A Chat with The Nuclear Barbarian

00:00:03:11 - 00:00:19:06

Chris Keefer

Welcome back to Decouple. I sit in I'm joined by Emmett Penny, the one and only nuclear barbarian for a long awaited episode. It has been, I think might have been like a year since we last talked to Emmett. And that is too long.

00:00:19:09 - 00:00:19:17

Emmet Penny

Yeah.

00:00:19:22 - 00:00:35:22

Chris Keefer

Too long in my books. And really, I just wanted to catch up with you. You've been writing some fantastic pieces. You're writing a book right now? I've been thinking a lot about a lot of different things as well, so I thought we would just kind of riff this, improv it and see where it takes us. Kind of, kind of exciting, actually.

00:00:35:22 - 00:00:41:02

Chris Keefer

Not to have like a direction that I'm that I'm aware of. So, Emmett, welcome back to well.

00:00:41:06 - 00:00:46:20

Emmet Penny

Let's see if we keep this actual recording after we do it.

00:00:46:22 - 00:00:55:04

Chris Keefer

All right. For those listening and not watching, Emmett just took a drink out of, I think, the largest beverage container I've ever seen.

00:00:55:06 - 00:00:57:03

Emmet Penny

Stay hydrated, All right?

00:00:57:05 - 00:01:04:01

Chris Keefer

All right. You don't trust your kidneys? I'm just kidding. It's a medical joke. All right, What's up? What's new? What's exciting?

00:01:04:03 - 00:01:24:16

Emmet Penny

Dude, I'm a fool, first of all. You're. You're conquering in Canada, So that's what's up. You're doing like me. A million appearances and stuff like that. What's new on my end? Dude, I've just been. Well, Robert's documentary came out, and I'm in it, and I'm in it way more than I thought I was going to be in it.

00:01:24:18 - 00:01:43:02

Emmet Penny

And I've just been writing, like you said, working on a book or I'm writing a History of the American electrical grid. And every day I sit down to write, I'm filled with dread at the task before me, and I try to overcome that great brief. Just lost some premium products, so I'm doing that as well. So busy time, man.

00:01:43:04 - 00:02:06:20

Chris Keefer

Yeah. Yeah. Everybody. I mean, definitely sign up for great brief. It's amazing. Go freemium. And yeah, Robert Bryce's documentary, I'm ashamed to say, you know, just with everything being going crazy with bickering and, you know, I've written five op eds in the last week. Four out of the five have been published. One of them were we're shooting to get into an American press, maybe The Wall Street Journal anyway.

00:02:06:20 - 00:02:23:17

Chris Keefer

So maybe with five and five, it's kept me way too busy. So I've not been able to watch the whole feature, just the episode. I was kind of featured in. But yeah, tell me a little bit more about that. Let's pick that up for just a second. For the decouple listeners that haven't, I haven't watched it yet. What's what's, what's the series about?

00:02:23:17 - 00:02:25:00

Chris Keefer

I mean, if you want to sum it up.

00:02:25:02 - 00:03:00:01

Emmet Penny

Yeah. Yeah. So it's called Juice Power Politics and the Grid. Matty and I recorded right after each other for it in Chicago, I think got a year ago or something like that. So it's been a long time in the making. And him and Tyson go over. I interviewed Tyson when it came out for nuclear barbarians. They basically wanted to take all the lessons that they'd learned from doing Power Hungry and after they had released their first documentary together, Juice How Electricity Explains the World.

00:03:00:03 - 00:03:38:06

Emmet Penny

And to talk about what's happening to the U.S. electrical grid. So a lot of familiar faces are in there. It's me. There's Matty Healy, there's you, there's Mark Nelson, there's Meredith and Gwen and a whole bunch of other people. And it covers the grid from a bunch of different angles. I think my favorite story in the entire thing, and this is probably the fan favorite overall, is the Osage Tribe's victory over the energy company that illegally installed 84 wind turbines on their land, to which they own the mineral rights and they just won their case against.

00:03:38:06 - 00:04:08:12

Emmet Penny

I think now it's an Italian company, I believe, if I remember rightly and so now, and has to rip out all 84 and that's on 8400 acres of land and the tribe has yet to even begin its suit for damages. So yeah, and that is already like $300 million expense for an owl just to rip those out. So there's a lot of stuff in there about what's going wrong with the grid and it ends.

00:04:08:13 - 00:04:38:01

Emmet Penny

I was surprised to find out with a rumination on my idea of nuclear power plants as industrial cathedrals. And so there's a lot of me talking towards the end of it, but that's the general gist of it. You know, people who listen to decouple will be familiar with the reliability concerns that a renewables heavy energy policy has brought the American grid to and what we can do to fix that.

00:04:38:03 - 00:04:58:19

Chris Keefer

Yeah, I mean, it's really interesting, the Osage issue I remember there was also I think Greta was in solidarity with a Sami tribe in either Norway or Sweden that were protesting a wind development on their lands, which would have impacted caribou migrations. And, you know, I guess we live in this era of identity politics and a certain amount of tokenism.

00:04:58:19 - 00:05:19:10

Chris Keefer

But, you know, an indigenous digital aren't convenient to the green tech process. I think that's an interesting, interesting moment. And I'm not sure I'm not sure if you've been following how that that issue has been followed amongst the Osage. I imagine there's some people saying, Hey, man, I mean, we got to save the climate, so they should just leave it up.

00:05:19:12 - 00:05:23:18

Chris Keefer

Have you followed reaction to that or it's just been not been reported? I know a.

00:05:23:18 - 00:05:58:14

Emmet Penny

Lot of it just hasn't been reported. Yeah. I don't really know who else has covered it, which isn't to say that they haven't. But, you know, I, I don't read every single thing. So maybe there has been some big coverage, but I'm surprised that it hasn't been bigger. I mean, it's like, you know, as you said, it's a very inconvenient narrative for just about anybody who covers energy, because energy is almost exclusively covered in the mainstream press through the prism of climate and environmentalism.

00:05:58:18 - 00:06:20:16

Chris Keefer

All right. Well, certainly, you know, ringing endorsement, therefore, for this new piece, it's I remember talking to Robert, as has been developed, one of the one of the working titles in the past, I think had been brand renewable. Another had been like the Enron ification of the grid. Those may have become sort of subtitle, because this is a docu series being released in 20 minute chunks.

00:06:20:18 - 00:06:39:17

Chris Keefer

But yeah, I've really got to join some my listeners who have not watched it yet and gone through the through the whole series. I mean, we could talk about a lot of different things. I've certainly been on a bit of a journey. I tend to go through these kind of ebbs and flows of of productivity and of optimism and pessimism.

00:06:39:19 - 00:07:04:02

Chris Keefer

You know, I my listenership will be tired with this story, but just the Duesberg clinical diagnosis of being a defensive pessimist, which very much fits my sort of Eastern European genetics, just getting rolled over and over again by, you know, our neighbors or the Mongols or whoever else. And yeah, I mean, expecting everything to go to shit and then being pleasantly surprised when it doesn't.

00:07:04:02 - 00:07:29:18

Chris Keefer

That's kind of how the psychology works. But, you know, you're thinking a lot about the grid right now. You're thinking about nuclear as well. You know, in on Syria, we've had this great victory with the Pickering refurbishments. But when I kind of step back and look at it, we are just holding the line here in Ontario, you know, due to this accident of geology and not having gas and coal, Ontario, what nuclear it was a completely an energy security play.

00:07:29:18 - 00:07:47:06

Chris Keefer

In the 1970s, price of coal went up after o back the lakes would freeze from time to time. Coal worker unions in the states were were pretty rowdy. And we would have supply security issues just to, you know, keep our auto manufacturing plants humming with all the electricity they needed. And so we went nuclear for a legitimate energy security reason.

00:07:47:08 - 00:08:07:17

Chris Keefer

And yeah, anyway, we built this incredible infrastructure and now we are maintaining it. We're doing a kick ass job. We're running nuclear mega-projects, you know, ahead of schedule and on or under budget. But we are treading water here, man. We're going to add these for us to Mars, hopefully by the mid 2030s, and that will get us back to where we are now because we're not refurbishing all of the six reactors at Pickering, just four.

00:08:07:17 - 00:08:31:19

Chris Keefer

So, you know, I find myself reflecting back to the number of years I've been in this, and certainly these are heady days compared to 2018. But at the same time, you know, I am not ready to do victory dances or join the industry in the kind of euphoria that I'm that I'm seeing in some areas where people are thinking, hey, you know, we got the social political license.

00:08:31:19 - 00:08:40:13

Chris Keefer

Now let's just let's just bang this stuff out and it's going to be easy. I'm not sure kind of where you're at in terms of your thoughts about nuclear in the grid right now. But I'd love to hear your weigh in.

00:08:40:15 - 00:09:01:14

Emmet Penny

Man. I hope people in the industry don't think that they have the social and political license to do what they want. At least in the United States, because they certainly don't. I mean, things have improved. That's unambiguous. We took another huge sip. Sorry, guys, I'm thirsty. I'm parched. But look, I mean, we're a long way away from where we want to be.

00:09:01:14 - 00:09:36:06

Emmet Penny

It's clear that our side is gaining ground. I mean, I want to give Breakthrough Institute their flowers for basically making sure that that anti-nuke dude didn't get re-upped for the NRC. You know, So it seems like we have a little more juice politically than we used to. It is true that the pro-nuclear side has more social license, and I think that's going to increase as it becomes clear that renewables can't do it on their own.

00:09:36:08 - 00:09:58:18

Emmet Penny

But you don't want to take anything for granted. You know, I mean, that's one thing that I've learned. Two things can always happen. You can always just postpone your targets for all sorts of things and build more fossil fuels, or you can just get poorer, you know, like you can do that too, if you're wealthy, you can just be like, Well, we'll just get poorer.

00:09:58:20 - 00:10:03:19

Chris Keefer

And yeah, you know, go, let's go to Germany. Over the receipts, right? Yeah.

00:10:03:21 - 00:10:06:11

Emmet Penny

Yeah. I mean, say yeah, exactly, exactly.

00:10:06:12 - 00:10:25:19

Chris Keefer

So something I'm like reflecting on and hearing a lot right now and I'll call it sort of like the hubris of the present, You know, we look back and we say, Hey, you know, if our parents and grandparents could do that in the seventies with their slide rules, man, we got this. You know, we've got a now like we you know, we've got the computing power of the Apollo program and like an iPhone four, no problem.

00:10:25:19 - 00:10:58:12

Chris Keefer

Right. And you know, and again, I think back to the great nuclear build out in Ontario when we commissioned 22 or 20 reactors in 22 years, the scale at which that was occurring, what an industrial heartland Ontario was at that time, massive steel mills, huge automotive sector and a, you know, vertically integrated utility called Ontario Hydro that did it all and was actually, you know, jokingly referred to as a construction company that makes electricity because we banged out these massive, you know, eight boiler unit coal plants like that's what we're building before we went nuclear.

00:10:58:12 - 00:11:15:22

Chris Keefer

And then, you know, we finally decided to kick the coal habit and didn't build a single large coal station. After we built Pickering. But they shifted over And I mean, there was just an a massive amount of industrial inertia of, you know, human resources that had been built up through that initial public power program since the fifties and sixties.

00:11:16:02 - 00:11:38:07

Chris Keefer

And I look at the state of things now, you know, the learn to code generation, the, you know, the gray hairs and the skilled trades which, you know, have been rejuvenated because of our refurbishments. But like we are nowhere near being in the position that we were. And what we critically need are the human beings who can, you know, swing the hammers, who can form the concrete, who can lay the rebar, you know, who can fit the pipes, etc..

00:11:38:09 - 00:12:01:22

Chris Keefer

And I don't think we're anywhere near as good a position as we were in the seventies and eighties right now. So I call it the hubris of the present. That's my little reflection from, you know, the utopia, the nuclear utopia of Ontario here, where, you know, I think the West is looking really for inspiration, you know, as the first grid scale ExoMars are, you know, at least they're scraping some topsoil away to start planning for them.

00:12:02:00 - 00:12:09:21

Chris Keefer

But, you know, you're writing a book on their grid, You're deep diving. Some history here. I wonder if you have similar reflections or anecdotes to add on to that.

00:12:09:23 - 00:12:41:02

Emmet Penny

Yeah, I mean, I think I think you're absolutely right that there is a human capital component to this that is undeniable, and that's at least one thing we can say that's a fixable problem. So that's one of the problems that we might want to have going through this. How it gets fixed remains to be seen. I mean, I would hate in America if fixing this human capital problem turns into a greater proliferation of the importance of higher education.

00:12:41:04 - 00:13:21:10

Emmet Penny

And I think job training and other non college ways to get people into these trades and professions is far preferable to what is clearly and this is not anything to do actually with like the quote unquote work politics of the university, but with what seems to be a university system that's decaying as a part of its own incentives, financial and otherwise, I all I would like people to walk into these jobs without being saddled with all sorts of debt or without having to have the taxpayer necessarily foot the bill for their education, because I don't think that's needed.

00:13:21:10 - 00:13:54:03

Emmet Penny

I think, you know, certainly for some higher level engineering jobs, that's just probably going to be needed, but not for everything. You know, I'm replete with humility on the rest of the shape of that. In terms of specifics, that's just how I'm taking a look at that. You know, And then I think how we view tech has and and industry has changed a lot since the 1890s or something like that.

00:13:54:05 - 00:14:27:00

Emmet Penny

The people had been convinced for a very long time that, you know, a smog, big brick buildings and steam towers were the hallmarks of progress. And then that really changed in the fifties, sixties and especially the seventies. And now we have a much more fraught relationship with our own industrial might, and that has been codified in the law in America.

00:14:27:02 - 00:15:01:21

Emmet Penny

So obviously there needs to be some regulatory overhaul and frankly some sort of cultural work done on figuring out how to have a different narrative about our Promethean abilities as human beings. You know, it's clear that there is no environmental story of humanity that moves beyond the realm of mere survival. Survival as the horizon of society does not inspire.

00:15:01:21 - 00:15:12:18

Emmet Penny

It demoralizes, atomized, is and is injurious to the type of projects that we want to embark upon because they require longer time horizons.

00:15:12:20 - 00:15:33:20

Chris Keefer

I mean, two things to kind of riff off of what you said. You know, you said the human capital issue is is solvable. And I do believe it is, although, you know, we do have different demography, maybe less so in the US, but certainly we see that internationally in a number of European countries and in Asia and Japan and Korea, you know, hopefully the Japanese get back on the wagon with nuclear.

00:15:33:20 - 00:15:53:14

Chris Keefer

But when I was chatting with some Japanese utility experts over there and asking them what the number one constraint was on on getting the nukes back online and for that industry to get back on its feet. And they said, you know, it's demographics. You know, they've got a replacement rate of, I don't know, 1.2, 1.3, and they've had an industry shutdown for 16 years.

00:15:53:16 - 00:16:21:11

Chris Keefer

You know, things are things are not looking good. So so I think it's solvable, but it's going to take significant policy investments. And, you know, this whole kind of social mobility of nuclear, as you're saying, there's some things that need to stay within the academy in terms of certain engineering educations. But, you know, a friend of mine who's now the CEO of Can Do Energy Inc started off and I think food and beverage management was his early training and he's worked for Ontario Power Generation for that.

00:16:21:11 - 00:16:41:14

Chris Keefer

You know, the big vertically integrated monolith Ontario Hydro for his most of his career. You know, they send him back to school to get an accounting degree. He ended up being a big part of running our Darlington refurbishment successfully and is now yeah, the CEO of Candu Energy Inc. And I mean those kind of social mobility stories, you hear a lot of them in this sector.

00:16:41:16 - 00:16:51:17

Chris Keefer

You know, on the one hand you hear, okay, you know, you can work at a nuclear plant with just a high school education. I'm sure some aunties go, man, okay, that sounds like Homer Simpson at the controls. But no, I mean, this is a great.

00:16:51:17 - 00:17:09:22

Emmet Penny

Let's do that. Yeah, I love that. Yeah. More Homer Simpson, please. Thank you. I double down on that. Absolutely. That's what I want. Do I want average Joes to be able to support, you know, a family and own their own a home and a high school education and operate technology that has the best safety record in the world.

00:17:09:22 - 00:17:14:11

Emmet Penny

Yes, absolutely. 100%. That's the America I want.

00:17:14:13 - 00:17:16:18

Chris Keefer

Amen, brother. I mean.

00:17:16:19 - 00:17:48:04

Emmet Penny

You know, like, I think that there's there's always this classism right around that. Like, do you really want a bunch of guys without degrees? You know, I am approaching early old age. So I now listen to interviews on C-SPAN because they do a lot of interviews with historians and stuff like that. And they were having a conversation about Oliver Wendell Holmes Jr, who was a legal scholar and then eventually Supreme Court justice who fought in the Civil War.

00:17:48:04 - 00:18:19:08

Emmet Penny

And some guy called in and I could tell immediately that this dude was working class just based on his dialect. And he asked this long, sophisticated question about a particular Supreme Court decision. And the interviewer said, Are you a lawyer? And he said, No, I'm a mechanic. You know what I mean? So, like, I don't really have time for that sort of, you know, like, my God, are you telling me somebody without a law degree or who doesn't write white papers for a living might actually be in charge of something?

00:18:19:10 - 00:18:24:17

Emmet Penny

God. no. They don't subscribe to The New York Times. How can we trust them?

00:18:24:17 - 00:18:29:01

Chris Keefer

Right? Right. Or is the Ivy League safe? Yeah, I mean, what I was referring to there is that are you telling.

00:18:29:01 - 00:18:38:00

Emmet Penny

Me that they didn't their favorite show wasn't White Lotus. How could this person ever run anything important in this country?

00:18:38:00 - 00:18:55:02

Chris Keefer

Yeah, no. And what I was afraid to you, to be clear, was you can enter as a high school student and then get on the job training. That takes you up to just extraordinary levels of competence and, you know, I've had the opportunity now to meet a number of reactor operators, senior reactor operators, chefs, supervisors, and the kind of vigor that goes into that training.

00:18:55:02 - 00:19:13:15

Chris Keefer

You know, I have some insight into it. As a medical professional, I have some inkling of what it takes to become a pilot and maintain a pilot's license and maintain your your reactor operator License is wild what they put you through, you know, needing to have memorized every valve and pump in your station and, you know, have that blueprint imprinted in your mind.

00:19:13:15 - 00:19:41:01

Chris Keefer

It's pretty extraordinary. So definitely, definitely a good thing. And I'm just like so grateful for the vantage point that I've gotten here in Ontario where we have a vibrant sector, you know, meeting people within the nuke industry itself from the shop floor on up to the top, you know, sitting in meetings with politicians, labor unions, just really getting a sense of of how the political sausage made is made, how the electrons are I won't say made, but jiggled.

00:19:41:03 - 00:20:12:18

Chris Keefer

You know, it's it's been a really important education. I wanted to like shift gears a little bit. And it's just because I've been sort of like, you know, tugging on some threads of some different ideas and wanting to bounce them off of some of my compadres where I mean, and the sort of initial thoughts that I shared in terms of the little bit of cynicism and pessimism, I mean, where are you at right now in terms of how you're seeing the world through the lens that you're looking at the grid, electricity, energy, power?

00:20:12:20 - 00:20:16:18

Chris Keefer

Where are you sitting in terms of optimism, pessimism, any frame it?

00:20:16:20 - 00:20:49:10

Emmet Penny

I mean, America is headed for a reliability crisis. There's just a consensus, you know, consensus. The consensus can be wrong. You know, that that happens happen with the housing market. But it seems like we're sort of not sort of we are getting unambiguous signals from both both the North American Electricity Reliability Corp., which is our shared watchdog for reliability, and then the Federal Energy Regulatory Commission, that this is happening.

00:20:49:12 - 00:21:15:01

Emmet Penny

And now we're starting to get signals from the markets, including PJM, the largest power market in the country, and I think the largest one in the world that they are starting to lose baseload power, too. I mean, so is MISO their neighbor? And this is the dynamic. So it's pretty hard to feel like things are going great when you're watching that unfold.

00:21:15:03 - 00:21:40:21

Emmet Penny

I think the real task is to not become a doer or a Cassandra about it, to not be hysterical. I think I've seen enough of that in my lifetime. The politics of fear is so poisonous and frankly, so tired at this point that I can't participate in that anymore. So how do we talk about a serious issue without it becoming this hysterical?

00:21:40:23 - 00:21:57:13

Emmet Penny

You know, we're all going to die if we don't get this right type of thing? Yeah, I don't know. I mean, I think what I really want and what I focus on now is cultivating within myself is a sense of sobriety and an attempt at prudence When looking at these things.

00:21:57:15 - 00:21:58:05

Chris Keefer

You do sound.

00:21:58:05 - 00:22:00:09

Emmet Penny

Like there's a certain level of epistemic humility.

00:22:00:15 - 00:22:05:11

Chris Keefer

It does sound like you're heading into your or you're calling it early old age.

00:22:05:13 - 00:22:31:05

Emmet Penny

Yeah, exactly. You know, because this is a really complex system. There are a lot of different elements at play, a lot of different interests. No one's ever going to get what they really want. I think that's another thing that's really important here. I would be shocked if America actually achieved a mostly nuclear grid in the next three generations.

00:22:31:07 - 00:22:32:19

Emmet Penny

Probably not going to happen.

00:22:32:21 - 00:22:33:14

Chris Keefer

Regarding, you know.

00:22:33:14 - 00:22:35:06

Emmet Penny

But yeah.

00:22:35:08 - 00:22:36:07

Chris Keefer

Regarding their reliability.

00:22:36:07 - 00:22:52:23

Emmet Penny

But you know, I'm not. I'm not. I'm not. So that's to say I'm not doing like pessimism. I'm also not doing optimism. What I will say is that I prefer what actually exists to what someone's trying to tell me. The future could be most of the time.

00:22:53:00 - 00:23:33:00

Chris Keefer

Talking about the reliability crisis, I had a very interesting conversation with our upcoming decouple guest David March of Ecology Energy and his his firm really consults with and I believe provides reliability services for mission critical industries like hospitals, for instance, that can't afford to go offline. So, you know, big diesel backup generators and what he's hearing from a lot of his customers and he'll tell the story better than me very soon and a couple of weeks is, you know, what is what is registered as a blackout depends on the utility, but often it's several minutes and you have a lot of, you know, really important industrial processes, for instance, that can't tolerate, you know, a

00:23:33:00 - 00:23:49:03

Chris Keefer

few microseconds, let alone a few seconds of interruption. And all the machines have to be turned off and retooled. And we're talking about major losses. So you're sort of putting your finger on the pulse of the grid right now and all the research you're doing for this book. Can you comment a bit more on the early warning signs that we're seeing?

00:23:49:03 - 00:24:05:23

Chris Keefer

Because right now, I mean, the blackouts that the majority of the public are familiar with are, you know, tree falls online, power out for a few hours, power back on. So tell me about some of the warning signs that we should be paying attention to.

00:24:06:01 - 00:24:38:15

Emmet Penny

Right. So this is what's difficult right now is that people remember back to Meredith and Gwynn's Fatal trifecta, which is an overreliance on natural gas and over commitment to intermittent renewables, and then an overdependence on imports for neighbors. Right now, most of the neighbors in America have enough baseload to where they can import and export to each other, but that is slowly disappearing as we lose coal.

00:24:38:17 - 00:25:06:05

Emmet Penny

And the Environmental Protection Agency is trying to ratchet up its methane and soot rules or whatever around coal and natural gas to really put the squeeze on them to get basically more of them turned into being uneconomic. That's part of their plan. And the utilities and the markets are like, please don't do this. This is horrific, but this is sort of where we're going.

00:25:06:05 - 00:25:42:08

Emmet Penny

And you can start to see it in very seldom publicly covered or explained story. So there's the Brandon Shores plant in Maryland, which powers a lot of Baltimore that's in the PJM footprint in America. Talen Energy owns that coal plant. PJM is trying to find a way to keep that coal plant online. And Talen doesn't really want to, in part because Talen reached a private deal with the Sierra Club that they would shut down that plant.

00:25:42:10 - 00:26:14:17

Emmet Penny

This is like the second or third time the Sierra Club said, We will basically bury you in lawsuits forever until you shut down this fossil fuel infrastructure. So there's nothing really PJM can do about that. And talent's been clear about that. They were like, Look, we participate in your capacity markets or whatever, if we could, but the soot regulations or whatever the emission regulations on this means that we can't actually run this plant enough even in the capacity markets, even, you know, I guess reliability must run because we can only emit so much before we actually have to shut down.

00:26:14:19 - 00:26:38:12

Emmet Penny

So it's just not worth our time and capital to keep this at this point. And you know, that's your problem. Not a my problem. That's a AYP, not an MP. And you know, then you start to wonder, well, how many other times has the Sierra Club or whoever done this, how many more times will they do it now that Michael Bloomberg has dumped half a billion dollars into these organizations?

00:26:38:13 - 00:27:10:08

Emmet Penny

You know, so what does this start to look like? We can get a pretty good idea when we take a look at the winter storms that have happened in America. So winter storm Elliot, which took place over the winter of 2023, 2020 for that time period, happened right around Christmas. If people remember the gas system in New York almost lost pressure, which would have required, you know, evacuating a couple hundred thousand people from New York City in the dead of winter and subzero temperatures.

00:27:10:10 - 00:27:30:00

Emmet Penny

And then you have to go into every single one of their apartments and buildings or whatever and turn off all the gas lines and then fix the problem with the pressure in the pipe system and then send all of these guys back out to turn them back on. So this is a several week process in the heart of one of the world's biggest, wealthiest metropolises.

00:27:30:02 - 00:28:01:12

Emmet Penny

And one of the things I've pointed out is that if that did happen or if it does happen, people are going to say, well, this is why we need to electrify everything and then shift the burden on to the already overly gas reliant and overtaxed electricity system that has some of the same problems. So you're getting rid of one redundancy that might have some governance or technical problems that need to be solved to basically put all of your chips onto a grid in New York that is already getting strained zone.

00:28:01:14 - 00:28:34:03

Emmet Penny

That's New York City is having to pay offshore, you know, basically these floating barges of peaker plants to stay online because of what happened after they lost Indian Point. This is a problem that's only going to accelerate, you know, as it goes. And as you've seen, as you've reported, I think not just in Ontario but other parts of Canada, electricity demand is slowly starting to increase and that is going to, I think, is forecasted to be pretty robust over the next few years.

00:28:34:05 - 00:28:56:01

Emmet Penny

Do the markets that import from Quebec Hydro expect that to continue to be a good deal when Canada has its own problems of demand increases and it needs that hydro for itself? Now I'm sure you could always find a deal with Quebec where they're willing to sell. It just might not be what you're willing to pay.

00:28:56:06 - 00:29:17:01

Chris Keefer

Yeah, I wouldn't be so sure about that because, you know, part of the wildfire stories were smoke from northern Quebec, you know, turned New York into a, you know, apocalypse Mad Max scene with all the soot and the kind of orange air that was so poignantly captured in those photos was drought. And their water levels are actually quite low.

00:29:17:01 - 00:29:35:00

Chris Keefer

And so usually they export a lot during the summer. It's a time of surplus. Their peak demand is in the winter. They got to stay warm and they put water through turbines to to heat their province. And so they were actually importing from us. They've been importing from us much more than usual because ultimately I guess it's the iron law.

00:29:35:00 - 00:29:54:18

Chris Keefer

Robert and Pilkey Jr, you know, they're going to stay, they're going to keep themselves warm in the winter. And so they had to hold a lot of water just because the rain was there. And we're seeing increasingly hydro electricity is is intermittent on a different timescale than wind and solar. But you know, climatically, it's not a surprise. We saw that in California last decade where hydropower.

00:29:54:18 - 00:29:55:14

Emmet Penny

Like Colorado, two.

00:29:55:18 - 00:30:03:07

Chris Keefer

Percent. And that's what is being leaned upon. It's always, you know, my neighbor can can sort of fill in for me. I got a question, I guess, about it.

00:30:03:08 - 00:30:04:17

Emmet Penny

So it's even worse than I thought.

00:30:04:18 - 00:30:29:06

Chris Keefer

It's terrible. No, honestly, it's terrible. Yeah. Yeah. And that's why Quebec is actually looking at refurbishing their candu nuclear reactor in the province. You know, there's a big issue in terms of public perception of nuclear in Quebec. We'll see if if the pain is enough to to make them head in what I think is very sensible direction. But, you know, when I look south of the border, like, you know, we're not Ontario, hi, Germany, but we're not a big vertically integrated utility up here.

00:30:29:08 - 00:31:07:23

Chris Keefer

But there's still you know, we have Ontario Power Generation, which basically owns almost all of the publicly owned generating assets. It's got a single shareholder, the province of Ontario, just, you know, supposed to represent its its voter base. It's a lot simpler in terms of kind of incentives that are there, the patronage relationships, etc.. When I look south of the border and I think a little bit about like the decline and fall of the Roman Empire, and I don't mean to be, you know, too hysterical in making comparisons, but I just see the institutions, the ecosystem of those institutions are starting to really become super messy in terms of, again, you know, the competing interests,

00:31:07:23 - 00:31:26:19

Chris Keefer

the competing fiduciary duties. It just seems so goddamn inefficient. And, you know, you're you're kind of a cultural political historian. Like, how did we get to the places that we're at now? And Meredith and Gwen, I think, talked about this a lot in her book Shorting the Grid. But the cluster fuckery of it all, you know, when I look south of the border, I just go this this is a hot mess.

00:31:26:19 - 00:31:41:00

Chris Keefer

And again, I'm not seeing it. We're not we're in a utopia here in Ontario. We're holding the line, we're treading water, maintaining our nuclear fleet. So tell me a bit more. You know, I've got an inkling. I'd like to hear your analysis of of of that phenomenon.

00:31:41:02 - 00:31:49:23

Emmet Penny

Yeah. So you're asking basically, why are American institutions both decadent and ossified right now.

00:31:50:00 - 00:32:12:10

Chris Keefer

Decaying, perhaps or dysfunctional, unable to plan properly for projected needs? Like, for instance, I've heard PJM is shutting down about 40 gigawatts of, you know, dispatchable fossils within the next decade. You know, the New England's pipeline constrained, you know, heavily gas dependent, but won't build the pipelines. This despite sitting next to the Marcellus shales, which maybe are starting to flatten.

00:32:12:14 - 00:32:44:12

Chris Keefer

And we'll see what happens there in terms of their production. And we have things like gigawatt scale server farms coming online, you know, and I assisted Google searches take 10 to 20 times more energy currently, I think Internet and computers use about 15 to 20% of grid electricity, like we are on a collision course. And I mean, that's aside from, you know, the these are pragmatic concerns, although, I mean, I think most of this AI is probably going to go to where it's just making really exciting porn for teenagers wearing their apple goggles.

00:32:44:13 - 00:33:06:23

Chris Keefer

But, you know, like we're also talking aspirationally about electrifying everything and heat pumps and EVs and whatnot. So, I mean, it's just yeah, I mean, it's a big question. It's way too fucking broad. But, you know, why? Why why is there such organization institutional dysfunction in terms of, again, that kind of ecosystem of government utility, you know, Sierra Club's whatever the big mess.

00:33:07:01 - 00:33:34:21

Emmet Penny

Yeah. So I mean there are there are there. Yes. So there's a lot of different explanations we can have. We let's talk about NGOs for a little bit. For a little bit. America has always leaned on its civil society, which means these groups that are both sort of a little bit outside of the market, a little bit outside of the political realm, church groups, things like that to hold itself together for a long time.

00:33:34:21 - 00:34:15:06

Emmet Penny

These were membership organizations. I mean, basically from the 19th century up until about the seventies. That was true, right? This was what Tocqueville noticed, the sort of the genius of American Democratic self organization when he was here during, I think, the Jackson administration. So about the 1830s. And you can see that happen when you look at any press coverage, contemporaneous press coverage of presidential elections in the early 20th century in America, it's like, you know, President Hoover meets with the New York, you know, Jewish Women's League, which is, you know, like I mean, how many people could that possibly be at that time?

00:34:15:07 - 00:34:35:07

Emmet Penny

And he but he needs them in order to convince them to talk to the rest of the community, to whip up their votes. And these are things that, you know, these groups have their own songs. They have their own rituals, all of these things. And they hold them together, you know, for a variety of reasons, including urban exit into the suburbs and things like that.

00:34:35:09 - 00:35:09:00

Emmet Penny

The loss of things like unions, which had it were pretty tightly correlated with civil society organizations at the membership level and secularization, which means people don't go to church as much. And the rise of these litigious NGO organizations, especially things like the environmental movement, we saw this go for membership organizations or to donor oriented NGOs that figured out that they could get the sweet, sweet tax benefits of being a nonprofit organization.

00:35:09:02 - 00:35:46:00

Emmet Penny

So these became things that were less responsive to any of their members and beholden mostly to their donors and had their own agenda to push. When we take a look at energy and how that's played out, one of the things that I've started to realize is that these NGOs and universities and then state bureaucracies themselves have created an ecosystem where it creates self-sustaining paradigms of values and the enforcement of those values.

00:35:46:02 - 00:36:08:02

Emmet Penny

So let's just take a brief example to talk about what I mean. This is not an endorsement of Trump or the Trump administration. One of the things people noticed is that the a lot of the offices or whatever that Trump could have staffed, he did not. And there were I thought at the time that was just because they were basically incompetent, didn't know what they were doing.

00:36:08:04 - 00:36:29:21

Emmet Penny

But now I realize what really happened is that they're just aren't there enough Republicans to do that? There aren't enough people that have a different set of values than the establishment that runs these things to even staff these organizations. So what does that tell you? It means that there is a substantial level of groupthink about how energy gets handled in America.

00:36:29:21 - 00:36:52:20

Emmet Penny

This is sort of my hypothesis. I might be wrong. Again, I'm willing to plead humility, but this is sort of what I'm seeing now. That doesn't mean that we're living in this like communist order where it's like, you know, top down from the state we enforce these things. It is something a little bit more diffuse and ambient. That's like a sociological dimension to what has happened to American institutions.

00:36:52:22 - 00:37:43:10

Emmet Penny

Now, one of the things that the people in this managerial class mostly have in common is that they're very worried about climate change and they view energy strictly through the lens of climate change. Everything is about that. I think Decouple a couple listeners are well aware that that does not always breed the best energy literacy. I also think that the utilities or whatever that the fossil fuel industry, whatever you want to say, simply thought that because they were necessary, they would be treated as necessary free and got their fiefdoms, their their holds in these air, in these bureaucracies and these patronage networks or whatever, eaten away out from under them.

00:37:43:12 - 00:38:13:00

Emmet Penny

So now we're in a really tight spot where there is incredible consensus and a lot of powerful unelected bodies both in and out of government that have a vested interest in pursuing these goals. They have the lion's share of the human capital to do so, and there are no proper feedback mechanisms in the press or otherwise to tell them that what they're doing might have some drawbacks that are very painful, and maybe they might want to think about it.

00:38:13:02 - 00:38:17:09

Emmet Penny

That is part of how we got here. It's not the whole story, but it's some of the story.

00:38:17:11 - 00:38:44:09

Chris Keefer

Yeah, no, it's definitely a vital element. You know, here in Ontario, the government commissioned a report called Pathways to Decarbonization. It was commissioned due to the Interior Clean Air Alliance, which is their sort of premier anti-nuclear group, which fought hard for our coal phaseout to be a coal to gas phaseout. They subsequently decided that gas no longer a transition or bridge fuel, but it was bad.

00:38:44:11 - 00:39:06:02

Chris Keefer

That was about ten or 15 years late in terms of, you know, being consistent on on climate and clean air. And they have been pushing now for a gas phaseout, thinking that it's just as simple as as coal was, you know, nuclear, you know, supplies those those are replaces those coal services quite well. Gas, as we know, It's really hard to get that last bit of gas off of a grid.

00:39:06:02 - 00:39:29:06

Chris Keefer

It's very, very expensive. It has a very important function in terms of peaking and as a capacity tool. In any case, they convinced 40 odd municipalities to put forward statements calling for a gas phase. The government had to respond. They issued this report, which is basically looking at how could Ontario phase gas completely off the grid? And, you know, it came up with some really bizarre stuff.

00:39:29:06 - 00:39:49:20

Chris Keefer

I mean, on the one side, you know, the nuclear folks are happy because it said we need about 18 gigawatts of new nuclear. This was also, I think, moving towards, you know, net zero push to explain that that amount of generation that was required, but also 16 gigawatts of hydrogen. And, you know, I think one of the very interesting phenomena I hear when people talk about, you know, wind and solar, yeah, they'll work.

00:39:49:20 - 00:40:07:16

Chris Keefer

We just need storage to back it up. They have storage currently and those are huge, I believe salt caverns where we store, you know, seasonally massive amounts of natural gas, like thinking about Europe here, but all over the world. That's part of the natural gas network. It's the plants themselves, but it's also the pipelines in these huge, huge storage geologic storage facilities.

00:40:07:18 - 00:40:39:01

Chris Keefer

And you know, the question is, are batteries and hydrogen like gas or the as good as gas can? You know, are they is energy dense as gas can? Can we produce them in the same kind of volumes as gas? But energy is the source of this question which is rambling is you know, you had the independent systems operator which are, you know, quite competent people playing fantasy games with what with planning our grid around like, you know, 16 gigawatts of gas or just hydrogen are just going to sort of appear and contribute to the mix.

00:40:39:03 - 00:41:03:15

Chris Keefer

I cannot imagine that kind of irresponsible fantasyland thinking occurring in the seventies and eighties. You'd be laughed off, you know, off your chair. But it's the climate concern which is pushing it because you have to sort of force all the models to fit, you know, what is the consensus getting to net zero by 2050 and, you know, practicality and the truth be damned.

00:41:03:15 - 00:41:12:09

Chris Keefer

We're going to make it happen and we can model it. So there it is. I don't know. That's that seems be part of the dysfunction that's north of the border, but it seems to be quite strong south of the border as well.

00:41:12:11 - 00:41:31:07

Emmet Penny

Yeah. I mean, in the seventies and eighties, these these managers, these utility people had their fantasyland ideas and it was that they could just continue to keep growth going forever and that would conform with the incentives of the monopoly utility system as it had for almost 100 years by that point. So they had a good reason to believe that it would do that.

00:41:31:09 - 00:42:00:19

Emmet Penny

But, you know, reality has a nasty way of pulling the rug out from under you. So, you know, I think what we're realizing is that, you know, everything works. Nothing works forever. That's, you know, all this like green stuff, like quote unquote works right up until a certain point, whether you have to get that last bit of gas off the grid or, again, the site for the umpteenth time, the German example, soon to be followed by Spain.

00:42:00:19 - 00:42:07:06

Emmet Penny

By the way, Spain is now embarking upon almost the exact same energy policy as Germany, including its nuclear phase out.

00:42:07:08 - 00:42:14:10

Chris Keefer

It's a little sunnier there, a little sunnier in there. We have like 9% capacity factors of 60 gigawatts of German solar. But yeah.

00:42:14:12 - 00:42:36:23

Emmet Penny

Yeah, yeah. Well, I'll say this. You know, I think that the Spanish current energy trajectory will be incredibly good for fresh nuclear and American and Qatari LNG, right? So they will become very reliant on their neighbors very soon if they pull that off. There are some nuclear activists in Spain who are going to fight this tooth and nail.

00:42:37:01 - 00:42:57:12

Emmet Penny

Hopefully you and I can talk to some of them and help them garner some more support for that. So I think, you know, one of the tales that I don't want to tell is that we used to lie to ourselves less often than we do now. I don't think that's true. I think humans lie to themselves about the rate every single point in history.

00:42:57:14 - 00:43:41:01

Emmet Penny

Sometimes those stories are actually very effective and line up with the way things are and then problems happen when they don't. Right now, we're running into a situation where they don't. I will say that the results of the previous paradigm were pretty undeniable and their improvements of everyday life for people and an increase wealth. So they do have that in their favor compared to what we have going on now, which even if I'm making this claim about like we lie to ourselves all the time, there is something pretty especially weird about what's happening now.

00:43:41:03 - 00:44:23:08

Emmet Penny

It is wild that the dominant paradigm for how we understand the most fundamental input in industrial society. Energy has been apocalyptic for over half a century. That's crazy and it's been around for a long time. I like spending time on YouTube going through random, like quotidian archival footage, people shot. So sometimes this will be like, you know, just a bunch of dudes like fixing a roof or something like that and somebody like, uploaded it onto for some reason.

00:44:23:08 - 00:44:49:21

Emmet Penny

And I don't know why, but I watch it because it's like interesting to see how people behave. Before cameras were ubiquitous. As a historian, I find it intriguing to see these slices of life I was watching today a high school yearbook video from Sugarland, Texas, in 1993, while I was drinking my coffee. And it has its own little section about how important solving climate change is in there.

00:44:49:23 - 00:45:00:03

Emmet Penny

Right? So we've been doing this for a while, so it's going to take a while to get out of this mode of this is the only way to think about energy and what we're going to do.

00:45:00:05 - 00:45:06:15

Chris Keefer

I've watched one of those videos recently, and what you notice is none of the kids are doing this don't have their phones in their faces.

00:45:06:15 - 00:45:09:11

Emmet Penny

Yeah, no phones, right? That's really nice. Yeah. Yeah.

00:45:09:12 - 00:45:44:18

Chris Keefer

I think we're in that early old age stage where we we remember fondly. Are you seeing a bit different than a current reality? You know, part of circle back a little bit to Tyson Culver, who you had in your podcast and Robert Bryce's new piece. I mean, it's it's pretty gung ho on on nuclear, you know, as an antidote to what's what's happening to our grids, happening to reliability and, you know, a nod to like, yes, let's try and do things that will avert the worst of climate change or let's do things that are that are good for working people or will help, you know, diminish air pollution.

00:45:44:20 - 00:46:18:11

Chris Keefer

In terms of the prospects in the U.S. right now, I've sort of shared a bit of what's happening in Canada. You know, there seems like there was this nuclear renaissance of 2005. Henry Hub was hitting like $15 per million to use. You know, fracking hadn't happened yet. Fukushima hadn't happened yet. You know, even with Fukushima, I would would make the contention that if the fracking revolution had not occurred and you still had those eye watering natural gas prices, if these LNG export terminals were in fact LNG import terminals, this was starting to happen in the noughties or the early 2000s.

00:46:18:13 - 00:46:52:18

Chris Keefer

We would have muscled through Vogel and Sommer and got better at building. If you want thousands and there'd be 17 to 20 under construction right now. Obviously that didn't happen and natural gas is still cheap, although it does seem like there's some evidence from, you know, during and Rosen's blog and our Bearman and others saying that some shale fields are starting to look like like a little like Hubbard's curve and might be showing some peaking in terms of the prospects for nuclear in the U.S. What are your thoughts right now analyzing this and thinking about it in terms of grid reliability?

00:46:52:19 - 00:47:20:23

Emmet Penny

I mean, obviously it's necessary. We need something that can do what coal does without the bad parts of coal, and we're losing coal without nuclear. So we're going to be put in a painful vise pretty soon. That's already underway, as we've already talked about. I think everybody expects gas prices to get higher, natural gas prices in America. Whether those expectations are true or not, you know, will remain to be seen.

00:47:20:23 - 00:47:43:23

Emmet Penny

But, you know, when you had Jigar Sean here, he did mention very helpfully that the American Gas Association thinks that the days of 2 to $3, you know, maybe to you natural gas are going to come to an end, you know, be something more like four or five. And for a system that is 40% dependent on natural gas and maybe increase may increase that amount by the time we hit those numbers.

00:47:44:00 - 00:48:16:10

Emmet Penny

I mean, you know, electricity is very sensitive to natural gas prices. So, yeah, there might be a new case for building more nuclear, especially as we see all of this demand for compute. You know, But again, it's going to depend on how we can get these markets and also people and these huge NGOs on board with this so that they're not in the way.

00:48:16:12 - 00:48:38:00

Emmet Penny

There are some helpful signs that there is a bipartisan way forward. I just wrote a piece for Re Freemium on Connecticut, which has a surprising amount of agreement between Republicans and Democrats and the Department of Environment and Energy Policy deep, which is their sort of state body that takes a look at this stuff about the need for nuclear.

00:48:38:02 - 00:49:03:14

Emmet Penny

And they seem to be open to perhaps a new AP1000, which means that when the CEO of Westinghouse was telling Bloomberg last year that there are some utilities in America that are interested is another one. So he could take them. He might have been talking about, I think, Dominion that owns Millstone out there that isn't a full reactor set and could afford a new one, hopefully in Connecticut as well.

00:49:03:14 - 00:49:33:23

Emmet Penny

They're teaming up with some of the other New England states because the New England states are starting to realize that the market, the New England ISO isn't conducive to them hitting their climate targets and maintaining reliability at the same time. They're very frustrated by that and they don't want to have to keep going to Connecticut taxpayers to say, Hey, we need to use some of your money to buy from this nuclear plant at a at a reasonable rate so that it stays online because we just need it.

00:49:34:01 - 00:50:03:16

Emmet Penny

Okay. So, yeah, we have a lot of dynamics that are pointing towards nuclear. It's going to be like it's going to be a total goat rodeo. It's going to be really hard to wrangle and it's going to require a huge level of consensus. The American system is built to basically, at the national level only do what absolutely almost everyone either doesn't care about agreeing on or does actually agree on.

00:50:03:16 - 00:50:23:22

Emmet Penny

Yeah, you know, so things where people are really divided and care a lot about it, lots of inertia, things where people don't care. Foreign policy is a great example. People can kind of do whatever they want and then America falls into whatever happens, it falls into their other stuff, requires a great level of unanimity, and that is by design.

00:50:24:00 - 00:50:39:23

Emmet Penny

That is how it is supposed to work. So we're going to have to get there. And I think it's going to be a very painful road there. We're going to have to basically be dragged kicking and screaming into a more nuclear future. I'd like.

00:50:39:23 - 00:50:40:17

Chris Keefer

You to paint for.

00:50:40:17 - 00:50:42:12

Emmet Penny

Us what.

00:50:42:14 - 00:51:02:19

Chris Keefer

The grid looks like without major policy change intervention, we're going to have coal plants shutting down. Gas will be relatively cheap. Gas plants will be relatively quick to build and cheap to build. Lots more wind and solar. Right. Guess what is that starts? I mean, am I correct in that assumption, you know, And what does that start to do to the grid?

00:51:02:21 - 00:51:37:12

Chris Keefer

You know, gas is gas is pretty awesome, but it has its limitations. You mentioned that under a pressurization issue in New York, Meredith Angwin talked about, you know, do you heat or door or or make juice, make electricity these these concerns come up. So, I mean, just you know, my listenership is pretty well-educated on this, but I'd like to really deep dive, you know, what are the problems with becoming overreliant on gas and again, if you could just paint that picture for us of without policy intervention, without interventions like your book, which will hopefully be read by a lot of thinkers and think tanks and policymakers, inshallah, you know what what, what we're heading towards.

00:51:37:14 - 00:52:10:05

Emmet Penny

Right? So I, I want to direct people to Travis Fisher. He's over at Cato. He wrote a piece. I published it on Good Grief, and he also published it in his substack the the Fish Tank. And he wrote a really great piece on what happens if these autos basically become clearinghouses for subsidies. And he agrees with former commissioner James Danley that it will basically tell people the price signal, will tell people that it is freer, better to build wind and solar.

00:52:10:06 - 00:52:41:05

Emmet Penny

So we're going to get way more of that. The subsidies will hasten the exit of this baseload power. And I like you said, I think we're going to get a proliferation of gas. So you mentioned the pressurization issue, gas contracts, and I saw New England on the pipeline system work in a way that the Keating and those utilities, because of their structure, can basically pay for access all the time.

00:52:41:07 - 00:53:20:14

Emmet Penny

Right? That's what they're interested in early seasonally. It is not wise for a natural gas plant operator to sign one of those contracts if they're going to be bidding into a market and they don't know how it's going to go. So they have these more ad hoc contracts for pipeline access. If you want more things on to these natural gas generators that don't have guarantees that they'll be served first in a time of crisis, I think we see another element of fragility that's going to happen here, especially as New England and especially New York.

00:53:20:16 - 00:53:43:14

Emmet Penny

New York's ISO just put out a report about this I think two days ago or yesterday actually saying that they are now moving from a summer peaking system to a winter peaking system. Right. So That's going to be a new challenge avenue there. The other thing that I will say is that we are going to be we would be very sensitive to price swings in the natural gas market because of that.

00:53:43:14 - 00:54:09:12

Emmet Penny

So we'll see perhaps all sorts of random spikes, even at times of very mild load. I think we saw some of that in California, if I remember correctly, some of the locational marginal pricing that was coming out of. So in January as the Arctic blast fell on its northern neighbors were pretty intense. And it's sometimes, I think, nearing $1,000 a megawatt hour, which was pretty crazy.

00:54:09:14 - 00:54:36:11

Emmet Penny

And these were days where California had like very little else going on on its grid. So we might see things like that. I actually think that we are going to start seeing major challenges to getting more wind and solar on the grid. I think the story of winds via offshore winds viability are becoming clear to everyone, even people in the wind industry, and they're at least saying like this won't be cheap anymore, you know.

00:54:36:11 - 00:55:00:11

Emmet Penny

So we're getting a little bit of candor from Siemens, Gamesa and others about that. And I just I think it's going to be very hard to finance those. So I don't think we're going to see a lot of that going forward. Onshore wind, I know less about. I'm not going to speak too heavily on that, but I think we're all familiar with the cannibalization problems of solar, where if you get enough of it, it's all producing at the same time.

00:55:00:11 - 00:55:20:09

Emmet Penny

And then devalue. There's a supply glut that devalues itself and so there's less incentive to build it. People expect batteries to fix that, you know, where that we might be able to see batteries do some shaving. And I think they can do some helpful shaving. I think batteries are useful technology for the grid no matter what, whether or not you're doing like wind, water, solar or whatever.

00:55:20:09 - 00:55:40:02

Emmet Penny

I think, you know, batteries should be in the mix. So I want to be like a pro energy next person there. But I think we'll see the limitations of that in ERCOT, where there is a lot of battery capacity being added right now. I think the last time I looked at that, there is just a ton coming on.

00:55:40:02 - 00:56:01:12

Emmet Penny

I think S&P Global should be releasing their seasonal report on it at the end of the quarter. But, you know, I think what we're going to see is that everybody is starting to not get what they want. We're going to see power prices go up. We might see I think we'll definitely see an increase in fragility. And, you know, next year is when we're supposed to see the Biden era subsidies go in.

00:56:01:17 - 00:56:22:07

Emmet Penny

So we don't even know how crazy this is going to get is. The other thing I want to add, we don't yet know how nutso this can really become. FERC Order 88, which was, you know, pushing us towards these markets, was supposed to achieve reliability at least cost we are now pursuing neither of those things.

00:56:22:09 - 00:56:25:03

Chris Keefer

On reliability at peak cost.

00:56:25:05 - 00:56:55:03

Emmet Penny

Yeah, exactly. You know, so I and it's clear, you know, that the market frameworks, the way they work now aren't the best. It's difficult to say what could be better. I know that most engineers hate power markets and most economists like them. The story of the grid is that neither economists nor engineers get everything they want and never have when it comes to the economics of electricity.

00:56:55:08 - 00:57:17:06

Emmet Penny

So I think, you know, we're going to have these interesting debates. I told Robert when I was on his show a while ago that we're at the beginning of this you know, we're at the beginning of this problem. We are this is not we're not in the part of this moment in history where we're in that active problem solving stage.

00:57:17:12 - 00:57:19:19

Emmet Penny

We're in the problem ID.

00:57:20:00 - 00:57:22:10

Chris Keefer

Making stage, actually.

00:57:22:12 - 00:57:44:15

Emmet Penny

Yeah, Well, those are sort of coinciding, right? So, you know, I mean, I think one of the things that's been surprising to me is some of the people from New York, again, the North American Electricity Reliability Corp. has been going on some podcasts and, you know, works policy taken out a policymaker. I think I'm glad that, you know, sometimes it's frustrating to me that they are more critical of policy.

00:57:44:15 - 00:58:02:18

Emmet Penny

But then I remember that it would be less useful if they were and they would be seen as more partizan. And I don't really want that from them, but they've been very clear. They're like, look, batteries. Since batteries aren't generation and people need to stop thinking that they're just fundamental realities to this system and we need to get acquainted with those.

00:58:03:00 - 00:58:37:13

Emmet Penny

They put out a report last spring, I think it was where they said the biggest threat to reliability on the grid is our current energy policy. And then the second, the second greatest threat was the grid transformations that that energy policy was incurring. I believe. So one or two were kind of the same thing. And that to me tells me that there are serious people whose incentives line up with maintenance of the system, who do take this seriously, who aren't partizan ideologues and who want to get this right.

00:58:37:18 - 00:58:59:11

Emmet Penny

You know what? I want to give credit to the now chairman. Thankfully, he's not just acting Chairman Willy Phillips in FERC. Even he and Alison Clements, who's about to step off for FERC, told the Senate last May that we need to keep coal on. And Clements and Phillips are Democrats who are very concerned environmental justice and climate change.

00:58:59:11 - 00:59:23:04

Emmet Penny

But even they recognize the importance of the reliability of the system. So I think there is potential for reasonable conversation for motivated and interested parties here. I don't want this to turn strictly into partizan infighting, not just because I personally am sick of that, but because of the level of broad consensus we need for any of these solutions to go forward.

00:59:23:06 - 00:59:42:12

Emmet Penny

I will add this If anyone in America thinks we are going to get to a point in at least my lifetime where we are not figuring out how to put wind and solar on the grid wake up. The interest for that is not going away anytime soon. That's just the way it is. That's we're just going to be trying to do that.

00:59:42:18 - 00:59:54:04

Emmet Penny

Now, I might disagree with that, but it's going to be what's happening And a lot of how this is going to get decided is the parties, politics and politics is the art of the possible.

00:59:54:06 - 01:00:15:22

Chris Keefer

You know, it is. You're saying the subsidy is a subsidy. Monsoons are not coming until next year. And, you know, I'm no economist, but it seems like the cost of energy is a is a key driver of inflation. If it if energy prices go up, then everything gets expensive. So we'll see if the Inflation Reduction Act lives up to its its its title.

01:00:16:00 - 01:00:34:03

Chris Keefer

You know, just I guess in closing, you know, talking about these retirements of fossil fuel facilities, you know, more renewables going on the grid, producing unreliable, unreliable. I mean, I think we're really looking at electricity shortages. And, you know, when that's acute, that's a blackout or brownouts when it's chronic, I'm not exactly sure what we call it or what it looks like.

01:00:34:03 - 01:01:00:05

Chris Keefer

If it just means higher prices incent consumers not to use electricity. But again, with these gigawatt electric scale, you know, data centers going online, Sam Altman was quoted recently as saying, you know, we need a energy breakthrough or energy revolution in order to enable, you know, this future that is rapidly being built. Again, a Google search using AI is 10 to 20 times more electricity than just a traditional Google search.

01:01:00:05 - 01:01:15:21

Chris Keefer

And that's just that. That's not the point. It's just the Google search, you know, And of course, as a tech bro, he says it's probably going to be fusion, you know, or I guess advanced nuclear is in there as well. I think it's fascinating. You know, I've been speaking with a few tech pros recently and I'm being pejorative.

01:01:15:21 - 01:01:39:12

Chris Keefer

I should. But, you know, there seems to be this fascination with maybe it's a bit like libertarian, but, you know, the server farms should have like a little micro reactor on it. And that's kind of the way to solve this issue, just kind of to be sort of self-contained and take care of itself rather than going, Holy shit, we're going to need a lot more generation, like we're building gigawatt scale servers, maybe we need gigawatt scale reactors.

01:01:39:12 - 01:02:01:01

Chris Keefer

And I'm not suggesting they build a reactor to just provide power to their own facility, but this might lead to a conversation that's more broad around planning within these different artigos or utility service areas for, hey, you know, we have baseload need now, baseload back, maybe baseload sexy data centers are baseload. We might need to build some, you know, clean baseload generators.

01:02:01:01 - 01:02:06:10

Chris Keefer

So I'm not sure, you know, another famous for rambling question slash commentary.

01:02:06:10 - 01:02:28:03

Emmet Penny

But no, I can so yeah, let me respond to that a little bit. So I used to think that that was just this sort of arch libertarian response. I don't think that anymore. One of the things that we forget is that most manufacturers or whatever had their own behind the meter power plants for a really long time for the first 30 years of the electric era.

01:02:28:05 - 01:02:53:23

Emmet Penny

And it was only in America, World War One, that changed that culture. Energy is created huge rationing that made their individual services uneconomic, which had allowed Samuel and Sole and his utilities to cross the moat and to bring them into his utility empire. And it took a long time to get there. People don't want to give up on their power sources.

01:02:53:23 - 01:03:24:11

Emmet Penny

So what we might be seeing is a reversion to behind the meter services that were the original paradigm of how this worked for large demand facilities. Now that's going to run into the problem of whether or not we can even do microwave reactors or what have you. Right? So it's a little bit different in that terms, like people already had scalable sized coal plants in the offing, you know, that had different economies of scale.

01:03:24:12 - 01:03:46:02

Emmet Penny

So when I take a look at this, I don't necessarily see it as this arch libertarian reaction, but really what seems to be a typical business response to the utility framework as it existed the entire time, it has. There's always been a fraught relationship between these places that need a lot of power all the time and the utilities that provide that.

01:03:46:02 - 01:04:13:09

Emmet Penny

It's not harmonious and it hasn't been, you know, some of the people who are buying a ton of wholesale power that wanted power markets because they thought we were going to get a better deal. We're like manufacturing trade organizations in the nineties because they didn't want to get hosed by the stupid incentives that monopoly utilities in America. I mean, there's this great quote from a guy in the fifties that said the utility industry is the only one I know of where you can turn a profit by redecorating your office.

01:04:13:11 - 01:04:48:13

Emmet Penny

You know? So, I mean, look, I don't I think it's very easy to say, like, these guys don't know what they're talking about or and maybe they don't, but what they're identifying is something that has always been a tension within the electricity system in America. And I almost think it's less helpful to see it in ideological terms, to see it in almost like even dumber or just interest political economy terms of what they're looking at when they say that they take a look at the power markets and say this looks screwy, the take a look at utilities and say, I don't want to be beholden to that.

01:04:48:15 - 01:04:59:04

Emmet Penny

Is there an alternative where I have more control over my balance book? At the end of the day, what firm is going to say they don't want that?

01:04:59:06 - 01:05:17:05

Chris Keefer

Yeah. Fair play, Emmit. We're going have to cut it somewhere. And I think that somewhere is here just over an hour. But it's phenomenal having you back. It's been way too long since we've had the chance to interact. And what a join us to have a podcast to be able to make an excuse to hang out with someone for an hour, especially someone I respect as much as you, my friend.

01:05:17:07 - 01:05:20:01

Chris Keefer

Looking forward to that book. Do you have a working title?

01:05:20:03 - 01:05:40:20

Emmet Penny

Yeah. I mean, I so I'm not going to share the title or anything right now. I've yet to sign a contract with anybody. I don't want to do it. By the way, if you work for Simon Schuster or something, hit me up, you know, But I'm already moving ahead on writing it because I want to stop thinking about it.

01:05:40:22 - 01:05:53:14

Emmet Penny

That's basically why I write. If anybody wants to know, like what drives some writers, for me, it's because I want to stop staying up thinking about something, so I need to write about it. And then as soon as I write it, I almost completely forget it. Right?

01:05:53:18 - 01:06:10:07

Chris Keefer

Right. I love it. Purge it. Okay. I might take another swig from that monstrously large drinking beverage of you. That haunt of, I don't know, some massive prehistoric horned beast. You barbarian, you okay? We'll talk again soon.

01:06:10:08 - 01:06:11:14

Emmet Penny

That's right.

01:06:11:16 - 01:06:12:01

Chris Keefer

My friend.

01:06:12:06 - 01:06:12:15

Emmet Penny

Later. But.