Unknown

I'm Shail Khan. I lead the early-stage venture strategy at Energy Impact Partners. Welcome to Catalyst. So you already know that the data center backlash is real. I think the question worth asking is whether it's the kind of thing you can actually fix, at least in the near term. Because I think there are two separate issues kind of wearing the same jacket. One is a set of specific negotiable grievances, some of which are highly warranted. This substation upgrade that has a cost on electricity rates, that water draw, this rate case, this worry that residential customers end up subsidizing a load that showed up overnight, pollution effects, all sorts of things like that. Those, you know, you can solve by doing it right. Cite it differently, pay for the upgrade, structure a tariff so the big load carries its own cost. The tools exist. And the industry, I think, is starting to get better at using them. But the other one maybe isn't really negotiable, at least not at the individual level, because it's not really about that data center. It's about AI and the company's building AI. And that issue would be there even if the facility drew half the power, lowered rates, never touched the water table. You can't redesign your way out of a values fight. So where does this go? Well, when developers can't get a yes, if we hit a ceiling, and our ability to build new large-scale data centers on the grid, do they stop asking the community and start building their own power behind the meter? Do they go small? Do they go off-grid? Do they go off-planet? Honestly, all of these are pretty clearly suboptimal. But right now, I think suboptimal is not a dirty word in this industry. And so I don't think we could say how much of them will happen. Does this get worse before it gets better? And what should data center developers do differently, if anything? Yeah. Interesting set of questions right now. And it is basically going to dictate the future of power in this country to a large extent. So let's talk through them. My guest is my good friend, Brian Janis. He's been on the show a bunch of times before. Brian is the co-founder and chief commercial officer of Cloverleaf Infrastructure, which just a couple weeks ago announced a big partnership and investment from NVIDIA. Congrats to Brian on that. Really good conversation. It's coming up after the break. We'll be right back after this. Demand flexibility is now an essential part of the data center speed-to-power playbook. But how do data centers actually curtail load? GridBeyond is the end-to-end solution for flexible energy management. GridBeyond's advanced DERMS and VPP platform is tailored to what data centers care about most, maximizing reliability, intelligently meeting curtailment obligations, reducing costs, and managing all your distributed resources in one place. Ready to transform your distributed energy management? Get started at gridbeyond.com. Catalyst is brought to you by Antenna Group, the communications and marketing partner behind the most influential companies in energy, climate, and infrastructure. For three decades, Antenna has helped ambitious companies stand out, build market leadership, and become category-defining brands. From breakthrough startups to global industry leaders, their team brings the expertise, relationships, and track record to accelerate your momentum. Learn more at Antenna.com. The power plant for the modern grid isn't a building, it's a network. Energy Hub's DERMS platform connects batteries, EVs, thermostats, and commercial and industrial sites into virtual power plants that over 230 utilities dispatch as reliable grid capacity day in, day out. VPPs deploy in 60 to 100 days at 40 to 60% less cost than traditional infrastructure, and they perform like conventional generation from day one. Learn about the flexibility platform. For the modern grid at energyhub.com. Ryan, welcome back. Thank you. Excited to be back. All right, so the data center backlash is here, it is real, it's substantial, it is mainstream news literally every single day right now. You know, you've been involved in developing data centers for, what, 13, 15, like a long time, right? More than 15 years, probably. Yeah, probably, but I think I worked on my first data center project in 2006, so maybe that's 20 years. Yeah, okay, wow. All right, so 20 years. Paint me the really quick picture in your perspective of how we got here. Like, why did we land in this place where there is this absolutely enormous upwelling of opposition? Yeah, so it's interesting because, you know, we've been building data centers at some scale for 20 years in this country. Even a few years ago, you know, you were getting the red carpet. The red carpet rolled out for you when you'd go meet with communities and cities, and we've somehow, in a relatively short time, gone from, you know, red carpet to pitchforks, you know? And it wasn't even like a whole break in between, you know, it was really fast. And so I think there's a number of things going on. I mean, one, of course, like what we're building today is much bigger, you know, in one fell swoop than what we built 15 years ago. Now, if you look at places like. Like Quincy, Washington, for instance. Microsoft probably has close to a gigawatt of data centers in Quincy, Washington. I don't know the exact number, but it's got to be sort of in that ballpark. But it's happened over a period. I think they built that first data center in 2007, right? So almost 20 years, you know, they've gone to a gigawatt. And there was a fantastic story just in the last week about Quincy, Washington building a $15 million aquatic center, and they have a $150 million state-of-the-art school, and their unemployment rate has gone from like 29% to 6%. They've been able, over a period of 20 years, to experience substantial benefits from this. But when you come in and say, well, I'm going to build, you know, what they did in 20 years in 18 months, you know, clearly there's a larger target. Because then you start going, well, how much water is that? How much power is that going to be? And so some of it is just the scale that we're doing. It draws a lot of attention, understandably so. Some of it is the. Some extrapolations that people. People were doing around, well, if, you know, this old data center uses X amount of water, and I take that times 100, then it's 100 times that. But, of course, it doesn't take into account the fact that the technology's changed substantially, and we're not using the same types of cooling systems that we did back then. We're using largely, you know, closed-loop systems because of the, you know, the heat rejection that's necessary. So some of it is just, I think, a misperception of how much water these things actually use. And if you look at the actual facts, like, data centers do not use that much. They don't use that much water relative to, you know, fill-in-the-blank almonds, avocados, golf courses, you know. Chemical plants, power plants. Yeah, right. And I find that one even ironic, too, because if, you know, if you were to come into a city and say, hey, we're going to build a new factory, and we're going to bring all these jobs, everyone's, you know, rolling out the red carpet again. It's like, but that factory's going to use more water, likely have more emissions, you know, have more externalities than a data center would. But, I mean, unfortunately, like, data centers are about the only thing we're building in this country. At any massive scale right now. So they get the lion's share of the attention. And I also think, so, you know, there's the externality issue. I mean, there's a scale. There's the, at least, perceived externalities. And I also think just the general backlash against AI is also real. I think people look at it and go, the thing happening in that, you know, if I'm building an auto factory, it's like, well, at least I like cars. So, like, sure, maybe I don't want this factory in my town, but I like cars, so I'm going to. Except the fact that we've got to build cars somewhere. But if, you know, one, they have this perception of the externalities of the building itself are negative for the community, which I would contend is not true, but nevertheless, it's a perception. And two, the thing that building is doing, I also don't like. Well, then it's, you know, it's a double whammy then. It's like, I don't like the building, and I don't like what they're doing in the building, and therefore, like, why would I support this project? So I do think the, you know, the tech companies have. A real issue around how AI has been presented, you know, and that is causing a lot of this backlash as well. The other layer, I guess I'd be interested, because you've seen this change over time, but I think the other layer that's, like, worth throwing in there, too, is the secrecy component, because it used to be totally standard to be very secretive as you were developing a data center in a community, and nobody knew whose data center it was until very late and all this kind of stuff. And that falls maybe more into your latter category. Of, like, generalized opposition to AI. This is more, I guess, generalized opposition to the tech companies, probably, to the hyperscalers. But, like, what has changed, if anything, in terms of how secretive you need to be when you're developing a data center and at, like, what stage? Yeah, that's been an issue for sure. I mean, for us and for Cloverleaf, we don't sign NDAs with government officials. Like, we don't think that's good practice. I would say that those that have done that are probably. Probably moving away from that, I would guess. I don't really know the policies of all the tech companies right now, but I think that issue is a lightning rod issue. And we've seen that in some of the, you know, the regulations that have come out. I think that was part of Shapiro's deal in Pennsylvania, which, you know, we're very supportive of that. Like, no NDAs. That's great. You know, disclose the cooling system. Like, all these things that we're seeing, most of them I'll look at and go, yeah, I agree with everything they're saying. Yes, that's responsible data center development. We should do that. Now, how it gets implemented is a whole other story, right? actually implement it in a way that's you know smooth and efficient and actually enables projects good projects to move forward or does it just grind everything to a halt like that's remains to be seen how how this all gets implemented um so i think that transparency issue is super important um you know we still sometimes face issues though because you know as you just think you know like we're an early stage developer right so we're developing a project without necessarily knowing who the end user is going to be so we end up sometimes in these situations of saying well why don't you tell us who the end user is going to be like you don't know and they're like well why aren't you being transparent i was like i'm telling you everything i know um so you know that that's something we we have to navigate as a as an early stage developer that you know you wouldn't if you're google or microsoft um but then you know you still have you still have to deal with the same ai backlash you could say well you know the company's meta and they're like well i don't like meta so well then it's like you didn't you didn't really fix anything so that's the you know the the general uh takes us back to that that ai thing so i'm not sure how much that really fixes anything um and and we i mean we've seen this with dialogues with communities too it's like you can be as transparent as you want at the end of the day like oftentimes the response is well i i just don't believe you yeah i don't believe you or they don't like it sure i just don't well i just don't like it i don't like data center so it's like okay well i can't fix the the emotions around this and that's a lot of what this is is i think the industry has tried to attack this and really miss the emotional resonance of like people just aren't happy about this stuff right now yeah i mean that gets to sort of i think the bigger picture question here is there's a you know your first category there's a list of things that are concerns that communities have some of them are totally well-founded and some of them are less well-founded but they're specific they are impacts on power bills they are water consumption maybe they are secrecy they are impacts economic impacts on the community those things seem very tractable to me right and there's a playbook now that the good developers of data centers whether it be the peer developers like you guys or or some hyperscalers i think google maybe is the the best at this have a playbook where you address all those things as close to up front as you can and you offer a lot in exchange to the community i mean you gave the example of of a town in washington but you know there are lots of these examples now where it's like okay data center is coming and as part of data center arriving they're offering you know a big community development fund and helping fund you know trade school at x y and z right that stuff that that seems tractable and like the good developers seem like they can solve for all of that um but then there's the other thing which is this generalized opposition whether to ai overall or to the tech companies and that one at the micro level like you clearly can't solve that second one on behalf of the ai industry so i wonder how you think about weighing those two against each other like to what extent are we hitting a point where you can do all of the right things and then the facts will totally be on your side and yet it's not going to matter i think that's very real like i do think that because we see that day in and day out like we come in you know with the facts we lay it out we put it in the statute uh and it doesn't seem to move the needle in a lot of instances like that everyone's already dug in on the issue that you and uh well you and i were at an event yesterday where we were talking about this you know with a group of industry folks and um you know that did come up of like there hasn't been enough from whether it's from the foundation models you know any player in the space that has really sold you know the world on like why ai like why is this actually going to make life better for everyone as opposed to this thing is a threat that we need to be scared of um and and i am a firm believer in that like we will ai will be transformative for the world it'll be transformative for medicine it'll be transformative for material sciences i mean there's so many things we're going to be able to do that we would not be able to do with ai um i'm also an optimist in the sense of i i don't believe the job displacement narrative because it just flies in the face of like every technology that's that we've ever had since the wheel like anytime we create efficiency some some process it always creates more prosperity like that just it's always happened and i i can at least intellectually assent to like it's possible in theory there is some technology to come along that would be the first to sort of you know prove that prove you know that to be false but i'm just not convinced that that's where we are with ai i truly believe it will be make us more productive it'll create more opportunity um it will certainly result in job displacement on the margin and i think that's real and that's been true of every technology i mean it was true of oil displacing whalers and you know i mean there's that's always true and i think that's where we have to have good regulations and we have to have good things focusing on skilling and job retraining and and all of these things that will ensure that you know those who are affected actually come out better on the other side um so that that fear is very real and i just don't think the industry has done a good job of sort of educating people on why why would we want to build these things like what is this technology going to do it's more than just chatbots and you know slop memes right i mean um so that that has been a big myth so far i think the industry and and we've got to somehow write that shit yeah i mean every time i have this conversation with anybody in the industry we landed this place which is the industry ai industry has not done a good and i think everybody says this right now like all the like sam says this and everybody says this right everybody agrees on this point the ai industry has done an insufficient job maybe a bad job of selling itself to the general public as something that is going to be good and everybody points fingers at each other at the you know leaders of the labs and so on as to why their messaging was the wrong messaging whatever but but if you abstract all that away i mean the question that i have is at least for the near term is the toothpaste out of the tube like is it too to salvage general um sentiment toward ai you know could you solve it with like we gotta we cure a form of cancer with ai or something do you need something like that and would it work even if yeah you you almost need a and it's the sort of the inverse of what i've been describing as like the fukushima event um what i found baffling about the shift to this this you know negative sentiment is how fast it happened without like an obvious catalyst right there was no meltdown yeah right yeah like when fukushima happened it's like oh i don't want nuclear it's like oh i don't want nuclear it's like okay that's understandable yeah and in fact the only jobs that have been lost really because of ai to date are like software engineers at software companies right right which none of the public cares about yeah so so it's it's it's curious how fast it shifted you know that the public sentiment has changed without you know without an obvious catalyst i mean all these other things we're talking about are true about people concerned about water and all these things but all those have always been true so it just but it really i mean if you look at the and i think politico has done a good job on you know the public sentiment and it really was like starting last september like you know really perception of data centers was pretty steady you know and and on both you know political spectrums was you know a little more favorable on the republican side a little less on democrats but it was like steady but it started in september and they're they're doing these surveys every month and it's just like we're just falling off this cliff um so yeah i think it's an interesting question could there be a catalyst the other way right could there be something where it's like oh wow like i never thought about the fact that ai could do that like would that be the thing that would that be the thing that would that be the got people to to start to go oh maybe this is a technology that that we need um and hopefully it would be a positive catalyst hopefully it's not some negative thing like you know china has now this technology that we don't have and it's it's threatening to us like hopefully it's something more of you know optimistic than that um but it almost seems like that's what needs to happen because i think you know the other issue we have right now is we're obviously in the middle of the midterms and then coming into a presidential election where this is a really top of mind issue and you're seeing it on both sides of the aisle of either a republican trying to label the democrat as the pro data center candidate or vice versa and it's working right it's actually affecting perception and so then that means that's a playbook that others are going to try to use and so we have that also that sort of headwind of you know the political environment right now that is concerning and so um i would hope that we would see some sort of favorable catalyst come along that could you know shift the tide a little bit against you know those factors right but who knows and who knows if it would work let's talk for a minute about the power price part just because that in particular is both your and my specialty um i don't know if you saw this andy my colleague i think you know uh wrote a piece a little while back that i thought made like an interesting point about about power prices as they pertain to data centers and and community opposition or community feeling about it which is that there may be this dynamic wherein um the objective truth particularly today is that a data center coming into a community tends to lower rates because nowadays you know the deal that the utility is striking with the data center is basically and guaranteed to do that sort of the whole point you were like a pioneer of doing this in the first place right um and yet and so like it may be true that at the micro level rates are lower if you get a data center near you or a bunch of data centers near you and yet it may also be true that at the macro level the build out of data centers is, has, created a lot of inflationary pressure on electricity prices because it has created shortages of transformers and gas turbines and higher demand for natural gas and all this different stuff, which is pushing the price of all the components of your retail electricity price up. And so like, you know, that shouldn't, you know, the, the, um, the logical conclusion of that should be sure if you, if you care about power prices, then you should want more data centers to be near you because they will lower your rates. But it also isn't like entirely crazy for you to say data centers are, uh, broadly causing an increase in power prices. I wonder how you think about that dichotomy. I think that's right. And so, because, because, you know, there's two ways that I can think about this. One, it is true that like producing more of something does not necessarily make it more expensive, right? In fact, it often makes it less expensive. And we saw that for a hundred years in electricity, right? Electricity prices did not go up for a hundred years as we massively expanded the grid. Now it is also true that we went through a period of, of no load growth and hence, you know, we did not, not to mention, you know, COVID related supply chain disruptions. And so growing, even if we're growing at the same rate that say we were growing in the eighties, we're doing it in a very different environment. We're doing it in an environment where we have to rebuild supply chains that aren't there. Right. Um, and, and no one was prepared, prepared for the demand. To spike like it has. And so the, you know, the, the supply chain issues are real and thus the, the inflationary issues are real. So I, I don't think though, then the argument should be, well, we should just not grow. It's like, okay, we are, we have some growing pains that we're going to have to get through, but long-term that growth is still actually going to be good for rates. Like it, it should be favorable. It's just, it's very, and this is where I think we have to, as an industry, be very sensitive to the fact that, you know, there are short-term pains that we're going through and these concerns that people have about power rates going up and their power bills higher than it was last year is true. Um, now is it necessarily higher because of data centers? Um, I mean, maybe partially, I mean, it's just higher also because we have these inflationary pressures that we have to deal with. Um, but I think that that is also an opportunity to say, well, what can we do as an industry to minimize the degree to which communities are facing those? And we we've seen things like that, like your data centers offering, you know, credits on power bills and like, are there things that we can do? Because I do think there's enough money to go around in this industry to ensure that, you know, that people are really insulated to a large degree from that sort of macro impact. So that's not easy to do, but it is, it is possible. And so it's something we have to take seriously, seriously as an industry of, you know, how are we really targeting? And you mentioned sort of the community benefit programs, like how are we targeting those programs that really address the concerns of a particular community? They're not just sort of general give backs to. Yeah. It doesn't feel like a, like a, yeah, like a bribe or something. Right. Right. But it's like, okay, we hear you. We understand this pain point. How can we work together to target that particular pain point? Yeah. Um, staying on the power theme for a second. Okay. So one of the emergent results of the backlash and of the political response to the backlash has been states, and others starting to really push hard on this, bring your own generation, bring your own capacity concept. You see this with what governor Abbott's doing in Texas, governor Shapiro in Pennsylvania, other places as well. Um, and, and as I understand it, most of those they're implied behind the meter. It's not like always entirely clear whether they mean that or not, you know? And so I'm curious your perspective on it, but I know you historically have been, uh, generally skeptical of behind the meter generation. And so I wonder what you think about that trend that we were seeing right now. Yeah. And I do think the language that people use is often very imprecise. And I always wonder that too. Like when you say that, do you mean that that capacity has to be on site or not? It's not clear. Yeah. Yeah. Cause the, the bring your own capacity concept as we think about it is you just have to make sure that you're funding all necessary capacity additions. And so we're doing a project right now, uh, in Oklahoma and it's with a smaller municipal and we're doing like a hundred percent of the sourcing of all the generation capacity of the wind, solar storage and everything that's going into that. Um, and we are packaging it up and delivering it to the utility to then turn around and deliver it to the data center. Right. So when I hear bring your own capacity, bring your own generation, that's the world that I think about is okay, go, go solve it for the utility, be financially responsible for backing it. But yeah, I think most people probably think about, oh, that just means you're going to have your own generation behind the meter. Um, and I've heard a number of people talk about that and, and I think they even, what it, it's definitely doesn't solve the problem we're talking about because you were talking about the issue is, uh, you know, if, if the inflationary pressure on rates is not coming from, you know, more load on the system, but rather it's coming from higher costs for equipment. Well, just buying that equipment and put it behind your meter, doesn't do anything, but provide more upward pressure for, for the, the, the other stuff that you're going to have to put on the, on the system. Right. So I don't think that not to mention the fact that, you know, sort of unit for unit doing something high in the meter actually results in you having to buy more stuff than if you would connect to the grid. And so you're actually overbuilding, whatever. Yeah. Now you're making it worse. In fact, I was, you know, talking to someone from, uh, uh, G even over yesterday and he was talking about for this gigawatt data center, they're having to build 2.6 gigawatts of capacity across generation and batteries and everything else. And so when you think about that, you're like, you're buying lots of extra stuff that you wouldn't have to buy if you're connecting the grid. So I don't think that if, if that's what people mean when they say bring your own capacity, I don't think that actually helps the problem. Um, I also wonder like if people don't want a data center next door, do they really want a data center plus a power plant next door? I, that also seems like not the right solution. Like, I think that's, worse than a data center that's connected to the grid. So I do get concerned when I hear about these proposals because I think it is very, well, again, I don't know exactly what they mean, but my assumption is they mean something that actually is worse than, you know, the right way to solve this problem. So it does create a lot of uncertainty in what does it mean for, like, how people are now going to go pursue projects as a result. For data centers, connecting to the grid quickly means two things, building distributed energy and having a plan for demand flexibility. GridBeyond helps with both. 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Utilities target, shape, and verify capacity down to the meter. Unlock flexible capacity that costs 40 to 60 percent less to deploy than traditional infrastructure, in a fraction of the time it takes you to break ground on a peaker plant. Learn more at energyhub.com. You know, it's interesting, now that you're saying it, I think putting a bunch of, okay, in order to go behind the meter entirely, and particularly if you're trying to go off-grid as a bridge power thing or whatever, you're definitely over-provisioning if you care about reliability at all. So you build too much stuff. Now, from the, you know, back to the micro, macro thing about power prices, it probably is fine from the micro perspective, right? You are not causing any new generation or equipment to get built on the grid, and you're paying for all the stuff behind the meter yourself. So it's probably fine micro, but it's definitely worse macro. It's fine micro, but I would even say, I mean, if you believe that a larger denominator is actually good for lowering electricity rates over time, it's actually negative in that you're taking that denominator off the grid. Right, you're not like, you're not like adding to the, you're not, sorry, you're not reducing the slack, the excess in the system, which is the way to, which is the way to lower rates for everybody. Yeah, that's it. It's not negative, but it's not positive either. It doesn't help. It could help. help. And so, yeah, I just don't think that that's at all fixing the problem. Maybe from a public perception it is, but when you actually understand the ins and outs of what's going on, you're like, oh, that's actually worse. Yeah. And on your second point, actually, I happened, you know, my algorithms now, like all they serve me is these like videos of local community hearings. I mean, this is your life, but it shouldn't be mine. And yet I watched a video yesterday of some Texas community hearing, some town hearing, where somebody was trying to fight against the data center that's coming, and they're mostly focused on the gas. They were saying things about how polluting the gas stacks are and all the nitrous oxides coming out of the gas stacks, as they called it. And I mean, I think it's a good point, right? Like behind the meter generation, particularly if it's thermal, there are reasons people don't want that in their backyard either. Right. So I don't think this is at all helpful at this point, in the conversation. Yeah. Okay. So then the next question, of course, is let's say, and I actually think this is like a, like a, I would bet on this being the case for the next couple of years, that it gets worse before it gets better. Partially because of the political timing that you described. It's just there currently where we stand today, there is no political advantage to being the pro data center candidate at the moment. I actually am interested to see somebody really try to take the lead. I think it's a good point. That mantle. Cause I think there, there should be a lane there for somebody, but I don't know, unless you tell me otherwise, I don't see it right now. What I see right now is exactly what you said. Everybody's fighting to, you know, brand the other candidate, the pro data center candidate. Yes. That's what we're seeing too. But I, I mean, I'm hopeful and, you know, we're certainly having discussions with different folks that we could create a narrative that really ties to that community benefit ties to the jobs. And, and I have definitely seen more stories. I mean, you know, there was a story about Mecklenburg County, Virginia. There was, uh, I think I saw on Loudoun County is now the richest County in the country. Yes, exactly. And the highest concentration of data centers and their property tax has gone down every year for the last decade. Uh, there was a good story about, I think Ellensdale, uh, North Dakota, which is where applied digital, I think it's North Dakota, uh, where they have a facility. So I've definitely seen a lot more stories that have been sort of like, well, hold on, slow down. I don't want to get into too much detail on this. Like data centers are, are absolutely terrible, you know, you know, period to like, oh yeah, there's a lot of benefits that come from these things. And there's a lot of value that we can see for having the jobs and having the, the tax revenue and lowering our, our property taxes. And so that is a narrative that it's certainly not as loud as the anti data center narrative, but it's, it's there now would a politician or a politician that has, you know, significant influence, like. Yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, it remains to be seen because certainly the voices that have been pro data centers have gotten a lot quieter, uh, you know, leading up to the election. Um, but you know, we continue to, you know, work with the local communities and, you know, and we work at all levels of government all the way down to, you know, the county and we spend probably more of our time there. Um, you know, we're not doing as much, you know, at the national level. Um, but not that it's not important to us. It's just, you know, we, we just tend to do a lot more kitchen table politicking and spending time with communities and trying to hear what the concerns are. Um, but I w I would like to see that happen. I mean, I would like to see some candidate come and say, Hey, it is important that we build things in this country. Like we, and data centers are the thing that we are building at massive scale and they are huge. Part of GDP growth. And if we, if we took that away, it would be hugely negative for the country right now. And also the geopolitical stuff, like, you know, China's going to build it either way. Like we probably should hear a little bit of that, but it's not, nobody's, nobody's really owning it. Um, but okay. But let's just say under the assumption that it does get worse before it gets better for a second. Um, there's two different thrusts of like, okay, so what happens then that I've seen people are, are thinking one. One thrust is the, I've, I've been calling it data centers go off grid, off land or off planet. Right. So off grid on the sea or in space, that's one I'm grouping them together. They're obviously different from each other, but that's like, we're going to continue to build big data centers. They're just going to be, you know, not connected to the grid or possibly not on earth. Um, and then the other one is tied more into the, you know, workloads over time shifting from just training to, or maybe even more inference. And that meaning maybe we can go distributed and it becomes edge computing. And we're not trying to go build gigawatt data centers and communities anyway. So I want to get your perspective on both of those kind of in order first off grid, off land, off planet. So we already talked about off grid. I don't think that's really the right solution. The underwater, it's funny. So we did a, we did this and gosh, uh, it was probably 2016 at Microsoft. We, uh, one of the guys, it was working for me, Sean James, who's now at NVIDIA did this. It was mostly just like science experiment. He literally built a Lego of a data center and put it in a fish tank for a little think week paper and was like, Oh, you can put data center underwater. And there's, you just cooling from the, you know, and Microsoft research picked it up and they're like, yeah, we should do that. And we're like, Oh, okay. I guess you can go do that if you want. So they did, they built one off the coast of California. I can't remember when it was in the kilowatts scale and they did it. And I'm like, okay, good. You did it. You proved that you could put a data center underwater. And then they're like, we want to do it again, but we want to do it bigger. I was like, Oh, okay. So they built a much bigger one. It was a megawatt scale, you know, off the coast of, uh, we were in the North sea. Um, and then the theory was like, well, you know, you could drop these like all over the world. I mean, most people live close to water, major ports. And, you know, you could, for a latency standpoint, you could just drop these all over the place. Um, of course it never went anywhere. We were like, well, you could do that, but like, you can also build them on land. It's a lot easier. And then your techs don't have to be scuba trained. And there's like a whole bunch of things like why, why you wouldn't want to do that. Um, now I know there are some companies that are pursuing that today for real. Um, then what's the name of the company? Panthalasa is the one you're thinking of. Thank you. Yeah. Um, so I know they're doing it. Um, and, and I will say I was initially quite skeptical given my experience underwater data centers. Um, but given everything we've just talked about for the last 30 minutes, like maybe, like maybe there actually is an argument for doing this. I still think the complexity and the scale of doing that is, or getting to the scale you would need to get to make it really worthwhile is, is super hard. Like I, and I haven't spent a ton of time really diving into it, but I, I have lots of questions about, yes, you could do that, but how scalable is it really? Yeah. Um, I very much have the same question about space. Yes, of course you could do that, but the scale at which, you know, we're building data centers and, and I, I just, I think both of those things will happen. I think both of those things will happen. I, I just look at the pie of total data centers by 2030 and pick your date in the future. I'm a big believer of terrestrial data centers are still going to be like the vast majority of the way we build data centers. Like I just don't, I'm not sure how much it moves the needle, uh, and just like sort of broad scale compute. Are there edge applications and other things that, for which it could be useful? Probably. I'm just, somewhat skeptical that it's going to be a big piece of the pie. It's interesting. I, I have sort of the opposite intuition from you about the, the, where the breaking point for you, you said like off-grid is not the solution, but we probably will do some in the sea and in space. And to me, look, if we, if we hit this, like impossible to penetrate ceiling on data centers connected to the grid, which we both agree is like, what should we, we should do as much as we can, but we're not going to be able to do that. Much of that as we can do, because that's the right way to do it. But if that's, if that hits some ceiling to me, I don't understand why we're not just going off grid then, right? Like then, cause, cause you, the land you go anywhere, right? Like remove the constraint of the grid. You can put the data center anywhere. You don't have to deal with like operations in the middle of the sea or in space. It's very scalable. But you don't get around. Let me, but let's say if the, if the biggest barrier today is actually the community acceptance, off grid doesn't solve that problem at all. You still need a piece of land that you can permit. But the constraint of the grid, man, you can go anywhere. I mean, we got some empty places in this country. Yeah, we, yeah, we, we do. Uh, but I, I still, I'm not convinced it's, it takes that much of that barrier away. Like I really don't. And I could be wrong. Like I, I, I definitely think, I mean, there's that sort of latency question. Like if you really don't care where you are, but I think if that's the case, I think you, what you end up seeing is you end up seeing a lot of stuff built in. In some other countries too. Like I saw a pitch recently for, you know, building a bunch of data centers in Mexico. And I was like, it's actually pretty good because this group had found a bunch of old industrial sites that had been set up to be big manufacturing facilities that never got built. And like, oh, that's actually, but not a bad idea. Like, you know, bring, bring the jobs there, bring the economic development. Um, you know, if you, if you don't care about it and that goes to like how much you care about it being in the United States and how much you care about data sovereignty and other things, you know? Right. We are kind of having a debate about, you know, how much we're going to build in the United States. But, you know, there are other places in the world to build data centers. Now there's other places in the world that are actually harder to build data centers in the United States too. So it's not like, that's not a panacea either just to be like, well, I'm just to go you know because it was like you know prior to the uh you know uh us attacking iran everyone's like everyone should go to the middle east and build data centers there and everyone's like maybe we don't want to build data centers in a in a middle of a war zone right um or an increasingly unstable region uh so so yeah i i don't know i i think i i will say like i'm a lot more open-minded maybe than i i was even nine months ago as to like there have to be other solutions we pursue because all the stuff we thought we were going to build in this country or thought we could build a lot of that's not going to get built because of all the things we've just been talking about like i think that and this problem is going to persist for the foreseeable future and everyone who thought oh i just got a constraint in 2027 or 2028 you have the same constraint in 29 and 30 and possibly into the early 2030s like i think this will just continue to be a a very very tight market yeah i guess my perspective has just been okay if you think that constraint will be fundamentally caused by power generation then space and the ocean make a lot of sense because you get your energy for free ultimately um but if you don't think it's power generation you think it's some combination of community and grid like transmission distribution and water concerns things like that like then i think that's a good idea i think that's a good idea i think that's a good idea that off-grid to me just feels like a smaller step that's like more plausible and you know you've seen the maps of like all the solar it would take to to power the entire country if you put it in mojave desert right like right imagine all the data center space you would need even including a bunch of solar and a bunch of thermal generation all that kind of stuff uh if you just put it in the middle of the southwestern united states in the emptiest part of the country like you could do it for sure yeah yeah you could do it in theory um so i don't know i i think we're going to learn a lot honestly i know this is such a unique time because you know you you have to sort of like throw out like everything we sort of understood about how we develop things you know for the last 15 20 years and it's like all this stuff that really made no sense again going back to microsoft doing underwater data centers you know 10 years ago and we were all like yeah we'll just put that on the shelf like we're not really to do that now you're like huh maybe that's maybe that's not as bad of an idea as we thought um so and i think we'll get to i think the next question was more about sort of that edge are you right and the other one it's related but i just want to be clear that like the rationale for edge is not entirely the same as the rationale for that okay the rationale for edge contains maybe you can do it with less community pushback but it seems to be equally equal parts about like well maybe you get faster speed to power because you don't need to go through the big long interconnection cues and and and you know and i think that's i i'm i'm increasingly more bullish on that than i ever have been i mean i've seen a lot of pitches i mean that doesn't make any sense and i've talked to a lot of investors who are like yeah i keep people coming to us and saying like people are going to take like one floor of a commercial building and all this stuff and it's like well maybe but you know you've got floor loading issues and there's a lot of so i mean a lot of those things are like well in theory yeah that ought to work but when you talk about actually what it takes to build a data center it's it's you know it's not like power isn't the only thing you have to think about right um however i i definitely think that given the i mean if you believe that and just take any curve between now and 2030 if you believe the market is going to be short and which means the the marginal megawatt that you bring online has real marginal value then a bunch of things that don't make sense in an unconstrained world might make a lot of sense in a constrained world and so then that it really gets in that price point it's almost like the same thing when you think about um oil and gas discovery right people will say well like oh you know we only have so much gas because like there's a bunch of unproductive wells and people aren't going to drill in these things and it's like well yeah that's true if you know if gas is 60 a barrel if gas is 150 a barrel there's a bunch of things that people would be like oh i'll drill that well all day long right i mean it's the same sort of thing when you when you have that that that price signal and so i think we're getting we're getting to a world where the price signal for that marginal unit of data center capacity is actually really quite high like it's it's a lot higher today than it was two or three years ago right which means that a bunch of businesses that maybe you got pitched two or three years ago that you looked at and were like interesting idea but it's never going to work because the break-even point is wrong right probably you know dust some of those off and be like actually that works in this environment of really high marginal cost for compute right um so i i am you know i i still believe that the vast majority of computation is going to be done in large data centers large being defined as 100 megawatts or more in my world like that's how i would think about i mean i think you know and definitely the people i talked to today are of that mind even the ones that are desperate or like i gotta have capacity the lowest i've ever heard is like this but it's got to be 50 megawatts i can't i can't spend a bunch of time doing like some onesie twosies and things but i think you know i think there's probably in fact i talked to one yesterday but i think there's probably let's call them like cloverleaf type customers that are going to go out and just say well we're just going to go do this on spec and we're going to go find a bunch of locations we're going to aggregate them together and we're going to create a portfolio of these things and someone's going to buy them and i think that's probably true um i just don't know the scale i don't have a good sense of like how big of a business you could build doing that but i think that's probably true um i think that's probably true i think people are going to build some businesses doing that so many people are building that business right now yeah the edge cloverleaf i can't tell you how many of them there are yeah there's a bunch out there but just like cloverleaf and and sort of all of our betters there's a bunch of people are going to try to do that and it's not going to go very well yeah yeah it's hard it's going to be a hard business to pull off and it's a spectrum right there's a there's a big difference between 15 kilowatt data centers strung together at people's houses up to you know industrial sites that can house 20 megawatts a piece or whatever you know and there's a there's a full spectrum in between there and the density that you need and the volume you need to aggregate and how you finance the whole thing there's a lot to figure out there that's kind of new and different from you know even with your your you know when you started cloverleaf like you're building bigger sites than really people had built much of before but it was kind of the same thing fundamentally that you were doing at microsoft right this is a different thing it's a different thing it's a different sort of product and and i just and that's what i'm saying like i i think it's going to be really hard to pull off some people are going to do it and i think the ones that do it are going to do quite well because getting a marginal cost of compute is just super super high and someone's going to be willing to pay for it um but i don't i don't envy your shoes as an investor to try to sort through uh which of those ones are going to work and which aren't because i think you're just gonna tell me yeah sorry yeah uh all right well in the absence of you telling me what to invest in uh it's good enough to just have a good conversation uh fun as always brian thank you yeah absolutely thanks a lot shell brian janice is the co-founder and chief commercial officer of cloverleaf infrastructure this show is a production of latitude media you can head over to latitude media.com for links to today's topics this episode is produced by max savage levinson mixing and theme song by sean marquand and bailey edits the video version of the show stephen lacey is our executive editor all of our episodes are on youtube you can subscribe to latitude media for episodes of this show and open circuit you can also find the audio version of this show anywhere you get your podcasts also uh if you haven't been before you should come this year to powerhouse's 10th annual new dawn party it's on october 22nd in oakland california i've been on the host committee for i don't know most of the 10 years probably and i'm always there so if you come you'll see me you can grab your tickets at powerhouse dash ventures dot co slash new dawn i'm shale khan and this is catalyst