That’s what I like about American Farmland Trust, having smart solar principles, going in with a real positive

Raina Hornaday (25:44.344)

plan for the community and for the landowner and for the whole thing. So it’s very much a community engagement industry. It always has been. You always know that you meet the judge. You always meet the school district. You always go in front of the city council. I’ll often meet multiple mayors doing a project. And so it’s neat. mean, Texas is incredible. I love it. It’s beautiful. And it’s a great place to be in this industry.

Micalah Spenrath (26:11.032)

Can we explore the school connection a little bit more? I do know that renewable energy projects contribute to local economies, but you’ve mentioned school boards a couple times. So how do your projects interact with the educational system?

Raina Hornaday (26:26.818)

Well, after I said it, I realized, you we used to have tax advantages through the school. So we would make deals with the school so they would have increased revenue. And so that got voted out of, I think it’s been a couple years. Yeah, it was, I think, three years ago.

Micalah Spenrath (26:45.442)

And that’s chapter 313.

Raina Hornaday (26:47.438)

Yeah, that’s 313, which was such a big part of the economics of our projects. It was such a big part of the development because, like I said, you go in and I think that’s why I mentioned it. It’s just very memorable to go to these school boards. It’s really cool to see all the different school boards in the Rio Grande Valley and Starr County and just see the gyms and meet all the people. And oftentimes the school board members, and I met with the landowner yesterday and he’s like, I’m on the school board.

Raina Hornaday (27:15.256)

They’re landowners and they’re leaders in their communities. So those are the people that are really good to have advocacy standpoint for local projects. So because of 313 went away, we don’t, aren’t as active, but it’s still important to be every school board that I met with. Someone would inevitably say, do you have information that you can share? Do you have a poster about renewable energy? That always stuck with me. Like the science departments.

Raina Hornaday (27:45.078)

want basic information about renewable energy. And then we’re going and talking to legislators on renewable energy. So that’s why I’m just so interested in getting as much education as possible, which people are doing a really good job. There’s so many industry folks and nonprofits that have podcasts and gatherings and happy hours and luncheons and roundtables. So I think it’s happening, but it’s a big industry. It’s a big state.

Raina Hornaday (28:14.996)

and we need a lot more of it.

Micalah Spenrath (28:16.686)

Absolutely. So it’s certainly important to continue engaging schools and educational facilities, even if it’s not an economic partnership, as was the case in a Chapter 313 policy environment.

Raina Hornaday (28:30.41)

And from a workforce perspective as well. I mean, this is a career path in Texas for students looking to what they want to do, whether it’s legally or trade school. Texas Tech, where I went, has a great renewable energy program and they work with a lot of developers and they have a lot of internships. so a lot of education comes out of these big institutions in Texas.

Micalah Spenrath (28:55.598)

Awesome. So I did want to highlight some of your battery projects. So what’s been your experience deploying? Is it utility or distributed batteries?

Raina Hornaday (29:05.42)

We have both under development. mean, they’re the sub 10 megawatt batteries. And so they’re considered distributed generation, but 10 megawatts is a lot. When you think about distributed generation, you normally think about rooftop solar or something like that. So these 10 megawatt projects, think they’re massive, but yeah. So it’s very different, just the land, if anything else. Like when I developed wind, it was

Raina Hornaday (29:35.424)

So many landowners, so many acres, and now I’m renting or trying to purchase square feet of half an acre, an acre, two acres. So it’s just so different from a land perspective, which is interesting. I mean, all the same development hurdles and SUPs and just working with the fire departments and working with the local permits and just depending on where you are, there’s different requirements in different places depending on how rural your projects are.

Raina Hornaday (30:04.96)

So, it’s been good. I’ve enjoyed it.

Micalah Spenrath (30:07.758)

Micalah Spenrath (30:08.139)

So based on your vast experience in the state developing different types of projects including energy storage, what’s your impression? How have the economics of these projects changed over the years?

Raina Hornaday (30:19.406)

Well, as so many batteries have been added onto the grid, it doubled with battery storage doubled in Arcot last year again, and with so much increase into Texas, like our population is looking to increase significantly and potentially double. And the Permian Basin electricity needs are growing so fast, so we’re trying to add transmission.

Raina Hornaday (30:48.226)

That’s a long time lead item, takes a lot of planning and a lot of construction time for all the reasons. So batteries have really become the stop gap that is needed. You know, if we can install batteries, that helps us utilize all the other energy supply sources to the grid, mainly solar and storage. And that helps us be able to deal with this long lead time we have for building out.

Raina Hornaday (31:17.09)

the transmission that we need to support the growth. So it’s just a super stabilizer for the grid and we’ve seen that now since Yuri, all these batteries have come on and we just haven’t had the volatility in pricing, which is a big part of getting these projects financed, but they’ve just become such an important part of being able to have really fast dispatchable power whenever we need it faster than

Raina Hornaday (31:46.126)

kind of anything else. And this is a completely energy only, entirely market driven. it’s interesting, just like everything in ERCOT, it’s unique to the energy only market and people are slowing down the large developments, but then we have the AI data centers. So those are picking up a lot of behind the meter and bring your own power.

Raina Hornaday (32:09.383)

and those type opportunities. So there’s still just significant development and build out in batteries and arcot and that’s going to continue.

Micalah Spenrath (32:18.636)

Yeah, hopefully. So you did mention that maybe some projects haven’t come to fruition just based on different factors. That actually aligns with the most recent GIS report from ERCOT, so showing the interconnection queue. In that report, it also looks at canceled projects. And in that list, there are a number of battery storage projects that have been canceled, as recently as February 2026.

Micalah Spenrath (32:44.92)

So just based on your experience, what could be some of the causes to canceling some of these projects? Why are some battery projects not being built?

Raina Hornaday (32:55.502)

I mean, I know some projects have been canceled due to inability to secure permitting. We all know there’s some areas and communities that are against developments. So that’s where siting is so important. You have to have the support from the local folks that will come to the site if they need to respond to something. And so it’s what I always go back to is education and just working with the local entities.

Raina Hornaday (33:25.208)

for fire safety. That’s obviously one of the big ones. Noise is one, although these aren’t noisy projects. They don’t create a ton of noise, but it really is just site specific. So I think that’s probably one of them. Obviously, funding financing would be another that’s changed significantly. And there’s supply chain issues still. There’s lots of complexity to this and...

Raina Hornaday (33:52.438)

It’s happening fast. So things can, what you think might be able to be done ends up not being able to be built for a very technical reason that you don’t know until you get farther down the line. So I think that’s why we see a lot of the drop-off, but I am optimistic about renewables being built in Texas going forward and smart solar, things like that, responsible siding and batteries paired with those, which is just kind of the magic puzzle piece.

Micalah Spenrath (34:22.454)

Yeah, absolutely. And to be fair, there are a whole host of energy storage projects that are still in the queue and are poised to bring additional megawatts to the grid. So even though there are cancellations, they are vastly outnumbered by the projects that are still in the queue and seeking interconnection. So that’s always a positive indicator. But to your point, siting and permitting can be a barrier. that just, to your point,

Micalah Spenrath (34:49.002)

illustrates the importance of partnering with first responders, local leadership, community leaders as well, and members, and making sure that everybody feels that they have some ownership in some of these projects. So I think that that’s a really interesting point to make. So I do want to save some time. So, Reyna, as we had mentioned, you have decades of experience in this industry in the state of Texas. What

Micalah Spenrath (35:12.822)

are you looking at towards the future? Where do see this industry going? What are some things that we still need to tackle in the state to make sure that renewables can still provide clean, reliable, and affordable energy to Texans?

Raina Hornaday (35:25.976)

think the flexibility of providing flexible grid and a lot of that is distributed generation, like being able to do projects that meet demand right there instead of like the CREZ line, which provided renewable energy into big city centers that were very far away from the generation. So I think we’re already seeing a lot of that. I think it’s going to get better.

Raina Hornaday (35:53.14)

Landowners are getting more involved and they have over the years, but having a smart option for things to do with your land and your legacy is going to continue to happen. Microgrids are happening quite a bit in the Permian Basin where all this oil and gas load is growing so quickly and with around data centers that bring your own power. I think there’s lots of solutions that only renewable energy can provide.

Raina Hornaday (36:21.204)

in the timeframe that these builders need. So I think we’re going to continue to see a lot of growth and it’s going to get better. I think it’s going to get smarter. It’s going to get more localized, which is makes a lot of sense and with any energy supply that you’re doing, but being able to add batteries to solar really makes a ton of sense. So I think we’re finally going to see those co-located again and again.

Micalah Spenrath (36:50.53)

Well, thank you so much for joining us on the Energy Capital Podcast, Reyna. Your insights have been extremely valuable.

Raina Hornaday (36:56.982)

It

Raina Hornaday (36:57.244)

was great to visit with you.

Micalah Spenrath (37:01.678)

Thanks for listening to the Energy Capital podcast. Thanks so much to Reina for a great conversation and to all of you for listening, engaging, and caring about how Texas powers its future. You can find us on Apple podcasts, Spotify, and all the usual platforms. For deeper analysis each week, please subscribe to the Texas Energy Empower newsletter at texasenergyempower.com. We’re also on LinkedIn, X, and YouTube. Big thanks to Nate Peeby, our producer,

Micalah Spenrath (37:31.414)

I’m Mikayla. Stay curious, stay engaged, and keep building a smarter energy future.

]]><![CDATA[Connecting the Regulatory Dots Shaping Texas Energy | Reading and Podcast Picks - April 20, 2026]]>https://www.texasenergyandpower.com/p/connecting-the-regulatory-dots-shapinghttps://www.texasenergyandpower.com/p/connecting-the-regulatory-dots-shapingMon, 20 Apr 2026 14:04:19 GMTReading and Podcast Picks is a collection of what we’ve been reading and listening to over the last week or so about energy topics.

In addition to these R&P Picks, paid subscribers receive access to the full archives, Grid Roundups, and select episodes of the Energy Capital Podcast. Please become a subscriber today.

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The Texas Energy Reference Design: Stress-Testing Load Growth Challenges for an AI Century | The Center for Strategic and International Studies

All spring, the Texas energy conversation has been dominated by a regulatory-palooza of proceedings at the PUCT and ERCOT. When the dust clears, the mix of process changes and implementations should provide a foundation allowing the grid to grow — and determining who will pay for that growth.

In this report for The Center for Strategic and International Studies, Arushi Sharma Frank (who appeared on the Energy Capital Podcast in 2024) surveys the regulatory activity, connects the dots between disparate activities, and shows how important these processes will be:

… Texas is tackling everything at once. The Electric Reliability Council of Texas (ERCOT) market is solving for speed-to-power by surmounting transmission bottlenecks, phantom load growth, buying down residential rate increases, and more.

Last week, a single hearing of the Texas Senate Committee on Business and Commerce brought this into view. Public Utility Commission of Texas (PUCT) Chairman Thomas Gleeson and ERCOT CEO Pablo Vegas told the committee that they were managing 410 gigawatts (GW) of load applications, nearly five times the capacity of today’s ERCOT grid, and nearly 90 percent of them were data centers. In the face of potentially overwhelming demand, Texas will either become an example of success or failure in the United States’ approach to winning the AI race.

The Texas legislature and regulators have developed a suite of policies to manage this growth. Three stand out as particularly important:

  1. Market-Based Reliability: The move toward a Dispatchable Reliability Reserve Service (DRRS) (mandated in H.B. 1500, codified in PURA § 39.159(d),(e)), proves that even in liberalized markets, long-duration reliability (like gas and long-duration batteries) requires a specific price signal to survive alongside zero-marginal-cost renewables and short-duration batteries.

  2. The Denominator Effect: Texas is shifting the conversation from “How much will this cost ratepayers?” to “How much can we grow the load base to dilute system costs?” There is an emerging Texan answer to debate over who bears the fixed costs of grid upgrades, and how the grid is utilized (and utilized by what technologies) to spread out fixed costs.

  3. The End of the “Doom Loop” and Flexible Connection: By ditching the traditional load study process for a “batching” approach, Texas is in a first-of-kind exercise to solve load interconnection with strict project maturity criteria, bankable energization timelines, and as-available service options for loads to receive power faster.

Renewable energy is a ‘second opportunity’ for some rural Texans | San Antonio Express-News

In a Texas Senate committee hearing this month, state Sen. Lois Kolkhorst — who represents a largely rural constituency — flatly declared, “Nobody wants the renewables anyway in their districts.” But this recent San Antonio Express-News story shows how important renewables projects can be for rural Texans trying to hold onto their land.

Read more

]]><![CDATA[What a Wind Lease Is Worth Now with Rod Wetsel]]>https://www.texasenergyandpower.com/p/what-a-wind-lease-is-worth-now-withhttps://www.texasenergyandpower.com/p/what-a-wind-lease-is-worth-now-withWed, 15 Apr 2026 10:03:42 GMTIn 1999, a rancher walked into a Sweetwater, Texas law office with a 50-page wind lease from landmen in South Dakota. The lawyer, an oil and gas attorney named Rod Wetsel, told him to throw it in the trash. The rancher insisted he take another look.

That lease became the first of an estimated 10,000 that Wetsel and his firm would negotiate across Texas. At one point, the line of landowners waiting to get into his office stretched two blocks down the street.

Wetsel is a founding partner at Wetsel & Lederle, co-author of the first treatise on Texas wind law, and a recipient of the Ernest E. Smith Lifetime Achievement Award from the Texas Journal of Oil, Gas and Energy Law. He teaches wind law at Texas Tech University. On this episode of the Energy Capital Podcast, Wetsel talks with host Joshua Rhodes about how wind, solar, and data center development changed Nolan County and the surrounding region.

In Nolan County, where Sweetwater is located in West Texas, the tax base grew from around $500million in 1999 to $2.7 billion in 2024. County commissioners who once debated whether they could afford to cut the grass now fund new schools with turf football stadiums. Young people are moving back to towns that had been losing working-age residents for generations.

Wetsel explains what makes a lease work for landowners, how townhall-style group negotiations give ranchers bargaining power against developers, and what data center companies are paying for land. He describes how electricity transmission lines, built more than a decade ago, added 18,000 megawatts of power generation capacity and enabled a wave of new energy projects across the region. And he shows why the Permian Reliability Project — a new transmission initiative that’s now in the siting phase — is poised to do the same for solar in far West Texas.

Energy Capital Podcast is produced by ClarityForge Studios.

Timestamps

  • 00:00 - Introduction and Rod Wetzel

  • 00:52 - How an Oil and Gas Lawyer Found Wind

  • 03:08 - The First Wind Lease vs. an Oil and Gas Lease

  • 04:47 - Ten Thousand Leases and the Town Hall Model

  • 07:20 - What Landowners Fear About Wind Development

  • 08:24 - What a Wind Turbine Actually Pays a Rancher

  • 11:50 - Solar, Storage, and Data Center Leases

  • 12:33 - What Makes a Good Lease

  • 14:36 - Hybrid Projects and Triple Landowner Income

  • 17:42 - When Lease Negotiations Break Down

  • 19:24 - How the CREZ Lines Transformed West Texas

  • 22:57 - Who Wants Development and Who Doesn’t

  • 27:29 - Tax Base, Schools, and Rural Revitalization

  • 31:17 - The Bar and the Workforce Boom

  • 34:30 - What This Industry Looks Like in Ten Years

  • 37:13 - Australia, Global Parallels, and Closing

Resources

People & Organizations

Company & Industry News

Books & Articles Discussed

Transcript

Joshua Rhodes (00:05.646)

Hey everyone. I’m really excited today to have Rod Wetzel on the podcast to talk about the work he does as a clean energy lawyer. Rod is a founding partner of the law firm Wetzel & Wetterly and based in Sweetwater, Texas, where he’s practiced law for over 36 years. He’s received the Ernest E. Smith Lifetime Achievement Award in Energy Law. He got his BA in JD from UT Austin and he’s previously taught law at the University of Texas at Austin and he currently teaches law at Texas Tech.

Joshua Rhodes (00:34.454)

In 2011, Mr. Wetzel co-authored the first treatise on Texas wind law and really has been someone who has helped write the legal playbook for how wind has developed in the state. Rod Wetzel, welcome to the Energy Capital Podcast.

Rod Wetsel (00:49.422)

Thank you very much. I appreciate you having me today.

Joshua Rhodes (00:52.408)

I just really wanted to kind of start off talking about, I’m not a lawyer, but I know in Texas, like a lot of laws based around energy law and particularly oil and gas law. So how did you get pulled into being basically the go-to lawyer for wind law in this state?

Rod Wetsel (01:09.294)

Well, that’s actually a pretty interesting story. I had practiced all kinds of law because we were in a general practice here in Sweetwater. But primarily for the 25 years before wind came along in about 1999, I had primarily been an oil and gas lawyer. And I’d heard rumors about wind farms. In fact, once upon a time, I had a girlfriend in California and I went out to Palm Springs and

Rod Wetsel (01:39.79)

I saw the wind turbines out there and of course at that time they looked more like windmills. They were lattice towers, very small. It me at the time that that looked more like Disneyland than anything that would ever happen in Texas until about December of 1999, a rancher client of mine, a longtime friend of the family came in with a very thick sheet of papers and said he had

Rod Wetsel (02:08.694)

a proposed wind lease on his property. And that was the very first wind lease that I did. And that sort of kicked off an avalanche of wind leases and projects in our area west, right out from here all over Texas. Even at the time when he came in, I was a skeptic that he was the kind of guy that was always looking for a new way to make some money, know, cut mesquite wood and sell it to aunts or

Rod Wetsel (02:39.092)

any kind of innovative idea. He told me he a wind lease from some landmen in South Dakota about erecting wind turbines on his land. I said, I think I would just pass on that one. He said, no, I want you to look over the lease and see if it doesn’t have some viability and be as hard on them as you can. Just don’t kill the deal. Cause I think they might actually be onto something. So that’s what I did.

Joshua Rhodes (03:07.95)

When you were looking over that wind lease, how different was it from the oil and gas leases and everything else that you had been looking over?

Rod Wetsel (03:15.438)

Rod Wetsel (03:15.938)

Well, it was similar in some respects. In one respect, it was all energy biased. There weren’t really any provisions in favor of the landowner. was more like the old producers’ 88 oil and gas leases. But those are two pages long. This was like a 50 piece. Yeah. And he asked me to look it over and after a few days he came back said, what do you think? said, I’d throw it in the trash.

Rod Wetsel (03:44.94)

because it’s really completely in favor of the wind company and those people are going to tear your place up and you’ll never make any money. And that’s when he urged me to go ahead and try to make a deal with them, which after a number of months, we were able to do that. And the company was actually out of California. It was GE wind, which at the time was part of Enron, as you know, had its own stigma involved.

Rod Wetsel (04:14.958)

We managed to get it done and the good news about him, the guy’s name was W.A. Oatman, we were able to get the lease negotiated. That was the very first lease I did. It’s on the Double Heart Ranch, is, it’s up on the Callahan Divide. It’s a ridge just south of Sweetwater where the elevation goes up about 500 feet. Wind really blows up there. And he was able to eventually get

Rod Wetsel (04:42.848)

about 33 turbines built on his property, so.

Joshua Rhodes (04:46.89)

How many win leases have you done since that first one, you reckon?

Rod Wetsel (04:50.926)

It would be hard to calculate. I would say probably somewhere in the 10,000 range maybe. Some of these projects would have as many as three or 400 landowners that we would all represent. And that made it really a challenge for lawyers and that how do you meet with 300 people at the same time? You have to find a convention center or a church or a barn or whatever.

Rod Wetsel (05:20.362)

And that began the concept of having sort of a town hall meeting of landowners to negotiate wind leases, which turned out to be a very efficient way of doing it because everybody got the same terms and we had more bargaining power with the wind company.

Joshua Rhodes (05:37.198)

After that first lease kind of showed up and you worked through it, when did you do the next one? How did that part of your business grow?

Rod Wetsel (05:43.342)

Well, the good news about a small county like Nolan County, which is only about 15,000 people, they had approached many of the landowners in that area. A lot of it had been clients of mine already for years. Okay. Once the word got around that Wetzel had worked out a wind lease for the Oldman family and they got paid some money and looked like it might be a real deal.

Rod Wetsel (06:10.742)

No joke. This is a fact. One day I looked out, the secretary said, what are we going to do with all these people? Because I went downstairs and there was a line of people that went about two blocks down the street waiting to try to get into my office. So that’s a real good problem for a lawyer to have. Yeah. And, you know, it just exploded from there in that we were the only firm around for a good while.

Rod Wetsel (06:38.06)

that were representing landowners and wind leases and so when the word spread we didn’t need to set up a billboard, they just came.

Joshua Rhodes (06:47.5)

Yeah, that makes a lot of sense. I that’d be interesting to have folks lined up around the corner. be like if you were selling the newest iPhone or something.

Rod Wetsel (06:55.758)

No, exactly. It was a fun time for sure and it just spread like wildfire. mean, that was the first wind project in Sweetwater. And after that, many other companies started coming here and setting up projects. And then at one point in time, we had the three largest wind projects here in Nolan County in the world.

Joshua Rhodes (07:19.66)

Yeah, I know it’s something like added billions of dollars to like the tax base and things out there and just Nolan County alone. But then there’s a lot of other counties in Texas that are also doing wind deals. When someone comes to you with a wind lease from a developer, like what’s the biggest misunderstanding do you think that landowners have whenever they’re first confronted with the possibility of having a wind farm?

Rod Wetsel (07:39.778)

Well, I think what all landowners are concerned about is the life change. Yeah. And that when you have wind turbines installed on your property, it’s never going to look the same. You know, the topography is going to be different. You’re to have to work around the turbines being placed there. And you’re concerned about the location. If you live on the property, you’re going to have to look out and see the turbines.

Rod Wetsel (08:09.074)

whether or not they were noisy, workmen being on the property, all those sort of issues that landowners that were used to living way out in the country had to deal with it they had never dealt with before.

Joshua Rhodes (08:24.002)

Yeah, but I guess the flip side of that is they’re generally getting compensated for having those wind turbines on their property though, yeah?

Rod Wetsel (08:29.72)

That was the driving force. The fact that the money was good, or at least had the promise of being really good, they actually arrived at the right time because about the nine, 2000 period of time, hadn’t rained here for about seven years. The cattle market was bad. We’re located on the Eastern shelf of the Permian Basin, most of the oil production.

Rod Wetsel (08:59.308)

was at a low ebb. And so people were faced with the dilemma that if they passed away, their property would probably have to be sold because their children had moved away to the big cities and could no longer afford to keep the ranch in operation so they had no income.

Joshua Rhodes (09:20.246)

Yeah. guess your wind turbines make a difference, right? Can you give a feel for kind of what type of income a wind turbine could provide a rancher these days?

Rod Wetsel (09:28.238)

Well, actually that’s gone up a lot. One of my best stories I always tell my class is, had a high school friend. I’ve grown up here. I was born here in Sweetwater and father did, my grandfather did. So we’ve been here for a long time. But my friend came in, he owns a really large ranch south of Sweetwater and area of a lot of this development. His father had passed away and he said, mom and I decided that

Rod Wetsel (09:57.58)

We just don’t want those wind turbines cluttering up our land. We’ve got a big cattle operation. We don’t want any interference. We don’t want them there. So don’t even ask me about it. So I said, okay. Well, in about six months he came back and he said, well, mama said that if we’re going to have to look at them, we might as well take the money. each at the time, the size of those wind turbines were about

Rod Wetsel (10:25.294)

met one and a half megawatts to about 1.7. They kicked off about eight to $12,000 a year per turbine income for the landowner. Today, turbines are now being repowered. Almost all of those have been repowered with turbines as large as anywhere from three and a half to six megawatts. Oh, wow. With corresponding

Rod Wetsel (10:53.55)

much more money for the landowner. I mean, as much as probably $25,000 a turbine per landowner.

Joshua Rhodes (11:02.508)

Wow, that could be pretty significant. I guess you have to look at them, but you don’t have to water them or do anything else to them,

Rod Wetsel (11:08.974)

That’s right. One of the famous quotes from this same gentleman was when we were interviewed by a foreign news service, they asked him, they said, when you hear all those turbines turning on your property, what does it make you think of? And he said, a cash register. that’s a pretty good answer because they’ve made a substantial, in fact, saved their ranch.

Joshua Rhodes (11:30.978)

Hahaha!

Rod Wetsel (11:38.926)

from bail or partition because their income from wind really was greatly out of distance to wind income from any other use of the property.

Joshua Rhodes (11:50.68)

Gotcha. know, wind was one of the first ones that you’ve gotten into, but I imagine you’re also doing solar leases and energy storage leases these days.

Rod Wetsel (11:58.89)

Exactly. About three to one on solar now. Solar is really a wind just from the standpoint that they don’t require as much acreage. You can deal with a lot fewer landowners. They’re cheaper to build, they’re quicker to build. And those and then all kinds of new technology like data centers and battery storage facility.

Rod Wetsel (12:27.094)

have really put a shot in the arm of the industry for anybody that’s in that field.

Joshua Rhodes (12:32.814)

When someone comes to you with a lease or whenever you’re negotiating a lease, wind or solar, storage or data center lease, what makes it good in your view?

Rod Wetsel (12:40.974)

the landowner is going to say is how much money am I going to get? And so the compensation is probably the number one issue. And that’s driven in the case of wind turbines by the number of megawatts that’ll be installed on the property. Okay. Because you don’t want to lease and have two turbines put on it and make no money. Yeah. You get paid by the acre. So you’re going to want to get

Rod Wetsel (13:08.236)

the majority of the acreage that you can to get paid more. Or if it’s a data center, generally you’re going to sell the property, but you want to get the very highest price, which lately has been astronomical. I mean, almost unbelievable the amount of money that companies are paying for what we would call a small tract of land, like 1200 acres. It’s not unusual.

Rod Wetsel (13:37.166)

for the starting price on 1,200 acres to be $50,000 an acre or above. We’ve seen as high as 100 or highest I’ve seen is $350,000 an acre, which is when you add it up on 1,200 acres, that’s fantastic sum of money.

Joshua Rhodes (13:56.408)

Wow, and that’s for a data center you’re talking about?

Rod Wetsel (13:59.234)

Yes, for a data center. So that’s sort of the new thing. We still have wind, we’re still doing a lot of wind leases, but like say more solar than wind. But now data centers have come on the scene and we’re doing a lot of those. You know, the great thing for our firm is that we started out doing wind leases here and now we’re pretty much nationwide. We do

Rod Wetsel (14:27.374)

A lot of work in different states, including Texas. So it’s really been a good deal for us and the legal community as a whole.

Joshua Rhodes (14:36.45)

Gotcha. That makes a lot of sense. I’m glad you brought up data centers because I feel like I can’t talk about energy these days without talking about data centers. And so I guess that probably makes sense that you’re seeing the same thing. Are you seeing any hybrid projects like people wanting to build wind farms with solar and plus data centers and other types of things like that? Are you seeing any of these hybrid projects that people keep kicking around?

Rod Wetsel (14:59.63)

Absolutely, we’re seeing those all the time. You have developers that come in and say, we want to build, for example, I have one client where they’re going to build a really large solar farm about 600 acres or 600 megawatts, that is, it’s on a large number of acres, 600 megawatts of solar, a data center that will use all the power from that solar farm. We’ve had other

Rod Wetsel (15:28.866)

data center projects where they build both wind and solar projects to furnish the power for the data centers. So the landowner then gets triple the income. They get the income from the solar, they get the income data center, and then from the wind project as well. So some of these have been extremely lucrative for landowners that

Rod Wetsel (15:54.838)

really have hard scrabble property that’s worth a lot more than it used to be, but the income is just staggering in comparison to any other uses like cattle ranching or farming.

Joshua Rhodes (16:08.406)

Yeah, but their acreage fees are better than dry land cotton and scrubbage fees.

Rod Wetsel (16:12.608)

I can assure you that’s the case. We’ve had occasion where people get really proactive. They have some pretty good looking property. They have it in the area of transmission or a good area that might be suitable for a data center or wind and solar. And they actually go out and try to market the property. And we’ve been successful in doing that.

Rod Wetsel (16:39.326)

Early on, one of the projects, the Roscoe Wind Farm, which is about 781 megawatts, it’s a really large wind farm. It’s in the top 10 in the world. One time, I think it was the largest wind farm in the world. No developer wanted to build there because it wasn’t located on the elevated land. It was on farmland that’s north of Sweetwater toward Lubbock.

Rod Wetsel (17:08.493)

And there were lots and lots of landowner small farmers and they just didn’t want to deal with it. And those people got banded together and managed to find a developer that ended up selling out to a larger developer. It’s now owned by RWE, which is big German company and it’s a huge wind farm. So that all came about on behalf of the landowners who

Rod Wetsel (17:37.198)

to the vision to go out and try to find somebody to build the project and they did.

Joshua Rhodes (17:42.414)

That’s really interesting that it’s kind of coming from both sides. We’ve talked a bit about what’s a good lease and what types of lease and things are going on. Have you been in any situations where negotiations break down? Where does that happen typically?

Rod Wetsel (17:55.822)

Unfortunately, that does happen. mean, there are cases where the parties simply can’t get together on the money. Most often, it’s where a landowner sets a bar that’s just simply too high for the developer to meet. For example, a landowner may say, I’m not going to encumber my property with wind turbines unless you build.

Rod Wetsel (18:21.774)

60 megawatts or you build 100 megawatts of wind on my property and the developer just says, we can’t guarantee that and the negotiations break down. Or if, you know, the parties can’t get together on other essential terms of the lease. But that’s fairly rare. It’s typically a win-win situation. It’s pretty rare that projects don’t get consummated.

Rod Wetsel (18:50.968)

But it does happen, unfortunately, from time to time. It’s just like any other business, some deals work and some don’t. We’re in the early stage of this business, as opposed to the oil company. The oil business has been around for 130 years. Wynn’s only been really around about 25 years. And so we’re still in sort of the honeymoon stage where usually it’s a win-win deal.

Rod Wetsel (19:19.966)

Everybody’s happy to get it done and looking forward to getting the money.

Joshua Rhodes (19:24.684)

Yeah, speaking over kind of that 25 years, you’re talking about still being kind of in the early stages, but Texas wind is in particular has gone through a couple of phases. In particular, about a decade ago or so, we kind of are a little bit more than a decade now. We finished the competitive renewable energy zone lines or the CREZ lines. How did the CREZ lines change what was possible to do out in West Texas in terms of energy development?

Rod Wetsel (19:48.11)

Actually, the change was really monumental. You know, at the time, we began to run into the issue of having curtailment and not being able to build additional projects because the transmission had been filled up or the existing transmission was filled up. And that added an extra 18,000 megawatts of transmission so a lot more projects could be built.

Rod Wetsel (20:15.95)

Plus, it allowed for projects to be built in the panhandle area, which is in a different grid system. The grid system from Lubbock South in our area is a totally state-owned grid system, Aircott. Whereas north of that, up into Oklahoma, the panhandle and so forth of Texas, is the Southwest Power Pool, where the prices weren’t nearly as good.

Rod Wetsel (20:46.488)

Well, the CREZ system allowed that power to be brought back into aircott without first jurisdiction, without the federal jurisdiction, and really sort of gave a huge shot in the arm to the wind business. Kind of in the same shape now, most of the CREZ lines are getting filled up. So probably gonna need another CREZ or some upgrade system before too long.

Rod Wetsel (21:15.096)

to upgrade the transmission to accommodate all the new developments.

Joshua Rhodes (21:19.074)

Yeah, I was going to ask about if you’re keeping an eye on the Permian Reliability Project, those big 765 KV lines that are going to run through the region and further out into the Permian and Delaware basins. I mean, when I look at maps, the solar resource and other types of things, I mean, the solar just gets better the further west you move because they’re building these lines nominally to move power out to electrify oil and gas operations. But when I see them, I just see us pushing further into solar territory. Are you seeing the same thing?

Rod Wetsel (21:48.014)

Exactly. Yeah, just today. I mean, I’m having landowners come in. mean, it’s a double deal for us because we’re representing landowners on that are in the path of the huge transmission line project. And as you know, these transmission lines are twice as big as any existing power line we have at the moment. So these are going to be gigantic lines that are going to be erected.

Rod Wetsel (22:18.38)

sometime in the next few years, but they’re locating those lines now. So you have a lot of landowners who either want the lines or they don’t want the lines and they want to hire a lawyer to deal with that issue. And then you have the fact of those transmission lines in the future is opening up all kinds of new areas. As you say, particularly for solar in far west Texas, which prior to now would have been a

Rod Wetsel (22:47.988)

inaccessible because of lack of transmission or distance from the Metroplex or Metropolitan Load Centers.

Joshua Rhodes (22:57.388)

Yeah, you mentioned some landowners wanted them and some might not. What’s usually the divide there?

Rod Wetsel (23:02.946)

Well, the divide usually is scenic area. mean, they’re around here. Most everybody, I’d say in central West Texas, it’s hard to find somebody that doesn’t want to winter solar farm or data center. But if you go down in the hill country or you go to, there’s certain areas are just completely off limits. You go down to Fredericksburg, you’re going to get run out of town or you go to certain really touristy areas.

Rod Wetsel (23:32.364)

you’re going to have difficulty, particularly with wind turbines, because they don’t want you to affect the scenic beauty of the area and have lots of visitors and recreation and so forth. And they just don’t want the development. And then there are other areas that are a mystery to me, like the Brownwood area, barely much like Sweetwater, it’s sort of dividing line, but you know, the central west Texas and the hill country.

Rod Wetsel (24:02.17)

and they have signs up saying no wind turbines here. So I’m not sure, but a lot of it just depends upon the area. And then there are other areas, Abilene is a good example. They have other industries or air bases or something there and they don’t want those to be interfered with. Abilene in particular has Dias Air Force Base. They’re fixing to do a

Rod Wetsel (24:31.918)

$26 billion renovation of that military installation to put in the new large bombers to be, you know, they already have the B1s, they’re going to put in the B2s. And they really don’t want a lot of turbines up close where it’s going to bother the low-flying airplanes and so forth. Some areas just aren’t conducive, others more.

Rod Wetsel (24:59.884)

and particularly the really rural areas are the areas that really want the development the most.

Joshua Rhodes (25:08.076)

Yeah, one of the things like in my observation and maybe you can tell me if this is right or not. It seems like for a lot of landowners, if you’re trying to make money off of the land, if you’ve got a ranch and you’re trying to feed your family, your kids to school, like off of what you can make off of the land, you’re generally more in favor of this type of development. But if you made all your money in the city and you’ve bought something that you just want to look at, like it’s generally going to be opposed to these types of things.

Joshua Rhodes (25:36.278)

Am I oversimplifying that too much or?

Rod Wetsel (25:38.83)

I don’t think so. I think if you’re a doctor in Dallas and you want to get as far away from Dallas as you could and you come out to Sweetwater and you buy an area and you want to have it for a hunting preserve, the last thing you want to have is a bunch of wind turbines on it, unless they’re going to pay you enough money. Then the adage is, well, if I get enough money, I’ll just buy a different place. But those are folks that sometimes are opposed. We’ve had folks on the other side of the coin.

Rod Wetsel (26:08.802)

that have said, have this really beautiful place here, we don’t want any wind turbines on our property, we have plenty of money. But for your average folks who are worried about having money to get by, they can’t make money from the land anymore like they used to, farming and ranching is much more difficult way of making a living than it was. We have a lot of folks in agricultural here that are really embracing

Rod Wetsel (26:37.95)

all things renewable and oil and gas as well because as they say the one thing that Texan wants is an oil well and a wind turbine or a solar panel, you know, to make as much money as possible from their property.

Joshua Rhodes (26:53.934)

Yeah, like you said, I think you mentioned some scene. I’ve heard of folks making money above, on top and below their property, right? Whether they got wind and maybe some solar and I guess maybe now data centers and then below with oil and gas. Doesn’t seem too bad if you got it. Yeah, so you mentioned, you know, you work in Texas, you work in other places. You advise counties and landowners in dozens of jurisdictions. I mean, in general, do you think you can sum up like what drives most local support or opposition now?

Rod Wetsel (27:08.002)

Not true.

Joshua Rhodes (27:23.19)

If that’s changed in the 25 or 30 years you’ve been doing this, what drives local opposition or support now?

Rod Wetsel (27:29.622)

Well, that’s changed somewhat. In the beginning, a lot of the counties, especially in our area of West Texas, were so economically deprived that actually the county commissioners around here argued if there was enough money to cut the grass. I mean, they didn’t have any money to spare. They needed money for road repair. Schools were becoming dilapidated.

Rod Wetsel (27:58.24)

At the time, you could get money for both abatements on schools and governmental entities. And so they were very much in favor at the first factor, always bidding wars about who gave the best to get the wind companies to be attracted to that area. Now with lots of development, you know, there is some opposition and some people that are on these county commissions are figuring we’ve got

Rod Wetsel (28:27.896)

plenty of development in the county. We’re not gonna be quite as generous as we were in the past. But that’s not always the case. I think most of them are still, they wanna get a better deal for the county, but I think they’re still in favor of trying to make a deal. You mentioned before Sweetwater, just to give a really good example that I always talk about. Sweetwater’s tax base and

Rod Wetsel (28:55.79)

1999 was about 435 million. Today it’s about 3.5 billion. So you take a look at that and now we actually have remnants of civilization in our part of the country. Hotels, restaurants, liquor by the drink, you whatever. You’ve got all kinds of things that you normally wouldn’t have except in the big city have all come to

Rod Wetsel (29:22.862)

the rural areas and that’s because of wind. Plus, for the time that existed up to 2022, the tax abatement on schools for a while there was pretty relaxed and they were able to put a lot of money into schools, rural schools. You drive around areas of rural West Texas and you drive through a little bitty town in the middle of nowhere and it has a brand new high school with a football stadium that has Astroturf.

Rod Wetsel (29:53.238)

you know, that afforded without the wind business. So that’s kind of neat and that we’ve been able to really revitalize the area. And one other deal I’ll mention that I think is really important is we really had a declining age population in West and lots of areas of West Texas and other states as well in rural areas where in the past when there were lots of family businesses, the young people would

Rod Wetsel (30:22.552)

graduate from college and come back and take over the family business. Well, after the Walmarts and the K-Marts and the big conglomerates came in, they ran all the small shopkeepers out of business pretty much. And the young people didn’t have any jobs unless they were professionals to come back to small town. And so you had an, you your average age in a lot of rural areas was 65 or above.

Rod Wetsel (30:52.302)

Well, today, with jobs in the wind industry, solar, all these data centers and so on, you’re having a lot more young people either live off the income and find things to do around here. So we have a lot more, a younger population base than we’ve ever had. In many years, I’d say since I was in high school.

Joshua Rhodes (31:17.098)

Is one of those things that folks find to do is now is to go to your bar?

Rod Wetsel (31:21.166)

Well, I guess you could say that’s a spinoff of the wind business as well. There were a lot of workers hanging around that needed a place to go after hours and no place existed. So we had a half of our building was vacant and we decided to, we’re first going to put in a coffee and a bookshop. And when I found out that only

Rod Wetsel (31:48.216)

probably last about six months before went broke. Somebody suggested maybe ought to put in a wine and beer bar and you’ll make money and it’s worked out. We did that. So there are lots of workers from these wind farms that stop ends and they stay at the hotels, you know, and a good example right now is, as you know, they’re building a really large data complex in Abilene and I’m told there’s not one single place

Rod Wetsel (32:17.678)

hotel anywhere in Abilene to stay now. They’re all filled with workers. There are 1,500 workers on that project. There are no hotels, there are no rent houses, there are no houses to speak of at all. And even the outlying communities, people are living as close as 35 miles away in Sweetwater driving over to work. So that’s a big plus too.

Joshua Rhodes (32:44.514)

Yeah, that reminds me when the fracking business was just getting off or just getting started. And there was a lot of folks that were coming into West Texas when back when you needed like 12 Roughnecks per well, I think they’ve economized that down where you don’t need as many necessarily. It just reminds me of that time when basically couldn’t find a hotel room and the liquor store would run out of beer on a Friday, right?

Rod Wetsel (33:05.132)

Exactly

Joshua Rhodes (33:06.826)

One of the things that I’ve heard on that project, particularly the data center project in Abilene, that electricians are making the equivalent of like three, $400,000 per year working double overtime or whatever it is, just because they just need so many of them right now. Have you heard that too?

Rod Wetsel (33:24.302)

I’ve heard that too, and what I’ve heard is those poor guys are working like, I heard they’re working like two weeks on and a couple of days off full time, and they’re planning on being there for couple of years. And that’s where it was here. First, we’re building all these projects. One of the requirements in the tax abatements that were granted by the county was that they use local

Rod Wetsel (33:53.026)

goods and services if they were comparable in price. And therefore all the dirt contractors, all the local electricians, everybody was just swamped. And you had that trickle down theory where they made money and they went out and spent money and bought more clothes here, did more things here, more businesses opened up. And it’s just been good all the way around.

Rod Wetsel (34:22.606)

It’s made life a lot more comfortable in rural areas than it’s ever been in my lifetime.

Joshua Rhodes (34:30.156)

Gotcha. If you can imagine Texas 10 years from now, kind of what does this industry look like?

Rod Wetsel (34:35.564)

Well, the good news, and this is another thing I tell my students, you know, because I have a lot of people always wonder if I’m an easy grader or if they really are interested in the subject matter. But I teach a course on wind and solar law, and I usually have about 50 students in there. And, you know, amazingly, at the beginning of the semester, they know absolutely nothing about what the course is about. They just heard it was fun.

Rod Wetsel (35:03.892)

And by the end of the semester, they’re saying, hey, I really want to go into this area. And what I tell those people is the good news is as maybe wind and solar are still there, but de-emphasized, now we’ve got green hydrogen plants, we’ve got data centers, we’ve got battery storage facilities.

Rod Wetsel (35:29.102)

Who knows what we’re going to have in the future, probably small nuclear plants. We’re have all kinds of things and there’s always something new. So I’ve been doing this now for going on 26, 27 years. Consistently, that’s basically all we do. We do some oil and gas as well, but we’re hiring more and more lawyers because it’s just too much work. And I tell people in the class,

Rod Wetsel (35:59.686)

out there and get those jobs because they’re not still after 25, 26 years are not enough persons who are trained in this industry, either in the legal aspects or the other aspects to get the job done. So people are paying really good salaries. The salaries at the industrial part, the developers paying are comparable with a really large

Rod Wetsel (36:26.102)

law firms in the big cities, which is sort of amazing to me.

Joshua Rhodes (36:29.996)

Yeah, no, absolutely. I think I shared the sentiment that Texas is the energy state and renewables, wind, solar, storage, small modular nuclear, new stuff. It’s all just other forms of energy that we’re gonna use as a state. Wetso, I really appreciate you coming on the Energy Capital Podcast today.

Rod Wetsel (36:49.752)

Well, thank you. It’s been a real pleasure. And I can tell you, as you know, our trip to Australia, we’re not the only place in the world that is really looking at renewables for the future. I think it has a great future. I don’t think anybody can go wrong about getting in this area of law or industry, either one. I think it’s going to be here for many, many years to come.

Joshua Rhodes (37:13.72)

We first connected over some work that I was doing on landowner payments and taxes and things like that associated around wind and solar and now storage across Texas. But I don’t think we ever actually met in person until we met in Australia. And I’m pretty sure it was at a bar or maybe it like a beer house or something like that.

Rod Wetsel (37:32.334)

That’s a fact. The one thing about this industry is so many of the folks that you deal with, you deal with remotely. So you know them on video or on the telephone, but you never meet them in person. And it’s always great to say, well, that’s what that person really looks like, you know, and then you get to have a visit. And so I think our trip to Australia was a really fun one, but just very indicative of there’s so many areas in the world.

Rod Wetsel (38:02.218)

including Australia, South Africa for one, that would really be benefited by all the benefits that we’ve had. So I’m really happy to be on.

Joshua Rhodes (38:13.752)

Yeah, I think one of the things in particular and you know, we...

Joshua Rhodes (38:18.946)

The building out of the transmission that the state does from time to time, whether that’s the CREZ lines or the Permian Reliability Project, like really acting as an economic enabler for the rest of the state, whether that’s new forms of energy or allowing us to have cheaper forms of energy to support other industries and things like that. And yeah, we think we’re doing the same thing in Queensland, Australia. They’re trying to figure out if they can do that kind of thing. I think it’s a good model. It’s fun to be here. I’m pretty sure you feel the same way.

Rod Wetsel (38:45.902)

Yeah, you know, it’s great to go to an area where it’s like going back in time. You take a look at that area and they’re where we were 25 years ago. And so you think, wow, wouldn’t it be fun just all over again? So I think there are many areas of the world that they’re still where we were 25 years ago. And that’s great. That leaves it a big opportunity for folks to go there and help those people do what we did and have the benefits we have.

Joshua Rhodes (39:15.255)

Absolutely.

Joshua Rhodes (39:18.702)

Thanks for listening to the Energy Capital Podcast. If today’s conversation helped you make better sense of how the energy system actually works, share the episode with a colleague and hit follow on your podcast app. You can find us on Apple Podcasts, Spotify, and all the usual platforms. For deeper analysis and context each week, subscribe to the Texas Energy and Power at texasenergyempower.com. That’s where you’ll find every episode, every article, and our latest updates. We’re also on LinkedIn, X, and YouTube.

Joshua Rhodes (39:48.046)

where we share clips, insights, and ongoing commentary on energy policy, markets, and the grid. Before we go, a quick note. The views expressed on this podcast are my own and do not represent the official positions of the University of Texas, Ideas Miss, Austin Energy, or Columbia University. A big thanks to Nate PD, our producer. I’m Joshua Rhodes. Thanks for listening. We’ll see you next time.

]]><![CDATA[Who Pays for the New Grid with Pablo Vegas]]>https://www.texasenergyandpower.com/p/who-pays-for-the-new-grid-with-pablohttps://www.texasenergyandpower.com/p/who-pays-for-the-new-grid-with-pabloWed, 08 Apr 2026 10:07:08 GMTERCOT’s current rulemaking process will shape the Texas grid for decades, driving infrastructure investments that last 30 to 50 years and cost billions of dollars.

During this year’s SXSW Texas Future’s Summit in Austin, ERCOT Chief Executive Pablo Vegas sat down with Energy Capital Podcast hosts Josh Rhodes and Matt Boms to explain the grid operator’s approach.

ERCOT has added more than 60 gigawatts of new supply since the devastating Winter Storm Uri blackouts in 2021, and battery storage resources have grown from a few hundred megawatts to more than 16 gigawatts. Vegas said the grid is more reliable today than it was three years ago. The challenge now is to plan for what’s coming. Last month, ERCOT announced that load interconnection requests now exceed 410 gigawatts. For comparison, existing load has peaked at around 85 gigawatts in recent years. New data centers drive much of that growth.

In this episode, Vegas described how ERCOT determines which projects in the interconnection pipeline are likely to be built. Even a fraction of those projects could reshape the system, especially if data centers arrive in the concentrations that some projections suggest.

Vegas also walked through ERCOT’s proposed batch study process for reviewing large load interconnection requests, and why the current one-review-at-a-time approach is inadequate given growing load projectionsAnd he discussed residential demand response — and why it may be a faster path to reliability than building new generation or transmission.

The ERCOT grid is growing like never before — yet demand is growing even faster. ERCOT’s response to this challenge will shape our grid and our economy for generations. Check out this week’s episode to learn more about what that response will look like.

Energy Capital Podcast is produced by ClarityForge Studios.

Timestamps

  • 00:00 - Introduction and Pablo Vegas

  • 03:40 - Lessons from Winter Storm Uri

  • 05:42 - How 60 GW of New Supply Changed the Grid

  • 09:18 - Filtering the 230 GW Load Forecast

  • 13:28 - Why Data Center Load Broke the Old Process

  • 19:15 - How ERCOT’s Batch Study Process Works

  • 22:02 - DERs and the Distribution Grid

  • 26:57 - Real-Time Co-optimization and RTC+B

  • 30:11 - Battery Duration vs. Flexibility

  • 33:26 - Residential Demand Response

  • 36:41 - How ERCOT Is Using AI

  • 40:35 - What Texas Should Learn and Export

Resources

People & Organizations

Company & Industry News

Programs & Processes Discussed

Related Podcasts by Energy Capital

Transcript

Joshua Rhodes (01:37.714)

the most in the first few years leading our cup?

Pablo Vegas (01:40.878)

I guess what’s been really interesting learning is, and when you work in the utilities space, and I worked in the utility space in Arcox, back in Albuquerque, Texas, but I’ve worked in the utility space, as you said, for quite a while, for over about 20 years.

Pablo Vegas (01:56.908)

I was surprised how different grid operations is from what it looks like inside of the utility. So the issues that the grid operator deals with in contrast to what a utility company deals with is pretty stark. And while there’s a lot of kind of overlap on elements of it, of course, but kind of the focus of what we’re looking at, which is, you know, looking at all of the issues across all the different components and players in the system, it’s a lot more complex trying to consider all of the

Pablo Vegas (02:26.67)

needs of the different stakeholders that are part of the process. When you’re a utility company, you’re always laser focused on your customers, you know, directly, and you’re serving them and you’re making sure that you are working constructively with, you know, your regulators and policymakers to serve your customers. At the grid operator level, the customers are still a very critical part of the conversation, but you’re doing that through one layer removed in helping to oversee the processes.

Pablo Vegas (02:52.354)

that govern the utilities and the power producers and the retail electric providers and the brokers and traders, the large industrials and the small consumer, everything in between. And so you’re really thinking about kind of the policy making that affects each one of those segments in a different way. And that’s what surprised me a little bit in terms of just how complex that can be, how in many cases, how political it can be. We have a very unique environment in Texas where, you know, we govern, legislate all the policy for what happens in the wholesale power markets.

Pablo Vegas (03:21.624)

which is different than what happens in other states. And that’s something that adds to the complexity inside of Texas, but it also gives us benefits, gives us the agility, the ability to make change. And we’re seeing that realized today at the pace of change that’s happening.

Matt Boms (03:34.9)

And I think you came in at such an interesting time

Matt Boms (03:37.373)

after Winter Storm, Yuri. We just had the five year anniversary of Yuri recently. Do you still feel like that’s hanging over our heads or do you feel like we’re now entering this new chapter? We’re going to talk about low growth and data centers and all that. But you came into the job during that kind tumultuous period. Do you feel like that’s behind us now or do you still feel kind of the shadow of Winter Storm, Yuri hanging over us?

Pablo Vegas (03:58.754)

Bye.

Pablo Vegas (03:59.48)

firmly believe that the memory of Yuri is going to remain with those who experienced it for years and years to come. I don’t think it’s something that is gonna be forgotten and put into the past and nor should it because it has taught us lessons across so many different facets of the work that we do, the importance of great communications. That’s something that was, I think, a very early lesson learned in the process that there needs to be so much better transparency

Pablo Vegas (04:29.424)

in terms of the role that our cop plays, what we do and how we do it, why we do it, who we work with in delivering the general service that everybody experiences. It was clear that it was not well understood as we went through the whole URI experience. we’re still working on that facet of it. But beyond that, the lessons learned in terms of just how critically important and dependent.

Pablo Vegas (04:52.738)

we all are on electric reliability is something that we can’t ever forget or should put in our past. And that’s something that should remain at the forefront as we think about policies, as we think about protocol changes, as we think about how we’re going to manage the growth that’s ahead of us, how we’re going to manage the transition to the different supply resources and everything in between. So it’s something that I want to continuously be helping people understand the things that we’re doing.

Pablo Vegas (05:20.428)

to change the circumstances that allowed Yuri to happen and we have made a lot of progress on those fronts. But it’s never gonna be gone from the memories of those who experienced it and we’re always gonna keep the lessons learned in our forefront because those lessons have to.

Joshua Rhodes (05:35.214)

Yeah, so since Yuri there’s been quite an addition of capacity. It’s been a bit of a different type of resource mix that we have. think during winter storm Yuri there was just a couple hundred megawatts of solar. Now there’s tens of gigawatts of solar and like an energy storage. And can you speak to like how the system has kind of changed since then, Yvette?

Pablo Vegas (05:58.338)

Yeah, it’s changed quite a bit. Over 60 gigawatts of new supply added to the Earth Hydrate since winter storm Yuri. That’s a huge number. Last year, we helped connect a record amount of generation supply to the Earth Hydrate, over 16 gigawatts in one year. And we’re on track to have a record first quarter, this quarter in terms of interconnecting new supply. So it has been changing rapidly. As you pointed out, the majority of the supply coming online

Pablo Vegas (06:28.178)

is solar resources and energy storage resources. That makes up the large bulk of the supply that’s connected in SINCE-URATE. And what that’s doing is it’s helping grid reliability through several lenses. So, you know, the battery storage has such a unique flexible characteristic where it is able to be responsive instantaneously when it’s needed on both being able to discharge as a supply source or for charge.

Pablo Vegas (06:56.438)

in terms of balancing for load need. And it can do that instantly at any point in time. And you’re right, back during Yuri, we had in the hundreds of, low hundreds of megawatts of energy storage. And today we have over 16 gigawatts installed, well over that in terms of gigawatt hours, because most of our storage is between an hour and a half and then two hours now. So that’s a fundamental change. And what batteries can do, if you remember,

Pablo Vegas (07:23.182)

during the summer periods of 2022 and 2023, those are some fairly hot summers. 2023 was, I think, the second hottest summer in Texas history. And that’s when we reached our peak. We hit the peak of a little over 85 gigawatts that summer. And we were experiencing conservation calls. We were pretty concerned about the levels of consumption in contrast to the supply we had. A short two years later,

Pablo Vegas (07:49.198)

with the additions of the solar and battery storage that we’ve seen in the last two years, we’ve had similar levels of demand and have not seen any kind of scarcity issues related to that. And so it’s completely changed the tenor and the risk profile of summers in Erickaht. That’s been a tremendous benefit. The batteries also have been a tremendous help during the winter in terms of managing the transitions of the early morning hours and in the solar sunsets in the evening as well. And so it’s really helping with those

Pablo Vegas (08:17.72)

periods that are now emerging as those peaks, it has changed the reliability picture. If you look at where the grid is from a probabilistic perspective today, we are more reliable in terms of the risk of emergencies today than we were five years ago or three years ago. Now, all of that is dependent upon how much load we have today and what the mix is. So when you look into the future, that can change. And so we can’t sit back today and say, we’re good.

Pablo Vegas (08:45.538)

because all these additions have made us more reliable. It’s really our job to look ahead three years, five years, and 10 years ago, is the trajectory gonna continue to remain improving or is it gonna change? Is it gonna become less reliable? And those are the things that we are focused on right now because the growth story ahead of us is significant and sitting back and just kind of looking at what’s happened over the last five years and thinking that will serve us for the next five, I don’t think works.

Matt Boms (09:13.102)

I think you teed that up perfectly. We want to ask you about load forecast. We want to ask you about data centers, load growth. And I think you hit the nail on the head. There’s 49 other states that love to have the grid we have in Texas right now as far as the diversity of our resource mix, the reliability. When you look at costs as well, we have some of the lowest costs in the country when you look at one hour. But when we think about five, 10 years from now, the load forecast that we’re seeing, I guess the first question is, how do you look at that load

Matt Boms (09:43.116)

forecast, do you take any it with a grain of salt? How do you figure out what’s real and what’s not real? And then when you have that number, how do you plan a grid of the future given all of the, not just data centers, right? The population explosion, industrial loads that are coming Texas, how do you plan for all of

Pablo Vegas (10:00.485)

Yeah,

Pablo Vegas (10:01.146)

and if you look at the population, just in the last five years, we’ve seen population grow from 25, 26 million in the state to over 31 million. Tremendous growth. The economic growth from a GDP perspective has far exceeded the U.S. economic growth for the same period of time. So it’s across all the measures. It’s people, it’s the poor economy, and it’s the new economies, the digital economy that are coming, are driving some of the fastest growth measures anywhere in the world right here in Texas.

Pablo Vegas (10:28.654)

As we look at that, the forecast that we received last year, if you all recall, we got a load forecast that was 230 gigawatts for about the 2030 time period. today we peaked at, we have around an 85 gigawatt peak. So it’s almost tripping the size of the aircraft grid if we believe that that’s gonna be the trajectory. I do take that with a grain of salt. We recognize that with these interconnection processes we have today, that

Pablo Vegas (10:56.854)

really it’s very simple to start a process to think about connecting a large load into the grid. It literally takes a computer and a relatively straightforward submission and you can be in a large load queue. Of all of that load that’s out there, about 200 and plus gigawatts of load that’s there today, the vast majority of it, over half of it, hasn’t begun any process at all with formally interconnecting into the grid, other than just submitting an application.

Pablo Vegas (11:25.216)

half of it you take off right away. Then you’ve got like another 70 gigawatts that’s out there that has some start process started but has not advanced far enough to have what’s considered planning studies ready to go. So you’re very quickly down to a level that’s I think a lot more reasonable where those projects that are serious that have backing behind it are moving forward. And that’s what we’re really trying to focus on today. There’s policy discussions going on around how to...

Pablo Vegas (11:52.972)

define the requirements to be inclusive in this forecast in our cod. There’s rulemaking going on, more so actually more than policy rulemaking. And that’s going to be a really important outcome that I think everybody who’s interested in this space has to watch closely because the requirements around that are going to drive everything else. It’s going to be inclusion requirements for being studied in this new batch process that we’re talking about. Sure, we’ll talk a little bit about that. It’s going to drive the inclusion in the

Pablo Vegas (12:21.294)

planning forecast, which is used for transmission planning. And that’s a super critical element. If you think about that, we need to get that number right because transmission investments are extremely long dated. They last for 30, 40, 50 years. They are very expensive. They can cost billions of dollars. And so you have to be building a system that is going to be rationalized and reasonable for the load and the consumers that are out there. And that’s an important part of that forecast.

Pablo Vegas (12:49.23)

But I also just want to add, you this forecast is also used to schedule and plan outages on the system for generators. We use the load forecast to create the space for generators to take outages in the future. And they need that in order to maintain their plans. We use the load forecast to set our budget at ERCOP, what everybody pays for ERCOP to do its job. So it’s such a critical part of all of these facets of what we do. And so...

Pablo Vegas (13:15.97)

Getting that right is critical and this rulemaking that’s happening right now around it is going to be very consequential.

Joshua Rhodes (13:22.894)

Yeah, I was talking to one transmission service provider and they said a few years ago, like three years ago, they had.

Pablo Vegas (13:29.504)

one

Pablo Vegas (13:29.828)

large load.

Joshua Rhodes (13:30.254)

study

Joshua Rhodes (13:30.754)

in their system. you know, last month they had 100 current large load systems like large load studies going on. And this is one of the really only big four big ones in the state, but that’s one of the big ones. And these loads, to my understanding, are quite different, right? It’s different than having diffuse load, like just population growing and overall, because these loads are also points of like, they exist in a particular location in a particular place. And that has particular implications for all the infrastructure and how to get power in and out.

Joshua Rhodes (14:00.12)

to them. And then plus like when you do like a large load study on one, it can impact what the large load study would look like for another one across the system. Because like we can’t scale the infrastructure infinitely. So can you just talk a little bit about what this batch process is? There are cuts like that you’re having rulemakings and proceedings and like meetings and all this kind of stuff. Like what will that do that’ll be different than how it’s done before?

Pablo Vegas (14:21.762)

Yeah, let me back up a little bit and talk about kind of how we used to manage some of the grid stability issues prior to this whole scenario evolving. So we would have what’s called our largest single contingency defined for the system where we plan for the eventuality of a very significant loss of supply in this case. And it would be around one of the nuclear units that operate in the state of Texas. We have large nuclear facilities that are over a gigabyte

Pablo Vegas (14:51.766)

watt in size at a unit level. And what we need to be able to do is there’s the possibility that if something goes wrong in the system, you could see a nuclear unit drop offline. so you have to be able to have the reserves to be able to manage the stability of the grid and the eventuality that something like that happens. And so that was always the way we talked about you manage the eventuality and risk associated with very large changes in a supplier.

Pablo Vegas (15:19.374)

Well, then now comes in the data centers. And data centers, like you said, are concentrated loads in a location. Today, a large data center might be 60, 80, or 100 megawatts, a very large data center under current definitions. In the future, what we’re looking at is sites that are going to have one gig to potentially two, three, or four gigs in kind of a concentrated area. And so that takes that whole paradigm of

Pablo Vegas (15:45.998)

planning for stability and single contingency issues to a whole different degree. Because now it’s not just a potential supply unit coming offline. You now have loads that have the same risk where they could trip offline and they’re larger than your otherwise previously defined single contingency. So now we have to start thinking about planning the grid differently with reserves in order to be able to manage that eventually. that just to add that dimension into the planning, that’s one thing that is

Pablo Vegas (16:15.83)

really fundamentally changed and why it’s so significant, the fact that these very large loads at a single site add a lot of operational complexity. So that’s something I think that’s important to understand. The batch process that we’re moving towards is necessary because today when a load comes, like you said, historically we’ve had, know, a transmission company would have one, two or three large loads that they’d be working on over the course of a year. And today there’s dozens of them and sometimes hundreds of them depending on.

Pablo Vegas (16:44.622)

company we’re talking about. And what’s happening is that our process effectively works closely with the transmission operator. And we do these planning and stability studies to ensure that the grid and the transmission system can stably connect a large load into the grid and can serve it reliably across 8,760 hours. We analyze literally every hour of the year to make sure that that site can receive energy reliably and stably throughout the

Pablo Vegas (17:13.678)

entire year’s period. And so when we do these studies with a transmission company, we go back and forth over a period of time. It could be six, 12 months worth of work to do that. And then they will get a planning study approved. And that’s kind of a stage in the interconnection process. The planning studies are approved, ERCOT has signed off on it, the transmission company has signed off on it. And effectively then what the customer does is then they build their site. And so then they build a site that could take one, two or three years to build a site. And then right before they come online, they go through one more check.

Pablo Vegas (17:43.278)

and they go through us all energy stabilization check essentially. And so we just make sure that if nothing has changed, you know, since the couple of years before when the planning studies were approved, now we have the as built so we know it’s actually there. And so we do a last table of stabilization study and give them a green light to energize. That’s the way the process has worked for the last 20 years. Well, imagine what’s happening now with data center that gets in a planning study approved, they start constructing a site.

Pablo Vegas (18:11.886)

they’re building their site starting at, let’s say, 120 megawatts in the second year, and then they’re ramping up to, let’s say, 800 megawatts over the next five years. While they’re doing that, 10 other projects within the same geography are doing the exact same thing. So the planning study that was approved for that company two years prior, all of sudden the topology of the grid looks vastly different than it did when the study was approved. And we’re sending them into this never-ending re-study loop.

Pablo Vegas (18:40.718)

where we have to go back and say, the study, the planning study you just had approved has changed materially because the entire transmission system in your geography has changed based on all of these other projects that have come in. And so we recognized pretty quickly that this was the bottleneck we were heading towards and the uncertainty that that was creating for loads was really very, very destructive to the stability that you need for massive investment. So these data centers are huge investments.

Pablo Vegas (19:10.626)

The batch studies is intended to solve that issue. So what it does is it takes, and basically we’re working towards what we call batch zero, which is to establish a baseline where all the projects that are getting ready to come online in the next couple of few years are going to go through this batch study and establish essentially the requirements and demands on the transmission system in order to serve all of these loads. It will then create an allocation of transmission that’ll be held for those projects.

Pablo Vegas (19:40.37)

Because historically we’ve never held transmission. Nobody in the US holds transmission for a project. You do a study and then you build and you assume the transmission capacity will be there when it’s ready, but there’s no holding of an allocation of transmission. Well, in this world we have to do that because with this Batch Zero we’re going to have a bunch of projects that will get approved, the transmission will be allocated for them to build over the next three to five years, and then every year we’re going to have subsequently more data centers coming in looking to interconnect and looking to grow.

Pablo Vegas (20:09.71)

or manufacturers or other industrial customers or any large load. And so we have to do that with the knowledge of what’s been committed historically, so we don’t derail those projects. Then we have to be able to support the new ones coming in and then define the transmission investments needed to serve all of them. So that’s what this batch study is gonna do is effectively do all of them together on a cycle of somewhere between six and 12 months and then each year rinse and repeat.

Pablo Vegas (20:36.814)

come up with the study, evaluate what’s available on the system, determine what needs to be built to serve, and then continue to remove that cycle during the period.

Joshua Rhodes (20:45.89)

That’s follow

Joshua Rhodes (20:46.91)

up. When I teach like electricity markets and electricity systems at UT,

Pablo Vegas (20:52.086)

I use

Joshua Rhodes (20:52.174)

just to skip, really kind of skip over the part of like, if there’s too much generation and not enough load, like that never happens. That’s not a big deal. That data center trip, gigawatt data center trip offline and PJM and like creating havoc, right? And then you’re right to bring that up. That is a new operational paradigm, right? It’s like, it’s not just like losing supply. It’s like losing demand.

Pablo Vegas (21:13.59)

It has the same electrical effect. What’s unique is that the way large electronic loads often behave is that when they see a fault on the system, what they’re designed to do is to protect the assets behind the meter, right? Because you’ve got super expensive GPUs and equipment behind the meter. And so they’ve got UPS systems that they can flip to instantly when they see something like that to protect those assets and then a couple cycles later reconnect to the grid. So we need to make sure that we understand when they’re going to do that and what are going to be the performance requirements

Pablo Vegas (21:43.545)

so that then we can plan around that. Because like you said, once we start to see a lot of these gigawatt sized facilities spread throughout the state or clustered in areas on the state, that becomes a very unique risk.

Matt Boms (21:57.282)

think the next logical question here, Bob, is we’re talking a lot about the transmission grid. I think Josh and I have spoken about this at length on the podcast and how.

Matt Boms (22:06.508)

We have this really successful experiment in Texas that’s called deregulation. And we’re coming up to 25 years, almost, of deregulation in Texas that I think most of us would agree is a resounding success given all the generation that we’ve brought on. However, on the distribution grid, that’s where I want to ask you a couple of questions because it feels like as a side effect of that experiment, we have utilities that are responsible.

Pablo Vegas (22:33.112)

for

Pablo Vegas (22:33.71)

capital expenditure.

Matt Boms (22:34.734)

And

Matt Boms (22:35.214)

we’re telling them not to dip their toes generation, right? They can’t, the T.D.’s in Texas are not allowed to generate. And what that means is, and I think you deserve a ton of credit for this because you’ve come out and spoken about the importance of demand response. You’ve spoken about the importance of DERs, behind the meter technologies, energy efficiency, all of this. And I think that’s probably even more important now given all the low growth that’s coming. So not feel so hard to crack given the regulatory structure we have in place.

Matt Boms (23:03.266)

The fact that we know that substations will be overloaded in the future because of all the load growth that’s coming. In your mind, is there the magic wand solution to this problem or where do you see this going over the next few years as far as DERs, demand response, energy efficiency, all that?

Pablo Vegas (23:19.084)

You started the question with kind of the recognition of how important the competitive market has been to the success Texas has experienced economically. And it is because it’s driven low cost energy that has helped the economic growth in this state for the last 20 plus years. And it’s continuing to do that. So that’s something that has been an incredible benefit, I think, to all Texans because of that construct. I believe that construct can be.

Pablo Vegas (23:45.096)

extrapolated deeper into the grid at the distribution level to leverage competitive forces on solutions and services that are now becoming more viable than they ever have been in history. Those types of solutions and services are distributed resources that are going to be at premises, and that could be batteries at a home, can be smart thermostats and smart coal pumps.

Pablo Vegas (24:14.218)

It can be rooftop solar. It can be electric vehicles. All of these components that are behind a meter at a residence or at a commercial site can provide a functional resource service to the grid at large, especially when it’s aggregated in total. And that’s something that we have proven already with our ADER program, which is our Aggregated Distributed Energy Resource program, that I think has been highly successful. We just recently

Pablo Vegas (24:43.842)

doubled the cap on that program and we’re looking to increase it even further because we’re starting to really see momentum pick up on these types of resources proliferating throughout the Texas grid. And when you think about that, I mean, it’s almost like the business model of an Uber or an Airbnb where you’ve got distributed capital. So consumers and business owners are investing in energy resources.

Pablo Vegas (25:11.682)

to help them manage their reliability and manage their costs. And those same assets that are providing those benefits to the consumers can be double leveraged by the grid operator to provide services to the grid and provide another income stream or economic incentive for those same assets. So they’re making the capital investment in putting rooftop solar on or buying an electric vehicle, but with the proper integration and aggregation, they can become a meaningful part

Pablo Vegas (25:40.75)

of a supply or demand response mix. And that’s really unique and it’s growing. We’re seeing the evidence of it working. We actually have these aggregated resources inside of our energy only market providing energy. We also have them in our ancillary services. So if you think about that, those are our reserve services that we are really protective of because we lean on those in order to keep the grid reliable. Yet we’ve seen that the reliability and effectiveness of these aggregated resources

Pablo Vegas (26:10.862)

can perform under the ancillary services requirements too, in the ECRS and in the non-STIN services. So it’s really a tremendous, when you think about the potential, we’re just getting started with that. And we’re just starting to see companies that are in this space start to really take hold and grow. So I think we’re in the very earliest innings of this trajectory. And I see a future where the grid operator is really moving out to the edge of the grid and working with

Pablo Vegas (26:39.756)

consumers and the retailers and the aggregators and those that are interested in bringing that competitive creativity to this space and finding ways to actually be very economically successful with them.

Joshua Rhodes (26:52.046)

We’ve

Joshua Rhodes (26:52.176)

talked about low growth changing. We’ve talked about, you talked about ancillary services. We’ve talked about how the supply mix has been changing. And then on top of that, we also recently changed a pretty big fundamental market design, like a little while ago, in terms of doing this real-time co-optimization plus batteries, and kind of how we actually are dispatching resources and how we’re procuring those ancillary services we’ve talked about. Can you talk a little bit about what RTC plus B, real-time co-optimization plus batteries,

Joshua Rhodes (27:22.0)

what that is, how that’s a bit different and like, well frankly, how’s it going? It’s going for a couple...

Pablo Vegas (27:25.806)

It’s been months

Pablo Vegas (27:27.026)

now. It has. Yeah, we launched that went live on December 5th of 2025 and it’s been going really well. We saw during winter storm Fern the operational benefits of this that we hope to see because what effectively we’re now doing is rather than taking the commitments for the ancillary services the day ahead and effectively holding them in those positions throughout the day in real time.

Pablo Vegas (27:53.858)

What we’re doing is in real time evaluating at every interval of the market, whether it’s more efficient from a cost perspective to hold one of the reserves and ancillary service with this resource or that resource. And we take the lowest cost resource, move it into the energy service space so that the dispatch comes down in its cost. And then the more expensive resources we could actually hold in the ancillary services in the case that we need those.

Pablo Vegas (28:20.312)

We’re not losing anything in terms of the amount of ancillary service and reserves we have, but we’re really optimizing the cost effectiveness of that. We are forecasting to be able to save at the wholesale power market level more than $3 billion a year just by doing this type of real-time optimization between what’s serving energy and what’s being held for reserves. We’re seeing that financial trajectory realized. We’re seeing it during the periods of

Pablo Vegas (28:48.13)

more scarcity, which Winter Storm firm a few weeks back gave us an opportunity to see that from an economic point of view. We also, so I mentioned the operational benefit, what it does is it will take a look at where the constraints on the system are, our dispatch system will, and it will move around between energy and ancillary services, what is providing energy in order to solve those constraints on the system. So it’s gonna have the opportunity to help bring down congestion.

Pablo Vegas (29:17.074)

in the system as well. And we saw that when we were seeing some constraints coming up into the San Antonio area on that weekend of winter storm firm, there were some constraints on the transmission line feeding the San Antonio area from the valley. And we saw the RTC plus B optimization activate some of the energy resources north of that constraint to alleviate that transmission congestion. So it’s looking at the most economic way to dispatch as well as the most reliable way to dispatch in order to manage the overall congestion of system too.

Pablo Vegas (29:46.71)

And so it’s working extremely well. And then with the plus B, we built it from the bottoms up, thinking about the role that batteries play and optimizing how to dispatch batteries in order to, again, optimize the cost of serving energy and ancillaries. And batteries continue to be such a core part of that operational flexibility.

Joshua Rhodes (30:06.766)

Can I follow up with one question? There has been some disagreement in some of the players around which of the ancillary services certain resources like duration limited and storage like duration limited resources like batteries can play. Can you just speak to ERCOT’s stance on kind how that’s being implemented and like kind of how why y’all see it that way?

Pablo Vegas (30:28.046)

So to understand your question, we have always wanted to try to understand what the battery operator is going to do because we don’t control the dispatch, we don’t control the state of charge for batteries. What we do is we set a set of requirements out for what the various ancillary services need to be able to perform and how we’ll plan around them. So non-spending, you have to be able to come online in 30 minutes, you have to be able to run for four hours in order to serve that block.

Pablo Vegas (30:56.142)

ECRS, you’ve got to be able to come online in 10 minutes. And you have to be able to run through these different wheel-throughs. And we’ve changed some of those definitions to actually shorten the requirements. So at ECRS, now it’s really a one-hour product with the latest iteration. So what we were talking about with batteries before was, if there’s a two-hour or four-hour obligation, we need to make sure that you’ve got that in case you’re called upon to provide that service. A lot of that has been resolved with the way RTC works. And so with real-time optimization, it

Pablo Vegas (31:25.216)

knows what is available in the state of charge because it has to get updated and reported by those resources at every interval. And then it will make the decision based on what’s in the tank on what to put into the next, you know, the next dispatch stack. And so I think we’ve become more flexible with the batteries and it’s become less of a concern around some of these requirements. And frankly, we really like what we see in the batteries here in Texas. There’s a lot of talk about, you know, how do we get more duration?

Pablo Vegas (31:51.97)

We would love to see more duration, but we don’t want to lose the flexibility that we have. A one-hour battery that has one hour of, let’s say a one megawatt battery with one megawatt hour of energy means that it can take its entire charge and give it to the grid inside of an hour. A one megawatt battery with four megawatt hours of energy means that it can provide that one megawatt hour over four hours, right?

Pablo Vegas (32:20.97)

Sounds good and it is good. Duration is good. But if you wanted to put those four megawatt hours on the grid in one hour, you can’t do that. And so that’s why the Ercob Market with our very flexible rules, we’ve been attracting those shorter duration batteries because they have the most flexibility to perform when the grid needs them most. You know, during those solar sunsets where we’ve got an hour and a half to two hours of really, you know, peak need, the entire battery community can put all their energy on the grid at once.

Pablo Vegas (32:50.712)

Whereas if they were under the California model, they have to all have four hours of energy behind them and they can’t dump all that energy in a one or two hour period as needed. So you potentially are holding a bunch of economic energy behind a limitation on the inverter that can’t put it all out of the system. So we really like the flexibility that we have with the batteries today. It’s not saying we’re not looking for more duration. Duration is always good. Right now, the name of the game is really flexibility and the way we’re structured gives us the flexibility.

Matt Boms (33:20.878)

We’re coming up on time almost, and I wanted to make sure we asked you about residential demand response. But look, it’s worked its way through different subcommittees. And again, I think your leadership on this issue has been really important. And when folks ask, like, residential customers in Texas why the industrials have access to demand response programs, but for the most part, residential folks don’t, how do we solve that problem? And where is the challenge as far as just getting all the stakeholders on the same page and getting a new program out there that we can also

Matt Boms (33:50.882)

And it’s maybe that the solution is a Texas solution, which is like, it might not be perfect, but let’s fix it on the fly.

Pablo Vegas (33:56.334)

Pablo Vegas (33:56.794)

I couldn’t agree more with you with that last statement that you just said. Every time we introduce something new, there’s always the potential that it could be improved upon. And that should never prevent us from taking the step forward and learning through that experience. And I think that’s right where we are right now at the precipice of considering some ways to do residential demand response, where let’s start by clarifying, residential demand response is available broadly across Eurot. There are many municipalities that have

Pablo Vegas (34:26.388)

successful programs and competitive retailers are offering demand response incentives as well. But we believe that there’s a lot more that we haven’t tapped into yet and that’s where I think the opportunity lies. And so what we’ve been talking about is how can ERCOT step into that space, provide an economic incentive on top of what the competitive retailers and the municipalities are already doing in order to grow.

Pablo Vegas (34:52.002)

the share of residential demand response that’s available to the grid. And that’s the opportunity set. It’s not about replacing or substituting what’s already happening. It’s about augmenting it to make it more valuable and to bring more people into the programs. And so the issues with moving this forward are the issues that happen with almost any change in our market. There’s always very different stakeholder needs across the spectrum that are looking at, what’s the impact going to be on wholesale prices? What’s going to be the impact on

Pablo Vegas (35:21.314)

potential economic revenues down the road. And so I think we have to think through balancing all those different interests. But in the short term, what I would say is we know we’re going to be faced with challenges with this low growth that’s coming our way. We know demand response is a relatively low cost and absolutely quicker timetable of a product that could be developed than building new supply, as an example of building new transmission.

Pablo Vegas (35:48.418)

We spend a lot of time talking about building new supply and transmission, but we could create a demand response program in a matter of months and get it up and running and get the potential reliability benefit of it sooner. And that’s the approach I think we should come into this looking at, saying let’s put a tool in the toolbox. Let’s try it. Maybe it won’t be perfect. Maybe it needs to be improved significantly after we start it. Let’s put the tool in the toolbox and start learning from it. And then if we realize we need this and we need more of it,

Pablo Vegas (36:18.03)

and it needs to be better, then we can work on it and change it. But we’re right at that junction now where we have to kind of get over that hump in order to move it forward. And it’s really about a a stakeholder policy discussion happening across the stakeholders in the state. And we need to get to that decision.

Joshua Rhodes (36:36.844)

That’s it. Before we get to closing remarks, I kind of want to...

Joshua Rhodes (36:40.072)

ask a little bit of a different question because you get folks like us on the panel and we’re talking about energy and AI. We’re talking about, how are these data centers? But I kind of want to talk about like, how can the electricity sector use AI to maybe do its operations better? I think the implementation of AI and big systems is a little bit of a mixed bag right now. We’ve seen lately we’ve seen Amazon having to come to Jesus moments with their engineers saying you allowed AI to cost 13 hours of interruption. Now, if I don’t get my phone case for next to 13 hours, not a big deal.

Joshua Rhodes (37:09.936)

from Amazon, but if I don’t have power for 13 hours, that is a big deal. But then PJM has recently, another electricity market on the East Coast, has recently implemented more extensive dynamic line ratings. So they’re able to change like the ratings of their transmission network given ambient conditions. Like if the wind’s blowing and the lines are cooled down, you can move more power over them than you automatically would. And some of the underlying machine learning techniques and all those other kinds of things are similar across like these large language models, neural networks versus.

Joshua Rhodes (37:38.902)

other types of models. So I’m just curious to the extent you can, like how or can speak about it? Is ERCOT using AI? How can ERCOT use AI? Are you having talks about it? Like what is it in the use of AI of electricity you’re seeing?

Pablo Vegas (37:51.234)

Yeah, I think the really great irony of all of it is that the big challenge for talking about how to manage the growth and the power requirements, I think can help get solved by the underlying technology that is driving those demands. So in our world, we talk about AI through the lens of people-led AI. That’s the first thing is that this has to be people-led. We’re not going to turn over the systems and the controls to machine learning or to AI, but we’re going to keep it.

Pablo Vegas (38:18.156)

you know, inside of the central function where the people with experience are going to leverage it to help them do what they do better. We are looking at AI in a lot of different areas. So from the obvious load forecasting. using AI to take dozens of different weather forecasts and different load forecasts and be able to look at historical experience and then look at, you know, the probabilistic changes in terms of weather and load and be able to run scenarios.

Pablo Vegas (38:47.326)

instantly getting you a spectrum of likelihoods of what could occur over the next five minutes. We’re starting to introduce AI into that process so that then as we experience what’s going on in real time, the learning occurs and it improves and we’re constantly getting better with kind of the process of being able to load and weather type forecasting to affect that part of our operations. In another area around queue management, there’s process of running studies, building cases,

Pablo Vegas (39:16.15)

and running scenarios, AI is very well suited to help facilitate and improve that because we take data from lots of different sources to build these cases, and then we run them through these stability or dynamic models. so AI can help with doing all of that data gathering, running these processes, analyzing the results, looking for anomalies, and giving the engineers, here’s the places you should look at in terms of these stability results or these dynamic results.

Pablo Vegas (39:41.91)

So we’re starting to introduce AI into the core planning and modeling of what we’re doing. So it’s starting to come into so many different facets of our business and it’s going to continue to grow its capabilities. There were some releases of the AI large language models in the last two months that have had meaningful step forwards in the autonomous capabilities in terms of how long they can actually run without a human intervention. And we’re starting to see the benefits of that in our coding, our development.

Pablo Vegas (40:10.542)

Because if you look at Erkop, we’re effectively a big tech company, right? We’re running a tech platform. The biggest part of our workforce are technology engineers. So it’s becoming a really important part of how we’re thinking about real-time operations and planning. And we’re going to continue to look at, to leverage that to get better on every level of reliability as well as possible.

Joshua Rhodes (40:14.659)

your

Matt Boms (40:30.606)

Well, I think we’re pretty much at top level. And Josh, I just want to thank you so much again. We know you’re busy and the fact that you took a few minutes out of your day to speak with us really means a lot. And anything you wanted to add at the end, I’m feeling optimistic. I feel like this is a huge challenge that we have here as a state, but probably no state is better positioned than Texas to meet this.

Pablo Vegas (40:49.582)

I agree.

Pablo Vegas (40:50.303)

I’d love to just get a quick perspective from either one of you. So you guys work inside of Texas, but you also have the opportunity to kind of look outside beyond our four walls. Are there things that you see outside of our four walls that you think are opportunities for us to learn from? Or are there things that, you know, perhaps we should be looking to export more of in order to try to help this endeavor? Because a lot of what we do is oriented to Texans.

Pablo Vegas (41:16.418)

We really are part of the national economy, we’re core part of it. I think we should always be looking broadly in terms of how we can help others in the industry be successful.

Joshua Rhodes (41:25.088)

I felt like I spent most of my time doing the opposite, getting called in from other places to talk about how we’re doing things in Texas, to be honest with you. Just given how fast we’re able to move and like, you everything from our connect and manage approach and just like this RTC plus B, how fast we’re able to move around. I’m going to kick it over to Matt, see if he has anything while I try to think on my feet really quickly.

Matt Boms (41:47.128)

Well, the one that comes to mind is there are states that do really good job on DERs through TND and deferral.

Matt Boms (41:54.284)

which looks different in Texas because of the problem we were talking about earlier, right, where we have our utilities responsible for just infrastructure, right, just hard transmission and distribution infrastructure. And I think Josh and I agree, like on the transmission side, we’re doing pretty well because you’ve got really good price signals there on the transmission grid, but you don’t have things on the distribution grid because they’re essentially regulated.

Pablo Vegas (42:17.71)

You

Pablo Vegas (42:18.429)

have to stay on that space.

Matt Boms (42:19.576)

Exactly. So I think that’s where we have some room for improvement. Like a study just came out showing, I think almost $2,000 per rate payer over the next 10 years, if you’re able to crack that T and D deferral piece. So I think that’s what I’m looking towards moving forward here.

Joshua Rhodes (42:35.212)

I guess the only thing is that I would say is.

Joshua Rhodes (42:38.178)

We talked about congestion and we talked about the price signals that we do see. Maybe the large loads and everything and all the transmission that we’re going to build will kind of alleviate this for a bit. I do think we can do a better job of leveraging the economic test for new transmission than we do. Because essentially, if we build a new transmission line, please correct me if I’m wrong on this, as I’m speaking to the CEO of Vircoq. We build a new transmission line on the economic test. It essentially has to pay for itself in one year’s worth of savings.

Joshua Rhodes (43:08.058)

mentioned earlier, transmission is a multi-decadal asset. so anytime that I’m talking about everything that Texas does great, I usually am like, well, there’s this one thing I really think we can do better. And that’s what I would say is like, if there’s any way the economic test for new transmission could be more, at least on the order of magnitude of the length or the lifetime of the asset that it’s paying back, like, I guess that would be my only feedback.

Pablo Vegas (43:13.078)

about

Pablo Vegas (43:31.63)

I think that’s really good point. And in fact, I’m glad you brought that up because it is something that we are working on right now. And there is another region, other regions use this concept of an MVP, a multi-value kind of a proposition for evaluating the effectiveness of transmission investment. And what you can do is you can take benefits across reliability, benefits across economics, and benefits across resiliency and look at the three components and say, okay, well, you may not hit 100 % on

Pablo Vegas (44:00.776)

one or the other, the combination, the multi-value combined creates enough of the hurdle, overcomes the hurdle to pass the requirement to build that transmission. We should be looking at transmission to that same ones because there is real value in resiliency, there’s real value in economics, there’s real value in reliability and combining those metrics to come up with a combined value proposition for a project is a much more effective way than trying to just fully clear one hurdle or fully clear another.

Joshua Rhodes (44:29.816)

Pablo Vegas, thank you for coming on the Energy Capital Podcast.

Pablo Vegas (44:32.13)

Thanks,

Pablo Vegas (44:32.422)

Josh. Appreciate it. Thanks, man.

]]><![CDATA[More Generation, More Transmission, More Load, More Challenges: Texas Grid Roundup #90]]>https://www.texasenergyandpower.com/p/more-generation-more-transmissionhttps://www.texasenergyandpower.com/p/more-generation-more-transmissionThu, 02 Apr 2026 14:12:20 GMTERCOT’s latest operational and interconnection updates show continued growth in new power generation projects. Since December, roughly 9,275 megawatts of new capacity have been added to the interconnection queue, including solar, wind, battery storage, and gas projects.

What stands out most in the latest data is the rapid growth in proposed gas development. As of January 2026, ERCOT’s queue included 57,403 megawatts of proposed gas generation; that’s up from 28,774 megawatts in January 2025, nearly doubling in a single year.

That said, solar generation (163,000 megawatts) and battery storage (178,000 megawatts) continue to dominate the queue. By comparison, ERCOT’s all-time demand record is 85,508 megawatts.

Still, the increased gas numbers reflect the growing emphasis among policymakers and regulators on gas generation (as seen in policies such as the Texas Energy Fund). It remains to be seen whether supply chains and other worldwide economic trends will allow gas plants to be built quickly enough to meet rising demand. In the meantime, it is critical for the Texas economy that the state build on its diverse mix of generation sources to help serve rapidly growing demand.

It also is important to note that interconnection queues represent proposals rather than guaranteed construction. Historically, a significant portion of projects withdraw before reaching completion. The surge in gas proposals may therefore reflect market positioning rather than firm development.

Transmission Investment Scales to Meet Growth

Alongside the surge in proposed generation, Texas is preparing for a major increase in grid infrastructure spending.

Planned transmission investment is expected to reach approximately $7.5 billion in 2026, compared with about $3.97 billion in 2025.

This level of investment signals a new phase of grid expansion in ERCOT. Texas needs transmission — not only to connect new generation resources, particularly in remote areas, but also to support rapidly growing electricity demand in urban and industrial regions. And as demand grows, the cost of the new transmission will be spread out over a larger customer base, which reduces potential cost increases for residential customers.

Reliability Planning Highlights Seasonal Risks

ERCOT’s most recent Monthly Operational Reliability Assessment (MORA) suggests some new gas-powered generation is beginning to come online.

Read more

]]><![CDATA[Earnings Calls Paint Dramatic Energy Growth Picture]]>https://www.texasenergyandpower.com/p/earnings-calls-paint-dramatic-energyhttps://www.texasenergyandpower.com/p/earnings-calls-paint-dramatic-energyTue, 31 Mar 2026 13:38:59 GMTIt was one of the big themes of fourth-quarter earnings season: a sea change in demand growth, driven by the rise of artificial intelligence, that will lift sales for both regulated utilities and wholesale generators for years to come in Texas and beyond.

Usually, independent generators’ sales are hard to predict because they move with electricity prices, while regulated utilities’ sales are among the most predictable – and predictably uninspiring – of any industry.

AI has changed that. Now, both utilities and independent power producers are raking in lucrative long-term supply deals from tech giants desperate to feed AI’s electricity-hungry silicon brain.

On its recent fourth-quarter earnings call, CenterPoint Energy Chief Executive Jason Wells said that by 2029, the Houston-area utility expects peak load in Greater Houston to grow 50 percent from 2025 levels. That’s two years earlier than the company had estimated in October.

Wells also reiterated CenterPoint’s projection that through 2028, annual operating earnings growth should sit at the high end of the company’s 7 percent-to-9 percent long-term target. CenterPoint also anticipates it will surpass its previous estimate of 11 percent compound annual growth in its base rate revenue.

These startling projections generally track ERCOT’s load growth projections. The grid operator’s long-term forecast, released in August, shows peak summer demand rising from 87 gigawatts in 2025 to 145 GW in the summer of 2031. That rapid growth includes 24 gigawatts of load for data centers and 8.5 gigawatts for cryptocurrency operations. The rest comes from industrial expansion, oil and gas, and population growth.

Read more

]]><![CDATA[Texas Growth Is Running Into Power Grid Limits with Katie Coleman]]>https://www.texasenergyandpower.com/p/texas-growth-is-running-into-powerhttps://www.texasenergyandpower.com/p/texas-growth-is-running-into-powerWed, 25 Mar 2026 07:40:16 GMTTexas built its electricity market to react quickly to changes in demand, attract private capital, and protect ratepayers from private-sector investment risk.

A wave of large load interconnection requests is testing that model.

In this conversation, Katie Coleman, a leading Texas energy lawyer and partner at O’Melveny & Myers LLP, describes the pressure points facing the ERCOT grid. Officials are scrambling to determine which loads are real, how quickly they will arrive, and how the state should build transmission and other infrastructure to support them.

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Coleman brings ERCOT’s challenge into focus. She explains how customers behave differently — signing different contracts, facing different operating constraints, and placing different demands on the system — and grid managers have to juggle those variables.

She also walks through a basic divide in the Texas market between generation and transmission. Private investors assume the risk of building generation. But with transmission, regulated utilities must get permission from the PUC to build power lines and then charge consumers for them (plus profit margin) over time.

As interconnection requests climb and forecasts shift, these infrastructure decisions will become increasingly important — for the ERCOT grid and Texans’ power bills.

The episode explores a range of issues, including:

  • How ERCOT and policymakers should judge new load forecasts.

  • Why transmission planning is a central constraint.

  • How Texas can preserve market discipline while serving growth.

Coleman also points to the importance of regulatory stability. As large customers, generators, and utilities make long-term decisions about growth and investment, they need an energy market they can read.

That predictability becomes even more crucial, Coleman says, as Texas debates how to respond to unprecedented demand growth.'

Energy Capital Podcast is produced by ClarityForge Studios.

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Timestamps

  • 00:00 - Introduction & Katie Coleman

  • 01:05 - Katie’s Energy Origin Story

  • 04:01 - Why She Represents Industrials

  • 05:55 - What Large Power Users Want

  • 08:56 - Speed to Power in Texas

  • 10:57 - How Industrial Demand Response Works

  • 17:04 - Crypto, Data Centers, and Misperceptions

  • 20:43 - How the Energy-Only Market Works

  • 28:27 - Load Forecasts and Transmission Risk

  • 36:46 - Bringing Generation With New Load

  • 38:49 - Why Texas Needs Stability

  • 40:32 - Final Reflections & Close

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Transcript

Matt Boms (00:05.198)

Today, I’m really excited to be joined by Katie Coleman, managing partner of the Austin office at Olmelvney and Myers. Katie is one of the leading energy regulatory attorneys in Texas. She has more than 15 years of experience representing large industrial energy customers in ERCOT and before the Public Utility Commission of Texas. She’s best known for her work representing groups like the Texas Industrial Energy Consumers, TIEC, and the Texas Association of Manufacturers, TAM.

helping shape some of the most important conversations around energy markets and policy in the state. Katie has also been deeply involved in the industry more broadly. She served as president of the Gulf Coast Power Association, and she previously led the state bar of Texas public utility law section. And across the energy community in Texas, she’s widely respected as one of the very best regulatory lawyers in our business. So Katie, thank you so much for making time for us, and thanks for joining the podcast today.

Katie Coleman (01:03.726)

Absolutely glad to be here.

Matt Boms (01:05.558)

I wanted to start with a layup and I wanted to ask you to just walk us through how you first got into energy. Like what is your origin story and how did you end up in this business?

Katie Coleman (01:15.182)

Yes, so I have no qualifications. I have no business doing this job that I’ve now been doing. My bio actually, I need to update it. This is actually the 20th year when I first started in the industry, which I count as when I clerked when I was in law school, which then turned into a permanent job. I spent the summer doing this, finished law school, and then came back in 2006. So it’s been 20 years now.

I went to UT undergrad. I was a liberal arts major. I did a small honors program at UT called Plan To, which people at UT are familiar with, but a lot of other people aren’t. But it is just an interdisciplinary liberal arts honors program. So I had no idea what I was going to do. And I did that very cliched thing where I took the LSAT to see how I did and then ended up in law school. Even in law school, I had no idea that I was going to end up in this field.

So I’m not from Texas. I’m actually from outside of Asheville in North Carolina. And Austin felt like a huge city to me when I was in school here. And in law school, I looked at jobs in Houston. I looked at jobs in Dallas. I actually split my summer in Austin and Dallas. And Dallas just felt unmanageable for me being from a very small mountain town. And so I really focused on Austin. And obviously there’s a big regulatory workforce here.

in Austin with the capital and all the state agencies. And so the firm that I clerked with, which was at the time Andrews Kerr, this was a big part of the work they did. So I tried several different sections and really liked the policy aspect of the energy practice. And the partner that originally hired me, I think took me around and met some of the clients, met some of the stakeholders that we were going to interact with regularly. And it seemed like a good fit. So he,

hired me on a little bit of a whim. And here we are. I feel really lucky. It’s been a really good fit and I’ve really enjoyed it, especially all of the people that we work with, I think make this a really unique, special industry. And I think that’s what I picked up on when I was looking at options. And so I’ve kind of learned it as we’ve gone and I’ve had great mentors that are very credentialed and do know a lot of things about power markets and

Katie Coleman (03:36.706)

just industrials in general that have taught me everything I know along the way. So that’s really been key.

Matt Boms (03:42.978)

That’s awesome. And when you say 20 years, I’m sure it probably feels like where did those 20 years go? Cause the time goes by so quickly.

Katie Coleman (03:49.806)

You know, it felt like that for a while and then in 2021 it stopped feeling like that. From 2021 until now it feels like it’s been like another 20 years.

Matt Boms (04:01.036)

Yeah, well, I guess the last part of the origin story is like, did you come to represent the large industrial customers? Like, how did the door open for you and how did you take that path?

Katie Coleman (04:10.296)

So I inherited it, is the short story. The group of attorneys that I started my career with, who I still work with, have a legacy that goes all the way back to the original adoption of the Public Utility Regulatory Act, and back in the 70s. And at that time, there was a lawyer in Houston, he was at a different firm, Mayor Day Caldwell and Keaton at the time. Jonathan Day was involved in writing Pura.

along with some other attorneys. And when the bill passed, they sort of divided up, you know, who was going to take which sector of the industry, who was going to work with the utilities. And Jonathan in Houston, with the Ship Channel and with strong industrial relationships, decided he was going to represent the industrial users. And so he then trained another attorney who then trained another attorney who then trained me. And so we have kind of a lineage back to the seventies representing these same clients.

And I think that’s really been official for the group’s advocacy because we do have a lot of history about how we got to be here, how different policy changes have actually impacted industry over the years. And it just helps to have that knowledge base to draw from and sort of the institutional experience. So it’s a pretty unique thing. And actually, if you look in Texas, there’s a lot of groups that are that way, like the cities, the...

city’s representatives, they’ve had a lineage of representing those stakeholders back for a long time. Some of the firms that represent utilities, you know, like I think about the relationship with MakerBot and Centerpoint, for example, you know, that goes way, way, way back. So it’s actually a pretty common thing, but that’s how it happened. I sort of joined the group, inherited this legacy.

Matt Boms (05:55.768)

That’s also, it’s also a great reminder that you think that this current generation of folks that work in our industry just showed up one day, but it is great reminder that there’s a whole line of people that came before us in our current roles that really carved out these roles and like made the industry what it is today. I love that you mentioned that. Well, I want to jump into industrial customers that you represent and kind of talking us through maybe spelling out and explaining some of the misperceptions there are about large power users. So.

Just to kick this off, what do large power users prioritize when it comes to electricity markets in general?

Katie Coleman (06:32.248)

So above all, they want reliability. They’re not primarily in the power industry. They’re primarily making widgets of some variety to sell in global markets. The number one thing that they want is to make sure that they’re going to have a reliable source of power that’s not going to damage their equipment, not going to cause them to lose product or feed stocks, not going to cause health and safety risks to their employees. So that is far and away the number one concern.

But of course, they’re businesses and so they care about cost. And in particular, they care about the ability to contract, to meet their individual business priorities and all of my clients are different. They all have sort of different profiles. They’re all in manufacturing of some variety, but different products, different sectors, and even within a sector, different goals. And so one of the things that has been

A real driver for businesses to site in Texas has been the flexibility that the deregulated market provides because you can have one customer who just cares about having price locked in and wants to hedge and is agnostic about fuel source. You can have other customers who really care a lot about green certifications and things like that. They can contract in a certain way.

You have other types of customers that maybe are flexible and can turn off if prices are too high. Maybe they don’t want to hedge in the same way that other types of customers do. And so our market really provides an endless suite of options for large industrial users. So I would say reliability and cost. If you ever hear me testify at the legislature, I often start with, this is sort of like the time honored, Tam talking point on electricity.

Electricity for a manufacturer in Texas is typically one of the top three production costs. Often it’s number one or number two. And for some of our members, it’s up to 70 % of their production costs. So it really is a driver in siting and expansion decisions and which assets, you know, our company’s choosing to operate at any given time. And it’s something, like I said, that people look at when they’re choosing where they want to build, where they want to be.

Matt Boms (08:47.298)

Yeah, correct me if I’m wrong, but that’s been the secret to our success in Texas is the abundance of electrons and low prices compared to other markets.

Katie Coleman (08:56.236)

Yes, I’ll say another thing that’s come into the forefront lately, which is not something I focused on a lot until maybe the last 10 years, but it’s definitely accelerated is speed to market. So getting interconnected has become a lot more challenging, not just in Texas, but across the country. And it has to do with this data center AI boom. But of course my clients are competing with.

all of the transmission voltage large load clients are customers are competing to get interconnected. And there’s only so many utility resources, only so many crews, only so much capital, only so much infrastructure that can go around. And so being able to get a quick and predictable interconnection has also become a real priority in a way that it’s not something I probably would have talked about.

well, maybe five years ago, but not 10 years ago, certainly. And five years ago, really only in areas that were experiencing oil and gas booms, West Texas has been an issue. Trying to get service out there has been an issue because they really needed to upgrade the transmission system and the import paths into West Texas. But other than that, you didn’t really have issues with going to the utility and asking to be interconnected.

and getting an uncertain answer or a really protracted timeline. So that’s something that’s changing rapidly that, like I said, it’s happening around the country, but it’s become more of a focal point in Texas recently.

Matt Boms (10:28.758)

Yeah, absolutely. Yeah, that’s speed to power has become like our thing in Texas, right? In other parts of the country, it’s just not as quick as it is here. Well, I wanted to ask you about the kind of demand response issue and when we do have grid stress events in Texas, I’m just curious how industrial customers respond to those grid stress events. And if you can just dispel maybe some of the ideas there are around how that works. Can you explain it to us? Like a two year old, how does demand response work for the industrials?

Katie Coleman (10:57.326)

Yeah, so again, it’s not homogenous, but there’s different varieties of response that you see. I’ll start with, we’ve got one set of customers who are what we call high load factor, which they’re using 95 % plus of their maximum possible demand at any given time. And those customers tend to not be price responsive, they tend to not be flexible. So when a grid emergency occurs,

You know, they will try to do their part to the extent they can and try to reduce usage to the extent they can, but you’re not going to get major response out of those sites. They just don’t have that capability because the reliability is so essential. Some of them may have invested in their own generation at the site. And so that’s something that can sometimes be utilized to provide additional electrons to the market in times of need. You know, they might have a generator that they don’t typically run, but they can turn on.

And again, they might be able to curtail a little bit, but there’s a whole category of customers that are not able to provide a lot of response. I would say that is well over 50 % of industrial sites are in that category and are not actively participating in the market. I think that’s a misconception that all industrials have their own trading desks and are all offering an ancillary services and responding to price. For most of them, it’s around the margins.

So you might get some response. certainly watch it. They certainly, you know, are aware of market conditions, but they’re not actively responding. You have another category of customers who can do things if really necessary. You know, they can do things at their site. They can reduce their usage, but it’s really only when they, like a winter storm, you’re a event or, you know, something that’s kind of foreseen that they can prepare for.

Then you’ll have customers that can do things at their site to reduce usage even further. And then you’ve got this other category of customers who are really actively participating in the market in one way or the other. So some of them provide ancillary services as load resources. Some of them participate in a program at ERCOT called Emergency Response Service. The profile of those customers is a little different. So the ones that are in responsive reserve service have to respond really, really quickly.

Katie Coleman (13:23.062)

like within a few cycles when they get an instruction from ERCOT. So they’re able to ramp down really quickly. They have to offer into the ancillary service market, you know, in the day ahead market if they want to provide that service. ERS providers, they’re not called on as often. They’re contracted seasonally, so they don’t have to actively offer into the market. And they have a little longer response time, so they don’t have to respond quite as quickly as responsive reserve providers.

Then you have another category of customers who will opportunistically respond. So they may not be offering into a formal service like ERS or like responsive reserve service. But if prices are high and it looks like they’re going to stay high, they might reduce their usage for economic reasons. And so there’s a category of customers that actively does that. There’s probably some overlap in the ERS responsive reserve and price responsive. But again, I would say that’s probably like

25 to 30 % of industrial sites. It’s not monolithic and it’s not everybody. But the thing that I think people have a major misconception about is the ones who do that, there has been this narrative that it’s a moneymaker for them, that by selling into ancillary services when prices are clearing up the cap, that they’re making money. And that is so far from the case.

I’m not aware of any client that has ever actually made money on a net basis providing ancillary services. It is a mitigation tool for what is overall a major cost for industrial. So a typical manufacturer in Texas will spend hundreds of millions of dollars a year on electricity. Offering into ancillary services is a way to mitigate some of those costs, but never under any scenario are they profiting.

from making money in the market, if that makes sense. And so I think after, for example, Winter Storm, URI, and some other events right after that, there were narratives about large users profiting from an unreliable grid, and that’s just the furthest thing from the truth. They want reliability, but remember that price signals are there to elicit behavior. You know, if that’s an issue, you’ve got a fundamental issue with competitive markets and supply and demand, because the whole

Katie Coleman (15:49.07)

point is you send a higher and higher and higher price to encourage users to stop using energy, to stop utilizing that resource that’s being priced at scarcity pricing. That’s why you do it. And so our clients who are, you know, sophisticated global businesses will respond to that price, some of them in certain circumstances, and that’s what you want. And actually, I think we should really be aiming collectively as an industry to get more of that response, not just from

my clients, but also from residential and commercial clients. That’s sort of the key to a well-functioning market is that price elasticity.

Matt Boms (16:29.88)

really appreciate you spelling that out. And I almost wonder if the misconceptions around large load behavior, because the large loads themselves have changed so much over the last few years. Like you’ve been doing this for 20 years and I just wonder like how much the profile has changed of those large loads in the past couple of decades, right? Like you didn’t have crypto miners 20 years ago.

You definitely didn’t have the volume of data centers that we’re seeing now. So can you speak to that a little bit? Maybe that’s part of the reason why policymakers and regulators are a bit confused about the way large loads behave.

Katie Coleman (17:04.609)

Definitely. So the cryptocurrency build out a few years ago took things that industrials have typically done in moderation and took it to sort of extremes. And the reason for that is obvious and just purely financial. The whole crypto business is basically converting electricity to cryptocurrency. There’s no other real feedstocks or, you know, there’s nothing else in the calculation. Right.

It’s electricity in, cryptocurrency out. And that’s different from a traditional manufacturer where we’re also making other products and with other feedstocks and with customers that have contracted with, you know, my clients for offtake agreements that they have to fulfill or be subject to, you know, damage clauses. So it’s a much more complicated calculus for an industrial to decide how and when to curtail usage.

because you’ve got to balance all of those things. Like, how am I doing on my production quotas? How many times have I curtailed this month? You know, there’s all kinds of things that go into that analysis. I think with the cryptocurrency, like I said, it’s a more purist application of this. And so you saw more dramatic response, more sort of predictable response, and at a larger scale. And I think there were companies in that space that were

touting their sophistication and efficiency for investors as businesses do, and talking about either the money they saved or the profits they made by liquidating power they bought forward into the market or selling ancillary services or some variety of that. And so I think that got regulators’ attention because they’re thinking, well, you’ve got residential and commercial customers at risk of...

power outage and then you’ve got these large companies that are making money off of it. But the piece of the logic that’s missing there is the behavior of those large customers is going to reduce the likelihood that there’s any reliability event for the residential and small commercial customers. And so you want that behavior. And I think you have to acknowledge sort of like the rational economic outcome there. If we’re sending a price trying to get people to portray all you can only

Katie Coleman (19:26.22)

have so negative a response if they respond to that signal, right? It’s ultimately what you want, but it certainly highlighted some things that the market was designed to elicit, but maybe weren’t as familiar to people. I think since Winter Storm URI and since some of the new trends and large loads starting with crypto and now getting into sort of larger AI data centers, there’s been a lot more...

public awareness and public knowledge around these issues, which I think is good. I think the narrative on this stuff has actually gotten a lot more rational and sophisticated over the last four five years just because of this sort of education that was forced through all of these major changes that we’re experiencing.

Matt Boms (20:12.066)

think also Texans are just like more fluent in energy than the rest of the country. Like we’ll just understand our energy bills, I think a little bit better because of the deregulation and retail providers and all that stuff. Well, we’re getting into like market design and I want to get into the weeds a little bit. And maybe you can help us understand how the energy only market is supposed to work in theory and whether the price signals that we’re seeing now are enough to bring in all the investment we need for reliability.

Katie Coleman (20:43.468)

Yeah. So go back to like a regulated model, because I like to compare what the energy market is supposed to look like to a regulated model. So in a regulated model, customers pay actual cost for energy and for power plants. So when you say, I’ve got your utility, you’ve got this load growth coming, you go and you say, I need to build this power plant. Here’s the most economic option to meet this need.

And then that goes into customer’s rates and they pay for it over the life of the power plant at actual cost plus a built-in return for the utility, a built-in profit for the utility. And they get the energy that that plant produces at actual cost. And that is an important difference that you’re getting energy at actual cost in a regulated model. In the deregulated model, the whole concept was we’re going to take that financial risk

of the capital investment for a power plant off regulated rate payers and we’re going to put it into the private sector. And we are going to let businesses compete for who can build the best mousetrap and who can meet the needs most efficiently. And in exchange, we’re not going to have customers pay the capital costs of power plants, but we’re not going to give them the energy at cost. We’re going to set a clearing price for the energy.

So that means whoever is the most expensive power plant that’s running, they set the price and everybody that’s cheaper than that power plant, they get a profit. And so the concept was all of those more efficient, cheaper power plants would get built and you’d have an incentive to continue building like more efficient power plants because they would continue to get this clearing price that’s gonna be set by older, less efficient technologies.

with a higher heat rate, et cetera. And you’re gonna get this financial risk off of Texas customers. Texas has historically been a very pro-markets state philosophically. And so there was a belief that as technology changed, as market needs changed, that a competitive construct would be more flexible, faster, and better suited to meet those needs, which I strongly believe

Katie Coleman (23:03.224)

continues to be the case. And it’s one of the reasons why one of the consultants that we work with a lot, Charles Griffey, he often says the energy only market works in practice, but not in theory. Because in theory, everybody’s like, the missing money and da da da da, which I’ll address what that is in a second. But we’ve for 25 years now had all these predictions that we’re going to have a reliability problem. We’re not going to have enough generation.

It never materializes. And part of that is because fundamentally, regulators can’t see more than a couple years down the road. They are not as good at rationalizing market incentives and dynamics as, again, the private sector. And so you can try your best to predict what’s going to happen, but in a market, you’re always wrong, right? And we’ve now got 25 years of experience showing that, that we’ve continued to replace plants, to get plants built.

get different types of technologies integrated in a way that has overall been reliable. Now, Winter Storm URI, I think probably people who are listening to this podcast right now are thinking, what about URI? Is it a reliable grid because of Winter Storm URI? And again, what I think people who are not in the industry don’t understand about URI is that was not really an issue of how much generation we have in Texas. It was an issue of the generation performing.

We had 50 % of our gas fleet was on outage and no system in the world is designed to continue to provide power when you have 50 % of your generators on outage. It’s just not economic. It’s not realistic to have that level of a reserve margin. I’d have to go back and look, but I want to say our reserve margins at that time were like 25 % or something. I mean, it was a healthy reserve margin by any standard, but we had...

weatherization issues, every variety of issues. There were plants that were getting water from nearby cities whose water lines froze or busted. I mean, it just couldn’t get workers to the plant to clear alarms after there was a unit trip. Every variety of issue that you would expect for a state that is not used to those types of temperatures for a sustained period of time. So all that to say, yes, URI was a terrible event.

Katie Coleman (25:22.262)

a lot of lessons learned, but it really wasn’t an indictment. It was not an indictment of the fundamental construct of the energy market. The other thing I would say is this missing money problem that people talk about. The missing money theory is, as I described earlier, one of the generators sets the price, whoever’s the most expensive generator sets the price, and then all the more efficient generators get a profit from the inframarginal rents between their actual cost and the

clearing price, right? But the question is, well, the unit that’s setting the marginal clearing price, when do they make money? Okay, and this is like a very oversimplified view of how the market actually works. But that is the missing money problem is, you know, that that entity that’s setting the clearing price, they don’t get money to reinvest in capital to keep their plant running or to build new plants or anything like that. And so in theory, that’s going to put retirement risk on those plants on the margin.

The reason that is not true is because we do have administrative scarcity pricing of various types. So we have features in the market where prices are not actually set by that last unit. So when we start getting toward emergency events, there’s actually administrative pricing that kicks in, that sets prices far above any unit’s actual cost. And so it’s the ability to show up and perform during those periods

that can really drive investment for the units that can reliably perform, the types of units that can reliably perform. And from the consumer standpoint, that’s a really efficient market design. You’re only paying people to be there when you need them, to provide energy to you when you want it, and to perform when the grid needs it most. And you’re not making sort of like fixed payments, irrespective of what’s happening on the grid for a generator to just exist.

And so that’s one of the reasons that I think Texas’s market has been more efficient, lower cost, and has performed really well compared to other markets around the country.

Matt Boms (27:28.652)

That was an awesome explanation. And it’s like, I said that all the time that ultimately the rate payer is not putting themselves on the line in Texas. It’s the private investor that goes out and wants to build project. And if it doesn’t work out, it’s on them. It’s not on the rate payer ultimately. But what is on the rate payer is the transmission system. So that was a great transition there. So I wanted to ask you about all this load growth that’s happening and dominating the conversations in Texas.

I don’t think anyone knows how much of it will materialize. If you do let us know what the number is, but I think no one really has that exact number. But what are the kind of challenges and opportunities around building out this transmission infrastructure, which takes time, right? And that is on the rate payer because that’s the piece of our system that is still very much regulated by the public utility commission. like, can you talk us through.

how you can build out that transmission system efficiently and allocate the costs in a fair way.

Katie Coleman (28:27.95)

Well, so just to tie this topic into the last one, there’s so much uncertainty about these load forecasts and the demand that we’re going to see and what level of infrastructure we need to build to serve that demand in the space that’s still regulated. Okay. In the generation side, we’re allowing private capital providers to make those assessments about what they believe is real and build plants at their own risk. And can you imagine if we were dealing with this problem?

both on the transmission side on building generation plants, which in the regulated areas of the country, they’re having to deal with both. And it’s again, an area where I think a market is well suited to rationalize this behavior. And so I think the competitive generation market is gonna be an advantage for Texas as we move forward more than it even has been to date. But on the transmission side, yes, the biggest difference in what we’re seeing now

And what we saw before in terms of load growth is because of the money involved in developing an AI data center and the value of actually getting an interconnection in again, the race to market for AI companies, you’re seeing a lot of third party developers in this space that are out developing sites and they’re not going to be the customer at the end of the day. They’re trying to get powered land.

or get a site constructed and then have one of the computing company, one hyperscalers or whatever type of computing it is, but typically it’s the AI hyperscalers right now. They would then come into the site and operate there, but they’re not often the ones that are interacting with the utility. Now, some of them do self-build, but even those are often also looking at sites that are being developed by a project developer.

So the question of what is real becomes really esoteric because there’s all these steps that have to happen after a developer gets an interconnection. They’ve got to develop the site in other ways aside from electricity. Different applications need access to fiber or robust communications networks. You need gas supply. There’s all other types of things that have to happen at a site. And so you don’t have, like we used to have, a customer like

Katie Coleman (30:53.622)

a refinery or a semiconductor fab, I’m a chemical company, you don’t have that entity interacting with the utility in this sector. It’s these third party developers. And it’s this race to get powered land that I think is causing these huge numbers that nobody knows what to do with, because it’s just a new type of project development that we’re seeing at a much different scale than we ever have before.

I think ultimately we’re going to get experience with what are the indicators that really should tell you that a site is going to make. But we just don’t have that yet. It’s a new industry. new data centers are not new, but this AI application and the size and the type of development is new. And again, the presence of third parties who are developing these sites, it’s not been at this scale before. So I think that is causing these huge numbers.

Senate Bill 6 was an important step in Texas toward trying to rationalize some of these load numbers. Before, when you were dealing with the direct consumer, there was not a lot of financial commitment required in order to get a utility to study you and to sign an interconnect. Really, when you sign an interconnection agreement, there was a decent amount of security, but to get studied and to get reflected in our cuts planning models was not a big.

financial commitment until you got to the point where the utility was offering you an interconnection and you posted security for that interconnection. So that’s changing. That was probably the main thing. Senate Bill 6 changed is to require proof of financial wherewithal earlier in the process. So we’re not just getting a ton of speculation. But I think what nobody realized when we were doing SB 6 is that solves part of the problem.

That’s all sort of unsophisticated speculators who just have a piece of property with a transmission line across it they don’t really know anything else about interconnections or developing a data center. But for the companies that do actually know that they’re very cost insensitive. And we’ve seen an appetite to put up big application fees, big security. And so it has not kind of culled these numbers in the way that people expect it. And in fact,

Katie Coleman (33:14.478)

what my industrial manufacturing clients would tell you is that it’s gotten to a point where the pay to play proposals are threatening to kind of push them out of the market. So right now there’s a rule pending at the Public Utility Commission where in order to get studied and get an allocation of capacity to interconnect, you would have to post $100,000 per megawatt non-refundable security fee.

If you’re talking about one huge hyperscaler company developing a data center or a couple data centers, maybe that makes sense. I don’t really know. But when you’re talking about oil and gas and midstream companies that are developing multiple sites a year that are over 75 megawatts, and they might get a lead time on interconnection that’s three or four years. And so you’re having them post tens of millions of dollars of credit each year.

that the utility has been holding until they energize, it just gets to be kind of silly. And it’s not something that other jurisdictions do. And so I think you’re going to see possibly two types of behavior from the traditional manufacturing sector. They’re going to try to get under that 75 megawatt threshold if they can. And they’re going to look elsewhere. And again, this rule hasn’t been adopted. It’s still under consideration. But I think we’re at a point right now where we’re having to

grapple with, do we need to treat this new type of development differently from kind of the traditional industrial manufacturing development? It’s something that my clients have struggled with because we fundamentally don’t want to discriminate based on what people are doing with the power. So we really have not wanted a different set of rules because these people are doing AI and we’re doing traditional manufacturing processes. That’s been something that we’ve not.

pushed for. But I think what you’re starting to see is other potential sources of demarcations like size, like a traditional manufacturing site. There are exceptions, but a lot of them are 200, 250 megawatts or less. They’re not a gig. They’re not two gigs. And it’s really that type of behavior that’s causing, you know, a lot of the major transmission needs and things like that, as opposed to what we’ve seen again for 30 years, 50 years in Texas with the industrial sector. So

Katie Coleman (35:41.986)

I think it’s going to be a tricky needle to thread how you put appropriate financial incentives for this new type of development without really harming the traditional business sector that’s been a key part of the economic story in Texas. I think everybody’s struggling with the right answer to that.

Matt Boms (35:59.862)

Yeah, I think that’s reasonable. And you don’t want to pit certain industries against each other. And you definitely don’t want to become a state that relies just on data centers and not on any other industry. Right. So there are huge questions, I think, happening at the highest levels of our state right now. And it’ll be interesting to see how this shakes out over the next few years, because like you said, this is kind of unprecedented, right? At least in our lifetimes, like we haven’t seen this kind of load growth before. So I think it just raises new questions that we haven’t needed to ask for a very long time about.

Who gets interconnected? How much do they need to pay? Because I think probably the thing that most people don’t want to admit at this point is like, we just don’t have enough generation to meet all of this load. It’s going to take time to build it. I mean, we could definitely build enough generation, but it’s going to take some time for the transmission system to catch up to that. The infrastructure is just not there yet.

Katie Coleman (36:46.968)

Well, let me mention one thing on that, which is, you know, a lot of the data center developers and the hyperscalers themselves are interested in supporting generation development. And they are not as cost sensitive in many instances, like I said, the traditional manufacturing community. So they’re interested in bringing generation, especially if it means that they can get interconnected faster.

But there’s not right now a formal way in the planning process to give a customer credit for that generation when they’re interconnecting. The way it’s studied is, well, what if the generation’s not there? We have to plan to serve the full load or what if the load’s not there? We have to plan for all the generation to export and show up on the grid. That’s something that I think the commission has recently given really strong direction to try to come up with a way that you get credit if you’re bringing generation and ERCOT’s working on that.

But I think that’s going to be a key part of the solution going forward is if I’m building a gigawatt load and I don’t get it to interconnect any faster, if I bring my own generation, it really diminishes the incentive to do that. So I think fixing that is going to be a key part of the solution. Cause I do think people want to build stuff, not just the companies themselves for self use, but the traditional dispatchable generators in Texas. think they want to build things too.

But figuring out exactly what the load looks like and, you know, if you can get credit for having this relationship with a large customer, I think those two things would go a long way toward making that happen.

Matt Boms (38:22.85)

Yeah, the system has changed so much, right, that it’s not simple anymore as the utility brings you the poles and wires and delivers the electrons, right? Like now you’ve got these large customers bringing their own generation. That’s a huge game changer. Okay, well, as we wrap this up, moving forward, what is your vision for the Texas grid? If we could snap our fingers and just travel 10 years into the future, like what is the best case scenario here of how this all shakes out?

Katie Coleman (38:49.368)

I really am hopeful that we’ve been through a period of really rapid change and dramatic change since Winter Storm URI. And I feel like we were just kind of coming out of all of that, reassessing market design, making a lot of changes. And there was hope that this last legislative session, it was going to be a quieter session on the electricity front. And then, of course, we got these data center numbers.

And so we had a very active session on electricity again last session and now there’s ongoing rulemaking. So there’s just been a ton of turn. What I’m really hoping for, and I hear this echoed from people at the legislature and at the commission, is a period of more stability where we get these impending problems addressed and then we let things ride, let the market digest it, let people react to it.

Because I think you’re seeing right now, I mean, I every day get questions from clients trying to understand the batching process that’s going on. Just understanding what it looks like to try to get an interconnection here. There’ve been major structural changes to rates recently, and they’re considering additional structural changes to transmission rates that people are still trying to understand. Wholesale pricing, has there been significant changes in that regard?

It’s really hard to get investment of any kind in an environment that’s changing that rapidly. And so I really think the key to the long-term success of the Texas market is again, to rely on market forces as much as you possibly can and to create stability and predictability. I think that’s gonna be the key to long-term success of the market.

Matt Boms (40:32.908)

Yeah, totally. Like the companies that I talk to also are, they’re all saying the same thing. It’s just show us where the goal posts are and just keep them there for a while and that’ll help. Well, Katie, thank you so much. know you’re extremely busy and I just really appreciate the time that you took out of your day to talk with me and just share your expertise. You’re such a brilliant person and so well respected in our industry. So it means a lot that you came on to spend some time with us today. So thank you so much.

Katie Coleman (40:57.848)

Glad to do it. Thanks for the invitation.

Matt Boms (41:02.008)

Thanks for listening to the Energy Capital Podcast. If today’s conversation helped you make sense of the energy world, share the episode with a friend and hit follow on your podcast app. You can find us on Apple podcasts, Spotify, and all the usual platforms. For deeper analysis each week, subscribe to the Texas Energy Empowered newsletter at texasenergyempowered.com. That’s where you’ll find every episode, every article, and all of our latest updates. We’re also on LinkedIn.

X and YouTube, where we post clips, insights and ongoing commentary. Big thanks to Nate Peavey, our producer. I’m Matt Bombs and I’ll see you next time. Stay curious, stay engaged and let’s keep building a stronger, smarter energy future.

]]><![CDATA[Texas-California Clean Power Race Heats Up | Reading and Podcast Picks - Mar. 23, 2026]]>https://www.texasenergyandpower.com/p/texas-california-clean-power-racehttps://www.texasenergyandpower.com/p/texas-california-clean-power-raceMon, 23 Mar 2026 15:24:50 GMTReading and Podcast Picks is a collection of what we’ve been reading and listening to over the last week or so about energy topics.

In addition to these R&P Picks, paid subscribers receive access to the full archives, Grid Roundups, and select episodes of the Energy Capital Podcast. Please become a subscriber today.

Subscribe now

How blue California and red Texas became green powerhouses | Yale Climate Connections

There’s been a rush of news in recent days about the staggering growth of renewables on the ERCOT grid. Just this weekend, as Texas Public Radio noted, Texas set a new record for solar power, “generating more than 33 gigawatts of electricity for the first time.” And Inside Climate News reported this month that the state “has passed California to become the leader in utility-scale solar.”

The Texas-vs.-California comparison is irresistible. Last week, Yale Climate Connections laid out why Texas’s competitive energy market has driven so much renewables growth compared to California (it also noted that power bills in California tend to be lower, thanks in part to that state’s active efficiency program, which reduces energy spending and protects the grid):

Rather than halt the growth of renewables, the expansion of natural gas in Texas came at the expense of coal. And all of the growth in electricity generation in both states over the past 15 years has been met by solar panels and wind turbines.

Simple dollars and cents continue to propel the expansion of renewable energy in the two states.

“The economics of solar and energy storage as new resources drive them to the top” in California’s state power purchases, said Brendan Pierpont, Director of Electricity at Energy Innovation, in an email. And in Texas’s free market system, “wind, solar, and energy storage are leading the way because they’re winners economically,” there as well, he added.

The biggest difference is that Texas uses a lot more energy, including more total clean energy, despite having a smaller population than efficiency-minded California.

The U.S. Energy Information Administration recently forecast that the U.S. will install a record-shattering amount of new power capacity in 2026, with solar panels and battery storage accounting for nearly 80% of those additions. Texas is expected to install 40% of that new solar capacity and 53% of the batteries, with California accounting for a further 6% and 14% of each, respectively.

Texas utility customers brace for soaring electric bills | E&E News

While Texas renewables have lowered electricity costs, especially compared with other parts of the country, bills have been rising due to increasing infrastructure spending. In a story this morning, E&E News showed how affordable solar, wind power, and battery storage have become even more important for Texas consumers as spending on poles, wires, and other needed infrastructure keeps going up:

The rise in rates is mostly thanks to a jump in transmission and distribution costs — expenses tied to building out power poles and wires that are levied by utilities across the state. While customers in other states are seeing rising rates tied to inflation and data center growth, Texas has been saddled with additional costs.

After the 2021 winter storm known as Uri, state lawmakers mandated that electric utilities upgrade their systems to be better prepared for future storms. Utilities in storm-battered regions are charging ratepayers to help cover recovery costs.

Texas’ population grew by more than 2.5 million people from April 2020 through July 2025. And now, a growing number of data centers are seeking to plug into the grid.

A study by the Texas Energy Poverty Research Institute found that the average residential electricity price rose by 30 percent from 2020 through 2025 within the region managed by the Electric Reliability Council of Texas. And the institute’s researchers forecast it could rise by another 29 percent by 2030. ERCOT, which manages the grid that handles about 90 percent of the state’s electricity demand, is largely isolated from other states.

With AI demand surging, Texas can’t stand in the way of renewables | Dallas Morning News

Texas’s nation-leading renewable resources continually face anti-energy attacks from interests seeking to undercut the industry. With the next Texas legislative session less than 10 months away, leaders who support renewables, the grid, and the Texas economy are already bracing for attacks. In an editorial this month, the Dallas Morning News editorial board warned about the implications if those attacks succeed:

Texas is already the nation’s top wind power producer and is poised to expand solar energy and industrial battery storage this year.

But as the state grapples with increased energy demands due to population growth and the influx of large users like crypto mines and massive data centers used to power artificial intelligence, lawmakers must remain open to renewable energy.

If they don’t, Texas risks falling behind in the energy race. Texans should not find themselves short on electricity because the grid can’t keep up with demand, whether that demand comes from industry, new residents or millions of people asking chatbots to generate images and answer silly questions.

Texas will continue to need dispatchable power sources, like natural gas, but blocking other sources of energy would be a mistake. Wind, solar and battery storage are among the fastest ways to add new electricity to the grid at a time when demand is growing rapidly. …

For years, Texas has maintained a relatively hands-off approach to energy development, reflecting the state’s broader reputation for being lightly regulated. But the last legislative session introduced some bills that would have curbed renewable energy if they had passed by requiring new rules and fees on these projects. Lawmakers should be careful about adding barriers to energy development as the state wades into increased energy demanded by AI and data centers.

Texas floats plan to ease data center approvals | E&E News by POLITICO

Most of the action in Texas energy is happening in quiet deliberations at the Public Utility Commission of Texas and ERCOT. One of the big questions hanging over the spring and summer concerns the process by which data centers and other large energy users will plug into the ERCOT grid.

Read more

]]><![CDATA[SPECIAL REPORT: Texas Feels the Iran Oil Shock with Michael Webber]]>https://www.texasenergyandpower.com/p/special-report-texas-feels-the-iranhttps://www.texasenergyandpower.com/p/special-report-texas-feels-the-iranWed, 18 Mar 2026 10:06:45 GMTFor a century, the Strait of Hormuz has been one of the world’s key energy choke points. But during the past couple of decades, the U.S. relationship to the shipping lane has changed.

In this special episode of the Energy Capital Podcast, Josh Rhodes talks with Michael Webber about what the Iran conflict means now, especially for Texas. The U.S. is not as vulnerable to oil shortage as it once was, but greater energy self-sufficiency does not insulate the country from global prices.

The U.S. now produces more oil and gas than it did in the 1970s, when another energy crisis rooted in the Middle East rattled the U.S. economy. That leaves the nation less vulnerable from a security perspective.

But consumers in Texas are still tied to global markets through pricing, refining constraints, and fuel trade flows. As Webber explains, even if the country has enough energy overall, price spikes abroad can still show up here at the pump, and they can linger.

The conversation gets into a few issues that will develop over the coming weeks and months:

  • Why gasoline and diesel prices may rise with a delay, then fall more slowly than consumers expect.

  • Why U.S. oil abundance does not fully protect Americans from disruption overseas.

  • Why Texas benefits, and what’s at risk, from the state’s current energy mix.

Rhodes and Webber also stress that resilience covers a range of issues: what resources can be refined, what generation and infrastructure can be built, and how quickly the system can adapt to challenges. That spotlights variables including refining capacity, permitting reform, and the roles of wind, solar, batteries, and electrification in reducing exposure to fuel volatility.

The episode explores how Texas fits into a deeply interconnected global energy system, even after the state’s shale revolution.The unresolved question: if the disruption in the Middle East continues, where will the state’s real vulnerabilities start to show?

Energy Capital Podcast is produced by ClarityForge Studios.

Timestamps

  • 00:00 - Iran Conflict & U.S. Exposure

  • 02:29 - Why Prices May Rise

  • 03:57 - Self-Sufficient, Still Coupled

  • 06:07 - Texas Refining Constraints

  • 08:03 - SPR, Export Bans, and Policy Tools

  • 10:48 - Renewables, Gas, and Energy Security

  • 16:35 - Affordability Politics

  • 19:14 - Permitting Reform & Outro

Resources

People & Organizations

Company & Industry News

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Related Posts by Texas Energy & Power

Transcript

Joshua Rhodes (00:05.558)

Welcome to the Energy Capital podcast. This is a bit of a special edition where we’re going to talk to Dr. Weber again. We’re talking on Friday, March 13th, and we’re really kind of doing a little bit of a current events type take on the energy impacts of the current conflict in Iran and the Strait of Hormuz. Dr. Weber just published an article or an op-ed in the Houston Chronicle where he just talked about the energy implications of what that would mean for the U.S.

Joshua Rhodes (00:33.624)

So Dr. Michael Weber, welcome back to the Energy Capital Podcast.

Michael Webber (00:39.502)

Thanks so much. It was great to be here and have another conversation with you. I appreciate you inviting me. Absolutely.

Joshua Rhodes (00:43.854)

Well,

Joshua Rhodes (00:44.234)

let’s dive in. You wrote in your op-ed that the energy risks we worried about 20 years ago, like disruptions to the Strait of Hormuz, that are actually happening right now, but you argue that the U.S. might not care as much this time around. Why is that?

Michael Webber (00:58.51)

That’s right. say that first of all, the risks of the Strait of Hormuz have been known since the seventies, but really amplified as a risk in the eighties with the Iran-Iraq-Tinker war that happened in the eighties and is really the main justification for why the US Navy projects so much force there just to keep the shipping lanes open, all that kind of thing. So the risk of the Strait of Hormuz as a choke point for global commerce around oil and refined products and helium and aluminum and other things like fertilizer area, that’s been known. But what has changed is how much we might care.

Michael Webber (01:27.648)

So 20 years ago, when I studied this for Think Tank doing national security work for the Pentagon, we identified the closure of the Strait of Hormuz as one of the biggest single point risk failures the world could go through in terms of destabilizing global energy markets. But that was before the shale revolution, all these other things that happened 20 years ago. So we were really worried about what this might mean in terms of United States even getting access to the resources in the first place, plus price spikes and everything else. In the 20 years since we did that study for the Pentagon,

Michael Webber (01:54.626)

The Shell Revolution’s come through, so we have a lot more domestic oil and gas production. We’re now exporting instead of importing. We have a lot more wind and solar, so we need less domestic fuels like coal or natural gas in the power sector. The whole situation’s changed where we’ll be exposed to the risks of higher prices, but we have enough supplies. We don’t have worry about absolute supply cutoff. And that’s a good position to be in. I think we should celebrate when we can policy successes. And I would say the last 20 years have been a combination of policy successes.

Michael Webber (02:22.434)

that put us in a better national security position when it comes to disruption to Middle Eastern flows of energy.

Joshua Rhodes (02:29.122)

So Americans are already seeing higher gasoline prices and diesel prices after this escalation. You mentioned that these price spikes can often lag disruption by a week or two, but should consumers expect this to get worse?

Michael Webber (02:41.326)

I expect it to get worse and I also expect the high prices to linger for a while. So there are a couple of things that happen. The disruption happens physically. The prices start to reflect it in the futures market pretty quickly, but at the gasoline pump say a little bit later. So there’s some lag time between physical disruption and higher prices. And then there’s also lag time from when the disruptions are settled and when prices come back down. But sadly, as one of the sort of bitter ironies of life, prices go up a lot faster than they come down for variety of reasons.

Michael Webber (03:08.622)

Yep. So even if the disruptions sorted out in the next few days, I expect higher prices to hang around for a while because people have to refill their inventories and they have to price in the risk of volatility or the risk of additional tax. So high prices will be here for a little while. And I think that’s one of the things about the US situation is that we are now self-sufficient on energy. It’s not like we’re independent. We’re still coupled to the global markets and being independent is different than being self-sufficient. We’re self-sufficient. We have enough energy to run our economy, but we are connected to the global economy.

Michael Webber (03:37.614)

So even if we have the energy, if the global price goes up, our price will grow up as well. And there’s all these sort of couplings that happen to the prices, but also these lag times. So I think we got prices that’ll be high for a while. Secretary of Energy Chris Wright, it’ll be settled in a couple of weeks, not months. I expect prices to be high for a few months, but who knows? We’ll see how it goes.

Joshua Rhodes (03:57.358)

Okay. We produce a lot of oil in the US now after the shale revolution, but we can’t always refine that oil here. I mean, we import a lot of crude from other regions like the Middle East, but we also export a lot of our sweeter crude to Europe where they can actually refine it. So can you speak to how even though we produce a lot of oil now, we’re still coupled to the global markets?

Michael Webber (04:16.8)

It’s really kind of a fascinating irony in many ways that we did not foresee the Shell Revolution. And so what we saw instead, looking forward from the 1980s onwards, was more imports of heavier oils from Venezuela or the Canadian oil sands, or even like the heavy sour crude from Saudi Arabia or other places. These heavier crudes, which are more difficult to refine, but we put the money into our refineries to make the refineries capable to handle those heavier crudes. Then we find all those light sweet crude, which is like the champagne of oil, and we’re buying the beer of oil.

Michael Webber (04:46.712)

the less valuable coarser crude that we know how to refine, but selling our more valuable champagne crude. So we can sell our light sweet crude at a higher price than what we pay for the heavier sour crudes. But the challenge is even when you have an abundance of the light sweet crude in West Texas for East Texas refiners, those East Texas refiners are not fine tuned for it. So you’re exactly right. We’re exporting the West Texas light sweet stuff to other people, refineries in say Asia or Europe and importing the heavier crudes

Michael Webber (05:15.97)

to turn into jet fuels and things like that. And that’s one of the couplings of the global market. Though we have enough energy in the nation to be self-sufficient, we’re not refining our own crude into the products we need for our cars and trucks and planes. We’re still depending on the global market to provide the crude to do that. And that’s okay. Like financially, that works out for us until there’s a major disruption and we can’t get the crude we need for our refineries. And that’s a risk we have to think about.

Joshua Rhodes (05:39.234)

Well, Highlife claims to be the champagne of years, but I don’t know if there’s a... oil.

Michael Webber (05:43.402)

Yeah, so I haven’t seen that ad yet. feel like someone should do that. Yeah, the West Texas Intermediate is the champagne of beers, something like that. It is kind of a funny sort of global trade situation because you could do that with foods as well like, hey, I’ll buy your champagne if you buy my beer, is a pretty typical global trade kind of conversation to have. Or I’ll buy your really high-end cheese if you buy my low-end refined food products or something like that. So we do that kind of thing for other markets as well.

Joshua Rhodes (06:07.534)

they recently announced like a new refinery in Texas that might be able to handle this.

Michael Webber (06:12.366)

through

Michael Webber (06:12.526)

though? That’s pretty exciting. So there is a big announcement for a new refinery for the first time in 50 years, for the most part for the last several decades, four or five decades, we’ve been shutting down refineries, primarily around environmental reasons. Some of the older refineries were less efficient and dirtier. So refineries in the United States have becoming fewer but bigger and more capable and cleaner. So we have fewer refineries, but more refining capacity. And that refining capacity has lower emissions and

Michael Webber (06:39.15)

more efficient throughput and things like that, but designed for the heavier crews like we mentioned. There’s an announcement of a new refinery in Brownsville that can take the light sweet crude, which is pretty exciting. And it’s a new refinery. It’s kind of exciting because it’s been 50 years. It’s also not a new announcement. It was first proposed a decade ago and they announced their construction permits in 2024, like two years ago. So the latest announcement, it’s not really clear it’s going to be built, but there is an announcement. President Trump announced it, for example, and Secretary of the was celebrating it. It’s not even 100 % clear to me who the actual investors are or whether there are

Michael Webber (07:09.144)

the firm off-take agreements. But if there are actual investors in off-take agreements and it gets built, it will take several years. That would be pretty interesting. It would be probably good for the Texas economy and good for us to have a local user of the light-sweep crude. There’s a lot of reason to be skeptical that it’s not really going to happen, but high prices are interesting because it helps the producers, but high prices make it harder for the refiners. And so a high price environment might not be a great time to build a refinery in terms of high price crude, except that

Michael Webber (07:39.15)

Jet fuel and diesel and gasoline prices are high, so the product prices are higher, so then it would be a good time. And if you can’t get the crudes, like if the Gulf Coast refiners can’t get the heavier crudes, and you have a refinery that can get the light-sweep crudes, it might be competitive advantage. So it’s all pretty complex. It takes a lot of risk, and that’s why these things cost billions of dollars and require 20-year off-take agreements. But there’s a long way to say that if it gets built, it’ll be the first new refinery in decades, and we’ll see if it gets built.

Joshua Rhodes (08:03.534)

Fair enough. So the administration has just ordered a release of oil from the strategic petroleum reserves after the Iranian attacks on shipping. Is this the right tool in a situation like this?

Michael Webber (08:13.346)

The SPR, the Strategic Petroleum Reserve is one of the right tools. It’s actually a tool that was custom designed for this exact situation. After the supply cutoffs in the 70s, happened in the early 70s and late 70s for different reasons, but the same region, the United States and other importing consuming countries all came to realization that there’s a vulnerability depending on a handful of countries for oil if those countries decide not to sell you oil anymore. So that was what led to the creation of the International Energy Agency primarily to coordinate

Michael Webber (08:43.244)

strategic petroleum reserves around the world and coordinate their release. So the SPR was developed first in the seventies and really expanded over a couple of decades for this purpose. And releasing oil from the SPR to settle price spikes or to fill a physical gap of deliveries is exactly what’s designed for. This is the right tool for the job. It’s also not a sufficient tool for the job. Meaning like you’re going to need other tools. Like it’s one of the tools, but we need to think about efficiency and fuel switching and

Michael Webber (09:10.978)

alternative routes for delivery. And there’s all sorts of things we need to do. This is one of the important ones because we can do it quickly. But if there’s a sustained outage or sustained disruption at the Strait of Hormuz, there’s not enough oil in the SPRs around the world to really fill that gap if it’s a multi-month situation. If it’s a few weeks, we’re good. If it’s months or years, we’re going to have to find alternatives.

Joshua Rhodes (09:33.112)

That’s a good point. It’s not only the US has an SPR, they’re SPR’s equivalents around the world,

Michael Webber (09:37.858)

Yeah, China, Japan, lot of European nations. United States has a very big one, so ours is very relevant. And just the announcement that the United States and other countries would release some oil kept oil prices down. And that release hasn’t even happened yet, I don’t think. It takes a while to get the oil out. But just the announcement itself was enough to calm markets a little bit.

Joshua Rhodes (09:55.416)

got it. You know, whenever gasoline prices spikes, sometimes there’s political calls for the US to restrict oil exports. And we’re hearing that again, like we’re talking about stopping oil exports. given what we talked about just a minute ago, would banning exports actually do anything or lower prices?

Michael Webber (10:10.894)

I don’t think banning exports would lower prices and it’s really kind of amazing to have President Trump say that oil and gas industry does not want that solution. Right. And he presents himself as like a friend of the oil and gas industry and they’re like, okay, that’s not the statement we want you to make. So I think economists don’t like that idea. think national security people don’t like the idea. The oil and gas industry doesn’t like it. I think in the end it wouldn’t even work. Frankly, we tried that after the 70s. We put a ban on exports and that wasn’t the appropriate solution. That would have been better just to increase domestic production or

Michael Webber (10:39.424)

implement more efficiency to reduce consumption. I don’t think that will actually become policy, his announcement to ban exports. I think there’s too much resistance, but you never know these days.

Joshua Rhodes (10:48.502)

Yeah, fair enough. You know, argue that in the op-ed that deploying more wind, solar, and batteries can actually strengthen national security in times like these. How does building more renewables help in a crisis like this?

Michael Webber (10:58.734)

There are a couple of things about renewables that are really handy for something like this and primarily in the power sector, if we look at wind and solar, they displace our demand for natural gas, which means we have more natural gas we can export to global markets. Gas prices are going up because LNG is disrupted as well. LNG is a liquefied natural gas and Qatar in the Middle East is a major LNG exporter. If they can’t get their LNG to market, then global gas prices will go up. Our domestic gas prices are lower than the global price, but they’ll be affected by that a little bit.

Michael Webber (11:27.67)

If global price has gone up and we consume less gas here, that frees up some volumes for us to export. So we can sell it to our friends in Europe or Asia and help out our ally while also making a handsome profit. So it’s a good moneymaker for us. The more wind and solar we have in the grid, the more gas we can sell. We also have coal in the grid. We’re mostly shutting down coal, but coal can ramp up for months or years at a time to help offset some of the gas needs as well. But it’s hard to build a new coal plant.

Michael Webber (11:54.764)

Meanwhile, we’re building a lot of wind and solar. So wind and solar is immediately a benefit in terms of freeing up how much gas we use, but it also is something we can build on the order of 18 months to 24 months to get new construction in place. It doesn’t take 10 years to build the way it does for nuclear, for example. So we can ramp up on this production if we think this is going to be a sustained disruption.

Joshua Rhodes (12:14.476)

Yeah, one of the things you and I were talking about the other day is like the possibility for high oil prices to actually incentivize more or potentially lower natural gas prices because a lot of natural gas production, particularly in Texas, is associated with oil. And so the higher the oil price, the more oil production, maybe the more gas it gets, but then maybe the more exports. Do we know which where that falls?

Michael Webber (12:35.628)

All of it, everything you say is possible. So these price spikes might lead to a glut, which leads to low prices. That might be a uniquely American situation because we have so much domestic production. But if we take what you said and carry through, there’ll be high oil prices, which means we’ll drill more. So we’ll get more oil. We’ll produce more gas, which will lead to a supply glut, which leads to lower gas prices. But there are also high gas prices and those high gas prices will lead us to build more wind and solar to use less gas, which means there’s even more of a gas glut.

Michael Webber (13:05.294)

So the high gas prices and the high oil prices might simultaneously lead to more gas production in the United States and less gas consumption, which will then lower the prices. And this is the problem with oil and gas. The world is, it’s kind of complicated because high prices will bring on the solutions to the high prices, which will lower prices and the solutions are less consumption, more production. But low prices will also lead to higher prices because if you have low prices, you’ll produce less but consume more.

Michael Webber (13:33.868)

and eventually you get a scarcity situation, prices go back up. So it’s hard for me to really anticipate, but the geographic tension with the United States is the West Texas oil will be produced getting associated gas kind of for free, but the shale production say in Pennsylvania is really just gas. And so as we’ve been drilling less for oil in the last year, one of the consequences of the Trump administration is less oil drilling. We’ve been doing more gas drilling in Pennsylvania.

Michael Webber (14:00.094)

And then the question is like, okay, in a high oil and gas price environment, do those drilling rigs come back to Texas to produce oil, giving you gas for free? Because it’s associated gas? Or do they stay in Pennsylvania and keep drilling gas because gas prices are high? Or do we just do more drilling of everything, right? All of these things are possible. But I think any way you slice it, probably our prices are lower than in Europe and Japan. But whether prices collapse again, that’s hard to predict unless there’s like some real global economic collapse and then prices will drop for sure.

Michael Webber (14:30.018)

But yeah, I think you’re exactly right that higher prices for oil will lead to more oil production, which leads to more associated gas. If you can get that gas to market because of new pipelines, in which there are some, then gas prices should stay relatively mild and won’t spike as much.

Joshua Rhodes (14:43.98)

fascinating. You know, one of the things that I’ve kind of always said about energy is like, no one really wants energy, they want the things that energy gives us, right? And so I was talking the other day or conversing with folks online about if you want to be insulated against high gasoline prices, then get an electric vehicle. And some of the things we’ve been talking about, like a lot of those fuels like natural gas and renewables that kind of flow into the electricity sector, is that the right argument to make? Would that make us more resilient against these types of events?

Michael Webber (15:09.71)

Absolutely. So I think the technologies to consider are not just wind and solar or more domestic oil and gas production. It’s also in the consuming appliances and electric vehicles are a classic example of this. By using electric vehicle, I reduce my exposure to gasoline prices. Like I just don’t have exposure to gasoline prices. Right. But I do have exposure indirectly to natural gas prices in the power sector. So if the higher oil prices are accompanied by higher gas prices, which seems to be happening to run by gas, I natural gas, not gasoline.

Michael Webber (15:38.57)

If natural gas prices are higher, then power prices should be higher, which means mileage of vehicle will have some exposure. But what we find is electricity price spikes are not anywhere close to the same thing as the wholesale commodity price spike. So crude oil and natural gas and gasoline prices can really spike. They can go up by factor of two or in some cases factor of 100, like in Winnerstorm, URI. But retail electricity prices don’t spike.

Michael Webber (16:03.586)

we have a rate making process that protects consumers, especially retail residential consumers, which is who most of us are when we’re charging up our electric vehicles. We don’t have price spikes. And so even though the wholesale price for electricity might be going up because the wholesale price for gas has gone up, the price you and I pay to charge up electric car probably has not spiked. So we’re protected through a rate making process. So it is a great hedge against this. And my costs for my car aren’t gonna go up with these price spikes.

Michael Webber (16:31.114)

If they happen for years, maybe it’ll take a while to adjust the rates. But I think it’s a great individual level hedge we can make. You could say the same thing about electric heat pumps instead of natural gas furnaces and electric cooktops instead of gas burners and things like that. By going electric and having a rate making process that’s designed to reduce exposure to high price spikes, we’ll be fine.

Joshua Rhodes (16:53.388)

Yeah, and I always think about there’s really only one one economical way to make gasoline and diesel is using oil, but there’s like dozens of ways to make electricity.

Michael Webber (17:02.7)

Yeah, it’s got a built-in diversification, a built-in hedge, right? It breaks the monopoly of any one particular fuel or technology, which means that the consumers have power on this, not just the producers, which is really handy. And if you look at transportation, light duty vehicles in particular have been dominated by gasoline historically in the United States, heavy duty trucking dominated by diesel and planes dominated by jet fuel. They can’t electrify or find alternative fuels very easily.

Michael Webber (17:28.886)

At our home with our electrons, we have so many choices, some of which are on a rooftop or our backyard, some of which are at the local utility, maybe dozens or hundreds of miles away, but we get a lot of options and that’s a nice built-in hedge for these kind of uncertain times.

Joshua Rhodes (17:41.902)

is interesting about the timing of this and like how long things may go. There’s already political unrest around like rising cost of energy. And so as we’re kind of heading into like a political season, is this going to be a big player? Is it going to be a big impact?

Michael Webber (17:54.69)

I think it will be. think the electricity affordability crisis is already a political issue. I think it will remain a political issue for the elections in November because I expect prices to be high for months. Even if prices aren’t high for months, the lingering memory of it will show up at the ballot box is what I expect. That was one of the main reasons that Trump won. He ran on a platform of affordability. He used that to beat up on his opponent, Kamala Harris, and that was successful. So think a lot of people will take a page from that playbook and say, okay, well,

Michael Webber (18:24.054)

running on affordability of eggs or milk or other food items, but also energy will be something that I expect candidates to run on. We’ve seen it already a little bit. There was an election a year ago, so in Georgia, where the statewide elected official for the public service commission, like the Public Utility Commission in Texas, was thrown out of office because of concerns around electricity rates. And usually the statewide commissioner positions are not one that people pay lot of attention to politically, but...

Michael Webber (18:50.728)

That was when we’re like, they flip the party and throughout the incumbent, all this kind of stuff. So clearly there was some anger there and that might be a preview of what’s to come. And we don’t often get to vote on the commissioners themselves who regulate energy. Some states do, some states don’t. And so I think if people are grumpy, they’ll take it out on whatever people they can vote for or vote against. So I think it will be an issue. think it is an issue. think it’s already showing up at the ballot box. I don’t expect that to change by November.

Joshua Rhodes (19:14.154)

Okay,

Joshua Rhodes (19:14.465)

last question. If you were advising policymakers right now, what’s the single most important energy policy decision that they can make?

Michael Webber (19:20.366)

I think the best thing we can do right now is permitting reform to get more stuff built quickly. These supply disruptions and price spikes are a reminder that being able to have your own supply, which means your ability to build things, which could be power plants or oil and gas production or pipelines or transmission lines, all of that is important. So we got to get things built. And another thing, if I can take a second point, just say we’ve actually had some pretty good success the last 20 years, increasing domestic production of oil, gas, wind and solar, batteries, things like that, and reducing consumption.

Michael Webber (19:49.374)

Our consumption per person and per dollar of unit of economic activity are down because of efficiency. So let’s keep the successes going. Let’s not give up on the things that have been working for us. And let’s get a lot more things built.

Joshua Rhodes (20:01.166)

I’m Michael Weber. Thank you for coming on the Energy Capital Podcast.

Michael Webber (20:03.751)

Thanks for the real-time current offense discussion.

Joshua Rhodes (20:06.67)

Absolutely, it was great.

Joshua Rhodes (20:10.126)

Thanks for listening to the Energy Capital Podcast. If today’s conversation helped you make better sense of how the energy system actually works, share the episode with a colleague and hit follow on your podcast app. You can find us on Apple Podcasts, Spotify, and all the usual platforms. For deeper analysis and context each week, subscribe to the Texas Energy and Power at texasenergyempower.com. That’s where you’ll find every episode, every article, and our latest updates. We’re also on LinkedIn, X, and YouTube.

Joshua Rhodes (20:39.48)

where we share clips, insights, and ongoing commentary on energy policy, markets, and the grid. Before we go, a quick note. The views expressed on this podcast are my own and do not represent the official positions of the University of Texas, Ideasmiss, Austin Energy, or Columbia University. A big thanks to Nate Peevee, our producer. I’m Joshua Rhodes. Thanks for listening, and we’ll see you next time.

]]><![CDATA[Top 5 Potential Federal Roadblocks Facing Texas Renewables]]>https://www.texasenergyandpower.com/p/top-5-potential-federal-roadblockshttps://www.texasenergyandpower.com/p/top-5-potential-federal-roadblocksThu, 12 Mar 2026 13:59:31 GMTWhile Texas depends more than ever on renewable energy to keep the lights on, the U.S. Department of the Interior (DOI) is changing how renewable energy projects are reviewed and approved.

As the New York Times has reported, new Interior directives are creating a regulatory environment with slower solar and storage project reviews, new approval processes, and unfamiliar evaluative standards that did not exist a year ago. Those changes extend beyond federal land, wrapping in some projects on private property as well.

As a result, tens of thousands of megawatts of planned energy development in Texas could face delays.

The changes come as Texas’s nation-leading renewable resources grow increasingly essential for the state’s power grid. On some afternoons, affordable solar power supplies about half the electricity in ERCOT, which is especially important in the heat of the summer as temperatures and air conditioners crank up. Battery capacity, which nearly doubled last year, provides an instant, reliable power boost, especially as the sun sets but demand remains high. And wind power delivers vital low-cost energy to counter increases to Texans’ power bills.

These resources have helped ERCOT avoid emergency conservation alerts for nearly three years, even as peak load approached new records.

But under the new federal rules, the continued growth of renewable resources is in jeopardy – even in Texas.

The Solar Energy Industries Association reports that Texas accounts for nearly 40 percent of all solar and storage capacity that’s now at risk nationally due to the regulations. More than 28,000 megawatts of planned solar and battery projects could be blocked this year and next.

Here are five important changes the Trump administration has made over the past 14 months that threaten to slow development of renewable energy in Texas:

Read more

]]><![CDATA[Build Fast or Fall Behind with Michael Webber]]>https://www.texasenergyandpower.com/p/build-fast-or-fall-behind-with-michaelhttps://www.texasenergyandpower.com/p/build-fast-or-fall-behind-with-michaelWed, 11 Mar 2026 10:09:38 GMTFor a long time, the basic story in U.S. energy was stability. Demand growth had flattened, efficiency was doing more work than most people realized, and expansion was steady.

Not anymore.

In this week’s conversation, Josh Rhodes talks with Michael Webber about what may be the most important shift now underway in energy: the dramatic growth in electricity demand, in Texas and beyond. Data centers are a big part of the story, but not all of it. Electrification, industrial growth, and population growth are also fueling the need for more energy.

In this episode, Webber notes that energy progress moves fastest when markets, policy, and engineering align. That is true for shale development, and it may be true again with the coming growth of the grid.

Texas is well-positioned to lead this next stage of energy development — we have a strong energy base, growing demand, and a mix of technologies competing to meet it. Josh and Michael talk through why geothermal power is gaining attention, why nuclear expansion plans feel different this time, and why wind, solar, storage, gas, and transmission remain essential.

They also address a problem that is becoming hard to ignore: new load can be built faster than new generation, and new generation can be built faster than transmission. That mismatch is showing up in transformer backlogs, turbine supply constraints, and growing pressure to move much faster than some energy executives are used to.

n many cases, the challenge Texas faces is not a lack of energy throughout the year — rather, it’s a shortage of power during a relatively small number of peak hours. That has real implications for cost, reliability, and what kinds of loads and technologies make sense for ERCOT.

Tune in to hear Michael and Josh talk through those challenges — and opportunities.

Energy Capital Podcast is produced by ClarityForge Studios.

Timestamps

  • 00:03 – Introduction & Michael Webber Background

  • 01:14 – The Energy Three-Body Problem

  • 04:16 – Shale Revolution & Forecasting Misses

  • 08:42 – Webber’s 2029 Energy Predictions

  • 09:42 – Why Efficiency Still Matters

  • 13:37 – Gasoline, Natural Gas & Texas Exports

  • 18:13 – Electrifying the Texas Oil Patch

  • 19:45 – Why Webber Is Bullish on Geothermal

  • 23:32 – Nuclear’s New Momentum

  • 26:27 – The Three-Part Energy Transition

  • 33:30 – Scarcity, Flexibility & Data Centers

  • 39:11 – Build Faster, Then Career Advice

  • 45:15 – Closing & Outro

Resources

People & Organizations

Company & Industry News

Books & Articles Discussed

Related Podcasts by Energy Capital

Related Posts by Texas Energy & Power

Transcript

Joshua Rhodes (00:03.726)

Hey everyone, and welcome to the Energy Capital podcast. I am really excited to have Dr. Michael Weber on to talk about, well, energy. He’s an energy guy, and I’m really excited to talk to him about energy and Texas energy and all kinds of things. Most of you probably know Michael, but just really quickly, he’s got a PhD from mechanical engineering from Stanford. He’s worked at Rand, various clean energy incubators, really been in kind of the energy space for a long time.

Joshua Rhodes (00:32.472)

But really the kind of the main areas right now that Michael’s he’s a double chaired professor at the University of Texas, which is pretty rare thing. The Sid Richardson chair at the LBJ School of Public Affairs and the Cockrell family chair number 16 in mechanical engineering. He’s a former CTO at Energy Impact Partners, which is a big climate clean tech venture fund and a former chief science and technology officer at Engie, one of the world’s largest energy companies, as well as a founding partner of Ideasmus upon which he and I work together.

Joshua Rhodes (01:01.688)

So he really sits at the intersection of engineering and policy and commercialization. Welcome to the Energy Capital Podcast.

Dr. Michael Webber (01:10.008)

Thanks for having me. Very excited to be part of the conversation today after being a long time listener.

Joshua Rhodes (01:14.574)

And so you really are kind of like a rare three world energy person. I mean you’ve kind of like gone across the spectrum from engineering to policy and you know commercialization. One of the things that this actually reminded me of and I’m gonna go off script almost immediately is kind of like the three body problem. You’re familiar with the three body problem in classical mechanics is that it’s basically impossible to predict the motions of three things that are gravitationally

Joshua Rhodes (01:42.786)

connected to each other at the same time. you feel this way in your three worlds? An engineering policy in the technical space? Like, is it similar?

Dr. Michael Webber (01:51.34)

That is a great orbital mechanics reference. did my undergraduate degree in aerospace engineering at UT. I took a class on orbital mechanics from one of the famous professors, Zabihay. Professor Zabihay taught that. And we could solve the two-body problem. You cannot solve the three-body problem. You can only approximate it. So you’re exactly right. And it does feel like this tension between engineering policy and markets or commercialization are in tension where you can’t completely solve the problem with all three. Although in orbital mechanics, you do get alignment if one’s swallowed.

Dr. Michael Webber (02:19.47)

where the planets align or the different celestial bodies align. And in my observation, at least in the United States, things work best when policies and markets and innovation are all aligned. If they’re all pointed the same direction, amazing things can happen very quickly. And so I like this sort of idea, like you can’t solve it perfectly, you can kind of get close, you can do some numerical approximation, but sometimes you have alignment. And if you have alignment, then great things happen. So let me give an example of that from like 2005 to seven timeframe, the Energy Policy Act of 2005.

Dr. Michael Webber (02:49.454)

in other things were happening where the policies were calling for more domestic production. We more natural gas in particular. The markets were calling for more natural gas production. Natural gas prices were quite high, say 2003 and other years. So the markets were calling for more natural gas. The policies were calling for more natural gas. And the innovation engineering was also unlocking a lot of new natural gas, which was a combination of technologies of hydraulic fracturing and horizontal drilling. So we had engineering policy and markets all aligned.

Dr. Michael Webber (03:16.044)

The world flipped, the whole shale revolution of producing so much oil and gas in such a sudden turnaround flipped geopolitics on its head. Where we went from LNG imports to exports, we went from feeling at the mercy of foreign countries for their oil and gas production to feeling a little more confident on the energy stage globally. That was a remarkable instance where things aligned. And we don’t have that very often in energy, frankly, for the decades before that.

Dr. Michael Webber (03:41.164)

We had groups calling for less production because of environmental concerns. have policies that inhibited production. The markets and innovation work there. So we often have misalignment, though when you have alignment, it goes quickly. And that’s another cool thing from Celestial Mechanics. So maybe we should write an article that says, what Celestial Mechanics teaches us about the energy three-body problem. That’d be a great op-ed. Let’s write that essay.

Joshua Rhodes (04:00.239)

Like we’re getting work done immediately even when we’re doing a podcast. This is great.

Dr. Michael Webber (04:04.204)

Yes, our to-do list just grew though, unfortunately.

Joshua Rhodes (04:07.106)

folks

Joshua Rhodes (04:07.307)

are interested in Three-Body Problem, there’s actually a Netflix series on it right now based on a series of books that have been written.

Dr. Michael Webber (04:13.026)

Yeah, and I feel like I should watch it. I hear it’s violent though. I don’t know. So we’ll have to check it out.

Joshua Rhodes (04:16.91)

I read the first book. I think there’s three of them, which of course there would be three, a trilogy on the three body problem. But it is on my list of things to watch. So that was interesting that we immediately got into a situation where we’re talking about fracking just a minute ago. If you had gone just a few years before that, no one saw that coming or very few people saw that coming. I did an exercise once where I went back and looked at all of like the annual energy outlooks from the EIA in like early 2000s. And you know,

Joshua Rhodes (04:44.47)

natural gas was on the decline. were going to be importing natural gas. Like LNG imports were like big chunks of charts. Coal consumption was going up. And then, boom, this thing happened. Hydraulic fracturing that no one was really thinking about or people didn’t see, weren’t predicting. And it completely flipped the script, as you say. We started turned around import terminals and, you know, turned them into export terminals and, you know, made us one of the energy powerhouses of today.

Dr. Michael Webber (05:09.166)

So the era of say like 2001 to 2007, it was a uniquely bad era when it comes to EIA forecasting. And I’m not trying to pick on them because what they do is very hard and they’re better at it than anybody yet they were wrong. They were wrong on top level energy consumption. Like they thought energy consumption was going to increase forever in the United States.

Dr. Michael Webber (05:30.51)

The EIA forecast were particularly bad. They thought top level energy consumption was going to grow forever. They failed to anticipate the effects of efficiency, for example, with the light bulbs and cars and other things. They missed on the fuels. They missed on whether it’s imports or exports or whether it’s domestically produced. A lot of mistakes were made. And that’s something we should all keep in mind and use as a source of humility. It’s easy to be wrong about the future of energy when making predictions. So let’s keep that in mind. The first I heard of shale in eventually hydraulic fracturing was in 2007 from a man named Robert Heffner.

Dr. Michael Webber (06:00.174)

who is a very famous sort of producer of gas, especially, but only gas in Oklahoma. He and I were at a conference together. He gave a presentation of the Shell resource in the United States and how much energy is there. And I was like, I’d never heard of this. So I heard about it in 2007. Then T. Boone Pickens, another Oklahoman, came to Texas, UT, and gave a lecture around 2008. And he talked about it. So Shell really hit my radar in 2007, 2008. It had been on policymakers’ radars in 2005, the Energy Policy Act of 2005.

Dr. Michael Webber (06:29.934)

had some clarity around how hydraulic reaction would be regulated. And they clarified that it would be the states would regulate it to the federal government. People called that the Halliburton loophole. Dick Cheney could put that into place. Dick Cheney from only guess since she knew it very well. So it was certainly on the radar of industry. It was on the radar of policymakers and a few wildcatters, but it wasn’t on my radar until I heard them talk about it. And then so to my eye, the shale revolution was really born from around 2007, 2008. It really took off around then.

Dr. Michael Webber (06:58.862)

from basically a zero dollar industry in 2008 to $150 billion a year in 2019. So it from zero to 150 billion in 11 years. And then if you dig into history, people like George Mitchell and Mitchell Energy or Devon Energy have been trying it since the seventies or the eighties. If you go back in time, there was dynamite fracturing in the 1860s and 1880s. wasn’t hydraulic fracturing. So we’ve been knocking on the door for quite some time, but it didn’t really hit the poppet of conscience even for energy analysts like me.

Dr. Michael Webber (07:25.856)

until 2007 or so. So there were a few people who saw it. There are a people who were evangelical about it, sort of preaching that it was going to change things. And they ended up being correct. But I feel like a lot of people missed it. I feel like Exxon Mobil missed it. Like some really big companies didn’t have a place. So they had to do an acquisition. They had to buy their way into it at the top of the market. So a lot of us missed it. But there were a few people who were singing it from the rooftops. And that’s something for us to keep in mind that the conventional wisdom could be wrong.

Dr. Michael Webber (07:54.178)

but there’s always someone who’s got some idea of the future, they might be right, there’s also a lot of people wrong who are seeing it from the rooftop, so we can’t believe all of them. But hydroelectric fraction really changed things quickly.

Joshua Rhodes (08:02.914)

Didn’t in the 70s we also try to do it with nuclear? Didn’t we try to do nuclear bombs?

Dr. Michael Webber (08:07.086)

Yeah. So there was projects to put nuclear down hole in the seventies to do fracturing. There were a lot of down hole nuclear tests for weapons purposes, but also for energy production. In the seventies, there were a couple of oil crises. like, let’s try everything. Let’s turn coal into liquid. Let’s try gasification. Let’s put nuclear down holes. See how that goes. We looked at nuclear aircraft that made people nervous. So there was like all sorts of things we tried in the seventies. Some were goofy. Some ended up leading to the development of hydraulic fracturing, which ended up

Dr. Michael Webber (08:34.689)

been very beneficial in solar and wind got their start in 70s. Didn’t really make sense for decades, but we fiddled around with it back then as well. Yeah.

Joshua Rhodes (08:42.83)

No, absolutely. So now that we’ve talked about how hard it is to get things right, I kind of want to put you on the spot a little bit because you’re a bit famous or infamous, I don’t know, depending on how you want to say it, for making predictions about the future. But I appreciate you willing to talk about the predictions after you’ve made them because I most people make them and then try to forget them, right?

Dr. Michael Webber (08:59.086)

Dr. Michael Webber (08:59.387)

That’s right, and I write them down and I publish them and so everyone can hold me accountable which is I think silly. I’ve made but anyway here we

Joshua Rhodes (09:06.656)

are.

Joshua Rhodes (09:06.946)

Yeah, here we are. about a year ago, roughly, you made some predictions about kind of where US energy would be in 2029 or so, kind of at the end of the Trump administration. Let’s just take like intermediate step on these and just kind of see how they’re going and if you would change them or if you’re still bullish in the direction that you’re going. One of the first ones you said is you said you think that national energy consumption will decrease, which is kind of counter in terms of

Joshua Rhodes (09:35.65)

We’re talking about data centers and electrification, like building out all this infrastructure. So what do you mean by that? And do you still stand by that?

Dr. Michael Webber (09:42.798)

So the context was it was April 19th, 2025. So we’re at the end of three months of the Trump administration. So by the end of three months, had a pretty clear view of what the Trump administration’s energy priorities would be. And not really many surprises. They were the things that he said he would do in the campaign trail. And so trying to flash forward, OK, at the end of the Trump administration, which is four years, so three years and nine months remaining when I wrote this on LinkedIn, what will the energy situation be in United States on January 20th, 2029?

Dr. Michael Webber (10:09.862)

And I think I stand by all my predictions. I haven’t really changed my mind, but we can go through them. the first one is your point out, and I’ve even tagged this or pinned it or bookmarked it whatever on LinkedIn so people can come back and make fun of me when I’m wrong, is that national energy consumption will decrease. And primarily, that is my hat tip towards energy efficiency. That efficiency will continue to be deployed and that despite population growth and economic growth, we will use less energy as a nation four years from now.

Dr. Michael Webber (10:37.922)

than today, well, I three years from now, but at this point, because of the new devices we are implementing and the ones that come to mind for you like electric cooktops, electric heat pumps, electric cars, more efficient industry. We already have better light bulbs. So we already done what we can there, but we have more ways to do things that accommodate even the low growth of data centers because we’ll have so many savings elsewhere. If we just take cars and the electrification of cars and despite Trump and despite policies that are not friendly to electric cars, electric cars are growing in their adoption.

Dr. Michael Webber (11:07.534)

might not be fully electric, it might be electrified drive trains like hybridized drive trains, things that will reduce the amount of gasoline and diesel we need to move about. Plus we have work from home and zoom and other things. So we have a variety of ways that our gasoline consumption will drop. It actually peaked in 2018, will continue to drop. the electricity we use in place either for working remotely or for electric cars is all more efficient. We use less energy. And so we can get a couple of percentage points of savings just on light duty vehicle transportation.

Dr. Michael Webber (11:35.374)

and then add this to the devices, we’ll get some savings. And in fact, I think efficiency is the unsung hero of the last 25 years. In the last 25 years, the United States, our energy consumption has been level or dropped, but our population has grown 20 % and the economy has doubled or tripled, depending on whether you look at nominal or real terms. So I think we’ll continue to have population economic growth, but energy consumption will drop, primarily because of this efficiency play. I stand by that. I think that’s gonna be the trend that continues.

Joshua Rhodes (12:00.418)

You think it’ll be resilient even in terms of the rollback of the endangerment finding?

Dr. Michael Webber (12:04.044)

Yes, so the endangerment is a very big news. So endangerment findings been rolled back. We’ll also have a lot of lawsuits that will go to the Supreme Court. Who knows what the Supreme Court says. Sure. But I think at this point, the endangerment finding really drives EPA decisions, for example. Yeah. But it doesn’t drive all the market decisions and the market decisions are going to go by what’s easiest or cheapest to build. And that’s not going to be a coal plant. Yeah. And coal plants, even if they don’t have endangerment finding for CO2, do have to deal with ash and NOx and SOx, the precursors to acid rain.

Dr. Michael Webber (12:31.65)

And they have to deal with mercury and the mercury rules are from the Bush administration. Those rules aren’t going away. And so no one’s going to build new coal. And then we have all this gas and wind and solar batteries that are cheaper than coal. So we’ll shut that down and even cheaper than gas in some cases. And then if we look beyond the Trump administration to the rise of geothermal nuclear. So I think endangerment finding is kind of sand in the gear. I’m going keep using that phrase probably in our coverage. Sand in the gears, it slows down the progress, but doesn’t stop the progress. We’re still going to move towards cleaner stuff.

Joshua Rhodes (13:00.492)

Yeah, I I think for a lot of our industry to be competitive in the global market, if we’re going to be at trade parity with other countries, they’re not going to want to buy stuff that they can’t use that’s less efficient, right?

Dr. Michael Webber (13:10.062)

I mean, maybe the Trump administration doesn’t care about CO2, but customers in Europe do. Right. And so people making products here for European market or Japanese market, you name the market that cares about CO2, there are several, they sell to clean up the supply chain to satisfy that market. So I think those fundamentals haven’t shifted. In fact, Europe’s now got the C-band, the carbon border adjustment mechanism. So there are even policies in place that will push for cleaning things up, even if those policies aren’t domestic out of DC. Yeah.

Joshua Rhodes (13:37.582)

You touched a bit on oil consumption, gasoline consumption. One of the predictions you made is gasoline exports will increase. So where are we going to send that gasoline?

Dr. Michael Webber (13:45.902)

Yeah, so there’s a phenomenon going on right now for the oil and gas world where half the products laid out of a barrel, the barrel goes of crude and the refinery comes out roughly half gasoline. The other half is diesel, jet fuel, waxes and tars and things like that. The demand for diesel and jet fuel is increasing, but the demand for gasoline domestically is dropping and has been dropping. We’re in year eight of the drop of gasoline. And so that means gasoline will be cheap. So gasoline is pretty cheap in the United States right now. And that will slow down the adoption of electric vehicles, but not stop the adoption of electric vehicles.

Dr. Michael Webber (14:14.902)

So I expect we’ll dump cheap gasoline on the world markets to other customers around the world who might want it for their light duty transportation and older cars or other purposes. So I’m thinking to sub-Saharan Africa or other markets around the world that would be happy to have the gasoline, they’ll export it. Now that might be a uniquely American problem because the refineries in Europe already produce more diesel and jet fuel than gasoline. So they’re less at risk for this problem. The American refineries have been tuned for a hundred years to produce more gasoline. So I think we’ll have to...

Dr. Michael Webber (14:44.61)

find other markets for it. We still need our diesel and jet fuel. So the refinery is going to keep running. And they’ll have this excess gasoline, which will lower prices. We’ll find someone for it potentially.

Joshua Rhodes (14:54.742)

Yeah, I guess similar for natural gas, like you predict natural gas production will increase and LNG exports will increase. I similar things are that like finding customers and

Dr. Michael Webber (15:03.886)

And there are lot of customers for natural gas globally. There might be more customers for natural gas than gasoline. The way I think about it, I feel like we’re entering a natural gas era. had a wood era, coal era. We’re in an oil era. Natural gas might have overtaken oil in terms of consumption in the United States last year. If not last year, probably this year. We just are producing so much gas. We consume so much gas, but we produce more than we consume. So we have gas that we can export to customers in Europe or Asia who are happy to have it.

Dr. Michael Webber (15:32.014)

For us, that’s good because they might use that gas to displace some coal, or they might use that gas to make electricity to displace some gasoline in those countries, and that would be good for the environment. So I think natural gas as a nation, we’re leaning in, in the Trump administration. People are very angry about the Biden administration, but frankly, natural gas production and consumption grew a lot under the Biden administration as well, and in the first Trump administration, and under the Obama administrations. So natural gas has been on the rise, has been ascended for a while, and I’ll see that stopping anytime soon.

Dr. Michael Webber (16:00.586)

maybe in a few decades, but it looks like the next five or 15 years natural gas. That’s a really good run ahead of it.

Joshua Rhodes (16:06.232)

absolutely. I think we’ve been talking about this in more of kind of a US context. Like, what do you think this means for the traditional energy production in Texas and how these like new exports and other things like that? Like, what does that mean for Texas here?

Dr. Michael Webber (16:19.352)

Texas has a good export capacity. We actually all have the ports. We have the LNG refrigeration trains. We have a lot of pipes that can move the oil and gas from West Texas or Haynesville or wherever to the ports. We can export to other states in the United States, not just other countries. So Texas is in a position. But if you look at the oil and gas policies under Trump administration, they’re actually not so good for oil and gas. In particular, they’re bad for domestic oil drillers. So oil drilling is down 20 % or something in Texas.

Dr. Michael Webber (16:47.638)

gas drilling is up 10 % nationally. so drilling overall is down say 10 % nationally. The rise has been in gas, the decline in oil, and that gas drilling is mostly in like Pennsylvania. The gas we produce in Texas is mostly, least in West Texas, mostly associated gas. It is the gas that is associated with oil production. So as long as we’re drilling for oil, we will have a lot of gas in Texas from the West. But if we...

Dr. Michael Webber (17:12.462)

drill less for oil or produce less oil, we will eventually have less natural gas in West Texas. The Haynesville areas in East Texas probably will still keep producing these gases in demand. And so there’s already been some warning signs that the CAPEX or the capital expenditures, the drilling investments, new sites for drilling in West Texas are down. So far, oil production has not dropped because they’re more efficient or more productive per well. But you can anticipate that in 2026 oil production in West Texas might drop.

Dr. Michael Webber (17:41.262)

which means gas production in West Texas might drop, which mean prices might go up. That might be good for natural gas sellers. It might be tough for consumers. If natural gas prices go up, it might make our exports less desirable on the global scene, depending on what price Australia or Russia are charging or Qatar, you name your country. We’re competing in a global marketplace and American gas is always undercut on price other providers. But that might be harder if our gas prices go up because our oil production goes out. It gets a very tangled mess, is the guess I’m saying.

Dr. Michael Webber (18:09.514)

And Texas benefits and loses simultaneously from all these maneuvers.

Joshua Rhodes (18:13.326)

We’ve been talking about energy writ large and focusing in on electricity. I one of the policy decisions we’ve made in Texas is to electrify those oil and gas operations out in West Texas, right? And so, if we run into these other kinds of pressures, they’ve been talking about at the same time, we’re getting them cheaper energy to get the energy out of the ground. Is this a wash? Do you think it’s net positive, net negative?

Dr. Michael Webber (18:32.014)

One of the hidden heroes of the oil and gas success in Texas, certainly a lot of innovation in the oil and gas sector, hydraulic fracturing, horizontal drilling, but electrification of the oil patch. I believe that the West Texas production, the Permian, is the most electrified oil field in the world at any significant scale. And having access to cheap electricity has improved productivity. It’s cleaned up production by reducing the venting or flaring of gases in some cases. It’s also improved

Dr. Michael Webber (18:57.454)

improved the boost with these downhole electric submersible pumps. electrification of oil and gas helps keep it competitive while also making it more environmentally friendly because of reduced emissions. And so, I think if we keep expanding the grid and keep installing transmission lines, which I know you’ve talked about and thought about, that will keep electricity cheaper for oil and gas. That is a competitive advantage that we get to have in Texas that not every oil and gas patch in America or around the world has. I think that’s kind of cool. And then if you look at Governor Abbott really pushing to expand the grid, he’s really leaning in hard on nuclear especially, but

Dr. Michael Webber (19:26.99)

he seems friendly to geothermal and other technologies. We’re going to have a pretty diverse mix of electricity. We’re going to build a lot of power plants. That means in my mind, despite data center load growth, we might still have low prices and that’ll be really good for oil and gas. oil and gas benefits from a big cheap reliable grid, just like we all do.

Joshua Rhodes (19:45.804)

Yeah, at the same time, you you’re bullish on wind, you’re bullish on solar, geothermal, nuclear will stay roughly about the same. I think some of this transmission we’ve been talking about are going to benefit particularly those first two. You’re bullish on geothermal. Talk about that.

Dr. Michael Webber (19:59.35)

Also in geothermal, I don’t think a whole lot of new geothermal will come online before January 2029, but there’ll be some. I think we’re entering in a few years, the geothermal decade. We’ve been in a solar and battery decade. Before that, we were in a wind decade. And wind growth has slowed down a lot. Solar growth doesn’t look like it’s slowing down again soon, but geothermal is about to take off for a couple of reasons. The technology has gotten better, especially for drilling. The technologies for finding the pockets of heat has gotten better with startups like Zanskar and others.

Dr. Michael Webber (20:28.878)

The demand for the power is there. We have a new customer class, these data center companies that have a lot of money and really want round the clock performance, but they want clean, they want renewable. So geothermal meets a lot of those. Geothermal doesn’t really compete with wind and solar. It competes with nuclear or competes with natural gas or carbon capture. So geothermal looks pretty good. It’s a good hedge against gas prices and it’s a good sort of speed to power choice because probably you can get geothermal online faster than nuclear. So geothermal looks good. It also seems to be

Dr. Michael Webber (20:58.566)

a favorite in a bipartisan way. Democrats and liberals and environmentalists like it because it’s clean and renewable and sustainable. think Republicans like it because it leverages drilling technologies, it’s domestic. So it’s got unique bipartisan, well maybe it’s not unique, along with nuclear has bipartisan support. And I think that means you’ll get good alignment on policies at the state, local and federal levels. And so there’s support for the Trump administration. I think Trump doesn’t love it as much as he loves nuclear.

Dr. Michael Webber (21:26.182)

But he seems to like it and he’s not beating up on it for sure. So geothermal looks like a winner. And one of the things that geothermal can leverage is all the advances in drilling technology that have happened in the last 20 years. It will also make advances, but it can leverage other people’s investments, namely the only gas industry’s investments in drilling technology. The geothermal industry can ride that cost curve down. And then they have this stable around the clock performance and customers who have the cash to pay for it. So geothermal looks really good.

Dr. Michael Webber (21:53.184)

It’s limited in location. tends to be Nevada, Utah, California, like Hawaii, places where have volcanoes or tectonic activity. There are a few pockets in Texas where you can do it. What I like from the Texas perspective as a Texas patriot is even if we’re not producing a lot of geothermal in Texas, the companies are talent or know-how might be here. So there’s a real good Texas angle for this, even if it’s for a site in Utah.

Joshua Rhodes (22:15.522)

That makes a lot of sense. I was thinking about this concept of talking about multiple different constituencies. They probably won’t want to use this as a tagline, but carbon-free drilling or something like that or low carbon drilling. It’s like got both buzzwords for both sides of this thing.

Dr. Michael Webber (22:27.456)

Yes, it’s one of the few options that satisfies most different people’s priorities, which is really great. think that’s one reason why it’ll be a winner.

Joshua Rhodes (22:35.512)

Yeah, it reminds me of the Green Tea Party, which is a coalition of Sierra Club and the Tea Party in Georgia back in like the early 2000s. They got together to force the utility to let them put solar on their roof. And was the libertarians were like, you won’t tell me what I won’t do on my own property. Thank you very much. And Sierra Club was like solar. In the Venn diagram of things, I was like the one thing that they kind of agreed on, but it was powerful enough to force Southern Company to let them do it, which is not an easy thing to do. It worked. It worked.

Dr. Michael Webber (22:59.522)

right? Yeah, they wanted to push back against the utility control. Environmentalists wanted the low emissions profile and the cleanliness. So yeah, and that’s a sign and I think solar still has that by the way, solar opportunity to grow because it satisfies some libertarian instinct as well as some environmental instinct. And so you look at those solutions that get there, they’ll do okay. Nuclear doesn’t satisfy a libertarian instinct so much nuclear is very clean. It is very reliable. It needs a very strong hand from government that is back to succeed. So you have a

Dr. Michael Webber (23:27.778)

kind of intervention in the markets to really give nuclear boost, but some of the other options do.

Joshua Rhodes (23:32.364)

Yeah, nuclear feels like it’s gone through a bit of a renaissance too in terms of like, it’s acceptance. There’s a lot of new environmentalist movements that are very pro-nuclear, just like, okay, we got to build something. We can’t just say no to building everything. Like the new environmental movement has to be about building something. And it doesn’t seem like it’s getting beat up on as much as it used to.

Dr. Michael Webber (23:52.11)

feel

Dr. Michael Webber (23:52.21)

like this is my third nuclear renaissance I’ve watched in the last 20 years. Everyone feels different. This one feels different. It feels stickier for that reasons you said, which is the environmental movement has been sort of looking at nuclear with a wary eye for one time because of the concerns around nuclear waste or meltdowns or public risk. Some security folks have looked at nuclear with a wary eye because of the connections with weapons proliferation. But I think the security establishment’s more concerned about other things in the energy system. And environmentalists had come around to the idea like, okay, nuclear still needs a lot of water.

Dr. Michael Webber (24:21.87)

There’s a nuclear waste issue, but there’s technologies for that. But it’s got a really clean profile. It doesn’t have the air emissions that are toxic. It doesn’t have the greenhouse gases. So the environmental movement’s kind of come around on nuclear after a hesitant relationship for many decades. But then there’s a cultural movement where you have students at universities like, why don’t we build nuclear? So you see nuclear engineering students from Texas A &M on ESPN College game day holding them a sign like, we love nuclear. And this moment went viral. And you have like,

Dr. Michael Webber (24:50.264)

beauty pageant winner who’s in nuclear engineering working for Constellation. She’s talking about nuclear, a Brazilian fashion model. So we have like fashion models and beauty pageant winners and engineering students on college game day all seeing the same thing, which is nuclear is a part of the future. And so there is a youthful cultural force that’s very different than the people who had been promoting nuclear for many decades. There’s going to be older engineers who worked at a utility or something. So it’s very different profile. So nuclear looks good. And then what that sort of manifests itself as is

Dr. Michael Webber (25:20.416)

local state and federal policies as far as certainly Trump administration supportive. But as I mentioned, Governor Abbott supportive, but even cities like city of Austin doesn’t seem opposed, right? Austin actually has a six of a nuclear reactor. I think you started to get this political and policy alignment, which is really interesting.

Joshua Rhodes (25:35.018)

totally. So thank you for letting us go through your historical predictions, predictions from last year about still into the future. And so I’m hoping you can come on and we can do this multiple times and you can either be proved right over and over again or wrong. So switching gears a little bit. So some folks may know that every year we have the annual Weber Energy Group Symposium, which is at the University of Texas. I’m in your research group and it’s kind of a celebration of all the research that we do.

Joshua Rhodes (26:01.964)

in the group. But one of the highlights of that event is you kind of give state of the energy or whatever talk, like a big wide ranging talk about where we’ve been, where we are, maybe where we’re going in terms of energy. And to keep with the theme of this podcast, one of the big themes of that talk you gave was energy is going through a three-part transition, right? So could you tell me what is that three-part transition that you think energy is going through?

Dr. Michael Webber (26:27.086)

Yeah, now we’re on our third trilemma, our third three-part transition, I would say. to my eye, it looks like three dimensions of the energy transition we’re going through right now. One is expanding the energy system or particular, expanding energy access. We have universal energy access in the United States, but we don’t around the world. There’s a billion or more people who don’t have access to electricity. A billion or more people don’t have access to other modern fuels, say gasoline or propane or something. They’re using solid fuels like wood or caldunga or straw or something like that.

Dr. Michael Webber (26:55.274)

And then we have a couple billion people who don’t have access to pipe to treated water or sanitation. So the sole access problem to clean resources or modern energy forms. And part of the transition is to expand energy access so that those people will have access to the energy that you and I already have access to. So that’s part number one, expanding energy access globally. Second is cleaning up the energy system. Those of us who have access, have a lot of emissions or land or water impacts must reduce our impacts.

Dr. Michael Webber (27:22.86)

And the energy system generally gets cleaner per unit of energy and cleaner per person, but we have more people, so it gets dirtier as a whole. It feels like we’re hitting a turning point where the energy system will get cleaner on absolute terms, even as we have population economic growth. So we have to expand energy access, that’s part one, but to clean up the energy system, that’s part two. Part three is operate in a warmer world. A lot of our energy system was built, for example, in the power sector 40 or 50 years ago in the United States, the pipelines often built

Dr. Michael Webber (27:50.828)

long before that, or the transmission lines built long before that. So we have a multi-decade or century old system in many parts of the United States that was designed for a different population, different strain on the system from the population, but also different weather. So as the climate warms on average, that means we’ll have milder winters, warmer summers, so more heat waves and droughts in the summers, but also perhaps more frequent and intense polar vortices or these cold snaps, which we just had a couple weeks ago in Texas and...

Dr. Michael Webber (28:18.904)

five years ago with winter storm Uri and we had all sorts of winter storms. So we have warmer weather, which will strain the system if you design it for different weather. And the heat waves are a typical problem in Texas, but the heat waves are hotter and lasting longer. Think of the heat dome in 2023 where it was summer for like four and a half months or something. heat waves in early May and heat waves in November, that’s six months, I can’t even do my math, but the heat waves in November and it was so hot for so long, that’s a real strain on the system.

Dr. Michael Webber (28:47.096)

but it is accompanied by droughts. You don’t have the cooling water you need for the power plants. We also have more people doing irrigation, which means more electric pumps for water, which means the demand goes up and blah, blah, blah. So we have all these things, that’s a real problem. So expanding energy access, decarbonizing, operating a warming world, that’s what we have to do with the entire system. And a lot of these assets are kind of old. The newer assets will be easier to design for, but we have to work with what we got and a lot of what we got isn’t new.

Joshua Rhodes (29:11.682)

Yeah, no, I think sometimes, you for some people now the term energy transition is kind of a triggering phrase. We have any other ideas for other things?

Dr. Michael Webber (29:21.006)

Yeah, I’ve got a list of phrases we no longer we used to call energy revolution unacceptable for a while we talked about energy evolution that’s no longer acceptable. For the last few years, we talked about energy transition that’s also unacceptable. So there were now like a short list of acceptable phrases, meaning like non triggering for different constituencies, things like energy innovation or energy expansion or energy addition or energy abundance or energy dominance. And you hear like with Trump administration’s energy

Dr. Michael Webber (29:48.524)

dominance. Secretary of Energy Chris Wright talks a lot about energy addition and energy abundance. And I like the innovation. I don’t really like the word dominant. That sounds like you’re beating someone up. But these are the kind of the phrases that work with the Trump administration that are less triggering. But within, say, the concept of energy innovation or energy expansion or energy addition, we have a lot of opportunity to add a lot of cool things to the grid or to the energy system that are cleaner and higher performing and more affordable and more reliable.

Joshua Rhodes (30:15.566)

Oh, totally. And so, maybe we’re beating up on the term energy transition. I mean, as it’s become, I guess, embody what it means, is it getting anything wrong right now? Like in 2026, what is the phrase energy transition get wrong?

Dr. Michael Webber (30:27.458)

I feel like a transition is still happening. I feel like for the most part, the fundamental trends are still occurring. We have to label it something different. Energy dominance, I think means exporting a lot of energy to the world and dominating the geopolitics of the markets, which actually we started around 21 or 22. Like a few years ago, we became the biggest exporter of qualified natural gas. For example, the biggest producer of hydrocarbons in the world. So we were kind of already been energy dominant for years, but we didn’t call it that. The Biden administration didn’t talk about energy dominance. They talked about energy transition.

Dr. Michael Webber (30:56.514)

The Trump administration talks about energy dominance, but not transition, but not a whole lot has changed for the most part. Some of the rhetoric has changed. Some of the policies has changed. The market preferences haven’t changed a whole lot to my eye. No one in the markets is really clamoring to build a new coal plant and the people who own coal plants are actually looking to shut them down. But they’re often forced to keep them online, even if they’re expensive because of policy fiat. So I think the word transition is too triggering. We had to drop it, but what the markets are doing hasn’t changed a whole lot.

Dr. Michael Webber (31:26.732)

The biggest change of the Trump administration has been sort of the all out war on offshore wind. That’s where the president has had the biggest impact. He’s revoked the permits or tried to cancel five projects that are either operating or closed operating. All have led to lawsuits. He’s lost every one of those lawsuits. All five of those wind farms will operate or are operational. But it’s going be hard to build a new offshore wind farm. So that’s one distinct change from the dominance. And I was like, well, if you really believe in energy expansion, we’ll expand everything. So that doesn’t make sense to me.

Dr. Michael Webber (31:56.046)

But he’s got his preferred fuels and the fuels he doesn’t like. Onshore wind and onshore solar will also suffer, but not as badly as offshore wind. And onshore solar is too competitive to keep out of the bar. The markets just are calling for it. Yeah. Yeah. Wind’s actually started to slow down in 2021 in the Biden administration. Yeah. Primarily because its supply profile doesn’t match our load profile and the lines were getting congested. So the new power plants with solar are a good compliment to that wind. I think we just had different phrases, but

Dr. Michael Webber (32:25.42)

the trends are basically the same.

Joshua Rhodes (32:27.982)

But even so, you said like the output may be not matching our load profile. But if we add a bunch of data centers that have not exactly flat, but flat-ish load profiles, I think that that script could flip back.

Dr. Michael Webber (32:40.024)

I mean, data centers want round the clock load. That’s not wind and that’s not solar, but wind plus solar plus a little bit of battery looks pretty flat in most places because the supply profiles of solar wind are so out of phase that you might get there. Data centers, a key thing there is they’re rich, they’re in a hurry, and they have high demands on reliability. And so that’s why they can pay for geothermal and nuclear, which is exciting. But because they’re in a hurry, they can’t wait till 2029 or 2035.

Dr. Michael Webber (33:08.75)

And if you’re in a hurry, it’s going to be wind, solar and batteries. So the thing is there’s room for everybody. would say we need fast simplicity of wind, solar and batteries and it’s cleanliness. We need around the clock performance. We’re doable source like geothermal. need the round the clock performance of large scale dense options. There’s room for all of them, but they arrive on different timelines. If you’re in a hurry, you’ll start to say, we’ll pay for everything. We just want everything we can get.

Joshua Rhodes (33:30.008)

Yeah. Do you think we’re given that we need everything? Like are we in an era, are we entering an era of energy scarcity or energy abundance?

Dr. Michael Webber (33:37.582)

That’s a great question. So if you look at the backlogs for like say natural gas turbines at Siemens and GE, there’s a rush on gas turbines, primarily for data centers behind the meter, say they might want natural gas combined cycle power plants, which are really good for around the clock performance. For grid reliability reasons, there’s a rush for the aerodirative fast ramping gas turbines, which you don’t use around the clock, but use on the hours or days you don’t have say winter, solar or other options.

Dr. Michael Webber (34:02.936)

So there’s a rush on the fast ramping gas turbines. There’s a rush on natural gas to mine cycle, but there are backlogs at all the different manufacturers. And so you could say, there’s a backlog, there’s gonna be scarcity. But fundamentally, we have plenty of energy available in the grid. We don’t have plenty of power. The scarcity is only a few hours of a few days of the year. And if we get to operate flexibly, dialing down the data centers or water treatment plants or steel smelters or whatever, we actually are fine.

Dr. Michael Webber (34:29.646)

We’re having all this argument, seems like over a few hours and a few days of the year. The rest of the year we have access capacity. And I think what people will find in our finding again and again is that the fastest way to get more power is through flexibility, or you can ramp your load up and down. You and I don’t worry about that so much at our houses with our light switches and each vac and heating and cooling. If you’re a crypto miner, especially, but if you’re some other big industrial load, you could totally dial down your load at peak times.

Dr. Michael Webber (34:56.706)

And that flexibility is going to look really cheap and fast to bring online. And we’re already seeing that. So I think that avoids scarcity. So I don’t think we’re heading towards a scarce situation very quickly. The scarcity will solve itself with flexibility.

Joshua Rhodes (35:07.406)

I think you noted in that presentation, know, peak load is a challenge, but you know, the grid is utilized on average less than 50 % of the time or something like that. yeah, with these new loads that are causing a lot of these backlogs at Siemens and GE and others, are these new loads, data centers in particular, are they a problem or an opportunity?

Dr. Michael Webber (35:23.086)

Dr. Michael Webber (35:23.406)

I think they’re an opportunity. I know they’re hated because there’s a fear they’ll drive up electric rates. There’s a concern about the land impacts and the water use. People are worried that it’ll make electricity more expensive. If we do it the right way and data centers and other loads are flexible, then all that new investment of the grid will actually lower the cost for everybody. It should improve the capital utilization. So we have a multi-trillion dollar power sector. We use it less than 50 % of the time. But if we had a lot of new electric users to the grid and they’re able to schedule their load, like charge

Dr. Michael Webber (35:51.63)

management for electric vehicles or flexibility at peak times with data centers and crypto miners, then we’ll get greater than 50 % capital utilization of entry 60 or 70 or 80%. That means we’re using the same asset base, the same trillions of dollars, but for more kilowatt hours. And so for dividing the same trillions over more kilowatt hours, that’s a lower cost per kilowatt hour. I think that’s where we’ll end up a few years from now. The intervening fears will be very painful because it takes a little while to get there. So we’re going to feel rates go up rates have already gone up rates are on the way up.

Dr. Michael Webber (36:21.016)

But I think as we get through this crush, we’ll get to higher performance, lower emissions, lower cost. That’s where I think we’ll end up. And I think we’ll get there within three to five years. I don’t think we’ll get there in one to three years. So it’s going to be pretty politically painful incumbents for the next few years. In fact, we already have politicians paying the price, losing office because rates have gone up. So I think that will continue for another couple of years.

Joshua Rhodes (36:47.348)

You talk about we’re moving into a transmission scarce environment. Is that part of that short term? These issues or is that more of a long term?

Dr. Michael Webber (36:54.56)

It’s all happening right now. these transitions, I talk about the trilemma now with energy access expansion, decarbonization and operating normal world, but we’ve always had change. Sometimes these changes happen in a condensed period of like 10 to 20 years. And we’ve had prior energy transitions that were very rapid. We call that the industrial revolution or the second industrial revolution or the jet age or the silicon age and now maybe the next energy transition. So there is a timing situation right now.

Dr. Michael Webber (37:21.438)

And one thing we’ve been at for a while is we’ve generally had an excess of transmission capacity and those days are over. Because you can build new load, a new data center, a new factory, a gigafactory, whatever it is, in like two years or less. You can build a new solar wind farm in say a couple years, a new gas plant maybe in five years, new geothermal nuclear for like four to 10 years. But transmission historically is six years in Texas, say, but 20 years elsewhere. So the time it takes to build new load is faster than the time it takes to

Dr. Michael Webber (37:50.254)

build new supply is faster than it to build new transmission. And we’ve gotten away with this tiny mismatch because of excess capacity in the grid. But we’re running out of excess capacity in the grid. We’re running out of excess capacity at the power plants. So we’re going to have to manage everything a little better. And I think we’re going to expand transmission. It’s just hard to expand it as quickly as the other things. But if you ramp up on flexibility, then we can solve all that, I think.

Joshua Rhodes (38:13.548)

Yeah, there’s other parts of that too. think you mentioned that we’ve got a gas turbine backlog that’s masking a gas pipeline backlog. Like it’s not just one part, it’s all parts of the system that are going to have to like grow quickly, right?

Dr. Michael Webber (38:25.134)

Everybody’s in a hurry for everything. We’re all waiting two to five years for transformers and three to five years for turbines. And then by the way, a gas pipeline hookup might take four to six years as well. So there’s just a lot that has happened. And I think a lot of that is consequence of we haven’t really grown to the power sector for 20 years. We’ve gone from a level mode where you don’t grow to also grow very quickly. So we’re taking a very large lumbering, continentally sized industry, causing it to grow five to 10 % a year.

Dr. Michael Webber (38:54.782)

Software and other parts of the world have done that. know how to do it. But energy, power sector, we’ve kind of forgotten how to do it. We’ve lost our muscle memory. So we got to break ground quickly, get steel on the ground quickly, regulatory approvals quickly, get your investment lined up quickly. Anyone’s really done that since the 80s. So it’s been a while since we’ve had to learn how to do that.

Joshua Rhodes (39:11.736)

So if there’s something you could get every policymaker out there to understand about how the energy sector is changing different, how fast it needs to go, like what’s one or two things you wish every policymaker would know about this current state of the energy sector?

Dr. Michael Webber (39:24.014)

I think there are two things on my mind. One is we’re going through a capex wave, a capital expenditures wave that is at really rare levels. Yeah. Exceeds what we did in the 50s with interstate highways. It exceeds what we did in 2000 with rural broadband. It exceeds what we did with the railroads and canals in the late 1800s. It exceeds wartime footing in some cases. Yeah. So it’s really a dramatic level of investment. So this isn’t some kind of ephemeral fly-by-night thing. There might be a bubble, but the numbers are real. Like there’s big investment.

Dr. Michael Webber (39:53.784)

just appreciate the scale of the situation and the opportunity. And secondly, I think we’ve been too fussy about our culture war of hating particular forms of energy or preferring certain forms of energy. I think if we just let people build stuff and make it easier to get our permitting, for the most part, we’ll build the right things. It won’t be perfect. We have to be willing to tolerate some imperfection. But I say the moment is calling for us to build quickly, let’s go quickly or else we won’t meet the moment. And if we...

Dr. Michael Webber (40:22.36)

build quickly and meet the moment, we’ll mostly meet it the right way. We’ll have a few things we build that we regret without a doubt. But I’d rather have a few things that we regret that we built than not build enough and then regret having missed out on one of the most important economic and national security opportunities in history. So I guess I’d rather err on the side of build too many things we regret than build too few capabilities that we’re really going to need in the future. Otherwise, you’re not going to meet the moment. Those are the two things I say is a real sort of interesting historical time. Let’s build. Let’s catch up.

Joshua Rhodes (40:51.052)

Yeah, I think it also exceeds the moon landing, but like we landed a few times. We haven’t been back. Maybe we’re going back. I don’t know. We’ll see what Elon’s talking about in this day and age.

Dr. Michael Webber (40:59.114)

He’s talking about Mars too, so who knows, right? So a lot of things going on and mostly private capital for that. that market has evolved as well.

Joshua Rhodes (41:05.902)

Okay, this is a part of the podcast where we’ve flipped the script. You’re now interviewing me. I’m on your podcast. What do you want to ask me?

Dr. Michael Webber (41:13.588)

What I want ask you, I love this. Okay, so if you were to talk to 18 year olds graduating from high school, and they’re confident in what they should do with their future for studies or career or whatever, would you recommend they go into energy?

Joshua Rhodes (41:27.374)

Totally. Of course, I’m going to be biased, but I definitely would recommend folks go into energy. I that doesn’t necessarily mean that you’re out on an oil rig or being in utility space. There’s lots of companies that are in this space. But in particularly, I think I would focus people on electricity. And again, I’m going to be double biased here that that’s what I study. That’s what I do. The thing is, I’ve heard people say the phrase peak oil. I’ve heard people say peak gas. I’ve never heard anyone say peak electricity like a real straight face.

Dr. Michael Webber (41:54.328)

peak electron. Yeah, that’s interesting. Yeah, that’s right. I’ve never heard that either. That’s right.

Joshua Rhodes (41:58.094)

Yeah. So I don’t think anyone said it because I don’t think anyone’s ever thinking that we’re going to use less electricity over time. mean, energy perhaps, but I think the electrification part of that continues to grow. think energy is going to be, or electricity in particular is going to be in a growth phase. Particularly right now, it’s in a massive growth phase with AI and data centers and all these other types of things. But yeah, I know I think it’s a great place to be in. I think some of this stuff AI is not going to be able to take over, at least in the next employment cycle wave or whatever. We’ll see where we eventually get to.

Joshua Rhodes (42:26.604)

I know we’re all kind of struggling with this, but yeah, think energy is a great place to be.

Dr. Michael Webber (42:29.966)

And electricity in particular, which says maybe it’s because you’re biased, but you also did your own thinking and arrived at that conclusion. Electricity is an exciting place to be and that’s why you’re excited. Okay. Can I ask you one more related following question? Yeah. Let’s say those 18 year olds are trying to decide to go to college or not. If they don’t go to college, should they just start working or get like a technical trade or some other thing? So what would you tell that 18 year old?

Joshua Rhodes (42:51.63)

Yeah, I I think if you’re not going to go to college, I mean, right now, sticking with the theme like electrician is a great career to be in. I’ve heard rumors of folks like working on data centers. Now you’re working multiple over times and other types of things, but making the equivalent of like three, $400,000 per year salaries right now. Hard work, a lot of work, but it’s probably hard to automate that at least at this point. I mean, if you’re going to college, I mean, I think one of the things that has changed that I would say, I mean,

Joshua Rhodes (43:18.914)

The advice I always give to people is study the hardest thing you like because it opens the most doors. If you like history and you like physics, equally, then study physics, minor in history or something like that. Just like study the hardest thing that you like. And that’s been the traditional advice that I’ve given to most that are going to college. Right now, I would focus on critical thinking. We’ve pushed hard into STEM. We’ve pushed hard into computer science and coding and a lot of this other kind of stuff. A lot of these things that are rules-based and...

Joshua Rhodes (43:45.888)

AI is pretty good at that kind of thing. AI is really good at things that have definite rules and even getting into law and like other types of things. But if you can still have the critical thinking to know how to guide these systems that we’re starting to use more, I think that’s still going to be valuable. I mean, it’s going to evolve over time. But yeah, so study the hardest thing that you like, but don’t skip liberal arts, the humanities, other types of things that make you actually have to think because some of the other types of technical thinking are getting co-opted by some of these.

Joshua Rhodes (44:14.678)

machines but kind of the bigger questions I mean I think we’re still going to need to know how to handle to guide the systems wherever they want to go.

Dr. Michael Webber (44:20.91)

I think I told you, I would say get a trade, pipe fitting, welding, electrician work, something, and study philosophy or humanities. So you could do both, by the way, you don’t have to do this, but I think humanities prepares us better to deal with the complexities of society that hasn’t presented itself yet with rise of AI and everything else. But the trades will call for a lot of work and lucrative careers and will be displaced by robotics later than coders who will be displaced by AI today or have been displaced.

Dr. Michael Webber (44:49.664)

I think I agree with you. There’s some combination there, perhaps.

Joshua Rhodes (44:51.918)

Yeah, and I still think things like engineering are extremely valuable in terms of just understanding systems and how they work and being able to like look at something and say, that’s a perpetual motion machine. That kind of intuition I think is super valuable. Intuition is I think is going to be lacking going into the future as we offload some of our cognitive processing.

Dr. Michael Webber (45:10.008)

That’s a point. And you only get that intuition from grappling with the problem and thinking that through. Yeah, totally.

Joshua Rhodes (45:15.726)

Michael

Joshua Rhodes (45:16.548)

Weber, thank you for being on the Energy Capital Podcast.

Dr. Michael Webber (45:19.096)

Thanks so much, I’m having a great conversation as always.

Joshua Rhodes (45:22.168)

Thanks for listening to the Energy Capital Podcast. If today’s conversation helped you make better sense of how the energy system actually works, share the episode with a colleague and hit follow on your podcast app. You can find us on Apple Podcasts, Spotify, and all the usual platforms. For deeper analysis and context each week, subscribe to the Texas Energy and Power at texasenergyempower.com. That’s where you’ll find every episode, every article, and our latest updates. We’re also on LinkedIn, X, and YouTube.

Joshua Rhodes (45:51.534)

where we share clips, insights, and ongoing commentary on energy policy, markets, and the grid. Before we go, a quick note. The views expressed on this podcast are my own and do not represent the official positions of the University of Texas, Ideasmiss, Austin Energy, or Columbia University. A big thanks to Nate Peevee, our producer. I’m Joshua Rhodes. Thanks for listening, and we’ll see you next time.

]]><![CDATA[The Data Behind Texas Reliability with Max Kanter]]>https://www.texasenergyandpower.com/p/the-data-behind-texas-reliabilityhttps://www.texasenergyandpower.com/p/the-data-behind-texas-reliabilityWed, 04 Mar 2026 11:03:36 GMTBehind the scenes, every few minutes, the ERCOT system generates tens of thousands of price signals, outage updates, and operational reports that demonstrate and drive the cost and availability of electricity.

Most of that data is public. But how can Texans access it?

This week, Joshua Rhodes talks with Max Kanter, chief executive officer of GridStatus, about the gap between public data and practical visibility and application, and why that matters in Texas.

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In this episode, they discuss:

  • Why public grid data is harder to use than it would seem.

  • What real-time pricing signals reveal about system stress.

  • How outage and congestion data shape ERCOT debates.

There are more than 70,000 pricing nodes across U.S. energy markets, updating every five minutes. ERCOT alone produces enormous volumes of operational data.Those signals often spotlight stresses on the system before they show up in prices and control rooms.

As Texas adds new industrial loads and faces continued risks from extreme weather, more policymakers, analysts, and large customers want to know what’s coming. They’re looking for distress signals.

On this week’s episode, Josh and Max tell you where to find them – and what to do with them.

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Timestamps

  • 00:06 – Welcome, Max Kanter intro

  • 02:00 – Computer science, AI shifts

  • 03:32 – What is GridStatus?

  • 04:36 – What users see first

  • 05:31 – Who uses GridStatus today

  • 06:56 – Tiers, hobbyists, accessibility

  • 07:52 – AI tools, new builders

  • 09:47 – Why a business existed

  • 12:49 – Early demand validated product

  • 14:18 – From carbon to markets

  • 16:44 – Data scale, nodal pricing map

  • 32:20 – Flip script, Rhodes on public role

Resources

Guest & Company
• Max Kanter - LinkedIn
• Grid Status - LinkedIn

Company & Industry News
• The power grid is hard to understand. This startup is trying to help.
• Why We Invested in Grid Status

Related Podcasts by TEAP
• The New Rules Behind ERCOT Prices with Andrew Reimers
• Who Pays for Texas Grid Growth? - Roundtable Discussion
• Texas’ Load Growth Challenges – And Opportunities, with Arushi Sharma Frank

Energy Capital Podcast is produced by ClarityForge Studios.

Transcript

Joshua Rhodes (00:05.778)

everyone, and welcome to the Energy Capital podcast. I am really excited to have Max Cantor, CEO of GridStatus on today to just talk about data, all the data that are coming off the grid and everything like that. If you’re steeped in grids, you’ve probably heard of GridStatus, you’ve probably seen at least a screenshot of dashboards and things like that floating around social media. But one of the things I wanted to bring to this podcast was to kind of dig a little bit deeper into some of the more technical side of things. And I promised all

Joshua Rhodes (00:35.278)

I’d be listeners that I wouldn’t completely bore you to tears with data, but we are going to talk about it a little bit because it is so important. So we have Max Cantor on. has a bachelor’s and a master’s of computer science from MIT. And I don’t usually name check theses, but this one actually caught my eye. So his master’s thesis was the data science machine emulating human intelligence in data science endeavors, which sounds like a harbinger of basically AI. We’ll get back to that here in a bit.

Joshua Rhodes (01:05.294)

He started off as CEO and co-founder of Feature Labs, which was acquired by Alteryx in 2019. At that point, was the VP of Engineering at Alteryx for the next couple of years before going back to MIT as a visiting scholar in the Data to AI lab, where at that time when he was at MIT, launched Grid Status in August of 2022. And the tagline, or at least the one that’s on his socials is, the future of the electric grid runs on data and AI. Grid Status provides

Joshua Rhodes (01:34.562)

data and insights for the understanding, investing and operating of the electrical grid. And our goal is to be the most trusted source for whatever is happening on the grid. Max Kanner, welcome to the Energy Capital Podcast.

Max Kanter (01:47.522)

Thank you, Joshua. Happy to be here.

Joshua Rhodes (01:49.452)

Yeah, I should probably say full disclosure, I’m actually a client as well. So I have a subscription to GridStatus. So thank you for making it so easy to get all of these data.

Max Kanter (01:58.456)

Yeah, that was the goal from the very beginning.

Joshua Rhodes (02:00.46)

Yeah, no, I think it’s worked out quite a bit. It’s much easier. I wanted to actually immediately kind of go off script. Your bachelor’s and master’s are in computer science. Do you have a feel for what computer science means today, kind of in this age of AI? How has it changed since you were there?

Max Kanter (02:16.312)

Computer science as an academic field is younger than many, right? So things like biology or physics, right? Computer science, I’d have to double check, but I think it’s probably a phrase that has only formally been studied for less than a hundred years. And so it’s come a long way in just that time from something minor to one of the hottest topics. One of the things I think is so interesting though about AI in particular though is

Max Kanter (02:42.87)

A lot of the earliest computer scientists, their goal from the very beginning was to create an artificial intelligence. That’s actually how they thought about computers, know, replicate the stuff that humans were doing. And so in some sense, the goals actually haven’t changed at all, right? I think over the decades, think the biggest thing that’s different is, really the size of the compute that’s being undertaken to actually accomplish it. And, know, one of the things, you know, thinking back to when I first started doing say academic computer science is so much.

Max Kanter (03:12.45)

of the forefront of the field was happening within universities. think nowadays when you think of, well, where’s the frontier AI research happening, know, oftentimes it’s thought of outside of universities. And I think that’s one of the biggest changes I’ve seen. And why is that? There might be many reasons, but think one of them is just the size of the compute and the cost of doing that.

Joshua Rhodes (03:31.916)

Yeah, that’s big implications of particularly like size of the compute. I mean for the electricity grid, right? Because you got to get a bunch of electricity to that. I apologize for throwing you a curveball right off. Yeah, totally. So, I’ve introduced grid status a bit. With someone who’s outside of energy, I think a lot of folks who listen to this podcast are kind of in energy. But if someone’s outside of energy, ask you what you do. Like how do you describe, you know, grid status?

Max Kanter (03:41.998)

that makes it more interesting.

Max Kanter (03:56.514)

Yeah. I would say grid status is the homepage for the electric grid. I think a lot of people, when they think about the grid, well, first they don’t actually think about it that much. You you plug something into an outlet, you get power, right? But behind the scenes, it’s actually the world’s most complex machine. And even though it’s this big machine, it’s not like you have one person operating it or one person putting power into it or one person regulating it. It’s actually very complex with a lot of different stakeholders.

Max Kanter (04:24.82)

And so, yeah, the role of grid status is to be, you if you have a question about the grid or you want to have an understanding about what’s going on, we want to be the first place people go. And so, yeah, we’re the homepage of the electric grid.

Joshua Rhodes (04:36.27)

That’s cool. Grid status started out as doing mostly data, Mostly hosting data and having data. Now there’s a lot more dashboards and other types of things. Can you just talk through a little bit, of like, if someone goes to the homepage of the electric grids, you say like, what are they going to find?

Max Kanter (04:52.748)

Yeah, I’d say that’s kind of the core product and technical question we’re trying to answer or solve, I should say. Right. And what are you going to find is, you know, the answer really is like, whatever is relevant for you. And we serve a lot of different types of users. Some people care a lot about, you know, what the fuel mix on the grid is. Some people care a lot about pricing. Some people care about forecasts and, know, grid operations for the coming days. And so our goal at GridSat is to show you what’s relevant.

Max Kanter (05:22.088)

And we’ve honed in on that over time.

Joshua Rhodes (05:24.76)

Nice. And talk about like you said for different types of users, what all types of users do you have?

Max Kanter (05:30.84)

I would say anybody who cares about the grid is part of our user base. And that’s one of the things that’s most exciting about grid status for me. think if you rewind five, 10 years and you were to say, your electric grid data and analytics company, who do you serve? The answer would be pretty narrow. Energy traders, utilities, power plant operators. What I see with grid status is really have expanded the pie of people who can make use of the data. So today I think some of our bread and butter

Max Kanter (06:00.318)

are people who are buying and selling large amounts of power. You know, it’s energy traders, it’s asset operators, but we’ve also expanded it. We have researchers, we have these like large loads who need to be responsive to the grid. Even the regulators, you we talk to people in the federal government who are trying to make laws about the grid and, the fastest place them to figure out what’s going on is grid status. Very large swath of people.

Joshua Rhodes (06:26.572)

Yeah, know used to, someone would ask me what was going on in ERCOT, which is a common thing. Well, when people start asking me what’s going on in ERCOT, I start to get worried. I used to go to the ERCOT website and, you know, grab a screenshot of something, but now more or less it’s to the grid status web page. You got better colors and fonts too, by the way. So that’s really nice. In the app, you’ve got multiple different tiers of access that folks can get. I noticed recently you put in like a hobby tier. Are you starting to see more hobbyists out there? Like using the data?

Max Kanter (06:55.928)

For sure. And one of the fun challenges with grid status is, you know, didn’t even actually start this thinking about me as company. It was very much around how do we make it easier to get access to this data? And that came from a personal problem I had. I wanted to build some actually machine learning algorithms for forecasting the price of electricity. And well, I needed to get access to the raw data to train those models. And so a lot of our journey over the last couple of years has been, you know, how do you solve the problem of making data accessible?

Max Kanter (07:25.262)

but also do it in a sustainable way. I mean, it’s not cheap or free to be collecting all this. And so, yeah, I think one of the fun things about Gridset as you talk about the tiers is yeah, we have evolved into, we have a free offering that is for everybody, hobbyist offering that you mentioned, and then also professional enterprise offerings and figuring out what goes into each bucket and how to, you know, sort of serve everybody is kind of like the fun side of developing the business.

Joshua Rhodes (07:52.398)

Kind of sticking to that hobby tier, you know, one of the things that AI has done is really democratize coding. You can write a thousand lines of code so much faster. It was so much less, how do I say, experience than it used to take. I mean, these models are pretty great. mean, like, have you seen anyone create anything from the hobby tier or other things like that? Really, since like, AI has made it lot easier to code?

Max Kanter (08:15.822)

I would say so. think from the kind of building blocks of it all, we’ve seen people actually take our tools and then wrap them in basically libraries to make it very easy for the AI tools to automatically consume them. so, you know, one of the things I think a lot of people end up using that for and on the hobby tier is there’s this whole group, I’d say of like policy advocacy, nonprofits, you know, people that have in the past had very limited budgets.

Max Kanter (08:45.784)

to get access to this data. Having to go to the ISOs themselves is either too time prohibitive, right? Or yeah, you know, as you kind of alluded to, like too expensive to actually write the code to grab all the data. And so using grid status, they’re able to kind of further whatever policy objective that they have. We don’t personally take any sort of stance, but it is definitely a goal of ours to supply the facts and the data for people to explore and make their case.

Max Kanter (09:13.024)

And so, yeah, like one of the things I’ve seen with the AI tools is I’m thinking of like a particular example of somebody in Illinois, you know, that’s where GridStats is actually based here in Chicago. So, you know, something that I personally like to pay attention to, you know, someone who’s a nuclear advocate, right? And, you know, being able to pull the data from GridStats about how nuclear power, the amount of generation in Illinois, where it’s getting imported and exported, how that affects costs. Yeah, it’s, you know, somebody who’s definitely very talented, but they certainly don’t have a computer science or programming background.

Max Kanter (09:42.51)

you’re not able to use our free and hobby products to accomplish that.

Joshua Rhodes (09:46.712)

So one of the things you said there was talking about like not being able to go to the ISO to get the data. I mean, I’ve done that before, right? Like I’ve played mostly in ERCOT. So I’ve gone to ERCOT’s website and downloaded a CSV that has like five minutes worth of data for like all the nodes and like all these other types of things. it just, well, one, they can only host like so much of it. You know, it was free, but it was very painful, right? We’ll give you the confidence that a business could be built around, you know, cleaning it up and getting it.

Joshua Rhodes (10:15.318)

organized in one spot.

Max Kanter (10:18.062)

Figuring out how to gain the confidence, I think, is a key part of the story of grid status. So early on, there was no goal to make it into a business. I had my own goal of actually trying to build out a vehicle to grid product. And I was like, in order to implement vehicle to grid, you need to have a sense or a forecast of where you think prices are going to be the next day. And so I started this grid status actually as an open source library, just going to be a little side quest.

Max Kanter (10:46.572)

to make it easy to collect this data. You know, if I had this problem, I’m sure somebody else is going to want to run this code. But yeah, I’d spend a few weeks on this and then get back to building Veil Code to Grid software. So actually, yeah, first I didn’t think there was a business here. However, I put that code out publicly. So I put it out on a product called GitHub, right? Where software developers hang out and, you know, very quickly met a handful of people who were saying things like, Hey, I wish this existed when I started my current job, because I would have just used that directly.

Max Kanter (11:16.098)

Right. And then people started asking for more features. They started contributing some code themselves. And, you know, that’s when I realized that, I’m not the only person who has this problem. And at that stage, it wasn’t even, let’s turn this into a company. was like, well, let me just listen to what people are asking for and build out some of those things. Because honestly, what gets me most excited and motivated is to build a product people use. And so you have someone basically telling you they’re going to use this software. you build that X, Y, and Z, you know, I did it. And.

Max Kanter (11:45.474)

Basically what happened is, you one thing led to another. We started adding in data sets and then people were like, you know, I don’t want to run your open source scrapers myself. I wish I could just hit an API and it would return me the data from your servers. And so then we built out the API and then people were asking, well, how do I even know what data is on the API? So then we built out the homepage that would just let people go to a URL and see what data is available. Right. And then they were like, couldn’t you show the data like this? And we started showing the data like we started showing, let’s say all the LMPs in one place.

Max Kanter (12:15.182)

And like, could you put that on a map? And we built that out. And you know, one thing led to another. And you know, now we have tens of thousands of people that are coming to this site every month because we just listened to our users. And somewhere in the middle there, I realized if a couple of people find this very useful, you we could probably find a lot more and find one people who are willing to pay.

Joshua Rhodes (12:34.222)

I think I was probably one of the people emailing you in 2022 when you started this about like... You were. How to use your Python, like how to use the API or how to use... I mean, I literally have it up on my computer right now. was pulling data the other day.

Max Kanter (12:48.002)

You probably don’t realize how impactful those early emails were because, I didn’t come from the energy industry. You guys had to know there was business here and it’s like, you know, I came from the general purpose data science world. I kind of just stumbled into energy really as a hobby project, right? Related to the vehicle to grid stuff I was mentioning. And so, yeah, you know, you are someone who obviously knows the energy industry very well. And so being able to see people like yourself feel like there was an unmet need. That’s when I said like, Hey, there are some underserved people.

Max Kanter (13:16.95)

And that’s ultimately, you know, I think if you were to say like, what is the actual inflection point to starting a business is, well, find a big industry, pretty hard to find a bigger industry than energy. And then, you know, find a group of people that have an unmet need or are underserved by the incumbents and build the product that they want. I think that’s a pretty good formula for starting a company.

Joshua Rhodes (13:39.662)

Okay, maybe this makes sense in terms of like the timeline of kind of when grid status started, like you were still at MIT. And you mentioned it just a minute ago. When was that inflection point when you’re like, okay, this is no longer the side hustle, this is going to be the full hustle? Like when did that flip?

Max Kanter (13:55.19)

Yeah, I would say I waited as long as possible. We signed a contract with one of our first customers who actually happened to be a very large entity in the grid who I never thought would decide to be the first customer of a startup. But I was like, yeah, mean, if they’re willing to pay us, we should make this formal and really go after it.

Joshua Rhodes (14:17.646)

That’s really cool. So you’ve kind of alluded to it a little bit like before you were working on machine learning algorithms to do like be able to grid. I think there was something in there about looking even for the carbon intensity. How did that play into when you went on your side quest looking for all this data?

Max Kanter (14:34.638)

So

Max Kanter (14:34.998)

I’d say early when I thought about energy, I think what was very much in the zeitgeist was climate, carbon emissions. I think, you you try to buy like an airplane ticket. say, you know, paying $10 more and we’ll, you know, reduce your emissions or, you know, buy some offsets. And so I think when I first thought about energy, like that was very top of mind at the time I saw, you know, there’s probably a dozen different startups doing carbon accounting. It’s a very like, I’d say intuitive.

Max Kanter (15:04.824)

thing when you say you want to get into energy, where should I start? And so definitely that was on my mind. I still find it very interesting, but what I kind of found in building the company is like, what I really had taken for granted was the part that wasn’t intuitive. And that was how the electric grid actually works. The markets themselves, you know, there’s not an inherently best way to run an electricity market, right? And that’s why we have a bunch of different ISOs and they all do things slightly differently.

Joshua Rhodes (15:32.728)

Besides Texas though, right? Sorry.

Max Kanter (15:35.182)

besides

Max Kanter (15:35.642)

that’s the best way. Yeah. And maybe they are the best way. And I think part of the reason why they can make a claim for that is because they have chosen to make decisions in a certain way. And maybe other people will all copy them, right? But that’s kind of like the beauty of the markets. Even though that’s where I started, like what was really cool about this whole space is just how many layers to the onion there are. And, you know, can just continually appeal them back at a greater understanding.

Max Kanter (16:02.286)

And, know, from someone outside of the industry, was like drinking from the fire hose. And that’s why I got really lucky to, ultimately meet my co-founder, Connor, who kind of unlike me had spent his entire career in energy because now I had someone to help me learn this stuff. And then the feedback loop of working with the data, working with someone who, you know, is clearly an expert in these energy markets, that kind of just caught the bug. And I’ve been focused on that ever since.

Max Kanter (16:29.474)

What still amazes me is actually how little public awareness there is. And I know I’m preaching to the choir here with you, but you how little public awareness there is of just how both interestingly complex these markets are and how consequential there are.

Joshua Rhodes (16:43.694)

Yeah, I mean, you can kind of see it like in the data, right? know, prices are formed every five minutes. Dispatch decisions are made, you know, in RCOT every five minutes are getting bids every 15 minutes. I know RCOT the best and so I know there’s other regions that may do things differently. But like, what’s the velocity or volume of data that you pull in every day? How much are you adding to your suitcases full of data like every day?

Max Kanter (17:11.374)

So

Max Kanter (17:12.174)

there’s a lot of different dimensions to think about it. So I think the first dimension is how many different data sets do we collect? Right. So we collect, you know, over 500 data sets at this point from all the different regions or all the different grids in North America. And then each of those data sets, you know, might have updates ranging from every 10 seconds to once a day or once a week. And then within each one of those updates, and this is where I think

Max Kanter (17:39.402)

It is an example of something that didn’t come intuitively to me is the granularity of some of those updates. So the pricing information is perhaps the most interesting where there’s not just one global price of electricity on the grid, as you know, it gets down to like the node level and there are 70,000 plus nodes in the United States that are getting priced on a real time basis. And so that’s a huge dimensionality to this data that we’re updating.

Max Kanter (18:06.728)

And all that kind of led to like one of my favorite product releases we’ve ever done at Grid Status was making our nodal price map. So without an account to Grid Status, you can come to the homepage and you can see we’ve manually kind of mapped the geographic locations for over 20,000 of these nodes. And you can see for free without an account, how those are getting updated across the United States in one place every five minutes. you

Max Kanter (18:33.698)

As far as I know to this day, there’s no one else that offers that product. Going back to the point about being, do we become the homepage of the grid? To me, that’s the best encapsulation of it. Where can you go to see the most granular data possible? The data, you know, being updated every five minutes at 20,000 locations in one spot, kind of summarize in a very intuitive way. That’s been my favorite product release probably. We’re trying to one up it, but that’s a tough one to beat.

Joshua Rhodes (18:58.61)

awesome. I look forward to seeing how you’re going to best a map. People love maps. mean, one of the things that I learned, one of my most popular tools that I created, it’s an online map that shows the levelized cost of electricity in every county in the US and you can change the cost of fuel and it’ll update and all that kind of thing. And people love maps. And I think it’s intuitive because people know how to get around maps, right? They may not know how to get around the box plot or a scatter plot or something like that, but people generally, you’re from somewhere on that map.

Joshua Rhodes (19:26.85)

your kid lives somewhere on that map, right? Like it’s just intuitive. I think you’ve done a great job of getting all that data onto one map. Cause I know what we used to do back when X was called Twitter, whenever like people would want to look at price of electricity across different regions is you’d have Vercot’s map and it would have its color scheme. You’d have MISO’s map and you’d have SPP’s map and like all these others. And then you would like put them together, but the colors would be different. Yeah, it is nice just having them all in one place.

Max Kanter (19:55.584)

Yeah. I in one place I’d say is one of the most repeated value propositions I hear for users of grid status. You know, they say I used to have six different tabs open at a time when I wanted to figure out what was going on in the grid. Yeah. And now I just have one, you know, and they say grid status is my new tab in my browser. And so, you know, that’s not the only thing that we do, but what differentiates us, you can get this data from a bunch of different places. It is public. You go to the ISO directly.

Max Kanter (20:23.992)

but to have one place that is super fast, convenient, intuitive, know, what I think we do best.

Joshua Rhodes (20:30.39)

I mean, I’m probably sound like a fanboy here, but like, I mean, it’s true. The all in one place thing is so useful. I used to know my way around the aircott website pretty well, probably less so now because I haven’t had to go get it anymore. But if I remember one time trying to go look for KISO data and just like, it’s so completely different. Like I had no idea of where to go and like what I was doing.

Max Kanter (20:51.586)

Yeah. And you know, it’s one of the interesting aspects of the fact that it’s public data because, know, I think a lot of people say, Hey, this data is public. And I say, yeah, it’s public, but if you don’t know where to find it, does it matter? And so part of the value proposition is just making public data discoverable. And you know, one other point I want to make too is, we don’t necessarily see ourselves replacing any of the ISO sites. Like we wouldn’t exist if each of the ISOs didn’t put in tremendous effort.

Max Kanter (21:20.972)

right, to make this data accessible in public. So, you one of things that we do is, you we try to be very transparent to our users of where did we get it on the ISO site. We know we have a data catalog and on every page we have a link back, you know, as much as we can to like literally, you know, click this URL and you will see the exact same data on grid status and in the ISO. No, there’s no goal to like this and intermediate. It really is just to be, we’re not the source of truth, but how can we be kind of like the public record?

Max Kanter (21:50.784)

of where people find the data.

Joshua Rhodes (21:52.428)

Yeah, citations and getting that as an academic, that’s super helpful all the time. You mentioned how you started as kind of data, now you’re doing kind of these insights. How do you choose when you want to publish an insight and maybe explain, we’ve talked mostly about grid status, posting a whole bunch of data, making it easy to get, but what is this insights piece?

Max Kanter (22:13.142)

Yeah. So the way I think about grid status, what we build is it all starts with, you know, we live in the energy markets ourselves, right? Like we spend all of our days thinking about what’s going on. And so to actually do that, right, we build the tools that we want to use to understand what’s going on. And so that’s why we started collecting the data. That’s how we build the different applications for monitoring it. And then the third step is to share out what we see.

Max Kanter (22:41.134)

And so, know, insights and this new insights product you’re referring to is essentially us just sharing out what we’re finding and how we’re using our tools to find it. Because then the fourth step is to then enable our customers and our users to do the same thing. Then the process repeats itself with them living in the markets alongside of us, building out the tools, right? For all of us to use it better, sharing what we see. And so, you know, the insights release is really meant to kind of flush out our platform. We have the data.

Max Kanter (23:10.222)

You have the tools to understand it. And then of course, the final, you know, actionable analysis of what’s going on.

Joshua Rhodes (23:16.226)

Are there any data sources or are there other things that you found really interesting that you wish people knew more about? is there some undiscovered piece there?

Max Kanter (23:25.998)

Yes. I mean, the true answer is yes. I mean, I think almost every customer I talk to, they’re not using our entire catalog. In probably 99 % of cases, right? Like they haven’t spent as much time clicking through parts of these sites that we have, or we just talk to so many people every day. Like if a customer requests a data set and we add to our catalog, it’s now available to everybody as well. This discoverability question, I think it’s actually very pertinent to how we develop a product.

Max Kanter (23:54.862)

Cause one of the biggest challenges we’ve had, you know, I’ll say over the last few years is, know, when the site started, it was very simple. We had a dozen data sets and we visualize a dozen data sets. Now we have 500 data sets. can’t put 500 data sets on the homepage. And so what happens is as you start building out your breath of data and functionality, you make it kind of harder to find things. And so I think about that a lot for, you know, a particular customer and their use case, how do you make it possible for them to find?

Max Kanter (24:24.438)

And so like an example of something that comes up a lot is like people want to know outage information, you know, which power plants are going offline, which transmission lines are going out, which of these things are happening, you know, on a scheduled basis or which ones are, you know, unexpected, right. And both of those, you know, have very different implications for operations pricing. And so I want all of our customers to find many different data sets, but that’s one in particular that I was trying to point users to because

Max Kanter (24:53.4)

They don’t always realize how much publicly available information there is in that regard.

Joshua Rhodes (24:57.452)

Yeah. Do people ever come back to you and say like, this is what I built with your data? Has anyone ever done that? Said, Hey, I built this cool thing. Like I just wanted to share it with you.

Max Kanter (25:06.99)

all the time, I’d say, you know, some of the really cool things are, you know, I’d say like the people who are actually physically participating on the grid. Okay. Right. So, you know, I think when you think about say like some energy traders, you know, a lot of them are virtually trading power, right? They’re kind of taking a position in one market and then later closing out that position in another market. And they’re not ever physically producing or consuming power.

Max Kanter (25:37.038)

Other users of ours, so like one of our users is Rayburn Electric Cooperative, a municipal generation transmission co-op, you know, in Texas. They actually service, I believe, know, 600, 700,000, you know, people and their member utilities. Right. And what’s really cool about their usage of grid status is the stuff that they build is, you know, actually translating to the physical world. Take a little bit of a tangent.

Max Kanter (26:04.728)

One of the things that really attracted me to the grid and energy from my previous world, or my previous life of really working in AI and data science was, so much of software never crosses that boundary into actually making a physical impact. so energy really felt that way. So we can influence decisions about how power plants are generating power, or people are building things on the grid, or where and when they’re deciding to buy power. That has just this early clear

Max Kanter (26:34.062)

physical real world implications. And so yeah, I could talk about Rayburn Electric, they’re a big user of ours. They actually became an investor in grid status as well. The stuff that they’ve built and just how they’re kind of rising to the challenge of the demand growth that they’re seeing is really cool. And we’re just along for the ride trying to build out some software to help them do that. But it’s always cool to see the stuff that they’re building.

Joshua Rhodes (26:56.396)

That’s really cool. If you’re talking about electricity, particularly like electricity grid, there’s a lot of carbon implications like that. There’s climate stories that are happening. How has grid status been used to talk about the climate and the impacts from the electricity?

Max Kanter (27:10.648)

I’d say one of the biggest ways I think we play a role in that story. First thing you need to decide is where is your power coming from? And when I say where is it coming from, like what generation, what fuel sources is it coming from? So one of the most prominent things we show on grid status is the basically generation stack. How much power is going from nuclear, solar, wind, natural gas, oil, and you know, the list actually goes on like some parts of the country.

Max Kanter (27:38.584)

For example, in New England, like they actually burn wood to generate power at times. And so, you when you think of the climate conversation or carbon or anything like that, it’s aware, how are we actually generating the power? And I believe a lot of people, they have very strong views and biases towards what they want the generation sources to be. And, some of those might be well-founded, very well-founded, but you need the data to actually back it up. And so, know, how is Goodsad contributing to that is like,

Max Kanter (28:08.194)

How do we make sure people who have very different opinions on where we should generate our power, how do we make sure they’re at least talking with the same facts, right? Having a conversation, you know, looking at the same data, understanding what’s going on together. And so one of my favorite things that happens with grid status and our visuals is like, we’ll have two people share the exact same picture of California’s fuel mix with solar in the middle of the day, taking up a huge share and decreasing prices.

Max Kanter (28:37.674)

Some people, people who are proponents of solar will share that and say one thing, people who are proponents of natural gas will point to a different part of the graph and share that. People who like batteries will point to the same graph. And so that to me is like one of the most powerful things. And I would say a very divisive kind of topic of how we should be providing power to the grid and what do we optimize for the effect that people can use grid status to be looking at the same data, I think is a huge win. And that’s kind of the role we hope to play.

Joshua Rhodes (29:08.14)

Yeah, that source is like ground source of truth. People who can have arguments but from the same set of principles or same set of facts or like same set of like data. It’s actually kind of rare these days, right? I remember the same thing like when I built the online map that I built, I mean that was one of the things that we saw was, you know, people would take the map. It has the same math underlies it. It’s very simple like calculating the levelized cost of electricity. People could put their own cost and their own fuel costs in there and it would update and then people could

Joshua Rhodes (29:37.87)

basically use it to discourse with each other, but they were starting from like a ground truth, right? They weren’t able to like manipulate things. that says, guess it feels like that translates here. You’re starting from the data and like people can do whatever they want, but if they’re using your product, they’re not going to be able to manipulate it, which seems like it’s a really good place to be.

Max Kanter (29:58.162)

Yeah, that all goes back to our mission, right? We want to be a centralized place that people can go to to understand what’s happening. two different counterparties in a transaction or, two different policy positions, right? They can take their stance, but making sure they have common ground on the facts is I think pretty enabling.

Joshua Rhodes (30:19.714)

Yeah. So do you have the data you need now to do your carbon accounting for charging your electric vehicle?

Max Kanter (30:25.39)

Short answer is yes. The longer answer is I thought when I started GridSats to get this data, was going to be a four week side quest and that would get back to building what I wanted. Turns out it’s a lot more complex than I expected. for example, we started 2025 with 200 datasets in our catalog. We ended 2025 with over double that. And the pace has kept up in 2026. So I thought that this was a very concrete

Max Kanter (30:54.894)

discrete challenge of collecting data about the grid. It really isn’t. And so I think at this point, the goal is not to get back to building vehicle to grid software, but it is to enable users and our customers to build that. know, since embarking on grid sets, you know, I’ve learned of so many different use cases and honestly, just like companies and organizations I didn’t even know existed a few years ago, but are very important for the operations and reliability of the grid.

Max Kanter (31:23.106)

Data has become table stakes for these companies to operate, right? And just making sure that they have what they need. We will always keep on trying to get the best data available to make even better vehicle to grid or other kind of innovative use cases like that possible.

Joshua Rhodes (31:37.934)

Yeah, absolutely. You 500 datasets. We talked a little bit about like how much you’re pulling every day and the granularity. If you had to count all your data points, LMP at this time is one point. Do you have any feel for how many data points you have in your database? Multiple databases. How many trillions? I’m assuming it’s trillions.

Max Kanter (31:58.808)

Fair to say hundreds of billions. Fair to say that. It depends how you count a data point. But yeah, hundreds of billions for sure. But like we’re collecting like tens of millions of rows of data a day. And each of those rows of data have multiple columns. You can multiply it out. It’s a lot of data, put it that way.

Joshua Rhodes (32:19.638)

Yeah, I’m sure it is. Okay, so one thing that I am asking folks is like, if we could flip the script right now, you’re interviewing me. Is there a question you would like to ask me?

Max Kanter (32:30.232)

I do have a question for you. So before Grid Status, I had completely taken the grid for granted. One of the things, you know, following you over the years is you are one of the more visible voices talking about the grid, you know, both in, you know, I’d say close industry circles, right? But also more broadly in the mainstream media and, national publications. I guess, how do you approach, I guess, that role? Because I find there’s a lot of needles to thread.

Max Kanter (32:59.936)

And so, yeah, I’m curious how you approach that role of being a very public face of the grid.

Joshua Rhodes (33:05.73)

When I started, my dissertation work was on Smart Grid 1.0. So this was like money coming out of the American Recovery and Reinvestment Act after the Great Recession area. Like I actually wanted to look at green roofs and other types of things, but they’re like, hey, we’ve got this project looking at Smart Grid. And I’m like, what is Smart Grid? And they’re like, yeah, we’re going to figure that out. As I dove deeper kind of into the data, I just got really comfortable there. I just got really comfortable looking at how homes are using energy and looking at how

Joshua Rhodes (33:35.596)

that would translate to, you know, what home makeups were and that type of thing. And I had a mentor, Dr. Michael Weber, who like he was also in the media quite a bit and he couldn’t do all of his media stuff. And he would just suggest me for things that he kind of couldn’t get to. And so I just I’ve never really been afraid of trying new things. And so I just kind of like tried it and turned out I’m pretty good at talking in analogies in a way that normal people could understand kind of these complex things. And so just being able to take the complexity of the grid or in the data to underlie it.

Joshua Rhodes (34:05.398)

and put it into terms that normal people can understand. Like I was just pretty good at that. So I just kind of kept going with it. And then once you get in someone’s, know, Rolodex, they tend to keep calling you. So.

Max Kanter (34:16.206)

Awesome. Does it feel like a lot of responsibility?

Joshua Rhodes (34:19.244)

You know, it does actually because I don’t ever want to be wrong. Like if I’m going to be interviewed or asked about something, I’m going to go do research. And in these days, it’s generally pulling a lot of data and looking at things. And part of that research is going to grid status and looking and seeing kind of what’s going on in MISO or wherever. I think that one of the tricks is never getting over your skis, being able to appropriately caveat things.

Joshua Rhodes (34:47.277)

I do have like a little bit of a good setup such that like if folks are wanting to interview me, it’s generally they’re looking for an expert so they’ll actually make me sound smarter than I am, which helps me out quite a bit. And so maybe that’s actually what it is. Is there actually looking for someone smarter so they make me smarter? I don’t know. We’ll see. But anyways, Max Cantor, thanks for being on the Energy Capital Podcast.

Max Kanter (35:08.328)

My pleasure, anytime.

Joshua Rhodes (35:12.024)

Thanks for listening to the Energy Capital Podcast. If today’s conversation helped you make better sense of how the energy system actually works, share the episode with a colleague and hit follow on your podcast app. You can find us on Apple Podcasts, Spotify, and all the usual platforms. For deeper analysis and context each week, subscribe to the Texas Energy and Power at texasenergyempower.com. That’s where you’ll find every episode, every article, and our latest updates. We’re also on LinkedIn, X, and YouTube.

Joshua Rhodes (35:41.39)

where we share clips, insights, and ongoing commentary on energy policy, markets, and the grid. Before we go, a quick note. The views expressed on this podcast are my own and do not represent the official positions of the University of Texas, Ideasmiss, Austin Energy, or Columbia University. A big thanks to Nate Peevee, our producer. I’m Joshua Rhodes. Thanks for listening, and we’ll see you next time.

]]><![CDATA[Texas at the Center of America’s Record Breaking Energy Buildout | Reading and Podcast Picks - Mar. 2, 2026 ]]>https://www.texasenergyandpower.com/p/texas-at-the-center-of-americas-recordhttps://www.texasenergyandpower.com/p/texas-at-the-center-of-americas-recordTue, 03 Mar 2026 16:55:35 GMTReading and Podcast Picks is a collection of what we’ve been reading and listening to over the last week or so about energy topics.

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New U.S. electric generating capacity expected to reach a record high in 2026 | U.S. Energy Information Administration

A recent U.S. Energy Information Administration report has an eye-popping forecast for electricity generation across the country. As usual, Texas is helping to drive that growth.

The report predicted, unsurprisingly, that the nation will hit another electricity generation record this year, adding 86 gigawatts to its inventory. More than 90% of that will come from renewables and batteries – with solar power alone accounting for 51% of the growth. Batteries represent another 28%.

Texas is a key driver across the board, accounting for 40% of the solar growth and more than half of the battery growth. The conclusions echo other recent reports showing that renewables continue to boom in Texas, despite policies at the federal level – and some anti-energy activism in the state – seeking to curtail them. As the Dallas Federal Reserve Bank reported last month, “Utility-scale solar shines in Texas despite tariffs (and) federal policy changes.” That report included this remarkable graph showing Texas solar growth accelerating in the face of policy headwinds:

Here are highlights from the EIA report:

Solar. We expect 2026 to be another big year for solar additions, similar to the record utility-scale solar capacity added to the U.S. grid in 2024 (30.8 GW) and in 2025 (27.2 GW). Developers plan to add 43.4 GW of new utility-scale solar capacity in 2026, a 60% increase in capacity additions from last year if realized.

More than half of the new utility-scale solar capacity is planned for four states: Texas (40%), Arizona (6%), California (6%), and Michigan (5%).

A new project, Tehuacana Creek 1 Solar and BESS, adding 837 megawatts (MW) in Texas, is the largest solar photovoltaic project expected to come online in 2026; it will also offer an additional 418 MW in battery energy storage capacity.

Battery storage. Developers plan to add 24 GW of utility-scale battery storage to the grid this year, compared with a record 15 GW added in 2025. U.S. battery storage capacity has grown exponentially over the last five years with more than 40 GW added to the grid during this period.

Projects in three states make up the bulk of planned battery storage capacity in 2026, accounting for about 80% of the new U.S. battery storage capacity: 53%, or 12.9 GW, in Texas; 14%, or 3.4 GW, in California; and 13%, or 3.2 GW, in Arizona.

Three of the four largest battery storage projects scheduled to come online in 2026 are in Texas:

  • Lunis Creek BESS in Jackson, Texas, 621 MW

  • Clear Fork Creek Solar and BESS SLF in Wilson, Texas, 600 MW

  • Bellefield 2 Solar & Energy Storage Farm in Kern County, California, 500 MW

  • Tehuacana Creek 1 Solar and BESS in Navarro County, Texas, 418 MW

Texas on track to lead nation in energy storage, report finds | Houston Public Media

The Solar Energy Industries Association (SEIA) made waves last week with a report showing that Texas is on track to take the national lead in battery storage. It was picked up by, among others, Gov. Abbott’s office, which declared, “With our capabilities, Texas will continue to power the nation.”

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]]><![CDATA[Who Pays for Texas Grid Growth? - Roundtable Discussion]]>https://www.texasenergyandpower.com/p/who-pays-for-texas-grid-growth-roundtablehttps://www.texasenergyandpower.com/p/who-pays-for-texas-grid-growth-roundtableWed, 25 Feb 2026 11:07:02 GMTTexas’s new era of electricity demand is forcing policymakers to walk an unprecedented tightrope.

The state has to keep the lights on – and it has to make sure that Texans can afford to do so..

Massive load growth from data centers, population, and electrification is teeing up existential questions for the ERCOT grid. How do we build what we need without overbuilding? And how do we avoid burdening households with costs that businesses and large users should be paying?

Those questions framed our latest Energy Capital roundtable with Matt Boms and Dr. Joshua Rhodes.

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Why bills are rising faster than people expect

Utilities across the country are planning massive infrastructure investments over the next several years, and Texas is leading the way. Between new generation, transmission, and distribution upgrades, the price tag for this growth is substantial.

Texas has covered recent load growth primarily with a mix of solar, wind and batteries. Some state leaders have prioritized new gas plants as well, though capital costs for these facilities has more than doubled in some cases, even as wait lists for turbines have grown.

At the same time, transmission and distribution companies are filing rate cases tied to resiliency, reliability, and growth. Those investments often show up in rates years before customers see any economic benefit from load growth.

What’s driving costs matters more than ever

As large new loads, especially data centers, request connection to the grid, the question of who pays becomes unavoidable.

The basic principle is simple: if infrastructure is built for a specific customer, that customer should bear the cost. If infrastructure provides broad system value, then costs should be shared. Problems arise when all customers pay for expensive upgrades to cover loads that may be temporary or never fully materialize – especially with transformers, substations, and core hardware now costing multiples more than they did just a few years ago.

Without guardrails, Texas risks building expensive infrastructure that everyone pays for, even if demand disappears for the energy that infrastructure is meant to support.

Underused tools

There are ways to blunt this load-growth pressure.

Distributed energy resources (i.e. community power or local power), demand response, and energy waste reduction can reduce peak demand and delay or avoid costly grid upgrades. In many cases, these solutions are faster and cheaper than traditional investments in poles and wires.

Analyses show that even modest levels of community power can save ratepayers meaningful amounts of money by deferring transmission and distribution spending while also delivering wholesale market value.

One way or another, decisions made in upcoming utility rate cases will lock in costs for decades.

Grid growth is real. Infrastructure costs are rising. Ignoring either won’t protect customers. The state must align costs with the parties driving them, wringing out value from lower-cost flexibility strategies before committing to the most expensive build-outs.

If Texas effectively walks the line between affordability and reliability, this period of load growth can strengthen the grid without punishing Texans who rely on it.

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Timestamps

  • 00:06 – Rising Costs, Rising Stakes

  • 01:17 – Load Growth and System Pressure

  • 03:16 – Gas Dependence and Fuel Risk

  • 06:21 – New Generation Costs and Competition

  • 07:05 – Oncor Rate Case, $830M Request

  • 08:27 – Who Pays, ERCOT vs Other States

  • 12:08 – Driveway vs Highway Cost Test

  • 15:33 – Capital Bias and Regulatory Incentives

  • 18:49 – Avoiding Rate Shock, Role of DERs

  • 24:07 – Higher Prices, Solar Payback Effect

  • 34:12 – Missing Price Signals in Distribution

  • 37:05 – Final Takeaways and Wrap

Resources

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Company & Industry News

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Energy Capital Podcast is produced by ClarityForge Studios.

Transcript

Micalah Spenrath (00:05.55)

Hi everybody and welcome back to the Energy Capital podcast. I’m your host, Makayla, and I’m joined by Josh Rhodes and Matt Bonds. We are at an interesting place in the energy transition. Energy costs are rising. Utilities are planning to spend trillions of dollars across the country to keep up with rising energy demand. And at the heart of these macro trends is us, the consumers, the payers of electricity bills. So that raises a question. How do we build the grid that we need today?

Micalah Spenrath (00:34.868)

and tomorrow without overbuilding it or pricing people out. I’d like to dig into what’s driving energy costs, where utilities are planning to spend those billions and trillions of dollars, and how we can modernize the grid in a way that’s reliable, efficient, and still affordable. So setting the stage, demand for energy is rising, outpacing traditional energy system planning frameworks and timelines, and utilities are in the middle. Challenge with meeting that demand and keeping costs.

Micalah Spenrath (01:03.778)

to consumers reasonable. So starting with the primary question, what is the primary driver of these increased energy costs in Texas or nationally?

Joshua Rhodes (01:17.038)

You know, there’s just this massive growth in electricity. There’s like a lot of things kind of coming together, kind of been kind of a perfect storm here, right? It’s like one across, you know, the US electricity growth has been flat. It’s been growing in Texas. Texas has been an exception to other places. I mean, really demand growth has been kind of flat, right? And managing a system that is just kind of going from day to day, not really changing is much different than managing a system that’s growing. The amount of inputs you need to that are just different.

Joshua Rhodes (01:46.734)

A lot of the utility spending and buying has been responding to storms or just replacing things kind of at the end of their life, but not really building for growth. And that’s just a different mindset. The big topic right now is like data centers and like all this other kind of stuff driving up demand. But I mean, even before this, 2022, 2023, before we taught the internet how to talk to us, we were already expecting.

Joshua Rhodes (02:11.532)

electricity used to go up, right? We were already looking at electrification of buildings and electrification of transportation and kind of reshoring of like, you know, manufacturing and all this other kind of stuff. I mean, we’re already looking at a lot of that, but then AI is here, you know, among us and demand is going up. There’s still hangovers from like, you know, COVID supply chain. Surprisingly, it’s really like at the same time that we’re looking to grow everything that we need to buy to facilitate that now costs like way more than it did five years ago. It’s kind of a perfect storm.

Joshua Rhodes (02:41.518)

Onomat, you got any extra thoughts?

Matt Boms (02:43.66)

I think Josh said it perfectly. The pie is getting bigger for everyone, right? Everything’s getting more expensive. We’ve got supply chain issues. And at the same time, I feel like we’re in the best possible place to meet all of this load growth. Michaela, you know I’m a glass heffal kind of guy. And I tend to think that where else would you rather be living and working when it comes to which market is best positioned to meet all of this load? And I think we’re seeing the answer play out in front of our eyes with all the action that’s happening in ERCOT, right? That’s true.

Matt Boms (03:11.362)

So yeah, I’m feeling more optimistic by the day. think it’s a huge challenge, but I think we’ll be able to meet it.

Joshua Rhodes (03:16.216)

some other interesting things in there. As I was thinking about what types of fuels and things like that that we’re going to use to meet this electricity sector growth. I think if you look at the interconnection queue, we’re going to build a lot of solar and storage, or what is like chock full there. we have gigawatts of natural gas in that queue as well. And long term, ERCOT’s gotten about 45 % of electricity from natural gas. I mean, there is pressure on natural gas prices, right? mean, they fluctuate.

Joshua Rhodes (03:45.55)

We’re going to export more from LNG and like how associated gas production is dependent on the price of oil and like all these other kinds of things. know, natural gas can be volatile in terms of its fuel price, which we saw in 2022 in Russia invaded Ukraine, natural gas prices tripled over two years. They tripled. And then two years, they came back down. It doesn’t mean that some other shock couldn’t do that as well. And 25 years ago, there was first generation tech bubble. thought we were going to be building a bunch of data centers for, you know, pets.com and

Joshua Rhodes (04:15.586)

what the original tech bubble that was out there and through efficiencies and switching to cloud and like a whole bunch of other things that demand growth really didn’t materialize. And there were utilities and builders of natural gas turbines and things like that, that kind of over invested, overbuilt and kind of got burned in that space. And I think there’s a bit more discipline right now in terms of, okay, we see the growth, maybe we’ll output of this factory by 20%, but we’re not going to increase it by 120 % or something like that, right? I think there’s some kind of

Joshua Rhodes (04:45.016)

things going there. And just, it made me also think of back in the seventies, even going further back, we actually used a lot of oil to generate electricity. And then we had the energy crises of the 1970s that kind of got us off of using oil for electricity because oil got super volatile. I don’t know. It just makes me think, could that be something that happens in gas too? I mean, probably not in the near term, but long-term it could be interesting to watch.

Micalah Spenrath (05:10.742)

Yeah, I think the word that stuck out to me there was discipline. So I think disciplined utility spending is music to my ears. So hopefully, hopefully we will implement some of the lessons learned from the 70s and prior. So for me, from what I’ve been seeing, a primary driver to increased energy costs nationally, but also Texas, is that

Micalah Spenrath (05:34.58)

utilities are leaning into natural gas in order to meet some of that demand. And as you noted, there’s fuel costs associated with that. There’s higher operating costs associated with that as compared to some of the other technologies at our disposal. So I think it’s really interesting to see that natural gas is still playing a very large role in utility strategies, even though the cost of natural gas is increasing. So that’s based on EIA data. So I think that’s part of it, right? And then I think another

Micalah Spenrath (06:04.12)

contributor to increased prices is barriers to low-cost energy deployment, whether that be market-driven or policy-driven. So if we don’t have as many low-cost electrons on the grid, you’re going to be spending more on things like natural gas. So that’s definitely going to drive up prices as well.

Joshua Rhodes (06:21.23)

Even like the costs for the gas power plants are up, right? When we do grid modeling, we used to do like a thousand bucks a kilowatt, right? That was like our thing for like a natural gas combined cycle. then somewhere now between, you know, 2,500 and 4,500, depending on which study you’re looking at. And does that include new pipeline infrastructure and all this other kind of stuff? Which is interesting because we did a study last year or two years ago that looked at how cheap does nuclear have to get versus when it becomes competitive in like a unbundled or deregulated kind of market.

Joshua Rhodes (06:51.84)

If we’re at 4,500 bucks per kilowatt for like combined cycle, that’s about where it started to look really competitive, which is just interesting to note. We’ll see, like, you know, do people think those are long-term prices or whatever? It is an interesting point.

Micalah Spenrath (07:05.122)

Yeah,

Micalah Spenrath (07:05.482)

okay. Continuing on, so looking a little bit deeper into utility spending. So as I mentioned, utilities are planning to spend trillions of dollars across the nation through 2030. And much of this investment is to expand capacity, modernize the grid and infrastructure, and then also respond to demand growth. So bringing it closer to home, looking at Encore in Texas, Encore recommended their revenues be increased by approximately, I think it was like eight

Micalah Spenrath (07:33.998)

$130 million or something like that, looking at about a 13 % increase over their current annualized revenues, which is a lot. That proposal can translate into meaningful bill increases for customers if regulators ultimately approve them. We haven’t found out the results of that just yet, but what they’re looking at primarily is resiliency and reliability projects and really infrastructure build out, which is not a surprise given the cost of service regulatory model we have in Texas.

Micalah Spenrath (08:04.226)

So when we talk about utilities needing to invest all of these billions of dollars, millions and billions of dollars, what types of projects are truly necessary for reliability and what might be deferred or approached differently? Simply put, are utilities investing in the right places in order to meet demand but also meet responsible costs for consumers?

Matt Boms (08:27.162)

I’ll take a stab at that Josh. My feeling on that Michaela is most people just want to know who’s left holding the bag. Who’s going to end up paying for all of this? Like if we were in a house state affairs hearing and chairman Todd Hunter were asking us questions, the first thing he would ask us is who’s ultimately paying for this? And that’s again, like bringing it back to Texas. That’s where we’re lucky that our utilities are just transmission and distribution and they’re not generators. So going back to the gas projects that are being built.

Matt Boms (08:56.556)

That’s happening all across the country with vertically integrated utilities who ultimately they’ll build the plant, they’ll own the plant, they’ll put them to the right base and they’ll get the guaranteed return on the gas plant, right? Regardless of what happens next, we know what the steps are, it’s predetermined, right? Versus in ERCOT, the company that builds the plant puts themselves at risk because they’re bidding into the market, right? So we’ve got a great market-based system where...

Matt Boms (09:21.824)

In my view, we can have that conversation on transmission and distribution infrastructure and what we need to meet all the load. at least when it comes to what I’m seeing, what I’m hearing from folks in other states is a whole lot of construction that may or may not be worth it for ratepayers. So that’s at least one thing that I’m grateful for working in Texas, in Urquhart specifically.

Joshua Rhodes (09:41.888)

Yeah, I think the national numbers are just some of the reading we’re doing before. It’s something like almost 71 billion in rate increases between now and 2028, like across the country. Like it’s not a little bit of money, right? I’m curious what the number would have been five years ago before all of this. this triple that or double that or is it similar magnitude? I don’t know. We’re just paying more attention to it lately. Some of these companies are starting to come out with like plans for this, which I think a lot of the big tech companies, now that they’re moving into hard infrastructure.

Joshua Rhodes (10:11.64)

They just didn’t really know how to deal with that. Like when you’re doing software and you’re dealing with a different kind of use case than you are for like grid infrastructure, sunk costs, fixed costs, things that other people are kind of paying for and kind of the whole Silicon Valley ethos of move fast and break things, you know, doesn’t work super great in the utility space, right? Whether that’s electricity or water or other types of things. And so, mean, there’s been some interesting stuff like, I think Microsoft recently came out with community first plan for like data centers that they’re going to

Joshua Rhodes (10:40.866)

shoulder a whole lot more of the cost and not ask for some of these tax abatement programs that maybe exist in certain regions, which is really interesting. I’ve been saying things like if these companies have buckets of money, let them spend it. And so maybe they sounds like starting to do some of that, but it’s been interesting, probably like, you know, working through that regulatory structure, right? It’s like, this is probably the first time that companies have come in, been willing to do that, or at least got to the point where they’ve been willing to do that, right? Just because of how fast they want to move and all this kind of stuff. So, I mean, I think it’s a really interesting.

Joshua Rhodes (11:10.638)

model that may start working, particularly in some of the regulated parts of the state. Now I talking about we are unbundled and we have deregulation in most of the state, but there’s some parts of the state that don’t. I think there’s a story just yesterday or that I read just yesterday talking about that Metta is going to pay for a brand new gas plant in the El Paso electric region, which is a regulated area. I swear it up and down that they’re going to pay for the whole cost because it’s all going to go to support a data center. I think it’s a 366 megawatt gas plant.

Joshua Rhodes (11:40.044)

and about there. So that’s an interesting thing because there’s a lot of competitive in Texas, but there’s still the non-optin entities, the non-ERCOT parts of the state, whether that’s in the far west, the panhandle, or the eastern or the far eastern part of the state. And then we’ve got these transmission and generate co-ops and other types of things like that. So there’s a big portion of the state that some of that thinking might be able to work its way into. mean, the majority of the power is in the deregulated competitive area, but there’s a good chunk of it that’s not.

Micalah Spenrath (12:08.354)

Yeah,

Micalah Spenrath (12:08.744)

I think what you said was Microsoft and their proposal to pay for the infrastructure that they are incurring. It just reminds me of conversations that we had at the Public Utility Commission of Texas, right? So driveway costs versus highway costs. Yeah. So I think many people understand the concept of if this is your driveway and it’s dedicated to you for your use, you should pay for it. Yeah. If it’s going to be something that all of us are using, then feel free to socialize those costs.

Micalah Spenrath (12:37.944)

but you don’t wanna have rate payers paying for something that they’re not gonna be benefiting from. So if that natural gas plant in El Paso is dedicated to this data center, then I think it makes common sense that Microsoft should pay for it. Although many people might interpret that as an act of goodwill, I interpret that as just aligning with cost causation principles. So it’ll be interesting to see if the community side of things evolves beyond that.

Micalah Spenrath (13:07.342)

or if it doesn’t. So I suppose we’ll see.

Joshua Rhodes (13:10.838)

Yeah, it’s an interesting, I think it’s Meta, the one on Microsoft and El Paso one, but it will be interesting to see like if some of those principles can also work their way into the competitive part of the state, right? I think there are some mechanisms. I may have talked about this in our last round table and I know I’ve talked to a bunch of folks around it, but like there’s this principle of how infrastructure is paid for in the Alberta system operators. Alberta is like the Texas of Canada, right? It really is. It is kind of uncanny in a lot of different ways, but they do this for generators and we can do this for load.

Joshua Rhodes (13:40.014)

New generators have to pay for like the cost upgrades that go into the system to be able to deliver that power. But then they’re paid back over time. So the generators pay for the driveway and the highway, but then they’re paid back for the highway over time if they exist over a long period of time and provide the market benefit that existing in that system does. And so, right, think some of the concerns, if some of this AI, you know, stuff turns out to be bubble-ish or

Joshua Rhodes (14:06.542)

partial bubble or whatever that like we build out all this infrastructure and then there’s no one there, you know, using that infrastructure or consuming that power that would pay for that infrastructure. And then right payers get left, you know, everyone else gets left holding the bag for that, right? If Matt was, was talking about, I mean, I think we could do something similar. It’s like right now in ERCOT, we just make you pay for the driveway, but we could make you pay for the driveway and highway and then pay you back for the highway over time. Put that up to load if you exist for 10, 15 years, whatever it takes.

Joshua Rhodes (14:36.236)

to pay that infrastructure cost back. And then if you are a bubble, if you’re gone in two years, then you defer the other 13 years worth of payment or something like that. And we’re not left holding the bag, right? So I think there are some mechanisms. I think they’re clear in like the regulated space, even in the deregulated space. I think we could do some learnings from other regions.

Matt Boms (14:54.518)

Yeah, it would be a good, interesting solution because under that scenario, Josh, you would take away some of the risk from the investors. ERCOT is completely dependent on those investors. And like you said, if it is a bubble, then you lose them, right? Right. Versus a middle ground. You don’t want to go to vertically integrated because then, the rate payer is paying for that drive. That drive is going to get turned into a highway or will pretend that it’s a highway, even though it’s really just a driveway.

Joshua Rhodes (15:21.73)

Five lane driveway, yeah.

Matt Boms (15:23.042)

Yeah, so you’d want some middle ground where the investment doesn’t dry up, but at the same time, you give it the value it deserves instead of prepaying and assuming that there’s some value there.

Joshua Rhodes (15:32.471)

for

Joshua Rhodes (15:32.646)

sure.

Micalah Spenrath (15:33.282)

This might be a hot potato of a question. if it is just. Many utilities are referencing historic load growth as justification for their historic spending, primarily pointing the finger at large loads and data centers. My question is, is this truly a new constraint that utilities are facing or does it largely and perhaps conveniently fit within the traditional utility model that prioritizes capital investment?

Micalah Spenrath (16:02.616)

So basically like, are utilities just doing what they’ve always done in that they’re spending on capital because that’s what they get a rate of return on and they’re just using data centers as a convenient justification for that? Or is this genuinely something that is catapulting them into a whole new order of magnitude of spending? I hope that’s not too controversial.

Matt Boms (16:25.706)

No, I don’t think so. I think that the answer is always somewhere in the middle because they’ve already been spending about $9 billion a year on poles and wires in Texas, right? And that’s roughly $5 billion on distribution, $4 billion on transmission. So you add that up, that’s $80 billion over the past 10 years. And that was all without the load growth that we’re seeing now. So the nature of utilities is to build because that’s what we’ve asked them to do in ERCOT. The shareholders want more capital expenditure, so you can’t blame them for

Matt Boms (16:55.224)

doing their job well. And I’ll let Josh answer the more difficult question, which is like how much of that is reasonable?

Joshua Rhodes (17:01.87)

Yeah, I mean the engineering answer it depends right but like I think there’s two camps on this right is one was like well the load growth will come and they’ll take care of all of that and a lot of people point to like that LBNL study that looked at like historically how you know electricity costs have maybe not risen as fast in places that have had low growth versus those that haven’t. There’s always a danger of saying this time is different but there are some flags that kind of this time is a little bit different in terms of the low growth is just much faster than we’ve done in the past. I mean I think it does come back to like

Joshua Rhodes (17:31.434)

Everything that we need to buy from the poles, the wires, the transformers, the conductors, everything, the power plants, everything that we need to buy cost way more than it did five years ago. mean, if you got mad about inflation on the cost of eggs, you should look at pad mount transformers in terms of how much more expensive they are. CPI on eggs is like 10 % and people were like in the streets, right? The inflation on like transformers is 200%.

Joshua Rhodes (17:56.44)

You know, those green boxes that are like out in your neighborhood or the cans that are mounted on poles and then all the way up into like the big pieces of equipment that, know, step voltage and things like up and down on the transmission system and, and other parts. mean, all that costs more money. And so it’s like, if all that didn’t cost double, triple, like what it did a few years ago, then I could be more convinced that, okay, this low growth is going to like help with that. Those costs will be spread out over a whole lot more megawatt hours and kilowatt hours.

Joshua Rhodes (18:23.798)

everything’s just more expensive. And so, I mean, I’m afraid because we’re asking the system to like grow much faster than it has and everything that we need to build is more expensive, there’s going to be more money quicker moving into that rate base and there could be a rate shock, right? I mean, that’s what I’m worried about is it’s the mechanisms are probably long-term we’ll even out, but like the short-term, know, people got to pay mortgage this month, not the average over the next 10 or 15 years.

Micalah Spenrath (18:48.62)

Yeah, and I think the idea of rate shock is something that is certainly the big bad wolf that everybody’s looking at. So in terms of what practical solutions are to moderate cost and to avoid rate shock, right? I’m thinking about a few options, distributed energy resources. Matt, looking at you, we’ll come back to that, right? So rooftop solar storage, demand response, energy efficiency generally, and flexibility.

Micalah Spenrath (19:17.772)

So virtual power plants and things like that, those can really temper peak demand and defer costly investments if we actually incorporate those into our strategy. So the question is, are utilities doing that sufficiently or aggressively? So Matt, know that Teba has a report on that very question, like how can distributed energy resources defer some of this to indie investment? So can you share any high level findings with the listeners?

Matt Boms (19:47.278)

Yeah, thanks for teaming up there, McKinna. That was awesome. Well, I think the total savings that we came up with was $1,850 per rate payer over 10 years. And that number was calculated on the one hand, the TND deferral, right? So like how much of the distribution upgrades are not being made immediately because you’ve got more DERs on the system, whether they’re distributed batteries or any one of the technologies you just mentioned.

Matt Boms (20:13.038)

And then the other half of it is wholesale market value. like, think the assumption we had in there was pretty small, but it was like 2.5 gigawatts of DERs over the next 10 years. And just that alone yielded over $1,800 per rate there. So there’s a lot of value on the table, right? And I think we’ll see moving forward how utilities incorporate that into their strategy. think your question is dead on because you asked if they’re doing enough, I would say no, because they’re leaving distributed.

Matt Boms (20:42.786)

technologies on the table and they’re not taking advantage of them. But again, poles and wires only ERCOT. So if you’re a TDU in ERCOT, you’re just building out grid infrastructure. You’re not allowed to deal with storage unless you’re a CPS or an Austin Energy or one of the vertically integrated ones. So that would be the reason why.

Micalah Spenrath (21:02.058)

Yeah. So where my mind goes with this is it’s going to be very difficult to reorient utilities to prioritize some of these cost effective technologies, which can be cost moderators is something that we’ve discussed. Without a regulation reform, I think cost of service regulatory models had their purpose and I think they’ve served people well in the grid of yesterday. But I think that performance based regulation is

Micalah Spenrath (21:32.066)

Hard pressed, I’m hard pressed to understand how we’re going to get to a more flexible, dynamic energy system, distributed energy system, without taking a hard look at how utilities are financially incentivized to get there. And in Texas, I just don’t think that many of them are, unless of course you’re an integrated utility or don’t know what you’re something like that. But that leaves a lot of other folks on the table that don’t have those incentives. So.

Micalah Spenrath (22:00.952)

That’s a question. And is there the political appetite to tackle that, right? Because we’ve had cost of service regulation in Texas for so long. So that’s certainly a question I have.

Joshua Rhodes (22:12.674)

I think your spot on, Michaela and Matt was mentioning it earlier. I mean, just follow the incentives, right? It’s like, if you change the incentives, the companies will change their behavior, right? It’s just cartoon, like a trail of money, right? It’s just make it go a different direction or whatever and they’ll go a different direction, right? It’s just pretty much that simple in concept, probably not so much in terms of changing like, you know, the regulations and things like that. I think you sent this out. There was something about, okay, if like costs are going to go up, it actually starts to make distributed energy resources look

Joshua Rhodes (22:41.506)

better, right? Because I mean, a lot of times you’re making comparisons like, do I get solar? Do I get storage? What does that cost relative to like my electricity bill or whatever arrangement I have for energy? And like, as the electricity, you know, as one side of that equation goes up, then like, you know, systems that were more marginal or maybe didn’t pencil out, you know, start to pencil out, right? I mean, I think we’re seeing this in ERCOT, like wholesale prices as those have gone up, particularly in like the western part of the state. I mean, those have gone up. I was just looking at the western load zone.

Joshua Rhodes (23:11.384)

prices yesterday and they’ve gone up last year quite a bit further than like the years before in other parts. And so as those costs go up, whether that’s distributed energy resources or more utility scale, know, wind and solar projects, they start to pencil out even with the loss of the tax credits. There’s kind of like, we’ll see which one wins there, right? There’s like dueling things. One, the loss of the tax credits makes it more expensive, but if the cost of the grid is going to go up and electricity prices are going to go up, then maybe they start to pencil out again, right? It’s a weird

Joshua Rhodes (23:40.034)

What’s the new equilibrium going to be? When have we ever had an equilibrium? But when will we get there? But even getting back down to the distributed side, for distributed energy resources, I I don’t love that this is the mechanism, but it’s the silver solar lining of this, right? As more of those DERs become like more competitive in this region where prices are going up. Again, don’t love that that’s the reason why, but it might be the case, right? Yeah.

Micalah Spenrath (24:07.402)

Yeah, I think for me, it’s a very interesting and perhaps unintended consequence of some of the federal policy changes that we’ve seen related to clean energy. So rising energy prices might actually make it more financially viable or feasible for people to make these investments. So to quote what the resource I had shared, it was a Wood Mackenzie report, and it found that increasing retail rate escalation

Micalah Spenrath (24:34.648)

can reduce payback periods by about a third for commercial systems. So my interpretation of that is that could spur more renewable energy deployment even as we contend with the materially different federal tax credit landscape. So I think that that’s really interesting because it’s a bit counterintuitive. You wouldn’t expect that to be the result, but it absolutely makes sense. If energy is more expensive, it makes it more feasible for me to just

Micalah Spenrath (25:02.624)

invest in my own energy and produce it at home rather than buying it for my utility. So I think it’ll be interesting while those changes may have been intended to decrease renewable energy deployment, it might actually have the opposite effect now that markets have kind of taken hold and we’re seeing these different trends.

Joshua Rhodes (25:20.362)

Yeah, like I’ve not looked at this at all, but it’d be really interesting if, okay, with loss of the federal tax credits means less utility scale gets built. the price of electricity wholesale goes up. So that means that retail goes up. that means people build more distributed energy resources because the cost of has gone up. If we just completed the circle on that and that’s actually where it came to, like, and I have no data for that whatsoever, just a hot take on it. But I don’t know, that would be really interesting to see, but maybe we’re starting to see that. Yeah.

Micalah Spenrath (25:48.12)

If you

Micalah Spenrath (25:48.352)

do any research on it, please report back.

Joshua Rhodes (25:50.894)

Okay,

Joshua Rhodes (25:51.814)

I will do.

Micalah Spenrath (25:52.974)

Ha

Matt Boms (25:53.998)

The problem is also like to unlock the real value of those distributed resources. There’s so many layers of the value stack that are currently not accessible, that are not available in ERCAD to customers, right? Like I mentioned the TND deferral, that’s not on the table. The way that price is settled is only instead of notally, right? If we want to get real nerdy and talk about if there’s a customer in a really overloaded substation in Houston on a really hot day in August.

Matt Boms (26:20.46)

Why aren’t they getting rewarded? Like we have all the technology in place to make that happen, but it’s ultimately a policy choice. And that’s what I love about what you said, Michaela, because we’re not asking anyone to reinvent the wheel. if, when you say performance based regulation, what we’re saying is essentially, shouldn’t we reward utilities based on how reliable they are and how much money they save for their rate payers, right? And like there are other states across the country that do that. Like Arizona, Georgia, Illinois.

Matt Boms (26:49.73)

We can look to other places and like Josh mentioned, Alberta, there’s plenty of successful case studies where folks are doing that in a better way because ultimately the way that we set up our system here in ERCOT is cost recovery for all capital expenditure. It’s not based on how many consecutive days you keep the lights on for your customers and how much money you save them.

Micalah Spenrath (27:10.422)

And I think you hit the nail on the head with it mostly being a policy choice, right? We can choose to better compensate residential customers for grid services. We just have to commit to it. And I think we’ve started a lot of progress there, but to your point, there are additional pathways or components of the value stack that we could really be utilizing to deliver even more benefits to consumers. It’ll be interesting to see how that evolves over time and if there is the momentum to get there.

Micalah Spenrath (27:40.184)

But to your point, yes, I think that we do want to reward utilities for performance, not necessarily just for capital investment.

Matt Boms (27:49.806)

And also to take it one step further, Michaela, I don’t know if you agree with this, but it sometimes takes emergency or a disaster to shake people because I remember Hurricane Barrel when folks started questioning Centerpoint and folks in Houston were really outraged at what happened. I hope it doesn’t take that. Like I hope that we’ll be more sensible and plan for this and really be able to meet the moment. Like actually reward utilities for performance instead of just writing blank checks.

Micalah Spenrath (28:15.518)

Yeah, so I think my interpretation of a lot of the utility spending that I’ve seen, and I haven’t read every proposed rate case or strategic plan that a utility puts out, but a lot of them are reactive, right? So it’s we experienced a hurricane, we experienced a wildfire, so now we’re going to be investing in these strategies versus an adaptation perspective. So if we know and

Micalah Spenrath (28:42.4)

If we look at the data, we are going to be experiencing more challenges in the future, but perhaps not less, right? So it would be interesting to see how utilities plan to innovate and adapt over a long time horizon versus having plans that are a bit reactive in nature. And that can really change the perspective, I think. It can also change how a consumer is actually going to be serviced. So I want to be able to rely on my utility.

Micalah Spenrath (29:12.242)

And being aware of them looking into the future versus the past, I think would really increase confidence that they’re actually going to be doing that. I’ll pay for that. Like as a consumer, I will pay for adaptation because I think that’s going to benefit us in the long run. For me, it’s a bit harder to pencil out if you’re only going to be reacting to things that we’ve experienced thus far, because we know that the future is going to look a little different.

Joshua Rhodes (29:40.046)

Yeah, I will say it is. Maybe I’ll provide a little bit of pushback. Predicting the future is hard. Yogi Berra taught us this. Or making predictions is hard, especially about the future, I think is a quote that’s probably misapplied to him. But anyways, building out stuff for like an adaptation against an uncertain future, like utilities kind of get caught with their pants down if they like make the wrong investments. They can get dragged before committees and other kinds of stuff. And like, why did you spend this money on this thing?

Micalah Spenrath (29:41.084)

That might be a hot take.

Joshua Rhodes (30:07.042)

you haven’t used or it’s not going to be useful or like other types of things. If we’re going to do that route, like we have to be willing to let them make some mistakes because no one can predict the future. But that’s hard is like how much, how much of making a mistakes is, you know, just imprudent or whatever the terms are in terms of how that works. And so like, I understand why they’re like always being kind of more reactive than proactive. And maybe it’s just whenever they want to be proactive, there’s not enough buy-in from the

Joshua Rhodes (30:34.584)

communities and folks and everyone and everyone just getting to an understanding of like, hey, we’re building this for the future. There’s a potential that we don’t do this exactly right. It’s one thing to like look back and say, okay, you this storm took out like all transformers that were below a certain sea level in Houston or whatever, like, okay, all those need to be either all stilts or whatever, right? Versus we think that the next hurricane is going to get them at 20 feet higher or whatever the metric would be. I think, you know, utilities are pretty sensitive on like

Joshua Rhodes (31:02.83)

spending money that they may get called out on so far in the future. I think we need more consensus on that and consensus is hard, right? That’s really hard to get. On the other hand, you can look at the Texas has experienced like 27 plus billion dollar CPI adjusted storms over the past 20 years, right? And if you look at the chart, it’s just going up and up and up. And so like basically maybe the base level of every resilience needs to get better on spending on that kind of stuff. I can kind of have a little sympathy there for like being against a rock and hard place.

Micalah Spenrath (31:33.27)

Absolutely. So the two words that come to my mind are prudently incurred.

Joshua Rhodes (31:38.646)

Okay, I’m the engineer.

Micalah Spenrath (31:41.08)

So yeah, so that’s one of the standards when it comes to costs and utility spending. So prudently incurred, I think what is it, and reasonable. And I’m sure someone listening who’s a lawyer is probably gonna add something to this.

Joshua Rhodes (31:55.54)

I was trying to just put them together, yeah.

Micalah Spenrath (31:57.694)

No, no, no. So that’s one of the standards that I think they have to meet, right? These costs have to be prudently incurred. So I think to your point, we do want to make sure that they have this space in order to innovate and experiment and even make a mistake every now and then because they are adjusting to an uncertain future. at the same time, that has to be based on some sort of prudent strategy that they have. And if they’re not looking into the future and seeing that

Micalah Spenrath (32:25.192)

our extreme weather costs are going up, then it’s hard to understand how the billions that they plan to spend are going to be prudent. So I actually think that does give them some cover, right? So like we are looking, we’re staring down the barrel of an uncertain future and this is what we think we need to do. And hopefully we will have the policy spaces to encourage experimentation. Josh, I have a quick question for you. To your point,

Micalah Spenrath (32:53.322)

What do you think is missing that would basically encourage a utility to be more innovative and take, I don’t want to say risks, but essentially take the leap that they feel they need to take in order to meet the challenges of the future based on currently available models and data. Cause it sounds like you might think that the current incentive structure that they have might not allow them to feel that way. And I could be misinterpreting.

Joshua Rhodes (33:21.582)

Well, I mean, I utilities can do things like pilot projects that are like, you know, it’s kind of in the name, right? Okay, there’s a pilot. We’re going to try something out. Who knows maybe in the face of like how fast things are like set to grow and how much more we’re sort of set to spend on like electricity and how much more electricity is going to be going. Maybe we just need bigger pilots. The ability to take some bigger steps kind of in that direction. And maybe that’s the vehicle that it can be shielded through. actually don’t know if there’s okay. Pilots can’t be more than 2 % of.

Joshua Rhodes (33:49.45)

operating or whatever. have no idea like if there are even like current constraints on that, but maybe in the face of, you know, higher levels of growth, being able to have some like higher value pilots and things like that to try out some of these new technologies, whether that’s bigger virtual power plants or advanced conductoring or whatever it is to let them try some of these things.

Matt Boms (34:11.928)

think, Michaela, this is also the problem with central planning because what Doug used to talk about this on the podcast, right? I won’t get into Hayek and I won’t be as intellectual as Doug, but I do think these are the dangers of a centrally planned system because you don’t have the price signals. the ones that we have in the wholesale market are pretty damn good. And that’s why folks love doing business in Texas. And conversely, we don’t have those price signals for the TDUs, right?

Matt Boms (34:41.1)

And like, we’re both relatively familiar with resiliency plans that were proposed by the utilities and approved by the commission and roughly a billion dollars a year for Encore and Centerpoint each. none of us are arguing on this podcast that they shouldn’t do hardening and they shouldn’t do vegetation management. Like we all agree on that stuff. It makes sense to be preventative.

Matt Boms (35:03.17)

But at the same time, like there were no DERs in those resiliency plans, right? There wasn’t a demand response program or energy efficiency or you name it. None of that is part of the resiliency strategy of the TDUs in Texas. And that’s a big problem because we all know that moving forward, that’s exactly what we need in Texas is more demand side solutions because most of the time we’re fine, but there’s always the chance of a winter storm and there’s always a chance of a really hot day in August. Then we’re kind of reaching the limits of what our grid can handle.

Joshua Rhodes (35:33.134)

So this is an interesting thing. I’ll agree like on half of that, that we don’t have the price signals. I think maybe not on the distribution side, because we don’t have prices down at the distribution edge or whatever. But on the transmission side, we do have congestion, right? Because of the way we do invest and connect and like we have our location of marginal pricing, LMPs, we do congestion revenue rights and all other kinds of complex things. I think we do have pretty good economic signals of like where new transmission is beneficial. But right now the way that we handle that,

Joshua Rhodes (36:02.434)

the economic test for transmission is so hard to overcome, the test doesn’t make sense. It essentially is like to pass the economic test and someone in chat or whatever is gonna tell me how I’m not exactly right on this, but essentially like you have to be able to make up all of the costs in one year or something. Whereas like transmission infrastructure upgrades and stuff, or that infrastructure is decade long infrastructure, right? It lasts for decades. And so like if we can take the congestion

Joshua Rhodes (36:32.602)

LMP signals, like I think it sends a very clear signal of where economic upgrades in transmission would be useful if we had a more sane economic test for that. So I think for the transmission side, we could, we have the data to be able to do this, but we’re just not doing it. But on the distribution side, yeah, it’s like if you want to do the same thing, you would need prices down there. And that does get pretty complex pretty fast. Maybe there’s always a divorce there somewhere, but like, I think at least on the transmission side, I think we do have the ability to do this now. just

Joshua Rhodes (37:01.696)

not doing it as good as I think we could.

Micalah Spenrath (37:04.59)

All right, so thank you so much for this amazing conversation. We are just about at time. So we’ve touched on a lot of different things, utility innovation, utility regulation, the pressures facing the energy system, whether that be cost or just speed of growth. So just quickly, what are your final takeaways from this conversation?

Joshua Rhodes (37:24.942)

I mean, think it just comes down to the pace at which this is happening is just so different than in the past, right? So I think we need to relook at how we’ve handled growth in the past and some of the mechanisms probably need to change to be able to handle how fast it’s coming to us now.

Matt Boms (37:38.958)

completely agree, Josh. And I think this is the moment where we need more innovation. I think we need to change the way we think about planning for the future. And if that means that our utilities have to become a little more innovative to meet the moment, then that probably makes sense as far as rewarding performance instead of just writing those checks for capital expenditure.

Micalah Spenrath (38:00.034)

Well, thank you so much for this amazing conversation, guys. And thanks so much to our listeners. Signing off, I’m Mikayla.

Matt Boms (38:06.731)

A man?

Joshua Rhodes (38:07.798)

I’m Josh.

Micalah Spenrath (38:08.93)

and we’ll see you next time.

Matt Boms (38:12.376)

Thanks for listening to the Energy Capital Podcast. If today’s conversation helped you make sense of the energy world, share the episode with a friend and hit follow on your podcast app. You can find us on Apple podcasts, Spotify, and all the usual platforms. For deeper analysis each week, subscribe to the Texas Energy Empowered newsletter at texasenergyempowered.com. That’s where you’ll find every episode, every article, and all of our latest updates. We’re also on LinkedIn,

Matt Boms (38:41.618)

X and YouTube, where we post clips, insights and ongoing commentary. Big thanks to Nate Peavey, our producer. I’m Matt Bombs and I’ll see you next time. Stay curious, stay engaged and let’s keep building a stronger, smarter energy future.

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