2026 trends: Gas turbines, Texas’ load queue and China electrifies

[swooshing] Latitude media covering the new frontiers of the energy transition. I'm Shio Kahn and this is Catalyst. So for all the talk that we have, at least in the looking ahead the next couple of years, at like spiking prices for electricity and things like that, and the share of GDP that might come from electricity expenditures, it's really fascinating how range bound it is. We basically spend between 3 and 4% of GDP on electricity, and that is that, essentially. Coming up, handcrafted artisanal slides on the state of decarbonization. [upbeat music] Catalyst is brought to you by antenna group, the Communications and Marketing Partner for Mission-driven organizations developing and adopting climate, energy, and infrastructure solutions. Their team of experts helps businesses like yours identify, refine, and amplify your authentic climate story. With over three decades of experience as a growth partner to the most consequential brands in the industry, their team is ready to make an impact on day one. Get started today at antennagroup.com. - What if utilities could meet surging electricity demand with energy assets already in homes and businesses? - Uplight is making this possible by turning customers and their smart energy devices into predictable grid capacity through an integrated demand stack. Uplight's AI-driven platform activates smart thermostats, batteries, EVs, and customers to generate, shift, and save energy when the grid needs it most. Learn how Uplight is helping utilities unlock flexible load at scale, reduce costs, and accelerate decarbonization at Uplight.com. - What if the next big source of grid reliability is already sitting in your home? Energy Hub software coordinates thermostats, EVs, batteries, and other devices, so they operate as a flexible resource when the grid needs support. These virtual power plants or VPPs help keep costs down, strengthen grid reliability, and support a cleaner energy system all while reducing the need for new infrastructure. More than 106 utilities trust Energy Hub to manage over 2.5 million devices. Learn more at energyhub.com. (upbeat music) - I'm Shail Khan. I lead the early stage venture strategy, the Energy Impact Partners. Welcome. All right, we're back. Long-time listeners will be familiar with my favorite time of the year, at the beginning of the year, when my friend, Nat Bullard, who is a long-time analyst and researcher in the energy and climate space, but also now the co-founder of Halcyon, puts together his annual opus of hundreds of slides on the state of energy and decarbonization, it's chock full of fun data that you don't get to see elsewhere. As always, I picked my favorites and Nat and I talked through 'em. It's all sorts of interesting stuff we talked to data centers, obviously, but not just data centers, oil markets, solar batteries, all sorts of things. As usual, this was too long conversation to fit into one podcast. So this is part one. We're gonna cover a whole bunch of interesting things now and then come back next week when we will cover part two. We know for the redo. Here's Nat. Nat, welcome back. - Shale, great to be back. It's always happy 2026. - This year four? Then we've been doing this? Something like that. - It is indeed year four. We've been doing this recording as long as I've been doing a big presentation. So yeah, four of the year it is. - Do you love a big deck? 200 slides this year. 200 slides exactly. So the way I have an important question for you, there's no way it just happened to be 200 slides. You made it an even number. What was the one that got cut out? - Oh, the one that got cut out is nothing I can tell you. I had about 365 slides as of the start of November. So the better way of thinking about it is that I essentially cut one slide for every slide that's in there. And in fact, I usually cut more than that. So I start off with like 300 plus and cut it down to about 150 or 160 and then build back up. So it's first an exercise in addition, then it's an exercise in subtraction to get to the kind of the magic number. As you remember, way back when I had 141, which is like a sort of arbitrary prime number count or maybe it's not even a prime number of slides. And then I always felt like there was stuff that I had left, so I made it bigger and then kept it there. I think it's quite possible that if you do more than that, you're going to lose the edit capability that gives it some of the strength that was the course of 12 months. - Yeah, I know. I think you need to start making the number like a meaningful number. Our mutual friend Andrew Beebe always appreciated at his for obvious ventures. Their first couple of funds, the fund sizes were always very fun. The first one was 123456,789 dollars. And then I think the second one was like 313,131,313 dollars or something like that. It was palindromic. Anyway, you got to come up with something better than 200. I was thinking about that natural log pie, it's a rich tapestry of options of numbers multiplied by something that I should be able to get in there. But I do like 200 for the for now. It's easy for people to wrap their heads around and to benchmark a little bit when they're paging through it too. - All right, enough Naval Geasing about numbers of slides. Let's get into some slides. Okay, as usual, I've picked a subset of my favorite slides that I found interesting and we're just going to run through 'em. So we're starting on slide 15, which is something that given that this trend has been ongoing for quite some time and in fact the lines crossed like a decade ago, I'm surprised I didn't already know, which is that China is significantly more electrified, at least as measured by the share of final energy that comes from electricity than the United States, like substantially more so. And I had somehow missed that trend. - This is a great one. It's some work from Ember that it's been now doing for quite some time and what it tracks is, as you say, that the share of final energy that comes from electricity, but another way to think about it is like how electrified is an economy? And there are lots of different ways that you can get to a high number, right? One of them would be that you have very little primary industry. Another would be that you have plenty of primary industry, but you apply a great deal of electrification to processes that otherwise would be driven with some kind of thermal input. - Or you have like a tiny bit of primary industry and it's all aluminum, a smelting or something? - Exactly, like an example of a country like that, for instance, would be Norway, right? Which is, both an advanced economy has some industry is highly primary energy from, or highly electricity rather than primary energy. But China is none of those things. It's a huge industrial economy. It's a huge user, a primary energy, but it's also a consistent user of electricity for its final energy source. And it's also moving at a much more rapid pace than either North America or Europe, which is sort of slowly ticked up over the course of five decades from 10% to a little bit north of 20%. China meanwhile has gone since 1970 from like 3% to 30%. - Well, I want to benchmark to 1990 actually, because that's where I find the chart start looks really interesting. In 1990, North America's already at roughly 20% electricity, which is by the way, it's still the truth. It's true today, 22, 23%. And that's the number that I always use. Like I knew that number. I always tell people if they over index on electricity or over, they're like solar is gonna be the whatever, you know, it's worth remembering. And the US that electricity is 20% of final energy consumption, or I guess it's actually 22, but that's been true since 1990, whereas China in 1990 is down at what 7% electricity and then jump to 30% today. So like, it's a very different trajectory. - It's a totally different trajectory at a totally different scale too. You know, everything in China is bigger when it comes to energy and in particular, when it comes to the sort of primary inputs. So I just think it's a really important measure as you talk about, you know, the electrified future or the electrotech or the electric tech stack or whatever it might be. The China is just sort of grasping this as opportunity that's also being done at scale. Like it's one thing to say, "No, or way can do this." It's another thing to say that China's doing this. - Not that you necessarily can speak for the Chinese central government, but you're certainly closer to it than I am. I've heard that one of the reasons, one of the rationales of China focusing so much on electrification is that they wish to control their own destiny. They don't have massive domestic reserves of hydrocarbons, but they can produce their own electricity. That is why they're investing in solar or the batteries play chain and blah, blah, blah, and nuclear for that matter. So do you think that that explains this? Like China is just saying, we can't rely on energy imports long-term, so we're gonna electrify. - So there's a bit of a nuance to that, which is that the primary imports that you'd have of primary energy in China are going to be oil, which is still a major importer and natural gas, which is still a major importer. It does import coal for kind of energy balance reasons, but it has an absolutely enormous indigenous coal supply that will last for centuries. So one thing to remember about this primary energy from electricity is that it doesn't mean that it's entirely coming from say hydropower or somewhere when. It can be coming from thermally generated, the thoroughly generated sources. But it is definitely within the realm of one-zone destiny. Wherein the electricity is generated within boundaries, within a nation state, it is effectively sovereign. And so in that sense, yes, it does provide a lot more control over destiny. This exposure to market forces, the geopolitics, to everything else if you're firmly in control of that element of energy. And wherein electricity is almost entirely within the national purview, then you would want to spend more and more energy, so to speak, getting that electricity share of energy up as high as you can. Okay, so let's move on to slide 17, which I think is an interesting Coda to slide 15. 15 is about how electrified an economy is. 17 is super interesting, and I had never seen this data put together. It's about what share of GDP is spent on electricity versus spent on oil, specifically. And the shapes of those two curves are very different from each other. In a way that I guess if you had asked me, I might have predicted, but is stark when you look at it. So describe the difference between the two. It's absolutely so we're like five and a half decades into an era of thinking about energy shocks. And when we talk about those, we make it seem sort of system wide, but it's really about a shock in liquid hydrocarbon prices, you know, and specifically oil. And if you look back at the data, you can see just how indexed the global economy was to oil, in terms of how many units it took of oil input to get a unit of GDP. And then the spend within different economies on not just energy, red, large, but oil, specifically in 1980. So year after the second oil shock coming from the Iranian Revolution, just that are 9% of per capita GDP expenditures globally, we're going to oil. Like, that's pretty amazing. Imagine one dollar out of every 11 being spent on oil of per capita GDP expenditure. That's pretty extraordinary. At the same time, the share for electricity was a little over 3%. And if you carry this trend across the entirety of the last 45 years, what you see is that the oil share, A, goes down significantly by the late 1990s, it's less than 5%. But it also bounces around quite a bit. So right now the share is, you know, in the range of still about 5%, but it's been as high as 6.5 or 7. And then 2020 was below 4%. And electricity meanwhile is essentially completely range bound. The highest that's ever gotten is like close to 4%. And the lowest that's ever gotten is 3%. So for all the talk that we have, at least in looking ahead the next couple of years at like spiking prices for electricity and things like that. And the share of GDP that might come from electricity expenditures, it's really fascinating how range bound it is. We basically spend between 3% and 4% of GDP on electricity. And that is that essentially. Yeah, that's the question, right? The reason this is interesting is because of the future, not necessarily because of the past. So just to reiterate the past, electricity looks like a flat line for 50 years. Basically rising prices of electricity or at least rising spend on electricity overall, let's say matches GDP growth essentially, it has to because it's a flat line. Whereas oil is super spiky. It's gone down since the 80s, sure, the early 80s. But it moves around a lot because oil prices move around a lot. Okay, so that's how it's gone historically. What happens now is a super interesting question, right? Because we're in this moment where oil prices are pretty low. President Trump is trying to do everything he can do to get oil prices even lower. He's got this stated goal of $50 a barrel if we start exporting a ton of Venezuelan oil, et cetera, et cetera. So he's trying to get oil prices low. Meanwhile, electricity prices are under upward pressure. I don't think anybody would debate that. And so do we see electricity escape its collar and spike? Could we see the lines cross, which by the way, tear in this chart they never have. We've never spent more of GDP on electricity than oil historically. It's just interesting to see whether this dynamic of one super volatile thing, which is oil and one super stable thing, which is electricity, whether that's going to hold. Let's go through this as a thought experiment. What would it take to make those lines cross? First of all, it would take much lower cost for oil, much more oil price for one, to a much lower reliance upon oil as an input to GDP or as an input to economic growth. We already get more units of economic activity out of a barrel of oil effectively every year, but you'd need to rapidly increase or enhance that. Secondly, you'd need to both spend a lot more on electricity and get less from it. You would need to have it be less of a contribution to GDP growth. So if you had both of those things happen, you'd be spending a lot more, you'd be spending a lot more, but you'd be getting that GDP out of it. And therefore, GDP is not going up as much. The expenditure is going up. That's how you would do it. You'd have to have like 10-dollar barrel and people using three times as much electricity or something roughly like that. Well, this is what's going to be interesting, right? So let's just take electricity on its own. Forget the comparison for a second. I think most people would bet that we're going to spend more on electricity overall over the next few years, five years, ten years, whatever it is. The question is, will GDP keep up? And they're tied to each other because the primary reason we're going to spend so much more on electricity is AI. And there's a bunch of people betting AI is going to help GDP go to the moon. Other people saying it's going to hurt GDP. That question sort of underlies whether we break this 50-year trend of basically spending the same portion of our GDP on electricity. Right. And remember that it is also global. So there are global, not just the US, not just Western European questions within there. What happens when places that have a limited but non-Zoo or reliance on oil rapidly electrify and electricity becomes more of GDP, but you're in turn electrifying more of everything and more people have access to electricity. We've somewhat plateaued on global access to electricity. There's like a million different ways that we can think about cutting this up to make it look possible. But it's the right kind of question to ask. A clear answer. Let's put it there. It might not very satisfying response. Okay. Not a clear answer. So let's move on. Slide 28. I want to talk about gas turbines. This one, we've talked about this a bunch in the spot and many of our listeners are going to be well familiar with this. I hadn't actually seen the data laid out though. So I think it's interesting measuring the order book for gas turbines that we have already seen relative to current production capacity. So basically how under supplied are we on gas turbines? So what do you see there? So I think it's actually important to start this at the front of the series, which is 2001. They were more than 80. In fact, closer to 90 gigawatts of gas plant orders in 2001, which is an awful lot if you think about it. I mean, we have to remember that the dash for gas that we, you and I started hearing about from industry veterans when we began, is now quite some time ago, like two and a half decades ago. But there was a time when the world was ordering quite a lot of gas turbines. And manufacturing obviously was of the mood to meet that demand with new supply, only to find order books that collapsed from 80 something to well under 40 the next year. And then staying steadily below production capability for pretty much the entire time with the exception of a few years, all the way up until right now. The current production limit, and as you know, there's not that many companies that make gas turbines is somewhere in the range of about 60 gigawatts a year. And we're likely last year to be passed that by about 20 gigawatts and to be passed that by about 30 gigawatts this year. And who knows based on current orders, you know, 40 gigawatts above a 60 gigawatts production limit. And there's a lot of reasons for this. But the first and foremost is if you are in the process and have the priority to manufacture gas turbines, but you really don't want to do is be oversupplied. It's not really a great, a great tentable market position. And being under supplied has, and Eastern the first instance, probably a net positive on your ability to book contracts and to secure durable orders and customers you want. And it has pricing benefits. And we're going to howl at you to do as many as you can build as much as you can. But if you're in charge of building a certain amount now, you probably have the institutional memory of the early 2000s. Yeah. And we've talked about this before with regard to like electric transformers also. It's a similar situation where like folks who've been in the industry a long time do remember a historic period wherein there was this huge order book boom. And then the market fell off from under them and they ended up over supplied. And so there's been reticence to expand capacity too much for that reason. They are expanding. capacity, but maybe not fast enough. Anyway, what's interesting about it is that, but also, even with that history, we are the most under-supplied we have ever been, early since the data starts at the beginning of the century, where right now, even today for 2028, the order book for 2028 today is over 100 gigawatts relative to about 60 gigawatts of production capacity, which helps to explain why my new, you know, the expression, "Everything is Computer." I like "Everything is Turban," because now we're seeing, right, like if you're a jet engine company, you are pivoting to provide turbines for the grid, right? This boom supersonic and all the arrow derivatives and like everybody who's got a turbine, it's trying to turn it into a AI data center power supply. And not just that, there's companies that are turning things that are usable, if frankly somewhat the imperfect solution for large scale always on grid-connected power into power, right? Arrow derivatives are traditionally used for very specific applications, and they're not being used necessarily to power things all the time, constantly for a decade straight. They can, but that's just not typically within the design spec. The design spec would be for combined cycle turbines that are grid integrated and that are part of a big wick-wood well-supplied power market in which they play the role that they've historically played. Yes, so it's an interesting time for all of these things, right, in terms of what this shortage for now with this order book mismatch brings to the market, who it brings to the market, the kind of approaches that people then take in terms of how they buy and sell power and everything. Yeah, it's different times. It's nothing like we've, it's nothing like we've experienced in our career, but for those who've got a little bit more tenure than us, it is achingly familiar. Catalyst is brought to you by antenna group, the OGs of PR and Marketing for Climate Tech. Is your brand a leader or challenger? Are you looking to win the hearts and minds of customers, partners or investors? Are you ramping up your new biz pipeline? Are you looking to influence policy conversations? Antenna works with leading brands across the energy, climate, and infrastructure space to do all of this and more. If you're a startup investor, enterprise, or innovation ecosystem that's helping drive climate's age of adoption, antenna group is ready to power your impact. Visit antennagroup.com to learn more. The grid is changing fast. Data centers, electrification, and extreme weather are driving a surge in energy demand. Utilities can meet the moment with existing resources by activating energy customers and their distributed energy resources to create predictable and flexible capacity with Uplights integrated demand stack. Uplight coordinates energy efficiency, rates, demand response, and virtual power plant programs into one cohesive strategy to strengthen grid resilience, improve energy affordability, and make progress toward clean energy goals. Learn how Uplight is helping leading utilities harness over eight gigawatts of flexible load at Uplight.com. What if everyday devices had the potential to strengthen the grid when it's needed most? Energy have helps utilities turn that potential into dependable capacity by coordinating thermostats, EVs, batteries, and other devices into virtual power plants that respond to grid needs in near real time. Energy hubs latest white paper lays out a maturity model for VPPs that can be planned and dispatched with the same confidence as conventional plants, while being 40 to 60% less expensive to build. That's why more than 106 utilities across North America partner with energy hub to manage over 2.5 million devices that provide 3.4 gigawatts of flexible capacity. Read the white paper and discover what VPPs can do for your grid at energyhave.com. Okay, so relatedly then of course we are under supplied, so what do you expect prices are going to go up? So you've got some good data on that from from you folks at Hal Ciann. Would you and I actually talked about the last time you're on the pod a little bit, but I want to run through it again because it is interesting. You've got good data on the average capital cost of various types of natural gas turbine power plants as they are planned. I'd say these are ones that are not operating yet, but the expected capital cost and how that has how that trends into the future, which I find interesting. So kind of walk me through that and particularly the breakdown of the different types. One of the exercises that we do that manifests itself as a data series that people can buy from us in the subscription is just going through the regulatory corpore in the US and pulling all of the data from the CPC and the certificate of public convenience and necessity or an equivalent that is basically the utility going to the state and saying we need to build this X. In this case we're looking at gas plants and all of the data that gives you an idea of what these things are supposed to cost is within there. It's not broken out in a neat and tidy fashion where there's this like here's this tabular spreadsheet with all the numbers in it. It tends to be hidden away and proceedings and responses and buttals and everything else. But the upshot of this is that we can map out on the order of more than 160 active plants, like close to about 80 gigawatts worth of actual capacity in which the cost of a combined cycle has doubled. Like 2026 deliveries, things that are going to come online this year are in the range of let's say $12 per kilowatt. The projects that are looking to come online in 2030, 2031 are a little bit shy of 2500. So like close to doubling in that time period. And the reason of it in this data useful is this isn't based on the announced capital cost for right now. It's based on the price as it moves into the future. So it's an updated live number that reflects the actual market conditions underneath these things once they've been announced. Not just whatever deposit you put down with your turbines supplier, but the actual ongoing cost to make this thing into a real asset. By the way, I also wonder, I don't know, you could probably tell me because you've looked at this data. But does this include like EPC costs, for example? Yeah, this is the whole this is the delivered delivered cost of the like the allowance for you know, work during construction. All kinds, all the sorts of things that flow into it. Minus the things that we know are discrete and separate. Like if you needed to build 80 miles of feeder for it, we script that out because that's not like part of the actual stuff, the kit. So we should come back and look at this data set again in like 2030 because I do wonder whether they're actually underestimating the total costs, right? These are because EPC and stuff like that in particular that's also super inflationary and it's a really hard to find EPCs right now because they're all booked out. And so I wonder actually whether it's again end up being even more expensive than they think it is. Well, that's why we that's why we revisit this every month because it moves. And it's interesting to add new assets. It's almost maybe even more interesting to watch movement with in existing assets based exactly on that, right? Like the EPC target went up because we did, right? Like any number of reasons tariffs cost of labor, right? Well, it's the same any number of reasons, but part of it is the same reason why gas turbines themselves. It's like an under supply problem. Yeah, exactly. So like you can you can see that coming through and continuing to go. And yes, we should be revisiting this essentially constantly. And we're already seeing we see people getting like verbal quotes that are higher. I've had actual developers come up and they say like your numbers are low. And I was like, well, show me yours and I'll show you mine. And then they don't. So we don't we haven't actually gotten anything more concrete in this, but this is what's written. This is what is essentially disclosed by law. And it's a pretty fertile ground to get an idea briefly and the other types of turbines. So simple cycle, not quite up so much, but up about 50% from like a thousand about $1,500 a kilowatt. And then we start to see reciprocating internal combustion engines as well or rice turbines. And those are really expensive. Those are like $2,500 to $3,000 a kilowatt already. But interestingly, we don't see a long delivery pipeline for those. The delivery pipeline for those only runs out a couple of years. Like we don't see anybody planning rice turbines or rice installations in the 2030s yet. Because I think they're mostly used for either bridge power or backup, right? Replacement from diesel chants in theory in theory. But they're increasingly being deployed at a scale that suggests that they're being used for something closer to bulk power. Right. Yeah. Maybe that is like I said, everything is turbine. Everything is turbine. Okay. Well, let's stay on the theme of like all this power build out stuff. I really like this next one. Slide 32. So so much catbacks. That's my version of the top slide title. You're comparing the the total amount of catbacks spending on this is going to be predominantly data centers, which is tech catbacks in 2025 to other historic booms in catbacks spending in the economy, which is a good way to compare what do you find? So I'm going to give credit. First of all to Michael Simpel, as the team at Jake Morgan asset and wealth management, they built this slide first, not me. I did in the past, I'd done some examples of interstate highway and broadband catbacks as a comp, but I'd not done this full suite that they've got here, which goes from all the public works in the 1930s, like the Hoover Dam through the Manhattan Project. And that we could call our wave of electrification in the US in the late 40s. Apollo project, the highways broadband build out and the tech catbacks. And things like the Manhattan Project, electricity, the Apollo Project. These are less than or barely above 1/2% of US GDP at their peak. Even the Apollo Project, even the Interstate Highway Project is like 6/10% building out broadband capex in the year 2000 at its peak was 1.2% of US GDP. And tech capex right now is just under 2%. So basically higher than anything else. And to your point, this is the capital expenditure to build compute essentially. This is capex for building just the actual computational elements as well as the buildings that contain them and the power stuff that's within the fence of the company's capital expenditures. It is not power and transmission and water capex to go with it. So it's a pretty fascinating, big number relative to everything else. And I will add all these other data points, as you've said, where you can go into history and you can figure out what year was the peak. And so the peak of broadband capex was the year 2000 when it was just over 1% of GDP. That's comparison against 2025 actual capex of tech, which may or may not probably isn't the peak. And in fact, the 2000 example for broadband is instructive because the NASDAQ bubble burst in March of 2000 and capex kept going. So this is not a new observation. Michael Burry made this observation recently on Michael Lewis's podcast that the capital expenditure actually lags what might be happening in the purely financial market. So yeah, like this could keep going for a while. The capex is committed. Sometimes it's already underway. And a lot of it, a lot of it will keep going. This is probably not the peak. Like most of the estimates based on what companies themselves are saying for their estimated capex have a higher number for next year. And then again, you attach the relevant quantum of investment in the electricity sector to it and it's a lot more money too. Right? In many cases, specifically is this new capex specific for energizing this data center? But certainly the prime mover of demand growth and of building new infrastructure in the US is for energizing data centers. And so the utility capex that goes with this is also in the tens of not hundreds of billions of dollars. Okay. Good segue. Let's get back in the energy then the energy results of this, right? So let's go to Texas. We're going to recot slide 91 is on the queue the Texas interconnection queue. This is a large load interconnection queue, not the generation cube, although the generation queue looks I think similar to be honest. Everybody knows this, right? Like Texas lots of people are trying to build data centers in Texas, no big surprise there. The queue has gone up a lot, no big surprise there. It is pretty astounding how quickly it has gone up, how recently. So the data suggests that the pipeline of large load interconnection requests in Irkot in Texas was what 40, 40 ish, 42 gigawatts as of January of 2024. So two years ago, it went from 40 ish, 42 gigawatts to 226 gigawatts as of November of 25. So I presume now it's even a little bit higher. Those are stupid high numbers. This is a reminder, I just want to like frame this up a little bit. As of what, maybe two years ago, there were about 30 gigawatts of data centers in the US and total. So this is going from 41 to 226 in Texas alone in two years. Yeah. In the queue. Now that's not all going to happen obviously, but nonetheless. Yeah. So this is a great one. Irkot kindly publishes this every month in a somewhat unstructured format, but high enough frequency that it's worth like extracting and putting into this, this fashion that I got here. This is an awful lot, right? So 226 gigawatts, this current state peak load is in the range of about 85 gigawatts. So that's like two and a half X-ing, the existing state peak load, if all of this were to happen at once, it's gone, as you say, really, really rapidly. It's increasingly co-located, like a couple of tens of gigawatts that are actually co-located in large-interconnection load, which is interesting, and that keeps ticking up. But, you know, sort of sounding like financial disclosures here, not all of these assets will eventually wait. Like I don't think that Texas is actually going to be building 226 gigawatts of just large load in the coming, let's say, seven to eight years. It's the nature of interconnection cues. You know, a lot of it is speculative, and it's especially the nature of like bubbly interconnection cues. Like, clearly most of this won't get built out. I think it is indicative though of one thing that is definitely happening, which is just like, people have the perception, Texas, you can build stuff, especially big stuff. A lot of data centers want to be big. And so there is a mad rush of developers, hyperscalers, reats, Rick Perry, basically everybody, trying to lock up sites in Texas where they think they can go interconnect gigawatts. And that adds up to hundreds of gigawatts in total. So, there's something else here that I think you and I and many of your listeners will be very familiar with, which is a highly speculative supply side cue. We're very comfortable with the fact that, of course, wind and solar developers plan for 10 and they're going to build too. Or that ratio might even be too high. You've got 10 assets that you're planning and you're going to build one of them. That you're highly speculative in terms of where you're going to go, what you're planning to do. The size of any asset itself is also fairly perspective. And it depends on what you're going to be able to get. And you'd be silly not to max out the possible interconnect on the site. And you'd be silly to not try to do as much as you can for optionality's sake. What I think we're not used to is a demand side interconnection cue that has some of those same speculative elements. Like back in the day, if you're building a hospital in suburban Atlanta, you're not going out and picking seven or ten possible sites for that hospital. You're definitely not picking seven to ten sites scattered across four or five different states. Like, if you are building a hospital, it's because you have a human need for medical services in a particular place. You're not viewing it as completely fungible between maybe we'll go to Tennessee and build this same hospital or maybe we'll go to Texas or maybe we'll go stay in Georgia. I think it's a different thing though, actually. Like, I don't think what's happening is the developers are saying, I need a data center and I'm going to pick seven to ten sites in which everyone wins, wins and I'll build it. It's actually, I think, what's happening that a lot of developers, speculators, et cetera, are saying, if I can develop this site, I can monetize it. I could sell this thing or maybe I can lease it if I'm a co-lo. So, you know, and I'll do as many of those as I can do that I think are good because right now there's a really valuable market on the other side. And so everybody's doing that in Texas. Yes, right. With the, my one other wrinkle being that like, if you're the pure, if you're the pure respect, you're the development of this and the citizen the good way, right? You're in the land business side of this, right? You're in the site control part of this business. That's true. If you are then building the data center on one of those sites though, if you're building the compute, you're a fate, you could be more fungible between that, between where you're exactly you're going to go, depending on other factors. To some extent, to some extent, there's more like spread across different places based on what you're planning to do. I need to build this compute and I've got it in this period of time and I'll talk to whoever has site control that will help you do that. All right. So then the direct result of this is the next slide, slide 92, which is the no one knows anything slide. So we're staying in Texas. We just talked about this crazy big load interconnection Q. So of course, the question is then how much new electricity demand is there going to be in Texas as a result of that? That is the operative question, whether you are a grid operator or the market itself or whatever. And you have these great contrasting data sets of the load forecast from two parties who you would think would be pretty aligned because they're both trying to answer exactly the same question and they work hand in glove with each other and yet. So walk me through the data. Sure. So this is one of the no one knows anything slides. I've got a couple. You know, my perennial favorite before this was markets respond to incentives. This is the new one for our current age is no one knows anything. So yes, the transmission service providers who are responsible for building the grid and integrating the energy required to energize an electrify what happens in Texas are fundamentally serving the same market that Erkott, the grid operator is operating. However, Erkott says, you know what, we could go from like, I'm going to look under 500 carawatt hours in 2024 to like a thousand by 2030. Right? So let's call it up 110%. time period. The transmission service providers in the other hand are like, sorry, we expect to go all the way up to about 1600-terra-one hours. We're going to go 240% up from where electricity demand was in the state in 2024. And part of the reason is that they're looking at different information. The TSP's are looking at everything that people are asking them to build, and Erkott is looking at everything that it thinks will actually happen. But also, the incentives are there. Erkott's incentive is to keep things operational as high as to be possible, and if the lowest cost distributed across all of the people who receive service in Texas. The transmission service providers are paid for building assets and will happily, if possible, build whatever asset base they're being asked to build. So the true number is either somewhere in between or much closer to Erkott's figure. Erkott has the reason for demand that supply balancing and upkeep and everything else to get it really, really accurate and energy terms. But the transmission service providers have every incentive to go as big as possible because that's how they get paid. They get paid to build assets. So your view here is that it's less like they just have different views of the future and their views very so substantially from each other. And more just like the transmission service providers have an incentive to maximize the number and it's not a real forecast. Well, it's nobody, it is driven. It is forecast. It's driven by what people are asking them to do. The question is how much discounting are they doing? And that I think is where there's a significant difference between Erkott and the TSP's. So this is the forecast out to 2030. It's four years away. It's not far in the electricity supply terms. It's like the blink of an eye. It's like no time at all. And there's a difference between these two forecasts of about 500 terawatt hours. Contextually, the US total electricity demand is in the range of 4,000 terawatt hours annually. Right? Coming up like 40 closer to 4,500 but 40,500 now. So call that more than 10% of all US electricity demand as just the delta between these two forecasts in Texas alone. Yeah, we're put it this way. Do we think that in 2030, Texas is going to consume as much electricity as a third of the United States consumes right now. It's potentially as compared to roughly 10% or 11 or 12% last year. That's right. So like it's some nice. These things are more helpful when we ask them in this fashion, in this comparative fashion. What would need to be true for all of that to happen? Right? And it's a huge number but again, it doesn't exist in a vacuum. And this is back to my earlier point about how developers work is there are other grids that are similarly aggressive in their expectation of what demand might look like based on requests that they're getting without any ability to kind of zero that out against similar or identical potential demand that might be built somewhere else and not happen in wherever it is. So if you're at like like this, there's kind of no way to cross reference all of this stuff yet because of the nature of the way they're regulated state by state. Okay, so the next one, I want to jump back actually to slide 35 because because this one, I think it's a reflection of like, I guess it's a reflection of a US-centric mindset that I have that I'm very surprised by this, that or I don't believe this data. But the data is from the IA and it's a projection of how much of the electricity demand growth through 2030 is going to come from various different sectors. And we just talked about in the case of Texas, but it's also true in the case of the US, like this like insane boom in electricity demand coming from data center. So what's surprising about this other data set is that data centers are ranked fifth in terms of the source of new electricity demand. I presume that's because we're this is a global perspective. Not a US-centric, right? That's right. So this is a global perspective. Globally, electrification of industry is going to be like 30 percent of the demand growth for electricity between 2024 and 2030. Even electrified transport, which we in the US are sort of being trained away from thinking about as a big driver of demand is a bigger driver of demand around the world than data centers is or would be. But even like even appliances, there's a lot of the world that needs to add, you know, its first dishwasher, right? Even its first refrigeration. Space cooling. So just aircon and buildings is going to be like 10 percent of the total growth. And data centers are ranked 8 percent. What I would say is consider this very much a moving target. Like I will be very interested to see what this print looks like a year from now, two years from now, three years from now, right? And the other thing will be to be considered is, is there a trade-off in if there's a sort of finite quantum of new electrons that are going to be consumed between now and 2030? Is it going to come to the point where well, yeah, more of it went more as being consumed by data centers and less in absolute terms by space cooling? That would be complex. That would be something for the rest of the world that would be akin to a trade-off that we really haven't had to do in the US in quite some time, at least not at a national level. Yeah. Yeah, it's a moving target. Data centers are going to, I mean, even on a global basis, I think they're going to move up this ranking before too long. I would agree with that certainly. They're going to move up a, but where they land is a really big question and how they interact with the rest of these different places that electricity will be consumed is going to be really interesting to watch. Yeah. And the fact that in some markets, it's to some extent, like it's a near zero sum game in the sense that there's only so much supply and we're building out as much supply as we possibly can. So like every new data center is a new electrified industry facility that isn't going to happen. Probably. Matt Bollard is a longtime climatic analyst and writer. He's a co-founder of Halcyon, which is an AI assistant research and information platform. This shows a production of latitude media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Max Savage Levinson, mixing in theme song by Sean Marquand, Stephen Lacey is our executive editor. I'm Shail Khan, and this is Catalyst.