The Fragilization of the Grid

00:00:03:06 - 00:00:29:11

Chris Keefer

Welcome back to Decouple. Today I'm joined by Dave March. Dave is a podcast fan and listener who reached out to me to do an event recently on a LinkedIn live seminar. And this is one of the joys of podcasting, is the folks that reach out to you and this wasn't a pitch to me anyway, but after meeting Dave and having a free chat before the LinkedIn live events, I found him to be a pretty fascinating guy.

00:00:29:13 - 00:00:51:06

Chris Keefer

So, Dave, you know, I've just met you. I know a few things about you. You're wearing your X or G energy shirts. I want you to explain that. And you also ran, I believe, a solar business called Entropy Energy, which seemed to me when I heard about it to be very, very fitting. So why don't you take a moment and fill in the audience on who exactly you are and what it what it is You're Chris.

00:00:51:06 - 00:01:16:15

David March

And thank you for, you know, the honor of appearing on decouple one of my favorite podcasts, by the way. And I recommend it to lots of people. And for all the great work that you do with Canadians for nuclear energy, so huge, huge proponent of your work. So me, I'm an engineer by training graduate in quantitative finance degree.

00:01:16:17 - 00:02:00:21

David March

I've been basically an entrepreneur, started three companies and before that chief operating officer with a lot of experience in operations, managed manufacturing and things like that. So X or G Energy is a concierge utility for organizations where energy is mission critical now. I use the term utility there with great poetic license, Right. We're not like a true registered utility, but it's more illustrative to our customers who think of anything that's coming out of the the wires or the pipe for natural gas is coming from the utility.

00:02:00:23 - 00:02:28:08

David March

So we're a concierge utility net. We stand between the customer and, I'll say the complex energy markets to help them get the energy they need, whether it's natural gas or electricity, but getting it in the form that they want with reliability, power, quality, green, renewable, whatever it is that they need to meet their corporate objectives. That's what it does.

00:02:28:10 - 00:03:03:19

David March

Now, the reality in essentially the genesis of ecology is we want to help our customers manage and if possible, prosper through the energy transition. The energy transition is going to be a bumpy road. Lots of issues I'm sure that we'll discuss somewhat later today as well. But the whole concept of how energy interacts with business is changed and it's going to get more complicated all the time.

00:03:04:01 - 00:03:35:06

David March

So we have stepped in to help businesses be able to focus on what they do best, which is whatever their business is. Let the let the experts handle the energy from your question on entropy in ex or GM, a chemical engineer, so apologies for I couldn't get past e's in the alphabet there. X or g means the maximum amount of work that you can obtain from the energy available in a system.

00:03:35:08 - 00:04:08:08

David March

So we thought it was sort of illustrative of what we're trying to do for our customers, which is to make them as productive as possible with the, you know, the energy markets as they are. We started Extra G Energy in 2019. In 2013, I started a company called Entropy, and Entropy was a developer constructor and manager of utility scale renewables, so primarily solar projects, but we did do some other, you know, anaerobic digestion and things like that.

00:04:08:08 - 00:04:43:12

David March

We built 450 megawatts of utility scale solar, invested about $700 million and what happened was we really learned the energy markets there, but more importantly, we learned that businesses are not being well-served by utilities in the energy markets. And it's only getting worse and more complex all the time. So we started X or G as a follow on to Entropy to focus exclusively on helping customers manage the energy situation.

00:04:43:14 - 00:05:09:04

Chris Keefer

And that's what sort of tweaked my insurance, definitely. I mean, I practice in a mission critical, as you put it, environments where moment to moment energy means dialysis machines running, ventilators running or not, all sorts of, you know, very vulnerable patients hooked up to machines which which need ultra reliable energy. And, you know, I've become quite cynical I think is as I dived deeper into understanding energy and energy markets, etc..

00:05:09:04 - 00:05:29:17

Chris Keefer

But, you know, the whole idea of an energy transition, I always kind of do air quotes around it because of course we're adding adding some renewables and, you know, low carbon energy to a system that's continually expanding. But leaving that aside is so many threads I want to touch on. But before I do, actually, I'm actually just wanting to dive a tiny bit deeper into extra G.

00:05:29:18 - 00:05:44:08

Chris Keefer

Some of my listeners are going to be bored by this, but basically, just to clarify, what you're saying is X or G refers to the work that's done, so it leaves out the waste heat. Essentially, if we're talking about like thermal generation, is that is that what a what would it mean?

00:05:44:09 - 00:06:07:22

David March

So again, extra G the maximum amount of work you can get out of the energy in a system, whether or not we can use the waste heat or not is dependent upon the customer's, you know, operation. If there is no use for waste heat, then the maximum amount of work we can get out doesn't include waste heat, if that makes sense.

00:06:08:00 - 00:06:13:15

Chris Keefer

And if there is a use for waste heat, then you're getting more total extra G. Yeah, more potential of the work out.

00:06:13:15 - 00:06:18:14

David March

And also also it's just a name. Okay. Yeah.

00:06:18:18 - 00:06:19:04

Chris Keefer

Got you.

00:06:19:04 - 00:06:41:14

David March

Good value of the company is really in helping them manage again this energy transition which is going to be and I hate to say it, it is going to be painful for companies. Yeah. And what I'd like to do if I have a second is go back. You can see I've got lots of gray hair. My children are grown up and have their own kids.

00:06:41:14 - 00:07:03:06

David March

I know you just had a child with a finger in the right. Five, five years ago is still a lot older than you. When I was an operations guy running manufacturing plants and things like that in the United States, energy is inexpensive except when it isn't there. Okay? Then it becomes it's like the price elasticity of energy is almost infinite.

00:07:03:06 - 00:07:39:07

David March

If it's not there, it's a big problem. In your case, people die and things like that. For businesses, it's it shuts things down. But from a cultural perspective, I didn't worry about energy when I was running manufacturing plants and things like that. It was an expensive and I'm going to go back to it's still inexpensive, but it was inexpensive and it was pretty bloody reliable and the power quality was good in the United States Today, for most manufacturing companies, energy only constitutes about 4% of their cost of goods sold.

00:07:39:09 - 00:08:03:00

David March

So people talk about energy costs and everything else. It really isn't that big a driver. But what it is, is it's absolutely essential, right? So if you don't have it, you'll pay anything you can get for it. But when you have it, it really isn't that expensive. So businesses didn't think about energy that much. You know, you went to and again, you had your local utility, you went to your utility.

00:08:03:00 - 00:08:33:03

David March

You say, I need an energy contract. You got it. Here's what it's going to cost. Now with the energy transition that is changing and energy is becoming much more complicated. So, again, in looking at it from a business management perspective, business managers want sort of security and surety. So I need to budget, I need to make my quarterly numbers and all that kind of stuff.

00:08:33:05 - 00:08:56:06

David March

Before I had an energy contract, it was I was going to pay whatever it was $0.08 kilowatt hour, blah, blah, blah. I didn't worry about it. Now, the energy markets have gotten highly volatile and they're getting worse. So now your energy procurement, your strategy becomes super important. And then at the same time, we've got power quality issues coming in.

00:08:56:06 - 00:09:22:23

David March

We'll talk more about that and just resiliency and reliability. The number of outages has gone up an order of magnitude in the last ten years. That's very significant. The power quality problems have increased 14 fold in the last five years. So energy, which used to be something that me as a you know, as an operations guy could ignore, is no longer the case.

00:09:23:01 - 00:09:41:06

Chris Keefer

Just really quickly, you said you said power quality. I just wanted to get a sense of, you know, define that term. And also I'm curious about what we define as an outage. There is a fabulous documentary out of Germany, of all places, produced by state media, Deutsche Avella is looking at the energy transition and like limits to it and whether it was faltering.

00:09:41:11 - 00:10:02:15

Chris Keefer

And a big part of the analysis was sort of the risk of catastrophic blackouts. But in some of the reporting they went to, what I recall was it's it's a company that creates some of the electromagnets and copper wiring for wind turbines. And this company was complaining that's, you know, a blackout. What is what is officially registered as a blackout is, as you know, a minute or two.

00:10:02:17 - 00:10:23:08

Chris Keefer

And when they have grid disruptions of microseconds, it completely screws up their industrial process and they got a shuttle of the machines down and it's at least a six figure expense to recalibrate and get back on line. So I imagine you know, doing what you do and, you know, these mission critical industries and these increasing concerns about reliability, I think a lot of vital signs as a medical doctor.

00:10:23:08 - 00:10:29:23

Chris Keefer

But you've got your finger on the pulse of this. You're feeling some funky stuff happening. So, yeah, what's what's power quality?

00:10:29:23 - 00:10:30:16

David March

And you sort of.

00:10:30:16 - 00:10:31:18

Chris Keefer

Find out it's for me.

00:10:31:18 - 00:10:59:00

David March

To share the two things and a lot of it where it gets confusing is what the rules are for reporting an outage. So typically there is an industry standard report in the United States on outages and in general it does not include outages that are less than 5 minutes. Right. So when I talk about outages increasing dramatically, those are ones that are longer typically than 5 minutes when you know.

00:10:59:03 - 00:11:00:19

Chris Keefer

What about the sub 5 minutes.

00:11:01:01 - 00:11:36:15

David March

Yeah. So that's a whole different, you know, situation. And most of those occur less than 30 seconds. The vast, vast majority occur less than 30 seconds. Many only just a couple of seconds. Now, you mentioned microseconds in general. That would be too short to really cause disruptions. But what is happening? We have two things going on. One are manufacturing processes are getting more sophisticated, more automated and more complex than they used to be.

00:11:36:17 - 00:12:05:18

David March

And then number two, we have power quality declining. Now, what do I mean by power quality declining? So the power is coming in. I might have a voltage dropped, so literally the voltage is falling out. I could have a frequency issue. In business, we use three phase power. One of the phases may drop out, one of the phases may become one synchronized with the other phases, or they're not sufficiently balanced that way.

00:12:05:20 - 00:12:31:12

David March

Or I'll get transients, you know, blips that come through, fallouts that come through, that may only be milliseconds in length. And then the other thing you get in is just noise, noise being harmonics that are created and things like that. All of these can be enough for the control systems, the automation in control systems in a factory to literally shut down.

00:12:31:14 - 00:12:54:14

David March

So that to scram. Yeah, the outage may only be 2 to 3 seconds or maybe less than that, but reality is it'll bring you down for hours because everything has to be reset all the machines. So this thing we've got injection molding machines or something like that, I've got plastic going in all sudden, you know, we get a trip.

00:12:54:16 - 00:13:15:14

David March

The power doesn't, you know, it blink, it blinks for a couple seconds or something, but the machine shut down. Now the machines have to be brought up, but the liquid plastic that's in an injection molding machine is now solidified or gotten really sticky. I've got to tear it all down, cleaned it all up, re buffer it all that kind of stuff, and bring it back up.

00:13:15:14 - 00:13:48:21

David March

So it's not uncommon for, you know, complex organization, you know, complex manufacturing, a blip of a few milliseconds to a second will take them down for an average of 5 to 7 hours. And these are not recorded by the utility. Power quality usually isn't recorded by the utility. And again, going back historically, historically, when you had a power quality problem, the you and you called the utility, they pointed to you and said is probably your stuff.

00:13:48:23 - 00:14:16:05

David March

Right now it is primarily on the utility side of it is where these problems are coming in. So yeah, it'll take you down. It'll be, you know, really nasty. Now what's causing that? Well, it's a variety of things. One, intermittent renewables caused some very interesting thing. This we're called the switching supplies in that create a lot of noise and harmonics.

00:14:16:06 - 00:15:01:19

David March

And when you have enough of them occurring, you know, around the place, you can get these issues, you know, created. So, you know, you sitting at your house and your neighbor has their solar on their rooftop exporting to the grid or something, Your power quality could be inversely, you know, could be affected by that. Same is I've got, you know, an industrial site or something, some of the the buildings there have rooftop solar, etc., etc. They can cause noise on the lines that this, you know, that will literally bring you down the way we find it, which is really interesting, is we provide backup as a service power quality, as a service, you know, upfront

00:15:01:19 - 00:15:24:06

David March

cost to our customers. We just have a long term agreement where we sort of manage their energy, you know, over ten years, quality, reliability, everything else. They'll contact us, let's say we need a backup generator. We'll go. Why do you need a backup generator? We're going down once a month or something and we're down for 7 hours. So, you know, we're we're pretty good at this, right?

00:15:24:08 - 00:15:47:14

David March

So we'll go and we'll look at the utility reports and things and go. There's no record of any outages. yeah, yeah, yeah, yeah. It's just this little blip. Well, unfortunately, a backup generator isn't going to do anything for you there, because under the best circumstances, a backup generator will take 6 to 10 seconds to start. Best circumstances.

00:15:47:14 - 00:16:14:04

David March

Those are fast start what are called for you for, you know, in your world life safety backups, right? Yeah. If I'm getting taken down, you know, by something that's 3 seconds or less, that generator is not going to do anything for you. So we are now incorporating a lot more uninterruptible power supplies and, you know, what's called ride through for systems.

00:16:14:06 - 00:16:34:18

David March

And essentially what you can think about it is it's like a big battery. It uses the battery term, but it's like a big battery. And what we're doing is we're taking the incoming power, converting it to DC, going into the battery, converting it back to AC and then feeding your plant. So if there's any hiccup out of here, the battery is writing through.

00:16:34:19 - 00:16:58:07

David March

And typically for our installations, we'll have that ride through meaning the the ups can hold the facility for 3 to 5 minutes. So one, if there is a hiccup, nobody sees it. If there's an outage, we know there's an outage, but we don't want it. You don't want to start generators for a three second outage or a five second outage or something or even a minute outage.

00:16:58:09 - 00:17:20:10

David March

You kind of want to look at and say, is it really out? Then start your generators and we will switch over. So that's what we're seeing a lot in the industry. And we expect it just to get worse as you get more and more intermittent renewables. And one of the things to to recognize you have a solar farm where we built lots of solar farms, you got clouds coming over.

00:17:20:16 - 00:17:44:03

David March

Solar output can drop by 60% in a matter of a few seconds, depending on the size of the farm and things like that. So that's going to cause interesting glitches and blips and things on on the line. Now, if it's tied in to the transmission line and it's miles from you, not a big deal. There's a lot of, you know, basic spinning inertia in it.

00:17:44:07 - 00:17:58:02

David March

But if it's close to you so that the impedance factor between where that's happening in your load is relatively short, you may have power, quality problems. And again, we're seeing it all the time these days.

00:17:58:04 - 00:18:19:12

Chris Keefer

It's interesting, a friend of mine was in Germany recently visiting with some pro-nuclear advocates, and one of them has become very wealthy selling diesel generators. And he sort of foresaw this. I don't think he took over like a monopoly of of the diesel generator backup business, but he foresaw the grid instability. I think he's an electrical engineer and got in early.

00:18:19:14 - 00:18:45:08

Chris Keefer

You know, you're describing the fragile ization of the grid. I've also called it the Nigeria ification of the grid, which is probably a little bit hyperbolic. But, you know what? What this all sounds like it amounts to, as we used to, have a very reliable power system. You could trust it. We all paid into it. You know, whether that was state owned or, you know, TVA or a big utility, vertically integrated, totally, They're responsible for delivering reliable energy that's kind of disappeared with energy only markets.

00:18:45:10 - 00:19:04:10

Chris Keefer

And now, you know, in terms of explaining the Niger ification, I mean, there's so much grid defection in Nigeria. There's there's a diesel backup system which costs billions of dollars more than their entire grid infrastructure. It's used, you know, probably actually pretty frequently, but, you know, even even infrequently. And it amounts to a massive net drag on the economy of the country.

00:19:04:12 - 00:19:22:04

Chris Keefer

And you know what you're describing, I felt guilty once or twice when I was traveling because I had my, you know, power outlet going to my battery and the battery going to my phone just because of some cable issues. But that's it's fascinating hearing from the boots on the ground of what this what this physical it looks like managing this problem but it's only growing bigger.

00:19:22:09 - 00:19:28:15

Chris Keefer

And Dave, I don't know if you have an IPO. I want to invest in extra energy because it seems like these are boom times.

00:19:28:17 - 00:19:53:06

David March

Yeah. And am not plugging anybody or something like that, but like Generac can't keep enough stuff in stock because people are literally buying for just for their homes. Lots and lots of backup generators because they're witnessing this more and more frequently. Now. One of the things that I mentioned before was this sort of price volatility and a couple of issues.

00:19:53:06 - 00:20:20:14

David March

And first, we don't play a blame game or get into, you know, that type of thing is this is the reality of what's going on out there. You're a business. You need to keep running. Here's how we help you. I don't want to point fingers, etc., etc.. But what what happens with the influx of renewables is you get a great, great increase involved the volatility of prices.

00:20:20:16 - 00:20:43:16

David March

So it used to be, you know, if I had a bunch of coal plants and natural gas plants, the cost to generate the same all the time and I just sort of factor up or down based upon load and load was easy to forecast. Okay, Now the grid is really struggling because load has become more intermittent because we had things like chargers, which is just going to get worse.

00:20:43:18 - 00:21:09:05

David March

But generation has now become completely variable. So everybody talks about, you know, renewables are the least expensive, more sort of get into that because that is a fallacy. But from the perspective of what it does and their marginal cost, because they don't have any fuel cost or something, they can suppress prices when they're operating and then prices spike at the end.

00:21:09:05 - 00:21:30:07

David March

So everybody knows about the DUC curve, right? So, you know, prices during the middle of the day could get, you know, go negative in a lot of ways. But as soon as the sun comes off, the load is still there. And even worse, the load goes up because people now are going home, turning on their air conditioning. So the prices spike.

00:21:30:09 - 00:22:04:10

David March

And the reason the prices spike is now you've got to bring in generation immediately ramp it up. It has to be fast acting, which is your most expensive stuff. So, yes, the solar may be inexpensive when the sun's out, but when the sun goes down and you have to recover from that rapid fall off, it's extraordinarily expensive. So in like Texas, there's a program called E CRC that is focused strictly on incentivizing generators.

00:22:04:12 - 00:22:38:04

David March

We consider ourselves a generator. If I put backup generators in or something, I'm there to help support the grid because when the solar rolls off at five or six or 7:00 and the wind hasn't picked up, the ramp rate is astronomical and prices can go literally from the middle of the day at you know, I just ran your numbers, you know, you know, $15, $20 a megawatt hour to at 9 p.m. go to $5,000 a megawatt hour.

00:22:38:06 - 00:23:00:13

David March

All right. You can get your clock cleaned through with just a few hours of exposure. Now, this happened to a lot of people when they when Uri hit is, you know, they were on what's called an index contract. It wasn't a fixed price contract. They were just buying from the grid. And their you know, their usual bill was, you know, 100 bucks a month or something like that.

00:23:00:15 - 00:23:28:23

David March

They were getting bills in the several thousands during that period of time because, you know, rates spiked. And at that time, ERCOT had a different circuit breaker. Prices in ERCOT could go to $9,000 a megawatt hour, 9000. So this volatility has now become a factor in how you manage your operations manager plant and things like that. So the thing again, this is finance, right?

00:23:29:01 - 00:23:52:18

David March

Somebodys got to take the risk. So if you're a business and you say, I need predictability, I can't take this risk, you've got to pay somebody else to take that risk. So your energy supplier, which is a utility retail energy provider or something, they're the ones that's got to source the energy for you. So your price is going to go up to compensate them for taking the risk.

00:23:52:20 - 00:24:15:23

David March

And that premium gets to be really quite significant. So one of the things we do with our customers is if they got mission critical operations and they need backup power, we'll use those backup generators to protect them from those periods of time where prices, you know, fly off the handle and we can keep them on index. They can buy the lowest cost energy.

00:24:16:04 - 00:24:24:22

David March

And then when it goes crazy, turn the generator on, say, you know, it's cheaper for me to self generate. So it is super interesting out there in the markets these days.

00:24:25:00 - 00:24:43:01

Chris Keefer

Absolutely. I mean, the complexity is is mind blowing. I was in Australia recently and they're really struggling with a lot of these issues and the amount of human resources that are going into all of the kind of management services that are a bit beyond me. But what you're helping me kind of get a grasp of is wild. And again, you talk about Nigeria and just the waste of physical resources.

00:24:43:01 - 00:25:07:20

Chris Keefer

The, you know, the additional mining and manufacturing that goes into this massive backup system. U.S. is nowhere near being there yet. Australia is nowhere near being there yet, but we're kind of heading in that direction. And in terms of, you know, the copper or the steel, whatever you need, the electromagnets, that's one side of it. But but like we're in a bit of a demographic squeeze in the Western world and you think of the sheer human talent, like you have a finite number of engineers that you can produce in a society, right?

00:25:07:22 - 00:25:26:20

Chris Keefer

And we've not been producing as many as the Chinese because everyone, I guess people are learning to code. That's a kind of engineering maybe, but you know what I mean, in terms of this stuff. And also that's going to long of a diatribe here. But the grid is shifting. You know, we had this pace of breakneck globalization and moved a lot of manufacturing over where there was cheap labor and less regulation.

00:25:26:20 - 00:25:50:22

Chris Keefer

And that made products cheaper despite real income, not really going up in the West anyway. We're heading into a place in this new multipolar world. There's re industrialization. There's big baseload demand that's coming back, not to mention the data centers like gigawatt scale data centers, you know, imposing a massive demand on the grid. And it all seems like it's it's just a very inefficient way to run a power system, to run a society.

00:25:50:22 - 00:25:58:12

Chris Keefer

Ultimately, that depends on that power system. That is a big commentary. Lots of pull on there, take it away, whatever you want it to.

00:25:58:14 - 00:26:30:13

David March

Be socialist, It's here. But let let's take a couple of as one data centers are insane. We work with data centers. Data centers. You know you power small city now with the data, you know the power for a data center. I don't know if you saw the announcement yesterday. This I saw it yesterday. Amazon. Yeah. Amazon Web Services buying talent, you know, new plants saying just like Microsoft has now signed an agreement, they expect to use small nuclear reactors to power their data centers going forward.

00:26:30:15 - 00:26:42:17

Chris Keefer

A, Do they need small or they need? I mean, these are gigawatt scale places like, you know, I've heard I've heard plants are able to build micro reactor in the backyard and, you know, partially power, fully power, a data center. But now we're talking gigawatt.

00:26:42:18 - 00:27:09:08

David March

Scale and when you close from together. Yeah. So we've worked with data centers where once one center is 180 megawatts, you know, they do a cluster, you can get up to 360 megawatts. You can't find places to connect to the grid anymore. So, you know, for those type of data centers. But stepping back, let's talking from a standard or culture in society.

00:27:09:10 - 00:27:45:08

David March

What we are trying to do is take the most complex, largest machine mankind has ever built. That is the grid. And we're trying to essentially reverse engineer it, change it in all kinds of things without a plan, literally without a plan. So we kind of think of it in a naive perspective of capitalism solves all problems eventually, yes, But after there's an awful lot of pain.

00:27:45:10 - 00:27:59:00

David March

So without a plan, we're just essentially incentivizing and throwing all kinds of stuff, you know, out there to see what sticks. Like, we have these, you know, trillion dollar incentive to put solar, wind and everything else. Great. You put that out.

00:27:59:02 - 00:28:15:19

Chris Keefer

And frankly, that's not capitalism. That's not capitalism. These massive subsidies, Right? I mean, I can hear the capitalist screaming that in the background that you're not describing a free market system. This is government intervention in the markets, renewables, targets. But you're right, there's no there's no plan for the base function of the electric grid, which is fundamentally reliable.

00:28:15:22 - 00:28:48:18

David March

Yeah. I mean, again, it's from the developers and again, not a not a slight against them building, you know, large, you know, large wind, large solar or something like that. How do you get the power, You know, now you need the transmission lines and things like that. They don't exist. So I think the EIA most recent numbers were we need $1,000,000,000,000 of investment in the United States just in transmission lines if we're going to play the renewable game, because you can't co-locate a wind farm in the middle of a city.

00:28:48:20 - 00:29:15:09

David March

I can put a small nuclear reactor at an old coal plant that sits outside the city, but I'm not going to put, you know, a 600 megawatt wind farm, you know, in Brooklyn or something like that. So again, I'll say it and again, I want to get to the blame game. I say it's a lack of leadership. Speaking as an engineer and a previous project manager scares the crap out of me that we're literally doing this without a plan.

00:29:15:11 - 00:29:40:06

David March

And it's tough because it is a free market. But again, you go back to capitalism and things like that. You have what's known as hyperbolic discounting. So things that are further out get really, really discounted a lot. So if you're looking for business to do it, business is going to look at a timeline of a couple of years, maybe five years or something like that, because we don't pay for itself in five years.

00:29:40:08 - 00:30:10:17

David March

Forget it. Who's going to do the, you know, the longer term stuff that's there? And then not only are we throwing in the renewables and taking away the baseload, you know, the previous baseload stuff at a rate that is not allowing for the the the low growth in the grid. All right. We're also now pushing increased load. So, yes, move to heat pumps, heat pumps, great, super efficient EVs.

00:30:10:17 - 00:30:44:06

David March

Hey, go, Edis. Great, you know, lower carbon, all those things. But we're pushing more load at the same time. We're not pushing increased capacity on the grid. In the capacity we are adding is not is intermediate is intermittent. So we are literally and this is why essentially X or G exists as we forecast this out, we see more and more problems coming not only in power quality but outages because, you know, weather can change relatively rapidly.

00:30:44:12 - 00:31:16:15

David March

The amount of what's called capacity margin on the grid has declined. More importantly, the amount of dispatchable capacity margin has really declined. And and the only thing the grid can do then is literally shudder at load and brownouts and things like that. Every ISO in the United States over the past year has warned of increased brownouts and outages moving forward, at least for the next decade.

00:31:16:17 - 00:31:33:20

Chris Keefer

In terms of the vital signs, I mean, there's you know, in medicine, there's there's subtle vital signs such as someone's like mentation, like, are they awake, alert? Can they talk to you? That infers a lot about their circulatory status. That probably means they have a good blood pressure that's obvious. And the stuff where you got to stop and really measure it and, you know, that gets really complex.

00:31:33:22 - 00:32:00:03

Chris Keefer

It sounds like so far this power quality issue and outage issue has been cloaked because that's a more subtle, vital sign. And you know, right now, again, these five minute blackouts are not becoming so common that that they're in the popular consciousness or imagination. You know, industrial manufacturer powers are not necessarily, you know, communicating that information to the general public who frankly don't even know how the sausage gets made.

00:32:00:05 - 00:32:15:20

Chris Keefer

So it sounds like that's a real issue. And you know, your A, what I'm trying to say like, you know, you're someone who's putting putting warning signs out there and communicating here. There's this subtle stuff going on, but it ain't going to be settled for long. And, you know, you talk about, you know, this capacity margin for reliable generators.

00:32:16:01 - 00:32:36:12

Chris Keefer

I mean, already that's that's trailing off. And it sounds I mean, I heard that there's 40 gigawatts of, you know, fossil fuel dispatchable coal power and PJM that's coming offline in the next eight years. You're seeing stuff like that in Australia as well. And I mean, in Australia, they're putting the brakes on it. They're keeping these aging coal plants around because they just frankly aren't ready to accept the damage.

00:32:36:14 - 00:32:37:05

Chris Keefer

So I don't know if.

00:32:37:05 - 00:33:07:08

David March

You know, I mean, you're right in the sense that we're retiring these things or as more and more intermittent renewables come in the capacity factor, how much these plants get to run declines because again, it's an open market. So a renewable having having basically zero fuel cost or almost zero operating costs is going to beat into the market at extremely low levels.

00:33:07:10 - 00:33:36:20

David March

One of the reasons being is they need to generate in order to create the the racks or the pizzas or something like that. So they're going to outbid, underbid the gas plants, the coal plants and everything else while their sun is shining and the wind is blowing. Right. So where the capacity factor for a natural gas plant used to be 70 to 80, maybe more percent, the average in the U.S. now has been down in the forties.

00:33:36:22 - 00:34:12:02

David March

Okay. If that's the case, how long can they even stay in business doing that? Because they're not running enough, you know, to essentially create the profit, to have the return on capital. So, again, not a plan, haven't thought it through is how do we keep the grid stable and reliable while we're essentially incentivizing all the things to come in that's going to make it less stable and less reliable, Right?

00:34:12:04 - 00:34:39:04

David March

No, no. The economics economics will or I should say finance and greed, as you're saying, will will end up ruling the day. So people will go and say, you know, this is a real problem. I'm going to keep my peaker plant literally private equity people that are buying peaker plants because, you know, the grid needs it for those few hours when, you know, the solar rolls off and, you know, loads there and things like that.

00:34:39:06 - 00:34:44:14

David March

All that's going to do is translate into increase costs, increase prices for everyone.

00:34:44:16 - 00:35:05:15

Chris Keefer

And you're coasting on these ultra low natural gas prices and can help us like a buck 50 the other day. And presumably at some point the shale revolution starts slowing down. I mean, some people already seeing a number of the big fields and the Marcellus field is as peaked. The red queen, in fact, just having to drill, drill, drill more and more and more to keep up with production needs.

00:35:05:15 - 00:35:24:11

Chris Keefer

I guess Permian still growing, but like eventually we hit peak shale peak cheap shale and prices go up. And it seems like that's the whole thing that's sustaining the US economy now. And as this whole grid system gets more and more inefficient, the higher prices are being cloaked by the ultra low cost of natural gas. But eventually when that price of natural gas goes up, you know, the chickens will come home to roost.

00:35:24:17 - 00:35:44:05

Chris Keefer

You know, not quite Niger ification yet, but heading in that direction towards a really complex Rube Goldberg machine that's inefficient and frankly costs a lot of of monetary capital, human capital and natural resource capital. I guess to me, it's an extraordinary story. And it's it's it's not one that's being told enough. And so we're we're sleepwalking into it.

00:35:44:07 - 00:36:20:22

David March

Yeah. There's an interesting thing is when you confront somebody and again I don't mean to do the blame game here. When you confront somebody with these issues, you know, they always go to the Hail Mary. Well, batteries will solve everything. Well, okay, that's fine. But you still got to build the batteries and everything else. The natural gas story has gotten also incredibly complex because historically, oil and gas were not necessarily they were correlated from an energy perspective and a price perspective, but not correlated in a use perspective.

00:36:21:00 - 00:36:46:14

David March

Oil was used for transportation, etc., etc. Natural gas was used for heating and everything else. Shale tight oil is the new play now. And so you can say we have super low natural gas prices because we're drilling all the time. Why are we drilling? Because we have high oil prices. Natural gas is the unwanted byproduct of oil, right?

00:36:46:19 - 00:37:07:18

David March

So as long as oil prices remain high, they're going to keep drilling, which is going to keep the gas literally at an inexpensive for the United States, which is a boon to, you know, manufacturers, chemical companies and everybody else who are coming back saying energy is really cheap here. I mean, we see the deindustrialization of Germany because power prices have gotten so high.

00:37:07:23 - 00:37:38:21

David March

They're going to come up. They're going to come over here. Now, where will oil go? And maybe people are going, well, you know, we're going to go to Easy's and therefore we're not going to need that much oil, blah, blah, blah. Passenger cars are only 10% of of essentially fossil fuel demand for transportation. So even if you turn to all the cars, you know, to Eve, you still need diesel for trucks and trains and tanker cars and airplanes and all of that.

00:37:38:23 - 00:38:02:05

David March

Well, are they eventually going to go electrification? Maybe. But how long is that going to take? And then you have the whole issue of, well, what's going to power? Is it going to be batteries and electricity? Will I need to mine all of that stuff? So part of part of the frustration and I'm going to say part of my paranoia is, you know, going back to we're doing this without a plan.

00:38:02:05 - 00:38:28:01

David March

We're also doing it without being realistic about how long things take. Right. So it's like, well, we're going to just build more batteries. Okay. Do we have enough lithium? No. Okay. We need more lithium mines. Well, we don't want lithium mines in my backyard, but it takes ten years to develop a lithium mine. Well, okay, have we factored that into our calculus of all of these things in most cases, no.

00:38:28:03 - 00:39:00:18

David March

You know, that kind of thing. So what we I fear is that things will get worse because we're going to be missing our climate goal targets and our decarbonization and our electrification car targets. And we're going to incentivize it even more. And if we incentivize it even more, it's going to make everything else worse, reliability worse. You know, price volatility, you'll get worse, power quality, you get worse, and there will be a revolt, you know, and just say, stop this.

00:39:00:18 - 00:39:24:13

David March

You know, we we need a plan. I don't know what that outcome might be. You know, going back to your question about capitalism and things like that, do we go back to regulated utilities and things like that because it's centralized and and whatnot? I don't know. All I know is our focus is to help our customers deal with these issues, and you got to stay close to it.

00:39:24:15 - 00:39:42:15

Chris Keefer

As far as I know, like America was in the communist country in the fifties, sixties and seventies. So, you know, it's you know, politics have kind of polarized to such a degree in some ways. What's up is down and it's unrecognizable in terms of left and right and capitalism and socialism. But I don't want to tug on that thread too much batteries.

00:39:42:15 - 00:40:11:17

Chris Keefer

Right. And I know as engineers and scientists very woefully in terms of not not not making a clear statement. Right. But a lot of people say, listen, and you see this in the media repeated ad nauseam over and over and again. You know, we're not quite there yet. Right. You know, when solar power is not, you know, and maybe even nuclear could be like a bridge technology as we figure out wind, solar batteries, I don't expect to get sort of a yes no or it's impossible answer out of you.

00:40:11:18 - 00:40:30:12

Chris Keefer

But I am interested in understanding the use cases of batteries a little bit more. You describe them in terms of your work, in terms of your mission critical clients and power quality and dealing with some of that. But again, in terms of this, you know, I understand there's not certainty out there, but there is probability and there's things that are comically improbable and sort of myriad of things.

00:40:30:14 - 00:40:50:06

Chris Keefer

Can batteries, paper over the wind solar thing. You've mentioned some of the limits to, you know, mining and minerals. I'm less interested in that. I've had people want to talk about that. But just in terms of their functionality, their scalability, you know, as you move into more and more gigawatt hours of storage, I understand the prices get sort of exponentially worse.

00:40:50:08 - 00:40:53:06

Chris Keefer

So yeah, I mean, respond to that.

00:40:53:08 - 00:40:54:15

David March

Okay.

00:40:54:17 - 00:40:58:02

Chris Keefer

Right. Is that a question, Doctor? I don't know, but okay.

00:40:58:04 - 00:41:35:16

David March

So first off, always remember that finance rules. Everything okay? It's all about, you know, what are my you know, my rates of return, my I earn and they finance rules, everything. So let's go to batteries. Batteries and renewables are capital intensive. Operating cost, minimal fossil fuels, our fuel or operating cost intensive capital. An intensive right, in essence, that changes the dynamics tremendously.

00:41:35:16 - 00:42:06:11

David March

So a battery for it to pay for itself has to be used frequently. All right. And we've done calculations on it. And if again, a plug for us, if you go to our website, go to our blog, we have done calculations on batteries, Alcoa and things like that. But let's take it. You know, I need to be charging and discharging at a profit for a lithium ion battery very frequently for it to make sense.

00:42:06:13 - 00:42:33:15

David March

Otherwise, it doesn't make sense. So from the perspective that we were talking about is, the solar rolls off. No, before the wind comes in, I've got a few hours and they're great for batteries. Absolutely great for batteries. Now, that being said, there's a limit to how much price arbitrage you can do and still maintain the rate of return you need on that battery, because that's primarily a merchant, what's called a merchant play.

00:42:33:20 - 00:43:02:10

David March

Merchant play is not guaranteed and therefore the risk premium is very, very high. So people are saying, we're going to get new batteries because we can buy power really, really cheap and sell it when it's really expensive. Yes, but that only goes on for a certain amount of time. And then that price arbitrage, they price difference will decrease until the point where you can't make the returns you need on the battery anymore given the, you know, the risk premium market premium.

00:43:02:12 - 00:43:35:20

David March

But here's the bigger challenge. What do I do with this generation that not only is variable on a day to day basis intermittent, but seasonally over the year, dramatically so solar production in the United States. Now this is on an average solar production. The United States will decline by 60% in the winter compared to the summer. Okay, so now what do we do without batteries?

00:43:35:22 - 00:43:59:00

David March

Well, wait a second. If I'm going to store energy the summer and I'm going to use it six months later, that means I get one round trip use of that battery, one round trip, and it's all capital. Right. So I'm going to turn it once. So I'm storing energy in the summer, let's say, and I'm going I'm making numbers up here.

00:43:59:06 - 00:44:26:21

David March

It's 20 megawatts, it's $20 a megawatt hour. I've got literally millions of dollars in battery tied up that I'm going to use once that year. So I buy it at 20. I hold it for six months. What do I have to sell it at in order to justify that investment? It's enormous. We've done again, we've done the calculations of given different battery types.

00:44:26:23 - 00:44:54:16

David March

What is the minimum, the maximum I'm sorry, minimum number of charge discharge cycles that are profit that you can do. So to sort of add insult to injury a little bit, So they talk about, we're talking about long duration storage, long duration storage by definition. This is from the National Renewable Energy Laboratory. Long duration storage is going to take a guess, 100 hours.

00:44:54:18 - 00:45:25:03

David March

That's long duration. Okay. So if we look at lithium ion as two to 4 to 8 hours now, long duration flow batteries, you know, the iron ore batteries, these are long duration 100 hours, right. We have 8760 hours in a year. So six months wait time is 4500 hours, Right? We have nothing to compensate for that. So then what do you do again?

00:45:25:03 - 00:45:47:09

David March

Because it's all capital. So do I build and in which originally was not that big a problem because your load was so much higher in the summer because of air conditioning than it was in the winter, because winter was natural gas heating. Now we electrify everything. Now we add these. Now what we're doing is flattening the load curve.

00:45:47:11 - 00:46:13:20

David March

So the load in winter time and in some locations the United States load in February, January and February is now higher than it is in the summertime. Okay. But so solar output is going to be the same. Doesn't make any difference. So what am I supposed to do? So do I look at the load in winter time and build sufficient solar capacity to be able to handle the winter time?

00:46:14:01 - 00:46:36:23

David March

And now I've got I'll call it one point X times more than I need in the summertime. What am I going to do? That energy right? Because I don't have long duration storage. So again, people haven't thought this stuff through. There isn't a plan, you know, And it's like, No, so what are the plans? Plans are, we need just more transmission, right?

00:46:37:02 - 00:46:52:14

David March

So if, you know, big transmission line, we can solve sort of that day to day. Well, I don't know. You know, from a from an annual perspective. So it's looking at, well, maybe what we need to do is, you know, the Sahara or we're going to.

00:46:52:16 - 00:46:55:09

Chris Keefer

David, it's a high. We need to hibernate in the winter. That's what we need.

00:46:55:09 - 00:46:57:03

David March

There you go. There you go.

00:46:57:05 - 00:47:12:07

Chris Keefer

It's demand response, baby. Just take a long nap. Turn off all the lights and get some warm blankets. And, I don't know, it gets a bit ridiculous. Like I was started throwing around this term. Actually, I think I got it from Al Scott. I want to give credit where credit is due and I thought it was brilliant. You know, doctorate, apparel, discovery.

00:47:12:07 - 00:47:37:04

Chris Keefer

I'm sure a bunch of people have thought about it, but this term energy Lysenkoism Trofim Lysenko, famous geneticist, well, infamous geneticist out of the Soviet Union who rejected Darwinian evolution because it didn't really fit in with communist ideology and said, you know, if we want to grow hardy wheat in the north, we got to put those seeds and cold water for a while and they're going to sort of carry that memory is, mean, this led to big, big famines in the Soviet Union, right?

00:47:37:09 - 00:47:57:16

Chris Keefer

And it infiltrated Chinese science or communist science again, just because it was ideologically convenient. And they didn't like this idea that, hey, there's competition and, you know, certain organisms, pressures and certain organisms succeed, that that sounds a lot like capitalism. So, you know, it seems like, you know, you say people haven't thought this through, but at the same time, I agree with you.

00:47:57:16 - 00:48:15:17

Chris Keefer

But but people are pretty firm in their convictions about the direction they're taking. And it's it seems ideological, not based in engineering reality. But can you comment a little bit on the sort of socio cultural factors? Because, I mean, again, I don't play the blame game well. I kind of do. There's people at the DOE that are that are pushing this hard.

00:48:15:17 - 00:48:23:13

Chris Keefer

And I understand if you got to be diplomatic and I won't name names, but like it's wild and it is to me it's energy in the sense of you.

00:48:23:15 - 00:48:47:16

David March

You mentioned again one of my SO decouples, one of my favorites. Okay. Another favorite who you just mentioned mentioned early on was Duma again, another one, my favorite. He has a wonderful saying, which was politics by platitude. And it's exactly that is everybody goes, yes, I want renewable, I want zero carbon. I want all this saying I want to combat climate change.

00:48:47:18 - 00:49:13:20

David March

What are you willing to give up? Nothing. Right. And the path that we are on is the path toward reduction in the standard of living. I think I go back like Nate Hagan's the great simplification. What are we simplifying? We're simplifying our lives in order to use less energy. Well, in using less energy, you have a lower standard of living.

00:49:13:22 - 00:49:29:00

Chris Keefer

Right? And that could mean like people fly private jets less, but like just understanding how society works, it's the poorer that get hit by harder than anybody. The rich can afford to continue to use copious amounts of energy. It's a bigger, you know, marginal increase in their cost of living. They can budget for it.

00:49:29:00 - 00:49:30:00

David March

Budget?

00:49:30:02 - 00:49:30:20

Chris Keefer

Yeah. This energy is.

00:49:30:21 - 00:49:31:15

David March

Irrelevant.

00:49:31:16 - 00:49:48:16

Chris Keefer

To this energy poverty. Yeah, this energy poverty thing. It's a it's a massive tax on the poor. And that's kind of drives me nuts about it. And sort of the zero thirties and whatnot, you know, the Hagans, the art. Berman's out there, you know, I think I respect a lot of their analysis and I find them intriguing and interesting.

00:49:48:18 - 00:50:02:00

Chris Keefer

I'll talk to them because because again, I think they've got fascinating things to say, but there's a huge naivete about this quality of living. And you can go, we're all rich here in the West and we can definitely tighten our belts. But it's like, who tightens their belt when it goes into energy?

00:50:02:00 - 00:50:25:22

David March

What are you going to ask to tighten their belts? I mean, if you look at the there was a recent reports on our website, you want to hear from Ernst and Young, who did their annual sort of decarbonization analysis. You know, what's the support in the in the country 70? Percent of people say, yes, we want to do more, but no, we won't spend any more.

00:50:26:03 - 00:50:48:11

David March

Okay. So as long as it's free, it's good. But if I have any if I have to give up something, pay something or something, I'm not going to do it. So we do not have, from what I would say, an educated populace, we do not have an educated populace that really understands the implications of what we're doing. Now.

00:50:48:11 - 00:51:09:02

David March

You sort of mentioned like we obviously were, you know, we're a small company, we raised money and everything else. We've we have challenges raising money because we don't pass the purity test. Okay. So you talk to investors and things like that, they go, we just love your model and everything else. But you got a natural gas generator?

00:51:09:02 - 00:51:36:04

David March

No, we can't do that. Can't you do it all with solar and batteries? No, you can't. You just. You just can't do it. So I am concerned that without a more stringent guiding plan and light, we're going to allow the and I don't mean this in a negative, but the laissez faire process is not necessarily going to get us where we want to.

00:51:36:06 - 00:52:10:00

David March

Capitalism does not like revolution. Capitalism does not guarantee success every minute of the day. It guarantees on the long run, you will probably get the most efficient or going do evolution. You'll get the fittest for the conditions that exist at that time. Capitalism will do that by allocating resources, but the price signals are not, you know, whether I reproduce or not, it's what my returns are.

00:52:10:01 - 00:52:36:00

David March

So right now, because of tax incentives and everything else, the returns are heavily dominated in putting more intermittent renewables on. And nowhere is it to, you know, to maintaining sort of, you know, the fossil fuel based power situation. So again, we look at it as the trajectory is going to be more problematic going forward, unfortunately.

00:52:36:02 - 00:52:59:17

Chris Keefer

So we've talked about, again, I'm going to call it energy transition. Certainly, you know, we have added renewable capacity, you know, as a as a share percentage wise, there's there's, you know, decreased fossil fuels, but in absolute terms, more fossil fuels than ever. Great report out. Got Jp morgan Eye on the market electric vision. I think Michael Sandblast was the main author.

00:52:59:17 - 00:53:21:08

Chris Keefer

This just came across my radar I think was published March 5th. So it's pretty recent. And you know, they talk about, okay, this energy transition is assessed anyway. It's based upon electrification of a whole bunch of stuff. We're not making progress there. We even have lectures like very little in terms of, you know, these other end uses which are not currently electrified.

00:53:21:10 - 00:53:41:14

Chris Keefer

We've added a bunch of renewable capacity. You're throwing in this comment that, you know, that has actually created massive problems on the grid and made the whole system less reliable and less friendly to further electrification because it's too risk. It's, you know, these are we're getting into stuff that's really high reliability, like keeping your home warm and freezing cold temperatures or, you know, other other industrial processes.

00:53:41:16 - 00:53:59:06

Chris Keefer

You know, you add to that and I can't ignore this again, just the pace at which A.I. is taking off. You've got Sam Altman saying we need an energy revolution for this whole thing to pan out. I'm not sure I want it to pan out, frankly, because I kind of like, you know, keeping the cognitive tool sharp amongst humanity.

00:53:59:06 - 00:54:19:17

Chris Keefer

And I'm a little bit worried about that. Sometimes it makes me want to become a renewable, renewable energy advocate, frankly, because when the air is, you know, about to take over and hopefully some clouds run over and give us a little chance to shrug that off. But talk a little bit about, you know, this combination of crises, our failure to actually electrify all that much, the addition of unstable power.

00:54:19:21 - 00:54:39:20

Chris Keefer

And now, you know, we're trying to electrify things for for climate reasons. But the biggest kind of think demand that's coming on to the grid now and you mentioned that Amazon deal with talent. I forget talent and talent and Susquehanna Nuclear Plant. I mean, it's you know, a lot of nuclear fans are saying, hey, this is great. It's going to get a lot of nuclear bolts.

00:54:40:01 - 00:54:57:00

Chris Keefer

Maybe that that's a good thing. But right now, they're using existing nuclear and they're taking that energy away from you know, other potential decarbonization or just other, you know, low carbon electricity is is being used on on I I'm not sure if most of us like the Internet going to be put into just making really high quality porn or what Exactly.

00:54:57:02 - 00:55:09:08

Chris Keefer

But I'm ranting here but in terms in terms of what do you see as the future there? Are they mission critical in terms of power disruption as well? What's the impact going to be on the grid? I've just asked you like when especially when something.

00:55:09:08 - 00:55:12:07

David March

Horrible if I sit down here. All right.

00:55:12:09 - 00:55:13:11

Chris Keefer

my God. I know. I know.

00:55:13:14 - 00:55:46:16

David March

We like to quote people. I'm going to. So Euripides once said, man is blind until he's given a metaphor that permits him to see damage. So the metaphors that are in people's mind and we can talk about like in nuclear, the anti-nuclear advocates has done a really, really good job of creating the narrative. Right. The renewable energy, the decarbonization, the climate thing has done a really, really good job of essentially controlling that narrative.

00:55:46:18 - 00:56:19:12

David March

And that is, in fact, you know, problematic because we have that view that technol is going to save us in everything. Right. So another sort of so related to that metaphor, people have this feeling that the energy system is like the Internet, right? That it's like computer power. All right. So like, the distributed generation is like the Internet, right?

00:56:19:14 - 00:56:48:23

David March

And the Internet is governed by what's called Metcalf's law, which is the value of the network increases by the square of the number of interconnected nodes. That's Metcalf's law. But that is about information flow. I can make. I can duplicate information as many times I want with no loss of fidelity. So you send me something like, that's cool, I can send it on.

00:56:48:23 - 00:57:37:10

David March

Right? So a physical network in power or energy is a physical network. If I'm connected and I consume, that's it. I can't move that stuff to you once I've consumed it. So a network which is physical in this respect goes by a different scaling factor. So the complexity of a physical network, which is what we call an energy and mass conserved network, the complexity increases by any factorial, which is more than the square, the square of net comes low, which means the more things we interconnect the complex, it increases very dramatically, very, very dramatically.

00:57:37:12 - 00:57:59:09

David March

Now, what does everybody want to do? We have two aspects of air here. Everybody wants to have air doing their thing. So I'm going to sell you a whatever. I'm going to sell you a battery or. I'm going to sell you a generator and I have a I that's going to run it and it's going to watch the market prices and everything else.

00:57:59:11 - 00:58:31:21

David March

What happens when I have tens of thousands of independent eyes looking at the data and learning from each other? Right. It's like the Terminator thing here, right? Is is one day I going to play games because another A.I. is going to react to that and will be able. So in before A.I. we would have these situations in automation is called a race condition where different control systems are trying to control kind of the same thing.

00:58:32:00 - 00:58:56:18

David March

They're related somehow and they literally bounce back and forth between each other and it never settles down. So I am very concerned about the proliferation of A.I. independently and AI running the whole grid. Cool. A thousand or 10,000. AI's running distributed energy all over the place and things like that are going to be are going to be a real issue.

00:58:56:19 - 00:59:20:23

David March

My opinion is going to be a real issue. And then we go to the next thing, which is just to power those eyes that we're all going to use the A. I think they're forecasting that with the growth of A.I., AI data centers could represent 40% of the energy consumption in the next ten years in the United States.

00:59:21:01 - 00:59:44:22

David March

Okay, But think about it. Everything we do is based on data is kind of based on data centers today. So when you mentioned electrification, we've seen a lot of success in electrification at the residential level, heat pumps, EVs and things like that. Those are relatively easy. So putting a drain on a strain on the grid, no doubt about that, especially EVs, EVs are really problematic.

00:59:44:22 - 01:00:18:08

David March

We're working with some many charging situations right now ourselves. They can also causing a tremendous amount of noise on noise and power, quality issues and things like that. But the other aspects 25% of energy, energy total now is just electricity, you know, heat, everything else, 25% of energy consumed is in the form of industrial heat. So very hard to electrify that stuff.

01:00:18:10 - 01:00:40:00

David March

And and if you do, you don't have the infrastructure to support it. So we have people come to us with, you know, with a manufacturing plant say, we want to electrify our boilers, etcetera, etcetera. We go, okay, fine, let's take a look at that. okay. We're just going to increase your load by a factor of ten.

01:00:40:02 - 01:01:08:14

David March

Okay, So now we have to get a new substation in there. The utility can handle it. We have to run wires again. People haven't thought this through. In my opinion, there isn't a plan. And we, you know, blame game here. I go back to 1985, Carl Sagan address joint session of Congress and said in 1985, the biggest problem facing mankind is climate change.

01:01:08:16 - 01:01:49:11

David March

We are now how many? 40 years on, we haven't really done squat right? And now we've got the compounding problem. And the compounding problem is we haven't addressed climate change. Now we're rushing to try and do it, but we've already as as Duma likes to say, we're already living the climate change experiment. And what we're doing is the climate is making the grid and everything else less reliable because 78% of outages are due to weather, you know, bringing wires down, bringing trees down and everything else.

01:01:49:16 - 01:02:14:23

David March

So we've created a process which makes the grids reliability lower at the same time as we're sort of systemically making the grids reliability lower by, you know, intermittent renewables and things like that. So again, we've got com pounding problems there, which is again, why we exist to help our customers.

01:02:15:01 - 01:02:31:05

Chris Keefer

Yeah. I mean, again, it's like partially your fault that I'm asking or making these sweeping commentaries because you say so many goddamn interesting things and I want to like address a whole bunch of them. I don't want to interrupt you because you're an amazing fellow. I'm going to they're going to kind of comment on like three things that we've got to wrap up.

01:02:31:07 - 01:02:57:13

Chris Keefer

But I have a feeling, you know, if you're willing, David, you're going to be a frequent flier here on decouple, you know, a couple of things. I mean, we've talked before about Amory Lovins and the soft path. You know, the hard path. You know what what they didn't come back with hydroelectricity overbuilding is massive dam systems. What we did in Ontario with that, with a, you know, massive nuclear fleet we put together, this is the kind of electrification, you know, God, you know, I wish Carl Sagan had tapped into energy and been all the praise that say this is the solution.

01:02:57:13 - 01:03:11:13

Chris Keefer

We need hard power, low carbon, hard power, because then we'd have the surface electricity would actually be able to start some of this industrial decarbonization with reliable sources that match the demand. Anyway, that's that's number one. I'm not even going to respond to that.

01:03:11:15 - 01:03:15:05

David March

I'm going to respond to that one. Okay. If I can look, because you haven't mentioned.

01:03:15:06 - 01:03:15:17

Chris Keefer

You can.

01:03:15:18 - 01:03:39:14

David March

Mention hydro power in Canada, but it's going back to people want we want we want, you know, fight climate change, we want a decarbonized economy, blah, blah, blah, blah, blah, blah, blah. But we're not willing to pay for it. We're not willing to take any pain whatsoever. So a great example is Massachusetts is literally shutting off net. I don't mean shutting off natural gas.

01:03:39:19 - 01:04:02:19

David March

They're not expanding the pipelines at all. They're shifting people away from it, etc., etc.. Now, they don't have enough electric. Now they don't have enough electricity. So they said, let's build a transmission line from Hydro Canada down to Massachusetts. Couldn't get it done. Couldn't get it done because Vermont wouldn't agree to it. New Hampshire wouldn't agree to it.

01:04:03:01 - 01:04:13:23

David March

You know, Maine wouldn't agree to it and things like that. So now it's like, okay, unless we all work together, we're not getting anywhere, anywhere on this side. Right.

01:04:14:01 - 01:04:36:02

Chris Keefer

And Quebec lost $1,000,000,000 of export money on their electricity because, you know, there was you know, why was New York choked in smoke? Well, because of wildfires. Why were the wildfires so bad? Because there's no goddamn rain in northern Quebec. The reservoirs are really low. They actually, again, in terms of electrification in the hard path, they heat mostly with electricity in Quebec.

01:04:36:02 - 01:04:53:10

Chris Keefer

And so they have to hold back water in those reservoirs. They don't freeze to death in the winter. We've had a mild winter, but you got to plan for the worse. So they have less summer exports, which is unheard of. So even if you built those wires, hydro is also, you know, affected by not not intermittency on a daily basis, but on on a seasonal basis.

01:04:53:10 - 01:05:25:16

Chris Keefer

And so that's that's a big deal. Just I wanted to talk on a few more threads from what you said before. I think when people think about, you know, I and this kind of like potential, I take over and I just replacing humans, often we think of it as a monolith. And so what you're describing here in terms of like competing eyes reminds me a lot of game theory, like Cold War game theory in the way that they could, you know, learn from each other, play off each other, you know, And I don't know where the human element and human values and the so-called alignment that people trying to work into, it seems like that

01:05:25:16 - 01:05:34:22

Chris Keefer

falls off the ramp pretty quickly. But that that is absolutely terrifying as a concept. I could let you riff on that, that we're really going have to go in the next few minutes. But, you know, if you.

01:05:34:22 - 01:05:35:07

David March

Have a day.

01:05:35:11 - 01:05:35:21

Chris Keefer

I give you.

01:05:35:21 - 01:05:39:08

David March

The opportunity to respond. You got to save lives. That's true.

01:05:39:10 - 01:05:41:19

Chris Keefer

That's true with reliable electricity.

01:05:41:19 - 01:05:48:14

David March

That's right. Well, it's good that you're where you are. You got reliable electricity for now.

01:05:48:14 - 01:06:05:17

Chris Keefer

Yes, sir. Okay. Listen, as I said, David, I am so grateful for this. My my fiancee thinks I'm very vain because quite often she hears me listening my own voice. I tell her it's like an athlete. You got to get tape on yourself. You got to kind of analyze how you're doing both as a guest and as a host.

01:06:05:19 - 01:06:20:21

Chris Keefer

But I have a feeling I'm going to be listening to this podcast quite a few times just to get my head around all the the we call it medicine, the pearls that you've dropped for for us to pick up and reflect on your perspectives are incredibly valid here, Sir. Thank you for coming on.

01:06:20:23 - 01:06:46:13

David March

Really appreciate it. And again, thank you for all the work that you're doing. Let's look at this as an altruistic type of thing. We're not trying to promote anything. We're trying to educate people as to what is going on, what is likely to happen, and provide them with information to help them to plan and be able to, as we say, you know, manage and prosper as much as possible.

01:06:46:15 - 01:06:57:19

David March

But the changes are coming and, you know, we've got to deal with them. As Dumars said, we're running the experiment. It's too late now. So, Chris, thank you so much. Appreciate it.

01:06:57:21 - 01:06:58:13

Chris Keefer

Thank you, sir.