Permitting Reform, Data Centers, and More With Senator Heinrich and Secretary Granholm

This episode of Shift Key is brought to you by HeatMapPro. You already rely on HeatMap for daily reporting and commentary on the energy transition. That's why you've listened to this show. Well, HeatMapPro brings all of our research, reporting, and insights down to the local level. It's a software platform that tracks all local opposition to clean energy projects and data centers. It forecasts community sentiment and it guides data-driven engagement campaigns. Go to HeatMap.News/Pro to book a demo and see the premiere intelligence platform for project permitting and community engagement. That's HeatMap.News/Pro. Hello, it's Friday, July 31st and gasp raises are still about $4 a gallon on average across the United States. That's about where they were a week ago when I had a very interesting conversation, which you'll hear on this show. But first, I want to kind of set the stage. So we are, I wouldn't say we're halfway through the Trump administration, the second Trump administration. We're close to halfway and of course the midterms are kind of spiritually halfway. And I think folks right now are looking back and looking forward. They are trying to figure out what went wrong during the Biden administration, what we've learned from the Trump administration that could be carried into energy policy making and climate policy making in the future. And I think they're also trying to figure out kind of what the next stage of energy and climate policy making will look like, especially in a world where electricity demand is increasing and where some of the biggest companies in the economy are trying to build artificial intelligence data centers. And so on that front, I had a very interesting conversation last week with two folks who have both been on shift key before but who I was able to bring together in a very cool way. Senator Martin Heinrich is the ranking Democratic member of the Senate Energy and Natural Resources Committee, which as you know from last episode is one of the key committees negotiating permitting reform. Secretary Jennifer Granholm is a former Secretary of Energy, of course, and also the former governor of Michigan. Last week they were both in DC on Capitol Hill at the same time. I was able to sit down with them. We covered kind of this looking back, looking forward topic as well as permitting reform, fuel prices, and AI data centers. It was a fun conversation. And I don't know the requires much more preamble than I've already given it. I'm Robyn Zimayar, the founding executive editor of HeatMap News and it's all coming up on shift key. Well, Senator Heinrich, former Secretary Granholm, great to be here with you. Likewise. Good to be here. I want to start, you know, yesterday, the defense secretary, as it were, announced that the cost of the around more is $37 billion and we've already seen fuel prices go up. I know you wanted to start the conversation by talking about the huge spikes in energy costs that your constituents have seen. And I just wanted to ask at the beginning, you know, what are you hearing here? Because it does seem to me that at this point there was an initial spike after the war, went back down, and now they're steadily climbing up again. And so, you know, obviously in Mexico also a producing state, but what are you hearing? Just that that people are feeling the pinch on energy prices everywhere. And so it's across all forms of energy. And this is an administration who has chosen to take actions that have negatively impacted prices in so many different sectors. So, you know, what they're doing in the electricity sector by not permitting all this new generation that is just waiting to be connected to the grid, that's raising electricity prices. You have the war in Iran, which has constrained international oil and gas supplies. And that is raising both natural gas, gasoline, and also diesel costs. And that diesel cost is really important because the reality is, once you run up the cost of diesel, then you see that every place that things move. You see it immediately in the grocery store because it costs more to move food from one part of the country to the other. You see it in building supply prices. What they're doing, making old coal plants that are ready to shut down, stay on the grid, that actually costs money. And those costs are being passed on to consumers in those places. And so no matter where you look in the energy map, what they're doing is increasing costs. And I hear about that at the grocery store at the gas station wherever I go, really. It's like energy prices are going up across the board. Secretary Granholm, I'm curious, you know, at this point we've had about a year and a half of watching the new Department of Energy in action. And I wonder what stood out to you about how it, we're going to do some retrospective in a bit. But I want to start by asking what has stood out to you about how it's operating. What you don't like and maybe one thing you like if there's anything. I will say, you know, there was a big diaspora of the team, incredibly smart team that had to leave or that chose to leave because of some of the things you're describing. I will say I'm going to give you a silver lining on some of this because I really do think that the actions of this administration have unintentionally caused a rush to clean energy and other solutions. So the O triple B, one big beautiful bill, didn't take away the tax credits for batteries. So it used to be, you know, solar plus storage. Solar plus storage. Now it's solar plus storage. And, and you know, it's great that those tax credits still exist and you're seeing developers really take advantage of it. Putting a cliff on when those tax credits, when the solar tax credits and the wind tax credits expired, obviously caused a rush for developers to build out. So the amount of gigawatts that are being added to the grid, I mean, it's so ironic at the end of 2024 when we added almost 60 gigawatts of clean power to the grid and batteries, we thought that was going to be the top because of what the administration is doing. But the unintended consequences of all of this action is that this year is going to be over 80 gigawatts added to the grid of clean power and batteries. Amazing. Amazing. So I'm glad that some of that foundation is still existing and that the private sector completely understands the importance of this move. And I will say because of the war, it only accelerates the move toward non fossil fuel none. You know, people of local powers, energy sovereignty and that means clean power. And we've seen other economies accelerate those shifts, seeing what's going on in the straight-of-form moves and in some cases, in China's case, really anticipating it moving large portions of their economy from molecules to electricity. Do you have any theories? I'm injecting this. But do you have any theories for why? I feel like after the straight-of-form moves closed, there were doomsday predictions but where oil would go and obviously oil prices increased significantly but they didn't hit $150 or $200 a barrel. Do you have any theories or hypotheses about why that is? It's a couple of things. There's just there's more buffer in the system than we used to have. China built up big reserves ahead of time. There are the commercial reserves. There's the strategic petroleum reserve. We haven't exhausted those buffers. So that really has worked to mitigate, you know, prices are bad. They're just not as bad as some of the predictions. We're not at the bottom though because the straights closed again and those commercial reserves are now after a little bump when the MOU happened and was announced, they're ticking back down. And there is a point at which the system stops working like it's designed to work. You need a certain amount of oil in the system and we're getting closer to that than I think any of us would want to be and then you're one hurricane away from really bad prices. So obviously one way to lower prices or one potential way to lower prices over the long term is permitting reform. I know you're in negotiations right now about a deal here so can you give us an update on where that stands? I don't want to get in the weeds on it because the negotiations are actually very active right now. But I do think there's a path there and I think both Republican and Democratic leaders in the relevant committees want to get to us on permitting. I think the biggest wild card is actually and challenge is the White House because the White House continues to do things that sort of poison the well. They did that with historic preservation act new regulations this week. They've done that with stop work orders on offshore wind with the Department of Defense stopping the process, processing very straightforward onshore wind permitting projects with winded solar on public lands. I mean time and time again they have entered this debate in ways that have not been healthy and haven't been helpful for getting a product across the line. So we're working hard. We're trying to negotiate a middle ground but I worry about the impact of the White House. I will say though that the utter frustration about waiting for Congress, President Cummings, up to get permitting reform done suggests that there may be another path. And I know that there is an effort on the part of hyper scalers or AI companies to look at how can AI do this instead of waiting for Congress. So for example I think you probably covered this the effort that Google has through tapestry at PGM, the notion that you should be able to take the interconnection queue and move it more quickly because you can do concurrent studies etc rather than all these consecutive wait and line blah blah. And if you can do that there or if you can do it with permitting and respect the intent of NEPA or the National Historic Preservation Act and use AI to get some of this done. and accelerate, then you might end up leapfrogging over Congress, which doesn't mean that you shouldn't be doing it, but I just worry that. The interconnection cues are a perfect place to apply machine learning AI advanced modeling, and we had all five FERC commissioners in front of us today on the Energy Natural Resources Committee, and one of the commissioners walked through an example where they were able to do historically what had been an over 600-day analysis of adding this generation to the grid became a 10-day process. And so we should absolutely do all that. I still think we're going to need to reform permitting and be able to get to yes or no faster and make sure that those permits flow. I do wonder with the AI acceleration of permitting, it seems like there's a lot of places to speed things up. It also seems like it's only so long until we are already used to these massive dockets and huge studies for a lot of energy projects or infrastructure projects. It does seem like AI only increases the ability to expand those dockets and make every study bigger and allow more people to file more documents that then have to be reviewed. I just seems like a both ways thing, but maybe I'm. It could be, but hopefully at least you can truncate the amount of time that it should not take 10 years for a transmission or 17. Or 17, in your case, but yeah, it's insane. There's only so much capital in that world and so many competent developers. And so I think it will generate additional demand, but the advantage of being able to do modeling quickly is really. It seems like a very unlinear advantage. I think we're going to see a lot of juice for the squeeze from that. I love what you have introduced though. The Connect and Manage Act. Can I ask him this question? I don't mean to take your. You probably had that on your list, but I mean describe what that is because it's so smart to be able to jump the queue essentially if you agree to certain conditions. Yeah, so I mean we've always been modeling based on what's the worst case scenario, what's the worst hour of the worst month when. You know, when in the middle of July everybody's coming home and turning on their air conditioning at the same time. There are vast stretches of time when the grid just has a lot more capacity on it. And so what our bill says is if you will commit to curtail power when the grid is full, you can just plug into the grid. And we'll let you sell power whenever the grid still has excess capacity, but you're going to have to dial it down when it doesn't have that capacity. And so that's something that we've seen work in ERCOT and I think has huge potential for getting a lot more generation on the grid quickly if we apply that nationally. Do you anticipate a law like that or some kind of policy like that being in a permitting reform deal this year or is that a future policy like to see? I mean we'll have the conversation, this we're rolling this out obviously late in the game and I'm a big believer in what you can done in any given Congress. Don't wait for the next Congress and think it's all going to be perfect, it never is around here. So we'll get everything we can done in this Congress, that's my position. And if that's not part of the mix then of course we're going to. there's permitting reforms not going to go away. And then one more on this just because I have a news responsibility which is what would a timeline look like? I once heard the timeline was you'd want to see text by August recess but that's pretty soon. We're very thick in the negotiations right now and whether or not we could land something before August I'm not going to speculate. But my goal has always been just to get something out of this Congress. I don't care when that happens but I'd like to get a product out of this Congress. Secretary Grant, I wonder what watching now 18 months of the Trump administration you think we should have done this differently during the Biden administration or there's an issue here that I would have handled differently or now that I see what's happened and how they've approached governing. It's such a great question because I think every one of the cabinet officials looks at what has happened in the Trump administration and says, "Man, I should have broken more eggs, not more laws but I should have really insisted on much more quicker all of the negotiations that took forever on getting the Treasury guidelines and all of that." We should have. I mean it like a cannonball should have the chapter and I think that's a good lesson that will be taken away for the next administration. Why didn't it happen? Because there's process. Because there's lawyers. I mean it just there was a sense that this was the way you do things etc. We should have. We should have built programs that don't take two years of analysis and that is definitely the less than that I took from the rapid, the things that were fairly straightforward like the tax credits were able to move quickly. But there were whole programs like the Green Bank that got stood up just in time to be turned off. Is that a drafting failure or an implementation failure? I think it's. I mean to be fair, there is a lot of in implementation. But there are a lot of rules around all of this that have certain timelines etc. So I think taking a look at all of that. I mean Democrats have been very. We're going to follow the rules and we're not going to bust. You know, we're not going to break norms. And I think this administration has broken a lot of norms and shown that you can get stuff done more quickly. I like what they've gotten done quickly. But nonetheless I think it's a lesson for us about challenging the status quo. I want to just observe a kind of interesting dynamic here. Which is that I think as Trump has taken steps that have driven up energy costs. I think we all agree. It's making costs higher than they would be otherwise. Certainly they're on more. Likely the permitting obstacles that they've put up to wind and solar tariffs. He has driven up. I think his administration has driven up energy costs. And we hear a lot from Democrats about how that's bad. It does seem a little bit to me like there's a bit of an effort to play both sides. Because I think when right now Trump is doing things that are driving up costs and costs are going up and everyone agrees that's bad. Democrats get an office and they have a lot of different goals for the energy system and some are procedural and some are about environmental goals. And that tends to slow things down. People take a long time to approve say oil and gas permits. And so do you think that watching the Trump administration, the Democrats are now ready to embrace or looking at, let's say, an affordability. First or affordability only agenda where it's like we'll take clean, we'll take fossil, we'll take whatever as long as costs are low. I think what Democrats should always keep in their minds is that you cannot create and manage the energy transition on the backs of consumers. They already have their plates full, they're doing everything they can to make our economy work. We can't ask them to do more, especially in this environment. That doesn't mean we quit managing that transition. It just means we can't ask consumers to pay for it. But if we're to be honest, the cheapest energy is clean energy. And so if you want to go cheap, then let abundance clean energy be prolific and deployed throughout the land and it will bring rates down. Let me just push back a little and say, I think watching, let's say, the Trump administration revoke permits and block permits and block construction for wind and solar, it does put you in mind of the Keystone XL pipeline, which was not necessarily an affordability project, but which Democrats did block. Now, there were good climate reasons to block it, or there were. But it was also an export project. And the reality is exports raise costs. They just do. Like we have. You can export a certain amount of natural gas and that can be okay, but when you hit a certain threshold, you're going to start to see natural gas prices increase. And that's why we built into those exports the fact that the Secretary of Energy is supposed to sign off on a project by project basis. It wasn't meant to be infinite because if you do make it infinite, eventually exports by virtue of those exports, you're actually going to raise domestic prices for both consumers and for manufacturers. And they've taken the opposite approach, which is, let's export as much as we can. At a certain point, you see that have an impact on the costs and on the jobs that those manufacturers create, right? I mean, the studies that it's been shown, I mean, it's the Cloud Christian of Supply and Demand, right? If in fact the capacity fills everything that's been authorized, you will have doubled the amount of exports of natural gas. And of course, even though we have such an abundant supply of natural gas in this country, that is going to put upward pressure on prices. You can access to the international price market. And we've seen this before in places like Australia, we don't want to be connected to that because those prices are much higher. There's more advantage in having moderate prices here that can really incentivize good jobs. in things like manufacturing. - Secretary Granholm, I wonder we've seen this explosion. I feel like just dated almost to when the Biden Trump transition happened in AI data centers and an electricity demand. I know you're working, you're thinking about these issues right now. So I guess take us to the end of your time and government versus what's happened since then. And was this scale of demand forecast? - No, no, I mean, even, I mean, you guys noted that Bloomberg New Energy Finance increased their projection, their forecast for a moment. Gigawatts are gonna be necessary to feed the beast by 2035. And just from December of last year of, you know, 2025 to now, it has increased by 80%. I mean, it's just, it's voracious, the appetite for power. So it is really quite astonishing. Now will all of that come to fruition? Will the chips be more efficient? Are these gonna be cited because of the NIMB? Issues, all of those are legitimate questions. But if the demand projections are accurate, it is gonna require a massive amount of build out of power. - What's the right way to make sure as much of that power is as green as possible? 'Cause I think right now it's gonna be meant by gas. - Yeah. - No, maybe, that's-- - But maybe or maybe not. I mean, is that the smart way to go when, I mean, you know, it's mind blowing to me a little bit that there's all this assumption that it's all gonna be natural gas? When, first of all, you have to have the infrastructure for natural gas or you have to build it out. It takes a lot of time to build out that infrastructure. Secondly, the wait for natural gas turbines, as everybody knows, as years. So the time frame of getting natural gas turbines and a natural gas plant is long. Whereas the time frame for getting solar and batteries, you can get within months, say, rather than years. So, you know, I don't necessarily buy the fat. I mean, maybe natural gas ends up being a backup power, maybe the, you know, bloom energy, et cetera, ends up being your backup source. But even that, when you look at the technology associated with long duration energy storage and how that is really coming to bear, I mean, there's, you know, example after example of that. Or, you know, geothermal, enhanced geothermal. Or, you know, I mean, there's any number of solutions that end up being clean and don't incur the wrath of citizens as much as fossil fuel solutions. - It's worth considering too that if we do see the level, the scale of natural gas generation that some people are proposing, it will markedly increase the cost of gas for other uses. So if your house electricity is generated by natural gas, those prices are gonna go up. If you heat your house with natural gas directly, those prices are gonna go up. If you're a manufacturer and you're using gas, those prices are gonna go up. So it is in our interest to find cheaper, cleaner sources of power to power as much of this transition as we possibly can. - How do you balance making like the big investments that I think the power system needs or the energy system needs to meet future energy demand, which is gonna come from data centers or electrification or manufacturing, then even if you curtain off data centers and be like, this is a bad energy use, we're gonna need to lot more energy in the future to do a lot of things we wanna do. How do you balance like the long term need to make big investments in the energy system or the power system to meet future demand versus they need to keep costs low in the short term. Because right now the way we pay for future big investments is to raise costs today. - Right, you rate base it. But what if these data centers that come are required to pay for those infrastructure upgrades, which everybody's talking about, the president has a pledge that he's having people sign, Gretchen Whitmer and Michigan has a pledge, I mean everybody's talking about, in fact you guys just, you guys meaning Congress just passed out of the E&C Committee of rate pay or pledge, great, let's get a pledge that the hyper-scalers pay for the upgrades that they bring clean power that they have responsible if not replenishment water use using advanced technologies to be able to do that. Maybe you take down some of the opposition, but maybe you also make the grid stronger as well. Maybe these data centers become grid assets because they are supplying power back to the grid or they have created additional battery usage to make the grid more reliable or they inject power when the grid is at maximum capacity. But more than that, those are kind of table stakes for data centers I think. What if they brought more than that, even? What if, in community benefit agreements, what is the stake that the community has? What do they give to the community? And to me this is where the most interesting part of this conversation could happen. Not only should they pay for all those upgrades, but maybe they also pay for distributed energy resources for home, solar and storage for maybe they pay help to subsidize EV batteries, et cetera, EV vehicles and use the batteries to create a virtual power plant for a portion of their capacity needs to get that flexibility. Now the community has a stake, they get something, they get a battery in their home or they get a heat pump or whatever. And it's interesting, Volta has done this with the PGM market. They're going to bid 100 megawatts of distributed capacity into the PGM capacity auction. How great is that? Because they're going to cobble together enough to create a virtual power plant. Why aren't we looking at that? Why aren't we looking at using the grid more efficiently with the resources we have? And what Volta is doing is taking existing assets and cobbling them together to create a virtual power plant. What if you created, what if the hyperscalers paid for a new stuff in a community that they're coming into? So I think there's a real opportunity here. I think given the premium that a lot of these developers have been willing to pay, that you can reduce price pressure on consumers and you can invest in more infrastructure. Which this looks like in policy. Because I think there's a lot of good ideas. There's a lot of goals. Obviously, it's a Trump administration in advance. They're rate-payer protection pledge, which is kind of all of this stuff, but without emphasizing clean as much, or at all. There's still a ton of demand to build data centers, which the policy to focus that demand look like. And what goals should Democrats bring to the process of regulating and shaping the data center build out? There may be a sort of floor that the federal government puts into place and then states take it to the next level. So maybe the rate-payer protection pledge, maybe the table stakes, as I call it, are happening at the federal level and they're required to meet. Those, and I think many of the responsible tech companies are willing to do that. And then the states go in and follow behind. Maybe they require buffer zones. Maybe they require community consultation. And they have a menu of options that a hyper-scaler might be able to bring to make-- not just a community home, but make a community better than when the hyper-scaler got here. Politically, this is hard because there's such a version. And people can't imagine that this is enforceable and that you trust them, that they're going to be transparent, that transparency issues are real big deal. If I were running for office right now, I'd say no data centers in my state unless you do these five things. And if those five things are done, then we'll have a conversation. What did you think of-- Sorry, say your five things. Say your five things. Which is what Christian Whitford did. Exactly. In Michigan. And she's asking the legislature to codify that. Or the Public Service Commission in Michigan to do that. That's what needs to happen. I interrupted you. You should say the five things. Well, so making sure that you don't socialize the cost to the rate-based. Bring your own clean energy. You have a long-term commitment. So there's an exit fee. If you go early, you have responsible water use. You are flexible. You agree to flexibility within the system just as a starter. But you must enter into a community benefit agreement. And that community benefit agreement has to be in consultation with the community in question. And it might include jobs. It might include job training and apprenticeships. And there's a whole menu of things that might be possible. That I think hyper-scalers would be willing to look at. Are you worried if you were to do this? That all those-- a lot of data center developers look at that to go, thank you. That's tough. We're going to take this to Texas and just build it. Well, could be. But honestly, local communities, no matter where they are, I mean, there's been over 100 moratoriums past. Local communities in red states and in blue states. These works are coming out. Yeah. This is my message to these local folks. You have leverage. You have leverage right now. You have to be transparent. And you've got to bring real value, which is what the secretary is talking about to the community from day one, and build some trust. Raise the bar for all of them. Because there's some data center companies who might not be eager to do this. But if you raise the bar as a community and insist on it, maybe they'll go to a place, another place. But maybe that other place is going to be insistent on using its leverage as well. Last question. The IRA. It was big, Bill. And you both played a major role in it. Implementation or writing or passage. It tried to electrify a lot of the economy. And obviously, it did a lot of good. Maybe wasn't going to meet its targets. Had everything remained in the case. It's impossible to know what would have happened with the Harris administration was trying to electrify more of the economy and create this big surge of electricity. Now we have the data center boom. Huge demand for electricity. And a ton of electricity infrastructure is getting built out now on the back of the demand boom. What are the lessons from the IRA that we should take? Maybe you both experienced the IRA. You both experienced, I would say, the IRA era of governance. So what should we learn from that and apply to the data center? I would say, well, to the data center-- Or to the next few years, yeah. I would like to say-- see a revising of the Implition Reduction Act, I mean a rebirth of the pieces that were carved out, so text credits for solar and for wind, etc. I'd like to see an investment text credit for the grid as well. But I think the lesson in terms of implementation was pretty clear that we just didn't do a good job of selling it. I mean, it took too long. We did a lot of ground breaks, we didn't do a lot of ribbon cuttings, meaning people weren't hired yet for all of these announcements that were made, and so people didn't feel it on the ground, so they didn't attribute it to the administration. From a political point of view, or certainly to the Implition Reduction Act, which people, everyday citizens, I have no idea what that was. So doing a much better job in getting the word out about why is this factory opening up in my area? Why am I hearing about a job fair over here and connecting those dots I think was one of the big errors? Read number one, and then doing a better job of telling the story. I think that's where we lost. The narrative is we had a great story to tell. I really focused, and it was an election year for me, so I focused heavily on the specific factories that were making solar and wind components for these big projects in New Mexico, and I tied it to big construction projects like the Sun Zia Generation and Transmission Line. I don't think we did that nationally as effectively as we could have. Do you think it needs a big charismatic idea at the center next time, National Grid, or big underground, and we're going to underground all the lines or something, or would just have selling it did better? Well, I think, I mean, when I tell people that there were 950 factories that came or announced they were coming or expanding in the United States just to build clean energy stuff as a result of the inflation reduction act, people are like 950 factories coming in. I mean, there was a good story there. It really was, and I was on the main cable networks, but I didn't go on all of the sides, you know, and most people aren't getting their news from main cable. So we have to think better strategically about how we communicate, where we communicate, use social media a lot more to be able to get the word out. We should have been on your podcast. We should have been on my podcast. You were at the end. After it was all over. And there was a lesson there. I think that would have made the difference maker. You know, if there's one thing I know about the shift key listener is that they are a swing voter in Exurban, Pennsylvania. No, we're going to have to leave it there, but thank you so much for joining us. Thanks so much for doing this. Thank you. And that will do it for this episode of Shift Key. We'll be back next week at the usual time with a new episode that I'm excited about. Until then, Shift Key is a production of HeatBap News. Our editors are Jillian Goodman and Nicole Louriccella, multimedia editing and audio engineering aids by Jacob Lambert and by Nick Woodbury, our music spy Adam Cromwell. Thanks so much for listening. We'll see you next week. [BLANK_AUDIO]